Document:

EX 10.1  Settlement Agreement

EXHIBIT 10.1

SETTLEMENT AGREEMENT

This SETTLEMENT AGREEMENT (this “Agreement”) is made and entered into as of July 28, 2014, by and among Affinity Gaming, a Nevada corporation (the “Company”), Z Capital Partners, L.L.C., a Delaware limited liability company (“Z Capital”), the Affiliates of Z Capital set forth on Exhibit A hereto (together with Z Capital, the “Z Capital Holders”), SPH Manager, LLC, a Delaware limited liability company (“SPH Manager”), and each of the entities listed under “Other Holders” on Exhibit A hereto (collectively, the “Other Holders”).  The Z Capital Holders, SPH Manager and the Other Holders are collectively referred to herein as the “Stockholders” and each individually as a “Stockholder.”  The Company and the Stockholders are sometimes collectively referred to herein as the “Parties” and each individually as a “Party.”  Capitalized terms used herein and not otherwise defined shall have the meanings set forth in Section 1.01.  

WHEREAS, certain of the Z Capital Holders, their Affiliates and the Company are parties to the Pending Litigation and wish to settle such Pending Litigation;

NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements of the Parties hereto, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

ARTICLE I
DEFINITIONS

Section 1.01    Definitions.  As used in this Agreement, the following terms shall have the meanings indicated below:

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person.  For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.  Notwithstanding the foregoing, no Stockholder shall be deemed to be an “Affiliate” of the Company solely by reason of having entered into this Agreement. 

“Agreement” has the meaning assigned in the preamble.

“Articles of Incorporation” means the Articles of Incorporation of the Company, dated December 20, 2012, as amended and/or restated from time to time.

“Beneficial Ownership” by a Person of any securities includes ownership by any Person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares (a) voting power which includes the power to vote, or to direct the voting of, such security; and/or (b) investment power which includes the power to dispose, or to direct the 

1

disposition, of such security, and shall otherwise be interpreted in accordance with the term “beneficial ownership” as defined in Rule 13d-3 adopted by the SEC under the Exchange Act (and the terms “Beneficially Own” and “Beneficial Owner” shall have a correlative meaning); provided, however, that for purposes of this Agreement no Stockholder shall be deemed to Beneficially Own the Common Stock of any other Stockholder solely by reason of having entered into this Agreement; and provided further that for purposes of calculating the percentage of Shares that are Beneficially Owned by a Stockholder hereunder at any time, only Shares outstanding at such time shall be included and any Share Equivalent that has not then been exercised, converted or exchanged shall be excluded, notwithstanding the beneficial ownership rules of Rule 13d-3 under the Exchange Act.

“Board” means the board of directors of the Company.

“Bylaws” means the Amended and Restated Bylaws of the Company, dated March 28, 2013, as amended and/or restated from time to time.

“Claims” has the meaning set forth in Section 3.01(b).

“Clark County District Court” means the Eighth Judicial District Court in and for Clark County, Nevada.

“Common Stock” means the common stock, par value $0.001 per share, of the Company.

“Company” has the meaning assigned in the recitals.

“Director” means any member of the Board.

“Eligible Designee” means any designee for Director who is capable of being elected to the Board without violation of, and who has complied with, any applicable Law or the requirements of any Governmental Authority. 

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

“Governmental Authority” means any federal, state, provincial, local or other court, governmental authority, tribunal, commission or regulatory body or self-regulatory body, including any securities exchange and any casino or gaming regulatory authority with jurisdiction over the Company or its activities, or any political or other subdivision, department, agency or branch of any of the foregoing.

“Independent Directors” has the meaning set forth in Section 2.01(b)(v). 

“Individual Defendants” means Don R. Kornstein, Thomas M. Benninger, Scott D. Henry, Michael Rumbolz, and David D. Ross, each of whom was named as a defendant in the Pending Litigation.

2

“Law” means any and all laws, rules, regulations, orders, judgments or decrees promulgated by any Governmental Authority.

“Necessary Action” means, with respect to a result and a Party, all actions (to the extent permitted by applicable Law) necessary to cause such result and within the control of such Party, including, without limitation and to the extent relevant, (a) voting or providing a written consent or proxy with respect to Shares, (b) calling and/or attending meetings in person or by proxy for purposes of obtaining a quorum and adopting or approving stockholders’ resolutions and amendments to the Articles of Incorporation or Bylaws, (c) causing Directors, to the extent such Directors were nominated or designated by the Person obligated to undertake the Necessary Action, and subject to any fiduciary duties that Directors may have, to act in a certain manner or causing them to be removed in the event they do not act in such a manner, (d) executing agreements and instruments, (e) making, or causing to be made, with any Governmental Authority, all filings, approvals, registrations or similar actions that are required to achieve such result, and (f) with respect to the Company only, appointing replacement directors designated or nominated by a Stockholder in accordance with this Agreement.

