Document:

Exhibit 10.5

 

AMENDED AND RESTATED 
 OPERATING AGREEMENT

 

OF

 

SCIPLAY PARENT COMPANY, LLC
 a Nevada limited liability company

 

Dated as of [·], 2019

 

THE SECURITIES REPRESENTED BY THIS AMENDED AND RESTATED OPERATING AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS.  SUCH SECURITIES MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.

 

 

TABLE OF CONTENTS

 

	
ARTICLE I
    
	
 
    
	
Definitions
    
	
 
    
	
ARTICLE II
    
	
 
    
	
Organizational   Matters
    
	
 
    	
 
    	
 
    
	
SECTION 2.01.
    	
Formation of Company
    	
12
    
	
SECTION 2.02.
    	
Amended and Restated   Operating Agreement
    	
12
    
	
SECTION 2.03.
    	
Name
    	
12
    
	
SECTION 2.04.
    	
Purpose
    	
12
    
	
SECTION 2.05.
    	
Principal Office;   Registered Agent
    	
12
    
	
SECTION 2.06.
    	
Term
    	
13
    
	
SECTION 2.07.
    	
No State-Law   Partnership
    	
13
    
	
 
    
	
ARTICLE III
    
	
 
    
	
Members; Units;   Capitalization
    
	
 
    	
 
    	
 
    
	
SECTION 3.01.
    	
Members
    	
13
    
	
SECTION 3.02.
    	
Units
    	
14
    
	
SECTION 3.03.
    	
Recapitalization; The   Corporation’s Common Unit Purchase
    	
14
    
	
SECTION 3.04.
    	
Authorization and Issuance   of Additional Units
    	
15
    
	
SECTION 3.05.
    	
Repurchase or   Redemption of Shares of Class A Common Stock
    	
16
    
	
SECTION 3.06.
    	
Certificates   Representing Units; Lost, Stolen or Destroyed Certificates; Registration and   Transfer of Units
    	
16
    
	
SECTION 3.07.
    	
Negative Capital   Accounts
    	
17
    
	
SECTION 3.08.
    	
No Withdrawal
    	
17
    
	
SECTION 3.09.
    	
Loans From Members
    	
17
    
	
SECTION 3.10.
    	
Corporation Stock   Incentive Plans
    	
17
    
	
SECTION 3.11.
    	
Dividend   Reinvestment Plan, Cash Option Purchase Plan, Equity Plan, Stock Incentive   Plan or Other Plan
    	
18
    
	
 
    
	
ARTICLE IV
    
	
 
    
	
Distributions
    
	
 
    	
 
    	
 
    
	
SECTION 4.01.
    	
Distributions
    	
19
    
	
SECTION 4.02.
    	
Restricted   Distributions
    	
19
    

 

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ARTICLE V
    
	
 
    
	
Capital   Accounts; Allocations; Tax Matters
    
	
 
    	
 
    	
 
    
	
SECTION 5.01.
    	
Capital Accounts
    	
20
    
	
SECTION 5.02.
    	
Allocations
    	
21
    
	
SECTION 5.03.
    	
Regulatory Allocations
    	
21
    
	
SECTION 5.04.
    	
Final Allocations
    	
22
    
	
SECTION 5.05.
    	
Tax Allocations
    	
22
    
	
SECTION 5.06.
    	
Indemnification and   Reimbursement for Payments on Behalf of a Member
    	
23
    
	
SECTION 5.07.
    	
Withholding
    	
23
    
	
 
    
	
ARTICLE VI
    
	
 
    
	
Management
    
	
 
    	
 
    	
 
    
	
SECTION 6.01.
    	
Authority of Manager
    	
24
    
	
SECTION 6.02.
    	
Actions of the Manager
    	
24
    
	
SECTION 6.03.
    	
Resignation; No Removal
    	
24
    
	
SECTION 6.04.
    	
Vacancies
    	
25
    
	
SECTION 6.05.
    	
Transactions Between   Company and Manager
    	
25
    
	
SECTION 6.06.
    	
Reimbursement for   Expenses
    	
25
    
	
SECTION 6.07.
    	
Delegation of Authority
    	
26
    
	
SECTION 6.08.
    	
Limitation of Liability   of Manager and Officers
    	
26
    
	
SECTION 6.09.
    	
Indemnification
    	
27
    
	
SECTION 6.10.
    	
Investment Company Act
    	
29
    
	
SECTION 6.11.
    	
Outside Activities of   the Manager
    	
29
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    
	
 
    
	
Rights and   Obligations of Members
    
	
 
    	
 
    	
 
    
	
SECTION 7.01.
    	
Limitation of Liability   and Duties of Members
    	
29
    
	
SECTION 7.02.
    	
Lack of Authority
    	
30
    
	
SECTION 7.03.
    	
No Right of Partition
    	
30
    
	
SECTION 7.04.
    	
Members Right to Act
    	
30
    
	
SECTION 7.05.
    	
Inspection Rights
    	
31
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII
    
	
 
    
	
Books, Records,   Accounting and Reports, Affirmative Covenants
    
	
 
    	
 
    	
 
    
	
SECTION 8.01.
    	
Records and Accounting
    	
31
    
	
SECTION 8.02.
    	
Fiscal Year
    	
32
    
	
SECTION 8.03.
    	
Reports
    	
32
    

 

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ARTICLE IX
    
	
 
    
	
Tax Matters
    
	
 
    
	
SECTION 9.01.
    	
Preparation of Tax   Returns
    	
32
    
	
SECTION 9.02.
    	
Tax Elections
    	
32
    
	
SECTION 9.03.
    	
Tax Controversies
    	
33
    
	
 
    	
 
    	
 
    
	
ARTICLE X
    
	
 
    
	
Restrictions on   Transfer of Units
    
	
 
    	
 
    	
 
    
	
SECTION 10.01.
    	
Transfers by Members
    	
33
    
	
SECTION 10.02.
    	
Permitted Transfers
    	
33
    
	
SECTION 10.03.
    	
Restricted Units Legend
    	
34
    
	
SECTION 10.04.
    	
Transfer
    	
34
    
	
SECTION 10.05.
    	
Assignee’s Rights
    	
35
    
	
SECTION 10.06.
    	
Assignor’s Rights and   Obligations
    	
35
    
	
SECTION 10.07.
    	
Overriding Provisions
    	
36
    
	
 
    	
 
    	
 
    
	
ARTICLE XI
    
	
 
    
	
Redemption and   Exchange
    
	
 
    	
 
    	
 
    
	
SECTION 11.01.
    	
Redemption Right of a   Member
    	
37
    
	
SECTION 11.02.
    	
Election and   Contribution of the Corporation
    	
39
    
	
SECTION 11.03.
    	
Exchange Right of the   Corporation
    	
40
    
	
SECTION 11.04.
    	
Reservation of Shares   of Class A Common Stock; Listing; Certificate of the Corporation
    	
40
    
	
SECTION 11.05.
    	
Effect of Exercise of   Redemption or Exchange Right
    	
41
    
	
SECTION 11.06.
    	
Tax Treatment
    	
41
    
	
 
    
	
ARTICLE XII
    
	
 
    
	
Admission of   Members
    
	
 
    	
 
    	
 
    
	
SECTION 12.01.
    	
Substituted Members
    	
41
    
	
SECTION 12.02.
    	
Additional Members
    	
41
    
	
 
    	
 
    	
 
    
	
ARTICLE XIII
    
	
 
    
	
Withdrawal and   Resignation
    
	
 
    	
 
    	
 
    
	
SECTION 13.01.
    	
Withdrawal and   Resignation of Members
    	
42
    

 

iii

 

	
ARTICLE XIV
    
	
 
    
	
Dissolution and   Liquidation
    
	
 
    	
 
    	
 
    
	
SECTION 14.01.
    	
Dissolution
    	
42
    
	
SECTION 14.02.
    	
Liquidation and   Termination
    	
42
    
	
SECTION 14.03.
    	
Deferment; Distribution   in Kind
    	
43
    
	
SECTION 14.04.
    	
Articles of Dissolution
    	
44
    
	
SECTION 14.05.
    	
Reasonable Time for Winding   Up
    	
44
    
	
SECTION 14.06.
    	
Return of Capital
    	
44
    
	
 
    	
 
    	
 
    
	
ARTICLE XV
    
	
 
    
	
Valuation
    
	
 
    	
 
    	
 
    
	
SECTION 15.01.
    	
Determination
    	
44
    
	
SECTION 15.02.
    	
Dispute Resolution
    	
44
    
	
 
    	
 
    	
 
    
	
ARTICLE XVI
    
	
 
    
	
General   Provisions
    
	
 
    	
 
    	
 
    
	
SECTION 16.01.
    	
Power of Attorney
    	
45
    
	
SECTION 16.02.
    	
Confidentiality
    	
45
    
	
SECTION 16.03.
    	
Amendments
    	
47
    
	
SECTION 16.04.
    	
Title to Company Assets
    	
47
    
	
SECTION 16.05.
    	
Addresses and Notices
    	
47
    
	
SECTION 16.06.
    	
Binding Effect;   Intended Beneficiaries
    	
48
    
	
SECTION 16.07.
    	
Creditors
    	
48
    
	
SECTION 16.08.
    	
Waiver
    	
48
    
	
SECTION 16.09.
    	
Counterparts
    	
48
    
	
SECTION 16.10.
    	
Applicable Law
    	
48
    
	
SECTION 16.11.
    	
Severability
    	
49
    
	
SECTION 16.12.
    	
Further Action
    	
49
    
	
SECTION 16.13.
    	
Delivery by Electronic   Transmission
    	
49
    
	
SECTION 16.14.
    	
Right of Offset
    	
49
    
	
SECTION 16.15.
    	
Effectiveness
    	
49
    
	
SECTION 16.16.
    	
Entire Agreement
    	
49
    
	
SECTION 16.17.
    	
Remedies
    	
50
    
	
SECTION 16.18.
    	
Descriptive Headings;   Interpretation
    	
50
    
	
 
    	
 
    	
 
    
	
Exhibits
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Exhibit A
    	
—
    	
Form of   Joinder Agreement
    	
 
    
				

 

iv

 

AMENDED AND RESTATED
 OPERATING AGREEMENT 
 OF 
 SCIPLAY PARENT COMPANY, LLC

 

This AMENDED AND RESTATED OPERATING AGREEMENT (this “Agreement”), dated as of [•], 2019, is entered into by and among SciPlay Parent Company, LLC, a Nevada limited liability company (the “Company”), and its Members (as defined herein).

 

WHEREAS, the Company was formed under the name “SG Nevada Holding Company, LLC” by the filing of the Articles (as defined herein) with the Secretary of State of the State of Nevada pursuant to the Act (as defined herein) on September 1, 2016;

 

WHEREAS, the Company changed its name to “SG Social Parent Company, LLC” on November 30, 2018 and subsequently changed its name to “SciPlay Parent Company, LLC” on March 4, 2019, in each case by the filing of a Certificate of Amendment to the Articles with the Secretary of State of the State of Nevada pursuant to the Act;

 

WHEREAS, on November 30, 2018, SG Social Holding Company II, LLC, a Nevada limited liability company, which was previously named “SG Nevada Holding Company II, LLC” until November 30, 2018, and the sole member of the Company, contributed its member’s interest in the Company to SG Social Holding Company I, LLC, a Nevada limited liability company (“SG Holding I”), whereupon SG Holding I became the sole member of the Company;

 

WHEREAS, on March 7, 2019, SG Holding I contributed a 1% member’s interest in the Company to SG Social Holding Company, LLC, a Nevada limited liability company (“SG Holding” and, together with SG Holding I, the “Original Members”), whereupon SG Holding became a member of the Company;

 

WHEREAS, SciPlay Corporation, a Nevada corporation (the “Corporation”), desires to effect an initial public offering of its Class A common stock, par value $.001 per share (the “Class A Common Stock” and, the initial public offering thereof, the “IPO”), and desires to use the net proceeds received from the IPO (the “IPO Net Proceeds”) to purchase Common Units (as defined herein) of the Company from the Company and from SG Holding I;

 

WHEREAS, following the IPO, the Original Members will be the holders of all shares of Class B common stock, par value $.001 per share, of the Corporation (the “Class B Common Stock”);

 

WHEREAS, in connection with the IPO, the Original Members, as all of the members of the Company immediately prior to the Effective Time (as defined herein), desire to amend and restate the operating agreement of the Company as in effect immediately prior to the Effective Time to be in the form of this Agreement as of the Effective Time to reflect (a) a recapitalization of the Company’s member’s interests (as set forth in Section 3.03 hereof) (the “Recapitalization”), (b) upon the Effective Time and immediately following the purchase by the Corporation of Common Units using the IPO Net Proceeds, the addition of the Corporation as a Member (as defined herein) of the Company and its designation as sole Manager (as defined

 

 

herein) and (c) the rights and obligations of the Members of the Company that are enumerated and agreed upon in the terms of this Agreement;

 

WHEREAS, in connection with the Recapitalization and as of the Effective Time, the member’s interests held by the Original Members in the Company will be canceled and Common Units will be issued to the Original Members in exchange therefor as contemplated by this Agreement;

 

WHEREAS, immediately following the Effective Time, the Corporation will purchase (a) newly issued Common Units from the Company and (b) existing Common Units held by SG Holding I following the Recapitalization, in each case using the IPO Net Proceeds; and

 

WHEREAS, in the event the underwriters for the IPO exercise their 30-day over-allotment option to purchase additional shares of Class A Common Stock from the Corporation (the “Over-Allotment Option”), the Corporation will issue such additional shares of Class A Common Stock in connection with the IPO and use the resulting additional net proceeds received by the Corporation (the “Over-Allotment Option Net Proceeds”) to purchase existing Common Units held by SG Holding I.

 

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

 

ARTICLE I

 

Definitions

 

The following definitions shall be applied to the terms used in this Agreement for all purposes, unless otherwise clearly indicated to the contrary.

 

“Act” means Chapter 86 of the Nevada Revised Statutes, as amended from time to time, or any corresponding provision or provisions of any succeeding or successor law of the State of Nevada.

 

“Additional Member” has the meaning set forth in Section 12.02.

 

“Adjusted Capital Account Deficit” means, with respect to the Capital Account of any Member as of the end of any Taxable Year, the amount by which the balance in such Capital Account is less than zero.  For this purpose, such Member’s Capital Account balance shall be:

 

(a)                                 reduced for any items described in Treasury Regulation Section 1.704- 1(b)(2)(ii)(d)(4), (5), and (6); and

 

(b)                                 increased for any amount such Member is obligated to contribute or is treated as being obligated to contribute to the Company pursuant to Treasury Regulation

 

2

 

Section 1.704-1(b)(2)(ii)(c) (relating to partner liabilities to a partnership) or 1.704-2(g)(1) and 1.704-2(i) (relating to minimum gain).

 

“Admission Date” has the meaning set forth in Section 10.06.

 

“Affiliate” (and, with a correlative meaning, “Affiliated”) means, with respect to a specified Person, each other Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified.  As used in this definition and the definition of Majority Member, “control” (including with correlative meanings, “controlled by” and “under common control with”) means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of voting securities or by contract or other agreement).

 

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

 

“Appraisers” has the meaning set forth in Section 15.02.

 

“Articles” means the Articles of Organization of the Company filed with the Secretary of State of the State of Nevada in accordance with the Act, as such Articles have been or may be amended from time to time in accordance with the Act.

 

“Assignee” means a Person to whom a Company Interest has been Transferred in accordance with this Agreement but who has not become a Member pursuant to Article XII.

 

“Base Rate” means, on any date, a variable rate per annum equal to the rate of interest most recently published by The Wall Street Journal as the “prime rate” at large U.S. money center banks.

 

“Black-Out Period” means any “black-out” or similar period under the Corporation’s policies covering trading in the Corporation’s securities to which the applicable Redeeming Member is subject, which period restricts the ability of such Redeeming Member to immediately resell shares of Class A Common Stock to be delivered to such Redeeming Member in connection with a Share Settlement. For purposes of this definition, a Redeeming Member shall include any Member whose Redeemed Units are acquired by the Corporation in a Direct Exchange.

 

“Book Value” means, with respect to any Company property, the Company’s adjusted basis for U.S. federal income tax purposes, adjusted from time to time to reflect the adjustments required or permitted by Treasury Regulation Section 1.704-1(b)(2)(iv)(d)-(g).

 

“Business Day” means any day other than a Saturday or a Sunday or a day on which banks located in New York City, New York or Las Vegas, Nevada generally are authorized or required by Law to close.

 

“Capital Account” means the capital account maintained for a Member in accordance with Section 5.01.

 

3

 

“Capital Contribution” means, with respect to any Member, the amount of any cash, cash equivalents, promissory obligations or the Fair Market Value of other property that such Member contributes (or is deemed to contribute) to the Company pursuant to Article III hereof.

 

“Cash Settlement” means immediately available funds in U.S. dollars in an amount equal to the Redeemed Units Equivalent.

 

“Change of Control Transaction” means (a) a sale of all or substantially all of the Company’s assets determined on a consolidated basis, (b) a sale of a majority of the Company’s outstanding Units (other than (i) to the Corporation or (ii) in connection with a Redemption or Exchange in accordance with Article XI) or (c) a sale of a majority of the outstanding voting securities of any Material Subsidiary of the Company; in any such case, whether by merger, recapitalization, consolidation, reorganization, combination or otherwise; provided, however, that neither (w) a transaction solely between the Company or any of its Subsidiaries, on the one hand, and the Company or any of its Subsidiaries, on the other hand, nor (x) a transaction solely for the purpose of changing the jurisdiction of domicile of the Company, nor (y) a transaction solely for the purpose of changing the form of entity of the Company, nor (z) a sale of a majority of the outstanding shares of Class A Common Stock, whether by merger, recapitalization, consolidation, reorganization, combination or otherwise, shall in each case of clauses (w), (x), (y) and (z) constitute a Change of Control Transaction.

 

“Class A Common Stock” has the meaning set forth in the recitals to this Agreement.

 

“Class B Common Stock” has the meaning set forth in the recitals to this Agreement.

 

“Class B Subscription and IPO Common Unit Purchase Agreement” means that certain Class B Subscription and Common Unit Purchase Agreement, dated as of the date hereof, by and among the Corporation, the Company, SG Holding and SG Holding I.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended.  Unless the context requires otherwise, any reference herein to a specific section of the Code shall be deemed to include any corresponding provisions of future Law as in effect for the relevant taxable period.

 

“Common Unit” means a Unit representing a fractional part of the Company Interests of the Members and Assignees and having the rights and obligations specified with respect to the Common Units in this Agreement.

 

“Common Unit Redemption Price” means the arithmetic average of the volume weighted average prices for a share of Class A Common Stock on the principal U.S. securities exchange or automated or electronic quotation system on which the Class A Common Stock is traded or quoted, as reported by Bloomberg, L.P. or its successor, for each of the five (5) consecutive full Trading Days ending on and including the last full Trading Day immediately prior to the Redemption Date, subject to appropriate and equitable adjustment for any stock splits, reverse splits, stock dividends or similar events affecting the Class A Common Stock.  If

 

4

 

the Class A Common Stock no longer trades on a securities exchange or automated or electronic quotation system, then a majority of the Independent Directors shall determine the Common Unit Redemption Price in good faith.

 

“Common Unitholder” means a Member who is the registered holder of Common Units.

 

“Company” has the meaning set forth in the preamble to this Agreement.

 

“Company Interest” means the interest of a Member or an Assignee in Profits, Losses and Distributions.

 

“Contribution Notice” has the meaning set forth in Section 11.01(b).

 

“Corporate Board” means the Board of Directors of the Corporation.

 

“Corporate Incentive Award Plan” means the SciPlay Corporation 2019 Long-Term Incentive Plan, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

 

“Corporation” has the meaning set forth in the recitals to this Agreement, together with its successors and assigns.

 

“Corporation’s Assumed Tax Liability” means, with respect to an applicable Taxable Year, (i) any U.S. federal, state and local and foreign tax obligations owed by the Corporation (other than any obligations to remit any amounts withheld from payments to third parties) and (ii) any obligations payable by the Corporation under the Tax Receivable Agreement (other than an Early Termination Payment and any Default Rate Interest (each, as defined in the Tax Receivable Agreement) attributable thereto).

 

“Credit Agreement” means that certain Credit Agreement, dated as of [•], by and among SciPlay Holding Company, LLC, as borrower, the Company, as a guarantor, the other guarantors from time to time party thereto, the several lenders from time to time party thereto, and Bank of America, N.A., as administrative agent for the lenders, including all exhibits, schedules and attachments thereto, as the same may be amended, restated, supplemented or otherwise modified from time to time and including any one or more refinancings or replacements thereof, in whole or in part, with any other debt facility or debt obligation.

 

“Direct Exchange” has the meaning set forth in Section 11.03(a).

 

“Distributable Cash” means, as of any relevant date on which a determination is being made by the Manager regarding a potential Distribution of cash pursuant to Section 4.01(a), the amount of cash that could be distributed by the Company for such purposes in accordance with the Credit Agreement (and without otherwise violating any applicable provisions of the Credit Agreement).

 

“Disregarded Shares” has the meaning set forth in Section 3.04(a).

 

5

 

“Distribution” means each distribution made by the Company to a Member with respect to such Member’s Units, whether in cash, property or securities of the Company and whether by liquidating distribution or otherwise; provided, however, that none of the following shall be a Distribution: (a) any recapitalization that does not result in the distribution of cash or property to Members or any exchange of securities of the Company, and any dividend or subdivision (by Unit split or otherwise) or any combination (by reverse Unit split or otherwise) of any outstanding Units or (b) any other payment made by the Company to a Member that is not properly treated as a “distribution” for purposes of Section 731, 732, or 733 or other applicable provisions of the Code.

 

“Distribution Tax Rate” shall mean the tax rate determined in the sole discretion of the Manager.

 

“Effective Time” has the meaning set forth in Section 16.15.

 

“Equity Plan” means any option, stock, unit, stock unit, appreciation right, phantom equity or other equity or equity-based compensation plan, program, agreement or arrangement, in each case now or hereafter adopted by the Corporation, including the Corporate Incentive Award Plan.

 

“Equity Securities” means (a) Units or other equity interests in the Company or any Subsidiary of the Company (including other classes or series thereof having such relative rights, powers and duties as may from time to time be established by the Manager pursuant to the provisions of this Agreement, including rights, powers and/or duties senior to existing classes and series of Units and other equity interests in the Company or any Subsidiary of the Company), (b) other securities or interests (including evidences of indebtedness) convertible or exchangeable into Units or other equity interests in the Company or any Subsidiary of the Company, and (c) warrants, options or other rights to purchase or otherwise acquire Units or other equity interests in the Company or any Subsidiary of the Company.

 

“Event of Withdrawal” means the expulsion, bankruptcy or dissolution of a Member or the occurrence of any other event that terminates the continued membership of a Member in the Company.  “Event of Withdrawal” shall not include an event that (a) terminates the existence of a Member for income tax purposes (including (i) a change in entity classification of a Member under Treasury Regulation Section 301.7701-3, (ii) a sale of assets by, or liquidation of, a Member pursuant to an election under Section 336 or 338 of the Code or (iii) merger, severance, or allocation within a trust or among sub-trusts of a trust that is a Member) but that (b) does not terminate the existence of such Member under applicable state law (or, in the case of a trust that is a Member, does not terminate the trusteeship of the fiduciaries under such trust with respect to all the Company Interests of such trust that is a Member).

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and applicable rules and regulations thereunder, and any successor to such statute, rules or regulations.  Any reference herein to a specific section, rule or regulation of the Exchange Act shall be deemed to include any corresponding provisions of future Law.

 

“Exchange Election Notice” has the meaning set forth in Section 11.03(b).

 

6

 

“Fair Market Value” means, with respect to any asset, its fair market value determined according to Article XV.

 

“Fiscal Period” means any interim accounting period within a Taxable Year established by the Company and which is permitted or required by Section 706 of the Code.

 

“Fiscal Year” means the Company’s annual accounting period established pursuant to Section 8.02.

 

“Governmental Entity” means (a) the United States of America, (b) any other sovereign nation, (c) any state, province, district, territory or other political subdivision of (a) or (b) of this definition, including any county, municipal or other local subdivision of the foregoing, or (d) any entity exercising executive, legislative, judicial, regulatory or administrative functions of government on behalf of (a), (b) or (c) of this definition.

 

“Green Shoe Common Unit Purchase” has the meaning set forth in Section 3.03(b).

 

“Indemnified Person” has the meaning set forth in Section 6.09(a).

 

“Independent Directors” means the members of the Corporate Board who are “independent” under the standards of the principal U.S. securities exchange on which the Class A Common Stock is traded or quoted.

 

“Investment Company Act” means the U.S. Investment Company Act of 1940, as amended from time to time.

 

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

 

“IPO Closing Date” means the closing date of the IPO (which, for the avoidance of doubt, means the date on which all IPO Net Proceeds required to be delivered pursuant to an underwriting agreement in connection with the IPO have been delivered to the Corporation in respect of its sale of Class A Common Stock, excluding any Over-Allotment Option Net Proceeds which may be delivered at a subsequent date following exercise of the Over-Allotment Option).

 

“IPO Common Unit Purchase” has the meaning set forth in Section 3.03(b).

