Document:

Exhibit 10.3

 

EMPLOYEE MATTERS AGREEMENT

 

BY AND BETWEEN

 

GANNETT CO., INC.

 

AND

 

GANNETT SPINCO, INC.

 

DATED AS OF JUNE 26, 2015

 

 

TABLE OF CONTENTS

 

	
ARTICLE I DEFINITIONS
    	
1
    
	
 
    	
 
    
	
Section 1.01.
    	
Definitions
    	
1
    
	
Section 1.02.
    	
Interpretation
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE II GENERAL PRINCIPLES   FOR ALLOCATION OF LIABILITIES
    	
13
    
	
 
    	
 
    
	
Section 2.01.
    	
General Principles
    	
13
    
	
Section 2.02.
    	
Service Credit
    	
15
    
	
Section 2.03.
    	
Transfer and Adoption of Benefit   Plans
    	
15
    
	
Section 2.04.
    	
Individual Agreements
    	
16
    
	
Section 2.05.
    	
Collective Bargaining
    	
17
    
	
Section 2.06.
    	
Non-U.S. Regulatory Compliance
    	
17
    
	
 
    	
 
    	
 
    
	
ARTICLE III ASSIGNMENT OF   EMPLOYEES
    	
17
    
	
 
    	
 
    
	
Section 3.01.
    	
Active Employees
    	
17
    
	
Section 3.02.
    	
No-Hire and Non-Solicitation
    	
18
    
	
 
    	
 
    	
 
    
	
ARTICLE IV   EQUITY, INCENTIVE AND EXECUTIVE COMPENSATION
    	
19
    
	
 
    	
 
    
	
Section 4.01.
    	
Generally
    	
19
    
	
Section 4.02.
    	
Equity Incentive Awards
    	
19
    
	
Section 4.03.
    	
Employee Stock Purchase Plan
    	
25
    
	
Section 4.04.
    	
Non-Equity Incentive Plans
    	
25
    
	
Section 4.05.
    	
Executive Severance Pay Plan
    	
26
    
	
Section 4.06.
    	
Transitional Compensation Plan
    	
26
    
	
Section 4.07.
    	
Director Compensation
    	
27
    
	
 
    	
 
    	
 
    
	
ARTICLE V QUALIFIED AND   NONQUALIFIED RETIREMENT PLANS
    	
27
    
	
 
    	
 
    
	
Section 5.01.
    	
SpinCo Retirement Plan
    	
27
    
	
Section 5.02.
    	
Retained Qualified Plans
    	
30
    
	
Section 5.03.
    	
401(k) Plans
    	
31
    
	
Section 5.04.
    	
Supplemental Retirement Plan
    	
33
    
	
 
    	
 
    	
 
    
	
ARTICLE VI NONQUALIFIED   DEFERRED COMPENSATION PLAN
    	
34
    
	
 
    	
 
    
	
Section 6.01.
    	
Deferred Compensation Plan
    	
34
    
	
Section 6.02.
    	
Participant Elections
    	
35
    
	
Section 6.03.
    	
Participation; Distributions
    	
35
    
	
 
    	
 
    	
 
    
	
ARTICLE VII WELFARE BENEFIT   PLANS
    	
36
    
	
 
    	
 
    
	
Section 7.01.
    	
Welfare Plans
    	
36
    
	
Section 7.02.
    	
COBRA and HIPAA
    	
38
    

 

i

 

	
Section 7.03.
    	
Vacation, Holidays and Leaves of   Absence
    	
38
    
	
Section 7.04.
    	
Severance and Unemployment   Compensation
    	
38
    
	
Section 7.05.
    	
Workers’ Compensation
    	
39
    
	
Section 7.06.
    	
Insurance Contracts
    	
39
    
	
Section 7.07.
    	
Third-Party Vendors
    	
39
    
	
Section 7.08.
    	
Post-65 Retiree Medical
    	
39
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII NON-U.S. EMPLOYEES
    	
40
    
	
 
    	
 
    
	
ARTICLE IX MISCELLANEOUS
    	
40
    
	
 
    	
 
    
	
Section 9.01.
    	
Information Sharing and Access
    	
40
    
	
Section 9.02.
    	
Preservation of Rights to Amend
    	
41
    
	
Section 9.03.
    	
Fiduciary Matters
    	
41
    
	
Section 9.04.
    	
Further Assurances
    	
42
    
	
Section 9.05.
    	
Counterparts; Entire Agreement;   Corporate Power
    	
42
    
	
Section 9.06.
    	
Governing Law
    	
43
    
	
Section 9.07.
    	
Assignability
    	
43
    
	
Section 9.08.
    	
Third-Party Beneficiaries
    	
43
    
	
Section 9.09.
    	
Notices
    	
43
    
	
Section 9.10.
    	
Severability
    	
45
    
	
Section 9.11.
    	
Force Majeure
    	
45
    
	
Section 9.12.
    	
Headings
    	
46
    
	
Section 9.13.
    	
Survival of Covenants
    	
46
    
	
Section 9.14.
    	
Waivers of Default
    	
46
    
	
Section 9.15.
    	
Dispute Resolution
    	
46
    
	
Section 9.16.
    	
Specific Performance
    	
46
    
	
Section 9.17.
    	
Amendments
    	
46
    
	
Section 9.18.
    	
Interpretation
    	
46
    
	
Section 9.19.
    	
Mutual Drafting
    	
47
    
	
 
    	
 
    	
 
    
	
Schedule 2.03(b)
    	
Parent Benefit Plans to Be Transferred to and   Assumed by SpinCo
    	
 
    
	
Schedule 3.01(f)
    	
Services of Dual Service Employees
    	
 
    
	
Schedule 5.01(e)
    	
Supplemental Contributions
    	
 
    
	
Schedule 7.01(a)
    	
Pre-Separation Parent Welfare Plans
    	
 
    

 

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EMPLOYEE MATTERS AGREEMENT

 

This EMPLOYEE MATTERS AGREEMENT, dated as of June 26, 2015 (this “Agreement”), is by and between Gannett Co., Inc., a Delaware corporation (“Parent”), and Gannett SpinCo, Inc., a Delaware corporation (“SpinCo”).

 

R E C I T A L S:

 

WHEREAS, the board of directors of Parent (the “Parent Board”) has determined that it is in the best interests of Parent and its shareholders to create a new publicly traded company that shall operate the SpinCo Business;

 

WHEREAS, in furtherance of the foregoing, the Parent Board has determined that it is appropriate and desirable to separate the SpinCo Business from the Parent Business (the “Separation”) and, following the Separation, make a distribution, on a pro rata basis, to holders of Parent Shares on the Record Date of 98.5% of the outstanding SpinCo Shares owned by Parent (the “Distribution”), with Parent retaining 1.5% of the outstanding SpinCo Shares;

 

WHEREAS, in order to effectuate the Separation and Distribution, Parent and SpinCo have entered into a Separation and Distribution Agreement, dated as of June 26, 2015 (the “Separation and Distribution Agreement”);

 

WHEREAS, in addition to the matters addressed by the Separation and Distribution Agreement, the Parties desire to enter into this Agreement to set forth the terms and conditions of certain employment, compensation and benefit matters; and

 

WHEREAS, the Parties acknowledge that this Agreement, the Separation and Distribution Agreement and the Ancillary Agreements represent the integrated agreement of Parent and SpinCo relating to the Separation and Distribution, are being entered into together and would not have been entered into independently.

 

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

 

ARTICLE I
 DEFINITIONS

 

Section 1.01.         Definitions.  For purposes of this Agreement, the following terms shall have the meanings set forth below.

 

“Action” shall mean any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) by or before any federal, state, local, foreign or international Governmental Authority or any arbitration or mediation tribunal.

 

 

“Adjusted SpinCo Stock Value” shall mean the product obtained by multiplying (a) the SpinCo Stock Value by (b) the Distribution Ratio.

 

“Affiliate” shall mean, when used with respect to a specified Person, a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person.  For the purpose of this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”), when used with respect to any specified Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise.  It is expressly agreed that, prior to, at and after the Effective Time, for purposes of this Agreement (a) no member of the SpinCo Group shall be deemed to be an Affiliate of any member of the Parent Group and (b) no member of the Parent Group shall be deemed to be an Affiliate of any member of the SpinCo Group.

 

“Agreement” shall have the meaning set forth in the Preamble to this Agreement and shall include all Schedules hereto and all amendments, modifications, and changes hereto entered into pursuant to Section 9.17.

 

“Ancillary Agreements” shall mean all agreements (other than the Separation and Distribution Agreement) entered into by the Parties or the members of their respective Groups (but as to which no Third Party is a party) in connection with the Separation, the Distribution, or the other transactions contemplated by the Separation and Distribution Agreement, including the Transition Services Agreement, the Tax Matters Agreement, this Agreement, the Content Sharing Agreement and the Transfer Documents.

 

“Assets” shall mean, with respect to any Person, the assets, properties, claims and rights (including goodwill) of such Person, wherever located (including in the possession of vendors or other third Persons or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of such Person, including rights and benefits pursuant to any contract, license, permit, indenture, note, bond, mortgage, agreement, concession, franchise, instrument, undertaking, commitment, understanding or other arrangement.

 

“Benefit Plan” shall mean any contract, agreement, policy, practice, program, plan, trust, commitment or arrangement providing for benefits, perquisites or compensation of any nature from an employer to any Employee, or to any family member, dependent, or beneficiary of any such Employee, including cash or deferred arrangement plans, profit sharing plans, post-employment programs, pension plans, thrift plans, supplemental pension plans, welfare plans, stock option, stock purchase, stock appreciation rights, restricted stock, restricted stock units, performance stock units, other equity-based compensation and contracts, agreements, policies, practices, programs, plans, trusts, commitments and arrangements providing for terms of employment, fringe benefits, severance benefits, change in control protections or benefits, travel and accident, life, accidental death and dismemberment, disability and accident insurance, tuition reimbursement, adoption assistance, travel reimbursement, vacation, sick, personal or

 

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bereavement days, leaves of absences and holidays; provided, however, that the term “Benefit Plan” does not include any government-sponsored benefits, such as workers’ compensation, unemployment or any similar plans, programs or policies or Individual Agreements.

 

“COBRA” shall mean the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Section 601 et seq. of ERISA and at Section 4980B of the Code.

 

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

 

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

 

“Distribution Date” shall mean the date of the consummation of the Distribution, which shall be determined by the Parent Board in its sole and absolute discretion.

 

“Distribution Ratio” shall mean a number equal to 0.5.

 

“Effective Time” shall mean 12:01a.m., New York City time, on the Distribution Date.

 

“Employee” shall mean any Parent Group Employee or SpinCo Group Employee.

 

“ERISA” shall mean the U.S. Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

 

“Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

 

“FICA” shall have the meaning set forth in Section 3.01(e).

 

“Force Majeure” shall mean, with respect to a Party, an event beyond the reasonable control of such Party (or any Person acting on its behalf), which event (a) does not arise or result from the fault or negligence of such Party (or any Person acting on its behalf) and (b) by its nature would not reasonably have been foreseen by such Party (or such Person), or, if it would reasonably have been foreseen, was unavoidable, and includes acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any significant and prolonged failure in electrical or air conditioning equipment.  Notwithstanding the foregoing, the receipt by a Party of an unsolicited takeover offer or other acquisition proposal, even if unforeseen or unavoidable, and such Party’s response thereto shall not be deemed an event of Force Majeure.

 

“Former Employees” shall mean Former Parent Group Employees and Former SpinCo Group Employees.

 

“Former Parent Group Employee” shall mean (a) any individual who is a former employee of the Parent Group as of the Effective Time and who is not a Former SpinCo Group Employee, and (b) any individual identified as a Former Parent Group Employee (despite the fact

 

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that such employee’s most recent employment with Parent was with a member of the SpinCo Group or the SpinCo Business) on the list previously prepared by Parent, dated June 25, 2015.

 

“Former SpinCo Group Employee” shall mean (a) any individual who is a former employee of Parent or any of its Subsidiaries or former Subsidiaries as of the Effective Time, in each case, whose most recent employment with Parent was with a member of the SpinCo Group or the SpinCo Business but who is not identified as a Former Parent Group Employee (despite the fact that such employee’s most recent employment with Parent was with a member of the SpinCo Group or the SpinCo Business) on the list previously prepared by Parent, dated June 25, 2015, and (b) any individual identified as a Former SpinCo Group Employee on the list previously prepared by Parent, dated June 25, 2015.

 

“FUTA” shall have the meaning set forth in Section 3.01(e).

 

“General Continuation Period” shall mean a period of time commencing as of the Distribution Date and ending on December 31, 2015.

 

“GLT Severance Continuation Period” shall mean the one (1)-year period commencing on the Distribution Date and ending on the first anniversary thereof.

 

“Governmental Authority” shall mean any nation or government, any state, municipality or other political subdivision thereof, and any entity, body, agency, commission, department, board, bureau, court, tribunal or other instrumentality, whether federal, state, local, domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory, administrative or other similar functions of, or pertaining to, a government and any executive official thereof.

 

“Group” shall mean either the SpinCo Group or the Parent Group, as the context requires.

 

“HIPAA” shall mean the U.S. Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations promulgated thereunder.

 

“Individual Agreement” shall mean any individual (a) employment contract, (b)  retention, severance or change in control agreement, (c) expatriate (including any international assignee) contract or agreement (including agreements and obligations regarding repatriation, relocation, equalization of Taxes and living standards in the host country), or (d) other agreement containing restrictive covenants (including confidentiality, non-competition and non-solicitation provisions) between a member of the Parent Group and a SpinCo Group Employee, as in effect immediately prior to the Effective Time.

 

“IRS” shall mean the U.S. Internal Revenue Service.

 

“Law” shall mean any national, supranational, federal, state, provincial, local or similar law (including common law), statute, code, order, ordinance, rule, regulation, treaty (including any income Tax treaty), license, permit, authorization, approval, consent, decree, injunction, binding judicial or administrative interpretation or other requirement, in each case, enacted, promulgated, issued or entered by a Governmental Authority.

 

4

 

“Liabilities” shall mean all debts, guarantees, assurances, commitments, liabilities, responsibilities, Losses, remediation, deficiencies, damages, fines, penalties, settlements, sanctions, costs, expenses, interest and obligations of any nature or kind, whether accrued or fixed, absolute or contingent, matured or unmatured, accrued or not accrued, asserted or unasserted, liquidated or unliquidated, foreseen or unforeseen, known or unknown, reserved or unreserved, or determined or determinable, including those arising under any Law, claim (including any Third-Party Claim), demand, Action, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority or arbitration tribunal, and those arising under any contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking, or any fines, damages or equitable relief that is imposed, in each case, including all costs and expenses relating thereto.

 

“Losses” shall mean actual losses (including any diminution in value), costs, damages, penalties and expenses (including legal and accounting fees and expenses and costs of investigation and litigation), whether or not involving a Third-Party Claim.

 

“Non-Solicit Date” shall have the meaning set forth in Section 3.02.

 

“NYSE” shall mean the New York Stock Exchange.

 

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

 

“Parent Assets” shall have the meaning set forth in Section 2.2(b) of the Separation and Distribution Agreement.

 

“Parent Awards” shall mean Parent Option Awards, Parent Restricted Stock Awards, Parent RSU Awards (Pre-2015), Parent RSU Awards (2015), Parent Performance Share Awards (Pre-2015) and Parent Performance Share Awards (2015), collectively.

 

“Parent Benefit Plan” shall mean any Benefit Plan established, sponsored or maintained by Parent or any of its Subsidiaries immediately prior to the Effective Time including any Parent Retained Qualified Plan, but excluding any SpinCo Benefit Plan, including any plan transferred to and assumed by SpinCo pursuant to Section 2.03(b).

 

“Parent Board” shall have the meaning set forth in the Recitals.

 

“Parent Business” shall mean all businesses, operations and activities (whether or not such businesses, operations or activities are or have been terminated, divested or discontinued) conducted at any time prior to the Effective Time by either Party or any member of its Group, other than the SpinCo Business.

 

“Parent Change in Control” shall have the meaning set forth in Section 4.02(g)(i).

 

“Parent Compensation Committee” shall mean the Compensation Committee of the Parent Board.

 

“Parent Deferred Compensation Plan” shall mean the Parent Deferred Compensation Plan, as amended.

 

5

 

“Parent Deferred Compensation Rabbi Trust” shall mean the Parent Trust for Deferred Compensation Plans (Restatement dated February 1, 2003).

 

“Parent ESPP” shall mean the Parent Employee Stock Purchase Plan, as in effect from time to time.

 

“Parent GLT Severance Plan” shall mean Parent Leadership Team Transition Severance Plan, as such plan is in effect immediately prior to the Effective Time.

 

“Parent Group” shall mean Parent and each Person that is a Subsidiary of Parent (other than SpinCo and any other member of the SpinCo Group).

 

“Parent Group Employees” shall have the meaning set forth in Section 3.01(a)(ii).

 

“Parent HSA” shall have the meaning set forth in Section 7.01(c).

 

“Parent Liabilities” shall have the meaning set forth in Section 2.3(b) of the Separation and Distribution Agreement.

 

“Parent New Retirement Plan” shall have the meaning set forth in Section 5.01(b).

 

“Parent New Retirement Trust” shall mean the trust established by Parent prior to or on the Distribution Date, which is intended to hold the Assets of the Parent New Retirement Plan.

 

“Parent Non-Equity Incentive Practices” shall mean the corporate non-equity incentive practices of the Parent Group.

 

“Parent Omnibus Plan” shall mean the Gannett Co., Inc. 2001 Omnibus Incentive Compensation Plan, as amended and restated as of May 4, 2010.

 

“Parent Option Award” shall mean an award of options to purchase Parent Shares granted pursuant to a Parent Omnibus Plan that is outstanding as of immediately prior to the Effective Time.

 

“Parent Performance Share Award (2015)” shall mean a performance share award granted in 2015 pursuant to the Parent Omnibus Plan that is outstanding as of immediately prior to the Effective Time.

 

“Parent Performance Share Award (Pre-2015)” shall mean a performance share award granted prior to 2015 pursuant to the Parent Omnibus Plan that is outstanding as of immediately prior to the Effective Time.

 

“Parent Ratio” shall mean the quotient obtained by dividing (a) the Pre-Separation Parent Stock Value by (b) the Post-Separation Parent Stock Value.

 

6

 

“Parent Restricted Stock Award”  shall mean an award of shares of restricted stock of Parent granted pursuant to the Parent Omnibus Plan that is outstanding as of immediately prior to the Effective Time.

 

“Parent Retained Qualified Plans” shall have the meaning set forth in Section 5.02(a).

 

“Parent RSU Award (2015)” shall mean an award of time-based restricted stock units granted in 2015 pursuant to a Parent Omnibus Plan that is outstanding as of immediately prior to the Effective Time.

 

“Parent RSU Award (Pre-2015)” shall mean an award of time-based restricted stock units granted prior to 2015 pursuant to a Parent Omnibus Plan that is outstanding as of immediately prior to the Effective Time.

 

“Parent SERP” shall mean the Parent Supplemental Retirement Plan, as such plan is in effect immediately prior to the Effective Time.

 

“Parent Share Fund” shall have the meaning set forth in Section 5.03(d).

 

“Parent Shares” shall mean the shares of common stock, par value $1.00 per share, of Parent.

 

“Parent Transitional Compensation Plan” shall mean the Parent Transitional Compensation Plan as amended and restated August 7, 2007.

 

“Parent Value Factor” shall mean the quotient obtained by dividing (a) the Pre-Separation Parent Stock Value by (b) the sum of (i) the Adjusted SpinCo Stock Value and (ii) the Post-Separation Parent Stock Value.

 

“Parent Welfare Plan” shall mean any Parent Benefit Plan which is a Welfare Plan.

 

“Parties” shall mean the parties to this Agreement.

 

“Person” shall mean an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

 

“Post-Separation Parent Awards” shall mean Post-Separation Parent Option Awards, Post-Separation Parent Restricted Stock Awards, Post-Separation Parent RSU Awards (Pre-2015), Post-Separation Parent RSU Awards (2015), Post-Separation Parent Performance Share Awards (Pre-2015) and Post-Separation Parent Performance Share Awards (2015), collectively.

 

“Post-Separation Parent Option Award” shall mean a Parent Option Award adjusted as of the Effective Time in accordance with Section 4.02(a).

 

7

 

“Post-Separation Parent Performance Share Award (2015)” shall mean a Parent Performance Share Award (2015) adjusted as of the Effective Time in accordance with Section 4.02(f).

 

“Post-Separation Parent Performance Share Award (Pre-2015)” shall mean a Parent Performance Share Award (Pre-2015) adjusted as of the Effective Time in accordance with Section 4.02(e).

 

“Post-Separation Parent Restricted Stock Award” shall mean a Parent Restricted Stock Award as adjusted as of the Effective Time in accordance with Section 4.02(b).

 

“Post-Separation Parent RSU Award (2015)” shall mean a Parent RSU Award (2015) as adjusted as of the Effective Time in accordance with Section 4.02(d).

 

“Post-Separation Parent RSU Award (Pre-2015)” shall mean a Parent RSU Award (Pre-2015) adjusted as of the Effective Time in accordance with Section 4.02(c).

 

“Post-Separation Parent Stock Value” shall mean the simple average of the volume weighted average per-share price of Parent Shares trading on the NYSE during each of the first five (5) full Trading Sessions immediately after the Effective Time.

 

“Pre-Separation Parent 401(k) Plan” shall mean the Gannett 401(k) Savings Plan, as such plan is in effect immediately prior to the Effective Time.

 

“Pre-Separation Parent Post-65 Retiree Medical Plan” shall mean the Parent Post-65 Retiree Medical Plan and Health Reimbursement Arrangement, as such plan is in effect immediately prior to the Effective Time.

 

“Pre-Separation Parent Retirement Plan” shall mean the Gannett Retirement Plan, as such plan is in effect immediately prior to the Effective Time.

 

“Pre-Separation Parent Stock Value” shall mean the simple average of the volume weighted average per-share price of Parent Shares trading “regular way with due bills” on the NYSE during each of the last five (5) full Trading Sessions immediately prior to the Effective Time.

 

“Pre-Separation Parent Supplemental Unemployment Benefit Pay Plan and Trust” shall mean the Parent Supplemental Unemployment Benefit Pay Plan and Trust, as such plan and trust are in effect immediately prior to the Effective Time.

 

“Pre-Separation Parent Welfare Plan” shall mean a Welfare Plan listed in Schedule 7.01(a), as such plan is in effect immediately prior to the Effective Time.

 

“QDRO” shall mean a qualified domestic relations order within the meaning of Section 206(d) of ERISA and Section 414(p) of the Code.

 

8

 

“Record Date” shall mean the close of business on the date to be determined by the Parent Board as the record date for determining holders of Parent Shares entitled to receive SpinCo Shares pursuant to the Distribution.

 

“Securities Act” shall mean the U.S. Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

 

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

 

“Separation and Distribution Agreement” shall have the meaning set forth in the Recitals to this Agreement.

 

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

 

“SpinCo 401(k) Plan” shall mean the Pre-Separation Parent 401(k) Plan, as assumed by SpinCo as of the Effective Time pursuant to Section 2.03(b) and Section 5.03(b).

 

“SpinCo Awards” shall mean SpinCo Option Awards, SpinCo Restricted Stock Awards, SpinCo Performance Share Awards (2015), SpinCo Performance Share Awards (Pre-2015), SpinCo RSU Awards (Pre-2015) and SpinCo RSU Awards (2015), collectively.

 

“SpinCo Benefit Plan” shall mean any Benefit Plan established, sponsored, maintained or contributed to by a member of the SpinCo Group as of or after the Effective Time, including any SpinCo Retained Qualified Plan and any Benefit Plans assumed or adopted by SpinCo pursuant to Section 2.03(a) and Section 2.03(b).

 

“SpinCo Board” shall mean the Board of Directors of SpinCo.

 

“SpinCo Business” shall mean (a) the business, operations and activities of the Publishing segment of Parent conducted at any time prior to the Effective Time by either Party or any of their current or former Subsidiaries and (b) any terminated, divested or discontinued businesses, operations and activities that, at the time of termination, divestiture or discontinuation, primarily related to the business, operations or activities described in clause (a) as then conducted, including those set forth on Schedule 1.4 of the Separation and Distribution Agreement, excluding, in the case of each of clauses (a) and (b), the business, operations and activities primarily related to the Parent Assets.

 

“SpinCo Change in Control” shall have the meaning set forth in Section 4.02(g)(i).

 

“SpinCo Deferred Compensation Plan” shall mean the deferred compensation plan, as adopted by SpinCo as of the Effective Time pursuant to Section 2.03(a) and Section 6.01(a).

 

“SpinCo Deferred Compensation Rabbi Trust” shall mean the rabbi trust, as adopted by SpinCo as of the Effective Time pursuant to Section 2.03(a) and Section 6.01(d).

 

“SpinCo Designees” shall mean any and all entities (including corporations, general or limited partnerships, trusts, joint ventures, unincorporated organizations, limited

 

9

 

liability entities or other entities) designated by Parent that will be members of the SpinCo Group as of immediately prior to the Effective Time.

 

“SpinCo Flex Plan” shall have the meaning set forth in Section 7.01(d).

 

“SpinCo GLT Severance Plan” shall mean the group leadership team transition severance plan, as adopted by SpinCo as of the Effective Time pursuant to Section 2.03(a) and Section 4.05.

 

“SpinCo Group” shall mean (a) prior to the Effective Time, SpinCo and each Person that will be a Subsidiary of SpinCo as of immediately after the Effective Time, including the Transferred Entities, even if, prior to the Effective Time, such Person is not a Subsidiary of SpinCo; and (b) on and after the Effective Time, SpinCo and each Person that is a Subsidiary of SpinCo.

 

“SpinCo Group Employees” shall have the meaning set forth in Section 3.01(a).

 

“SpinCo HSA” shall have the meaning set forth in Section 7.01(c).

 

“SpinCo Liabilities” shall have the meaning set forth in Section 2.3(a) of the Separation and Distribution Agreement.

 

“SpinCo Non-Equity Incentive Practices” shall mean the corporate non-equity incentive practices, as established by SpinCo as of the Effective Time pursuant to Section 2.03(a) and Section 4.04(a).

 

“SpinCo Omnibus Plan” shall mean the SpinCo 2015 Omnibus Incentive Plan, as established by SpinCo as of the Effective Time pursuant to Section 2.03(a) and Section 4.01.

 

“SpinCo Option Award” shall mean an award of options to purchase SpinCo Shares assumed by SpinCo pursuant to the SpinCo Omnibus Plan in accordance with Section 4.02(a).

 

“SpinCo Performance Share Award (2015)” shall mean an award of performance shares assumed by SpinCo pursuant to the SpinCo Omnibus Plan in accordance with Section 4.02(f).

 

“SpinCo Performance Share Award (Pre-2015)” shall mean an award of performance shares assumed by SpinCo pursuant to the SpinCo Omnibus Plan in accordance with Section 4.02(e).

 

“SpinCo Post-65 Retiree Medical Plan” shall mean the Pre-Separation Parent Post-65 Retiree Medical Plan, as assumed by SpinCo as of the Effective Time pursuant to Section 2.03(b) and Section 7.08.

 

“SpinCo Ratio” shall mean the quotient obtained by dividing (a) the Pre-Separation Parent Stock Value by (b) the SpinCo Stock Value.

 

10

 

“SpinCo Retained Qualified Plans” shall have the meaning set forth in Section 5.02(b).

 

“SpinCo Retirement Plan” shall mean the Pre-Separation Parent Retirement Plan, as assumed by SpinCo as of the Effective Time pursuant to Section 2.03(b) and Section 5.01(a).

 

“SpinCo Retirement Trust” shall mean the trust as assumed by SpinCo as of the Effective Time pursuant to Section 2.03(b) and Section 5.01(a), which holds the Assets of the SpinCo Retirement Plan.

 

“SpinCo RSU Award (2015)” shall mean an award of time-based restricted stock units assumed pursuant to the SpinCo Omnibus Plan in accordance with Section 4.02(d).

 

“SpinCo RSU Award (Pre-2015)” shall mean an award of time-based restricted stock units assumed pursuant to the SpinCo Omnibus Plan in accordance with Section 4.02(c).

 

“SpinCo SERP” shall mean the supplemental retirement plan, as adopted by SpinCo as of the Effective Time pursuant to Section 2.03(a) and Section 5.04.

 

“SpinCo Share Fund” shall have the meaning set forth in Section 5.03(e).

 

“SpinCo Shares” shall mean the shares of common stock, par value $0.01 per share, of SpinCo.

 

“SpinCo Stock Value” shall mean the simple average of the volume weighted average per-share price of SpinCo Shares trading on the NYSE during each of the first five (5) full Trading Sessions immediately after the Effective Time.

 

“SpinCo Supplemental Unemployment Benefit Pay Plan and Trust” shall mean the Pre-Separation Parent Supplemental Unemployment Benefit Pay Plan and Trust as assumed by SpinCo as of the Effective Time pursuant to Section 2.03(b) and Section 7.04.

 

“SpinCo Transitional Compensation Plan” shall mean the SpinCo Transitional Compensation Plan, as adopted by SpinCo pursuant to Section 2.03(a) and Section 4.06.

 

“SpinCo Value Factor” shall mean the quotient obtained by dividing (a) the Pre-Separation Parent Stock Value by (b) the sum of (i) the SpinCo Stock Value and (ii) the quotient obtained by dividing the Post-Separation Parent Stock Value by the Distribution Ratio.

 

“SpinCo Welfare Plan” shall mean a Welfare Plan established, sponsored, maintained or contributed to by any member of the SpinCo Group for the benefit of SpinCo Group Employees and Former SpinCo Group Employees, including (a) Pre-Separation Parent Post-65 Retirement Medical Plan assumed by SpinCo pursuant to Section 2.03(b) and Section 7.09 as the SpinCo Post-65 Retiree Medical Plan and (b) the Pre-Separation Parent Supplemental Unemployment Benefit Pay Plan, assumed by SpinCo pursuant to Section 2.03(b) and Section 7.04 as the SpinCo Supplemental Unemployment Benefit Pay Plan and Trust.

 

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“Subsidiary” shall mean, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (a) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (i) the total combined voting power of all classes of voting securities, (ii) the total combined equity interests or (iii) the capital or profit interests, in the case of a partnership, or (b) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body.

 

“Tax” shall have the meaning set forth in the Tax Matters Agreement.

 

“Tax Matters Agreement” shall mean the Tax Matters Agreement to be entered into by and between Parent and SpinCo or any members of their respective Groups in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement.

 

“TEGNA 401(k) Plan” shall mean the TEGNA Inc. 401(k) Savings Plan.

 

“TEGNA Participation Date” shall have the meaning set forth in Section 5.03(a).

 

“Third Party” shall mean any Person other than the Parties or any members of their respective Groups.

 

“Third-Party Claim” shall have the meaning set forth in Section 4.5(a) of the Separation and Distribution Agreement.

 

“Trading Session” shall mean the period of time during any given calendar day, commencing with the determination of the opening price on the NYSE and ending with the determination of the closing price on the NYSE, in which trading in Parent Shares or SpinCo Shares (as applicable) is permitted on the NYSE.

 

“Transfer Documents” shall have the meaning set forth in Section 2.1(b) of the Separation and Distribution Agreement.

 

“Transferred Account Balances” shall have the meaning set forth in Section 7.01(d).

 

“Transferred Director” shall mean each SpinCo non-employee director as of the Effective Time who served on the Parent Board immediately prior to the Effective Time.

 

“Transferred Entities” shall mean the entities set forth on Schedule 1.9 of the Separation and Distribution Agreement.

 

“Transition Services Agreement” shall mean the Transition Services Agreement to be entered into by and between Parent and SpinCo or any members of their respective Groups in connection with the Separation, the Distribution or the other transactions contemplated by the Separation and Distribution Agreement.

 

“U.S.” shall mean the United States of America.

 

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“Welfare Plan” shall mean any “welfare plan” (as defined in Section 3(1) of ERISA) or a “cafeteria plan” under Section 125 of the Code, and any benefits offered thereunder, and any other plan offering health benefits (including medical, prescription drug, dental, vision, mental health, substance abuse and retiree health), disability benefits, or life, accidental death and dismemberment, and business travel insurance, pre-Tax premium conversion benefits, dependent care assistance programs, employee assistance programs, paid time-off programs, contribution funding toward a health savings account, flexible spending accounts, supplemental unemployment benefits or severance.

 

Section 1.02.         Interpretation.  Section 10.15 of the Separation and Distribution Agreement is hereby incorporated by reference.

 

ARTICLE II
 GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES

 

Section 2.01.         General Principles.

 

(a)           Acceptance and Assumption of SpinCo Liabilities.  Except as otherwise provided by this Agreement, on or prior to the Effective Time, but in any case prior to the Distribution, SpinCo and the applicable SpinCo Designees shall accept, assume and agree faithfully to perform, discharge and fulfill all of the following Liabilities in accordance with their respective terms (each of which shall be considered a SpinCo Liability), regardless of when or where such Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Effective Time, regardless of where or against whom such Liabilities are asserted or determined (including any Liabilities arising out of claims made by Parent’s or SpinCo’s respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates against any member of the Parent Group or the SpinCo Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the Parent Group or the SpinCo Group, or any of their respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates:

 

(i)            any and all wages, salaries, incentive compensation, equity compensation, commissions, bonuses and any other employee compensation or benefits payable to or on behalf of any SpinCo Group Employees and Former SpinCo Group Employees after the Effective Time, without regard to when such wages, salaries, incentive compensation, equity compensation, commissions, bonuses or other employee compensation or benefits are or may have been awarded or earned;

 

(ii)           any and all Liabilities whatsoever with respect to claims under a SpinCo Benefit Plan, taking into account the SpinCo Benefit Plan’s assumption of Liabilities with respect to SpinCo Group Employees and Former SpinCo Group Employees that were originally the Liabilities of the corresponding Parent Benefit Plan with respect to periods prior to the Effective Time; and

 

(iii)          any and all Liabilities expressly assumed or retained by any member of the SpinCo Group pursuant to this Agreement.