“Nevada Supreme Court” means the Supreme Court of the State of Nevada.

“Other Holders” has the meaning set forth in the Preamble. 

“Other Holders Minimum Ownership Condition” means, at any time, the Beneficial Ownership by the Other Holders in the aggregate of at least 3,643,787 Shares (as adjusted from time to time for any stock dividend, stock split, reverse stock split, stock combination, recapitalization, reclassification or any other similar transaction  that affects all stockholders or the holders of any class of Shares (as the case may be) proportionately).

“Parties” has the meaning set forth in the Preamble.

“Pending Litigation” means that certain action styled “Z Capital Partners, L.L.C., et al. v. Don R. Kornstein, et al.,” Case No. A-13-677739-B, pending in the Clark County District Court and that certain action styled “Don R. Kornstein, et al. v. Z Capital Partners, L.L.C.,” Case No. 63177, pending in the Nevada Supreme Court.

“Person” means any individual, firm, partnership, corporation, trust, joint venture, association, joint stock company, limited liability company, unincorporated organization or any other entity or organization, including a government or agency or political subdivision thereof, and shall include any successor (by merger or otherwise) of such entity.
“Preliminary Injunction” has the meaning set forth in Section 3.01(a).

“Regulatory Event” means, with respect to any Other Holder, (i) receipt by such Other Holder of notice from any casino or gaming regulatory authority with jurisdiction over any of the Company, its Affiliates or any of their respective operations that, as a result of such Other Holder being bound by this Agreement, such Other Holder is required to obtain a license, permit, 

3

approval, waiver or finding of suitability that such Other Holder does not already possess, (ii) such Other Holder shall have consulted with gaming counsel and such counsel shall have attempted and been unsuccessful in dissuading the applicable authority from such a view and (iii) such Other Holder shall have determined that it must invoke its rights under Section 5.11 in order to preserve its desired passive regulatory status.

“Releasees” has the meaning set forth in Section 3.01(b). 

“Releasors” has the meaning set forth in Section 3.01(b).

“Rights Agreement” means that certain Rights Agreement, dated effective December 21, 2012, between the Company and American Stock Transfer & Trust Company, LLC, as rights agent, as amended.

“SEC” means the Securities and Exchange Commission.

“Shares” means any and all shares of Common Stock and/or shares of capital stock of the Company, by whatever name called, that are entitled to vote generally in the election of Directors (including voting rights which arise by reason of default) and shall include any such shares now owned or subsequently acquired, however acquired, including, without limitation, through stock splits and as stock dividends.

“Share Equivalent” means any option, right, subscription, warrant, phantom stock right or other contract right to receive Shares or any bonds, notes, debentures or other securities of any kind whatsoever, that are, or may become, convertible into or exchangeable or exercisable for, Shares, in each case, that do not carry the right generally to vote in the election of Directors until such time as they are converted, exchanged or exercised, as the case may be. 

“SPH Manager” has the meaning set forth in the Preamble.

“Stockholder” has the meaning set forth in the Preamble.

“Z Capital” has the meaning set forth in the Preamble.

“Z Capital Holders” has the meaning set forth in the Preamble.  

“Z Capital VCOC” has the meaning set forth in Section 2.01(b)(ii).

Section 1.02    General Interpretive Principles.  Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders.  Unless otherwise specified, words such as “herein”, “hereof”, “hereby”, “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular Section or subsection of this Agreement, and references herein to “Articles” or “Sections” refer to Articles or Sections of this Agreement.

