THIRD Amendment to
Loan and security agreement

 

This THIRD AMENDMENT TO Loan and security agreement (this “Amendment”), dated as
of February 28, 2017, is entered into by and between EAST WEST BANK, a
California banking corporation (“Bank”), and NTN BUZZTIME, INC., a Delaware
corporation (“Borrower”), with reference to the following facts.

 

RECITALS

 

A. Borrower and Bank are parties to that certain Loan and Security Agreement
dated as of April 14, 2015, as amended by that certain First Amendment to Loan
and Security Agreement and Waiver, dated as of March 10, 2016, and as amended by
that certain Second Amendment to Loan and Security Agreement dated as of
December 30, 2016 (as the same may from time to time be further amended,
restated, supplemented, or otherwise modified, the “Loan Agreement”).

 

B. Borrower has requested that Bank make certain revisions to the Loan Agreement
as more fully set forth herein.

 

C. Bank has agreed to so amend the Loan Agreement, but only to the extent, in
accordance with the terms, subject to the conditions and in reliance upon the
representations and warranties set forth below.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

 

1. Definitions. Capitalized terms used but not defined in this Amendment shall
have the meanings given to them in the Loan Agreement.

 

2. Amendments to Loan Agreement.

 

2.1 Section 2.2(a) of the Loan Agreement is hereby deleted and replaced in its
entirety, as follows:

 

(a) Interest Rates. Except as set forth in Section 2.2(b), all Advances shall
bear interest, on the outstanding daily balance thereof, at Borrower’s option,
either (i) on or before the Non-Formula Sublimit Maturity Date (A) if such
Advance is a Prime Rate Loan, at a variable rate per annum equal to the Prime
Rate plus 3.25% or (B) if such Advance is a LIBOR Loan, at a fixed rate per
annum equal to the LIBOR-Based Rate for the Interest Period applicable to such
Advance plus 6.00% and (ii) at all times after the earlier of the (x)
Non-Formula Sublimit Maturity Date or (y) pay off in full in cash of the
Non-Formula Sublimit Amount, (A) if such Advance is a Prime Rate Loan, at a
variable rate per annum equal to the Prime Rate plus 1.75% or (B) if such
Advance is a LIBOR Loan, at a fixed rate per annum equal to the LIBOR-Based Rate
for the Interest Period applicable to such Advance plus 4.50%.

 

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2.2 Section 6.7(a) of the Loan Agreement is hereby deleted and replaced in its
entirety, as follows:

 

(a) Adjusted EBITDA. Borrower shall achieve Adjusted EBITDA for each period
noted below of not less than the applicable amount set forth below for such
fiscal quarter:

 

Three Month Period Ending   Minimum Adjusted EBITDA March 31, 2017   ($900,000)
June 30, 2017   ($650,000) September 30, 2017   $0 December 31, 2017  
$1,000,000

 

2.3 Section 6.7(b) of the Loan Agreement is hereby deleted and replaced in its
entirety, as follows:

 

(b) Churn Rate. Borrower shall achieve a Churn Rate for each trailing three
month period (calculated on a rolling basis) during the term of this Agreement
of not less than -2%.

 

2.4 Section 6.7(c) of the Loan Agreement is hereby deleted and replaced in its
entirety, as follows:

 

(c) Minimum Cash Amount. Borrower shall, on June 15, 2017, or at any time prior
to June 15, 2017 if the Non-Formula Sublimit has been paid off, maintain a
balance on deposit in deposit accounts with Bank at least equal to100% of the
aggregate outstanding principal amount of the Advances at such time made under
Section 2.1(b). For purposes of clarity, this is a one-time deposit balance
test.

 

2.5 The definition of “Non-Formula Sublimit Maturity Date” in Exhibit A to the
Loan Agreement is hereby deleted and replaced in its entirety, as follows:

 

“Non-Formula Sublimit Maturity Date” means June 15, 2017.

 

2.6 Exhibit E to the Loan Agreement is hereby deleted and replaced in its
entirety with Annex A attached to this Amendment.

 

3. Limitation of Amendments.

 

3.1 The amendments set forth in Section 2 above are effective for the purposes
set forth herein and shall be limited precisely as written and shall not be
deemed to (a) be a consent to any amendment, waiver or modification of any other
term or condition of any Loan Document, or (b) otherwise prejudice any right or
remedy which Bank may now have or may have in the future under or in connection
with any Loan Document.

 

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3.2 This Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants and
agreements set forth in the Loan Documents, except as herein amended, are hereby
ratified and confirmed and shall remain in full force and effect.