 

“IPO Common Unit Purchase Agreement” means that certain Common Unit Purchase Agreement, dated as of the date hereof, by and between the Corporation and the Company.

 

“IPO Net Proceeds” has the meaning set forth in the recitals to this Agreement.

 

“Joinder” means a joinder to this Agreement, in form and substance substantially similar to Exhibit A to this Agreement.

 

7

 

“Law” means all laws, statutes, ordinances, rules and regulations of the United States, any foreign country and each state, commonwealth, city, county, municipality, regulatory or self-regulatory body, agency or other political subdivision thereof.

 

“Losses” means items of Company loss or deduction determined according to Section 5.01(b).

 

“Majority Members” means the Members (which, for the avoidance of doubt, may include the entity that is also the Manager in its capacity as a Member) holding a majority of the Voting Units then outstanding; provided that, if as of any date of determination, a majority of the Voting Units are then held by the Member that is also the Manager or any of its controlled Affiliates, then “Majority Members” shall mean the Member that is also the Manager together with the other Members (other than the Member that is also the Manager and its controlled Affiliates) holding a majority of the Voting Units (excluding Voting Units held by the Member that is also the Manager and its controlled Affiliates) then outstanding.

 

“Manager” has the meaning set forth in Section 6.01(a).  Unless the context requires otherwise, any reference herein to the Manager shall be deemed a reference to the Manager in its capacity as such.

 

“Material Subsidiary” means any direct or indirect Subsidiary of the Company that, as of any date of determination, represents more than (a) 50% of the consolidated net tangible assets of the Company or (b) 50% of the consolidated net income of the Company before interest, taxes, depreciation and amortization (calculated in a manner substantially consistent with the Corporation’s accounting practices utilized for financial reporting purposes with the SEC).

 

“Member” means, as of any date of determination, (a) each Person named on the Schedule of Members and (b) any Person admitted to the Company as a Substituted Member or Additional Member in accordance with Article XII, but in each case only so long as such Person is shown on the Company’s books and records, including the Schedule of Members, as the owner of one or more Units.

 

“Minimum Gain” means “partnership minimum gain” determined pursuant to Treasury Regulation Section 1.704-2(d).

 

“Net Loss” means, with respect to a Fiscal Year or Fiscal Period, as the case may be, the excess, if any, of Losses for such Fiscal Year or Fiscal Period, as applicable, over Profits for such Fiscal Year or Fiscal Period, as applicable (excluding Profits and Losses specially allocated pursuant to Section 5.03 and Section 5.04).

 

“Net Profit” means, with respect to a Fiscal Year or Fiscal Period, as the case may be, the excess, if any, of Profits for such Fiscal Year of Fiscal Period, as applicable, over Losses for such Fiscal Year or Fiscal Period, as applicable (excluding Profits and Losses specially allocated pursuant to Section 5.03 and Section 5.04).

 

“Officer” has the meaning set forth in Section 6.01(b).

 

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“Original Members” has the meaning set forth in the recitals to this Agreement.

 

“Other Agreements” has the meaning set forth in Section 10.04.

 

“Over-Allotment Option” has the meaning set forth in the recitals to this Agreement.

 

“Over-Allotment Option Net Proceeds” has the meaning set forth in the recitals to this Agreement.

 

“Partnership Representative” has the meaning set forth in Section 9.03.

 

“Percentage Interest” means, as among an individual class or series of Units and with respect to a Member at a particular time, such Member’s percentage interest in the Company determined by dividing such Member’s Units of such class or series by the total Units of all Members of such class or series at such time.  The Percentage Interest of each Member shall be calculated to the fourth (4th) decimal place.

 

“Permitted Transfer” has the meaning set forth in Section 10.02.

 

“Person” means an individual or any corporation, partnership, limited liability company, trust, unincorporated organization, association, joint venture or any other organization or entity, whether or not a legal entity.

 

“Pro rata,” “pro rata portion,” “according to their interests,” “ratably,” “proportionately,” “proportional,” “in proportion to,” “based on the number of Units held,” “based upon the percentage of Units held,” “based upon the number of Units outstanding,” and other terms with similar meanings, when used in the context of a number of Units of the Company relative to other Units, means as amongst an individual class or series of Units, pro rata based upon the number of such Units within such class or series of Units.

 

“Profits” means items of Company income and gain determined according to Section 5.01(b).

 

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

 

“Redeemed Units” has the meaning set forth in Section 11.01(a).

 

“Redeemed Units Equivalent” means the product of (a) the Share Settlement and (b) the Common Unit Redemption Price.

 

“Redeeming Member” has the meaning set forth in Section 11.01(a).

 

“Redemption” has the meaning set forth in Section 11.01(a).

 

“Redemption Date” has the meaning set forth in Section 11.01(a).

 

“Redemption Notice” has the meaning set forth in Section 11.01(a).

 

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“Redemption Right” has the meaning set forth in Section 11.01(a).

 

“Registration Rights Agreement” means that certain Registration Rights Agreement, dated as of the date hereof, by and among the Corporation, SG Holding I and SG Holding (together with any joinder thereto from time to time by any successor or assign to any party to such Agreement).

 

“Retraction Notice” has the meaning set forth in Section 11.01(b).

 

“Schedule of Members” has the meaning set forth in Section 3.01(c).

 

“Scientific Games” means Scientific Games Corporation, a Nevada corporation, and its Affiliates, excluding, for purposes of this definition, the Corporation, the Company and the Company’s Subsidiaries.

 

“Scientific Games Person” has the meaning set forth in Section 6.09(d).

 

“SEC” means the U.S. Securities and Exchange Commission, including any governmental body or agency succeeding to the functions thereof.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended, and applicable rules and regulations thereunder, and any successor to such statute, rules or regulations.  Any reference herein to a specific section, rule or regulation of the Securities Act shall be deemed to include any corresponding provisions of future Law.

 

“SG Holding” has the meaning set forth in the recitals to this Agreement.

 

“SG Holding I” has the meaning set forth in the recitals to this Agreement.

 

“Share Settlement” means a number of shares of Class A Common Stock equal to the number of Redeemed Units.

 

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors (or equivalent governing body) thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (b) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of the voting interests thereof are at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof.  For purposes hereof, references to a “Subsidiary” of the Company shall be given effect only at such times that the Company has one or more Subsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the Company.

 

“Substituted Member” means a Person that is admitted as a Member to the Company pursuant to Section 12.01.

 

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“Tax Distribution” has the meaning set forth in Section 4.01(b).

 

“Tax Receivable Agreement” means that certain Tax Receivable Agreement, dated as the date hereof, by and among the Corporation, the Company, SG Holding I and SG Holding (together with any joinder thereto from time to time by any successor or assign to any party to such agreement).

 

“Taxable Year” means the Company’s accounting period for U.S. federal income tax purposes determined pursuant to Section 9.02.

 

“Trading Day” means a day on which the principal U.S. securities exchange on which the Class A Common Stock is traded or quoted is open for the transaction of business (unless such trading shall have been suspended for the entire day).

 

“Transfer” (and, with correlative meanings, “Transferring” and “Transferred”) means any sale, transfer, assignment, pledge, encumbrance or other disposition of (whether directly or indirectly, whether with or without consideration and whether voluntarily or involuntarily or by operation of Law) (a) any interest (legal or beneficial) in any Equity Securities or (b) any equity or other interest (legal or beneficial) in any Member if substantially all of the assets of such Member consist solely of Units.

 

“Treasury Regulations” means the final, temporary and (to the extent they can be relied upon) proposed regulations under the Code, as promulgated from time to time (including corresponding provisions and succeeding provisions) and as in effect for the relevant taxable period.

 

“UCC” has the meaning set forth in Section 3.06(a).

 

“Unit” means a Company Interest of a Member or an Assignee in the Company representing a fractional part of the Company Interests of all Members and Assignees as may be established by the Manager from time to time in accordance with Section 3.02; provided, however, that any class or series of Units issued shall have the relative rights, powers and duties set forth in this Agreement, and the Company Interest represented by such class or series of Units shall be determined in accordance with such relative rights, powers and duties.

 

“Unitholder” means a Common Unitholder and any Member who is the registered holder of any other class of Units, if any.

 

“Unvested Corporate Shares” means shares of restricted stock issued pursuant to an Equity Plan that are not vested pursuant to the terms thereof or any award or similar agreement relating thereto.

 

“Vested Corporate Shares” means the shares of Class A Common Stock issued pursuant to an Equity Plan that are vested pursuant to the terms thereof or any award or similar agreement relating thereto.

 

“Voting Units” means (a) the Common Units and (b) any other Units other than Units that by their express terms do not entitle the record holder thereof to vote on any matter

 

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presented to the Members generally under this Agreement for approval; provided that (i) no vote by Voting Units shall have the power to override any action taken by the Manager or to remove or replace the Manager, (ii) the Voting Units have no ability to take part in the conduct or control of the Company’s business and (iii) notwithstanding any vote by Voting Units hereunder, the Manager shall retain exclusive management power over the business and affairs of the Company in accordance with Section 6.01(a).

 

ARTICLE II

 

Organizational Matters

 

SECTION 2.01.                                   Formation of Company.  The Company was formed on September 1, 2016 pursuant to the provisions of the Act.

 

SECTION 2.02.                                   Amended and Restated Operating Agreement.  The Members hereby execute this Agreement for the purpose of establishing the affairs of the Company and the conduct of its business in accordance with the provisions of the Act.  The Members hereby agree that during the term of the Company set forth in Section 2.06 the rights and obligations of the Members with respect to the Company will be determined in accordance with the terms and conditions of this Agreement, the Articles and the Act.  On any matter upon which this Agreement is silent, the Act shall control.  No provision of this Agreement shall be in violation of the Act and to the extent any provision of this Agreement is in violation of the Act, such provision shall be void and of no effect to the extent of such violation without affecting the validity of the other provisions of this Agreement; provided, however, that where the Act provides that a provision of the Act shall apply “unless otherwise provided in the operating agreement” or words of similar effect, the provisions of this Agreement shall in each instance control.

 

SECTION 2.03.                                   Name.  The name of the Company shall be “SciPlay Parent Company, LLC”. The Manager in its sole discretion may change the name of the Company at any time and from time to time.  Notification of any such change shall be given to all of the Members and, to the extent practicable, to all of the holders of any Equity Securities then outstanding.  The Company’s business may be conducted under its name and/or any other name or names deemed advisable by the Manager.

 

SECTION 2.04.                                   Purpose.  The primary business and purpose of the Company shall be to engage in such activities as are permitted under the Act and determined from time to time by the Manager in accordance with the terms and conditions of this Agreement.

 

SECTION 2.05.                                   Principal Office; Registered Agent.  The principal office of the Company shall be at 6601 Bermuda Road, Las Vegas, Nevada 89119, or such other place as the Manager may from time to time designate.  The registered agent for service of process on the Company in the State of Nevada, and the address of such agent, shall be c/o CSC Services of Nevada, Inc., 2215-B Renaissance Drive, Las Vegas, Nevada, 89119.  The Manager may from time to time change the Company’s registered agent in the State of Nevada.

 

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SECTION 2.06.                                   Term.  The term of the Company commenced upon the filing of the Articles in accordance with the Act and shall continue in existence until termination and dissolution of the Company in accordance with the provisions of Article XIV.

 

SECTION 2.07.                                   No State-Law Partnership.  The Members intend that the Company not be a partnership (including a limited partnership) or joint venture, and that no Member be a partner or joint venturer of any other Member by virtue of this Agreement, for any purposes other than as set forth in the last sentence of this Section 2.07, and neither this Agreement nor any other document entered into by the Company or any Member relating to the subject matter hereof shall be construed to suggest otherwise.  The Members intend that the Company shall be treated as a partnership for U.S. federal and, if applicable, state or local income tax purposes.  Each Member and the Company shall file all tax returns and shall otherwise take all tax and financial reporting positions in a manner consistent with such tax treatment.

 

ARTICLE III

 

Members; Units; Capitalization

 

SECTION 3.01.                                   Members.  (a)  At the Effective Time and concurrently with the IPO Common Unit Purchase, the Corporation shall be automatically admitted to the Company as a Member.

 

(b)                                 Each Original Member previously was admitted as a Member and shall remain a Member of the Company upon the Effective Time.

 

(c)                                  The Company shall maintain a schedule setting forth: (i) the name and address of each Member; (ii) the aggregate number of outstanding Units and the number and class or series of Units held by each Member; (iii) the aggregate amount of cash Capital Contributions that has been made by the Members with respect to their Units; and (iv) the Fair Market Value of any property other than cash contributed by the Members with respect to their Units (including, if applicable, a description and the amount of any liability assumed by the Company or to which contributed property is subject) (such schedule, the “Schedule of Members”).  Upon any change in the number or ownership of outstanding Units (whether upon an issuance of Units, a Transfer of Units, a redemption or an exchange of Units or otherwise), the Company shall amend and update the Schedule of Members.  The Schedule of Members shall be the definitive record of ownership of each Unit of the Company and all relevant information with respect to each Member.  Any reference in this Agreement to the Schedule of Members shall be deemed a reference to the Schedule of Members as amended and as in effect from time to time.  The Company shall be entitled to recognize the exclusive right of a Person registered on the Schedule of Members as the owner of Units for all purposes and shall not be bound to recognize any equitable or other claim to or interest in Units on the part of any other Person, whether or not it shall have express or other notice thereof, except as otherwise provided by the Act.

 

(d)                                 No Member shall be required or, except as approved by the Manager pursuant to Section 6.01 and in accordance with the other provisions of this Agreement,

 

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permitted to loan any money or property to the Company or borrow any money or property from the Company.

 

SECTION 3.02.                                   Units.  Interests in the Company shall be represented by Units, or such other securities of the Company, in each case as the Manager may establish in its discretion in accordance with the terms and subject to the restrictions hereof.  Immediately after the Effective Time, the Units will be comprised of a single class of Common Units (with an aggregate of [•] Common Units being authorized for issuance by the Company).  To the extent required pursuant to Section 3.04(a), the Manager may create one or more classes or series of Common Units or preferred Units solely to the extent they are in the aggregate substantially equivalent to a class of common stock of the Corporation or class or series of preferred stock of the Corporation; provided that as long as there are any Members of the Company (other than the Corporation), then no such new class or series of Units may deprive such Members of, or dilute or reduce, the pro rata share of all Company Interests they would have received or to which they would have been entitled if such new class or series of Units had not been created except to the extent (and solely to the extent) the Company actually receives cash in an aggregate amount, or other property with a Fair Market Value in an aggregate amount, equal to the pro rata share of Company Interests allocated to such new class or series of Units and the number thereof issued by the Company.

 

SECTION 3.03.                                   Recapitalization; The Corporation’s Common Unit Purchase.  (a)  Recapitalization.  In connection with the Recapitalization, at the Effective Time, all member’s interests issued and outstanding and held by the Original Members prior to the execution and effectiveness of this Agreement are hereby canceled and (i) [•] Common Units are hereby issued to SG Holding I and outstanding as of the Effective Time and (ii) [•] Common Units are hereby issued to SG Holding and outstanding as of the Effective Time.

 

(b)                                 The Corporation’s Common Unit Purchase.  Following the Recapitalization, immediately upon the Effective Time, the Corporation will (i) purchase [•] Common Units from SG Holding I at a purchase price per Common Unit equal to the offering price per share of Class A Common Stock in the IPO, less any applicable Discount (as defined in Section 6.06), pursuant to the Class B Subscription and IPO Common Unit Purchase Agreement and (ii) contribute the IPO Net Proceeds (less any portion of the IPO Net Proceeds used to purchase Common Units from SG Holding I pursuant to clause (i) above) to the Company in exchange for [•] newly issued Common Units pursuant to the IPO Common Unit Purchase Agreement (such purchases from SG Holding I and the Company, together, the “IPO Common Unit Purchase”).  The IPO Common Unit Purchase shall be reflected on the Schedule of Members.  In addition, to the extent the underwriters in the IPO exercise the Over-Allotment Option in whole or in part, upon the exercise of the Over-Allotment Option, the Corporation will purchase a number of Common Units from the SG Holding I equal to the number of shares of Class A Common Stock issued by the Corporation in connection with the exercise of the Over-Allotment Option, at a purchase price per Common Unit equal to the offering price per share of Class A Common Stock in the IPO, less any applicable Discount, pursuant to the Class B Subscription and IPO Common Unit Purchase Agreement (such purchase from SG Holding I, the “Green Shoe Common Unit Purchase”).  The Green Shoe Common Unit Purchase shall be reflected on the Schedule of Members.  For the avoidance of doubt, the Corporation shall be admitted as a Member with respect to all Common Units it holds from time to time.  The parties 

 

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hereto acknowledge and agree that the IPO Common Unit Purchase will result in a “reevaluation of partnership property” and corresponding adjustments to Capital Account balances as described in Section 1.704-1(b)(2)(iv)(f) of the Treasury Regulations.  Immediately following the consummation of the IPO Common Unit Purchase and, if the Over-Allotment Option is exercised, the Green Shoe Common Unit Purchase, pursuant to the Class B Subscription and IPO Common Unit Purchase Agreement, the Corporation will issue to each of SG Holding I and SG Holding (for nominal consideration) a number of shares of Class B Common Stock equal to the number of Common Units held by such Person.

 

SECTION 3.04.                                   Authorization and Issuance of Additional Units. (a)  The Company shall undertake all actions requested or directed by the Manager, including, without limitation, a reclassification, distribution, division, combination or recapitalization, with respect to the Common Units, to maintain at all times a one-to-one ratio between the number of Common Units owned by the Corporation and the number of outstanding shares of Class A Common Stock, disregarding, for purposes of maintaining such one-to-one ratio, (i) Unvested Corporate Shares, (ii) treasury shares or (iii) preferred stock or other debt or equity securities (including warrants, options or rights) issued by the Corporation that are convertible into or exercisable or exchangeable for Class A Common Stock (except to the extent the net proceeds from such other securities, including any exercise or purchase price payable upon conversion, exercise or exchange thereof, have been contributed by the Corporation to the equity capital of the Company) (clauses (i), (ii) and (iii), collectively, the “Disregarded Shares”).  In the event the Corporation issues shares of Class A Common Stock, transfers or delivers from treasury shares of Class A Common Stock or repurchases or redeems shares of Class A Common Stock in a transaction not contemplated by this Agreement, the Manager shall take all actions such that, after giving effect to all such issuances, transfers, deliveries, repurchases or redemptions, the number of outstanding Common Units owned by the Corporation will equal on a one-for-one basis the number of outstanding shares of Class A Common Stock, disregarding, for purposes of maintaining such one-to-one ratio, the Disregarded Shares.  In the event the Corporation issues preferred stock, transfers or delivers from treasury preferred stock or repurchases or redeems the Corporation’s preferred stock in a transaction not contemplated by this Agreement, the Manager shall have the authority to take all actions such that, after giving effect to all such issuances, transfers, deliveries, repurchases or redemptions, the Corporation holds (in the case of any issuance, transfer or delivery) or ceases to hold (in the case of any repurchase or redemption) Units in the Company which (in the good faith determination by the Manager) are in the aggregate substantially equivalent in all respects to the outstanding preferred stock of the Corporation so issued, transferred, delivered, repurchased or redeemed.  The Company shall not undertake any subdivision (by any Common Unit split, Common Unit distribution, reclassification, recapitalization or similar event) or combination (by reverse Common Unit split, reclassification, recapitalization or similar event) of the Common Units that is not accompanied by an identical subdivision or combination of Class A Common Stock to maintain at all times a one-to-one ratio between the number of Common Units owned by the Corporation and the number of outstanding shares of Class A Common Stock, disregarding, for purposes of maintaining such one-to-one ratio, the Disregarded Shares, unless such action is necessary to maintain at all times a one-to-one ratio between the number of Common Units owned by the Corporation and the number of outstanding shares of Class A Common Stock, disregarding, for purposes of maintaining such one-to-one ratio, the Disregarded Shares.

 

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(b)                                 The Company shall only be permitted to issue additional Units or other Equity Securities in the Company to the Persons and on the terms and conditions provided for in Section 3.02, this Section 3.04, Section 3.10 and Section 3.11.  Subject to the foregoing, the Manager may cause the Company to issue additional Common Units authorized under this Agreement at such times and upon such terms as the Manager shall determine and the Manager shall amend this Agreement as necessary in connection with the issuance of additional Common Units and admission of additional Members under this Section 3.04 without the requirement of any consent or acknowledgement of any other Member.

 

SECTION 3.05.                                   Repurchase or Redemption of Shares of Class A Common Stock.  If, at any time, any shares of Class A Common Stock are repurchased or redeemed (whether by exercise of a put or call, automatically or by means of another arrangement) by the Corporation for cash, then the Manager shall cause the Company, immediately prior to such repurchase or redemption of Class A Common Stock, to redeem a corresponding number of Common Units held by the Corporation, at an aggregate redemption price equal to the aggregate purchase or redemption price of the shares of Class A Common Stock being repurchased or redeemed by the Corporation (plus any expenses related thereto) and upon such other terms as are the same for the shares of Class A Common Stock being repurchased or redeemed by the Corporation.  Notwithstanding any provision to the contrary in this Agreement, the Company shall not make any repurchase or redemption if such repurchase or redemption would violate any applicable Law.

 

SECTION 3.06.                                   Certificates Representing Units; Lost, Stolen or Destroyed Certificates; Registration and Transfer of Units.  (a)  Units shall not be certificated unless otherwise determined by the Manager.  If the Manager determines that one or more Units shall be certificated, each such certificate shall be signed by or in the name of the Company, by the Chief Executive Officer or any other officer designated by the Manager, representing the number of Units held by such holder.  Such certificate shall be in such form (and shall contain such legends) as the Manager may determine.  Any or all of such signatures on any certificate representing one or more Units may be a facsimile, engraved or printed, to the extent permitted by applicable Law.  The Manager agrees that it shall not elect to treat any Unit as a “security” within the meaning of Article 8 of the Uniform Commercial Code (the “UCC”) of any applicable jurisdiction unless thereafter all Units then outstanding are represented by one or more certificates.

 

(b)                                 If Units are certificated, the Manager may elect to treat each Unit as a “security” within the meaning of, and governed by, Article 8 of the UCC of any applicable jurisdiction, including the UCC of the State of Nevada, by affixing the following legend to each such certificate:

 

“This certificate evidences Units in SciPlay Parent Company, LLC, and shall constitute a “security” within the meaning of, and governed by, Article 8 of the Uniform Commercial Code in effect in the State of Nevada (including Nevada Revised Statutes 104.8102(1)(n)), or Article 8 of the Uniform Commercial Code of any other applicable jurisdiction.”

 

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(c)                                  In such event, such legend and this Section 3.06(b) shall constitute an express provision that the Units are a security governed by Article 8 of the UCC of the State of Nevada within the meaning of Section 104.8103(3) of the UCC of the State of Nevada (or other corresponding provision of the UCC of any other applicable jurisdiction), solely for the purposes of establishing the applicability thereto of the provisions of Article 8 of the UCC governing securities.  The Units shall not be considered a “security” for any other purpose unless otherwise expressly provided in this Agreement.

 

(d)                                 If Units are certificated, the Manager may direct that a new certificate representing one or more Units be issued in place of any certificate theretofore issued by the Company alleged to have been lost, stolen or destroyed, upon delivery to the Manager of an affidavit of the owner or owners of such certificate, setting forth such allegation.  The Manager may require the owner of such lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Company a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate.

 

(e)                                  Upon surrender to the Company or the transfer agent of the Company, if any, of a certificate for one or more Units, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, in compliance with the provisions hereof, the Company shall issue a new certificate representing one or more Units to the Person entitled thereto, cancel the old certificate and record the transaction upon its books.  Subject to the provisions of this Agreement, the Manager may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, Transfer and registration of Units.

 

SECTION 3.07.                                   Negative Capital Accounts.  No Member shall be required to pay to any other Member or the Company any deficit or negative balance which may exist from time to time in such Member’s Capital Account (including upon and after dissolution of the Company).

 

SECTION 3.08.                                   No Withdrawal.  No Person shall be entitled to withdraw any part of such Person’s Capital Contribution or Capital Account or to receive any Distribution from the Company, except as expressly provided in this Agreement.

 

SECTION 3.09.                                   Loans From Members.  Loans by Members to the Company shall not be considered Capital Contributions.  Subject to the provisions of Section 3.01(d), the amount of any such advances shall be a debt of the Company to such Member and shall be payable or collectible in accordance with the terms and conditions upon which such advances are made.

 

SECTION 3.10.                                   Corporation Stock Incentive Plans.  (a) Nothing in this Agreement shall be construed or applied to preclude or restrain the Corporation from adopting, implementing, modifying or terminating any Equity Plan or from issuing Vested Corporate Shares or Unvested Corporate Shares.  The Corporation may implement any Equity Plans and any actions taken under such Equity Plans (such as the grant or exercise of options to acquire shares of Class A Common Stock or the issuance of Unvested Corporate Shares), in a manner determined by the Corporation, in accordance with this Section 3.10, which shall be amended at

 

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the Corporation’s request from time to time.  The Members acknowledge and agree that, in the event that an Equity Plan is adopted, implemented, modified or terminated by the Corporation in a manner that is not in accordance with this Section 3.10, amendments to this Section 3.10 may become necessary or advisable, and that any approval or consent to any such amendments requested by the Corporation shall be deemed granted by the Manager without the requirement of any further consent or acknowledgment of any Member, and any such amendments to this Section 3.10 shall be deemed in effect from such date.  In the event of any adoption, implementation, modification or termination of an Equity Plan in a manner that is not in accordance with this Section 3.10, the Company shall provide written notice thereof to the Members.  The Company is expressly authorized to issue Units in an amount equal to the number of shares of Class A Common Stock issued pursuant to any such Equity Plan, without further act, approval or vote of any Member or any other Persons.

