Amended and Restated Credit Agreement, dated March 29, 2021, between Galaxy Gaming, Inc., a Nevada corporation, and Zions Bancorp, N.A., dba Nevada State Bank, a Nevada state banking corporation

Section 4.28         Material Adverse Occurrence. Since December 31, 2019, there has been no Material Adverse Occurrence.

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(h)          Reasonably promptly upon any officer of the Borrower becoming aware of any pending or threatened revocation, cancellation, suspension or non-renewal of any Gaming License or any other license, permit, consent, authorization or similar right that is material to the operation of the Borrower’s or its Subsidiaries’ business, a notice from the Borrower describing the nature and status thereof and what action the Borrower proposes to take with respect thereto.

 

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

 

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

 

(k)          From time to time, such other information regarding the business, operation and financial condition of the Borrower and the Subsidiaries as the Lender reasonably requests, including copies of any Gaming Licenses.

 

 

 

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

 

Section 5.3          Insurance.

 

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

 

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

 

(c)          The Borrower shall, and shall use its best efforts to cause each Subsidiary to, carry and maintain each policy for such insurance with a company which is rated no lower than “A” by A.M. Best Company, Inc. and “AA” by S&P at the time such policy is placed and at the time of each annual renewal thereof (or reasonably equivalent foreign rating where applicable); and

 

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

 

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

 

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

 

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

 

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

 

Section 5.8          Compliance. The Borrower will, and will cause each Subsidiary to, (a) comply in all material respects with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject including, without limitation, all Anti-Corruption Laws and applicable Sanctions, and (b) obtain and maintain in full force and effect all permits, licenses (including Gaming Licenses), consents and authorizations required by law (including any Gaming Authority) for the ownership, use or operation of the businesses and properties owned by the Borrower and its Subsidiaries, and comply, in all material respects, with the provisions thereof.

 

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

 

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

 

Section 5.11          Further Assurances.

 

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

 

(b)          Subsidiaries. In addition to and not in limitation of the foregoing paragraph (a), upon the formation of any Subsidiary after the Closing Date or upon the acquisition of any fee interests in domestic real property after the Closing Date by the Borrower or any Subsidiary, the Borrower shall promptly provide written notice to the Lender of such formation or acquisition and provide any information related thereto that the Lender may reasonably request. The Borrower shall designate each Subsidiary as either a Restricted Subsidiary or an Excluded Subsidiary. Each Restricted Subsidiary shall join the Guaranty and guaranty the Obligations, and the holder of the Equity Interests in each Restricted Subsidiary shall pledge (i) in the case of a Domestic Subsidiary, all of the Equity Interests of such Domestic Subsidiary, and (ii) in the case of a Foreign Subsidiary, 65% of the Equity Interests of such Foreign Subsidiary. Any Person owning such domestic real property shall grant to the Lender a security agreement as required by the Lender (and permit the Lender to perfect such interest) in the real property of such Person, creating a first-priority mortgage or deed of trust (subject to Permitted Liens) and deliver such other related documents and instruments as the Lender reasonably requests. The Borrower or the applicable Subsidiary shall, at the Borrower’s cost and expense, execute and deliver to the Lender such documents and instruments reasonably deemed necessary by the Lender to effect the matters specified in this Section 5.11(b).

 

(c)          Excluded Subsidiaries. Concurrently with the delivery of each Compliance Certificate, the Borrower shall advise the Lender as to any Excluded Subsidiary that now qualifies as a Restricted Subsidiary and comply with the requirements of Section 5.11(b) with respect to such newly designated Restricted Subsidiary.

 

(d)          Cash Management. Within 90 days after the Closing Date, the Borrower and each of its Domestic Subsidiaries shall maintain all deposit accounts and cash management accounts with the Lender (such accounts collectively, the “Primary Cash Management Accounts”).

 

Section 5.12          Compliance with Terms of Material Contracts. The Borrower shall, and shall cause each Subsidiary to, make all payments and otherwise perform all material obligations of all material contracts, permits, licenses (including Gaming Licenses), consents and authorizations to which the Borrower or such Subsidiary is a party.

 

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

 

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

 

Section 5.15          Post-Closing.