 

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(b)           Acceptance and Assumption of Parent Liabilities.  Except as otherwise provided by this Agreement, on or prior to the Effective Time, but in any case prior to the Distribution, Parent and certain members of the Parent Group designated by Parent shall accept, assume and agree faithfully to perform, discharge and fulfill all of the following Liabilities in accordance with their respective terms (each of which shall be considered a Parent Liability), regardless of when or where such Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Effective Time, regardless of where or against whom such Liabilities are asserted or determined (including any Liabilities arising out of claims made by Parent’s or SpinCo’s respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates against any member of the Parent Group or the SpinCo Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the Parent Group or the SpinCo Group, or any of their respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates:

 

(i)            any and all wages, salaries, incentive compensation, equity compensation, commissions, bonuses and any other employee compensation or benefits payable to or on behalf of any Parent Group Employees and Former Parent Group Employees after the Effective Time, without regard to when such wages, salaries, incentive compensation, equity compensation, commissions, bonuses or other employee compensation or benefits are or may have been awarded or earned;

 

(ii)           any and all Liabilities whatsoever with respect to claims under a Parent Benefit Plan, taking into account a corresponding SpinCo Benefit Plan’s assumption of Liabilities with respect to SpinCo Group Employees and Former SpinCo Group Employees that were originally the Liabilities of such Parent Benefit Plan with respect to periods prior to the Effective Time; and

 

(iii)          any and all Liabilities expressly assumed or retained by any member of the Parent Group pursuant to this Agreement.

 

(c)           Unaddressed Liabilities.  To the extent that this Agreement does not address particular Liabilities under any Benefit Plan and the Parties later determine that they should be allocated in connection with the Distribution, the Parties shall agree in good faith on the allocation, taking into account the handling of comparable Liabilities under this Agreement.

 

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Section 2.02.         Service Credit.  As of the Effective Time, the SpinCo Benefit Plans shall, and SpinCo shall cause each member of the SpinCo Group to, recognize for each SpinCo Group Employee who is employed immediately following the Effective Time by a member of the SpinCo Group and each Former SpinCo Group Employee full service with Parent or any of its Subsidiaries or predecessor entities at or before the Effective Time, to the same extent that such service was recognized by Parent for similar purposes prior to the Effective Time as if such full service had been performed for a member of the SpinCo Group, for purposes of eligibility, vesting and determination of level of benefits under any such SpinCo Benefit Plan.

 

Section 2.03.         Adoption and Transfer and Assumption of Benefit Plans.

 

(a)           Adoption by SpinCo of Benefit Plans.  As of no later than the Effective Time, SpinCo shall adopt Benefit Plans (and related trusts, if applicable) as contemplated and in accordance with the terms of this Agreement, which Benefit Plans shall contain terms substantially comparable (or such other standard and with such other terms or modifications as are specified in this Agreement with respect to any particular Benefit Plan) to those of the corresponding Parent Benefit Plans as in effect immediately prior to the Effective Time, with such changes, modifications or amendments to the SpinCo Benefit Plans as may be required by applicable Law or to reflect the Separation and Distribution, including limiting participation in any such SpinCo Benefit Plan to SpinCo Group Employees and Former SpinCo Group Employees who participated in the corresponding Benefit Plan immediately prior to the Effective Time.

 

(b)           Transfer to and Assumption by SpinCo of Certain Pre-Separation Parent Plans.  As of the Effective Time, Parent shall assign and transfer to SpinCo and SpinCo shall assume the Benefits Plans listed on Schedule 2.03(b), including all related Liabilities and Assets, and any related trusts and other funding vehicles and insurance contracts of any of such plans other than as specifically provided in this Agreement; provided, however, that SpinCo may make such changes, modifications or amendments to such SpinCo Benefit Plans as may be required by applicable Law or to reflect the Separation and Distribution Agreement, including limiting participation in any such SpinCo Benefit Plan to SpinCo Group Employees and Former SpinCo Group Employees who participated in the corresponding Benefit Plan immediately prior to the Effective Time.

 

(c)           Plans Not Required to Be Adopted.  With respect to any Benefit Plan not listed or otherwise addressed in this Agreement, the Parties shall agree in good faith on the treatment of such plan taking into account the handling of any comparable plan under this Agreement and, notwithstanding that SpinCo shall not have an obligation to continue to maintain any such plan with respect to the provision of future benefits from and after the Effective Time, SpinCo shall remain obligated to pay or provide any previously accrued or incurred benefits to the SpinCo Group Employees and Former SpinCo Group Employees consistent with Section 2.01(a) of this Agreement.

 

(d)           Information and Operation.  Each Party shall use its commercially reasonable efforts to provide the other Party with information describing each Benefit Plan election made by an Employee or Former Employee that may have application to such Party’s Benefit Plans from and after the Effective Time, and each Party shall use its commercially reasonable efforts to administer its Benefit Plans using those elections.  Each Party shall, upon

 

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reasonable request, use its commercially reasonable efforts to provide the other Party and the other Party’s respective Affiliates, agents, and vendors all information reasonably necessary to the other Party’s operation or administration of its Benefit Plans.

 

(e)           No Duplication or Acceleration of Benefits.  Notwithstanding anything to the contrary in this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement, no participant in any Benefit Plan shall receive service credit or benefits to the extent that receipt of such service credit or benefits would result in duplication of benefits provided to such participant by the corresponding Benefit Plan or any other plan, program or arrangement sponsored or maintained by a member of the Group that sponsors the corresponding Benefit Plan.  Furthermore, unless expressly provided for in this Agreement, the Separation and Distribution Agreement or in any Ancillary Agreement or required by applicable Law, no provision in this Agreement shall be construed to create any right to accelerate vesting distributions or entitlements under any Benefit Plan sponsored or maintained by a member of the Parent Group or member of the SpinCo Group on the part of any Employee or Former Employee.

 

(f)            Transition Services.  The Parties acknowledge that the Parent Group or the SpinCo Group may provide administrative services for certain of the other Party’s compensation and benefit programs for a transitional period under the terms of the Transition Services Agreement.  The Parties agree to enter into a business associate agreement (if required by HIPAA or other applicable health information privacy Laws) in connection with such Transition Services Agreement.

 

(g)           Beneficiaries.  References to Parent Group Employees, Former Parent Group Employees, SpinCo Group Employees, Former SpinCo Group Employees, and current and former non-employee directors of either Parent or SpinCo, shall be deemed to refer to their beneficiaries, dependents, survivors and alternate payees, as applicable.

 

Section 2.04.         Individual Agreements.

 

(a)           Assignment by Parent.  To the extent necessary, Parent shall assign, or cause an applicable member of the Parent Group to assign, to SpinCo or another member of the SpinCo Group, as designated by SpinCo, all Individual Agreements, with such assignment to be effective as of no later than the Effective Time; provided, however, that to the extent that assignment of any such Individual Agreement is not permitted by the terms of such agreement or by applicable Law, effective as of the Effective Time, each member of the SpinCo Group shall be considered to be a successor to each member of the Parent Group for purposes of, and a third-party beneficiary with respect to, such Individual Agreement, such that each member of the SpinCo Group shall enjoy all of the rights and benefits under such agreement (including rights and benefits as a third-party beneficiary), with respect to the business operations of the SpinCo Group; provided, further, that in no event shall Parent be permitted to enforce any Individual Agreement (including any agreement containing non-competition or non-solicitation covenants) against a SpinCo Group Employee or Former SpinCo Group Employee for action taken in such individual’s capacity as a SpinCo Group Employee or Former SpinCo Group Employee other than on behalf of SpinCo Group as requested by SpinCo Group in its capacity as a third-party beneficiary.

 

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(b)           Assumption by SpinCo.  Effective as of the Effective Time, SpinCo shall assume and honor any individual agreement to which any SpinCo Group Employee or Former SpinCo Group Employee is a party with any member of the Parent Group, including any Individual Agreement.

 

Section 2.05.         Collective Bargaining.  No later than the Effective Time, to the extent necessary, SpinCo shall (a) assume all collective bargaining agreements (including any national, sector or local collective bargaining agreement) that cover SpinCo Group Employees or Former SpinCo Group Employees and the Liabilities arising under any such collective bargaining agreements, and (b) join any industrial, employer or similar association or federation if membership is required for the relevant collective bargaining agreement to continue to apply.

 

Section 2.06.         Non-U.S. Regulatory Compliance.  Parent shall have the authority to adjust the treatment described in this Agreement with respect to SpinCo Group Employees and Former SpinCo Group Employees who are located outside of the U.S. in order to ensure compliance with the applicable Laws or regulations of countries outside of the U.S. or to preserve the Tax benefits provided under local Tax Law or regulation before the Distribution.

 

ARTICLE III
 ASSIGNMENT OF EMPLOYEES

 

Section 3.01.         Active Employees.

 

(a)           Assignment and Transfer of Employees.  Effective as of no later than the Effective Time and except as otherwise agreed by the Parties, (i) the applicable member of the Parent Group shall have taken such actions as are necessary to ensure that each individual who is intended to be an employee of the SpinCo Group as of immediately after the Effective Time (including any such individual who is not actively working as of the Effective Time as a result of an illness, injury or leave of absence approved by the Parent Human Resources department or otherwise taken in accordance with applicable Law) (collectively, the “SpinCo Group Employees”) is employed by a member of the SpinCo Group as of immediately after the Effective Time, and (ii) the applicable member of the Parent Group shall have taken such actions as are necessary to ensure that each individual who is intended to be an employee of the Parent Group as of immediately after the Effective Time (including any such individual who is not actively working as of the Effective Time as a result of an illness, injury or leave of absence approved by the Parent Human Resources department or otherwise taken in accordance with applicable Law) and any other individual employed by the Parent Group as of the Effective Time who is not a SpinCo Group Employee (collectively, the “Parent Group Employees”) is employed by a member of the Parent Group as of immediately after the Effective Time.  Each of the Parties agrees to execute, and to seek to have the applicable Employees execute, such documentation, if any, as may be necessary to reflect such assignment and/or transfer.

 

(b)           At-Will Status.  Nothing in this Agreement shall create any obligation on the part of any member of the Parent Group or any member of the SpinCo Group to (i) continue the employment of any Employee or permit the return from a leave of absence for any period after the date of this Agreement (except as required by applicable Law) or (ii) change the employment

 

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status of any Employee from “at-will,” to the extent that such Employee is an “at-will” employee under applicable Law.

 

(c)           Severance.  The Parties acknowledge and agree that the Separation, Distribution and the assignment, transfer or continuation of the employment of Employees as contemplated by this Section 3.01 shall not be deemed an involuntary termination of employment entitling any SpinCo Group Employee or Parent Group Employee to severance payments or benefits.

 

(d)           Not a Change in Control.  The Parties acknowledge and agree that neither the consummation of the Separation, Distribution nor any transaction contemplated by this Agreement, the Separation and Distribution Agreement or any other Ancillary Agreement shall be deemed a “change in control,” “change of control,” or term of similar import for purposes of any Benefit Plan sponsored or maintained by any member of the Parent Group or member of the SpinCo Group.

 

(e)           Payroll and Related Taxes.  With respect to any SpinCo Group Employee or group of SpinCo Group Employees, the Parties shall, or shall cause their respective Subsidiaries to, (i) treat SpinCo (or the applicable member of the SpinCo Group) as a “successor employer” and Parent (or the applicable member of the Parent Group) as a “predecessor,” within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, for purposes of Taxes imposed under the U.S. Federal Insurance Contributions Act, as amended (“FICA”), or the U.S. Federal Unemployment Tax Act, as amended (“FUTA”), (ii) cooperate with each other to avoid, to the extent possible, the restart of FICA and FUTA upon or following the Effective Time with respect to each such SpinCo Group Employee for the Tax year during which the Effective Time occurs, and (iii) use commercially reasonable efforts to implement the alternate procedure described in Section 5 of Revenue Procedure 2004-53; provided, however, that, to the extent that SpinCo (or the applicable member of the SpinCo Group) cannot be treated as a “successor employer” to Parent (or the applicable member of the Parent Group) within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code with respect to any SpinCo Group Employee or group of SpinCo Group Employees, (x) with respect to the portion of the Tax year commencing on January 1, 2015 and ending on the Distribution Date, Parent shall (A) be responsible for all payroll obligations, Tax withholding and reporting obligations for such SpinCo Group Employees and (B) furnish a Form W-2 or similar earnings statement to all such SpinCo Group Employees for such period, and (y) with respect to the remaining portion of such Tax year, SpinCo shall (A) be responsible for all payroll obligations, Tax withholding and reporting obligations regarding such SpinCo Group Employees and (B) furnish a Form W-2 or similar earnings statement to all such SpinCo Group Employees.

 

(f)            Dual Service Employees.  Without limiting the generality of Section 3.01(a), the individuals who are designated as “Dual Service Employees” on Schedule 3.01(f) shall be employed by both the Parent Group and SpinCo Group immediately following the Effective Time, and shall be classified as Parent Group Employees.  Certain additional terms applicable to the Dual Service Employees’ services to the Parent Group and the SpinCo Group are set forth on Schedule 3.01(f).

 

Section 3.02.         No-Hire and Non-Solicitation.  Each Party agrees that, for a period of two (2) years from the Distribution Date, such Party shall not hire or solicit for employment any

 

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individual who is a Parent Group Employee or a Former Parent Group Employee whose employment was terminated during the thirty (30) days prior to the Effective Time (the “Non-Solicit Date”), in the case of SpinCo, or a SpinCo Group Employee or a Former SpinCo Group Employee whose employment was terminated during the thirty (30) days prior to the Effective Time, in the case of Parent; provided, however, without limiting the generality of the foregoing prohibition on solicitation and hiring Employees of the other Party, this Section 3.02 shall not prohibit (a) hiring resulting from generalized solicitations that are not directed to specific Persons or Employees of the other Party, or (b) the solicitation and hiring of a Person whose employment was involuntarily terminated by the other Party.  Except as provided in clause (b) of the immediately preceding sentence with respect to involuntary terminations, without regard to the use of the term “Employee” or “employs,” the restrictions under this Section 3.02 shall be applicable to the applicable Employee or Former Employee until the date that is six (6) months after such Employee or Former Employee’s last date of employment with Parent or SpinCo, as applicable.  For the avoidance of doubt, the restrictions under this Section 3.02 shall not apply to (x) Former Parent Group Employees or Former SpinCo Group Employees whose most recent employment with Parent and its Subsidiaries was terminated prior to the Non-Solicit Date, or (y) Employees or Former Employees who are licensed attorneys that are solicited or hired to provide legal services to either Party.

 

ARTICLE IV
 EQUITY, INCENTIVE AND EXECUTIVE COMPENSATION

 

Section 4.01.         Generally.  Each Parent Award granted that is outstanding as of immediately prior to the Effective Time shall be adjusted as described below; provided, however, effective immediately prior to the Effective Time, the Parent Compensation Committee may provide for different adjustments with respect to some or all Parent Awards to the extent that the Parent Compensation Committee deems such adjustments necessary and appropriate.  Any adjustments made by the Parent Compensation Committee pursuant to the foregoing sentence shall be deemed incorporated by reference herein as if fully set forth below and shall be binding on the Parties and their respective Affiliates.  Before the Effective Time, the SpinCo Omnibus Plan shall be established, with such terms as are necessary to permit the implementation of the provisions of Section 4.02.

 

Section 4.02.         Equity Incentive Awards.

 

(a)           Option Awards.  Each Parent Option Award that is outstanding as of immediately prior to the Effective Time shall be converted, as of the Effective Time, into both a Post-Separation Parent Option Award and a SpinCo Option Award and shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to vesting and expiration) after the Effective Time as were applicable to such Parent Option Award immediately prior to the Effective Time; provided, however, that from and after the Effective Time:

 

(i)            the number of Parent Shares subject to such Post-Separation Parent Option Award shall be equal to the product, rounded down to the nearest whole share, obtained by multiplying (A) the number of Parent Shares subject to the corresponding Parent Option Award immediately prior to the Effective Time by (B) the Parent Value Factor;

 

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(ii)           the number of SpinCo Shares subject to such SpinCo Option Award shall be equal to the product, rounded down to the nearest whole share, obtained by multiplying (A) the number of Parent Shares subject to the corresponding Parent Option Award immediately prior to the Effective Time by (B) the SpinCo Value Factor;

 

(iii)          the per share exercise price of such Post-Separation Parent Option Award shall be equal to the quotient, rounded up to the nearest cent, obtained by dividing (A) the per share exercise price of the corresponding Parent Option Award immediately prior to the Effective Time by (B) the Parent Ratio; and

 

(iv)          the per share exercise price of such SpinCo Option Award shall be equal to the quotient, rounded up to the nearest cent, obtained by dividing (A) the per share exercise price of the corresponding Parent Option Award immediately prior to the Effective Time by (B) the SpinCo Ratio.

 

Notwithstanding anything to the contrary in this Section 4.02(a), the exercise price, the number of Parent Shares and SpinCo Shares subject to each Post-Separation Parent Option Award and SpinCo Option Award, and the terms and conditions of exercise of such options shall be determined in a manner consistent with the requirements of Section 409A of the Code.

 

(b)           Restricted Stock Awards.  Each Parent Restricted Stock Award that is outstanding as of immediately prior to the Effective Time shall be converted, as of the Effective Time, into a Post-Separation Parent Restricted Stock Award and a SpinCo Restricted Stock Award and each such award shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to vesting) after the Effective Time as were applicable to such Parent Restricted Stock Award prior to the Effective Time; provided, however, that from and after the Effective Time the number of shares subject to (i) the Post-Separation Parent Restricted Stock Award shall be equal to the number of Parent Shares subject to the corresponding Parent Restricted Stock Award immediately prior to the Effective Time, and (ii) the SpinCo Restricted Stock Award shall be equal to the product, rounded to the nearest whole share, obtained by multiplying (A) the number of Parent Shares subject to the Parent Restricted Stock Award immediately prior to the Effective Time by (B) the Distribution Ratio.

 

(c)           RSU Awards (Pre-2015).  Each Parent RSU Award (Pre-2015) that is outstanding as of immediately prior to the Effective Time shall be converted, as of the Effective Time, into a Post-Separation Parent RSU Award (Pre-2015) and a SpinCo RSU Award (Pre-2015) and each such award shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to vesting) after the Effective Time as were applicable to such Parent RSU Award (Pre-2015) prior to the Effective Time; provided, however, that from and after the Effective Time the number of shares subject to (i) the Post-Separation Parent RSU Award (Pre-2015) shall be equal to the number of Parent Shares subject to the corresponding Parent RSU Award (Pre-2015) immediately prior to the Effective Time, and (ii) the SpinCo RSU Award (Pre-2015) shall be equal to the product, rounded to the nearest whole share, obtained by multiplying (A) the number of Parent Shares subject to the Parent RSU Award (Pre-2015) immediately prior to the Effective Time by (B) the Distribution Ratio.

 

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(d)           RSU Awards (2015).  Each Parent RSU Award (2015) that is outstanding as of immediately prior to the Effective Time shall be treated as follows:

 

(i)            If the holder is not a SpinCo Group Employee, Former SpinCo Group Employee or a Transferred Director (except as otherwise provided in Section 4.02(d)(ii) with respect to Post-Separation Parent RSU Awards (2015) that are vested as of the Effective Time), such award shall be converted, as of the Effective Time, into a Post-Separation Parent RSU Award (2015), and shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to vesting and expiration) after the Effective Time as were applicable to such Parent RSU Award (2015) immediately prior to the Effective Time; provided, however, that from and after the Effective Time, the number of Parent Shares subject to such Post-Separation Parent RSU Award (2015) shall be equal to the product, rounded to the nearest whole share, obtained by multiplying (A) the number of Parent Shares subject to the corresponding Parent RSU Award (2015) immediately prior to the Effective Time by (B) the Parent Ratio.

 

(ii)           Notwithstanding the terms of Section 4.02(d)(i) or 4.02(d)(iii) and in lieu of the treatment provided in such Sections, any portion of a Parent RSU Award (2015) that is held by a non-employee director, including a Transferred Director, that is vested as of the Effective Time, shall be converted, as of the Effective Time, into a vested Post-Separation Parent RSU Award (2015) and a vested SpinCo RSU Award (2015) and each such award shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions after the Effective Time as were applicable to such Parent RSU Award (2015) prior to the Effective Time; provided, however, that the number of shares subject to (A) the Post-Separation Parent RSU Award (2015) shall be equal to the number of Parent Shares subject to the vested portion of the corresponding Parent RSU Award (2015) immediately prior to the Effective Time, and (B) the SpinCo RSU Award (2015) shall be equal to the product, rounded to the nearest whole share, obtained by multiplying (x) the number of Parent Shares subject to the vested portion of the Parent RSU Award (2015) immediately prior to the Effective Time by (y) the Distribution Ratio.

 

(iii)          If the holder is a SpinCo Group Employee, Former SpinCo Group Employee or (subject to Section 4.02(d)(ii)) a Transferred Director, such award shall be converted, as of the Effective Time, into a SpinCo RSU Award (2015), and shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to vesting and expiration) after the Effective Time as were applicable to such Parent RSU Award (2015) immediately prior to the Effective Time; provided, however, that from and after the Effective Time, the number of SpinCo Shares subject to such SpinCo RSU Award (2015) shall be equal to the product, rounded to the nearest whole share, obtained by multiplying (A) the number of Parent Shares subject to the corresponding Parent RSU Award (2015) immediately prior to the Effective Time by (B) the SpinCo Ratio.

 

(e)           Performance Share Awards (Pre-2015).  Each Parent Performance Share Award (Pre-2015) that is outstanding as of immediately prior to the Effective Time shall be converted, as of the Effective Time, into a Post-Separation Parent Performance Share Award and a SpinCo Performance Share Award and each such award shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to vesting and applicable performance criteria) after the Effective Time as were applicable to such Parent

 

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Performance Share Award prior to the Effective Time; provided, however, that from and after the Effective Time:

 

(i)            the number of shares subject to (A) the Post-Separation Parent Performance Share Award shall be equal to the number of Parent Shares subject to the corresponding Parent Performance Share Award immediately prior to the Effective Time, and (B) the SpinCo Performance Share Award shall be equal to the product, rounded to the nearest whole share, obtained by multiplying (1) the number of Parent Shares subject to the Parent Performance Share Award immediately prior to the Effective Time by (2) the Distribution Ratio;

 

(ii)           the value of dividends taken into account for purposes of the calculation of total shareholder return, shall be (A) the value of any cash dividends paid on Parent Shares during the performance period and (B) the product obtained by multiplying (1) the value of any cash dividends paid on SpinCo Shares during the portion of the performance period occurring after the Effective Time by (2) the Distribution Ratio; and

 

(iii)          the stock price at the end of the performance period used to determine total shareholder return shall be the sum of (A) the price per share of Parent Shares on the relevant measurement dates, and (B) the product obtained by multiplying (1) the price per share of SpinCo Shares on the relevant measurement dates by (2) the Distribution Ratio.

 

(f)            Performance Share Awards (2015).  Each Parent Performance Share Award (2015) that is outstanding as of immediately prior to the Effective Time shall be treated as follows:

 

(i)            If the holder is not a SpinCo Group Employee or Former SpinCo Group Employee, such award shall be converted, as of the Effective Time, into a Post-Separation Parent Performance Share Award (2015), and shall, except as otherwise provided in this Section 4.02 and the terms of the award agreement governing the applicable Parent Performance Share Award (2015) (including with respect to the adjustment of the applicable performance goals), be subject to the same terms and conditions (including with respect to vesting) after the Effective Time as were applicable to such Parent Performance Share Award (2015) immediately prior to the Effective Time; provided, however, that from and after the Effective Time, the number of Parent Shares subject to such Post-Separation Parent Performance Share Award (2015) shall be equal to the product, rounded to the nearest whole share, obtained by multiplying (A) the number of Parent Shares subject to the corresponding Parent Performance Share Award (2015) immediately prior to the Effective Time by (B) the Parent Ratio.

 

(ii)           If the holder is a SpinCo Group Employee or Former SpinCo Group Employee, such award shall be converted, as of the Effective Time, into a SpinCo Performance Share Award (2015), and shall, except as otherwise provided in this Section 4.02 and the terms of the award agreement governing the applicable Parent Performance Share Award (2015) (including with respect to the adjustment of the applicable performance goals), be subject to the same terms and conditions (including with respect to vesting) after the Effective Time as were applicable to such Parent Performance Share Award (2015) immediately prior to the Effective Time; provided, however, that from and after the Effective Time, the number of SpinCo Shares subject to such SpinCo Performance Share Award (2015) shall be equal to the product, rounded to the nearest whole share, obtained by multiplying (A) the number of Parent Shares subject to the

 

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corresponding Parent Performance Share Award (2015) immediately prior to the Effective Time by (B) the SpinCo Ratio.

 

(g)           Miscellaneous Award Terms.

 

(i)            With respect to Post-Separation Parent Awards and SpinCo Awards, (A) employment with or service to the Parent Group shall be treated as employment with or service to SpinCo with respect to SpinCo Awards held by a Parent Group Employee who is employed by a member of the Parent Group immediately following the Effective Time or a Parent non-employee director who is a non-employee director of Parent immediately following the Effective Time, and (B) employment with or service to the SpinCo Group shall be treated as employment with or service to Parent with respect to Post-Separation Parent Awards held by SpinCo Group Employees who is employed by a member of the SpinCo Group immediately following the Effective Time or a Transferred Director who is a director of SpinCo immediately following the Effective Time.  In addition, none of the Separation, the Distribution or any employment transfer described in Section 3.01(a) shall constitute a termination of employment for any Employee for purposes of any Post-Separation Parent Award or any SpinCo Award.  After the Effective Time, for any award adjusted under this Section 4.02, any reference to a “change in control,” “change of control” or similar definition in an award agreement, employment agreement or Parent Omnibus Plan applicable to such award (x) with respect to Post-Separation Parent Awards, shall be deemed to refer to a “change in control,” “change of control” or similar definition as set forth in the applicable award agreement, employment agreement or Parent Omnibus Plan (a “Parent Change in Control”), and (y) with respect to SpinCo Awards, shall be deemed to refer to a “Change in Control” as defined in the SpinCo Omnibus Plan a (“SpinCo Change in Control”).  Without limiting the foregoing, with respect to provisions related to vesting of awards, a Parent Change in Control shall be treated as a SpinCo Change in Control for purposes of SpinCo Awards held by Parent Group Employees, Former Parent Group Employees and Parent non-employee directors, and a SpinCo Change in Control shall be treated as a Parent Change in Control for purposes of Post-Separation Parent Awards held by SpinCo Group Employees, Former SpinCo Group Employees and Transferred Directors.

 

(ii)           Any determination in respect of a Post-Separation Parent Option Award and SpinCo Option Award, Post-Separation Parent RSU Award (Pre-2015) and SpinCo RSU Award (Pre-2015) or Post-Separation Parent Performance Share Award (Pre-2015) and SpinCo Performance Share Award, in each case, granted to the holder pursuant to the Parent Omnibus Plan or the SpinCo Omnibus Plan, as applicable, and this Section 4.02, shall be made by the Compensation Committee of the Board of Directors of the Party to which the holder provides services immediately after the Effective Time (Parent or SpinCo, as applicable); provided, that any such determination shall apply uniformly to both the applicable Post-Separation Parent Award and the corresponding SpinCo Award held by such holder.

 

(h)           Settlement; Tax Reporting and Withholding.

 

(i)            Except as otherwise provided in this Section 4.02(h) or Section 6.01, after the Effective Time, Post-Separation Parent Awards, regardless of by whom held, shall be settled by Parent, and SpinCo Awards, regardless of by whom held, shall be settled by SpinCo.

 

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(ii)           Upon the vesting, payment or settlement, as applicable, of SpinCo Awards, SpinCo shall be solely responsible for ensuring the satisfaction of all applicable Tax withholding requirements on behalf of each SpinCo Group Employee or Former SpinCo Group Employee and for ensuring the collection and remittance of applicable employee withholding Taxes to the Parent Group with respect to each Parent Group Employee or Former Parent Group Employee (with Parent Group being responsible for remittance of the applicable employee Taxes and payment and remittance of the applicable employer Taxes relating to Parent Group Employees and Former Parent Group Employees to the applicable Governmental Authority).  Upon the vesting, payment or settlement, as applicable, of Post-Separation Parent Awards, Parent shall be solely responsible for ensuring the satisfaction of all applicable Tax withholding requirements on behalf of each Parent Group Employee or Former Parent Group Employee and for ensuring the collection and remittance of applicable employee withholding Taxes to the SpinCo Group with respect to each SpinCo Group Employee or Former SpinCo Group Employee (with SpinCo Group being responsible for remittance of the applicable employee Taxes and payment and remittance of the applicable employer Taxes relating to SpinCo Group Employees and Former SpinCo Group Employees to the applicable Governmental Authority).  Following the Effective Time, Parent shall be responsible for all income Tax reporting in respect of Post-Separation Parent Awards and SpinCo Awards held by Parent Group Employees, Former Parent Group Employees and individuals who are or were Parent non-employee directors, and SpinCo shall be responsible for all income Tax reporting in respect of Post-Separation Parent Awards and SpinCo Awards held by SpinCo Group Employees, Former SpinCo Group Employees and Transferred Directors.

 

(iii)          SpinCo shall be responsible for the settlement of cash dividends or dividend equivalents on any Post-Separation Parent Restricted Stock Award or SpinCo Restricted Stock Award held by a Transferred Director.  Prior to the date any such settlement is due, Parent shall pay SpinCo in cash amounts required to settle (A) any dividends or dividend equivalents with respect to Post-Separation Parent Restricted Stock Awards and (B) any dividends or dividend equivalents accrued prior to the Effective Time with respect to SpinCo Restricted Stock Awards.  Parent shall be responsible for the settlement of cash dividends or dividend equivalents on any Post-Separation Parent Restricted Stock Awards or SpinCo Restricted Stock Awards held by a non-employee director of Parent.  Prior to the date any such settlement is due, SpinCo shall pay Parent in cash amounts required to settle any dividends or dividend equivalents accrued following the Effective Time with respect to SpinCo Restricted Stock Awards.  For the avoidance of doubt, the term “dividend equivalents” shall not include any dividend equivalents that are deemed reinvested in SpinCo Shares or Parent Shares, consistent with the practice with respect to the applicable award prior to the Separation, and Parent or SpinCo, as applicable, shall adjust the number of shares subject to the applicable Post-Separation Parent Award or SpinCo Award, as applicable, to reflect such deemed reinvestment in the manner set forth in the applicable award agreement.

 

(iv)          Following the Effective Time, if any Post-Separation Parent Award held by a SpinCo Group Employee, Former SpinCo Group Employee or Transferred Director shall fail to become vested, such Post-Separation Parent Award shall be forfeited to Parent, and if any SpinCo Award held by a Parent Group Employee, Former Parent Group Employee or non-employee director of Parent shall fail to become vested, such SpinCo Award shall be forfeited to SpinCo.

 

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(i)            Cooperation.  Each of the Parties shall establish an appropriate administration system in order to administer, in an orderly manner, (i) exercises of vested Post-Separation Parent Options and SpinCo Options, (ii) the vesting and forfeiture of unvested Post-Separation Parent Awards and SpinCo Awards, and (iii) the withholding and reporting requirements with respect to all awards.  Each of the Parties shall work together to unify and consolidate all indicative data and payroll and employment information on regular timetables and make certain that each applicable Person’s data and records in respect of such awards are correct and updated on a timely basis.  The foregoing shall include employment status and information required for vesting and forfeiture of awards and Tax withholding/remittance, compliance with trading windows and compliance with the requirements of the Exchange Act and other applicable Laws.

 

(j)            Registration and Other Regulatory Requirements.  SpinCo agrees to file Forms S-1, S-3 and S-8 registration statements with respect to, and to cause to be registered pursuant to the Securities Act, the SpinCo Shares authorized for issuance under the SpinCo Omnibus Plan, as required pursuant to the Securities Act, not later than the Effective Time and in any event before the date of issuance of any SpinCo Shares pursuant to the SpinCo Omnibus Plan.  The Parties shall take such additional actions as are deemed necessary or advisable to effectuate the foregoing provisions of this Section 4.02(j), including compliance with securities Laws and other legal requirements associated with equity compensation awards in affected non-U.S. jurisdictions.  Parent agrees to facilitate the adoption and approval of the SpinCo Omnibus Plan consistent with the requirements of Treasury Regulations Section 1.162-27(f)(4)(iii).

 

Section 4.03.         Employee Stock Purchase Plan.  The administrator of the Parent ESPP shall take all actions necessary and appropriate to provide that all payroll deductions and other contributions of the participants in the Parent ESPP who are SpinCo Group Employees shall cease on or before the Distribution Date.

 

Section 4.04.         Non-Equity Incentive Practices and Plans.

 

(a)           Corporate Bonus Practices.

 

(i)            For not less than the General Continuation Period, SpinCo shall follow the SpinCo Non-Equity Incentive Practices, which, for not less than the General Continuation Period, shall be applied in a manner that is substantially comparable to the manner in which  the corresponding Parent Non-Equity Incentive Practices were applied to the SpinCo Group Employees who were subject thereto as of immediately prior to the Effective Time, with such changes to the applicable performance goals as may be necessary in order to reflect the SpinCo Business following the Separation, and such other changes, modifications or amendments to the SpinCo Non-Equity Incentive Practices as may be required by applicable Law.

