Exhibit 10.1

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT is entered into as of November 22, 2017 by and
between NORTH MILL CAPITAL LLC, a Delaware limited liability company (Lender),
with an office located at 821 Alexander Road, Suite 130, Princeton, New Jersey
08540 and AMERICAN GAMING & ELECTRONICS, INC., a Nevada corporation (Borrower),
with its chief executive office located at 223 Pratt Street, Hammonton, New
Jersey 08037.

 

The parties hereto, hereby agree as follows:

 

1.     DEFINITIONS AND CONSTRUCTION

 

1.1     Terms. Unless otherwise defined herein, as used in this Agreement, the
following terms shall have the following meanings:

 

Accounts means, collectively, in addition to the definition of "Account" in the
Code, all presently existing and hereafter arising accounts receivable, contract
rights, health-care-insurance receivables and all other forms of obligations
owing to Borrower arising out of the sale, lease, license or assignment of goods
or other property or the rendition of services by Borrower, whether or not
earned by performance, all credit insurance, guaranties and other security
therefor, as well as all merchandise returned to or reclaimed by Borrower and
Borrower's Books relating to any of the foregoing.

 

Advances means all loans, advances and other financial accommodations by Lender
to or on account of the Borrower, including those under this Agreement and the
other Loan Documents.

 

Agreement means, collectively, this Loan and Security Agreement, together with
any and all exhibits, schedules, addenda or riders hereto, as each may be
amended, modified, supplemented, substituted, extended or renewed from time to
time.

 

Authorized Officer means any officer or other representative of Borrower
authorized in a writing delivered to Lender to transact business with Lender.

 

Borrower's Books means all of Borrower's books and records including all of the
following: ledgers; records indicating, summarizing or evidencing Borrower's
assets or liabilities, or the Collateral; all information relating to Borrower's
business operations or financial condition; and all computer programs, disks or
tape files, printouts, runs or other computer prepared information, whether
inscribed on tangible medium or stored in an electronic or other medium and
which information is retrievable in perceivable form and the goods containing
such information.

 

Business Day means any day which is not a Saturday, Sunday, or other day on
which banks in the State of New Jersey are authorized or required to close.

 

Chattel Paper has the same meaning ascribed to such term in the Code (whether
tangible or electronic).

 

Code means the New Jersey Uniform Commercial Code, as amended or revised from
time to time.

 

Collateral means all assets of the Borrower, whether now owned or existing, or
hereafter acquired or arising, and wherever located, including, without
limitation, all of the following assets, properties, rights and interests in
property of Borrower: all Accounts, all Equipment, all Commercial Tort Claims,
all General Intangibles, all Chattel Paper, all Inventory, all Negotiable
Collateral, all Investment Property, all Financial Assets, all Letter-of-Credit
Rights, all Supporting Obligations, all Deposit Accounts, all money or assets of
Borrower, which hereafter come into the possession, custody, or control of
Lender; all proceeds and products, whether tangible or intangible, of any of the
foregoing, including proceeds of insurance covering any or all of the foregoing;
any and all tangible or intangible property resulting from the sale, lease,
license or other disposition of any of the foregoing, or any portion thereof or
interest therein, and all proceeds thereof; and any other assets of Borrower or
any Guarantor which may be subject to a lien in favor of Lender as security for
the Obligations.

 

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Commercial Tort Claims has the meaning ascribed to such term in the Code.

 

Daily Balance means the amount of the Obligations owed at the end of a given
day.

 

Deposit Account has the meaning ascribed to such term in the Code.

 

Dilution means, as of any date of determination, a percentage based upon the
experience of the immediately prior three (3) months, that is the result of
dividing the amount of (a) bad debt write-downs, discounts, advertising
allowances, credits or other dilutive items with respect to Borrower's Accounts
during such period, by (b) Borrower's billings with respect to Accounts during
such period.

 

Documents has the meaning ascribed to such term in the Code.

 

Eligible Accounts means those Accounts created by Borrower in the ordinary
course of business, which are, and at all times shall continue to be, acceptable
to Lender in all respects, provided that standards of eligibility may be
established and revised from time to time by Lender in Lender's exclusive
judgment. In determining such acceptability and standards of eligibility, Lender
may, but need not, rely on agings, reports and schedules of Accounts furnished
to Lender by Borrower, but reliance thereon by Lender from time to time shall
not be deemed to limit Lender's right to revise its standards of eligibility and
acceptability at any time, as to both Borrower's present and future Accounts. In
general, an Account shall not be deemed eligible unless: (a) the Account debtor
on such Account is, and at all times continues to be, acceptable to Lender in
its Good Faith discretion and up to credit limits in Lender's Good Faith
Discretion or standards acceptable to Lender in its Good Faith, and (b) such
Account complies in all respects with the representations, covenants and
warranties set forth in this Agreement. Except in Lender's sole discretion,
Eligible Accounts shall not include any of the following: (i) Accounts with
respect to which the Account debtor has failed to pay within sixty (60) days of
due date, but not later than ninety (90) days of invoice date, and all Accounts
owed by any Account debtor that has failed to pay twenty-five percent (25%) or
more of its Accounts owed to Borrower within sixty (60) days of due date, but
not later than ninety (90) days of invoice date; (ii) Accounts with respect to
which the goods sold are sold on a bill and hold basis, a consignment sale
basis, a guaranteed sale basis, a sale or return basis or which contain other
terms by reason of which payment by the Account debtor may be conditional; (iii)
Accounts with respect to which the Account debtor is not a resident of the
United States unless such Accounts are supported by foreign credit insurance or
a letter of credit, in both instances satisfactory, in form and substance, to,
and assigned to, Lender, or Accounts with respect to which the Account debtor is
a casino based on tribal land and operated by the Native American community
unless such Accounts are supported by credit insurance satisfactory, in form and
substance, to, and assigned to, Lender; (iv) Accounts with respect to which the
Account debtor is the United States or any department, agency or instrumentality
of the United States, any State of the United States or any city, town,
municipality or division thereof unless all filings have been made under the
Federal Assignment of Claims Act or comparable state or other statute; (v)
Accounts with respect to which the Account debtor is an officer, employee or
agent of, or subsidiary of, related to, affiliated with or has common
shareholders, officers or directors with Borrower; (vi) Accounts with respect to
which Borrower is or may become liable to the Account debtor for goods sold or
services rendered by the Account debtor to Borrower or otherwise; (vii) Accounts
with respect to an Account debtor whose total obligations to Borrower exceed
fifteen percent (15%) of all Accounts or such other percentage as Lender may
agree to in writing as to a particular Account debtor (such applicable
percentage being, the Concentration Percentage), to the extent such obligations
exceed the applicable Concentration Percentage, provided that with respect to
the Account debtor, Aristocrat Technologies, Inc., the Concentration Percentage
shall not exceed thirty percent (30%) (rather than 15%); (viii) Accounts with
respect to which the Account debtor disputes liability or makes any claim with
respect thereto, is subject to any insolvency proceeding, becomes insolvent,
fails or goes out of business; (ix) Accounts arising out of a contract or
purchase order for which a surety bond was issued on behalf of Borrower; (x)
Accounts with respect to which Lender does not have a first priority and
exclusive perfected security interest; (xi) Accounts with respect to which the
Account debtor is in a jurisdiction for which Borrower is required to file a
notice of business activities or similar report and Borrower has not filed such
report within the time period required by applicable law; (xii) Accounts with
respect as to which an invoice has not been issued to the Account debtor; or
(xiii) Accounts which represent a progress or "milestone" billing on a contract
that has not been fully completed by Borrower.

 

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Equipment means, collectively, in addition to the definition of "Equipment" in
the Code, all of Borrower's present and hereafter acquired equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, motor vehicles, rolling
stock, processors, tools, pans, dies, jigs, goods (other than consumer goods or
farm products), together with any warranties, rights and interest in any of the
foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions and improvements to any of the foregoing, wherever
located.

 

ERISA means the Employee Retirement Income Security Act of 1974, as amended or
revised from time to time, and the regulations promulgated thereunder.

 

ERISA Affiliate means each trade or business (whether or not incorporated and
whether or not foreign) which is or may hereafter become a member of a group of
which Borrower is a member and which is treated as a single employer under ERISA
Section 4001(b)(1) or Section 414 of the IRC.

 

Event of Default means each of the events specified in Section 8. Any specific
event shall no longer be an Event of Default, if Lender, in writing, waives the
existence of an Event of Default as a consequence of the specific event, or if
the specific event is cured within any allowable cure period set forth in
Section 8.

 

Financial Assets has the meaning ascribed to such term in the Code.

 

General Intangibles means, collectively, in addition to the definition of
"General intangible" in the Code, all of Borrower's present and future general
intangibles and other personal property (including choses or things in action,
goodwill, patents, trade names, trademarks, service marks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, infringement claims, computer programs,
computer discs, computer tapes, Borrower's Books, literature, reports, catalogs,
Deposit Accounts, insurance premium rebates, tax refunds and tax refund claims)
other than goods and Accounts.

 

Good Faith means honesty in fact and the observance of reasonable commercial
standards of fair dealing.

 

Guarantor means each person or entity which guarantees the Obligations, issues a
validity guaranty relating to the Collateral or pledges any assets to Lender as
additional security for the Obligations.

 

Holdings means AG&E Holdings Inc., an Illinois corporation, the parent
corporation of Borrower.

 

Insolvency Proceeding means any proceeding commenced by or against any person or
entity under any provision of the federal Bankruptcy Code, as amended or revised
from time to time, or under any other state or federal insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions or extensions generally with its creditors.

 

Instruments has the meaning ascribed to such term in the Code.

 

Inventory means, collectively, in addition to the definition of "Inventory" in
the Code, all present and future inventory in which Borrower has any interest,
including goods held for sale or lease or to be furnished under a contract of
service, Borrower's present and future raw materials, work in process, finished
goods, tangible property, stock in trade, wares and materials used in or
consumed in Borrower's business, goods which have been returned to, repossessed
by, or stopped in transit by, Borrower, packing and shipping materials, wherever
located, any documents of title representing any of the above, and Borrower's
Books relating to any of the foregoing.