 

(a)          Landlord Agreements. If requested by the Lender, the Borrower will use commercially reasonable efforts to obtain, within 60 days after the date of the Lender’s request, or such later date as the Lender, in its sole discretion, shall designate, (a) landlord waivers with respect to any leased locations of the Loan Parties listed on Schedule 4.24, duly signed by the applicable landlord and attaching a copy of the applicable lease, and (b) control agreements with respect to any deposit accounts or securities accounts listed on Schedule 4.25, in each case, in form and substance reasonably satisfactory to the Lender.

 

(b)          Pledged Equity. If ever any Restricted Subsidiary opts into Article 8 of the Uniform Commercial Code, as enacted in any jurisdiction, or otherwise certificates its Equity Interests, then, within 14 days after the date of such certification, or such later date as the Lender, in its sole discretion, shall designate, the Borrower shall deliver to the Lender equity certificates representing (i) in the case of a Domestic Subsidiary, all of the Equity Interests of such Domestic Subsidiary, and (ii) in the case of a Foreign Subsidiary, 65% of the Equity Interests of such Foreign Subsidiary, together with a transfer power, executed in blank.

 

(c)          Insurance Certificates. Within 14 days after the Closing Date, or such later date as the Lender, in its sole discretion, shall designate, the Borrower shall deliver to the Lender property and liability insurance certificates demonstrating that the Borrower maintains the insurance required by Section 5.3, naming the Lender as an additional insured or loss payee (and with a lender’s loss payable endorsement) and stating that such insurance shall not be cancelled or revised without 30 days’ prior written notice from the insurer to the Lender.

 

(d)          Opinion. Within 10 days after the Closing Date, or such later date as the Lender, in its sole discretion, shall designate, the Borrower shall have its outside counsel deliver a written opinion addressed to the Lender, in form and substance reasonably acceptable to the Lender.

 

(e)          Schedule III to Borrower Security Agreement. Within 10 days after the Closing Date, or such later date as the Lender, in its sole discretion, shall designate, the Borrower shall deliver to the Lender an updated Schedule III (Intellectual Property) to the Borrower Security Agreement, which shall replace the version of Schedule III appended to Amendment No. 1 to Borrower Security Agreement on the Closing Date.

 

 

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

 

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

 

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

 

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

 

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

 

(c)          the sale of any real property that is Security Documents Collateral to the extent that the sale of such property is pursuant to an arm’s length transaction to a party other than an Affiliate of the Borrower or any Subsidiary, the purchase price of such sale is the fair market value of such property, and the net proceeds of such sale (or such other amount as the Lender may agree in its sole discretion) are paid to the Lender pursuant to Section 2.6(a)(ii); and

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 6.10          Maintenance Capital Expenditures. The Borrower will not make Maintenance Capital Expenditures in any fiscal year in an amount in excess of 5.00% of Total Revenues for the immediately preceding fiscal year (aggregated with the Maintenance Capital Expenditures of its Subsidiaries).

 

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

 

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

 

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

 

(c)          Cash Equivalents;

 

(d)          Hedging Transactions;

 

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

 

(f)          Contingent Obligations permitted by Section 6.12;

 

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

 

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

 

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

 

(a)          the Obligations;

 

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

 

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

 

(d)          Hedging Transaction Obligations;

 

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

 

(f)          the Subordinated Debt (Triangulum);

 

(g)          CARES Debt and Main Street Debt; and

 

(h)          additional unsecured Indebtedness for borrowed money of up to $1,000,000 in the aggregate at any time outstanding incurred after the Closing Date; provided that (i) at the time such Indebtedness is incurred no Default or Event of Default has occurred and is continuing, (ii) copies of each document or instrument evidencing such Indebtedness are provided to the Lender and (iii) giving effect to such Indebtedness, Borrower is in pro forma compliance with the financial covenants set forth in Section 6.15 and 6.16.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 6.15         Fixed Charge Coverage Ratio. The Borrower will not permit the Fixed Charge Coverage Ratio to be less than 1.25 to 1.00.

 

Section 6.16         Leverage Ratios.

 

(a)          Senior Leverage Ratio. The Borrower will not permit the Senior Leverage Ratio to be greater than the “Senior Leverage Ratio” corresponding to the applicable “Fiscal Quarter Ending” in the table below.