 

4. Representations and Warranties. To induce Bank to enter into this Amendment,
Borrower hereby represents and warrants to Bank as follows:

 

4.1 Immediately after giving effect to this Amendment (a) the representations
and warranties contained in the Loan Documents to which it is a party are true,
accurate and complete in all material respects as of the date hereof (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct in all material respects as of such date);
provided that any representations and warranties subject to “materiality”,
“Material Adverse Effect” or similar materiality qualifiers shall be true and
correct in all respects as of the date hereof (or as of such earlier date, as
applicable), and (b) no Event of Default has occurred and is continuing;

 

4.2 Borrower has the power and authority to execute and deliver this Amendment
and to perform its obligations under the Loan Documents (as amended by this
Amendment) to which it is a party;

 

4.3 The organizational documents of Borrower delivered to Bank on the Closing
Date are true, accurate and complete and have not been amended, supplemented or
restated and are and continue to be in full force and effect;

 

4.4 The unanimous written consent adopted by the Board of Directors of the
Borrower and delivered to Bank on the Closing Date authorizing the execution,
delivery and performance of the Loan Documents has not in any way been amended,
modified, revoked or rescinded, and has been in full force and effect since its
adoption up to and including the date hereof and continues to be in full force
and effect.

 

4.5 The execution and delivery by Borrower of this Amendment and the performance
by Borrower of its obligations under the Loan Documents (as amended by this
Amendment) to which it is a party, have been duly authorized;

 

4.6 The execution and delivery by Borrower of this Amendment and the performance
by Borrower of its obligations under the Loan Documents (as amended by this
Amendment) to which it is a party do not and will not contravene (a) any law or
regulation binding on or affecting Borrower, (b) any contractual restriction
with a Person binding on Borrower, (c) any order, judgment or decree of any
court or other governmental or public body or authority, or subdivision thereof,
binding on Borrower, or (d) the organizational documents of Borrower, except for
any contraventions in the case of clauses (a), (b) or (c) as would not
reasonably be expected to have Material Adverse Effect;

 

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4.7 The execution and delivery by Borrower of this Amendment and the performance
by Borrower of its obligations under the Loan Documents (as amended by this
Amendment) to which it is a party do not require any order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with, or exemption by any governmental or public body or authority, or
subdivision thereof, binding on Borrower, except as already has been obtained or
made; and

 

4.8 This Amendment has been duly executed and delivered by Borrower and is the
binding obligation of Borrower, enforceable against Borrower in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium or other similar laws of
general application and equitable principles relating to or affecting creditors’
rights.

 

5. Effectiveness. This Amendment shall be deemed effective upon the satisfaction
of each of the following (in each case, in form and substance satisfactory to
Bank):

 

5.1 Bank shall have received this Amendment, duly executed by the parties
thereto; and

 

5.2 Bank shall have received payment from the Borrower of:

 

(a) a modification fee of $20,000, which fee shall be fully earned and
non-refundable as of the date hereof; and

 

(b) all actual and reasonable out of pocket costs and expenses of Bank in
connection with the preparation, execution and delivery of this Amendment,
including without limitation the reasonable fees and expenses of Bank’s legal
counsel.

 

6. General Release. In consideration of Bank’s willingness to enter into this
Amendment, Borrower hereby releases and forever discharges Bank and Bank’s
respective predecessors, successors, assigns, officers, managers, directors,
employees, agents, attorneys, representatives, and affiliates (hereinafter all
of the above collectively referred to as the “Bank Group”), from any and all
claims, counterclaims, demands, damages, debts, suits, liabilities, actions and
causes of action of any nature whatsoever, including, without limitation, all
claims, demands, and causes of action for contribution and indemnity, whether
arising at law or in equity, whether known or unknown, whether liability be
direct or indirect, liquidated or unliquidated, whether absolute or contingent,
foreseen or unforeseen, and whether or not heretofore asserted, which Borrower
may have or claim to have against any of the Bank Group in any way related to or
connected with the Loan Documents and the transactions contemplated thereby
occurring on or prior to the date hereof. Borrower further acknowledges that it
is familiar with Section 1542 of the California Civil Code, which provides:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

 

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Borrower waives and releases any rights or benefits that it may have under
Section 1542, or other similar provision, to the full extent that it may
lawfully waive such rights and benefits, and Borrower acknowledges that it
understands the significance and consequences of the waiver of the provisions of
Section 1542 and that it has been advised by its attorney as to the significance
and consequences of this waiver. Borrower understands, acknowledges and agrees
that the release set forth above may be pleaded as a full and complete defense
and may be used as a basis for an injunction against any action, suit or other
proceeding which may be instituted, prosecuted or attempted in breach of the
provisions of such release. Borrower agrees that no fact, event, circumstance,
evidence or transaction which could now be asserted or which may hereafter be
discovered shall affect in any manner the final, absolute and unconditional
nature of the release set forth above.