 

(ii)           The SpinCo Group shall be responsible for determining all bonus awards that would otherwise be payable under the SpinCo Non-Equity Incentive Practices to SpinCo Group Employees or Former SpinCo Group Employees for any performance periods that are open when the Effective Time occurs.  The SpinCo Group shall also determine for SpinCo Group Employees or Former SpinCo Group Employees (A) the extent to which established performance criteria (as interpreted by the SpinCo Group, in its sole discretion) have been met, and

 

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(B) the payment level for each SpinCo Group Employee or Former SpinCo Group Employee.  The SpinCo Group shall assume all Liabilities with respect to any such bonus awards payable to SpinCo Group Employees or Former SpinCo Group Employees for any performance periods that are open when the Effective Time occurs and thereafter, and no member of the Parent Group shall have any obligations with respect thereto.

 

(iii)          The Parent Group shall be responsible for determining all bonus awards that would otherwise be payable under the Parent Non-Equity Incentive Practices to Parent Group Employees or Former Parent Group Employees for any performance periods that are open when the Effective Time occurs.  The Parent Group shall also determine for Parent Group Employees or Former Parent Group Employees (A) the extent to which established performance criteria (as interpreted by the Parent Group, in its sole discretion) have been met, and (B) the payment level for each Parent Group Employee or Former Parent Group Employee.  The Parent Group shall retain (or assume as necessary) all Liabilities with respect to any such bonus awards payable to Parent Group Employees or Former Parent Group Employees for any performance periods that are open when the Effective Time occurs and thereafter, and no member of the SpinCo Group shall have any obligations with respect thereto.

 

(b)           Parent Retained Bonus Plans.  No later than the Effective Time, the Parent Group shall continue to retain (or assume as necessary) any incentive plan for the exclusive benefit of Parent Group Employees and Former Parent Group Employees, whether or not sponsored by the Parent Group, and, from and after the Effective Time, shall be solely responsible for all Liabilities thereunder.

 

(c)           SpinCo Retained Bonus Plans.  No later than the Effective Time, the SpinCo Group shall continue to retain (or assume as necessary) any incentive plan for the exclusive benefit of SpinCo Group Employees and Former SpinCo Group Employees, whether or not sponsored by the SpinCo Group, and, from and after the Effective Time, shall be solely responsible for all Liabilities thereunder.

 

Section 4.05.         Executive Severance Pay Plan.  As of the Effective Time, SpinCo shall establish the SpinCo GLT Severance Plan pursuant to Section 2.03(a).  For not less than the GLT Severance Continuation Period, the Parent GLT Severance Plan and the SpinCo GLT Severance Plan shall have the same terms as of immediately prior to the Effective Time as the Parent GLT Severance Plan, with such changes as may be required by applicable Law or to reflect the Separation and Distribution Agreement, it being understood that any such changes, modifications or amendments shall not result in benefits that are less favorable than those provided under the Parent GLT Separation Plan to the Parent Group Employees and SpinCo Group Employees who were participants in the Parent GLT Severance Plan immediately prior to the Effective Time.

 

Section 4.06.         Transitional Compensation Plan.  As of the Effective Time, SpinCo shall establish the SpinCo Transitional Compensation Plan pursuant to Section 2.03(a).  For not less than the General Continuation Period, the SpinCo Transitional Compensation Plan and the Parent Transitional Compensation Plan shall have substantially the same terms as of immediately prior to the Effective Time as the Parent Transitional Compensation Plan.  Notwithstanding the foregoing, the SpinCo Transitional Compensation Plan shall not provide for a gross-up of Taxes

 

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imposed under Section 4999 of the Code or a “Window Period” (as defined in the Parent Transitional Compensation Plan) and, during the General Continuation Period, Parent and SpinCo may make such changes, modifications or amendments to the SpinCo Transitional Compensation Plan and the Parent Transitional Compensation Plan, respectively, as may be required by applicable Law, it being understood that any such changes, modifications or amendments (except as expressly contemplated by this Section 4.06) shall not result in benefits that are less favorable than those applicable under the Parent Transitional Plan as in effect immediately prior to the Effective Time to the Parent Group Employees and SpinCo Group Employees who were participants in the Parent Transitional Compensation Plan immediately prior to the Effective Time.

 

Section 4.07.         Director Compensation.  Parent shall be responsible for the payment of any fees for service on the Parent Board that are earned at, before, or after the Effective Time, and SpinCo shall not have any responsibility for any such payments except as otherwise provided in Article VI with respect to deferred compensation.  With respect to any SpinCo non-employee director, SpinCo shall be responsible for the payment of any fees for service on the SpinCo Board that are earned at any time after the Effective Time and Parent shall not have any responsibility for any such payments.  Notwithstanding the foregoing, SpinCo shall commence paying quarterly cash retainers to SpinCo non-employee directors in respect of the quarter in which the Effective Time occurs; provided that (a) if Parent has already paid such quarter’s cash retainers to Parent non-employee directors prior to the Effective Time, then within thirty (30) days after the Distribution Date, SpinCo shall pay Parent an amount equal to the portion of such payment that is attributable to Transferred Directors’ service to SpinCo after the Distribution Date (other than any amount that is subject to a deferral election and is credited or to be credited to any such director’s account under the Parent Deferred Compensation Plan), and (b) if Parent has not yet paid such quarter’s cash retainers to Parent non-employee directors prior to the Effective Time, then within thirty (30) days after the Distribution Date, Parent shall pay SpinCo an amount equal to the portion of such payment that is attributable to Transferred Directors’ service to Parent on and prior to the Distribution Date.

 

ARTICLE V
 QUALIFIED AND NONQUALIFIED RETIREMENT PLANS

 

Section 5.01.         SpinCo Retirement Plan.

 

(a)           Assumption of Pre-Separation Parent Retirement Plan.  As of the Distribution Date, SpinCo shall assume, pursuant to Section 2.03(b), the Pre-Separation Parent Retirement Plan and related trust thereunder (including all related Assets and Liabilities), as the SpinCo Retirement Plan and related Trust.  For not less than the General Continuation Period, the SpinCo Retirement Plan, shall have substantially the same terms as of immediately prior to the Distribution Date as the Pre-Separation Parent Retirement Plan, with such changes, modifications or amendments to the SpinCo Retirement Plan as may be required by applicable Law or as are necessary and appropriate to reflect the Separation.

 

(b)           Establishment of Parent New Retirement Plan.  Effective as of the Distribution Date, Parent shall establish the Parent New Retirement Plan and Parent New Master Trust, which shall be intended to meet the Tax qualification requirements of Section 401(a) of the Code and Tax exemption requirements of Section 501(a) of the Code, and for not less than the

 

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General Continuation Period, the Parent New Retirement Plan shall have substantially the same terms as of immediately prior to the Distribution Date as the Pre-Separation Parent Retirement Plan, with such changes, modifications or amendments to the Parent New Retirement Plan, as may be required by applicable Law or as are necessary and appropriate to reflect the Separation.  Parent shall submit an application to the IRS as soon as practicable (but no later than the last day of the applicable remedial amendment period as described in Section 401(b) of the Code and the regulations and IRS pronouncements thereunder) requesting a determination letter that the Parent New Retirement Plan and Parent New Retirement Trust meet the Tax qualification requirements of Section 401(a) of the Code and Tax exemption requirements of Section 501(a) of the Code, and shall make any amendments reasonably requested by the IRS to receive such a favorable determination letter.   Prior to the Distribution Date, Parent shall file the notice required under Section 6058(b) of the Code.

 

(c)           Assumption of Liabilities; ERISA Section 4044 Transfer.

 

(i)            Assumption of Liabilities by the Parent New Retirement Plan.  As of the Distribution Date, Parent shall cause the Parent New Retirement Plan to assume Liabilities under the SpinCo Retirement Plan for Parent Group Employees and Former Parent Group Employees, and shall cause the Parent New Retirement Trust to accept Assets with respect to such assumed Liabilities (including Assets and Liabilities in respect of beneficiaries and/or alternate payees) in the amount determined consistent with Section 5.01(c)(ii)).  In accordance with the timing contemplated by Section 5.01(c)(ii), the SpinCo Retirement Trust shall transfer such Assets to the Parent New Retirement Trust and, upon completion of such Asset transfer, the SpinCo Retirement Plan and the SpinCo Group shall be relieved of such Liabilities.

 

(ii)           Transfer of Assets to the Parent New Retirement Plan.

 

(A)          The amount of Assets to be transferred from the SpinCo Retirement Trust to the Parent New Retirement Trust in respect of the assumption of Liabilities by Parent under Section 5.01(c)(i) (the “Retirement Plan Transfer Amount”) shall be determined, subject to adjustment contemplated by Section 5.01(c)(ii)(C), based on Assets as of the Distribution Date in accordance with, and shall comply with, Sections 411(d) and 414(l) of the Code, ERISA Section 208 and, to the extent deemed applicable by the Parties, ERISA Section 4044.  The Benefit Plans Committee of Parent and the Benefit Plans Committee of SpinCo shall mutually determine if the transfer of Assets shall be made in cash or kind, provided that any transfer in kind shall be pro rata to the extent practical or as otherwise agreed by the Benefit Plans Committee of Parent and the Benefit Plans Committee of SpinCo.  Assumptions used to determine the Retirement Plan Transfer Amount shall be the safe harbor assumptions specified for valuing benefits in trusteed plans under Department of Labor Regulations Section 4044.51-57 as of the Distribution Date and, to the extent not so specified, shall be based on the assumptions used in the annual valuation report to determine minimum funding requirements most recently prepared before the transfer by the actuary for the Pre-Separation Parent Retirement Plan.  Unless otherwise agreed by the Parties, actuarial determinations pursuant to this Section 5.01(c)(ii) shall be made by Towers Watson.

 

(B)          Unless Parent and SpinCo agree otherwise, within sixty (60) days after the Distribution Date, the SpinCo Retirement Trust shall transfer Assets having an aggregate value, as mutually determined by the Benefit Plans Committee of Parent and the Benefit Plans

 

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Committee of SpinCo, based on all relevant information known to the Benefit Plans Committee of Parent at the time of such determination, equal to ninety-five percent (95%) of the Retirement Plan Transfer Amount (the “Initial Retirement Plan Transfer Amount”) to the Parent New Retirement Trust, subject to compliance with applicable notice requirements to any Governmental Authority. The amounts transferred shall be determined in accordance with Section 5.01(c)(ii)(A). Prior to transferring the amounts determined in this Section 5.01(c)(ii)(B), Parent shall provide to SpinCo (I) a copy of the Parent New Retirement Plan and (II) a copy of certified resolutions of the Parent Board (or its authorized committee or other delegate) evidencing adoption of the Parent New Retirement Plan and the Parent New Master Trust.  During the time before the transfer contemplated by this Section 5.01(c)(ii)(B), benefits for Parent Group Employees and Former Parent Group Employees shall be paid from the SpinCo Retirement Trust.

 

(C)          Within one hundred fifty (150) days after the Distribution Date, Parent shall provide SpinCo with an updated calculation of the Retirement Plan Transfer Amount (the “Final Retirement Plan Transfer Amount”) as of a date that is as close as administratively feasible (taking into account the timing and reporting of valuation of assets in the SpinCo Retirement Trust) to the date of transfer contemplated by this Section 5.01(c)(ii)(C), as mutually determined by the Benefit Plans Committee of Parent and the Benefit Plans Committee of SpinCo, based on all relevant information known to the Benefit Plans Committee of Parent at the time of such determination, which  determination shall be final, conclusive and binding for all purposes under this Agreement.  Unless Parent and SpinCo agree otherwise, on the last Business Day of the month following the month in which the determination of the Final Retirement Plan Transfer Amount is made, SpinCo or Parent, as applicable, shall cause an additional transfer of Assets from the SpinCo Retirement Trust to the Parent New Retirement Trust, in an amount equal to the difference between (I) the Initial Retirement Plan Transfer Amount and (II) the Final Retirement Plan Transfer Amount, which Final Retirement Plan Transfer Amount shall be appropriately adjusted to reflect: (1) any distributions made from the SpinCo Retirement Trust in respect of Parent Group Employees and Former Parent Group Employees between the Distribution Date and the date of the transfers contemplated by Sections 5.01(c)(ii)(B) and (C); (2) Parent’s pro rata share of third-party fees, costs and expenses including trustee, investment management, trustee and administration and other similar fees incurred or due in respect of the plans, with such proportion based on the relative Liabilities of the plans as of the Distribution Date (as determined in accordance with Section 5.01(c)(ii)(A); and (3) actual investment earnings or Losses from the Distribution Date to the valuation date described in the first sentence of this Section 5.01(c)(ii)(C).

 

(d)           Parent New Retirement Plan Provisions.  The Parent New Retirement Plan shall provide that:

 

(i)            Parent Group Employees and Former Parent Group Employees shall (A) be eligible to participate in the Parent New Retirement Plan as of the Distribution Date to the extent that they were eligible to participate in the Pre-Separation Parent Retirement Plan as of immediately prior to the Distribution Date, and (B) receive credit for vesting, eligibility and benefit service for all service credited for those purposes under the Pre-Separation Parent Retirement Plan as of immediately prior to the Distribution Date;

 

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(ii)                                  the compensation that is recognized under the Pre-Separation Parent Retirement Plan as of immediately prior to the Distribution Date shall be credited and recognized for all applicable purposes under the Parent New Retirement Plan;

 

(iii)                               the accrued benefit of each Parent Group Employee or Former Parent Group Employee under the Pre-Separation Parent Retirement Plan as of the Distribution Date shall be payable under the Parent New Retirement Plan at the time and in a form that would have been permitted under the Pre-Separation Parent Retirement Plan as in effect as of immediately prior to the Distribution Date to the extent required by Section 411(d)(6) of the Code; and

 

(iv)                              the Parent New Retirement Plan shall assume and honor the terms of all QDROs in effect under the Pre-Separation Parent Retirement Plan as of immediately prior to the Distribution Date with respect to Parent Group Employees and Former Parent Group Employees.

 

(e)                                  SpinCo Retirement Plan After Distribution Date.  On and after the Distribution Date, (i) the SpinCo Retirement Plan shall continue to be responsible for Liabilities in respect of SpinCo Group Employees and Former SpinCo Group Employees, (ii) no Parent Group Employees or Former Parent Group Employees shall accrue any benefits under the SpinCo Retirement Plan, and (iii) in addition to any minimum required contributions and installments under Sections 412 and 430 of the Code with respect to the SpinCo Retirement Plan, SpinCo shall make supplemental contributions to the SpinCo Retirement Plan as set forth on Schedule 5.01(e).  Without limiting the generality of the foregoing, Parent Group Employees or Former Parent Group Employees shall cease to be participants in the SpinCo Retirement Plan, effective as of the Distribution Date.

 

(f)                                   Plan Fiduciaries.  On and after the Distribution Date, the Parties agree that the applicable fiduciaries of each of the Parent New Retirement Plan and the SpinCo Retirement Plan, respectively, shall have the authority with respect to the Parent New Retirement Plan and the SpinCo Retirement Plan, respectively, to determine the plan investments and such other matters as are within the scope of their duties under ERISA and the terms of the applicable plan documents.

 

Section 5.02.                          Retained Qualified Plans.

 

(a)                                 Parent Retained Qualified Plans.  As of no later than the Distribution Date, except as set forth in Section 5.01 and Section 5.03, the Parent Group shall retain sponsorship of the Benefit Plans intended to be Tax-qualified retirement plans (whether under ERISA or the Laws of a jurisdiction other than the U.S.) and sponsored by a member of the Parent Group prior to the Distribution Date (collectively, the “Parent Retained Qualified Plans”), and, from and after the Distribution Date, all Assets and Liabilities thereunder shall be Assets and Liabilities of the Parent Group.

 

(b)                                 SpinCo Retained Qualified Plans.  As of no later than the Distribution Date, in addition to the plans assumed under Section 5.01 and Section 5.03, the SpinCo Group shall retain sponsorship of the Benefit Plans intended to be Tax-qualified retirement plans (whether under ERISA or the Laws of a jurisdiction other than the U.S.) and sponsored by a member of the

 

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SpinCo Group prior to the Distribution Date (collectively, the “SpinCo Retained Qualified Plans”), and, from and after the Distribution Date, all Assets and Liabilities thereunder shall be Assets and Liabilities of the SpinCo Group.

 

(c)                                  Plan Fiduciaries.  On and after the Distribution Date, the Parties agree that the applicable fiduciaries of each of the Parent Retained Qualified Plans and the SpinCo Retained Qualified Plans, respectively, shall have the authority with respect to the Parent Retained Qualified Plans and the SpinCo Retained Qualified Plans, respectively, to determine the investment alternatives, the terms and conditions with respect to those investment alternatives and such other matters as are within the scope of their duties under ERISA and the terms of the applicable plan documents.

 

Section 5.03.                          401(k) Plans.

 

(a)                                 TEGNA 401(k) Plan.  Prior to the Distribution Date, Parent shall (i) amend the TEGNA 401(k) Plan as described below to cover Persons effective as of a date specified by Parent that is prior to the Distribution Date (the “TEGNA Participation Date”), who Parent has designated as Parent Group Employees and Former Parent Group Employees as of the TEGNA Participation Date and (ii) amend the Pre-Separation Parent 401(k) Plan to provide that such designated Persons shall cease to be participants in the Pre-Separation Parent 401(k) Plan effective immediately prior to the TEGNA Participation Date and all other Parent Group Employees and Former Parent Group Employees shall cease to be participants in the Pre-Separation Parent 401(k) Plan effective immediately prior to the Distribution Date. The TEGNA 401(k) Plan shall provide that:

 

(i)                                     each Parent Group Employee and Former Parent Group Employee shall (A) be eligible to participate in the TEGNA 401(k) Plan as of (1) the TEGNA Participation Date to the extent that such Person was eligible to participate in the Pre-Separation Parent 401(k) Plan as of immediately prior to the TEGNA Participation Date and designated by Parent as a Parent Group Employee and Former Parent Group Employee as of the TEGNA Participation Date or (2) the Distribution Date, to the extent such Person was eligible to participate in the Pre-Separation Parent 401(k) Plan immediately prior to the Distribution Date and was not previously designated as of the TEGNA Participation Date as a Parent Group Employee and Former Parent Group Employee, and (B) receive credit for all service credited for that purpose and any other applicable purpose under the Pre-Separation Parent 401(k) Plan as of immediately prior to the TEGNA Participation Date or the Distribution Date, as applicable; and

 

(ii)                                  the TEGNA 401(k) Plan shall assume and honor the terms of all QDROs in effect under the Pre-Separation Parent 401(k) Plan, in respect of Parent Group Employees and Former Parent Group Employees as of immediately prior to the TEGNA Participation Date or the Distribution Date, as applicable.

 

(b)                                 SpinCo 401(k) Plan.  As of no later than the Distribution Date, SpinCo shall assume pursuant to Section 2.03(b) the Pre-Separation Parent 401(k) Plan and related trust thereunder, including all related Assets and Liabilities, which on and after the Distribution Date shall be the SpinCo 401(k) Plan and related trust thereunder.  On and after the Distribution Date, (i) the SpinCo 401(k) Plan shall be responsible for Liabilities in respect of SpinCo Group

 

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Employees and Former SpinCo Group Employees, and (ii) no Parent Group Employees or Former Parent Group Employees shall accrue any benefits under the SpinCo 401(k) Plan.  Without limiting the generality of the foregoing, Parent Group Employees and Former Parent Group Employees shall cease to be participants in the SpinCo 401(k) Plan effective as of the TEGNA Participation Date or Distribution Date, as applicable.

 

(c)                                  Benefit Continuation.  For not less than the General Continuation Period, the SpinCo 401(k) Plan shall have substantially comparable terms as of immediately prior to the Distribution Date as the Pre-Separation Parent 401(k) Plan, with such changes, modifications or amendments to the SpinCo 401(k) Plan as may be required by applicable Law or as are necessary and appropriate to reflect the Separation, it being understood that any such changes, modifications or amendments shall not result in benefits that are less favorable than those provided under the Pre-Separation Parent 401(k) Plan immediately prior to the Distribution Date to Employees who were participants at such times and are covered as of the Distribution Date by the SpinCo 401(k) Plan.

 

(d)                                 Transfer of Account Balances to TEGNA 401(k) Plan Trust.  On or after the TEGNA Participation Date and prior to the Distribution Date (unless otherwise determined by Parent), Parent shall cause the trustee of the Pre-Separation Parent 401(k) Plan to transfer from the Pre-Separation Parent 401(k) trust(s) that forms a part of the Pre-Separation Parent 401(k) Plan to the trust(s) that forms a part of the TEGNA 401(k) Plan the account balances of the Persons who  Parent has designated as Parent Group Employees and Former Parent Group Employees as of the TEGNA Participation Date under the Pre-Separation Parent 401(k) Plan, determined as of the date of the transfer.  Such transfers shall be made in cash or in kind, as determined by Parent, provided that with respect to any outstanding loans such transfers shall be in kind, including promissory notes evidencing the transfer of outstanding loans, and, with respect to unitized investments in the Parent Common Stock Fund (the “Parent Share Fund”), such transfer shall include Parent Shares and, if applicable, SpinCo Shares.  Not later than thirty (30) days following the Distribution Date, with respect to any Parent Group Employees or Former Group Employees who were not designated by Parent as of the TEGNA Participation Date as a Parent Group Employee or a Former Group Employee, Parent shall cause the trustee of the SpinCo 401(k) Plan to transfer from the SpinCo 401(k) trust(s) that forms a part of the SpinCo 401(k) Plan to the trust(s) that forms a part of the TEGNA 401(k) Plan the account balances of Parent Group Employees and Former Parent Group Employees not previously transferred from the trust that forms part of the SpinCo 401(k) Plan, determined as of the date of the transfer.  Such transfers shall be made in cash or in kind, as determined by the Parties, provided that with respect to any outstanding loans such transfers shall be in kind, including promissory notes evidencing the transfer of outstanding loans.  With respect to any Person who was designated by Parent as a Parent Group Employee or Former Parent Group Employee as of the TEGNA Participation Date but is a SpinCo Group Employee or a Former SpinCo Group Employee as of the Distribution Date, the Parties shall use procedures similar to those set forth in the preceding sentence to transfer such Person’s account balance from the trust under the TEGNA 401(k) Plan to the trust under the SpinCo 401(k) Plan.  Any Asset and Liability transfers pursuant to this Section 5.03(d) shall comply in all respects with Sections 414(l) and 411(d)(6) of the Code.

 

(e)                                  SpinCo Share Fund in SpinCo 401(k) Plan.  The SpinCo 401(k) Plan shall provide, effective as of the Effective Time:  (i) for the establishment of a share fund for SpinCo

 

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Shares (the “SpinCo Share Fund”); (ii) that such SpinCo Share Fund shall receive all SpinCo Shares distributed in connection with the Distribution in respect of Parent Shares held in SpinCo 401(k) Plan accounts of SpinCo Group Employees and Former SpinCo Group Employees participating in the SpinCo 401(k) Plan immediately prior to the Effective Time; and (iii) that, following the Effective Time, contributions made by or on behalf of such participants shall be allocated to the SpinCo Share Fund, if so directed in accordance with the terms of the SpinCo 401(k) Plan.

 

(f)                                   Parent Share Fund in SpinCo 401(k) Plan.  Participants in the SpinCo 401(k) Plan shall be prohibited from increasing their holdings in the Parent Share Fund under the SpinCo 401(k) Plan and may elect to liquidate their holdings in the Parent Share Fund and invest those monies in any other investment fund offered under the SpinCo 401(k) Plan.  After the Effective Time, all outstanding investments in the Parent Share Fund under the SpinCo 401(k) Plan shall be liquidated and reinvested in other investment funds offered under the SpinCo 401(k) Plan, on such dates and in accordance with such procedures as are determined by the administrator of the SpinCo 401(k) Plan.

 

(g)                                  SpinCo Share Fund in TEGNA 401(k) Plan.  SpinCo Shares distributed in connection with the Distribution in respect of Parent Shares transferred to the TEGNA 401(k) Plan accounts of Parent Group Employees or Former Parent Group Employees who participate in the TEGNA 401(k) Plan shall be deposited in a SpinCo Share Fund under the TEGNA 401(k) Plan, and such participants in the TEGNA 401(k) Plan shall be prohibited from increasing their holdings in such SpinCo Share Fund under the TEGNA 401(k) Plan and may elect to liquidate their holdings in such SpinCo Share Fund and invest those monies in any other investment fund offered under the TEGNA 401(k) Plan.  After the Effective Time, all outstanding investments in the SpinCo Share Fund under the TEGNA 401(k) Plan shall be liquidated and reinvested in other investment funds offered under the TEGNA 401(k) Plan, on such dates and in accordance with such procedures as are determined by the administrator of the TEGNA 401(k) Plan.

 

(h)                                 Plan Fiduciaries.  For all periods on and after the Distribution Date, the Parties agree that the applicable fiduciaries of each of the TEGNA 401(k) Plan and the SpinCo 401(k) Plan, respectively, shall have the authority with respect to the TEGNA 401(k) Plan and the SpinCo 401(k) Plan, respectively, to determine the investment alternatives, the terms and conditions with respect to those investment alternatives and such other matters as are within the scope of their duties under ERISA and the terms of the applicable plan documents.

 

Section 5.04.                          Supplemental Retirement Plan.

 

(a)                                 Establishment of Plan.  As of the Distribution Date, SpinCo shall establish the SpinCo SERP pursuant to Section 2.03(a).  For not less than the General Continuation Period, the SpinCo SERP shall have substantially the same terms as of immediately prior to the Effective Time as the Parent SERP.  During the General Continuation Period, SpinCo may make such changes, modifications or amendments to the SpinCo SERP, as may be required by applicable Law or as are necessary and appropriate to reflect the Separation, it being understood that any such changes, modifications or amendments shall not result in benefits that are less favorable than those provided under the Parent SERP to participants in the SpinCo SERP who were participants in the Parent SERP immediately prior to the Effective Time.

 

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(b)                                 Assumption of Liabilities.  As of the Distribution Date, SpinCo shall, and shall cause the SpinCo SERP to, assume all Liabilities under the Parent SERP for the benefits of SpinCo Group Employees and Former SpinCo Group Employees determined as of immediately prior to the Distribution Date, and the Parent Group and the Parent SERP shall be relieved of all Liabilities for those benefits.  Parent shall retain all Liabilities under the Parent SERP for the benefits of Parent Group Employees and Former Parent Group Employees.  On and after the Distribution Date, SpinCo Group Employees and Former SpinCo Group Employees shall cease to be participants in the Parent SERP.  For the avoidance of doubt, SpinCo shall not be required to establish or fund a rabbi trust for the purpose of funding the benefits under the SpinCo SERP and Parent shall not transfer any Assets to SpinCo with respect to the Liabilities under the SpinCo SERP.

 

ARTICLE VI

NONQUALIFIED DEFERRED COMPENSATION PLAN

 

Section 6.01.                          Deferred Compensation Plan.

 

(a)                                 Establishment of the Deferred Compensation Plan.  As of the Effective Time, SpinCo shall establish the SpinCo Deferred Compensation Plan pursuant to Section 2.03(a).  For not less than the General Continuation Period, the SpinCo Deferred Compensation Plan shall have substantially comparable terms as of immediately prior to the Effective Time as the Parent Deferred Compensation Plan, with such changes, modifications or amendments to the SpinCo Deferred Compensation Plan as may be required by applicable Law.

 

(b)                                 Assumption of Liabilities from SpinCo.  As of the Effective Time, SpinCo shall, and shall cause the SpinCo Deferred Compensation Plan to, assume all Liabilities under the Parent Deferred Compensation Plan for the benefits of SpinCo Group Employees, Former SpinCo Group Employees and Transferred Directors determined as of immediately prior to the Effective Time, and the Parent Group and the Parent Deferred Compensation Plan shall be relieved of all Liabilities for those benefits.  Parent shall retain all Liabilities under the Parent Deferred Compensation Plan for the benefits for Parent Group Employees, Former Parent Group Employees, non-employee directors of Parent as of immediately following the Effective Time and former non-employee directors of Parent (other than the Transferred Directors).  From and after the Effective Time, SpinCo Group Employees, Former SpinCo Group Employees and Transferred Directors shall cease to be participants in the Parent Deferred Compensation Plan.  For the avoidance of doubt and notwithstanding the terms of Section 4.02(h), (i) the SpinCo Deferred Compensation Plan shall assume all Liabilities in respect of Post-Separation Parent Awards and SpinCo Awards held by SpinCo Group Employees, Former SpinCo Group Employees and Transferred Directors for which a deferral election had been made as of the Effective Time, and (ii) the Parent Deferred Compensation Plan shall retain all Liabilities in respect of Post-Separation Parent Awards and SpinCo Awards held by Parent Group Employees, Former Parent Group Employees, non-employee directors of Parent as of immediately following the Effective Time and former non-employee directors of Parent (other than the Transferred Directors) for which a deferral election had been made as of the Effective Time.

 

(c)                                  Treatment of Deferred Shares and Deferred Awards.  Subject to the immediately following sentence, as of the Effective Time, all Parent Shares notionally credited to

 

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participants’ accounts under the Parent Deferred Compensation Plan and SpinCo Deferred Compensation Plan shall be notionally credited with SpinCo Shares as determined by applying the Distribution Ratio in the same way as if the notionally credited Parent Shares were outstanding and vested as of the Effective Time.  As of the Effective Time, all Parent Awards that have been credited to participants’ accounts under the Parent Deferred Compensation Plan and SpinCo Deferred Compensation Plan shall be notionally adjusted in the manner contemplated by Section 4.02.  As of no later than the Effective Time, the Parent Deferred Compensation Plan shall be amended to provide that any notional SpinCo Shares or SpinCo Awards that would ordinarily be settled in SpinCo Shares shall  be settled for cash,  and vested SpinCo Awards may, at the election of the applicable participant, be notionally invested into an investment alternative other than SpinCo Shares.  As of no later than the Effective Time, the SpinCo Deferred Compensation Plan shall provide that any notional Parent Shares or Post-Separation Parent Awards that would ordinarily be settled in Parent Shares shall  be settled for cash, and Parent Shares and vested Post-Separation Parent Awards may, at the election of the applicable participant, be notionally invested into an investment alternative other than Parent Shares.

 

(d)                                 Rabbi Trust.  Prior to the Distribution Date, SpinCo shall adopt the SpinCo Deferred Compensation Rabbi Trust, the terms of which shall be substantially comparable as of immediately prior to the Effective Time to the terms of the Parent Deferred Compensation Rabbi Trust to the extent such terms of the Parent Deferred Compensation Rabbi Trust relate to obligations in respect of the Parent Deferred Compensation Plan, with such changes, modifications or amendments to the SpinCo Deferred Compensation Rabbi Trust as may be required by applicable Law.  In connection with the establishment by SpinCo of the SpinCo Deferred Compensation Plan and the assumption by SpinCo and the SpinCo Deferred Compensation Plan of the Liabilities under the Parent Deferred Compensation Plan in respect of the SpinCo Group Employees, Former SpinCo Group Employees and Transferred Directors, on or prior to the Distribution Date, Parent shall, or shall cause SpinCo to, make a contribution in cash to the SpinCo Deferred Compensation Rabbi Trust in an amount that is at least equal to the value of the account balances as of such contribution date of the SpinCo Group Employees, Former SpinCo Group Employees and Transferred Directors participating in  such plans as of the contribution date.

 

Section 6.02.                          Participant Elections.  Any election made by a SpinCo Group Employee, Former SpinCo Group Employee and Transferred Director under the Parent Deferred Compensation Plan, including without limitation those with respect to compensation deferral, investments, optional forms of benefit, benefit commencement and beneficiaries, shall be recognized for the same purposes under the SpinCo Deferred Compensation Plan.  No new elections shall be permitted under the Parent Deferred Compensation Plan and SpinCo Deferred Compensation Plan as a result of the Separation.

 

Section 6.03.                          Participation; Distributions.  The Parties acknowledge that none of the transactions contemplated by this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement shall trigger a payment or distribution of compensation under any of the Parent Deferred Compensation Plan, or SpinCo Deferred Compensation Plan for any participant and, consequently, that the payment or distribution of any compensation to which such participant is entitled under any such plan shall occur upon such participant’s separation from service from the

 

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Parent Group or SpinCo Group or at such other time as provided in the applicable deferred compensation plan or participant’s deferral election.

 

ARTICLE VII

WELFARE BENEFIT PLANS

 

Section 7.01.                          Welfare Plans.

 

(a)                                 Establishment of SpinCo Welfare Plans.  Except as otherwise provided in this Article VII, as of the Effective Time, SpinCo shall establish the SpinCo Welfare Plans (other than the Pre-Separation Parent Supplemental Unemployment Benefit Pay Plan and Trust, the Pre-Separation Post-65 Retiree Medical Plan and certain obligations in respect of long-term disability benefits contemplated by Section 7.09, each of which shall be assumed by SpinCo under Section 7.04, Section 7.08 and Section 7.09, respectively, of this Agreement) pursuant to Section 2.03(a).  For not less than the General Continuation Period, the SpinCo Welfare Plans shall have terms substantially comparable to those of the corresponding Pre-Separation Parent Welfare Plans listed on Schedule 7.01(a), and in all cases, with such changes, modifications or amendments as may be required by applicable Law or as are necessary and appropriate to reflect the Separation.