4

ARTICLE II
BOARD OF DIRECTORS 

Section  2.01    Board Composition.  From and after the date hereof and until the termination of this Agreement pursuant to Section 5.01, each Party shall take all Necessary Action so that:

(a)the authorized number of Directors shall be maintained at seven (7); 

(b)the following persons shall be nominated by the Board for election and appointed or elected to the Board:

(i)the Chief Executive Officer of the Company; 

(ii)two (2) Eligible Designees of Z Capital, one of which shall be designated by Z Capital Special Situations Fund II-B, LP (the “Z Capital VCOC”) during any time that the Z Capital VCOC holds direct or indirect ownership interests in the Company; 

(iii)one (1) Eligible Designee of SPH Manager; 

(iv)one (1) Eligible Designee as follows:

(A)if the Other Holders Minimum Ownership Condition is satisfied, one (1) Eligible Designee of the Other Holders; or

(B)if the Other Holders Minimum Ownership Condition is not satisfied, one (1) Eligible Designee of SPH Manager and the Other Holders; and 

(v)two (2) Eligible Designees who meet the applicable director independence requirements then in use by the Company to determine director independence (the “Independent Directors”), one (1) of whom shall be designated by SPH Manager and one (1) of whom shall be designated by (A) the Other Holders so long as the Other Holders Minimum Ownership Condition is satisfied and, (B) in all other cases, by SPH Manager and the Other Holders.  Notwithstanding the foregoing, in the event that, and for so long as, the combined Beneficial Ownership of SPH Manager and the Other Holders is less than 5,060,816 Shares and the combined Beneficial Ownership of the Z Capital Holders is greater than 5,060,816 Shares (in each case, as such Share number is adjusted from time to time for any stock dividend, stock split, reverse stock split, stock combination, recapitalization, reclassification or any other similar transaction  that affects all stockholders or the holders of any class of Shares (as the case may be) proportionately), one (1) 

5

Independent Director shall be designated by SPH Manager and the Other Holders and one (1) Independent Director shall be designated by Z Capital.

Section 2.02    Removal; Vacancies.

(a) Each Stockholder (or group of Stockholders) that has the right to designate a Director(s) shall have the exclusive right to (i) cause the removal of its respective designee(s) from the Board, and the Parties shall take all Necessary Action to cause the removal of any such designee at the request of the applicable designating Stockholder(s) and (ii) designate for election or appointment to the Board, Directors to fill vacancies created by reason of death, removal or resignation of its designees to the Board, and the Parties shall take all Necessary Action to cause any such vacancies to be filled by replacement directors designated by such designating Stockholder(s) as promptly as reasonably practicable.

(b)If any Stockholder (or group of Stockholders) that has the right to designate a Director(s) fails to exercise such right (i) in the case of the Company’s annual meeting or a special meeting at which Directors are to be elected, within the period constituting timely notice for such events as set forth in the applicable provisions of the Articles of Incorporation and Bylaws, or (ii) in the case of a designation of a director for election to the Board to fill a vacancy on the Board pursuant to Section 2.02(b) of this Agreement, 60 days, then, until such time as such Stockholder (or group of Stockholders) properly exercises its designation rights hereunder, such vacancy or vacancies shall be filled (A) by Directors designated by SPH Manager, in the event that the Other Holders decline for any reason to exercise their right to designate a Director at a time when the Other Holders are permitted to do so, and, (B) in all other cases, by Directors designated by a majority of Directors then in office. 

Section 2.03    Voting; Actions in Furtherance of this Article. Without limiting the generality of Section 2.01 and Section 2.02:

(a)each Stockholder agrees to take all Necessary Action, including by casting all votes to which such Stockholder is entitled in respect of its Shares, at any and all election of Directors, whether at any annual or special meeting, by written consent or otherwise, so as to cause the election, removal and replacement of Directors in the manner contemplated in Section 2.01 and Section 2.02 and to otherwise give the fullest effect possible to the provisions of this Article II; and

(b)the Company agrees, to the extent permitted by applicable Law, to include in the slate of nominees recommended by the Board for election at any meeting of stockholders called for the purpose of electing Directors the individuals designated pursuant to Section 2.01 (or their replacement pursuant to Section 2.02) and to nominate and recommend each such individual to be elected as a Director as provided herein, and to solicit proxies or consents in favor thereof, and take all Necessary Action to otherwise give the fullest effect possible to the provisions of this Article II.

6

Section 2.04    Collective Action. The election to designate (pursuant to clause (iv) or (v) of Section 2.01(b)) or to cause the removal of (pursuant to Section 2.02(a)) any Director by the Other Holders, or by SPH Manager and the Other Holders, and the taking of any other action by the Other Holders, or by SPH Manager and the Other Holders, in each case collectively as contemplated in this Agreement, shall be effective upon the delivery of a written notice thereof to the Company executed by the holders of a majority of the outstanding Shares (other than Shares held by any Other Holder who has waived its right or declined to participate in the designation or removal of Directors pursuant to Section 5.06, Section 5.11 or otherwise) that are Beneficially Owned in the aggregate by the Other Holders or by SPH Manager and the Other Holders, as the case may be. 

