GPIC Gaming Partners International Corp.

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) July 2, 2015 (June 26, 2015)

 

Gaming Partners International Corporation

(Exact name of registrant as specified in its charter)

 

Nevada		0-23588		88-0310433
(State or other jurisdiction		(Commission		(IRS Employer
of incorporation)		File Number)		Identification No.)

 

1700 Industrial Road, Las Vegas, Nevada		89102
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code (702) 384-2425

 

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 1.01

Entry into a Material Definitive Agreement.   The information described below under "Item 2.03. Creation of a Direct Financial Obligation or Obligation under an Off-Balance Sheet Arrangement of a Registrant" is hereby incorporated by reference into this Item 1.01.

 

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant   On June 26, 2015, Gaming Partners International Corporation (the “Company”) entered into a $10.0 million 7-year term loan facility and a $5.0 million 5-year revolving credit facility, for a combined $15.0 million facility with Nevada State Bank. The facility will be used to refinance existing indebtedness and for working capital, capital expenditures and other general purposes.   The Company borrowed the full amount under the term loan facility and repaid the $10.0 million demand line of credit with HSBC Bank USA, National Association on June 26, 2015. The Company has not drawn down any funds under the revolving credit facility.   Interest on funds borrowed under the term loan facility and the revolving credit facility will be charged at a rate per annum equal to LIBOR plus 2.25%   The facility contains customary representations, warranties and affirmative, negative and financial covenants. The covenants contain, among other things, limitations on the Company's and its subsidiaries' ability to merge, consolidate, dispose of assets, or incur liens or certain indebtedness. Under the financial covenant, the Company will not permit its fixed charge coverage ratio to be less than 1.15 to 1.00 or its leverage ratio to be more than 3.00 to 1.00 as of the last day of any fiscal quarter for the 12 consecutive months ending on such date.   The facility includes customary events of default, including events of default relating to non-payment of amounts due, material inaccuracy of representations and warranties, violation of covenants, non-payment or acceleration of other material indebtedness, bankruptcy and insolvency, and change of control. If an event of default occurs under the facility, the lender will be able to terminate the commitments and accelerate the maturity of the loans and exercise other rights and remedies.   The Company and its subsidiary, Gaming Partners International USA, Inc. granted to lender a first priority security interest in substantially all of their assets as collateral for the facility. In addition, the facility is guaranteed by the Company’s subsidiaries Gaming Partners International USA, Inc. and Gaming Partners International Asia Limited.   The above description of the material terms and conditions of the facility does not purport to be complete and is qualified in its entirety by reference to the full texts of the Credit Agreement, the Pledge and Security Agreement and Irrevocable Proxy and the Guaranty, which are filed as Exhibits 10.1, 10.2 and 10.3 to this Current Report on Form 8-K.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

	10.1	Credit Agreement by and between Gaming Partners International Corporation and Nevada State Bank dated as of June 26, 2015.
	10.2	Pledge and Security Agreement and Irrevocable Proxy by and between Gaming Partners International Corporation, Gaming Partners International USA, Inc. and Nevada State Bank dated June 26, 2015.
	10.3	Guaranty of Gaming Partners International USA, Inc. and Gaming Partners International Asia Limited in favor of Nevada State Bank dated June 26, 2015.

 

 

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.

 

	Gaming Partners International Corporation
Date:  July 2, 2015
	By:	/s/ Gregory S. Gronau
		Gregory S. Gronau
		President and Chief Executive Officer

 

 

EXHIBIT INDEX

 

Exhibit No.		Description
Exhibit 10.1		Credit Agreement by and between Gaming Partners International Corporation and Nevada State Bank dated as of June 26, 2015.
Exhibit 10.2		Pledge and Security Agreement and Irrevocable Proxy by and between Gaming Partners International Corporation, Gaming Partners International USA, Inc. and Nevada State Bank dated June 26, 2015.
Exhibit 10.3		Guaranty of Gaming Partners International USA, Inc. and Gaming Partners International Asia Limited in favor of Nevada State Bank dated June 26, 2015.

 

 

Exhibit 10.1

 

Execution Version

 

CREDIT AGREEMENT

 

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

 

Article I
DEFINITIONS AND ACCOUNTING TERMS

 

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

 

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

 

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

 

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

 

“Applicable Margin”:  2.25%.

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

“Closing Date”:  June 26, 2015.

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

“Financials”: As defined in Section 4.5.

 

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

 

(a)

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

 

to

 

(b)

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

 

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

 

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

 

 

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

 

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

 

“GPI Asia” means Gaming Partners International Asia Limited.

 

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

 

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

 

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

 

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

 

“Indemnitee”:  As defined in Section 8.12.

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

“Loan Parties”:  The Borrower and the Guarantors.

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

“Permitted Liens”:  Liens permitted by Section 6.13.

 

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

 

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

 

“Prepayment Event”:  Each of the following:

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

Article II
TERMS OF THE CREDIT FACILITIES

 

Part A -- Terms of Lending

 

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

 

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

 

 

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

 

Section 2.2           Procedure for Loans.

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

Section 2.5           Repayment.  

 

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

 

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

 

 

Section 2.6           Prepayments.  

 

(a)          Mandatory Prepayments.

 

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

 

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

 

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

 

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

 

Part B -- General

 

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

 

 

Section 2.8           

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 2.13         Taxes.  

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

Section 2.14         Increased Costs; Capital Adequacy.

 

(a)          If any Change in Law:

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

 

Article III
CONDITIONS PRECEDENT

 

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

 

(a)

Documents. The Lender shall have received the following:

 

(i)

This Agreement, duly executed by the Borrower.

 

(ii)

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

 

(iii)

A Security Agreement duly executed by each Domestic Loan Party.

 

(iv)

A Guaranty duly executed by each Guarantor.

 

(v)

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

 

(A)

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

 

(B)

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

 

(C)

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

 

(D)

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

 

(vi)

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

 

 

(vii)

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

 

(viii)

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

 

(ix)

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

 

(x)

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

 

(A)

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

 

(B)

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

 

(C)

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

 

(D)

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

 

(E)

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

 

(F)

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

 

(G)

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

 

 

(xi)

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

 

(xii)

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

 

(xiii)

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

 

(xiv)

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

Article IV
REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

Article V
AFFIRMATIVE COVENANTS

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

 

Section 5.3           Insurance.  

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

Section 5.11         Further Assurances.  

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

Article VI
NEGATIVE COVENANTS

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

(c)          Cash Equivalents;

 

(d)          Rate Protection Agreements;

 

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

 

(f)          Contingent Obligations permitted by Section 6.12;

 

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

 

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

 

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

 

(a)          the Obligations;

 

 

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

 

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

 

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

 

(e)          Rate Protection Obligations;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 6.17         Intentionally Omitted.

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

Article VII
EVENTS OF DEFAULT AND REMEDIES

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

(n)          Any Change of Control occurs.

 

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

 

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

 

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

 

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

 

 

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

 

Article VIII
MISCELLANEOUS

 

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

 

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

 

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

 

 

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

 

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

 

Section 8.6           Successors and Assigns; Participations; Purchasing Lenders.

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

 

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

 

	BORROWER:
	GAMING PARTNERS INTERNATIONAL CORPORATION
	By:
	Name:  Gregory S. Gronau
	Title:  President

 

Address for the Borrower:

 

Gaming Partners International Corporation

1700 South Industrial Road

Las Vegas, NV 89102

Fax: 702-598-2494

 

S-1

Credit Agreement

 

 

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

 

Address for Nevada State Bank:

 

750 E. Warm Springs Rd., 4th Floor

Las Vegas, NV 89119

Fax: (702) 914-4556

 

S-2

Credit Agreement

 

 

EXHIBIT A TO

CREDIT AGREEMENT

 

Borrowing Request

 

_______________, _____

 

TO:        Nevada State Bank, as the Lender

 

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

 

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

 

Amount of Revolving Loan: $[______________________]

Revolving Loan Date: ____________________, 201__

 

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

 

Amount of Term Loan: $10,000,000

Date:     Closing Date

 

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

 

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

 

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

 

 

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

 

	GAMING PARTNERS INTERNATIONAL
	CORPORATION
	By:
	Name:
	Title:

 

 

EXHIBIT B TO
CREDIT AGREEMENT

 

FORM OF REVOLVING NOTE

 

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

 

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

 

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

 

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

 

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

 

	Gaming Partners International
	Corporation
	By:
	Name:
	Title:

 

 

EXHIBIT c TO
CREDIT AGREEMENT

 

FORM OF TERM NOTE

 

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

 

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

 

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

 

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

 

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

 

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

 

	Gaming Partners International Corporation
	By:
	Name:
	Title:

 

 

EXHIBIT D TO
CREDIT AGREEMENT

 

FORM OF COMPLIANCE CERTIFICATE

 

To: Nevada State Bank:

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

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

 

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

 

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

 

 

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

 

	Gaming Partners International Corporation
	By:
	Name:
	Title:

 

 

ATTACHMENT TO COMPLIANCE CERTIFICATE
AS OF ______________, ____WHICH PERTAINS
TO THE PERIOD FROM ________________, ______
TO ________________, _______

 

1.

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

 

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

 

2.

Fixed Charge Coverage Ratio (Section 6.15)

 

Fixed Charge Coverage Ratio

 

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

 

3.

Leverage Ratio (Section 6.16)

 

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

 

 

LIST OF SCHEDULES

 

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

 

 

Schedule 4.6

To

Credit Agreement

 

LITIGATION

 

1.

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

 

 

Schedule 4.7

To

Credit Agreement

 

ENVIRONMENTAL MATTERS

 

NONE.

 

 

Schedule 4.18

To

Credit Agreement

 

SUBSIDIARIES

 

Gaming Partners International Corporation - Nevada

 

-100% interest in Gaming Partners International USA

-100% interest in Gaming Partners International SAS

-4% interest in Gaming Partners International Asia Limited

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

 

Gaming Partners International USA - Nevada

 

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

-96% interest in Gaming Partners International Asia Limited

 

Gaming Partners International Asia Limited – Macau

 

Gaming Partners International SAS – France

 

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

 

 

Schedule 4.24

To

Credit Agreement

 

LOCATIONS

 

1.

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

2.

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

3.

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

4.

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

5.

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

6.

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

7.

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

8.

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

9.

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

10.

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

11.

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

 

 

Schedule 4.25

To

Credit Agreement

 

ACCOUNTS

 

Please See Attached Spreadsheet.

 

 

Schedule 6.11

To

Credit Agreement

 

INVESTMENTS

 

NONE.

 

 

Schedule 6.12

To

Credit Agreement

 

INDEBTEDNESS

 

NONE.

 

 

Schedule 6.13

To

Credit Agreement

 

LIENS

 

1.

UCC Lien

a.

Debtor: Gaming Partners International USA, Inc.

b.

Secured Party: Advanced Imaging Solutions

c.

File No: 2012020072-2

d.

Lapse Date: 7/24/17

e.

Collateral: Leased Equipment

2.

UCC Lien*

a.

Debtor: Gaming Partners International USA, Inc.

b.

Secured Party: Heidelberg USA, Inc.

c.

File No: 2015006376-4

d.

Lapse Date: 3/11/20

e.

Collateral: Specific Equipment

 

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

 

 

 

Exhibit 10.2

 

Execution Version

 

PLEDGE AND SECURITY AGREEMENT

AND IRREVOCABLE PROXY

 

THIS PLEDGE AND SECURITY AGREEMENT AND IRREVOCABLE PROXY (this “Agreement”), dated as of June 26, 2015, is made and given by each of the corporations, limited liability companies and limited partnerships party hereto (together with any entity subsequently joining in this Agreement, each a “Grantor” and collectively the “Grantors”) in favor of NEVADA STATE BANK, a Nevada state banking corporation (the “Secured Party”).

 

RECITALS

 

A.           Gaming Partners International Corporation, a Nevada corporation (the “Borrower”) and the Secured Party have entered into a Credit Agreement dated as of the date hereof (as amended, supplemented, extended, restated or otherwise modified from time to time prior to the date hereof, the “Credit Agreement”) pursuant to which the Secured Party has agreed, among other things, to extend to the Borrower certain credit accommodations.

 

B.           It is a condition precedent to the obligation of the Secured Party to extend credit accommodations pursuant to the terms of the Credit Agreement that the Grantors agree to enter into this Agreement.

 

C.           Each Grantor finds it advantageous, desirable and in its best interests to comply with the requirement that it execute and deliver this Agreement to the Secured Party.

 

NOW, THEREFORE, in consideration of the premises and in order to induce the Secured Party to enter into the Credit Agreement and to extend credit accommodations to the Borrower thereunder, each Grantor hereby agrees with the Secured Party as follows:

 

Section 1.              Defined Terms.

 

(a)          As used in this Agreement, the following terms shall have the meanings indicated:

 

“Account” shall mean an “Account” as such term is defined in the NV UCC.  

 

“Account Debtor” shall mean a Person who is obligated on or under any Account, Chattel Paper, Instrument or General Intangible.

 

“Agreement” shall have the meaning indicated in the opening paragraph hereof.

 

“Borrower” shall have the meaning set forth in Recital A above.

 

“Chattel Paper” shall mean “Chattel Paper” as such term is defined in the NV UCC.

 

 

“Collateral” shall have the meaning given to such term in Section 2 hereof; provided however that “Collateral” shall not include and in no event shall the security interest granted hereunder attach to any Excluded Property so long as, and only so long as, any such Collateral is Excluded Property.

 

“Commercial Tort Claim” shall mean “Commercial Tort Claims” as defined in the NV UCC.  

 

“Control” shall have the meaning given to such term in Section 8-106, 9-104 or 9-106 of the applicable Uniform Commercial Code.

 

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

 

“Credit Agreement” shall have the meaning set forth in Recital C above.

 

“Deposit Account” shall mean a “Deposit Account” as such term is defined in the NV UCC.

 

“Document” shall mean a “Document” as such term is defined in the NV UCC.

 

“Equipment” shall mean “Equipment” as such term is defined in the NV UCC.

 

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

 

“Event of Default” shall have the meaning given to such term in Section 23 hereof.

 

“Excluded Property” shall have the meaning given to such term in Section 2 hereof.

 

“Financing Statement” shall have the meaning given to such term in Section 4 hereof.

 

“Fixtures” shall mean “Fixtures” as such term is defined in the NV UCC.

 

 

“Foreign Subsidiary” shall mean any Subsidiary that is “foreign,” as defined in Section 7701(a)(5) of the Code, more than 50 percent of (i) the total combined voting power of all classes of stock of such corporation entitled to vote, or (ii) the total value of the stock of such corporation, is directly or indirectly owned by the Borrower.

 

“General Intangibles” shall mean “General Intangibles” as such term is defined in the NV UCC.

 

“Government Contract” shall mean a contract between any Grantor and an agency, department or instrumentality of the United States or any other jurisdiction or any state, municipal or local Governmental Authority located in the United States or any other jurisdiction or all obligations of any such Governmental Authority arising under any Account now or hereafter owing by any such Governmental Authority, as account debtor, to any Grantor.

 

“Grantor” and “Grantors” shall have the meaning indicated in the opening paragraph hereof.

 

“Initial Pledged Collateral” shall mean the Pledged Equity Interests and the Pledged Debt.

 

“Instrument” shall mean “Instrument” as such term is defined in the NV UCC.

 

“Inventory” shall mean “Inventory” as such term is defined in the NV UCC.

 

“Investment Property” shall mean “Investment Property” as such term is defined in the NV UCC.

 

“Letter of Credit Right” shall mean “Letter of Credit Right” as such term is defined in the NV UCC.

 

“Lien” shall mean any security interest, mortgage, pledge, lien, charge, encumbrance, title retention agreement or analogous instrument or device (including the interest of the lessors under capitalized leases) in, of or on any assets or properties of the Person referred to.

 

“NV UCC” shall mean the Uniform Commercial Code as enacted and in effect in the State of Nevada on the date of this Agreement.

 

“Obligations” shall mean (a) all indebtedness, liabilities and obligations of the Borrower to the Secured Party of every kind, nature or description under the Credit Agreement and each other Loan Document (as defined in the Credit Agreement), including the Borrower’s obligations on any promissory note or notes under the Credit Agreement and any note or notes hereafter issued in substitution or replacement thereof or under the other Loan Documents and (b) all liabilities of any Grantor under this Agreement, the Guaranty, or any other Loan Document to which it is a party, and in all of the foregoing cases whether due or to become due, and whether now existing or hereafter arising or incurred; provided that “Obligations” shall exclude all Excluded Swap Obligations.

