SCIENTIFIC GAMES CORP (Form: 10-Q, Received: 08/09/2011 16:54:46)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

{Mark One}

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 0-13063

SCIENTIFIC GAMES CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		81-0422894
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

750 Lexington Avenue, New York, New York 10022

(Address of principal executive offices)

(Zip Code)

(212) 754-2233

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x		Accelerated filer o

Non-accelerated filer o		Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The registrant has the following number of shares outstanding of each of the registrant’s classes of common stock as of August 3, 2011:

Class A Common Stock: 92,125,024

Class B Common Stock: None

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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

INDEX TO FINANCIAL INFORMATION

AND OTHER INFORMATION

THREE AND SIX MONTHS ENDED JUNE 30, 2011

PART I.	FINANCIAL INFORMATION	4

Item 1.	Financial Statements	4

	Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010	4

	Consolidated Statements of Operations for the Three Months Ended June 30, 2011 and 2010	5

	Consolidated Statements of Operations for the Six Months Ended June 30, 2011 and 2010	6

	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 and 2010	7

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4.	Controls and Procedures	38

PART II.	OTHER INFORMATION	38

Item 1A.	Risk Factors	38

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 6.	Exhibits	40

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Forward-Looking Statements

Throughout this Quarterly Report on Form 10-Q we make “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often be identified by the use of terminology such as “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “anticipate,” “could,” “potential,” “opportunity,” or similar terminology. The forward-looking statements contained in this Quarterly Report on Form 10-Q are generally located in the material set forth under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” but may be found in other locations as well. These statements are based upon management’s current expectations, assumptions and estimates and are not guarantees of future results or performance. Actual results may differ materially from those projected in these statements due to a variety of risks and uncertainties and other factors, including, among other things: competition; material adverse changes in economic and industry conditions; technological change; retention and renewal of existing contracts and entry into new or revised contracts; availability and adequacy of cash flows to satisfy obligations and indebtedness or future needs; protection of intellectual property; security and integrity of software and systems; laws and government regulation, including those relating to gaming licenses, permits and operations; inability to identify, complete and integrate future acquisitions; inability to complete the proposed acquisition of Barcrest Group Limited and Cyberview Technology CZ s.r.o.; inability to benefit from, and risks associated with, joint ventures and strategic investments and relationships; failure of the Company’s Northstar joint venture to meet the net income targets or otherwise realize the anticipated benefits under its private management agreement with the Illinois Lottery; seasonality; inability to identify and capitalize on trends and changes in the lottery and gaming industries; inability to enhance and develop successful gaming concepts; dependence on suppliers and manufacturers; liability for product defects; fluctuations in foreign currency exchange rates and other factors associated with foreign operations; influence of certain stockholders; dependence on key personnel; failure to perform on contracts; resolution of pending or future litigation; labor matters; and stock price volatility. Additional information regarding risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated in forward-looking statements is included from time to time in our filings with the Securities and Exchange Commission (“SEC”), including under the heading “Risk Factors” in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q. Forward-looking statements speak only as of the date they are made and, except for our ongoing obligations under the U.S. federal securities laws, we undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

You should also note that this Quarterly Report on Form 10-Q may contain various references to industry market data and certain industry forecasts. Industry market data and industry forecasts are obtained from publicly available information and industry publications. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of that information is not guaranteed. Similarly, industry forecasts, while we believe them to be accurate, are not independently verified by us and we do not make any representation as to the accuracy of that information. In general, there is less publicly available information concerning the international lottery industry than the lottery industry in the U.S.

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PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of June 30, 2011 and December 31, 2010

(Unaudited, in thousands, except per share amounts)

	June 30,			December 31,
	2011			2010
ASSETS
Current assets:
Cash and cash equivalents	$	127,256		$	124,281
Accounts receivable, net of allowance for doubtful accounts of $2,150 and $2,175 as of June 30, 2011 and December 31, 2010, respectively	166,771			178,179
Inventories	69,229			68,744
Deferred income taxes, current portion	2,528			2,448
Prepaid expenses, deposits and other current assets	50,095			40,013
Total current assets	415,879			413,665
Property and equipment, at cost	787,604			776,367
Less accumulated depreciation	(350,920		)	(325,786		)
Net Property and equipment	436,684			450,581
Goodwill, net	780,927			763,915
Intangible assets, net	78,659			70,613
Other assets and investments	502,542			452,764
Total assets	$	2,214,691		$	2,151,538

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Debt payments due within one year	$	9,479		$	8,431
Accounts payable	55,872			50,642
Accrued liabilities	134,260			136,925
Total current liabilities	199,611			195,998
Deferred income taxes	63,376			60,858
Other long-term liabilities	61,344			53,765
Long-term debt, excluding current installments	1,381,335			1,388,259
Total liabilities	1,705,666			1,698,880
Commitments and contingencies
Stockholders’ equity:
Class A common stock, par value $0.01 per share, 199,300 shares authorized, 97,863 and 97,474 shares issued and 92,114 and 91,725 shares outstanding as of June 30, 2011 and December 31, 2010, respectively	979			975
Additional paid-in capital	682,093			674,691
Accumulated earnings	(130,934		)	(131,021		)
Treasury stock, at cost, 5,749 shares held as of June 30, 2011 and December 31, 2010	(74,460		)	(74,460		)
Accumulated other comprehensive income (loss)	31,347			(17,527		)
Total stockholders’ equity	509,025			452,658
Total liabilities and stockholders’ equity	$	2,214,691		$	2,151,538

See accompanying notes to consolidated financial statements

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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30, 2011 and 2010

(Unaudited, in thousands, except per share amounts)

	Three Months Ended June 30,
	2011			2010
Revenue:
Instant tickets	$	130,419		$	118,439
Services	82,096			101,010
Sales	7,733			13,584
Total revenue	220,248			233,033

Operating expenses:
Cost of instant tickets (1)	72,133			68,227
Cost of services (1)	41,460			55,171
Cost of sales (1)	5,361			9,600
Selling, general and administrative expenses	43,426			40,552
Write-down of assets held for sale	—			5,874
Depreciation and amortization	29,004			27,078
Operating income	28,864			26,531
Other (income) expense:
Interest expense	26,409			24,845
Earnings from equity investments	(9,224		)	(13,631		)
Other (income) expense, net	(876		)	6,584
	16,309			17,798
Net income before income taxes	12,555			8,733
Income tax expense	5,536			13,076
Net income (loss)	$	7,019		$	(4,343	)

Basic and diluted net income (loss) per share:
Basic net income (loss) per share	$	0.08		$	(0.05	)
Diluted net income (loss) per share	$	0.08		$	(0.05	)

Weighted-average number of shares used in per share calculations:
Basic shares	92,069			93,552
Diluted shares	92,565			93,552

(1) Exclusive of depreciation and amortization.

See accompanying notes to consolidated financial statements

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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Six Months Ended June 30, 2011 and 2010

(Unaudited, in thousands, except per share amounts)

	Six Months Ended June 30,
	2011			2010
Revenue:
Instant tickets	$	244,279		$	227,538
Services	155,843			194,714
Sales	16,782			27,120
Total revenue	416,904			449,372

Operating expenses:
Cost of instant tickets (1)	139,366			132,144
Cost of services (1)	80,382			109,613
Cost of sales (1)	11,051			19,866
Selling, general and administrative expenses	82,980			79,108
Write-down of assets held for sale	—			5,874
Depreciation and amortization	59,908			54,733
Operating income	43,217			48,034
Other (income) expense:
Interest expense	52,864			49,559
Earnings from equity investments	(18,574		)	(29,443		)
Other (income) expense, net	(1,870		)	12,566
	32,420			32,682
Net income before income taxes	10,797			15,352
Income tax expense	10,710			14,808
Net income	$	87		$	544

Basic and diluted net income per share:
Basic net income per share	$	0.00		$	0.01
Diluted net income per share	$	0.00		$	0.01

Weighted-average number of shares used in per share calculations:
Basic shares	91,978			93,771
Diluted shares	92,518			94,364

(1) Exclusive of depreciation and amortization.

See accompanying notes to consolidated financial statements

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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30, 2011 and 2010

(Unaudited, in thousands, except per share amounts)

	Six Months Ended June 30,
	2011			2010
Cash flows from operating activities:
Net income	$	87		$	544
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	59,908			54,733
Change in deferred income taxes	768			11,611
Stock-based compensation	9,702			12,533
Non-cash interest expense	4,107			3,396
Undistributed earnings from equity investments	10,186			4,133
Write-down of assets held for sale	—			5,874
Changes in current assets and liabilities, net of effects of acquisitions
Accounts receivable	13,664			16,131
Inventories	191			2,220
Accounts payable	(8,587		)	(13,818		)
Accrued liabilities	1,052			(8,711		)
Other current assets and liabilities	6,297			14,491
Other	208			(1		)
Net cash provided by operating activities	97,583			103,136

Cash flows from investing activities:
Capital expenditures	(3,613		)	(3,329		)
Lottery and gaming systems expenditures	(22,191		)	(31,502		)
Other intangible assets and software expenditures	(18,372		)	(18,009		)
Change in other assets and liabilities, net	(9,323		)	(767		)
Net equity investments	(33,799		)	(126,810		)
Business acquisitions, net of cash acquired	—			(5,906		)
Net cash used in investing activities	(87,298		)	(186,323		)

Cash flows from financing activities:
Proceeds from issuance of long-term debt	—			105,541
Payment on long-term debt	(4,661		)	(91,507		)
Payment of financing fees	(2,623		)	(6,778		)
Purchases of treasury stock	—			(18,227		)
Net proceeds from issuance of common stock	(1,353		)	(394		)
Net cash (used in) provided by financing activities	(8,637		)	(11,365		)
Effect of exchange rate changes on cash and cash equivalents	1,327			(14,753		)
Increase (decrease) in cash and cash equivalents	2,975			(109,305		)
Cash and cash equivalents, beginning of period	124,281			260,131
Change in cash and cash equivalents of held for sale operations at June 30, 2010	—			627
Cash and cash equivalents, end of period	$	127,256		$	151,453

See accompanying notes to consolidated financial statements

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Non-cash investing and financing activities

For the six months ended June 30, 2011 and 2010

During the six months ended June 30, 2011 we contributed approximately $37,000 to International Terminal Leasing (“ITL”) which is described in Note 3 of the Notes to Consolidated Financial Statements herein, including a non-cash investment of $8,200 out of our total investment in ITL of approximately $37,000 as of June 30, 2011. There were no significant non-cash investing and financing activities for the six months ended June 30, 2010.

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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, in thousands, except per share amounts)

Notes to Consolidated Financial Statements

(1) Consolidated Financial Statements

Basis of Presentation

The Consolidated Balance Sheet as of June 30, 2011, the Consolidated Statements of Operations for the three and six months ended June 30, 2011 and 2010, and the Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010, have been prepared by Scientific Games Corporation and are unaudited. When used in these notes, the terms “we,” “us,” “our” and the “Company” refer to Scientific Games Corporation and all entities included in our consolidated financial statements unless otherwise specified or the context otherwise indicates. In the opinion of management, all adjustments necessary to present fairly our consolidated financial position as of June 30, 2011, the results of our operations for the three and six months ended June 30, 2011 and 2010 and our cash flows for the six months ended June 30, 2011 and 2010 have been made. Such adjustments are of a normal, recurring nature.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2010 Annual Report on Form 10-K. The results of operations for the three and six months ended June 30, 2011 are not necessarily indicative of the results of operations for the full year.

Significant Accounting Policies

We describe our significant accounting policies in Note 1 of the Notes to Consolidated Financial Statements in our 2010 Annual Report on Form 10-K. There have been no changes to our significant accounting policies during the period ended June 30, 2011 except as discussed below.

In September 2009, the Financial Accounting Standards Board (“FASB”) amended the Accounting Standards Codification (“ASC”) as summarized in Accounting Standards Update (“ASU”) 2009-14, Software (Topic 985): Certain Revenue Arrangements That Include Software Elements , and ASU 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements . As summarized in ASU 2009-14, ASC Topic 985 has been amended to remove from the scope of industry-specific revenue accounting guidance for software and software related transactions, tangible products containing software components and non-software components that function together to deliver the product’s essential functionality. As summarized in ASU 2009-13, ASC Topic 605 has been amended: (1) to provide updated guidance on whether multiple deliverables exist, how the deliverables in an arrangement should be separated, and the consideration allocated; (2) to require an entity to allocate revenue in an arrangement using estimated selling prices of deliverables if a vendor does not have vendor-specific objective evidence or third-party evidence of the selling price; and (3) to eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method. The accounting changes summarized in ASU 2009-14 and ASU 2009-13 are both effective for fiscal years beginning on or after June 15, 2010, with early adoption permitted. Adoption may either be on a prospective basis or by retrospective application.

We adopted these amendments to the ASC on January 1, 2011 on a prospective basis as applicable to our revenue generated from licensing branded properties that are coupled with a service component, where we also purchase and distribute prizes on behalf of lottery authorities. The impact of these accounting changes was not material to our consolidated financial statements for the three and six months ended June 30, 2011.

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Basic and Diluted Net Income (Loss) Per Share

The following represents a reconciliation of the numerator and denominator used in computing basic and diluted net income (loss) per share available to common stockholders for the three and six months ended June 30, 2011 and 2010:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
Income (numerator)
Net income (loss)	$	7,019	$	(4,343	)	$	87	$	544

Shares (denominator)
Weighted-average basic common shares outstanding	92,069		93,552			91,978		93,771
Effect of dilutive securities-stock rights	496		—			540		593
Weighted-average diluted common shares outstanding	92,565		93,552			92,518		94,364

Basic and diluted per share amounts
Basic net income (loss) per share	$	0.08	$	(0.05	)	$	0.00	$	0.01
Diluted net income (loss) per share	$	0.08	$	(0.05	)	$	0.00	$	0.01

The weighted-average diluted common shares outstanding for the three and six months ended June 30, 2011 excludes the effect of approximately 7,967 and 7,690 weighted-average stock rights outstanding, respectively, because their effect would be anti-dilutive. For the three months ended June 30, 2010, there were no dilutive stock rights outstanding due to the net loss reported for the period. The weighted-average diluted common shares outstanding for the six months ended June 30, 2010 excludes the effect of approximately 6,408 weighted-average stock rights outstanding, because their effect would be anti-dilutive.

(2) Operating Segment Information

We operate in three segments: Printed Products Group; Lottery Systems Group; and Diversified Gaming Group. During the first quarter of 2011 we reviewed the allocation of overhead expenses to our reportable segments in light of the realignment of our management structure. Based on this review, we determined to no longer allocate certain overhead expenses to our reportable segments. This change, which was effective January 1, 2011, had no impact on the Company’s consolidated balance sheets or its statements of operations, cash flows or changes in stockholders’ equity for any periods. Prior period segment information has been adjusted to reflect the change in segment reporting.

The following tables represent revenue, cost of revenue, depreciation, amortization, selling, general and administrative expenses and operating income for the three and six months ended June 30, 2011 and 2010, by reportable segments. Corporate expenses, including interest expense, other (income) expense and corporate depreciation and amortization, are not allocated to the reportable segments.

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	Three Months Ended June 30, 2011
	Printed Products Group		Lottery Systems Group		Diversified Gaming Group		Totals
Revenue:
Instant tickets	$	130,419	$	—	$	—	$	130,419
Services	—		51,196		30,900		82,096
Sales	2,087		5,634		12		7,733
Total revenue	$	132,506	$	56,830	$	30,912	$	220,248

Cost of instant tickets (1)	$	72,133	$	—	$	—	$	72,133
Cost of services (1)	—		26,220		15,240		41,460
Cost of sales (1)	1,238		4,123		—		5,361
Selling, general and administrative expenses	13,112		5,524		3,636		22,272
Depreciation and amortization	8,208		11,879		8,789		28,876
Segment operating income	$	37,815	$	9,084	$	3,247	$	50,146
Unallocated corporate costs							21,282
Consolidated operating income							$	28,864

	Three Months Ended June 30, 2010
	Printed Products Group		Lottery Systems Group		Diversified Gaming Group			Totals

Revenue:
Instant tickets	$	118,439	$	—	$	—		$	118,439
Services	—		53,517		47,493			101,010
Sales	2,731		8,666		2,187			13,584
Total revenue	$	121,170	$	62,183	$	49,680		$	233,033

Cost of instant tickets (1)	$	68,227	$	—	$	—		$	68,227
Cost of services (1)	—		25,637		29,534			55,171
Cost of sales (1)	1,969		6,186		1,445			9,600
Selling, general and administrative expenses	11,730		6,858		5,181			23,769
Write-down of assets held for sale	—		—		5,874			5,874
Depreciation and amortization	8,429		10,839		7,686			26,954
Segment operating income	$	30,815	$	12,663	$	(40	)	$	43,438
Unallocated corporate costs								16,907
Consolidated operating income								$	26,531

(1) Exclusive of depreciation and amortization.

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	Six Months Ended June 30, 2011
	Printed Products Group		Lottery Systems Group		Diversified Gaming Group		Totals

Revenue:
Instant tickets	$	244,279	$	—	$	—	$	244,279
Services	—		100,412		55,431		155,843
Sales	3,857		12,807		118		16,782
Total revenue	$	248,136	$	113,219	$	55,549	$	416,904

Cost of instant tickets (1)	$	139,366	$	—	$	—	$	139,366
Cost of services (1)	—		52,188		28,194		80,382
Cost of sales (1)	2,244		8,772		35		11,051
Selling, general and administrative expenses	23,492		9,796		6,562		39,850
Depreciation and amortization	16,568		23,246		19,837		59,651
Segment operating income	$	66,466	$	19,217	$	921	$	86,604
Unallocated corporate costs							43,387
Consolidated operating income							$	43,217

	Six Months Ended June 30, 2010
	Printed Products Group		Lottery Systems Group		Diversified Gaming Group		Totals

Revenue:
Instant tickets	$	227,538	$	—	$	—	$	227,538
Services	—		101,704		93,010		194,714
Sales	5,601		18,377		3,142		27,120
Total revenues	$	233,139	$	120,081	$	96,152	$	449,372

Cost of instant tickets (1)	$	132,144	$	—	$	—	$	132,144
Cost of services (1)	—		52,310		57,303		109,613
Cost of sales (1)	3,977		13,645		2,244		19,866
Selling, general and administrative expenses	21,970		12,239		11,554		45,763
Write-down of assets held for sale	—		—		5,874		5,874
Depreciation and amortization	16,966		21,653		15,867		54,486
Segment operating income	$	58,082	$	20,234	$	3,310	$	81,626
Unallocated corporate costs							33,592
Consolidated operating income							$	48,034

(1) Exclusive of depreciation and amortization.

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The following table provides a reconciliation of segment operating income to consolidated income before income taxes for each period:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Reported segment operating income	$	50,146		$	43,438		$	86,604		$	81,626
Unallocated corporate costs	(21,282		)	(16,907		)	(43,387		)	(33,592		)
Consolidated operating income	28,864			26,531			43,217			48,034
Interest expense	(26,409		)	(24,845		)	(52,864		)	(49,559		)
Earnings from equity investments	9,224			13,631			18,574			29,443
Other income (expense), net	876			(6,584		)	1,870			(12,566		)
Income before income taxes	$	12,555		$	8,733		$	10,797		$	15,352

In evaluating financial performance, we focus on operating income as a segment’s measure of profit or loss. Operating income is income before interest income, interest expense, earnings from equity investments, unallocated corporate expenses and income taxes. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies (see Note 1 of the Notes to Consolidated Financial Statements in our 2010 Annual Report on Form 10-K).

(3) Equity Method Investments

Lotterie Nazionali S.r.l. / Consorzio Lotterie Nazionali

We are a 20% equity owner in Lotterie Nazionali S.r.l. (“LNS”), a joint venture comprised principally of us, Lottomatica Group S.p.A. (“Lottomatica”) and Arianna 2001, a company owned by the Federation of Italian Tobacconists, that was awarded the concession from the Italian Monopoli di Stato to be the exclusive operator of the Italian Gratta e Vinci instant ticket lottery beginning on October 1, 2010. The concession has an initial term of nine years (subject to a performance evaluation during the fifth year) and could be extended by the Monopoli di Stato for an additional nine years. LNS succeeded Consorzio Lotterie Nazionali (“CLN”), a consortium comprised of essentially the same group that owns LNS, as holder of the concession. Under the new concession, we are the primary supplier of instant lottery tickets for the joint venture, as we were under the prior concession. CLN, which had held the concession since 2004, is being wound up and the bulk of its assets have been transferred to LNS. LNS paid €800,000 in upfront fees under the terms of the new concession. We paid our pro rata share of these fees in 2010 (€160,000). The upfront fees associated with the new concession are amortized by LNS (anticipated to be approximately €89,000 each year of the new concession on a pre-tax basis), which reduces our earnings from our equity investment in LNS. Our share of the amortization is expected to be approximately €18,000 each year on a pre-tax basis. In light of the corporate structure of LNS, we record our earnings from our equity investment in LNS on an after-tax basis under applicable accounting rules, which impacts the comparability of our results of operations associated with LNS with our results of operations associated with CLN, since we recorded earnings from our equity investment in CLN on a pre-tax basis. Subject to applicable limitations, we are entitled to receive from LNS annual cash dividends as well as periodic return of capital payments over the life of the concession. In April 2011, we received a dividend of $22,012 from CLN. In May 2011, we received $10,504 from LNS comprised of a dividend of $4,238 and a return of capital payment of $6,266.

Northstar Lottery Group, LLC

We are a 20% equity owner in Northstar Lottery Group, LLC (“Northstar”), a joint venture with GTECH Corporation, a subsidiary of Lottomatica, that was formed to bid for the agreement to be the private manager for the Illinois lottery for a ten-year term. Northstar was selected as the private manager following a competitive procurement and entered into a private management agreement with the State of Illinois on January 18, 2011 (the “PMA”). As the private manager, Northstar will, subject to the oversight of the Illinois lottery, manage the day-to-day operations of the lottery including lottery game development and portfolio management, retailer recruitment and training, supply of goods and services and overall marketing strategy. Under the terms of the PMA, Northstar is entitled to receive annual incentive compensation payments to the extent it is successful in increasing the lottery’s net income above specified target levels, subject to a cap of 5% of the applicable year’s net income. Northstar will be responsible for payments to the State to the extent such targets are not achieved, subject to a similar cap. Northstar is expected to be reimbursed on a monthly basis for most of its operating expenses under the PMA. Under our agreement with Northstar, we will be responsible for the design, development, manufacturing, warehousing and distribution of instant lottery tickets and will be compensated based on a percentage of retail sales.

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On January 26, 2011, the Appellate Court of Illinois upheld a constitutional challenge to the revenue statute that, among other things, amended the lottery law to facilitate the PMA on grounds that the statute impermissibly addressed more than one subject. On July 11, 2011, the Illinois Supreme Court reversed the Appellate Court decision and upheld the revenue statute. Operations under the PMA commenced on July 1, 2011. We contributed $10,000 to Northstar in March 2011 and additional $2,000 in July 2011. We account for our interest in Northstar under the equity method of accounting.

International Terminal Leasing

As contemplated by our strategic agreements with Video B Holdings Limited (“Video B”), a subsidiary of Playtech Limited, relating to our license of Video B’s back-end technology platform for our gaming machines, we formed ITL with Video B in the first quarter of 2011. The purpose of ITL is to acquire gaming terminals using funds contributed to the capital of ITL by each partner. The gaming terminals, which will employ Video B’s software, will be leased to whichever Company subsidiary is to provide the terminals to third-party customers. We account for our interest in ITL under the equity method of accounting. The equity interest of each partner is expected to vary based on the respective capital contributions from the partners; however, each partner has joint control regarding operating decisions of ITL. Intra-entity profits and losses will be eliminated as necessary. As of June 30, 2011 our investment in ITL was $37,002 which is included in Other Assets and Investments. The impact of ITL on our Consolidated Statements of Operations for the three or six months ended June 30, 2011 was not material.

Sportech Plc

Upon the closing of the sale of our racing and venue management businesses (the “Racing Business”) to Sportech Plc (“Sportech”) on October 5, 2010, we received an equity interest in Sportech of approximately 20% of the shares then outstanding. Sportech operates football pools and associated games through various distribution channels including direct mail and telephone, agent-based collection and via the Internet. Sportech also operates a portfolio of online casino, poker, bingo and fixed-odds games through its e-Gaming division. Our interest in Sportech is accounted for under the equity method of accounting. We record our equity interest in Sportech on a 90-day lag as allowed under Accounting Standards Codification 323, Investments—Equity Method and Joint Ventures .

Shandong Inspur Scientific Games Technology, Ltd.

On April 16, 2007, we invested approximately $750 to establish Shandong Inspur Scientific Games Technology, Ltd. (“SIST”). On February 1, 2011, we sold our interest in SIST resulting in a gain of $397.

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(4) Comprehensive Income (Loss)

The following presents a reconciliation of net income (loss) to comprehensive income (loss) for the three and six months ended June 30, 2011 and 2010:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
Net income (loss)	$	7,019	$	(4,343	)	$	87	$	544
Other comprehensive income (loss):
Foreign currency translation (loss) gain	13,342		(34,384		)	47,962		(63,248		)
Gain on derivative financial instruments (1)	462		321			912		287
Total other comprehensive income (loss)	13,804		(34,063		)	48,874		(62,961		)
Comprehensive income (loss)	$	20,823	$	(38,406	)	$	48,961	$	(62,417	)

(1) For the three and six months ending June 30, 2011, the change is net of income taxes of approximately $308 and $608, respectively. For the three and six months ending June 30, 2010, the change is net of income taxes of approximately $217 and $194, respectively.

(5) Inventories

Inventories consist of the following:

	June 30,		December 31,
	2011		2010
Parts and work-in-process	$	25,646	$	23,224
Finished goods	43,583		45,520
	$	69,229	$	68,744

Parts and work-in-process includes costs for equipment expected to be sold. Costs incurred for equipment associated with specific lottery and gaming contracts not yet placed in service are classified as construction in progress in property and equipment and are not depreciated.

(6) Long-Term Debt

Credit Agreement

The Company and its wholly owned subsidiary, Scientific Games International, Inc. (“SGI”), entered into a credit agreement, dated as of June 9, 2008 and amended and restated as of February 12, 2010 (as amended from time to time, the “Credit Agreement”), among SGI, the Company, the several lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent. The Credit Agreement provides for a $250,000 senior secured revolving credit facility and senior secured term loan credit facilities under which $566,409 of borrowings are outstanding as of June 30, 2011. The Credit Agreement is scheduled to mature on June 9, 2013.

On March 11, 2011, the Company and SGI entered into an amendment (the “Amendment”) to the Credit Agreement. Under the Amendment, from and after December 31, 2010, “consolidated EBITDA” (as such term is defined in the Credit Agreement) will generally include the Company’s share of the earnings of the Company’s joint venture that holds the Italian instant ticket concession, whether or not such earnings have been distributed to the Company, before interest expense (other than interest expense in respect of debt of such joint venture if such debt exceeds $25,000), income tax expense and depreciation and amortization expense, provided that the amount of “consolidated EBITDA” attributable to the Company’s interest in such joint venture that would not have otherwise been permitted to be included in “consolidated EBITDA” prior to giving effect to the Amendment will be capped at $25,000 in any period of four consecutive quarters (or $30,000 in the case of any such period ending on or prior to June 30, 2012). Prior to giving effect to the Amendment, “consolidated EBITDA” generally included only the Company’s share of the earnings of such joint venture that was distributed to the Company. In addition, under the terms of the Amendment, any cash compensation expense incurred but not paid in a particular period will be added back for purposes of determining “consolidated EBITDA” so long as no cash payment in respect thereof is required prior to the scheduled maturity of the borrowings under the Credit Agreement. “Consolidated EBITDA” is relevant

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for determining whether the Company is in compliance with the financial ratios required to be maintained under the terms of the Credit Agreement.

The Amendment also provides that up to $100,000 of unrestricted cash and cash equivalents of the Company and its subsidiaries in excess of $15,000 will be netted against “consolidated total debt” for purposes of determining the Company’s “consolidated leverage ratio” and “consolidated senior debt ratio” (as such terms are defined in the Credit Agreement) as of any date from and after December 31, 2010.

A summary of the terms of the Credit Agreement, including the financial ratios that the Company is required to maintain under the terms of the Credit Agreement (which ratios were not adjusted by the Amendment), is included in Note 8 of the Notes to Consolidated Financial Statements in our 2010 Annual Report on Form 10-K. For more information regarding the Amendment, see our Current Report on Form 8-K filed with the SEC on March 14, 2011.

As of June 30, 2011, we had approximately $196,604 available for additional borrowing or letter of credit issuances under our revolving credit facility. There were no borrowings and $53,396 in outstanding letters of credit under our revolving credit facility as of June 30, 2011. Our ability to borrow under the Credit Agreement will depend on us remaining in compliance with the covenants contained in the Credit Agreement.

We were in compliance with our covenants under the Credit Agreement as of June 30, 2011.

Outstanding Debt and Capital Leases

As of June 30, 2011, we had total debt outstanding of $1,390,814 including $566,409 outstanding under our term loan facilities under the Credit Agreement, $345,365 in aggregate principal amount of SGI’s 9.25% senior subordinated notes due 2019 (the “2019 Notes”), $200,000 in aggregate principal amount of SGI’s 7.875% senior subordinated notes due 2016 (the “2016 Notes”), $250,000 in aggregate principal amount of the Company’s 8.125% senior subordinated notes due 2018 (the “2018 Notes”), and loans denominated in Chinese Renminbi Yuan (“RMB”) totaling RMB178,500 of which RMB116,000 matures in December 2012 and RMB62,500 matures in January 2013.

On May 6, 2011, we paid the remaining £628 aggregate principal amount outstanding of the promissory notes we issued to defer a portion of the earn-out payable in connection with our acquisition of The Global Draw Limited (“Global Draw”) in 2006.

(7) Derivative Financial Instruments

Effective October 17, 2008, SGI entered into a three-year interest rate swap agreement (the “Hedge”) with JPMorgan. Under the Hedge, which is designated as a cash flow hedge, SGI pays interest on a $100,000 notional amount of debt at a fixed rate of 3.49% and receives interest on a $100,000 notional amount of debt at the prevailing three-month LIBOR rate. The objective of the Hedge is to eliminate the variability of cash flows attributable to the LIBOR component of interest expense paid on $100,000 of our variable-rate debt. As of June 30, 2011, the Hedge was measured at a fair value of $968 using Level 2 valuation techniques of the fair value hierarchy and included in accrued liabilities on the Consolidated Balance Sheet.

Hedge effectiveness is measured quarterly on a retrospective basis using the cumulative dollar-offset approach in which the cumulative changes in the cash flows of the actual swap are compared to the cumulative changes in the cash flows of the hypothetical swap. The effective portion of the Hedge is recorded in other comprehensive income (loss) and the ineffective portion of the Hedge, if any, is recorded in the Consolidated Statements of Operations. During the three and six months ended June 30, 2011, we recorded a gain of approximately $462 and $912, respectively, in other comprehensive income (loss). During the three and six months ended June 30, 2010, we recorded a gain of approximately $321 and $287, respectively, in other comprehensive income (loss). There was no ineffective portion of the Hedge recorded in the Consolidated Statements of Operations in either period. Amounts recorded in other comprehensive income (loss) that were deferred on the effective hedged forecasted transactions are reclassified to earnings when the interest expense related to the hedged item affects earnings.

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(8) Goodwill and Intangible Assets

The following disclosure presents certain information regarding our intangible assets as of June 30, 2011 and December 31, 2010. Amortizable intangible assets are amortized over their estimated useful lives with no estimated residual values.

Intangible Assets	Gross Carrying Amount		Accumulated Amortization		Net Balance
Balance as of June 30, 2011
Amortizable intangible assets:
Patents	$	12,394	$	4,809	$	7,585
Customer lists	29,903		19,573		10,330
Licenses	77,123		52,427		24,696
Intellectual property	18,273		18,217		56
Lottery contracts	1,500		1,144		356
	139,193		96,170		43,023
Non-amortizable intangible assets:
Trade name	37,754		2,118		35,636
Total intangible assets	$	176,947	$	98,288	$	78,659

Balance as of December 31, 2010
Amortizable intangible assets:
Patents	$	12,106	$	4,321	$	7,785
Customer lists	30,083		19,009		11,074
Licenses	62,124		46,381		15,743
Intellectual property	17,833		17,719		114
Lottery contracts	1,500		1,093		407
	123,646		88,523		35,123
Non-amortizable intangible assets:
Trade name	37,608		2,118		35,490
Total intangible assets	$	161,254	$	90,641	$	70,613

The aggregate intangible amortization expense for the three and six months ended June 30, 2011 was approximately $3,700 and $7,500, respectively. The aggregate intangible amortization expense for the three and six months ended June 30, 2010 was approximately $3,300 and $7,500, respectively.

The table below reconciles the change in the carrying amount of goodwill, by reporting segment, for the period from December 31, 2010 to June 30, 2011. In the six months ended June 30, 2011, we recorded an increase in goodwill of approximately $17,000 as a result of foreign currency translation.

Goodwill	Printed Products Group		Lottery Systems Group	Diversified Gaming Group	Totals
Balance as of December 31, 2010	$	335,481	186,944	241,490	763,915
Adjustments	2,614		7,355	7,043	17,012
Balance as of June 30, 2011	$	338,095	194,299	248,533	780,927

(9) Pension and Other Post-Retirement Plans

We have defined benefit pension plans for our U.K.-based union employees and certain Canadian-based employees (the “U.K. Plan” and the “Canadian Plan,” respectively). Retirement benefits under the U.K. Plan are based on an employee’s average compensation over the two years preceding retirement. Retirement benefits under the Canadian Plan are generally based on the number of years of credited service. Our policy is to fund the minimum contribution permissible by the respective tax authorities.

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The following table sets forth the combined amount of net periodic benefit cost recognized for the three and six months ended June 30, 2011 and 2010:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Components of net periodic pension benefit cost:
Service cost	$	462		$	471		$	923		$	943
Interest cost	1,173			1,237			2,347			2,473
Expected return on plan assets	(1,162		)	(1,226		)	(2,324		)	(2,451		)
Amortization of actuarial gains	95			140			189			280
Amortization of prior service costs	(3		)	11			(5		)	22
Net periodic cost	$	565		$	633		$	1,130		$	1,267

We have a 401(k) plan for U.S.-based employees who are not covered by a collective bargaining agreement. We contribute 37.5 cents on the dollar for the first 6% of participant contributions for a match of up to 2.25% of eligible compensation.

(10) Income Taxes

The effective tax rates of 44.1% and 99.2%, respectively, for the three and six months ended June 30, 2011 were determined using an estimated annual effective tax rate and after considering any discrete items for such periods. Due to a valuation allowance against our U.S. deferred tax assets, the effective tax rate for the three and six months ended June 30, 2011 does not include the benefit of the current year forecasted U.S. tax loss. Income tax expense for the three and six months ended June 30, 2011 is primarily due to income tax expense in foreign jurisdictions.

The effective tax rates of 149.7% and 96.5%, respectively, for the three and six months ended June 30, 2010 were determined using an estimated annual effective tax rate and after considering any discrete items for such periods. The effective tax rate for the three and six months ended June 30, 2010 includes the impact of a valuation allowance against certain U.S. state deferred tax assets.

In 2010, we established a valuation allowance of $149,583 against the U.S. deferred tax assets that, in the judgment of management, are more likely than not to expire before they can be utilized. In assessing the recoverability of our deferred tax assets, we analyzed all evidence, both positive and negative. We considered, among other things, our deferred tax liabilities, our historical earnings and losses, projections of future income, and tax-planning strategies available to us. We have not changed our assessment regarding the recoverability of our U.S. deferred tax assets for the three and six months ended June 30, 2011.

(11) Stockholders’ Equity

The following demonstrates the change in the number of shares of Class A common stock outstanding during the six months ended June 30, 2011 and during the fiscal year ended December 31, 2010:

	Six Months	Twelve Months
	Ended	Ended
	June 30,	December 31,
	2011	2010
Shares outstanding as of beginning of period	91,725	93,883
Shares issued as part of equity-based compensation plans and the Employee Stock Purchase Plan (“ESPP”), net of RSUs surrendered	389	461
Shares repurchased into treasury stock	—	(2,619	)
Shares outstanding as of end of period	92,114	91,725

(12) Stock-Based Compensation

We offer stock-based compensation through the use of stock options and restricted stock units (“RSUs”). We grant stock options to employees and directors under our equity-based compensation plans with exercise prices that are not less than the fair

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market value of our common stock at the date of grant. The terms of the stock option and RSU awards, including the vesting schedule of such awards, are determined at our discretion subject to the terms of the applicable equity-based compensation plan. Options granted over the last several years have generally been exercisable in four or five equal installments beginning on the first anniversary of the date of grant with a maximum term of ten years. RSUs typically vest in four or five equal installments beginning on the first anniversary of the date of grant or when certain performance measures are met. There are 13,500 shares of common stock authorized for awards under our 2003 Incentive Compensation Plan (the “Plan”) plus available shares from a preexisting equity-based compensation plan, which plans were approved by our stockholders. We also have outstanding stock options granted as part of inducement stock option awards that are not approved by stockholders prior to being granted. We record compensation cost for all stock options and RSUs based on the fair value at the grant date.

The Company may grant certain awards that are contingent upon the Company achieving certain performance targets. Upon determining the performance target is probable, the fair value of the award is recognized over the service period. Certain equity awards may be settled in cash or shares. The fair value of these awards is measured each reporting period and recorded as a liability and corresponding compensation expense. As the fair value changes each reporting period, the corresponding liability and compensation expense are adjusted, such that the liability and cumulative compensation expense equal the total fair value of the obligation upon the reporting date.