 

 

(b)          Total Leverage Ratio. The Borrower will not permit the Total Leverage Ratio to be greater than the “Total Leverage Ratio” corresponding to the applicable “Fiscal Quarter Ending” in the table below.

 

 

Section 6.17          Loan Proceeds. The Borrower will not, and will not permit any Subsidiary to, use any part of the proceeds of any Loan directly or indirectly, and whether immediately, incidentally or ultimately, (a) to purchase or carry margin stock (as defined in Regulation U of the Board) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund Indebtedness originally incurred for such purpose or (b) for any purpose that entails a violation of, or that is inconsistent with, the provisions of Regulations U or X of the Board.

 

Section 6.18          Sale and Leaseback Transactions. The Borrower will not, and will not permit any Subsidiary to, enter into any arrangement, directly or indirectly, whereby it sells or transfers any property, real or personal, and thereafter leases such property for the same or a substantially similar purpose or purposes as the property sold or transferred.

 

Section 6.19         Hedging Agreements. The Borrower will not, and will not permit any Subsidiary to, enter into any Swap Contracts or transactions thereunder, other than any Hedging Transactions for the hedging of interest rates under this Agreement.

 

Section 6.20         Unlawful Use, Medical Marijuana, Controlled Substances and Prohibited Activities.

 

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

 

(b)          This Section 6.20 is a material consideration and inducement upon which the Lender relies in extending credit and other financial accommodations to the Borrower. Failure by the Borrower to comply with this section shall constitute a material non-curable Event of Default. Notwithstanding anything in this Agreement or the other Loan Documents regarding rights to cure Events of Default, the Lender is entitled upon breach of this Section 6.20 to immediately exercise any and all remedies under this Agreement, the other Loan Documents and by law.

 

(c)          In addition and not by way of limitation, the Borrower shall indemnify, defend and hold the Lender harmless from and against any loss, claim, damage, liability, fine, penalty, cost or expense (including attorneys’ fees and expenses) arising from, out of or related to any Prohibited Activities at or on the owned property or property leased by such Person, Prohibited Activities by the Borrower or any lessee of the owned or leased property, or the Borrower’s breach, violation, or failure to enforce or comply with any of the covenants set forth in this Section 6.20. This indemnity includes any claim by any Governmental Authority, any lessee, or any third person, including any governmental action for seizure or forfeiture of any owned or leased property (with or without compensation to the Lender, and whether or not such real property is taken free of or subject to Lender’s lien or security interest).

 

Section 6.21         Minimum EBITDA. For the fiscal quarters ending March 31, 2021, June 30, 2021, and September 30, 2021, the Borrower will not permit EBITDA for such fiscal quarter to be less than $2,400,000. Commencing with the fiscal quarter ended December 31, 2021, the Borrower will not permit EBITDA for the four consecutive fiscal quarters ending on the last day of the applicable fiscal quarter to be less than $8,000,000.

 

Section 6.22         Liquidity. The Borrower will not permit its total cash and Cash Equivalents to be less than the “Liquidity” corresponding to the applicable “Fiscal Quarter Ending” in the table below.

 

 

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

 

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

 

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

 

(c)          The Borrower fails to comply with Section 2.11, 5.1, 5.2, 5.3, or any Section of Article VI; provided that, for purposes of determining compliance with the financial covenants set forth in Sections 6.15 and 6.16 (each, a “Financial Covenant”), any cash proceeds from an equity issuance, subordinated debt, or other cash contribution received by the Borrower in the 45 days after the end of the most recent fiscal quarter shall, at the request of Borrower, be included in the calculation of EBITDA solely for the purposes of determining compliance with such Financial Covenant at the end of such fiscal quarter and applicable subsequent periods which include such fiscal quarter; provided, further, that the Borrower may exercise no more than two such Financial Covenant cures during any 12-month period.

 

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

 

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

 

(f)          Any bankruptcy, reorganization, debt arrangement or other proceedings under any bankruptcy or insolvency law is instituted by or against the Borrower or any Subsidiary, and, if instituted against such Person, has consented to or acquiesced in by such Person or remains undismissed for 45 days, or an order for relief has been entered against such Person.