 

Investment Property has the meaning ascribed to such term in the Code.

 

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IRC means the Internal Revenue Code of 1986, as amended or revised from time to
time, and the regulations promulgated thereunder.

 

Lender Expenses means, collectively, costs and expenses (whether taxes,
assessments, insurance premiums or otherwise) required to be paid by Borrower
under any of the Loan Documents which are paid or advanced by Lender, including
filing, recording, publication, appraisal and search fees paid or incurred by
Lender in connection with Lender's transactions with Borrower, costs and
expenses incurred by Lender in the disbursement or collection of funds to or
from Borrower or its Account debtors, charges resulting from the dishonor of
checks, costs and expenses incurred by Lender to correct any default or enforce
any provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, costs and expenses incurred by Lender in
enforcing or defending the Loan Documents or otherwise exercising its rights and
remedies upon the existence of an Event of Default, including, but not limited
to, costs and expenses incurred in connection with any proceeding, suit,
enforcement of judgment, or appeal and Lender's reasonable attorneys' fees and
expenses, including allocated fees of in-house counsel, incurred in advising,
structuring, drafting, reviewing, administering, amending, modifying,
terminating, enforcing, defending, or otherwise representing Lender with respect
to the Loan Documents or the Obligations.

 

Letter-of-Credit Rights has the meaning ascribed to such term in the Code.

 

Loan Documents means, collectively, this Agreement, any Note or Notes, any
security agreements, pledge agreements, mortgages, deeds of trust or other
encumbrances or agreements which secure the Obligations, and any other agreement
entered into between Borrower and Lender or by Borrower or a Guarantor in favor
of Lender relating to or in connection with this Agreement or the Obligations,
as each may be amended, modified, supplemented, substituted, extended or renewed
from time to time.

 

Multiemployer Plan means a multiemployer plan as defined in ERISA Sections 3(37)
or 4001(a)(3) or IRC Section 414(f).

 

Negotiable Collateral means all of Borrower's present and future letters of
credit, notes, drafts, Instruments, Documents, leases and Chattel Paper.

 

Note means any promissory note made by Borrower to the order of Lender
concurrently herewith or at any time hereafter, as the same may be amended,
modified, supplemented, substituted, extended or renewed from time to time.

 

Obligations means all Advances, debts, liabilities (including all interest and
amounts charged to the Obligations pursuant to any agreement authorizing Lender
to charge the Obligations), obligations, lease payments, guaranties, covenants
and duties owing by Borrower to Lender of any kind and description (whether
pursuant to or evidenced by the Loan Documents or by any other agreement between
Lender and Borrower, and irrespective of whether for the payment of money),
whether made or incurred prior to, on or after the Termination Date, direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, whenever executed, and further including any debt, liability
or obligation owing from Borrower to others which Lender may obtain by
assignment or otherwise, and all interest thereon (including any interest
accruing thereon after maturity, or after the filing of any petition in
bankruptcy, or the commencement of any Insolvency Proceeding relating to
Borrower, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) and all Lender Expenses.

 

Perfection Certificate means the perfection certificate executed by Borrower
prior to or concurrently herewith.

 

Plan means any plan described in ERISA Section 3(2) maintained for employees of
Borrower or any ERISA Affiliate, other than a Multiemployer Plan.

 

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Prime Rate means that rate designated by Wells Fargo Bank, National Association,
or any successor thereof, from time to time as its prime rate, which shall not
necessarily constitute its lowest available rate.

 

Revolving Credit Facility means the revolving credit facility defined and
provided for in Section 2.1.

 

Supporting Obligation has the same meaning ascribed to such term in the Code.

 

Term means the period from the date of the execution and delivery by Lender of
this Agreement through and including the later of (a) the Termination Date and
(b) the payment and performance in full of the Obligations.

 

Termination Date means (a) November 22, 2018 (the period through such date,
being, the Initial Term), unless such date is extended pursuant to Section 3.1,
and if so extended on one or more occasions, the last date of the last such
extension, or (b) if earlier terminated by Lender pursuant to Section 9.1, the
date of such termination.

 

1.2     Construction. Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular and to the singular
include the plural. The words hereof, herein, hereby, hereunder and similar
terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Section, subsection, paragraph, clause,
Exhibit or Schedule references used in this Agreement refer to the specific
Section, subsection, paragraph or clause of, or Exhibit or Schedule to, this
Agreement unless otherwise specified. Words importing a particular gender mean
and include every other gender.

 

1.3     Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting principles
(GAAP) as in effect from time to time. When used herein, the term financial
statements includes the notes and schedules thereto.

 

1.4     Exhibits, Etc. All of the Exhibits, Schedules, addenda or riders
attached to this Agreement are deemed incorporated herein by reference.

 

1.5     Code. Any terms used in this Agreement which are defined in the Code
shall be construed and defined as set forth in the Code, unless otherwise
defined herein.

 

2.     ADVANCES AND TERMS OF PAYMENT

 

2.1     Revolving Advances; Advance Limit. Upon the request of Borrower made at
any time from and after the date hereof until the Termination Date, and so long
as no Event of Default has occurred, Lender may, in its sole and absolute
discretion, make Advances to Borrower under a revolving credit facility (the
Revolving Credit Facility) in an amount up to eighty-five percent (85%) of the
aggregate outstanding amount of Eligible Accounts so long as Dilution is less
than three percent (3%); provided, however, in no event at any time shall the
maximum aggregate principal amount outstanding under the Revolving Credit
Facility exceed Three Million Five Hundred Thousand Dollars ($3,500,000) (said
dollar limit being, the Advance Limit). Lender may create reserves against, or
reduce its advance percentages based on Eligible Accounts without declaring an
Event of Default if Lender determines, in its good faith discretion, that such
reserves or reduction are necessary, without limitation, to protect Lender's
interest in the Collateral and/or against diminution in the value of any
Collateral and/or to insure that the prospect of payment or performance by
Borrower of its Obligations to Lender are not impaired.

 

2.2     Overadvances. All Advances shall be added to and be deemed part of the
Obligations when made. If, at any time and for any reason, the aggregate amount
of the outstanding Advances under the Revolving Credit Facility exceeds the
dollar or percentage limitations contained in Section 2.1 (any such excess
being, an Overadvance), Borrower shall, upon demand by Lender, immediately pay
to Lender in cash, the amount of any such Overadvance. Without affecting
Borrower's obligation to immediately repay to Lender the amount of each
Overadvance, Borrower shall pay Lender a fee (the Overadvance Fee) in an amount
to be agreed upon between Lender and Borrower, but in any event, not less than
$500.00 per occurrence of an Overadvance, plus interest on such Overadvance
amount at the Default Rate set forth below. Further, without affecting
Borrower's obligation to immediately repay to Lender the amount of each
Overadvance, all Overadvances are deemed Obligations and are secured by the
Collateral and guaranteed by the Guarantor under any guaranty executed in
connection herewith.

 

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2.3     Authorization to Make Advances. Lender is hereby authorized to make the
Advances based upon telephonic or other instructions received from anyone
purporting to be an Authorized Officer, or, at the discretion of Lender, if such
Advances are necessary to satisfy any Obligations. All requests for Advances
shall specify the date on which such Advance is to be made (which day shall be a
Business Day) and the amount of such Advance. Requests received after 12:00 p.m.
Eastern time on any day shall be deemed to have been made as of the opening of
business on the immediately following Business Day. All Advances made under this
Agreement shall be conclusively presumed to have been made to, and at the
request and for the benefit of, Borrower when deposited or otherwise disbursed
in accordance with the instructions of Borrower or in accordance with the terms
and conditions of this Agreement. Unless otherwise requested by Borrower, all
Advances shall be made by a wire transfer to the Deposit Account of Borrower
designated on Schedule 2.3 or to such other account as Borrower shall notify
Lender in writing. Borrower shall pay to Lender a funds transfer fee of $35.00
for each Advance, which such fee shall be payable on the first (1st) calendar
day of each month of the Term for all Advances made during the preceding month.

 

2.4     Interest.

 

(a)     Except where specified to the contrary in the Loan Documents, interest
shall accrue on the Daily Balance at the per annum rate of three-quarters of a
percentage point (.75%) above the Prime Rate in effect from time to time, but
not less than four and three-quarter percent (4.75%) (the Applicable Rate). At
the option of Lender, (i) from and after the occurrence of an Event of Default,
and without constituting a waiver of any such Event of Default, and (ii) if the
Obligations are not paid in full by the Termination Date, and without waiving
the maturity of the Obligations on the Termination Date, the Obligations shall
bear interest at the per annum rate of six percentage points (6%) above the
Applicable Rate (the Default Rate). All interest payable under the Loan
Documents shall be computed on the basis of a three hundred sixty (360) day year
for the actual number of days elapsed on the Daily Balance. Interest as provided
for herein shall continue to accrue until the Obligations are indefeasibly paid
in full.

 

(b)     The interest rate payable by Borrower under the terms of this Agreement
shall be adjusted in accordance with any change in the Prime Rate, from time to
time, on the date of any such change. All interest payable by Borrower shall be
due and payable on the first (1st) day of each calendar month during the Term.
Lender may, at its option, add such interest, fees and charges payable by
Borrower under the Loan Documents and all Lender Expenses to the Obligations,
and the Obligations (as so increased by the amount of such interest, fees,
charges and Lender Expenses), shall thereafter accrue interest at the rate then
applicable under this Agreement. Notwithstanding anything to the contrary
contained in the Loan Documents, the minimum monthly interest payable by
Borrower on the Advances shall be calculated on a minimum Daily Balance of Five
Hundred Thousand Dollars ($500,000).

 

(c)     In no event shall interest on the Obligations exceed the highest lawful
rate in effect from time to time. It is not the intention of the parties hereto
to make an agreement which violates any applicable state or federal usury laws.
In no event shall Borrower pay, nor shall Lender accept or charge, any interest
which, together with any other charges on the principal or any portion thereof,
exceeds the maximum lawful rate of interest allowable under any applicable state
or federal usury laws. Should any provision of this Agreement or any existing or
future Notes or Loan Documents between the parties be construed to require the
payment of interest or any other fees or charges that could be construed as
interest, which, with any other charges upon the principal or any portion
thereof and any other fees or charges that could be construed as interest,
exceed the maximum lawful rate of interest, then any such excess shall be
applied to the remaining principal balance of the Obligations, if any, and any
remainder shall be refunded to Borrower.