ARTICLE III
ADDITIONAL AGREEMENTS

Section 3.01    Release of Claims; Termination of Pending Litigation.  

(a)The Company and the Z Capital Holders and their respective Affiliates shall cause the Pending Litigation to be terminated by the submission of the (i) Stipulation and Order to Dismiss Action With Prejudice, Dissolve Preliminary Injunction, and Release Security Bond in the form of Exhibit 3.01(a)(i) attached hereto to the Clark County District Court and (ii) Stipulation for Dismissal of Appeal in the form of Exhibit 3.01(a)(ii) attached hereto to the Nevada Supreme Court. The Parties and their Affiliates hereby agree and acknowledge that Exhibit 3.01(a)(i), when filed with the Clark County District Court, and Exhibit 3.01(a)(ii), when filed with the Nevada Supreme Court, shall (A) dissolve the preliminary injunction entered in the Pending Litigation on May 10, 2013 (the “Preliminary Injunction”), (B) release and return to the Z Capital Holders the $500,000 bond posted by or on behalf of the Z Capital Holders as a condition to the entry of the Preliminary Injunction in the Pending Litigation and (C) cause the Pending Litigation to be terminated with prejudice.

(b)Each Party, for itself and for its Affiliates, and its and their respective directors, officers, employees, agents, successors and assigns, as applicable (collectively, the “Releasors”), does hereby irrevocably remise, release and forever discharge each other Party and its Affiliates and its and their respective current and past directors, officers, employees, agents, successors and assigns, as applicable (collectively, the “Releasees”) of and from any and all manner of actions, causes of action, suits, complaints, claims, demands, damages, costs, fines, penalties, expenses and any and all legal obligations and compensation of whatsoever kind and howsoever arising, in law or in equity, whether known or unknown, suspected or unsuspected, in each case to the extent related to the Company or the Shares and arising at or before the date hereof (collectively, the “Claims”), in each case other than any matter or thing arising in respect of the execution or performance of this Agreement.  For the avoidance of doubt, the Claims released in this Section 3.01(b) include any and all claims that were asserted or could have been asserted in the Pending Litigation.  Notwithstanding the foregoing, each of the Individual Defendants in the Pending Litigation will not be released by the terms of this Agreement but instead shall be released by a separate settlement agreement to be executed simultaneously herewith.

7

(c) Each Party further covenants and agrees not to, and to cause each other Releasor not to, directly or indirectly, join, assist, aid or act in concert in any manner whatsoever with any other Person in the making of any claim or demand or in the bringing of any proceeding or action in any manner whatsoever against the Releasees or any of them with respect to the Claims released or discharged pursuant to Section 3.01(b).

Section 3.02    VCOC Management Rights Letter.  Promptly after the date hereof, the Company and the Z Capital VCOC shall enter into a VCOC management rights letter in the form of Exhibit 3.02 attached hereto.

Section 3.03    Actions by the Company; Termination of the Rights Agreement.  The Parties acknowledge and agree that the Rights Agreement is and shall be considered null and void.  Upon execution of this Agreement, the Company and its Affiliates shall promptly take any and all actions necessary to terminate the Rights Agreement.  The Company shall not enter into any stockholder rights agreement or similar arrangement that would have an effect the same or substantially the same as the Rights Agreement, unless such agreement or similar arrangement exempts each Stockholder and its Affiliates (and any group consisting of one or more Stockholders or their Affiliates) until such time such Stockholder Beneficially Owns, together with its Affiliates, less than one-half of the Shares owned by such Stockholder and its Affiliates as of the date hereof as set forth on Exhibit A  (as adjusted from time to time for any stock dividend, stock split, reverse stock split, stock combination, recapitalization, reclassification or any other similar transaction  that affects all stockholders or the holders of any class of Shares (as the case may be) proportionately), it being understood that thereafter such Stockholder and its Affiliates will no longer be entitled to such exemption (regardless of the number of Shares such Stockholder Beneficially Owns).