In connection with A. Lorne Weil becoming Chief Executive Officer, the Company entered into an amendment to his employment agreement effective December 2, 2010. Pursuant to the amendment, the Company awarded to Mr. Weil sign-on equity awards consisting of 1,000 stock options with an exercise price of $9.00 per share (representing an approximately 12% premium to the market value of our common stock on the date of grant) and a ten-year term and 1,000 RSUs, which awards have a four-year vesting schedule, with 25% scheduled to vest on December 31, 2011 and on each of the next three anniversaries of such date (such options and RSUs, the “time-vesting equity awards”). Mr. Weil was also awarded additional performance-conditioned awards consisting of 1,000 stock options with an exercise price of $8.06 per share (representing the market value of our common stock on the date of grant) and 1,000 RSUs, which awards have a five-year vesting schedule, with 20% of such options and RSUs scheduled to vest each year if specified performance targets are met (subject to certain “carryover” vesting provisions as described in the employment agreement amendment) (such performance-conditioned stock options and RSUs, the “performance-conditioned equity awards”).

The performance-conditioned stock options will expire, and the performance-conditioned RSUs will be forfeited, on March 15, 2016 to the extent that such awards remain unvested on such date. Any performance-conditioned stock options that have vested by March 15, 2016 will expire ten years from the date of grant. Delivery of shares in respect of vested performance-vesting RSUs will occur on March 15, 2016, provided that such RSUs will be forfeited to the extent that sufficient shares are not available under the Plan for such delivery. The performance-vesting stock options will not be exercisable to the extent that sufficient shares are not available under the Plan for the delivery of the shares issuable upon such exercise. In addition, to the extent that sufficient shares are not available under the Plan for the delivery of the shares underlying the 500 time-vesting RSUs that are scheduled to vest on December 31, 2013 and December 31, 2014 or the delivery of the shares issuable upon the exercise of 200 of the time-vesting stock options that are scheduled to become exercisable on December 31, 2014, the Company will settle such delivery in cash. See the Company’s Current Report on Form 8-K filed with the SEC on December 3, 2010 for additional information regarding these sign-on equity awards, including information regarding the performance targets with respect to the performance-conditioned equity awards.

In January 2011, the Company awarded an aggregate of 475 equity awards to certain officers consisting of approximately 113 performance-conditioned stock options, approximately 113 time-vesting stock options (with an exercise price of $10.02 per share and a ten-year term) and 250 time-vesting stock options (with an exercise price of $9.98 per share and a ten-year term), which options will not be exercisable to the extent that sufficient shares are not available under the Plan for the delivery of the shares issuable upon such exercise.

The equity awards that will be forfeited or not exercisable and the equity awards that will be settled in cash, as the case may be, to the extent that sufficient shares are not available under the Plan at the time of delivery of the underlying shares, are not deemed to be granted for accounting purposes as stock-based equity awards (and are not reflected as granted in 2011 or 2010, as the case may be, or outstanding as of June 30, 2011 or December 31, 2010 in the tables below). Excluding the awards described in the preceding sentence, we had approximately 972 and 2,119 shares available for grants of equity awards under our equity-based compensation plans (excluding 480 and 514 shares available under our employee stock purchase plan) as of June 30, 2011 and December 31, 2010, respectively.

On July 19, 2011, we commenced a stockholder-approved exchange offer to allow eligible employees and directors the opportunity to exchange all (but not less than all) of their outstanding stock options with an exercise price greater than $11.99 that were granted before July 19, 2010, whether vested or unvested, for a lesser number of new RSUs. The exchange ratios were established in order to comply with the terms of the option exchange approved by our stockholders and so that we are unlikely to incur accounting expense as a result of the option exchange. The exchange offer is currently set to expire on August 15, 2011. New RSUs granted in the exchange offer will be scheduled to vest on the later of the first anniversary of the acceptance date of exchange offer

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and the date on which the corresponding option would have vested. Eligible options granted under the Plan that are surrendered and accepted by us for exchange will be returned to the pool of available shares under the Plan.

Stock Options

A summary of the changes in stock options outstanding under our equity-based compensation plans during the six months ended June 30, 2011 is presented below:

	Number of Options		Weighted Average Remaining Contract Term (Years)	Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value
Options outstanding as of December 31, 2010	6,751		6.0	$	20.72	$	1,814
Granted	754
Exercised	(2	)				15
Cancelled	(307	)
Options outstanding as of March 31, 2011	7,196		6.4	19.42		654
Granted	20
Exercised	(2	)				11
Cancelled	(51	)
Options outstanding as of June 30, 2011	7,163		6.1	19.41		3,288
Options exercisable as of June 30, 2011	4,444		4.5	$	23.36	$	1,132

The weighted-average grant date fair value of options granted during the three months ended June 30, 2011 and March 31, 2011 was $4.61 and $4.62, respectively. For the three and six months ended June 30, 2011, we recognized stock-based compensation expense of approximately $1,700 and $3,400, respectively, related to the vesting of stock options and the related tax benefit of approximately $630 and $1,260, respectively. For the three and six months ended June 30, 2010, we recognized stock-based compensation expense of approximately $2,100 and $4,000, respectively, related to the vesting of stock options and the related tax benefit of approximately $700 and $1,300, respectively.

As of June 30, 2011, we had unearned compensation of approximately $13,900 relating to stock option awards that will be amortized over a weighted-average period of approximately two years.

Restricted Stock Units

A summary of the changes in RSUs outstanding under our equity-based compensation plans during the six months ended June 30, 2011 is presented below:

	Number of Restricted Shares		Weighted Average Grant Date Fair Value Per Share
Non-vested units as of December 31, 2010	2,440		$	15.13
Granted	917		8.92
Vested	(482	)	18.43
Cancelled	(16	)	15.52
Non-vested units as of March 31, 2011	2,859		$	12.58
Granted	32		9.47
Vested	(44	)	25.31
Cancelled	(26	)	13.66
Non-vested units as of June 30, 2011	2,821		$	12.34

For the three and six months ended June 30, 2011, we recognized stock-based compensation expense of approximately $3,300 and $6,200 related to the vesting of RSUs and the related tax benefit of approximately $1,240 and $2,240, respectively. For the three and six months ended June 30, 2010, we recognized equity-based compensation expense of approximately $3,300 and $8,500, respectively, related to the vesting of RSUs and the related tax benefit of approximately $1,300 and $3,300, respectively.

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As of June 30, 2011, we had unearned compensation of approximately $32,300 relating to RSUs that will be amortized over a weighted-average period of approximately two years.

(13) Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries

We conduct substantially all of our business through our domestic and foreign subsidiaries. SGI’s obligations under the Credit Agreement, the 2016 Notes and the 2019 Notes are fully and unconditionally and jointly and severally guaranteed by Scientific Games Corporation (the “Parent Company”) and our 100%-owned domestic subsidiaries other than SGI (the “Guarantor Subsidiaries”). Our 2018 Notes, which were issued by the Parent Company, are fully and unconditionally and jointly and severally guaranteed by our 100% owned domestic subsidiaries, including SGI.

Presented below is condensed consolidating financial information for (i) the Parent Company, (ii) SGI, (iii) the Guarantor Subsidiaries and (iv) our 100%-owned foreign subsidiaries and our non-100%-owned domestic and foreign subsidiaries (collectively, the “Non-Guarantor Subsidiaries”) as of June 30, 2011 and December 31, 2010 and for the three and six months ended June 30, 2011 and 2010. The condensed consolidating financial information has been presented to show the nature of assets held, results of operations and cash flows of the Parent Company, SGI, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries assuming the guarantee structures of our obligations as disclosed in Note 8 of the Notes to Consolidated Financial Statements in our 2010 Annual Report on Form 10-K for all periods presented. The condensed consolidating financial information has also been recast for all periods presented to reflect entities included in the sale of the Racing Business as non-guarantors.

The condensed consolidating financial information reflects the investments of the Parent Company in the Guarantor and Non-Guarantor Subsidiaries using the equity method of accounting. Corporate interest and administrative expenses have not been allocated to the subsidiaries.

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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

As of June 30, 2011

	Parent Company		SGI		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated
Assets
Cash and cash equivalents	$	30,903	$	137	$	—	$	103,394	$	(7,178	)	$	127,256
Accounts receivable, net	—		51,295		41,924		73,552		—			166,771
Inventories	—		26,375		14,388		28,466		—			69,229
Other current assets	14,382		3,337		6,466		28,438		—			52,623
Property and equipment, net	2,617		167,434		37,003		229,630		—			436,684
Investment in subsidiaries	606,561		706,241		—		856,910		(2,169,712		)	—
Goodwill	—		273,656		78,618		428,653		—			780,927
Intangible assets	—		41,655		28,838		8,166		—			78,659
Intercompany balances	136,895		—		202,139		—		(339,034		)	—
Other assets	17,836		77,161		10,892		402,754		(6,101		)	502,542
Total assets	$	809,194	$	1,347,291	$	420,268	$	2,159,963	$	(2,522,025	)	$	2,214,691

Liabilities and stockholders’ equity
Current installments of long-term debt	$	—	$	6,280	$	—	$	3,199	$	—		$	9,479
Other current liabilities	39,800		46,479		29,428		81,604		(7,179		)	190,132
Long-term debt, excluding current installments	250,000		1,105,494		—		25,841		—			1,381,335
Other non-current liabilities	10,369		40,287		15,751		58,313		—			124,720
Intercompany balances	—		37,668		—		301,367		(339,035		)	—
Stockholders’ equity	509,025		111,083		375,089		1,689,639		(2,175,811		)	509,025
Total liabilities and stockholders’ equity	$	809,194	$	1,347,291	$	420,268	$	2,159,963	$	(2,522,025	)	$	2,214,691

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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2010

	Parent Company		SGI		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated
Assets
Cash and cash equivalents	$	62,639	$	150	$	—	$	62,770	$	(1,278	)	$	124,281
Accounts receivable, net	—		72,830		45,541		59,808		—			178,179
Inventories	—		29,416		16,210		23,118		—			68,744
Other current assets	14,997		2,783		4,564		20,117		—			42,461
Property and equipment, net	1,730		150,130		43,859		254,862		—			450,581
Investment in subsidiaries	510,260		670,471		—		386,690		(1,567,421		)	—
Goodwill	—		273,656		78,843		411,416		—			763,915
Intangible assets	—		42,170		20,481		7,962		—			70,613
Intercompany balances	133,483		—		164,982		—		(298,465		)	—
Other assets	18,457		98,933		6,046		335,429		(6,101		)	452,764
Total assets	$	741,566	$	1,340,539	$	380,526	$	1,562,172	$	(1,873,265	)	$	2,151,538

Liabilities and stockholders’ equity
Current installments of long-term debt	$	—	$	6,280	$	—	$	2,151	$	—		$	8,431
Other current liabilities	29,363		48,074		32,601		78,817		(1,288		)	187,567
Long-term debt, excluding current installments	250,000		1,110,573		—		27,686		—			1,388,259
Other non-current liabilities	9,545		43,188		8,141		53,749		—			114,623
Intercompany balances	—		27,292		—		271,186		(298,478		)	—
Stockholders’ equity	452,658		105,132		339,784		1,128,583		(1,573,499		)	452,658
Total liabilities and stockholders’ equity	$	741,566	$	1,340,539	$	380,526	$	1,562,172	$	(1,873,265	)	$	2,151,538

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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended June 30, 2011

	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated

Revenue	$	—		$	99,042		$	16,278		$	105,357		$	(429	)	$	220,248
Cost of instant ticket revenue, cost of services and cost of sales (1)	—			29,506			36,854			53,988			(1,394		)	118,954
Selling, general and administrative expenses	14,891			12,199			2,517			15,247			(1,428		)	43,426
Depreciation and amortization	128			7,548			4,664			16,664			—			29,004
Operating income (loss)	(15,019		)	49,789			(27,757		)	19,458			2,393			28,864
Interest expense	5,357			20,624			—			427			1			26,409
Other (income) expense	(998		)	48,420			(50,615		)	(9,299		)	2,392			(10,100		)
Income (loss) before equity in income of subsidiaries, and income taxes	(19,378		)	(19,255		)	22,858			28,330			—			12,555
Equity in income (loss) of subsidiaries	30,019			22,752			—			—			(52,771		)	—
Income tax expense	3,622			(4		)	8			1,910			—			5,536
Net income	$	7,019		$	3,501		$	22,850		$	26,420		$	(52,771	)	$	7,019

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended June 30, 2010

	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated

Revenue	$	—		$	99,750		$	10,919		$	122,733		$	(369	)	$	233,033
Cost of instant ticket revenue, cost of services and cost of sales (1)	—			31,160			34,800			67,414			(376		)	132,998
Selling, general and administrative expenses	11,917			15,352			2,078			11,196			9			40,552
Write-down of assets held for sale	—			—						5,874			—			5,874
Depreciation and amortization	124			8,270			4,573			14,111			—			27,078
Operating income (loss)	(12,041		)	44,968			(30,532		)	24,138			(2		)	26,531
Interest expense	3,270			20,449			—			1,126			—			24,845
Other (income) expense	9,700			41,269			(54,020		)	(3,994		)	(2		)	(7,047		)
Income (loss) before equity in income of subsidiaries, and income taxes	(25,011		)	(16,750		)	23,488			27,006			—			8,733
Equity in income (loss) of subsidiaries	30,662			19,835			—			—			(50,497		)	—
Income tax expense	9,994			21			10			3,051			—			13,076
Net income	$	(4,343	)	$	3,064		$	23,478		$	23,955		$	(50,497	)	$	(4,343	)

(1) Exclusive of depreciation and amortization.

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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME

Six Months Ended June 30, 2011

	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated

Revenue	$	—		$	197,099		$	25,798		$	194,730		$	(723	)	$	416,904
Cost of instant ticket revenue, cost of services and cost of sales (1)	—			61,799			69,025			101,657			(1,682		)	230,799
Selling, general and administrative expenses	30,456			24,655			5,153			24,502			(1,786		)	82,980
Depreciation and amortization	256			15,112			9,610			34,930			—			59,908
Operating income (loss)	(30,712		)	95,533			(57,990		)	33,641			2,745			43,217
Interest expense	10,747			41,282			—			834			1			52,864
Other (income) expense	(2,219		)	89,195			(93,255		)	(16,909		)	2,744			(20,444		)
Income (loss) before equity in income of subsidiaries, and income taxes	(39,240		)	(34,944		)	35,265			49,716			—			10,797
Equity in income (loss) of subsidiaries	46,705			36,179			—			—			(82,884		)	—
Income tax expense	7,378			(295		)	8			3,619			—			10,710
Net income	$	87		$	1,530		$	35,257		$	46,097		$	(82,884	)	$	87

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME

Six Months Ended June 30, 2010

	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated

Revenue	$	—		$	193,048		$	19,800		$	237,334		$	(810	)	$	449,372
Cost of instant ticket revenue, cost of services and cost of sales (1)	—			60,199			68,079			134,163			(818		)	261,623
Selling, general and administrative expenses	23,574			28,126			4,010			23,366			32			79,108
Write-down of assets held for sale	—			—			—			5,874			—			5,874
Depreciation and amortization	247			16,647			9,147			28,692			—			54,733
Operating income (loss)	(23,821		)	88,076			(61,436		)	45,239			(24		)	48,034
Interest expense	6,587			40,609			—			2,363			—			49,559
Other (income) expense	15,676			78,681			(105,993		)	(5,217		)	(24		)	(16,877		)
Income (loss) before equity in income of subsidiaries, and income taxes	(46,084		)	(31,214		)	44,557			48,093			—			15,352
Equity in income (loss) of subsidiaries	56,912			42,286			—			—			(99,198		)	—
Income tax expense	10,284			21			10			4,493			—			14,808
Net income	$	544		$	11,051		$	44,547		$	43,600		$	(99,198	)	$	544

(1) Exclusive of depreciation and amortization.

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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2011

	Parent Company			SGI			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminating Entries			Consolidated
Net cash provided by operating activities	$	(13,976	)	$	28,257		$	24,844		$	58,466		$	(8	)	$	97,583
Cash flows from investing activities:
Capital and lottery and gaming systems expenditures	(1,037		)	(20,932		)	(6,524		)	(15,683		)	—			(44,176		)
Business acquisitions, net of cash acquired	—			—			—			—			—			—
Other assets and investments	(352		)	(9,858		)	(730		)	(502,429		)	470,247			(43,122		)
Net cash provided by (used in) investing activities	(1,389		)	(30,790		)	(7,254		)	(518,112		)	470,247			(87,298		)

Cash flows from financing activities:
Net proceeds (payments) on long-term debt	—			(3,140		)	—			(1,521		)	—			(4,661		)
Net proceeds from issuance of stock	(1,353		)	—			11			470,236			(470,247		)	(1,353		)
Purchase of treasury stock	—			—			—			—			—			—
Payment of financing fees	(8		)	(2,615		)	—			—			—			(2,623		)
Other, principally intercompany balances	(14,290		)	7,364			(23,501		)	30,419			8			—
Net cash provided by (used in) financing activities	(15,651		)	1,609			(23,490		)	499,134			(470,239		)	(8,637		)

Effect of exchange rate changes on cash	(720		)	911			—			1,136			—			1,327

Increase (decrease) in cash and cash equivalents	(31,736		)	(13		)	(5,900		)	40,624			—			2,975
Cash and cash equivalents, beginning of period	62,639			150			2,279			59,213			—			124,281
Cash and cash equivalents of held for sale operations	—			—			—			—			—			—
Cash and cash equivalents, end of period	$	30,903		$	137		$	(3,621	)	$	99,837		$	—		$	127,256

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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2010

	Parent Company			SGI			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminating Entries			Consolidated
Net cash provided by operating activities	$	(17,324	)	$	13,701		$	34,666		$	72,149		$	(56	)	$	103,136
Cash flows from investing activities:
Capital and lottery and gaming systems expenditures	(43		)	(17,201		)	(2,278		)	(15,309		)	—			(34,831		)
Business acquisitions, net of cash acquired	—			—			—			(5,906		)	—			(5,906		)
Other assets and investments	(130,986		)	(127,735		)	(5,213		)	(194,538		)	312,886			(145,586		)
Net cash provided by (used in) investing activities	(131,029		)	(144,936		)	(7,491		)	(215,753		)	312,886			(186,323		)

Cash flows from financing activities:
Net proceeds (payments) on long-term debt	(9,943		)	74,275			—			(50,298		)	—			14,034
Net proceeds from issuance of stock	(395		)	131,002			14			181,877			(312,892		)	(394		)
Purchase of treasury stock	(18,227		)	—			—			—			—			(18,227		)
Payment of financing fees	—			(6,778		)	—			—			—			(6,778		)
Other, principally intercompany balances	127,795			(65,807		)	(34,131		)	(28,086		)	229			—
Net cash provided by (used in) financing activities	99,230			132,692			(34,117		)	103,493			(312,663		)	(11,365		)

Effect of exchange rate changes on cash	—			(971		)	—			(13,615		)	(167		)	(14,753		)

Increase (decrease) in cash and cash equivalents	(49,123		)	486			(6,942		)	(53,726		)	—			(109,305		)
Cash and cash equivalents, beginning of period	147,220			137			(279		)	113,053			—			260,131
Cash and cash equivalents of held for sale operations	—			—			617			10			—			627
Cash and cash equivalents, end of period	$	98,097		$	623		$	(6,604	)	$	59,337		$	—		$	151,453

(14) Acquisitions

On April 26, 2011 we entered into a purchase agreement to acquire all of the issued shares of Barcrest Group Limited, a U.K. company, and Cyberview Technology CZ s.r.o., a company incorporated in the Czech Republic (collectively, “Barcrest”), a leading supplier of gaming content and machines in Europe, from subsidiaries of International Game Technology for approximately £33,000 in cash (subject to certain adjustments), plus up to approximately £2,000 in deferred consideration, the payment of which was subject to the satisfaction of certain conditions relating to a third-party contract. The closing of the acquisition of Barcrest is conditioned on, among other things, obtaining U.K. competition approvals and certain third-party consents. The £2,000 in deferred consideration will not be payable as the conditions relating to the third-party contract were not satisfied. Barcrest will be integrated into our gaming divisions, Global Draw and Games Media Limited.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis (this “MD&A”) is intended to enhance the reader’s understanding of our operations and current business environment. This MD&A should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended December 31, 2010 and the “Business” section included in our 2010 Annual Report on Form 10-K.

This MD&A also contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and should be read in conjunction with the disclosures and information contained and referenced under “Forward-Looking Statements” included in this Quarterly Report on Form 10-Q.

As used in this MD&A, the terms “we,” “us,” “our” and the “Company” mean Scientific Games Corporation together with its consolidated subsidiaries.

Overview

Introduction

We are a leading global supplier of products and services to lotteries and a leading provider of gaming technology and content to other gaming operators worldwide. We also gain access to technology and pursue global expansion opportunities through strategic joint ventures and minority equity investments.

We report our operations in three business segments: Printed Products Group; Lottery Systems Group; and Diversified Gaming Group.

Our revenue is segregated into three categories: instant ticket revenue; service revenue; and sales revenue. Instant ticket revenue includes revenue related to our instant ticket fulfillment/services businesses, including our MDI Entertainment, LLC (“MDI”) business. Revenue generated from our Lottery Systems business (including revenue from the validation of instant tickets) and Diversified Gaming Group (our wide area gaming business) is generally categorized as service revenue. Revenue generated from our sales of lottery systems and terminals is categorized as sales revenue.

For the six months ended June 30, 2011, we derived approximately 47% of our revenue from our customers outside of the U.S. and were affected by fluctuations in foreign currency exchange rates. The foreign currencies to which we are most exposed are the British Pound Sterling and the Euro. For the three and six months ended June 30, 2011, foreign currency exchange rate fluctuations increased our revenues by approximately $5.0 million and $5.1 million, respectively.

The discussion below highlights certain known trends, demands, commitments, events and uncertainties that have affected our recent financial and operating performance and/or may affect our future financial and operating performance in our three business segments.

Printed Products Group

Our Printed Products Group is primarily comprised of our global instant ticket and related services businesses, which include ticket design and manufacturing as well as value-added services such as game design, sales and marketing support, specialty games and promotions, inventory management and warehousing and fulfillment services. We also provide lotteries with cooperative service partnerships (“CSPs”), under which we provide an extended suite of services to help our customers efficiently and effectively manage their operations to achieve higher profitability. The Printed Products Group includes MDI, a leading provider of licensed games, promotional entertainment and Internet-based services to the lottery industry. The Printed Products Group also includes our interest in Lotterie Nazionali S.r.l (“LNS”), our joint venture that holds the concession to operate the Gratta e Vinci instant ticket lottery in Italy (which succeeded our joint venture with Consorzio Lotterie Nazionali (“CLN”)), our interest in Northstar Lottery Group, LLC (“Northstar”), our joint venture that was awarded the private management agreement for the Illinois lottery in 2010 (executed in January 2011), and our interest in CSG Lottery Technology (Beijing) Co. Ltd. (“CSG”), our instant ticket printing joint venture in China.

Based on third-party data, our U.S. customers’ total instant ticket lottery retail sales increased approximately 6.5% and 5.4% for the three and six months ended June 30, 2011, respectively, compared to the same periods in 2010. Most of our U.S. customers reported year-over-year growth in sales of instant tickets, which we believe was primarily driven by sales of higher price-point games. Our Printed Products instant ticket revenue increased 10.1% and 7.4% for the three and six months ended June 30, 2011, respectively, compared to the same periods in 2010. We experienced an increase in our revenue from our U.S. CSP contracts reflecting the improvement in retail sales, which was offset by a decrease in the volume of tickets sold to certain U.S. customers primarily due to the timing of instant ticket orders. The increase in revenue for these periods also reflected higher sales of licensed games by MDI, in part due to the successful introduction in the second quarter of a multi-state licensed game. There has also been an increase in interest within the lottery industry in player loyalty programs, which we believe may result in growth opportunities for MDI’s Properties Plus offering. Our results also reflect higher revenue from our international customers, which was predominately driven by higher sales to LNS and higher revenues from our European CSP contracts.

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We believe we are likely to continue to experience a highly competitive procurement environment in all of our segments, which could lead to contract rate reductions and/or additional service requirements in connection with re-bids, extensions and renewals of our domestic and international contracts. See the table in “Business—Contract Procurement” in Item 1 of our 2010 Annual Report on Form 10-K for information regarding the scheduled expiration dates of our U.S. lottery contracts and certain international contracts. Our strategy to counter-balance these industry trends includes working with our lottery customers to grow their sales through a variety of methods including launching new products, implementing innovative marketing tools and expanding retail distribution. We are seeing evidence of increased interest by domestic and international lotteries in exploring privatization (full or partial) or new ownership structures in order to maximize their growth and resulting revenues, which we believe could provide new growth opportunities for the Company in the coming years.

Our LNS joint venture commenced operations under the new concession to operate the Italian instant ticket lottery on October 1, 2010. Under the concession, we are the primary supplier of instant lottery tickets for the joint venture, as we were under the prior concession. Over the life of the new concession, we expect that we will supply no less than 80% of LNS’ instant ticket requirements. The upfront fees paid in 2010 associated with the new concession will be amortized by LNS (anticipated to be approximately €89.0 million per year of the new concession), which reduces our earnings from equity investments. Our share of the amortization is expected to be approximately €18.0 million per year on a pre-tax basis. In light of the corporate structure of LNS, we record earnings from our equity investment in LNS on an after-tax basis under applicable accounting rules, which will impact the comparability of our results of operations from our Italian joint venture during 2011 since we recorded earnings from our equity investment in CLN on a pre-tax basis. Subject to applicable limitations, we are entitled to receive from LNS annual cash dividends as well as periodic return of capital payments over the life of the concession. In April 2011, we received a dividend of $22.0 million from CLN. We received $10.5 million from LNS in May 2011 comprised of a dividend of approximately $4.2 million and a return of capital payment of approximately $6.3 million.

Our Northstar joint venture, in which we are a 20% equity holder, was awarded the agreement to be the private manager for the Illinois lottery for a ten-year term following a competitive procurement, which agreement was executed on January 18, 2011 (the “PMA”). As the private manager, Northstar will, subject to the oversight of the Illinois lottery, manage the day-to-day operations of the Lottery including lottery game development and portfolio management, retailer recruitment and training, supply of goods and services and overall marketing strategy. On January 26, 2011, the Illinois Appellate Court upheld a constitutional challenge to the revenue statute that, among other things, amended the lottery law to facilitate the PMA, on grounds that the statute impermissibly addressed more than one subject. On July 11, 2011, the Illinois Supreme Court reversed the Appellate Court decision and upheld the revenue statute. Operations under the PMA commenced on July 1, 2011. We contributed $10.0 million to Northstar in March 2011 and an additional $2.0 million in July 2011.

Lottery Systems Group

Our Lottery Systems Group provides customized computer software, software support, equipment and data communication services to lotteries. The Lottery Systems Group also provides lotteries with transaction processing software for the accounting and validation of both instant and online lottery games, point-of-sale terminals, video lottery terminals (“VLTs”), central site computers, communications technology, and ongoing support and maintenance for these products. We are also the exclusive instant ticket validation network provider to the China Sports Lottery (“CSL”). The Lottery Systems Group also includes our 50% interest in Guard Libang, a provider of systems and services to a majority of the China Welfare Lottery jurisdictions.

Based on third-party data, Lottery Systems customers’ retail sales in the U.S. decreased approximately 8.2% and 1.3% for the three and six months ended June 30, 2011, respectively, compared to the same periods in 2010 which we believe is primarily due to lower jackpot amounts. Our Lottery Systems service revenue decreased 4.3% and 1.3% for the three and six months ended June 30, 2011, respectively, compared to the same periods in 2010. The decrease for both periods was primarily due to lost contracts in New Hampshire and Vermont, which terminated on June 30, 2010. Also, we saw a decline in retail sales of Powerball ® and Mega Millions ® games for the quarter ended June 30, 2011 as compared to the same period in the prior year. These decreases were partially offset by higher instant ticket validation revenue in the U.S. and from the CSL. We also experienced lower sales revenue for the three and six month periods ended June 30, 2011 primarily due to large hardware orders from certain European customers in 2010 that were not repeated to the same extent in 2011.

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During 2010, the lottery authority in Maine awarded a new online lottery contract to one of our competitors, which award was subsequently invalidated as a result of our protest. The competitor has appealed the protest ruling and legal proceedings related to the protest are ongoing. Our contract with Maine was extended for one year until June 30, 2012. During 2009, the Indiana lottery awarded us an online lottery contract that began in August 2010. In 2010, following a competitive procurement process, we were awarded a new lottery systems contract in Iowa, which commenced operations in July 2011.

U.S. lottery directors recently authorized certain changes to the Powerball ® multi-state online lottery game, including an increase in the ticket price to $2, which changes are anticipated to take effect on January 15, 2012. The increase in the Powerball ® ticket price represents the first price increase in the history of the U.S. multi-state online lottery and potentially provides an impetus for growth in online lottery retail sales. We have also recently seen an increase in bidding opportunities to provide central monitoring and control systems for video gaming networks, particularly in jurisdictions in North America, as these jurisdictions pursue VLTs as an opportunity to address budget deficits. We believe that this could be an attractive growth opportunity for the Company in the coming years.

In China, instant ticket retail sales of the CSL increased approximately 14% and 23% for the three and six months ended June 30, 2011, respectively, compared to the same periods in 2010. We believe the increase is a result of our strategic initiatives related to our China operations, which focus on accelerating growth through the offering of higher price-point instant tickets, the expansion of the retailer and validation network, the introduction of tickets with licensed brands and the launch of an advertising campaign to build brand awareness. We also continue to focus on the pursuit of additional distribution channels ( e.g. , mobile phones). The rate we receive on retail sales under our China instant ticket validation contract decreased by 0.2% in January 2011 and is scheduled to decrease by an additional 0.1% in January 2012 and an additional 0.1% in January 2014. To the extent we are not able to continue to offset these rate reductions by retail sales growth, our revenue and gross margin from this contract may be adversely affected.

Diversified Gaming Group

Our Diversified Gaming Group provides services and systems to operators in the wide area gaming industry. The Diversified Gaming Group includes The Global Draw Limited (“Global Draw”) and Games Media Limited (“Games Media”), leading suppliers of wide area gaming machines, server-based gaming systems and game content to licensed bookmakers primarily in betting shops and pub operators in the U.K. The Diversified Gaming Group also includes our equity interests in Roberts Communication Network, LLC (“RCN”), which provides communications services to racing and non-racing customers, Sportech Plc (“Sportech”), a leading operator and supplier of football pools and associated games, Sciplay , our joint venture with Playtech Limited to deliver Internet gaming solutions to government-sponsored and other lotteries and certain other gaming operators, and International Terminal Leasing (“ITL”).

The Diversified Gaming Group included our racing and venue management businesses (the “Racing Business”) prior to its sale on October 5, 2010 to Sportech. Due to the Company’s continued involvement with Sportech, including our equity interest in Sportech, the disposal of the Racing Business did not qualify as discontinued operations and was not reflected as such in our Consolidated Statements of Operations. Our interest in Sportech is accounted for under the equity method of accounting. The comparability of our results of operations during 2011 will be affected by the sale of the Racing Business.

In 2010, Global Draw began migrating its server-based gaming machines to a new state-of-the-art software platform technology, and rolling out this new technology to its customers in the U.K. As of June 30, 2011, Global Draw completed the U.K. migration. In 2010, Global Draw was awarded a four-year contract to supply approximately 7,600 server-based gaming machines to Ladbrokes, which we believe represents approximately 95% of its terminal base. In March 2011, Global Draw was awarded the remaining 5% of Ladbrokes’ terminal base. We have completed the installation of gaming machines in the Ladbrokes estate, representing a significant portion of the increase in Global Draw’s installed gaming machine base from June 30, 2010 to June 30, 2011. Operating results for the three and six months ended June 30, 2011 reflects the increase in revenue resulting from the higher installed base of gaming machines.

On April 26, 2011 we entered into a purchase agreement to acquire all of the issued shares of Barcrest Group Limited, a U.K. company, and Cyberview Technology CZ s.r.o., a company incorporated in the Czech Republic (collectively, “Barcrest”), a leading supplier of gaming content and machines in Europe, from subsidiaries of International Game Technology for approximately £33.0 million in cash (subject to certain adjustments), plus up to approximately £2.0 million in deferred consideration, the payment of which was subject to the satisfaction of certain conditions relating to a third-party contract. The closing of the acquisition of Barcrest is conditioned on, among other things, obtaining U.K. competition approvals and certain third-party consents. The £2.0 million in deferred consideration will not be payable as the conditions relating to the third-party contract were not satisfied. Barcrest will be integrated into our gaming divisions, Global Draw and Games Media Limited.

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Results of Operations

Three Months Ended June 30, 2011 Compared to Three Months Ended June 30, 2010

The following analysis compares the results of operations for the quarter ended June 30, 2011 to the results of operations for the quarter ended June 30, 2010.

Revenue Analysis

For the quarter ended June 30, 2011, total revenue was $220.2 million compared to $233.0 million for the quarter ended June 30, 2010, a decrease of $12.8 million, or 5%, which was primarily due to the sale of our Racing Business in October 2010. Our instant ticket revenue for the quarter ended June 30, 2011 was $130.4 million compared to $118.4 million for the quarter ended June 30, 2010, an increase of $12.0 million, or 10%. Our service revenue for the quarter ended June 30, 2011was $82.1 million compared to $101.0 million for the quarter ended June 30, 2010, a decrease of $18.9 million, or 19%. Our sales revenue for the quarter ended June 30, 2011was $7.7 million compared to $13.6 million for the quarter ended June 30, 2010, a decrease of $5.9 million, or 43%.

Printed Products

For the quarter ended June 30, 2011, total revenue for Printed Products was $132.5 million compared to $121.2 million for the quarter ended June 30, 2010, an increase of $11.3 million, or 9%. For the quarter ended June 30, 2011, instant ticket revenue for Printed Products was $130.4 million compared to $118.4 million for the quarter ended June 30, 2010, an increase of $12.0 million, or 10%. This increase reflected higher revenue of $6.0 million from U.S. customers due primarily to increased sales of licensed games and $3.9 million from international customers driven by increased sales to LNS and increased revenues from our European CSP contracts. Revenue also increased as a result of favorable foreign currency translation of $2.1 million.

Printed Products sales revenue for the quarter ended June 30, 2011 was $2.1 million compared to $2.7 million for the quarter ended June 30, 2010, a decrease of $0.6 million, primarily due to a decline in phone card sales.

Lottery Systems

For the quarter ended June 30, 2011, total revenue for Lottery Systems was $56.8 million compared to $62.2 million for the quarter ended June 30, 2010, a decrease of $5.4 million, or 9%. Lottery Systems service revenue for the quarter ended June 30, 2011, was $51.2 million compared to $53.5 million for the quarter ended June 30, 2010, a decrease of $2.3 million, or 4%. The service revenue decrease reflected $2.2 million in lower revenue due to the loss of contracts in New Hampshire and Vermont on June 30, 2010 and approximately $2.1 million of lower retail sales due in part to lower jackpots for Powerball ® and Mega Millions ® games. The decrease in service revenue was partially offset by increased international revenue of $0.7 million, higher U.S. instant ticket validation revenue of $0.7 million, and higher revenue of $0.7 million due to favorable foreign currency translation.

Lottery Systems sales revenue for the quarter ended June 30, 2011, was $5.6 million compared to $8.7 million for the quarter ended June 30, 2010, a decrease of $3.0 million, or 35%. The decrease was primarily due to an international customer terminal sale in the prior-year period that did not occur in the current period resulting in lower revenue of $1.8 million and lower sales of hardware in the U.S. of $1.9 million.

Diversified Gaming

For the quarter ended June 30, 2011, total revenue for Diversified Gaming was $30.9 million compared to $49.7 million for the quarter ended June 30, 2010, a decrease of $18.8 million, or 38%. Diversified Gaming service revenue for the quarter ended June 30, 2011 was $30.9 million compared to $47.5 million for the quarter ended June 30, 2010, a decrease of $16.6 million, or 35%. The decrease in service revenue was primarily due to the sale of the Racing Business in October 2010 resulting in a decrease of $25.9 million. The decrease was partially offset by increased revenue of $8.2 million primarily due to the roll-out of Global Draw terminals to Ladbrokes betting shops in the U.K. during the quarter and higher revenue of $1.7 million due to favorable foreign currency translation.

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Diversified Gaming sales revenue for the quarter ended June 30, 2011 was $2.2 million lower than for the quarter ended June 30, 2010, primarily due to the sale of the Racing Business.

Cost of Revenue Analysis

Cost of instant ticket revenue of $72.1 million for the quarter ended June 30, 2011 was $3.9 million, or 6%, higher than for the quarter ended June 30, 2010. Cost of services of $41.5 million for the quarter ended June 30, 2011 was $13.7 million, or 25%, lower than for the quarter ended June 30, 2010. Cost of sales of $5.4 million for the quarter ended June 30, 2011 was $4.2 million, or 44%, lower than for the quarter ended June 30, 2010.

Printed Products

Cost of instant ticket revenue of $72.1 million for the quarter ended June 30, 2011 was $3.9 million, or 6%, higher than for the quarter ended June 30, 2010. The increase reflected higher costs of $2.4 million as a result of increased revenue and higher costs of $1.5 million due to the impact of foreign exchange rates.

Cost of sales of $1.2 million for the quarter ended June 30, 2011 was $0.7 million lower than for the quarter ended June 30, 2010 primarily due to the decline in phone card sales.

Lottery Systems

Cost of services of $26.2 million for the quarter ended June 30, 2011 was $0.6 million, or 2%, higher than for the quarter ended June 30, 2010. The increase was primarily due to higher costs from our U.S. and international businesses of $1.4 million, partially offset by lower costs of $1.1 million due to the loss of the New Hampshire and Vermont online lottery contracts on June 30, 2010.

Cost of sales of $4.1 million for the quarter ended June 30, 2011 was $2.1 million, or 33%, lower than for the quarter ended June 30, 2010. The decrease was primarily due to international terminal sales in the prior-year period that did not occur in the current period resulting in lower costs of $0.8 million and lower sales of hardware in the U.S. resulting in lower costs of $1.7 million.