 

(b)                                 Waiver of Conditions; Benefit Maximums.  SpinCo shall use commercially reasonable efforts to cause the SpinCo Welfare Plans to:

 

(i)                                     with respect to initial enrollment as of the Effective Time, waive (x) all limitations as to preexisting conditions, exclusions, and service conditions with respect to participation and coverage requirements applicable to any SpinCo Group Employee or Former SpinCo Group Employee, other than limitations that were in effect with respect to the SpinCo Group Employee or Former SpinCo Group Employee under the applicable Pre-Separation Parent Welfare Plan as of immediately prior to the Effective Time, and (y) any waiting period limitation or evidence of insurability requirement applicable to a SpinCo Group Employee or Former SpinCo Group Employee other than limitations or requirements that were in effect with respect to such SpinCo Group Employee or Former SpinCo Group Employee under the applicable Pre-Separation Parent Welfare Plans as of immediately prior to the Effective Time; and

 

(ii)                                  take into account (x) with respect to aggregate annual, lifetime, or similar maximum benefits available under the SpinCo Welfare Plans, a SpinCo Group Employee’s or Former SpinCo Group Employee’s prior claim experience under the Pre-Separation Parent Welfare Plans and any Benefit Plan that provides leave benefits; and (y) any eligible expenses incurred by a SpinCo Group Employee or Former SpinCo Group Employee and his or her covered dependents during the portion of the plan year of the applicable Pre-Separation Parent Welfare Plan ending as of the Effective Time to be taken into account under such SpinCo Welfare Plan for purposes of satisfying all deductible, coinsurance, and maximum out-of-pocket requirements applicable to such SpinCo Group Employee or Former SpinCo Group Employee and his or her covered dependents for the applicable plan year to the same extent as such expenses were taken into account by Parent for similar purposes prior to the Effective Time as if such amounts had been paid in accordance with such SpinCo Welfare Plan.

 

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(c)                                  Health Savings Accounts.  As of no later than the Effective Time, SpinCo shall establish a SpinCo Welfare Plan that shall provide health savings account benefits to SpinCo Group Employees on and after the Effective Time (a “SpinCo HSA”).  It is the intention of the Parties that all activity under a SpinCo Group Employee’s health savings account under a Parent Welfare Plan, which for the avoidance of doubt includes a Pre-Separation Parent Welfare Plan (a “Parent HSA”) for the year in which the Effective Time occurs be treated instead as activity under the corresponding account under the SpinCo HSA, such that (i) any period of participation by a SpinCo Group Employee in a Parent HSA during the year in which the Effective Time occurs shall be deemed a period when such SpinCo Group Employee participated in the corresponding SpinCo HSA; (ii) all expenses incurred during such period shall be deemed incurred while such SpinCo Group Employee’s coverage was in effect under the corresponding SpinCo HSA; and (iii) all elections and reimbursements made with respect to such period under the Parent HSA shall be deemed to have been made with respect to the corresponding SpinCo HSA.

 

(d)                                 Flexible Spending Accounts.  As of no later than the Effective Time, SpinCo shall establish SpinCo Welfare Plans that shall provide health or dependent care flexible spending account benefits to SpinCo Group Employees on and after the Effective Time (collectively, the “SpinCo Flex Plan”).  The Parties shall use commercially reasonable efforts to ensure that as of the Effective Time any health and dependent care flexible spending accounts of SpinCo Group Employees (whether positive or negative) (the “Transferred Account Balances”) under Parent Welfare Plans, which for the avoidance of doubt includes a Pre-Separation Parent Welfare Plan that are health or dependent care flexible spending account plans, are transferred as soon as practicable after the Effective Time, from the Parent Welfare Plans to the SpinCo Flex Plan.  Such SpinCo Flex Plan shall assume responsibility as of the Effective Time for all outstanding health or dependent care claims under the corresponding Parent Welfare Plans of each SpinCo Group Employee for the year in which the Effective Time occurs and shall assume and agree to perform the obligations of the corresponding Parent Welfare Plans from and after the Effective Time.  As soon as practicable after the Effective Time, and in any event within thirty (30) days after the amount of the Transferred Account Balances is determined or such later date as mutually agreed upon by the Parties, Parent shall pay SpinCo the net aggregate amount of the Transferred Account Balances, if such amount is positive, and SpinCo shall pay Parent the net aggregate amount of the Transferred Account Balances, if such amount is negative.

 

(e)                                  Allocation of Welfare Plan Assets and Liabilities.  Except as otherwise provided in this Article VII, including Section 7.04, Section 7.08 and Section 7.09, effective as of the Effective Time, the Parent Group shall retain or assume, as applicable, and be responsible for all Assets (including any insurance contracts, policies or other funding vehicles) and Liabilities relating to, arising out of or resulting from health and welfare coverage or claims incurred by or on behalf of Parent Group Employees or Former Parent Group Employees under the Pre-Separation Parent Welfare Plans, SpinCo Welfare Plans or Parent Welfare Plans before, at, or after the Effective Time, and the SpinCo Group shall retain or assume, as applicable, and be responsible for all Assets (including any insurance contracts, policies or other funding vehicles) and Liabilities relating to, arising out of or resulting from health and welfare coverage or claims incurred by or on behalf of SpinCo Group Employees or Former SpinCo Group Employees under the Pre-Separation Parent Welfare Plans, SpinCo Welfare Plans or Parent Welfare Plans before, at, or after the Effective Time.  Except as otherwise provided in this Article VII, including Section 7.04, Section 7.08 and Section 7.09, no SpinCo Welfare Plan shall provide coverage to any Parent Group

 

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Employee or Former Parent Group Employee after the Effective Time, and no Parent Welfare Plan shall provide coverage to any SpinCo Group Employee or Former SpinCo Group Employee after the Effective Time.

 

Section 7.02.                          COBRA and HIPAA.  The Parent Group shall continue to be responsible for complying with, and providing coverage pursuant to, the health care continuation requirements of COBRA, and the corresponding provisions of the Parent Welfare Plans with respect to any Parent Group Employees and any Former Parent Group Employees (and their covered dependents) who incur a qualifying event under COBRA before, as of, or after the Effective Time.  Effective as of the Effective Time, the SpinCo Group shall assume responsibility for complying with, and providing coverage pursuant to, the health care continuation requirements of COBRA, and the corresponding provisions of the SpinCo Welfare Plans with respect to any SpinCo Group Employees or Former SpinCo Group Employees (and their covered dependents) who incur a qualifying event or loss of coverage under the SpinCo Welfare Plans and/or the Parent Welfare Plans before, as of, or after the Effective Time.  The Parties agree that the consummation of the transactions contemplated by the Separation and Distribution Agreement shall not constitute a COBRA qualifying event for any purpose of COBRA.

 

Section 7.03.                          Vacation, Holidays and Leaves of Absence.  Effective as of no later than the Effective Time, the SpinCo Group shall assume all Liabilities of the SpinCo Group with respect to vacation, holiday, annual leave or other leave of absence, and required payments related thereto, for each SpinCo Group Employee, unless otherwise required by applicable Law.  The Parent Group shall retain all Liabilities with respect to vacation, holiday, annual leave or other leave of absence, and required payments related thereto, for each Parent Group Employee.

 

Section 7.04.                          Severance and Unemployment Compensation.  As of the Effective Time, SpinCo or another member of the SpinCo Group shall assume pursuant to Section 2.03(b) the Pre-Separation Parent Supplemental Unemployment Benefit Pay Plan and Trust, including all Assets thereunder, which on and after the Distribution Date shall be the SpinCo Supplemental Unemployment Benefit Pay Plan and Trust.  As of the Effective Time, the SpinCo Group shall assume and be responsible for any and all Liabilities to, or relating to, SpinCo Group Employees and Former SpinCo Group Employees in respect of severance, unemployment compensation and supplemental unemployment benefits, regardless of whether the event giving rise to the Liability occurred before, at or after the Effective Time.  The Parent Group shall retain or assume, as applicable, and be responsible for any and all Liabilities to, or relating to, Parent Group Employees and Former Parent Group Employees in respect of severance, unemployment compensation and supplemental unemployment benefits, regardless of whether the event giving rise to the Liability occurred before, at or after the Effective Time; provided that, with respect to obligations for supplemental unemployment pay benefits to a Former Parent Group Employee who was terminated prior to the Distribution Date, the Parent Group shall be liable to such employee only to the extent such benefits are not otherwise provided by the Pre-Separation Parent Supplemental Unemployment Benefit Pay Plan and Trust, and if such Former Parent Group Employee receives payment of such benefits after the Distribution Date from the SpinCo Supplemental Unemployment Benefit Pay Plan and Trust, Parent shall promptly reimburse SpinCo upon the submission by SpinCo to Parent  of an invoice detailing such payment.

 

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Section 7.05.                          Workers’ Compensation.  With respect to claims for workers’ compensation in the U.S., (a) the SpinCo Group shall be responsible for claims in respect of SpinCo Group Employees and Former SpinCo Group Employees, whether occurring before, at or after the Effective Time, and (b) the Parent Group shall be responsible for all claims in respect of Parent Group Employees and Former Parent Group Employees, whether occurring before, at or after the Effective Time.  The treatment of workers’ compensation claims by SpinCo with respect to Parent insurance policies shall be governed by Section 5.1 of the Separation and Distribution Agreement.

 

Section 7.06.                          Insurance Contracts.  To the extent that any Welfare Plan is funded through the purchase of an insurance contract or is subject to any stop loss contract, the Parties shall cooperate and use their commercially reasonable efforts to replicate such insurance contracts for SpinCo or Parent as applicable (except to the extent that changes are required under applicable Law or filings by the respective insurers) and to maintain any pricing discounts or other preferential terms for both Parent and SpinCo for a reasonable term.  Neither Party shall be liable for failure to obtain such insurance contracts, pricing discounts, or other preferential terms for the other Party.  Each Party shall be responsible for any additional premiums, charges, or administrative fees that such Party may incur pursuant to this Section 7.06.

 

Section 7.07.                          Third-Party Vendors.  Except as provided below, to the extent that any Welfare Plan is administered by a third-party vendor, the Parties shall cooperate and use their commercially reasonable efforts to replicate any contract with such third-party vendor for Parent or SpinCo, as applicable and to maintain any pricing discounts or other preferential terms for both Parent and SpinCo for a reasonable term.  Neither Party shall be liable for failure to obtain such pricing discounts or other preferential terms for the other Party.  Each Party shall be responsible for any additional premiums, charges, or administrative fees that such Party may incur pursuant to this Section 7.07.

 

Section 7.08.                          Post-65 Retiree Medical.  As of the Distribution Date, SpinCo shall assume the Pre-Separation Parent Post-65 Retiree Medical Plan pursuant to Section 2.03(b) as the SpinCo Post-65 Retiree Medical Plan.  Until at least December 31, 2016, such plan shall have terms substantially comparable to those of the Pre-Separation Parent Post-65 Retiree Medical Plan immediately prior to the Distribution Date as applicable to the Employees and Former Employees who were participants or eligible participants under such plan as of immediately prior to the Distribution Date by the Pre-Separation Parent Post-65 Retiree Medical Plan with such changes, modifications or amendments as may be required by applicable Law or as are necessary and appropriate to reflect the Separation.  As of the Distribution Date, the SpinCo Group shall assume and remain responsible for all Liabilities relating to, arising out of or resulting from post-65 retiree medical plan health and welfare coverage or claims under the Pre-Separation Parent Post-65 Retiree Medical Plan relating to all eligible Employees, regardless of whether the event giving rise to the Liability occurred before, at or after the Distribution Date; provided that Parent shall reimburse SpinCo for the actual costs incurred by SpinCo under the SpinCo Post-65 Retiree Medical Plan in respect of any Parent Group Employee or Former Parent Group Employee, which reimbursement shall occur within 30 days of Parent’s receipt of notice and documentation of SpinCo’s incurrence of such costs.  In no event shall SpinCo take a Tax deduction for the costs attributable to the provision of such benefits to Parent Group Employees or Former Parent Group Employees, and at least annually, SpinCo shall timely provide Parent with such information as is

 

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necessary to determine the timing and amount of any applicable deduction by Parent with respect to the provision of such benefits to any Parent Group Employee or Former Parent Group Employee.

 

Section 7.09.                          Self-Insured Long-Term Disability.  As of the Distribution Date, the SpinCo Group shall assume and remain responsible for all Liabilities relating to, arising out of or resulting from long-term disability coverage or claims that are not covered by a third-party insurance policy incurred by any Employees who, as of immediately prior to the Distribution Date, are eligible for such benefits under a Parent Benefit Plan.  As of the Distribution Date, the Parent Group shall make a payment to SpinCo in an amount equal to the actuarial present value of such Liabilities that are attributable to Employees who historically provided services to the Parent Business and a prorated portion of such Liabilities that are attributable to Employees who historically provided services to both the SpinCo Business and Parent Business, as determined by Towers Watson based on reasonable actuarial assumptions in consultation with Parent.

 

ARTICLE VIII

NON-U.S. EMPLOYEES

 

SpinCo Group Employees and Former SpinCo Group Employees who are residents outside of the U.S. or otherwise are subject to non-U.S. Law and their related benefits and Liabilities shall be treated in the same manner as the SpinCo Group Employees and Former SpinCo Group Employees, respectively, who are residents of the U.S. and are not subject to non-U.S. Law.  Notwithstanding anything in this Agreement to the contrary, all actions taken with respect to non-U.S. Employees or U.S. Employees working in non-U.S. jurisdictions shall be subject to and accomplished in accordance with applicable Law consistent with the custom of the applicable jurisdictions.

 

ARTICLE IX

MISCELLANEOUS

 

Section 9.01.                          Information Sharing and Access.

 

(a)                                 Sharing of Information.  Subject to any limitations imposed by applicable Law, each of Parent and SpinCo (acting directly or through members of the Parent Group or the SpinCo Group, respectively) shall provide to the other Party and its authorized agents and vendors all information necessary (including information for purposes of determining benefit eligibility, participation, vesting, calculation of benefits) on a timely basis under the circumstances for the Party to perform its duties under this Agreement.  Such information shall include information relating to equity awards under stock plans.  To the extent that such information is maintained by a third-party vendor, each Party shall use its commercially reasonable efforts to require the third-party vendor to provide the necessary information and assist in resolving discrepancies or obtaining missing data.

 

(b)                                 Transfer of Personnel Records and Authorization.  Subject to any limitation imposed by applicable Law and to the extent that it has not done so before the Effective Time, Parent shall transfer to SpinCo any and all employment records (including any Form I-9, Form W-2 or other IRS forms) with respect to SpinCo Group Employees and Former SpinCo Group

 

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Employees and other records reasonably required by SpinCo to enable SpinCo properly to carry out its obligations under this Agreement.  Such transfer of records generally shall occur as soon as administratively practicable at or after the Effective Time.  Each Party shall permit the other Party reasonable access to its Employee records, to the extent reasonably necessary for such accessing Party to carry out its obligations hereunder.

 

(c)                                  Access to Records.  To the extent not inconsistent with this Agreement, the Separation and Distribution Agreement or any applicable privacy protection Laws or regulations, reasonable access to Employee-related and benefit plan related records after the Effective Time shall be provided to members of the Parent Group and members of the SpinCo Group pursuant to the terms and conditions of Article VI of the Separation and Distribution Agreement.

 

(d)                                 Maintenance of Records.  With respect to retaining, destroying, transferring, sharing, copying and permitting access to all Employee-related information, Parent and SpinCo shall comply with all applicable Laws, regulations and internal policies, and shall indemnify and hold harmless each other from and against any and all Liability, Actions, and damages that arise from a failure (by the indemnifying Party or its Subsidiaries or their respective agents) to so comply with all applicable Laws, regulations and internal policies applicable to such information.

 

(e)                                  Cooperation.  Each Party shall use commercially reasonable efforts to cooperate and work together to unify, consolidate and share (to the extent permissible under applicable privacy/data protection Laws) all relevant documents, resolutions, government filings, data, payroll, employment and benefit plan information on regular timetables and cooperate as needed with respect to (i) any claims under or audit of or litigation with respect to any employee benefit plan, policy or arrangement contemplated by this Agreement, (ii) efforts to seek a determination letter, private letter ruling or advisory opinion from the IRS or U.S. Department of Labor on behalf of any employee benefit plan, policy or arrangement contemplated by this Agreement, (iii) any filings that are required to be made or supplemented to the IRS, U.S. Pension Benefit Guaranty Corporation, U.S. Department of Labor or any other Governmental Authority, and (iv) any audits by a Governmental Authority or corrective actions, relating to any Benefit Plan, labor or payroll practices; provided, however, that requests for cooperation must be reasonable and not interfere with daily business operations.

 

(f)                                   Confidentiality.  Notwithstanding anything in this Agreement to the contrary, all confidential records and data relating to Employees to be shared or transferred pursuant to this Agreement shall be subject to Section 6.9 of the Separation and Distribution Agreement and the requirements of applicable Law.

 

Section 9.02.                          Preservation of Rights to Amend.  Except as set forth in this Agreement, the rights of each member of the Parent Group and each member of the SpinCo Group to amend, waive, or terminate any plan, arrangement, agreement, program, or policy referred to herein shall not be limited in any way by this Agreement.

 

Section 9.03.                          Fiduciary Matters.  Parent and SpinCo each acknowledges that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable Law, and no Party shall be deemed to be in

 

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violation of this Agreement if it fails to comply with any provisions hereof based upon its good-faith determination (as supported by advice from counsel experienced in such matters) that to do so would violate such a fiduciary duty or standard.  Each Party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party for any Liabilities caused by the failure to satisfy any such responsibility.

 

Section 9.04.                          Further Assurances.  Each Party hereto shall take, or cause to be taken, any and all reasonable actions, including the execution, acknowledgment, filing and delivery of any and all documents and instruments that any other Party hereto may reasonably request in order to effect the intent and purpose of this Agreement and the transactions contemplated hereby.

 

Section 9.05.                          Counterparts; Entire Agreement; Corporate Power.

 

(a)                                 This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Party.

 

(b)                                 This Agreement, the Separation and Distribution Agreement and the Ancillary Agreements and the Exhibits, Schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein.  This Agreement, the Separation and Distribution Agreement and the Ancillary Agreements govern the arrangements in connection with the Separation and Distribution and would not have been entered independently.

 

(c)                                  Parent represents on behalf of itself and each other member of the Parent Group, and SpinCo represents on behalf of itself and each other member of the SpinCo Group, as follows:

 

(i)                                     each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and

 

(ii)                                  this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms hereof.

 

(d)                                 Each Party acknowledges that it and each other Party is executing this Agreement by facsimile, stamp or mechanical signature, and that delivery of an executed counterpart of a signature page to this Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement.  Each Party expressly adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it will not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if

 

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it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it will as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

 

Section 9.06.                          Governing Law.  This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common Law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of Laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.

 

Section 9.07.                          Assignability.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided, however, that neither Party may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other Party hereto.  Notwithstanding the foregoing, no such consent shall be required for the assignment of a party’s rights and obligations under this Agreement, the Separation and Distribution Agreement and all other Ancillary Agreements (except as may be otherwise provided in any such Ancillary Agreement) in whole (i.e., the assignment of a party’s rights and obligations under this Agreement and all Ancillary Agreements all at the same time) in connection with a change of control of a Party so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant party thereto by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party.

 

Section 9.08.                          Third-Party Beneficiaries.  The provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any other Person except the Parties any rights or remedies hereunder.  There are no third-party beneficiaries of this Agreement and this Agreement shall not provide any third person with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.  Nothing in this Agreement is intended to amend any employee benefit plan or affect the applicable plan sponsor’s right to amend or terminate any employee benefit plan pursuant to the terms of such plan.  The provisions of this Agreement are solely for the benefit of the Parties, and no current or former Employee, officer, director, or independent contractor or any other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of this Agreement.

 

Section 9.09.                          Notices.  All notices, requests, claims, demands or other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9.09):

 

43

 

If to Parent (prior to the Effective Time), to:

 

Gannett Co., Inc.

7950 Jones Branch Drive

McLean, Virginia  22107

Attention:  General Counsel

Facsimile:  (703) 854-2031

 

with a copy to:

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York  10019

Attention:                                                                     Edward D. Herlihy

Igor Kirman

Victor Goldfeld

Facsimile:  (212) 403-2000

 

If to Parent (from and after the Effective Time), to:

 

TEGNA Inc.

7950 Jones Branch Drive

McLean, Virginia  22107

Attention:  General Counsel

Facsimile:  (703) 854-2031

 

with a copy to:

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York  10019

Attention:                                                                     Edward D. Herlihy

Igor Kirman

Victor Goldfeld

Facsimile:  (212) 403-2000

 

If to SpinCo (prior to the Effective Time), to:

 

Gannett SpinCo, Inc.

7950 Jones Branch Drive

McLean, Virginia  22107

Attention:  General Counsel

Facsimile:  (703) 854-2031

 

with a copy to:

 

44

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York  10019

Attention:                                                                     Edward D. Herlihy

Igor Kirman

Victor Goldfeld

Facsimile:  (212) 403-2000

 

If to SpinCo (from and after the Effective Time), to:

 

Gannett Co., Inc.

7950 Jones Branch Drive

McLean, Virginia  22107

Attention:  Chief Legal Officer

Facsimile:  (703) 854-2031

 

with a copy to:

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York  10019

Attention:                                                                     Edward D. Herlihy

Igor Kirman

Victor Goldfeld

Facsimile:  (212) 403-2000

 

A Party may, by notice to the other Party, change the address to which such notices are to be given.

 

Section 9.10.                          Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby.  Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

 

Section 9.11.                          Force Majeure.  No Party shall be deemed in default of this Agreement or, unless otherwise expressly provided therein, any Ancillary Agreement for any delay or failure to fulfill any obligation (other than a payment obligation) hereunder or thereunder so long as and to the extent to which any delay or failure in the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure.  In the event of any such excused delay, the time for performance of such obligations (other than a payment obligation) shall be extended for a period equal to the time lost by reason of the delay.  A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Party of the nature and extent

 

45

 

of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement and the Ancillary Agreements, as applicable, as soon as reasonably practicable.

 

Section 9.12.                          Headings.  The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

Section 9.13.                          Survival of Covenants.  Except as expressly set forth in this Agreement, the covenants, representations and warranties contained in this Agreement, and Liability for the breach of any obligations contained herein, shall survive the Separation and Distribution and shall remain in full force and effect.

 

Section 9.14.                          Waivers of Default.  Waiver by a Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party.  No failure or delay by a Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

 

Section 9.15.                          Dispute Resolution.  The dispute resolution procedures set forth in Article VII of the Separation and Distribution Agreement shall apply to any dispute, controversy or claim arising out of or relating to this Agreement.

 

Section 9.16.                          Specific Performance.  Subject to the provisions of Article VII of the Separation and Distribution Agreement, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are, or are to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief in respect of its or their rights under this Agreement, in addition to any and all other rights and remedies at Law or in equity, and all such rights and remedies shall be cumulative.  The Parties agree that the remedies at Law for any breach or threatened breach, including monetary damages, are inadequate compensation for any Loss and that any defense in any Action for specific performance that a remedy at Law would be adequate is waived.  Any requirements for the securing or posting of any bond with such remedy are hereby waived by each of the Parties.

 

Section 9.17.                          Amendments.  No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

 

Section 9.18.                          Interpretation.  In this Agreement, (a) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires; (b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules, Exhibits and Appendices hereto and thereto) and not to any particular provision of this Agreement; (c) Article, Section, Schedule, Exhibit and Appendix references are to the Articles, Sections, Schedules, Exhibits and Appendices to this Agreement

 

46

 

unless otherwise specified;  (d) unless otherwise stated, all references to any agreement shall be deemed to include the exhibits, schedules and annexes to such agreement; (e) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) unless otherwise specified in a particular case, the word “days” refers to calendar days; (h) references to “business day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions are generally authorized or required by Law to close in the U.S. or McLean, Virginia; (i) references herein to this Agreement or any other agreement contemplated herein shall be deemed to refer to this Agreement or such other agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified; and (j) unless expressly stated to the contrary in this Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to June 26, 2015.

 

Section 9.19.                          Limitations of Liability.  Notwithstanding anything in this Agreement to the contrary, neither SpinCo or any member of the SpinCo Group, on the one hand, nor Parent or any member of the Parent Group, on the other hand, shall be liable under this Agreement to the other for any indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the transactions contemplated hereby (other than any such Liability with respect to a Third-Party Claim).

 

Section 9.20.                          Mutual Drafting.  This Agreement shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.

 

[Remainder of page intentionally left blank]

 

47

 

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

 

 

	
 
    	
GANNETT CO., INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/    Todd A. Mayman
    
	
 
    	
 
    	
Name: Todd A. Mayman
    
	
 
    	
 
    	
Title:   Senior   Vice President, General Counsel and Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GANNETT SPINCO, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Todd A. Mayman
    
	
 
    	
 
    	
Name: Todd A. Mayman
    
	
 
    	
 
    	
Title:   Vice PresidentExhibit 10.1

 

Execution Version

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT, dated as of June
26, 2015, is by and between GAMING PARTNERS INTERNATIONAL CORPORATION, a Nevada corporation (the “Borrower”),
and NEVADA STATE BANK, a Nevada state banking corporation (the “Lender”).

 

Article
I

DEFINITIONS AND ACCOUNTING TERMS

 

Section 1.1           Defined
Terms.  As used in this Agreement the following terms shall have the following respective meanings (and such meanings
shall apply equally to both the singular and plural form of the terms defined, as the context requires):

 

“Affiliate”:  When
used with reference to any Person, (a) each Person that, directly or indirectly, controls, is controlled by or is under common
control with, the Person referred to, (b) each Person that beneficially owns or holds, directly or indirectly, 10% or more
of any class of voting Equity Interests of the Person referred to, (c) each Person, 10% or more of the voting Equity Interests
of which is beneficially owned or held, directly or indirectly, by the Person referred to, and (d) each of such Person’s
officers, directors, joint venturers and partners.  The term control (including the terms “controlled by”
and “under common control with”) means the possession, directly, of the power to direct or cause the direction of the
management and policies of the Person in question.

 

“Agreement”:  This
Credit Agreement, as it may be amended, restated, supplemented and/or modified and in effect from time to time.

 

“Anti-Corruption Laws”:  All
laws, rules, and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries, if any, from time to time concerning
or relating to bribery or corruption.

 

“Applicable
Margin”:  2.25%.

 

“Availability”:  As
of any date of determination, (i) the Revolving Commitment Amount minus (ii) the aggregate unpaid principal balance of Revolving
Loans outstanding on such date.

 

“Board”:  The
Board of Governors of the Federal Reserve System or any successor thereto.

 

“Borrower”:  As
defined in the opening paragraph hereof.

 

“Borrowing Request”:  A
Borrowing Request in the form of Exhibit A.

 

“Business Day”:  Any
day (other than a Saturday, Sunday or legal holiday in the State of Nevada) on which banks are permitted to be open in Las Vegas,
Nevada.

 

    	 

    	 

    

 

“Capital Expenditures”:  For
any period of determination and any Person, the sum of all amounts that would, in accordance with GAAP, be included as additions
to property, plant and equipment on a consolidated statement of cash flows of such Person during such period, in respect of (a)
the acquisition, construction, improvement, replacement or betterment of land, buildings, machinery, equipment or of any other
fixed assets or leaseholds, (b) to the extent related to and not included in (a) above, materials, contract labor (excluding expenditures
properly chargeable to repairs or maintenance in accordance with GAAP), and (c) other capital expenditures and other uses recorded
as capital expenditures or similar terms having substantially the same effect.

 

“Capitalized Lease”:  A
lease of (or other agreement conveying the right to use) real or personal property with respect to which at least a portion of
the rent or other amounts thereon constitutes Capitalized Lease Obligations.

 

“Capitalized Lease Obligations”:  As
to any Person, the obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right
to use) real or personal property which obligations are required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.

 

“Cash Equivalents”:  Without
duplication, (i) short-term obligations of, or fully guaranteed by, the United States of America, (ii) commercial paper rated A-1
or better by S&P or P-1 or better by Moody’s, (iii) demand deposit accounts maintained in the ordinary course of business,
(iv) certificates of deposit issued by and time deposits with commercial banks (whether domestic or foreign) having capital and
surplus in excess of $500,000,000; provided in each case that the same provides for payment of both principal and interest (and
not principal alone or interest alone) and is not subject to any contingency regarding the payment of principal or interest, (v)
shares of money market mutual funds that are rated at least “AAAm” or “AAA-G” by S&P or “P-1”
or better by Moody’s and (vi) any of the foregoing with Lender or Lender’s parent company.

 

“Cash Management Obligations”:  The
liabilities, indebtedness and obligations, if any, with respect to any Cash Management Services.  

 

“Cash Management Services”:  Any
banking services provided to the Borrower or any Subsidiary by the Lender or by any Affiliate of the Lender, including without
limitation (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) stored
value cards, (f) automated clearing house or wire transfer services, and (g) treasury management, including, without
limitation, collections, depository and disbursement services.

 

“Change in Law”:  Any
of (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule
or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or
(c) compliance by the Lender with any request, guideline or directive (whether or not having the force of law) of any Governmental
Authority that is applicable to the Borrower or is of general applicability and that is made or issued after the date of this Agreement.  Notwithstanding
the foregoing for purposes of this definition, all requests, rules, guidelines or directives in connection with the Dodd-Frank
Wall Street Reform and Consumer Protection Act shall be deemed to be a Change in Law regardless of the date enacted, adopted or
issued and all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee
on Banking Supervision (or any successor or similar authority) or the United States financial regulatory authorities, in each case
pursuant to Basel III, shall be deemed to be a Change in Law regardless of the date adopted, issued, promulgated or implemented.  

 

    	- 2 -

    	 

    

 

“Change of Control”:  The
occurrence, after the Closing Date and without the prior written consent of the Lender, of: (i) the acquisition by an Person,
or two or more Persons acting in concert, of beneficial ownership (with the meaning of Rule 13d-3 of the U.S. Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 10% or more of the outstanding shares of voting stock of the Borrower
on a fully diluted basis; (ii) occupation of a majority of the seats (other than vacant seats) on the board of directors of
the Borrower by Persons who were neither (x) nominated by the board of directors of the Borrower nor (y) appointed by directors
so nominated; (iii) Holding Wilson, SA shall cease to directly or indirectly own, free and clear of all Liens or other encumbrances,
more than 50% of the outstanding shares of voting stock of the Borrower on a fully diluted basis; or (iv) except following a transaction
permitted by Section 6.1 or 6.2, the Borrower ceasing to own and control, directly or indirectly through one or more other Subsidiaries,
100% of the Equity Interests or 100% of the voting power of each Subsidiary (in each case other than de minimis Equity Interests
or voting power required by local law of any foreign Subsidiary to be held by local officers and Equity Interests or voting power
of a Subsidiary owned or held by employees by virtue of a stock option, restricted share, or other employee stock plan so long
as such Equity Interests or voting power does not exceed 10% with respect to the Subsidiary) entitled to vote in the election of
the board of directors (or other similar body) of such Subsidiary.

 

“Closing Date”:  June
26, 2015.

 

“Code”:  The
Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.

 

“Commitments”:  The
Revolving Commitment and the Term Loan Commitment.

 

“Commodity Exchange Act”:  The
Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

 

“Constituent Documents”:  With
respect to any Person, as applicable, such Person’s certificate of incorporation, articles of incorporation, bylaws, certificate
of formation, articles of organization, limited liability company agreement, management agreement, operating agreement, shareholder
agreement, partnership agreement or similar document or agreement governing such Person’s existence, organization or management
or concerning disposition of Equity Interests of such Person or voting rights among such Person’s owners.

 

    	- 3 -

    	 

    

 

“Contingent Obligation”:  With
respect to any Person at the time of any determination, without duplication, any obligation, contingent or otherwise, of such Person
guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “primary obligor”)
in any manner, whether directly or otherwise: (a) to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any direct or indirect security therefor,
(b) to purchase property, securities, Equity Interests or services for the purpose of assuring the owner of such Indebtedness of
the payment of such Indebtedness, (c) to maintain working capital, equity capital or other financial statement condition of the
primary obligor so as to enable the primary obligor to pay such Indebtedness or otherwise to protect the owner thereof against
loss in respect thereof, or (d) entered into for the purpose of assuring in any manner the owner of such Indebtedness of the payment
of such Indebtedness or to protect the owner against loss in respect thereof; provided, that the term “Contingent Obligation”
shall not include endorsements for collection or deposit, in each case in the ordinary course of business.

 

“Control Agreement”:  A
control agreement for deposit accounts, sweep accounts, securities accounts or other investment accounts, granting to the Lender
control over such accounts in each case in form and substance reasonably satisfactory to the Lender.  

 

“Deed of Trust”:  Collectively,
those certain Mortgages or Deeds of Trust, Assignments of Leases and Rents, Security Agreements, and Financing Statements in respect
of the Real Property dated as of the Closing Date and executed by the Loan Party owning such Real Property in favor of the Lender,
as each may from time to time be supplemented, modified, amended, extended or replaced, and any other deed of trust or mortgage
that may from time to time be executed in favor of the Lender securing the Obligations.

 

“Deed of Trust Documents”:  Collectively,
(a) the Deed of Trust, (b) any and all other documents or instruments executed and delivered by the owners of the Real Property
to the Lender in connection with the Deed of Trust and (d) any and all documents or instruments amending, supplementing, restating,
replacing, relating to or otherwise modifying any of the foregoing documents.

 

“Default”:  Any
event that, with the giving of notice or lapse of time, or both, would constitute an Event of Default.

 

“Domestic Loan Parties”:  The
Borrower and the Guarantors, other than GPI Asia.

 

“Domestic Subsidiary”:  Any
Subsidiary incorporated or organized under the laws of the United States of America, any State thereof or the District of Columbia.

 

“EBITDA”:  For
any period of determination, the consolidated net income of the Borrower and its Subsidiaries before deductions for income taxes,
Interest Expense, depreciation and amortization, calculated excluding non-recurring gains and losses, in each case calculated for
said period without duplication and in accordance with GAAP.  