 

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(d)     Notwithstanding any of the foregoing in this Section 2.4, for purposes
of this Agreement, it is the intention of Borrower and Lender that interest
shall mean, and be limited to, any payment to Lender which compensates Lender
for (i) the extension of credit to Borrower and the availability to Borrower of
the Revolving Credit Facility and (ii) any default or breach by Borrower of a
condition upon which such credit was extended and such Revolving Credit Facility
was made available. Borrower and Lender agree that for the sole purpose of
calculating the interest paid by Borrower to Lender, it is the intention of
Borrower and Lender that interest shall mean and include, and be expressly
limited to, any interest accrued on the aggregate outstanding Daily Balance of
the Obligations during the term hereof pursuant to subsections 2.4(a) and
2.4(b), any Overadvance Fee, Facility Fee (as defined below) and late fees
charged to Borrower during the term hereof. Borrower and Lender further agree
that it is their intention that the following fees shall not constitute
interest: any Servicing Fees (as defined below), any Field Examination Fees (as
defined below), any attorney fees incurred by Lender, any premiums or
commissions attributable to insurance guaranteeing repayment, finders' fees,
credit report fees, appraisal fees or fees for document preparation or
notarization. To the extent however that New Jersey law excludes from the
calculation of interest any fees defined herein as interest or includes as
interest any fees or other sums which are intended not to constitute interest,
New Jersey law shall supersede and prevail, and all such interest shall be
subject to subsection 2.4(c) above.

 

2.5     Collection of Accounts. Lender or Lender's designee may at any time,
with or without notice to Borrower, (a) notify customers, Account debtors or
other obligors of Borrower that the Accounts and other Collateral have been
assigned to Lender and that Lender has a security interest therein and (b)
collect the Accounts and other Collateral directly and add the collection costs
and expenses thereof to the Obligations; provided, however, unless and until
Lender takes such action or gives Borrower other written instructions, Borrower
shall notify all Account debtors and other obligors of Borrower to remit
payments on the Accounts and other Collateral to a lockbox to be designated by
Lender, or in the case of payments to be made by wire transfer, ACH or other
electronic means, to an account designated by Lender over which Lender shall
have control and with Borrower granting to Lender viewing access rights thereto.
All such payments remitted to the lockbox or made by wire transfer, ACH or other
electronic means to the account designated by Lender shall then be credited to a
deposit account of Lender into which remittances from Account debtors and other
obligors of Borrower and obligors of other customers of Lender may be credited.
If, notwithstanding any notices that may be sent to Account debtors or other
obligors of Borrower, Borrower obtains payment on any Account or other
Collateral, including, without limitation, collections under credit card sales,
Borrower shall receive any and all such payments on Accounts and other
Collateral and other proceeds (including cash) in trust for Lender and shall
immediately deliver said payments to Lender in the original form as received,
together with any necessary endorsements thereof, and/or at the discretion of
Lender, shall deposit said payments into a deposit account designated by, and in
the name of and under the exclusive control of, Lender.

 

2.6     Crediting Payments. The receipt of any item of payment by Lender for the
sole purpose of determining availability under the Revolving Credit Facility,
subject to final payment of such item, shall be provisionally applied to reduce
the Obligations on the date of receipt of such item of payment by Lender;
provided however, the receipt of such item of payment by Lender for determining
the Daily Balance and for all other purposes hereunder, including, without
limitation, the calculation of interest on the Obligations and the calculation
of the Servicing Fee, shall not be deemed to have been paid to Lender until
three (3) Business Days after the date of Lender's actual receipt of such item
of payment. Notwithstanding anything to the contrary contained herein, payments
received by Lender after 11:00 a.m. Eastern time shall be deemed to have been
received by Lender as of the opening of business on the immediately following
Business Day.

 

2.7     Facility Fee. In consideration of Lender's entering into this Agreement,
Borrower shall pay to Lender an annual facility fee (the Facility Fee) equal to
Fifteen Thousand Dollars ($15,000) (that is, one percent (1%) of $1,5000,000 the
Advance Limit). One twelfth (1/12) of such Facility Fee shall be paid
simultaneously with the execution of this Agreement, and the remaining amount
shall be paid in installments of like amount on the first (1st) day of each
month thereafter until paid in full. The Facility Fee for the entire Initial
Term is deemed to be fully earned upon the execution of this Agreement. The
unpaid balance of the Facility Fee for the entire Initial Term shall be payable
in full on the earlier of (a) termination of this Agreement and (b) at Lender's
option, upon Lender's declaration of an Event of Default.

 

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In addition, if the amount owed under the Revolving Credit Facility during
Initial Term (a) exceeds One Million Five Hundred Thousand Dollars ($1,500,000),
but is equal to or less than Two Million Dollars ($2,000,000), an additional
Facility Fee of Five Thousand Dollars ($5,000) will be charged at the initial
occurrence thereof, (b) exceeds Two Million Dollars ($2,000,000), but is less
than or equal to Two Million Five Hundred Thousand Dollars ($2,500,000), an
additional Facility Fee of Five Thousand Dollars ($5,000) will be charged at the
initial occurrence thereof, (c) exceeds Two Million Five Hundred Thousand
Dollars ($2,500,000), but is less than or equal to Three Million Dollars
($3,000,000), an additional Facility Fee of Five Thousand Dollars ($5,000) will
be charged at the initial occurrence thereof, or (c) exceeds Three Million
Dollars ($3,000,000), but is less than or equal to the Advance Limit (that is,
Three Million Five Hundred Thousand Dollars ($3,500,000), an additional Facility
Fee of Five Thousand Dollars ($5,000) will be charged at the initial occurrence
thereof. The highest Daily Balance of the Revolving Credit Facility during the
Initial Term (rounded upward to the next $500,000, unless such amount is a
multiple of $500,000, in which case, such amount need not be rounded upward),
but in no event less than One Million Five Hundred Thousand Dollars
($1,500,000), shall hereinafter be referred to as, the Benchmark Advance Amount.

 

2.8     Servicing Fee. In consideration of Lender's services for the preceding
calendar month, Borrower shall pay to Lender a monthly fee (the Servicing Fee)
in an amount equal to one third of one percent (1/3%) of the average Daily
Balance during each month on or before the first (1st) day of each calendar
month during the Term, including each Renewal Term (as defined below), or so
long as the Obligations are outstanding, provided that, in the event Borrower
breaches its obligations under Section 2.5, and without constituting a waiver of
the Event of Default as a consequence of such breach, at the election of Lender,
the Servicing Fee shall be doubled. Notwithstanding anything to the contrary
contained in the Loan Documents, the Servicing Fee shall be based on a minimum
daily average outstanding balance of Advances of Five Hundred Thousand Dollars
($500,000).

 

2.9     Field Examination Fee. Borrower shall pay Lender a fee (the Field
Examination Fee) in an amount equal to Nine Hundred Ninety-Five Dollars ($995)
per day, per examiner plus out-of-pocket expenses for each examination of
Borrower's Books or the other Collateral performed by Lender or its designee.

 

2.10     Late Reporting Fee. Borrower shall pay to Lender a fee in an amount
equal to Fifty Dollars ($50.00) per document, per day for each Business Day any
report, financial statement or schedule required by this Agreement to be
delivered to Lender is past due.

 

2.11     StuckyNet-Link Fee. Borrower shall pay to Lender a fee in an amount
equal to One Hundred Dollars ($100.00) per month in connection with the
StuckyNet-Link software program for collateral reporting.

 

2.12     Monthly Statements. Lender may render monthly statements to Borrower of
all Obligations, including statements of all principal, interest and Lender
Expenses, and Borrower shall have fully and irrevocably waived all objections to
such statements and the contents thereof unless, within thirty (30) days after
receipt, Borrower shall deliver to Lender, by registered, certified or overnight
mail as set forth in Section 12, a written objection to such statement,
specifying the error or errors, if any, contained therein.

 

3.     TERM

 

3.1     Term and Renewal Date. This Agreement shall become effective upon
execution by Lender and, provided that Borrower shall not have exercised its
termination right as hereinafter provided, shall continue in full force and
effect through the Initial Term, and from year to year thereafter (each a
Renewal Term), if Lender, at its option, in writing agrees to extend the Term
for a period of one (1) year from the then Termination Date. Borrower may
terminate the Term on the then Termination Date by giving Lender at least sixty
(60) days' prior written notice by registered or certified mail, return receipt
requested. In addition, Lender shall have the right to terminate this Agreement
immediately at any time upon the occurrence of an Event of Default. No such
termination by either Borrower or Lender shall relieve or discharge Borrower of
its duties, Obligations and covenants hereunder until all Obligations have been
indefeasibly paid and performed in full, and Lender's continuing security
interest in the Collateral shall remain in effect until the Obligations have
been indefeasibly fully and irrevocably paid and satisfied in cash or cash
equivalent. On the Termination Date, the Obligations shall be immediately due
and payable in full.

 

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3.2     Termination Fee. If the Term is terminated by Lender upon the occurrence
of an Event of Default or is terminated by Borrower, other than in compliance
with Section 3.1, in view of the impracticability and extreme difficulty of
ascertaining actual damages, and by mutual agreement of the parties as to a
reasonable calculation of Lender's lost profits, as a result thereof, in
addition to payment of all principal, interest, fees, expenses and other
Obligations, Borrower shall pay Lender upon the effective date of such
termination a fee in an amount equal to one percent (1%) of the Benchmark
Advance Amount plus any Advances by Lender to or on behalf of Borrower other
than under the Revolving Credit Facility, if such termination occurs on or prior
to the then Termination Date. Such fee shall be presumed to be the amount of
damages sustained by Lender as the result of termination, and Borrower
acknowledges that such fee is reasonable under the circumstances currently
existing. The fee provided for in this Section 3.2 shall be deemed included in
the Obligations.