 

7. References to the Loan Agreement. The Loan Agreement, each of the other Loan
Documents, and any and all other agreements, documents or instruments now or
hereafter executed and delivered pursuant to the terms hereof, or pursuant to
the terms of the Loan Agreement as amended hereby, are hereby amended so that
any reference therein to the Loan Agreement shall mean a reference to the Loan
Agreement as amended by this Amendment.

 

8. Reaffirmation of Obligations. The Loan Agreement and the other Loan Documents
remain in full force and effect, and Borrower hereby ratifies the Loan
Documents, as amended by this Amendment, and acknowledges and reaffirms (a) that
it is bound by all terms of the Loan Documents (as amended by this Amendment) to
which it is a party and (b) that it is responsible for the observance and full
performance of its respective obligations thereunder. Borrower hereby confirms
that no Event of Default has occurred and is continuing.

 

9. Integration. This Amendment and the Loan Documents represent the entire
agreement about this subject matter and supersede prior negotiations or
agreements. All prior agreements, understandings, representations, warranties,
and negotiations between the parties about the subject matter of this Amendment
and the Loan Documents merge into this Amendment and the Loan Documents.

 

10. Severability. Any provision of this Amendment held by a court of competent
jurisdiction to be invalid or unenforceable shall not impair or invalidate the
remainder of this Amendment and the effect thereof shall be confined to the
provision so held to be invalid or unenforceable.

 

11. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of California applied to contracts to be
performed wholly within the State of California.

 

12. Headings. The headings, captions and arrangements used in this Amendment are
for convenience only and shall not affect the interpretation of this Amendment.

 

13. Counterparts. This Amendment may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.

 

14. NO ORAL AGREEMENTS. THIS AMENDMENT REPRESENTS THE FINAL AGREEMENT AMONG THE
PARTIES WITH REGARD TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

[Signature pages follow.]

 

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In Witness Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

 

  BANK:       EAST WEST BANK,   a California banking corporation         By: /s/
Eric Berlin   Name: Eric Berlin   Title: Vice President

 

Third Amendment to Loan and Security Agreement

 

   

 

 

  BORROWER:       NTN BUZZTIME, INC.,   a Delaware corporation         By: /s/
Allen Wolff   Name: Allen Wolff   Title: Chief Financial Officer

 

Third Amendment to Loan and Security Agreement

 

   

 

 

ANNEX A

 

EXHIBIT E TO

LOAN AND SECURITY AGREEMENT

 

COMPLIANCE CERTIFICATE

 

TO:        EAST WEST BANK

 

FROM: NTN BUZZTIME, INC.

 

The undersigned authorized officer of NTN Buzztime, Inc., a Delaware corporation
(Borrower”), for and on behalf of Borrower, hereby certifies that in accordance
with the terms and conditions of the Loan and Security Agreement dated as of
April 14, 2015 by and between Bank and Borrower (the “Agreement”), (i) Borrower
is in complete compliance for the period ending _______________ with all
required covenants except as noted below and (ii) except as noted below all
representations and warranties of Borrower stated in the Agreement are true and
correct in all material respects as of the date hereof except that those
representations and warranties referring to another date shall be true and
correct in all material respects on that other date. Attached hereto are the
required documents supporting the above certification. The summary descriptions
in the Reporting Covenants below are qualified by, and subject to, the terms of
the Agreement.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenant   Required   Complies             Annual audited consolidated
and consolidating financial statements and Compliance Certificate   FYE within
180 days   Yes No Monthly balance sheet , income statements and statements of
cash (Borrower prepared)   Monthly within 30 days after each month   Yes No
Recurring revenue report   Monthly within 30 days after each month   Yes No    
        Annual financial projections   Annually, within 45 days after the start
of each fiscal year   Yes No             Compliance Certificate   Monthly within
30 days after each month   Yes No            

Financial Covenants

  Required   Complies           Minimum Adjusted EBITDA   $_______1   Yes No
Churn Rate – trailing three month period   Not < -2%   Yes No Minimum Cash
Amount   $_______2   Yes No Minimum Liquidity   $2,000,000   Yes No

 

 

 

1 Insert applicable amount pursuant to Section 6.7(a).

2 Insert applicable amount pursuant to Section 6.7(c).

 

   

 

 

Comments Regarding Exceptions: See Attached.   BANK USE ONLY           Verified:
SIGNATURE     AUTHORIZED SIGNER           Date: TITLE             Compliance
Status Yes No       DATE