 

“Environmental Indemnity Agreement”:  The
Environmental and ADA Indemnification Agreement dated as of the Closing Date between the Loan Parties and the Lender.

 

“Equity Interests”:  All
shares, interests, participation or other equivalents, however designated, of or in a corporation or limited liability company,
whether or not voting, including but not limited to common stock, member interests, warrants, preferred stock, convertible debentures,
and all agreements, instruments and documents convertible, in whole or in part, into any one or more or all of the foregoing.

 

    	- 4 -

    	 

    

 

“ERISA”:  The
Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder.

 

“ERISA Affiliate”:  Any
trade or business (whether or not incorporated) that is a member of a group of which the Borrower is a member and that is treated
as a single employer under Section 414 of the Code.

 

“ERISA Event”:  Any
of (a) any Reportable Event; (b) the existence with respect to any Plan of an “accumulated funding deficiency”
(as defined in § 412 of the Code or § 302 of ERISA), whether or not waived; (c) the filing pursuant to § 412(d)
of the Code or § 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan;
(d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice
relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal of the Borrower or
any of its ERISA Affiliates from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any
notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition
upon the Borrower or any of its ERISA Affiliates of withdrawal liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

 

“Event of Default”:  Any
event described in Section 7.1.

 

“Excluded Swap Obligation”:  With
respect to any Guarantor, any Swap Obligation if, and only to the extent that, all or a portion of the guarantee of such Guarantor
of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any guarantee thereof) is or becomes
illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application
or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible
contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guarantee of
such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation.  If a Swap
Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such
Swap Obligation that is attributable to swaps for which such guarantee or security interest becomes illegal.

 

“Excluded Taxes”:  Any
(a) Taxes imposed on or measured in whole or in part by revenue, net income, capital, or net worth of the Lender and franchise
or other Taxes imposed in lieu thereof by any jurisdiction in which the Lender is organized or incorporated, maintains its principal
office, or is doing business, and (b) any branch profits Taxes imposed by the United States or any similar Tax imposed by
any other jurisdiction in which the Lender is located.  

 

    	- 5 -

    	 

    

 

“Federal Funds Rate”:  For
any day, the interest rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank on the Business
Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if
no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate
(rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Lender on such day on such transactions as determined
by the Lender.

 

“Financials”: As defined
in Section 4.5.

 

“Fixed Charge Coverage Ratio”:  As
of the day of each fiscal quarter for the 12 consecutive fiscal months ending on such date, subject to the following provisions
of this definition, the ratio of the following, in each case calculated without duplication and on a consolidated basis for the
Borrower and its Subsidiaries in accordance with GAAP:

 

		(a)	trailing twelve month EBITDA, minus the sum of (i)
Maintenance Capital Expenditures paid in cash (net of any amounts financed or funded with capital contributions to the extent
such capital contributions are included in EBITDA) during the trailing twelve month period and (ii) Restricted Payments paid during
the trailing twelve month period plus rent paid in cash during the trailing twelve month period,

 

to

 

		(b)	the sum, without duplication, of Interest Expense paid
in cash during the trailing twelve month period, plus the aggregate amount of all scheduled principal payments made during
the trailing twelve month period with respect to Total Liabilities, including the principal portion of scheduled payments made
with respect to Capitalized Lease Obligations, but excluding  any principal payments made pursuant to Section 2.6(a)
minus expenses paid in respect of leases.  The foregoing computed sum is herein referred to as “Fixed
Charges.”

 

“GAAP”:  Generally
accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entity as may be approved by a significant segment of the accounting profession, that are applicable
to the circumstances as of any date of determination.

 

“Gaming Authority” means
collectively, the Nevada Gaming Control Board, the Nevada Gaming Commission, the Missouri Gaming Commission, the Mississippi Gaming
Commission and any other Governmental Authority that holds regulatory, licensing or permitting authority over gaming distribution
or manufacturing activities conducted by the Borrower or any Subsidiary within its jurisdiction.

 

    	- 6 -

    	 

    

 

“Gaming Laws” means all
laws pursuant to which any Gaming Authority possesses regulatory, licensing or permitting authority over gaming distribution or
manufacturing activities conducted by Borrower or any Subsidiary within its jurisdiction.

 

“Governmental Authority”:  Collectively,
(a) any international, foreign, federal, state, county or municipal government, or political subdivision thereof, (b) any governmental
or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, including any Gaming
Authority, (c) any court or administrative tribunal, or (d) any arbitration tribunal or other nongovernmental authority to whose
jurisdiction a Person has consented.

 

“GPI Asia” means Gaming
Partners International Asia Limited.

 

“Guarantor”:  Each
direct and indirect Domestic Subsidiary of the Borrower and GPI Asia.

 

“Guaranty”:  The
guaranty dated of the Closing Date and executed by the Guarantors in favor of the Lender, as from time to time supplemented, modified,
amended, extended or replaced.

 

“Immediately Available Funds”:  Funds
with good value on the day and in the city in which payment is received.

 

“Indebtedness”:  With
respect to any Person at the time of any determination, without duplication:  (a) all obligations of such Person for
borrowed money (including non-recourse obligations), (b) all obligations of such Person evidenced by debentures, notes or other
similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid or accrued, (d) all obligations
of such Person under conditional sale or other title retention agreements relating to property purchased by such Person, (e) all
obligations of such Person issued or assumed as installment purchases of property or the deferred purchase price of property or
services in respect of which such Person is liable, contingently or otherwise, as obligor or otherwise (including all earn-out
or like obligations), (f) all obligations of others secured by any Lien on property owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed, (g) all Capitalized Lease Obligations of such Person, (h) all net obligations
of such Person in respect of interest rate swap agreements, cap or collar agreements, interest rate futures or option contracts,
currency swap agreements, currency futures or option agreements and other similar contracts (i) all obligations of such Person,
actual or contingent, as an account party in respect of letters of credit or bankers’ acceptances, (j) all obligations of
any partnership or joint venture as to which such Person is or may become personally liable and (k) all mandatory redemption, repurchase,
put option or dividend obligations of such Person under any Equity Interests issued by such Person, and (l) all Contingent Obligations
of such Person.  

 

“Indemnitee”:  As
defined in Section 8.12.

 

“Interest Expense”:  For
any period of determination and any Person, the aggregate consolidated amount, without duplication, of interest paid, accrued or
scheduled to be paid in respect of any Indebtedness of such Person, including (a) all but the principal component of payments in
respect of conditional sale contracts, Capitalized Leases and other title retention agreements, (b) commissions, discounts
and other fees and charges with respect to letters of credit and bankers’ acceptance financings and (c) net costs under interest
rate protection agreements, in each case determined in accordance with GAAP.

 

    	- 7 -

    	 

    

 

“Interest Period”:  A
period of one month, during which the entire outstanding principal balance of the Loans bears interest determined in relation to
the LIBOR Rate, with the understanding that (i) the initial Interest Period shall commence on the date of the initial Loans and
shall be in effect until the last day of the calendar month of the initial Loans, (ii) each successive Interest Period shall commence
automatically, and without notice to or consent from the Borrower, on the first day of the calendar month following the date on
which the immediately preceding Interest Period matures, and (iii) if, on the first day of the last Interest Period applicable
hereto the remaining term of the Loans having the latest final scheduled maturity date is less than one month, such Interest Period
shall be in effect only until the scheduled maturity date hereof.  

 

“Investment”:  The
acquisition, purchase, making or holding of any Equity Interests or other security, any loan, advance, contribution to capital,
extension of credit (except for trade and customer accounts receivable for inventory sold or services rendered in the ordinary
course of business and payable in accordance with customary trade terms), any acquisitions of real or personal property (other
than real and personal property acquired to be utilized in the business operations of Borrower or a Subsidiary in the ordinary
course of its business) and any purchase or commitment or option to purchase Equity Interests, securities or other debt of or any
interest in another Person or any integral part of any business or the assets comprising such business or part thereof and the
formation of, or entry into, any partnership as a limited or general partner or the entry into any joint venture.  The
amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment, less all cash returns,
cash dividends, and cash distributions (or the fair market value of any non-cash returns, dividends, and distributions) received
by such Person, less all liabilities expressly assumed by another Person in connection with the sale of such Investment, and all
loans and advances shall be taken at the principal amount thereof then remaining unpaid.

 

“Las Vegas Real Property”:  That
certain real property owned by Gaming Partners International USA, Inc. and located at 1700 Industrial Rd, Las Vegas, Nevada (APN
#162-04-609-009, #162-04-704-001 and #162-04-609-001).

 

“Lender”:  As
defined in the opening paragraph hereof.

 

“Leverage Ratio”:  As
of the last day of any fiscal quarter for the 12 consecutive fiscal months ending on such date, the ratio of Total Funded Debt
to EBITDA for the four fiscal quarters ending on such date, in each case calculated for the Borrower and its Subsidiaries in accordance
with GAAP.

 

    	- 8 -

    	 

    

 

“LIBOR Rate”:  As
of any date of determination and for each Interest Period relevant to the Loans, the greater of (a) zero percent (0.0%) and (b)
the rate per annum reported at 11 a.m. on the Business Day that is two Business Days prior to the first day of such Interest Period
on Reuters Screen LIBOR01 Page (or any successor or substitute page on such screen) as the London Interbank Offered Rate for United
States dollar deposits for a period equal to the Interest Period, adjusted for any reserve requirement and any subsequent costs
arising from a change in government regulation, such rate rounded up to the nearest one-sixteenth percent (or, if such page shall
cease to be publicly available or, if the information on such page, in the Lender’s reasonable judgment, ceases to accurately
reflect such London Interbank Offered Rate, such rate as reported by any publicly available recognized source of similar market
data selected by the Lender that, in the Lender’s reasonable judgment, accurately reflects such London Interbank Offered
Rate).

 

“Lien”:  With
respect to any Person, any security interest, mortgage, pledge, lien, charge, encumbrance, title retention agreement or analogous
instrument or device (including the interest of each lessor under any Capitalized Lease), in, of or on any assets or properties
of such Person, now owned or hereafter acquired, whether arising by agreement or operation of law.

 

“Loan”:  A
Revolving Loan or a Term Loan.

 

“Loan Documents”:  This
Agreement, the Notes, the Security Agreement, the Deed of Trust Documents, the Guaranty and any other document or instrument given
by any Person in favor of the Lender to secure or guaranty all or any portion of the Obligations, in each case as such document
or instrument may from time to time be supplemented, modified, amended, extended or replaced.

 

“Loan Parties”:  The
Borrower and the Guarantors.

 

“Maintenance Capital Expenditures”:  Capital
Expenditures for the maintenance, repair or refurbishment of the Real Property but excluding any Capital Expenditures that adds
to or further improves the Real Property.

 

“Material Adverse Occurrence”:  Any
occurrence of whatsoever nature (including any adverse determination in any litigation, arbitration, or governmental investigation
or proceeding) that could reasonably be expected to materially and adversely affect (a) the financial condition or operations of
the Borrower and its Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform its obligations under any Loan
Document to which it is a party, or any writing executed pursuant thereto, or (c) the validity, collectability or enforceability
of any of the Loan Documents or the rights or remedies of the Lender under the Loan Documents; provided that the sale of the Las
Vegas Property pursuant to Section 6.2(c) shall not constitute a Material Adverse Occurrence.

 

“Multiemployer Plan”:  A
multiemployer plan, as such term is defined in Section 4001(a)(3) of ERISA, that is maintained (on the Closing Date, within the
five years preceding the Closing Date, or at any time after the Closing Date) for employees of the Borrower or any ERISA Affiliate.

 

“Note”:  The
Term Note or the Revolving Note.

 

    	- 9 -

    	 

    

 

“Obligations”:  All
unpaid principal of and accrued and unpaid interest on the Loans, all Cash Management Obligations, all Rate Protection Obligations,
all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of any Loan Party to the Lender
or any indemnified party arising under the Loan Documents, in all cases whether now existing or hereafter arising or incurred,
whether it is direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated,
or sole, joint, several or joint and several, and together with all renewals, modifications, extensions, increases, substitutions
or replacements of any such obligations or liabilities; provided that “Obligations” shall exclude all
Excluded Swap Obligations.

 

“OFAC”:  The
U.S. Department of the Treasury’s Office of Foreign Assets Control, and any successor thereto.

 

“PATRIOT Act”:  The
USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001, codified as 31 U.S.C. Section 5318)), as amended
from time to time, and any successor statute.

 

“PBGC”:  The
Pension Benefit Guaranty Corporation, established pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to
the functions thereof.

 

“Permitted Acquisition”:  As
defined in Section 6.11(e).

 

“Permitted Liens”:  Liens
permitted by Section 6.13.

 

“Person”:  Any
natural person, corporation, partnership, limited partnership, limited liability company, joint venture, firm, association, trust,
unincorporated organization, government or governmental agency or political subdivision or any other entity, whether acting in
an individual, fiduciary or other capacity.

 

“Plan”:  Each
employee benefit plan (whether in existence on the Closing Date or thereafter instituted), as such term is defined in Section 3
of ERISA, maintained for the benefit of employees, officers or directors of the Borrower or of any ERISA Affiliate.

 

“Prepayment Event”:  Each
of the following:

 

(a)          any
sale, transfer or other disposition (including pursuant to a sale and leaseback transaction) of any property or asset of the Borrower
or any Subsidiary, including the Real Property, other than dispositions described in clauses (a), (b) and (d) of Section 6.2;

 

(b)          any
casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any
property or asset of the Borrower or any Subsidiary, but only to the extent that the net proceeds therefrom have not been applied,
or committed pursuant to an agreement (including any purchase orders) to be applied, to repair, restore or replace such property
or asset within 180 days after such event;

 

(c)          any
Subsidiary of Borrower ceases to be a direct or indirect wholly-owned Subsidiary of Borrower (excepting those circumstances as
are described as exceptions to the 100% provisions in the definition of “Change of Control” clause (iv); or

 

    	- 10 -

    	 

    

 

(d)          the
incurrence by the Borrower or any Subsidiary of any Indebtedness, other than Indebtedness permitted by Section 6.12.

 

“Prohibited Transaction”:  The
respective meanings assigned to such term in Section 4975 of the Code and Section 406 of ERISA.

 

“Rate Protection Agreement”:  Any
Swap Contract pursuant to which the Borrower hedges interest rate risk, entered into by the Borrower with a Rate Protection Provider.

 

“Rate Protection Obligations”:  The
liabilities, indebtedness and obligations of any  Borrower, if any, to any Rate Protection Provider under a Rate Protection
Agreement.

 

“Rate Protection Provider”:  The
Lender, or any Affiliate of the Lender, that is the counterparty of the Borrower under any Rate Protection Agreement.

 

“Real Property”:  Collectively,
(a) the Las Vegas Real Property and (b) the real property located at 2925 N. & Hwy, Blue Springs, Missouri (APN #36-320-20-01).

 

“Reportable Event”:  A
reportable event as defined in Section 4043 of ERISA and the regulations issued under such Section, with respect to a Plan, excluding,
however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notified
within 30 days of the occurrence of such event, provided that a failure to meet the minimum funding standard of Section 412 of
the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any waiver in accordance with Section
412(d) of the Code.  A Reportable Event shall also include an event under Section 4062(e) of ERISA and an event requiring
notice to the PBGC under Section 4010 of ERISA, excluding any such event as to which the PBGC has waived the notice required under
Section 4010 of ERISA.

 

“Restricted Payment”:  Any
dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest in the Borrower
or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit,
on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the
Borrower or any Subsidiary thereof or any option, warrant or other right to acquire any such Equity Interest in the Borrower or
any Subsidiary thereof.

 

“Revolving Commitment”:  With
respect to the Lender, the agreement of the Lender to make Revolving Loans to the Borrower in an aggregate principal amount outstanding
at any time not to exceed the Revolving Commitment Amount upon the terms and subject to the conditions and limitations of this
Agreement.

 

“Revolving Commitment Amount”:  As
of the Closing Date, $5,000,000 as the same may be reduced from time to time pursuant to Section 2.7.

 

“Revolving Loan”:  As
defined in Section 2.1(a).

 

“Revolving Loan Date”:  The
date of the making of any Revolving Loan.

 

    	- 11 -

    	 

    

 

“Revolving Note”:  The
promissory note of the Borrower in the form of Exhibit B, evidencing the obligation of the Borrower to repay the Revolving
Loans.

 

“Sanctioned Country”:  At
any time, any country or territory which is itself the subject or target of any comprehensive Sanctions.

 

“Sanctioned Person”:  At
any time, (a) any Person or group listed in any Sanctions-related list of designated Persons maintained by OFAC or the U.S. Department
of State, the United Nations Security Council, the European Union or any EU member state, (b) any Person or group operating, organized
or resident in a Sanctioned Country, (c) any agency, political subdivision or instrumentality of the government of a Sanctioned
Country, or (d) any Person 50% or more owned, directly or indirectly, by any of the above.

 

“Sanctions”:  Economic
or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including
those administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council, the European Union or Her
Majesty’s Treasury of the United Kingdom.

 

“Security Agreement”:  Collectively,
one or more pledge and security agreements of the Domestic Loan Parties that grant a security interest to the Lender to secure
the Obligations, as amended, supplemented, extended, restated or otherwise modified from time to time, each in form and substance
acceptable to the Lender.

 

“Security Documents”:  Collectively,
the Security Agreement, the Deed of Trust Documents, any Control Agreements and each other agreement, instrument and document executed
by any Loan Party to secure the Obligations, as amended, supplemented, extended, restated, modified or replaced from time to time

 

“Security Documents Collateral”:  Collectively,
all real and personal property pledged, assigned, mortgaged or otherwise conveyed to the Lender pursuant to the Security Documents
as security for the Obligations.

 

“Subsidiary”:  As
to any Person, any corporation, limited liability company or other entity of which Equity Interests having ordinary voting power
for the election of a majority of the board of directors or other Persons performing similar functions are owned by such Person
either directly or through one or more Subsidiaries.  Except as the context otherwise requires, the term “Subsidiaries”
in this Agreement refers to direct and indirect Subsidiaries of the Borrower.

 

“Swap Contract”:  Any
of (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index
swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign
exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate
swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any
master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms
and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association,
Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with
any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master
Agreement.

 

    	- 12 -

    	 

    

 

“Swap Counterparty”:  With
respect to any swap with the Lender, any person or entity that is or becomes a party to such swap.

 

“Swap Obligation”:  With
respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap”
within the meaning of section 1a(47) of the Commodity Exchange Act between the Lender and one or more Swap Counterparties.

 

“Taxes”:  Any
and all present or future taxes, levies, imposts, deductions, charges, or withholdings, and all liabilities with respect thereto.

 

“Term Loan”:  As
defined in Section 2.1(b).

 

“Term Loan Commitment”:  The
agreement of the Lender to make a Term Loan to the Borrower in the Term Loan Commitment Amount upon the terms and subject to the
conditions of this Agreement.

 

“Term Loan Commitment Amount”:  $10,000,000.

 

“Term Loan Maturity Date”:  The
earlier of (a) the seventh anniversary of the Closing Date and (b) the date on which the Commitments are terminated pursuant to
Section 7.2.

 

“Term Note”:  The
promissory note of the Borrower in the form of Exhibit C, evidencing the obligation of the Borrower to repay the Term Loan.

 

“Termination Date”:  The
earliest of (a) the fifth anniversary of the Closing Date, (b) the date on which the Revolving Commitments are terminated pursuant
to Section 7.2, and (c) the date on which the Revolving Commitments are terminated pursuant to Section 2.7.

 

“Total Funded Debt”:  At
the time of any determination, without duplication, (a) all Indebtedness for borrowed money, (b) Capitalized Lease Obligations,
(c) notes payable and drafts accepted representing extensions of credit, (d) any obligations owed for all or any part of the deferred
purchase price of property or services (excluding trade payables incurred in the ordinary course of business and insurance premiums
paid over time), (e) all Indebtedness secured by any Lien on any property of the Borrower or Subsidiary even though the Borrower
or Subsidiary has not assumed or become liable for the payment of such Indebtedness, provided that for purposes of this clause
(e) the amount of such Indebtedness shall be limited to the greater of (i) the amount of such Indebtedness as to which there is
recourse to the Borrower and (ii) the fair market value of the property subject to the Liens, and (f) Contingent Obligations.

 

    	- 13 -

    	 

    

 

“Total Liabilities”:  At
the time of any determination, the amount, on a consolidated basis, of all items of Indebtedness of any Person referred to that
would constitute “liabilities” for balance sheet purposes in accordance with GAAP.

 

“Total Revenues”:  With
respect to any period of determination, the consolidated total revenues of the Borrower and its Subsidiaries for such period, as
determined in accordance with GAAP.

 

Section 1.2           Accounting
Terms and Calculations.  Except as may be expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder shall be made on a consolidated basis for the Borrower and the
Subsidiaries and in accordance with GAAP.  To the extent any change in GAAP affects any computation or determination
required to be made pursuant to this Agreement, such computation or determination shall be made as if such change in GAAP had not
occurred unless the Borrower and the Lender agree in writing on an adjustment to such computation or determination to account for
such change in GAAP.

 

Section 1.3           Computation
of Time Periods.  In this Agreement, in the computation of a period of time from a specified date to a later specified
date, unless otherwise stated the word “from” means “from and including” and the word “to”
or “until” each means “to but excluding.”

 

Section 1.4           Other
Definitional Terms.  The words “hereof,” “herein” and “hereunder” and words of
similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision.  References
to Sections, Exhibits, Schedules, and the like are to this Agreement unless otherwise expressly provided.  The words
“include,” “includes” and “including” shall be deemed to be followed by the phrase “without
limitation.”  The term “will” shall have the same mandatory meaning as the term “shall.”  Unless
the context otherwise clearly requires, “or” has the inclusive meaning represented by the phrase “and/or.”  All
covenants, terms, definitions or other provisions incorporated by reference to other agreements are so incorporated as if fully
set forth herein, and such incorporation shall include all necessary definitions and related provisions from such other agreements
but include only amendments thereto agreed to by the Lender, and shall survive any termination of such other agreements until the
Obligations are irrevocably paid in full and the Commitments are terminated.  References to agreements or other contractual
obligations shall, unless otherwise specified, be deemed to refer to such agreements or contractual obligations as amended, renewed,
supplemented, restated or otherwise modified from time to time.

 

Article
II

TERMS OF THE CREDIT FACILITIES

 

Part A -- Terms of Lending

 

Section 2.1           Lending
Commitments.  On the terms and subject to the conditions hereof, the Lender agrees to make the following lending
facilities available to the Borrower:

 

(a)          Revolving
Credit.  A revolving credit facility available as loans (each, a “Revolving Loan” and, collectively,
the “Revolving Loans”) to the Borrower on a revolving basis at any time and from time to time from the Closing
Date to the Termination Date, during which period the Borrower may borrow, repay and reborrow in accordance with the provisions
hereof, provided, that no Revolving Loan will be made in any amount that, after giving effect thereto, would cause the aggregate
unpaid principal balance of Revolving Loans outstanding on such date to exceed the Revolving Commitment Amount.  

 

    	- 14 -

    	 

    

 

(b)          Term
Loan.  A term loan facility available as a loan (the “Term Loan”) from the Lender to the Borrower
on a term loan basis on the Closing Date, provided that the Term Loan will not be made in any amount if, after giving effect thereto,
the aggregate amount advanced upon the Term Loan would exceed the Term Loan Commitment Amount.  

 

Section 2.2           Procedure
for Loans.

 

(a)          Procedure
for Revolving Loans.  Any request by the Borrower for Revolving Loans hereunder shall be in writing pursuant to a
Borrowing Request and must be given so as to be received by the Lender not later than 12:00 p.m. (Las Vegas, Nevada time) two Business
Days prior to the requested Revolving Loan Date.  Each request for Revolving Loans shall be irrevocable and shall be
deemed a representation by the Borrower that on the requested Revolving Loan Date and after giving effect to the requested Revolving
Loans the applicable conditions specified in Article III have been and will be satisfied.  Each request for Revolving
Loans shall specify (i) the requested Revolving Loan Date and (ii) the aggregate amount of Revolving Loans to be made on such
date, which shall be in a minimum amount of $100,000.  Unless the Lender determines that any applicable condition specified
in Article III has not been satisfied, the Lender will make available to the Borrower at the Lender’s principal office in
Las Vegas, Nevada in Immediately Available Funds not later than 3:00 p.m. (Las Vegas, Nevada time) on the requested Revolving Loan
Date the amount of the requested Revolving Loans.

 

(b)          Procedure
for Term Loan.  The request by the Borrower for the Term Loan shall be in writing pursuant to a Borrowing Request
and must be given so as to be received by the Lender not later than 12:00 p.m.. (Las Vegas, Nevada time) two Business Days before
the Closing Date.  The request for the Term Loan shall be irrevocable and shall be deemed a representation by the Borrower
that on the Closing Date and after giving effect to the requested Term Loan the applicable conditions specified in Article III
have been and will be satisfied.  The request for the Term Loan shall specify (i) the requested Term Loan date (which
shall be the Closing Date) and (ii) the aggregate amount of the Term Loan.  Unless the Lender determines that any applicable
condition specified in Article III has not been satisfied, the Lender will transmit the proceeds of the requested Term Loan in
accordance with wire instructions provided by the Borrower not later than 3:00 p.m. (Las Vegas, Nevada time) on the Closing Date.

 

    	- 15 -

    	 

    

 

Section 2.3           Notes.  The
Revolving Loans shall be evidenced by a single Revolving Note payable to the order of the Lender in a principal amount equal to
the Revolving Commitment Amount originally in effect.  The Term Loan shall be evidenced by a Term Note payable to the
order of the Lender in the principal amount equal to the Term Loan Commitment Amount.  The Lender shall enter in its
ledgers and records the amount of each Term Loan and each Revolving Loan, the various Revolving Loans made, and the payments made
thereon, and, in all events, the principal amounts owing by the Borrower in respect of the Revolving Note shall be the aggregate
amount of all Revolving Loans made by the Lender less all payments of principal thereof made by the Borrower, and the principal
amount owing by the Borrower in respect of the Term Note shall be the aggregate amount of the Term Loan less all payments of principal
thereof made by the Borrower.

 

Section 2.4           Interest
Rates, Interest Payments and Default Interest.  Interest shall accrue and be payable on the Loans as follows:

 

(a)          Subject
to paragraph (b) below, each Loan shall bear interest on the unpaid principal amount thereof at a rate per annum equal to the sum
of (i) the LIBOR Rate in effect, and as reset on, the first day of each Interest Period, plus (B) the Applicable Margin.

 

(b)         Upon
the occurrence of any Event of Default, each Loan shall, at the option of the Lender, bear interest until paid in full at a rate
per annum equal to the sum of the interest rate otherwise applicable thereto plus 2.0%.

 

(c)          (i)
Interest with respect to Revolving Loans shall be payable on the last day of each Interest Period and upon any permitted prepayment
(on the amount prepaid) and on the Termination Date and (ii) interest with respect to Term Loan shall be payable as set
forth in Section 2.5(b), upon any permitted prepayment (on the amount prepaid), and on the Term Loan Maturity Date; provided, that
with respect to any Loan, interest under paragraph (b) of this Section shall be payable on demand.

 

Section 2.5           Repayment.  

 

(a)          Revolving
Loans.  The unpaid principal balance of all Revolving Loans, together with all accrued and unpaid interest thereon,
shall be due and payable on the Termination Date.

 

(b)          Term
Loan.  The unpaid principal balance and interest of the Term Loan shall be paid in (i) equal monthly installments
sufficient to amortize the entire principal balance of and interest on the Term Loan over a 7-year period, due and payable on the
last day of each month to and including the Term Loan Maturity Date, and (ii) an additional installment in an amount equal to all
unpaid principal of, and interest upon, the Term Loan on the Term Loan Maturity Date; provided, however, that if the aggregate
principal amount outstanding under the Term Loan as of the date any principal payment is due is less than the amount specified
above in this sentence, then the principal amount payable on such date shall be such amount outstanding.  The Lender
shall calculate the amounts payable under clause (i) above based on the LIBOR Rate and the Applicable Margin in effect from time
to time (which calculations shall be conclusive absent manifest error) and, on or before the date hereof and promptly upon any
change in such amounts, shall furnish to the Borrower a schedule setting forth the amount of such installments.  

 

    	- 16 -

    	 

    

 

Section 2.6           Prepayments.  

 

(a)          Mandatory
Prepayments.

 

(i)          If
at any time the aggregate unpaid principal balance of Revolving Loans outstanding exceeds the Revolving Commitment Amount, the
Borrower shall immediately repay to the Lender the amount of such excess.

 

(ii)         If
at any time a Prepayment Event occurs, and without prejudice to any other rights the Lender may have in respect of the occurrence
of the Prepayment Event, the Borrower shall immediately pay to the Lender the net proceeds realized by such Prepayment Event.  Any
such prepayments shall be applied first, to the Revolving Loan, and second, to any outstanding Term Loan.  All
prepayments applied to the Term Loan shall be applied to the scheduled principal payments on the Term Loan in the inverse order
of their maturities.

 

(b)          Optional
Prepayments.  The Borrower may prepay Revolving Loans or the Term Loan, in whole or in part, at any time, without
premium or penalty, except if such prepayment is made on a day other than the last day of the then current Interest Period, the
Borrower must also pay any indemnities payable pursuant to Section 2.16.  The Borrower shall notify the Lender in advance
no later than 12:00 p.m. (Las Vegas, Nevada time) two Business Days before the making of any prepayment.  Any prepayment
must be accompanied by accrued and unpaid interest on the amount prepaid.  Each partial prepayment shall be in a minimum
aggregate amount of $50,000 (or, as to the Term Loan, $100,000) or an integral multiple thereof.  Amounts prepaid on
the Term Loan in inverse order of maturity.  

 

(c)          Effect
of Payments.  Amounts paid (unless following an acceleration or upon termination of the Revolving Commitment in whole)
or prepaid on Revolving Loans may be reborrowed upon the terms and subject to the conditions and limitations of this Agreement.  Amounts
paid or prepaid in the Term Loan may not be reborrowed.  

 

Part B -- General

 

Section 2.7           Reduction
and Termination of Revolving Commitments.  The Borrower may, at any time, upon not less than three Business Days’
prior written notice from the Borrower to the Lender, reduce the Revolving Commitment Amount, with any such reduction in an integral
multiple of $500,000; provided, however, that the Borrower may not at any time reduce the Revolving Commitment Amount below the
aggregate unpaid principal balance of Revolving Loans outstanding at such time.  The Borrower may, upon not less than
10 Business Days prior written notice from the Borrower to the Lender, terminate the Revolving Commitment in its entirety.  Upon
termination of the Revolving Commitment pursuant to this Section, the Borrower shall pay to the Lender the full amount of all outstanding
Revolving Loans, all accrued and unpaid interest thereon and all other unpaid Obligations.

 

    	- 17 -

    	 

    

 

Section 2.8           

 

(a)          Upfront
Fees.  The Borrower shall pay to the Lender on the Closing Date an upfront fee in an amount equal to the 0.25% of
the Commitments.  Such upfront fee shall be fully earned when paid and nonrefundable.

 

(b)          Commitment
Fee.  There shall be no commitment or unused fee regarding the undrawn amount of the Revolving Commitment or the
Term Loan Commitment.

 

Section 2.9           Computation.  Interest
on the Loans shall be computed on the basis of actual days elapsed and a year of 360 days.

 

Section 2.10         Payments.  Payments
and prepayments of principal of, and interest on, the Notes and all fees, expenses and other obligations under this Agreement payable
to the Lender shall be made without setoff or counterclaim in Immediately Available Funds not later than 12:00 p.m. (Las Vegas,
Nevada time) on the dates called for under this Agreement and the Notes to the Lender at its main office in Las Vegas, Nevada.  Funds
received after such time shall be deemed to have been received on the next Business Day.  Whenever any payment to be
made hereunder or on the Notes is stated to be due on a day that is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time, in the case of a payment of principal, shall be included in the computation
of any interest on such principal payment; provided, however, that if such extension would cause payment of interest on or principal
to be made in the next following calendar month, such payment shall be made on the immediately preceding Business Day.

 

Section 2.11         Use
of Loan Proceeds.  The proceeds of the Term Loan shall be used to (a) refinance outstanding Indebtedness of
the Borrower and its Subsidiaries, (b) pay transaction and closing costs associated with the Loan Documents, and (c) fund
the general business purposes of the Borrower and its Subsidiaries in a manner not in conflict with any of the covenants in the
Loan Documents.  The proceeds of the Revolving Loan shall be used for working capital, capital expenditures and other
general business purposes of the Borrower and its Subsidiaries in a manner not in conflict with any of the Borrower’s covenants
in this Agreement.  Without limitation of the above sentences, the Borrower will not request any Loan, and the Borrower
shall not use, and the Borrower shall ensure that its Subsidiaries, and its or their respective directors, officers, employees
and agents shall not use, the proceeds of any Loan (a) in furtherance of an offer, payment, promise to pay, or authorization of
the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws or (b) in
any manner that would result in the violation of any applicable Sanctions.

 

Section 2.12          Interest Rate Not Ascertainable, Etc.  If,
on or prior to the date for determining the LIBOR Rate in respect of the Interest Period for any Loan, the Lender determines (which
determination shall be conclusive and binding, absent manifest error) that deposits in dollars (in the applicable amount) are not
being made available to the Lender in the relevant market for such Interest Period, the Lender shall forthwith give notice thereof
to the Borrower of such determination, whereupon the obligation of the Lender make or continue any Loans at the LIBOR Rate shall
be suspended until the Lender notifies the Borrower that the circumstances giving rise to such suspension no longer exist.  While
any such suspension continues, all further Loans by the Lender shall be made at an alternate floating rate reasonably quoted from
time to time by the Lender plust the Applicable Margin.  No such suspension shall affect the interest rate then in effect
during the applicable Interest Period for any Loan outstanding at the time such suspension is imposed.    