 

4.     CREATION OF CONTINUING SECURITY INTEREST

 

4.1     Grant of Continuing Security Interest. Borrower hereby grants to Lender
a continuing security interest in the Collateral in order to secure the prompt
repayment of the Obligations and the prompt performance by Borrower of each and
all of its covenants and Obligations under the Loan Documents and otherwise.
Lender's continuing security interest in the Collateral shall attach to all
Collateral without further act on the part of Lender or Borrower.

 

4.2     Negotiable Collateral. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, Borrower shall
notify Lender and, upon the request of Lender, shall immediately endorse and
assign such Negotiable Collateral to Lender and deliver physical possession of
such Negotiable Collateral to Lender.

 

4.3     Delivery of Additional Documentation Required. Concurrently with
Borrower's execution and delivery of this Agreement and at any time thereafter
at the request of Lender, Borrower shall execute and deliver to Lender all
security agreements, chattel mortgages, pledges, assignments, endorsements of
certificates of title, applications for title, affidavits, reports, notices,
schedules of accounts, letters of authority and all other documents that Lender
may request, in form satisfactory to Lender, to perfect and maintain perfected
Lender's continuing security interests in the Collateral and to fully consummate
all of the transactions contemplated under the Loan Documents. Borrower hereby
(a) authorizes Lender to file and/or record such financing statements and other
documents as Lender deems necessary or desirable to perfect and maintain
Lender's continuing security interest in the Collateral, (b) agrees any such
financing statement may contain an "all asset" or "all property" description of
the Collateral and (c) hereby ratifies any such financing statement or other
document heretofore filed by Lender.

 

4.4     Power of Attorney. Borrower hereby irrevocably makes, constitutes and
appoints Lender (and any person designated by Lender) as Borrower's true and
lawful attorney-in-fact with power to sign the name of Borrower on any of the
above described documents in Section 4.3 above or on any other similar documents
to be executed, recorded or filed in order to perfect or continue perfected
Lender's continuing security interest in the Collateral. In addition, Borrower
hereby appoints Lender (and any person designated by Lender) as Borrower's
attorney-in-fact with power to: (a) sign Borrower's name on verifications of
Accounts and other Collateral and on notices to Account debtors; (b) send
requests for verification of Accounts and other Collateral; (c) endorse
Borrower's name on any checks, notes, acceptances, money orders, drafts or other
forms of payment or security that may come into Lender's possession; (d) during
the existence of an Event of Default, notify the post office authorities to
change the address for delivery of Borrower's mail to an address designated by
Lender, to receive and open all mail addressed to Borrower, and to retain all
mail relating to the Collateral and forward all other mail to Borrower; and (e)
during the existence of an Event of Default, make, settle and adjust all claims
under Borrower's policies of insurance, endorse the name of Borrower on any
check, draft, instrument or other item of payment for the proceeds of such
policies of insurance and make all determinations and decisions with respect to
such policies of insurance. In the event Lender elects to receive and open
Borrower's mail as set forth in clause (d) above, Lender shall open and forward
to Borrower by a nationally recognized overnight courier all of Borrower's
exempted "other mail" within twenty-four hours of Lender's receipt of the
exempted "other mail." The appointment of Lender as Borrower's attorney-in-fact
and each and every one of Lender's rights and powers, being coupled with an
interest, is irrevocable so long as any Accounts in which Lender has a
continuing security interest remain unpaid and until all of the Obligations have
been fully, indefeasibly repaid and performed.

 

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4.5     Right To Inspect. Lender shall have the right, after using its best
efforts to give Borrower twenty-four (24) hours' notice (so long as no Event of
Default shall exist and Borrower has not made a request for Advances beyond the
lending parameters set forth in Section 2.1, or other requests outside of the
ordinary course of business, otherwise no advance notice need be given), at any
time or times hereafter during Borrower's usual business hours, or during the
usual business hours of any third party having control over Borrower's Books, to
inspect Borrower's Books in order to verify the amount or condition of, or any
other matter relating to, the Collateral or Borrower's financial condition.

 

5.     REPRESENTATIONS AND WARRANTIES AND COVENANTS

 

Borrower represents and warrants to Lender, and covenants and acknowledges, the
following:

 

5.1     No Prior Encumbrances; Security Interests. Borrower has good and
marketable title to the Collateral, free and clear of liens, claims, security
interests or encumbrances held by other third parties, except for the security
interests to be satisfied from the proceeds of the first Advances hereunder, the
continuing security interests granted to Lender by Borrower and those disclosed
on Schedule 5.1. Other than those liens, claims, security interests or
encumbrances expressly permitted by this Agreement, Borrower will not create,
suffer or permit to be created any security interest, lien, pledge, mortgage or
encumbrance on any Collateral or any of its other assets.

 

5.2     Bona Fide Accounts. All Accounts represent bona fide sales or leases of
goods and/or services for which Borrower has an unconditional right to payment
and as to which the goods have been delivered to the customer or Account debtor
and/or the services have been rendered, as applicable. None of the Accounts is
subject to any right of offset, counterclaim, cancellation or contractual right
of return. All Accounts reported to Lender as Eligible Accounts conform to the
requirements of Eligible Accounts.

 

5.3     Merchantable Inventory. All Inventory is now and at all times hereafter
shall be of good and merchantable quality, free from defects.

 

5.4     Location of Inventory and Equipment. The Inventory and Equipment is not
now, and shall not at any time or times hereafter be, stored with a bailee,
warehouseman, processor or similar third party. Borrower shall keep the
Inventory and Equipment only at its address set forth on the first page hereof
and at the locations set forth in the Perfection Certificate. If any of the
Inventory and Equipment is located at a premises not owned by Borrower, Borrower
shall cause the landlord of such premises, or other third party having an
interest in said premises, to execute and deliver to Lender a landlord waiver
and subordination, or similar agreement, satisfactory in form and substance to
Lender.

 

5.5     Inventory Records. Borrower now keeps, and hereafter at all times shall
keep, correct and accurate records itemizing and describing the kind, type,
quality and quantity of the Inventory and Borrower's cost of said items.

 

5.6     Retail Accounts. No Accounts arise from the sale of goods or rendition
of services for personal, family or household purposes.

 

5.7     Relocation of Chief Executive Office. The chief executive office of
Borrower is at the address indicated on the first page of this Agreement, and
Borrower will not, without thirty (30) days' prior written notice to Lender and
compliance with Section 4.3, relocate such office. The location of all books and
records of Borrower relating to the Collateral is at 556 West Taylor Road,
Romeoville, IL 60446.

 

5.8     Due Incorporation and Qualification. Borrower is, and shall at all times
hereafter, be a corporation duly incorporated, organized and existing under the
laws of the state of its incorporation as set forth on the first page hereof,
and Borrower is, and shall at all times hereafter be, qualified and licensed to
do business and is in good standing in any state in which the conduct of its
business or its ownership of assets requires that it be so qualified. Borrower's
organizational identification number as issued by the state in which it is
incorporated is set forth in the Perfection Certificate.

 

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5.9     Actual and Fictitious Name. Borrower's exact name is set forth on the
first page hereof, and except as set forth in the Perfection Certificate,
Borrower has not changed its name within the last five (5) years. Borrower is
conducting its business under the trade or fictitious name(s) set forth in the
Perfection Certificate, and no others. Borrower has complied with the fictitious
name laws of all jurisdictions in which compliance is required in connection
with its use of such name(s).

 

5.10     Permits and Licenses. Borrower holds all licenses, permits, franchises,
approvals and consents required for the conduct of its business and the
ownership and operation of its assets, including, without limitation, any all
applicable licenses to operate in the gaming industry, specifically to sell and
service gaming parts and equipment.

 

5.11     Due Authorization; Enforceability. Borrower has the right and power and
is duly authorized to enter into the Loan Documents to which it is a party; all
necessary action to authorize the execution and delivery of the Loan Documents
has been properly taken; and Borrower is and will continue to be duly authorized
to borrow under this Agreement and to perform all of the other terms and
provisions of the Loan Documents throughout the Term. The Loan Documents, when
executed and delivered by Borrower, will constitute the legal, valid and binding
obligations of Borrower enforceable in accordance with their terms.

 

5.12     Compliance with Organizational Documents, Etc. The execution and
delivery by Borrower of the Loan Documents to which it is a party and the
performance of the terms thereof do not constitute a breach of any provision
contained in Borrower's Articles of Incorporation or its By-Laws, nor does the
execution and delivery by Borrower of the Loan Documents to which it is a party
or the performance of the terms thereof constitute an event of default under any
material agreement to which Borrower is now or may hereafter become a party.

 

5.13     Litigation. There are no actions, proceedings or claims pending by or
against Borrower, whether or not before any court or administrative agency, and
Borrower has no knowledge or notice of any pending, threatened or imminent
litigation, governmental investigations, or claims, complaints, actions, or
prosecutions involving Borrower, except for ongoing collection matters in which
Borrower is the plaintiff. If any such actions, proceedings or claims presently
exist or arise during the Term, Borrower shall promptly notify Lender in writing
and shall, from time to time, notify Lender of all material events relating
thereto.

 

5.14     Accuracy of Information and No Material Adverse Change in Financial
Statements. All information furnished by Borrower to Lender, and all statements
made by Borrower to Lender, including, without limitation, information set forth
in any loan application, client profile and in the Perfection Certificate are
true, accurate and complete in all respects and do not contain any misstatement
of fact or omit to state any facts necessary to make the statements or
information contained therein not misleading. All financial statements relating
to Borrower which have been or may hereafter be delivered to Lender: (a) have
been prepared in accordance with GAAP; (b) fairly present Borrower's financial
condition as of the date thereof and Borrower's results of operations for the
period then ended; and (c) disclose all contingent obligations of Borrower. No
material adverse change in the financial condition of Borrower has occurred
since the date of the most recent of such financial statements.

 

5.15     Solvency. Borrower is now, and shall be at all times throughout the
Term, solvent and able to pay its debts (including trade debts) as they mature.