 

 

“Partnership/LLC Interests” means, with respect to any Grantor, the entire partnership, membership interest or limited liability company interest, as applicable, of such Grantor in each partnership, limited partnership or limited liability company owned thereby, including, without limitation, such Grantor’s capital account, its interest as a partner or member, as applicable, in the net cash flow, net profit and net loss, and items of income, gain, loss, deduction and credit of any such partnership, limited partnership or limited liability company, as applicable, such Grantor’s interest in all distributions made or to be made by any such partnership, limited partnership or limited liability company, as applicable, to such Grantor and all of the other economic rights, titles and interests of such Grantor as a partner or member, as applicable, of any such partnership, limited partnership or limited liability company, as applicable, whether set forth in the partnership agreement or membership agreement, as applicable, of such partnership, limited partnership or limited liability company, as applicable, by separate agreement or otherwise.

 

“Permitted Lien” means Liens permitted under Section 6.13 of the Credit Agreement.

 

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

 

“Pledged Collateral” shall mean collectively (a) the Initial Pledged Collateral and the certificates and instruments representing the Initial Pledged Collateral, and all dividends, interest, principal, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Initial Pledged Collateral, (b) all additional shares of stock, limited liability company member interests, partnership interests and debt of any issuer of or obligor upon the Initial Pledged Collateral, or any other issuer, from time to time acquired by any Grantor in any manner, and the certificates and instruments representing such additional shares, member interests, partnership interests and debt, and all dividends, interest, principal, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares, limited liability company member interests, partnership interests and debt and (c) any and all collateral security now or hereafter securing all or any items of the Pledged Debt or securing all or any items of any additional debt described in clause (b) above (including after-acquired security) and all agreements granting such security (the “Related Collateral”) and all rights, remedies, powers and privileges of any Grantor under all of the foregoing.

 

 

“Pledged Debt” shall mean the indebtedness described in Schedule I hereto as the same is updated from time to time and issued by the obligors named therein.

 

“Pledged Equity Interests” shall mean the Equity Interests, if any, described in Schedule I hereto as the same is updated from time to time issued by the corporations, limited liability companies and partnerships named therein, including (a) the Grantor’s capital account, if any, relating to the issuers of such Equity Interests, (b) the entire economic and voting interest of any Grantor as a shareholder, member or partner, as applicable, in the issuers of such Equity Interest and (c) the Grantor’s interest in the organizational documents of the issuers of such Equity Interests.  

 

“Pledged Partnership/LLC Agreement” shall have the meaning given such term in Section 10(f) hereof.

 

“Related Collateral” shall have the meaning given to such term in the definition of “Pledged Collateral” herein.

 

“Secured Party” shall have the meaning indicated in the opening paragraph hereof.

 

“Securities Account” shall have the meaning given to such term in Section 104.8501 of the NV UCC.

 

“Securities Act” shall have the meaning given such term in Section 28 hereof.

 

“Security Interest” shall have the meaning given such term in Section 2 hereof.

 

(b)          All other terms used in this Agreement that are not specifically defined herein shall have the meaning assigned to such terms in the Credit Agreement or, if not specifically defined therein, shall have the meaning assigned to such terms in Article 9 of the NV UCC.

 

(c)          Unless the context of this Agreement otherwise clearly requires, references to the plural include the singular, and to the singular include the plural, and “or” has the inclusive meaning represented by the phrase “and/or.”  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The words “hereof,” “herein,” “hereunder” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.  References to Sections and Schedules are references to Sections and Schedules in this Agreement unless otherwise provided.

 

 

Section 2.              Grant of Security Interest.  As security for the payment and performance of all of the Obligations, each Grantor hereby grants to the Secured Party a first priority security interest (the “Security Interest”) in all of such Grantor’s right, title and interest in and to the following, whether now or hereafter owned, existing, arising or acquired and wherever located (all being collectively referred to herein as the “Collateral”):

 

(a)          All Accounts.

 

(b)          All Chattel Paper.

 

(c)          All Deposit Accounts.

 

(d)          All Documents.

 

(e)          All Equipment.

 

(f)           All Fixtures.

 

(g)          All General Intangibles.

 

(h)          All Instruments.

 

(i)           All Intellectual Property.

 

(j)           All Inventory.

 

(k)          All Investment Property.

 

(l)           All Letter of Credit Rights.

 

(m)          All Pledged Collateral.

 

(n)          To the extent not otherwise included in the foregoing, all other rights to the payment of money, including rents and other sums payable to such Grantor under leases, rental agreements and other Chattel Paper; all books, correspondence, credit files, records, invoices, bills of lading, and other documents relating to any of the foregoing, including, without limitation, all tapes, cards, disks, computer software (other than off-the-shelf software), computer runs and other papers and documents in the possession or control of such Grantor or any computer bureau from time to time acting for such Grantor; all rights in, to and under all policies insuring the life of any officer, director, stockholder or employee of such Grantor, the proceeds of which are payable to such Grantor; all accessions and additions to, parts and appurtenances of, substitutions for and replacements of any of the foregoing; and all proceeds (including insurance proceeds) and products thereof.

 

 

Notwithstanding anything herein to the contrary, in no event shall the Security Interest attach to, or the terms “Collateral,” “Pledged Collateral” or “Pledged Equity Interests” be deemed to include, (i) any of the outstanding Equity Interests in a Foreign Subsidiary; (ii) any property subject to a Lien permitted by Section 6.13(b) of the Credit Agreement if the terms of the Indebtedness secured thereby prohibit other Liens on such property; (iii) any lease, license, contract, property rights or agreement to which a Grantor is a party or any of such Grantor’s rights or interests thereunder, in any case if and for so long as and to the extent that the grant of the Security Interest or lien shall constitute or result in (A) the abandonment, invalidation or unenforceability of any material right, title or interest of such Grantor therein or (B) a breach or termination pursuant to the terms of, or a default under, any such lease, license, contract, property rights or agreement (other than to the extent that any such breach, termination or default would be rendered ineffective pursuant to Sections 104.9406, 104.9407, 104.9408 or 104.9409 of the NV UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law or principles of equity), provided, however, that the Security Interest (x) shall attach immediately at such time as the condition causing such abandonment, invalidation or unenforceability shall be remedied, (y) to the extent severable, shall attach immediately to any term of such lease, license, contract, property rights or agreement to the extent that such attachment does not result in any of the consequences specified in (A) or (B) above and (z) shall attach immediately to any such lease, license, contract, property rights or agreement to which the account debtor or the Grantor’s counterparty has consented to such attachment; (iv) any Equity Interest acquired after the Closing Date that is an Equity Interest in an entity other than a Subsidiary of the Borrower solely to the extent such acquisition or Investment is permitted under Section 6.11(e) of the Credit Agreement, if the terms of the organizational documents of the issuer of such Equity Interests do not permit the grant of a security interest in such Equity Interests by the owner thereof or the applicable Grantor has been unable to obtain any approval or consent to the creation of a Security Interest therein that is required under such organizational documents; (v) any application to register any trademark or service mark prior to the filing under applicable law of a verified statement of use (or the equivalent) for such trademark or service mark to the extent the creation of a Security Interest therein or the grant of a mortgage thereon would void or invalidate such trademark or service mark; and (vi) any license, permit, or authorization issued by any Gaming Authority solely to the extent a security interest is prohibited under Gaming Laws or which would require a license, registration, finding of suitability or other similar approval or procedure by any Gaming Authority prior to being pledged, hypothecated, or given as collateral security (to the extent such license finding or approval has not been obtained) (collectively, the “Excluded Property”); provided, however, that any Collateral (or any portion thereof) that ceases to satisfy the criteria for Excluded Property (whether as a result of a Grantor obtaining any necessary consent, any change in any rule of law, statute or regulation or otherwise) shall no longer be Excluded Property and the Security Interest shall attach immediately to such Collateral (or portion thereof) at such time.

 

Section 3.              Grantors Remain Liable.  Anything herein to the contrary notwithstanding, (a) the relevant Grantor shall remain liable under its Accounts, Chattel Paper, General Intangibles and other items included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Secured Party of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under the Accounts or any other items included in the Collateral and (c) the Secured Party shall not have any obligation or liability under Accounts, Chattel Paper, General Intangibles and other items included in the Collateral by reason of this Agreement, nor shall the Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

 

 

Section 4.              Title to Collateral.  The relevant Grantor has (or will have at the time it acquires rights in Collateral hereafter acquired or arising) and will maintain so long as the Security Interest may remain outstanding title to each item of Collateral (including the proceeds and products thereof), free and clear of all Liens except the Security Interest and except Permitted Liens.  The Grantors will not license any Collateral (other than pursuant to non-exclusive licenses in the ordinary course of business) without the prior written consent of the Secured Party.  The Grantors will defend the Collateral against all claims or demands of all Persons (other than the Secured Party and Persons holding Permitted Liens) claiming the Collateral or any interest therein.  As of the date of execution of this Agreement, no effective financing statement or other similar document used to perfect and preserve a security interest under the laws of any jurisdiction (a “Financing Statement”) covering all or any part of the Collateral is on file in any recording office, except (a) such as may have been filed in favor of the Secured Party relating to this Agreement, (b) such as may have been filed to perfect Permitted Liens or (c) Financing Statements to be terminated on the Closing Date in connection with indebtedness repaid on the Closing Date.

 

Section 5.              Disposition of Collateral.  No Grantor will sell, lease or otherwise dispose of, or discount or factor with or without recourse, any Collateral, except as otherwise permitted by the Credit Agreement.

 

Section 6.              Delivery of Pledged Collateral.  Subject to Gaming Laws, all certificates and instruments representing or evidencing the Initial Pledged Collateral shall be delivered to the Secured Party contemporaneously with the execution of this Agreement, or within five Business Days after the Closing Date.  Subject to Gaming Laws, all certificates and instruments representing or evidencing Pledged Collateral received by any Grantor after the execution of this Agreement shall be delivered to the Secured Party promptly upon that Grantor’s receipt thereof.  Subject to Gaming Laws, all such certificates and instruments shall be held by or on behalf of the Secured Party pursuant hereto and shall be in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Secured Party.  With respect to all Pledged Collateral consisting of uncertificated securities, book-entry securities or securities entitlements, and subject to Gaming Laws, any Grantor shall either (a) execute and deliver, and cause any necessary issuers or securities intermediaries to execute and deliver, control agreements in form and substance satisfactory to the Secured Party covering such Pledged Collateral, or (b) cause such Pledged Collateral to be transferred into the name of the Secured Party.  Subject to Gaming Laws, the Secured Party shall have the right at any time after an Event of Default has occurred and is continuing to cause any or all of the Pledged Equity Interests to be transferred of record into the name of the Secured Party or its nominee (but subject to the rights of any Grantor under Section 10) and to exchange certificates representing or evidencing Pledged Equity Interests for certificates of smaller or larger denominations.  

 

 

Section 7.              Intellectual Property Representations and Warranties.

 

(a)          Schedule III contains a complete and accurate listing as of the Closing Date (or, if later, as of the date any Grantor becomes party hereto) of all United States and material state and foreign registered Intellectual Property of the Grantors, including but not limited to (i) United States, state and foreign trademark registrations and applications for trademark registration, (ii) United States, state and foreign patents and patents applications, together with all reissuances, continuations, continuations in part, revisions, extensions and reexaminations thereof, (iii) United States, state and foreign copyright registrations and applications for registration, (iv) industrial design registrations and industrial design applications, (v) domain names, (vi) all forms of Intellectual Property described in clauses (i)-(iii) above that are owned by a third party and licensed to any Grantor or otherwise used by any Grantor under contract and (vii) the names of any Person that has been granted rights in respect thereof outside of the ordinary course of business.

 

(b)          Except as could not be reasonably expected to result in a Material Adverse Effect, such Intellectual Property is valid, subsisting, unexpired (where registered) and enforceable and has not been abandoned or adjudged invalid or unenforceable, in whole or in part.

 

(c)          To the Grantor’s knowledge, no Person other than the Grantors has any right or interest of any kind or nature in or to the Intellectual Property, including any right to sell, license, lease, transfer, distribute, use or otherwise exploit the Intellectual Property or any portion thereof outside of the ordinary course of the Grantors’ business, except as noted on Schedule III.  Each Grantor has good and marketable title to, and the valid and enforceable power and right to sell, license, transfer, distribute, use and otherwise exploit, its Intellectual Property, except as noted on Schedule III or as could not reasonably be expected to result in a Material Adverse Effect.

 

(d)          None of any Grantor’s material Intellectual Property the value of which to such Grantor is contingent upon maintenance of the confidentiality thereof has been disclosed by any Grantor to any Person other than employees, contractors, customers, representatives and agents of the Grantors who are parties to customary confidentiality and nondisclosure agreements with the applicable Grantor, except where such disclosures, individually or in the aggregate, could not be reasonably expected to result in a Material Adverse Effect.

 

(e)          To the Grantors’ knowledge, no Person has violated, infringed upon or breached, or is currently violating, infringing upon or breaching, any of the rights of any Grantor to the Intellectual Property or has breached or is breaching any duty or obligation owed to any Grantor in respect of the Intellectual Property except where those breaches, individually or in the aggregate, could not be reasonably expected to result in a Material Adverse Effect.

 

(f)          No settlement, consent, covenant not to sue, nonassertion assurance or release that any Grantor has entered into, or to which any Grantor is bound, adversely affects any Grantor’s rights to own or use any Intellectual Property, except as could not be reasonably expected to result in a Material Adverse Effect, in each case individually or in the aggregate.

 

 

(g)          No Grantor has received any written notice that remains outstanding challenging the validity, enforceability or ownership of any Intellectual Property, except where such challenges could not reasonably be expected to result in a Material Adverse Effect, either individually or in the aggregate, and to each Grantor’s knowledge at the date hereof there are no facts upon which such a challenge could be made.

 

(h)          Each Grantor owns directly or is entitled to use, by license or otherwise, all Intellectual Property necessary for the conduct of such Grantor’s business.

 

(i)          Each Grantor uses adequate standards of quality in the manufacture, distribution and sale of all products sold and in the provision of all services rendered under or in connection with all trademarks and has taken all commercially reasonable action necessary to insure that all licensees of the trademarks owned or licensed by such Grantor use such adequate standards of quality, except where the failure to use adequate standards of quality could not reasonably be expected to result in a Material Adverse Effect.

 

(j)          The consummation of the transactions contemplated by the Loan Documents will not result in the termination or material impairment of any material Intellectual Property.

 

(k)          No holding, decision or judgment has been rendered in any action or proceeding before any court or administrative authority challenging the validity of, any Grantor’s right to register, or any Grantor’s rights to own or use any material Intellectual Property, and no such action or proceeding is pending or, to any Grantor’s knowledge, threatened.

 

(l)          Except as could not be reasonably expected to result in a Material Adverse Effect, each Grantor has been using appropriate statutory notice of registration in connection with its use of registered trademarks, proper marking practices in connection with the use of patents and appropriate notice of copyright in connection with the publication of copyrights material to such Grantor’s business.

 

Section 8.            Intellectual Property Covenants.

 

(a)         Concurrently with the execution and delivery of this Agreement, each Grantor that owns or holds any United States registered Intellectual Property shall execute and deliver to the Secured Party a separate Confirmatory Grant of Security Interest in Intellectual Property in the form of Exhibit A.  Upon filing thereof in the applicable office, and filing of appropriate financing statements in the appropriate jurisdictions, all action necessary or desirable to protect and perfect the security interest in, to and on the Grantors’ United States patents, trademarks or copyrights will have been taken and such perfected security interest will be enforceable as such as against any and all creditors of and purchasers from the Grantors.