Diversified Gaming

Cost of services of $15.2 million for the quarter ended June 30, 2011 was $14.3 million lower than for the quarter ended June 30, 2010. The decrease was primarily due to a decline in costs of $19.1 million due to the sale of the Racing Business. The decrease was partially offset by an increase in costs of $4.0 million, primarily due to the expansion of Global Draw’s terminal base, and the impact of foreign currency translation of $0.8 million.

Cost of sales for the quarter ended June 30, 2011 was $1.4 million lower than for the quarter ended June 30, 2010, primarily due to the sale of the Racing Business.

Selling, General and Administrative Expense Analysis

Selling, general and administrative expense of $43.4 million for the quarter ended June 30, 2011 was $2.9 million, or 7%, higher than for the quarter ended June 30, 2010. The increase reflected $3.6 million of higher acquisition-related due diligence and advisory fees and expenses related to a potential contract dispute. The increase also included higher compensation expense of $1.8 million. The increase was offset by lower expenses of $2.9 million due to the sale of the Racing Business.

Write-down of Assets Held for Sale

Write-down of assets held for sale of $5.9 million included in the three months ended June 30, 2010 resulted from valuing the held for sale assets of the Racing Business at fair market value less estimated costs to sell.

Depreciation and Amortization Expense Analysis

Depreciation and amortization expense of $29.0 million for the quarter ended June 30, 2011 increased $1.9 million, or 7%, from the quarter ended June 30, 2010. The increase was primarily due to accelerated depreciation expense of approximately $1.2 million recorded by Global Draw on existing technology as it migrated to a new back-end technology platform.

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Other (Income) Expense Analysis

Interest expense of $26.4 million for the quarter ended June 30, 2011 increased $1.6 million, or 6%, from the quarter ended June 30, 2010, primarily attributable to the issuance of our 8.125% senior subordinated notes due 2018 (“2018 Notes”) and the retirement of our 6.25% senior subordinated notes due 2012 (“2012 Notes”) during 2010.

Earnings from equity investments of $9.2 million for the quarter ended June 30, 2011 decreased $4.4 million, or 32%, from the quarter ended June 30, 2010. The decrease primarily related to a decline in earnings from our equity investment in LNS of $5.5 million. The Company’s share of earnings from the Italian joint venture is now reported on an after-tax basis (as compared to on a pre-tax basis under the prior instant ticket concession) and reflects the amortization of a portion of the upfront fees for the new concession, which together reduced our earnings from our equity investment in the Italian joint venture by approximately $9.2 million. The decrease was offset by an increase of $1.9 million from CSG.

Other income for the quarter ended June 30, 2011 of $0.9 million, increased by $7.5 million from other expense of $6.6 million for the quarter ended June 30, 2010, primarily due to the loss on foreign currency hedging contracts related to the Italian instant ticket concession tender of $9.0 million for the quarter ended June 30, 2010. The foreign currency forward contracts were settled in 2010.

Income Tax Expense Analysis

Income tax expense was $5.5 million for the quarter ended June 30, 2011 compared to $13.1 million for the quarter ended June 30, 2010. The effective income tax rates for the quarters ended June 30, 2011 and 2010 were 44.1% and 149.7%, respectively. Due to a valuation allowance against our U.S. deferred tax assets, the effective tax rate for the quarter ended June 30, 2011 does not include the benefit of the current year forecasted U.S. tax loss. Income tax expense for the quarter ended June 30, 2011 was primarily attributable to income tax expense in our foreign jurisdictions. The effective tax rate for the quarter ended June 30, 2010 included a valuation allowance of $11.8 million against certain U.S. state deferred tax assets.

Six Months Ended June 30, 2011 Compared to Six Months Ended June 30, 2010

The following analysis compares the results of operations for the six months ended June 30, 2011 to the results of operations for the six months ended June 30, 2010.

Revenue Analysis

For the six months ended June 30, 2011, total revenue was $416.9 million compared to $449.4 million for the six months ended June 30, 2010, a decrease of $32.5 million, or 7%, which was primarily due to the sale of our Racing Business. Our instant ticket revenue for the six months ended June 30, 2011 was $244.3 million compared to $227.5 million for the six months ended June 30, 2010, an increase of $16.7 million, or 7%. Our service revenue for the six months ended June 30, 2011 was $155.8 million compared to $194.7 million for the six months ended June 30, 2010, a decrease of $38.9 million, or 20%. Our sales revenue for the six months ended June 30, 2011was $16.8 million compared to $27.1 million for the six months ended June 30, 2010, a decrease of $10.3 million, or 38%.

Printed Products

For the six months ended June 30, 2011, total revenue for Printed Products was $248.1 million compared to $233.1 million in the six months ended June 30, 2010, an increase of $15.0 million, or 6%. For the six months ended June 30, 2011, instant ticket revenue for Printed Products was $244.3 million compared to $227.5 million for the six months ended June 30, 2010, an increase of $16.7 million, or 7%. This increase reflected higher revenue of $7.9 million from international customers, including increased sales to LNS and our European CSP customers. The increase also reflected higher revenue of $6.0 million from U.S. customers, primarily due to increased sales of licensed games. Revenue for the six months ended June 30, 2011 also included favorable foreign currency translation of $2.9 million.

Printed Products sales revenue for the six months ended June 30, 2011 was $3.9 million compared to $5.6 million for the six months ended June 30, 2010, a decrease of $1.7 million, primarily due to a decline in phone card sales.

Lottery Systems

For the six months ended June 30, 2011, total revenue for Lottery Systems was $113.2 million compared to $120.1 million for the six months ended June 30, 2010, a decrease of $6.9 million, or 6%. Lottery Systems service revenue for the six months ended June 30, 2011 was $100.4 million compared to $101.7 million for the six months ended June 30, 2010, a decrease of $1.3 million, or 1%. The service revenue decrease primarily reflected lower revenue of $4.3 million due to the loss of contracts in New Hampshire and Vermont on June 30, 2010. The decrease in service revenue was partially offset by increased instant ticket validation revenue in the U.S. of $1.4 million and from the CSL of $1.4 million and increased international service revenue of $1.0 million.

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Lottery Systems sales revenue for the six months ended June 30, 2011, was $12.8 million compared to $18.4 million for the six months ended June 30, 2011, a decrease of $5.6 million, or 30%. The decrease was primarily due to a large hardware order from two European customers in the prior-year period that was not repeated to the same extent in 2011 resulting in lower revenue of $9.0 million. The decrease in sales revenue was partially offset by increased sales of hardware of $3.0 million in the U.S. and to international customers.

Diversified Gaming

For the six months ended June 30, 2011, total revenue for Diversified Gaming was $55.5 million compared to $96.2 million for the six months ended June 30, 2010, a decrease of $40.6 million, or 42%. Diversified Gaming service revenue for the six months ended June 30, 2011was $55.4 million compared to $93.0 million for the six months ended June 30, 2010, a decrease of $37.6 million, or 40%. The decrease in service revenue was principally due to the sale of the Racing Business in October 2010 resulting in a decrease of $49.8 million. The decrease was partially offset by increased revenue of $10.9 million primarily from the roll-out of Global Draw terminals to Ladbrokes betting shops in the U.K. during the period and higher revenue of $1.4 million due to favorable foreign currency translation.

Diversified Gaming sales revenue for the six months ended June 30, 2011 was $3.0 million lower than for the six months ended June 30, 2010, due to the sale of the Racing Business.

Cost of Revenue Analysis

Cost of instant ticket revenue of $139.4 million for the six months ended June 30, 2011 was $7.2 million, or 5%, higher than for the six months ended June 30, 2010. Cost of services of $80.4 million for the six months ended June 30, 2011 was $29.2 million, or 27%, lower than for the six months ended June 30, 2010. Cost of sales of $11.1 million for the six months ended June 30, 2011 was $8.8 million, or 44%, lower than for the six months ended June 30, 2010.

Printed Products

Cost of instant ticket revenue of $139.4 million for the six months ended June 30, 2011 was $7.2 million, or 5%, higher than for the six months ended June 30, 2010. The increase reflected higher costs of $5.1 as a result of increased revenues and higher costs of $2.2 million due to the impact of foreign exchange rates.

Cost of sales of $2.2 million for the six months ended June 30, 2011 was $1.7 million lower than for the six months ended June 30, 2010, primarily due to the decline in phone card sales.

Lottery Systems

Cost of services of $52.2 million for the six months ended June 30, 2011 was $0.1 million lower than for the six months ended June 30, 2010. The decrease reflected lower costs of $2.2 million due to the loss of our New Hampshire and Vermont online lottery contracts on June 30, 2010, partially offset by increased costs of $2.0 million from our U.S. and international businesses.

Cost of sales of $8.8 million for the six months ended June 30, 2011 was $4.9 million, or 36%, lower than for the six months ended June 30, 2010. The decrease was primarily due to a large hardware order from two European customers in the prior-year period that was not repeated to the same extent in 2011 resulting in lower costs of $6.2 million. The decrease in cost of sales was partially offset by increased costs of $0.9 million related to increased hardware sales in the U.S. and international businesses.

Diversified Gaming

Cost of services of $28.2 million for the six months ended June 30, 2011 was $29.1 million lower than for the six months ended June 30, 2010. The decrease in cost of services was primarily due to a decline of $37.1 million due to the sale of the Racing Business. The decrease was partially offset by an increase in costs of $7.4 million, primarily due to the expansion of Global Draw’s terminal base, and higher costs of $0.7 million due to the impact of foreign exchange rates.

Cost of sales for the six months ended June 30, 2011 was $2.2 million lower than for the six months ended June 30, 2010, due to the sale of the Racing Business.

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Selling, General and Administrative Expense Analysis

Selling, general and administrative expense of $83.0 million for the six months ended June 30, 2011 was $3.9 million, or 5%, higher than for the six months ended June 30, 2010. The increase was primarily due to increased compensation expense of $7.0 million including $1.0 million related to our Asia-Pacific Business Incentive Compensation Plan (“the Asia-Pacific Plan”). The increase also reflected $5.0 million related to higher acquisition-related due diligence and advisory fees and expenses related to a potential contract dispute. The increase was offset by lower expenses of $6.3 million due to the sale of the Racing Business and lower stock-based compensation expense of $2.4 million.

Write-down of Assets Held for Sale

Write-down of assets held for sale of $5.9 million included in the six months ended June 30, 2010 was the result of valuing the held for sale assets of the Racing Business at fair market value less estimated costs to sell.

Depreciation and Amortization Expense Analysis

Depreciation and amortization expense of $59.9 million for the six months ended June 30, 2011 increased $5.2 million, or 9%, from the six months ended June 30, 2010. The increase was primarily due to accelerated depreciation expense of approximately $6.4 million recorded by Global Draw on existing technology as it migrated to a new back-end technology platform.

Other (Income) Expense Analysis

Interest expense of $52.9 million for the six months ended June 30, 2011increased $3.3 million, or 7%, from the six months ended June 30, 2010, primarily attributable to the issuance of the 2018 Notes and the retirement of the 2012 Notes during 2010.

Earnings from equity investments of $18.6 million for the six months ended June 30, 2011 decreased $10.9 million, or 37%, from the six months ended June 30, 2010. The decrease primarily related to a decline in earnings from our equity investment in LNS of $12.7 million. The Company’s share of earnings from the Italian joint venture is now reported on an after-tax basis (as compared to on a pre-tax basis under the prior instant ticket concession) and reflects the amortization of a portion of the upfront fees for the new concession, which together reduced our earnings from our equity investment in the Italian joint venture by approximately $18.4 million. The decrease was offset by an increase of $3.1 million from CSG.

Other income for the six months ended June 30, 2011 of $1.9 million increased by $14.4 million from other expense of $12.6 million for the six months ended June 30, 2010, primarily due to the loss on foreign currency hedging contracts related to the Italian instant ticket concession tender of $15.7 million for the quarter ended June 30, 2010. The foreign currency forward contracts were settled in 2010.

Income Tax Expense Analysis

Income tax expense was $10.7 million for the six months ended June 30, 2011 compared to $14.8 million for the six months ended June 30, 2010. The effective income tax rates for the six months ended June 30, 2011 and 2010 were 99.2% and 96.5%, respectively. Due to a valuation allowance against our U.S. deferred tax assets, the effective tax rate for the six months ended June 30, 2011 does not include the benefit of the current year forecasted U.S. tax loss. Income tax expense for the six months ended June 30, 2011 was primarily attributable to income tax expense in our foreign jurisdictions. The effective tax rate for the six months ended June 30, 2010 included a valuation allowance of $11.8 million against certain U.S. state deferred tax assets.

Critical Accounting Policies

There have been no changes to our critical accounting policies from those discussed under the caption “Critical Accounting Policies” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2010 Annual Report on Form 10-K except as noted below.

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Topic 605 has been amended: (1) to provide updated guidance on whether multiple deliverables exist, how the deliverables in an arrangement should be separated, and the consideration allocated; (2) to require an entity to allocate revenue in an arrangement using estimated selling prices of deliverables if a vendor does not have vendor-specific objective evidence or third-party evidence of the selling price; and (3) to eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method. The accounting changes summarized in ASU 2009-14 and ASU 2009-13 are both effective for fiscal years beginning on or after June 15, 2010, with early adoption permitted. Adoption may either be on a prospective basis or by retrospective application.

Liquidity, Capital Resources and Working Capital

We are party to a credit agreement, dated as of June 9, 2008, and amended and restated as of February 12, 2010 (as amended from time to time, the “Credit Agreement”), among Scientific Games International, Inc. (“SGI”), as borrower, the Company, as guarantor, the several lenders from time to time parties thereto and JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent. The Credit Agreement contains customary covenants, including negative covenants that, among other things, limit the ability of the Company and its subsidiaries to incur additional indebtedness, pay dividends or make distributions or certain other restricted payments, purchase or redeem capital stock, make investments or extend credit, engage in certain transactions with affiliates, engage in sale-leaseback transactions, consummate certain asset sales, effect a consolidation or merger, sell, transfer, lease or otherwise dispose of all or substantially all assets, prepay or modify certain indebtedness, or create certain liens and other encumbrances on assets.

On March 11, 2011, the Company and SGI entered into an amendment to the Credit Agreement (the “Amendment”). Under the Amendment, from and after December 31, 2010, “consolidated EBITDA” (as such term is defined in the Credit Agreement) will generally include the Company’s share of the earnings of the Company’s joint venture that holds the Italian instant ticket concession, whether or not such earnings have been distributed to the Company. Prior to giving effect to the Amendment, “consolidated EBITDA” generally included only the Company’s share of the earnings of such joint venture that was distributed to the Company. In addition, under the terms of the Amendment, any cash compensation expense incurred but not paid in a particular period will be added back for purposes of determining “consolidated EBITDA” so long as no cash payment in respect thereof is required prior to the scheduled maturity of the borrowings under the Credit Agreement ( i.e. , currently June 9, 2013). “Consolidated EBITDA” is relevant for determining whether the Company is in compliance with the financial ratios required to be maintained under the terms of the Credit Agreement.

The Amendment also provides that up to $100.0 million of unrestricted cash and cash equivalents of the Company and its subsidiaries in excess of $15.0 million will be netted against “consolidated total debt” for purposes of determining the Company’s “consolidated leverage ratio” and “consolidated senior debt ratio” (as such terms are defined in the Credit Agreement) as of any date from and after December 31, 2010.

A summary of the terms of the Credit Agreement, including the financial ratios that the Company is required to maintain under the terms of the Credit Agreement, is included in Note 8 of the Notes to Consolidated Financial Statements in our 2010 Annual Report on Form 10-K. The Company was in compliance with all covenants as of June 30, 2011. For more information regarding the Amendment, see our Current Report on Form 8-K filed with the SEC on March 14, 2011.

As of June 30, 2011, we had approximately $196.6 million available for additional borrowing or letter of credit issuances under our revolving credit facility under the Credit Agreement. There were no borrowings and $53.4 million in outstanding letters of credit under our revolving credit facility as of June 30, 2011. Our ability to borrow under the Credit Agreement will depend on us remaining in compliance with the limitations imposed by our lenders, including the maintenance of our financial ratios and covenants.

On May 6, 2011 we paid the remaining ₤0.6 million aggregate principal amount outstanding of the promissory notes we issued to defer a portion of the earn-out payable in connection with our acquisition of Global Draw in 2006.

Periodically, we bid on new online lottery or wide area gaming contracts. Once awarded, these contracts generally require significant upfront capital expenditures for terminal assembly, customization of software, software and equipment installation and telecommunications configuration. Historically, we have funded these upfront costs through cash flows generated from operations, available cash on hand and borrowings under our credit facilities. Our ability to continue to commit to new contracts will depend on, among other things, our then present liquidity levels and/or our ability to borrow at commercially acceptable rates to finance the initial

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upfront costs. The actual level of capital expenditures will ultimately largely depend on the extent to which we are successful in winning new contracts.

We own a 20% equity interest in Northstar. We contributed $10.0 million to Northstar in March 2011 and an additional $2.0 million in July 2011. Under the terms of its private management agreement with the State of Illinois (the “PMA”), Northstar is entitled to receive annual incentive compensation payments to the extent it is successful in increasing the Illinois lottery’s net income above specified target levels, subject to a cap of 5% of the applicable year’s net income. Northstar will be responsible for payments to the State to the extent such targets are not achieved, subject to a similar cap. We may be required to make capital contributions to Northstar to fund our pro rata share ( i.e. , based on our percentage interest in Northstar) of any shortfall payments that may be owed by Northstar to the State under the PMA. Northstar is expected to be reimbursed on a monthly basis for most of its operating expenses under the PMA.

At June 30, 2011, our available cash, short-term investments and borrowing capacity totaled $323.9 million (including cash and cash equivalents of $127.3 million and availability of $196.6 million under the revolving credit facility) compared to $258.6 million at December 31, 2010 (including cash and cash equivalents of $124.3 million and availability of $134.3 million under the revolving credit facility). The amount of our available cash and short-term investments fluctuate principally based on the timing of collections from our customers, cash expenditures associated with new and existing and lottery and gaming systems contracts, borrowings or repayments under our credit facilities, the funding of joint ventures, acquisitions and changes in our working capital position. Our borrowing capacity under the revolving credit facility under the Credit Agreement will depend on the balance of loans borrowed and outstanding letters of credit issued under the revolving credit facility as well as the level of certain financial ratios under the Credit Agreement.

The $3.0 million increase in our available cash since December 31, 2010 principally reflects the net cash provided by operating activities of $97.6 million for the six months ended June 30, 2011 and $1.3 million from the impact of foreign exchange rates offset by $4.7 million of debt repayments, $44.2 million of capital expenditures, lottery and gaming systems expenditures and other intangible assets and software expenditures, a $28.8 million investment in ITL related to the roll-out of terminals for the Ladbrokes betting shop estate, a $10.0 million investment in Northstar, a $6.3 million return of capital payment from LNS, and $2.6 million for the payment of financing fees. The $97.6 million of net cash provided by operating activities was derived from approximately $85.0 million of net cash provided by operations and approximately $12.6 million from changes in working capital. The working capital changes principally reflected decreases in accounts receivable and increases in accrued liabilities, offset by decreases in accounts payable. Capital expenditures were $3.6 million in the six months ended June 30, 2011 compared to $3.3 million in the corresponding period in 2010. Lottery and gaming systems expenditures totaled $22.2 million in the six months ended June 30, 2011 compared to $31.5 million in the corresponding period in 2010, and consisted primarily of expenditures associated with our lottery contract in Iowa. Other intangible assets and software expenditures of $18.4 million during the six months ended June 30, 2011 consisted primarily of licensed properties and gaming contracts related to Global Draw. Cash flow from financing activities principally reflected payment of the term loan facilities under the Credit Agreement and payment of financing fees.

In December 2010, the Company adopted the Asia-Pacific Plan. The purpose of the Asia Pacific Plan is to provide an equitable and competitive compensation opportunity to certain key employees and consultants of the Company who are involved in the Company’s business in China (and potentially other jurisdictions in the Asia-Pacific region) (the “Asia-Pacific Business”) and to promote the creation of long-term value for the Company’s stockholders by directly linking Asia-Pacific Plan participants’ compensation under this Asia-Pacific Plan to the appreciation in value of such business. Each participant will be eligible to receive a cash payment following the end of 2014 equal to a pre-determined share of an Asia-Pacific Business incentive compensation pool. The incentive compensation pool will equal a certain percentage of the growth in the value of the Asia-Pacific Business over four years, calculated in the manner provided under the Asia-Pacific Plan and subject to a cap of (1) $35 million, in the event an Asia-Pacific Business liquidity event does not occur by December 31, 2014 or (2) $50 million, in the event an Asia-Pacific Business liquidity event occurs by December 31, 2014. An “Asia-Pacific Business liquidity event” means an initial public offering of at least 20% of the Asia-Pacific Business or a strategic investment by a third-party to acquire at least 20% of the Asia-Pacific Business, in each case, that is approved by the Company.

We believe that our cash flow from operations, available cash and available borrowing capacity under the Credit Agreement will be sufficient to meet our liquidity needs, including anticipated capital expenditures, for the next 12 months; however, there can be no assurance that this will be the case. We believe that substantially all cash held by foreign entities is available to meet liquidity needs as necessary. Our contracts are periodically renewed and there can be no assurance that we will be successful in sustaining our cash flow from operations through renewal of our existing contracts or through the addition of new contracts. In addition, lottery customers in the U. S. generally require service providers to provide performance bonds in connection with each state contract. Our ability to obtain performance bonds on commercially reasonable terms is subject to prevailing market conditions, which may be impacted by economic and political events. Although we have not experienced difficulty in obtaining such bonds to date, there can be no assurance that we will continue to be able to obtain performance bonds on commercially reasonable terms or at all. If we need to

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refinance all or part of our indebtedness, on or before maturity, or provide letters of credit or cash in lieu of performance bonds, there can be no assurance that we will be able to obtain new financing or to refinance any of our indebtedness, on commercially reasonable terms or at all.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We have no material changes to the disclosure under “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” included in our 2010 Annual Report on Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. The evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our 2010 Annual Report on Form 10-K other than as set forth below, which risk factors should be read in conjunction with the other risk factors disclosed in our 2010 Annual Report on Form 10-K.

We may not succeed in realizing the anticipated benefits of our joint ventures and strategic investments and relationships.

Part of our corporate strategy is to pursue growth through joint ventures and strategic investments as a means to, among other things, gain access to new and tactically important geographies, business opportunities and technical expertise, while simultaneously offering the potential for reducing capital requirements.

These joint ventures and strategic investments currently include LNS (which succeeded CLN as the holder of the concession to operate the instant ticket lottery in Italy that began on October 1, 2010), our joint ventures in China, RCN, our Northstar joint venture to act as the private manager of the Illinois lottery, our Sciplay joint venture with Playtech to deliver Internet gaming solutions to government-sponsored and other lotteries and certain other gaming operators and our equity investment in Sportech. We are party to other strategic agreements with Playtech relating to gaming machines that contemplate our use of and reliance on Playtech’s back-end technology platform in international territories. Failure to timely migrate to the new back-end technology platform could result in Global Draw being unable to meet certain contract commitments, which could negatively impact our business, results of operations and prospects. We cannot assure you that we will be able to successfully develop and market Internet and land-based gaming products under our agreements with Playtech. As of June 30, 2011, Global Draw completed the migration to the new back-end technology platform in the U.K.

Our Northstar joint venture, in which we are a 20% equity holder, was awarded the agreement to be the private manager for the Illinois lottery for a ten-year term following a competitive procurement, which agreement was executed on January 18, 2011. See “Business—Operational Overview—Printed Products—Northstar Lottery Group” in Item 1 of our Annual Report on Form 10-K. On January 26, 2011, the Illinois Appellate Court upheld a constitutional challenge to the revenue statute that, among other things, amended the Illinois lottery law to facilitate the PMA, on grounds that the statute impermissibly addressed more than one subject. On July 11, 2011, the Illinois Supreme Court reversed the Appellate Court decision and upheld the revenue statute. Operations under the PMA commenced on July 1, 2011.

We may not realize the anticipated benefits of these joint ventures, investments and other strategic relationships or others that we may enter into, or may not realize them in the timeframe expected. These arrangements pose significant risks that could have a negative effect on our operations, including: the potential diversion of our management’s attention from our core business to, for example, integrate technologies; the potential failure to realize anticipated synergies, economies of scale or other value associated with

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the arrangements; unanticipated costs and other unanticipated events or circumstances; possible adverse effects on our operating results during any integration process; impairment charges if joint ventures, or strategic investments or relationships are not as successful as we originally anticipate; and our possible inability to achieve the intended objectives of the arrangements.

Furthermore, our joint ventures and other strategic relationships pose risks arising from our reliance on our partners and our lack of sole decision-making authority, which may give rise to disputes between us and our joint venture and other strategic partners. Our joint venture and other strategic partners may have economic or business interests or goals that are inconsistent with our interests and goals, take actions contrary to our objectives or policies, undergo a change of control, experience financial and other difficulties or be unable or unwilling to fulfill their obligations under our arrangements.

The failure to avoid the risks described above or other risks associated with such arrangements could have a material adverse effect on our business, financial condition and results of operations.

Our revenues fluctuate due to seasonality and timing of equipment sales and, therefore, our periodic operating results are not guarantees of future performance.

Our revenues can fluctuate due to seasonality in some components of our business. The summer season historically has been the weakest part of the year for certain parts of our lottery business, particularly where our revenues are tied to a percentage of retail sales such as under our CSP contracts. The third quarter is typically the weakest quarter for Global Draw, which could adversely affect the amounts wagered and our corresponding service revenues.

In addition, our revenues in our Lottery Systems Group can be somewhat dependent on the size of jackpots of lottery games such as Powerball ® and Mega Millions ® during the relevant period.

Lottery and gaming equipment sales and software license revenues usually reflect a limited number of large transactions, which may not recur on an annual basis. Consequently, revenues and operating margins can vary substantially from period to period as a result of the timing and magnitude of major equipment sales and software license revenue. As a general matter, lottery and gaming equipment sales generate lower operating margins than revenue from other aspects of our business. In addition, instant ticket sales may vary depending on the season and timing of contract awards, changes in customer budgets, ticket inventory levels, lottery retail sales and general economic conditions.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
4/1/2011 - 4/30/2011	6,360	$	8.81	—	$	173.7 million
5/1/2011 - 5/31/2011	4,617	$	10.38	—	$	173.7 million
6/1/2011 - 6/30/2011	3,407	$	9.01	—	$	173.7 million
Total	14,384	$	9.36	—	$	173.7 million

(1)		There were no shares purchased as part of the publicly announced repurchase program during the quarter ended June 30, 2011. The activity in this column reflects 14,384 shares acquired from employees to satisfy the withholding taxes associated with the vesting of restricted stock units during the quarter ended June 30, 2011.
(2)		The $200 million stock repurchase program, which expires on December 31, 2011, was publicly announced on May 10, 2010.

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Exhibits

Item 6.

Exhibit Number

10.1		Share Purchase Agreement, dated as of April 26, 2011, by and among the Company, Global Draw Limited, IGT-UK Group Limited, Cyberview International, Inc. and International Game Technology. (†)

10.2		Separation Agreement dated as of May 12, 2011, by and between the Company and Ira H. Raphaelson (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 13, 2011).

10.3		2003 Incentive Compensation Plan, as amended and restated (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 9, 2011).

31.1		Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (†)

31.2		Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (†)

32.1		Certification of the Chief Executive Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (†)

32.2		Certification of the Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (†)

101		Financial statements from the quarterly report on Form 10-Q of the Company for the quarter ended June 30, 2011, filed on August 9, 2011, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows and (iv) the Notes to Consolidated Financial Statements tagged as blocks of text. (†)(*)

(†) Filed herewith.

(*) Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act, except as shall be expressly set forth by specific reference in such filing or document.

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SIGNATURES

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

	SCIENTIFIC GAMES CORPORATION
	(Registrant)


	By:	/s/ Jeffrey S. Lipkin
	Name:	Jeffrey S. Lipkin
	Title:	Senior Vice President and Chief Financial Officer


	By:	/s/ Stephen L. Gibbs
	Name:	Stephen L. Gibbs
	Title:	Vice President and Chief Accounting Officer


Dated: August 9, 2011

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INDEX TO EXHIBITS

Exhibit Number
10.1		Share Purchase Agreement, dated as of April 26, 2011, by and among the Company, Global Draw Limited, IGT-UK Group Limited, Cyberview International, Inc. and International Game Technology. (†)

10.2		Separation Agreement dated as of May 12, 2011, by and between the Company and Ira H. Raphaelson (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 13, 2011).

10.3		2003 Incentive Compensation Plan, as amended and restated (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 9, 2011).

31.1		Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (†)

31.2		Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (†)

32.1		Certification of the Chief Executive Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (†)

32.2		Certification of the Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (†)

101		Financial statements from the quarterly report on Form 10-Q of the Company for the quarter ended June 30, 2011, filed on August 9, 2011, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows and (iv) the Notes to Consolidated Financial Statements tagged as blocks of text. (†)(*)

(†) Filed herewith.

Exhibit 10.1

EXECUTION VERSION

Share Purchase Agreement

IGT-UK Group Limited

and

International Game Technology

and

Cyberview International, Inc.

and

Global Draw Limited

and

Scientific Games Corporation

for the sale and purchase of all of the issued shares of Barcrest Group Limited and Cyberview Technology CZ s.r.o

26 April 2011

[Note: The Share Purchase Agreement contains representations and warranties made only for the purposes of such Agreement solely for the benefit of the parties thereto, and are not intended to be and should not be relied upon by any other person. These representations and warranties should not be treated as establishing matters of fact, but rather as a way of allocating risk between the parties. Moreover, certain of the representations and warranties may be subject to limitations agreed upon by the parties to such Agreement and are qualified by information in a confidential disclosure letter. These representations and warranties may apply standards of materiality in a way that is different from what may be material to investors, and were made only as of the date of such Agreement or such other date or dates as may be specified in such Agreement and are subject to more recent developments. Accordingly, investors are not third party beneficiaries under such Agreement and should not rely on the representations and warranties in such Agreement as characterizations of the actual state of facts.]

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CLAUSE		PAGE

1.	INTERPRETATION	1

2.	SALE AND PURCHASE	18

3.	CONDITIONS	19

4.	CONDUCT OF BUSINESS PRIOR TO COMPLETION AND UNDERTAKINGS	21

5.	COMPLETION	24

6.	POST-COMPLETION UNDERTAKINGS	28

7.	COMPLETION ACCOUNTS	31

8.	COMPLETION ACCOUNTS PAYMENTS	33

9.	WARRANTIES, UNDERTAKINGS AND INDEMNITIES	34

10.	PROTECTIVE COVENANTS	37

11.	INSURANCE COVENANTS	38

12.	CONFIDENTIAL INFORMATION	40

13.	ANNOUNCEMENTS	41

14.	TERMINATION	41

15.	PAYMENTS AND SET-OFF	43

16.	ASSIGNMENT	44

17.	COSTS	45

18.	EFFECT OF COMPLETION	45

19.	FURTHER ASSURANCES	45

20.	ENTIRE AGREEMENT	45

21.	VARIATIONS	46

22.	WAIVER	46

23.	INVALIDITY	46

24.	NOTICES	46

25.	COUNTERPARTS	47

26.	THIRD PARTY RIGHTS	48

27.	UK VAT GROUPING	48

28.	SELLER GUARANTEE	49

29.	BUYER GUARANTEE	50

30.	GOVERNING LAW AND JURISDICTION	51

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(continued)

	Page

SCHEDULE 1 Particulars relating to the Company BARCREST GROUP LIMITED	52

SCHEDULE 2 Particulars relating to Subsidiaries and Cyberview Czech	54

SCHEDULE 3 The Warranties	60

SCHEDULE 4 Seller Protection Clauses	95

SCHEDULE 5 The Properties	100

SCHEDULE 6 Form of Completion Accounts Statement	101

SCHEDULE 7 Accounting Policies and Procedures for the Completion Accounts	102

SCHEDULE 8 Czech Transfer Agreement	105

SCHEDULE 9 Required Consents	109

SCHEDULE 10 Resigning Directors and Officers	113

SCHEDULE 11 CONDUCT OF THE GROUP COMPANIES PRE-COMPLETION	114

SCHEDULE 12

Part A BRAND LICENSES	119

Part B SOFTWARE TO BE TRANSFERRED TO THE COMPANY ON OR PRIOR TO COMPLETION	120

SCHEDULE 13 LEASEHOLD PROPERTY SCHEDULE	122

SCHEDULE 14 DEFERRED CONSIDERATION	128

THIS SHARE PURCHASE AGREEMENT (the “ Agreement ”) is made on 26 April 2011,

BETWEEN:

(1) IGT-UK GROUP LIMITED (No. 5541397) whose registered office is at Margaret Street, Ashton-under-Lyne, Lancashire OL7 0QQ (the “ Seller ”);

(2) INTERNATIONAL GAME TECHNOLOGY, a Nevada corporation whose registered office is at 9295 Prototype Drive, Reno, NV 89521-8986 (the “ Seller Guarantor ”);

(3) CYBERVIEW INTERNATIONAL, INC., a Delaware corporation whose registered office is at 160 Greentree Drive, Suite 101, Dover, DE 19904 (the “ Czech Seller ”);

(4) GLOBAL DRAW LIMITED (No. 03565480) whose registered office is at 99 Green Lane, Hounslow, Middlesex, TW4 6BW (the “ Buyer ”); and

(5) SCIENTIFIC GAMES CORPORATION , a Delaware corporation whose registered office is at 750 Lexington Avenue, New York, NY 10022 (the “ Buyer Guarantor ”)

for the sale and purchase of all of the issued shares of BARCREST GROUP LIMITED and CYBERVIEW TECHNOLOGY CZ S.R.O .