 

5.16     ERISA. Neither Borrower or any ERISA Affiliate, nor any Plan is or has
been in violation of any of the provisions of ERISA, any of the qualification
requirements of IRC Section 401(a) or any of the published interpretations
thereof. No lien upon the assets of Borrower has arisen with respect to any
Plan. No prohibited transaction within the meaning of ERISA Section 406 or IRC
Section 4975(c) has occurred with respect to any Plan. No reportable event as
defined under Section 4043 has occurred with respect to any Plan which would
cause the Pension Benefit Guaranty Corporation to institute proceedings under
Section 4042 of ERISA. Neither Borrower nor any ERISA Affiliate has incurred any
withdrawal liability with respect to any Multiemployer Plan. Borrower and each
ERISA Affiliate have made all contributions required to be made by them to any
Plan or Multiemployer Plan when due. There is no accumulated funding deficiency
in any Plan, whether or not waived.

 

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5.17     Environmental Laws and Hazardous Materials. Borrower has complied, and
at all times through the Term will comply, with all Environmental Laws (as
defined below). Borrower has not and will not cause or permit any Hazardous
Materials (as defined below) to be located, incorporated, generated, stored,
manufactured, transported to or from, released, disposed of, or used at, upon,
under, or within any premises at which Borrower conducts its business, or in
connection with Borrower's business. To the best of Borrower's knowledge,
information or belief, without undertaking an independent investigation, no
prior owner, occupant or operator of any premises at which Borrower conducts its
business has caused or permitted any of the above to occur at, upon, under, or
within any of the premises. Borrower will not permit any lien to be filed
against the Collateral or any part thereof under any Environmental Law, and will
promptly notify Lender of any proceeding, inquiry or claim relating to any
alleged violation of any Environmental Law, or any alleged loss, damage or
injury resulting from any Hazardous Material. Lender shall have the right to
join and participate in, as a party if it so elects, any legal or administrative
proceeding initiated with respect to any Hazardous Material or in connection
with any Environmental Law. For purposes hereof, Hazardous Material includes
without limitation any substance, material, emission, or waste which is or
hereafter becomes regulated or classified as a hazardous substance, hazardous
material, toxic substance or solid waste under any Environmental Law, asbestos,
petroleum products, urea formaldehyde, polychlorinated biphenyls (PCBs), radon,
and any other hazardous or toxic substance, material, emission or waste, and
substances containing excessive moisture, mildew, mold, microbial contamination,
microbial growth or other fungi, or biological agents that can or are known to
produce mycotoxins or other bioaerosols, such as antigens, bacteria, amoebae and
microbial organic compounds or other similar matter, in each case that poses a
risk to human health or the environment. Environmental Laws means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Resource Conservation and Recovery Act of 1976, the Hazardous
Materials Transportation Act, the Toxic Substances Control Act, the Clean Water
Act and the regulations pertaining to such statutes, and any other safety,
health or environmental statutes, laws, regulations or ordinances of the United
States or of any state, county or municipality in which Borrower conducts its
business or the Collateral is located, and the rules, resolutions, directives,
orders, executive orders, consent orders, guidance from regulatory agencies,
policy statements, judicial decrees, standards, permits, licenses and ordinances
or any judicial or administrative interpretation of any of the foregoing,
pertaining to the protection of land, water, air, health, safety or the
environment, whether now or in the future enacted, promulgated or issued.

 

5.18     Tax Compliance. Borrower has filed all tax returns required to be filed
by it and has paid all taxes due and payable on said returns and on any
assessment made against it or its assets.

 

5.19     Reliance by Lender; Cumulative. Each warranty, representation and
agreement contained in this Agreement shall be automatically deemed repeated by
Borrower with each request for an Advance and shall be conclusively presumed to
have been relied on by Lender regardless of any investigation made or
information possessed by Lender. The warranties, representations and agreements
set forth herein shall be cumulative and in addition to any and all other
warranties, representations and agreements which Borrower shall now or hereafter
give, or cause to be given, to Lender.

 

5.20     Use of Proceeds. The proceeds of the initial Advance will be used by
Borrower for the purposes set forth on Schedule 5.20. Absent Lender's written
consent to the contrary, the proceeds of Advances after the initial Advance will
be used by Borrower solely for working capital purposes.

 

5.21     Motor Vehicles and Intellectual Property. The Perfection Certificate
identifies all motor vehicles, patents, patent applications, copyrights,
trademarks, trade-names and other intellectual property, registered or
unregistered, owned by Borrower. Borrower will promptly notify Lender of all
motor vehicles or intellectual property hereafter owned by Borrower, and the
status of all patent and trademark applications and the issuance of patents and
trademarks, and all copyrights registrations, and in accordance with Section
4.3, will cooperate with Lender in taking all actions required by Lender to have
a perfected security interest or lien on such motor vehicles and intellectual
property.

 

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5.22     Commercial Tort Claims. Borrower does not, as of the date hereof, have
any Commercial Tort Claims against any third parties. If Borrower does hereafter
have any such Commercial Tort Claims, Borrower shall furnish Lender with prompt
written notice thereof, and in accordance with Article 4 hereof, shall execute
and deliver such supplemental documents and cooperate with Lender in taking all
action as required by Lender to have a perfected security interest or lien on
such Commercial Tort Claims.

 

6.     AFFIRMATIVE COVENANTS

 

Borrower covenants and acknowledges that throughout the Term, Borrower shall
comply with all of the following:

 

6.1     Collateral and Other Reports. Borrower shall at least once every week
and each time it requests an Advance under the Revolving Credit Facility utilize
Lender's StuckyNet-Link software for collateral reporting and shall furnish to
Lender a borrowing base report and loan request, satisfactory in form and
substance to Lender, report to Lender all sales and Accounts arising since its
most recent report to Lender and shall execute and deliver to Lender, no later
than the fifteenth (15th) day of each month during the Term, a detailed aging of
the Accounts, a reconciliation statement and a summary aging, by vendor, of all
accounts payable of Borrower and any book overdraft. Borrower and Lender agree
that each authorized signer's (on behalf of Borrower) signature on borrowing
base reports may be provided via an electronic signature (that is, by each
authorized signer's password for such program). Borrower shall provide Lender a
listing of each authorized signer. Borrower shall deliver to Lender, as Lender
may from time to time require, collection reports, sales journals, invoices,
copies of or original delivery receipts, customers' purchase orders, shipping
instructions, bills of lading and other documentation respecting shipment
arrangements and such other matters requested by Lender. Absent such a request
by Lender, copies of all such documentation shall be held by Borrower as
custodian for Lender. Borrower shall at all times provide Lender with all
current "passwords" or similar access requirements relative to all computer
systems available to Borrower with its Account debtors so as to enable Lender to
have access to said computer systems so as to verify the status of Accounts
owing to Borrower from said Account debtors.

 

6.2     Returns. Returns and allowances, if any, as between Borrower and any
Account debtors, shall be permitted on the same basis and in accordance with the
usual customary practices of Borrower as they exist as of the date hereof. If at
any time prior to the occurrence of an Event of Default any Account debtor
returns any Inventory to Borrower, Borrower shall promptly determine the reason
for such return and, if Borrower accepts such return, issue a credit memorandum
(with a copy to be sent to Lender) in the appropriate amount to such Account
debtor. Borrower shall promptly notify Lender of all returns and recoveries and
of all disputes and claims.

 

6.3     Designation of Inventory. Borrower shall, from time to time hereafter as
requested by Lender, execute and deliver to Lender a designation of Inventory
specifying the cost and the wholesale market value of Borrower's raw materials,
work in process and finished goods, and further specifying such other
information as Lender may reasonably request. Borrower shall also, from time to
time hereafter as requested by Lender, promptly, in writing, notify Lender if
any of Borrower's Inventory contains any labels, trademarks, trade-names or
other identifying characteristics that are the properties of third parties.

 

6.4     Financial Statements, Reports, Certificates. Borrower shall deliver to
Lender: (a) as soon as available, but in any event within thirty (30) days after
the end of each month during the Term, a balance sheet and profit and loss
statement prepared by Borrower covering Borrower's operations during such
period; and (b) as soon as available, but in any event within ninety (90) days
after the end of each fiscal year of Borrower, consolidated financial statements
of Holdings for each such period, audited by independent certified public
accountants acceptable to Lender. Such financial statements shall include a
balance sheet and profit and loss statement and statements of cash flows, if
available, and the accountants' management letter, if any, and shall be prepared
in accordance with GAAP. To extent the financial statements of Borrower are
prepared on a consolidated basis, such financial statements shall include
consolidating/combining schedules, as applicable. Together with the above,
Borrower shall also deliver Holding's Form 10-Qs, 10-Ks or 8-Ks, as soon as the
same become available, and any other report reasonably requested by Lender
relating to the Collateral and the financial condition of Borrower, together
with a certificate, substantially in the form of Exhibit 6.4, signed by
Borrower's chief financial officer to the effect that (a) all reports,
statements or computer prepared information of any kind or nature delivered or
caused to be delivered to Lender under this Section 6.4 fairly present
Borrower's financial condition and (b) there exists on the date of delivery of
such certificate to Lender no condition or event which constitutes an Event of
Default, and, among other things, certifying as to compliance with Sections 7.8
and 7.10.

 

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6.5     Tax Returns, Receipts. Borrower shall deliver to Lender copies of each
of its federal income tax returns (including all schedules thereto), and any
amendments thereto, within thirty (30) days of the filing thereof. Borrower
further shall promptly deliver to Lender, upon request, satisfactory evidence of
Borrower's payment of all withholding and other taxes required to be paid by
Borrower.

 

6.6     Guarantor Reports. Borrower will cause Holdings to deliver to Lender
copies of all federal and state income tax returns (including all schedules
thereto) as soon as the same are available and in any event no later than thirty
(30) days after the same are required to be filed by law.

 

6.7     Title to Equipment. Upon Lender's request, Borrower shall immediately
deliver to Lender any and all evidence of ownership of, certificates of title,
or applications for title to any items of Equipment, properly endorsed to
Lender, as applicable.