 

(b)                                 For accounting and tax purposes, the Company shall take the following actions in connection with equity-based awards granted pursuant to an Equity Plan:

 

(i)                                     in the event that the Corporation incurs any compensation expense in connection with any such award granted to an individual employed by, or engaged to provide services to, the Corporation as consideration for such employment or services, then the Company shall, without duplication of any reimbursement made pursuant to Section 6.06, reimburse or be deemed to reimburse the Corporation for a portion of the compensation expense equal to the amount includible in the taxable income of such individual; and

 

(ii)                                  at the time any Common Units are issued in accordance with Section 3.04 in connection with any such award granted to an individual who is employed by, or engaged to provide services to, the Company or any of its Subsidiaries as consideration for such employment or services, then the Company or its applicable Subsidiary shall be deemed to (A) purchase a number of shares of Class A Common Stock equal to the number of Common Units issued from the Corporation for their Fair Market Value and (B) transfer the shares of Class A Common Stock includible in such individual’s taxable income to such individual as compensation.

 

(c)                                  At the time any Common Units are issued in accordance with Section 3.04 in connection with equity-based awards granted pursuant to an Equity Plan, the Corporation shall be deemed to make a Capital Contribution in exchange for such Common Units in an amount equal to (i) the number of Common Units issued multiplied by (ii) the Fair Market Value of a share of Class A Common Stock on the date upon which the event triggering the issuance of such Common Units occurred; provided that, where applicable, the Company shall be deemed to have contributed such amount to the capital of the Subsidiary that is the recipient of the award holder’s employment or services.

 

SECTION 3.11.                                   Dividend Reinvestment Plan, Cash Option Purchase Plan, Equity Plan, Stock Incentive Plan or Other Plan.  Except as may otherwise be provided in this Article III, all amounts received or deemed received by the Corporation in respect of any dividend reinvestment plan, cash option purchase plan, Equity Plan, stock incentive or other stock or subscription plan or agreement (other than any amounts received in order to satisfy any

 

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tax obligations), either (a) shall be utilized by the Corporation to effect open market purchases of shares of Class A Common Stock, or (b) if the Corporation elects instead to issue new shares of Class A Common Stock with respect to such amounts, shall be contributed by the Corporation to the Company in exchange for additional Common Units.  Upon such contribution, the Company will issue to the Corporation a number of Common Units equal to the number of new shares of Class A Common Stock so issued.

 

ARTICLE IV

 

Distributions

 

SECTION 4.01.                                   Distributions.  (a)  Distributable Cash; Other Distributions.  To the extent permitted by applicable Law and this Agreement, Distributions to Members may be declared by the Manager out of Distributable Cash or other funds or property legally available therefor in such amounts and on such terms (including the payment dates of such Distributions) as the Manager shall determine using such record date as the Manager may designate.  Such Distributions shall be made to the Members as of the close of business on such record date on a pro rata basis in accordance with each Member’s Percentage Interest as of the close of business on such record date; provided, however, that the Manager shall have the obligation to make Distributions as set forth in Sections 4.01(b) and 14.02; and, provided further, that, notwithstanding any other provision herein to the contrary, no Distribution shall be made to any Member to the extent such Distribution would render the Company insolvent.  For purposes of the foregoing sentence, “insolvent” means the inability of the Company to pay its debts as they become due in the usual course of business.  Promptly following the designation of a record date and the declaration of a Distribution pursuant to this Section 4.01(a), the Manager shall give notice to each Member of the record date, the amount and the terms of the Distribution and the payment date thereof.  In furtherance of the foregoing, it is intended that the Manager shall, to the extent permitted by applicable Law and this Agreement, have the right in its sole discretion to make Distributions to the Members pursuant to this Section 4.01(a) in such amounts as shall enable the Corporation to pay dividends or to meet its obligations, including its obligations pursuant to the Tax Receivable Agreement (to the extent such obligations are not otherwise able to be satisfied as a result of Tax Distributions made pursuant to Section 4.01(b)).

 

(b)                                 Tax Distributions.  On or about each date that is five (5) Business Days prior to each due date for the U.S. federal income tax return of the Corporation for a Taxable Year, as determined without regard to extensions, the Company shall be required to make a Distribution out of Distributable Cash or other funds or property legally available therefor (a “Tax Distribution”) to the Members on a pro rata basis in accordance with each Member’s Percentage Interest equal to an amount sufficient to cause the Corporation to receive a Distribution equal to (i) the amount of the Corporation’s Assumed Tax Liability for such Taxable Year, minus (ii) the amount of all Distributions previously made to the Corporation pursuant to Section 4.01(a) during such Taxable Year or pursuant to this Section 4.01(b) with respect to such Taxable Year.  Notwithstanding the foregoing, the Manager may, in its discretion, make payments in respect of Tax Distributions on a quarterly basis.

 

SECTION 4.02.                                   Restricted Distributions.  Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make any Distribution to any

 

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Member on account of any Company Interest if such Distribution would violate any applicable Law or the terms of the Credit Agreement.

 

ARTICLE V

 

Capital Accounts; Allocations; Tax Matters

 

SECTION 5.01.                                   Capital Accounts.  (a)  The Company shall maintain a separate Capital Account for each Member according to the rules of Treasury Regulation Section 1.704-1(b)(2)(iv).  For this purpose, the Company may (in the discretion of the Manager), upon the occurrence of the events specified in Treasury Regulation Section 1.704-1(b)(2)(iv)(f), increase or decrease the Capital Accounts in accordance with the rules of such Treasury Regulation and Treasury Regulation Section 1.704-1(b)(2)(iv)(g) to reflect a revaluation of Company property.

 

(b)                                 For purposes of computing the amount of any item of Company income, gain, loss or deduction to be allocated pursuant to this Article V and to be reflected in the Capital Accounts of the Members, the determination, recognition and classification of any such item shall be the same as its determination, recognition and classification for U.S. federal income tax purposes (including any method of depreciation, cost recovery or amortization used for this purpose); provided, however, that:

 

(i)                                     The computation of all items of income, gain, loss and deduction shall include those items described in Section 705(a)(l)(B) or 705(a)(2)(B) of the Code and Treasury Regulation Section 1.704-1(b)(2)(iv)(i), without regard to the fact that such items are not includible in gross income or are not deductible for U.S. federal income tax purposes.

 

(ii)                                  If the Book Value of any Company property is adjusted pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property.

 

(iii)                               Items of income, gain, loss or deduction attributable to the disposition of Company property having a Book Value that differs from its adjusted basis for tax purposes shall be computed by reference to the Book Value of such property.

 

(iv)                              Items of depreciation, amortization and other cost recovery deductions with respect to Company property having a Book Value that differs from its adjusted basis for tax purposes shall be computed by reference to the property’s Book Value in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g).

 

(v)                                 To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 732(d), 734(b) or 743(b) of the Code is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis).

 

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SECTION 5.02.                                   Allocations.  Except as otherwise provided in Section 5.03 and Section 5.04, Net Profits and Net Losses for any Fiscal Year or Fiscal Period shall be allocated to the Members pro rata in accordance with their respective Percentage Interests.

 

SECTION 5.03.                                   Regulatory Allocations.  (a)  Losses attributable to partner nonrecourse debt (as defined in Treasury Regulation Section 1.704-2(b)(4)) shall be allocated in the manner required by Treasury Regulation Section 1.704-2(i).  If there is a net decrease during a Taxable Year in partner nonrecourse debt minimum gain (as defined in Treasury Regulation Section 1.704-2(i)(3)), Profits for such Taxable Year (and, if necessary, for subsequent Taxable Years) shall be allocated to the Members in the amounts and of such character as determined according to Treasury Regulation Section 1.704-2(i)(4).

 

(b)                                 Nonrecourse deductions (as determined according to Treasury Regulation Section 1.704-2(b)(1)) for any Taxable Year shall be allocated pro rata among the Members in accordance with their Percentage Interests.  Except as otherwise provided in Section 5.03(a), if there is a net decrease in the Minimum Gain during any Taxable Year, each Member shall be allocated Profits for such Taxable Year (and, if necessary, for subsequent Taxable Years) in the amounts and of such character as determined according to Treasury Regulation Section 1.704-2(f).  This Section 5.03(b) is intended to be a minimum gain chargeback provision that complies with the requirements of Treasury Regulation Section 1.704-2(f) and shall be interpreted in a manner consistent therewith.

 

(c)                                  If any Member that unexpectedly receives an adjustment, allocation or Distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) has an Adjusted Capital Account Deficit as of the end of any Taxable Year, computed after the application of Sections 5.03(a) and 5.03(b) but before the application of any other provision of this Article V, then Profits for such Taxable Year shall be allocated to such Member in proportion to, and to the extent of, such Adjusted Capital Account Deficit.  This Section 5.03(c) is intended to be a qualified income offset provision as described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner consistent therewith.

 

(d)                                 If the allocation of Net Losses to a Member as provided in Section 5.02 would create or increase an Adjusted Capital Account Deficit, there shall be allocated to such Member only that amount of Losses as will not create or increase an Adjusted Capital Account Deficit.  The Net Losses that would, absent the application of the preceding sentence, otherwise be allocated to such Member shall be allocated to the other Members in accordance with their relative Percentage Interests, subject to this Section 5.03(d).

 

(e)                                  Profits and Losses described in Section 5.01(b)(v) shall be allocated in a manner consistent with the manner that the adjustments to the Capital Accounts are required to be made pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(j), (k) and (m).

 

(f)                                   The allocations set forth in Section 5.03(a) through and including Section 5.03(e) (the “Regulatory Allocations”) are intended to comply with certain requirements of Sections 1.704-1(b) and 1.704-2 of the Treasury Regulations.  The Regulatory Allocations may not be consistent with the manner in which the Members intend to allocate Profit and Loss of the Company or for the Company to make Distributions.  Accordingly, notwithstanding the other

 

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provisions of this Article V, but subject to the Regulatory Allocations, income, gain, deduction and loss shall be reallocated among the Members so as to eliminate the effect of the Regulatory Allocations and thereby cause the respective Capital Accounts of the Members to equal the amounts (or as close thereto as possible) they would have equaled if Profit and Loss (and such other items of income, gain, deduction and loss) had been allocated without reference to the Regulatory Allocations.  In general, the Members anticipate that this will be accomplished by specially allocating other Profit and Loss (and such other items of income, gain, deduction and loss) among the Members so that the net amount of the Regulatory Allocations and such special allocations to each such Member is zero.  In addition, if in any Fiscal Year or Fiscal Period there is a decrease in Minimum Gain, or in partner nonrecourse debt minimum gain, and application of the minimum gain chargeback requirements set forth in Section 5.03(a) or Section 5.03(b) would cause a distortion in the economic arrangement among the Members, the Members may, if they do not expect that the Company will have sufficient other income to correct such distortion, request the Internal Revenue Service to waive either or both of such minimum gain chargeback requirements.  If such request is granted, this Agreement shall be applied in such instance as if it did not contain such minimum gain chargeback requirement.

 

SECTION 5.04.                                   Final Allocations.  Notwithstanding any contrary provision in this Agreement except Section 5.03, the Manager shall make appropriate adjustments to allocations of Profits and Losses to (or, if necessary, allocate items of gross income, gain, loss or deduction of the Company among) the Members upon the liquidation of the Company (within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations), the transfer of substantially all the Units (whether by sale or exchange or merger) or sale of all or substantially all the assets of the Company, such that, to the maximum extent possible, the Capital Accounts of the Members are proportionate to their Percentage Interests.  In each case, such adjustments or allocations shall occur, to the maximum extent possible, in the Fiscal Year of the event requiring such adjustments or allocations.

 

SECTION 5.05.                                   Tax Allocations.  (a)  The income, gains, losses, deductions and credits of the Company will be allocated, for U.S. federal and state and local income tax purposes, among the Members in accordance with the allocation of such income, gains, losses, deductions and credits among the Members for computing their Capital Accounts; provided that if any such allocation is not permitted by the Code or other applicable Law, the Company’s subsequent income, gains, losses, deductions and credits will be allocated among the Members so as to reflect as nearly as possible the allocation set forth herein in computing their Capital Accounts.

 

(b)                                 Items of Company taxable income, gain, loss and deduction with respect to any property contributed to the capital of the Company shall be allocated among the Members in accordance with Section 704(c) of the Code so as to take account of any variation between the adjusted basis of such property to the Company for U.S. federal income tax purposes and its Book Value using the traditional method, as described in Treasury Regulation Section 1.704-3(b).

 

(c)                                  If the Book Value of any Company asset is adjusted pursuant to Section 5.01(b), subsequent allocations of items of taxable income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for U.S.

 

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federal income tax purposes and its Book Value in the same manner as under Section 704(c) of the Code using the traditional method, as described in Treasury Regulation Section 1.704-3(b).

 

(d)                                 Allocations of tax credits, tax credit recapture and any items related thereto shall be allocated to the Members pro rata or as determined by the Manager taking into account the principles of Treasury Regulation Section 1.704-1(b)(4)(ii).

 

(e)                                  For purposes of determining a Member’s pro rata share of the Company’s “excess nonrecourse liabilities” within the meaning of Treasury Regulation Section 1.752-3(a)(3), each Member’s interest in income and gain shall be in proportion to the Units held by such Member.

 

(f)                                   Allocations pursuant to this Section 5.05 are solely for purposes of U.S. federal and state and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Profits, Losses, Distributions or other Company items pursuant to any provision of this Agreement.

 

SECTION 5.06.                                   Indemnification and Reimbursement for Payments on Behalf of a Member.  Notwithstanding anything in this Agreement to the contrary, if the Company is obligated to pay any amount to a Governmental Entity (or otherwise makes a payment to a Governmental Entity) that is specifically attributable to a Member or a Member’s status as such (including U.S. federal withholding or other taxes, state personal property taxes and state unincorporated business taxes), then such Member shall indemnify the Company in full for the entire amount paid (including interest, penalties and related expenses).  The Manager may offset Distributions to which a Member is otherwise entitled under this Agreement against such Member’s obligation to indemnify the Company under this Section 5.06.  A Member’s obligation to indemnify the Company under this Section 5.06 shall survive the Transfer of any Company Interests and the termination, dissolution, liquidation and winding up of the Company, and for purposes of this Section 5.06, the Company shall be treated as continuing in existence.  The Company may pursue and enforce all rights and remedies it may have against each Member under this Section 5.06, including instituting a lawsuit to collect such indemnification with interest calculated at a rate per annum equal to the sum of the Base Rate plus 300 basis points (but not in excess of the highest rate per annum permitted by Law).

 

SECTION 5.07.                                   Withholding.  Each Member hereby agrees to furnish to the Company such information and forms as required or reasonably requested in order to comply with any Laws governing taxes, including withholding of tax or in order to claim any reduced rate of, or exemption from, withholding to which the Member is legally entitled.  The Company may withhold any amount that it determines is required to be withheld from any amount otherwise payable to any Member hereunder, and any such withheld amount shall be deemed to have been paid to such Member for purposes of this Agreement.

 

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ARTICLE VI

 

Management

 

SECTION 6.01.                                   Authority of Manager.  (a)  Except for situations in which the approval of any Member(s) is specifically required by the Act or this Agreement, (i) all management powers over the business and affairs of the Company shall be exclusively vested in the Corporation, as the sole manager of the Company (the Corporation, in such capacity, the “Manager”), and (ii) the Manager shall conduct, direct and exercise full control over all activities of the Company.  The Manager shall be the “manager” of the Company for the purposes of the Act.  Except as otherwise expressly provided for herein and subject to the other provisions of this Agreement, the Members hereby consent to the exercise by the Manager of all such powers and rights conferred by the Act with respect to the management and control of the Company.  Any vacancies in the position of Manager shall be filled in accordance with Section 6.04.

 

(b)                                 The day-to-day business and operations of the Company shall be overseen and implemented by officers of the Company (each, an “Officer” and collectively, the “Officers”), subject to any limitations imposed by the Manager.  An Officer may, but need not, be a Member.  Each Officer shall be appointed by the Manager and shall hold office until his or her successor shall be duly designated and qualified or until his or her death or until he or she shall resign or shall have been removed in the manner hereinafter provided.  Any one Person may hold more than one office.  Subject to the other provisions in this Agreement (including in Section 6.07 below), the salaries or other compensation, if any, of the Officers shall be fixed from time to time by the Manager.  The authority and responsibility of the Officers shall include, but not be limited to, such duties as the Manager may, from time to time, delegate to them and the carrying out of the Company’s business and affairs on a day-to-day basis.  As of the Effective Time, the Manager hereby removes the existing Officer as of the Effective Time from his offices and hereby appoints Joshua J. Wilson Chief Executive Officer of the Company and Michael D. Cody Chief Financial Officer of the Company.  All Officers shall be, and shall be deemed to be, officers and employees of the Company.  An Officer may also fill and perform one or more roles as an officer of the Manager.

 

(c)                                  The Manager shall have the power and authority to effectuate the sale, lease, transfer, exchange or other disposition of any, all or substantially all of the assets of the Company (including the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Company) or the merger, consolidation, reorganization or other combination of the Company with or into another entity.

 

SECTION 6.02.                                   Actions of the Manager.  The Manager may authorize any Officer or other Person or Persons to act on behalf of the Company pursuant to Section 6.07.

 

SECTION 6.03.                                   Resignation; No Removal.  The Manager may resign at any time by giving written notice to the Members.  Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the Members, and the acceptance of the

 

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resignation shall not be necessary to make it effective.  The Members have no right under this Agreement to remove or replace the Manager.

 

SECTION 6.04.                                   Vacancies.  Vacancies in the position of Manager occurring for any reason shall be filled by the Corporation (or, if the Corporation has ceased to exist without any successor or assign, then by the holders of a majority in interest of the voting capital stock of the Corporation immediately prior to such cessation).  The Members have no right under this Agreement to fill any vacancy in the position of Manager.

 

SECTION 6.05.                                   Transactions Between Company and Manager.  The Manager may cause the Company to contract and deal with the Manager, or any Affiliate of the Manager, provided such contracts and dealings are on terms comparable to those available to the Company from others dealing with the Company at arm’s length or are approved by the Members and otherwise are permitted by the Credit Agreement.  The Members hereby approve the Class B Subscription and IPO Common Unit Purchase Agreement and the IPO Common Unit Purchase Agreement in the forms heretofore provided to each such Member, together with such modifications, revisions or amendments as the Manager may approve in its discretion.

 

SECTION 6.06.                                   Reimbursement for Expenses.  The Manager shall not be compensated for its services as Manager of the Company except as expressly provided in this Agreement.  The Members acknowledge and agree that, upon the Effective Time, the Class A Common Stock will be publicly traded and therefore the Manager, in its capacity as the Corporation, will have access to the public capital markets and that such status and the services performed by the Manager will inure to the benefit of the Company and all Members; therefore, the Manager shall be reimbursed by the Company for any reasonable out-of-pocket expenses incurred on behalf of the Company, including all fees, expenses and costs associated with the IPO and all fees, expenses and costs of being a public company (including expenses incurred in connection with public reporting obligations, proxy statements, stockholder meetings, stock exchange fees, transfer agent fees, SEC and FINRA filing fees and offering expenses) and maintaining its corporate existence.  In the event that shares of Class A Common Stock are sold to underwriters in the IPO (or in any subsequent public offering) at a price per share that is lower than the price per share for which such shares of Class A Common Stock are sold to the public in the IPO (or in such subsequent public offering, as applicable) after taking into account underwriters’ discounts or commissions and brokers’ fees or commissions (such difference, the “Discount”), (i) the Corporation shall be deemed to have contributed to the Company in exchange for Common Units the full amount for which such shares of Class A Common Stock were sold to the public in the IPO (or in such subsequent public offering, as applicable) and (ii) the Company shall be deemed to have paid the Discount as an expense.  To the extent practicable, expenses incurred by the Manager on behalf of or for the benefit of the Company shall be billed directly to and paid by the Company and, if and to the extent any reimbursements to the Manager or any of its Affiliates by the Company pursuant to this Section 6.06 constitute gross income to such Person (as opposed to the repayment of advances made by such Person on behalf of the Company), such amounts shall be treated as “guaranteed payments” within the meaning of Section 707(c) of the Code and shall not be treated as Distributions for purposes of computing the Members’ Capital Accounts.  Notwithstanding the foregoing, the Company shall not bear any income tax obligations of the Manager or any payments made pursuant to the Tax Receivable Agreement.

 

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SECTION 6.07.                                   Delegation of Authority.  The Manager (a) may, from time to time, delegate to one or more Officers or other Persons such authority and duties as the Manager may deem advisable and (b) may assign titles (including “chief executive officer”, “president”, “chief financial officer”, “chief operating officer”, “vice president”, “secretary”, “assistant secretary”, “treasurer” or “assistant treasurer”) to such Officers or Persons as the Manager may deem advisable.  Any number of titles may be held by the same individual.  The salaries or other compensation, if any, of such Officers or agents of the Company shall be fixed from time to time by the Manager, subject to the other provisions in this Agreement.

 

SECTION 6.08.                                   Limitation of Liability of Manager and Officers. (a)  Except as otherwise provided herein or in an agreement entered into by such Person and the Company, neither the Manager nor any Officer shall be liable to the Company, to any Member or to their respective Affiliates for any act or omission performed or omitted by the Manager or such Officer, in such Person’s capacity as the Manager or an Officer, as applicable, in good faith and in a manner reasonably believed by such Person to be within the scope of authority conferred to such Person by this Agreement or by the Manager or other authorized Person; provided, however, that, except as otherwise provided herein, such limitation of liability shall not apply to the extent the act or omission constituted a breach of such Person’s duties, if any, as the Manager or an Officer, as applicable, and such breach involved intentional misconduct, fraud or a knowing violation of Law, and was material to the cause of action, in each case as determined by a final judgment, order or decree of a court of competent jurisdiction, in each case, that is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected.  The Manager and each Officer may exercise any of the powers granted to it by this Agreement and perform any of the duties, if any, imposed upon it hereunder either directly or by or through its respective agents, and shall not be responsible for any misconduct or negligence on the part of any such agent (so long as such agent was selected in good faith and with reasonable care).  The Manager and each Officer shall be entitled to rely in good faith on the provisions of this Agreement and on information, opinions, reports or statements (including financial statements and information, opinions, reports or statements as to the value or amount of the assets, liabilities, profits or losses of the Company or any facts pertinent to the existence and amount of assets from which Distributions to Members might properly be paid) of the following other Persons or groups: one or more Officers or employees of the Company or the Manager; any attorney, independent accountant, appraiser or other expert or professional employed or engaged by or on behalf of the Company; or any other Person who has been selected in good faith and with reasonable care by or on behalf of the Company, in each case as to matters which the Manager or Officer reasonably believes to be within such other Person’s competence, and any act of or failure to act by the Manager or such Officer in good faith reliance on such advice shall in no event subject the Manager or such Officer to liability to the Company or any Member.

 

(b)                                 Notwithstanding any other provision of this Agreement, to the extent that, at law or in equity, the Manager (or any Affiliate of the Manager or any manager, managing member, general partner, director, officer, employee, agent, fiduciary or trustee of the Manager or of any Affiliate of the Manager) or any Officer has duties (including fiduciary duties) to the Company, to the Manager (in the case of any Officer), to a Member, to any Person who acquires an interest in a Company Interest or to any other Person bound by this Agreement, all such duties (including fiduciary duties) are hereby eliminated, to the fullest extent permitted by law, and

 

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replaced with the duties or standards expressly set forth herein, if any.  Such elimination of duties (including fiduciary duties) to the Company, the Manager (in the case of any Officer), each of the Members, each other Person who acquires an interest in a Company Interest and each other Person bound by this Agreement and replacement thereof with the duties or standards expressly set forth herein, if any, are approved by the Company, each of the Members, each other Person who acquires an interest in a Company Interest after the date hereof and each other Person bound by this Agreement.

 

(c)                                  Whenever this Agreement or any other agreement contemplated herein provides that the Manager shall act in a manner which is, or provide terms which are, “fair and reasonable” to the Company or any Member that is not the Manager, the Manager shall determine such appropriate action or provide such terms considering, in each case, the relative interests of each party to such agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable United States generally accepted accounting practices or principles.

 

(d)                                 Whenever in this Agreement or any other agreement contemplated herein, the Manager is permitted or required to take any action or to make a decision in its “sole discretion” or “discretion,” with “complete discretion” or under a grant of similar authority or latitude, the Manager shall be entitled to consider such interests and factors as it desires, including the interests of the Corporation, and shall, to the fullest extent permitted by applicable Law, have no duty or obligation to give any consideration to any interest of or factors affecting the Company or other Members.