 

 

(b)          Notice of Filing of Intellectual Property.  If, after the Closing Date, any Grantor obtains rights to, including but not limited to by filing and acceptance of a statement of use or an amendment to allege use with the United States Patent and Trademark Office, or applies for or seeks federal registration of, any new patentable invention, trademark or copyright in addition to Intellectual Property described on Schedule III, such Grantor shall provide the Secured Party with notice thereof (i) after obtaining such rights or applying for such application with respect to any such Intellectual Property that is material to the business and operations of the Grantors, taken as a whole, within 90 days thereafter, and (ii) with respect to all such Intellectual Property, promptly following a request from the Secured Party and in any event within 30 days after such request.  Promptly upon request by the Secured Party, each Grantor shall execute and deliver to the Secured Party any supplement to this Agreement or any other document reasonably requested by the Secured Party to evidence the Security Interest in a form appropriate for recording in the applicable United States federal office.  Each Grantor also hereby authorizes the Secured Party to modify this Agreement unilaterally (i) by amending Schedule III to include any future United States registered Intellectual Property of which the Secured Party receives notification from any Grantor pursuant hereto and (ii) by recording, in addition to and not in substitution for this Agreement, a duplicate original of this Agreement containing in Schedule III a description of such Intellectual Property.

 

Section 9.            Certain Warranties and Covenants.  Each Grantor makes the following warranties and covenants:

 

(a)          The Pledged Equity Interests have been duly authorized and validly issued by the issuer thereof and are fully paid and non-assessable.  The Pledged Debt, if any, to the Grantor’s knowledge, has been duly authorized, issued and delivered and is the legal, valid and binding obligation of the obligors thereof and is not in default.  The certificates and instruments, as applicable, representing the Pledged Collateral are genuine.  Except as may be provided by the law of the jurisdiction in which a Foreign Subsidiary is organized, the Pledged Collateral is not subject to any offset or similar right or claim of the issuers thereof.  

 

(b)          As of the Closing Date (or, if later, the date such Grantor becomes a party hereto), the Pledged Equity Interests constitute the percentage of the issued and outstanding ownership interests of the respective issuers thereof indicated on Schedule I (if any such percentage is so indicated).

 

(c)          As of the Closing Date (or, if later, the date such Grantor becomes a party hereto), there are no obligations for borrowed money or other indebtedness owed to any Grantor, including with respect to the deferred purchase price of property (but excluding all accounts payable on ordinary trade terms) other than as specifically permitted pursuant to Section 6.11 of the Credit Agreement and as set forth on Schedule I hereto, as the same is updated from time to time. Grantors hereby agree to provide the Secured Party with written notice within 10 Business Days of obtaining any debt instruments or any rights or interests owed to such Grantor with an individual value in excess of $50,000, or an aggregate value for all such debt instruments or rights or interests in excess of $200,000, and upon written request from the Secured Party, each Grantor hereby agrees to pledge such debt instrument or such rights or interests and deliver such documents and certificates as the Secured Party may reasonably request in connection with the perfection and Control of such debt instrument or such rights or interests.

 

 

(d)          No Grantor shall forgive, cancel, subordinate, compromise, modify, amend or extend the time for payment of, or waive any default under, any of the Pledged Debt, or modify or amend, or waive any default under, any agreement with respect to the Related Collateral, or consent to or acquiesce in any of the foregoing, without in each case the prior written consent of the Secured Party.

 

(e)          None of the Collateral (i) shall be deposited in, credited to or otherwise subject to any Securities Account, except a Securities Account subject to the Control of the Secured Party, or (ii) shall be subject to the Control of any Person other than the applicable Grantor and the Secured Party.  

 

(f)          Each Grantor will (i) cause each issuer of the Pledged Equity Interests that it controls not to issue any Equity Interests in addition to or in substitution for the Pledged Equity Interests issued by such issuer, except to the Grantor or as otherwise permitted by the Credit Agreement, and (ii) pledge hereunder, promptly upon its acquisition thereof, any and all additional Equity Interests of each issuer of the Pledged Equity Interests that are issued to the Grantor.

 

(g)          Other than Deposit Accounts and Securities Accounts for which a Grantor provides written notice to Secured Party after the date hereof (other than Deposit Accounts opened with the Secured Party), Schedule II lists, as of the Closing Date, each Grantor’s Deposit Accounts and Securities Accounts (collectively, the “Existing Accounts”).  Each Grantor (other than the Parent and Intermediate Holdings) shall (a) in accordance with Section 6.14 of the Credit Agreement deposit all of its cash in (i) Deposit Accounts maintained with the Secured Party or (ii) in an account with another Person otherwise subject to a Control Agreement to the extent permitted under Section 6.14 of the Credit Agreement; and (b) maintain all Securities Accounts, if any, with the Secured Party or in an account otherwise subject to a Control Agreement.

 

(h)          Each Grantor shall promptly notify the Secured Party, in writing, of: (i) any Lien (other than Permitted Liens) on any of the Collateral which would materially and adversely affect the ability of the Secured Party to exercise any of its remedies hereunder, (ii) the occurrence of any other event which could reasonably be expected to materially and adversely effect the aggregate value of the Collateral or on the Security Interest, (iii) any Collateral which, to the knowledge of such Grantor, constitutes a Government Contract with an individual value in excess of $250,000 or to the extent the aggregate value of all Government Contracts is in excess of $750,000, and (iv) the acquisition or ownership by such Grantor of any (A) Commercial Tort Claim (other than, as long as no Default exists, a Commercial Tort Claim for less than $250,000), or (B) any Letter of Credit Rights after the Closing Date.

 

 

(i)           As of the date hereof, there are no Partnership/LLC Interests that are Pledged Equity Interests by their terms expressly provide that they are securities governed by Article 8 of the applicable Uniform Commercial Code.   Each Grantor covenants and agrees that it will not permit any issuer of Pledged Equity Interests to elect to opt into or voluntarily allow any Partnership/LLC Interest to be governed by Article 8 of the applicable Uniform Commercial Code without the prior written consent of the Secured Party.   Except to the extent prohibited by applicable law, if certificates representing any Partnership/LLC Interests that are Pledged Equity Interests have been issued, such certificates have been delivered to the Secured Party along with duly executed and undated stock powers or other similar endorsements in blank with respect to such Partnership/LLC Interests on the date of this Agreement or if issued after the date hereof, within 5 Business Days of the issuance of such certificates.  None of the Partnership/LLC Interests that are Pledged Equity Interests (i) are dealt in or traded on a Securities exchange or in Securities markets, (ii) are Investment Company Securities (as defined in the UCC) or (iii) are held in a Securities Account.

 

Section 10.            Voting Rights; Dividends; Distributions, Equity Interest in Limited Liability Companies and Partnerships, Etc.  

 

(a)          Subject to paragraph (d) of this Section 10, the relevant Grantor shall be entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Pledged Equity Interests or any other Equity Interests that become part of the Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Credit Agreement; provided, however, that no Grantor shall exercise or refrain from exercising any such right if such action could reasonably be expected to have a material adverse effect on the value of the Pledged Collateral or any material part thereof.  

 

(b)          Subject to paragraph (e) of this Section 10, the relevant Grantor shall be entitled to receive, retain and use in any manner not prohibited by the Credit Agreement any and all principal, interest, dividends and other distributions paid in respect of the Pledged Collateral, subject to compliance with applicable Gaming Laws.  

 

(c)          So long as an Event of Default shall have occurred and be continuing and the Secured Party has notified the applicable Grantor of the Secured Party’s intention to exercise its voting power under this subsection (c), subject to compliance with applicable Gaming Laws,

 

i.            the Secured Party may exercise (to the exclusion of such Grantor) the voting power and all other incidental rights of ownership with respect to any Pledged Equity Interests or Investment Property constituting Collateral.  EACH GRANTOR HEREBY GRANTS THE SECURED PARTY AN IRREVOCABLE PROXY (WHICH IRREVOCABLE PROXY SHALL CONTINUE IN EFFECT UNTIL THE SATISFACTION, IN FULL, OF ALL OBLIGATIONS) EXERCISABLE UNDER SUCH CIRCUMSTANCES TO VOTE THE PLEDGED EQUITY INTERESTS, INVESTMENT PROPERTY AND SUCH OTHER COLLATERAL; AND

 

 

ii.         such Grantor shall promptly deliver to the Secured Party such additional proxies and other documents as may be necessary to allow the Secured Party to exercise such voting power.

 

(d)          During the continuance of an Event of Default, and subject to Gaming Laws, the Secured Party shall have the right in its sole discretion, and the Grantors shall each execute and deliver all such proxies and other instruments as may be necessary or appropriate to give effect to such right, to terminate all rights of the Grantors to exercise or refrain from exercising the voting and other consensual rights they would otherwise be entitled to exercise pursuant to Section 10(a) hereof, and all such rights shall thereupon become vested in the Secured Party that shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights; provided, however, that the Secured Party shall not be deemed to possess or have control over any voting rights with respect to any Pledged Collateral unless and until the Secured Party has given written notice to the relevant Grantor that any further exercise of such voting rights by such Grantor is prohibited and that the Secured Party and/or its assigns will henceforth exercise such voting rights; and provided, further, that neither the registration of any item of Pledged Collateral in the Secured Party’s name nor the exercise of any voting rights with respect thereto shall be deemed to constitute a retention by the Secured Party of any such Collateral in satisfaction of the Obligations or any part thereof.

 

(e)          During the continuance of an Event of Default, and subject to Gaming Laws:

 

i.            all rights of the Grantors to receive the principal, interest, dividends and other distributions that the Grantors would otherwise be authorized to receive and retain pursuant to Section 10(b) hereof shall cease, and all such rights shall thereupon become vested in the Secured Party which shall thereupon have the sole right to receive and hold such property as Pledged Collateral, and

 

ii.         all payments of principal, interest, dividends and other distributions that are received by any Grantor contrary to the provisions of paragraph (i) of this subsection (e) shall be received in trust for the benefit of the Secured Party, shall be segregated from such Grantor’s other funds and shall be forthwith paid over to the Secured Party as Pledged Collateral in the same form as so received (with any necessary indorsement).

 

(f)          Each of the Grantors covenants and agrees that each of the limited liability agreement, operating agreement, membership agreement, partnership agreement or similar agreement to which a Grantor is a party and relating to any Partnership/LLC Interests that are Pledged Equity Interests (as amended, restated, supplemented or otherwise modified from time to time, a “Pledged Partnership/LLC Agreement”) is hereby amended by this Section 10(f) to permit each member, manager and partner that is a Grantor to pledge all of the Partnership/LLC Interests that are Pledged Equity Interests in which such Grantor has rights to and grant and collaterally assign to the Secured Party a lien and security interest in its Partnership/LLC Interests that are Pledged Equity Interests in which such Grantor has rights without any further consent, approval or action by any other party, including, without limitation, any other party to any Pledged Partnership/LLC Agreement or otherwise, but in all events subject to Gaming Laws.

 

 

(g)          During the continuance of an Event of Default, subject to Gaming Laws, the Secured Party or its designees shall have the right (but not the obligation) to be substituted for the applicable Grantor as a member, manager or partner under the applicable Pledged Partnership/LLC Agreement and the Secured Party shall have all rights, powers and benefits of such Grantor as a member, manager or partner, as applicable, under such Pledged Partnership/LLC Agreement in accordance with the terms of Section 10(d).  For avoidance of doubt, such rights, powers and benefits of a substituted member shall include all voting and other rights and not merely the rights of an economic interest holder. So long as this Agreement remains in effect, no further consent, approval or action by any other party including, without limitation, any other party to the Pledged Partnership/LLC Agreement or otherwise shall be necessary to permit the Secured Party to be substituted as a member, manager or partner pursuant to this Section 10(g).  The rights, powers and benefits granted pursuant to this paragraph shall inure to the benefit of the Secured Party and each of their respective successors, assigns and designated agents, as intended third party beneficiaries.

 

(h)          Each applicable Grantor and each applicable Pledged Interest issuer agrees that so long as this Agreement remains in effect, no Pledged Partnership/LLC Agreement shall be amended to modify the provisions of Section 10(f) without the prior written consent of the Secured Party, which consent shall not be unreasonably withheld or delayed.

 

Section 11.            Names, Offices, Locations, Jurisdiction of Organization.  Each Grantor’s legal name (as set forth in its constituent documents filed with the appropriate governmental official or agency), jurisdiction of organization and organizational number are set forth on Schedule IV.  If any Grantor has been involved in a merger or a disposition of substantially all of the assets of another person in the five years before the later of the Closing Date and the date such Grantor becomes a party hereto, the name of the merged entity or the seller of such assets is set forth on Schedule IV next to the name of such Grantor. Each Grantor shall from time to time at the request of the Secured Party provide the Secured Party with current good standing certificates or state-certified constituent documents from the appropriate governmental officials. The chief executive office of each Grantor is located at its address set forth on the signature page hereof.  All premises where Collateral is located are identified on Schedule IV, which shall be deemed to be updated from time to time to incorporate additional locations disclosed by the Borrower in writing to the Secured Party.  No Grantor shall locate or relocate any item of Collateral into any jurisdiction in which an additional Financing Statement would be required to be filed to maintain the Secured Party’s perfected security interest in such Collateral unless such additional Financing Statement is first filed in such jurisdiction (or such Financing Statement is a fixture filing).  No Grantor does business nor has done business during the past five years under any trade name or fictitious business name except as disclosed on Schedule III or as otherwise specified from time to time in writing by such Grantor in accordance with the terms of this Agreement.  Except as disclosed on Schedule IV under such Grantor’s name, no Grantor has acquired assets from any Person, other than assets acquired in the ordinary course of such Grantor’s business from a Person engaged in the business of selling goods of such kind, during the five years before the later of the Closing Date and the date such Grantor becomes a party to this Agreement.  No Grantor shall change its name, the location of its chief executive office or its corporate structure (including without limitation its jurisdiction of organization) unless the Secured Party has received at least 10 Business Days’ prior written notice thereof and such Grantor has executed and delivered to the Secured Party such Financing Statements and other instruments as are required or appropriate to continue the perfection of the Security Interest.

 

 

Section 12.           Rights to Payment.  Each Account, Chattel Paper, Document, General Intangible and Instrument constituting or evidencing Collateral is (or, in the case of all future Collateral, will be when arising or issued) the valid, genuine and legally enforceable obligation of the Account Debtor or other obligor named therein or in the relevant Grantor’s records pertaining thereto as being obligated to pay or perform such obligation.  Without the Secured Party’s prior written consent, no Grantor will agree to any modifications, amendments, subordinations, cancellations or terminations of the obligations of any such Account Debtors or other obligors except in the ordinary course of business.  Each Grantor will perform and comply in all material respects with all its obligations under any items included in the Collateral and exercise promptly and diligently its rights thereunder.

 

Section 13.           Further Assurances; Attorney-in-Fact.

 

(a)          Each Grantor agrees that from time to time, at its expense, and subject to Gaming Laws and the limitations of Section 13(c), it will promptly execute and deliver all further instruments and documents, and take all further action, that may be reasonably necessary or that the Secured Party may reasonably request, in order to perfect and protect the Security Interest granted or purported to be granted hereby or to enable the Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Collateral (but any failure to request or assure that any Grantor execute and deliver such instruments or documents or to take such action shall not affect or impair the validity, sufficiency or enforceability of this Agreement and the Security Interest, regardless of whether any such item was executed and delivered or action taken in a similar context or on a prior occasion).  Without limiting the generality of the foregoing, each Grantor will, promptly and from time to time at the reasonable request of the Secured Party, (i) execute, authorize or file such Financing Statements or continuation statements in respect thereof, or amendments thereto, and such other instruments or notices (including fixture filings with any necessary legal descriptions as to any goods included in the Collateral that the Secured Party determines might be deemed to be fixtures, and, subject to the limitations of Section 13(c), and instruments and notices with respect to vehicle titles) as may be necessary or desirable, or as the Secured Party may request, in order to perfect, preserve and enhance the Security Interest granted or purported to be granted hereby; (ii) use commercially reasonable efforts to obtain from any bailee holding any item of Collateral an acknowledgement, in form satisfactory to the Secured Party, that such bailee holds such Collateral for the benefit of the Secured Party; (iii) use commercially reasonable efforts to obtain from any securities intermediary, or other party holding any item of Collateral, Control Agreements in form satisfactory to the Secured Party; (iv) if an Event of Default exists, deliver and pledge to the Secured Party all Instruments and Documents, duly indorsed or accompanied by duly executed instruments of transfer or assignment, with full recourse to each Grantor, all in form and substance reasonably satisfactory to the Secured Party; (v) use commercially reasonable efforts to obtain waivers, in form satisfactory to the Secured Party, of any claim to any Collateral from any landlords or mortgagees of any property where any Inventory or Equipment is located; and (vi) deliver all other items and perform all other actions required pursuant to Section 5.11 of the Credit Agreement.  