 

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

 

(h)          A final judgment or judgments for the payment of money in excess of the sum of $100,000 in the aggregate are rendered against the Borrower or any Subsidiary and either (i) the judgment creditor executes on such judgment or (ii) such judgment remains unpaid or undischarged for more than 45 days from the date of entry thereof or such longer period during which execution of such judgment is stayed during an appeal from such judgment.

 

(i)          The maturity of any material Indebtedness of any Loan Party (other than Indebtedness under this Agreement) is accelerated, or any Loan Party fails to pay any such material Indebtedness when due (after the lapse of any applicable grace period) or, in the case of such Indebtedness payable on demand, when demanded (after the lapse of any applicable grace period), or any event occurs or condition exists and continues for more than any applicable grace period and causes, or permitting the holder of any such Indebtedness or any trustee or other Person acting on behalf of such holder to cause, such material Indebtedness to become due prior to its stated maturity or permits such holder to realize upon any collateral given as security therefor. For purposes of this Section, Indebtedness shall be deemed “material” if it exceeds $100,000 as to any item of Indebtedness or in the aggregate for all items of Indebtedness with respect to which any of the events described in this Section 7.1(i) has occurred.

 

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

 

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

 

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

 

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

 

(n)          Any Change of Control occurs.

 

(o)          Any “event of default” or “termination event” (as such terms are defined in the swap arrangement documents) under any Hedging Transaction Document.

 

(p)          Any final nonmonetary judgment or order is rendered against the Borrower or any Subsidiary in excess of $250,000 and either (i) enforcement proceedings have been commenced by any person upon such judgment or order, or (ii) there is any period of 45 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, is not in effect.

 

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

 

(r)          (i) Any Gaming License material to the Borrower’s and its Subsidiaries’ business is suspended, revoked or terminated or (ii) any application for a Gaming License material to the Borrower’s and its Subsidiaries’ business is terminated, withdrawn with prejudice or denied by a Gaming Authority.

 

(s)          A material adverse change occurs in Borrower’s financial condition, or the prospect of payment or performance of the Note could reasonably be expected to be impaired.

 

Section 7.2          Remedies. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Loan Documents, all commitments and obligations of the Lender under this Agreement or the Loan Documents or any other agreement immediately will terminate (including any obligation to make further Loan advances or disbursements), and, at Lender’s option, all Indebtedness immediately will become due and payable, all without notice of any kinds to Borrower, except that in the case of an Event of Default of the type described in Section 7.1(f) above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Loan Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender’s rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender’s right to declare a default and to exercise its rights and remedies.

 

The Lender may take any of the foregoing actions without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything in this Agreement or in the Notes to the contrary notwithstanding.

 

Section 7.3          Right of Setoff. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account.) This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, any trust accounts for which setoff would be prohibited by law, or monies in any accounts that were received pursuant to the federal Social Security Act, including, without limitation, retirement and survivors’ benefits, supplemental security income benefits, and disability insurance benefits. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the debt against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.

 

Such right shall exist whether or not the Lender has made any demand hereunder or under any other Loan Document, whether or not the Obligations, or any part thereof, is or are matured or unmatured, and regardless of the existence or adequacy of any collateral, guaranty or any other security, right or remedy available to the Lender. Nothing in this Agreement shall be deemed a waiver or prohibition of or restriction on the Lender to all rights of banker’s Lien, setoff and counterclaim available pursuant to law.

 

 

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

 

Section 8.2          Expenses. Whether or not the transactions contemplated hereby are consummated, the Borrower shall reimburse the Lender upon demand for all reasonable out-of-pocket expenses paid or incurred by the Lender (including filing and recording costs and reasonable fees and expenses of counsel to the Lender) in connection with the negotiation, preparation, approval, review, execution, delivery, administration, amendment, modification and interpretation of this Agreement and the other Loan Documents and any commitment letters relating thereto. The Borrower shall also reimburse the Lender upon demand for all reasonable out-of-pocket expenses (including reasonable expenses of legal counsel) paid or incurred by the Lender in connection with the collection and enforcement of this Agreement and any other Loan Document. The obligations of the Borrower under this Section shall survive any termination of this Agreement.