 

(e)                                  Whenever in this Agreement the Manager is permitted or required to take any action or to make a decision in its “good faith” or under another express standard, the Manager shall act under such express standard and, to the extent permitted by applicable Law, shall not be subject to any other or different standards imposed by this Agreement or any other agreement contemplated herein or by applicable law, and, notwithstanding anything contained herein to the contrary, so long as the Manager acts in good faith or under such other express standard, as applicable, the resolution, action or terms so made, taken or provided by the Manager shall not constitute a breach of this Agreement or any other agreement contemplated herein or impose liability upon the Manager or any of the Manager’s Affiliates or any other Person.

 

SECTION 6.09.                                   Indemnification.  (a) Subject to Section 5.06, the Company hereby agrees to indemnify and hold harmless any Member, the Manager, the Officers and such other Persons as the Manager determines to indemnify (each, an “Indemnified Person”) to the fullest extent permitted under the Act, as the same now exists or may hereafter be amended, substituted or replaced (but, in the case of any such amendment, substitution or replacement only to the extent that such amendment, substitution or replacement permits the Company to provide broader indemnification rights than the Company is providing immediately prior to such amendment, substitution or replacement), against all expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such Person in connection with any threatened, pending or completed actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which such Person is or is threatened to be made a party by reason of the fact that such Person is or was a Member, the Manager, an Officer,

 

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an employee or an agent of the Company or is or was serving at the request of the Company as a manager, member, employee or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise; provided, however, that no Indemnified Person shall be indemnified for actions not made in good faith or not in a manner which such Person reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal action or proceeding other than by or in the right of the Company, had reasonable cause to believe the conduct was unlawful.  Expenses, including attorneys’ fees, incurred by any such Indemnified Person in defending a proceeding shall be paid by the Company as they are incurred and in advance of the final disposition of such action, suit or proceeding, upon receipt of an undertaking by or on behalf of such Indemnified Person to repay such amount if it shall ultimately be determined by a court of competent jurisdiction that such Indemnified Person is not entitled to be indemnified by the Company.

 

(b)                                 The right to indemnification and the advancement of expenses conferred in this Section 6.09 shall not be exclusive of any other right which any Person may have or hereafter acquire under any statute, agreement, bylaw, action by the Manager or otherwise.

 

(c)                                  The Company shall maintain directors’ and officers’ liability insurance, or make other financial arrangements, at its expense, to protect any Indemnified Person against any expense, liability or loss described in Section 6.09(a) whether or not the Company would have the power to indemnify such Indemnified Person against such expense, liability or loss under the provisions of this Section 6.09.  The Company shall use its commercially reasonable efforts to purchase directors’ and officers’ liability insurance with a carrier and in an amount determined necessary or desirable as determined in good faith by the Manager.

 

(d)                                 Notwithstanding anything contained herein to the contrary (including in this Section 6.09), the Company agrees that any indemnification and advancement of expenses available from Scientific Games to any current or former Indemnified Person by virtue of such Person’s service as a manager, member, director, officer, partner, employee or agent of Scientific Games prior to or following the Effective Time (any such Person, a “Scientific Games Person”) shall be secondary to the indemnification and advancement of expenses to be provided by the Company pursuant to this Section 6.09, which shall be provided out of and to the extent of Company assets only, and no Member (unless such Member otherwise agrees in writing or is found in a final decision by a court of competent jurisdiction to have personal liability on account thereof) shall have personal liability on account thereof or shall be required to make additional Capital Contributions to help satisfy such indemnity of the Company and the Company (i) shall be the primary indemnitor of first resort for such Scientific Games Person pursuant to this Section 6.09 and (ii) shall be fully responsible for the advancement of all expenses and the payment of all amounts or liabilities with respect to such Scientific Games Person which are addressed by this Section 6.09.

 

(e)                                  If this Section 6.09 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify and hold harmless each Indemnified Person pursuant to this Section 6.09 to the fullest extent permitted by any applicable portion of this Section 6.09 that shall not have been invalidated and to the fullest extent permitted by applicable Law.

 

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SECTION 6.10.                                   Investment Company Act.  The Manager shall use its best efforts to ensure that the Company shall not be subject to registration as an investment company pursuant to the Investment Company Act.

 

SECTION 6.11.                                   Outside Activities of the Manager.  The Manager shall not, directly or indirectly, enter into or conduct any business or operations, other than in connection with (a) in its capacity as a Member, the ownership, acquisition and disposition of Common Units, (b) the management of the business and affairs of the Company and its Subsidiaries, (c) the operation of the Manager as a reporting company with a class (or classes) of securities registered under Section 12 of the Exchange Act, and listed on a securities exchange, (d) the offering, sale, syndication, private placement or public offering of stock, bonds, securities or other interests, (e) financing or refinancing of any type related to the Company, its Subsidiaries or their assets or activities, and (f) such activities as are incidental to the foregoing; provided, however, that, except as otherwise provided herein, the net proceeds of any financing or refinancing raised by the Manager pursuant to the preceding clauses (d) and (e) shall be made available to the Company, whether as Capital Contributions, loans or otherwise, as appropriate, and, provided further, that the Manager may, in its sole and absolute discretion, from time to time hold or acquire assets in its own name or otherwise other than through the Company and its Subsidiaries so long as the Manager takes commercially reasonable measures to ensure that the economic benefits and burdens of such assets are otherwise vested in the Company or its Subsidiaries, through assignment, mortgage, loan or otherwise or, if it is not commercially reasonable to vest such economic interests in the Company or any of its Subsidiaries, the Members shall negotiate in good faith to amend this Agreement to reflect such activities and the direct ownership of assets by the Manager.  Nothing contained herein shall be deemed to prohibit the Manager from executing any guarantee of indebtedness of the Company or its Subsidiaries.

 

ARTICLE VII

 

Rights and Obligations of Members

 

SECTION 7.01.                                   Limitation of Liability and Duties of Members. (a)  Except as provided in this Agreement or in the Act, no Member (including the Member that is also the Manager) shall be personally liable, whether to the Company, to any of the other Members, to the creditors of the Company or to any third party, for any debt, obligation or liability of the Company, whether arising in contract, tort or otherwise, solely by reason of being a Member.  Notwithstanding anything contained herein to the contrary, the failure of the Company to observe any formalities or requirements relating to the exercise of its powers or management of its business and affairs under this Agreement or the Act shall not be grounds for imposing personal liability on the Members for any debts, obligations or liabilities of the Company.

 

(b)                                 In accordance with the Act and the laws of the State of Nevada, a Member may, under certain circumstances, be required to return amounts previously distributed to such Member.  It is the intent of the Members that no Distribution to any Member pursuant to Article IV shall be deemed a return of money or other property paid or distributed in violation of the Act.  To the fullest extent permitted by Law, any Member receiving any such money or property shall not be required to return any such money or property to the Company or any other

 

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Person, unless such distribution was made by the Company to its Members in clerical error.  However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Member is obligated to make any such payment, such obligation shall be the obligation of such Member and not of any other Member.

 

(c)                                  Notwithstanding any other provision of this Agreement (subject to Section SECTION 6.08), to the extent that, at law or in equity, any Member (or any Member’s Affiliate or any manager, managing member, general partner, director, officer, employee, agent, fiduciary or trustee of any Member or of any Affiliate of a Member) has duties (including fiduciary duties) to the Company, to the Manager, to another Member, to any Person who acquires an interest in a Company Interest or to any other Person bound by this Agreement, all such duties (including fiduciary duties) are hereby eliminated, to the fullest extent permitted by law, and replaced with the duties or standards expressly set forth herein, if any.  Such elimination of duties (including fiduciary duties) to the Company, the Manager, each of the other Members, each other Person who acquires an interest in a Company Interest and each other Person bound by this Agreement and replacement thereof with the duties or standards expressly set forth herein, if any, are approved by the Company, each of the Members, each other Person who acquires an interest in a Company Interest after the date hereof and each other Person bound by this Agreement.

 

SECTION 7.02.                                   Lack of Authority.  No Member in its capacity as such has the authority or power to act for or on behalf of the Company, to do any act that would be binding on the Company or to make any expenditure on behalf of the Company.  The Members hereby consent to the exercise by the Manager, the Officers and any Persons to whom the Manager delegates authority and duties pursuant to Section 6.07 of the powers conferred on them by Law and this Agreement.

 

SECTION 7.03.                                   No Right of Partition.  No Member in its capacity as such shall have the right to seek or obtain partition by court decree or operation of Law of any Company property, or the right to own or use particular or individual assets of the Company.

 

SECTION 7.04.                                   Members Right to Act.  For matters that require the approval of the Members, the Members shall act through meetings and written consents as described in paragraphs (a) and (b) below:

 

(a)                                 Except as otherwise expressly provided by this Agreement, acts by the Members holding a majority of the Units, voting together as a single class, shall be the acts of the Members.  Any Member entitled to vote at a meeting of Members or to express consent or dissent to Company action in writing without a meeting may authorize another person or persons to act for it by proxy.  An electronic mail or similar transmission by the Member, or a photographic, facsimile or similar reproduction of a writing executed by the Member shall be treated as a proxy executed in writing for purposes of this Section 7.04(a).  No proxy shall be voted or acted upon after eleven months from the date thereof, unless the proxy provides for a longer period.  A proxy shall be revocable unless the proxy form conspicuously states that the proxy is irrevocable and that the proxy is coupled with an interest.  Should a proxy designate two or more Persons to act as proxies, unless that instrument shall provide to the contrary, a majority of such Persons present at any meeting at which their powers thereunder are to

 

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be exercised shall have and may exercise all the powers of voting or giving consents thereby conferred, or, if only one be present, then such powers may be exercised by that one; or, if an even number attend and a majority do not agree on any particular issue, the Company shall not be required to recognize such proxy with respect to such issue if such proxy does not specify how the votes that are the subject of such proxy are to be voted with respect to such issue.

 

(b)                                 The actions by the Members permitted hereunder may be taken at a meeting called by the Manager or by the Members holding a majority of the Units entitled to vote on such matter on at least 48 hours’ prior written notice to the other Members entitled to vote, which notice shall state the purpose or purposes for which such meeting is being called.  The actions taken by the Members entitled to vote or consent at any meeting (as opposed to by written consent), if improperly called and noticed, shall be as valid as though taken at a meeting duly held after regular call and notice if (but not until), either before, at or after the meeting, the Members entitled to vote or consent as to whom it was improperly held signs a written waiver of notice or a consent to the holding of such meeting or an approval of the minutes thereof.  The actions by the Members entitled to vote or consent may be taken by vote of the Members entitled to vote or consent at a meeting or by written consent, so long as such consent is signed by Members having not less than the minimum number of Units that would be necessary to authorize or take such action at a meeting at which all Members entitled to vote thereon were present and voted.  Prompt notice of the action so taken without a meeting, which shall state the purpose or purposes for which such written consent was required shall be given to those Members entitled to vote or consent who did not consent in writing (for which such notice and written consent may be delivered via email); provided, however, that the failure to give any such notice shall not affect the validity of the action taken by such written consent.  Any action taken pursuant to such written consent of the Members shall have the same force and effect as if taken by the Members at a meeting thereof.

 

SECTION 7.05.                                   Inspection Rights.  The Company shall permit each Member and each of its designated representatives to (i) visit and inspect any of the premises of the Company and its Subsidiaries, all at reasonable times and upon reasonable notice, (ii) examine the corporate and financial records of the Company or any of its Subsidiaries and make copies thereof or extracts therefrom, during reasonable business hours and upon reasonable notice, (iii) consult with the managers, officers, employees and independent accountants of the Company or any of its Subsidiaries concerning the affairs, finances and accounts of the Company or any of its Subsidiaries, during reasonable business hours and upon reasonable notice.  The presentation of an executed copy of this Agreement by any Member to the Company’s independent accountants shall constitute the Company’s permission to its independent accountants to participate in discussions with such Persons and their respective designated representatives.

 

ARTICLE VIII

 

Books, Records, Accounting and Reports, Affirmative Covenants

 

SECTION 8.01.                                   Records and Accounting.  The Company shall keep, or cause to be kept, appropriate books and records with respect to the Company’s business, including all

 

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books and records necessary to provide any information, lists and copies of documents required to be provided pursuant to Section 8.03 or pursuant to applicable Law.  All matters concerning (a) the determination of the relative amount of allocations and Distributions among the Members pursuant to Articles III and IV and (b) accounting procedures and determinations, and other determinations not specifically and expressly provided for by the terms of this Agreement, shall be determined by the Manager, whose determination shall be final and conclusive as to all of the Members absent manifest clerical error.

 

SECTION 8.02.                                   Fiscal Year.  The Fiscal Year of the Company shall begin on the first day of January and end on the last day of December each year or such other date as may be established by the Manager.

 

SECTION 8.03.                                   Reports.  The Company shall deliver or cause to be delivered, within ninety (90) days after the end of each Fiscal Year, to each Person who was a Member at any time during such Fiscal Year, all information reasonably necessary for the preparation of such Person’s U.S. federal and applicable state and local income tax returns.

 

ARTICLE IX

 

Tax Matters

 

SECTION 9.01.                                   Preparation of Tax Returns.  The Manager shall arrange for the preparation and timely filing of all tax returns required to be filed by the Company.  On or before April 10, June 10, September 10 and December 10 of each Fiscal Year, the Company shall send to each Person who was a Member at any time during the prior quarter, an estimate of such Member’s state tax apportionment information and allocations to the Members of taxable income, gains, losses, deductions and credits for such quarter, which estimate shall (at the election of SG Holding I) have been reviewed and approved by the Company’s outside tax accountants.  In addition, no later than the later of (i) April 10 following the end of the prior Fiscal Year and (ii) 30 Business Days after the issuance of the final financial statement report for a Fiscal Year by the Company’s auditors, the Company shall send to each Person who was a Member at any time during such Fiscal Year, a statement showing such Member’s final state tax apportionment information and allocations to the Members of taxable income, gains, losses, deductions and credits for such Fiscal Year and a completed IRS Schedule K-1.  Each Member shall notify the other Members upon receipt of any notice of a tax examination of the Company by U.S. federal or state or local tax authorities.  Subject to the terms and conditions of this Agreement, in its capacity as the Partnership Representative, the Corporation shall have the authority to prepare the tax returns of the Company using such permissible methods and elections as it determines in its reasonable discretion, including the use of any permissible method under Section 706 of the Code for purposes of determining the varying Company Interests of the Members.

 

SECTION 9.02.                                   Tax Elections.  The Taxable Year shall be the Fiscal Year set forth in Section 8.02.  The Manager shall cause the Company and each of its Subsidiaries that is treated as a partnership for U.S. federal income tax purposes to have in effect an election under Section 754 of the Code (or any similar provisions of applicable state, local or foreign tax Law) for each Taxable Year.  The Manager shall take commercially reasonable efforts to cause each

 

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Person in which the Company owns a direct or indirect equity interest (other than a Subsidiary) that is so treated as a partnership to have in effect any such election for each Taxable Year.  Each Member will upon request supply any information reasonably necessary to give proper effect to any such election.

 

SECTION 9.03.                                   Tax Controversies.  The Corporation shall be designated and may, on behalf of the Company, at any time, and without further notice to or consent from any Member, act as the “partnership representative” of the Company (within the meaning given to such term in Section 6223 of the Code) (the “Partnership Representative”) for purposes of the Code.  The Partnership Representative shall have the right and obligation to take all actions authorized and required, respectively, by the Code for the Partnership Representative and is authorized and required to represent the Company (at the Company’s expense) in connection with all examinations of the Company’s affairs by tax authorities, including resulting administrative and judicial proceedings, and to expend Company funds for professional services reasonably incurred in connection therewith.  Each Member agrees to cooperate with the Company and to do or refrain from doing any or all things reasonably requested by the Company with respect to the conduct of such proceedings.  The Partnership Representative shall keep all Members fully advised on a current basis of any contacts by or discussions with tax authorities, and the Members shall have the right to observe and participate through representatives of their own choosing (at their sole expense) in any tax proceedings.  Nothing herein shall diminish, limit or restrict the rights of any Member under Subchapter C of Chapter 63 of the Code (Sections 6221 et seq.), as enacted by the Bipartisan Budget Act of 2015, any Treasury Regulations or other guidance promulgated thereunder or any similar state or local legislation, regulations or guidance.

 

ARTICLE X

 

Restrictions on Transfer of Units

 

SECTION 10.01.                            Transfers by Members.  No Unitholder may Transfer any interest in any Units, except Transfers (a) pursuant to and in accordance with Section 10.02 or (b) approved in writing by the Manager.  Notwithstanding the foregoing, “Transfer” shall not include an event that terminates the existence of a Member for income tax purposes (including (i) a change in entity classification of a Member under Treasury Regulation Section 301.7701-3, (ii) a sale of assets by, or liquidation of, a Member pursuant to an election under Section 336 or 338 of the Code or (iii) a merger, severance or allocation within a trust or among sub-trusts of a trust that is a Member), but that does not terminate the existence of such Member under applicable state law (or, in the case of a trust that is a Member, does not terminate the trusteeship of the fiduciaries under such trust with respect to all the Company Interests of such trust that is a Member).

 

SECTION 10.02.                            Permitted Transfers.  The restrictions contained in Section 10.01(a) shall not apply to any Transfer (each such Transfer, and together with any Transfer approved pursuant to Section 10.01(b), a “Permitted Transfer”) pursuant to (i)(A) a Change of Control Transaction, (B) a Redemption or Exchange in accordance with Article XI hereof or (C) a Transfer by a Member to the Corporation or any of its Subsidiaries; (ii) a Transfer by any Member to such Member’s spouse, any lineal ascendants or descendants or trusts or other

 

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entities in which such Member or Member’s spouse, lineal ascendants or descendants hold (and continue to hold while such trusts or other entities hold Units) 50% or more of such entity’s beneficial interests; (iii) the laws of descent and distribution and (iv) a Transfer to an Affiliate of such Member; provided, however, that (A) the restrictions contained in this Agreement will continue to apply to Units after any Permitted Transfer of such Units, and (B) in the case of the foregoing clauses (ii), (iii) and (iv), the transferees of the Units so Transferred shall agree in writing to be bound by the provisions of this Agreement and, the transferor will deliver a written notice to the Company and the Members, which notice will disclose in reasonable detail the identity of the proposed transferee.  In the case of a Permitted Transfer by SG Holding I or SG Holding of Common Units to a transferee in accordance with this Section 10.02, SG Holding I or SG Holding (or any subsequent transferee thereof) shall be required to also Transfer an equal number of shares of Class B Common Stock corresponding to the proportion of such Person’s Common Units that were Transferred in the Permitted Transfer to such transferee. All Permitted Transfers are subject to the additional limitations set forth in Section 10.07(b).

 

SECTION 10.03.                            Restricted Units Legend.  The Units have not been registered under the Securities Act and, therefore, in addition to the other restrictions on Transfer contained in this Agreement, cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is then available.  To the extent such Units have been certificated, each certificate evidencing Units and each certificate issued in exchange for or upon the Transfer of any Units (if such securities remain Units as defined herein after such Transfer) shall be stamped or otherwise imprinted with a legend in substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER.  THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED IN THE AMENDED AND RESTATED OPERATING AGREEMENT OF SCIPLAY PARENT COMPANY, LLC, AS MAY BE AMENDED AND MODIFIED FROM TIME TO TIME, AND SCIPLAY PARENT COMPANY, LLC RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO ANY TRANSFER.  A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY SCIPLAY PARENT COMPANY, LLC TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”

 

The Company shall imprint such legend on certificates (if any) evidencing Units.  The legend set forth above shall be removed from the certificates (if any) evidencing any units which cease to be Units in accordance with the definition thereof.

 

SECTION 10.04.                            Transfer.  Prior to Transferring any Units (other than pursuant to a Change of Control Transaction), the Transferring Unitholder shall cause the prospective transferee to agree in writing to be bound by this Agreement as provided in Section 10.02 and

 

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any other agreements executed by the holders of Units and relating to such Units in the aggregate (collectively, the “Other Agreements”), and shall cause the prospective transferee to execute and deliver to the Company and the other holders of Units counterparts of this Agreement and any applicable Other Agreements.  Any Transfer or attempted Transfer of any Units in violation of any provision of this Agreement (including any prohibited indirect Transfers) shall be void, and in the event of any such Transfer or attempted Transfer, the Company shall not record such Transfer on its books and records, including the Schedule of Members, or treat any purported transferee of such Units as the owner of such securities for any purpose.

 

SECTION 10.05.                            Assignee’s Rights.  (a)  The Transfer of a Company Interest in accordance with this Agreement shall be effective as of the date of its assignment (assuming compliance with all of the conditions to such Transfer set forth herein), and such Transfer shall be shown on the books and records of the Company.  Profits, Losses and other Company items shall be allocated between the transferor and the Assignee according to Section 706 of the Code, using any permissible method as determined in the reasonable discretion of the Manager.  Distributions made before the effective date of such Transfer shall be paid to the transferor, and Distributions made after such date shall be paid to the Assignee.

 

(b)                                 Unless and until an Assignee becomes a Member pursuant to Article XII, the Assignee shall not be entitled to any of the rights granted to a Member hereunder or under applicable Law, other than the rights granted specifically to Assignees pursuant to this Agreement; provided, however, that, without relieving the transferring Member from any such limitations or obligations as more fully described in Section 10.06, such Assignee shall be bound by any limitations and obligations of a Member contained herein that a Member would be bound on account of the Assignee’s Company Interest (including the obligation to make Capital Contributions on account of such Company Interest, to the extent applicable).

 

SECTION 10.06.                            Assignor’s Rights and Obligations.  Any Member who shall Transfer any Company Interest in a manner in accordance with this Agreement shall cease to be a Member with respect to such Units or other interest and shall no longer have any rights or privileges, or, except as set forth in Section 5.06 or this Section 10.06, duties, liabilities or obligations, of a Member with respect to such Units or other interest (it being understood, however, that the applicable provisions of Sections 6.08 and 6.09 shall continue to inure to such Person’s benefit), except that unless and until the Assignee (if not already a Member) is admitted as a Substituted Member in accordance with the provisions of Article XII (the “Admission Date”), (i) such assigning Member shall retain all of the duties, liabilities and obligations of a Member with respect to such Units or other interest, and (ii) the Manager may, in its sole discretion, reinstate all or any portion of the rights and privileges of such Member with respect to such Units or other interest for any period of time prior to the Admission Date.  Nothing contained herein shall relieve any Member who Transfers any Units or other interest in the Company from any liability of such Member to the Company with respect to such Company Interest that may exist on the Admission Date or that is otherwise specified in the Act and incorporated into this Agreement or for any liability of such Member to the Company or any other Person for any materially false statement made by such Member (in its capacity as such) or for any present or future breaches of any representations, warranties or covenants by such Member (in its capacity as such) contained herein or in the other agreements with the Company.

 

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SECTION 10.07.                            Overriding Provisions.  (a)  Any Transfer in violation of this Article X shall be null and void ab initio, and the provisions of Sections 10.05 and 10.06 shall not apply to any such Transfers.  For the avoidance of doubt, any Person to whom a Transfer is made or attempted in violation of this Article X shall not become a Member, shall not be entitled to vote on any matters coming before the Members and shall not have any other rights in or with respect to any rights of a Member of the Company.  The approval of any Transfer in any one or more instances shall not limit or waive the requirement for such approval in any other or future instance.  The Manager shall promptly amend the Schedule of Members to reflect any Permitted Transfer pursuant to this Article X.

 

(b)                                 Notwithstanding anything contained in this Agreement to the contrary (including, for the avoidance of doubt, the provisions of Article XI and Article XII and the other provisions of this Article X), in no event shall any Member Transfer any Units to the extent such Transfer could, in the reasonable determination of the Manager:

 

(i)                                     result in a violation of the Securities Act, or any other applicable federal, state or foreign Laws;

 

(ii)                                  cause an assignment under the Investment Company Act;

 

(iii)                               be a violation of or a default (or an event that, with notice or the lapse of time or both, would constitute a default) under, or result in an acceleration of any (A) indebtedness under the Credit Agreement or (B) any indebtedness incurred, issued or guaranteed by the Company that, individually or in the aggregate, has an aggregate principal amount then outstanding that is greater than $25,000,000;

 

(iv)                              cause the Company to lose its status as a partnership for U.S. federal income tax purposes or, without limiting the generality of the foregoing, be a Transfer effected on or through an “established securities market” or a “secondary market or the substantial equivalent thereof”, as such terms are used in Section 1.7704-1 of the Treasury Regulations;

 

(v)                                 be a Transfer to a Person who is not legally competent or who has not achieved his or her majority under applicable Law (excluding trusts for the benefit of minors);

 

(vi)                              cause the Company or any Member or the Manager to be treated as a fiduciary under the Employee Retirement Income Security Act of 1974, as amended;

 

(vii)                           cause the Company (as determined by the Manager in its sole discretion) to be treated as a “publicly traded partnership” or to be taxed as a corporation pursuant to Section 7704 of the Code; or

 

(viii)                        result in the Company having more than one hundred (100) partners, within the meaning of Treasury Regulation Section 1.7704-1(h)(1) (determined pursuant to the rules of Treasury Regulation Section 1.7704-1(h)(3)).