Section 3.04    Governing Documents of the Company.  The Parties acknowledge and agree that all provisions of the Articles of Incorporation and the Bylaws are in full force and effect and binding upon the Company and its stockholders (including the Stockholders).  The Parties further acknowledge and agree that the Operating Agreement of Herbst Gaming, LLC, dated as of December 31, 2010 and as thereafter amended from time to time, is of no force or effect and does not govern the Company or its Affiliates.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

Section 4.01    Representations and Warranties of All Parties.  Each Party hereby represents and warrants to each other Party on the date hereof as follows:  

(a)Organization; Authority; Enforceability. Such Party is a corporation or legal entity duly organized or formed, validly existing and (to the extent applicable) in good standing, under the laws of its jurisdiction of organization or formation and has the requisite corporate or similar entity power and authority to conduct its business as it is now being conducted.  Such Party has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement by such Party and the consummation by such Party of the transactions 

8

contemplated hereby have been duly and validly authorized by all necessary action, and no other proceedings on the part of such Party are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby.  This Agreement has been duly and validly executed and delivered by such Party and, assuming the due authorization, execution and delivery by each other Party, constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms (except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditor’s rights, and subject to general equitable principles).

(b)No Breach.  None of the execution and delivery of this Agreement, the consummation by such Party of the transactions contemplated by this Agreement or the performance by such Party of its obligations hereunder will (i) conflict with, or result in the breach of any provision of the constitutive documents of such Party; (ii) result in any violation, breach, conflict, default or event of default (or an event which with notice, lapse of time, or both, would constitute a default or event of default), or give rise to any right of acceleration or termination or any additional payment obligation, under the terms of any material contract, agreement or permit to which such Party is a party or by which such Party’s assets or operations are bound or affected; or (iii) violate, in any material respect, any Law applicable to such Party. 

(c)Consents.  No consent, waiver, approval, authorization, exemption, registration, license or declaration is required to be made or obtained by such Party in connection with the execution, delivery or performance of this Agreement that has not yet been obtained.

Section 4.02    Representations and Warranties of the Stockholders.  Each Stockholder hereby represents, warrants and agrees to or with each other Party as follows:

(a)Such Stockholder Beneficially Owns the number of Shares set forth opposite such Stockholder’s name on Exhibit A hereto.

(b)Such Stockholder has not entered into any agreement or knowingly taken any action (and shall not during the term of this Agreement enter into any agreement or knowingly take any action) that would make any representation and warranty of such Stockholder contained in Section 4.01 untrue or incorrect in any material respect or have the effect of preventing such Stockholder from performing any of such Stockholder’s material obligations under this Agreement. 

ARTICLE V
MISCELLANEOUS

Section 5.01    Termination.  

(a)This Agreement shall terminate (i) by the mutual consent of all Stockholders at any time, and (ii) automatically (without action by any Party) if either the Z Capital Holders (in the aggregate) or SPH Manager and the Other Holders (in the aggregate) cease to 

9

Beneficially Own at least 4,048,652 Shares (as adjusted from time to time for any stock dividend, stock split, reverse stock split, stock combination, recapitalization, reclassification or any other similar transaction that affects all stockholders or the holders of any class of Shares (as the case may be) proportionately).

(b)Any termination of this Agreement shall be without prejudice to liabilities arising hereunder before such termination of this Agreement.

(c)Notwithstanding anything to the contrary in this Agreement, Articles III and V of this Agreement, and each of the provisions therein, shall each indefinitely survive any termination, in whole or in part, of this Agreement.

Section 5.02    No Third Party Beneficiaries.  This Agreement is not intended to confer upon any person or entity other than the Releasees and the Parties hereto and thereto any rights or remedies hereunder. 

Section 5.03    Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such expenses.

Section 5.04    Assignment. Neither this Agreement nor any rights, interests or obligations hereunder, shall be assigned, in whole or in part, by any Party hereto by operation of law or otherwise without the prior written consent of the other Parties hereto.  Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and assigns.

Section 5.05    Amendments.  Except as otherwise provided herein, the terms and provisions of this Agreement may be modified or amended at any time and from time to time only by a written instrument signed by both Z Capital and the holders of at least two-thirds of the Shares then Beneficially Owned by SPH Manager and the Other Holders (in the aggregate); provided, that (a) any amendment to this Agreement that would have a disproportionate material adverse effect on any Stockholder (or, in the case of rights held by a group of Stockholders, on such group of Stockholders) relative to another Stockholder or Stockholders (other than as a result of such Stockholder or group of Stockholders electing not to exercise any rights granted to such Stockholder or group of Stockholders pursuant to the terms of this Agreement) shall require the written consent of that Stockholder (or, in the case of rights held by a group of Stockholders, such group of Stockholders), (b) any amendment to this Agreement that deprives a Stockholder of its right to designate, or participate in the collective designation of, a Director or Directors shall require the written consent of that Stockholder and (c) this Section 5.05 may not be amended without the prior written consent of all of the Stockholders.  All Stockholders shall receive notice of any amendment to this Agreement.  For the avoidance of doubt, any amendment required to be approved by the Other Holders, or by SPH Manager and the Other Holders, as the case may be, pursuant to this Section 5.05 shall be approved in accordance with Section 2.04; provided such written notice shall be provided to each Party.  