 

 

(b)          Each Grantor hereby authorizes the Secured Party to file one or more Financing Statements or continuation statements in respect thereof, and amendments thereto, relating to all or any part of the Collateral without the signature of such Grantor where permitted by law, including Financing Statements designating the Collateral as “all assets” or “all personal property” or words of like import.  Each Grantor irrevocably waives any right to notice of any such filing, provided that Secured Party shall endeavor to provide notice to such Grantor promptly after filing any such Financing Statement.  A photocopy or other reproduction of this Agreement or any Financing Statement covering the Collateral or any part thereof shall be sufficient as a Financing Statement where permitted by law.

 

(c)          Upon the occurrence and during the continuance of an Event of Default, at the request of the Secured Party, all applications for certificates of title or ownership indicating the Secured Party’s first priority Lien on any and all Equipment that constitute vehicles (subject to any Permitted Liens) covered by such certificate, and any other necessary documentation, shall be filed in each office in each jurisdiction which the Secured Party shall deem reasonably advisable to perfect its Liens on such vehicles; provided, that at all times, each certificate of title or ownership relating to each such vehicle of such Grantor shall be maintained by such Grantor in accordance with applicable law to reflect the ownership interest of such Grantor.  In addition, upon the acquisition after the date of this Agreement of any vehicle with a purchase price of over $100,000, at the request of Secured Party, an application for certificate of title or ownership indicating the Secured Party’s first priority Lien on such vehicle (subject to any Permitted Liens), and any other necessary documentation, shall be filed in each office in each jurisdiction which the Secured Party shall deem reasonably advisable to perfect its Liens on such vehicle.

 

(d)          The Grantors will furnish to the Secured Party from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Secured Party reasonably requests, all in reasonable detail and in form and substance reasonably satisfactory to the Secured Party.

 

(e)          Subject to compliance with Gaming Laws, in furtherance, and not in limitation, of the other rights, powers and remedies granted to the Secured Party in this Agreement and the other Loan Documents, each Grantor hereby appoints the Secured Party such Grantor’s attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time during the continuation of an Event of Default and in the Secured Party’s good faith discretion, to take any action (including the right to collect on any Collateral) and to execute any instrument that the Secured Party may reasonably believe is necessary or advisable to accomplish the purposes of this Agreement, in a manner consistent with the terms hereof. THE GRANTORS EACH HEREBY ACKNOWLEDGE, CONSENT AND AGREE THAT THE POWER OF ATTORNEY GRANTED PURSUANT TO THIS SECTION 13(e) IS IRREVOCABLE AND COUPLED WITH AN INTEREST AND SHALL BE EFFECTIVE UNTIL THE SATISFACTION OF ALL OBLIGATIONS.

 

 

Section 14.           Taxes and Claims.  In addition to the requirements under Section 5.4 of the Credit Agreement, each Grantor will promptly pay all income taxes and other material governmental charges or taxes levied or assessed upon or against any Collateral or upon or against the creation, perfection or continuance of the Security Interest, as well as all other claims of any kind (including claims for labor, material and supplies) against or with respect to the Collateral, except to the extent (a) such taxes, charges or claims are being contested in good faith by appropriate proceedings, (b) such proceedings do not involve any material danger of the sale, forfeiture or loss of any collateral or any interest therein and (c) such taxes, charges or claims are adequately reserved against on such Grantor’s books in accordance with GAAP.

 

Section 15.           Books and Records.  In addition to the requirements under Section 5.7 of the Credit Agreement, each Grantor will keep and maintain at its own cost and expense reasonably satisfactory and materially complete records of the Collateral, including a record of all payments received and credits granted with respect to all Accounts, Chattel Paper and other items included in the Collateral.

 

Section 16.           Inspection, Reports, Verifications.  Subject to Gaming Laws, each Grantor will upon prior written notice and at all reasonable times (which times, unless an Event of Default is continuing, shall be during normal business hours and at mutually agreeable times) permit the Secured Party or its representatives to examine or inspect any Collateral, any evidence of Collateral and such Grantor’s books and records concerning the Collateral, wherever located, provided, that, unless a Default or an Event of Default is continuing, the Secured Party shall not conduct such visits, inspections and examinations more than two times per calendar year.  Each Grantor will from time to time when requested by the Secured Party furnish to the Secured Party a report on its Accounts, Chattel Paper, General Intangibles and Instruments, naming the Account Debtors or other obligors thereon, the amount due and the aging thereof.  During the continuance of an Event of Default, the Secured Party or its designee is authorized to contact Account Debtors and other Persons obligated on any such Collateral from time to time to verify the existence, amount and/or terms of such Collateral.

 

Section 17.           Notice of Loss.  The Grantors will promptly notify the Secured Party of any loss of or material damage to any material item of Collateral or of any substantial adverse change, known to any Grantor, in any material item of Collateral or the prospect of payment or performance thereof, in each case that would reasonably be expected to cause a Material Adverse Effect.

 

Section 18.           Insurance.  Each Grantor shall maintain with financially sound and reputable insurance companies insurance on all of its Property in such amounts and covering such risks as are consistent with sound business practice  and as are customarily carried by companies engaged in similar business and owning similar properties in localities where the Grantors operate in accordance with Section 5.3 of the Credit Agreement, and the Borrower, on behalf of the Grantors, will furnish to the Secured Party upon request full information as to the insurance carried and evidence that the endorsements, declaration pages and certificates furnished pursuant to Section 3.1.(a)(vii) of the Credit Agreement are in full force and effect.  Each Grantor will name the Secured Party as an additional insured with respect to general liability insurance and as a lender loss payee with respect to property insurance at all times prior to the repayment in full of the Obligations.

 

 

Section 19.            Lawful Use; Fair Labor Standards Act.  Each Grantor will use and keep the Collateral, and will require that others use and keep the Collateral, only for lawful purposes, without any material violation of any federal, state or local law, statute or ordinance.  All Inventory of any Grantor as of the date of this Agreement that was produced by such Grantor or with respect to which such Grantor performed any manufacturing or assembly process was produced by such Grantor (or such manufacturing or assembly process was conducted) in compliance in all material respects with all requirements of the Fair Labor Standards Act, and all Inventory produced, manufactured or assembled by any Grantor after the date of this Agreement will be so produced, manufactured or assembled, as the case may be.

 

Section 20.            Action by the Secured Party.  If any Grantor at any time fails to perform or observe any of the foregoing agreements, subject to Gaming Laws, the Secured Party shall have (and each Grantor hereby grants to the Secured Party) the right, power and authority (but not the duty) to perform or observe such agreement on behalf and in the name, place and stead of such Grantor (or, at the Secured Party’s option, in the Secured Party’s name) and to take any and all other actions which the Secured Party may reasonably deem necessary to cure or correct such failure (including, without limitation, the payment of taxes, the satisfaction of Liens, the procurement and maintenance of insurance, the execution of assignments, security agreements and Financing Statements and the indorsement of instruments); and each Grantor shall thereupon pay to the Secured Party on demand the amount of all monies expended and all reasonable costs and expenses (including reasonable attorneys’ fees and legal expenses) incurred by the Secured Party in connection with or as a result of the performance or observance of such agreements or the taking of such action by the Secured Party, together with interest thereon from the date expended or incurred at the highest lawful rate then applicable to any of the Obligations, and all such monies expended, costs and expenses and interest thereon shall be part of the Obligations secured by the Security Interest.

 

Section 21.            Insurance Claims.  As additional security for the payment and performance of the Obligations, each Grantor hereby assigns to the Secured Party any and all monies (including proceeds of insurance and refunds of unearned premiums) due or to become due under, and all other rights of such Grantor with respect to, any and all policies of insurance now or at any time hereafter covering the Collateral or any evidence thereof or any business records or valuable papers pertaining thereto.  At any time whether before or after the occurrence of any Event of Default (or, for any such claim that is less than $250,000, only during the continuation of an Event of Default), the Secured Party may (but need not), in the Secured Party’s name or in any Grantor’s name, execute and deliver proofs of claim, receive all such monies, indorse checks and other instruments representing payment of such monies, and adjust, litigate, compromise or release any claim against the issuer of any such policy.  Notwithstanding any of the foregoing, so long as no Event of Default is continuing the Grantors shall be entitled to all insurance proceeds with respect to Equipment or Inventory provided that such proceeds are applied to the cost of replacement Equipment or Inventory or other assets used or usable in the Grantors’ business.

 

 

Section 22.            The Secured Party’s Duties.  The powers conferred on the Secured Party hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers.  The Secured Party shall be deemed to have exercised reasonable care in the safekeeping of any Collateral in its possession if such Collateral is accorded treatment substantially equal to the safekeeping that the Secured Party accords its own property of like kind.  Except for the safekeeping of any Collateral in its possession and the accounting for monies and for other properties actually received by it hereunder, the Secured shall have no duty, as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not the Secured Party has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any Persons or any other rights pertaining to any Collateral.  The Secured Party will take action in the nature of exchanges, conversions, redemptions, tenders and the like requested in writing by a Grantor with respect to the Collateral in the Secured Party’s possession if the Secured Party in its reasonable judgment determines that such action will not impair the Security Interest or the value of the Collateral, but a failure of the Secured Party to comply with any such request shall not of itself be deemed a failure to exercise reasonable care with respect to the taking of any necessary steps to preserve rights against any Persons or any other rights pertaining to any Collateral.

 

Section 23.            Default.  Each of the following occurrences shall constitute an “Event of Default” under this Agreement: (a) any Grantor shall fail to observe or perform its covenant or agreement set forth in Section 4, 5, 6, 8, 9, 10, 11, 12, 14 or 18 of this Agreement; (b) any Grantor shall fail to observe or perform any other covenant or agreement applicable to it under this Agreement, which breach is not remedied within 30 days after the earlier of (i) the date on which an Authorized Officer of such Grantor becomes aware thereof or (ii) the date on which such Grantor receives notice of the same from the Secured Party; (c) any material representation or warranty made by any Grantor in this Agreement or any material schedule, exhibit, supplement or attachment hereto or in any financial statements, or written reports or certificates heretofore or at any time hereafter submitted by or on behalf of any Grantor to the Secured Party, shall prove to have been false or materially misleading when made; or (d) any “Event of Default” (as defined in the Credit Agreement) shall occur under the Credit Agreement.

 

Section 24.            Remedies on Default.  Upon and during the continuance of an Event of Default, and subject to compliance with Gaming Laws:

 

(a)           The Secured Party may exercise and enforce any and all rights and remedies available upon default to a secured party under Article 9 of the NV UCC.

 

 

(b)          The Secured Party shall have the right to enter upon and into and take possession of all or such part or parts of the properties of each Grantor, including lands, plants, buildings, Equipment, Inventory and other property, as may be necessary or appropriate in the judgment of the Secured Party to permit or enable the Secured Party to manufacture, produce, process, store or sell or complete the manufacture, production, processing, storing or sale of all or any part of the Collateral, as the Secured Party may elect, and to use and operate said properties for said purposes and for such length of time as the Secured Party may deem necessary or appropriate for said purposes without the payment of any compensation to any Grantor therefor.  The Secured Party may require each Grantor to, and each Grantor hereby agrees that it will, at its expense and upon request of the Secured Party, forthwith assemble all or part of the Collateral as directed by the Secured Party and make it available to the Secured Party at a place or places to be designated by the Secured Party.  The Secured Party may give any entitlement orders deemed appropriate by it with respect to the Investment Property and Pledged Collateral.  The Secured Party may for any reason apply for the appointment of a receiver over any Grantor or any of the Collateral, to which appointment each Grantor hereby consents.

 

(c)          Any disposition of Collateral may be in one or more parcels at public or private sale, at any of the Secured Party’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Secured Party may reasonably believe are commercially reasonable.  The Secured Party shall not be obligated to dispose of Collateral regardless of notice of sale having been given and the Secured Party may adjourn any public or private sale from time to time by announcement made at the time and place fixed therefor, and such disposition may, without further notice, be made at the time and place to which the sale was so adjourned.  

 

(d)          The Secured Party is hereby granted a license or other right to use, without charge, all of each Grantor’s property, including, without limitation, all of each Grantor’s labels, trademarks, copyrights, patents and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale or selling any Collateral, and such Grantor’s rights under all licenses and all franchise agreements shall inure to the Secured Party’s benefit until the Obligations are paid in full.  

 

(e)          If notice to any Grantor of any intended disposition of Collateral or any other intended action is required by law in a particular instance, such notice shall be deemed commercially reasonable if given in the manner specified for the giving of notice in Section 30 hereof at least ten calendar days prior to the date of intended disposition or other action, and the Secured Party may exercise or enforce any and all other rights or remedies available by law or agreement against the Collateral, against any Grantor, or against any other Person or property.  The Secured Party (i) may dispose of the Collateral in its then present condition or following such preparation and processing as the Secured Party deems commercially reasonable, (ii) shall have no duty to prepare or process the Collateral prior to sale, (iii) may disclaim warranties of title, possession, quiet enjoyment and the like and (iv) may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral, and none of the foregoing actions shall be deemed to adversely affect the commercial reasonableness of the disposition of the Collateral.

 

 

Section 25.            Remedies as to Certain Rights to Payment.  During the continuance of an Event of Default the Secured Party may notify any Account Debtor or other Person obligated on any Accounts or other Collateral that the same have been assigned or transferred to the Secured Party and that the same should be performed as requested by, or paid directly to, the Secured Party, as the case may be.  Each Grantor shall join in giving such notice, if the Secured Party so requests.  During the continuance of an Event of Default, the Secured Party may, in the Secured Party’s name or in any Grantor’s name, demand, sue for, collect or receive any money or property at any time payable or receivable on account of, or securing, any such Collateral or grant any extension to, make any compromise or settlement with or otherwise agree to waive, modify, amend or change the obligation of any such Account Debtor or other Person.  If any payments on any such Collateral are received by such Grantor after an Event of Default has occurred and is continuing, such payments shall be held in trust by such Grantor as the property of the Secured Party and shall not be commingled with any funds or property of such Grantor and shall upon the request of the Secured Party be forthwith remitted to the Secured Party for application on the Obligations.  

 

Section 26.           Application of Proceeds.  Subject to Gaming Laws, all cash proceeds received by the Secured Party in respect of any sale of, collection from or other realization upon all or any part of the Collateral in connection with the Secured Party’s exercise of its remedies hereunder may, in the discretion of the Secured Party, be held by the Secured Party as collateral for, or then or at any time thereafter so long as an Event of Default shall have occurred and be continuing be applied in whole or in part by the Secured Party against, all or any part of the Obligations (including, without limitation, any expenses of the Secured Party payable pursuant to Section 27 hereof).

 

Section 27.           Costs and Expenses; Indemnity.  In addition to the requirements set forth in Section 8.12 of the Credit Agreement, the Grantors will pay or reimburse the Secured Party on demand for all reasonable out of pocket expenses paid or incurred by the Secured Party, including in each case all filing and recording costs and fees, taxes, reasonable charges and disbursements of outside counsel to the Secured Party or the allocated costs of in-house counsel incurred from time to time, in connection with the creation, perfection, protection, satisfaction, foreclosure, collection or enforcement of the Security Interest and the preparation, administration, continuance, amendment or enforcement of this Agreement, including without limitation any actions taken by the Secured Party pursuant to Section 12, and all such costs and expenses shall be part of the Obligations secured by the Security Interest.  The Grantors shall indemnify and hold the Secured Party harmless from and against any and all claims, losses and liabilities (including reasonable attorneys’ fees) arising or resulting from this Agreement and the Security Interest hereby created (including enforcement of this Agreement) or the Secured Party’s actions pursuant hereto, except claims, losses or liabilities resulting from the Secured Party’s gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction.  Any liability of the Grantors to indemnify and hold the Secured Party harmless pursuant to the preceding sentence shall be part of the Obligations secured by the Security Interest.  The obligations of the Grantors under this Section shall survive any termination of this Agreement.