 

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ARTICLE XI

 

Redemption and Exchange

 

SECTION 11.01.                            Redemption Right of a Member.  (a)  Redemption Notice.  Subject to the provisions set forth in this Section 11.01, each Member (other than the Corporation) shall be entitled to cause the Company to redeem (a “Redemption”) its Common Units (the “Redemption Right”) at any time beginning on the earlier of (i) 180 days after the Effective Time or (ii) if such Member has entered into a contractual lock-up agreement with the underwriters in connection with the IPO relating to the shares of the Corporation owned by such Member, the date such lock-up agreement has been waived or terminated as it applies to such Member.  A Member desiring to exercise its Redemption Right (the “Redeeming Member”) shall exercise such right by giving written notice (the “Redemption Notice”) to the Company with a copy to the Corporation.  The Redemption Notice shall specify the number of Common Units (the “Redeemed Units”) that the Redeeming Member intends to have the Company redeem and a date, not less than seven (7) Business Days nor more than ten (10) Business Days after delivery of such Redemption Notice (unless and to the extent that the Manager in its sole discretion agrees in writing to waive such time periods), on which exercise of the Redemption Right shall be completed (the “Redemption Date”); provided that the Company, the Corporation and the Redeeming Member may change the number of Redeemed Units and/or the Redemption Date specified in such Redemption Notice to another number and/or date by mutual agreement signed in writing by each of them; provided further that a Redemption Notice may be conditioned on (x) the Redeeming Member having entered into a valid and binding agreement with a third party for the sale of shares of Class A Common Stock that may be issued in connection with such proposed Redemption (whether in a tender or exchange offer, private sale or otherwise) and such agreement is subject to customary closing conditions for agreements of this kind and the delivery of the Class A Common Stock by the Redeeming Member to such third party, (y) the closing of an announced merger, consolidation or other transaction in which the shares of Class A Common Stock that may be issued in connection with such proposed Redemption would be exchanged or converted or become exchangeable for or convertible into cash or other securities or property and/or (z) the closing of an underwritten distribution of the shares of Class A Common Stock that may be issued in connection with such proposed Redemption.  Unless the Redeeming Member timely has delivered a Retraction Notice as provided in Section 11.01(b) or has revoked or delayed a Redemption as provided in Section 11.01(c), on the Redemption Date (to be effective immediately prior to the close of business on the Redemption Date): (A) the Redeeming Member shall transfer and surrender the Redeemed Units to the Company, free and clear of all liens and encumbrances, and (B) the Company shall (x) cancel the Redeemed Units, (y) transfer to the Redeeming Member the consideration to which the Redeeming Member is entitled under Section 11.01(b), and (z) if the Units are certificated, issue to the Redeeming Member a certificate for a number of Common Units equal to the difference (if any) between the number of Common Units evidenced by the certificate surrendered by the Redeeming Member pursuant to clause (A) of this Section 11.01(a) and the Redeemed Units.

 

(b)                                 In exercising its Redemption Right, a Redeeming Member shall be entitled to receive the Share Settlement or the Cash Settlement; provided that the Corporation shall have

 

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the option (as determined solely by its Independent Directors who are disinterested) as provided in Section 11.02 and subject to Section 11.01(d) to select whether the redemption payment is made by means of a Share Settlement or a Cash Settlement.  Within three (3) Business Days of delivery of the Redemption Notice, the Corporation shall give written notice (the “Contribution Notice”) to the Company (with a copy to the Redeeming Member) of its intended settlement method; provided that if the Corporation does not timely deliver a Contribution Notice, the Corporation shall be deemed to have elected the Share Settlement method.  If the Corporation elects the Cash Settlement method, the Redeeming Member may retract its Redemption Notice by giving written notice (the “Retraction Notice”) to the Company (with a copy to the Corporation) within two (2) Business Days of delivery of the Contribution Notice.  The timely delivery of a Retraction Notice shall terminate all of the Redeeming Member’s, Company’s and the Corporation’ rights and obligations under this Section 11.01 arising from the Redemption Notice.

 

(c)                                  In the event the Corporation elects a Share Settlement in connection with a Redemption, a Redeeming Member shall be entitled to revoke its Redemption Notice or delay the consummation of a Redemption if any of the following conditions exists: (i) any registration statement pursuant to which the resale of the Class A Common Stock to be registered for such Redeeming Member at or immediately following the consummation of the Redemption shall have ceased to be effective pursuant to any action or inaction by the SEC or no such resale registration statement has yet become effective; (ii) the Corporation shall have failed to cause any related prospectus to be supplemented by any required prospectus supplement necessary to effect such Redemption; (iii) the Corporation shall have exercised its right to defer, delay or suspend the filing or effectiveness of a registration statement and such deferral, delay or suspension shall affect the ability of such Redeeming Member to have its Class A Common Stock registered at or immediately following the consummation of the Redemption; (iv) the Corporation shall have disclosed to such Redeeming Member any material non-public information concerning the Corporation, the receipt of which could reasonably be determined to result in such Redeeming Member being prohibited or restricted from selling Class A Common Stock at or immediately following the Redemption without disclosure of such information, and the Corporation does not permit such Redeeming Member to disclose such information; (v) any stop order relating to the registration statement pursuant to which the Class A Common Stock was to be registered by such Redeeming Member at or immediately following the Redemption shall have been issued by the SEC; (vi) there shall have occurred a material disruption in the securities markets generally or in the market or markets in which the Class A Common Stock is then traded; (vii) there shall be in effect an injunction, a restraining order or a decree of any nature of any Governmental Entity that restrains or prohibits the Redemption; (viii) the Corporation shall have failed to comply in all material respects with its obligations under the Registration Rights Agreement, and such failure shall have affected the ability of such Redeeming Member to consummate the resale of Class A Common Stock to be received upon such redemption pursuant to an effective registration statement or (ix) the Redemption Date would occur three (3) Business Days or less prior to, or during, a Black-Out Period; provided further that in no event shall the Redeeming Member seeking to revoke its Redemption Notice or delay the consummation of such Redemption in reliance on any of the matters contemplated in clauses (i) through (ix) above have controlled or intentionally materially influenced any facts, circumstances or Persons in connection therewith (except in the good faith performance of his or

 

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her duties as an officer or director of the Corporation) in order to provide such Redeeming Member with a basis for such delay or revocation.  If a Redeeming Member delays the consummation of a Redemption pursuant to this Section 11.01(c), the Redemption Date shall occur on the fifth (5th) Business Day following the date on which the conditions giving rise to such delay cease to exist (or such earlier day as the Corporation, the Company and such Redeeming Member may agree in writing).

 

(d)                                 The number of shares of Class A Common Stock or the Redeemed Units Equivalent that a Redeeming Member is entitled to receive under Section 11.01(b) shall not be adjusted on account of any Distributions previously made with respect to the Redeemed Units or dividends previously paid with respect to Class A Common Stock; provided, however, that if a Redeeming Member causes the Company to redeem Redeemed Units and the Redemption Date occurs subsequent to the record date for any Distribution with respect to the Redeemed Units but prior to payment of such Distribution, the Redeeming Member shall be entitled to receive such Distribution with respect to the Redeemed Units on the date that it is made notwithstanding that the Redeeming Member transferred and surrendered the Redeemed Units to the Company prior to such date.

 

(e)                                  In the event of a reclassification or other similar transaction as a result of which the shares of Class A Common Stock are converted into another security, then in exercising its Redemption Right a Redeeming Member shall be entitled, in the case of a Redemption effected using the Share Settlement method, to receive the amount of such security that the Redeeming Member would have received if such Redemption Right had been exercised and the Redemption Date had occurred immediately prior to the record date of such reclassification or other similar transaction.

 

(f)                                   Notwithstanding anything to the contrary contained herein, neither the Company nor the Corporation shall be obligated to effectuate a Redemption if such Redemption could (as determined in the sole discretion of the Manager) cause the Company to be treated as a “publicly traded partnership” or to be taxed as a corporation pursuant Section 7704 of the Code or successor provisions of the Code.

 

SECTION 11.02.                            Election and Contribution of the Corporation.  In connection with the exercise of a Redeeming Member’s Redemption Rights under Section 11.01(a), the Corporation shall contribute to the Company the consideration the Redeeming Member is entitled to receive under Section 11.01(b).  The Corporation, at its option (as determined solely by its Independent Directors who are disinterested), shall determine whether to contribute, pursuant to Section 11.01(b), the Share Settlement or the Cash Settlement.  Unless the Redeeming Member has timely delivered a Retraction Notice as provided in Section 11.01(b), or has revoked or delayed a Redemption as provided in Section 11.01(c), on the Redemption Date (to be effective immediately prior to the close of business on the Redemption Date) (i) the Corporation shall make its Capital Contribution to the Company (in the form of the Share Settlement or the Cash Settlement) required under this Section 11.02, and (ii) the Company shall issue to the Corporation a number of Common Units equal to the number of Redeemed Units surrendered by the Redeeming Member.  Notwithstanding any other provisions of this Agreement to the contrary, in the event that the Corporation elects a Cash Settlement, the Corporation shall only be obligated to contribute to the Company an amount in respect of such

 

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Cash Settlement equal to the net proceeds (after deduction of any Discount) from the sale by the Corporation of a number of shares of Class A Common Stock equal to the number of Redeemed Units to be redeemed with such Cash Settlement, provided that the Corporation’s Capital Account shall be increased by an amount equal to any Discount relating to such sale of shares of Class A Common Stock in accordance with Section 6.06.  The timely delivery of a Retraction Notice shall terminate all of the Company’s and the Corporation’ rights and obligations under this Section 11.02 arising from the Redemption Notice.

 

SECTION 11.03.                            Exchange Right of the Corporation.  (a)  Notwithstanding anything to the contrary in this Article XI, the Corporation may, in its sole and absolute discretion (as determined solely by its Independent Directors who are disinterested), elect to effect on the Redemption Date the exchange of Redeemed Units for the Share Settlement or Cash Settlement, as the case may be, through a direct exchange of such Redeemed Units and such consideration between the Redeeming Member and the Corporation (a “Direct Exchange”).  Upon such Direct Exchange pursuant to this Section 11.03, the Corporation shall acquire the Redeemed Units and shall be treated for all purposes of this Agreement as the owner of such Units.

 

(b)                                 The Corporation may, at any time prior to a Redemption Date, deliver written notice (an “Exchange Election Notice”) to the Company and the Redeeming Member setting forth its election to exercise its right to consummate a Direct Exchange in lieu of a Redemption; provided that such election does not prejudice the ability of the parties to consummate a Redemption or Direct Exchange on the Redemption Date.  An Exchange Election Notice may be revoked by the Corporation at any time; provided that any such revocation does not prejudice the ability of the parties to consummate a Redemption or Direct Exchange on the Redemption Date.  The right to consummate a Direct Exchange in all events shall be exercisable for all the Redeemed Units that would have otherwise been subject to a Redemption.  Except as otherwise provided by this Section 11.03, a Direct Exchange shall be consummated pursuant to the same timeframe and in the same manner as the relevant Redemption would have been consummated if the Corporation had not delivered an Exchange Election Notice.

 

SECTION 11.04.                            Reservation of Shares of Class A Common Stock; Listing; Certificate of the Corporation.

 

(a)                                 At all times the Corporation shall reserve and keep available out of its authorized but unissued Class A Common Stock, solely for the purpose of issuance upon a Redemption or Direct Exchange, such number of shares of Class A Common Stock as shall be issuable upon any such Redemption or Direct Exchange pursuant to Share Settlements; provided that nothing contained herein shall be construed to preclude the Corporation from satisfying its obligations in respect of any such Redemption or Direct Exchange by delivery of purchased shares of Class A Common Stock (which may or may not be held in the treasury of the Corporation) or the delivery of cash pursuant to a Cash Settlement.  The Corporation shall deliver shares of Class A Common Stock that have been registered under the Securities Act with respect to any Redemption or Direct Exchange to the extent a registration statement is effective and available for such shares.  The Corporation shall use its commercially reasonable efforts to list the shares of Class A Common Stock required to be delivered upon any such Redemption or Direct Exchange prior to such delivery upon each national securities exchange upon which the

 

40

 

outstanding shares of Class A Common Stock are listed at the time of such Redemption or Direct Exchange (it being understood that any such shares may be subject to transfer restrictions under applicable securities Laws).  The Corporation covenants that all shares of Class A Common Stock issued upon a Redemption or Direct Exchange will, upon issuance, be validly issued, fully paid and non-assessable.  The provisions of this Article XI shall be interpreted and applied in a manner consistent with the corresponding provisions of the Corporation’s certificate of incorporation.

 

(b)                                 To the extent any Redeeming Member (other than the Corporation) that owns shares of Class B Common Stock exercises its right to consummate a Redemption (or Direct Exchange, if so elected by the Corporation), then simultaneous with the consummation of such Redemption (or Direct Exchange, if so elected by the Corporation), the Redeeming Member shall surrender to the Corporation, and the Corporation shall cancel for no consideration, a number of shares of Class B Common Stock registered in the name of such Redeeming Member equal to the number of the Redeemed Units redeemed in such Redemption or exchanged in such Direct Exchange, if so elected by the Corporation).

 

SECTION 11.05.                            Effect of Exercise of Redemption or Exchange Right.  This Agreement shall continue notwithstanding the consummation of a Redemption or Direct Exchange and all governance or other rights set forth herein shall be exercised by the remaining Members and the Redeeming Member (to the extent of such Redeeming Member’s remaining interest in the Company).  No Redemption or Direct Exchange shall relieve such Redeeming Member of any prior breach of this Agreement.

 

SECTION 11.06.                            Tax Treatment.  The parties hereto acknowledge and agree that each Redemption shall be treated as a direct purchase of Units by the Corporation from the Redeeming Member pursuant to Section 707(a)(2)(B) of the Code (or any similar provisions of applicable state, local or foreign tax Law) (i.e., equivalent to a Direct Exchange).

 

ARTICLE XII

 

Admission of Members

 

SECTION 12.01.                            Substituted Members.  Subject to the provisions of Article X hereof, in connection with the Permitted Transfer of a Company Interest hereunder, the transferee shall become a substituted Member (“Substituted Member”) on the effective date of such Permitted Transfer, which effective date shall not be earlier than the date of compliance with the conditions to such Transfer, and such admission shall be shown on the books and records of the Company, including the Schedule of Members.

 

SECTION 12.02.                            Additional Members.  Subject to the provisions of Article X hereof, any Person (other than the Original Members and the Corporation) may be admitted to the Company as an additional Member (any such Person, an “Additional Member”) only upon furnishing to the Manager (a) counterparts of this Agreement and any applicable Other Agreements and (b) such other documents or instruments as may be reasonably necessary or appropriate to effect such Person’s admission as a Member (including entering into such documents as the Manager may deem appropriate in its reasonable discretion).  Such admission

 

41

 

shall become effective on the date on which the Manager determines in its reasonable discretion that such conditions have been satisfied and when any such admission is shown on the books and records of the Company, including the Schedule of Members.

 

ARTICLE XIII

 

Withdrawal and Resignation

 

SECTION 13.01.                            Withdrawal and Resignation of Members.  No Member shall have the power or right to withdraw or otherwise resign as a Member from the Company prior to the dissolution and winding up of the Company pursuant to Article XIV.  Any Member, however, that attempts to withdraw or otherwise resign as a Member from the Company without the prior written consent of the Manager upon or following the dissolution and winding up of the Company pursuant to Article XIV, but prior to such Member receiving the full amount of Distributions from the Company to which such Member is entitled pursuant to Article XIV, shall be liable to the Company for all damages (including all lost profits and special, indirect and consequential damages) directly or indirectly caused by the withdrawal or resignation of such Member.  Upon a Transfer of all of a Member’s Units in a Transfer permitted by this Agreement, subject to the provisions of Section 10.06, such Member shall cease to be a Member.

 

ARTICLE XIV

 

Dissolution and Liquidation

 

SECTION 14.01.                            Dissolution.  The Company shall not be dissolved by the admission of Additional Members or Substituted Members or the attempted withdrawal or resignation of a Member.  The Company shall dissolve, and its affairs shall be wound up, upon:

 

(a)                                 the decision of the Manager together with the holders of a majority of the outstanding Common Units entitled to vote to dissolve the Company;

 

(b)                                 a Change of Control Transaction that is not approved by the Majority Members;

 

(c)                                  a dissolution of the Company under Section 86.491(1)(e) of the Act; or

 

(d)                                 the entry of a decree of judicial dissolution of the Company under Section 86.495 of the Act.

 

Except as otherwise set forth in this Article XIV, the Company is intended to have perpetual existence.  An Event of Withdrawal shall not cause a dissolution of the Company and the Company shall continue in existence subject to the terms and conditions of this Agreement.

 

SECTION 14.02.                            Liquidation and Termination.  On dissolution of the Company, the Manager shall act as liquidator or may appoint one or more Persons as liquidators.  The liquidators shall proceed diligently to wind up the affairs of the Company and make final distributions as provided herein and in the Act.  The costs of liquidation shall be borne as a

 

42

 

Company expense.  Until final distribution, the liquidators shall continue to operate the Company properties with all of the power and authority of the Manager.  Subject to the Act, the steps to be accomplished by the liquidators are as follows:

 

(a)                                 as promptly as possible after dissolution and again after final liquidation, the liquidators shall cause a proper accounting to be made by a recognized firm of certified public accountants of the Company’s assets, liabilities and operations through the last day of the calendar month in which the dissolution occurs or the final liquidation is completed, as applicable;

 

(b)                                 the liquidators shall pay, satisfy or discharge from Company funds, or otherwise make adequate provision for payment and discharge thereof (including the establishment of a cash fund for contingent liabilities in such amount and for such term as the liquidators may reasonably determine): first, all expenses incurred in liquidation of the Company; second, all of the debts, liabilities and obligations owed to creditors of the Company, other than Members; third, all of the debts and liabilities owed to Members; and

 

(c)                                  all remaining assets of the Company shall be distributed to the Members in accordance with Article IV by the end of the Taxable Year during which the liquidation of the Company occurs (or, if later, by ninety (90) days after the date of the liquidation).  The distribution of cash and/or property to the Members in accordance with the provisions of this Section 14.02 and Section 14.03 below constitutes a complete return to the Members of their Capital Contributions, a complete distribution to the Members of their interest in the Company and all the Company’s property and constitutes a compromise to which all Members have consented within the meaning of the Act.  To the extent that a Member returns funds to the Company, it has no claim against any other Member for those funds.

 

SECTION 14.03.                            Deferment; Distribution in Kind.  Notwithstanding the provisions of Section 14.02, but subject to the order of priorities set forth therein, if upon dissolution of the Company the liquidators determine that an immediate sale of part or all of the Company’s assets would be impractical or would cause undue loss (or would otherwise not be beneficial) to the Members, the liquidators may, in their sole discretion, defer for a reasonable time the liquidation of any assets except those necessary to satisfy Company liabilities (other than loans to the Company by Members) and reserves.  Subject to the order of priorities set forth in Section 14.02, the liquidators may, in their sole discretion, distribute to the Members, in lieu of cash, either (a) all or any portion of such remaining Company assets in-kind in accordance with the provisions of Section 14.02(c), (b) as tenants in common and in accordance with the provisions of Section 14.02(c), undivided interests in all or any portion of such Company assets or (c) a combination of the foregoing.  Any such Distributions in kind shall be subject to (y) such conditions relating to the disposition and management of such assets as the liquidators deem reasonable and equitable and (z) the terms and conditions of any agreements governing such assets (or the operation thereof or the holders thereof) at such time.  Any Company assets distributed in kind will first be written up or down to their Fair Market Value, thus creating Profit or Loss (if any), which shall be allocated in accordance with Article V.  The liquidators shall

 

43

 

determine the Fair Market Value of any property distributed in accordance with the valuation procedures set forth in Article XV.

 

SECTION 14.04.                            Articles of Dissolution.  On completion of the distribution of Company assets as provided herein, the Company is terminated (and the Company shall not be terminated prior to such time), and the Manager (or such other Person or Persons as the Act may require or permit) shall file articles of dissolution with the Secretary of State of the State of Nevada, cancel any other filings made pursuant to this Agreement that are or should be canceled and take such other actions as may be necessary to terminate the Company.  The Company shall be deemed to continue in existence for all purposes of this Agreement until it is terminated pursuant to this Section 14.04.

 

SECTION 14.05.                            Reasonable Time for Winding Up.  A reasonable time shall be allowed for the orderly winding up of the business and affairs of the Company and the liquidation of its assets pursuant to Sections 14.02 and 14.03 in order to minimize any losses otherwise attendant upon such winding up.

 

SECTION 14.06.                            Return of Capital.  The liquidators shall not be personally liable for the return of Capital Contributions or any portion thereof to the Members (it being understood that any such return shall be made solely from Company assets).

 

ARTICLE XV

 

Valuation

 

SECTION 15.01.                            Determination.  “Fair Market Value” of a specific Company asset will mean the amount which the Company would receive in an all-cash sale of such asset in an arms-length transaction with a willing, unaffiliated third party, with neither party having any compulsion to buy or sell, consummated on the day immediately preceding the date on which the event occurred which necessitated the determination of the Fair Market Value (and after giving effect to any transfer taxes payable in connection with such sale), as such amount is determined by the Manager (or, if pursuant to Section 14.02, the liquidators) in its good faith judgment using all factors, information and data it deems to be pertinent.

 

SECTION 15.02.                            Dispute Resolution.  If any Member or Members dispute the accuracy of any determination of Fair Market Value in accordance with Section 15.01, and the Manager and such Member(s) are unable to agree on the determination of the Fair Market Value of any asset of the Company, the Manager and such Member(s) shall each select a nationally recognized investment banking firm experienced in valuing securities of closely-held companies such as the Company in the Company’s industry (the “Appraisers”), who shall each determine the Fair Market Value of the asset or the Company (as applicable) in accordance with the provisions of Section 15.01.  The Appraisers shall be instructed to give written notice of their determination of the Fair Market Value of the asset or the Company (as applicable) within thirty (30) days of their appointment as Appraisers.  If Fair Market Value as determined by an Appraiser is higher than Fair Market Value as determined by the other Appraiser by 10% or more, and the Manager and such Member(s) do not otherwise agree on a Fair Market Value, the original Appraisers shall designate a third Appraiser meeting the same criteria used to select the

 

44

 

original two Appraisers, and such third Appraiser shall determine the Fair Market Value of such asset or the Company (as applicable) within thirty (30) days of its appointment as an Appraiser, provided that such Appraiser shall not determine the Fair Market Value of such asset or the Company (as applicable) to be lower or higher than the determinations made by the original two Appraisers.  If Fair Market Value as determined by an Appraiser is within 10% of the Fair Market Value as determined by the other Appraiser (but not identical), and the Manager and such Member(s) do not otherwise agree on a Fair Market Value, the Manager shall select the Fair Market Value of one of the Appraisers.  The fees and expenses of the Appraisers shall be borne by the Company.

 

ARTICLE XVI

 

General Provisions

 

SECTION 16.01.                            Power of Attorney.  (a)  Each Member who is an individual hereby constitutes and appoints the Manager (or the liquidator, if applicable) with full power of substitution, as his or her true and lawful agent and attorney-in-fact, with full power and authority in his, her or its name, place and stead, to:

 

(i)                                     execute, swear to, acknowledge, deliver, file and record in the appropriate public offices (A) this Agreement, all certificates and other instruments and all amendments thereof which the Manager deems appropriate or necessary to form, qualify, or continue the qualification of, the Company as a limited liability company in the State of Nevada and in all other jurisdictions in which the Company may conduct business or own property; (B) all instruments which the Manager deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement in accordance with its terms; (C) all conveyances and other instruments or documents which the Manager deems appropriate or necessary to reflect the dissolution and liquidation of the Company pursuant to the terms of this Agreement, including articles of dissolution; and (D) all instruments relating to the admission, withdrawal or substitution of any Member pursuant to Article XII or XIII; and

 

(ii)                                  sign, execute, swear to and acknowledge all ballots, consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the reasonable judgment of the Manager, to evidence, confirm or ratify any vote, consent, approval, agreement or other action which is made or given by the Members hereunder or is consistent with the terms of this Agreement, in the reasonable judgment of the Manager, necessary or appropriate to effectuate the terms of this Agreement.

 

(b)                                 The foregoing power of attorney is irrevocable and coupled with an interest, and shall survive the death, disability, incapacity, dissolution, bankruptcy, insolvency or termination of any Member who is an individual and the transfer of all or any portion of his, her or its Company Interest and shall extend to such Member’s heirs, successors, assigns and personal representatives.

 

SECTION 16.02.                            Confidentiality.  (a)  The Manager and each of the Members agree to hold the Company’s Confidential Information in confidence and may not use such

 

45

 

information except (i) in furtherance of the business of the Company, (ii) as reasonably necessary for compliance with applicable Law, including compliance with disclosure requirements under the Securities Act and the Exchange Act and compliance with the listing requirements of any securities exchange on which the Class A Common Stock is traded, and securities laws of other jurisdictions or (iii) as otherwise authorized separately in writing by the Manager.  “Confidential Information” as used herein includes, but is not limited to, ideas, financial product structuring, business strategies, innovations and materials, all aspects of the Company’s business plan, proposed operation and products, corporate structure, financial and organizational information, analyses, proposed partners, software code and system and product designs, employees and their identities, equity ownership, the methods and means by which the Company plans to conduct its business, all trade secrets, trademarks, tradenames and all intellectual property associated with the Company’s business.  With respect to the Manager and each Member, Confidential Information does not include information or material that: (a) is rightfully in the possession of the Manager or each Member at the time of disclosure by the Company; (b) before or after it has been disclosed to the Manager or each Member by the Company, becomes part of public knowledge, not as a result of any action or inaction of the Manager or such Member, respectively, in violation of this Agreement; (c) is approved for release by written authorization of the Manager or the Chief Executive Officer or the President of the Company; (d) is disclosed to the Manager or such Member or their representatives by a third party not, to the knowledge of the Manager or such Member, respectively, in violation of any obligation of confidentiality owed to the Company with respect to such information; or (e) is or becomes independently developed by the Manager or such Member or their respective representatives without use or reference to the Confidential Information.