    	- 18 -

    	 

    

 

Section 2.13         Taxes.  

 

(a)          Any
and all payments by the Borrower hereunder or under the Notes shall be made free and clear of and without deduction for any and
all present or future Taxes (excluding Excluded Taxes).

 

(b)          The
Borrower agrees to pay any present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar
levies that arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, performing
under, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as “Other Taxes”).

 

(c)          The
Borrower shall indemnify the Lender for the full amount of Taxes or Other Taxes imposed on or paid by the Lender and any liabilities,
penalties, interest and expenses with respect thereto.  Payments on this indemnification shall be made within 10 days
after the date the Lender makes written demand therefor.  A certificate as to the amount of such payment or liability
delivered to the Borrower by the Lender shall be conclusive absent manifest error.

 

(d)          Within
10 days after the date of any payment of Taxes or Other Taxes, the Borrower shall furnish to the Lender, at its address referred
to on the signature page hereof, a certified copy of a receipt evidencing payment thereof.  In the case of any payment
hereunder or under the Notes by or on behalf of the Borrower through an account or branch outside the United States or by or on
behalf of the Borrower by a payor that is not a United States person, if the Borrower determines that no Taxes are payable in respect
thereof, the Borrower shall furnish or shall cause such payor to furnish, to the Lender, at such address, an opinion of counsel
acceptable to the Lender stating that such payment is exempt from Taxes.  For purposes of this subsection (d), the terms
“United States” and “United States person” shall have the meanings specified in Section 7701
of the Internal Revenue Code.

 

(e)          If
the Borrower is required by law or regulation to make any deduction, withholding or backup withholding of any taxes, levies, imposts,
duties, fees, liabilities or similar charges of the United States of America, any possession or territory of the United States
of America (including the Commonwealth of Puerto Rico) or any area subject to the jurisdiction of the United States of America
(“U.S. Taxes”) from any payments to the Lender pursuant to any Loan Document in respect of the Obligations payable
to the Lender then or thereafter outstanding, the Borrower shall make such withholdings or deductions and pay the full amount withheld
or deducted to the relevant taxation authority or other authority in accordance with applicable law.

 

(f)          Without
prejudice to the survival of any other agreement contained herein, the agreements and obligations contained in this Section 2.13
shall survive the payment in full of principal, interest and all other Obligations hereunder.

 

    	- 19 -

    	 

    

 

(g)          If
the Lender claims any additional amounts in respect of indemnifiable Taxes payable pursuant to this Section 2.13, it shall use
reasonable efforts (consistent with legal and regulatory restrictions and the Lender’s internal policies) (i) to file any
certificate or document reasonably requested by the Borrower, if the making of such a filing would avoid the need for or reduce
the amount of any such indemnifiable Taxes attributable to the Loans and would not, in the sole determination of the Lender, result
in any unreimbursed loss, cost or expense or otherwise be disadvantageous to the Lender, or (ii) to recover or obtain a reimbursement
or refund of any such indemnifiable taxes.

 

(h)          Nothing
contained in this Section 2.13 shall require the Lender to make available any of its tax returns or any other information that
it deems to be confidential or proprietary.

 

Section 2.14         Increased
Costs; Capital Adequacy.

 

(a)          If
any Change in Law:

 

(i)          subjects
the Lender to any Taxes, or change the basis of taxation of payments to the Lender in respect of its Loans (excluding Excluded
Taxes), or

 

(ii)         imposes,
increases, modifies, or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, the Lender, or

 

(iii)        imposes
any other condition the result of which is to increase the cost the Lender of making, funding or maintaining Loans, or reduces
any amount receivable by the Lender in connection with the Loans, or requires the Lender to make any payment calculated by reference
to the amount of Loans or interest received by it, by an amount deemed material by the Lender in the exercise of its reasonable
discretion,

 

and the result of any of the foregoing is to increase
the cost to the Lender of making or maintaining its Loans or Commitments or to reduce the return received by the Lender in connection
with such Loans or Commitments, then the Borrower shall pay the Lender such additional amount or amounts as will compensate the
Lender for such increased cost or reduction in amount received.

 

(b)          If
the Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of
return on the Lender’s capital or on the capital of the Lender’s holding company, if any, as a consequence of this
Agreement or a Loan made by the Lender to a level below that which the Lender’s holding company could have achieved but for
such Change in Law (taking into consideration the Lender’s policies and the policies of the Lender’s holding company
with respect to capital adequacy), then from time to time the Borrower will pay to the Lender such additional amount or amounts
as will compensate the Lender’s holding company for any such reduction suffered.  For purposes of this Section,
(a) “Change in Law” includes (i) any change after the date of this Agreement in the Risk-Based Capital Guidelines (as
defined below) or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy,
guideline, interpretation, or directive (whether or not having the force of law) or in the interpretation, promulgation.  implementation
or administration thereof after the date of this Agreement that affects the amount of capital required or expected to be maintained
by the Lender or any corporation controlling the Lender and (b) “Risk-Based Capital Guidelines” means (i) the risk-based
capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding
capital regulations promulgated by regulatory authorities outside the United States including transition rules, and any amendments
to such regulations adopted prior to the date of this Agreement.

 

    	- 20 -

    	 

    

 

(c)          A
certificate of the Lender setting forth the amount or amounts necessary to compensate the Lender or its holding company, as the
case may be, as specified in subsections (a) and (b) above, the basis for calculating such amount(s) and the method of allocating
such amount(s) to the Borrower shall be delivered to the Borrower and shall be conclusive absent manifest error.  The
Borrower shall pay to the Lender the amount shown as due on any such certificate within 10 Business Days after receipt thereof.

 

(d)          Failure
or delay on the part of the Lender to demand compensation pursuant to this Section 2.14 shall not constitute a waiver of the
Lender’s right to demand such compensation; provided, however, that Borrower shall not be required to compensate the Lender
pursuant to the foregoing provisions of this section for any increased costs incurred or reductions suffered more than 9 months
prior to the date that the Lender notifies the Borrower of the Change in Law and of its intent to claim compensation as a consequence
thereof.

 

Section 2.15         Illegality.  Notwithstanding
anything to the contrary in this Agreement, if the Lender determines (which determination shall be conclusive and binding, absent
error) at any time that it is illegal for the Lender to continue to charge interest on the Loans based on LIBOR Rate, then the
Lender shall forthwith give notice thereof to the Borrower of such determination, whereupon (subject to Section 2.4(b)) the Loans
shall bear interest at an alternate floating rate reasonably quoated from time to time by the Lender plus the Applicable Margin.

 

Section 2.16         Funding
Losses; LIBOR Rate Advances.  The Borrower shall compensate the Lender, upon its written request, for all losses,
reasonable expenses, and liabilities (including any interest paid by the Lender to lenders of funds borrowed by it to make or carry
Loans at the LIBOR Rate to the extent not recovered by the Lender in connection with the re-employment of such funds and including
loss of anticipated profits) that the Lender may sustain:  (i) if for any reason, other than a default by the Lender,
a funding of a Loan at the LIBOR Rate does not occur on the date specified therefor in the Borrower’s request or notice under
Section 2.2, or (ii)  if, for whatever reason (including, but not limited to, acceleration of the maturity of the Loans
following an Event of Default), any repayment of a Loan at the LIBOR Rate, occurs on any day other than the last day of the Interest
Period applicable thereto.  The Lender’s request for compensation shall set forth the basis for the amount requested
and shall be final, conclusive, and binding, absent error.

 

    	- 21 -

    	 

    

 

Article
III

CONDITIONS PRECEDENT

 

Section 3.1           Conditions
of Initial Transaction.  The making of the Term Loan and the initial Revolving Loans shall be subject to the prior
or simultaneous fulfillment of the following conditions:

 

		(a)	Documents. The Lender shall have received the following:

 

		(i)	This Agreement, duly executed by the Borrower.

 

		(ii)	A Revolving Note and a Term Note drawn to the order of the Lender duly executed the Borrower and dated the Closing Date.

 

		(iii)	A Security Agreement duly executed by each Domestic Loan Party.

 

		(iv)	A Guaranty duly executed by each Guarantor.

 

		(v)	Subject to 5.11(c), a certificate of the Secretary (or other appropriate officer) of each Loan Party dated as of the Closing
Date and certifying as to the following:

 

		(A)	A true and accurate copy of the company resolutions of such Person authorizing the execution, delivery and performance of the
Loan Documents to which it is a party;

 

		(B)	The incumbency, names, titles and signatures of the officers of such Person authorized to execute the Loan Documents to which
it is a party and, as to the Borrower, to request Loans;

 

		(C)	A true and accurate copy of the articles of organization or equivalent document of such Person with all amendments thereto,
certified by the appropriate governmental official of the jurisdiction of its incorporation as of a date acceptable to the Lender;
and

 

		(D)	A true and accurate copy of the bylaws (or the equivalent), and other Constituent Documents of such Person.

 

		(vi)	Subject to 5.11(c), a certificate of good standing for each Loan Party in the jurisdiction of its formation and in each other
jurisdiction in which the nature of its operation made such qualification necessary to the business, certified by the appropriate
governmental officials as of a date acceptable to the Lender.

 

    	- 22 -

    	 

    

 

		(vii)	A certificate of even date herewith of the chief financial officer or treasurer of the Borrower certifying as to the matters
set forth in Section 3.2(a) and (b).

 

		(viii)	Property and liability insurance certificates demonstrating that the Borrower maintain the insurance required by Section 5.3,
including by naming the Lender as an additional insured and/or loss payee (and with a lenders loss payable endorsement), and stating
that such insurance shall not be cancelled or revised without 30 days’ prior written notice by the insurer to the Lender.

 

		(ix)	Completed UCC, tax lien and judgment searches for each Domestic Loan Party reasonably satisfactory to the Lender.

 

		(x)	The Deed of Trust Documents, duly executed by the applicable owners of the Real Property, together with:

 

		(A)	a commitment in form and substance acceptable to the Lender for an ALTA lender’s title policy in the amount of acceptable
to the Lender together with endorsements reasonably requested by the Lender;

 

		(B)	subordination and estoppel agreement with respect to any lease of any Real Property.

 

		(C)	an ALTA survey for each Real Property made in accordance with the 2011 Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Surveys, and including Items 1, 2, 3, 4, 6(a), 6(b), 7(a), 7(b)(1), 7(b)(2), 7(c), 8, 9, 10, 11(b), 13, 16, 17, 18, 19, and
20(a) of Table A thereof in form and substance reasonably acceptable to the Lender;

 

		(D)	UCC financing statements and fixture filings, covering the Security Documents Collateral described in the Deed of Trust Documents,
each in a form prescribed by the Lender;

 

		(E)	A Phase I environmental surveys for each Real Property reasonably satisfactory to the Lender;

 

		(F)	a flood check satisfactory to the Lender and satisfying the requirements of 42 U.S.C. § 4104b and any rules and regulations
promulgated pursuant thereto; and

 

		(G)	the Environmental Indemnity Agreement, duly executed by each Loan Party.

 

    	- 23 -

    	 

    

 

		(xi)	The Lender shall have received the annual audited financial statements of the Borrower and its Subsidiaries for the most recent
ended fiscal year, certified by independent certified public accountants of recognized national standing selected by the Borrower
and reasonably acceptable to the Lender and other financial statements required by the Lender, together with any management letters,
management reports or other supplementary comments or reports to the Borrower or its board of directors furnished by such accountants.

 

		(xii)	Landlord waivers for each of the Borrower’s or its Domestic Subsidiaries’ leased business premises described on
Schedule 4.24 in form and substance reasonably satisfactory to the Lender duly signed by the Borrower’s or the applicable
Domestic Subsidiary’s landlord and true and correct copies of each of the applicable leases.

 

		(xiii)	Payoff letters duly executed by the holders of all Indebtedness of the Borrower that is to be paid off on the Closing Date,
in form and substance reasonably acceptable to the Lender.

 

		(xiv)	Such other documents and deliveries as may be reasonably requested by the Lender.

 

(b)          Opinion.  Subject
to Section 5.11(c), the Loan Parties shall have their counsel prepare a written opinion, addressed to the Lender and dated the
Closing Date, covering the matters reasonably prescribed by the Lender and otherwise in form and substance reasonably acceptable
to the Lender.  

 

(c)          Security
Documents.  All Security Documents (or financing statements under the Uniform Commercial Code as in effect in the
State of Nevada and with respect thereto) shall have been appropriately filed or recorded to the satisfaction of the Lender; any
pledged Security Documents Collateral shall have been duly delivered to the Lender; and the priority and perfection of the Liens
created by the Security Documents shall have been established to the satisfaction of the Lender and its counsel.

 

(d)          Fees
and Expenses.  The Lender shall have received all fees and other amounts due and payable by the Borrower on or prior
to the Closing Date, including the reasonable fees and expenses of counsel to the Lender payable pursuant to Section 8.2.

 

(e)          Material
Adverse Occurrence.  No Material Adverse Occurrence shall have occurred and be continuing.  

 

(f)          Gaming
Approval.  The Borrower shall have provided the Lender with evidence reasonably satisfactory to the Lender that the
Borrower and its Subsidiaries have received all necessary approvals for the Loans and Loan Documents from the Gaming Authorities
in Mississippi.  

 

    	- 24 -

    	 

    

 

Section 3.2           Conditions
Precedent to All Loans.  The obligation of the Lender to make any Loans (including the Term Loan and the initial
Revolving Loans) shall be subject to the fulfillment of the following conditions:

 

(a)          Representations
and Warranties.  The representations and warranties in Article IV shall be true and correct in all material respects
on and as of the Closing Date and on the date of each Loan, with the same force an effect as if made on such date.

 

(b)          No
Default.  No Default or Event of Default shall have occurred and be continuing on the Closing Date and on the date
of each Loan or will exist after giving effect to the Loan made on such date.

 

(c)          Notices
and Requests.  The Lender shall have received the Borrower’s request for such Loans as required under Section
2.2.

 

Article
IV

REPRESENTATIONS AND WARRANTIES

 

To induce the Lender to enter into this
Agreement and to make Loans, the Borrower represents and warrants to the Lender:

 

Section 4.1           Organization,
Standing, etc.  The Borrower and each Subsidiary (a) is duly created and validly existing and in good standing
under the laws of its jurisdiction of organization and (b) has all requisite power and authority to carry on its business as now
conducted and enter into and perform its obligations under the Loan Documents to which it is a party.  The Borrower and
each Subsidiary (x) holds all certificates of authority, licenses and permits necessary to carry on its business as presently
conducted (or contemplated to be conducted) in each jurisdiction in which it is carrying on such business, except where the failure
to hold such certificates, licenses or permits could not be reasonably be expected to result in a Material Adverse Occurrence and
(y) is duly qualified and in good standing, or has applied for qualification, as a foreign corporation (or other organization)
in each jurisdiction in which the character of the properties owned, leased or operated by it or the business conducted (or contemplated
to be conducted) by it makes such qualification necessary and the failure so to qualify would permanently preclude such Person
from enforcing its rights with respect to any material assets or could reasonably be expected to result in a Material Adverse Occurrence.

 

Section 4.2           Authorization
and Validity.  The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a
party have been duly authorized by all necessary company action by such Loan Party.  The Loan Documents to which each
Loan Party is a party when executed will constitute, the legal, valid and binding obligations of such Loan Party, enforceable against
such Loan Party in accordance with their respective terms, subject to limitations as to enforceability that might result from bankruptcy,
insolvency, moratorium and other similar laws affecting creditors’ rights generally and subject to limitations on the availability
of equitable remedies.

 

    	- 25 -

    	 

    

 

Section 4.3           No
Conflict; No Default.  The execution, delivery and performance of the Loan Documents will not (a) violate any provision
of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court,
governmental agency or arbitrator presently in effect having applicability to any Loan Party, (b) violate or contravene any
provision of the Constituent Documents of any Loan Party, (c) result in a breach of or constitute a default under any indenture,
loan or credit agreement or any other agreement, lease or instrument to which any Loan Party is a party or by which it or any of
its properties may be bound (after giving effect to the transactions contemplated on the Closing Date) or (d) result in the creation
of any Lien thereunder other than Liens under the Loan Documents.  Neither the Borrower nor any Subsidiary is in default
under or in violation of any such law, statute, rule or regulation, order, writ, judgment, injunction, decree, determination or
award or any such indenture, loan or credit agreement or other agreement, lease or instrument in any case in which the consequences
of such default or violation could reasonably be expected to result in a Material Adverse Occurrence.

 

Section 4.4           Government
Consent.  No order, consent, approval, license, authorization or validation of, or filing, recording or registration
with, or exemption by, any governmental or public body or authority is required on the part of any Loan Party to authorize, or
is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability
of, the Loan Documents to which it is a party, except for any necessary filing or recordation of or with respect to any of the
Security Documents.

 

Section 4.5           Financial
Statements and Condition.  The consolidated audited financial statements of the Borrower as of December 31, 2014
(the “Financials”), copies of each of which have been delivered to the Lender, have been consistently prepared
and accurately and fairly present the financial condition, cash flow and results of operation of the Borrower and the Subsidiaries
as at the respective dates thereof and for the periods therein referred to.  The Financials reflect all material liabilities
of the Borrower and the Subsidiaries, whether absolute, accrued or contingent, as of the respective dates thereof of the type required
to be reflected or disclosed in a balance sheet (or the notes thereto) prepared in accordance with GAAP.  As of the Closing
Date, the books, records and accounts of the Borrower and the Subsidiaries maintained with respect to their respective businesses
were true and accurate in all material respects, reflected the material transactions and the material assets and material liabilities
of the Borrower and the Subsidiaries, and were used as the basis to prepare the Financials.  

 

Section 4.6           Litigation.  Except
as disclosed on Schedule 4.6, there is no litigation, arbitration, governmental investigation, proceeding or inquiry pending
or, to the knowledge of any of their officers, threatened against or affecting Borrower, any Subsidiary or the Security Documents
Collateral that could reasonably be expected to result in a Material Adverse Occurrence or that seeks to prevent, enjoin or delay
the making of any Loans.  Other than any liability incident to any litigation, arbitration or proceeding that could not
reasonably be expected to cause a Material Adverse Occurrence, neither the Borrower nor any Subsidiary has any material Contingent
Obligations not provided for or disclosed in the financial statements referred to in the Financials.

 

    	- 26 -

    	 

    

 

Section 4.7           Environmental,
Health and Safety Laws.  To the best of the Borrower’s knowledge, there does not exist any violation by the
Borrower or any Domestic Subsidiary of any applicable federal, state or local law, rule or regulation or order of any government,
governmental department, board, agency or other instrumentality relating to environmental, pollution, health or safety matters
that has, will or threatens to impose any liability on the Borrower or any Domestic Subsidiary or that has required or would require
any expenditure by the Borrower or any Domestic Subsidiary to cure.  Neither the Borrower nor any Domestic Subsidiary
has received any notice to the effect that any part of its operations or properties is not in material compliance with any such
law, rule, regulation or order or notice that it or its property is the subject of any governmental investigation evaluating whether
any remedial action is needed to respond to any release of any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to result in a Material Adverse Occurrence.  Except as
set out on Schedule 4.7, neither the Borrower nor any Domestic Subsidiary has knowledge that the Borrower or any Domestic
Subsidiary or the property of the Borrower or any Domestic Subsidiary will become subject to environmental laws or regulations
during the term of this Agreement, compliance with which could reasonably be expected to require Capital Expenditures that could
constitute a Material Adverse Occurrence.

 

Section 4.8           ERISA.  Each
Plan is in substantial compliance with all applicable requirements of ERISA and the Code and with all material applicable rulings
and regulations issued under the provisions of ERISA and the Code setting forth those requirements.  No Reportable Event
has occurred and is continuing with respect to any Plan.  All of the minimum funding standards applicable to such Plans
have been satisfied and there exists no event or condition which would reasonably be expected to result in the institution of proceedings
to terminate any Plan under Section 4042 of ERISA.  With respect to each Plan subject to Title IV of ERISA, as of
the most recent valuation date for such Plan, the present value (determined on the basis of reasonable assumptions employed by
the independent actuary for such Plan and previously furnished in writing to the Lender) of such Plan’s projected benefit
obligations did not exceed the fair market value of such Plan’s assets.

 

Section 4.9           Federal
Reserve Regulations.  Neither the Borrower nor any Subsidiary is engaged principally or as one of its important activities
in the business of extending credit for the purpose of purchasing or carrying margin stock (as defined in Regulation U of the Board).  The
value of all margin stock owned by the Borrower or any Subsidiary does not constitute more than 25% of the value of the assets
of such Person.

 

Section 4.10         Title
to Property; Leases; Liens; Subordination.  The Borrower and each Subsidiary has (a) good and marketable title
to its real properties (including the Real Property) and (b) good and sufficient title to, or valid, subsisting and enforceable
leasehold interest in, its other material properties, including all real properties, other properties and assets, referred to as
owned by such Person in the most recent financial statement referred to in Section 5.1 (other than property disposed of since the
date of such financial statements in the ordinary course of business).  None of such properties is subject to a Lien,
except as allowed Permitted Liens.  The Obligations are secured by valid, perfected, first-priority Liens (subject to
Permitted Liens) in favor of the Lender, covering and encumbering all Security Documents Collateral granted or purported to be
granted by the Security Documents, to the extent perfection has occurred by the filing of a UCC financing statement, recording
the Deed of Trust or by continued possession or control (other than with respect to Liens on collateral represented by a certificate
of title).  Neither the Borrower nor any Subsidiary has subordinated any of its rights under any obligation owing to
it to the rights of any other Person other than the Lender.

 

    	- 27 -

    	 

    

 

Section 4.11         Taxes.  The
Borrower and each Subsidiary has filed all federal and all state and local Tax returns required to be filed and has paid or made
provision for the payment of all taxes due and payable pursuant to such returns and pursuant to any assessments made against it
or any of its property and all other Taxes, fees and other charges imposed on it or any of its property by any governmental authority
(other than taxes, fees or charges the amount or validity of which is currently being contested in good faith by appropriate proceedings
and with respect to which reserves in accordance with GAAP have been provided on the books of the Borrower).  No Tax
Liens have been filed and no material claims are being asserted with respect to any such taxes, fees or charges.  The
charges, accruals and reserves on the books of the Borrower in respect of Taxes and other governmental charges are adequate and
the Borrower is not aware of any proposed material Tax assessment against the Borrower or any Subsidiary or any basis therefor.

 

Section 4.12         Trademarks,
Patents.  The Borrower and each Subsidiary possesses or has the right to use all of the patents, trademarks, trade
names, service marks and copyrights, and applications therefor, and all technology, know-how, processes, methods and designs used
in or necessary for the conduct of its business, without known conflict with the rights of others.  

 

Section 4.13         Burdensome
Restrictions.  Neither the Borrower nor any Subsidiary is a party to or otherwise bound by any indenture, loan or
credit agreement or any lease or other agreement or instrument or subject to any charter, corporate or partnership restriction
that could reasonably be expected to result in a Material Adverse Occurrence.

 

Section 4.14         Force
Majeure.  Since the date of the most recent financial statement referred to in Section 5.1, the business, properties
and other assets of the Borrower and the Subsidiaries have not been affected in any way as the result of any fire or other casualty,
strike, lockout, or other labor trouble, embargo, sabotage, confiscation, condemnation, riot, civil disturbance, activity of armed
forces or act of God, in any case that could reasonably be expected to result in a Material Adverse Occurrence.

 

Section 4.15         Investment
Company Act.  Neither the Borrower nor any Subsidiary is an “investment company” or a company “controlled”
by an investment company within the meaning of the Investment Company Act of 1940, as amended.

 

Section 4.16         Retirement
Benefits.  Except as required under Section 4980B of the Code, Section 601 of ERISA or applicable state law, neither
the Borrower nor any Domestic Subsidiary is obligated to provide post-retirement medical or insurance benefits with respect to
employees or former employees.

 

Section 4.17         Full
Disclosure.  Subject to the following sentence, neither the financial statements referred to in Section 5.1 nor any
other certificate, written statement, exhibit or report furnished by or on behalf of any Loan Party in connection with or pursuant
to this Agreement contains any untrue statement of a material fact or omits any material fact necessary to make the statements
therein not misleading.  Certificates or statements furnished by or on behalf of any Loan Party to the Lender consisting
of projections or forecasts of future results or events have been prepared in good faith and based on good faith estimates and
assumptions of the management of such Loan Party, and no Loan Party has any reason to believe that such projections or forecasts
are not reasonable.

 

    	- 28 -

    	 

    

 

Section 4.18         Subsidiaries.  Schedule
4.18 sets forth as of the Closing Date a list of all Subsidiaries and the number and percentage of the shares of each class
of Equity Interests owned beneficially or of record by the Borrower or any Subsidiary therein, and the jurisdiction of incorporation
of each Subsidiary. Except as described in the Constituent Documents as of the Closing Date, there are no agreements among the
Borrower’s Equity Interest holders with respect to the voting and transfer of the Borrower’s Equity Interests.

 

Section 4.19         Labor
Matters.  There are no pending or threatened strikes, lockouts or slowdowns against the Borrower or any Subsidiary.  Neither
the Borrower nor any Subsidiary has been or is in violation in any material respect of the Fair Labor Standards Act or any other
applicable federal, state, local or foreign law dealing with such matters that could reasonably be expected to constitute a Material
Adverse Occurrence.  All material payments due from the Borrower or any Subsidiary on account of wages and employee health
and welfare insurance and other benefits (in each case, except for de minimis amounts) have been paid or accrued as a liability
on the books of such Person. The consummation of the transactions contemplated under the Loan Documents will not give rise to any
right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the
Borrower or any Subsidiary is bound.

 

Section 4.20         Solvency.  After
the making of any Loan and after giving effect thereto, on a consolidated basis (a) the fair value of the assets of the Borrower
and its Subsidiaries will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable
value of the property of the Borrower and its Subsidiaries will be greater than the amount that will be required to pay the probable
liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become
absolute and matured; (c) neither the Borrower nor any Subsidiary intends to, or believes that it will, incur debts or liabilities
beyond its ability to pay as such debts and liabilities mature; (d) the Borrower and each Subsidiary will be able to pay its
debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (e) neither
the Borrower nor any Subsidiary will have unreasonably small capital with which to conduct the business in which it is engaged
as such business is proposed to be conducted following the Closing Date.

 

Section 4.21         Insurance.  Each
Loan Party maintains insurance coverage as required by Section 5.3.

 

Section 4.22         Compliance
with Laws; Anti-Corruption Laws; PATRIOT Act.  The Borrower and each Subsidiary is in compliance in all material
respects with the requirements of all applicable laws and all orders, writs, injunctions, and decrees applicable to it or to its
properties and possesses all licenses, permits, franchises, exemptions, approvals, and other governmental authorizations necessary
for the ownership of its property and the conduct and operation of its business, including Gaming Laws.  The Borrower,
its Subsidiaries and their respective officers and employees and to the knowledge of the Borrower its directors and agents, are
in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.  None of the Borrower, any
Subsidiary or to the knowledge of the Borrower or such Subsidiary any of their respective directors, officers or employees is a
Sanctioned Person.  No Loan, use of the proceeds of any Loan or other transactions contemplated hereby will violate Anti-Corruption
Laws or applicable Sanctions.  The Borrower and its Subsidiaries have all permits, licenses and approvals required by
such laws, copies of which have been provided to the Lender.  The Borrower and its Subsidiaries are in compliance in
all material respects with the PATRIOT Act.  Neither the making of any Loan nor the use of the proceeds thereof will
violate the PATRIOT Act, the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating
thereto or successor statute thereto.

 

    	- 29 -

    	 

    

 

Section 4.23         Perfected
Liens and Security Interests.  The Obligations are secured by valid, perfected first-priority Liens in favor of the
Lender, covering and encumbering all collateral granted by the Security Documents, to the extent perfection has occurred by the
filing of a UCC financing statement or by continued possession or control or the filing or recording of the Security Documents
(other than with respect to security interests in any collateral not required to be perfected pursuant to the terms of the Security
Agreement).

 

Section 4.24         Business
Locations.  Schedule 4.24 sets forth as of the Closing Date the addresses of each business location of the
Borrower and its Subsidiaries, and, if such business location is leased, the name and address of the landlord for such business
location.  

 

Section 4.25         Accounts.  The
only deposit, checking, brokerage or other similar accounts maintained by the Borrower and any Subsidiary with any bank, savings
association, financial institution or similar financial intermediary are those listed on Schedule 4.25.

 

Section 4.26         Broker’s
or Finder’s Commissions.  No broker’s or finder’s or placement fee or commission will be payable
to any broker or agent engaged by any Loan Party or any of its officers, directors or agents with respect to the Loans, except
for fees payable to the Lender.

 

Section 4.27         Material
Adverse Occurrence.  Since December 31, 2014, there has been no Material Adverse Occurrence.

 

Article
V

AFFIRMATIVE COVENANTS

 

Until any obligation of the Lender to make
the Term Loan and Revolving Loans has expired or been terminated and the Notes and all of the other Obligations have been irrevocably
paid in full, unless the Lender otherwise consents in writing:

 

Section 5.1           Financial
Statements and Reports.  The Borrower will furnish to the Lender:

 

(a)          As
soon as available and in any event within 120 days after the end of each fiscal year of the Borrower the audited consolidated financial
statements of the Borrower and the Subsidiaries consisting of at least statements of income, cash flow and changes in shareholders’
equity, and a consolidated balance sheet as at the end of such year, setting forth in each case in comparative form corresponding
figures from the previous annual audit, certified without qualification by independent certified public accountants selected by
the Borrower and reasonably acceptable to the Lender, together with any management letters, management reports or other supplementary
comments or reports to the Borrower or its board of managers furnished by such accountants.

 

    	- 30 -

    	 

    

 

(b)          Within
45 days after the close of the first three (3) quarterly periods of each of its fiscal years, for itself and its Subsidiaries,
consolidated audited balance sheets as at the close of each such period and consolidated profit and loss and reconciliation of
surplus statements (including sufficient detail for independent calculation of the financial covenants set forth in Sections 6.15
and 6.16) and a statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified
by its chief financial officer.

 

(c)          Contemporaneously
with the furnishing of the statements and reports under Section 5.1(a) and (b), a Compliance Certificate in the form of Exhibit
D signed by the chief financial officer, treasurer or controller of the Borrower demonstrating in reasonable detail compliance
(or noncompliance, as the case may be) with Sections 6.15 and 6.16 as of the end of the relevant reporting period, and Section 6.10
for the period ending the end of each fiscal year, and stating that as at the end of such period there did not exist any Default
or Event of Default or, if any Default or Event of Default existed, specifying the nature and period of existence thereof and what
action the Borrower proposes to take with respect thereto.  

 

(d)          As
soon as available, but in any event within 45 days after the beginning of each fiscal year of the Borrower, a copy of the detailed
consolidated operating budget of the Borrower and its Subsidiaries for such fiscal year.

 

(e)          Immediately
upon any officer of the Borrower becoming aware of any Default or Event of Default, a notice describing the nature thereof and
what action the Borrower proposes to take with respect thereto.

 

(f)          Immediately
upon any officer of the Borrower becoming aware of the occurrence, with respect to any Plan, of any Reportable Event or any Prohibited
Transaction, a notice specifying the nature thereof and what action the Borrower proposes to take with respect thereto, and, when
received, copies of any notice from PBGC of intention to terminate or have a trustee appointed for any Plan.

 

(g)          Immediately
upon any officer of the Borrower becoming aware of any matter that has resulted or is reasonably likely to result in a Material
Adverse Occurrence, a notice from the Borrower describing the nature thereof and what action the Borrower proposes to take with
respect thereto.

 

    	- 31 -

    	 

    

 

(h)          Immediately
upon any officer of the Borrower becoming aware of (i) the commencement of any action, suit, investigation, proceeding or arbitration
before any court or arbitrator or any governmental department, board, agency or other instrumentality affecting the Borrower or
any Subsidiary or any property of such Person, or to which the Borrower or any Subsidiary is a party (other than litigation where
the insurance insures against the damages claimed and the insurer has assumed defense of the litigation without reservation) and
in which an adverse determination or result could constitute a Material Adverse Occurrence; or (ii) any adverse development in
any litigation, arbitration or governmental investigation or proceeding previously disclosed by the Borrower or any Subsidiary
that, if determined adversely to the Borrower or any Subsidiary, would constitute a Material Adverse Occurrence, a notice from
the Borrower describing the nature and status thereof and what action the Borrower proposes to take with respect thereto.

 

(i)          Such
information and evidence of actions taken as reasonably requested by the Lender in order to assist the Lender in maintaining compliance
with the Patriot Act.

 

(j)          From
time to time, such other information regarding the business, operation and financial condition of the Borrower and the Subsidiaries
as the Lender reasonably requests.

 

Any financial statement
required to be furnished pursuant to Section 5.1(a) or Section 5.1(b) shall be deemed to have been furnished on the date on which
the Lender receives notice that the Borrower has filed such financial statement with the U.S. Securities and Exchange Commission
and is available on the EDGAR website on the Internet at www.sec.gov or any successor government website that is freely and readily
available to the Lender without charge; provided that the Borrower shall give notice of any such filing to the Lender.  Notwithstanding
the foregoing, the Borrower shall deliver paper or electronic copies of any such financial statement to the Lender if the Lender
requests the Borrower to furnish such paper or electronic copies until written notice to cease delivering such paper or electronic
copies is given by the Lender.

 

If any information which
is required to be furnished to the Lender under this Section 5.1 is required by law or regulation to be filed by the Borrower with
a Governmental Authority on an earlier date, then the information required hereunder shall be furnished to the Lender at such earlier
date.