 

 

Section 28.           Waiver of Certain Claims.  The Grantors acknowledge that because of present or future circumstances, a question may arise under the Securities Act of 1933, as from time to time amended (the “Securities Act”), with respect to any disposition of the Pledged Collateral and Investment Property permitted hereunder.  The Grantors understand that compliance with the Securities Act may very strictly limit the course of conduct of the Secured Party if the Secured Party attempts to dispose of all or any portion of the Pledged Collateral and Investment Property and may also limit the extent to which or the manner in which any subsequent transferee of the Pledged Collateral and Investment Property or any portion thereof may dispose of the same.  There may be other legal restrictions or limitations affecting the Secured Party in any attempt to dispose of all or any portion of the Pledged Collateral and Investment Property under the applicable “Blue Sky” or other securities laws or similar laws analogous in purpose or effect.  The Secured Party may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Pledged Collateral and Investment Property for their own account for investment only and not to engage in a distribution or resale thereof.  The Grantors agree that the Secured Party shall not incur any liability, and any liability of the Grantors for any deficiency shall not be impaired, as a result of the sale of the Pledged Collateral and Investment Property or any portion thereof at any such private sale in a manner that the Secured Party reasonably believes is commercially reasonable (within the meaning of Section 9-627 of the Uniform Commercial Code).  The Grantors hereby waive any claims against the Secured Party arising by reason of the fact that the price at which the Pledged Collateral and Investment Property may have been sold at such sale was less than the price that might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Secured Party shall accept the first offer received and does not offer any portion of the Pledged Collateral and Investment Property to more than one possible purchaser, so long as such sale was commercially reasonable.  The Grantors further agree that the Secured Party has no obligation to delay sale of any Pledged Collateral and Investment Property for the period of time necessary to permit the issuer of such Pledged Collateral and Investment Property to qualify or register such Pledged Collateral and Investment Property for public sale under the Securities Act, applicable Blue Sky laws and other applicable state and federal securities laws, even if said issuer would agree to do so.  Without limiting the generality of the foregoing, the provisions of this Section would apply if, for example, the Secured Party were to place all or any portion of the Pledged Collateral and Investment Property for private placement by an investment banking firm, or if such investment banking firm purchased all or any portion of the Pledged Collateral and Investment Property for its own account, or if the Secured Party placed all or any portion of the Pledged Collateral and Investment Property privately with a purchaser or purchasers, so long as in each case such sale was commercially reasonable.

 

Section 29.           Waivers; Remedies; Marshalling.  This Agreement can be waived, modified, amended, terminated or discharged and the Security Interest can be released only explicitly in a writing signed by the Secured Party.  A waiver so signed shall be effective only in the specific instance and for the specific purpose given.  Mere delay or failure to act shall not preclude the exercise or enforcement of any rights and remedies available to the Secured Party.  All rights and remedies of the Secured Party shall be cumulative and may be exercised singly in any order or sequence, or concurrently, at the Secured Party’s option, and the exercise or enforcement of any such right or remedy shall neither be a condition to nor bar the exercise or enforcement of any other.  The Grantors hereby waive all requirements of law, if any, relating to the marshalling of assets that would be applicable in connection with the enforcement by the Secured Party of its remedies hereunder, absent this waiver.

 

 

Section 30.           Notices.  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 shall have specified to the other party hereto in writing.  All periods of notice shall be measured from the date of delivery thereof if manually delivered, from the date of sending thereof 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.  All notices shall be made in a manner consistent with the Credit Agreement.

 

Section 31.           Grantor Acknowledgments.  Each Grantor hereby acknowledges that (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement, (b)  Secured Party has no fiduciary relationship to the respective Grantor, the relationship being solely that of debtor and creditor and (c) no joint venture exists between the respective Grantor and the Secured Party.

 

Section 32.           Continuing Security Interest; Assignments under Credit Agreement.  This Agreement shall (a) create a continuing security interest in the Collateral and shall remain in full force and effect until payment in full of the Obligations and the expiration of the obligations (other than inchoate indemnity obligations, if any) of the Secured Party to extend credit accommodations to the Borrower, (b) be binding upon each Grantor, its successors and assigns and (c) inure to the benefit of, and be enforceable by, the Secured Party and its successors, transferees and assigns.  Without limiting the generality of the foregoing clause (c), subject to Gaming Laws, the Secured Party may assign or otherwise transfer all or any portion of their respective rights and obligations under the Credit Agreement to any other Persons to the extent and in the manner provided in the Credit Agreement and may similarly transfer all or any portion of its rights under this Agreement to such Persons.

 

Section 33.           Termination of Security Interest.  Upon payment in full of the Obligations and the expiration of any obligation of the Secured Party to extend credit accommodations to the Borrower (other than inchoate indemnity obligations), the Security Interest and other liens granted hereby shall terminate.  Upon such termination, the Secured Party will promptly return to the Borrower or the applicable Grantor such of the Collateral then in the possession of the Secured Party as shall not have been sold or otherwise applied pursuant to the terms hereof and execute and deliver to the Grantors such documents, releases, satisfactions and termination statements as the Grantors shall reasonably request to evidence such termination.  Any reversion or return of Collateral upon termination of this Agreement and any instruments of transfer or termination shall be at the expense of the Grantors and shall be without warranty by, or recourse to, the Secured Party.  As used in this Section, “Grantors” includes any assigns of any Grantor, any Person holding a subordinate security interest in any of the Collateral or whoever else may be lawfully entitled to any part of the Collateral.

 

Section 34.            Governing Law and Construction.  THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEVADA.  GRANTORS AND SECURED PARTY INTEND THAT THIS AGREEMENT COMPLIES WITH ALL APPLICABLE GAMING LAWS.  ACCORDINGLY, THE PROVISIONS OF THIS AGREEMENT ARE SUBJECT, IN THEIR ENTIRETY, TO APPLICABLE GAMING LAWS AND APPROVALS OF ANY APPLICABLE GAMING AUTHORITY, EVEN THOUGH A PARTICULAR PROVISION MAY NOT SO EXPRESSLY PROVIDE.  Whenever possible, each provision of this Agreement and any other statement, instrument or transaction contemplated hereby or relating hereto shall be interpreted in such manner as to be effective and valid under such applicable law, but, if any provision of this Agreement or any other statement, instrument or transaction contemplated hereby or relating hereto shall be 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 or any other statement, instrument or transaction contemplated hereby or relating hereto.

 

 

Section 35.           Consent to Jurisdiction.  AT THE OPTION OF THE SECURED PARTY, THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR STATE COURT SITTING IN CLARK COUNTY, NEVADA; AND EACH OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT.  IN THE EVENT ANY GRANTOR COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE SECURED PARTY AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

 

Section 36.           Waiver of Notice and Hearing.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH GRANTOR HEREBY WAIVES ALL RIGHTS TO A JUDICIAL HEARING OF ANY KIND PRIOR TO THE SECURED PARTY’S EXERCISE OF ITS RIGHTS TO POSSESSION OF THE COLLATERAL WITHOUT JUDICIAL PROCESS OR ITS RIGHTS TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR HEARING.  EACH GRANTOR ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS PROVISION AND THIS AGREEMENT.

 

Section 37.           Waiver of Jury Trial; Arbitration; Class Action Waiver.  This Section contains a jury waiver, arbitration clause, and a class action waiver.  READ IT CAREFULLY.

 

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

 

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

 

 

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

 

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

 

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

 

 

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

 

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

 

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

 

Section 38.           Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

 

Section 39.           General.  All representations and warranties contained in this Agreement or in any other agreement between any Grantor and the Secured Party shall survive the execution, delivery and performance of this Agreement and the creation and payment of the Obligations.  The Grantors waive notice of the acceptance of this Agreement by the Secured Party.  Captions in this Agreement are for reference and convenience only and shall not affect the interpretation or meaning of any provision of this Agreement.

 

 

Section 40.           Waiver of Defenses.  Each Grantor waives the benefit of any and all defenses and discharges available to a guarantor, surety, indorser or accommodation party, dependent on its character as such.  Without limiting the generality of the foregoing, each Grantor (in such capacity) waives presentment, demand for payment and notice of nonpayment or protest of any note or other instrument evidencing any of the Obligations; and each Grantor agrees that each Grantor’s liability hereunder and the Security Interest hereby created shall not be affected or impaired in any way by any of the following acts and things (which the Secured Party may do from time to time without notice to each Grantor): (a) by any sale, pledge, surrender, compromise, settlement, release, renewal, extension, indulgence, alteration, substitution, exchange, change in, modification or other disposition of any of the Obligations or any evidence thereof or any collateral therefor, (b) by any acceptance or release of collateral for or guarantors of any of the Obligations, (c) by any failure, neglect or omission to realize upon or protect any of the Obligations or to obtain, perfect, enforce or realize upon any collateral therefor or to exercise any Lien upon or right of appropriation of any moneys, credits or property toward the liquidation of any of the Obligations, (d) by any application of payments or credits upon any of the Obligations, or (e) by any irregularity or avoidability of the Obligations (including any avoidability of the Obligations or fraudulent transfers or fraudulent conveyances under any applicable law).  The Secured Party shall not be required, before exercising its rights under this Agreement, to first resort for payment of any of the Obligations to the Borrower or any other Person, its or their properties or estates, or any collateral, property, Liens or other rights or remedies whatsoever.  Each Grantor agrees not to exercise any right of contribution, recourse, subrogation or reimbursement available to each Grantor against the Borrower or any other Person or property, unless and until all Obligations and all other debts, liabilities and obligations owed by the Borrower and each Grantor to the Secured Party have been paid and discharged.  Each Grantor expects to derive benefits from the transactions resulting in the creation of the Obligations.  The Secured Party may rely conclusively on the continuing warranty, hereby made, that each Grantor continues to be benefited by the Secured Party’s extension of credit accommodations to the Borrower, and the Secured Party shall have no duty to inquire into or confirm the receipt of any such benefits, and this Agreement shall be effective and enforceable by the Secured Party without regard to the receipt, nature or value of any such benefits.

 

Section 41.           Uniform Electronic Transactions Act.  The Grantors authorize the Secured Party to (a) create electronic images and to destroy paper originals of any imaged documents (and any such images maintained by the Secured Party as a part of its normal business processes shall be given the same legal effect as the paper originals) and (b) convert any instrument into a “transferable record” under the Uniform Electronic Transactions Act (UETA), with the image of such instruments in the Secured Party’s possession constituting an “authoritative copy” under UETA.

 

Section 42.           Gaming Approval.  Notwithstanding anything to the contrary herein or in any of the other Loan Documents, the parties hereto acknowledge and agree that:

 

(a)          To the extent that the approval of a Gaming Authority is required under applicable Gaming Laws for the pledge of any of the Collateral consisting of Equity Interests to be effective, the pledge of such Equity Interests will not be effective without such approval; provided, that upon receipt of such approval, such pledge shall become immediately effective without any act or action of any party; provided, further, that until receipt of such approval, physical delivery of certificates representing such pledged Equity Interests shall not be required.  

 

(b)          The physical location of all certificates evidencing the Pledged Collateral shall at all times remain within the territory of the State of Nevada (or, as applicable under the law of another state, in such state) and each such certificate shall be made available for inspection by agents of any Gaming Authority upon request.  

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed and delivered by its respective officer thereunto duly authorized as of the date first above written.

 

	GAMING PARTNERS INTERNATIONAL CORPORATION
	By:
	Name:  Gregory S. Gronau
	Title:  President
	GAMING PARTNERS INTERNATIONAL USA, INC.
	By:
	Name:  Gregory S. Gronau
	Title:  President

 

Address for the Grantors:
Gaming Partners International Corporation

1700 South Industrial Road

Las Vegas, NV  89102

Fax:  702-598-2494

 

Signature Page to Pledge and Security Agreement and Irrevocable Proxy

 

 

EXHIBIT A TO
PLEDGE AND SECURITY AGREEMENT
AND IRREVOCABLE PROXY

 

Form of Confirmatory Grant of Security Interest in Intellectual Property

 

THIS CONFIRMATORY GRANT OF SECURITY INTEREST IN [COPYRIGHTS] [PATENTS][TRADEMARKS] (this “Confirmatory Grant”) is made effective as of [_____________], 20[__], by and from the grantor party hereto (the “Grantor”), to and in favor of NEVADA STATE BANK, a Nevada banking corporation (the “Secured Party”).

 

WHEREAS, Gaming Partners International Corporation, a Nevada corporation (the “Borrower”) and the Secured Party have entered into a Credit Agreement dated as of June 26, 2015 (as amended, supplemented, extended, restated or otherwise modified from time to time prior to the date hereof, the “Credit Agreement”) pursuant to which the Secured Party has agreed, among other things, to extend to the Borrower certain credit accommodations..

 

WHEREAS, the Grantor has granted security interests to the Secured Party under the Pledge and Security Agreement and Irrevocable Proxy of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”);

 

[WHEREAS, the Grantor owns the trademarks (the “Trademarks”) listed on Exhibit A, which are registered or applied for with the United States Patent and Trademark Office; and]

 

[WHEREAS, the Grantor owns the patents (the “Patents”) listed on Exhibit A, which are registered or applied for with the United States Patent and Trademark Office; and]

 

[WHEREAS, the Grantor owns the copyrights (the “Copyrights”) listed on Exhibit A, which are registered or applied for with the United States Copyright Office; and]

 

WHEREAS, this Confirmatory Grant has been granted in conjunction with the security interest granted to the Secured Party under the Security Agreement.  The rights and remedies of the Secured Party with respect to the security interest granted herein are without prejudice to and are in addition to those set forth in the Security Agreement and the other Loan Documents, all terms and provisions of which are incorporated herein by reference.  If any provisions of this Confirmatory Grant are deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall govern.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed that:

 

1)         Definitions.  All capitalized terms not defined herein shall have the respective meaning given to them in the Credit Agreement.

 

 

2)         The Security Interest.

 

(a)          This Confirmatory Grant is made to secure the performance and payment of (i) all the Obligations and (ii) all of the obligations and liabilities of the Guarantors under the Guaranty.  Upon the payment in full of all Obligations (other than contingent indemnification obligations), the Secured Party shall promptly, upon such satisfaction, execute, acknowledge, and deliver to the Grantor (at the Grantor’s expense) all reasonably requested instruments releasing the security interest in the [Trademarks]/[Patents]/[Copyrights] acquired under this Confirmatory Grant.

 

(b)          The Grantor hereby grants to the Secured Party a security interest in [all of the Trademarks set forth in Exhibit A now owned or from time to time after the date hereof owned or acquired by the Grantor]/[all of the Patents set forth in Exhibit A now owned or from time to time after the date hereof owned or acquired by the Grantor]/[all of the Copyrights set forth in Exhibit A now owned or from time to time after the date hereof owned or acquired by the Grantor];

 

(c)          Unless and until an Event of Default occurs and is continuing, the Grantor shall retain the legal and equitable title to the [Trademarks]/[Patents]/[Copyrights], and shall have the right to use and register the Trademarks, Patents and Copyrights in the ordinary course of the business of the Grantor.

 

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

 

 

IN WITNESS WHEREOF, the Grantor has executed this Confirmatory Grant of Security Interest in [Trademarks][Patents][Copyrights] effective as of the date first written above.

 

	[Grantor]
	By:
	Name:
	Title:

 

 

CONFIRMATORY GRANT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS

Exhibit A - SCHEDULE OF TRADEMARKS

 

United States Trademarks:

 

Mark	Reg. No.	Reg. Date	Country

 

 

CONFIRMATORY GRANT OF SECURITY INTEREST
IN UNITED STATES PATENTS

Exhibit A - SCHEDULE OF PATENTS

 

PATENT OR PATENT APPLICATION PUBLICATION	OWNER	TITLE	FILING DATE	ISSUE DATE

 

 

CONFIRMATORY GRANT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS

Exhibit A - SCHEDULE OF COPYRIGHTS

 

COPYRIGHT	OWNER	REGISTRATION NO.	REGISTRATION DATE

 

 

SCHEDULE I
TO
PLEDGE AND SECURITY AGREEMENT

 

PLEDGED EQUITY INTERESTS

 

Issuer	Grantor	Percentage Ownership	Certificate No.	Class of Interest	No. of Units/ Shares
Gaming Partners International USA, Inc. (Subject to approval by the applicable Gaming Authority in Nevada pursuant to Section 6.22 of the Credit Agreement)	Gaming Partners International Corporation	100%	1	Common	500

 

PLEDGED DEBT

 

None.