THE PARTIES AGREE AS FOLLOWS:

1. INTERPRETATION

1.1 In this Agreement, including the schedules hereto, the following words and expressions and abbreviations have the following meanings, unless the context otherwise requires:

“ 2010 Accounts ” means the unaudited combined financial statements of the Group comprising the combined balance sheet of the Group, the combined profit and loss statement of the Group and the combined cash flow statement of the Group as at and for the financial year ended on the 2010 Accounts Date which are annexed to the Disclosure Letter;

“ 2010 Accounts Date ” means 30 September 2010;

“ AAMS ” means Amministrazione Autonoma Dei Monopoli di Stato;

“ Accounts ” means the audited financial statements of each Group Company, comprising its balance sheet, profit and loss account or, where relevant, the income statement or other equivalent financial statement required to be prepared by (in the case of the Company and the Subsidiaries) Generally Accepted Accounting Practice in the United Kingdom and (in the case of Cyberview Czech) the IFRS and Czech Accounting Standards and (in the case of Barcrest Development B.V.) Title 9, Book 2 of the Netherlands Civil Code, together in each case with the notes thereon, directors’ report and auditors’ report, as at and for the financial year ended on the Accounts Date which are annexed to the Disclosure Letter;

“ Accounts Date ” means 30 September 2009;

“ Acquisition ” means the sale and purchase of the Shares contemplated by this Agreement, and any related matters;

“ Action ” means any action, arbitration, claim, mediation, dispute, grievance, inquiry, investigation, litigation, suit, interference, opposition, cancellation or other proceeding;

“ Agreed Form ” means, in relation to any document, the form of that document which has been initialled for the purpose of identification by the Buyer (or the Buyer’s Solicitors on behalf of the Buyer) and the Seller (or the Seller’s Solicitors on behalf of the Seller);

“ Agreed Rate ” means two per cent above the base rate from time to time of Barclays Bank plc;

“ Bass Executive Plan ” means the Bass Executive Pension Plan, operated by Bass plc, of which some employees of the Group Companies were members prior to the acquisition of Barcrest Limited by the Company in 1998;

“ Bass Plan ” means the Bass Pension Plan, operated by Bass plc, of which some employees of the Group Companies were members prior to the acquisition of Barcrest Limited by the Company in 1998;

“ Business Day ” means a day (excluding Saturdays, Sundays and public holidays) on which banks generally are open in London for the transaction of normal banking business;

“ Business Plan ” means the business plan for the Group for the financial year ending 30 September 2011 in the form appended to the Disclosure Letter at Annex II;

“ Buyer’s Account ” means the account as may be notified by the Buyer to the Seller (in writing) for the purpose from time to time

“ Buyer’s Group ” means the Buyer and its Related Persons from time to time (including, from Completion, each of the Group Companies), all of them and each of them as the context admits;

“ Buyer Obligation ” means any representation, warranty or undertaking to indemnify (including any covenant to pay pursuant to the Tax Deed) given by the Buyer to the Seller under any Transaction Agreement;

“ Buyer’s Solicitors ” means Skadden, Arps, Slate, Meagher & Flom (UK) LLP;

“ Cash ” means the aggregate amount of freely available cash and cash equivalents held by the Group with reference to the nominal ledger, and the aggregate amount held by the Group for finance lease prepayments, in each case, immediately prior to Completion, but, for the avoidance of doubt, excluding any amount in respect of any receivables (including

the Extended Term Receivables), as set out in the Statement and calculated in accordance with clause 7 and on the basis of the accounting policies and procedures set out in schedule 7, and provided that in the case of a Non-Wholly Owned Subsidiary, only the Pro-rata Amount of Cash attributable to such Non-Wholly Owned Subsidiary shall be taken into account;

“ Cirsa Matter ” means any allegations, complaints or claims (including any claim of default by a Group Company or termination of the relevant Contract) by Cirsa Italia S.p.A (or any of its Related Persons) (“ Cirsa ”) arising out of or relating to the Company’s obligations with respect to the development and supply of video lottery terminals to Cirsa as referred to in the Disclosure Letter, to the extent based on facts and circumstances in existence as at Completion;

“ Company ” means Barcrest Group Limited (No. 03500514);

“ Company Policies ” means shall bear the meaning given to that term in paragraph 11.1(b) of schedule 3;

“ Company Shares ” means all of the issued shares in the capital of the Company;

“ Company Game Product ” means any games or gaming products (including the graphics, content, sounds, imagery, branding, paytables, formulas, math models and “look and feel” therein), software products, and any software components of any other products, that are made, sold or owned by any Group Company (including the CVT 6-7, and CVT07 software), including software-development management and game development tools used to create and manage the foregoing, object code, source code, specifications, designs, assembler code, test scripts, and manuals and other documentation related to the foregoing (but excluding, for the avoidance of doubt, commercially available “off the shelf” computer software licensed by Barcrest from third parties and the Wolf Run Math Model licensed in the New Media Game Content Agreement);

“ Competing Business ” means the sale, marketing, distribution, operating, designing, licensing, supporting or manufacturing of Products; provided that Competing Business will not include (a) any licensing or supporting Intellectual Property of Seller Guarantor and its Related Persons other than game content on land based gaming machines in Category “B-2, “B-3”, “B-4”, “C” or “D” as defined under applicable United Kingdom Gaming Commission Regulations, as in effect on the date of this Agreement nor (b) any action or any competition conducted by Seller Guarantor or its Related Persons in (i) Category “A” or (ii) Category “B-1” but excluding Categories “B-2”, “B-3”, “B-4”, “C” or “D”, in the case of each such excluded category as it is defined in such Regulations (including Video Bingo Machines), as in effect on the date of this Agreement;

“ Completion ” means the completion of the sale and purchase of the Shares in accordance with clause 5;

“ Completion Accounts ” means a document in the format set out in schedule 6 to be prepared in accordance with clause 7 and on the basis of the accounting policies and procedures set out in schedule 7;

“ Completion Date ” shall bear the meaning given to such term in clause 5.2;

“ Completion Payment ” means an amount equal to:

(a) £32,900,000;

(b) PLUS an amount equal to the Estimated Cash;

(d) if the Estimated Working Capital Amount is greater than the Target Working Capital Amount, PLUS the amount of the difference, or, if the Estimated Working Capital Amount is less than the Target Working Capital Amount, LESS the amount of the difference,

provided that, for the purpose of calculating the Completion Payment, if and to the extent that any amount is expressed in a currency other than pounds sterling, it shall be converted into pounds sterling at the Exchange Rate as at the date which is two Business Days before the Completion Date;

“ Conditions ” has the meaning given to it in clause 3.1;

“ Confidential Information ” means

(a) any information received or held as of the Completion Date by the Seller (or any of its Representatives) or provided pursuant to clause 7.7 where such information is confidential, proprietary, or valuable and relates to any member of the Buyer’s Group or any of the Group Companies; and

(b) any information relating to the provisions and subject matter of, and negotiations leading to, this Agreement, the Tax Deed, and the other Transaction Agreements;

and includes not only written information but information transferred, held or obtained orally, visually, electronically or by any other means;

“ Contract ” means any contract, arrangement, undertaking, lease, commitment, obligation, purchase order, statement of work, license, note, mortgage, bond, indenture, arrangement, or other legally binding agreement or obligation, whether written or oral;

“ Covered Termination ” has the meaning given to it in clause 6.5;

“ Cyberview Czech ” means CYBERVIEW TECHNOLOGY CZ s.r.o. Business ID No. 27168174, whose registered office is at Prague 5, Hlubocepy, Hlubocepska 418/70,

Postal Code 152 00, registered in the Commercial Register administered by the Municipal Court in Prague, Section C, Insert 101493;

“ Cyberview Czech Share ” means, as of the day hereof, the 100 per cent ownership share (in Czech Obchodni podil ) in Cyberview Czech corresponding to the contribution of CZK 200,000 in the registered capital of Cyberview Czech, representing 100 per cent. of the registered capital and voting rights, which shall be divided before Completion pursuant to the resolution described in clause 5.4(c) to a 90 per cent. ownership share corresponding to a contribution of CZK 180,000 and a 10 per cent. ownership share corresponding to a contribution of CZK 20,000;

“ Czech Accounting Standards ” means the accounting standards issued by the Ministry of Finance of the Czech Republic, from time to time;

“ Czech Insolvency Act ” means Act No. 182/2006 Coll., on insolvency and means of its solution (insolvency act), as amended;

“ Czech Transfer Agreement ” means the documentation required to effect transfers of the Cyberview Czech Share to the Buyer in the form attached in schedule 8;

“ Dangerous Substance ” means any natural or artificial substance, article or material (whether in the form of a solid, liquid, gas or vapour), which alone or in combination with any other substance, article or material is capable of causing harm or damage to property or to the Environment, including man, and such substance, article or material shall include radiation, PCBs, asbestos, petroleum, urea-formaldehyde and Waste;

“ Data Room ” means an internet website “Project Ben DataSite” maintained by Merrill Corp. at the direction of the Seller as of 21 April 2011, a true, complete and correct copy of all materials and information on which will be provided on DVD to the Buyer promptly after the date of this Agreement;

“ Debt ” means the aggregate amount of indebtedness of the members of the Group, including for Financial Debt, accrued interest and penalties, accrued and/or payable dividends (including dividends payable by Red Gaming Limited to any person other than the Company), obligations with respect to bonuses or other incentive compensation not in the ordinary course (including bonuses payable to any of the directors and employees of Red Gaming Limited and bonuses payable in connection with the transactions contemplated by the Transaction Agreements), transaction fees and expenses in connection with the transactions contemplated by the Transaction Agreements, deferred consideration for any property or services, costs and accrued liabilities relating to exceptional and non-ordinary course items, retrospective discounts, convertible loan stock, provisions and accrued liabilities for Tax, in each case, immediately prior to Completion, and any guarantee or indemnity obligations incurred by any Group Company in respect of any of the foregoing, as set out in the Statement and calculated in accordance with clause 7 and on the basis of the accounting policies and procedures set out in schedule 7, together with a sum equal to the SNAI Remediation Contribution provided that in the case of a Non-Wholly Owned Subsidiary, only the Pro-rata Amount

of Debt attributable to such Non-Wholly Owned Subsidiary shall be taken into account and, for the avoidance of doubt, the Terminal Repurchase Obligations will not be considered Debt .

“ Default Rate ” means five per cent above the base rate from time to time of Barclays Bank plc;

“ Deferred Consideration ” means the amounts, if any, that are paid by the Buyer to the Seller in accordance with the provisions of schedule 14;

“ Disclosure Letter ” means a letter on or prior to the date of this Agreement together with the attachments thereto addressed by the Seller to the Buyer disclosing exceptions to the Warranties which has been provided to the Buyer prior to the entry into of this Agreement;

“ Domain Name Assignment ” means the domain name assignment in the Agreed Form;

“ Encumbrance ” means any lien, pledge, encumbrance, charge (fixed or floating), mortgage, third party claim, debenture, option, right of pre-emption, rights of first or last refusal, negotiation or similar rights, royalty or revenue interests, right to acquire, assignment by way of security, trust arrangement for the purpose of providing security or other security interests of any kind whatsoever, including retention arrangements or other encumbrances and any agreement to create any of the foregoing;

“ Endemol Matter ” means any allegations, complaints or claims of infringement of any Intellectual Property by Endemol UK Plc (or any of its Related Persons) (“ Endemol ”) and other related allegations, complaints or claims by Endemol (e.g., breach of common law rights and “passing off”) referred to in the Disclosure Letter or the correspondence between Endemol (or its counsel) and any Group Company (or its counsel) included in the Data Room;

“ Enterprise Act ” means the Enterprise Act 2002;

“ Environment ” means all, or any of the following media, namely the air (including, without limitation, the air within buildings and the air within other natural or man-made structures above or below ground), water (including, without limitation, water under or within land and water in pipes or drains), soil and land, and any living organisms or systems supported by those media;

“ Environmental Condition ” means any presence, retention, accumulation or migration of any Dangerous Substances at, in, on, under or from the Manchester Property at any time (save to the extent that any such Dangerous Substances are first present at the Manchester Property as a result of the act or omission of the Buyer or the Buyer’s Group following the Completion Date);

“ Environmental Matters ” means the disposal, release, spillage, deposit, escape, discharge, leak or emission of substances which may be hazardous to the Environment or waste and the creation of any noise, vibration, radiation, common law or statutory

nuisance or other adverse impact on the Environment and any other matters in relation to the Properties and the business of the Company which are related to pollution or protection of the Environment or the protection of human health and safety in the workplace, save, for the avoidance of doubt, Environmental Matters shall not include any matter relating to town and country planning;

“ Environmental Warranties ” means the Warranties set out in paragraph 25 of schedule 3;

“ Estimated Cash ” has the meaning given to that term in clause 5.3(c);

“ Estimated Debt ” has the meaning given to that term in clause 5.3(b);

“ Estimated Working Capital Amount ” has the meaning given to that term in clause 5.3(a);

“ Exchange Rate ” means with respect to a particular currency for a particular day the spot rate of exchange (the closing mid-point) for that currency into pounds sterling on such date as published in the London edition of the Financial Times first published thereafter or, where no such rate is published in respect of that currency for such date, at the rate quoted by Barclays Bank as at the close of business in London as at such date;

“ Extended Term Receivables ” means amounts due to members of the Group from: (i) Cirsa Italia S.P.A. for the supply of “VLT Hardware” pursuant to clause 2 of schedule 1 to the Supply, Licensing and Maintenance Agreement dated 20 November 2009 (set out in the Data Room at document reference 5.9.3.3), and in such case such amounts not to exceed Euros 3,039,870 in the aggregate; and (ii) Sceptre Leisure Solutions Limited, in connection with the Purchase Agreement effective as at 28 May 2010 (set out in the Data Room at document reference 5.9.1.53), and in such case such amounts not to exceed £2,733,145 in the aggregate, in each case where such amounts are in respect of supplies made by the Seller Group prior to Completion;

“ fairly disclosed ” shall mean fairly disclosed and in such manner to enable a reasonable person to make a reasonably informed and accurate assessment of the matter concerned and its effect and to understand that it amounts to a breach (or potential breach) of Warranty;

“ Financial Debt ” means all borrowings and other indebtedness by way of loans, overdrafts, acceptance credit or similar facilities, letters of credit, loan stocks, bonds, debentures, notes, debt or inventory financing, finance leases or sale and lease back arrangements, hire purchase commitments or any other arrangements the purpose of which is to borrow money, together with foreign exchange, interest rate or other swaps, hedging obligations, bills of exchange, recourse obligations on factored debts and obligations under derivative instruments;

“ Firm ” shall bear the meaning given to such term in clause 7.5;

“ Full Title Guarantee ” means with the benefit of the implied covenants set out in Part 1 of the Law of Property (Miscellaneous Provisions) Act 1994 when a disposition is expressed to be made with full title guarantee;

“ Fundamental Warranties ” means the Warranties set out in paragraphs 1.1, 1.2, 1.3, 2.1, 2.2, 2.3, 10.1, 20 and 26 of schedule 3;

“ Group ” means the Company, the Subsidiaries and Cyberview Czech and “ Group Company ” means any one of them;

“ Group IP ” means all Intellectual Property used, or held for use, in a Group Company’s business;

“ Governmental Authority ” means any supranational (having regulatory power), national, state, municipal or local government (including any subdivision, court, administrative agency or commission or other authority thereof) or any other supranational, governmental, intergovernmental, quasi-governmental authority, body, department or organisation, including the European Union, or any regulatory body appointed by any of the foregoing in each case, in any jurisdiction;

“ HMRC ” means Her Majesty’s Revenue and Customs and, where relevant, any predecessor body which carried out part of its functions;

“ IAS Regulation ” means EC Regulation No. 1606/2002 of the European Parliament and the Council of 19 July 2002 on the application of international accounting standards;

“ IFRS ” means International Financial Reporting Standards, International Accounting Standards and interpretations of those standards issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee and their predecessor bodies as adopted by the European Commission under Regulation 1606/2002 and the applicable provisions of the Companies Act 2006;

“ Information Technology ” means all computer systems (including software and hardware) owned, supported by or licensed to any of the Group Companies (except Company Game Products);

“ Intellectual Property ” means all patents, trademarks, trade dress, service marks, and other indicia of source of origin (together with all goodwill symbolized by any of the foregoing), computer software, databases and compilations, design rights, trade names, copyrights, (whether registered or not and any applications to register or rights to apply for registration of any of the foregoing), domain names, rights in inventions, Know-How, trade secrets and other Confidential Information, and all other intellectual property rights in any part of the world;

“ Intellectual Property Assignments ” means the Domain Name Assignment and the Trademark Assignment;

“ Intellectual Property License Agreement ” means the Intellectual Property License Agreement to be entered into between the Buyer Guarantor and IGT, a subsidiary of the Seller Guarantor, in the Agreed Form.

“ Interest Element ” shall bear the meaning given to such term in clause 8.1;

“ Intra-Group Indebtedness ” means all debts outstanding between any of the Group Companies, on the one hand, and any member of the Seller’s Group, on the other hand;

“ Intra-Group Payables ” means amounts owing from members of the Group to members of the Seller’s Group;

“ Intra-Group Receivables ” means amounts owing from members of the Seller’s Group to members of the Group;

“ Insolvency Event ” means, in respect of any person, the making of an order, presentation of a petition or passing of a resolution for winding up or the appointment of a provisional liquidator in respect of the person, the taking of any step (including the service of any notice, the filing of any document or the making of any order) with respect to the placing of the person in administration, the appointment of any receiver, receiver and manager or administrative receiver of the whole or part of the person’s business or assets, or the entry into, proposing or approval of any compromise or arrangement with the creditors or any class of creditors of the person (or, in each case, the equivalent or analogous proceeding or event in any relevant jurisdiction);

“ Italy Project Costs ” means any costs which the Group has incurred in assessing its potential entry into the Italian market and starting up its operations or contracts (including travel and employee costs);

“ Know-How ” means confidential or proprietary industrial, technical or commercial information and techniques in any form (including paper, electronically stored data, magnetic media, files and micro-film) including, drawings, data relating to inventions, formulae, test results, reports, research reports, project reports and testing procedures, shop practices, instruction and training manuals, market forecasts, specifications, quotations, lists and particulars of customers and suppliers, marketing methods and procedures, show-how and advertising copy;

“ L&T Covenants Act ” means the Landlord and Tenant (Covenants) Act 1995;

“ Leasehold Properties ” shall bear the meaning given to that term in schedule 13, and “ Leasehold Property ” shall mean any one of them;

“ Management Accounts ” means the unaudited combined management accounts of the Group comprising the combined balance sheet of the Group, the combined profit and loss statement of the Group and the combined cash flow statement of the Group as at the date of and for the financial year end-to-date period ended on the Management Accounts Date;

“ Management Accounts Date ” means 31 March 2011;

“ Manchester Property ” means the property at Margaret Street in Ashton-under-Lyne, OL7 0QQ with Title Numbers: LA287252, GM936202, GM292918, LA188090, GM51356 and GM333399;

“ NASDAQ ” means the NASDAQ Stock Market;

“ Non-Wholly Owned Subsidiaries ” means each of Red Gaming Limited and Barcrest Development B.V.;

“ Open Source Software ” means all software or other material that is distributed as “free software”, “open source software” or under a similar licensing or distribution model, including, but not limited to, the GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), BSD licenses, the Artistic License, the Netscape Public License, the Sun Community Source License (SCSL), the Sun Industry Standards License (SISL) and the Apache License;

“ Permitted Encumbrance ” means any Encumbrance in respect of property or assets of any Group Company imposed by law, which is incurred in the ordinary course of business, such as carriers’, warehousemen’s, and mechanics’ liens arising in the ordinary course of business, in each case for amounts:

(a) the payment of which is not yet due and payable; or

(b) which if due and payable are not more than 30 days’ overdue;

“ Policies ” shall bear the meaning given to such term in paragraph 11.1(b) of schedule 3, and “ Policy ” shall mean any one of them;

“ Pre-Closing Claim ” shall bear the meaning given to such term in clause 11.2;

“ Pre-Closing Incident ” shall bear the meaning given to such term in clause 11.2;

“ Pre-Completion Dividends ” means (a) the in-kind distribution of the Manchester Property and any Intra-Group Receivables and (b) dividends to be paid by each of the Subsidiaries to the Company, by Cyberview Czech to the Czech Seller and by the Company to the Seller, in each case to the extent: (i) that the relevant Group Company has available c ash, and (ii) permissible in accordance with applicable law and the constitutional documents of the relevant Group Company, of all of the Group’s available c ash, with such all dividends to be paid by no later than immediately prior to Completion in accordance with clause 4.3;

“ Products ” means land-based gaming machine products and services, including game content, that are offered to the “Category B2”, “Category B3”, “Category B4”, “Category C”, or “Category D” machine markets (including, without limitation, video bingo terminals) as such terms are defined under applicable United Kingdom Gaming Commission regulations, as in effect on the date of this Agreement;

“ Properties ” means the properties described in schedule 5 (including the Manchester Property) or any part or parts thereof and “ Property ” shall mean any one of them;

“ Proprietary Information ” has the meaning given in paragraph 6.5 of schedule 3;

“ Protected Territory ” means the United Kingdom;

“ Pro-rata Amount ” means, in respect of any sum relating to a Non-Wholly Owned Subsidiary, an amount calculated by multiplying the relevant sum by a fraction the numerator of which is the number of shares in the issued share capital of the Non-Wholly Owned Subsidiary held by the Company and the denominator of which is the total number of shares in the capital of the Non-Wholly Owned Subsidiary in issue;

“ Registered Company IP ” has the meaning given in paragraph 6.1 of schedule 3;

“ Related Person ” means in relation to any person, any subsidiary undertaking or parent undertaking of that person, and any subsidiary undertaking of such parent undertaking, in each case from time to time, and all of them and each of them as the context admits;

“ Relief ” shall have the meaning given to it in the Tax Deed;

“ Relevant Benefits ” means any lump sum, pension, gratuity or other benefit provided, or to be provided on, after, in anticipation of or in connection with the retirement, or death, or any change in the nature of the service or termination of employment, of any employee or officer or former employee or former officer of a Group Company;

“ Remedial Action ” means works for preventing, removing, remedying, cleaning up, abating, containing or ameliorating the presence or effect of any Dangerous Substances and including inspections, investigations, assessments, audits, sampling or monitoring and like activities;

“ Representatives ” means in relation to a party, its respective Related Persons, and the directors, officers, employees, agents, managers, external legal advisers, accountants, consultants and financial advisers of that party and of its respective Related Persons;

“ Sazka ” means SAZKA, a.s. Business ID No. 471 16 307, whose registered office is at Prague 9, K Zizkovu 851, Postal Code 190 93, registered in the Commercial Register administered by the Municipal Court in Prague, Section B, Insert 1855;

“ Sazka Contract ” means the Operating Services Agreement dated 22 February 2005 by and among Cyberview Czech, the Czech Seller and Sazka (including any rental agreements contemplated thereby), as amended or supplemented by the side letters and memorandum of understanding referred to in schedule 9 in connection with that agreement;

“ Sazka Insolvency Proceedings ” means the court proceedings governed by the Czech Insolvency Act relating to the insolvency of Sazka, initiated by the declaration of the

Municipal Court in Prague on 17 January 2011 and in the course of which Sazka was declared insolvent on 29 March 2011;

“ Schemes ” means the:

(a) IGT UK Group Pension Scheme; and

(b) IGT-UK-Group Limited Group Life Assurance Plan, established by a deed dated 4 March 2010;

“ SEC ” means US Securities and Exchange Commission;

“ Seller Obligation ” means any representation, warranty or undertaking to indemnify (including any covenant to pay pursuant to the Tax Deed) given by the Seller to the Buyer under any Transaction Agreement;

“ Seller Policies ” means shall bear the meaning given to that term in paragraph 11.1(b) of schedule 3, and “ Seller Policy ” shall mean any one of them;

“ Seller’s Account ” means means the account designated by the Seller to the Buyer (in writing) for the purpose at least five Business Days before the Completion;

“ Seller’s Group ” means the Seller and its Related Persons from time to time (excluding, from Completion, each of the Group Companies), all of them and each of them as the context admits;

“ Seller’s Solicitors ” means Fulbright & Jaworski International LLP of 85 Fleet Street London, EC4Y 1AE;

“ Senior Employee ” shall mean any person who is employed by any Group Company on an annual base salary of £40,000 or more as at the date of this Agreement, and “ Senior Employees ” shall mean any or all of them;

“ SG Global ” means Scientific Games Global Plus Ltd., whose registered office is at 3 George Mann Road, Leeds, West Yorkshire, LS10 1DJ, United Kingdom;

“ Share Consideration ” shall bear the meaning given to such term in clause 2.5;

“ Shares ” means each of the Company Shares and the Cyberview Czech Share;

“ SNAI ” means SNAI Spa;

“ SNAI Remediation Contribution ” means the sum of £1 million;

“ SNAI Supply Agreement ” means the Supply, License and Distribution Agreement dated 30 December 2009 between SNAI and the Company, as it may be amended from time to time;

“ SNAI Matter ” means any allegations, complaints or claims of any nature whatsoever, whether in tort, contract or under any other principle of applicable law or legal or equitable theory ( i ncluding any claim of breach of, or default under, the SNAI Supply Agreement by a Group Company, or for termination of the SNAI Supply Agreement), by SNAI (or any of its Related Persons) arising out of, in connection with or relating to: (i) any actual or alleged failure to supply VLT Packages (as defined in the SNAI Supply Agreement), or any part thereof, in a timely manner or otherwise, (ii) any actual or alleged failure to supply a minimum quantity or level of games, game content or game source codes in a timely manner or otherwise, or (iii) any actual or alleged technical issue, anomaly, malfunction, interruption, inadequacy, instability, or non-compliance with any applicable standard or service level (including the Performance Criteria (as defined in the SNAI Supply Agreement)) relating to the VLT Packages (as defined in the SNAI Supply Agreement), or any part thereof, in any of (i), (ii) or (iii) that: (A) may have occurred or arisen at or prior to Completion, (B) has occurred or arisen at or prior to Completion and that continues or becomes apparent or manifest after Completion, or (C) that may become apparent or manifest after Completion, including any matters related to the allegations by SNAI referred to in the Disclosure Letter or the correspondence between SNAI (or its counsel) and any Group Company (or its counsel) included in the Data Room, in each such case to the extent based on facts, matters, circumstances, defects and/or failures to comply with any applicable standard or service levels (including, for example, difficulties in scalability required in order to comply with the Company’s obligations under or as contemplated by the SNAI Supply Agreement) which are in existence at Completion, but whether such facts, matters, circumstances, defects and/or failures to comply are known or unknown or manifest or otherwise at Completion (it being understood and agreed, for the avoidance of doubt, that any matters related to the allegations by SNAI referred to in the Disclosure Letter or the correspondence between SNAI (or its counsel) and any Group Company (or its counsel) included in the Data Room are in existence at Completion);

“ Software Matter ” means any allegations, complaints or claims (including any claim of default by a Group Company or termination of the relevant Contract) arising out of or relating to the defect or “bug” in software that is the same or substantially related to the defect or “bug” described in the Disclosure Letter with respect to the software supplied to Sazka s.r.o and Jamp s.r.o;

“ Specified Covenant ” means clause 4.1 insofar as it relates to the obligation to perform the obligations set out in paragraphs 1(d) or 1( n ) (to the extent related to any alleged breach of paragraph 1(d)) of schedule 11;

“ Statement ” shall bear the meaning given to such term in clause 7.1;

“ Subsidiary ” means each of the companies in schedule 2 other than Cyberview Czech, and “ Subsidiaries ” means all those companies;

“ Surviving Policies ” shall bear the meaning given to such term in clause 11.3;

“ TA ” means the Income and Corporation Taxes Act 1988;

“ Target Working Capital Amount ” means £11,100,000;

“ Tax ” or “ tax ” shall have the meaning given to it in the Tax Deed;

“ Tax Deed ” means a deed of covenant between the Seller and the Buyer in the Agreed Form;

“ Taxation Authority ” shall have the meaning given to it in the Tax Deed;

“ Taxation Statutes ” means all statutes, statutory instruments, orders enactments, laws, by-laws, directives and regulations, whether domestic or foreign decrees, providing for or imposing any Tax;

“ Terminal Repurchase Obligations ” means the obligation or liability to repurchase any terminals under the Sazka Contract and under certain leasing Contracts to which Cyberview Czech is a party;

“ Trademark Assignment ” means the trademark assignment in the Agreed Form;

“ Transaction Agreements ” means the following: (i) this Agreement; (ii) the Tax Deed; (iii) the Land Registry Form TR5 for the transfer of the Manchester Property from the Company to the Seller; (iv) the Land Registry Forms TR1 for the transfer of each of the Leasehold Properties, underleases for the use of office space in Birmingham, England and London, England, and property side letter; (v) the Environmental Deed; (vi) each of the Transitional Services Agreements; (vii) the Intellectual Property License Agreement; (v iii ) the New Media Game Content Transition Agreement, providing for the distribution and revenue sharing arrangement between the Company and the Seller; ( ix ) the Extended Term Receivables Agreement, providing for the payment of any Extended Term Receivables received by the Buyer and the Company after the Completion to the Seller; ( x ) the Intellectual Property Assignments; (xi) the Deed of Termination providing for the termination of the confidentiality agreement dated 29 September 2010 between the Seller and the Buyer, and (xii) the Czech Transfer Agreement, each in the Agreed Form;

“ Transitional Services Agreements ” means the following agreements by and among the Company, the Seller and companies in the Seller’s Group: (i) the Transitional Services Agreement providing for the use of office space in Ashton-under-Lyne, England; and (ii) the Transitional Services Agreement providing for the use of information technology, and the provision of certain other services, each in the Agreed Form;

“ Transfer Regulations ” means the Transfer of Undertakings (Protection of Employment) Regulations 2006;

“ TULR(C)A ” means the Trade Union and Labour Relations (Consolidation) Act 1992;

“ US GAAP ” means generally accepted accounting principles in the United States;

“ VAT ” means in relation to any jurisdiction within the European Union, the value added tax provided for in Directive 2006/112/EC and charged under the provisions of any

national legislation implementing that directive or Directive 77/388/EEC together with legislation supplemental thereto and, in relation to any other jurisdiction, the equivalent Tax (if any) in that jurisdiction;

“ VAT Legislation ” means any law, statute, directive, regulation and order relating to VAT;

“ Video Bingo Machines ” means video bingo machines in the License Territory (as such term is defined in the Intellectual Property License Agreement) , where bingo on such machines is implemented within the characteristics identified in the June 2009 UK Gambling Commission guidance entitled, “Key characteristics of bingo,” attached in Schedule 7.0 to the Intellectual Property License Agreement;

“ Warranties ” means the warranties set out in schedule 3 (including the Fundamental Warranties);

“ Waste ” means anything which is abandoned, unwanted or surplus, irrespective of whether it is capable of being reused, recovered or recycled;

“ Working Capital Amount ” means the aggregate value of:

(a) the total net inventory of the Group, comprising the gross “Finished goods”, “Work in progress” and “Raw materials” balance less all inventory provisioning;

(b) the total net trade and sundry receivables of the Group, comprising the gross trade and sundry debtors (excluding Intra-Group Receivables but including all associated VAT on such gross trade and sundry debtors) less all trade receivables provisioning;

(d) the total of any other current assets of the Group (excluding Cash and Intra-Group Receivables),

less the aggregate value of:

(i) the total trade and sundry creditors of the Group (excluding Debt, Intra-Group Payables and all Terminal Repurchase Obligations (unless and to the extent that such Terminal Repurchase Obligations are required to be settled in cash) but including all associated VAT on such total trade and sundry creditors of the Group);

(ii) all liabilities of Cyberview Czech (other than the Terminal Repurchase Obligations (unless and to the extent that such Terminal Repurchase Obligations are required to be settled in cash));

(iii) all accrued expenses of the Group;

(iv) all other current liabilities of the Group (other than the Terminal Repurchase Obligations (unless and to the extent that such Terminal Repurchase Obligations are required to be settled in cash)),

in each case, immediately prior to Completion and calculated in accordance with clause 7 and on the basis of the accounting policies and procedures set out in schedule 7, and for the avoidance of doubt, the Working Capital Amount excludes Cash and Debt, and any amount in respect of the Extended Term Receivables, the current asset shown as investment in Red Gaming Limited in the Vendor Due Diligence Report in respect of the Group prepared by KPMG dated 9 November 2010, at page 87, products issued to Ladbrokes, any Italy Project Costs, all assets and receivables of Cyberview Czech; provided that in the case of a Non-Wholly Owned Subsidiary, only the Pro-rata Amount of the items referred to in sub-paragraphs (a) to (d) and (i) to (iii) of this definition attributable to such Non-Wholly Owned Subsidiary shall be taken into account; and

“ Working Hours ” means 9.30 a.m. to 5.30 p.m. on a Business Day.

1.2 In this Agreement unless otherwise specified, reference to:

(a) a “ subsidiary undertaking ” or a “ parent undertaking ” is to be construed in accordance with section 1162 of the Companies Act 2006 and a “ subsidiary ”, “ holding company ” or “ wholly-owned subsidiary ” is to be construed in accordance with section 1159 of that Act;

(b) “ FA ” followed by a stated year means the Finance Act of that year;

(d) a “ party ” means a party to this Agreement and includes its assignees (if any) and/or the successors in title to substantially the whole of its undertaking and, in the case of an individual, to his or her estate and personal representatives;

(e) a “ person ” includes any person, individual, company, body corporate, joint venture, unincorporated association, firm, corporation, partnership, trust government, governmental body or authority, state or agency of a state or any undertaking (whether or not having separate legal personality and irrespective of the jurisdiction in or under the law of which it was incorporated or exists); and a reference to a person includes reference t o that person’s successors and assigns;

(f) a reference to a “ statute ”, “ statutory instrument ”, “ accounting standard ” or any law or enactment (including in this clause 1) or any of their provisions is to be construed as a reference to:

(i) that statute or statutory instrument or accounting standard or such provision as the same may have been amended or re-enacted before the date of this Agreement;

(ii) any law or enactment which that law or enactment re-enacts (with or without modification); and

(iii) any subordinate legislation made (before or after signature of this Agreement) under any law or enactment, as re-enacted, amended, extended or applied, as described in paragraph (i) above, or under any law or enactment referred to in paragraph (ii) above,

and “law” and “enactment” includes any legislation in any jurisdiction;

(g) a reference to a “ company ” shall be construed so as to include any company, corporation or other body corporate, wherever and however incorporated or established;

(h) a reference to “ indemnify ” and “ indemnifying ” any person against any circumstance include indemnifying and keeping that person harmless from all actions, claims and proceedings from time to time made against that person and all loss or damage and all payments, costs or expenses made or incurred by that person as a consequence of or which would not have arisen but for that circumstance (save only for any indirect or consequential losses);

(i) a reference to “ clauses ”, “ paragraphs ”, “ sub-paragraphs ”, “ recitals ” or “ schedules ” are to clauses, paragraphs sub-paragraphs, recitals of and schedules to this Agreement;

(j) “ writing ” includes any methods of representing words in a legible form (other than writing on an electronic or visual display screen) or other writing in non-transitory form;

(k) a reference to “ pounds ”, “ sterling ” or to “ £ ” shall be construed as references to the lawful currency for the time being of England and Wales;

(l) a reference to any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall in respect of any jurisdiction other than England be deemed to include what most nearly approximates the English legal term in that jurisdiction and references to any English statute or enactment shall be deemed to include any equivalent or analogous laws or rules in any other jurisdiction;

(m) references to “ costs ” and/or “ expenses ” incurred by a person shall not include any amount in respect of VAT comprised in such costs or expenses for which either that person or, if relevant, any other member of the group to which that person belongs for VAT purposes is entitled to credit or repayment as VAT input tax under any applicable provisions;

(n) a reference to the term “ accrued ”, with respect to a liability of a Group Company, means that an accrual would have been required to have been made in respect of

the relevant liability in accordance with US GAAP on a balance sheet of the relevant Group Company prepared as at immediately prior to Completion;

(o) unless expressly stated to the contrary in this Agreement, any reference to (or requirement for) the execution of a document by a person includes execution on behalf of that person;

(p) in construing this Agreement the so-called “ejusdem generis” rule does not apply and accordingly the interpretation of general words is not restricted by (i) being preceded by words indicating a particular class of acts, matters or things; or (ii) being followed by particular examples;

(q) words denoting the singular shall include the plural and vice versa and words denoting any gender shall include all genders; and

(r) the time of day is reference to time in London, England.

1.3 The schedules form part of the operative provisions of this Agreement, and references to this “ Agreement ”, or to any specified provision of this Agreement, are to this Agreement as in force for the time being (including any schedule to it), as amended, modified, supplemented, varied, assigned or novated, from time to time.

1.4 The index and the headings and the descriptive notes in brackets relating to provisions of Taxation Statutes in this Agreement are for information only and are to be ignored in construing the same.

2. SALE AND PURCHASE

2.1 Upon the terms and subject to the conditions of this Agreement and the Czech Transfer Agreement, the Seller shall sell and the Buyer shall purchase the Company Shares and the Czech Seller shall sell and the Buyer and SG Global shall purchase the Cyberview Czech Share, in each case with effect from Completion with Full Title Guarantee and free from any Encumbrance, together with all accrued benefits and rights attached thereto and the benefit of all distributions and dividends declared, paid or made after the Completion Date in respect of the Shares.

2.2 The Seller and the Czech Seller each irrevocably and unconditionally waives, and agrees to procure the waiver (from any person who is not a party to this Agreement) of, all rights or restrictions over, or in connection with, any of the Company Shares and the Cyberview Czech Share including any right of pre-emption or other restriction on transfer in respect of the Company Shares or the Cyberview Czech Share or any of them conferred on the Seller under the articles of association of the Company or the Czech Seller under the constitutional documents of Cyberview Czech, respectively, or otherwise.

2.3 The Buyer and SG Global shall not be obliged to complete the purchase of any of the Shares unless the purchase of all the Shares is completed simultaneously in accordance with this Agreement, but completion of the purchase of some of the Shares will not affect the rights of the Buyer with respect to the purchase of the others.

2.4 The total consideration for the sale and purchase of the Shares shall be the Share Consideration and the Deferred Consideration, if any.

2.5 The “ Share Consideration ” shall be:

(a) £32,900,000;

(b) PLUS the amount (if any) of the Cash;

(d) if the Working Capital Amount is greater than the Target Working Capital Amount, PLUS the amount of the difference, or if the Working Capital Amount is less than the Target Working Capital Amount, LESS the amount of the difference.

2.6 Any payment made in satisfaction of any liability arising under a Seller Obligation, or a Buyer Obligation, shall (so far as legally possible) for all purposes be deemed to be and shall take effect as adjusting the consideration paid by the Buyer for the Shares, and the aggregate of the Share Consideration, as adjusted by this clause 2.6, and the Deferred Consideration, if any, shall be adopted for all tax reporting purposes.

2.7 The Buyer and Seller shall comply with their respective obligations under schedule 14, to the extent applicable.

3. CONDITIONS

3.1 Completion is conditional upon the fulfilment of each of the conditions as follows (the “ Conditions ”):

(a) the Office of Fair Trading deciding in terms satisfactory to the Buyer (acting reasonably) that the Acquisition will not be referred to the Competition Commission pursuant to section 33 of the Enterprise Act and either the expiry of the time limit within which an application may be made to the Competition Appeal Tribunal for the setting aside of such a decision without such an application having been made; or if such an application is made, the dismissal of such application by the Competition Appeal Tribunal;

(b) in the event that the Secretary of State issues an intervention notice to the Office of Fair Trading under section 42 of the Enterprise Act, (i) the Office of Fair Trading deciding in terms satisfactory to the Buyer (acting reasonably) that the Secretary of State does not intend to refer the Acquisition to the Competition Commission on public interest grounds and (ii) either (x) the expiry of the time limit within which an application may be made to the Competition Appeal Tribunal for the setting aside of such a decision without such an application having been made; or (y) if such an application is made, the dismissal of such application by the Competition Appeal Tribunal;

(c) in the event that the Secretary of State serves an intervention notice to the Office of Fair Trading under section 67 of the Enterprise Act, the Office of Fair Trading (i) deciding in terms satisfactory to the Buyer (acting reasonably) that the Secretary of State does not intend to refer the Acquisition to the Competition Commission and (ii) either (x) the expiry of the time limit within which an application may be made to the Competition Appeal Tribunal for the setting aside of such a decision without such an application having been made; or (y) if such an application is made, the dismissal of such application by the Competition Appeal Tribunal;

(d) in the event that the Office of Fair Trading decides to refer the Acquisition to the Competition Commission pursuant to sections 33, 42 or 67 of the Enterprise Act, the Competition Commission deciding to clear the Acquisition in terms satisfactory to the Buyer (acting reasonably), and either the expiry of the time limit within which an application may be made to the Competition Appeal Tribunal for the setting aside of such a decision without such an application having been made; or if such an application is made, the dismissal of such application by the Competition Appeal Tribunal;

(e) the consents, authorisations , similar clearances and confirmations from the applicable gaming regulatory authority, law enforcement authority, regulatory body or counterparty to a Contract with a member of the Group set forth in schedule 9 having been obtained, in a form satisfactory to the Buyer (acting reasonably), and without, in the case of any consent from a counterparty to a Contract, any obligation on the part of the Buyer to pay any fee or consideration in excess of £10,000 in the aggregate, in connection therewith; and

(f) Buyer shall have entered into a brand licensing agreement, in a form satisfactory to the Buyer, acting reasonably, of the brand licenses set forth in Part A of schedule 12 covering products in the United Kingdom.

3.2 The Seller, Czech Seller and Buyer undertake to use reasonable endeavours to ensure that the Conditions are fulfilled as soon as possible after the date of this Agreement, and shall keep each other advised of the progress towards the satisfaction of the Conditions. For avoidance of doubt, nothing in this Agreement shall require the Buyer to offer o r agree to any conditions or undertakings (or agree to any amendments to or additional obligations under Contracts) in order to fulfil any of the Conditions that would materially impair the benefit to be derived by the Buyer from the transactions contemplated by the Transaction Agreements .