 

6.8     Maintenance of Equipment. Borrower shall keep and maintain the Equipment
in good operating condition and repair, and shall make all necessary
replacements thereto so that the value and operating efficiency of its Equipment
shall at all times be maintained and preserved. Borrower shall not permit any
item of Equipment to become a fixture to real estate or an accession to other
property. The Equipment is now and shall at all times remain Borrower's personal
property.

 

6.9     Taxes. All federal, state and local assessments and taxes, whether real,
personal or otherwise, due or payable by, or imposed, levied or assessed against
Borrower or any of its assets or in connection with Borrower's business shall
hereafter be paid in full, before the same become delinquent or before the
expiration of any extension period. Borrower shall make due and timely payment
or deposit of all federal, state and local taxes, assessments or contributions
required of it by law, and will execute and deliver to Lender, on demand,
appropriate certificates attesting to the payment or deposit thereof.

 

6.10     Insurance. Borrower, at its expense, shall keep and maintain insurance
to protect the Collateral against all risk of loss covered under a Special
property form. If any of the tangible Collateral is located in a flood zone,
Borrower must also have flood insurance. The coverage shall be written on a
replacement cost basis. The property limit(s) shall be no less than those
necessary to satisfy the coinsurance requirement contained in the insurance
policy. Borrower, at its expense, shall keep and maintain Business Income
Coverage. Business Income Coverage shall insure against loss covered under a
Special policy form. The limit must contemplate a benefit period of no less than
twelve (12) months and meet the minimum limit needed to satisfy the coinsurance
requirement contained in the policy. Business Income coverage can be written on
an agreed amount basis, or with a coinsurance percentage from 80% to 100%. All
policies of insurance covering business personal property and business income
shall contain a Lender's Loss Payable endorsement in a form satisfactory to
Lender. All policies insuring real property on which Lender has a mortgage or
other lien shall contain a Mortgagee endorsement in form satisfactory to Lender.
Either or both form(s) shall contain a waiver of warranties. All proceeds
payable under such policies shall be payable to Lender and applied to the
Obligations. Borrower shall cause to be delivered to Lender a properly executed
Evidence of Property Insurance form along with a copy of the Lender's Loss
Payable and/or Mortgagee endorsement(s) as applicable, in advance of the closing
date for the credit facilities hereunder and thereafter at least thirty (30)
days prior to the expiration date(s) of the policy(ies). All Mortgagee and
Lender's Loss Payable endorsements shall contain the following address for
notification purposes, or such other address as Lender may, from time to time,
notify Borrower:

 

North Mill Capital LLC

821 Alexander Road, Suite 130

Princeton, New Jersey 08540

Attention: Thomas G. Siska, Senior Vice President

 

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Borrower, at its expense, shall keep and maintain Commercial General Liability
Coverage insuring against all risks relating to or arising from Borrower's
ownership and use of the Collateral and its other assets, products and
operations. Lender and its directors, officers and employees shall be named as
additional insureds for Commercial General Liability on Borrower's policy.
Borrower shall cause to be delivered to Lender a properly executed Certificate
of Insurance, containing the required additional insured wording, before the
closing date for the credit facilities hereunder and thereafter at least thirty
(30) days prior the expiration date of the policy. Along with the Certificate of
Insurance, Borrower shall also deliver a copy of the General Liability
endorsement whereby Lender and its directors, officers and employees are added
to the policy as additional insureds.

 

All required policies shall be in such form, with such companies and in such
amounts as may be satisfactory to Lender. All policies shall contain a thirty
(30) day notice for cancellation or non-renewal. Lender reserves the right to
change insurance specifications at any time.

 

6.11     Lender Expenses. Borrower shall immediately, and without demand,
reimburse Lender for all Lender Expenses, and Borrower hereby authorizes the
payment of such Lender Expenses.

 

6.12     Compliance With Law. Borrower shall comply, in all material respects,
with the requirements of all applicable laws, rules, regulations and orders of
governmental authorities relating to Borrower and the conduct of its business.

 

6.13     Accounting System. Borrower shall at all times hereafter maintain a
standard and modern system of accounting in accordance with GAAP with ledger and
account cards or computer tapes, disks, printouts and records pertaining to the
Collateral containing such information as may from time to time be requested by
Lender.

 

7.     NEGATIVE COVENANTS

 

Borrower covenants and acknowledges to Lender that throughout the Term, Borrower
shall not undertake any of the following:

 

7.1     Extraordinary Transactions and Disposal of Assets. (a) Enter into any
transaction not in the ordinary and usual course of its business as conducted on
the date hereof, including, but not limited to, the sale, lease, disposal,
movement, relocation or transfer, whether by sale or otherwise, of any its
assets, other than sales of Inventory in the ordinary and usual course of its
business as presently conducted; (b) incur (i) any indebtedness for borrowed
money, including, without limitation, merchant advances, or purchase money
indebtedness, or (ii) any other indebtedness outside the ordinary and usual
course of its business as conducted on the date hereof, except for renewals or
extensions of existing indebtedness permitted by Lender; (c) make any advance or
loan to any third party; or (d) grant a lien on any of its assets except (i) in
favor of Lender or (ii) the continuing liens and security interests, if any, set
forth on Schedule 5.1.

 

7.2     Change Name, etc. Change its name, business structure, jurisdiction of
incorporation or formation, as applicable, or identity, or add any new
fictitious name.

 

7.3     Merge, Acquire. Merge, acquire, or consolidate with or into any other
business organization.

 

7.4     Guaranty. Guaranty or otherwise become in any way liable with respect to
the obligations of any third party, except by endorsement of instruments or
items of payment for deposit to the account of Borrower for negotiation and
delivery to Lender.

 

7.5     Restructure. Make any change in its financial structure or business
operations.

 

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7.6     Prepayments. Prepay any existing indebtedness owing to any third party
other than trade payables.

 

7.7     Change of Ownership. Cause, permit or suffer any change, direct or
indirect, in the ownership of the capital stock or other equity interest of
Borrower or any entity that directly or indirectly owns the capital stock or
equity interest in Borrower or its parent entity(ies), or enter into any
agreement with any person or entity that provides for a payment to such person
or entity based upon the income of Borrower.

 

7.8     Compensation. Pay total compensation, including salaries, withdrawals,
fees, bonuses, commissions, drawing accounts, management fees or other payments,
whether direct or indirect, in money or otherwise, during any fiscal year to its
executives, officers, shareholders, affiliates and directors in an aggregate
amount in excess of one hundred ten percent (110%) of the total compensation
paid in the prior fiscal year. Except as otherwise specifically set forth in
Section 4(A) of the Debt Subordination Agreement of even date herewith, any
pre-existing, fully executed and executory employment, compensation and merger
related agreements (collectively, the Compensation Agreements) with any of the
individuals identified in the previously sentence in this Section 7.8 shall not
be affected by the terms of this Section 7.8 nor shall the sums to be paid under
the Compensation Agreements be part of the compensation, limitation cap
contained in this Section 7.8.

 

7.9     Loans and Advances. Make any loans, advances or extensions of credit to
any officer, director, executive employee or shareholder of Borrower (or any
relative of any of the foregoing), or to any entity which is a subsidiary of,
related to, affiliated with, or has common shareholders, officers or directors
with, Borrower.

 

7.10     Capital Expenditures. Make any plant or fixed capital expenditure, or
any commitment therefor, or purchase or lease any real or personal assets or
replacement Equipment in excess of Fifty Thousand Dollars ($50,000) for any
individual transaction or where the aggregate amount of such transactions in any
fiscal year exceeds One Hundred Thousand Dollars ($100,000).

 

7.11     Consignments of Inventory. Consign any Inventory to any third party or
obtain any Inventory on a consignment basis from any third party.

 

7.12     Dividends or Distributions. Make any dividends or distribution to
Holdings so as to permit Holdings to make payments on the subordinated loan from
Anthony R. Tomasello to Holdings in contravention of the debt subordination
agreement between Anthony R. Tomasello and Lender.

 

7.13     Accounting Methods. Modify or change its method of accounting, or enter
into, modify or terminate any agreement presently existing or at any time
hereafter entered into with any third party for the preparation or storage of
Borrower's records of Accounts and financial condition without such third
party's agreeing to provide Lender with information regarding the Collateral or
Borrower's financial condition. Borrower waives the right to assert a
confidential relationship, if any, it may have with any such third party in
connection with any information requested by Lender hereunder and agrees that
Lender may contact any such third party directly in order to obtain such
information.

 

7.14     Business Suspension. Suspend or go out of business.

 

8.     EVENTS OF DEFAULT

 

The occurrence of any one or more of the following events shall constitute an
Event of Default by Borrower hereunder:

 

8.1     Failure to Pay. Borrower's failure to pay when due and payable, or when
declared due and payable, any portion of the Obligations (whether principal,
interest, taxes, Lender Expenses, or otherwise);

 

8.2     Failure to Perform. Borrower's or any Guarantor's failure to perform,
keep or observe any term, provision, condition, representation, warranty,
covenant or agreement contained in this Agreement, in any of the Loan Documents
or in any other present or future agreement between Borrower and/or any
Guarantor and Lender;

 

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8.3     Misrepresentation. Any misstatement or misrepresentation now or
hereafter exists in any warranty, representation, statement, aging or report
made to Lender by Borrower and/or any Guarantor or any officer, employee, agent
or director thereof, or if any such warranty, representation, statement, aging
or report is withdrawn by such person;

 

8.4     Material Adverse Change. There is a material adverse change in
Borrower's or any Guarantor's business or financial condition;

 

8.5     Material Impairment. There is a material impairment of the prospect of
repayment of the Obligations or a material impairment of Lender's continuing
security interests in the Collateral;

 

8.6     Levy or Attachment. Any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant or is levied upon, or
comes into the possession of any judicial officer or assignee;

 

8.7     Insolvency by Borrower or Guarantor. An Insolvency Proceeding is
commenced by Borrower or by any Guarantor;

 

8.8     Insolvency Against Borrower or Guarantor. An Insolvency Proceeding is
commenced against Borrower or any Guarantor;

 

8.9     Injunction Against Borrower. Borrower is enjoined, restrained or in any
way prevented by court order from continuing to conduct all or any material part
of its business;

 