 

 

SCHEDULE II
TO
PLEDGE AND SECURITY AGREEMENT

 

Deposit Accounts

 

Grantor	Account Name
GPIC	Payroll Acct.
GPIC	Operating/Accts Pay. Acct.
GPIC	Escrow Acct. – Blue Chip
GPI USA	Operating/Accts Pay. Acct.
GPI USA	Operating/Accts Pay. Acct.
GPI USA	Payroll Acct.

 

Securities Accounts

 

Grantor	Account Name
GPIC	Marketable Securities
GPIC	Marketable Securities
GPIC	American Stock & Transfer Account

 

 

SCHEDULE III TO
PLEDGE AND SECURITY AGREEMENT

 

Intellectual Property

 

See attached

 

 

PATENTS

 

US Patent No.	Issue Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
5,651,548	7/29/1997	Gaming Chips with Electronic Circuits Scanned by Antennas in Gaming Chip Placement Areas for Tracking the Movement of Gaming Chips Within a Casino Apparatus and Method	Assignment of Assignors Interest	John B. French and William Piehl	Chip Track International	11/4/1996	008207/0341
			Assignment of Assignors Interest	William Piehl, Chip Track International Inc. A Nevada Corporation, and John B. French	Enpat Inc.	10/30/2000	011213/0614
			Assignment of Assignors Interest	Enpat, Inc.	Shuffle Master, Inc.	1/7/2005	015571/0075
			Assignment of Assignors Interest	Shuffle Master, Inc.	IGT	7/25/2005	017411/0268
			Assignment of Assignors Interest	Shuffle Master, Inc.	IGT	11/2/2006	018471/0422
			Assignment of Assignors Interest	IGT	Gaming Partners International USA, Inc.	8/13/2014	033530/0393
8,783,688	7/22/2014	Gaming Tables Having a Table Top Exchangeable Insert	Assignment of Assignors Interest	Emmanuel Gelinotte, Francisco Javier Moreno, and Gregory S. Gronau	Gaming Partners International USA, Inc.	3/26/2013	030083/0931
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849

 

 

US Patent No.	Issue Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
8,528,909	9/10/2013	Gaming Table Protecting Antennas From Electromagnetic Interferences	Assignment of Assignors Interest	Emmanuel Gelinotte, Francisco Javier Moreno, Gregory S. Gronau, and Justin Woodard	Gaming Partners International USA, Inc.	3/25/2011	026025/0481
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849
D657427	4/10/2012	RFID Chip Tray	Assignment of Assignors Interest	Gregory S. Gronau, Emmanuel Gelinotte, Francisco Javier Moreno, and Justin Woodard	Gaming Partners International USA, Inc.	11/18/2010	025373/0221
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849
D669473	10/23/2012	Portable Chip Reader	Assignment of Assignors Interest	Gregory S. Gronau, Emmanuel Gelinotte, Francisco Javier Moreno, and Justin Woodard	Gaming Partners International USA, Inc.	11/18/2010	025373/0183
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849
7,913,915	3/29/2011	Token With Structure to Prevent Damage During Molding	Assignment of Assignors Interest	Heriberto Corrales Castaneda	Gaming Partners International USA, Inc.	12/10/2005	016878/0800
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849

 

 

US Patent No.	Issue Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
7,926,725	4/19/2011	Method of Making a Token With an Electronic Identifier	Assignment of Assignors Interest	Gerard Charlier and Heriberto Corrales Castaneda	Gaming Partners International USA, Inc.	1/4/2006	016971/0033
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849
7,942,334	5/17/2011	Token With an Electronic Identifier	Assignment of Assignors Interest	Gerard Charlier and Heriberto Corrales Castaneda	Gaming Partners International USA, Inc.	1/4/2006	016970/0971
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849
6,199,862	3/13/2011	Token Drop	Assignment of Assignors Interest	Shane Long and David Warren	Gaming Edge Products, LLC	3/14/2001	011584/0593
			Assignment of Assignors Interest	David Warren and Shane Long	Gaming Edge Products	2/15/2005	016256/0997
			Assignment of Assignors Interest	GamingEdge Products, LLC	Gaming Partners International USA, Inc.	3/20/2005	015918/0973

 

 

US Patent No.	Issue Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
6,834,855	12/28/2004	Dice Scanner	Assignment of Assignors Interest	Edward J. Mancuso	Gaming Partners International USA, Inc.	3/8/2005	015748/0653
4,827,640	5/9/1989	Gaming Token and Process Therefor	Assignment of Assignors Interest	Bernard B. Jones	Bud Jones Company, Inc., The	8/11/2000	011052/0220
			Merger	The Bud Jones Company, Inc.	Paul-Son Gaming Supplies, Inc.	9/16/2004	015134/0130
			Change of Name	Paul-Son Gaming Supplies, Inc.	Gaming Partners International USA, Inc.	9/30/2004	015201/0590
5,166,502	11/24/1992	Gaming Chip With Implanted Programmable Identifier Means & Process for Fabricating Same	Assignment of Assignors Interest	Trend Plastics, Inc.	Bud Jones Company, Inc., The	8/15/2001	012075/0055
			Assignment of Assignors Interest	Bud Jones Co. Inc., By Assignment, The	Paul-Son Gaming Supplies, Inc.	2/3/2004	015676/0850
			Change of Name	Paul-Son Gaming Supplies, Inc.	Gaming Partners International USA, Inc.	9/30/2004	015201/0590

 

 

US Patent No.	Issue Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
5,568,666	10/29/1996	Gaming Table Cloth	Assignment of Assignors Interest	Gilbert E. Seibert	Paulson Gaming Supplies, Inc.	11/19/1999	010395/0490
			Assignment of Assignors Interest	Gilbert E. Seibert	Paulson Gaming Supplies, Inc.	12/3/1999	010437/0436
			Assignment of Assignors Interest	Gibert E. Seibert	Paulson Gaming Supplies, Inc.	11/18/2002	013475/0661
			Change of Name	Paul-Son Gaming Supplies, Inc.	Gaming Partners International USA, Inc.	9/30/2004	015201/0590
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849
5,673,503	10/7/1997	Gaming Chip With Edge Insert and Process for Fabricating Same	Assignment of Assignors Interest	Thomas G. Rendleman	Trend Plastics, Inc.	1/23/1996	007809/0962
			Assignment of Assignors Interest	Trend Plastics, Inc.	Bud Jones Company, Inc., The	8/15/2001	012075/0055
			Assignment of Assignors Interest	The Bud Jones Company, Inc.	Paul-Son Gaming Supplies, Inc.	2/3/2004	014926/0762
			Change of Name	Paul-Son Gaming Supplies, Inc.	Gaming Partners International USA, Inc.	9/30/2004	015201/0590
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849

 

 

US Patent No.	Issue Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
5,692,748	12/2/1997	Card Shuffling Device and Method	Assignment of Assignors Interest	Anthony Frisco and Ferrell Sullibant	Paulson Gaming Supplies, Inc.	9/26/1996	008428/0693
			Change of Name	Paul-Son Gaming Supplies, Inc.	Gaming Partners International USA, Inc.	9/30/2004	015201/0590
6,296,190	10/2/2001	Gaming Chip With Transponder and a Method for Making Same	Assignment of Assignors Interest	Thomas G. Rendleman	Trend Plastics, Inc.	5/3/1999	009940/0139
			Assignment of Assignors Interest	Trend Plastics, Inc.	Bud Jones Company, Inc., The	8/15/2001	012075/0055
			Assignment of Assignors Interest	The Bud Jones Co., Inc.	Paul-Son Gaming Supplies, Inc.	2/3/2004	014926/0762
			Change of Name	Paul-Son Gaming Supplies, Inc.	Gaming Partners International USA, Inc.	9/30/2004	015201/0590
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849
6,508,466	1/21/2003	Easy Handling Gaming Chip	Assignment of Assignors Interest	Thomas G. Rendleman	Trend Plastics, Inc.	10/29/1999	010356/0032
			Assignment of Assignors Interest	Trend Plastics, Inc.	Bud Jones Company, Inc., The	8/15/2001	012075/0055
			Assignment of Assignors Interest	The Bud Jones Co., Inc.	Paul-Son Gaming Supplies, Inc.	2/3/2004	014926/0762
			Change of Name	Paul-Son Gaming Supplies, Inc.	Gaming Partners International USA, Inc.	9/30/2004	015201/0590
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849

 

 

US Patent No.	Issue Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
6,210,267	4/3/2001	Air Rail	Assignment of Assignors Interest	Shane Long and David Warren	Gaming Edge Products, L.L.C.	1/10/2001	011431/0644
			Assignment of Assignors Interest	GamingEdge Products, LLC	Gaming Partners International USA, Inc.	3/20/2005	015918/0973
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849
6,402,142	6/11/2002	Method for Handling of Cards in a Dealer Shoe, and a Dealer Shoe	Assignment of Assignors Interest	David Warren and Shane Long	Gaming Edge Products LLC	5/1/2002	012853/0921
			Assignment of Assignors Interest	David Warren and Shane Long	Gaming Edge Products	2/15/2005	016256/0997
			Assignment of Assignors Interest	GamingEdge Products, LLC	Gaming Partners International USA, Inc.	3/20/2005	015918/0973

 

 

US Patent No.	Issue Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
5,735,742	4/7/1998	Gaming Table Tracking System and Method	Assignment of Assignors Interest	William Piehl, Chip Track International Inc. A Nevada Corporation, and John B. French	Enpat Inc.	10/30/2000	011213/0614
			Assignment of Assignors Interest	Enpat, Inc.	Shuffle Master, Inc.	1/7/2005	015571/0075
			Assignment of Assignors Interest	Shuffle Master, Inc.	IGT	7/25/2005	017411/0268
			Assignment of Assignors Interest	Shuffle Master, Inc.	IGT	11/2/2006	018471/0422
			Assignment of Assignors Interest	IGT	Gaming Partners International USA, Inc.	8/13/2014	033530/0393
D702236	4/8/2014	Portable Chip Reader	Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849
8,668,148	3/11/2014	RFID Chip Tray	Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849

 

 

US Patent No.	Issue Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
6,508,466	1/21/2003	Easy Handling Gaming Chip	Assignment of Assignors Interest	Thomas G. Rendleman	Trend Plastics, Inc.	10/29/1999	010356/0032
			Assignment of Assignors Interest	Trend Plastics, Inc.	Bud Jones Company, Inc., The	8/15/2001	012075/0055
			Assignment of Assignors Interest	The Bud Jones Co., Inc.	Paul-Son Gaming Supplies, Inc.	2/3/2004	014926/0762
			Change of Name	Paul-Son Gaming Supplies, Inc.	Gaming Partners International USA, Inc.	9/30/2004	015201/0590
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849
7,382,229	6/3/2008	Method of Managing a Plurality of Electronic Microcircuit Chip Readers and Equipments for Implementing Said Method	Assignment of Assignors Interest	Dan Tudor Vuza	Gaming Partners International	6/30/2005	018128/0327
			Assignment of Assignors Interest	Viktor Mayer	Gaming Partners International	6/9/2006	017753/0226
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849

 

 

US Patent No.	Issue Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
8888102	11/18/2014	Gaming tables having a table top exchangeable insert
6581747	6/24/2003	Gaming token with an electronic chip and methods for manufacturing the same
7100501	9/5/2006	Devices for marking gaming chips and pad printing installations incorporating same
7063012	6/20/2006	Method for ink pad and sublimation printing and sublimable tampographic links
7563834	7/21/2009	Method for ink pad and sublimation printing and sublimable tampographic links

 

 

US Patent No.	Issue Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
7883408	2/8/2011	Station for reading and/or writing in electronic gaming chips
7931204	4/26/2011	Electronic microchip token and its fabrication process
7918455	4/5/2011	Chip with insert including an electronic microchip
7866583	1/11/2011	Token with electronic device, method of making thereof, and apparatus for making thereof
8336881	12/25/2012	Method of producing a gaming chip, and a gaming chip comprising two plaques
5794532	8/16/1998	Gambling chip and method marking same

 

 

US Patent No.	Issue Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
5895321	4/20/1999	Gambling chip
6467413	10/22/2002	Method for marking a gaming disk by pad printing and device for implementing same
US Publication No.	Publication Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
20030218299	11/27/2003	Method of Manufacturing Gaming Dice and Die Made Thereby	Assignment of Assignors Interest	Fred Zapata	Bud Jones Company, Inc., The	5/22/2002	01037/0748
			Merger	Bud Jones Company, Inc., The	Paul-Son Gaming Supplies, Inc.	5/5/2003	014032/0622
			Change of Name	Paul-Son Gaming Supplies, Inc.	Gaming Partners International USA, Inc.	9/30/2004	015201/0590

 

 

US Patent No.	Issue Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
20120105215	5/3/2012	Portable Reader	Assignment of Assignors Interest	Gregory S. Gronau, Emmanuel Gelinotte, Francisco Javier Moreno, and Justin Woodard	Gaming Partners International Corporation	5/8/2013	030373/0813
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849
20130313776	11/28/2013	Anti-Bacterial Gaming Currency and Gaming Accessories	Assignment of Assignors Interest	Emmanuel Gelinotte, Gregory S. Gronau, and Celine Rappeneau	Gaming Partners International USA, Inc.	7/6/2012	028503/0855
			Assignment of Assignors Interest	Gaming Partners International USA, Inc.	Gaming Partners International Corporation	5/28/2013	030492/0849

 

 

US Patent No.	Issue Date	Title	Assignment Type	Assignor	Assignee	Date	Reel/Frame
20130316797	11/28/2013	Total Money Management System	Assignment of Assignors Interest	Emmanuel Gelinotte, Kirsten Clark, Scott McCarthy, and Gregory S. Gronau	Gaming Partners International Corporation	7/24/2013	030865/0123
20140339107	11/20/2014	RFID Plaque Box	Assignment of Assignors Interest	Emmanuel Gelinotte, Bernard Molina, Miguel Choi, Scott McCarthy, Benjamin Raz, Kirstin Clark, Gregory S. Gronau, and Regis Marcel Roger Vicaire	Gaming Partners International Corporation	11/5/2013	031548/0027
20130229952	9/5/2013	Method and Apparatus for Avoiding Interference Between Multiple Radios in a User Equipment	Assignment of Assignors Interest	Henri Markus Koskinen, Jussi Kustaa Ojala, Antti-Veikko Pipponen, and Tommi Juhani Zetterman	Nokia Corporation	5/21/2013	030459/0253
			Corrective Assignment	Henri Markus Koskinen, Jussi Kustaa Ojala, Antti-Veikko Piipponen, and Tommi Juhani Zetterman	Nokia Corporation	8/21/2013	031058/0804
			Assignment of Assignors Interest	Francisco Javier Moreno, Emmanuel Gelinotte, Gregory S. Gronau, Kirsten Clark, Heriberto C. Corrrales, Ramon R. Saturnino, Raul M. Castro, and Joseph B. Friedman	Gaming Partners International Corporation	5/16/2013	030428/0837

 

 

TRADEMARKS

 