 

(b)                                 Each of the Members may disclose Confidential Information to its Subsidiaries, Affiliates, partners, members, directors, managers, officers, employees, counsel, advisers, consultants, outside contractors and other agents, on the condition that such Persons keep the Confidential Information confidential to the same extent as such disclosing party is required to keep the Confidential Information confidential, solely to the extent it is reasonably necessary or appropriate to fulfill its obligations or to exercise its rights under this Agreement; provided that the disclosing party shall remain liable with respect to any breach of this Section 16.02 by any such Person.

 

(c)                                  Notwithstanding anything in Section 16.02(a) or Section 16.02(b) to the contrary, each of the Members may disclose Confidential Information (i) to the extent that such party is legally compelled (by oral questions, interrogatories, request for information or documents, subpoena, civil investigative demand or similar process) to disclose any of the Confidential Information, for purposes of reporting to its stockholders and direct and indirect equity holders the performance of the Company and its Subsidiaries and for purposes of including applicable information in its financial statements to the extent required by applicable Law or applicable accounting standards; or (ii) to any bona fide prospective purchaser of the equity or assets of a Member, or the Common Units held by such Member, or a prospective merger partner of such Member (provided, that (x) such Persons will be informed by such Member of the confidential nature of such information and shall agree in writing to keep such information confidential in accordance with the contents of this Agreement and (y) each Member will be liable for any breaches of this Section 16.02 by any such Persons).  Nothing in this

 

46

 

Agreement shall prevent a Member from (A) filing and, as provided for under Section 21F of the Exchange Act, maintaining the confidentiality of, a claim with the SEC; (B) providing Confidential Information to the SEC, or providing the SEC with information that would otherwise violate any part of this Agreement, to the extent permitted by Section 21F of the Exchange Act; (C) cooperating, participating or assisting in an SEC investigation or proceeding without notifying the Company or any of its Affiliates; or (D) receiving a monetary award as set forth in Section 21F of the Exchange Act.  Notwithstanding any of the foregoing, nothing in this Section 16.02 will restrict in any manner the ability of the Corporation to comply with its disclosure obligations under Law or the listing requirements of any securities exchange on which the Class A Common Stock is traded, and the extent to which any Confidential Information is necessary or desirable to disclose.

 

SECTION 16.03.                            Amendments.  This Agreement may be amended or modified (a) as provided in Section 3.10 of this Agreement or (b) upon the consent of the Majority Members; provided that, solely for purposes of clause (b) of this Section 16.03, the second reference to “a majority” in the definition of Majority Members shall be deemed to be “thirty-three percent (33%) or more”.  Notwithstanding the foregoing, no amendment or modification (x) to this Section 16.03 may be made without the prior written consent of the Manager and each of the Members, (y) to any of the terms and conditions of this Agreement which terms and conditions expressly require the approval or action of certain Persons may be made without obtaining the consent of the requisite number or specified percentage of such Persons who are entitled to approve or take action on such matter, and (z) to any of the terms and conditions of Article VI or Section 14.01 (and related definitions as used directly or indirectly therein) may be made without the prior written consent of the Manager, which consent may be given or withheld in the Manager’s sole discretion.

 

SECTION 16.04.                            Title to Company Assets.  Company assets shall be deemed to be owned by the Company as an entity, and no Member, individually or collectively, shall have any ownership interest in such Company assets or any portion thereof.  The Company shall hold title to all of its property in the name of the Company and not in the name of any Member.  All Company assets shall be recorded as the property of the Company on its books and records, irrespective of the name in which legal title to such Company assets is held.  The Company’s credit and assets shall be used solely for the benefit of the Company, and no asset of the Company shall be transferred or encumbered for, or in payment of, any individual obligation of any Member.

 

SECTION 16.05.                            Addresses and Notices.  Any notice provided for in this Agreement will be in writing and will be either personally delivered, or sent by certified mail, return receipt requested, or sent by reputable overnight courier service (charges prepaid), or sent by e-mail to the Company at the address set forth below and to any other recipient and to any Member at such address as indicated by the Company’s records, or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.  Notices will be deemed to have been given hereunder when delivered personally, three (3) days after deposit in the U.S. mail and one (1) day after deposit with a reputable overnight courier service or transmission via e-mail.  The Company’s address is:

 

47

 

to the Company:

 

SciPlay Parent Company, LLC

6601 Bermuda Road,

Las Vegas, Nevada 89119

Attn: General Counsel

 

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

 

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022

Attention: Marc Jaffe

Facsimile: (212) 751-4864 

E-mail: Marc.Jaffe@lw.com

 

SECTION 16.06.                            Binding Effect; Intended Beneficiaries.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

 

SECTION 16.07.                            Creditors.  None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company or any of its Affiliates, and no creditor who makes a loan to the Company or any of its Affiliates may have or acquire (except pursuant to the terms of a separate agreement executed by the Company in favor of such creditor) at any time as a result of making the loan any direct or indirect interest in Company Profits, Losses, Distributions, capital or property other than as a secured creditor.

 

SECTION 16.08.                            Waiver.  No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, duty, agreement or condition.

 

SECTION 16.09.                            Counterparts.  This Agreement may be executed in separate counterparts, each of which will be an original and all of which together shall constitute one and the same agreement binding on all the parties hereto.

 

SECTION 16.10.                            Applicable Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Nevada, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Nevada or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State

 

48

 

of Nevada.  Any dispute relating hereto shall be heard in the state or federal courts of the State of Nevada, and the parties agree to jurisdiction and venue therein.

 

SECTION 16.11.                            Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

SECTION 16.12.                            Further Action.  The parties shall execute and deliver all documents, provide all information and take or refrain from taking such actions as may be reasonably necessary or appropriate to achieve the purposes of this Agreement.

 

SECTION 16.13.                            Delivery by Electronic Transmission.  This Agreement and any signed agreement or instrument entered into in connection with this Agreement or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by means of an electronic transmission, including by a facsimile machine or via email, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties.  No party hereto or to any such agreement or instrument shall raise the use of electronic transmission by a facsimile machine or via email to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through such electronic transmission as a defense to the formation of a contract and each such party forever waives any such defense.

 

SECTION 16.14.                            Right of Offset.  Whenever the Company is to pay any sum (other than pursuant to Article IV) to any Member, any amounts that such Member owes to the Company which are not the subject of a good faith dispute may be deducted from that sum before payment.  For the avoidance of doubt, the distribution of Units to the Corporation shall not be subject to this Section 16.14.

 

SECTION 16.15.                            Effectiveness.  This Agreement shall be effective immediately as of the time at which the IPO closes on the IPO Closing Date (the “Effective Time”).

 

SECTION 16.16.                            Entire Agreement.  This Agreement, those documents expressly referred to herein (including the Registration Rights Agreement and the Tax Receivable Agreement) embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.  For the avoidance of doubt, the operating agreement of the Company as in effect immediately prior to the Effective Time is superseded by this Agreement as of Effective Time and shall be of no further force and effect thereafter.

 

49

 

SECTION 16.17.                            Remedies.  Each Member shall have all rights and remedies set forth in this Agreement and all rights and remedies which such Person has been granted at any time under any other agreement or contract and all of the rights which such Person has under any Law.  Any Person having any rights under any provision of this Agreement or any other agreements contemplated hereby shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by Law.

 

SECTION 16.18.                            Descriptive Headings; Interpretation.  The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement.  Whenever required by the context, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.  The use of the word “including” in this Agreement shall be by way of example rather than by limitation and shall mean, “including, without limitation”.  Reference to any agreement, document or instrument means such agreement, document or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof.  Without limiting the generality of the immediately preceding sentence, no amendment or other modification to any agreement, document or instrument that requires the consent of any Person pursuant to the terms of this Agreement or any other agreement will be given effect hereunder unless such Person has consented in writing to such amendment or modification.  Wherever required by the context, references to a Fiscal Year shall refer to a portion thereof.  The use of the words “or,” “either” and “any” shall not be exclusive.  The parties hereto have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.  Wherever a conflict exists between this Agreement and any other agreement, this Agreement shall control but solely to the extent of such conflict.

 

[Remainder of page intentionally left blank]

 

50

 

The undersigned hereby agree to be bound by all of the terms and provisions of the Amended and Restated Operating Agreement of SciPlay Parent Company, LLC as of the date first set forth above.

 

	
 
    	
SCIPLAY   PARENT COMPANY, LLC, AS THE COMPANY 
    
	
 
    	
By:   SG Social Holding Company I, LLC, as its sole Manager
    
	
 
    	
 
    
	
 
    	
by
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:   
    
	
 
    	
 
    	
Title:   
    

 

	
 
    	
SCIPLAY   CORPORATION, AS A MEMBER AND THE CORPORATION
    
	
 
    	
 
    
	
 
    	
by
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:   
    
	
 
    	
 
    	
Title:   
    

 

	
 
    	
SG   SOCIAL HOLDING COMPANY I, LLC, AS A MEMBER
    
	
 
    	
By:   SG Social Holding Company II, LLC, as its sole Manager
    
	
 
    	
 
    
	
 
    	
by
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:   
    
	
 
    	
 
    	
Title:   
    

 

	
 
    	
SG   SOCIAL HOLDING COMPANY, LLC, AS A MEMBER
    
	
 
    	
 
    
	
 
    	
by
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:   
    
	
 
    	
 
    	
Title:   
    

 

SIGNATURE PAGE TO AMENDED AND RESTATED OPERATING AGREEMENT OF SCIPLAY PARENT COMPANY, LLC

 

 

Exhibit A

 

FORM OF JOINDER AGREEMENT

 

This JOINDER AGREEMENT, dated as of [•], 20[•] (this “Joinder”), is delivered pursuant to that certain Amended and Restated Operating Agreement, dated as of [•], 2019 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Operating Agreement”) by and among SciPlay Parent Company, LLC, a Nevada limited liability company (the “Company”), SciPlay Corporation, a Nevada corporation and the sole manager of the Company (the “Corporation”), and each of the Members from time to time party thereto.  Capitalized terms used but not otherwise defined herein have the respective meanings set forth in the Operating Agreement.

 

1.                                      Joinder to the Operating Agreement.  Upon the execution of this Joinder by the undersigned and delivery hereof to the Corporation, the undersigned hereby is and hereafter will be a Member under the Operating Agreement and a party thereto, with all the rights, privileges and responsibilities of a Member thereunder.  The undersigned hereby agrees that it shall comply with and be fully bound by the terms of the Operating Agreement as if it had been a signatory thereto as of the date thereof.

 

2.                                      Incorporation by Reference.  All terms and conditions of the Operating Agreement are hereby incorporated by reference in this Joinder as if set forth herein in full.

 

3.                                      Address.  All notices under the Operating Agreement to the undersigned shall be directed to:

 

[Name]

[Address]

[City, State, Zip Code]

Attn:

Facsimile:

E-mail:

 

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Joinder as of the day and year first above written.

 

	
 
    	
[NAME   OF NEW MEMBER],
    
	
 
    	
 
    
	
 
    	
by
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

A-1

 

Accepted and agreed
 as of the date first set forth above:

 

	
SCIPLAY PARENT COMPANY, LLC,
    	
 
    
	
By: [SciPlay Corporation, as its sole Manager]
    	
 
    
	
 
    	
 
    
	
by
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   [·]
    	
 
    
	
 
    	
Title:   [·]
    	
 
    

 

A-2Exhibit 10.6

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

BY AND AMONG

 

SCIPLAY CORPORATION

 

AND

 

CERTAIN SECURITYHOLDERS

 

DATED AS OF [·], 2019

 

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I
    
	
 
    
	
Effectiveness
    
	
 
    	
 
    	
 
    
	
Section 1.1.
    	
Effectiveness
    	
2
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    
	
 
    
	
Definitions
    
	
 
    	
 
    	
 
    
	
Section 2.1.
    	
Definitions
    	
2
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    
	
 
    
	
Registration Rights
    
	
 
    	
 
    	
 
    
	
Section 3.1.
    	
Demand Registration
    	
7
    
	
Section 3.2.
    	
Shelf Registration
    	
9
    
	
Section 3.3.
    	
Piggyback Registration
    	
13
    
	
Section 3.4.
    	
Lock-Up Agreements
    	
15
    
	
Section 3.5.
    	
Registration Procedures
    	
15
    
	
Section 3.6.
    	
Underwritten Offerings
    	
21
    
	
Section 3.7.
    	
No Inconsistent   Agreements; Additional Rights
    	
23
    
	
Section 3.8.
    	
Registration Expenses
    	
23
    
	
Section 3.9.
    	
Indemnification
    	
23
    
	
Section 3.10.
    	
Rules 144 and 144A   and Regulation S
    	
27
    
	
Section 3.11.
    	
Existing Registration   Statements
    	
27
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    
	
 
    
	
Miscellaneous
    
	
 
    	
 
    	
 
    
	
Section 4.1.
    	
Authority: Effect
    	
28
    
	
Section 4.2.
    	
Notices
    	
28
    
	
Section 4.3.
    	
Termination and Effect   of Termination
    	
29
    
	
Section 4.4.
    	
Permitted Transferees
    	
29
    
	
Section 4.5.
    	
Remedies
    	
30
    
	
Section 4.6.
    	
Amendments
    	
30
    
	
Section 4.7.
    	
Governing Law
    	
30
    

 

i

 

	
Section 4.8.
    	
Consent to Jurisdiction
    	
30
    
	
Section 4.9.
    	
WAIVER OF JURY TRIAL
    	
31
    
	
Section 4.10.
    	
Merger; Binding Effect,   Etc.
    	
31
    
	
Section 4.11.
    	
Counterparts
    	
32
    
	
Section 4.12.
    	
Severability
    	
32
    
	
Section 4.13.
    	
No Recourse
    	
32
    

 

ii

 

This REGISTRATION RIGHTS AGREEMENT (as it may be amended from time to time in accordance with the terms hereof, the “Agreement”), dated as of [·], 2019, is made by and among:

 

i.   SciPlay Corporation, a Nevada corporation (the “Company”);

 

ii.  SG Social Holding Company I, LLC, a Nevada limited liability company (“SG Holding I”);

 

iii. SG Social Holding Company, LLC, a Nevada limited liability company (“SG Holding”); and

 

iv. such other Persons, if any, that from time to time become party hereto as holders of Registrable Securities (as defined herein) pursuant to Section 4.4.

 

RECITALS

 

WHEREAS, on the date hereof, the Company priced an initial public offering (the “IPO”) of shares of the Company’s Class A common stock, par value $0.001 per share (the “Class A Common Stock” and such shares, the “Shares”);

 

WHEREAS, concurrent with the execution hereof, the Company, SciPlay Parent Company, LLC, a Nevada limited liability company (“SciPlay LLC”), and the Members (as defined herein) are entering into that certain Amended and Restated Operating Agreement of SciPlay LLC (such agreement, as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Operating Agreement”);

 

WHEREAS, in connection with the effectiveness of the Operating Agreement, among other things, SciPlay LLC has provided the Members with a redemption right pursuant to which the Members may cause SciPlay LLC to redeem their Common Units (subject to the Company’s right, at the Company’s option, to effect a direct exchange in lieu of such redemption) for Class A Common Stock or cash on the terms set forth in the Operating Agreement;

 

WHEREAS, upon the closing of the IPO (the “Closing”), the Company intends to purchase (a) newly issued Common Units (as defined herein) from SciPlay LLC and (b) existing Common Units held by SG Holding I, in each case using the net proceeds from the IPO; and

 

WHEREAS, in connection with the transactions described above, the Company has agreed to grant to the Holders (as defined herein) certain rights with respect to the registration of the Registrable Securities (as defined herein) on the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements of the parties hereto, and for other good and

 

 

valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

Effectiveness

 

Section 1.1.           Effectiveness.  This Agreement shall become effective upon the Closing.

 

ARTICLE II

 

Definitions

 

Section 2.1.           Definitions.  As used in this Agreement, the following terms shall have the following meanings:

 

“Adverse Disclosure” means public disclosure of non-public information that, in the good faith judgment of the Board of Directors of the Company, after consultation with outside counsel to the Company: (i) would be required to be made in any Registration Statement filed with the SEC by the Company so that such Registration Statement, from and after its effective date, does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) would not be required to be made at such time but for the filing, effectiveness or continued use of such Registration Statement; and (iii) the Company has a bona fide business purpose for not disclosing publicly.

 

“Affiliate” means, with respect to any specified Person, any Person that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person; provided that the Company, SciPlay LLC and each of SciPlay LLC’s subsidiaries shall not be Affiliates of SG Holding I or SG Holding for all purposes of this Agreement. As used in this definition, the term “control” 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 ownership of voting securities, by contract or otherwise.

 

“Agreement” shall have the meaning set forth in the Preamble.

 

“Block Trade Offering” means any bought deal or block sale to a financial institution conducted as an underwritten Public Offering.

 

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the City of New York.

 

“Class A Common Stock” shall have the meaning set forth in the Recitals.

 

“Closing” shall have the meaning set forth in the Recitals.

 

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“Common Unit” means “Common Unit” as defined in the Operating Agreement.

 

“Company” shall have the meaning set forth in the Preamble.

 

“Demand Holder” means (i) SG Holding I and each of its Affiliates holding Registrable Securities, taken together, and (ii) each Holder to which a Demand Holder transfers Registrable Securities and that, immediately following such transfer, holds, together with its Affiliates holding any such Registrable Securities received from such Demand Holder, Registrable Securities representing 10% of the combined voting power of the Company’s common stock, and each such Affiliate, in each case, for so long as such Person holds Registrable Securities.

 

“Demand Notice” shall have the meaning set forth in Section 3.1.3.

 

“Demand Registration” shall have the meaning set forth in Section 3.1.1(a).

 

“Demand Registration Request” shall have the meaning set forth in Section 3.1.1(a).

 

“Demand Registration Statement” shall have the meaning set forth in Section 3.1.1(c).

 

“Demand Suspension” shall have the meaning set forth in Section 3.1.6.

 

“Direct Exchange” means “Direct Exchange” as defined in the Operating Agreement.

 

“Demanding Holder” means any Demand Holder that exercises a right to request a Demand Registration pursuant to Section 3.1.

 

“Effective Date” means the date of the Closing.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.

 

“Excluded Registration” means (i) a registration relating to the sale of securities to employees of the Company or a controlled Affiliate of the Company pursuant to a stock option, stock purchase or similar plan on Form S-8 (or its successor form) approved by the Board of Directors of the Company or (ii) a registration on Form S-4 (or its successor form).

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“Holders” means the holders of Registrable Securities party to this Agreement from time to time.

 

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“IPO” shall have the meaning set forth in the Recitals.

 

“Issuer Free Writing Prospectus” means an issuer free writing prospectus, as defined in Rule 433 under the Securities Act, relating to an offer of the Registrable Securities.

 

“Issuer Shares” means the shares of Class A Common Stock or other equity securities of the Company, and any securities into which such shares of Class A Common Stock or other equity securities shall have been changed or any securities resulting from any reclassification or recapitalization of such shares of Class A Common Stock or other equity securities.

 

“Loss” shall have the meaning set forth in Section 3.9.1.

 

“Member” means “Members” as defined in the Operating Agreement.

 

“Operating Agreement” shall have the meaning set forth in the Recitals.

 

“Participation Conditions” shall have the meaning set forth in Section 3.2.5(b).

 

“Person” means any individual, partnership, corporation, company, association, trust, joint venture, limited liability company, unincorporated organization, entity or division.

 

“Piggyback Notice” shall have the meaning set forth in Section 3.3.1.

 

“Piggyback Registration” shall have the meaning set forth in Section 3.3.1.

 

“Potential Takedown Participant” shall have the meaning set forth in Section 3.2.5(b).

 

“Prospectus” means (i) the prospectus included in any Registration Statement, all amendments and supplements to such prospectus, including post-effective amendments, and all other material incorporated by reference in such prospectus, and (ii) any Issuer Free Writing Prospectus.

 

“Public Offering” means the offer and sale of Registrable Securities for cash pursuant to an effective Registration Statement under the Securities Act (other than a Registration Statement on Form S-4 or Form S-8 or any successor form).

 

“Redemption” means “Redemption” as defined in the Operating Agreement.

 

“Registrable Securities” means (i) all shares of Class A Common Stock held by the Persons who are party to this Agreement that have been issued by the Company pursuant to a Redemption or Direct Exchange and (ii) all shares of Class A

 

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Common Stock directly or indirectly issued to such Persons with respect to the securities referred to in clause (i) above by way of unit or stock dividend or distribution or unit or stock split, or in connection with a combination of units or shares, recapitalization, merger, consolidation or other reorganization. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (w) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such Registration Statement, (x) such securities shall have been Transferred to the public pursuant to Rule 144 and the restrictive legend and any stop transfer restrictions have been removed, (y) such holder is able to immediately distribute such securities publicly without any restrictions on transfer (including without application of paragraphs (c), (d), (e), (f) and (h) of Rule 144) or (z) such securities shall have ceased to be outstanding. For purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities, and such Registrable Securities shall be deemed to be in existence, whenever such Person has the right to acquire, directly or indirectly, such Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected, and such Person shall be entitled to exercise the rights of a Holder hereunder; provided that a Holder may only request that Registrable Securities in the form of Class A Common Stock be registered pursuant to this Agreement.

 

“Registration” means registration under the Securities Act of the offer and sale to the public of any Issuer Shares under a Registration Statement. The terms “register”, “registered” and “registering” shall have correlative meanings.

 

“Registration Expenses” shall have the meaning set forth in Section 3.8.

 

“Registration Statement” means any registration statement of the Company filed with, or to be filed with, the SEC under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including pre- and post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement, other than a registration statement (and related Prospectus) filed on Form S-4 or Form S-8 or any successor form thereto.

 

“Rule 144” means Rule 144 under the Securities Act (or any successor rule).

 

“SciPlay LLC” shall have the meaning set forth in the Recitals.

 

“SEC” means the Securities and Exchange Commission or any successor agency having jurisdiction under the Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.

 

“SG Holding” shall have the meaning set forth in the Preamble.

 

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“SG Holding I” shall have the meaning set forth in the Preamble.

 

“Shelf Period” shall have the meaning set forth in Section 3.2.3.

 

“Shelf Registration” shall have the meaning set forth in Section 3.2.1(a).

 

“Shelf Registration Notice” shall have the meaning set forth in Section 3.2.2.

 

“Shelf Registration Request” shall have the meaning set forth in Section 3.2.1(a).

 

“Shelf Registration Statement” shall have the meaning set forth in Section 3.2.1(a).

 

“Shelf Suspension” shall have the meaning set forth in Section 3.2.4.

 

“Shelf Takedown Notice” shall have the meaning set forth in Section 3.2.5(b).

 

“Shelf Takedown Request” shall have the meaning set forth in Section 3.2.5(a).

 

“Transfer” means, with respect to any Registrable Security, any interest therein, or any other securities or equity interests, a direct or indirect transfer, sale, exchange, assignment or other disposition thereof, including the grant of an option or other right, whether directly or indirectly, whether voluntarily, involuntarily, by operation of law, pursuant to judicial process or otherwise. “Transferred” shall have a correlative meaning.

 

“Underwritten Public Offering” means an underwritten Public Offering, including any Block Trade Offering.

 

“Underwritten Shelf Takedown” means an Underwritten Public Offering pursuant to an effective Shelf Registration Statement.

 

“Underwritten Shelf Takedown Request” means a Shelf Takedown Request with respect to an Underwritten Shelf Takedown.

 

“WKSI” means any Securities Act registrant that is a well-known seasoned issuer as defined in Rule 405 under the Securities Act (or any successor rule) at the most recent eligibility determination date specified in paragraph (2) of that definition.

 

Section 2.2. Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

 

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(b) The words “hereof”, “herein”, “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and any subsection and Section references are to this Agreement unless otherwise specified.

 

(c) The term “including” is not limiting and means “including without limitation.”

 

(d) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

 

(e) Whenever the context requires, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms.

 

ARTICLE III

 

Registration Rights

 

The Company will perform and comply, and cause each of its controlled Affiliates to perform and comply, with such of the following provisions as are applicable to it. Each Holder will perform and comply with such of the following provisions as are applicable to such Holder.

 

Section 3.1.           Demand Registration.

 

Section 3.1.1.        Request for Demand Registration.

 

(a)           Following the Effective Date, each Demand Holder shall have the right to make written requests from time to time (a “Demand Registration Request”) to the Company for Registration of all or part of the Registrable Securities held by such Demand Holder. Any such Registration pursuant to a Demand Registration Request shall hereinafter be referred to as a “Demand Registration.”  Each such Demand Registration Request shall be in respect of at least $50 million in anticipated aggregate net proceeds from all shares sold pursuant to such registration (including after giving effect to net proceeds expected to be received by any Holder that participates in such offering after delivering written notice pursuant to Section 3.1.3 or otherwise).