8.10     Government Lien. A notice of lien, levy or assessment is filed of
record with respect to any of Borrower's or any Guarantor's assets by the United
States Government or any department, agency or instrumentality thereof, or by
any state, county, municipal or other governmental agency, or any taxes or debts
owing at any time hereafter to any one or more of such entities becomes a lien,
whether inchoate or otherwise, upon Borrower's or any Guarantor's assets and the
same is not paid on the payment date thereof, unless Borrower or Guarantor
contests any such lien, levy or assessment and thereafter appeals from any
determination in good faith and diligently and continuously pursues either to
conclusion, in which event these shall not constitute an Event of Default
provided that during any such contests no government lien shall exist which
would have priority over the lien of Lender on the assets of Borrower, or if any
such priority lien exists, the amount owing covered by said lien shall be
reserved against the amount otherwise available for Advances under the Revolving
Credit Facility;

 

8.11     Judgment. A judgment is entered against Borrower or any Guarantor
unless the judgment is appealed in good faith which is diligently and
continuously pursued until conclusion in which event shall not constitute an
Event of Default, provided that during the time of appeal no judgment lien shall
exist which would have priority over the lien of Lender on the assets of
Borrower, or if any such priority lien exists, the amount owing covered by said
lien shall be reserved against the amount otherwise available for Advances under
the Revolving Credit Facility ;

 

8.12     Default to Third Party. There is a default in any material agreement to
which Borrower or any Guarantor is a party or which binds Borrower or any
Guarantor or any of their respective assets;

 

8.13     Subordinated Debt Payments. Borrower or any Guarantor makes any payment
on account of indebtedness which has now or hereafter been subordinated to the
Obligations, except to the extent such payment is allowed under any
subordination agreement entered into with Lender;

 

8.14     Death of Guarantor; Termination of Guaranty. Any Guarantor dies or
terminates its guaranty;

 

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8.15     Change in Management. If Anthony R. Tomasello or Renee M. Zimmerman
ceases to be actively engaged in the management of Borrower;

 

8.16     ERISA Violation. A prohibited transaction shall occur with respect to a
Plan which could have a material adverse effect on the financial condition of
Borrower; any lien upon the assets of Borrower in connection with any Plan shall
arise; Borrower or any ERISA Affiliate shall completely or partially withdraw
from a Multiemployer Plan and such withdrawal could, in the opinion of Lender,
have a material adverse effect on the financial condition of Borrower; Borrower
or any of its ERISA Affiliates shall fail to make full payment when due of all
amounts which Borrower or any of its ERISA Affiliates may be required to pay to
any Plan or any Multiemployer Plan as one or more contributions thereto;
Borrower or any of its ERISA Affiliates creates or permits the creation of any
accumulated funding deficiency, whether or not waived; the voluntary or
involuntary termination of any Plan which termination could, in the opinion of
Lender, have a material adverse effect on the financial condition of Borrower;
or Borrower shall fail to notify Lender promptly, and in any event within ten
(10) days, of the occurrence of an event which constitutes an Event of Default
under this Section 8.16 or would constitute an Event of Default upon the
exercise of Lender's judgment;

 

8.17     Loss of License, etc. If any license, permit, distributor, franchise or
similar agreement necessary for the continued operation of Borrower's business
in the ordinary course is revoked, suspended or terminated, including, without
limitation, any all applicable licenses to operate in the gaming industry,
specifically to sell and service gaming parts and equipment.

 

8.18     Other Agreements with Lender. A default under any other obligation by
or of Borrower or any Guarantor in favor of Lender, including any obligation
under any instrument securing or evidencing such obligation, whether or not such
obligation is otherwise secured, which default is not cured within any
applicable grace or cure period.

 

Notwithstanding anything contained in this Agreement to the contrary, Lender
shall refrain from exercising its rights and remedies and an Event of Default
shall not be deemed to have occurred by reason of the occurrence of any of the
events set forth in Sections 8.6 or 8.8 hereof if, within ten (10) days from the
date thereof, the same is released, discharged, dismissed, bonded against or
satisfied; provided, however, Lender shall not be obligated to make Advances to
Borrower during any such period.

 

9.     LENDER'S RIGHTS AND REMEDIES

 

9.1     Rights and Remedies. Upon the occurrence of an Event of Default, Lender
may, at its election, without notice of such election and without demand, do any
one or more of the following:

 

(a)     Declare all Obligations, whether evidenced by the Loan Documents or
otherwise, immediately due and payable in full;

 

(b)     Cease advancing money or extending credit to or for the benefit of
Borrower under the Loan Documents or under any other agreement between Borrower
and Lender;

 

(c)     Terminate this Agreement as to any future liability or obligation of
Lender, but without affecting Lender's rights and security interest in the
Collateral and without affecting the Obligations;

 

(d)     Settle or adjust disputes and claims directly with Account debtors for
amounts and upon terms which Lender considers advisable and, in such cases,
Lender will credit the Obligations with the net amounts received by Lender in
payment of such disputed Accounts, after deducting all Lender Expenses;

 

(e)     Cause Borrower to hold all returned Inventory in trust for Lender,
segregate all returned Inventory from all other property of Borrower or in
Borrower's possession and conspicuously label said returned Inventory as the
property of Lender;

 

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(f)     Without notice to or demand upon Borrower or any Guarantor, make such
payments and do such acts as Lender considers necessary, desirable or reasonable
to protect its security interest in the Collateral. Borrower shall assemble the
Collateral if Lender so requires and deliver or make the Collateral available to
Lender at a place designated by Lender. Borrower authorizes Lender to enter any
premises where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest or compromise any
encumbrance, charge or lien on the Collateral which in Lender's determination
appears to be prior or superior to its security interest or lien, and to pay all
expenses incurred in connection therewith;

 

(g)     Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, lease, license or other disposition, advertise for sale, lease, license or
other disposition, and sell, lease, license or otherwise dispose (in the manner
provided for herein or in the Code) the Collateral. Lender is hereby granted a
license or other right to use, without charge, Borrower's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any asset of a similar nature,
pertaining to the Collateral, in completing the production of, advertising for
sale, lease, license or other disposition, and sale, lease, license or other
disposition of the Collateral. Borrower's rights under all licenses and all
franchise agreements shall inure to Lender's benefit; and/or

 

(h)     Sell, lease, license or otherwise dispose of the Collateral at either a
public or private proceeding, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
Borrower's premises) as Lender determines is commercially reasonable. It is not
necessary that the Collateral be present at any such sale. Lender shall give
notice of the disposition of the Collateral as follows:

 

(i)     to Borrower and all other parties entitled to receive a notice of
disposition under the Code, a notice in writing of the time and place of the
public sale or other disposition, or if the sale or other disposition is a
private sale or some other disposition other than a public sale, a notice in
writing of the time on or after which the private sale or other disposition is
to be made; and

 

(ii)     the notice hereunder shall be personally delivered or mailed, postage
prepaid, to Borrower as provided in Section 12, at least ten (10) calendar days
before the date fixed for the sale or other disposition, or at least ten (10)
calendar days before the date on or after which the private sale or other
disposition is to be made, unless the Collateral is perishable or threatens to
decline speedily in value. Notice to persons other than Borrower claiming an
interest in the Collateral shall be sent to such addresses as is required or
authorized under the Code.

 

Lender may credit bid and purchase at any public sale and, if permitted by
applicable law, at any private sale, and any deficiency that exists after
disposition of the Collateral as provided herein, shall be immediately paid by
Borrower. Any excess will be remitted without interest by Lender to the party or
parties legally entitled to such excess.

 

In addition to the foregoing, Lender shall have all rights and remedies provided
by law (including those set forth in the Code) and at equity, and any rights and
remedies contained in any Loan Documents and all such rights and remedies shall
be cumulative.

 

9.2     No Waiver. No delay on the part of Lender in exercising any right, power
or privilege under any Loan Document shall operate as a waiver of the terms and
conditions hereof, nor shall any single or partial exercise of any right, power
or privilege under such Loan Documents or otherwise, preclude any other or
further exercise of any such right, power or privilege.

 

9.3     Waivers. If Lender seeks to take possession of any of the Collateral by
court process, Borrower hereby irrevocably waives: (a) any bond and any surety
or security relating thereto required by any statute, court rule or otherwise as
an incident to such possession; (b) any demand for possession prior to the
commencement of any suit or action to recover possession thereof; and (c) any
requirement that Lender retain possession of, and not dispose of, any such
Collateral until after trial or final judgment.

 

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9.4     Commercially Reasonable Sale. Borrower and Lender agree that a sale or
other disposition of any Collateral which complies with the following standards
will conclusively be deemed to be commercially reasonable (but nothing herein
implies that other methods or manners of sale are not commercially reasonable):
(a) notice of the sale is given to Borrower at least (10) ten days prior to the
sale, and, in the case of a public sale, notice of the sale is published at
least seven (7) days before the sale in a newspaper of general circulation in
the county where the sale is to be conducted; (b) notice of the sale describes
the Collateral in general, non-specific terms; (c) the sale is conducted at a
place designated by Lender, with or without the Collateral being present; (d)
the sale commences at any time between 8:00 a.m. and 6:00 p.m.; (e) payment of
the purchase price in cash or by cashier's check or wire transfer is required;
and (f) with respect to any sale of any of the Collateral, Lender may (but is
not obligated to) direct any prospective purchaser to ascertain directly from
Borrower any and all information concerning the Collateral. Lender shall be free
to employ other methods of noticing and selling the Collateral, in its
discretion, if they are commercially reasonable.

 

10.     TAXES AND EXPENSES REGARDING THE COLLATERAL. If Borrower fails to pay
any monies (whether taxes, assessments, insurance premiums or otherwise) due to
third persons or entities, fails to make any deposits or furnish any required
proof of payment or deposit or fails to perform any of Borrower's other
covenants under any of the Loan Documents, then in its discretion and without
prior notice to Borrower, Lender may do any or all of the following: (a) make
any payment which Borrower has failed to pay or any part thereof; (b) set up
such reserves in Borrower's loan account as Lender deems necessary to protect
Lender from the exposure created by such failure; (c) obtain and maintain
insurance policies of the type described in Section 6.10 and take any action
with respect to such policies as Lender deems prudent; or (d) take any other
action deemed necessary to preserve and protect its interests and rights under
the Loan Documents. Any payments made by Lender shall not constitute: (i) an
agreement by Lender to make similar payments in the future or (ii) a waiver by
Lender of any Event of Default. Lender need not inquire as to, or contest the
validity of, any such expense, tax, security interest, encumbrance or lien, and
the receipt of notice for the payment thereof shall be conclusive evidence that
the same was validly due and owing.