Our Matter	Your Ref.	Trademark	Trademark Description	Country	Application No./ Filed	Registration No./ Issued	Status	International Class(es)	Goods
101821.000520	T0063.US	BUD JONES	BUD JONES (word mark)	United States	78/154960 08/16/2002	2890152 09/28/2004	Renewal due 09/28/2024	28	Dice and gaming chips
101821.000522	T0140.US		D-TECT (word mark)	United States	85/904681 04/15/2013	4439965 09/10/2013	Section 8 Declaration due 09/10/2019	28	Game equipment, namely, chips
101821.000526	T0108.US		PAULSON PRO SERIES (word mark)	United States	85/181085 11/1/2010	4129429 04/17/2012	Section 8 Declaration due 04/17/2018	28	Gaming equipment, namely, playing cards and chips
101821.000529	T0102.US		LASERTRACK (word mark)	United States	85/047786 05/25/2010	4020331 08/30/2011	Section 8 Declaration due 08/30/2017	28	Dice; Game equipment, namely, infrared security dyes sold as a component part of gaming chips; Playing cards
101821.000530	T0062.US		E READY & Design (in red & blue)	United States	77/746897 05/28/2009	3741374 01/19/2010 (Supplemental)	Section 8 Declaration due 01/19/2016	28	Gaming tables
101821.000531	T0061.US		PSV SERIES (word mark)	United States	77/735819 05/13/2009	3791347 05/18/2010	Drop per client instructions	28	Playing cards
101821.000532	T0060.US		EREADY (word mark)	United States	77/732030 05/07/2009	3738415 01/12/2010 (Supplemental)	Section 8 Declaration due 01/12/2016	28	Gaming tables
101821.000537	T0074.US	CASINO CURRENCY CONTROL	CASINO CURRENCY CONTROL (word mark)	United States	78/980767 11/15/2005	3545460 12/09/2008	Drop per client instructions 8/27/2014	9 35	Gaming tokens and chips, electronic or non-contact electronic chip operated; devices for control, authentication, identification, monitoring of movement, reading and writing for gaming tokens and chips, electronic or non-contact electronic chip, comprising a radio frequency identification transponder and containing an electronic memory; apparatus for reading, writing, recording, transmission or reproduction of data, equipment for processing information, namely, chips, integrated circuits, magnetic data media, optical data media, magnetic encoded cards, magnetic identity cards, data processing apparatus, intercommunication apparatus, transmitters of electronic signals, telecommunication transmitting sets, microprocessors, electronic transistors, transmitters; equipment for software, computers, namely, network computers, computers intended for casino's customers; computer network programs, electronic sorting machines, all the aforesaid goods for use with gaming tokens and chips; token-operated electronic game boards; electronic gaming tables; electronic gaming chip casino tables; electronic security and information management systems for casinos or games rooms; electronic security systems, namely, anti-intrusion alarms, people locators in the nature of a device programmed to use a global positioning systems (GPS) and cellular telecommunications and information management systems, namely, computer software for scheduling and downloading information about patrons in casinos or game rooms; electronic or electro-magnetic detectors for game tokens or chips.   Sales promotion services directly to casinos of supplies and equipment for casinos for use with gaming chips and tokens

 

 

Our Matter	Your Ref.	Trademark	Trademark Description	Country	Application No./ Filed	Registration No./ Issued	Status	International Class(es)	Goods
101821.000538	T0070.US		GPI & Design (black & white)	United States	78/753509 11/14/2005	3158096 10/17/2006	Renewal due 10/17/2016	9	Casino gaming supplies, namely, radio frequency identification device chips and plaques, and radio frequency identification device chip readers
101821.000539	T0071.US		GPI & Design (black & white)	United States	78/753520 11/14/2005	3158098 10/17/2006	Renewal due 10/17/2016	28	Game equipment, namely, chips, dice, playing cards, table layouts and gaming tables
101821.000540	T0069.US		GPI & Design (black & white)	United States	78/753494 11/14/2005	3176646 11/28/2006	Renewal due 11/28/2016	35	Wholesale distributorship featuring gaming and casino supplies
101821.000541	T0068.US		T-K (word mark)	United States	78/753388 11/14/2005	3158093 10/17/2006	Renewal due 10/17/2016	28	Gaming equipment, namely, dice
101821.000545	T0067.US		PAULSON (word mark)	United States	78/570082 02/17/2005	3191178 01/02/2007	Renewal due 01/02/2017	9	Computer gaming software and hardware
101821.000546	T0066.US	PAULSON	PAULSON (word mark)	United States	78/553677 01/25/2005	3089726 05/09/2006	Renewal due 05/09/2016	40	Custom manufacturing of gaming equipment of others

 

 

Our Matter	Your Ref.	Trademark	Trademark Description	Country	Application No./ Filed	Registration No./ Issued	Status	International Class(es)	Goods
101821.000547	T0064.US	PAULSON	PAULSON (word mark)	United States	78/553636 01/25/2005	3191145 01/02/2007	Renewal due 01/02/2017	28	Playing cards
101821.000548	T0065.US	PAULSON	PAULSON (word mark)	United States	78/553663 01/25/2005	3191146 01/02/2007	Renewal due 01/02/2017	28	Gaming chips and dice
101821.000549	T0046.US	CHIPSOFT	CHIPSOFT	United States	76/535249 08/06/2003	2985876 08/16/2005	Renewal due 08/16/2015	9 28	Electronic and smart contactless gaming tokens, chips and plaques all containing electronic chips for supervision, authentication, identification, tracking, and sorting of casino and gaming activity; c gaming tokens, chips [ and plaques ] with embedded radio frequency identification transponders including an electronic memory.   Gaming tokens, chips
101821.000550	T0045.US	GPI	GPI (word mark)	United States	76/322104 10/09/2001	2733101 07/01/2003	Renewal due 07/01/2023	35	[Retail store services, wholesale stores, and ] wholesale distributorships featuring casino supplies and equipment
101821.000551	T0044.US	GAMING PARTNERS INTERNATIONAL	GAMING PARTNERS INTERNATIONAL (word mark)	United States	76/332103 10/09/2001	2722803 06/03/2003	Renewal due 06/03/2023	35	[Retail store services featuring supplies and equipment and wholesale stores featuring casino supplies and equipment and ] wholesale distributorships featuring casino supplies and equipment
101821.000555	T0037.US	GRAND PIP	GRAND PIP (word mark)	United States	75/938596 03/08/2000	2530623 01/15/2002	Renewal due 01/15/2022	28	Playing Cards
101821.000556	T0036.US	PAUL-SON FX	PAUL-SON (word mark)	United States	75/938595 03/08/2000	2579724 06/11/2002	Renewal due 06/11/2022	40	Custom manufacture of gaming table layouts for others
101821.000557	T0033.US	CASINO DE ISTHMUS CITY	CASINO DE ISTHMUS CITY (word mark)	United States	75/741056 07/01/1999	2439440 03/27/2001	Renewal due 03/27/2021	28	Gaming Chips
101821.000558	T0026.US	AIR RAIL	AIR RAIL (word mark)	United States	75/494616 06/01/1998	2369265 07/18/2000	Renewal due 07/18/2020	11	General ventilation equipment, namely, smoke diversion units, fans and blowers for commercial use

 

 

Our Matter	Your Ref.	Trademark	Trademark Description	Country	Application No./ Filed	Registration No./ Issued	Status	International Class(es)	Goods
101821.000561	T0003.US		Deisgn of Visuel	United States	74/639938 02/24/1995	1951247 01/23/1996	Renewal due 01/23/2016	16	Playing cards
101821.000562	T0002.US	PAUL-SON GAMING SUPPLIES	PAUL-SON GAMING SUPPLIES (word mark)	United States	74/635749 02/17/1995	1972584 05/07/1996	Renewal due 05/07/2016	40	Custom manufacture of gaming equipment for others
101821.000563	T0001.US		Top Hat Design	United States	72/423184 05/03/1972	960790 06/12/1973	Renewal due 06/12/2023	28	Gaming chips
101821.000668	T0164.US		Sunburst Design	United States	85/336608 06/02/2011	4141474 05/15/2012	Section 8 due 05/15/2018	28	Playing cards
101821.000669	T0165.US		THE ZONKS and Design of Yellow and Black Striped Bar	United States	78/699823 08/24/2005	3203614 01/30/2007	Renewal due 01/30/2017	28	Playing cards
101821.000670	T0166.US	GEMPAK	Gempak (word mark)	United States	77/014691 10/05/2006	3319246 10/23/2007	Renewal due 10/23/2017	28	Playing cards
101821.000671	T0167.US	GEMACO	Gemaco (word mark)	United States	77/057906 12/06/2006	3374987 01/29/2008	Renewal due 01/29/2018	16, 28	Calendar cards   Playing cards, fabric table layouts for gaming tables
101821.000679	T0175.US		Card back repetitive gem design	United States	73/412475 02/04/1983	1314104 01/08/1985	Renewal due 01/08/2018	28	Playing cards
101821.000680	T0176.US		Diamond design	United States	73/508181 11/13/1984	1337878 05/28/1985	Renewal due 05/28/2015	28	Playing cards

 

 

Our Matter	Your Ref.	Trademark	Trademark Description	Country	Application No./ Filed	Registration No./ Issued	Status	International Class(es)	Goods
101821.000681	T0177.US		Card back with five star design	United States	73462140 01/23/1984	1349226 07/16/1985	Renewal due 07/16/2015	28	Playing cards
101821.000682	T0178.US	VALUGEM	Valugem (word mark)	United States	77/921056 01/27/2010	3840909 08/31/2010	Section 8 due 08/31/2016	28	Playing cards
101821.000683	T0179.US		Findex (stylized letters)	United States	73/605818 06/23/1986	1429200 02/17/1987	Renewal due 02/17/2017	28	Information bearing file cards
101821.000684	T0180.US	MINIGEM	Minigem (word mark)	United States	75/793861 09/07/1999	2362343 06/27/2000	Renewal due 06/27/2020	28	Playing cards
101821.000685	T0181.US		Sentinel Security Series and design of a spade, eagle and ribbon with stars	United States	75/764573 07/30/1999	2372707 08/01/2000	Renewal due 08/01/2020	28	Playing cards
101821.000686	T0182.US	CALDEX	Caldex (word mark)	United States	74/071652 06/22/1990	1642806 04/30/1991	Renewal due 04/30/2021	28	Calendar cards
101821.000687	T0183.US	IDEA DECK	Idea Deck (word mark)	United States	76/121963 09/05/2000	2478092 08/14/2001	Renewal due 08/14/2021	28	Playing cards

 

COPYRIGHTS

 

Work Title	Registration Date Registration Number	Owner
GPI Casino Royale Gaming Chips	Reg No. VA0001710796 Reg 04/08/2008	Gaming Partners International USA, Inc.
GPI Casino Royale Gaming Chips	Reg No. VA0001753684 Reg 04/08/2008	Gaming Partners International USA, Inc.
GPI Paulson Poker Chips	Reg No. VA0001710841 Reg 04/08/2008	Gaming Partners International USA, Inc.

 

 

SCHEDULE IV TO
PLEDGE AND SECURITY AGREEMENT

 

Names, Jurisdictions of Organization; Organizational Numbers;
Locations of Collateral; Trade Names

 

NAMES, OFFICES, LOCATIONS AND JURISDICTIONS

 

1.        Gaming Partners International Corporation

a.         Jurisdiction: Nevada

b.         Entity Number: C16935-1993

c.         NV Business ID: NV19931102753

 

2.        Gaming Partners International USA, Inc.

a.         Jurisdiction: Nevada

b.         Entity Number: C2472-1969

c.         NV Business ID: NV19691002459

 

3.        Locations Where Collateral is Located:

a.         1700 S. Industrial Road, Las Vegas, NV 89102;

b.         2925 North 7 Highway, Blue Springs, MO 64014;

c.         1220 N. Hidalgo Avenue, San Luis, AZ 85349;

d.         3101 Geospace Drive, Independence, MO 64056;

e.         2901 Atlantic Avenue, Atlantic City, NJ 08401; and

f.         12231 Ashley Drive, Gulfport, MS 39503.

 

 

 

 

 

 Exhibit 10.3

 

Execution version

 

GUARANTY

 

THIS GUARANTY, (this “Guaranty”) dated as of June 26, 2015, is made and given by each of the guarantors signatory hereto and any other Person that becomes a party hereto after the date hereof (each, a “Guarantor” and collectively the “Guarantors”), in favor of NEVADA STATE BANK, a Nevada state banking corporation (the “Lender”).

 

RECITALS

 

A.           Gaming Partners International Corporation, a Nevada corporation (the “Borrower”) and the Lender have entered into a Credit Agreement dated as of the date hereof (as amended, supplemented, extended, restated or otherwise modified from time to time prior to the date hereof, the “Credit Agreement”) pursuant to which the Lender has agreed, among other things, to extend to the Borrower certain credit accommodations.

 

B.           It is a condition precedent to the obligation of the Lender to extend credit accommodations pursuant to the terms of the Credit Agreement that the Guarantors execute and deliver this Guaranty.

 

C.           The Guarantors expect to derive benefits from the extension of credit accommodations to the Borrower by the Lender and find it advantageous, desirable and in their best interests to execute and deliver this Guaranty to the Lender.

 

NOW, THEREFORE, in consideration of the credit accommodations to be extended to the Borrower by the Lender and for other good and valuable consideration, the Guarantors hereby covenant and agree with the Lender as follows:

 

Section 1.            Defined Terms. Unless otherwise defined herein, all capitalized terms used in this Guaranty shall have the meaning given to such term in the Credit Agreement. As used in this Guaranty, the following terms shall have the meaning indicated:

 

“Borrower” shall have the meaning indicated in Recital A.

 

“Credit Agreement” shall have the meaning indicated in Recital A.

 

“Guarantor” and “Guarantors” shall have the meaning indicated in the opening paragraph hereof.

 

“Guaranty” shall have the meaning indicated in the opening paragraph hereof.

 

“Lender” shall have the meaning indicated in the opening paragraph hereof.

 

“Obligations” shall mean all “Obligations” as defined in the Credit Agreement including all indebtedness, liabilities and obligations of the Borrower to the Lender of every kind, nature or description under the Credit Agreement, including the Borrower’s obligation on any promissory note or notes under the Credit Agreement and any note or notes hereafter issued in substitution or replacement thereof and under the Loan Documents in all of the foregoing cases whether due or to become due, and whether now existing or hereafter arising or incurred; provided that the Obligations shall exclude all Excluded Swap Obligations.

 

 

“Qualified ECP Guarantor” shall mean, in respect of any Swap Obligation, each Guarantor that has total assets exceeding $10,000,000 at the time the relevant guaranty or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

Section 2.           The Guaranty.

 

2(a)      Subject at all times to the following subsection 2(b), each Guarantor, jointly and severally, hereby absolutely and unconditionally guarantees to the Lender, the payment when due (whether at a stated maturity or earlier by reason of acceleration or otherwise) and performance of the Obligations.

 

2(b)      As used in this subsection: (i) “Applicable Insolvency Laws” means the laws of any Governmental Authority relating to bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent transfers or conveyances or other similar laws (including, without limitation, 11 U.S.C. § 547, § 548 § 550 and other “avoidance” provisions of Title 11 of the United States Code) as applicable in any proceeding in which the validity and/or enforceability of this Guaranty or any Specified Lien is in issue; and (ii) “Specified Lien” means any security interest, mortgage, lien or encumbrance securing this Guaranty, in whole or in part. Notwithstanding any other provision of this Guaranty, if, in any proceeding, a court of competent jurisdiction determines that this Guaranty or any Specified Lien would, but for the operation of this Section, as to any Guarantor, be subject to avoidance and/or recovery or be unenforceable by reason of Applicable Insolvency Laws, this Guaranty and each such Specified Lien shall, as to such Guarantor, be valid and enforceable only to the maximum extent that would not cause this Guaranty or such Specified Lien to be subject to avoidance, recovery or unenforceability. To the extent that any payment to, or realization by, the Lender on the guaranteed Obligations exceeds the limitations of this Section or is otherwise subject to avoidance and recovery in any such proceeding, the amount subject to avoidance shall in all events be limited to the amount by which such actual payment or realization exceeds such limitation, and this Guaranty as limited shall in all events remain in full force and effect and be fully enforceable against the relevant Guarantor. This Section is intended solely to reserve the rights of the Lender hereunder against each Guarantor in such proceeding to the maximum extent permitted by Applicable Insolvency Laws and no Guarantor, the Borrower nor any other guarantor of the Obligations nor any Person shall have any right, claim or defense under this Section that would not otherwise be available under Applicable Insolvency Laws in such proceeding.

 

 

Section 3.           Continuing Guaranty. This Guaranty is an absolute, unconditional and continuing guaranty of payment and performance of the Obligations (other than inchoate indemnity obligations), and none of the obligations of any Guarantor hereunder shall be released, in whole or in part, by any action or thing that might, but for this provision of this Guaranty, be deemed a legal or equitable discharge of a surety or guarantor, other than irrevocable payment and performance in full of the Obligations. No notice of the Obligations to which this Guaranty may apply, or of any renewal or extension thereof, need be given to any Guarantor and none of the foregoing acts shall release any Guarantor from liability hereunder. Each Guarantor hereby expressly waives: (a) demand of payment, presentment, protest, notice of dishonor, nonpayment or nonperformance on any and all forms of the Obligations; (b) notice of acceptance of this Guaranty and notice of any liability to which it may apply; (c) all other notices and demands of any kind and description relating to the Obligations now or hereafter provided for by any agreement, statute, law, rule or regulation; and (d) any and all defenses of the Borrower pertaining to the Obligations except for the defense of discharge by payment. No Guarantor shall be exonerated with respect to such Guarantor’s liabilities under this Guaranty by any act or thing except irrevocable payment and performance of the Obligations, it being the purpose and intent of this Guaranty that the Obligations constitute the direct and primary obligations of each Guarantor and that the covenants, agreements and all obligations of each Guarantor hereunder be absolute, unconditional and irrevocable. Each Guarantor shall be and shall remain liable for any deficiency remaining after foreclosure of any mortgage, deed of trust or security agreement securing all or any part of the Obligations, whether or not the liability of the Borrower or any other Person for such deficiency is discharged pursuant to statute, judicial decision or otherwise. The acceptance of this Guaranty by the Lender is not intended, and does not, release any liability previously existing of any guarantor or surety of any indebtedness of the Borrower to the Lender.