 

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

 

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

 

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

 

Section 8.6          Successors and Assigns; Participations; Purchasing Lenders.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 8.8          Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Nevada without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of Nevada. Whenever possible, each provision of this Agreement and the other Loan Documents and any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto shall be interpreted so as to be effective and valid under such applicable law, but if any provision of this Agreement, the other Loan Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto is held to be prohibited or invalid under such applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement, the other Loan Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto.

 

Section 8.9          Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of Clark County, State of Nevada; and the Borrower and the Lender consent to the jurisdiction and venue of any such court and waive any argument that venue in such forum is not convenient.

 

Section 8.10         Dispute Resolution Provision. This Dispute Resolution Provision contains a jury waiver, a class action waiver, and an arbitration clause (or judicial reference agreement, as applicable), set out in four sections. READ IT CAREFULLY.

 

(a)          General Provisions Governing All Disputes.

 

 

 

If a third party is a party to a Dispute (such as a credit reporting agency, merchant accepting a credit card, junior lienholder or title company), each party hereto agrees to consent to including that third party in any arbitration or judicial reference proceeding for resolving the Dispute with that party.

 

 

 

 

(b)          Arbitration If Jury Waiver Unenforceable (Except California). If (but only if) a state or federal court located outside the state of California determines for any reason that the jury trial waiver in this Dispute Resolution Provision is not enforceable with respect to a Dispute, then any party hereto may require that said Dispute be resolved by binding arbitration pursuant to this Section 2 before a single arbitrator. An arbitrator shall have no authority to determine matters (i) regarding the validity, enforceability, meaning, or scope of this Dispute Resolution Provision, or (ii) class action claims brought by either party as a class representative on behalf of others and claims by a class representative on either party’s behalf as a class member, which matters may be determined only by a court without a jury. By agreeing to arbitrate a Dispute, each party gives up any right that party may have to a jury trial, as well as other rights that party would have in court that are not available or are more limited in arbitration, such as the rights to discovery and to appeal.

 

Arbitration shall be commenced by filing a petition with, and in accordance with the applicable arbitration rules of, National Arbitration Forum (“NAF”) or Judicial Arbitration and Mediation Service, Inc. (“JAMS”) (“Administrator”) as selected by the initiating party. However, if the parties agree, arbitration may be commenced by appointment of a licensed attorney who is selected by the parties and who agrees to conduct the arbitration without an Administrator. If NAF and JAMS both decline to administer arbitration of the Dispute, and if the parties are unable to mutually agree upon a licensed attorney to act as arbitrator with an Administrator, then either party may file a lawsuit (in a court of appropriate venue outside the state of California) and move for an Arbitration Order. The arbitrator, howsoever appointed, shall have expertise in the subject matter of the Dispute. Venue for the arbitration proceeding shall be at a location determined by mutual agreement of the parties or, if no agreement, in the city and state where Lender or Bank is headquartered. The arbitrator shall apply the law of the state specified in the agreement giving rise to the Dispute.

 

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

 

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

 

Arbitration under this provision concerns a transaction involving interstate commerce and shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. If the terms of this Section 2 vary from the Administrator’s rules, this Section 2 shall control.

 