3.3 The Seller, Czech Seller and Buyer shall each co-operate with each other in all relevant jurisdictions in connection with their obligations under clause 3.2, and the Seller and Czech Seller shall each promptly supply to the Buyer all information necessary or desirable for the making of (or responding to any requests for further information consequent upon) any notifications and filings (including draft versions) made in respect of this Agreement or any related transactions.

3.4 Each of the Seller and the Buyer shall give notice to the other that a relevant Condition has been satisfied as soon as practicable and in any event within two Business Days of becoming aware of the fact.

3.5 The Buyer may waive satisfaction of any of the Conditions in its sole discretion, by written notice to the Seller.

3.6 The Buyer undertakes to the Seller that, in the event that the Office of Fair Trading decides to refer the Acquisition to the Competition Commission under any provision of the Enterprise Act, or the Secretary of State serves an intervention notice to the Office of Fair Trading under any provision of the Enterprise Act, it shall use reasonable endeavours to avoid and to minimise any disruption that would have a material effect on the normal business of the Seller or the Group Companies which may be caused by any requests for information and/or assistance which may be necessary as a result of such referral or intervention and to indemnify Seller and the Group Companies for any reasonable and properly incurred out of pocket third party costs, liabilities, or expenses incurred by any of them and which would not have been incurred but for any such referral.

4. CONDUCT OF BUSINESS PRIOR TO COMPLETION AND UNDERTAKINGS

4.1 During the period from the date of this Agreement to Completion, the Seller and the Czech Seller, as applicable, shall perform the obligations set out in schedule 11 to this Agreement.

4.2 The Seller and the Czech Seller, as applicable, shall procure that each member of the Seller’s Group takes all such steps and actions as may be necessary to ensure that the Intra-Group Payables (including “Long Term Creditors re: IGT US” shown on the Management Accounts) and the Intra-Group Receivables are repaid and settled in full prior to Completion, without any liability to a Group Company, so that there are no Intra-Group Payables or Intra-Group Receivables in existence at Completion and that no Group Company has any rights or obligations in respect thereof at and following Completion. Following Completion, save pursuant to a Transaction Agreement, the Seller shall not, and shall procure that no other member of the Seller’s Group shall, make any claim or demand for payment, or take any enforcement action, of any nature whatsoever in respect of any Intra-Group Indebtedness from any Group Company, and shall indemnify the Buyer (for itself and as trustee for each of the Group Companies) against any costs, losses, claims, or expenses which the Buyer or any Group Company may suffer or incur as a result of any breach of this clause 4.2, clause 4.4 or clause 4.5.

4.3 The Seller and the Czech Seller, as applicable, shall procure that the Group Companies pay the Pre-Completion Dividends by no later than immediately prior to Completion, with the intent that all of the Group’s available and distributable c ash shall have been distributed to the Seller and to the Czech Seller, as applicable, prior to Completion.

4.4 The Seller shall procure that all Contracts between a member of the Seller’s Group, on the one hand, and a Group Company, on the other hand, other than the Transaction Agreements, are terminated and cease to have effect on or prior to Completion, without

any liability to a Group Company, and that all rights and obligations of the parties thereto thereunder cease to have effect by no later than that time.

4.5 The Seller and the Czech Seller, as applicable, shall procure that each Group Company shall repay or otherwise discharge, without liability to any Group Company, any and all Financial Debt of the relevant Group Company, and shall further terminate any related instruments of any Group Company, including any overdraft facility, in each case, at or prior to Completion.

4.6 The Seller or Czech Seller shall, as applicable, on or prior to Completion:

(a) to the extent it has any of the following and to the extent not otherwise contemplated by the Transaction Agreements: (i) erase and destroy all copies, releases and versions of the Company Game Products in its possession or control and (ii) transfer all right, title and interest in the Company Game Products to the Company with Full Title Guarantee; and

(b) execute the Intellectual Property Assignments, and transfer all right, title and interest in the Intellectual Property listed therein to the Company ; and

(c) transfer, or procure the transfer, assignment or novation, to the Company, in a form satisfactory to the Buyer, acting reasonably, the software Contracts listed in Part B of schedule 12.

4.7 Each of the Buyer and the Seller shall comply with their respective obligations under schedule 13.

4.8 Subject to the requirements of applicable law, from the date of this Agreement the Buyer and the Seller shall co-operate and work together in good faith with a view to addressing and resolving the issues that have given rise to the SNAI Matter as soon as possible, and in any event by no later than Completion, to the extent reasonably practicable. Without prejudice to the generality of the foregoing, with effect from the date of this Agreement, subject as aforesaid:

(a) the Seller shall provide the Buyer and its Representatives with such access to the books and records, personnel and premises of the members of the Seller’s Group as the Buyer may reasonably require for these purposes;

(b) the Buyer and its Representatives shall be given access to the products and services supplied by the Company to SNAI in order to assess the technical parameters required for implementation, and the Buyer and the Seller shall perform joint implementation, of a timely corrective action plan to bring the SNAI Supply Agreement into compliance with the requirements of SNAI;

(c) the Seller shall continue to use all reasonable endeavours to address and resolve the issues that have given rise to the SNAI Matter and to bring the Company into compliance with the requirements of the SNAI Supply Agreement as soon as possible, and in any event by no later than Completion, to the extent reasonably

practicable. Such reasonable endeavours shall include the dedication by the Seller of a reasonable and appropriate level of internal and external resources to achieve this objective, with the quantum and nature of such resources to be determined in consultation with the Buyer and to include the allocation of up to six incremental employees or consultants with an appropriate level of relevant skills and experience to work exclusively and on a full time basis on seeking to address and resolve the issues that have given rise to the SNAI Matter and to bring the Company into compliance with the requirements of the SNAI Supply Agreement (the “ Dedicated Employees ”). As used in this clause 4.8(c), the term “incremental” shall mean that the allocation of the Dedicated Employees for the purposes referred to in this clause 4.8(c) shall not result in a reduction in the overall number of employees or consultants engaged in other aspects of the business of the Group; and

(d) the Buyer and the Seller shall constitute a steering committee to supervise and provide guidance to the efforts of the Seller, the Buyer and their respective Representatives, including the Dedicated Employees, to address and resolve the issues that have given rise to the SNAI Matter as soon as possible, and in any event by no later than Completion, to the extent reasonably practicable (the “ Steering Committee ”).

4.9 The Buyer and the Seller shall use reasonable endeavours to procure that the Steering Committee shall:

(a) be comprised of Robert White and Ian Timmis;

(b) have regular access to, and include in its deliberations, the Chief Technology Officers of each of the Buyer and the Company;

(c) meet at least once every week, or at such other times and at such other frequency as Robert White and Ian Timmis may agree, acting reasonably;

(d) be the primary forum through which the Buyer and the Seller shall plan and implement the corrective action plan referred to in clause 4.8(b), monitor the progress of such corrective action plan and supervise and provide guidance for and oversight of the activities of the Dedicated Employees; and

(e) reasonably confer and consult on the resources to be applied by each of the Buyer and the Seller in seeking to resolve the issues that have given rise to the SNAI Matter and to bring the Company into compliance with the requirements of the SNAI Supply Agreement, as soon as possible, and in any event by no later than Completion, to the extent reasonably practicable.

4.10 For the avoidance of doubt, save only in the case of fraud, no steps or actions taken, or omissions to take any steps or to act, in each case of any nature whatsoever by the Buyer or any of its Representatives pursuant to the provisions of clauses 4.8 and/or 4.9 shall in any way limit, reduce, absolve or release any obligation or liability of the Seller to the Buyer, or reduce or limit or constitute a waiver of the rights of the Buyer, under the terms

of this Agreement, including under any of clauses 6.5, 6.6 and/or 9.9, or limit or reduce the availability to the Buyer of any remedies otherwise available to it.

4.11 The Seller undertakes to provide to the Buyer promptly after the date of this Agreement, and in any event by no later than five Business Days after the date of this Agreement, a DVD which will contain a true, complete and correct copy of all materials and information contained in the internet website “Project Ben DataSite” maintained by Merrill Corp. at the direction of the Seller as at 21 April 2011.

5. COMPLETION

5.1 Completion shall take place at the offices of the Seller’s Solicitors on the Completion Date.

5.2 Subject to any extension in accordance with clause 5.7, the Completion Date means:

(a) the fifth Business Day after all of the Conditions are satisfied or waived; or

(b) any other date agreed in writing by Seller and Buyer.

5.3 At least five Business Days prior to the date fixed for Completion, Seller, acting reasonably and in good faith (but otherwise without liability), shall provide to Buyer a written estimate of the Completion Accounts and the Statement, including each of the following, together with a certificate from the Seller’s accountants as to the accuracy of each such estimate:

(a) the Working Capital Amount (the “ Estimated Working Capital Amount ”);

(b) the Debt (the “ Estimated Debt ”); and

5.4 On Completion the Seller or the Czech Seller (as the case may be) shall deliver to or, if the Buyer shall so agree, make available to the Buyer:

(a) an extract of the minutes of a duly held meeting of the directors (or a duly constituted committee thereof) of each of the Seller and the Czech Seller (and, to the extent available, the Seller Guarantor) authorising the execution by each of the Seller, the Czech Seller and the Seller Guarantor of this document and any document to be delivered by the Seller, the Czech Seller and/or the Seller Guarantor at or prior to Completion (including each Transaction Agreement) and, where such execution is authorised by a committee of the board of directors of the Seller, the Czech Seller and/or the Seller Guarantor, an extract of the minutes of a duly held meeting of the directors constituting such committee or the relevant extract thereof);

(b) transfers in common form relating to all the Company Shares duly executed in favour of the Buyer (or as it may direct);

(c) a resolution of the Czech Seller, as the sole shareholder of Cyberview Czech, acting in the capacity of Cyberview Czech’s general meeting in accordance with Section 132 of Act No. 513/1991 Coll., Commercial Code as amended, of the Czech Republic, resolving to divide the Czech Share into two parts (consistent with the division of the Czech Share as contemplated in the Czech Transfer Agreement), such resolution being in the form of the Czech notarial deed prepared by a Czech notary in the Czech Republic, in a form acceptable to the Buyer, acting reasonably ;

(d) the Czech Transfer Agreement duly executed in favour of the Buyer and SG Global duly notarised and apostilled;

(e) share certificates representing the Company Shares;

(f) resignations in the Agreed Form duly executed as deeds, of the directors of any Group Company set forth on schedule 10, or as the Buyer may specify by notice to the Seller no later than 5 Business Days prior to Completion, from their offices as director any Group Company containing a confirmation that they have no claims (whether statutory, contractual or otherwise) against any Group Company;

(g) if so required by the Buyer no later than 5 Business Days prior to Completion, the written resignations of the auditors of each Group Company containing an acknowledgement that they have no claim against any Group Company for compensation for loss of office, professional fees or otherwise and a statement under section 519(1) of the Companies Act 2006;

(h) the common seals, certificates of incorporation and statutory books, share certificate books and cheque books of each Group Company;

(i) an officer’s certificate executed on behalf of the Seller to the effect that (i) the Warranties are true and correct and not misleading in any respect at Completion that would give rise to a right to terminate under clause 14.1(e); and (ii) there has been no material breach by the Seller of any of its obligations under this Agreement required to be performed at or prior to Completion;

(j) each Transaction Agreement duly executed by the Seller and each of its Related Persons that is required to be a party thereto;

(k) title deeds and other documents relating to the Properties, excluding the Manchester Property (except to the extent that the same are in the possession of mortgagees pursuant to mortgages disclosed in schedule 5);

(l) irrevocable powers of attorney from the Seller in a form satisfactory to the Buyer (acting reasonably) relating to the exercise of rights in respect of the Shares pending their registration in the name of the Buyer and/or its nominee;

(m) to the extent not in the possession of any Group Company all books of account concerning the businesses of that Group Company;

(n) to the extent not in the possession of any Group Company, copies of all licences, consents, permits and authorisations obtained by or issued to that Group Company;

(o) to the extent not in the possession of any Group Company, all books and records of that Group Company relating to the employees and/or directors of that Group Company;

(p) an acknowledgement from the Seller in a form satisfactory to the Buyer (acting reasonably), to the effect that: (i) there is no Intra-Group Indebtedness owing at Completion; (ii) all Contracts between a member of the Seller’s Group, on the one hand, and a Group Company, on the other hand, other than the Transaction Agreements, have been terminated and have ceased to have effect on or prior to Completion, and that all rights and obligations of the parties thereto thereunder have ceased to have effect; (iii) the Pre-Completion Dividends have been paid prior to Completion and specifying the amount or character thereof; and (iv) no Group Company has any liability or obligation in respect of Financial Debt as at Completion;

(q) share certificates relating to all of the issued shares that the Company owns in the capital of each of the Subsidiaries;

(r) duly executed releases in a form acceptable to the Buyer, acting reasonably, of all Encumbrances, except Permitted Encumbrances, to which any of the Group Companies is party together with any forms or other documents to release or evidence release of such Encumbrances in any relevant jurisdiction;

(s) the deed of amendment, substitution of principal employer and cessation of participation, in a form acceptable to the Buyer, acting reasonably, duly executed by the Seller and the Trustee of the IGT UK Group Pension Scheme;

(t) a resolution of the Czech Seller, the sole shareholder of Cyberview Czech, acting in the capacity of Cyberview Czech’s general meeting in accordance with Section 132 of Act No. 513/1991 Coll., Commercial Code as amended, of the Czech Republic, resolving to:

(i) remove each of the existing directors;

(ii) appoint each of the persons as the Buyer nominates to be the directors of Cyberview Czech;

(iii) appoint such person as the Buyer nominates to be the auditor; and

(iv) amend the articles of association of Cyberview Czech in accordance with the Buyer’s instructions to: (i) change the registered office; and (ii) change the accounting reference date to 31 December;

such resolution to be in the form of a Czech notarial deed prepared by a Czech notary in the Czech Republic, in a form acceptable to the Buyer, acting reasonably;

(u) either:

(i) an original extract from the companies register of the Czech Seller with an apostille certification, such extract showing the name, the registered office and the directors of the Czech Seller; or

(ii) an original or certified copy of the certificate of incorporation of the Czech Seller, with an apostille certification, and an original confirmation of the Czech Seller’s company secretary (with an apostille certification) stating the name, registered office and names of directors of the Czech Seller as well as confirmation that the person who shall sign the Czech Transfer Agreement is authorized to do so (if applicable); and

(v) if applicable, the original of a power of attorney, with an apostille certification, pursuant to which the Czech Transfer Agreement has been executed by the Czech Seller;

(w) evidence in a form acceptable to the Buyer, acting reasonably, of the termination of each overdraft facility of each Group Company; and

(x) the deed of cessation of participation, in a form acceptable to the Buyer, acting reasonably, duly executed by the Seller and the Trustee of the IGT-UK-Group Limited Group Life Assurance Plan.

5.5 The Seller and the Czech Seller, as applicable, shall procure the passing of board resolutions of each Group Company, in a form acceptable to the Buyer, acting reasonably, at Completion (in the case of Cyberview Czech the resolution may be adopted in the Czech Republic and delivered at Completion in a copy by e-mail or facsimile, with the original being delivered to the Buyer promptly, and in any event within five Business Days, after Completion):

(a) sanctioning for registration (subject where necessary to due stamping) the transfers in respect of the Shares, except for Cyberview Czech;

(b) appointing such persons as the Buyer nominates to be the directors and secretary of each Group Company, except for Cyberview Czech;

(d) revoking and/or revising all banks mandates for each Group Company as the Buyer requires, and giving authority in favour of such persons as the Buyer may nominate to operate the bank accounts thereof;

(e) resolving that the registered office of each Group Company be changed as the Buyer requires; and

(f) changing the accounting reference date of each Group Company, except for Cyberview Czech, to 31 December.

5.6 By no later than 2.00 p.m. on the Completion Date, subject to the Seller having complied with all the provisions of clause 5.4 and clause 5.5, the Buyer shall:

(a) provide for the transfer by CHAPS of the Completion Payment to the Seller’s Account and the receipt of the Seller’s Solicitors shall be a good discharge to the Buyer (and, for the avoidance of doubt, the Buyer shall be under no obligation whatsoever with respect to the apportionment of the Completion Payment between the Seller and the Czech Seller);

(b) deliver to the Seller the Tax Deed duly executed by the Buyer; and

(c) deliver to the Seller each other Transaction Agreement duly executed by the member of the Buyer’s Group expressed to be a party thereto (including the notarised and apostilled Czech Transfer Agreement).

5.7 If in any respect the material obligations of the Seller or the Czech Seller, on the one hand, or the Buyer on the other hand, are not complied with on Completion, the Buyer, if the Seller or Czech Seller is in default of its material obligations, or the Seller and Czech Seller if the Buyer is in default of its material obligations, shall not be obliged to complete the sale and purchase of the Shares and may, in its absolute discretion, by written notice to the other party at the time Completion would otherwise be due to take place:

(a) terminate this Agreement; or

(b) elect to defer Completion by not more than 20 Business Days after the original date for Completion to such other date as it may specify in such notice (in which event the provisions of this clause 5.7 shall apply, mutatis mutandis, if the Seller or the Czech Seller, on the one hand, or the Buyer, on the other, fails or is unable to perform any such obligations),

provided that neither the Seller nor the Czech Seller shall be able to exercise such rights if the Buyer can demonstrate to the reasonable satisfaction of the Seller that it has arranged for the transfer of the Completion Payment to the Seller’s Account, value date the Completion Date.

6. POST-COMPLETION UNDERTAKINGS

6.1 Following Completion, the Seller and the Czech Seller, as applicable, undertake to the Buyer:

(a) to use reasonable endeavours to ensure that each Group Company is released from any guarantee, indemnity, bond, letter of comfort or Encumbrance or other similar obligation given or incurred by it prior to Completion which relates in whole or in part to debts or other liabilities or obligations, whether actual or contingent, of a member of the Seller’s Group and prior to such release the Seller undertakes to the Buyer (on behalf of itself and as trustee on behalf of each Group Company) to keep each Group Company fully indemnified against any failure to make any such repayment or any liability arising under any such guarantee, indemnity, bond, letter of comfort or Encumbrance;

(b) subject to and without prejudice to the other Transaction Agreements: (i) that no member of the Seller’s Group shall hold itself out as the owner of or being affiliated with any member of the Group or its business; and (ii) that it shall procure that within 60 days after Completion, each member of the Seller’s Group ceases in any manner whatsoever to use, or display any trade or service marks, trade or service names or logos used or held by any member of the Buyer’s Group or any confusingly similar mark, name or logo; and

(c) that the Seller shall not unreasonably withhold consent with respect to the Buyer Group obtaining licenses under the brand licenses set forth in Part A of schedule 12 covering products in jurisdictions where members of the Seller Group from time to time are not conducting business with such brand licenses and are not contemplating conducting business with such brand licenses.

6.2 Following Completion the Buyer undertakes, subject to and without prejudice to the other Transaction Agreements: (i) that no member of the Group shall hold itself out as being owned or controlled by the Seller and its businesses; and (ii) that it shall within 60 days after Completion, cease in any manner whatsoever to use, or display any trade or service marks, trade or service names or logos used or held by any member of the Seller’s Group or any confusingly similar mark, name or logo, provided that nothing herein shall prevent Buyer from using the name “Barcrest”, any Intellectual Property which is identical or similar to the phrase “Barcrest”, or any other Intellectual Property owned by a Group Company. Notwithstanding the foregoing, Cyberview Czech may continue trading and operating under, and using, the names ‘Cyberview Technology s.r.o.’ and ‘Cyberview’ in the Czech Republic and Slovakia, until the day falling 180 days after the date on which the Buyer has obtained all necessary consents and approvals from all relevant Governmental Authorities in the Czech Republic to change the name of Cyberview Czech to such other name as the Buyer shall determine, acting reasonably. The Buyer and the Seller shall use all reasonable endeavours to co-operate together to obtain such consents and approvals as soon as possible following Completion.

6.3 The Czech Seller undertakes to the Buyer that it shall take all such steps and actions as are referred to in Article IX, Section 2(d) of the Sazka Contract, including bringing and/or defending any claims, actions and/or proceedings, as the Buyer may reasonably request and in accordance with the directions of the Buyer.

6.4 Each of the Seller and the Czech Seller, for itself and on behalf of each of its Representatives, hereby undertakes to the Buyer (as trustee for itself and on behalf of SG Global and each of their respective successors and assigns and any person to whom the Buyer and/or SG Global may sell any ownership interest in the registered capital of Cyberview Czech and any person to whom such a purchaser may in turn sell any ownership interest in the registered capital of Cyberview Czech and so on (any such purchaser, collectively with the Buyer, being the “ Transferee ”)) and each of the Buyer’s Representatives, that neither it nor any of its Representatives shall, following Completion, make, assert, allege, support, encourage, incite, assist or maintain or cause to be made, asserted, alleged, supported, encouraged, incited, assisted or maintained any claim of any kind and whether made or proposed to be made by itself or any other person:

(a) contesting or disputing in any manner whatsoever that the act of establishment and/or incorporation of Cyberview Czech was invalid;

(b) initiating a process of dissolution and liquidation of Cyberview Czech;

(c) to the effect that the entry into of this Agreement and the Czech Transfer Agreement and the occurrence of Completion under this Agreement have not been fully effective to vest irrevocably and unconditionally full legal and beneficial ownership of a 90 per cent. interest in the registered capital of Cyberview Czech in the Buyer and a 10 per cent. interest in the registered capital of Cyberview Czech in SG Global; or

(d) contesting or disputing in any manner whatsoever that any Transferee is the sole legal and beneficial owner of the relevant ownership interest in the registered capital of Cyberview Czech that was transferred to it.

6.5 In the event that the SNAI Supply Agreement is terminated by SNAI following Completion as a result of the SNAI Matter (a “ Covered Termination ”), and following such termination:

(a) the Company either removes or transfers to a third party that is not a Related Person of the Buyer not less than 66 2/3 per cent. of the terminal hardware comprising the “VLT Packages” (within the meaning of the SNAI Supply Agreement) installed under the SNAI Supply Agreement immediately prior to such termination; and

(b) no Contract substantially similar to the SNAI Supply Agreement is entered into between the Buyer and its Related Persons, on the one hand, and SNAI and its Related Persons, on the other, within 90 days after the removal or transfer referred to in subclause (a) above,

the Seller shall promptly (and, in any event, within five (5) Business Days following the 90-day period referred to in subclause (b) above) pay the sums provided for in clause 6.6 in cash to the Buyer.

6.6 The Seller shall be liable to pay the following sums upon the occurrence of the events referred to in clause 6.5:

(a) if the Covered Termination occurs in the period from the Completion Date to (and including) the day falling 180 days after the Completion Date (the “ First Milestone Date ”), the Seller shall pay the Buyer the sum of £8 million;

(b) if the Covered Termination occurs in the period from the day after the First Milestone Date to (and including) the day falling 180 days after the First Milestone Date (the “ Second Milestone Date ”), the Seller shall pay the Buyer the sum of £5 million;

(c) if the Covered Termination occurs in the period from the day after the Second Milestone Date to (and including) the day falling 180 days after the Second Milestone Date (the “ Third Milestone Date ”), the Seller shall pay the Buyer the sum of £3 million; and

(d) the Seller’s obligation to pay any amount to the Buyer pursuant to this clause 6.6 shall cease and determine fully if no Covered Termination shall have occured by the day after the Third Milestone Date. For the avoidance of doubt, the Buyer shall be entitled to receive the amounts provided for in this clause 6.6 if: (a) a Covered Termination occurs before any of the First Milestone Date, the Second Milestone Date and the Third Milestone Date (collectively, the “ Milestone Dates ”); and (b) the requirements of clauses 6.5(a) and (b) are subsequently satisfied. It shall not be necessary for the removal or transfer of the terminal hardware referred to in clause 6.5(a), or any part thereof, to have been completed, or for the 90 day period referred to in clause 6.5(b) to have expired, prior any of the Milestone Dates in order for the Buyer to be so entitled.

7. COMPLETION ACCOUNTS

7.1 The Buyer shall procure that the Group prepares drafts of the Completion Accounts and the Statement in the format set out in schedule 6 (the “ Statement ”), on the basis of the accounting policies and procedures set out in schedule 7 and delivers them to the Seller within 75 days of Completion.

7.2 The Seller shall notify the Buyer in writing within 45 days of receipt of such draft Completion Accounts and the Statement whether or not it accepts the draft Completion Accounts and Statement for the purposes of this Agreement.

7.3 If the Seller notifies the Buyer that it does not accept such draft Completion Accounts and Statement:

(a) it shall, at the same time as it notifies the Buyer that it does not accept such draft Completion Accounts and Statement, set out in such notice in writing its reasons in reasonable detail for such non-acceptance and specify the adjustments which, in its opinion, should be made to the draft Completion Accounts and the Statement in order to comply with the requirements of this Agreement; and

(b) the parties shall use reasonable endeavours to:

(i) discuss the objections of the Seller; and

(ii) try to reach agreement upon the adjustments (if any) required to be made to the draft Completion Accounts and the Statement

in each case, within 20 Business Days of the Seller’s notice of non-acceptance pursuant to clause 7.2 (or such other time as the parties may agree in writing).

7.4 If the Seller is satisfied with the draft Completion Accounts and the Statement (either as originally submitted or after adjustments agreed between the Seller and the Buyer) or if the Seller fails to notify the Buyer of its non-acceptance of the draft Completion Accounts and the Statement within the 45 day period referred to in clause 7.2, then the draft Completion Accounts and the Statement (incorporating any agreed adjustments) shall constitute the Completion Accounts and the Statement for the purposes of this Agreement.

7.5 If the Seller and the Buyer do not reach agreement within the 20 Business Day period referred to in clause 7.3(b) (or such other time as the parties may agree in writing) then the matters in dispute and in respect of which reasonable details have been provided by the Seller to the Buyer at the time that it notified the Buyer that it does not accept the Completion Accounts and the Statement in accordance with clause 7.3(a) (and only those) shall be referred for determination by an expert to be agreed by the Seller and the Buyer, and failing such agreement by the Seller and the Buyer within 10 Business Days following the end of the 20 Business Day period referred to in clause 7.3(b) (or such other time as the Seller and the Buyer may agree in writing), on the application of either the Buyer or the Seller by an expert appointed by the President of the Institute of Chartered Accountants of England and Wales from time to time (the “ Firm ”). The following provisions shall apply to such determination:

(a) the Buyer and/or the Buyer’s accountants and the Seller and/or the Seller’s accountants shall each promptly (and in any event within such time frame as reasonably enables the Firm to make its decision in accordance with the time frame set down in clause 7.5(b)) prepare and deliver to the Firm a written statement on the matters in dispute (together with the relevant documents);

(b) the Firm shall be requested to give its decision within 20 Business Days (or such later date as the Buyer and the Seller and the Firm agree in writing) of the confirmation and acknowledgment by the Firm of its appointment hereunder;

(c) in giving such determination, the Firm shall state what adjustments (if any) are necessary to the draft Completion Accounts and the Statement in respect of the matters in dispute in order to comply with the requirements of this Agreement and shall give its reasons therefor;

(d) the Firm shall act as an expert (and not as an arbitrator) in making any such determination, and the Completion Accounts and Statement, as adjusted by the Firm shall be deemed to be finally determined and shall be final and binding on the parties (in the absence of manifest error);

(e) each party shall bear the costs and expenses of all counsel and other advisers, witnesses and employees retained by it and the costs and the expenses of the Firm shall be borne between the Seller and the Buyer in such proportions as the Firm shall in its discretion determine or, in the absence of any such determination, equally between the Seller and the Buyer.

7.6 When the Seller and the Buyer reach (or pursuant to clause 7.4 are deemed to reach) agreement on the Completion Accounts and the Statement or when the Completion Accounts and the Statement are finally determined at any stage in accordance with the procedures set out in this clause 7 (including clause 7.5):

(a) the Completion Accounts and the Statement as so agreed or determined shall be the Completion Accounts and the Statement for the purposes of this Agreement and shall be final and binding on the parties; and

(b) the Working Capital Amount, the Debt and the Cash, in each case, shall be as set out in the Statement.

7.7 Subject to any rule of law or any regulatory body or any provision of any contract entered into prior to the date of this Agreement to the contrary, the Seller shall procure that each member of the Seller’s Group shall, and the Buyer shall procure that the Group shall, promptly provide each other, their respective advisers, the Firm, the Buyer’s accountants and the Seller’s accountants with all information (in their respective possession or control) relating to the operations of the Seller’s Group and/or the Group, as the case may be, including access at all reasonable times to all the Seller’s Group and Group employees, books, records, and other relevant information and all co-operation and assistance, as may in any such case be reasonably required to:

(a) enable the production of the Completion Accounts and the Statement; and

(b) enable the Firm to determine the Completion Accounts and the Statement.

The Seller and the Buyer hereby authorise each other, their respective advisers and the Firm to take copies of all information which they have agreed to provide under this clause 7.7.

7.8 Subject to clause 7.5(e), the Seller and the Buyer shall each bear their own costs and expenses arising out of the preparation and review of the Completion Accounts and Statement.

8. COMPLETION ACCOUNTS PAYMENTS

8.1 Within five Business Days of the agreement or determination of the Completion Accounts and the Statement in accordance with the provisions of clause 7:

(a) if the Completion Payment is less than the Share Consideration (excluding the Interest Element), then the Buyer shall pay to the Seller the amount of such shortfall (if such difference exceeds £1,000); or

(b) if the Completion Payment is more than the Share Consideration (excluding the Interest Element), then the Seller shall pay to the Buyer the amount of such excess (if such difference exceeds £1,000),

in each case, together with an amount equal to interest on the amount so payable at the Agreed Rate per annum for the period from the Completion Date to the date of payment (both dates inclusive) (the “ Interest Element ”).

9. WARRANTIES, UNDERTAKINGS AND INDEMNITIES

9.1 The Seller warrants to the Buyer that, as at the date of this Agreement, each of the Warranties is true and accurate and not misleading in any respect. Each of the Warranties shall be construed as a separate and independent warranty and no Warranty shall be limited by reference to any other Warranty (except as expressly provided otherwise).

9.2 Subject to the limitations in schedule 4, the Seller warrants to the Buyer that the Warranties will be true and accurate and not misleading in any respect at Completion by reference to the facts and circumstances then subsisting and, for this purpose, the Warranties shall be deemed to be repeated at Completion as if any express or implied reference in the Warranties to the date of this Agreement was replaced by a reference to the Completion Date.

9.3 The Seller undertakes to notify the Buyer in writing promptly if it or any other member of the Seller’s Group becomes aware of any circumstance arising after the date of this Agreement which would cause any Warranty (if the Warranties were repeated with reference to the facts and circumstances then existing) to become untrue or inaccurate or misleading in any respect which is material to the financial or trading position of the Group taken as a whole.

9.4 In each Warranty expressed to be given “to the best of the Seller’s knowledge and belief or “so far as the Seller is aware” or otherwise qualified by reference to the knowledge of the Seller, that expression shall mean the actual knowledge of Robert Melendres and the actual knowledge of any of the following persons (collectively but excluding individuals of whom the following listed persons makes inquiry, the “ Relevant Individuals ”) after having reviewed records and sources of information reasonably believed by them to be relevant and making reasonable enquiries of such persons as they reasonably believe are aware of facts and circumstances relevant to the accuracy of the Warranties: Robert White, David Jones, Alex Stephens, Timothy Kennedy, James Ramshaw, Dennis Wolstenholme, Conleth Byrne, Andrew Wagstaff, Timothy Penasack, Pierre Cadena,

Chris Jones, Richard Bures and Melissa Faith. Nothing in the foregoing will be deemed an admission that any communication with Robert Melendres or Chris Jones constitutes a waiver of any applicable privilege. For the avoidance of doubt, all Warranties are given by the Seller and not the Relevant Individuals.

9.5 The Seller acknowledges and agrees that the Buyer has entered into this Agreement on the basis of and in reliance upon the Warranties.

9.6 Any claim under the Warranties is subject to the terms and provisions of schedule 4.

9.7 The Seller agrees and undertakes to the Buyer and to each individual and entity referred to in this clause 9.7 that, except in the case of fraud, neither it nor any other member of the Seller’s Group, has any rights against and hereby waives and shall not make any claim against, any present or former employee, director, agent or officer of any of the Group Companies or any member of the Buyer’s Group on whom it may have relied before agreeing any term of, or before entering into, this Agreement or any other Transaction Agreement or the Disclosure Letter, including in relation to any information supplied or omitted to be supplied by any such person in connection with the Warranties, this Agreement, any other Transaction Agreement or the Disclosure Letter.

9.8 The Buyer warrants to the Seller that (and each such warranty shall be construed as a separate warranty):

(a) the execution and delivery of this Agreement and the completion of the transactions contemplated hereby, have, where required, been duly and validly authorised and no other proceedings or action on the part of the Buyer is necessary to authorise the Agreement or to complete the transactions contemplated;

(b) no broker, finder, agent or person is entitled to receive from the Buyer a finder’s fee, brokerage or commission in connection with this Agreement for which the Seller shall be liable; and

(c) at Completion, the Buyer will have sufficient immediately available funds to enable it to make payment of the Completion Payment without Encumbrance or delay.

9.9 The Seller hereby undertakes to indemnify and keep indemnified the Buyer (for itself and as trustee of each Group Company) against all costs (including any costs of settlement), obligations, fines, penalties, losses, liabilities (including liabilities to Tax), present and future damages, claims and expenses (including legal and other professional fees and other losses, liabilities, costs, charges, or expenses suffered or incurred in disputing, defending, investigating or providing evidence in connection with establishing its right to be indemnified pursuant to this clause) (collectively, “ Losses ”) suffered or incurred by the Buyer, any Group Company or any of their Related Persons in connection with or arising out of:

(a) the Manchester Property or any matter or circumstance relating thereto, prior to, at, or following Completion (including any Losses relating to any Remedial Action or any Environmental Condition in respect of the Manchester Property and the transfer of the Manchester Property from the Company to the Seller as contemplated by certain of the Transaction Agreements);

(b) the Leasehold Properties (other than, to the extent validly transferred or assigned in accordance with schedule 13, obligations arising from and after such transfer or assignment under the applicable Lease (as defined in schedule 13) that are not contemplated as obligations of the Seller under the applicable underlease appended to schedule 13), including Losses arising out of claims made after Completion that relate to the period at or prior to Completion, and, in the case of any claims relating to dilapidations and reinstatement of the Leasehold Properties, the Losses in respect of such claims which are determined to have arisen prior to Completion. For these purposes, the Buyer and the Seller shall each appoint one surveyor and the two surveyors shall together conduct a joint survey of the Leasehold Properties prior to Completion in order to seek to agree the likely amount of any claims for dilapidation and reinstatement of the Leasehold Properties as at Completion. In the event that the surveyors appointed by the Buyer and the Seller are unable to reach agreement within a period of ten Business Days the issue shall be referred for determination by either the Buyer or the Seller to a surveyor appointed by the President of the Royal Institution of Chartered Surveyors from time to time, who shall act as expert (and not as arbitrator), who shall be requested to render its determination of the appropriate amount of any claims for dilapidation and reinstatement of the Leasehold Properties as at Completion within 20 Business Days (or such other period as the Buyer and the Seller may agree in writing) of its appointment, whose determination shall be final and binding on the Buyer and the Seller (in the absence of manifest error) and whose costs and expenses shall be borne equally between the Buyer and the Seller;

(d) the Software Matter;

(e) the landlord’s claim for dilapidations in respect of the office and warehouse premises at 2, Hertford Street, Ashton Under Lyne, Lancashire as set forth in paragraph 6.17.1 of the Disclosure Letter or any related correspondence referred to in such paragraph;

(f) any failure of the Warranties set forth in paragraphs 1.1 and/or 2.2(a) of schedule 3 to be true, accurate and not misleading in any respect in connection with the Czech Seller and/or the Cyberview Czech Share;

(g) any failure by the Czech Seller or any of its Related Persons to have duly complied with the requirements of Section 105(2) of Czech Act No. 513/1991

Coll., Commercial Code, as amended, with respect to the incorporation or ownership of Cyberview Czech prior to Completion;

(h) any breach of clause 6.4;

(i) any Terminal Repurchase Obligations which are required to be settled in cash and which have not been taken into account in the determination of the Working Capital Amount for the purposes of the preparation of the Completion Accounts and the Statement;

(j) any failure to obtain any necessary consent or authorisation in connection with the Sazka Contract related to the acquisition of Czech Seller prior to Completion as set forth in paragraph 6.10.2 of the Disclosure Letter;

(k) all and any liabilities (whether attributable to service before, on, or after Completion) that passed to the Company or the Subsidiaries under the Transfer of Undertakings (Protection of Employment) Regulations 1981 or the Transfer Regulations and relate in any way whatsoever to pension, retirement or death benefits payable (actually, prospectively or contingently) under or in connection with an occupational pension scheme (within the meaning of section 1 of the Pension Schemes Act 1993);

(l) any failure of Cyberview Czech to claim (in Czech p ř ihlásit ) any debt owed by Sazka to Cyberview Czech in the Sazka Insolvency Proceedings;

(m) the Cirsa Matter; and

(n) the SNAI Matter, to the extent that the relevant Loss is suffered or incurred by the relevant Group Company in the period between the Completion Date and the second anniversary thereof, save only for Losses comprising diminution in value of the Shares or loss of revenues or loss of profit of the Buyer, any Group Company or any of their Related Persons arising from a Covered Termination

10. PROTECTIVE COVENANTS

10.1 The Seller undertakes to the Buyer and to each of the Buyer’s Related Persons that the Seller shall not, and shall procure that each other member of the Seller’s Group that is a subsidiary undertaking of the Seller Guarantor shall not, (whether alone or jointly with another and whether directly or indirectly) carry on or be engaged in any manner in, any Competing Business in the Protected Territory during a period of two years after Completion.