 

Section 4.           Other Transactions. The Lender is expressly authorized without notice to or the consent of any Guarantor (a) to exchange, surrender or release with or without consideration any or all collateral and security which may at any time be placed with it by the Borrower or by any other Person, or to forward or deliver any or all such collateral and security directly to the Borrower for collection and remittance or for credit, or to collect the same in any other manner without notice to any Guarantor and (b) to amend, modify, extend or supplement any Loan Document or any part thereof and any other agreement with respect to the Obligations, waive compliance by the Borrower or any other Person with the respective terms thereof and settle or compromise any of the Obligations without notice to any Guarantor and without in any manner affecting the absolute liabilities of any Guarantor hereunder. No invalidity, irregularity or unenforceability of all or any part of the Obligations or of any security therefor or other recourse with respect thereto shall affect, impair or be a defense to this Guaranty. The liabilities of each Guarantor hereunder shall not be affected or impaired by any failure, delay, neglect or omission on the part of the Lender to realize upon any of the Obligations, or upon any collateral or security for any or all of the Obligations, nor by the taking by the Lender of (or the failure to take) any other guaranty or guaranties to secure the Obligations, nor by the taking by the Lender of (or the failure to take or the failure to perfect its security interest in or other lien on) collateral or security of any kind. No act or omission of the Lender, whether or not such action or failure to act varies or increases the risk of, or affects the rights or remedies of, any Guarantor shall affect or impair the obligations of the Guarantors hereunder. Each Guarantor acknowledges that this Guaranty is in effect and binding without reference to whether this Guaranty is signed by any other Person or Persons, that possession of this Guaranty by the Lender shall be conclusive evidence of due delivery hereof by such Guarantor and that this Guaranty shall continue in full force and effect, both as to the Obligations then existing and/or thereafter created, notwithstanding the release of or extension of time to any other guarantor of the Obligations or any part thereof.

 

 

Section 5.           Actions Not Required; Waiver. Each Guarantor hereby waives any and all right to cause a marshalling of the assets of the Borrower or any other action by any court or other Governmental Authority with respect thereto or to cause the Lender to proceed against any security for the Obligations or any other recourse that the Lender may have with respect thereto and further waives any and all requirements that the Lender institute any action or proceeding at law or in equity, or obtain any judgment, against the Borrower or any other Person, or with respect to any collateral security for the Obligations, as a condition precedent to making demand on or bringing an action or obtaining and/or enforcing a judgment against such Guarantor upon this Guaranty. To the extent permitted by law, each Guarantor hereby waives and relinquishes all rights and remedies accorded by applicable law to guarantors and agrees not to assert or take advantage of any such rights or remedies, including, without limitation, any right provided the Nevada one-action rule, by NRS 40.430 et seq., in effect from time to time. Each Guarantor further acknowledges that time is of the essence with respect to such Guarantor’s obligations under this Guaranty. Any remedy or right hereby granted that shall be found to be unenforceable as to any Person or under any circumstance, for any reason, shall in no way limit or prevent the enforcement of such remedy or right as to any other Person or circumstance, nor shall such unenforceability limit or prevent enforcement of any other remedy or right hereby granted.

 

Section 6.           Deferral of Subrogation. Until the Obligations have been indefeasibly paid in full (other than inchoate indemnity obligations) and all obligations of the Lender to extend credit accommodations to the Borrower have expired or have been terminated, each Guarantor waives all rights of subrogation to any of the rights of the Lender against the Borrower or any other Person liable for payment of any of the Obligations or any collateral security or guaranty or right of offset held by the Lender for the payment of the Obligations, and such Guarantor waives all rights to seek any recourse to or contribution or reimbursement from the Borrower or any other Person liable for payment of any of the Obligations in respect of payments made by such Guarantor hereunder.

 

Section 7.           Application of Payments. Any and all payments upon the Obligations made by any Guarantor or by any other Person, and/or the proceeds of any or all collateral or security for any of the Obligations, may be applied by the Lender on such items of the Obligations as the Lender may elect to the extent provided in the Credit Agreement or other Loan Documents; provided, however, that, notwithstanding anything to the contrary set forth above, Excluded Swap Obligations with respect to any Guarantor shall not be paid with amounts received from such Guarantor or its assets, but appropriate adjustments shall be made with respect to payments from the Borrower and the other Guarantors to preserve the allocation to Obligations otherwise set forth above in this Section.

 

Section 8.           Recovery of Payment. If any payment received by the Lender and applied to the Obligations is subsequently set aside, recovered, rescinded or required to be returned for any reason (including, without limitation, the bankruptcy, insolvency or reorganization of the Borrower or any other obligor), the Obligations to which such payment was applied shall for the purposes of this Guaranty be deemed to have continued in existence, notwithstanding such application, and this Guaranty shall be enforceable as to such Obligations as fully as if such application had never been made. References in this Guaranty to amounts “irrevocably paid” or to “irrevocable payment” refer to payments that cannot be set aside, recovered, rescinded or required to be returned for any reason.

 

 

Section 9.           Borrower’s Financial Condition. Each Guarantor is familiar with the financial condition of the Borrower, and each Guarantor has executed and delivered this Guaranty based on such Guarantor’s own judgment and not in reliance upon any statement or representation of the Lender. The Lender shall have no obligation to provide any Guarantor with any advice whatsoever or to inform any Guarantor at any time of the Lender’s actions, evaluations or conclusions on the financial condition or any other matter concerning the Borrower.

 

Section 10.           Remedies. All remedies afforded to the Lender by reason of this Guaranty are separate and cumulative remedies and it is agreed that no one of such remedies, whether or not exercised by the Lender, shall be deemed to be in exclusion of any of the other remedies available to the Lender and no one of such remedies shall in any way limit or prejudice any other legal or equitable remedy that the Lender may have hereunder and with respect to the Obligations. Mere delay or failure to act shall not preclude the exercise or enforcement of any rights and remedies available to the Lender.

 

Section 11.           Bankruptcy of the Borrower. Each Guarantor expressly agrees that the liabilities and obligations of such Guarantor under this Guaranty shall not in any way be impaired or otherwise affected by the institution by or against the Borrower or any other Person (other than such Guarantor) of any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or any other similar proceedings for relief under any bankruptcy law or similar law for the relief of debtors and that any discharge of any of the Obligations pursuant to any such bankruptcy or similar law or other law shall not diminish, discharge or otherwise affect in any way the obligations of such Guarantor under this Guaranty, and that upon the institution of any of the above actions, such obligations shall be enforceable against such Guarantor.

 

Section 12.           Costs and Expenses. The Guarantors jointly and severally agree to pay or reimburse the Lender on demand for all reasonable and documented fees and out-of-pocket expenses (including in each case all reasonable documented fees and expenses of counsel of the Lender) incurred by the Lender arising out of or in connection with the enforcement of this Guaranty against the Guarantors or arising out of or in connection with any failure of any Guarantor to fully and timely perform the obligations of such Guarantor hereunder.

 

Section 13.           Waivers and Amendments. This Guaranty can be waived, modified, amended, terminated or discharged only explicitly in a writing signed by the Lender and the Guarantors. A waiver so signed shall be effective only in the specific instance and for the specific purpose given.

 

 

Section 14.           Notices. Any notice or other communication to any party in connection with this Guaranty shall be in writing and shall be sent by manual delivery, facsimile or other electronic 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 shall have specified to the other party hereto in writing. All periods of notice shall be measured from the date of delivery thereof if manually delivered, from the date of sending thereof if sent by facsimile or other electronic 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.

 

Section 15.           Guarantor Acknowledgements. Each Guarantor hereby acknowledges that (a) counsel has advised the Guarantors in the negotiation, execution and delivery of this Guaranty, (b) the Lender has no fiduciary relationship to the Guarantors, the relationship being solely that of obligor and creditor, and (c) no joint venture exists between the Guarantors and the Lender.

 

Section 16.           Representations and Warranties. Each Guarantor hereby represents and warrants to the Lender that it is a corporation, limited liability company, or limited partnership, as applicable, organized, validly existing and in good standing under the laws of its state of organization or formation, as applicable, and has the power, authority and the legal right to own and operate its properties and to conduct the business in which it is currently engaged. Each Guarantor further represents and warrants to the Lender that:

 

16(a)      It has the power, authority and the legal right to execute and deliver, and to perform its obligations under, this Guaranty and has taken all necessary action required by its form of organization to authorize such execution, delivery and performance.

 

16(b)      This Guaranty constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

 

16(c)      The execution, delivery and performance of this Guaranty will not (i) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority applicable to it, (ii) violate or contravene any provision of its Constituent Documents, or (iii) except as disclosed in the Credit Agreement, result in a breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument to which it is a party or by which it or any of its properties may be bound or result in the creation of any lien thereunder except in each case of any such breach or default under this clause (iii) as would not reasonably be expected to have a Material Adverse Occurrence. It is not in default under or in violation of any such law, statute, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, loan or credit agreement or other agreement, lease or instrument in any case in which the consequences of such default or violation would reasonably be expected to cause a Material Adverse Occurrence.

 

16(d)     No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any Governmental Authority is required on its part to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, this Guaranty.

 

 

16(e)     There are no actions, suits or proceedings pending or, to its knowledge, threatened against or affecting it or any of its properties before any Governmental Authority that could reasonably be expected to cause a Material Adverse Occurrence.

 

16(f)      It expects to derive benefits from the transactions resulting in the creation of the Obligations. The Lender may rely conclusively on the continuing warranty, hereby made, that such Guarantor continues to be benefited by the Lender’s extension of credit accommodations to the Borrower and the Lender shall have no duty to inquire into or confirm the receipt of any such benefits, and this Guaranty and the Loan Documents shall be effective and enforceable by the Lender without regard to the receipt, nature or value of any such benefits.

 

16(g)     It is an “eligible contract participant” as defined in the Commodity Exchange Act and such representation is deemed to be made as of the date of the execution of this Guaranty and on each day that the Borrower enters into a swap (within the meaning of Section 1(a)(47) of the Commodity Exchange Act).

 

Section 17.           Keepwell. Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by the Borrower and each other Guarantor to honor all of its Obligations in respect of all Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 17 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 17, or otherwise under this Guaranty, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section 17 shall remain in full force and effect until irrevocable payment in full of the Obligations (other than any inchoate indemnity obligations that survive the termination of the Credit Agreement and the other Loan Documents) and the expiration of the obligations, if any, of the Lender to extend credit accommodations to the Borrower. Each Qualified ECP Guarantor intends that this Section 17 constitute, and this Section 17 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of the Borrower and each other Guarantor for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act. Notwithstanding anything herein to the contrary, if a Guarantor or a Swap Counterparty makes a written representation to the Lender in connection with a Guaranty, a swap, or any master agreement governing a swap to the effect that such Guarantor is or will be an “eligible contract participant” as defined in the Commodity Exchange Act on the date the Guaranty becomes effective with respect to such swap (this date shall be the date of the execution of the swap if the corresponding Guaranty is then in effect, and otherwise it shall be the date of execution and delivery of such Guaranty unless the Guaranty specifies a subsequent effective date), and such representation proves to have been incorrect when made or deemed to have been made, the Lender reserves all of its contractual and other rights and remedies, at law or in equity, including (to the extent permitted by applicable law) the right to claim, and pursue a separate cause of action, for actual, out of pocket damages as a result of such misrepresentation, provided that such Guarantor’s liability for such damages shall not exceed the amount of the Excluded Swap Obligations with respect to such swap.

 

 

Section 18.           Continuing Guaranty. This Guaranty shall (a) remain in full force and effect until irrevocable payment in full of the Obligations (other than inchoate indemnity obligations) and the expiration of the obligations, if any, of the Lender to extend credit accommodations to the Borrower, (b) be binding upon each Guarantor and its successors and assigns and (c) inure to the benefit of, and be enforceable by, the Lender and its successors, transferees, and assigns. Without limiting the generality of the foregoing clause (c), the Lender may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement to any other Persons to the extent and in the manner provided in the Credit Agreement and may similarly transfer all or any portion of its rights under this Guaranty to such Persons.

 

Section 19.           Reaffirmation. Each Guarantor agrees that when so reasonably requested by the Lender from time to time it will promptly execute and deliver to the Lender a written reaffirmation of this Guaranty in such form as the Lender may reasonably require.

 

Section 20.           Revocation. Notwithstanding any other provision hereof, a Guarantor may revoke this Guaranty as to such Guarantor prospectively as to future transactions by written notice to that effect actually received by the Lender. No such revocation shall release, impair or affect in any manner any liability hereunder with respect to Obligations created, contracted, assumed or incurred prior to receipt by the Lender of written notice of revocation, or Obligations created, contracted, assumed or incurred after receipt of such notice pursuant to any contract entered into by the Lender prior to receipt of such notice, or any renewals or extensions thereof, theretofore or thereafter made, or any interest accrued or accruing on such Obligations, or all other costs, expenses and reasonable attorneys’ fees arising from such Obligations.

 

Section 21.           Governing Law and Construction. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS GUARANTY SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEVADA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. Whenever possible, each provision of this Guaranty and any other statement, instrument or transaction contemplated hereby or relating hereto shall be interpreted in such manner as to be effective and valid under such applicable law, but, if any provision of this Guaranty or any other statement, instrument or transaction contemplated hereby or relating hereto shall be 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 Guaranty or any other statement, instrument or transaction contemplated hereby or relating hereto.

 

Section 22.           Consent to Jurisdiction. EXCEPT AS SET FORTH IN SECTION 23, AT THE OPTION OF THE LENDER, THIS GUARANTY MAY BE ENFORCED IN ANY FEDERAL COURT OR STATE COURT SITTING IN CLARK COUNTY, NEVADA; AND EACH OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT A GUARANTOR COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS GUARANTY, THE LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

 

 

Section 23.           Waiver of Jury Trial; Arbitration; Class Action Waiver. This Section contains a jury waiver, arbitration clause, and a class action waiver. READ IT CAREFULLY.

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

Section 24.           Counterparts. This Guaranty may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

 

Section 25.           General. All representations and warranties contained in this Guaranty or in any other agreement between a Guarantor and the Lender shall survive the execution, delivery and performance of this Guaranty and the creation and payment of the Obligations. Captions in this Guaranty are for reference and convenience only and shall not affect the interpretation or meaning of any provision of this Guaranty.

 

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IN WITNESS WHEREOF, each of the undersigned has executed this Guaranty as of the date first above written.

 

	GAMING PARTNERS INTERNATIONAL USA, INC.
	By:
	Name:  Gregory S. Gronau
	Title:  President
	GAMING PARTNERS INTERNATIONAL ASIA LIMITED
	By:
	Name:  Gregory S. Gronau
	Title:  Director

 

Address for Guarantors:

Address for the Grantors:
Gaming Partners International Corporation

1700 South Industrial Road

Las Vegas, NV 89102

Fax: 702-598-2494

Gaming Partners International Asia Limited

 

Alameda Dr. Carlos D’ Assumpcao No. 180

Tong Nam Ah Central Comercio 19 Andar K,L,M,

Macau S.A.R.

 

F: +853 2872 2630

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Guaranty

  

 

	Accepted and acknowledged by:
	NEVADA STATE BANK,
	as Lender
	By:
	Name: Jamie Gazza
	Title: Vice President

 

Address for Lender:
750 E. Warm Springs Rd., 4th Floor

Las Vegas, NV 89119

Fax: (702) 914-4556

 

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