(c)          Judicial Reference If Jury Waiver Unenforceable (California Only). If (but only if) a Dispute is filed in a state or federal court located within the state of California, and said court determines for any reason that the jury trial waiver in this Dispute Resolution Provision is not enforceable with respect to that Dispute, then any party hereto may require that Dispute be resolved by judicial reference in accordance with California Code of Civil Procedure, Sections 638, et seq., including without limitation whether the Dispute is subject to a judicial reference proceeding. By agreeing to resolve Disputes by judicial reference, each party is giving up any right that party may have to a jury trial. The referee shall be a retired judge, agreed upon by the parties, from either the American Arbitration Association (AAA) or Judicial Arbitration and Mediation Service, Inc. (JAMS). If the parties cannot agree on the referee, the party who initially selected the reference procedure shall request a panel of ten retired judges from either AAA or JAMS, and the court shall select the referee from that panel. (If AAA and JAMS are unavailable to provide this service, the court may select a referee by such other procedures as are used by that court.) The referee shall be appointed to sit with all of the powers provided by law, including the power to hear and determine any or all of the issues in the proceeding, whether of fact or of law, and to report a statement of decision. The parties agree that time is of the essence in conducting the judicial reference proceeding set forth herein. The costs of the judicial reference proceeding, including the fee for the court reporter, shall be borne equally by the parties as the costs are incurred, unless otherwise awarded by the referee. The referee shall hear all pre-trial and post-trial matters (including without limitation requests for equitable relief), prepare a statement of decision with written findings of fact and conclusions of law, and apportion costs as appropriate. The referee shall be empowered to enter equitable relief as well as legal relief, provide all temporary or provisional remedies, enter equitable orders that are binding on the parties and rule on any motion that would be authorized in a trial, including without limitation motions for summary adjudication. Only for this Section 3, “Dispute” includes matters regarding the validity, enforceability, meaning, or scope of this Section, and (ii) class action claims brought by either party as a class representative on behalf of others and claims by a class representative on either party’s behalf as a class member. Judgment upon the award shall be entered in the court in which such proceeding was commenced and all parties shall have full rights of appeal. This provision will not be deemed to limit or constrain Bank or Lender’s right of offset, to obtain provisional or ancillary remedies, to interplead funds in the event of a dispute, to exercise any security interest or lien Bank or Lender may hold in property or to comply with legal process involving accounts or other property held by Bank or Lender.

 

Nothing herein shall preclude a party from moving (prior to the court ordering judicial reference) to dismiss, stay or transfer the suit to a forum outside California on grounds that California is an improper, inconvenient or less suitable venue. If such motion is granted, this Section 3 shall not apply to any proceedings in the new forum. This Section 3 may be invoked only with regard to Disputes filed in state or federal courts located in the State of California. In no event shall the provisions in this Section 3 diminish the force or effect of any venue selection or jurisdiction provision in this Agreement or any Related Document.

 

(d)          Reliance. Each party (i) certifies that no one has represented to such party that the other party would not seek to enforce a jury waiver, class action waiver, arbitration provision or judicial reference provision in the event of suit, and (ii) acknowledges that it and the other party have been induced to enter into this Agreement by, among other things, material reliance upon the mutual waivers, agreements, and certifications in this Section (Dispute Resolution Provision).

 

Section 8.11         WAIVER OF DEFENSES AND RELEASE OF CLAIMS. The undersigned hereby (i) represents that neither the undersigned nor any Affiliate or principal of the undersigned has any defenses to or setoffs against any Indebtedness or other obligations owing by the undersigned, or by the undersigned’s Affiliates or principals, to Lender or any Lender Affiliate (the “Covered Obligations”), nor any claims against Lender or any Lender Affiliate for any matter whatsoever, related or unrelated to the Covered Obligations, and (ii) releases Lender and all Lender Affiliates, officers, directors, employees and agents from all claims, causes of action, and costs, in law or equity, known or unknown, whether or not matured or contingent, existing as of the date hereof that the undersigned has or may have by reason of any matter of any conceivable kind or character whatsoever, related or unrelated to the Covered Obligations, including the subject matter of this Agreement. The foregoing release does not apply, however, to claims for future performance of express contractual obligations that mature after the date hereof that are owing to the undersigned by Lender or any Lender Affiliate. As used in this paragraph, the word “undersigned” does not include Lender or any individual signing on behalf of Lender. The undersigned acknowledges that Lender has been induced to enter into or continue the Obligations by, among other things, the waivers and releases in this paragraph.

 

Section 8.12         Survival. All representations, warranties, covenants and agreements made by the Borrower herein or in the other Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be deemed to have been relied upon by the Lender and shall survive the making of the Loans and the execution and delivery to the Lender by the Borrower of the Notes, regardless of any investigation made by or on behalf of the Lender, and shall continue in full force and effect as long as any Obligation is outstanding and unpaid and so long as the Commitments have not been terminated; provided, however, that the obligations of the Borrower under Sections 8.2, 8.5, 8.13 and 8.24 shall survive payment in full of the Obligations and the termination of the Commitments.