10.2 Notwithstanding anything contained in this Agreement or the other Transaction Agreements to the contrary, the restrictions set forth in this clause 10 shall not in any way prohibit or restrict the Seller or any of its Related Persons from, directly or indirectly:

(a) acquiring beneficial ownership after the date of this Agreement of any interest in any person or business (however such acquisition is structured) that, directly or

indirectly (including without limitation, through any Related Person of such person or business) owns, manages, operates or engages in a Competing Business; provided that (i) such business does not constitute the principal business of such person or business and its Related Persons, taken as a whole (based on the revenues of the relevant person or business during the four full calendar quarters immediately preceding the date on which the acquisition is consummated) and (ii) if , in the financial year immediately preceding the date on which the acquisition is consummated , such Competing Business was responsible for or the source of revenues of more than £10 ,000,000 , the Seller shall cause the divestiture of that portion of such p erson or business that engages in such Competing Business within 12 months after the consummation of such acquisition; or

(b) acquiring or holding beneficial ownership of securities or other equity interests (i) representing not more than three percent of the outstanding voting power of any person that has voting securities traded on a national securities exchange, the Nasdaq Stock Market or the over-the-counter market, (ii) in any person through any employee benefit plan or (iii) in Buyer Guarantor or any successor person.

10.3 The Seller undertakes to the Buyer and to each of the Buyer’s Related Persons that the Seller shall not, and shall procure that each other member of Seller’s Group shall not, within a period of one year after Completion (whether alone or jointly with another and whether directly or indirectly) solicit or endeavour to entice away from any member of the Buyer’s Group, offer employment to or employ, or offer to conclude any contract for services with (together “solicit or employ”), any person who was employed by any Group Company on an annual salary of £40,000 or more on the Completion Date. This clause 10.3 shall not prevent any member of the Seller’s Group from employing any person who responds to a public advertisement for the relevant vacancy placed by or on behalf of the relevant member of the Seller’s Group or soliciting or employing persons contacted through bona fide search firms not targeting Group personnel if there has been no previous contact (specifically made with a view to allowing the relevant member of the Seller’s Group to take advantage of the proviso to this clause) between such member of the Seller’s Group (or any person acting on its behalf) and such person, or soliciting or employing any person whose employment was terminated by a Group Company after Completion.

10.4 The Seller acknowledges and agrees that each of clauses 10.1 to 10.3 (inclusive) constitutes an entirely separate and independent restriction and that the duration, extent and application of each of the respective restrictions are no greater than is reasonable and necessary for the protection of the interests of the Buyer and its Related Persons but that, if any such restriction shall be adjudged by any court or authority of competent jurisdiction to be void or unenforceable but would be valid if part of the wording thereof were to be deleted and/or the period thereof were to be reduced and/or the area dealt with thereby were to be reduced then (without prejudice to its continued application elsewhere) the said restriction shall apply within the jurisdiction of that court or competent authority with such modifications as may be necessary to make it valid and effective in that jurisdiction.

11. INSURANCE COVENANTS

11.1 The Seller shall keep, or cause to be kept, all Seller Policies and Company Policies (or replacement policies on substantially similar terms) in full force and effect until Completion.

11.2 If, prior to Completion, any matter, event, circumstance or incident occurs or arises in relation to any of the Group Companies or any of their assets, businesses or operations (a “ Pre-Closing Incident ”) and any Group Company or any other member of the Seller’s Group becomes aware that it has any right to make a claim in respect of it under the terms of any Policy (a “ Pre-Closing Claim ”), the Seller undertakes to, or to procure that the relevant member of the Seller’s Group shall, use reasonable endeavours to make such Pre-Closing Claim prior to Completion under the relevant Policy and pursue and obtain recovery under the relevant Policy in respect of any such Pre-Closing Claim. The Seller shall procure (both prior to and following Completion, as may be applicable) that any proceeds in respect of any such Pre-Closing Claim together with the amount of any deductible, co-payment or insurance cost incurred or applicable with respect to such Pre-Closing Claim (collectively, the “ Pre-Closing Claim Amount ”) is applied to the remediation, restoration or replacement of the relevant insured asset(s), business or operation of the relevant Group Company or the satisfaction of the relevant claim, liability or obligation of the relevant Group Company (as applicable) or that such Pre-Closing Claim Amount is passed to the Buyer (on behalf of the relevant Group Company) (without duplication of any other obligation under this Agreement). The foregoing obligation to remit to the Buyer any Pre-Closing Claim Amount shall arise only to the extent that any member of the Buyer’s Group has made payment or incurred liability with respect to any such claim or the subject matter thereof.

11.3 From Completion onwards, the Seller shall, and shall procure that the Seller’s Group shall use reasonable endeavours to continue in force on the same terms (a) all Seller Policies to the extent that they provide coverage in relation to any Pre-Closing Incident under any “occurrence-based” Policies under which claims may be made relating to Pre-Closing Incidents both prior to and following Completion and (b) any Policies for which “tail” coverage is to be obtained as contemplated by the immediately following sentence (the Policies referred to in this clause 11.3 being the “ Surviving Policies ” and claims to be made under such Surviving Policies following Completion being the “ Post Closing Claims ”). At the Buyer’s request, the Seller will use reasonable endeavors to obtain “tail” coverage in respect of such Policies as the Buyer may specify for the period after Completion, with the premiums for such coverage paid in advance (and not by means of any offset) by the Buyer, including providing information reasonably requested by Buyer in connection therewith (including a schedule of any Pre-Closing Incidents, which the Seller shall use reasonable endeavours to procure sets forth details of the Pre-Closing Incidents identified in accordance with clause 11.5 which are accurate and complete in all material respects so far as the Representatives of the Seller who are responsible for the preparation of such schedule are actually aware, provided that the provision of such a schedule shall not be deemed to constitute a representation or warranty by the Seller to the Buyer that such schedule sets forth a complete and comprehensive listing of all actual and contingent liabilities of the Group Companies as at Completion). Notwithstanding

the foregoing, to the extent that any member of the Seller’s Group reasonably incurs any incremental out-of-pocket cost as a result of the maintenance in force of the Surviving Policies following Completion to the extent such costs relate to Post-Closing Claims, which incremental out-of-pocket costs would not have been incurred but for the maintenance in force of the Surviving Policies from Completion in respect of the Post-Closing Claims as contemplated by this clause 11.3, such incremental out-of-pocket costs shall be borne by the Buyer. In the event that the Buyer desires to terminate its obligation to pay such expenses in respect of one or more (or all) Post-Closing Claims, it may give the Seller written notice to such effect, after which time the Buyer shall have no future obligations to reimburse any such expenses incurred after the date of notice, and the Seller shall be under no obligation to pursue any such Post-Closing Claims after the date of such notice.

11.4 From Completion onwards, the Seller shall, and shall procure that each member of the Seller’s Group shall, take such steps as are reasonably required by the Buyer to make and pursue any claims under the Policies with respect to the Pre-Closing Incidents as are reasonably required (including giving notice of the claim to the insurer at the request of the Buyer) or to assist any Group Company or any member of the Buyer’s Group in the making of that claim (and the Buyer shall indemnify the Seller for any cost, expense, liability, obligation incurred by the Seller in acting in accordance with the Buyer’s instructions under this clause 11.4). The Seller shall pay to the Buyer (on behalf of the relevant Group Company) any proceeds actually received in connection with such claim promptly after their receipt (but shall not be required to remit to Buyer any related deductible, co-payment or insurance cost incurred or applicable). After Completion, the Seller shall have no responsibility for insurance of the Group Companies except as expressly set forth in this clause 11.

11.5 Prior to Completion, the Seller shall use reasonable endeavours in order to identify any and all Pre-Closing Incidents which could reasonably be expected to give rise to a claim in order to pursue such Pre-Closing Incidents under clause 11.2. The Seller shall provide a draft of the schedule of Pre-Closing Incidents referred to in clause 11.3 to the Buyer by no later than 5 Business Days prior to Completion.

12. CONFIDENTIAL INFORMATION

12.1 The Seller undertakes that it shall (and shall procure that each of its Representatives shall) maintain Confidential Information in confidence and not disclose that Confidential Information to any person except as permitted by this clause 12 or with the prior written consent of the Buyer.

12.2 Clause 12.1 does not apply to:

(a) disclosure of Confidential Information to or at the written request of the Buyer;

(b) use or disclosure of Confidential Information required to be disclosed by law, legal process, or the rules or standards of the New York Stock Exchange,

NASDAQ, the SEC, or the rules or requirements of any gaming regulatory authority, law enforcement authority, or any other regulatory body;

(c) disclosure of Confidential Information to Representatives if it is reasonably required for the purposes of exercising the rights or performing the obligations under this Agreement or the other Transaction Agreements and only if the Representatives are informed of the confidential nature of the Confidential Information; or

(d) Confidential Information which becomes publicly known other than by the Seller’s breach (including a breach in respect of a failure of any Representative) of clause 12.1.

12.3 The Buyer undertakes that it shall not unreasonably withhold its written consent to the disclosure of Confidential Information by the Seller to persons discussing or evaluating potential transactions with Seller or its Related Persons or to actual or potential financing sources of the Seller and their Representatives, in each case where such persons are bound by confidentiality agreements which are enforceable by the Buyer and otherwise in a form acceptable to the Buyer, acting reasonably.

12.4 The provisions of this clause 12 shall survive the termination and/or Completion of this Agreement.

13. ANNOUNCEMENTS

13.1 No party shall make any public announcement concerning the existence of this Agreement or its terms or the existence or the terms of any Transaction Agreement (except those matters set out in a press release in the Agreed Form) and each party shall procure that each of its Related Persons shall not make any such public announcement, without the prior consent of the other party, except to the extent required by law or the rules or standards of the New York Stock Exchange, NASDAQ or the SEC or the rules or requirements of any gaming regulatory authority, law enforcement authority, or any other Governmental Authority, provided that this clause 13.1 shall not prevent disclosure by a party of the existence or the terms of any Transaction Agreement to its lenders or financiers, or the public filing by the Seller Guarantor of this Agreement or any other Transaction Agreement with the SEC .

13.2 The restrictions contained in clause 13.1 shall apply without limit of time.

14. TERMINATION

14.1 This Agreement may be terminated at any time prior to Completion:

(a) by the written agreement of each of Seller and Buyer;

(b) by either the Buyer or the Seller if any of the Conditions are not satisfied or waived in accordance with the terms of this Agreement on or prior to the date falling 180 days after the date of this Agreement;

(c) by either the Buyer or the Seller if any gaming regulatory authority, law enforcement authority or other Governmental Authority enjoins or denies approval of or otherwise prohibits or renders unlawful the consummation of the Acquisition or the completion of any of the transactions contemplated by this Agreement, provided that this right of termination may only be exercised if such enjoinment, denial, prohibition or rendering unlawful remains in effect as at the date that all Conditions have been satisfied or waived in accordance with clause 3;

(d) by either the Seller or the Buyer in accordance with clause 5.7(a);

(e) by the Buyer if, before Completion:

(i) there is a breach of any of the Warranties (other than any of the Fundamental Warranties or the Warranty set forth at paragraph 4.2(h) of schedule 3) as given on the date of this Agreement, the effect of which, individually or in the aggregate, is or would reasonably be expected to be material and adverse to the Group, taken as a whole, and which, if capable of remedy, is not remedied to the satisfaction of the Buyer (acting reasonably) within 20 days of notice from the Buyer to do so, or a breach of any of the Fundamental Warranties or the Warranty set forth in paragraph 4.2(h) of schedule 3, as given on the date of this Agreement, which, if capable of remedy, is not remedied to the satisfaction of the Buyer (acting reasonably) within 20 days of notice from the Buyer to do so , provided that, for the purposes of this clause 14.1(e)(i), in determining whether a breach of any Warranty has occurred and whether the right to terminate this Agreement may be exercised, each Warranty , other than the Warranty set forth at paragraph 4.2(h) of schedule 3, shall be read and construed so that any qualification of such Warranty by reference to materiality, for example by the inclusion therein of the words “material”, “in any material respect”, “to an extent which is material in the context of a Group Company”, “to an extent which is material in the context of the Group” or any similar formulation or expression qualifying a Warranty by reference to a threshold of materiality, shall be disregarded and deemed to be deleted from such Warranty; or

(ii) any event occurs which, if the Warranties were repeated at any time before Completion by reference to the facts and circumstances then existing as if reference in the Warranties to the date of this Agreement were references to the relevant date, would constitute a breach of any of the Warranties (other than any of the Fundamental Warranties or the Warranty set forth in paragraph 4.2(h) of schedule 3), the effect of which, individually or in the aggregate, is or would reasonably be expected to be material and adverse to the Group, taken as a whole, or which would constitute a breach of any of the Fundamental Warranties or the Warranty set forth at paragraph 4.2(h) of schedule 3, and which, if capable of remedy, is not remedied to the satisfaction of the Buyer (acting reasonably) within 20 days of notice from the Buyer to do so, provided that, for the purposes of this clause 14.1(e)(ii),

in determining whether a breach of any Warranty has occurred and whether the right to terminate this Agreement may be exercised, each Warranty other than the W arranty set forth at paragraph 4.2(h) of schedule 3, shall be read and construed so that any qualification of such Warranty by reference to materiality, for example by the inclusion therein of the words “material”, “in any material respect”, “to an extent which is material in the context of a Group Company”, “to an extent which is material in the context of the Group” or any similar formulation or expression qualifying a Warranty by reference to a threshold of materiality, shall be disregarded and deemed to be deleted from such Warranty; or

(iii) there is any material breach or non-fulfilment by the Seller of any of its material obligations under this Agreement to be performed prior to Completion which, if capable of remedy, is not remedied to the satisfaction of the Buyer (acting reasonably) within 15 days of notice from the Buyer to do so,

provided that, in respect of any right of termination in clauses 14.1(b), (c), (d) or (e), such termination right may only be exercised by the terminating party providing written notice of termination to the other party, prior to the Completion Date.

14.2 In the event of termination of this Agreement by either Seller or Buyer as provided in clause 14.1, this Agreement shall become void and have no effect, without liability or obligation on the part of the Seller or the Buyer or their respective officers or directors (save in respect of any rights and liabilities which have accrued before termination), except as provided for in clause 14.3 below and as set forth in clause 12 and clause 30 or in the confidentiality agreement dated 29 September 2010 between Seller and Buyer, which shall survive termination of this Agreement by either Seller or Buyer as provided in clause 14.1.

14.3 Unless agreed otherwise by the parties, the following provisions shall survive termination: clause 1 (Interpretation), clause 9.7 (Warranties, Undertakings, Indemnities), clause 12 (Confidential Information), clause 13 (Announcements), clause 17 (Costs), clause 20 (Entire Agreement), clause 21 (Variations), clause 22 (Waiver), clause 23 (Invalidity), clause 24 (Notices), clause 26 (Third party rights) and clause 30 (Governing law and jurisdiction).

14.4 Upon any termination of this Agreement, each of the parties shall bear its own legal, accountancy and other costs, charges and expenses connected therewith.

15. PAYMENTS AND SET-OFF

15.1 Unless otherwise expressly stated in this Agreement or any other Transaction Agreement , every amount payable under this Agreement or any of the other Transaction Agreements by one party (the “ Paying Party ”) to another (the “ Receiving Party ”) shall be free and clear of deduction or withholding of any kind other than any deduction or withholding required by law, provided that the Paying Party shall be entitled to set - off against and

deduct from any payment to be made by it or any of its Related Persons to the Receiving Party or any of its Related Persons under any of the Transaction Agreements any amount which i t reasonably and in good faith considers to be due to it or any of its Related Persons under the terms of this Agreement or any of the other Transaction Agreements.

15.2 Unless otherwise expressly stated in this Agreement or any of the other Transaction Agreements , all payments to be made under this Agreement or any of the other Transaction Agreements shall be made in sterling by way of electronic funds transfer of immediately available funds:

(a) in the case of payments to the Seller, to the Seller’s Account; and

(b) in the case of payments to the Buyer, to the Buyer’s Account;

15.3 Subject to clause 15.1, i f any sum due for payment under or in accordance with this Agreement or any of the other Transaction Agreements by one party to another is not paid on the due date, the party in default shall pay interest thereon (at the same time and payment is made) at the Default Rate for the period from the due date to the date of actual payment (both dates inclusive).

15.4 If a party is required by law to make a deduction or withholding from any payment referred to in clause 15.1 where that payment is made in satisfaction of any liability arising under a Seller Obligation or a Buyer Obligation, that party (or the Seller Guarantor or Buyer Guarantor, as the case may be) shall pay such sum as will, after the making of any such deduction or withholding, leave the recipient of the payment with the same amount as it would have received had no deduction or withholding been made. For the avoidance of doubt, the immediately preceding sentence shall not apply to the exercise of set-off rights in accordance with the proviso in clause 15.1.

15.5 If any sum payable by a party under this Agreement or under the Tax Deed (where that payment is made in satisfaction of any liability arising under a Seller Obligation or Buyer Obligation), shall be subject to Tax in the hands of the recipient of the payment (ignoring the availability of any Relief), the same obligation to make an increased payment as is referred to in clause 15.4 shall apply in relation to such liability to Tax as if it were a deduction or withholding required by law.

16. ASSIGNMENT

This Agreement is personal to the parties and accordingly no party, without the prior written consent of the others, shall assign, transfer, charge or declare a trust of the benefit of all or any of any other party’s obligations, by operation of law or otherwise, nor any benefit arising under this Agreement nor shall any party delegate any of its obligations under this Agreement to any person, provided that the Buyer may assign the benefit of this Agreement (in whole or in part), after Completion, to any of its Related Persons, to a successor to all or substantially all the business of the Group and/or to any purchaser of any of its Related Persons or of any significant portion of the business of the Group, and, at any time, as collateral for bona fide debt obligations, in each case without the prior consent of any other party; provided, further , subject to the Buyer Guarantor confirming

to the Seller that the provisions of clause 29 shall apply to the obligations and liabilities of the relevant delegate and that the delegating party remains fully liable for all of its obligations under this Agreement , the Buyer may delegate any or all of the obligation or liabilities of the Buyer under this Agreement to a Related Person of the Buyer without the prior written consent of any other party. If the Buyer assigns the benefit of this Agreement (in whole or in part) in accordance with the provisions of this clause 16, the liability of the Seller and the Seller Guarantor under this Agreement shall be no greater than such liabilities would have been had the assignment not occurred.

17. COSTS

Unless expressly otherwise provided in this Agreement each of the parties shall bear its own legal, accountancy and other costs, charges and expenses connected with the sale and purchase of the Shares. For the avoidance of doubt, the Buyer shall bear any fees required to be paid to any regulatory authority in connection with the satisfaction of the Conditions.

18. EFFECT OF COMPLETION

The terms of this Agreement (insofar as not performed at Completion and subject as specifically otherwise provided in this Agreement) shall continue in force after and notwithstanding Completion.

19. FURTHER ASSURANCES

19.1 Each of the parties shall from time to time upon request from the other do or procure the doing of all acts and/or execute or procure the execution of all such documents in so far as each is reasonably able and in a form reasonably satisfactory to the party concerned for the purpose of transferring to the Buyer the Shares and otherwise giving the other party the full benefit of this Agreement.

20. ENTIRE AGREEMENT

20.1 Each party on behalf of itself and as agent for each of its Related Persons acknowledges and agrees with the other party that:

(a) this Agreement together with any other documents referred to in this Agreement, including without limitation the other Transaction Agreements and the confidentiality agreement dated 29 September 2010 between the Seller and the Buyer constitute the entire and only agreement between the parties and their respective Related Persons relating to the subject matter of the Transaction Agreements and such confidentiality agreement;

(b) neither it nor any of its Related Persons have been induced to enter into any Transaction Agreement in reliance upon, nor have they been given, any oral or written warranty, representation, statement, information disclosures, projection of future financial or business prospects, assurance, covenant, agreement, undertaking, indemnity or commitment of any nature whatsoever (express or

implied) other than as are expressly set out in the Transaction Agreements and, to the extent that any of them have been, it (acting on behalf of itself and as agent on behalf of each of its Related Persons) unconditionally and irrevocably waives any claims, rights or remedies which any of them might otherwise have had in relation thereto; and

(c) save as expressly provided in this Agreement or any of the other Transaction Agreements, the only remedies available to it in respect of the Transaction Agreements (and, where appropriate, to its Related Persons) are damages for breach of contract and, for the avoidance of doubt, following Completion neither it (nor its Related Persons, where appropriate) have any right to rescind or terminate any Transaction Agreements either for breach of contract or for negligent or innocent misrepresentation or otherwise;

PROVIDED THAT the provisions of this clause 20 shall not exclude any liability or remedy (including any right to rescind this Agreement) which any of the parties or, where appropriate, their Related Persons would otherwise have, in respect of another party or, where appropriate, to any other party’s Related Persons, in respect of any fraud , fraudulent misrepresentation or fraudulent concealment by any of them.

21. VARIATIONS

This Agreement may be varied only by a document signed by or on behalf of each of the Seller and the Buyer.

22. WAIVER

22.1 A waiver of any term, provision or condition of, or consent granted under, this Agreement shall be effective only if given in writing and signed by the waiving or consenting party and then only in the instance and for the purpose for which it is given.

22.2 No failure or delay on the part of any party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

22.3 No breach of any provision of this Agreement shall be waived or discharged except with the express written consent of the Seller and the Buyer.

23. INVALIDITY

23.1 If any provision of this Agreement is or becomes invalid, illegal, void or unenforceable in any respect under the law of any jurisdiction:

(a) such provision shall:

(i) to the extent that it is illegal, void, invalid or unenforceable be given no effect and shall be deemed not to be included in this Agreement; and

(ii) not affect or impair the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement; or the legality, validity or enforceability under the law of any other jurisdiction of such provision or any other provision of this Agreement; and

(b) the parties shall use reasonable endeavours to replace such a provision with a valid and enforceable substitute provision which carries out, as closely as possible, the intentions of the parties under this Agreement.

24. NOTICES

24.1 Any notice, demand or other communication given or made under or in connection with the matters contemplated by this Agreement shall be in writing and shall be delivered personally or sent by fax or prepaid first class post (air mail if posted to or from a place outside the United Kingdom):

In the case of the Buyer to:
		Global Draw Limited
		99 Green Lane
		Hounslow, Middlesex
		TW4 6BW
Fax:		+44 208 917 9113
Attention:		Company Secretary

In the case of the Buyer Guarantor to:
		Scientific Games Corporation
		750 Lexington Avenue, 25th Floor
		New York, New York 10022
Fax:		+1 (212) 754 2372
Attention:		General Counsel

In the case of the Seller, the Czech Seller or the Seller Guarantor to:
		IGT-UK Group Limited
		Margaret Street, Ashton-under-Lyne
		Lancashire OL7 0QQ
Fax:		+44 161 308 2580
Attention:		Managing Director

With a copy to:
		IGT
		6335 South Buffalo Drive
		Las Vegas, NV 89113
Fax:		1-702-669-7904
Attention:		Chief Legal Officer

and shall be deemed to have been duly given or made as follows:

(a) if personally delivered, upon delivery at the address of the relevant party;

(b) if sent by international courier, upon delivery at the address of the relevant party; and

provided that if, in accordance with the above provisions, any such notice, demand or other communication would otherwise be deemed to be given or made outside 9.00 a.m. — 5 p.m. on a Business Day such notice, demand or other communication shall be deemed to be given or made at 9.00 a.m. on the next Business Day.

24.2 A party may notify the other party to this Agreement of a change to its name, relevant addressee, address or fax number for the purposes of clause 24.1 provided that such notification shall only be effective:

(a) on the date specified in the notification as the date on which the change is to take place; or

(b) if no date is specified or the date specified is less than five Business Days after the date on which notice is given, the date falling five Business Days after notice of any such change has been given.

25. COUNTERPARTS

25.1 This Agreement may be executed in any number of counterparts which together shall constitute one agreement. Any party may enter into this Agreement by executing a counterpart and this Agreement shall not take effect until it has been executed by all parties.

25.2 Delivery of an executed signature page of a counterpart by facsimile transmission or in Adobe™ Portable Document Format (PDF) sent by electronic mail shall take effect as delivery of an executed counterpart of this Agreement. If either method is adopted, without prejudice to the validity of such agreement, each party shall provide the other with the original of such page as soon as reasonably practicable thereafter.

26. THIRD PARTY RIGHTS

26.1 Except for the provisions of clauses 6.4 and 9.7, which shall be enforceable by the persons expressly referred to in such clauses (each such person who is not also party to this Agreement, a “ Third Party ”) pursuant to the Contracts (Rights of Third Parties) Act 1999, the parties do not intend that any term of this Agreement should be enforceable by any person who is not a party to this Agreement by virtue of the Contracts (Rights of Third Parties) Act 1999 or otherwise.

26.2 Notwithstanding the provisions of clause 26.1 or any benefits conferred by this Agreement on any third party by virtue of the Contracts (Rights of Third Parties) Act 1999, the parties may (subject to the other provisions of this Agreement) amend, vary, waive or terminate this Agreement at any time and in any way without the consent of any Third Party.

27. UK VAT GROUPING

27.1 The Seller and the Buyer shall notify HMRC as soon as reasonably practicable that IGT Gaming UK Limited and the Seller are required to be excluded from the Company’s UK VAT group and shall co-operate to ensure that such exclusion is sought to have effect from Completion (or such other date as is agreed by the parties acting reasonably and in good faith) (that date from which such exclusion has effect being the “ Effective Date ”). The Seller shall procure that IGT Gaming UK Limited and the Seller shall be registered for VAT from (or as soon as is reasonably practicable after) the Effective Date and shall from the Effective Date, not issue any invoices containing the VAT registration number of the Company’s UK VAT Group.

27.2 If HMRC request any information or documentation pursuant to an investigation, audit or otherwise into or in respect of the Company’s UK VAT group which relates to the period in which IGT Gaming UK Limited and the Seller were members of the Company’s UK VAT group, the Seller shall provide, and undertakes to procure that IGT Gaming UK Limited shall provide, the Company (as representative member of the relevant UK VAT group) or their duly authorised agents with access to such information and documentation as is required to be provided to HMRC in accordance with applicable laws.

27.3 The Buyer covenants with the Seller that, if the Company (as representative member of the relevant UK VAT group) is entitled to be paid by HMRC an amount of credit for input tax (where no output tax is due) or the amount by which any credit for input tax exceeds the relevant output tax (in either case the “ Credit ”) the Buyer shall procure that the Company shall pay to IGT Gaming UK Limited or the Seller (as the case may be) a sum equal to the Credit within five Business Days of receipt of such Credit. References to “input tax” in this clause 27.3 are to input tax in respect of any supply of goods or services made to IGT Gaming UK Limited or the Seller or any importation or acquisition made by IGT Gaming UK Limited or the Seller before the Effective Date and after the last day of the last prescribed accounting period of IGT Gaming UK Limited or the Seller (as appropriate) to end before the Effective Date.

27.4 The Seller covenants to pay to the Buyer an amount equal to any VAT for which the Company (as representative member of the relevant UK VAT group) is liable to account for in respect of any supply of goods or services or any acquisition or importation made by IGT Gaming UK Limited or IGT UK Group Limited after the last day of the last prescribed accounting period of IGT Gaming UK Limited or IGT UK Group Limited (as appropriate) to end before the Effective Date and before the Effective Date.

28. SELLER GUARANTEE

28.1 The Seller Guarantor as primary obligor unconditionally and irrevocably:

(a) guarantees by way of continuing guarantee to the Buyer the due and punctual performance by the Seller, the Czech Seller and their Related Persons of their

respective obligations under or pursuant to this Agreement and each other Transaction Agreement;

(b) agrees that if and each time that the Seller, the Czech Seller or any of their Related Persons fails to make any payment when it is due under or pursuant to this Agreement or any other Transaction Agreement, the Seller Guarantor shall on demand (without requiring the Buyer first to take steps against the Seller or any other person) pay that amount to the Buyer.

28.2 Each payment to be made by the Seller Guarantor under this clause shall be made in the currency in which the relevant amount is payable by the Seller, free and clear of all deductions or withholdings of any kind.

28.3 The Seller Guarantor’s obligations under this clause shall not be affected by any matter or thing which but for this provision might operate to affect or prejudice those obligations, including without limitation:

(a) any time or indulgence granted to, or composition with, the Seller, the Czech Seller or any other person;

(b) the taking, variation, renewal or release of, or neglect to perfect or enforce this Agreement, any other Transaction Agreement or any right, guarantee, remedy or security from or against the Seller, the Czech Seller or any other person; or

(c) any unenforceability or invalidity of any obligation of the Seller or the Czech Seller, so that this clause shall be construed as if there were no such unenforceability or invalidity.

29. BUYER GUARANTEE

29.1 The Buyer Guarantor as primary obligor unconditionally and irrevocably:

(a) guarantees by way of continuing guarantee to the Seller the due and punctual performance by the Buyer and its Related Persons of their respective obligations under or pursuant to this Agreement and each other Transaction Agreement;

(b) agrees that if and each time that the Buyer or any of its Related Persons fails to make any payment when it is due under or pursuant to this Agreement or any other Transaction Agreement, the Buyer Guarantor shall on demand (without requiring the Seller first to take steps against the Buyer or any other person) pay that amount to the Seller.

29.2 Each payment to be made by the Buyer Guarantor under this clause shall be made in the currency in which the relevant amount is payable by the Buyer, free and clear of all deductions or withholdings of any kind.

29.3 The Buyer Guarantor’s obligations under this clause shall not be affected by any matter or thing which but for this provision might operate to affect or prejudice those obligations, including without limitation:

(a) any time or indulgence granted to, or composition with, the Buyer or any other person;

(c) any unenforceability or invalidity of any obligation of the Buyer, so that this clause shall be construed as if there were no such unenforceability or invalidity.

30. GOVERNING LAW AND JURISDICTION

This Agreement (and any dispute, controversy, proceedings or claim of whatever nature arising out of or in any way relating to this Agreement or its formation) shall be governed by and construed in accordance with English law. The Courts of England shall have non-exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to non-contractual obligations arising from or in connection with this Agreement, or a dispute regarding the existence, validity or termination of this Agreement or the consequences of its nullity).

IN WITNESS whereof this Agreement has been executed on the date first above written.

SCHEDULE 3

The Warranties

In this schedule 3, any reference to any legislation of the European Union or the United Kingdom shall be deemed to include a reference to any similar legislation, or legislation covering similar issues, in any jurisdiction in which a Group Company carries on business or otherwise derives revenue and unless another definition is provided, a “ Material Contract ” means a Contract which involves revenue or expenditure in excess of £100,000 per annum exclusive of VAT or other sales taxes and includes any Contract referred to in paragraph 12.2 of this schedule 3.

1. SELLER’S CAPACITY

1.1 Each of the Seller, the Seller Guarantor and the Czech Seller, and each of their relevant Related Persons, has the requisite power and authority, and has obtained all corporate authorisations and all other applicable governmental, statutory, regulatory or other consents, licences, waivers or exemptions required to enter into and to perform its obligations under this Agreement, the Tax Deed and each of the other Transaction Agreements to which it is a party.

1.2 Each Transaction Agreement to which the Seller, the Seller Guarantor or the Czech Seller, or any of their Related Persons is a party constitutes or will, when executed, constitute legally valid and binding obligations on the Seller, the Seller Guarantor or the Czech Seller (as the case may be), and/or such Related Person, enforceable against such person in accordance with its terms except as enforceability may be affected by bankruptcy, insolvency, and similar laws affecting creditors’ rights and except as the availability of certain remedies may be limited by principles of equity.

1.3 Compliance with the terms of each Transaction Agreement to which any of the Seller, the Seller Guarantor or the Czech Seller, or any of their Related Persons is a party does not and will not conflict with or constitute a default or breach under any provision of:

(a) the memorandum or articles of association (or equivalent documents) of the Seller, the Seller Guarantor or the Czech Seller (as the case may be) or the relevant Related Person; or

(b) any order, judgment, award, injunction, decree or regulation or any other restriction of any kind or character by which it is bound or submits to an extent which would prohibit, prevent, delay, impede or restrict the consummation of the transactions contemplated by any of the Transaction Agreements.

2. THE COMPANY, THE SHARES AND THE SUBSIDIARIES

2.1 Incorporation and existence

The Seller, the Company and each of the Subsidiaries are limited companies incorporated under English law or (in the case of Barcrest Development B.V.) the law of the

Netherlands, and have been in continuous existence since incorporation. Cyberview Czech is a limited liability company incorporated under the law of the Czech Republic, and has been in continuous existence since incorporation.

2.2 The Shares

(a) The Seller is the only legal and beneficial owner of the Company Shares. The Czech Seller is the only legal and beneficial owner of the Cyberview Czech Share. Upon the delivery and payment of the Completion Payment at Completion, the Buyer will receive from the Seller and the Czech Seller, good and valid title to the Company Shares and the Cyberview Czech Share, respectively, free from any Encumbrances.

(b) The Company has not issued or allotted any shares other than the Company Shares and the Company Shares are fully paid or credited as fully paid. Cyberview Czech has not increased its registered capital nor has the Czech Seller decided on such increase; the Cyberview Czech Share represents 100% of the registered capital of Cyberview Czech and is fully paid.

(c) There is no Encumbrance over or affecting any Shares, nor is there any commitment to give or create such an Encumbrance, and, so far as the Seller is aware, no person has claimed to be entitled to such an Encumbrance.

(d) Other than this Agreement, there is no agreement or obligation requiring, and no claim has been made requesting:

(i) the allotment, sale, transfer, redemption or repayment of, or the grant to a person of the right (conditional or not) to require the issue, allotment, sale, transfer, redemption or repayment of, a share in the capital of the Company or Cyberview Czech (including an option or right of pre-emption or conversion); or

(ii) the issue or grant to a person of a right (conditional or not) to require the issue of loan capital,

either now or at any future date.

2.3 The Group Companies

(a) The particulars relating to the Group Companies set out in schedules 1 and 2 to this Agreement are true and accurate.

(b) Save as shown in schedule 2, the Company is the only legal and beneficial owner of the shares in the capital of the Subsidiaries. The Company does not have any subsidiary undertakings other than the Subsidiaries. The Czech Seller is the only legal and beneficial owner of the Cyberview Czech Share. Cyberview Czech does not have any subsidiaries. Each of the Subsidiaries is a wholly-owned subsidiary of the Company (unless otherwise indicated in schedule 2) and each of

the shares of each Group Company has been properly allotted and issued and is fully paid or credited as fully paid.

(c) There is no Encumbrance over or affecting any shares in the capital of any Group Company, nor is there any commitment to give or create such an Encumbrance, and so far as the Seller is aware no person has claimed to be entitled to such an Encumbrance.

(d) Other than this Agreement, there is no Contract requiring the allotment, sale, transfer, redemption or repayment of, or the grant to a person of the right (conditional or not) to require the allotment, sale, transfer, redemption or repayment of, a share in the capital of any of the Subsidiaries (including an option or right of pre-emption or conversion).

(e) No Group Company owns any shares or stock in the capital of, nor does it have any other ownership interest in, any company or business organisation of whatever nature other than, (in the case of the Company,) the Subsidiaries, nor does the Company nor any other Group Company control or take part in the management of, or is or has agreed to become a member of, any other company, partnership, unincorporated association, joint venture or other business organisation or has outside the United Kingdom any branch or any permanent establishment (as that expression is defined in the respective Double Taxation Relief Orders current at the date of this agreement).

2.4 Corporate Structure

The diagram of the corporate structure of the Group attached to the Disclosure Letter is true and accurate.

2.5 Confidentiality agreements

The Company is a party to, or otherwise is a beneficiary of and is able to enforce the terms of, any confidentiality agreement that may have been entered into by a third party who has participated as a potential purchaser of the Shares in the process in respect of the Group that has culminated in the entry into of this Agreement.

3. ACCOUNTS

3.1 General

(a) The Accounts of each Group Company:

(i) have been prepared in accordance with applicable laws (including the Companies Act 1985, the Companies Act 2006 and, in the case of the Accounts of Cyberview Czech, the Act No. 563/1991 Coll., on accounting, as amended, of the Czech Republic, and as applicable) and (in the case of the Accounts for each of the Company and the Subsidiaries) Generally Accepted Accounting Practice in the United Kingdom and (in

the case of the Accounts of Cyberview Czech) the IFRS and the Czech Accounting Standards, the IAS Regulations and (in the case of Barcrest Development B.V.) Title 9, Book 2 of the Netherlands Civil Code, and, subject thereto and save as expressly stated in the Accounts, on a basis consistent with that adopted in preparing the audited accounts in respect of the relevant Group Company for and during the previous two financial periods;

(ii) give a true and fair view of the assets, liabilities and state of affairs of that Group Company as at the Accounts Date and of the profit or loss and (where applicable) cash flow of that Group Company for the period ended on the Accounts Date;

(iii) contain provision adequate to cover all liabilities (including all contingent liabilities (except for contingent liabilities not required to be set forth in the Accounts) or deferred liability for Tax) of that Group Company as at the Accounts Date as required (in the case of the Accounts for each of the Company and the Subsidiaries) by Generally Accepted Accounting Practice in the United Kingdom and (in the case of the Accounts for Cyberview Czech) by the IFRS and Czech Accounting Standards; and

(iv) make provision reasonably regarded at that time as adequate for all bad and doubtful debts as at the Accounts Date on a basis consistent (in the case of the Accounts for each of the Company and the Subsidiaries) with Generally Accepted Accounting Practice in the United Kingdom and (in the case of the Accounts for Cyberview Czech) by the IFRS and Czech Accounting Standards.

(b) The 2010 Accounts:

(i) have been prepared in accordance with applicable laws and US GAAP;

(ii) give a true and fair view of the combined assets, liabilities and state of affairs of the Group as at the 2010 Accounts Date and of the combined profit or loss and (where applicable) cash flow of the Group for the period ended on the 2010 Accounts Date;

(iii) contain provision adequate to cover all combined liabilities (including all contingent liabilities (except for contingent liabilities not required to be set forth in the 2010 Accounts) or deferred liability for Tax) of the Group as at the 2010 Accounts Date as required by US GAAP; and

(iv) make provision reasonably regarded at that time as adequate for all bad and doubtful debts as at the 2010 Accounts Date on a basis consistent with US GAAP.