 

Section 5.2           Existence.  The
Borrower will maintain, and cause each Subsidiary to maintain, its company existence in good standing under the laws of its jurisdiction
of organization and its qualification to transact business in each jurisdiction where failure so to qualify could reasonably be
expected to result in a Material Adverse Occurrence; provided, however, that nothing herein shall prohibit the merger or liquidation
of any Subsidiary allowed under Section 6.1.

 

    	- 32 -

    	 

    

 

Section 5.3           Insurance.  

 

(a)          The
Borrower shall, and shall cause each Subsidiary to, secure, pay for and maintain for the Real Property and the Security Documents
Collateral, without interruption, at its own expense, insurance during the term of this Agreement of the types and in the amounts
customarily carried from time to time by others engaged in substantially the same business as the Borrower and its Subsidiaries
and operating in the same or similarly situated geographic area or areas as the Borrower and its Subsidiaries, including, but not
limited to, fire, public liability and property damage, and the Borrower shall deliver evidence of insurance complying with the
requirements of this Section 5.3, in each case for the Borrower, its Subsidiaries, the Real Property and the Security Documents
Collateral.  The Borrower shall, and shall cause each Subsidiary to, name the Lender as an additional insured with respect
to general liability insurance and as the Lender loss payee and mortgagee with respect to property and hazard insurance at all
times and state that such insurance shall not be cancelled or revised without 30 days prior written notice by the insurer to the
Lender.

 

(b)          The
Borrower shall, and shall cause each Subsidiary to, furnish to the Lender, upon written request, full information as to the insurance
carried;

 

(c)          The
Borrower shall, and shall use its best efforts to cause each Subsidiary to, carry and maintain each policy for such insurance with
a company which is rated no lower than “A X” in the most recent edition of A.M. Best’s and “AA” in
the most recent edition of Standard & Poor’s at the time such policy is placed and at the time of each annual renewal
thereof (or reasonably equivalent foreign rating where applicable); and

 

(d)          The
Borrower shall, and shall cause each Subsidiary to, obtain and maintain endorsements acceptable to the Lender for such insurance
(including form 438BFU or equivalent) naming the Lender as lender’s loss payable and naming the Lender as additional insureds.

 

Section 5.4           Payment
of Taxes and Claims.  The Borrower shall file, and cause each Subsidiary to file, all federal and state and local
tax returns and reports that are required by law to be filed by it and will pay, and cause each Subsidiary to pay, before they
become delinquent all federal and state and local taxes, assessments and governmental charges and levies imposed upon it or its
property and all claims or demands of any kind (including but not limited to those of suppliers, mechanics, carriers, warehouses,
landlords and other like Persons) that, if unpaid, might result in the creation of a Lien upon its property; provided that the
foregoing items need not be paid if they are being contested in good faith by appropriate proceedings, and as long as the Borrower’s
or such Subsidiary’s title to its property is not materially adversely affected, its use of such property in the ordinary
course of its business is not materially interfered with and adequate reserves with respect thereto have been set aside on the
Borrower’s or such Subsidiary’s books in accordance with GAAP.

 

Section 5.5           Inspection.  The
Borrower shall permit any Person designated by the Lender, upon reasonable prior notice to the Borrower (which notice shall not
be required to be given during the continuation of an Event of Default), to visit and inspect any of the properties, books and
financial records of the Borrower and the Subsidiaries, to examine and to make copies of the books of accounts and other financial
records of the Borrower and the Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and the Subsidiaries
with, and to be advised as to the same by, its officers at such reasonable times and intervals as the Lender may designate.  The
expenses of the Lender for such visits, inspections and examinations shall be at the expense of the Lender, provided, that any
such visit, inspection, or examination shall be at the reasonable expense of the Borrower if such visit, inspection, or examination
(a) constitutes the Lender’s annual collateral audit or (b) is made while any Event of Default is continuing.

 

    	- 33 -

    	 

    

 

Section 5.6           Maintenance
of Properties.  The Borrower will maintain, and cause each Subsidiary to maintain, its properties used or useful
in the conduct of its business in good condition, repair and working order, ordinary wear and tear excepted, and supplied with
all necessary equipment, and make all necessary repairs, renewals, replacements, betterments and improvements thereto, all as may
be reasonably necessary so that the business carried on in connection therewith may be properly and advantageously conducted at
all times.

 

Section 5.7           Books
and Records.  The Borrower will keep, and will cause each Subsidiary to keep, adequate and proper records and books
of account in which full and correct entries in all material respects will be made of its dealings, business and affairs.

 

Section 5.8           Compliance.  The
Borrower will, and will cause each Subsidiary to, comply in all material respects with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject including, without limitation, all Anti-Corruption Laws and
applicable Sanctions, and will obtain all permits, licenses and approvals required by such laws, copies of which will be provided
to the Lender upon request.

 

Section 5.9           Environmental
Matters; Reporting.  The Borrower will observe and comply with, and cause each Subsidiary to observe and comply with,
all laws, rules, regulations and orders of any government or government agency relating to health, safety, pollution, hazardous
materials or other environmental matters to the extent non-compliance could result in a material liability or otherwise could reasonably
be expected to result in a Material Adverse Occurrence.  The Borrower will give the Lender prompt written notice of any
violation as to any environmental matter by the Borrower or any Subsidiary and of the commencement of any judicial or administrative
proceeding relating to health, safety or environmental matters (a) in which an adverse determination or result could constitute
or result in a Material Adverse Occurrence or (b) that will or threatens to impose a material liability on the Borrower or such
Subsidiary to any Person or that will require a material expenditure by the Borrower or such Subsidiary to cure any alleged problem
or violation.

 

Section 5.10         ERISA.  The
Borrower will maintain, and cause each Subsidiary to maintain, each Plan in compliance with all applicable requirements of ERISA
and of the Code and with all applicable rulings and regulations issued under the provisions of ERISA and of the Code and will not,
and will not permit any of the ERISA Affiliates to (a) engage in any transaction in connection with which the Borrower or any of
the ERISA Affiliates would be subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, (b) fail to make full payment when due of all amounts which, under the provisions of any Plan, the
Borrower any ERISA Affiliate is required to pay as contributions thereto, or permit to exist any accumulated funding deficiency
(as such term is defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, with respect to any Plan
or (c) fail to make any payments to any Multiemployer Plan that the Borrower or any of the ERISA Affiliates may be required to
make under any agreement relating to such Multiemployer Plan or any law pertaining thereto.

 

    	- 34 -

    	 

    

 

Section 5.11         Further
Assurances.  

 

(a)          The
Borrower shall, and shall cause each other Loan Party to, promptly correct any defect or error that may be discovered in any Loan
Document or in the execution, acknowledgment or recordation thereof.  Promptly upon request by the Lender, the Borrower
also shall, and shall cause each Loan Party to, do, execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register any and all deeds, conveyances, mortgages, deeds of trust, trust deeds, assignments, estoppel certificates, financing
statements and continuations thereof, notices of assignment, transfers, certificates, assurances and other instruments as the Lender
reasonably requires from time to time:  (i) to carry out more effectively the purposes of the Loan Documents; (ii) to
perfect and maintain the validity, effectiveness and priority of any security interests intended to be created by the Loan Documents
including, without limitation, the delivery of a landlord waiver from the landlord of each location required by the Lender; and
(iii) to better assure, convey, grant, assign, transfer, preserve, protect and confirm unto the Lender the rights granted
now or hereafter intended to be granted to the Lender under any Loan Document or under any other instrument executed in connection
with any Loan Document or that any Loan Party may be or become bound to convey, mortgage or assign to the Lender to carry out the
intention or facilitate the performance of the provisions of any Loan Document.  The Borrower shall furnish to the Lender
evidence satisfactory to the Lender of every such recording, filing or registration.

 

(b)          In
addition to and not in limitation of the foregoing paragraph (a), upon the formation of any Domestic Subsidiary after the
Closing Date or upon the acquisition of any fee interests in domestic real property after the Closing Date by the Borrower or any
Subsidiary:  (i)(A) such Person (other than the Borrower, and a Subsidiary, if already a Loan Party) shall join
the Guaranty and guaranty the Obligations, and (B) such Person shall grant to the Lender a mortgage, deed of trust, or other
similar agreement as required by the Lender (and permit the Lender to perfect such interest) in the real property of such Person,
creating a first-priority mortgage or deed of trust (subject to Permitted Liens) and deliver such other related documents and instruments
as the Lender reasonably requests; and (ii) the Borrower or the applicable Domestic Subsidiary shall, at the Borrower’s
cost and expense, execute and deliver to the Lender such documents and instruments reasonably deemed necessary by the Lender to
effect the matters specified in subclause (i).

 

(c)          Post-Closing
(GPI Asia).  Within 90 days of the Closing Date, GPI Asia shall comply with its obligations under Section 3.1(a)(v)
(certificate), Section 3.1(a)(vi) (good standings ) and Section 3.1(b) (opinion).  

 

(d)          Cash
Management. Within 90 days after the Closing Date, the Borrower and each of its Domestic Subsidiaries shall maintain all deposit
accounts and principal cash management accounts with the Lender (such accounts collectively, the “Primary Cash Management
Accounts”).  After the Closing Date, except as set forth in the Security Agreement, neither the Borrower nor
any Domestic Subsidiary shall open any deposit accounts or securities accounts (other than the Primary Cash Management Accounts)
without the prior written consent of the Lender.

 

    	- 35 -

    	 

    

 

Section 5.12         Compliance
with Terms of Material Contracts.  The Borrower shall, and shall cause each Subsidiary to, make all payments and
otherwise perform all obligations in respect of all material contracts to which the Borrower or such Subsidiary is a party.

 

Section 5.13         Intellectual
Property.  The Borrower shall, and shall cause each Subsidiary to, maintain adequate licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications, tradestyles and trade names to continue its business as heretofore
conducted by it or as hereafter conducted by it.  

 

Section 5.14         Leaseholds.  The
Borrower will use commercially reasonable efforts to prevent the termination of, and to maintain in full force and effect, each
leasehold of the Borrower or any Subsidiary on any of property leased by such Person, which is reasonably necessary to the conduct
of the business of the Borrower or Subsidiary.

 

Article
VI

NEGATIVE COVENANTS

 

Until any obligation of the Lender hereunder
to make the Term Loan and Revolving Loans has expired or been terminated and the Notes and all of the other Obligations have been
paid in full, unless the Lender otherwise consents in writing:

 

Section 6.1           Merger.  The
Borrower will not merge or consolidate or enter into any analogous reorganization or transaction with any Person or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution) or permit any Subsidiary to do any of the foregoing; provided,
however, any Subsidiary may be merged with or liquidated into the Borrower or any wholly-owned Domestic Subsidiary of the Borrower
(if the Borrower or such wholly-owned Domestic Subsidiary of the Borrower is the surviving entity).

 

Section 6.2           Disposition
of Assets.  The Borrower will not, and will not permit any Subsidiary to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise dispose of (whether in one transaction or a series of transactions) any property (including accounts
and notes receivable, with or without recourse) or enter into any agreement to do any of the foregoing, except:

 

(a)          dispositions
of inventory, or used, worn-out or surplus equipment, or abandonment of ownership of or rights incident to intellectual property,
all in the ordinary course of business;

 

(b)          the
sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment,
or the proceeds of such sale are applied with reasonable promptness to the purchase price of such replacement equipment;

 

(c)          the
sale of the Las Vegas Real Property to the extent the sale of such property is pursuant to an arm’s length transaction to
a party other than an Affiliate of the Borrower or any Subsidiary, the purchase price of such sale is the fair market value of
such property and the net proceeds of such sale (or such other amount as Lender may agree in its sole discretion) are (i) paid
to the Lender pursuant to Section 2.6(a)(ii) or (ii) held by the Borrower in a deposit account with Lender until Borrower
and Lender agree to an appropriate disposition of such funds; provided, however, that Borrower and Lender shall use reasonable
efforts to agree on an appropriate disposition within 45 days; provided, further that after such 45 day period as may be extended
in the reasonable discretion of the Lender, such funds shall be applied pursuant to clause (i) of this Section 6.2(c); and

 

    	- 36 -

    	 

    

 

(d)          other
dispositions of property in any fiscal year during the term of this Agreement whose net book value in the aggregate does not exceed
10% of the Borrower’s total consolidated assets as shown on the balance sheet for the most recent prior fiscal year.

 

Section 6.3           Plans.  The
Borrower will not, nor will it allow any Subsidiary to, (a) enter into any new Plan or modify any existing Plan so as to increase
its obligations thereunder in any manner that could reasonably be expected to result in a Material Adverse Occurrence, unless such
modification is required by ERISA, the Code or other applicable law; (b) terminate any Plan under any circumstances that would
cause the Lien provided for in Section 4068 of ERISA to attach to any assets of the Borrower or any Subsidiary or (c) enter into
any agreement as a purchaser or as a seller of assets under Section 4204 of ERISA.

 

Section 6.4           Change
in Nature of Business.  The Borrower will not, nor will it permit any Subsidiary to, make any material change in
the nature of the business of the Borrower or any Subsidiary, as carried on at the Closing Date; provided, however, that the foregoing
shall not prohibit an expansion of the Borrower’s core business so long as such core business does not materially change.

 

Section 6.5           Subsidiaries.  The
Borrower will not, nor will it permit any Subsidiary to, form or acquire any corporation, limited liability company, or other entity
that would thereby become a Subsidiary, unless the Borrower or such Subsidiary complies with the provisions of Section 5.11.

 

Section 6.6           Subsidiary
Restrictions.  The Borrower will not, and will not permit any Subsidiary to, place or allow any restriction, directly
or indirectly, on the ability of such Person to (a) pay dividends or any distributions on or with respect to such Person’s
capital stock or (b) make loans or other cash payments to the Borrower.

 

Section 6.7           Restricted
Payments.  The Borrower will not, nor will it permit any Subsidiary to, make any Restricted Payment, except that
(i) any Subsidiary may declare and pay dividends or make distributions to the Borrower, and (ii) the Borrower may declare and pay
dividends on its capital stock provided that no Default or Event of Default shall exist before or after giving effect to such dividends
or be created as a result thereof.

 

Section 6.8           Transactions
with Affiliates.  The Borrower will not, and will not permit any Subsidiary to, enter into any transaction with any
of its Affiliates, except upon fair and reasonable terms no less favorable than the Borrower or such Subsidiary would obtain in
a comparable arm’s-length transaction with a Person not an Affiliate.

 

    	- 37 -

    	 

    

 

Section 6.9           Accounting
Changes, etc.  The Borrower will not, nor will it permit any Subsidiary to, (a) make any change in accounting treatment
or reporting practices, except as permitted by GAAP, or change its fiscal year or (b) amend, modify or change any of its Constituent
Documents in any manner that could reasonably be expected to be materially adverse in any respect to the rights or interests of
the Lender.

 

Section 6.10         Maintenance
Capital Expenditures.  For the fiscal year ending December 31, 2015, the Borrower will not make Maintenance Capital
Expenditures in an amount in excess of 6.50% of Total Revenues for the immediately preceding fiscal year (aggregated with Maintenance
Capital Expenditures of its Subsidiaries).  For the fiscal year ending December 31, 2016 and each fiscal year thereafter,
the Borrower will not make Maintenance Capital Expenditures in an amount in excess of 5.00% of Total Revenues for the immediately
preceding fiscal year (aggregated with Maintenance Capital Expenditures of its Subsidiaries).  

 

Section 6.11         Investments.  The
Borrower will not, and will not permit any Subsidiary to, acquire for value, make, have or hold any Investments, except:

 

(a)          Investments
existing on the date of this Agreement and disclosed on Schedule 6.11;

 

(b)          Travel
advances to management personnel and employees in the ordinary course of business;

 

(c)          Cash
Equivalents;

 

(d)          Rate
Protection Agreements;

 

(e)          Investments
by the Borrower or any Domestic Subsidiary in the form of acquisitions of all or substantially all of the business or a line of
business (whether by the acquisition of Equity Interests, assets or any combination thereof) of any other Person if such acquisition
has been approved in writing by the Lender (the “Permitted Acquisitions”), such approval not to be unreasonably
withheld or delayed;

 

(f)          Contingent
Obligations permitted by Section 6.12;

 

(g)          The
establishment or creation of Domestic Subsidiaries by the Borrower or a wholly-owned Domestic Subsidiary of the Borrower after
the Closing Date if the Borrower and Subsidiaries have complied with the provisions of Section 5.11 in respect thereof and
no Default or Event of Default exists or otherwise would arise or result therefrom; and

 

(h)          Any
other Investment if the aggregate consideration therefor does not exceed $1,000,000.

 

Section 6.12         Indebtedness.  The
Borrower will not, nor will it permit any Subsidiary to, incur, create, issue, assume or suffer to exist any Indebtedness, except:

 

(a)          the
Obligations;

 

    	- 38 -

    	 

    

 

(b)          current
liabilities, other than for borrowed money, incurred in the ordinary course of business;

 

(c)          Indebtedness
existing on the date of this Agreement and disclosed on Schedule 6.12, but not including any extension or refinancing thereof
in excess of the amount outstanding as of the Closing Date;

 

(d)         Contingent
Obligations of the Borrower and its Subsidiaries in respect of Indebtedness of Loan Parties otherwise permitted hereunder;

 

(e)          Rate
Protection Obligations;

 

(f)          Indebtedness
consisting of purchase money financing of equipment or other personal property fixed assets acquired after the Closing Date, if,
after giving effect to such Indebtedness, the Borrower is in pro forma compliance with the financial covenants set forth in Section
6.15 an 6.16; and

 

(g)          additional
Indebtedness for borrowed money incurred after the Closing Date; provided that (i) at the time such Indebtedness is incurred
no Default or Event of Default has occurred and is continuing, (ii) copies of each document or instrument evidencing such Indebtedness
are provided to the Lender and (iii) giving effect to such Indebtedness, Borrower is in pro forma compliance with the financial
covenants set forth in Section 6.15 and 6.16.  

 

Section 6.13         Liens.  The
Borrower will not, and will not permit it any Subsidiary to, create, incur, assume or suffer to exist any Lien, or enter into,
or make any commitment to enter into, any arrangement for the acquisition of any property through conditional sale, lease-purchase
or other title retention agreements, with respect to any property now owned or hereafter acquired by the Borrower or any Subsidiary,
except:

 

(a)          Liens
granted to the Lender under the Security Documents to secure the Obligations;

 

(b)          Liens
existing on the date of this Agreement and disclosed on Schedule 6.13;

 

(c)          Deposits
or pledges to secure payment of workers’ compensation, unemployment insurance, old age pensions or other social security
obligations, in the ordinary course of business of the Borrower or any Subsidiary;

 

(d)          Liens
for taxes, fees, assessments and governmental charges not delinquent or to the extent that payment therefor is not at the time
required to be made in accordance with Section 5.4;

 

(e)          Liens
of carriers, warehousemen, mechanics and materialmen, and other like Liens arising in the ordinary course of business, for sums
not due or to the extent that payment therefor is not at the time required to be made in accordance with Section 5.4;

 

    	- 39 -

    	 

    

 

(f)          deposits
or pledges to secure performance of bids, trade contracts, leases, statutory obligations and other obligations or a like nature,
in each case in the ordinary course of business;

 

(g)          Liens
arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided that (i) such
deposit account is not a dedicated cash collateral account and is not subject to restriction against access by the Borrower or
any Subsidiary in excess of those set forth by regulations promulgated by the Board, and (ii) such deposit account is not intended
by the Borrower or any Subsidiary to provide collateral to the depository institution;

 

(h)         encumbrances
in the nature of zoning restrictions, easements and rights or restrictions of record on the use of real property and landlord’s
Liens under leases on the premises rented that do not materially detract from the value of such property or impair the use thereof
in the business of the Borrower or any Subsidiary; and

 

(i)          the
interest of any lessor under any Capitalized Lease entered into after the Closing Date or purchase money Liens on property acquired
after the Closing Date; provided, that, (i) the Indebtedness secured thereby is otherwise permitted by this Agreement and (ii)
such Liens are limited to the property acquired and do not secure Indebtedness other than the related Capitalized Lease Obligations
or the purchase price of such property.

 

Section 6.14         Deposit
Accounts.  Subject to Section 5.11(d), the Borrower and its Domestic Subsidiaries will not fail to maintain all of
their operating accounts with the Lender.

 

Section 6.15         Fixed
Charge Coverage Ratio.  Commencing with the fiscal quarter ending June 30, 2015, the Borrower will not permit the
Fixed Charge Coverage Ratio to be less than 1.15 to 1.00 as of the last day of any fiscal quarter for the 12 consecutive fiscal
months ending on such date.  

 

Section 6.16         Leverage
Ratio.  Commencing with the fiscal quarter ending June 30, 2015, the Borrower will not permit the Leverage Ratio
to be more than 3.00 to 1.00 as of the last day of any fiscal quarter for the 12 consecutive fiscal months ending on such date.

 

Section 6.17         Intentionally
Omitted.

 

Section 6.18         Loan
Proceeds.  The Borrower will not, and will not permit any Subsidiary to, use any part of the proceeds of any Loan
directly or indirectly, and whether immediately, incidentally or ultimately, (a) to purchase or carry margin stock (as defined
in Regulation U of the Board) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund
Indebtedness originally incurred for such purpose or (b) for any purpose that entails a violation of, or that is inconsistent with,
the provisions of Regulations U or X of the Board.

 

Section 6.19         Sale
and Leaseback Transactions.  The Borrower will not, and will not permit any Subsidiary to, enter into any arrangement,
directly or indirectly, whereby it sells or transfers any property, real or personal, and thereafter leases such property for the
same or a substantially similar purpose or purposes as the property sold or transferred.

 

    	- 40 -

    	 

    

 

Section 6.20         Hedging
Agreements.  The Borrower will not, and will not permit any Subsidiary to, enter into any hedging arrangements, other
than any Rate Protection Agreements.

 

Section 6.21         Management
Agreements.  The Borrower will not, and will not permit any Subsidiary to, (a) enter into any agreement for the management
or operation of all or any material portion of the Real Property, or (b) pay or otherwise incur management or other similar fees
to any Person, with respect to any such management agreement, each without the prior consent of the Lender, excepting herefrom
management fees and agreements between or among the Borrower and/or its Subsidiaries.

 

Section 6.22         Nevada
Gaming Approval.  The Borrower will not, and will not permit any Subsidiary to, fail to (a) obtain approval for the
Loan, the Loan Documents and the transactions contemplated therein, including the pledge of Equity Interests, from any applicable
Gaming Authority in Nevada within 120 days after the Closing Date and (b) to the extent allowable under applicable Gaming Laws
provide to the Lender all stock powers in a form reasonably acceptable to the Lender and original stock certificates for all such
pledges of Equity Interests by no later than five Business Days after the receipt of the approval in clause (a) and in any event
no later than 120 days after the Closing Date.

 

Section 6.23         Unlawful
Use, Medical Marijuana, Controlled Substances and Prohibited Activities.  

 

(a)          The
Borrower shall not, and shall not permits Subsidiaries to, use, occupy, or permit the use or occupancy of any Real Property or
leased property or any lessee, tenant, licensee, permitee, agent, or any other Person in any manner that would be a violation of
any applicable federal, state or local law or regulation, regardless of whether such use or occupancy is lawful under any conflicting
law, including without limitation any law relating to the use, sale, possession, cultivation, manufacture, distribution or marketing
of any controlled substances or other contraband (whether for commercial, medical, or personal purposes), or any law relating to
the medicinal use or distribution of marijuana (collectively, “Prohibited Activities”).  Any lease,
license, sublease or other agreement for use, occupancy or possession of any Real Property or leased property (collectively a “lease”)
with any third person (“lessee”) shall expressly prohibit the lessee from engaging or permitting others to engage
in any Prohibited Activities.  The Borrower shall upon demand provide Lender with a written statement setting forth its
compliance with this section and stating whether any Prohibited Activities are or may be occurring in, on or around the Real Property
or such leased property.  If the Borrower becomes aware that any lessee is likely engaged in any Prohibited Activities,
the Borrower shall, in compliance with applicable law, terminate the applicable lease and take all actions permitted by law to
discontinue such activities.  The Borrower shall keep the Lender fully advised of its actions and plans to comply with
this section and to prevent Prohibited Activities.  

 

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(b)          This
Section 6.23 is a material consideration and inducement upon which the Lender relies in extending credit and other financial accommodations
to the Borrower. Failure by the Borrower to comply with this section shall constitute a material non-curable Event of Default.  Notwithstanding
anything in this Agreement or the other Loan Documents regarding rights to cure Events of Default, the Lender is entitled upon
breach of this Section 6.23 to immediately exercise any and all remedies under this Agreement, the other Loan Documents and by
law.

 

(c)          In
addition and not by way of limitation, the Borrower shall indemnify, defend and hold the Lender harmless from and against any loss,
claim, damage, liability, fine, penalty, cost or expense (including attorneys’ fees and expenses) arising from, out of or
related to any Prohibited Activities at or on the Real Property or property leased by such Person, Prohibited Activities by the
Borrower or any lessee of the Real Property or leased property, or the Borrower’s breach, violation, or failure to enforce
or comply with any of the covenants set forth in this Section 6.23. This indemnity includes any claim by any Governmental Authority,
any lessee, or any third person, including any governmental action for seizure or forfeiture of any Real Property (with or without
compensation to the Lender, and whether or not Real Property is taken free of or subject to Lender’s lien or security interest).

 

Article
VII

EVENTS OF DEFAULT AND REMEDIES

 

Section 7.1           Events
of Default.  The occurrence of any one or more of the following events shall constitute an Event of Default:

 

(a)          The
Borrower fails to make when due, whether by acceleration or otherwise, any payment of principal of or interest on any Note or any
other Obligation required to be made to the Lender pursuant to this Agreement or any other Loan Document; provided, however, that
an inadvertent failure to make a mandatory prepayment pursuant to Section 2.6(a)(ii) of this Agreement shall not constitute an
Event of Default if a Prepayment Event occurs and Borrower cures the failure to make the mandatory prepayment within 30 calendar
days of the earlier of (i) the date the Borrower becomes aware or (ii) the date the Lender gives notice of such failure to the
Borrower.

 

(b)          Any
representation or warranty made by or on behalf of any Loan Party in this Agreement or any other Loan Document or by or on behalf
of any Loan Party in any certificate, statement, report or document furnished to the Lender pursuant to this Agreement or any other
Loan Document proves to have been false or misleading in any material respect on the date as of which the facts set forth are stated
or certified and which would constitute a Material Adverse Occurrence.

 

(c)          The
Borrower fails to comply with Section 2.11, 5.1, 5.2, 5.3, 5.11(c) or any Section of Article VI.

 

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(d)          The
Borrower fails to comply with any other agreement, covenant, condition, provision or term in this Agreement (other than those otherwise
set forth in this Section 7.1 excepting Section 7.1(c) with respect to Section 5.3 (insurance)) and such failure to comply continues
for 30 calendar days after the earliest of (i) the date the Borrower gives notice of such failure to the Lender, (ii) the date
the Borrower should have given notice of such failure to the Lender pursuant to Section 5.1, and (iii) the date the Lender gives
notice of such failure to the Borrower.

 

(e)          The
Borrower or any Subsidiary becomes insolvent or generally does not pay its debts as they mature or applies for, consents to, or
acquiesces in the appointment of a custodian, trustee or receiver of the Borrower or any Subsidiary or for a substantial part of
the property thereof or, in the absence of such application, consent or acquiescence, a custodian, trustee or receiver is appointed
for the Borrower or any Subsidiary or for a substantial part of the property thereof and is not discharged within 45 days, or the
Borrower or any Subsidiary makes an assignment for the benefit of creditors.

 

(f)          Any
bankruptcy, reorganization, debt arrangement or other proceedings under any bankruptcy or insolvency law is instituted by or against
the Borrower or any Subsidiary, and, if instituted against such Person, has consented to or acquiesced in by such Person or remains
undismissed for 60 days, or an order for relief has been entered against such Person.

 

(g)          Any
dissolution or liquidation proceeding not permitted by Section 6.1 is instituted by or against the Borrower or any Subsidiary,
and, if instituted against such Person, is consented to or acquiesced in by such Person or remains for 45 days undismissed.

 

(h)          A
final judgment or judgments for the payment of money in excess of the sum of $250,000 in the aggregate are rendered against the
Borrower or any Subsidiary and either (i) the judgment creditor executes on such judgment or (ii) such judgment remains unpaid
or undischarged for more than 60 days from the date of entry thereof or such longer period during which execution of such judgment
is stayed during an appeal from such judgment.

 

(i)          The
maturity of any material Indebtedness of any Loan Party (other than Indebtedness under this Agreement) is accelerated, or any Loan
Party fails to pay any such material Indebtedness when due (after the lapse of any applicable grace period) or, in the case of
such Indebtedness payable on demand, when demanded (after the lapse of any applicable grace period), or any event occurs or condition
exists and continues for more than any applicable grace period and causes, or permitting the holder of any such Indebtedness or
any trustee or other Person acting on behalf of such holder to cause, such material Indebtedness to become due prior to its stated
maturity or permits such holder to realize upon any collateral given as security therefor.  For purposes of this Section,
Indebtedness shall be deemed “material” if it exceeds $125,000 as to any item of Indebtedness or in the aggregate for
all items of Indebtedness with respect to which any of the events described in this Section 7.1(i) has occurred.

 

    	- 43 -

    	 

    

 

(j)          Any
execution or attachment is issued whereby any substantial part of the property of the Borrower or any Subsidiary is taken or attempted
to be taken and such execution or attachment is not vacated or stayed within 30 days after the issuance thereof.

 

(k)          Any
default or event of default (however denominated) occurs under any other Loan Document and continues beyond any applicable grace
period.

 

(l)          Any
Guarantor repudiates or purports to revoke its guaranty, or the Guaranty for any reason ceases to be in full force and effect or
is judicially declared null and void, except in connection with a merger or disposition permitted hereunder.

 

(m)          Any
Security Document, at any time, ceases to be in full force and effect or is judicially declared null and void, or the validity
or enforceability thereof is contested by a Loan Party, or the Lender ceases to have a valid and perfected security interest having
the priority contemplated thereunder in all of the collateral described therein, other than by action or inaction of the Lender.

 

(n)          Any
Change of Control occurs.

 

(o)          Any
“event of default” or “termination event” (as such terms are defined in the swap arrangement documents)
under a Swap Contract, including any Rate Protection Agreement.

 

(p)          Any
final nonmonetary judgment or order is rendered against the Borrower or any Subsidiary in excess of $250,000 and either (i) enforcement
proceedings have been commenced by any person upon such judgment or order, or (ii) there is any period of 60 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, is not in effect.

 

(q)          An
ERISA Event occurs that in the reasonable opinion of the Lender, when taken together with all other ERISA Events, could be expected
to be a Material Adverse Occurrence.

 

Section 7.2           Remedies.  If
(a) any Event of Default described in Section 7.1(e), (f) or (g) occurs with respect to the Borrower, the Commitments shall automatically
terminate and the Notes and all other Obligations (other than Rate Protection Obligations and Cash Management Obligations) shall
automatically become immediately due and payable; or (b) any other Event of Default is continuing, then the Lender may take
any of the following actions:  (i) declare the Commitments terminated, whereupon the Commitments shall terminate
and (ii) declare the outstanding unpaid principal balance of the Notes, the accrued and unpaid interest thereon and all other
Obligations (other than Rate Protection Obligations and Cash Management Services Obligations) to be forthwith due and payable,
whereupon the Notes, all accrued and unpaid interest thereon and all such Obligations shall immediately become due and payable,
in each case without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything
in this Agreement or in the Notes to the contrary notwithstanding.  Upon the occurrence of any of the events described
in clause (a) or clause (b) of the preceding sentence, the Lender may exercise all rights and remedies under any of the Loan Documents,
and enforce all rights and remedies under any applicable law.

 

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Section 7.3           Offset.  In
addition to the remedies set forth in Section 7.2, while any Event of Default is continuing beyond any applicable cure period,
the Borrower hereby irrevocably authorizes the Lender to set off any Obligations owed to the Lender against all deposits, credits,
deposit accounts and other accounts (collectively, “Deposits”) of the Borrower with, and any and all claims
of the Borrower against, the Lender.  Such right shall exist whether or not the Lender has made any demand hereunder
or under any other Loan Document, whether or not the Obligations, or any part thereof, or Deposits is or are matured or unmatured,
and regardless of the existence or adequacy of any collateral, guaranty or any other security, right or remedy available to the
Lender.  The Lender agrees that, as promptly as is reasonably possible after the exercise of any such setoff or enforcement
right, it shall notify the Borrower of its exercise of such setoff or enforcement right; provided, however, that the failure of
the Lender to provide such notice shall not affect the validity of the exercise of such setoff or enforcement rights.  Nothing
in this Agreement shall be deemed a waiver or prohibition of or restriction on the Lender to all rights of banker’s Lien,
setoff and counterclaim available pursuant to law.

 

Article
VIII

MISCELLANEOUS

 

Section 8.1           Modifications.  Notwithstanding
any provisions to the contrary herein, any term of this Agreement may be amended with the written consent of the Borrower; provided,
that no amendment, modification or waiver of any provision of this Agreement or any other Loan Document or consent to any departure
therefrom by the Borrower or other party thereto shall in any event be effective unless in writing and signed by the Lender, and
then such amendment, modification, waiver or consent shall be effective only in the specific instance and for the purpose for which
given.  