 

Section 8.13         Indemnification. The Borrower hereby agrees to defend, protect, indemnify and hold harmless the Lender and all Lender Affiliates and the directors, officers, employees, attorneys and agents and their respective Affiliates (each of the foregoing being an “Indemnitee” and all of the foregoing being collectively the “Indemnitees”) from and against any and all claims, actions, damages, liabilities, judgments, costs and expenses (including all reasonable fees and disbursements of counsel that may be incurred in the investigation or defense of any matter) imposed upon, incurred by or asserted against any Indemnitee, whether direct, indirect or consequential and whether based on any federal, state, local or foreign laws or regulations (including securities laws, environmental laws, commercial laws and regulations), under common law or on equitable cause, or on contract or otherwise:

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 8.14         Captions. The captions or headings herein and any table of contents hereto are for convenience only and in no way define, limit or describe the scope or intent of any provision of this Agreement.

 

Section 8.15         Entire Agreement. This Agreement and the other Loan Documents embody the entire agreement and understanding between the Borrower and the Lender with respect to the subject matter hereof and thereof. This Agreement supersedes all prior agreements and understandings relating to the subject matter hereof. Nothing in this Agreement or in any other Loan Document, expressed or implied, is intended to confer upon any Persons other than the parties hereto any rights, remedies, obligations or liabilities hereunder or thereunder.

 

Section 8.16         Multiple Loan Agreements (Independent Loan Agreements). Borrower and Lender acknowledge that Borrower may have more than one outstanding loan with Lender, and may be granted additional loans by Lender in the future. Borrower and Lender agree that (a) the loan agreement executed in connection with each loan shall govern that particular loan; (b) execution or amendment of a loan agreement for one loan shall not be interpreted to supersede or amend any loan agreement previously executed in connection with another loan; and (c) any present or future loan for which no separate loan agreement is executed shall always be governed by the most recently executed loan agreement then outstanding between Borrower and Lender, whether executed before or after the granting of said loan. This section shall not diminish any cross-default or cross-collateralization term in any loan agreement, promissory note or related loan document. (This section supersedes any contrary provision in this Agreement.)

 

Notwithstanding the preceding paragraph of this section, every loan agreement between Borrower and Lender (together with all related loan documents associated therewith) shall be deemed amended to adopt the dispute resolution provisions that are now or hereafter set forth in the most recently executed loan agreement. In this paragraph, “dispute resolution provision” includes any provision, or omission thereof, in the nature of a class action waiver, a jury trial waiver, or alternative dispute resolution term (such as resolution by arbitration or judicial reference).

 

Section 8.17         Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart.

 

Section 8.18         Borrower Acknowledgements. The Borrower hereby acknowledges that (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents, (b) the Lender has no fiduciary relationship to the Borrower, the relationship being solely that of debtor and creditor, (c) no joint venture exists between the Borrower and the Lender, and (d) the Lender undertakes no responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the business or operations of the Borrower and the Borrower shall rely entirely upon its own judgment with respect to its business, and any review, inspection or supervision of, or information supplied to, the Borrower by the Lender is for the protection of the Lender and neither the Borrower nor any third party is entitled to rely thereon.

 

Section 8.19         Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts that are treated as interest on such Loan under applicable law (collectively, the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to the Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Rate to the date of repayment, has been received by the Lender.

 

Section 8.20         Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid an Event of Default or Default if such action is taken or condition exists.

 

Section 8.21         Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the Lender, or the Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any bankruptcy or insolvency law or otherwise, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred. The obligations of the Borrower and the Lender under this Section shall survive the irrevocable payment in full of the Obligations and the termination of the Commitments.

 

Section 8.22         Electronic Signatures, Etc. The words “execution,” “signed,” “signature,” and words of like import in Loan Document or in any amendment or other modification thereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

Section 8.23         Document Imaging. Lender shall be entitled, in its sole discretion, to image or make copies of all or any selection of the agreements, instruments, documents, and items and records governing, arising from or relating to any of Borrower’s loans, including, without limitation, this document and the Loan Documents, and Lender may destroy or archive the paper originals. The parties hereto (i) waive any right to insist or require that Lender produce paper originals, (ii) agree that such images shall be accorded the same force and effect as the paper originals, (iii) agree that Lender is entitled to use such images in lieu of destroyed or archived originals for any purpose, including as admissible evidence in any demand, presentment or other proceedings, and (iv) further agree that any executed facsimile (faxed), scanned, or other imaged copy of this document or any Loan Document shall be deemed to be of the same force and effect as the original manually executed document.