(c) The Management Accounts have been prepared diligently, in good faith and in accordance with US GAAP (having regard to their status as management accounts

and that the normal period end adjustments which would arise on an audit have not been made), fairly represent the combined assets and liabilities, combined profits and losses and combined cash flow of the Group (taken as a whole) as at and for the fiscal year-to-date period ended on the Management Accounts Date, and are not misleading in any material respect.

3.2 Accounting and other records

(a) The books of account and other records of each Group Company are up-to-date and have been maintained in all material respects in accordance with (in the case of the Company and the Subsidiaries) the law and applicable standards, principles and practices generally accepted in the United Kingdom including, where relevant, International Accounting Standards and (in the case of Cyberview Czech) the IFRS and the IAS Regulations.

(b) All material deeds and documents (properly stamped where stamping is necessary for enforcement thereof) belonging to each Group Company and which by law ought to be in the possession of the respective Group Company are in the possession of such Group Company.

3.3 Accounting reference date

The accounting reference date for each of the Group Companies under section 391 of the Companies Act 2006, section 224 of the Companies Act 1985, or, in the case of Cyberview Czech, the Act No. 563/1991 Coll., on accounting, as amended, of the Czech Republic (as applicable) is, and during the last three years has always been 30 September.

3.4 Government grants

No Group Company is liable to pay or repay an investment with other grants or subsidy made to it by any Governmental Authority.

3.5 Loans

No Group Company had lent any money which was outstanding as at the 2010 Accounts Date or has lent any money since the 2010 Accounts Date (excluding intra-group debt between Group Companies) which has not been repaid to it and no Group Company owns the benefit of any debt (whether present or future) other than debts accrued to it in the ordinary course of its business consistent with past practice.

3.6 Bank accounts

The Group Companies do not have any bank or deposits accounts other than the bank accounts set forth in the statement attached to the Disclosure Letter. Since the date of that statement there have been no payments out of any of the accounts except for payments made in the ordinary course of business consistent with past practice.

4. CHANGES SINCE THE 2010 ACCOUNTS DATE

4.1 General

Since the 2010 Accounts Date, each Group Company has carried on its business in the ordinary and usual course consistent with past practice so as to maintain the business as a going concern.

4.2 Specific

Since the 2010 Accounts Date:

(a) no Group Company has made, or agreed to make, capital expenditure exceeding in total £250,000 or incurred, or agreed to incur, a commitment or connected commitments involving capital expenditure exceeding in total £100,000 or incurred extended payment terms with customers over £100,000;

(b) no substantial supplier or substantial customer (being a supplier or customer who in any of the last two years the Group paid to or received from in excess of £350,000) has ceased or substantially reduced its trade with the Group or has altered the terms of trade to the Group’s material disadvantage or has informed any Group Company in writing or, as far as the Seller is aware, has otherwise indicated, that it will or is likely to terminate any contract with any Group Company or cease to deal with or to reduce the level of business it does with any Group Company;

(c) no Group Company has declared, paid or made a dividend or other distribution (including a distribution within the meaning of the TA) except to the extent provided in the Accounts or as provided for in this Agreement;

(d) no resolution of the shareholders of the Group has been passed (except for those representing the ordinary business of an annual general meeting);

(e) no Group Company has repaid or redeemed share or loan capital, or made (whether or not subject to conditions) an agreement or undertaken an obligation to do any of those things;

(f) no Group Company has paid nor is under an obligation to pay any management charges;

(g) no Group Company has entered into any Material Contract outside the ordinary course of business consistent with past practice;

(h) there has been no material adverse change in the turnover, financial or trading position or, so far as the Seller is aware, prospects of the Group taken as a whole;

(i) no Group Company has assumed or incurred any liabilities (excluding contingent liabilities which would not be required to be accrued, provided or reserved for on

a balance sheet of the relevant Group Company in accordance with US GAAP), otherwise than in the ordinary course of carrying on its business consistent with past practice; and

(j) there have been no material changes in the accounting policies of any Group Company (including any change in depreciation or amortisation policies) and no revaluation of any Group Company’s properties or assets.

5. ASSETS

5.1 Title

(a) There are no Encumbrances, nor has the Group agreed to create or give any such Encumbrance, over any part of the material assets, property, undertaking, goodwill or uncalled capital of any Group Company (other than Permitted Encumbrances).

(b) Each material asset included in the 2010 Accounts or acquired by it since the 2010 Accounts Date (other than assets sold or otherwise disposed of in the ordinary course of business):

(i) is legally and beneficially owned by a Group Company; and

(ii) where capable of possession, in the possession of a Group Company, except where such asset is kept elsewhere in the ordinary course of business consistent with past practice.

(c) The property, rights, Intellectual Property and assets owned by the Group or leased or licensed by the Group Companies (other than from the Seller Group) or otherwise to be provided to the Group Companies pursuant to the Transaction Agreements comprise all the property, rights, Intellectual Property and assets reasonably necessary for the carrying on of the business of the Group Companies to the extent to which it is conducted as at the date of this Agreement.

(d) All material tangible personal property owned or leased by any of the Group Companies is located on the Properties except where such property is kept elsewhere in the ordinary course of its business, consistent with past practice.

5.2 Hire purchase and leased assets

Copies of the material parts of any bill of sale or any hiring or leasing agreement, hire purchase agreement, credit or conditional sale agreement, agreement for payment on deferred terms or any other similar agreement to which any Group Company is a party and which are material to the operation of its business are described in the Disclosure Letter.

6. INTELLECTUAL PROPERTY

6.1 General

(a) The Disclosure Letter contains a complete and accurate list of all Intellectual Property which is registered in or applied for in the name of any Group Company (complete and accurate in all material respects in respect of the foregoing Intellectual Property) or that is subject to the Intellectual Property Assignments (all the foregoing, collectively “ Registered Company IP ”), setting forth as to each such item of Intellectual Property, as applicable, the item or title, the application or registration number, the jurisdiction in which such item is registered or pending, and its current status. All Registered Company IP is valid and enforceable, free from Encumbrances (except Permitted Encumbrances), and a member of the Group is the sole and exclusive owner of all right, title and interest in and to the Registered Company IP (or in the case of Intellectual Property subject to the Intellectual Property Assignments, will be the sole and exclusive owner of all right, title and interest therein prior to the Completion Date). There are no actual (nor have there been since January 1, 2008) or, to the Seller’s knowledge, threatened oppositions, re-examinations, cancellations, or interferences in any jurisdiction challenging the validity, enforceability, registration, existence or ownership of any material (individually or in the aggregate) Intellectual Property owned by a Group Company, or which is owned by a member of Seller’s Group and used in the business of a Group Company.

(b) Each Group Company owns, or has a valid and enforceable right to use (in each case free and clear of all Encumbrances), all Intellectual Property used in its business that is material (individually or in the aggregate) to the business of such Group Company.

6.2 Renewals/Maintenance

So far as the Seller is aware all registration and renewal fees have been paid in relation to the Intellectual Property which is registered or applied for in the name of any Group Company and so far as the Seller is aware there is no reason why such registrations should be revoked or declared invalid.

6.3 Licences and other Contracts

(a) Details of all written material Contracts pursuant to which any third party is granted a right to use Intellectual Property owned by any Group Company are set out in the Disclosure Letter. The Seller is not aware of any material breach of any such Contracts.

(b) Details of all material Contracts granting any right, title or interest with respect to any Intellectual Property to a Group Company or relating to the Intellectual Property used in the business of a Group Company are set out in the Disclosure Letter. There has been no material breach of any such Contracts, nor is there any fact or matter which is reasonably likely to constitute a breach of any of such

Contracts by (i) a Group Company; the effect of which is or would reasonably be expected to be material to the Group, taken as a whole or would reasonably be expected to interfere in any material respect with the conduct of the business of the Group, taken as a whole, or (ii) to the Seller’s knowledge, by any other party to such Contracts.

(c) Except as set forth in the Disclosure Letter, no Group Company or any member of the Seller Group is subject to any outstanding judgments, governmental orders, consents, forbearances to sue, settlement agreements or other similar arrangements that restrict the right to use or prohibit the use of any Intellectual Property that is material (individually or in the aggregate) to the operation of a Group Company’s business.

6.4 Infringement

(a) Except as would not reasonably be expected to be material to the Group or to interfere in any material respect with the conduct of the business of the Group, taken as a whole, the business of the Group as currently conducted, and the use by any Group Company of any Intellectual Property owned by a member of Seller’s Group or any member of the Group, does not infringe, misappropriate or violate the Intellectual Property of any other person, and, since January 1, 2008, no Action has been threatened in writing or asserted to allege (including by invitations to license and other communications) any infringement, misappropriation or other violation by a Group Company of any person’s Intellectual Property.

(b) So far as the Seller is aware no third party is infringing, misappropriating, violating, or overtly threatening to infringe, misappropriate or violate any Group IP, and since January 1, 2008 no Action has been threatened in writing or asserted by a Group Company or any member of Seller’s Group to allege that any person is or has infringed, misappropriated or violated any Group IP.

6.5 Confidentiality

The Seller’s Group and the Group Companies have taken commercially reasonable steps to protect, preserve and maintain the confidentiality and secrecy of, and to restrict the improper use of the Trade Secrets and other Confidential Information used in the business of any member of the Group (“ Proprietary Information ”), and the security of their computer systems and networks, and so far as Seller is aware, there has not been any material loss or material compromise of any of the foregoing. So far as the Seller is aware: (i) no material Proprietary Information has been disclosed or authorised to be disclosed to any person other than pursuant to a non-disclosure agreement that provides reasonable protection to such Proprietary Information, (ii) no party to any non-disclosure agreement relating to the Proprietary Information is in material breach or default thereof, and (iii) no Action has been asserted or threatened against any Group Company or member of Seller’s Group alleging a material violation of any person’s privacy, or personal data rights under applicable law or regulation.

6.6 Effect of Transaction on Intellectual Property

(a) The consummation of the transactions contemplated in this Agreement will not: (i) result in the material loss or impairment of, or give rise to any right of any person to terminate or materially restrict, or (ii) require payment of any material additional amounts or the consent of any Governmental Authority or third person in respect of, or (iii) result in the grant or transfer to any other person of, in each case, any Group Company’s right to own or use any material (individually or in the aggregate) Group IP.

(b) Except as expressly provided in the Transaction Agreements, none of Seller’s Group will have upon consummation of the transactions contemplated by this Agreement: (i) any ownership of any Group IP, or (ii) any license to or any other right, title or interest in or to any Group IP owned by any member of the Group.

7. EFFECT OF SALE

7.1 General

(a) Neither the execution nor performance of any Transaction Agreement or any document to be executed at or before Completion will:

(i) conflict with, or result in a breach of a Material Contract to which any Group Company is a party or by which any Group Company is bound, or of any other Contract to which a Group Company is a party or by which any Group Company is bound, which conflict or breach of any such other Contract, individually or in the aggregate, is or would reasonably be expected to be, material to the Group taken as a whole, or would reasonably be expected to interfere in any material respect with the conduct of the business of the Group, taken as a whole; or

(ii) constitute a default under any provision of any lien, lease, order, judgment, award, injunction, decree, law or regulation or any other analogous requirements of any kind or character by which any Group Company is bound; or

(iii) give rise to a contractual right allowing any customer under a Material Contract to cease dealing with any Group Company, or give rise to a contractual right allowing any other customer to cease dealing with any Group Company, except as would not, individually or in the aggregate (with respect to such other customers) reasonably be expected to be material to the Group taken as a whole, or to interfere in any material respect with the conduct of the business of the Group, taken as a whole; or

(iv) give rise to a contractual right allowing any supplier under a Material Contract to cease dealing with any Group Company, or give rise to a contractual right allowing any other supplier to cease dealing with any Group Company, except as would not, individually or in the aggregate

(with respect to such other suppliers) reasonably be expected to be material to the Group taken as a whole, or to interfere in any material respect with the conduct of the business of the Group, taken as a whole; or

(v) save as provided, in the Transaction Agreements, make any Group Company liable to transfer or purchase any assets, including shares held by it in other bodies corporate under their articles of association or any agreement; or

(vi) result in the creation or imposition of any Encumbrance on any of the property or assets of any Group Company or permit any party to enforce any such Encumbrance; or

(vii) permit any insurer to terminate any Policy.

(b) No director or Senior Employee has provided notice in writing to any Group Company or the Seller of any intention to terminate his employment, whether as a consequence of the proposed acquisition of the Shares by the Buyer or otherwise.

8. LARGE RELATIONSHIPS

There is annexed to the Disclosure Letter a true and correct list showing the ten largest customers and suppliers (by cash amount of sale) of the Group during the 12 months to the date of this Agreement and all suppliers (other than public utilities) who are the sole source of supply of products of a material nature.

9. ABSENCE OF CLAIMS; BUSINESS RELATIONSHIPS WITH RELATED PERSONS

Except as contemplated under the Transaction Agreements, the Seller and its Related Persons (other than the Group Companies) do not own any property or right, tangible or intangible, used by any Group Company.

10. CONSTITUTION

10.1 Intra vires

Each Group Company has the power to carry on its business as now conducted.

10.2 Memorandum and articles

(a) The memorandum and articles of association or other constitutional documents of each Group Company except for Cyberview Czech in the form annexed to the Disclosure Letter are true and complete and have embodied therein or annexed thereto copies of all resolutions and agreements as are referred to in section 30 of the Companies Act 2006.

(b) The articles of association or other constitutional documents of Cyberview Czech in the form annexed to the Disclosure Letter are true, complete and up-to-date and comply with all statutory requirements under the Act No. 513/1991 Coll., the commercial code, as amended, of the Czech Republic.

10.3 Powers of attorney

The Company has not executed any power of attorney or conferred on any person other than its directors, officers and employees any authority to enter into any transaction on behalf of or to bind the Company in any way and which power of attorney remains in force or was granted or conferred within one year of the date of this Agreement.

10.4 Statutory books and filings

(a) The register of members and other statutory books and registers of each Group Company are up to date, in its possession and are true and complete in accordance with the law.

(b) All resolutions, annual returns and other documents required to be delivered by a Group Company to the Registrar of Companies (or other relevant company authority) have been properly prepared and duly filed or delivered and neither the Seller nor any Group Company has received any notice that any is incorrect or should be rectified. The common seal of the Company is in its possession.

(c) The Collection of Deeds (in Czech Sbírka listin) of the Czech Commercial Register contains all documents and filings of Cyberview Czech required to be published in it under Czech law.

11. INSURANCE

11.1 Policies

(a) All the tangible assets, businesses and operations of each Group Company which are capable of being insured (other than those where a third party is liable to insure such assets) have at all times since the 2010 Accounts Date been and are insured with persons other than members of the Seller’s Group in amounts and subject to reasonable excesses or deductibles or both, reasonably regarded as adequate against risks normally insured against by companies carrying on similar businesses and each Group Company has been at all times since the 2010 Accounts Date and is insured in amounts and subject to reasonable excesses or deductibles or both, reasonably regarded as adequate against accident, physical loss or damage, third party liability (including product liability), environmental liability, and other risks normally covered by insurance by companies carrying on similar businesses (to the extent that insurance is reasonably available at reasonable cost).

(b) The Disclosure Letter contains a list that is complete and correct and particulars of current insurance and indemnity policies in respect of which any Group

Company has an interest or which provide coverage in respect of any of the assets, properties or business of any Group Company (together the “ Policies ”), identifying therein which of such policies are held or maintained by one or more Group Companies (together the “ Company Policies ”). All Policies that are not Company Policies are referred to herein as “ Seller Policies .”

(c) All of the Policies are currently in full force and effect, all premiums have been duly paid to date, and, so far as the Seller is aware, nothing has been done or omitted to be done which could make any Policy void or voidable. As of the date of this Agreement, in relation to any of the Group Companies or any of their assets, businesses or operations, there are no claims outstanding under any Policy and, as of Completion, there will be no claims outstanding under any Policy which in the aggregate (for all such claims under all such Policies) exceed £25,000 under all such Policies or which arise out of a single circumstance or event or related series of circumstances or events which exceed £10,000 under any such Policy.

(d) The Disclosure Letter sets forth a list that is true and correct in all material respects of all insurance loss runs and claims over £2,500 of any of the Group Companies for the past five (5) years under any Policy.

11.2 Claims

No claim is outstanding under any of the Policies and so far as the Seller is aware no matter exists which could reasonably be expected to give rise to a claim under any of the Policies.

12. CONTRACTUAL MATTERS

12.1 Validity of agreements

(a) No party with whom any Group Company has entered into any Material Contract has given notice of its intention to terminate, or has notified the Seller or any Group Company that it is seeking to repudiate or disclaim, such Material Contract.

(b) So far as the Seller is aware no party with whom any Group Company has entered into a Material Contract is in material breach of such Material Contract. So far as the Seller is aware no matter exists which might give rise to such material breach.

(c) No Group Company is in breach of any Material Contract and so far as the Seller is aware no matter exists which could reasonably be expected to give rise to such breach.

(d) No orders or similar instructions have been made by any court or other competent authority requiring the modification of any Material Contract to which any Group Company is party and the Seller is not aware of any circumstances which could

reasonably be expected to give rise to any such order or similar instruction in the future.

12.2 Material Contracts

(a) Set forth in the Data Room at paragraphs 5.9 and 5.17 are true and correct copies of each Contract to which any Group Company is a party or under which any Group Company is liable which:

(i) was entered into other than by way of a bargain at arm’s length; or

(ii) involves or is likely to involve obligations or restrictions on the part of a Group Company of an unusual or exceptional nature and not in the ordinary and usual course of business; or

(iii) is of a long term (meaning that the agreement is not capable of performance within its terms within 12 months after the date on which it was entered into or undertaken or cannot be terminated on less than 12 months’ notice) or unusual nature; or

(iv) involves an aggregate outstanding expenditure or other liability by any Group Company of more than £350,000 (or equivalent); or

(v) is a Contract by which any Group Company is a member of a joint venture, consortium, partnership or association (other than a bona fide trade association); or

(vi) is any agency, distributorship, sales representative, marketing, purchasing, manufacturing or licensing Contract; or

(vii) is a Contract which restricts in any respect its freedom to carry on the whole or any part of its business in any part of the world in such manner as it thinks fit.

12.3 Anti-competitive arrangements

(a) No Group Company is a party to any Contract or business practice which:

(i) amounts to an infringement of any laws relating to anti-competitive activities and no director is engaged in any activity which would be an offence or infringement under such law; or

(ii) is void or unenforceable (whether in whole or in part) or may render any Group Company liable to proceedings under any such legislation as is referred to in subparagraph (a) above.

(b) No Group Company is party to any Contract or business practice which infringes any provision of the Competition Act 1998 or, in the case of Cyberview Czech,

Act No. 143/2001 Coll., on protection of competition, as amended, of the Czech Republic, or any undertaking or, so far as the Seller is aware, order made against or pursuant to any anti-trust or similar legislation in any jurisdiction in which it carries on business or has assets or sales.

(c) No Group Company is a party to any Contract or business practice or is involved in any business practice in respect of which:

(i) any request for information, statement of objections or similar matter has been received from any Governmental Authority; or

(ii) an application for negative clearance or exemption has been made to the Commission of the European Communities or any other Governmental Authority.

12.4 Miscellaneous

(a) The Disclosure Letter contains a list that is complete and correct of the material commercial terms offered to customers of any Group Company under the in gaming trials.

(b) No material changes have been made to the terms on which any Group Company provides its services and products to customers since the 2010 Accounts Date.

13. INFORMATION TECHNOLOGY

13.1 Breakdowns

In the twelve months prior to the date hereof the Group has not suffered and so far as the Seller is aware no other person has suffered any material failures or bugs in or breakdowns of any Information Technology used in connection with the business of the Group which have caused any substantial disruption or substantial interruption in or to its use.

13.2 Ownership

(a) Except as otherwise set forth in the Transaction Agreements, the Information Technology owned by or licensed to each Group Company:

(i) comprise all material computer hardware and software systems used in the operation of the business of the Group Companies as carried on at the date of this Agreement;

(ii) have not during the twelve months prior to the date of this Agreement failed to perform in any way that materially and adversely affected the business of the Group Companies taken as a whole; and

(iii) have been maintained consistently with the Company’s plans for that system, except as would not be material to the Group taken as a whole.

13.3 Company Game Products

Except as otherwise set forth in, or provided for in, the Transaction Agreements:

(a) a Group Company is the exclusive owner of all right, title and interest in and to all material Company Game Products, and no third party (except Seller’s Group) has been granted access to any of the Company Game Products, and no third party has any escrow right, conditional right, royalty, honoraria or other payment, license, covenant not to sue or other right, title or interest to any of the Company Game Products (including source code or object code), except for non-exclusive rights to: (i) contractors solely for purposes of providing services to the Group; (ii) distributors of the material Company Game Products for marketing, distributing and supporting customers’ use of the Company Game Products; and (iii) the Group’s customers to use the Company Game Products, in each case that are granted in the ordinary course of business;

(b) each of Group Companies owns and possesses all source code necessary to compile all executable versions of the Company Game Products that are used by or to support any Group customers or that are in development;

(d) Except as would not reasonably be expected to be material to the Group taken as a whole or to interfere in any material respect with the conduct of the business of the Group, taken as a whole, no Group Company has used Open Source Software in a manner that creates, or purports to create, any obligation on any Group Company to distribute or otherwise make available the source code to any software owned by any Group Company.

14. PRODUCT CLAIMS

14.1 The standard terms of the Group’s warranty obligations, provided to customers in connection with the sale or distribution of products or services, are, save for warranties implied by applicable law, set out in the Disclosure Letter and there are no other product warranties and guarantees save:

(a) as set out in Section 5.9 of the Data Room; or

(b) for those which are not, individually or in the aggregate, material to the Group taken as a whole concerned and which are capable of being claimed against only in the 12 months after delivery.

14.2 Each of the products and services sold by any Group Company prior to the date of this Agreement meets all standards for quality and workmanship and other technical and/or

certification standards prescribed by law or regulation (including applicable gaming regulations), or contractual agreements, and no Group Company has received notice of any claim that any of its products does not meet such standards in the two years prior to the date of this Agreement.

14.3 No changes or modifications are required to be made to the products or services provided by any Group Company prior to the date of this Agreement in order to ensure compliance with the requirements of any applicable law or regulation or, save as provided in Contracts set forth in Section 5.9 of the Data Room, any Contract to which any Group Company is a party.

14.4 Except as described in the Disclosure Letter:

(a) no claims have been made or are, to the knowledge of the Seller, threatened under the product warranties or indemnification obligations of any Group Company, other than routine warranty claims at such levels and for reasons as may be reasonably expected in the ordinary course of business consistent with past practice;

(b) so far as the Seller is aware, there exists no event or circumstance, which after notice or the passage of time or both, would reasonably be expected to create or result in liabilities or obligations with respect to products or services provided by a Group Company prior to the date of this Agreement under any of the product warranties or indemnification obligations of any Group Company, in excess of the liabilities and obligations incurred under such product warranties in the ordinary course consistent with past practice over the past two years;

(c) so far as the Seller is aware, there is no design, manufacturing or other defect in any model or type of product or product specification of any Group Company which has been sold, licensed, leased, supplied or otherwise provided prior to the date of this Agreement; and

(d) there have not been any mandatory or voluntary product recalls with respect to any products of any Group Company within the past six years and so far as the Seller is aware, there is no fact relating to any product of any Group Company that would reasonably be expected to impose a duty on any Group Company to recall any product or warn customers of a defect in any product of any Group Company.

14.5 So far as the Seller is aware, no Group Company has any liabilities (except contingent liabilities which would not be required to be accrued, provided or reserved for on a balance sheet of the relevant Group Company in accordance with US GAAP) arising out of any injury to individuals or damage to tangible or real property as a result of the ownership, possession, or use of any product manufactured, sold, leased, or delivered by the Group Company prior to the date hereof.

15. IMPROPER PAYMENTS

15.1 No member of the Seller’s Group nor any of the Group Companies, nor, so far as the Seller is aware, any director, trustee, officer, employee, beneficiary, agent or representative of any of them, nor, any person associated with or acting for, or on behalf of, any of them, has directly or indirectly:

(a) made, in violation of any applicable law, any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment to any person, private or public, regardless of what form, whether in money, property, or services:

(i) to obtain favourable treatment for the Group Companies or contracts secured;

(ii) to pay for favourable treatment for the Group Companies or contracts secured;

(iii) to obtain special concessions or for special concessions already obtained; or

(iv) in violation of any legal requirement, in breach of applicable law or

(b) established or maintained any fund or asset that is required by applicable law or regulation to have been recorded in the books and records of the Group Companies that has not been recorded in the books or records of the Group Companies.

16. LIABILITIES

16.1 Save as disclosed in the 2010 Accounts, no Group Company has any liabilities, except commercial liabilities incurred since the 2010 Accounts Date in the ordinary course of business consistent with past practice and except contingent liabilities which would not be required to be set forth on a balance sheet of the relevant Group Company in accordance with US GAAP, none of which, individually or in the aggregate, is material in the context of the Group.

16.2 Borrowings

(a) The total amount borrowed, raised, or hedged by each Group Company from its bankers or other financial institutions or borrowed, issued or otherwise raised in the capital markets does not exceed its overdrafts, loans, borrowings and other financial facilities as set out in the Disclosure Letter.

(b) In respect of any Financial Debt of any Group Company, no material event of default, refinancing event, credit event, default or acceleration of indebtedness has occurred thereunder and no Group Company has received any notice to repay thereunder.

(c) No steps for the enforcement of any Encumbrances constituted or created in connection with Financial Debt of any Group Company have been taken and no

event or circumstance has occurred that entitles any person to enforce any such Encumbrance.

16.3 Guarantees

(a) No Group Company is a party to or has delivered (or arranged for delivery of) any guarantee or suretyship, performance bond, letter of credit, keep-well or reimbursement arrangement or similar arrangement, with respect to another person’s obligations other than those of another Group Company.

(b) No part of the loan capital or Financial Debt of a Group Company is dependent on the guarantee of, or security provided by, another person other than another Group Company.

(c) No Group Company has any liability or obligation (actual or contingent) to Ian Rodden save for his right to receive accrued dividends of not more than £600,000 in aggregate from Red Gaming Limited.

17. PERMITS

17.1 The Group has all licences, permissions, permits, and other governmental authorisations and consents (including licences, permissions, permits, authorisations and consents related to gaming) necessary to own and operate its assets and required for carrying on its business in the places and in the manner in which such business is currently carried on, including a licence issued by the Alderney Gambling Control Commission in accordance with the Alderney eGambling Ordinance, 2009 (the “ Alderney Licence ”).

17.2 The licences, permissions, permits, and other governmental authorisations and consents referred to in paragraph 17.1 (including the Alderney Licence) are in full force and effect, have been complied with in all material respects, and all fees payable pursuant to any such licence, permission, permit, and other governmental authorisation or consent have been fully paid, and, so far as the Seller is aware, no facts exist that would reasonably be expected to result in the revocation, suspension or modification of any of those.

18. INSOLVENCY

18.1 Winding up

No order has been made, petition presented or resolution passed for the winding up of any Group Company or for the appointment of a provisional liquidator to any Group Company.

18.2 Administration

No Group Company has been or is in administration (as defined in schedule Bl of the Insolvency Act 1986) and no step (including but without limitation the service of any notice, the filing of any document(s) or the making of any administrative order) has been

taken under schedule Bl of the Insolvency Act 1986 by any person to place any Group Company in administration.

18.3 Receivership

No receiver, receiver and manager or administrative receiver has been appointed of the whole or part of any Group Company’s business or assets.

18.4 Compromises with creditors

(a) No voluntary arrangement under section 1 of the Insolvency Act 1986 has been proposed or approved in respect of any Group Company.

(b) No compromise or arrangement under section 895 of the Companies Act 2006 has been proposed, agreed to or sanctioned in respect of any Group Company.

(c) No reorganisation under the Czech Insolvency Act has been proposed, agreed to or sanctioned in respect of Cyberview Czech.

(d) No Group Company has not entered into any compromise or arrangement with its creditors or any class of its creditors generally.

18.5 Distress

No distress or execution or other process has been levied on any Group Company or (if applicable) any material part of its assets or undertaking.

18.6 Insolvency

No Group Company is insolvent or unable to pay its debts as they fall due within the meaning of the Insolvency Act 1986 or any other insolvency legislation applicable to the relevant Group Company and so far as the Seller is aware, no Insolvency Event has occurred in respect of a substantial supplier or substantial customer as defined in paragraph 4.2(b) of this schedule 3.

18.7 General

No circumstances exist which would be reasonably expected to give rise to any of the matters listed in paragraphs 18.1 to 18.6 in respect of any Group Company or, so far as the Seller is aware, any substantial supplier or substantial customer (as defined above).

19. LITIGATION AND COMPLIANCE WITH LAW

19.1 Litigation

(a) No Group Company (or, any person for whose acts or defaults any Group Company is vicariously liable) during the two years ending on the date of this Agreement has been involved in any civil, criminal, arbitration, administrative or other proceeding in any jurisdiction. No civil, criminal, arbitration, administrative

or other proceeding in any jurisdiction is pending or, so far as the Seller is aware, threatened by or against any member of the Group.

(b) The Seller does not know of anything which would reasonably be expected to result in any civil, criminal, arbitration, administrative or other proceeding in any jurisdiction by or against any Group Company (or any person for whose acts or defaults any Group Company is vicariously liable) which proceedings are likely to involve an individual claim in excess of £10,000 (or equivalent) or claims in aggregate in excess of £100,000 (or equivalent) (including any such proceeding against or by the Seller or any Related Person of the Seller).

(c) There is no outstanding or unsatisfied judgment, order, injunction, decree, stipulation or award (whether rendered by a court, administrative agency or other Governmental Authority, by arbitration or otherwise) in any jurisdiction against any Group Company or any material part of its assets or undertaking. Neither the Seller nor any Related Person of the Seller has any claim or right of action against any Group Company.

19.2 Compliance with law

Each Group Company has conducted its business and dealt with its assets in all material respects in accordance with applicable legal and administrative requirements in all relevant jurisdictions.

19.3 Investigations

So far as the Seller is aware, no Group Company (or any person for whose acts or defaults any Group Company is vicariously liable) is,and no Group Company has been, subject to any investigation, enquiry, disciplinary or enforcement proceeding by any Governmental Authority (whether judicial, quasi-judicial or otherwise) in any jurisdiction. No Group Company has received any request for information from, any court or Governmental Authority (including any national competition authority and the Commission of the European Communities and the EFTA Surveillance Authority) under any anti-trust or similar legislation in any jurisdiction. So far as the Seller is aware, no matter exists which could reasonably be expected to give rise to such an investigation, enquiry, proceeding or request for information.

20. BROKERAGE OR COMMISSIONS

No broker, finder, agent or other person is entitled to receive from any Group Company a fee, brokerage, commission or any other sum in connection with this Agreement or anything in it.

21. DIRECTORS, OFFICERS AND EMPLOYEES

21.1 Particulars of directors, officers and employees

A list that is accurate of all directors, officers and Senior Employees and a list that is accurate in all material respects of all other employees of each Group Company has been provided to the Buyer, and sets out the employing Group Company, job title, date of commencement of continuous employment, date of birth, and notice period (or if the contract is fixed term, the length of the term) of every such officer, director and employee. Such list also particularises, in all material respects:

(a) (excluding names) any person who has accepted an offer of employment by any Group Company but whose employment has not yet started who would on employment become a Senior Employee and any current Senior Employee who is under notice of termination of employment or who has so far as the Seller is aware threatened to give notice;

(b) the number of employees who are currently absent from any Group Company and have been so for a period in excess of 30 days and the number of employees who so far as the Seller is aware are due to be absent on maternity leave or annual leave for a period in excess of 30 days together with the reason for absence in each case; and

21.2 Remuneration and benefits

The particulars listed below have been provided to the Buyer, and show:

(a) all remuneration and benefits actually provided to any officer, director or employee of any Group Company (including salary, bonuses, commissions, profit-sharing arrangements, incentive payments, share option schemes, insurance schemes, and any other contractual benefits); and

(b) all remuneration and other benefits which the Company is bound to provide (whether now or in the future) to each officer, director and employee of the Company, including but not limited to on termination of employment or in relation to sickness absence.

21.3 Terms and conditions

(a) The particulars listed below have been provided to the Buyer, and contain:

(i) examples of all the standard written terms and conditions and staff handbooks which apply to officers directors and employees of each Group Company and all officers, directors and employees are engaged on such standard written terms and conditions;

(ii) in respect of each Group Company a copy of the terms and conditions of employment of each Senior Employee; and

(iii) so far as the Seller is aware, details of any Contract or of any practice that has been applied in the last two years pursuant to which employees who are redundant are paid redundancy payments whether contractual or customary in excess of the level required to be made under the Employment Rights Act 1996 section 135.

(b) There are no terms and conditions in any Contract with any officer, director or employee of the Company pursuant to which such person will be entitled to receive any payment or benefit or such person’s rights will change as a direct consequence of the transaction contemplated by this Agreement.

(c) There are no share incentives or share option schemes or arrangements or bonus or other incentive schemes in existence in relation to any officer, director or employee of any Group Company.

21.4 Employees

(a) In respect of all employees and former employees, each Group Company has:

(i) complied with all applicable laws (whether statutory, common law or otherwise) material to the relations between it and its employees;

(ii) maintained adequate and suitable records regarding the service of each such employees;

(iii) complied with all contractual obligations, codes of conduct and customs and practices relevant to the relations between it and its employees including but not limited to the terms of reference and meeting minutes for 2010 to the date of this Agreement of their information and consultation committee(s); and

(iv) complied with all judgments and relevant orders and awards made by the Central Arbitration Committee or ACAS.

(b) Each Group Company has in its possession a copy of an original document evidencing the right of each of its employees who works in the United Kingdom to work for it in the United Kingdom and no Group Company employee working in the United Kingdom is not entitled to work in the United Kingdom under the Immigration, Asylum and Nationality Act 2006.

(d) No Group Company has entered into any contractual outsourcing agreements with a third party with an annual value of more than £40,000 under which the Group

Company has agreed to provide services to a third party or has agreed to the provision of services to it by a third party in either case in circumstances in which the Transfer of Undertakings (Protection of Employment) Regulations 2006 apply other than as set forth in the Data Room.

(e) Save for intra-group secondments of persons to and from Group Companies, no person is currently seconded to any Group Company and no Group Company is under any obligation to have any person seconded to it.

(f) Other than those disclosed in the Disclosure Letter, all subsisting contracts of employment to which any Group Company is a party are terminable by it, on six months’ notice or less without compensation (other than compensation pursuant to the Employment Rights Act 1996).

21.5 Changes since the 2010 Accounts Date

Since the 2010 Accounts Date no Group Company has made any changes or given any contractual commitment to make any changes in the future to the terms of employment emoluments or benefits of or any bonus to any of its officers, directors or employees or made any material gratuitous payment or benefit to any employee or former employee or to any of their respective dependants.

21.6 Loans

There are no amounts owing or agreed to be loaned or advanced by any Group Company to any directors, officers or, to employees of any Group Company (other than amounts representing remuneration accrued due for the current pay period, accrued holiday pay for the current holiday year or for reimbursement of expenses).

21.7 Payment up to Completion

All salaries, wages, other benefits, PAYE (defined below in paragraph 24.4) and national insurance in respect of all employees or former employees of any Group Company have, to the extent due, been paid or discharged in full.

21.8 Industrial relations

(a) No trade union, staff association or any other body representing workers is recognised by any Group Company for the purposes of collective bargaining. No Group Company has received any request from a trade union for recognition within the 12 months prior to this Agreement.

(b) No Group Company has received or issued any request for the establishment of information and consultation arrangements, under the Information and Consultation of Employees Regulations 2004 or the Transactional Information and Consultation of Employees Regulations 1999 within the 12 months prior to this Agreement.

(c) The Disclosure Letter contains copies of any collective agreements between each Group Company and any trade union, staff association or any other body representing workers.

(d) No Group Company is engaged or involved in any trade dispute (as defined in section 218 of the TULR(C)A) with any employee, trade union, staff association or any other body representing workers.

21.9 Disputes, investigations and collective redundancies

(a) No past or present director, officer, or employee of any Group Company is engaged in any formal grievance procedure with any Group Company.

(b) No past or present director, officer, or employee of any Group Company or any predecessor in business has instigated any claim or right of action against the Company in respect of any accident or injury which remains outstanding and which is not fully covered by insurance and so far as the Seller is aware there are no circumstances which are likely to give rise to such claim or right of action.

(c) No Group Company has received notification from any court of competent jurisdiction of proceedings issued against the Group Company by any past or present director, officer or employee in relation to his office or employment which remain outstanding.

(d) No Group Company has any current disciplinary proceedings or appeals in respect of any of its employees or former employees or has taken any disciplinary action against such employees in the 12 months preceding this Agreement and so far as the Seller is aware there are no circumstances which are likely to give rise to such disciplinary proceedings.

(e) No formal complaint about any Group Company has been notified to any Group Company in the two year period prior to the date of this Agreement by the Commission for Racial Equality, the Equal Opportunities Commission, the Disability Rights Commission, any health and safety enforcement body, or any similar Governmental Authority in respect of any act, event, omission or other matter arising out of or in connection with:

(i) any application for employment by any person; or

(ii) the employment (including terms of employment, working conditions, benefits and practices) or termination of employment of any person.

(f) During the 12 months prior to the date of this Agreement no Group Company has given notice of any redundancies to the Secretary of State (or such similar governmental agencies) or started consultations with any representative body under Chapter II, Part IV of the Trade Union and Labour Relations (Consolidation) Act 1992.

(g) All amounts agreed to be paid by a Group Company to any employee in respect of redundancy (whether statutory or contractual) have been paid or have been accrued in full in the accounts of the relevant Group Company.