 

Section 8.2           Expenses.
Whether or not the transactions contemplated hereby are consummated, the Borrower shall reimburse the Lender upon demand for all
reasonable out-of-pocket expenses paid or incurred by the Lender (including filing and recording costs and reasonable fees and
expenses of counsel to the Lender) in connection with the negotiation, preparation, approval, review, execution, delivery, administration,
amendment, modification and interpretation of this Agreement and the other Loan Documents and any commitment letters relating thereto;
provided, however, that such expenses for legal fees accrued on or before the Closing Date shall not exceed $50,000 and expenses
accrued for environmental reviews on or before the Closing Date shall not exceed $4,000.  The Lender hereby acknowledges
receipt of $10,000 from the Borrower prior to the Closing Date, which shall be applied to expenses owed by the Borrower under this
Section 8.2 on or before the Closing Date.  The Borrower shall also reimburse the Lender upon demand for all reasonable
out-of-pocket expenses (including reasonable expenses of legal counsel) paid or incurred by the Lender in connection with the collection
and enforcement of this Agreement and any other Loan Document.  The obligations of the Borrower under this Section shall
survive any termination of this Agreement.

 

Section 8.3           Waivers,
etc.  No failure on the part of the Lender or the holder of a Note to exercise and no delay in exercising any power
or right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise
of any power or right preclude any other or further exercise thereof or the exercise of any other power or right.  The
remedies herein and in the other Loan Documents provided are cumulative and not exclusive of any remedies provided by law.

 

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Section 8.4           Notices.  Except
when telephonic notice is expressly authorized by this Agreement, any notice or other communication to any party in connection
with this Agreement shall be in writing and shall be sent by manual delivery, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified on the signature page hereof, or at such other address
as such party specifies to the other party hereto in writing.  All periods of notice shall be measured from the date
of delivery if manually delivered, from the date of sending if sent by facsimile transmission, from the first Business Day after
the date of sending if sent by overnight courier, or from four days after the date of mailing if mailed; provided, however, that
any notice to the Lender under Article II shall be deemed to have been given only when received by the Lender.

 

Section 8.5           Taxes.  The
Borrower agrees to pay, and save the Lender harmless from all liability for, any stamp or other taxes that may be payable with
respect to the execution or delivery of this Agreement or the issuance of the Notes, which obligation of the Borrower shall survive
the termination of this Agreement.

 

Section 8.6           Successors
and Assigns; Participations; Purchasing Lenders.

 

(a)          This
Agreement shall be binding upon and inure to the benefit of the Borrower, the Lender, all future holders of the Notes, and their
respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of the Lender.

 

(b)          The
Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time sell to
one or more lenders that are not natural persons (“Participants”) participating interests in any Loan or other
Obligation owing to the Lender, any Note held by the Lender, any Commitment of the Lender, or any other interest of the Lender
hereunder.  In the event of any such sale by the Lender of participating interests to a Participant, (i) the Lender’s
obligations under this Agreement to the other parties to this Agreement shall remain unchanged, (ii) the Lender shall remain solely
responsible for the performance thereof, (iii) the Lender shall remain the holder of any such Note for all purposes under this
Agreement, (iv) the Borrower and the Lender shall continue to deal solely and directly with the Lender in connection with the Lender’s
rights and obligations under this Agreement, and (v) the agreement pursuant to which such Participant acquires its participating
interest herein shall provide that the Lender shall retain the sole right and responsibility to enforce the Obligations, including,
without limitation the right to consent or agree to any amendment, modification, consent or waiver with respect to this Agreement
or any other Loan Document.  The Borrower agrees that if amounts outstanding under this Agreement, the Notes, and the
other Loan Documents are due and unpaid, or have been declared or have become due and payable upon an Event of Default, each Participant
shall be deemed to have, to the extent permitted by applicable law, the right of setoff in respect of its participating interest
in amounts owing under this Agreement and any Note or other Loan Document to the same extent as if the amount of its participating
interest were owing directly to it as the Lender under this Agreement or any Revolving Note, any Term Note or other Loan Document.  The
Borrower also agrees that each Participant shall be entitled to the benefits of Sections 2.13, 2.14, 2.15, 2,16 and 8.2 with respect
to its participation in the Commitments and Loans; provided, that no Participant shall be entitled to receive any greater amount
pursuant to such Sections than the transferor Lender would have been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer occurred.

 

    	- 46 -

    	 

    

 

(c)          The
Lender may, from time to time, assign to other lenders that are not natural persons (“Assignees”), all or part
of its rights or obligations hereunder or under any other Loan Document evidenced by any Note then held by that Lender, together
with equivalent proportions of its Commitment, pursuant to written agreements executed by the Lender and such Assignee(s); provided
that the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless an Event of
Default is continuing at the time of such assignment; provided that the Borrower shall be deemed to have consented to any such
assignment unless it objects thereto by written notice to the Lender within 5 Business Days after having received notice thereof,
where such written notice clearly states that a failure to object within 5 Business Days shall be deemed approval.  

 

(d)          The
Borrower shall not be liable for any costs incurred by the Lender in effecting any participation under subparagraph (b) of this
subsection or by the Lender in effecting any assignment under subparagraph (c) of this subsection.

 

(e)          The
Lender may disclose to any Assignee or Participant and to any prospective Assignee or Participant any and all financial information
in the Lender’s possession concerning the Borrower or any of their Subsidiaries that has been delivered to the Lender by
or on behalf of any Loan Party pursuant to the Loan Documents or that has been delivered to the Lender by or on behalf of any Loan
Party in connection with the Lender’s credit evaluation of the Loan Parties prior to entering into this Agreement, subject
to the provisions of Section 8.7.

 

(f)          Notwithstanding
any other provision in this Agreement, the Lender may at any time create a security interest in, or pledge, all or any portion
of its rights under and interest in this Agreement and any note held by it in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board or U. S. Treasury Regulation 31 C.F.R. § 203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.

 

Section 8.7           Confidentiality
of Information.  The Lender shall use reasonable efforts to assure that information about the Borrower and its operations,
affairs and financial condition not generally disclosed to the public or to trade and other creditors that is furnished to the
Lender pursuant to the provisions hereof is used only for the purposes of this Agreement and any other relationship between the
Lender and the Borrower and shall not be divulged to any Person other than the Lender, its Affiliates and their respective officers,
directors, employees and agents, except:  (a) to their attorneys and accountants; (b) in connection with the enforcement
of the rights of the Lender hereunder and under the Loan Documents or otherwise in connection with applicable litigation; (c) in
connection with assignments and participations and the solicitation of prospective assignees and participants referred to in the
Section 8.6; (d) if such information is generally available to the public other than as a result of disclosure by the Lender; (e)
to any direct or indirect contractual counterparty in any hedging arrangement or such contractual counterparty’s professional
advisor; (f) to any nationally recognized rating agency that requires information about the Lender’s investment portfolio
in connection with ratings issued with respect to the Lender; and (g) as may otherwise be required or requested by any regulatory
authority having jurisdiction over the Lender or by any applicable law, rule, regulation or judicial process, the opinion of the
Lender’s counsel concerning the making of such disclosure to be binding on the parties hereto.  Lender shall not
incur any liability to the Borrower by reason of any disclosure permitted by this Section.

 

    	- 47 -

    	 

    

 

Section 8.8           Governing
Law and Construction.  THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.  Whenever
possible, each provision of this Agreement and the other Loan Documents and any other statement, instrument or transaction contemplated
hereby or thereby or relating hereto or thereto shall be interpreted so as to be effective and valid under such applicable law,
but if any provision of this Agreement, the other Loan Documents or any other statement, instrument or transaction contemplated
hereby or thereby or relating hereto or thereto is held to be prohibited or invalid under such applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement, the other Loan Documents or any other statement, instrument or transaction contemplated
hereby or thereby or relating hereto or thereto.

 

Section 8.9           Consent
to Jurisdiction.  EXCEPT AS SET FORTH IN SECTION 8.10, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL
BE ENFORCED IN ANY FEDERAL OR STATE COURT SITTING IN CLARK COUNTY, NEVADA, WHICH SHALL HAVE EXCLUSIVE JURISDICTION AS TO ANY DISPUTE
ARISING FROM OR RELATING TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THE BORROWER AND THE LENDER CONSENT TO THE JURISDICTION
AND VENUE OF ANY SUCH COURT AND WAIVE ANY ARGUMENT THAT VENUE IN SUCH FORUM IS NOT CONVENIENT.

 

Section 8.10         Waiver
of Jury Trial; Arbitration; Class Action Waiver.  This Section contains a jury waiver, arbitration clause, and a
class action waiver.  READ IT CAREFULLY.

 

(a)          Jury
Trial Waiver.  The Loan Parties and Lender each waive their respective rights to a trial before a jury in connection
with any Dispute (as “Dispute” is hereinafter defined), and Disputes
shall be resolved by a judge sitting without a jury.  If a court determines that this provision is not enforceable for
any reason and at any time prior to trial of the Dispute, but not later than 30 days after entry of the order determining this
provision is unenforceable, any party shall be entitled to move the court for an order compelling arbitration and staying or dismissing
such litigation pending arbitration (“Arbitration Order”).

 

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(b)          Arbitration.  If
a claim, dispute, or controversy arises with respect to this Agreement or the other Loan Documents, or any other agreement or business
relationship between the parties hereto whether or not related to the subject matter of this Agreement (all of the foregoing, a
“Dispute”), and only if a jury trial waiver is not permitted by applicable law or ruling by a court, either party may
require that the Dispute be resolved by binding arbitration before a single arbitrator at the request of any party.  By
agreeing to arbitrate a Dispute, each party gives up any right that party may have to a jury trial, as well as other rights that
party would have in court that are not available or are more limited in arbitration, such as the rights to discovery and to appeal.

 

Arbitration shall be commenced
by filing a petition with, and in accordance with the applicable arbitration rules of, JAMS or National Arbitration Forum (“Administrator”)
as selected by the initiating party.  If the parties agree, arbitration may be commenced by appointment of a licensed
attorney who is selected by the parties and who agrees to conduct the arbitration without an Administrator.  Disputes
include matters (i) relating to a deposit account, application for or denial of credit, enforcement of any of the obligations we
have to each other, compliance with applicable laws and/or regulations, performance or services provided under any agreement by
any party, (ii) based on or arising from an alleged tort, or (iii) involving either party’s employees, agents, affiliates,
or assigns of a party.  However, Disputes do not include the validity, enforceability, meaning, or scope of this arbitration
provision and such matters may be determined only by a court.  If a third party is a party to a Dispute, each party will
consent to including the third party in the arbitration proceeding for resolving the Dispute with the third party.  Venue
for the arbitration proceeding shall be at a location determined by mutual agreement of the parties or, if no agreement, in Las
Vegas, Nevada.  

 

After entry of an arbitration
order, the non-moving party shall commence arbitration.  The moving party shall, at its discretion, also be entitled
to commence arbitration but is under no obligation to do so, and the moving party shall not in any way be adversely prejudiced
by electing not to commence arbitration.  The arbitrator:  (i) will hear and rule on appropriate dispositive
motions for judgment on the pleadings, for failure to state a claim, or for full or partial summary judgment; (ii) will render
a decision and any award applying applicable law;  (iii) will give effect to any limitations period in determining any
Dispute or defense; (iv) shall enforce the doctrines of compulsory counterclaim, res judicata, and collateral estoppel, if
applicable; (v) with regard to motions and the arbitration hearing, shall apply rules of evidence governing civil cases; and (vi)
will apply the law of the state specified in the agreement giving rise to the Dispute.  Filing of a petition for arbitration
shall not prevent any party from (i) seeking and obtaining from a court of competent jurisdiction (notwithstanding ongoing arbitration)
provisional or ancillary remedies including but not limited to injunctive relief, property preservation orders, foreclosure, eviction,
attachment, replevin, garnishment, and/or the appointment of a receiver, (ii) pursuing non-judicial foreclosure, or (iii) availing
itself of any self-help remedies such as setoff and repossession.  The exercise of such rights shall not constitute a
waiver of the right to submit any Dispute to arbitration.

 

    	- 49 -

    	 

    

 

Judgment upon an arbitration award
may be entered in any court having jurisdiction except that, if the arbitration award exceeds $4,000,000, any party shall be entitled
to a de novo appeal of the award before a panel of three arbitrators.  To allow for such appeal, if the award (including
Administrator, arbitrator, and attorney’s fees and costs) exceeds $4,000,000, the arbitrator will issue a written, reasoned
decision supporting the award, including a statement of authority and its application to the Dispute.  A request for
de novo appeal must be filed with the arbitrator within 30 days following the date of the arbitration award; if such a request
is not made within that time period, the arbitration decision shall become final and binding.  On appeal, the arbitrators
shall review the award de novo, meaning that they shall reach their own findings of fact and conclusions of law rather than deferring
in any manner to the original arbitrator.  Appeal of an arbitration award shall be pursuant to the rules of the Administrator
or, if the Administrator has no such rules, then the JAMS arbitration appellate rules shall apply.

 

Arbitration under this provision
concerns a transaction involving interstate commerce and shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1
et seq.  This arbitration provision shall survive any termination, amendment, or expiration of this Agreement.  If
the terms of this provision vary from the Administrator’s rules, this arbitration provision shall control.

 

(c)       Class
Action Waiver.  the Loan Parties
and Lender EACH waive the right to Litigate in court or arbitrate any claim
or Dispute as a class action, either as a member of a class or as a representative, or to act as a private attorney general.

 

(d)        Reliance.  Each
party (i) certifies that no one has represented to such party that the other party would not seek to enforce jury and class action
waivers in the event of suit, and (ii) acknowledges that it and the other party have been induced to enter into this Agreement
by, among other things, the mutual waivers, agreements, and certifications in this Section.

 

Section 8.11         Survival
of Agreement.  All representations, warranties, covenants and agreement made by the Borrower herein or in the other
Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement
or any other Loan Document shall be deemed to have been relied upon by the Lender and shall survive the making of the Loans and
the execution and delivery to the Lender by the Borrower of the Notes, regardless of any investigation made by or on behalf of
the Lender, and shall continue in full force and effect as long as any Obligation is outstanding and unpaid and so long as the
Commitments have not been terminated; provided, however, that the obligations of the Borrower under Sections 8.2, 8.5, 8.12 and
8.22 shall survive payment in full of the Obligations and the termination of the Commitments.

 

    	- 50 -

    	 

    

 

Section 8.12         Indemnification.
The Borrower hereby agrees to defend, protect, indemnify and hold harmless the Lender and its respective Affiliates and the directors,
officers, employees, attorneys and agents and their respective Affiliates (each of the foregoing being an “Indemnitee”
and all of the foregoing being collectively the “Indemnitees”) from and against any and all claims, actions,
damages, liabilities, judgments, costs and expenses (including all reasonable fees and disbursements of counsel that may be incurred
in the investigation or defense of any matter) imposed upon, incurred by or asserted against any Indemnitee, whether direct, indirect
or consequential and whether based on any federal, state, local or foreign laws or regulations (including securities laws, environmental
laws, commercial laws and regulations), under common law or on equitable cause, or on contract or otherwise:

 

(a)          by
reason of, relating to or in connection with the execution, delivery, performance or enforcement of any Loan Document, any Commitments,
or any transaction contemplated by any Loan Document; or

 

(b)          by
reason of, relating to or in connection with any credit extended or used under the Loan Documents or any act done or omitted by
any Person, or the exercise of any rights or remedies thereunder, including the acquisition of any collateral by the Lender by
way of foreclosure of the Lien thereon, deed or bill of sale in lieu of such foreclosure or otherwise;

 

provided, however, that no Borrower shall be liable to any Indemnitee
for any portion of such claims, damages, liabilities and expenses resulting from such Indemnitee’s gross negligence or willful
misconduct. If this indemnity is unenforceable as a matter of law as to a particular matter or consequence referred to herein,
it shall be enforceable to the full extent permitted by law.

 

This indemnification applies, without limitation,
to any act, omission, event or circumstance existing or occurring on or prior to the later of the Term Loan Maturity Date or the
date of irrevocable payment in full of the Obligations, including specifically Obligations arising under clause (b) of this Section.
The indemnification provisions set forth above shall be in addition to any liability the Borrower may otherwise have.

 

To the fullest extent permitted by applicable
law, no Borrower shall assert, and the Borrower hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with,
or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions
contemplated hereby or thereby, any Loan or the use of the proceeds thereof, unless such claim arises as a consequence of such
Indemnitee’s gross negligence or willful misconduct.

 

Without prejudice to the survival of any
other obligation of the Borrower hereunder, the agreements of the Borrower in this Section shall survive the payment in full of
the Obligations and the termination of the Commitments.

 

Section 8.13         Captions.
The captions or headings herein and any table of contents hereto are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.

 

Section 8.14         Entire
Agreement. This Agreement and the other Loan Documents embody the entire agreement and understanding between the Borrower and
the Lender with respect to the subject matter hereof and thereof. This Agreement supersedes all prior agreements and understandings
relating to the subject matter hereof. Nothing in this Agreement or in any other Loan Document, expressed or implied, is intended
to confer upon any Persons other than the parties hereto any rights, remedies, obligations or liabilities hereunder or thereunder.

 

    	- 51 -

    	 

    

 

Section 8.15         Counterparts.
This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument,
and any of the parties hereto may execute this Agreement by signing any such counterpart.

 

Section 8.16         Borrower
Acknowledgements. The Borrower hereby acknowledges that (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents, (b) the Lender has no fiduciary relationship to the Borrower, the relationship
being solely that of debtor and creditor, (c) no joint venture exists between the Borrower and the Lender, and (d) the Lender undertakes
no responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the business or
operations of the Borrower and the Borrower shall rely entirely upon its own judgment with respect to its business, and any review,
inspection or supervision of, or information supplied to, the Borrower by the Lender is for the protection of the Lender and neither
the Borrower nor any third party is entitled to rely thereon.

 

Section 8.17         Interest
Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts that are treated as interest on such Loan under applicable law (collectively,
the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in
respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and,
to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result
of the operation of this Section shall be cumulated and the interest and Charges payable to the Lender in respect of other Loans
or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon
at the Federal Funds Rate to the date of repayment, has been received by the Lender.

 

Section 8.18         Independence
of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid an Event of Default or Default if such action is taken or condition exists.

 

Section 8.19         Payments
Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the Lender, or the Lender exercises its
right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Lender in its discretion)
to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any bankruptcy or insolvency law
or otherwise, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred. The obligations
of the Borrower and the Lender under this Section shall survive the irrevocable payment in full of the Obligations and the termination
of the Commitments.

 

    	- 52 -

    	 

    

 

Section 8.20         Electronic
Signatures, Etc. The words “execution,” “signed,” “signature,” and words of like import
in Loan Document or in any amendment or other modification thereof (including waivers and consents) shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent
and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, or
any other similar state laws based on the Uniform Electronic Transactions Act.

 

Section 8.21         Electronic
Records. The Borrower hereby acknowledges receipt of a copy of this Agreement and all other Loan Documents.  The Lender
may, on behalf of the Borrower, create a microfilm or optical disk or other electronic image of this Agreement and any or all of
the Loan Documents.  The Lender may store the electronic image of this Agreement and Loan Documents in its electronic form
and then destroy the paper original as part of the Lender’s normal business practices, with the electronic image deemed
to be an original and of the same legal effect, validity and enforceability as the paper originals. The Lender is authorized, when
appropriate, to convert any note into a “transferable record” under the Uniform Electronic Transactions Act.

 

Section 8.22         PATRIOT
Act. The Lender is subject to the requirements of the PATRIOT Act and hereby notifies the Borrower that pursuant to the requirements
of the PATRIOT Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes
the name and address of the Borrower and other information that will allow the Lender to identify the Borrower in accordance with
the PATRIOT Act. The Borrower shall, promptly following a request by the Lender, provide all documentation and other information
that the Lender requests to comply with its ongoing obligations under applicable “know your customer” and anti-money
laundering rules and regulations, including the PATRIOT Act.

 

[The remainder of this page has been intentionally
left blank]

 

    	- 53 -

    	 

    

 

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed as of the date first above written.

 

	 	BORROWER:
	 	 
	 	GAMING PARTNERS INTERNATIONAL 

CORPORATION
	 	 
	 	By:	 
	 	Name:  Gregory S. Gronau
	 	Title:  President

 

Address for the Borrower:

 

Gaming Partners International Corporation

1700 South Industrial Road

Las Vegas, NV 89102

Fax: 702-598-2494

 

S-1

Credit Agreement

 

    	 

    	 

    

 

	 	NEVADA STATE BANK, 
	 	as the Lender
	 	 
	 	By:	 
	 	Name: Jamie Gazza
	 	Title: Vice President 

 

Address for Nevada State Bank:

 

750 E. Warm Springs Rd., 4th Floor

Las Vegas, NV 89119

Fax: (702) 914-4556

 

S-2

Credit Agreement

 

    	 

    	 

    

 

EXHIBIT A TO

CREDIT AGREEMENT

 

Borrowing Request

 

_______________, _____

 

TO:        Nevada State Bank, as the Lender

 

We refer to that certain Credit Agreement
dated June 26, 2015 (as amended, restated or otherwise modified to date, the “Credit Agreement”) by and between
Gaming Partners International Corporation, a Nevada corporation (the “Borrower”), and Nevada State Bank, as
the Lender. Capitalized terms used herein but not otherwise defined shall have the same meanings assigned to them in the Credit
Agreement.

 

Pursuant to Section 2.2(a) of the Credit
Agreement, we hereby request a Revolving Loan on the Revolving Loan Date and in the amount set forth below (the “Requested
Advances”):

 

Amount of Revolving Loan: $[______________________]

Revolving Loan Date: ____________________, 201__

 

[Closing Date only] Pursuant to Section 2.2(b)
of the Credit Agreement, we hereby request a Term Loan on the Closing Date and in the amount set forth below (the “Requested
Term Loan”):

 

Amount of Term Loan: $10,000,000

Date:     Closing Date

 

To induce the Lender to make the Requested
Advances [and the Requested Term Loan], we hereby represent and warrant to the Lender that:

 

(a)          As of the date hereof and
before giving effect to the Requested Advances, the aggregate outstanding principal balance of the Revolving Loans was $[___________________].
After giving effect to the Requested Advances, the aggregate outstanding principal balance of the Revolving Loans will be $[__________________].
[[Closing Date only:] After giving effect to the Requested Term Loan, the aggregate outstanding principal balance of the
Term Loan will be $10,000,000.]

 

(b)         No Default or Event of Default exists,
or will result from the making of the Requested Advances [or the Requested Term Loan].

 

    	A-1

    	 

    

 

(c)          The conditions precedent
set forth in Section 3.2 of the Credit Agreement are fully satisfied as of the date of the Requested Advances [and the Requested
Term Loan].

 

	 	GAMING PARTNERS INTERNATIONAL 
	 	CORPORATION
	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

    	A-2

    	 

    

 

EXHIBIT B TO

CREDIT AGREEMENT

 

FORM OF
REVOLVING NOTE

 

	$5,000,000	June 26, 2015
	 	Las Vegas, Nevada

 

FOR VALUE RECEIVED,
Gaming Partners International Corporation, a Nevada corporation, hereby promises to pay to the order of Nevada State Bank (the
“Lender”) at its main office in Las Vegas, Nevada, in lawful money of the United States of America in Immediately
Available Funds (as such term and each other capitalized term used herein are defined in the Credit Agreement hereinafter referred
to) on the Termination Date the principal amount of FIVE MILLION DOLLARS and NO CENTS ($5,000,000) or, if less, the aggregate unpaid
principal amount of the Revolving Loans made by the Lender under the Credit Agreement, and to pay interest (computed on the basis
of actual days elapsed and a year of 360 days) in like funds on the unpaid principal amount hereof from time to time outstanding
at the rates and times set forth in the Credit Agreement.

 

This note is the Revolving
Note referred to in the Credit Agreement dated as of June 26, 2015, (as the from time to time amended, restated or otherwise modified,
the “Credit Agreement”) between the undersigned and the Lender. This note is secured, it is subject to certain
mandatory prepayments and its maturity is subject to acceleration, in each case upon the terms provided in said Credit Agreement.

 

In the event of default
hereunder, the undersigned agrees to pay all reasonable costs and expenses of collection, including reasonable attorneys’
fees. The undersigned waives demand, presentment, notice of nonpayment, protest, notice of protest and notice of dishonor.

 

THE VALIDITY, CONSTRUCTION
AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEVADA WITHOUT GIVING EFFECT TO THE CONFLICT
OF LAWS PRINCIPLES THEREOF.

 

	 	Gaming Partners International
	 	Corporation
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

    	B-1

    	 

    

 

EXHIBIT c
TO

CREDIT AGREEMENT

 

FORM OF
TERM NOTE

 

	$10,000,000	June 26, 2015
	 	Las Vegas, Nevada

 

FOR VALUE RECEIVED,
Gaming Partners International Corporation, a Nevada corporation, hereby promises to pay to the order of Nevada State Bank (the
“Lender”) at its main office in Las Vegas, Nevada, in lawful money of the United States of America in Immediately
Available Funds (as such term and each other capitalized term used herein are defined in the Credit Agreement hereinafter referred
to) the principal amount of TEN MILLION AND NO/100 DOLLARS ($10,000,000), or, if less, the aggregate unpaid principal balance of
the Term Loan made by the Lender under the Credit Agreement, and to pay interest (computed on the basis of actual days elapsed
and a year of 360 days) in like funds on the unpaid principal amount hereof from time to time outstanding at the rates and times
set forth in the Credit Agreement.

 

The principal hereof
is payable as set forth in the Credit Agreement.

 

This note is the Term
Note referred to in the Credit Agreement dated as of June 26, 2015, as from time to time amended, restated or otherwise modified,
the “Credit Agreement”) between the undersigned and the Lender. This note is secured, it is subject to certain
mandatory prepayments and its maturity is subject to acceleration, in each case upon the terms provided in said Credit Agreement.

 

In the event of default
hereunder, the undersigned agrees to pay all reasonable costs and expenses of collection, including reasonable attorneys’
fees. The undersigned waives demand, presentment, notice of nonpayment, protest, notice of protest and notice of dishonor.

 

THE VALIDITY, CONSTRUCTION
AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEVADA WITHOUT GIVING EFFECT TO THE CONFLICT
OF LAWS PRINCIPLES THEREOF.

 

	 	Gaming Partners International 

Corporation
	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

    	C-1

    	 

    

 

EXHIBIT D TO

CREDIT AGREEMENT

 

FORM OF
COMPLIANCE CERTIFICATE

 

To: Nevada State Bank:

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

(1) I am the [chief
financial officer, treasurer or controller] of Gaming Partners International Corporation, a Nevada corporation (the “Borrower”);

 

(2) I have reviewed
the terms of the Credit Agreement dated as of June 26, 2015, between the Borrower and Nevada State Bank, as the Lender (as amended,
the “Credit Agreement”), and I have made, or have caused to be made under my supervision, a detailed review
of the transactions and conditions of the Borrower during the accounting period covered by the Attachment hereto;

 

(3) The examination
described in paragraph (2) did not disclose, and I have no knowledge, whether arising out of such examinations or otherwise, of
the existence of any condition or event that constitutes a Default or an Event of Default (as such terms are defined in the Credit
Agreement) as of the end of the accounting period covered by the Attachment hereto or as of the date of this Certificate, except
as described below (or on a separate attachment to this Certificate). The exceptions listing, in detail, the nature of the condition
or event, the period during which it has existed and the action the Borrower have taken, is taking or proposes to take with respect
to each such condition or event are as follows:

 

	 
	 
	 

 

The foregoing certification,
together with the computations in the Attachment hereto and the financial statements delivered with this Certificate in support
hereof, are made and delivered this ___ day of _______________, _______ pursuant to Section 5.1(c) of the Credit Agreement.

 

	 	Gaming Partners International 

Corporation
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

    	D-1

    	 

    

 

ATTACHMENT TO COMPLIANCE CERTIFICATE

AS OF ______________, ____WHICH PERTAINS

TO THE PERIOD FROM ________________, ______

TO ________________, _______

 

		1.	Maintenance Capital Expenditures (Section 6.10, calculated on an annual basis)

 

	 	(a)	Total Revenues for Prior Year (201_):	$________
	 	 	 	 
	 	(b)	Maximum Maintenance Capital Expenditures:	$________
	 	 	([6.50][5.00]% of (a))	 
	 	 	 	 
	 	(c)	Total Maintenance Capital Expenditures for Current Year (201_):	$________

 

		2.	Fixed Charge Coverage Ratio (Section 6.15)

 

Fixed Charge Coverage Ratio

 

	(i) EBITDA	$______________ (A)
	 	 
	(ii) Maintenance Capital Expenditures paid in cash	$______________ (B)
	 	 
	(iii) Restricted Payments	$______________ (C)
	 	 
	(iv) rent paid in cash	$______________ (D)
	 	 
	(v) Interest Expense paid in cash	$______________ (E)
	 	 
	(vi) scheduled principal payments with	 
	respect to Total Liabilities	$______________ (F)
	 	 
	(vii) expenses paid in respect of leases	$______________ (G)
	 	 
	(viii) (A) minus (B) minus (C) plus (D)	$______________ (H)
	 	 
	(ix) (E) plus (F) minus (G)	$______________ (I)
	 	 
	Ratio of (H) to (I)	______ to 1.0

 

		3.	Leverage Ratio (Section 6.16)

 

	(i) Total Funded Debt	$______________ (J)
	 	 
	(ii) EBITDA	$______________ (I)
	 	 
	Ratio of (J) to (I)	______ to 1.0

 

    	D-2

    	 

    

 

LIST OF SCHEDULES

 

	1.	Schedule 4.6
	2.	Schedule 4.7
	3.	Schedule 4.18
	4.	Schedule 4.24
	5.	Schedule 6.11
	6.	Schedule 6.12
	7.	Schedule 6.13

 

    	List of Schedules

    	 

    

 

Schedule 4.6

To

Credit Agreement

 

LITIGATION

 

		1.	Certain Gaming Commission Approvals: Pursuant to certain state gaming commission bylaws,
the Borrower is required to obtain routine approval from said commissions as a result of certain facets of this Agreement (notably
including the existence of Guarantor equity as Collateral). The gaming commissions in question include: Nevada. Any approvals not
attached to this Schedule 4.6 shall be obtained post-closing pursuant to the applicable terms and conditions in the Agreement
and the other Loan Documents.

 

    	Schedule 4.6

    	 

    

 

Schedule 4.7

To

Credit Agreement

 

ENVIRONMENTAL MATTERS

 

NONE.

 

    	Schedule 4.7

    	 

    

 

Schedule 4.18

To

Credit Agreement

 

SUBSIDIARIES

 

Gaming Partners International Corporation - Nevada

 

-100% interest in Gaming Partners International USA

-100% interest in Gaming Partners International SAS

-4% interest in Gaming Partners International Asia Limited

-.01% interest in GPI Mexicana S.A. de C.V.

 

Gaming Partners International USA - Nevada

 

-99.9% interest in GPI Mexicana S.A. de C.V.

-96% interest in Gaming Partners International Asia Limited

 

Gaming Partners International Asia Limited – Macau

 

Gaming Partners International SAS – France

 

GPI Mexicana S.A. de C.V. - Mexico

 

    	Schedule 4.18

    	 

    

 

Schedule 4.24

To

Credit Agreement

 

LOCATIONS

 

		1.	1700 S. Industrial Road, Las Vegas, NV 89102 (Owned);

		2.	2925 North 7 Highway, Blue Springs, MO 64014 (Owned);

		3.	1220 N. Hidalgo Avenue, San Luis, AZ 85349 (Leased);

		4.	3101 Geospace Drive, Independence, MO 64056 (Leased);

		5.	2901 Atlantic Avenue, Atlantic City, NJ 08401 (Leased);

		6.	11070 David Street, Gulfport, MS 39503 (Leased);

		7.	Alameda Dr. Carlos D’ Assumpcao No. 180, Tong Nam Ah Central Comercio 19, Andar K,L,M, Macau S.A.R. (Leased);

		8.	Avn Son On, 190 EDF. Industrial Viron, 2 andB. Taipa, Macau (Leased);

		9.	Parque Ind. Transfronteirico, S/N EDF. Industrial DO Parque Industrial TRA R/C B, Macau (Leased);

		10.	Beco Da Illha Verde, S/N EDF. Pou Va Commercial & Industrial 5 and C, Macau (Leased); and

		11.	Ave. Transforamacion y Dr. Samuel Ocana, Parque Industrial, Building 1, 2 and 3, San Luis RC Sonora, Mexico 83455 (Building
1 and 2: Leased, Building 3: Owned).

 

    	Schedule 4.24

    	 

    

 

Schedule 4.25

To

Credit Agreement

 

ACCOUNTS

 

Please See Attached Spreadsheet.

 

    	Schedule 4.25

    	 

    

 

Schedule 6.11

To

Credit Agreement

 

INVESTMENTS

 

NONE.

 

    	Schedule 6.11

    	 

    

 

Schedule 6.12

To

Credit Agreement

 

INDEBTEDNESS

 

NONE.

 

    	Schedule 6.12

    	 

    

 

Schedule 6.13

To

Credit Agreement

 

LIENS

 

		1.	UCC Lien

		a.	Debtor: Gaming Partners International USA, Inc.

		b.	Secured Party: Advanced Imaging Solutions

		c.	File No: 2012020072-2

		d.	Lapse Date: 7/24/17

		e.	Collateral: Leased Equipment

		2.	UCC Lien*

		a.	Debtor: Gaming Partners International USA, Inc.

		b.	Secured Party: Heidelberg USA, Inc.

		c.	File No: 2015006376-4

		d.	Lapse Date: 3/11/20

		e.	Collateral: Specific Equipment

 

*The above UCC Lien is being disputed by
Borrower. Borrower’s books reflect that no additional funds are owed to Heidelberg USA, Inc., and as such, this lien should
have been removed.

 

    	Schedule 6.13

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