 

Section 8.24         PATRIOT Act. The Lender is subject to the requirements of the PATRIOT Act and hereby notifies the Borrower that pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Lender to identify the Borrower in accordance with the PATRIOT Act. The Borrower shall, promptly following a request by the Lender, provide all documentation and other information that the Lender requests to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act.

 

Section 8.25         Waiver.   Upon the effectiveness of this Agreement, the Lender acknowledges that, as a result of the COVID-19 worldwide pandemic, the Borrower has failed to comply with the financial covenants in Section 6.15 (Fixed Charge Covenant Ratio), Section 6.16(a) (Senior Leverage Ratio), and Section 6.16(b) (Total Leverage Ratio) of the Existing Credit Agreement for the measurement dates of June 30, 2020 (for Section 6.16(b) only), September 30, 2020, and December 31, 2020 and the financial covenant in Section 6.21 (Minimum EBITDA) for the measurement date of December 31, 2020, each of which failures constituted an Event of Default under Section 7.l(c) of the Existing Credit Agreement (collectively, the “Existing Defaults”), and the Lender hereby waives the Existing Defaults. Such waiver is limited to the express terms hereof, and nothing herein shall be deemed a waiver by the Lender of any other term, condition, representation, or covenant applicable to the Borrower under this Agreement (including but not limited to any future occurrence similar to the Existing Defaults) or any of the other agreements, documents, or instruments executed and delivered in connection herewith, or of the covenants described herein.  The waiver set forth herein shall not constitute a waiver by the Lender of any other Default or Event of Default under this Agreement, and shall not be, and shall not be deemed to be, a course of action with respect thereto upon which the Borrower may rely in the future, and the Borrower hereby expressly waives any claim to such effect.

 

Section 8.26         Effect of Existing Credit Agreement. This Agreement amends and replaces in its entirety the Existing Credit Agreement, provided that the obligations of any Borrower incurred under the Existing Credit Agreement shall continue under this Agreement and shall not in any circumstance be terminated, extinguished, or discharged hereby but shall hereafter be governed by the terms of this Agreement. None of the security interests created by the Existing Credit Agreement or the other Loan Documents shall be terminated, extinguished, or discharged hereby. This Agreement is not intended to and shall not constitute a novation.

 

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

Address:
Galaxy Gaming, Inc.
6480 S. Cameron Street, Suite 305
Las Vegas, NV 89118
Attn:	Harry Hagerty, CFO
Fax:	(702) 939-3255
Email:	***@***

TO:        ZIONS BANCORPORATION, N.A. DBA NEVADA STATE BANK (the “Lender”)

We refer to that certain Amended and Restated Credit Agreement, dated as of March 29, 2021 (as amended, restated, supplemented, or otherwise modified, the “Credit Agreement”), between GALAXY GAMING, INC., a Nevada corporation (the “Borrower”), and the Lender. Capitalized terms used herein but not otherwise defined shall have the meanings assigned to them in the Credit Agreement.

 

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

 

Amount of Revolving Loan:   $________________

Revolving Loan Date:             ________________, 202__

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

 

(a)          As of the date hereof and before giving effect to the Requested Advances, the aggregate outstanding principal balance of the Revolving Loans was $_______________. After giving effect to the Requested Advances, the aggregate outstanding principal balance of the Revolving Loans will be $_______________.

 

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

 

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

 

 

 

 

 

$7,022,300

March 29, 2021

 

 

 

 

 

To:         ZIONS BANCORPORATION, N.A. DBA NEVADA STATE BANK (the “Lender”)

 

Date:       _______________, 202__

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

 

 

 

 

1.	Maintenance Capital Expenditures (Section 6.10, calculated on an annual basis)
	(a)	Total Revenues for prior year (202__):	$
	(b)	Maximum Maintenance Capital Expenditures (5.00% of (a)):	$
	(c)	Total Maintenance Capital Expenditures for current year (202__):	$