(h) No Group Company has announced or provided in its accounts for any redundancies to take effect on any date after the Management Accounts Date.

21.10 Transfer regulations

In the past 12 months preceding the date of this Agreement no Group Company has entered into any agreement further to which it has acquired any undertaking or part of one such that the Transfer Regulations apply thereto.

22. PROPERTIES

22.1 All Property

No Group Company owns, uses or occupies any freehold or leasehold estate other than the Properties, and the Properties comprise:

(a) all the land and premises owned or occupied by any Group Company; and

(b) all the rights vested in any Group Company and all agreements whereby a Group Company has any financial entitlement relating to any land at the date hereof.

22.2 No other liabilities

No Group Company has any actual or contingent obligations or liabilities (in any capacity including as principal contracting party or guarantor) in relation to any lease, licence or other interest in, or agreement relating to, land apart from the Properties.

22.3 Title to the Properties

(a) One of the Group Companies is the sole legal and beneficial owner in possession of the whole of each of the Properties and no other person, save for other Group Companies, is in or entitled to occupation of any of the Properties.

(b) One of the Group Companies has in its possession or unconditionally held to its order all the necessary documents of title to all of the Properties.

(c) The Properties (excluding the Manchester Property) are not subject to or affected by any mortgage or charge, debenture, lien, pledge or other form of security interest including any which secure the payment of money or relate to any other obligation or liability of any third party.

(d) All material formalities have been discharged in each relevant jurisdiction in which each relevant Property is located, to ensure that all legal requirements (whether statutory, regulatory or otherwise) appropriate to that jurisdiction to

22.4 Leasehold Properties

(a) Each of the Properties which is leasehold is held under the lease brief details of which are set out in schedule 5.

(b) Any lease of any of the Properties which is a new tenancy for the purposes of the L&T Covenants Act is stated so to be in schedule 5.

(c) The Company has paid the principal rent due and has received no notice from the landlord claiming any outstanding breach of any of the other covenants and obligations on the part of the tenant contained in the relevant lease.

(d) In relation to each of the Properties which is leasehold, there has been no written complaint by the landlord received by the tenant alleging any breach nor any refusal to accept rent.

(e) There are no outstanding notices given by the landlord or the tenant or proceedings pursuant to the Landlord and Tenant Act 1954 or, in the case of Cyberview Czech, the Act No. 116/1990 Coll., on lease of non-residential premises, as amended, of the Czech Republic.

(f) Any consents required for the granting of any lease were duly obtained.

22.5 Occupational interests

All such leases, tenancies, licences and agreements to which the Properties are subject are correctly summarised in the particulars thereof set out in schedule 5 specifying which of such leases is a new tenancy for the purposes of the L&T Covenants Act.

22.6 Use

The existing use of each of the Properties is only that specified in schedule 5.

22.7 Disputes

No Group Company has received written notice of any current contingent or anticipated notice, actions, disputes, claims, liabilities or demands regarding boundaries, easements, covenants or other matters materially affecting any Property or its use.

22.8 Notices, orders and proposals

Neither the Seller nor any Group Company has received any written notice or order affecting any Property from any Governmental Authority which remains outstanding.

22.9 Particulars of Properties

The particulars relating to the Properties set out in schedule 5 are true and accurate in all material respects.

23. PENSIONS

(a) Except for the Schemes, the Group Companies do not have any liability (including any contingent liability) to contribute to any scheme or arrangement for the provision of Relevant Benefits.

(b) The Group Companies do not have any liability to the Bass Plan or the Bass Executive Plan.

(c) All contributions and expenses and premiums payable to or in respect of the Schemes, relating to any period up to and including Completion, have been paid.

(d) All benefits payable in the event of the death or accident, injury or sickness of an employee in service of a Group Company are fully insured with an insurance company authorised under the Financial Services and Markets Act 2000 with permission under that Act to effect and carry out such insurance.

(e) All material information and documents in respect of the Schemes have been provided to the Buyer including full details of the names of all the members of the Schemes and the contributions which are made by any Group Company in respect of those members. There are no other employees of any Group Company who are currently eligible for or who have been offered membership of the Schemes.

(f) No undertaking or assurance (whether or not legally enforceable) has been given or discretion or power exercised by or on behalf of any Group Company or the trustees or provider of the Schemes:

(i) to any person that any benefits under the Schemes (other than lump sum benefits on death in service) will be calculated by reference to any person’s remuneration or length of service or will be approximately or exactly any amount;

(ii) to any person as to the continuance of the Schemes or the continuance, increase or improvement of any benefit provided by, or contribution to, the Schemes; or

(iii) to admit to membership any person who would not normally be eligible for membership of the Schemes or on terms other than those that would normally be applicable under the Schemes.

(g) The participating Group Companies and, so far as Seller is aware, the trustee and scheme administrator have operated the Schemes in compliance with their governing documentation and all applicable laws and regulations.

(h) The Schemes are registered pension schemes under the Finance Act 2004.

(i) So far as the Seller is aware, the records of the Schemes have been properly, fully and accurately maintained.

(j) No person has made or threatened any claim (other than a routine claim for benefits under the Schemes) against any Group Company or, so far as the Seller is aware, against the trustees or administrator of the Schemes or made a complaint or report to the Pensions Regulator in respect of the Schemes. So far as the Seller is aware, there are no circumstances which may give rise to any such claim, complaint or report being made.

(k) All benefits (other than lump sum benefits on death in service) payable under the Schemes are money purchase benefits (as defined in section 181 of the Pension Schemes Act 1993).

(l) There are no circumstances which could result in any penalty for failure to comply with Part I of the Welfare Reform and Pensions Act 1999 or the Stakeholder Pension Schemes Regulations 2000 becoming payable by any Group Company.

(m) No employee or former employee of any Group Company has had his contract of employment transferred to such Group Company from another employer in circumstances where:

(i) the Transfer of Undertakings (Protection of Employment) Regulations 1981 or the Transfer Regulations applied; and

(ii) the employee or former employee was entitled to defined benefit occupational pension scheme rights in respect of his employment before such transfer to such Group Company.

(n) No Group Company is or has been connected with, or an associate of, an employer (within the meaning of sections 249 and 435 of the Insolvency Act 1986 respectively) in relation to a defined benefit occupational pension scheme.

(o) The employees listed in document 2.31 in the Data Room are the only employees who transferred to the Company and the Subsidiaries, under the Transfer of Undertakings (Protection of Employment) Regulations 1981 or the Transfer Regulations, as a result of:

(i) the sale and purchase agreement dated 16 March 1998 by which there was a transfer of Barcrest Limited from Bass Machine Holdings Limited to the Company; and

(ii) the agreement dated 2 August 1997 by which there was a transfer of trade and assets by Gala Holdings Limited to Barcrest Limited.

24. TAX

24.1 Returns and Disputes

(a) Each Group Company has made all returns and supplied all information and given all notices to HMRC or other Taxation Authority as reasonably requested or required by law within any requisite period and all such returns and information and notices were correct and accurate in all material respects.

(b) No Group Company is, nor so far as the Seller is aware is it reasonably likely to be, involved in any dispute in relation to Tax and neither HMRC nor any other Taxation Authority has in the past six years investigated or indicated in writing that it intends to investigate the Tax affairs of a Group Company.

24.2 Accounts

The Accounts make full provision or reserve in respect of any period ended on or before the Accounts Date for all Tax assessed or liable to be assessed on each Group Company or for which a Group Company is accountable at the Accounts Date whether or not a Group Company has or may have any right of reimbursement against any other person.

24.3 Payment of Tax

Each Group Company has paid all Tax which it has become liable to pay and has not paid or become liable to pay any penalty, interest, surcharge or other payment in connection with any claim for Tax.

24.4 Pay As You Earn

(a) Each Group Company has properly operated the Pay As You Earn system or non-UK equivalent (“ PAYE ”) system, deducted Tax as required by law, duly accounted to the relevant Taxation Authority for Tax under PAYE, and complied with its reporting obligations to such Taxation Authority including in relation to payments made to contractors. No PAYE audit in respect of a Group Company has been made by a Taxation Authority nor has any Group Company been notified that any such audit will be made.

24.5 Value Added Tax

(a) The Company is a registered taxable person for the purpose of the relevant VAT Legislation and is the representative member of a VAT group comprising the Company, Red Gaming Limited, IGT UK Gaming Limited and IGT UK Group Limited.

(b) The Company and any Group Company that is not part of the VAT group referred to above has complied in all respects with the requirements and provisions of relevant VAT Legislation and has made and maintained accurate and up to date records, invoices, accounts and other documents required by or necessary for the

purposes of such VAT Legislation and the Company and any such Group Company has punctually made all payments and returns required thereunder.

24.6 Stamp Duty

All documents to which a Group Company is a party and under which form part of a Group Company’s title to any material owned by it have been duly stamped.

24.7 Foreign Element

Each Group Company has always been resident in the territory in which it was incorporated and has never been resident in any other territory or treated as so resident for the purposes of any double Tax agreement. No Group Company is or has ever been subject to Tax in any jurisdiction other than its place of incorporation by virtue of having a permanent establishment or other place of business in that jurisdiction.

24.8 Close Group Company

No Group Company is nor has it ever been a close company as defined by section 439 Corporation Tax Act 2010.

24.9 Group Relief and Consortium Relief

The Disclosure Letter contains particulars of all arrangements made in the last four accounting periods relating to Relief surrendered or claimed pursuant to Part 5 Corporation Tax Act 2010 (“ group relief ”) to which a Group Company is or has been a party and in that period:

(i) all claims by a Group Company for such Relief were when made and are now valid and have been or will be allowed by way of relief from corporation tax;

(ii) no Group Company has made nor is liable to make any payment for group relief otherwise than in consideration for the surrender of group relief allowable to the Group Company in question by way of relief from corporation tax;

(iii) each Group Company has received all payments due to it under any agreement for surrender of group relief by it for periods prior to the Accounts Date;

(iv) no such payment exceeds or could exceed the amount permitted by section 183 Corporation Tax Act 2010.

24.10 Secondary Liability

No Group Company has within the last six years entered into any indemnity, guarantee or covenant under which it has agreed to meet or pay a sum equivalent to or by reference to another person’s liability to Tax.

24.11 Clearances and Consent

No action has been taken by a Group Company in respect of which any consent or clearance from any Taxation Authority was required save in circumstances where such consent or clearance was validly obtained, and where any conditions attaching thereto were and will, immediately following Completion, continue to be met.

24.12 Special Arrangements

No Taxation Authority is operating any special arrangement (being an arrangement which is not based on relevant legislation or any published practice) in relation to the affairs of any Group Company.

24.13 Withholdings

Each Group Company has duly and punctually complied with its obligations to deduct, withhold or retain amounts of or on account of Tax from any payments made by it and to account for such amounts to the relevant Taxation Authority and has complied with all its reporting obligations to such Taxation Authority in connection with any such payments made.

24.14 Transfer Pricing

All transactions entered into by each Group Company have been entered into on an arm’s length basis and the consideration (if any) charged or received or paid by each Group Company on all transactions entered into by it has been equal to the consideration which might have been expected to be charged, received or paid (as appropriate) between independent persons dealing at arm’s length and no notice or enquiry by any Taxation Authority has been made in connection with any such transaction.

24.15 Capital Allowances and Chargeable Gains

Copies of all claims for relief and elections made by a Group Company in respect of gains having been realised and rolled over, or held over (as the case may be) in the current period and the preceding five periods have been provided to the Buyer.

24.16 Intra-Group Transactions

(a) No Group Company has acquired any asset other than trading stock from any member of the Seller’s Group.

(b) All related party transactions to which Cyberview Czech is or has been a party have always been made in accordance with Section 196a of the Commercial Code of the Czech Republic.

24.17 Employment related securities

In relation to any employment related securities acquired by an employee of a Group Company prior to Completion, such Group Company and employee have entered into a valid election under section 431 of Income Tax (Earnings and Pensions) Act 2003 in respect of such securities.

24.18 Avoidance

No Group Company has entered into any notifiable arrangements for the purposes of Part 7 of the Finance Act 2004 or any notifiable schemes for the purposes of Schedule 11A to the VATA 1994.

24.19 Tax Computations

Copies of the tax computations and related documents for each Group Company for the accounting period ending 29 September 2009 are contained in the Data Room.

24.20 US Matters

(a) Each of Red Gaming Limited and Cyberview Czech is treated as a controlled foreign corporation as defined under section 957 of the Code and the regulations thereunder. Other than the Company and Barcrest Group Technology Limited, no Group Company has an election in effect for purposes of section 7701 of the Code, and the regulations thereunder, to be treated as something other than a corporation for US federal income tax purposes.

(b) No Group Company has an account for the purposes of section 952(c) of the Code, and the regulations thereunder.

25. ENVIRONMENTAL MATTERS

25.1 In this paragraph:

(a) “ Environmental Law ” means all statutes, subordinate legislation, common law, civil codes, criminal codes, regulations, judgments and statutory guidance notes that are or were in force and binding on any Group Company at or prior to the date of this Agreement and that concern Environmental Matters;

(b) “ Environmental Licence ” means any permit, licence, authorisation, consent or other approval, or any notification, registration or waiver, required at the date of this Agreement under Environmental Law for the carrying on of the business of any Group Company or in relation to any Property, as such business is carried on, or as such Property is used by the business, as at the date of this Agreement; and

(c) “ Future Environmental Law ” means all statues, subordinate legislation, common law, civil codes, criminal codes, regulations, judgments and statutory guidance notes that are or will be in force and binding on any Group Company within one year immediately following the date of this Agreement, that concern Environmental Matters and which the Seller is aware of as at the date of this Agreement.

25.2 Compliance

(a) Each Group Company is at the date of this Agreement in compliance and, during the three years immediately prior to the date of this Agreement, has complied, with all applicable Environmental Law and with the terms and conditions of all Environmental Licences.

(b) Each Group Company has obtained all Environmental Licences, and all such Environmental Licences are valid and subsisting.

(c) So far as the Seller is aware, no material operating or capital expenditure is required now, or in the three years immediately following the date of this Agreement, in relation to the business of any Group Company as carried on at the date of the Agreement, in order to comply with, extend, renew or obtain any Environmental Licence or in order to comply with (i) any Environmental Law, or (ii) any Future Environmental Law.

(d) Neither the Seller nor any Group Company has received any written notice or claim or other formal written communication which is outstanding at the date of this Agreement and under which any Group Company is in violation of any Environmental Law or Environmental Licence, or which states that any further Environmental Licence is likely to be required, or that any existing Environmental Licence may be revoked, suspended, varied or limited.

(e) So far as the Seller is aware, no Group Company is in breach of, or has a liability under, Environmental Law and which is, in either case, outstanding at the date of the Agreement and which relates to:

(i) any soil or groundwater contamination present at any Property at the date of this Agreement; or

(ii) any property (other than a Property) which has been owned or occupied by any Group Company.

(f) All audits, assessments, reports and other reviews concerning Environmental Matters in the possession or control of the Seller or any Group Company, which have been commissioned in the three years immediately prior to the date of this Agreement, and relating to the operation of the business of any Group Company or any Property have been disclosed to the Buyer.

25.3 Litigation

There are no civil, criminal, arbitration or administrative or other formal proceedings pending or, so far as the Seller is aware, threatened against any Group Company in relation to any breaches of Environmental Law or of the terms and conditions of any Environmental Licences which are material to the operation of its business and which are outstanding as at the date of this Agreement.

26. DATA ROOM DVD

The DVD to be provided by the Seller to the Buyer promptly after the date of this Agreement, and in any event by no later than five Business Days after the date of this Agreement, as referred to in clause 4.11 of this Agreement, will contain a true, complete and correct copy of all materials and information contained in the internet website “Project Ben DataSite” maintained by Merrill Corp. at the direction of the Seller as at 21 April 2011, and will not contain any materials or information which were not made available by the Seller to the Buyer on that website as at that date.

SCHEDULE 4

Seller Protection Clauses

1. Save in the case of fraud, fraudulent misrepresentation or fraudulent concealment by the Seller, the Seller shall be under no liability in respect of any claim under the Warranties (other than the Fundamental Warranties, a claim in respect of which shall not be restricted in any manner under this paragraph 1) or under the Tax Deed and any such claim shall be wholly barred and unenforceable unless written notice setting out a brief summary of the material facts giving rise to the potential claim which are then reasonably and readily available to the Buyer, shall have been served upon the Seller by the Buyer after it becomes likely that such a claim will be made, and in any event:

1.1 in the case of a claim under the Warranties other than the Tax Warranties, as defined below (the “ Non-Tax Warranties ”), and other than the Warranties relating to Intellectual Property, as set forth in paragraph 6 of schedule 3 (the “ IP Warranties ”), by no later than 5.00 p.m. on the date falling 18 months after the Completion Date;

1.2 in the case of a claim under the IP Warranties, by not later than 5.00 p.m. on the third anniversary of the Completion Date; and

1.3 in the case of a claim under the Warranties in paragraph 24 of schedule 3 (the “ Tax Warranties ”) or under the Tax Deed by not later than 5.00 p.m. on the sixth anniversary of the date falling three months after Completion,

1.4 and the liability of the Seller for any claim specified in such notice shall absolutely determine and cease if either (unless the amount payable in respect of the relevant claim has been agreed by the Seller within six months of the date of such written notice), legal proceedings have not been instituted in respect of such claim by the due service of process on the Seller within: (i) in the case of a claim under a Non-Tax Warranty, six months of the date of such written notice; or (ii) in the case of a claim under a Tax Warranty, twelve months of the date of such written notice. Where a claim is made in respect of a matter where the loss to the Buyer or to a Group Company is uncertain, or such claim is unascertainable or otherwise contingent on another event, such legal action need not be brought until six months after the first to occur of the loss becoming ascertained or ascertainable or ceasing to be contingent.

2. Save in the case of fraud, fraudulent misrepresentation or fraudulent concealment by the Seller, the Seller shall be under no liability in respect of any claim under the Warranties (other than the Fundamental Warranties with respect to paragraph 2.2 below):

2.1 where the liability of the Seller in respect of that claim, when aggregated with other claims arising from the same or similar subject matter, facts, events or circumstances would (but for this paragraph) have been less than £10,000; or

2.2 unless and until and only to the extent that the liability in respect of that claim (not being a claim for which liability is excluded under, paragraph 2.1 above) when aggregated with the liability of the Seller in respect of all other such claims shall exceed £250,000, in

which event the Seller shall be liable for the full amount of all such qualifying claims, and not just the excess over £250,000.

3. Save in the case of fraud, fraudulent misrepresentation or fraudulent concealment by the Seller, the aggregate liability of the Seller (before any netting off or set off of any liability of the Buyer) in respect of all claims whatsoever under the Warranties, a claim for a breach of the Specified Covenant (other than a claim for a bad faith breach of the Specified Covenant), claims under the Tax Deed and claims under the indemnity set forth at clause 9.9(k) shall not in any circumstances exceed:

(a) £16,500,000 for all claims under the Non-Tax Warranties, the Specified Covenant and claims under the indemnity set forth at clause 9.9(k), other than claims for breach of the Fundamental Warranties and the Environmental Warranties and claims for bad faith breaches of the Specified Covenant; and

(b) the aggregate of the Share Consideration and any Deferred Consideration that has been paid by the Buyer to the Seller at the relevant time, for breaches of the Fundamental Warranties, the Tax Warranties, the Environmental Warranties, claims against the Seller for breach of the Specified Covenant (other than claims for bad faith breaches of the Specified Covenant), claims under the Tax Deed and claims under the indemnity set forth at clause 9.9(k), provided that, and without prejudice to the provisions of (a) above, the aggregate of all claims under or arising out of the Warranties, for breach of the Specified Covenant (other than claims for bad faith breaches of the Specified Covenant), under the Tax Deed and claims under the indemnity set forth at clause 9.9(k) shall in no case exceed the aggregate of the Share Consideration and any Deferred Consideration that has been paid by the Buyer to the Seller at the relevant time.

4. The Seller shall be under no liability in respect of any claim under the Warranties given as at the date of this Agreement to the extent that the facts or circumstances giving rise thereto are fairly disclosed in the Disclosure Letter. Without prejudice to the Buyer’s right under clause 14.1(e) to terminate this Agreement in the circumstances provided for therein, the Seller shall be under no financial liability in respect of any claim under the Warranties given as at Completion to the extent that the facts or circumstances giving rise thereto occur or arise after the date of this Agreement and are outside the control of the Seller or any of its Related Persons, each acting in good faith and with a reasonable level of skill and diligence, and are fairly and duly disclosed in writing to the Buyer by no later than the day which is five Business Days prior to the Completion Date. Nothing in the Disclosure Letter shall constitute a representation or warranty as to the accuracy of the information forming part of the Disclosure Letter.

5. No liability (whether in contract, tort or otherwise) shall attach to the Seller in respect of any claim under the Warranties (other than the Fundamental Warranties) to the extent that:

5.1 the claim is based upon a liability which is contingent only, unless and until such contingent liability becomes an actual liability (subject to paragraph 3);

5.2 specific provision or reserve in respect of the matter giving rise to the claim shall have been made in the Completion Accounts and shall have been taken into account in the calculation of the Share Consideration in accordance with the provisions of clause 7 and schedule 7;

5.3 the claim occurs wholly or partly out of or the amount thereof is increased as a result of:

(a) any change in the accounting principles or practices of any member of the Buyer’s Group introduced or having effect after the Completion Date unless the same is introduced to bring the accounting principles and practices into line with the generally accepted accounting principles and practices of the relevant jurisdiction including, where relevant, International Accounting Standards, in relation to a business of the type carried on by the Company or the Group Companies; or

(b) save in relation to any Future Environmental Law (but only to the extent required for the purpose of paragraph 25.2(c) of Schedule 3), any change in law or regulation or in its interpretation or administration by the English courts or by any other fiscal, monetary or regulatory authority (whether or not having the force of law) introduced or having effect after the Completion Date; or

5.4 the loss or damage giving rise to the claim is actually recovered by the Buyer’s Group under any policy of insurance maintained by a Group Company as at Completion.

6. In assessing any liabilities damages or other amounts recoverable by the Buyer as a result of any claim under the Warranties there shall be taken into account any benefit accruing to the Buyer’s Group including, without prejudice to the generality of the foregoing, any amount of any Relief obtained, utilised and retained by the Buyer’s Group or the net present value of any amount by which any Taxation for which the Buyer’s Group is liable to be assessed or accountable is reduced or extinguished, arising directly in consequence of the matter which gives rise to such claim.

7. No liability will arise and no claim may be made under any of the Warranties to the extent that the matter giving rise to such claim is remediable, unless such matter shall not have been remedied to the reasonable satisfaction of the Buyer within the period of 15 days following the date of service of notice by the Buyer to the Seller.

8. 8.1 This paragraph 8 shall apply in circumstances where:

(a) any claim is made against the Buyer’s Group by a third party which may give rise to a claim by the Buyer’s Group against the Seller under the Non-Tax Warranties or the indemnities set forth in clause 9.9; or

(b) the Buyer’s Group is or may be entitled to make recovery from some other person any sum in respect of any facts or circumstances by reference to which the Buyer’s Group has or may have a claim against the Seller under the Non-Tax Warranties or the indemnities set forth in clause 9.9; or

(c) the Seller shall have paid to the Buyer’s Group an amount in respect of a claim under the Non-Tax Warranties or the indemnities set forth in clause 9.9 and subsequent to the making of such payment the Buyer’s Group becomes or shall become entitled to recover from some other person a sum which is referable to that payment.

8.2 The Buyer, subject to it being indemnified to its reasonable satisfaction by the Seller in respect of any losses or costs it may suffer pursuant to the Seller’s actions in accordance with this paragraph 8, shall and shall procure that the Buyer’s Group shall:

(a) (prior to taking any action against the Seller under the Non-Tax Warranties or the indemnities set forth in clause 9.9 in the case of paragraph 8.1(a) and paragraph 8.1(b)) promptly and diligently take all such action as the Seller may reasonably request including the institution of proceedings and the instruction of professional advisers approved by the Seller and acceptable to the Buyer (acting reasonably) to act on behalf of the Buyer to avoid, dispute, resist, compromise, defend or appeal against any such claim against the Buyer’s Group as is referred to in paragraph 8.1(a) or to make such recovery by the Buyer’s Group as is referred to in paragraph 8.1(b) or paragraph 8.1(c), as the case may be, in accordance with the reasonable instructions of the Seller; and

(b) not settle or compromise any liability or claim to which such action is referable without the prior written consent of the Seller which consent shall not be unreasonably withheld or delayed; and

(c) in the case of paragraph 8.1(c) only, promptly following receipt of the relevant sum, repay to the Seller an amount equal to the amount so recovered (less any costs, expenses and tax incurred by the Buyer and its Related Persons in connection with the recovery of such amount) or, if lower, the amount paid by the Seller to the Buyer,

provided that neither the Buyer nor any of its Related Persons shall be under any obligation to take any steps or action that the Buyer reasonably considers would, or would be reasonably likely to, be prejudicial to its business or to the business of any of its Related Persons.

9. Nothing in this Agreement shall or shall be deemed to relieve the Buyer of any common law duty to mitigate any loss or damage incurred by it as a result of a breach of Warranty.

10. For the avoidance of doubt, save to the extent expressly provided for in this schedule 4, any claim under the Tax Warranties shall be governed by the Tax Deed.

11. The limitations of liability contained in this schedule 4 shall not apply to any liability for any claim to the extent that the same is attributable to fraud, fraudulent misrepresentation or fraudulent concealment on the part of the Seller or any of its Representatives or to any claim of any nature whatsoever under this Agreement other than a claim under the Warranties, save, in the case of paragraph 3 of this schedule 4, for a claim for a breach of the Specified Covenant other than such a claim for a bad faith breach of the Specified

Covenant and for claims under the indemnity set forth at clause 9.9(k) and, in the case of paragraph 8 of this schedule 4, for claims under the indemnities set forth in clause 9.9.

12. Any failure by the Buyer or any of its Related Persons to comply with the requirements of this schedule (other than the specified time limit for the notification of claims or commencement of legal action as set out in paragraph 1) shall not absolve or release the Seller or any member of the Seller’s Group from liability, but shall entitle the Seller to claim a deduction from its liability to pay any claim in respect of a breach of Warranty to the extent it is financially prejudiced by such failure, and provided that the Seller shall have taken reasonable steps to mitigate such financial prejudice.

SCHEDULE 11

CONDUCT OF THE GROUP COMPANIES PRE-COMPLETION

1. From the date of this Agreement until Completion, the Seller and the Czech Seller, as applicable, shall except as required by clauses 4.8 and 4.9 of this Agreement:

(a) procure that each Group Company carries on its business only in the ordinary and usual course consistent with past practice;

(b) procure that all reasonable steps are taken to preserve and protect the assets of each of the Group Companies and to preserve and retain the goodwill of their businesses (including the existing relationships with customers, employees and suppliers);

(c) subject to clause 12 ( Confidential Information ) and the requirements of applicable law, procure that the Buyer’s Representatives shall be allowed, upon reasonable notice and during Working Hours, access to: (i) the books and records (or those parts of such books and records) of each Group Company, including all statutory books, minute books, leases, contracts, supplier lists and customer lists, any notice or communication received from, or provided to, any Governmental Authority in connection with the business of any member of the Group, any communication received from a distributor, supplier or customer which is or could reasonably be expected to be material to the business of any Group Company or the Group, and any other information relating to the business, assets, operations or financial and trading position of any of the Group Companies, as the Buyer may reasonably request from time to time (but excluding any information that relates to the sale or divestiture process with respect to the Company or the Shares conducted by the Seller Guarantor and its Affiliates up to and including Completion, including strategy, other potential interested parties, negotiations, projections, or other information related thereto) , together with the right to take copies (provided that such information is returned to the Seller promptly in the event that Completion does not occur); and (ii) with the prior consent of the Seller (not to be unreasonably withheld) the premises (including the Properties) used by, and management of, the Group Companies on such terms as are agreed between the Seller and the Buyer provided, however, that (i) the Buyer shall schedule such access through a designated officer of the Seller and in such a way as to avoid disrupting the normal business of the Group Companies, (ii) the Seller shall not be required to take any action which would, in the Seller’s judgment, constitute a waiver of the attorney client or other privilege, and (iii) the Seller need not supply any information which it is under a legal obligation not to supply;

(d) not knowingly do or procure, and shall ensure that no Group Company or other member of the Seller Group shall knowingly do or procure, any act or omission which c ould be prevented with the exercise of reasonable diligence which would constitute or give rise to a breach of any Warranty (in the knowledge that such act

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or omission would constitute or give rise to such a breach) when the Warranties are repeated at Completion as provided in this Agreement;

(e) make prompt disclosure to the Buyer of all relevant information which comes to the notice of the Seller or any other member of the Seller’s Group in relation to any fact or matter (whether existing on or before the date of this Agreement or arising afterwards) which the Seller reasonably believes constitutes, or w ould reasonably be expected to constitute a breach of any Warranty when the Warranties are repeated at Completion as provided in this Agreement;

(f) procure that there is no declaration, authorisation, making or payment of a dividend or other distribution of any kind (other than the Pre-Completion Dividends) nor any reduction of its paid-up share capital by any Group Company;

(g) procure that no share or loan capital or other security is created, allotted or issued or agreed to be created, allotted or issued by any Group Company and that no option over or other right to subscribe for any share or loan capital or other security is granted by any Group Company;

(h) procure that there is no sale, purchase, redemption or repurchase by any Group Company or any member of the Seller Group of any share or loan capital or other security of any Group Company;

(i) procure that each Group Company continues to make capital expenditures as contemplated by the Business Plan and that no Group Company makes any material capital expenditure not contemplated by the Business Plan;

(j) procure that no Senior Employee is given notice of the termination of his or her employment or is dismissed (except for incompetence or gross misconduct or other reasonable cause justifiable in law) without the prior consent of the Buyer;

(k) continue each Policy and not do or omit to do anything; which would make a Policy void or voidable;

(l) procure that no amendment or other modification is made, and no waiver or consent is granted, under any of the constitutional documents of any of the Group Companies, and that no Group Company changes the nature or scope of its business;

(m) procure that a claim is filed by Cyberview Czech as a creditor of Sazka in the Sazka Insolvency Proceedings in accordance with the requirements of the Czech Insolvency Act, in particular within the time limit for submission of claims by creditors provided for under that Act, and keep the Buyer fully and promptly informed of all material developments in the Sazka Insolvency Proceedings, including providing the Buyer with all material correspondence, communications and documents received by a Group Company in connection with the Sazka Insolvency Proceedings, including written legal advice in connection therewith; and

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(n) procure that no Contract to do, engage or cause any act or thing that would constitute a breach of any of the foregoing is entered into or approved by the Seller , any Group Company or any of their Related Persons.

2. From the date of this Agreement until Completion, the Seller shall procure that, save with the prior written consent of the Buyer (such consent not to be unreasonably withheld):

(a) none of the following are done, permitted or agreed to be done by or in relation to the Group Companies except as required by clauses 4.8 or 4.9 of this Agreement:

(i) the reorganisation of any Group Company, or the discontinuance of any line of the business of any Group Company;

(ii) any entry into or material modification of or termination of, any Significant Contract or a Contract of a long term or unusual nature, or any material modification of any Contract which would cause the relevant Contract to become a Significant Contract or a Contract of a long term or unusual nature. For the purposes of this paragraph (ii), “ Significant Contract ” means a Contract which does or could reasonably be expected to generate annual revenues of at least, or involve annual expenditure in excess of, £100,000, and a “ Contract of a long term or unusual nature ” means a Contract that: (A) is not capable of performance within its terms within twelve months after the date on which it is entered into or undertaken; (B) cannot be terminated on less than twelve months’ notice; (C) could involve an obligation or a liability for expenditure in excess of £100,000; or (D) may result in any material change in the nature or scope of the operations of any Group Company;

(iii) the giving of or entry into any individual guarantee, indemnity or other agreement to secure an obligation of a third party;

(iv) any increase in the amount of any Intra-Group Payables owed by any Group Company at the date of this Agreement or the creation of any new Intra-Group Payables or Receivables, in each case other than in the ordinary course of trading consistent with past practice;

(v) the institution or settlement of, or agreement to settle, any litigation, where the institution or settlement would result in a payment to or by a Group Company of £50,000 or more, or the institution of any litigation against any customer of or supplier to any Group Company;

(vi) the entry into, or the variation, termination of waiver of any rights in respect of, any transaction between a Group Company and any member of the Seller’s Group;

(vii) the entry into or the material modification of any subsisting agreement with any trade union or other body representing its employees or relating to any works council;

116

(viii) the creation of any Encumbrance over the Shares or the shares or (save for any Permitted Encumbrance) assets (including any Intellectual Property) of any Group Company, or any of them, in each case which are not released within 30 days of their creation;

(ix) incur Financial Debt (except pursuant to facilities disclosed in the Disclosure Letter where the Financial Debt does not exceed the amount available to be drawn by each Group Company under those facilities);

(x) the acquisition of, or entry into an agreement to acquire, or the disposal (whether by sale, license, lease or otherwise) of, or entry into an agreement to dispose (whether by sale, license, lease or otherwise) of, any asset (including any Intellectual Property) involving consideration, expenditures or liabilities in excess of £50,000 or of any stock, in each case, other than in the ordinary course and consistent with past practice or as contemplated by any Transaction Agreement;

(xi) the adoption or change in any accountancy method relating to Tax (unless required by applicable accounting standards) or the making of or change to any election relating to Tax or settlement of any claim or assessment relating to Tax (unless and to the extent that the making or changing of election or settlement of claim or assessment is reflected in a provision for Tax in the Completion Accounts) or as required pursuant to the Tax Deed;

(xii) the extension for a period longer than seven days of the period of time within which amounts due to any Group Company may be paid;

(xiii) except for replacement of departing employees, employing or agreeing to employ any new persons full-time on terms that would result in compensation expenses of more than £50,000 per annum in the aggregate; or engaging any part-time employee or consultant whose employment or consulting contract cannot be terminated with no prior notice and without liability to any Group Company from and after Completion;

(xiv) materially changing or amending the terms of employment (including pension fund commitments) of, or providing any new, increased or accelerated remuneration or benefits to, any employee, other than as required by law (in which case the Seller shall notify the Buyer of such change, increase or acceleration);

(xv) the taking of any material step or action in connection with the Sazka Insolvency Proceedings, including exercising any voting rights at meetings of creditors of Sazka in the course of the Sazka Insolvency Proceedings;

(xvi) agreeing to vary, amend or terminate the Sazka Contract or to waive any rights thereunder; and

117

(xvii) entering into or approving any Contract to do, engage or cause any of the foregoing.

(b) save as contemplated by the Transaction Agreements, none of the following things are done, permitted or agreed to be done in relation to the Properties:

(i) termination or serving of any notice to terminate, surrender or accept any surrender of or waiving the terms of any lease, tenancy or licence;

(ii) agreeing any new rent or fee payable under any lease, tenancy or licence;

(iii) entering into or in any material respect varying any agreement, lease, tenancy, licence or other commitment; and

(iv) entering into or approving any Contract to do, engage or cause any of the foregoing.

(c) the members of the Seller Group providing services to any Group Company of a nature similar to those services described in the Transitional Services Agreements shall continue to provide such services in the ordinary course and consistent with past practice over a period of three months prior to the date of this Agreement.

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Signed by	)
for and on behalf of IGT-UK GROUP	)	/s/ Patti S. Hart
LIMITED	)	Patti S. Hart
in the presence of:	)

		/s/ Jill P. Reith
		Jill P. Reith
		Witness

[Signature page to Share Purchase Agreement]

Signed by	)
for and on behalf of	)	/s/ Patti S. Hart
INTERNATIONAL GAME	)	Patti S. Hart
TECHNOLOGY	)
in the presence of:	)	/s/ Jill P. Reith
		Jill P. Reith
		Witness

[Signature page to Share Purchase Agreement]

Signed by	)
for and on behalf of CYBERVIEW	)	/s/ Patti S. Hart
INTERNATIONAL, INC.	)	Patti S. Hart
	)
in the presence of :	)

County of Clark

State of NEVADA

I, Jill P. Reith , a Notary Public for said County and State, do hereby certify that Patti S. Hart, personally appeared before me this day and acknowledged the due execution of the foregoing instrument.

Witness my hand and official seal, this 25 th day of April, 2011.

(Seal)

					/s/ Jill P. Reith
					Notary Public
					My commission expires: August 31, 2012

[Signature page to Share Purchase Agreement]

Signed by	)
for and on behalf of GLOBAL DRAW	)	/s/ Ian Timmis
LIMITED	)	Ian Timmis
in the presence of :	)

		/s/ Phil Horne
		Phil Horne
		Witness

[Signature page to Share Purchase Agreement]

Signed by	)
for and on behalf of SCIENTIFIC	)	/s/ Jeffrey S. Lipkin
GAMES CORPORATION	)	Jeffrey S. Lipkin
in the presence of :	)

		/s/ Alana J. Cohen
		Alana J. Cohen
		Witness

I hereby certify that the above signature, signed before me, is the true signature of Jeffrey S. Lipkin, who appeared before me and whose identity I have verified.

/s/ Carol L. Gilmore
A Notary Public in and for the
State of New York


(Seal)

[Signature page to Share Purchase Agreement]

Exhibit 31.1

Certification by Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, A. Lorne Weil, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Scientific Games Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2011

/s/ A. Lorne Weil
A. Lorne Weil
Chief Executive Officer

Exhibit 31.2

Certification by Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeffrey S. Lipkin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Scientific Games Corporation;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2011

/s/ Jeffrey S. Lipkin
Jeffrey S. Lipkin
Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Scientific Games Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, A. Lorne Weil, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

	/s/ A. Lorne Weil
	A. Lorne Weil
	Chief Executive Officer
	August 9, 2011

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Scientific Games Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey S. Lipkin, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Jeffrey S. Lipkin
	Jeffrey S. Lipkin
	Chief Financial Officer
	August 9, 2011