 

11.     WAIVERS

 

11.1     Demand, Protest. Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, notice of any
default, notice of intention to accelerate, notice of acceleration, and notice
of nonpayment at maturity and acknowledges that Lender may compromise, settle or
release, without notice to Borrower, any Collateral and/or guaranties at any
time held by Lender. Borrower hereby consents to any extensions of time of
payment or partial payment at, before or after the Termination Date.

 

11.2     No Marshaling. Borrower, on its own behalf and on behalf of its
successors and assigns, hereby expressly waives all rights, if any, to require a
marshaling of assets by Lender or to require that Lender first resort to some
portion(s) of the Collateral before foreclosing upon, selling or otherwise
realizing on any other portion thereof.

 

11.3     Lender's Non-Liability for Inventory or Equipment or for Protection of
Rights. So long as Lender complies with its obligations, if any, under Section
9-207 of the Code, Lender shall not in any way or manner be liable or
responsible for: (a) the safekeeping of the Inventory or Equipment; (b) any loss
or damage thereto occurring or arising in any manner or fashion from any cause;
(c) any diminution in the value thereof; or (d) any act or default of any
carrier, warehouseman, bailee, forwarding agency or other person whomsoever. All
risk of loss, damage or destruction of the Inventory or Equipment shall be borne
by Borrower. Lender shall have no obligation to protect any rights of Borrower
against any person obligated on any Collateral.

 

11.4     Limitation of Damages. In any action or other proceeding against Lender
under this Agreement or relating to the transactions between Lender and
Borrower, Borrower waives the right to seek any consequential or punitive
damages.

 

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12.     NOTICES. Unless otherwise provided herein, all consents, waivers,
notices or demands by any party relating to the Loan Documents shall be in
writing and (except for financial statements and other informational documents
which may be sent by first-class mail, postage prepaid) shall be telecopied/sent
by facsimile transmission or other electronic transmission .pdf (followed up by
a mailing or overnight delivery), personally delivered or sent by registered or
certified mail, postage prepaid, return receipt requested, or by receipted
overnight delivery service to Borrower or to Lender, as the case may be, at
their addresses set forth below

 

If to Borrower:

American Gaming & Electronics, Inc.

223 Pratt Street

Hammonton, New Jersey 08037
Attn:       Anthony R. Tomasello, President and CEO
Fax #:      (609) 704-9685
        If to Lender:

North Mill Capital LLC

821 Alexander Road, Suite 130
Princeton, New Jersey 08540
Attn:       Thomas G. Siska, Senior Vice President
Fax #       (609) 919-0677

 

Any party may change the address at which it is to receive notices hereunder by
notice in writing in the foregoing manner given to the other. All notices or
demands sent in accordance with this Section 12 shall be deemed received on the
earlier of the date of actual receipt or five (5) calendar days after the
deposit thereof in the mail or on the date telecommunicated if telecopied.

 

13.     DESTRUCTION OF BORROWER'S DOCUMENTS. All documents, schedules, invoices,
agings or other papers delivered to Lender may be destroyed or otherwise
disposed of by Lender four (4) months after they are delivered to or received by
Lender, unless Borrower requests in writing the return of the said documents,
schedules, invoices or other papers and makes arrangements, at Borrower's
expense, for their return.

 

14.     GENERAL PROVISIONS

 

14.1     Effectiveness. This Agreement shall be binding and deemed effective
when executed by Lender.

 

14.2     Successors and Assigns; Assignments and Participations; Third Party
Beneficiaries. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
Borrower may not assign this Agreement or any rights hereunder, and any such
prohibited assignment shall be absolutely void. No consent to an assignment by
Lender shall release Borrower from its Obligations. Without notice to or the
consent of Borrower, Lender may assign this Agreement and its rights and duties
hereunder, and Lender reserves the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in Lender's rights
and benefits hereunder. In connection therewith, Lender may disclose all
documents and information which Lender now or hereafter may have relating to
Borrower or Borrower's business. Borrower and Lender do not intend any of the
benefits of the Loan Documents to inure to any third party, and no third party
shall be a third party beneficiary hereof or thereof.

 

14.3     Section Headings. Article, Section and Exhibit headings and numbers
thereof have been set forth herein for convenience only.

 

14.4     Interpretation. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against Lender or Borrower, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by each party and shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the purposes and
intentions of the parties hereto.

 

14.5     Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of such provision.

 

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14.6     Amendments in Writing. This Agreement cannot be changed or terminated
orally. This Agreement supersedes all prior agreements, understandings and
negotiations, if any, all of which are merged into this Agreement. THIS
AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND THEREIN,
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.

 

14.7     Counterparts and Facsimile Signatures. This Agreement may be executed
in any number of counterparts, each of which, when executed and delivered, shall
be deemed to be an original and all of which, when taken together, shall
constitute one and the same Agreement. Any signature to a Loan Document
delivered by a party via telecopy/facsimile transmission or other electronic
means shall be deemed to be an original signature.

 

14.8     Indemnification. Borrower hereby indemnifies, protects, defends and
saves harmless Lender and any member, officer, director, investor, bank group
member, official, agent, employee and attorney of Lender, and their respective
heirs, successors and assigns (collectively, the Indemnified Parties), from and
against any and all losses, damages, expenses or liabilities of any kind or
nature and from any suits, claims or demands, including reasonable counsel fees
incurred in investigating or defending such claim, suffered by any of them and
caused by, relating to, arising out of, resulting from, or in any way connected
with the Loan Documents and the transactions contemplated therein or the
Collateral (unless caused by the gross negligence or willful misconduct of the
Indemnified Parties) including, without limitation: (a) losses, damages,
expenses or liabilities sustained by Lender in connection with any environmental
cleanup or other remedy required or mandated by any Environmental Law; (b) any
known, untrue statement of a material fact contained in information submitted to
Lender by Borrower or any Guarantor or any known omission of any material fact
necessary to be stated therein in order to make such statement not misleading or
incomplete; (c) the willful failure of Borrower or any Guarantor to perform any
obligations required to be performed by Borrower or any Guarantor under the Loan
Documents; and (d) the ownership, construction, occupancy, operations, use and
maintenance of any of Borrower's or any Guarantor's assets. The provisions of
this Section 14.8 shall survive termination of this Agreement and the other Loan
Documents.

 

14.9.     Joint and Several Obligations; Dealings with Multiple Borrowers. If
more than one person or entity is named as Borrower hereunder, all Obligations,
representations, warranties, covenants and indemnities set forth in the Loan
Documents to which such person or entity is a party shall be joint and several.
Lender shall have the right to deal with any Authorized Officer of any Borrower
with regard to all matters concerning the rights and obligations of Lender and
Borrower hereunder and pursuant to applicable law with regard to the
transactions contemplated under the Loan Documents. All actions or inactions of
the officers, managers, members and/or agents of any Borrower with regard to the
transactions contemplated under the Loan Documents shall be deemed with full
authority and binding upon all Borrowers hereunder. Each Borrower hereby
appoints each other Borrower as its true and lawful attorney-in-fact, with full
right and power, for purposes of exercising all rights of such person hereunder
and under applicable law with regard to the transactions contemplated under the
Loan Documents. The foregoing is a material inducement to the agreement of
Lender to enter into this Agreement and to consummate the transactions
contemplated hereby. Each Borrower represents that it and each other Borrower,
together, are operated as part of one consolidated business entity and are
directly dependent upon each other for and in connection with each of their
respective business activities and financial resources. Each Borrower will
receive a direct economic and financial benefit from the Obligations incurred
under this Agreement and the incurrence of such Obligations is in the best
interests of each Borrower.

 

14.10.     Setoff. Borrower hereby grants to Lender a lien, security interest
and right of setoff as security for all Obligations to Lender upon and against
all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Lender, or any entity under the
control of Lender, or its parent entity(ies), or in transit to any of them. At
any time, without demand or notice, Lender may set off the same or any part
thereof and apply the same to the Obligations of Borrower, even though unmatured
and regardless of the adequacy of any other collateral securing the Obligations.
ANY AND ALL RIGHTS TO REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHTS OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.

 

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15.     CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER. THE VALIDITY OF THE LOAN
DOCUMENTS, THEIR CONSTRUCTION, INTERPRETATION AND ENFORCEMENT AND THE RIGHTS OF
THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW JERSEY, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. THE PARTIES HERETO AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THE LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE COURTS LOCATED IN THE COUNTY OF MERCER, STATE OF NEW
JERSEY, THE FEDERAL COURTS WHOSE VENUE INCLUDES THE STATE OF NEW JERSEY, OR AT
THE SOLE OPTION OF Lender, IN ANY OTHER COURT IN WHICH Lender SHALL INITIATE
LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER
THE MATTER IN CONTROVERSY. BORROWER AND Lender EACH WAIVES, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY IN ANY PROCEEDING
UNDER THE LOAN DOCUMENTS OR RELATING TO THE DEALINGS OF BORROWER AND Lender AND
ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF "FORUM NON CONVENIENS" OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 15.

 

[SIGNATURES CONTINUED ON NEXT PAGE]

 

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Borrower and Lender have executed this Agreement and delivered this Agreement to
Lender at Lender's place of business in Princeton, New Jersey as of the date
first above written.

 

AMERICAN GAMING & ELECTRONICS, INC., a Nevada corporation

 

 

 

By:    /s/ Anthony R. Tomasello                               

Name:   Anthony R. Tomasello

Title:     President and CEO

 

 

NORTH MILL CAPITAL LLC,

a Delaware limited liability company

 

 

 

By:    /s/ Beatriz Hernandez                                      

Name:   Beatriz Hernandez

Title:     Executive Vice President

 

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