 

(b)           Each Demand Registration Request shall specify (x) the aggregate amount of Registrable Securities to be registered, and (y) the intended method or methods of disposition thereof.

 

(c)           Upon receipt of the Demand Registration Request, the Company shall as promptly as reasonably practicable file a Registration Statement (a “Demand Registration Statement”), as specified in the Demand Registration Request for such Demand Registration, relating to such Demand Registration. The Company shall use its reasonable best

 

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efforts to cause such Demand Registration Statement to be declared effective as promptly as reasonably practicable.

 

Section 3.1.2.        Limitation on Demand Registrations.  The Company shall not be obligated to take any action to effect any Demand Registration if a Demand Registration was declared effective or an Underwritten Shelf Takedown (other than a Block Trade Offering) was consummated within the preceding 60 days (unless otherwise consented to by the Board of Directors of the Company).

 

Section 3.1.3.        Demand Notice.  Promptly upon receipt of a Demand Registration Request pursuant to Section 3.1.1 (but in no event more than three Business Days thereafter), the Company shall deliver a written notice (a “Demand Notice”) of any such Demand Registration Request to all other Holders and the Demand Notice shall offer each such Holder the opportunity to include in the Demand Registration that number of Registrable Securities as each such Holder may request in writing.  Subject to Section 3.1.7, the Company shall include in the Demand Registration all such Registrable Securities with respect to which the Company has received written requests for inclusion therein within three Business Days after the date that the Demand Notice was delivered.

 

Section 3.1.4.        Demand Withdrawal.  Any Holder that has requested its Registrable Securities be included in a Demand Registration pursuant to Section 3.1.3 (including any Demanding Holder) may withdraw all or any portion of its Registrable Securities included in a Demand Registration from such Demand Registration at any time prior to the execution of the underwriting agreement related to such Demand Registration.  Upon receipt of a notice to such effect from a Demanding Holder (or if there is more than one Demanding Holder, from all such Demanding Holders) with respect to all of the Registrable Securities included by such Demanding Holder(s) in such Demand Registration, the Company shall cease all efforts to secure effectiveness of the applicable Demand Registration Statement.

 

Section 3.1.5.        Effective Registration.  The Company shall use reasonable best efforts to cause the Demand Registration Statement to become effective and remain effective for not less than 180 days plus the duration of any suspension period (or such shorter period as will terminate when all Registrable Securities covered by such Demand Registration Statement have been sold or withdrawn), or, if such Demand Registration Statement relates to an Underwritten Public Offering, such longer period as in the opinion of counsel for the underwriter or underwriters a Prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer.

 

Section 3.1.6.        Delay in Filing; Suspension of Registration.  If the filing, initial effectiveness or continued use of a Demand Registration Statement at any time would require the Company to make an Adverse Disclosure, the Company may, upon giving prompt written notice of such action to the Holders, delay the filing or initial effectiveness of, or suspend use of, the Demand Registration

 

8

 

Statement (a “Demand Suspension”); provided, however, that the Company shall not be permitted to exercise a Demand Suspension (i) more than once during any 12-month period or (ii) for a period exceeding 60 days on any one occasion.  In the case of a Demand Suspension, the Holders agree to suspend use of the applicable Prospectus in connection with any sale or purchase, or offer to sell or purchase, Registrable Securities, upon receipt of the notice referred to above.  The Company shall immediately notify the Holders in writing upon the termination of any Demand Suspension.  Notwithstanding the provisions of this Section 3.1.6, the Company may not postpone the filing or effectiveness of, or suspend use of, a Demand Registration Statement past the date upon which the applicable Adverse Disclosure is disclosed to the public or otherwise ceases to constitute Adverse Disclosure.  During a Demand Suspension, the Company shall be prohibited from filing a registration statement for its own account or for the account of any other Holder or holder of its securities and, upon termination of any Demand Suspension, the Company shall promptly amend or supplement the applicable Prospectus, if necessary, so it does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and furnish to the Holders such numbers of copies of the Prospectus as so amended or supplemented as the Holders may reasonably request.

 

Section 3.1.7.        Priority of Securities Registered Pursuant to Demand Registrations.  If the managing underwriter or underwriters of a proposed Underwritten Public Offering of the Registrable Securities included in a Demand Registration advise the Company in writing that, in its or their opinion, the number of securities requested to be included in such Demand Registration exceeds the number that can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the securities to be included in such Registration shall be (x) first, 100% of the Registrable Securities requested to be registered by the initiating Demand Holder, (y) second, and only if all the securities referred to in clause (x) have been included, for each Holder (other than the initiating Demand Holder) that has requested to participate in such Demand Registration, an amount equal to such Holder’s pro rata share of the total number of such Registrable Securities requested to be registered or sold by Holders other than the initiating Demand Holder that, in the opinion of such managing underwriter or underwriters, can be sold without having such adverse effect, and (z) third, and only if all the securities referred to in clause (y) have been included, the number of other securities that, in the opinion of such managing underwriter or underwriters, can be sold without having such adverse effect.

 

Section 3.2.           Shelf Registration.

 

Section 3.2.1.        Request for Shelf Registration.

 

(a)           Upon the written request of any Demand Holder from time to time following the date on which the Company becomes eligible to use

 

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Form S-3 or any similar short-form registration statement (a “Shelf Registration Request”), the Company shall promptly file with the SEC a shelf Registration Statement pursuant to Rule 415 under the Securities Act (“Shelf Registration Statement”) relating to the offer and sale of Registrable Securities by any Holders thereof from time to time in accordance with the methods of distribution elected by such Holders and set forth in the Shelf Registration Statement and the Company shall use its reasonable best efforts to cause such Shelf Registration Statement to become effective under the Securities Act as promptly as reasonably practicable.  Any such Registration pursuant to a Shelf Registration Request shall hereinafter be referred to as a “Shelf Registration.”

 

(b)           If on the date of the Shelf Registration Request: (i) the Company is a WKSI, then the Shelf Registration Request may request Registration of an unspecified amount of Registrable Securities; and (ii) the Company is not a WKSI, then the Shelf Registration Request shall specify the aggregate amount of Registrable Securities to be registered.

 

Section 3.2.2.        Shelf Registration Notice.  Promptly upon receipt of a Shelf Registration Request (but in no event more than three Business Days thereafter), the Company shall deliver a written notice (a “Shelf Registration Notice”) of any such request to all other Holders, which notice shall specify, if applicable, the amount of Registrable Securities to be registered, and the Shelf Registration Notice shall offer each such Holder the opportunity to include in the Shelf Registration that number of Registrable Securities as each such Holder may request in writing.  Subject to Section 3.2.6, the Company shall include in such Shelf Registration all such Registrable Securities with respect to which the Company has received written requests for inclusion therein within three Business Days after the date that the Shelf Registration Notice has been delivered.

 

Section 3.2.3.        Continued Effectiveness.  The Company shall use its reasonable best efforts to keep such Shelf Registration Statement continuously effective under the Securities Act in order to permit the Prospectus forming part of the Shelf Registration Statement to be usable by Holders until the earlier of: (i) the date as of which all Registrable Securities have been sold pursuant to the Shelf Registration Statement or another Registration Statement filed under the Securities Act; and (ii) the date as of which no Holder holds Registrable Securities (but in no event prior to the applicable period referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder) (such period of effectiveness, the “Shelf Period”). Subject to Section 3.2.4, the Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration Statement effective during the Shelf Period if the Company voluntarily takes any action or omits to take any action that would result in Holders of the Registrable Securities covered thereby not being able to offer and sell any Registrable Securities pursuant to such Shelf Registration Statement during the Shelf Period, unless such action or omission is required by applicable law.

 

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Section 3.2.4.                       Suspension of Registration.  If the continued use of such Shelf Registration Statement at any time would require the Company to make an Adverse Disclosure, the Company may, upon giving prompt written notice of such action to the Holders, suspend use of the Shelf Registration Statement (a “Shelf Suspension”); provided, however, that the Company shall not be permitted to exercise a Shelf Suspension (i) more than one time during any 12-month period, or (ii) for a period exceeding 60 days on any one occasion.  In the case of a Shelf Suspension, the Holders agree to suspend use of the applicable Prospectus and in connection with any sale or purchase of, or offer to sell or purchase, Registrable Securities, upon receipt of the notice referred to above. The Company shall immediately notify the Holders in writing upon the termination of any Shelf Suspension and, upon such termination, promptly amend or supplement the Prospectus, if necessary, so it does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and furnish to the Holders such numbers of copies of the Prospectus as so amended or supplemented as the Holders may reasonably request.  Notwithstanding the provisions of this Section 3.2.4, the Company may not postpone the filing or effectiveness of, or suspend use of, a Shelf Registration Statement past the date upon which the applicable Adverse Disclosure is disclosed to the public or otherwise ceases to be Adverse Disclosure.  During a Shelf Suspension, the Company shall be prohibited from filing a registration statement for its own account or for the account of any other Holder or holder of its securities.

 

Section 3.2.5.                       Shelf Takedown.

 

(a)                                 At any time during which the Company has an effective Shelf Registration Statement with respect to a Demand Holder’s Registrable Securities, by notice to the Company specifying the intended method or methods of disposition thereof, such Demand Holder may make a written request (a “Shelf Takedown Request”) to the Company to effect a Public Offering, including an Underwritten Shelf Takedown, of all or a portion of such Demand Holder’s Registrable Securities that are covered by such Shelf Registration Statement, and as soon as practicable the Company shall amend or supplement the Shelf Registration Statement for such purpose; provided that any Underwritten Shelf Takedown Request that does not include all of the Registrable Securities then held by the initiating Demand Holder that are covered by the applicable Shelf Registration Statement shall be in respect of at least $25 million in anticipated net proceeds in the aggregate (including after giving effect to net proceeds expected to be received by any Holder that participates in such offering after delivering a written notice pursuant to Section 3.2.5(b)).

 

(b)                                 Promptly upon receipt of any Underwritten Shelf Takedown Request (but in no event more than three Business Days thereafter), the Company shall deliver a notice (a “Shelf Takedown

 

11

 

Notice”) to each other Holder with Registrable Securities covered by the applicable Registration Statement (each a “Potential Takedown Participant”). The Shelf Takedown Notice shall offer each such Potential Takedown Participant the opportunity to include in any Underwritten Shelf Takedown that number of Registrable Securities as each such Potential Takedown Participant may request in writing.  Subject to Section 3.2.6, the Company shall include in the Underwritten Shelf Takedown all such Registrable Securities with respect to which the Company has received written requests for inclusion therein within three Business Days after the date that the Shelf Takedown Notice has been delivered. Any Potential Takedown Participant’s request to participate in an Underwritten Shelf Takedown in connection with a proposed Block Trade Offering shall be binding on the Potential Takedown Participant; provided that each such Potential Takedown Participant that elects to participate may condition its participation on such Underwritten Shelf Takedown being completed within 10 Business Days of its acceptance at a price per share (after giving effect to any underwriters’ discounts or commissions) to such Potential Takedown Participant of not less than 90% (or such lesser percentage specified by such Potential Takedown Participant in writing) of the closing price for the shares on their principal trading market on the Business Day immediately prior to such Potential Takedown Participant’s election to participate (the “Participation Conditions”). Notwithstanding the delivery of any Shelf Takedown Notice, but subject to the Participation Conditions in any Block Trade Offering, all determinations as to whether to complete any Underwritten Shelf Takedown and as to the timing, manner, price and other terms of any Underwritten Shelf Takedown contemplated by this Section 3.2.5 shall be determined by the initiating Demand Holder; provided that if such Underwritten Shelf Takedown is to be completed and subject to the Participation Conditions in any Block Trade Offering, each Potential Takedown Participant’s pro rata share of the Registrable Securities being sold shall (subject to Section 3.2.6) be included in such Underwritten Shelf Takedown if such Potential Takedown Participant has complied with the requirements set forth in this Section 3.2.5.  For any Underwritten Shelf Takedown that is not a Block Trade Offering, any Holder that has requested its Registrable Securities be included in such Underwritten Shelf Takedown pursuant to this Section 3.2.5 may withdraw all or any portion of its Registrable Securities included in an Underwritten Shelf Takedown from such Underwritten Shelf Takedown at any time prior to the execution of the underwriting agreement related to such Underwritten Shelf Takedown.

 

(c)                                  The Company shall not be obligated to take any action to effect any Underwritten Shelf Takedown if a Demand Registration or an Underwritten Shelf Takedown (other than a Block Trade Offering) was consummated within the preceding 60 days (unless otherwise consented to by the Board of Directors of the Company).

 

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Section 3.2.6.                       Priority of Securities Sold Pursuant to Shelf Takedowns.  If the managing underwriter or underwriters of a proposed Underwritten Shelf Takedown pursuant to Section 3.2.5 advise the Company in writing that, in its or their opinion, the number of securities requested to be included in the proposed Underwritten Shelf Takedown exceeds the number that can be sold in such Underwritten Shelf Takedown without being likely to have an adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, the number of Registrable Securities to be included in such offering shall be (x) first, 100% of the Registrable Securities requested to be registered by the initiating Demand Holder, (y) second, and only if all the securities referred to in clause (x) have been included, for each Holder (other than the initiating Demand Holder) that has requested to participate in such Underwritten Shelf Takedown, an amount equal to such Holder’s pro rata share of the total number of such Registrable Securities requested to be registered or sold by Holders other than the initiating Demand Holder that, in the opinion of such managing underwriter or underwriters, can be sold without having such adverse effect, and (z) third, and only if all the securities referred to in clause (y) have been included, the number of other securities that, in the opinion of such managing underwriter or underwriters can be sold without having such adverse effect.

 

Section 3.3.                                 Piggyback Registration.

 

Section 3.3.1.                       Participation.  If the Company at any time proposes to file a Registration Statement under the Securities Act or to conduct a Public Offering with respect to any offering of its equity securities for its own account or for the account of any other Persons (other than (i) a Registration under Sections 3.1 or 3.2 or (ii) an Excluded Registration), then, as soon as practicable (but in no event less than five Business Days prior to the proposed date of filing of such Registration Statement or, in the case of any such Public Offering, the anticipated pricing or trade date), the Company shall give written notice (a “Piggyback Notice”) of such proposed filing or Public Offering to all Holders, and such Piggyback Notice shall offer the Holders the opportunity to register under such Registration Statement, or to sell in such Public Offering, such number of Registrable Securities as each such Holder may request in writing (a “Piggyback Registration”). Subject to Section 3.3.2, the Company shall include in such Registration Statement or in such Public Offering as applicable, all such Registrable Securities that are requested to be included therein within three Business Days after the receipt by such Holder of any such notice; provided, however, that if at any time after giving written notice of its intention to register or sell any securities and prior to the effective date of the Registration Statement filed in connection with such Registration, or the pricing or trade date of such Public Offering, the Company shall determine for any reason not to register or sell or to delay Registration or the sale of such securities, the Company shall promptly give written notice of such determination to each Holder and, thereupon, (i) in the case of a determination not to register or sell, the Company shall be relieved of its obligation to register or sell any Registrable Securities in connection with such

 

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Registration or Public Offering (but not from its obligation to pay the Registration Expenses in connection therewith), without prejudice, however, to the rights of any Holders entitled to request that such Registration or sale be effected as a Demand Registration under Section 3.1 or an Underwritten Shelf Takedown under Section 3.2, as the case may be, and (ii) in the case of a determination to delay Registration or sale, in the absence of a request for a Demand Registration or an Underwritten Shelf Takedown, as the case may be, the Company shall be permitted to delay registering or selling any Registrable Securities, for the same period as the delay in registering or selling such other securities. If the offering pursuant to such Registration Statement or Public Offering is to be an Underwritten Public Offering, then each Holder making a request for a Piggyback Registration pursuant to this Section 3.3.1 shall, and the Company shall, make such arrangements with the managing underwriter or underwriters so that each such Holder may, participate in such underwritten offering. If the offering pursuant to such Registration Statement or Public Offering is to be on any other basis, then each Holder making a request for a Piggyback Registration pursuant to this Section 3.3.1 shall, and the Company shall, make such arrangements so that each such Holder may participate in such offering on such basis. Any Holder shall have the right to withdraw all or part of its request for inclusion of its Registrable Securities in a Piggyback Registration by giving written notice to the Company of its request to withdraw; provided that such request must be made in writing prior to the execution of the underwriting agreement.

 

Section 3.3.2.                       Priority of Piggyback Registration.  If the managing underwriter or underwriters of any proposed offering of Registrable Securities included in a Piggyback Registration informs the Company and the participating Holders in writing that, in its or their opinion, the number of securities that such Holders and any other Persons intend to include in such offering exceeds the number that can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the securities to be included in such Registration shall be (x) first, 100% of the securities that the Company or (subject to Section 3.7) any Person (other than a Holder) exercising a contractual right to demand Registration, as the case may be, proposes to sell, and (y) second, and only if all the securities referred to in clause (x) have been included, for each Holder that has requested to participate in such offering an amount equal to such Holder’s pro rata share of the total number of such Registrable Securities requested to be registered or sold by Holders that, in the opinion of such managing underwriter or underwriters, can be sold without having such adverse effect and (z) third, and only if all of the Registrable Securities referred to in clause (y) have been included in such Registration, any other securities eligible for inclusion in such Registration.

 

Section 3.3.3.                       No Effect on Other Registrations.  No Registration of Registrable Securities effected pursuant to a request under this Section 3.3 shall be deemed to have been effected pursuant to Sections 3.1 and 3.2 or shall relieve the Company of its obligations under Sections 3.1 and 3.2.

 

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Section 3.4.                                 Lock-Up Agreements.  In connection with each Registration or sale of Registrable Securities pursuant to Section 3.1, 3.2 or 3.3 conducted as an Underwritten Public Offering, each Holder agrees, if requested, to become bound by and to execute and deliver such lock-up agreement with the underwriter(s) of such Public Offering restricting such Holder’s right to (a) Transfer, directly or indirectly, any Registrable Securities or (b) enter into any swap or other arrangement that transfers to another any of the economic consequences of ownership of Registrable Securities, as is entered into by any Demand Holder (in the case of a Registration or sale pursuant to Section 3.1 or 3.2) or the Company (in the case of a Registration or sale pursuant to Section 3.3) with the underwriter(s) of such Public Offering; provided, however, that no Holder shall be required to enter into a lock-up agreement covering a period of greater than 90 days after the date of the final Prospectus relating to such offering or such longer period as is agreed to by each of the Demand Holders (in the case of a Registration or sale pursuant to Section 3.1 or 3.2) or the Company (in the case of a Registration or sale pursuant to Section 3.3); provided, further, that in no event shall such lock-up period be greater than the period agreed to by the Company or its directors or officers or any other Demand Holder.  Notwithstanding the foregoing, such lock-up agreement shall not apply to (i) distributions-in-kind to a Demand Holder’s direct or indirect equityholders; (ii) Transfers in accordance with the terms of this Agreement or (iii) other customary exceptions that the underwriter(s) of such Underwritten Public Offering may agree to.

 

Section 3.5.                                 Registration Procedures.

 

Section 3.5.1.                       Requirements.  In connection with the Company’s obligations under Sections 3.1, 3.2 and 3.3, the Company shall use its reasonable best efforts to effect any applicable Registration and to facilitate the sale of any applicable Registrable Securities in accordance with the intended method or methods of distribution thereof as expeditiously as reasonably practicable, and in connection therewith the Company shall:

 

(a)                                 as promptly as is reasonably practicable prepare and file the required Registration Statement, including all exhibits and financial statements required under the Securities Act to be filed therewith, and, before filing a Registration Statement or Prospectus or any amendments or supplements thereto, (x) furnish to the underwriters, if any, and to the Holders of the Registrable Securities covered by such Registration Statement, copies of all documents prepared to be filed, which documents shall be subject to the review of such underwriters and such Holders and their respective counsel, (y) subject to applicable law, make such changes in such documents concerning the Holders prior to the filing thereof as such Holders, or their counsel, may reasonably request and (z) subject to applicable law, except in the case of a Registration under Section 3.3, not file any Registration Statement or Prospectus or amendments or supplements thereto to which any participating Demand Holder or the underwriters, if any, shall reasonably object;

 

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(b)                                 as promptly as is reasonably practicable prepare and file with the SEC such amendments and post-effective amendments to such Registration Statement and supplements to the Prospectus as may be (x) reasonably requested by any Demand Holder with Registrable Securities covered by such Registration Statement, (y) reasonably requested by any participating Holder (to the extent such request relates to information relating to such Holder) or (z) necessary to keep such Registration Statement effective for the period of time required by this Agreement, and comply with provisions of the applicable securities laws with respect to the sale or other disposition of all securities covered by such Registration Statement during such period in accordance with the intended method or methods of disposition by the sellers thereof set forth in such Registration Statement;

 

(c)                                  notify the participating Holders and the managing underwriter or underwriters, if any, and (if requested) confirm such notice in writing and provide copies of the relevant documents, as soon as reasonably practicable after notice thereof is received by the Company (a) when the applicable Registration Statement or any amendment thereto has been filed or becomes effective, and when the applicable Prospectus or any amendment or supplement thereto has been filed, (b) of any written comments by the SEC, or any request by the SEC or other federal or state governmental authority for amendments or supplements to such Registration Statement or such Prospectus, or for additional information (whether before or after the effective date of the Registration Statement) or any other correspondence with the SEC relating to, or which may affect, the Registration, (c) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or any order by the SEC or any other regulatory authority preventing or suspending the use of any preliminary or final Prospectus or the initiation or threatening of any proceedings for such purposes, (d) if, at any time, the representations and warranties of the Company in any applicable underwriting agreement cease to be true and correct in all material respects and (e) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

 

(d)                                 promptly notify each selling Holder and the managing underwriter or underwriters, if any, when the Company becomes aware of the happening of any event as a result of which the applicable Registration Statement or the Prospectus included in such Registration Statement (as then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of such Prospectus or any preliminary Prospectus, in light of the circumstances under which they were made) not misleading, when any Issuer Free Writing Prospectus includes information that may conflict with

 

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the information contained in the Registration Statement, or, if for any other reason it shall be necessary during such time period to amend or supplement such Registration Statement or Prospectus in order to comply with the Securities Act and, as promptly as reasonably practicable thereafter, prepare and file with the SEC, and furnish without charge to the selling Holders and the managing underwriter or underwriters, if any, an amendment or supplement to such Registration Statement or Prospectus, which shall correct such misstatement or omission or effect such compliance;

 

(e)                                  to the extent the Company is eligible under the relevant provisions of Rule 430B under the Securities Act, if the Company files any Shelf Registration Statement, the Company shall include in such Shelf Registration Statement such disclosures as may be required by Rule 430B under the Securities Act (referring to the unnamed selling security holders in a generic manner by identifying the initial offering of the securities to the Holders) in order to ensure that the Holders may be added as selling security holders to such Shelf Registration Statement at a later time through the filing of a Prospectus supplement rather than a post-effective amendment;

 

(f)                                   use its reasonable best efforts to prevent, or obtain the withdrawal of, any stop order or other order or notice preventing or suspending the use of any preliminary or final Prospectus;

 

(g)                                  promptly incorporate in a Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment such information as the managing underwriter or underwriters and the Holders of a majority of the Registrable Securities being sold agree should be included therein relating to the plan of distribution with respect to such Registrable Securities; and make all required filings of such Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment as soon as reasonably practicable after being notified of the matters to be incorporated in such Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment;

 

(h)                                 furnish to each selling Holder and each underwriter, if any, without charge, as many conformed copies as such Holder or underwriter may reasonably request of the applicable Registration Statement and any amendment or post-effective amendment or supplement thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference);

 

(i)                                     deliver to each selling Holder and each underwriter, if any, without charge, as many copies of the applicable Prospectus (including each preliminary prospectus) and any amendment or supplement thereto and such other documents as such Holder or underwriter may reasonably

 

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request in order to facilitate the disposition of the Registrable Securities by such Holder or underwriter (it being understood that the Company shall consent to the use of such Prospectus or any amendment or supplement thereto by each of the selling Holders and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto);

 

(j)                                    on or prior to the date on which the applicable Registration Statement becomes effective, use its reasonable best efforts to register or qualify, and cooperate with the selling Holders, the managing underwriter or underwriters, if any, and their respective counsel, in connection with the Registration or qualification of such Registrable Securities for offer and sale under the securities or “Blue Sky” laws of each state and other jurisdiction as any such selling Holder or managing underwriter or underwriters, if any, or their respective counsel reasonably request in writing and do any and all other acts or things reasonably necessary or advisable to keep such Registration or qualification in effect for such period as required by Section 3.1 or Section 3.2, as applicable; provided that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to taxation or general service of process in any such jurisdiction where it is not then so subject;

 

(k)                                 cooperate with the selling Holders and the managing underwriter or underwriters, if any, to enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request at least three Business Days prior to any sale of Registrable Securities to the underwriters;

 

(l)                                     use its reasonable best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter or underwriters, if any, to consummate the disposition of such Registrable Securities;

 

(m)                             not later than the effective date of the applicable Registration Statement, provide a CUSIP number for all Registrable Securities if other than the CUSIP for the publicly traded Class A Common Stock;

 

(n)                                 make such representations and warranties to the Holders of Registrable Securities being registered, and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in public offerings similar to the offering then being undertaken;

 

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(o)                                 enter into such customary agreements (including underwriting and indemnification agreements) and take all such other actions as any participating Demand Holder or the managing underwriter or underwriters, if any, reasonably request in order to expedite or facilitate the Registration and disposition of such Registrable Securities;

 

(p)                                 obtain for delivery to the Holders of Registrable Securities being registered and to the underwriter or underwriters, if any, an opinion or opinions from counsel for the Company dated the most recent effective date of the Registration Statement or, in the event of an Underwritten Public Offering, the date of the closing under the underwriting agreement, in customary form, scope and substance, which opinions shall be reasonably satisfactory to such Holders or underwriters, as the case may be, and their respective counsel;

 

(q)                                 in the case of an Underwritten Public Offering, obtain for delivery to the Company and the managing underwriter or underwriters, with copies to the Holders included in such Registration or sale, a comfort letter from the Company’s independent certified public accountants or independent auditors (and, if necessary, any other independent certified public accountants or independent auditors of any controlled Affiliate of the Company or any business acquired by the Company or any of its controlled Affiliates for which financial statements and financial data are, or are required to be, included in the Registration Statement) in customary form and covering such matters of the type customarily covered by comfort letters as the managing underwriter or underwriters reasonably request, dated the date of execution of the underwriting agreement and brought down to the closing under the underwriting agreement;

 

(r)                                    cooperate with each seller of Registrable Securities and each underwriter, if any, participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;

 

(s)                                   use its reasonable best efforts to comply with all applicable securities laws and, if a Registration Statement was filed, make available, including through the SEC’s EDGAR filing system or any successor system, to its security holders, as soon as reasonably practicable, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder;

 

(t)                                    provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by the applicable Registration Statement from and after a date not later than the effective date of such Registration Statement;

 

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(u)                                 use its reasonable best efforts to cause all Registrable Securities covered by the applicable Registration Statement to be listed on the securities exchange on which the Company’s Class A Common Stock is then listed or quoted and on each inter-dealer quotation system on which the Company’s Class A Common Stock is then quoted;

 

(v)                                 make available upon reasonable notice at reasonable times and for reasonable periods for inspection by any Demand Holder with Registrable Securities covered by the applicable Registration Statement, by a representative appointed by the Holders of a majority of Registrable Securities covered by the applicable Registration Statement, by any underwriter participating in any disposition to be effected pursuant to such Registration Statement and by any attorney, accountant or other agent retained by such Holders or any such underwriter, all pertinent financial and other records and pertinent corporate documents and properties of the Company, and cause all of the Company’s officers, directors and employees and the independent public accountants who have certified its financial statements to make themselves available to discuss the business of the Company and to supply all information reasonably requested by any such Person in connection with such Registration Statement;

 

(w)                               in the case of a marketed Public Offering, cause the senior executive officers of the Company to participate in the customary “road show” presentations that may be reasonably requested by the managing underwriter or underwriters in any such offering and otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto;

 

(x)                                 take no direct or indirect action prohibited by Regulation M under the Exchange Act;

 

(y)                                 take all reasonable action to ensure that any Issuer Free Writing Prospectus utilized in connection with any Registration complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related Prospectus, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

 

(z)                                  to the extent that a Holder might reasonably be deemed to be an underwriter of any Registrable Securities or a “controlling person” (within the meaning of the Securities Act or the Exchange Act) of the Company, allow such Holder to propose language for insertion in such Registration Statement or comparable document, which in the reasonable

 

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judgment of such Holder and its counsel should be included, and the Company will consider in good faith inclusion thereof; and

 

(aa)                          take all such other reasonable actions as are necessary or advisable in order to expedite or facilitate the Registration and disposition of such Registrable Securities in accordance with the terms of this Agreement.

 

Section 3.5.2.                       Company Information Requests.  The Company may require each seller of Registrable Securities as to which any Registration or sale is being effected to furnish to the Company such information regarding the distribution of such securities and such other information relating to such Holder and its ownership of Registrable Securities as the Company may from time to time reasonably request in writing and the Company may exclude from such Registration or sale the Registrable Securities of any such Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request. Each Holder agrees to furnish such information to the Company and to cooperate with the Company as reasonably necessary to enable the Company to comply with the provisions of this Agreement.

 

Section 3.5.3.                       Discontinuing Registration.  Each Holder agrees that, as promptly as possible after receipt of any notice from the Company of the happening of any event of the kind described in Section 3.5.1(d), such Holder will promptly discontinue disposition of Registrable Securities pursuant to such Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3.5.1(d), or until such Holder is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus, or any amendments or supplements thereto, and if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company shall give any such notice, the period during which the applicable Registration Statement is required to be maintained effective shall be extended by the number of days during the period from and including the date of the giving of such notice to and including the date when each seller of Registrable Securities covered by such Registration Statement either receives the copies of the supplemented or amended Prospectus contemplated by Section 3.5.1(d) or is advised in writing by the Company that the use of the Prospectus may be resumed.

 

Section 3.6.                                 Underwritten Offerings.

 

Section 3.6.1.                       Shelf and Demand Registrations.  If requested by the underwriters for any Underwritten Public Offering, pursuant to a Registration or sale under Section 3.1 or 3.2, the Company shall enter into an underwriting

 

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agreement with such underwriters, such agreement to be reasonably satisfactory in substance and form to each of the Company, each Demand Holder seeking to participate in such offering and the underwriters, and to contain such representations and warranties by the Company and such other terms as are customary in agreements of that type. The Holders of the Registrable Securities proposed to be distributed by such underwriters shall cooperate with the Company in the negotiation of the underwriting agreement and shall give consideration to the reasonable suggestions of the Company regarding the form thereof. Such Holders shall be parties to such underwriting agreement, which underwriting agreement shall contain such representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such Holders as are customarily made by issuers to selling stockholders in public offerings similar to the applicable offering.

 

Section 3.6.2.                       Piggyback Registrations.  If the Company proposes to register or sell any of its securities under the Securities Act as contemplated by Section 3.3 and such securities are to be distributed through one or more underwriters, the Company shall, if requested by any Holder pursuant to Section 3.3 and, subject to the provisions of Section 3.3.2, use its reasonable best efforts to arrange for such underwriters to include on the same terms and conditions that apply to the other sellers in such Registration or sale all the Registrable Securities to be offered and sold by such Holder among the securities of the Company to be distributed by such underwriters in such Registration or sale. The Holders of Registrable Securities to be distributed by such underwriters shall be parties to the underwriting agreement between the Company and such underwriters, which underwriting agreement shall contain such representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such Holders as are customarily made by issuers to selling stockholders in secondary public offerings.

 

Section 3.6.3.                       Participation in Underwritten Registrations.  Subject to the provisions of Section 3.6.1 and Section 3.6.2 above, no Person may participate in any Underwritten Public Offering hereunder unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Persons entitled to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

 

Section 3.6.4.                       Selection of Underwriters.  In the case of an Underwritten Public Offering under Section 3.1 or 3.2, the managing underwriter or underwriters to administer the offering shall be determined by the Holders of a majority of Registrable Securities to be included in such Underwritten Public Offering; provided that such managing underwriter or underwriters shall be reasonably acceptable to the Company.

 

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Section 3.7.                                 No Inconsistent Agreements; Additional Rights.  Neither the Company nor any of its controlled Affiliates shall hereafter enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders by this Agreement.  Without the prior written consent of each Demand Holder, neither the Company nor any of its controlled Affiliates shall enter into any agreement granting registration or similar rights to any Person that are prior in right, pari passu or inconsistent with the rights under this Agreement, and the Company hereby represents and warrants that, as of the date hereof, no registration or similar rights have been granted to any other Person other than pursuant to this Agreement.

 

Section 3.8.                                 Registration Expenses.  All expenses incident to the Company’s performance of or compliance with this Agreement shall be paid by the Company, including (i) all registration and filing fees, and any other fees and expenses associated with filings required to be made with the SEC or FINRA, (ii) all fees and expenses in connection with compliance with any securities or “Blue Sky” laws (including reasonable fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities), (iii) all printing, duplicating, word processing, messenger, telephone, facsimile and delivery expenses of the Company (including expenses of printing certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing Prospectuses), (iv) all fees and disbursements of counsel for the Company and of all independent certified public accountants or independent auditors of the Company and any controlled Affiliates of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance), (v) Securities Act liability insurance or similar insurance if the Company so desires, (vi) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or quotation of the Registrable Securities on any inter-dealer quotation system, (vii) all applicable rating agency fees with respect to the Registrable Securities, (viii) all reasonable fees and disbursements of counsel for each Demand Holder to the extent that it participates in such Registration or sale, (ix) all fees and expenses of any special experts or other Persons retained by the Company in connection with any Registration or sale, (x) all of the Company’s internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties) and (xi) all expenses of the Company related to the “road-show” for any Underwritten Public Offering (including the reasonable out-of-pocket “road-show” expenses of each Demand Holder), including all travel, meals and lodging.  All such expenses are referred to herein as “Registration Expenses”. The Company shall not be required to pay any fees and disbursements to underwriters not customarily paid by the issuers of securities in an offering similar to the applicable offering, including underwriting discounts and commissions and transfer taxes, if any, attributable to the sale of Registrable Securities, which shall be paid by the participating Holders in proportion to the number of Registrable Securities offered and sold by or on behalf of each such Holder.

 

Section 3.9.                                 Indemnification.

 

Section 3.9.1.                       Indemnification by the Company.  The Company shall, and it hereby does, indemnify and hold harmless, to the fullest extent permitted by

 

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law, each Holder, its Affiliates and its and its Affiliates’ respective officers, directors, partners, members, managers, stockholders and employees and each Person who controls (within the meaning of the Securities Act or the Exchange Act) such Persons from and against any and all losses, claims, damages, liabilities and expenses, joint or several (including reasonable costs of investigation and reasonable legal expenses or other reasonable expenses actually incurred thereby in connection with investigating or defending any claim or proceeding resulting therefrom) (each, a “Loss” and collectively “Losses”) arising out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which such Registrable Securities are registered or sold under the Securities Act (including any final, preliminary or summary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or any other disclosure document produced by or on behalf of the Company or any of its controlled Affiliates including any report and other document filed under the Exchange Act, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus or preliminary Prospectus, in light of the circumstances under which they were made) not misleading; provided that no selling Holder shall be entitled to indemnification pursuant to this Section 3.9.1 in respect of any untrue or alleged untrue statement or omission or alleged omission made in any Registration Statement or other disclosure document in reliance upon, and in conformity with, written information furnished in writing by such selling Holder to the Company specifically for inclusion therein that has not been corrected in a subsequent writing prior to the sale of the Registrable Securities to the Person asserting the claim or (iii) any violation or alleged violation by the Company (or any of its agents or controlled Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.  This indemnity shall be in addition to any liability the Company may otherwise have. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any indemnified party and shall survive the Transfer of such securities by such Holder. The Company shall also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers and directors and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above with respect to the indemnification of the indemnified parties.

 

Section 3.9.2.                       Indemnification by the Selling Holders.  Each selling Holder agrees (severally and not jointly) to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers and each Person (other than such Holder) who controls the Company (within the meaning of the Securities Act or the Exchange Act) from and against any Losses resulting from (i) any untrue statement of a material fact in any Registration Statement under which such Registrable Securities were registered or sold under the Securities Act (including any final, preliminary or summary Prospectus contained

 

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therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or (ii) any omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus or preliminary Prospectus, in light of the circumstances under which they were made) not misleading, in each case to the extent, but only to the extent, that such untrue statement or omission is made in reliance upon, and in conformity with, written information about such Holder furnished in writing by such selling Holder to the Company specifically for inclusion in such Registration Statement and has not been corrected in a subsequent writing prior to or concurrently with the sale of the Registrable Securities to the Person asserting the claim. In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder under the sale of Registrable Securities giving rise to such indemnification obligation less any amounts paid by such Holder pursuant to Section 3.9.4 and any amounts paid by such Holder as a result of liabilities incurred under the underwriting agreement, if any, related to such sale. The Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as provided above (with appropriate modification) with respect to information furnished in writing by such Persons specifically for inclusion in any Prospectus or Registration Statement.

 

Section 3.9.3.  Conduct of Indemnification Proceedings.  Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that any delay or failure to so notify the indemnifying party shall relieve the indemnifying party of its obligations hereunder only to the extent, if at all, that it is actually and materially prejudiced by reason of such delay or failure) and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any Person entitled to indemnification hereunder shall have the right to select and employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (i) the indemnifying party has agreed in writing to pay such fees or expenses, (ii) the indemnifying party shall have failed to assume the defense of such claim within a reasonable time after receipt of notice of such claim from the Person entitled to indemnification hereunder and employ counsel reasonably satisfactory to such Person, (iii) the indemnified party has reasonably concluded (based upon advice of its counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, or (iv) in the reasonable judgment of any such Person (based upon advice of its counsel) a conflict of interest may exist between such Person and the indemnifying party with respect to such claims (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person). If the indemnifying party assumes the defense, the indemnifying party

 

25

 

shall not have the right to settle such action without the prior written consent of the indemnified party. No indemnifying party shall consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of an unconditional release from all liability in respect to such claim or litigation without the prior written consent of such indemnified party. If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its prior written consent, but such consent may not be unreasonably withheld or delayed. Notwithstanding the foregoing, if at any time an indemnified party shall have requested that an indemnifying party reimburse the indemnified party for reasonable fees and expenses of counsel as contemplated by this paragraph, the indemnifying party shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into in good faith more than 60 days after receipt by the indemnifying party of such request and more than 30 days after receipt of the proposed terms of such settlement and (ii) the indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. It is understood that the indemnifying party or parties shall not, except as specifically set forth in this Section 3.9.3, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements or other charges of more than one separate firm admitted to practice in such jurisdiction.

 

Section 3.9.4.  Contribution.  If for any reason the indemnification provided for in Section 3.9.1 and Section 3.9.2 is unavailable to an indemnified party (other than as a result of exceptions contained in Section 3.9.1 and Section 3.9.2) or insufficient in respect of any Losses referred to therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party or parties on the other hand in connection with the acts, statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations. In connection with any Registration Statement filed with the SEC by the Company, the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just or equitable if contribution pursuant to this Section 3.9.4 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 3.9.4. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The amount paid or payable by an indemnified party as a result of the Losses referred

 

26

 

to in Sections 3.9.1 and 3.9.2 shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.  If indemnification is available under this Section 3.9, the indemnifying parties shall indemnify each indemnified party to the fullest extent provided in Sections 3.9.1 and 3.9.2 hereof without regard to the provisions of this Section 3.9.4. The remedies provided for in this Section 3.9 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.  Notwithstanding the provisions of this Section 3.9.4, in connection with any Registration Statement filed by the Company, a selling Holder shall not be required to contribute any amount in excess of the dollar amount of the net proceeds received by such holder under the sale of Registrable Securities giving rise to such contribution obligation less any amounts paid by such Holder pursuant to Section 3.9.2 and any amounts paid by such Holder as a result of liabilities incurred under the underwriting agreement, if any, related to such sale.

 

Section 3.10.                          Rules 144 and 144A and Regulation S.  The Company shall file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Holder, make publicly available such necessary information for so long as necessary to permit sales that would otherwise be permitted by this Agreement pursuant to Rule 144, Rule 144A or Regulation S under the Securities Act, as such rules may be amended from time to time or any similar rule or regulation hereafter adopted by the SEC), and it will take such further action as any Holder may reasonably request, including the delivery of customary opinions requested to effectuate such sales pursuant to Rule 144, all to the extent required from time to time to enable such Holder to sell Registrable Securities without Registration under the Securities Act in transactions that would otherwise be permitted by this Agreement and within the limitation of the exemptions provided by (i) Rules 144, 144A or Regulation S under the Securities Act, as such rules may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements and, if not, the specifics thereof.

 

Section 3.11.                          Existing Registration Statements.  Notwithstanding anything herein to the contrary and subject to applicable law and regulation, the Company may satisfy any obligation hereunder to file a Registration Statement or to have a Registration Statement become effective by a specified date by designating, by notice to the Holders, a Registration Statement that previously has been filed with the SEC or become effective, as the case may be, as the relevant Registration Statement for purposes of satisfying such obligation, and all references to any such obligation shall be construed accordingly; provided that such previously filed Registration Statement may be amended or, subject to applicable securities laws, supplemented to add the number of Registrable Securities, and, to the extent necessary, to identify as selling stockholders those Holders demanding the filing of a Registration Statement pursuant to the terms of this Agreement. To the extent this Agreement refers to the filing or effectiveness of other Registration

 

27

 

Statements, by or at a specified time and the Company has, in lieu of then filing such Registration Statements or having such Registration Statements become effective, designated a previously filed or effective Registration Statement as the relevant Registration Statement for such purposes, in accordance with the preceding sentence, such references shall be construed to refer to such designated Registration Statement, as amended.

 

ARTICLE IV

 

Miscellaneous

 

Section 4.1.                                 Authority: Effect.  Each party hereto represents and warrants to and agrees with each other party that the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized on behalf of such party and do not violate any agreement or other instrument applicable to such party or by which its assets are bound. This Agreement does not, and shall not be construed to, give rise to the creation of a partnership among any of the parties hereto, or to constitute any of such parties members of a joint venture or other association.

 

Section 4.2.                                 Notices.  Any notices, requests, demands and other communications required or permitted in this Agreement shall be effective if in writing and (i) delivered personally, (ii) sent by e-mail, or (iii) sent by overnight courier, in each case, addressed as follows:

 

	
if   to the Company, to:
    
	
 
    
	
 
    	
SciPlay   Corporation
    
	
 
    	
6601   Bermuda Road
    
	
 
    	
Las   Vegas, Nevada 89119
    
	
 
    	
Attention:
    	
General   Counsel
    
	
 
    
	
with   a copy (which shall not constitute notice) to:
    
	
 
    
	
 
    	
Latham   & Watkins LLP

885   Third Avenue

New   York, New York 10022

Attention:   Marc Jaffe

Facsimile:   (212) 751-4864 

E-mail:   Marc.Jaffe@lw.com
    

 

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if   to SG Holding I or to SG Holding, to:
    
	
 
    	
 
    
	
 
    	
SG   Social Holding Company I, LLC
    
	
 
    	
6601   Bermuda Road
    
	
 
    	
Las   Vegas, Nevada 89119
    
	
 
    	
Attention:
    	
Legal   Department
    
	
 
    
	
with   a copy (which shall not constitute notice) to:
    
	
 
    
	
 
    	
Cravath,   Swaine & Moore LLP
    
	
 
    	
825   Eighth Avenue
    
	
 
    	
New   York, New York 10019
    
	
 
    	
Attention:
    	
Robert   I. Townsend, III, Esq.
    
	
 
    	
E-mail:
    	
RTownsend@cravath.com
    

 

Notice to the holder of record of any Registrable Securities shall be deemed to be notice to the holder of such securities for all purposes hereof.

 

Unless otherwise specified herein, such notices or other communications shall be deemed effective (i) on the date received, if personally delivered, (ii) on the date received if delivered by e-mail on a Business Day, or if not delivered on a Business Day, on the first Business Day thereafter and (iii) two Business Days after being sent by overnight courier. Each of the parties hereto shall be entitled to specify a different address by giving notice as aforesaid to each of the other parties hereto.

 

Section 4.3.                                 Termination and Effect of Termination.  This Agreement shall terminate upon the date on which no Holder holds any Registrable Securities, except for the provisions of Sections 3.9, 4.2, 4.7, 4.8, 4.9 and 4.13 and this Section 4.3, which shall survive any such termination. No termination under this Agreement shall relieve any Person of liability for breach prior to termination. In the event this Agreement is terminated, each Person entitled to indemnification rights pursuant to Section 3.9 hereof shall retain such indemnification rights with respect to any matter that (i) may be an indemnified liability thereunder and (ii) occurred prior to such termination.

 

Section 4.4.                                 Permitted Transferees.  The rights of a Holder hereunder may be assigned (but only with all related obligations as set forth below) in connection with a Transfer of Common Units or Registrable Securities effected in accordance with the terms of the Operating Agreement. Without prejudice to any other or similar conditions imposed hereunder with respect to any such Transfer, no assignment permitted under the terms of this Section 4.4 will be effective unless the transferee to which the assignment is being made, if not a Holder, has delivered to the Company a written acknowledgment and agreement in form and substance reasonably satisfactory to the Company that the transferee will be bound by, and will be a party to, this Agreement. A transferee to whom rights are transferred pursuant to this Section 4.4 may not again transfer those rights to any other transferee, other than as provided in this Section 4.4.

 

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Section 4.5.                                 Remedies.  The parties to this Agreement shall have all remedies available at law, in equity or otherwise in the event of any breach or violation of this Agreement or any default hereunder. The parties acknowledge and agree that in the event of any breach of this Agreement, in addition to any other remedies that may be available, each of the parties hereto shall be entitled to specific performance of the obligations of the other parties hereto and, in addition, to such other equitable remedies (including preliminary or temporary relief) as may be appropriate in the circumstances. No delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any such delay, omission nor waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver. The Company and its controlled Affiliates shall be jointly and severally liable for all obligations of each such party pursuant to this Agreement.

 

Section 4.6.                                 Amendments.  This Agreement may not be orally amended, modified, extended or terminated, nor shall any oral waiver of any of its terms be effective. This Agreement may be amended, modified, extended or terminated, and the provisions hereof may be waived, only by an agreement in writing signed by the Company and each of the Demand Holders.  Each such amendment, modification, extension or termination shall be binding upon each party hereto and each other Holder; provided that no such amendment, modification, extension or termination that disproportionately and adversely affects any party hereto shall be binding upon such party unless agreed to in writing by such party.  In addition, each party hereto may waive any right hereunder by an instrument in writing signed by such party.

 

Section 4.7.                                 Governing Law.  This Agreement and all claims arising out of or based upon this Agreement or relating to the subject matter hereof shall be governed by and construed in accordance with the domestic substantive laws of the State of New York without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction.

 

Section 4.8.                                 Consent to Jurisdiction.  Each party to this Agreement, by its execution hereof, (i) hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York for the purpose of any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation arising out of or based upon this Agreement or relating to the subject matter hereof, (ii) hereby waives to the extent not prohibited by applicable law, and agrees not to assert, and agrees not to allow any of its controlled Affiliates to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such proceeding brought in one of the above-named courts is improper, or that this Agreement or the subject matter hereof or thereof may not be enforced in or by such court and (iii) hereby agrees not to commence or maintain any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation arising out of or based upon this Agreement or relating to the subject

 

30

 

matter hereof or thereof other than before one of the above-named courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation to any court other than one of the above-named courts whether on the grounds of inconvenient forum or otherwise. Notwithstanding the foregoing, to the extent that any party hereto is or becomes a party in any litigation in connection with which it may assert indemnification rights set forth in this Agreement, the court in which such litigation is being heard shall be deemed to be included in clause (i) above. Notwithstanding the foregoing, any party to this Agreement may commence and maintain an action to enforce a judgment of any of the above-named courts in any court of competent jurisdiction. Each party hereto hereby consents to service of process in any such proceeding in any manner permitted by New York law, and agrees that service of process by registered or certified mail, return receipt requested, at its address specified pursuant to Section 4.2 hereof is reasonably calculated to give actual notice.

 

Section 4.9.                                 WAIVER OF JURY TRIAL.  TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION 4.9 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 4.9 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

 

Section 4.10.                          Merger; Binding Effect, Etc.  This Agreement (along with the Operating Agreement) constitutes the entire agreement of the parties with respect to its subject matter, supersedes all prior or contemporaneous oral or written agreements or discussions with respect to such subject matter, and shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective heirs, representatives, successors and permitted assigns. Except as otherwise expressly provided herein, no Holder or other party hereto may assign any of its respective rights or delegate any of its respective obligations under this Agreement without the prior written consent of the other parties hereto, and any attempted assignment or delegation in violation of the foregoing shall be null and void.

 

31

 

Section 4.11.                          Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one instrument.

 

Section 4.12.                          Severability.  In the event that any provision hereof would, under applicable law, be invalid or unenforceable in any respect, such provision shall be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law. The provisions hereof are severable, and in the event any provision hereof should be held invalid or unenforceable in any respect, it shall not invalidate, render unenforceable or otherwise affect any other provision hereof.

 

Section 4.13.                          No Recourse.  Notwithstanding anything that may be expressed or implied in this Agreement, the Company and each Holder covenant, agree and acknowledge that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall be had against any current or future director, officer, employee, general or limited partner or member of any Holder or of any Affiliate or assignee thereof, as such, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any current or future officer, agent or employee of any Holder or any current or future member of any Holder or any current or future director, officer, employee, partner or member of any Holder or of any Affiliate or assignee thereof, as such, for any obligation of any Holder under this Agreement or any documents or instruments delivered in connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.

 

[Signature pages follow]

 

32

 

IN WITNESS WHEREOF, each of the undersigned has duly executed this Agreement (or caused this Agreement to be executed on its behalf by its officer or representative thereunto duly authorized) as of the date first above written.

 

	
 
    	
SCIPLAY   CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Registration Rights Agreement]

 

 

	
 
    	
SG   SOCIAL HOLDING COMPANY I, LLC
    
	
 
    	
By:   SG Social Holding Company II, LLC, as its sole Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SG   SOCIAL HOLDING COMPANY, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Registration Rights Agreement]

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