10

Section 5.06    Waiver.  Any Party may waive in whole or in part any benefit or right provided to it under this Agreement, such waiver being effective only if contained in a writing executed by the waiving Party.  No failure by any Party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon breach thereof shall constitute a waiver of any such breach or of any other covenant, duty, agreement or condition, nor shall any delay or omission of either Party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.  

Section 5.07    Notices. All notices and other communications hereunder shall be in writing and shall be deemed given only (a) when delivered personally to the recipient, (b) one (1) business day after being sent to the recipient by reputable overnight courier service provided that confirmation of delivery is received, (c) upon machine-generated acknowledgement of receipt after transmittal by facsimile (provided that a confirmation copy is sent via reputable overnight courier service for delivery within two (2) business days thereafter, or (d) by e-mail of a .pdf attachment (with confirmation of receipt by non-automated reply e-mail from the recipient). Any notice and document shall be addressed to the Party entitled to receive such notice or other document (a) in the case of the Company, at Affinity Gaming, ATTN: Legal Department, 3755 Breakthrough Way, Suite 300, Las Vegas, NV 89135, and (b) in the case of any Stockholder, at such Stockholder’s address shown on Exhibit A hereto, or at such other address for a Party as shall be specified by like notice. 

Section 5.08    Severability.  Any term or provision of this Agreement that is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.  If the final judgment of a court of competent jurisdiction or other authority declares that any term or provision hereof is invalid, void or unenforceable, the Parties agree that the court making such determination shall have the power to reduce the scope, duration, area or applicability of the term or provision, to delete specific words or phrases, or to replace any invalid, void or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision.

Section 5.09    Specific Performance.  

(a)The Parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, may occur in the event that the Parties hereto do not perform the provisions of this Agreement (including failing to take such actions as are required of it hereunder to consummate the transactions contemplated by this Agreement) in accordance with its specified terms or otherwise breach such provisions.  Accordingly, except as otherwise set forth in this Section 5.09, the Parties acknowledge and agree that the Parties hereto shall be entitled, without posting a bond, security or other indemnity, to an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity.

11

(b)Each Party hereby agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches of this Agreement by such Party, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of such Party under this Agreement all in accordance with the terms of this Section 5.09.  The Parties hereto further agree that (i) by seeking the remedies provided for in this Section 5.09, a Party shall not in any respect waive its right to seek any other form of relief that may be available to a Party, and (ii) neither the commencement of any legal proceeding pursuant to this Section 5.09 nor anything set forth in this Section 5.09 shall restrict or limit any Party’s right to pursue any other remedies that may be available then or thereafter.

Section 5.10    Governing Law and Exclusive Jurisdiction; Service of Process; Waiver of Jury Trial. 
 
(a)This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada.

(b)To the fullest extent permitted by applicable Law, each Party hereto (i) agrees that any claim, action or proceeding by such Party seeking any relief whatsoever arising out of, or in connection with, this Agreement or the transactions contemplated hereby shall be brought only in the United States District Court for the District of Nevada or any Nevada State court, in each case, located in Clark County, Nevada and not in any other State or Federal court in the United States of America or any court in any other country, (ii) agrees to submit to the exclusive jurisdiction of such courts located in Clark County, Nevada for purposes of all legal proceedings arising out of, or in connection with, this Agreement or the transactions contemplated hereby, (iii) waives and agrees not to assert any objection that it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court or any claim that any such proceeding brought in such a court has been brought in an inconvenient forum, (iv) agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 5.07 or any other manner as may be permitted by law shall be valid and sufficient service thereof and (v) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law.
  
(c)EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE COMPANY OR THE STOCKHOLDERS IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.

Section 5.11    Regulatory Matters.    All agreements of the Other Holders herein are made subject to applicable gaming laws and regulations and interpretations of any applicable gaming regulatory authority.  Each Other Holder, by its execution and delivery of this Agreement 

12

and notwithstanding its acknowledgements and agreements set forth herein, does not intend to alter its current passive investor status relative to the Shares owned by it.  As a result, each Other Holder intends to invoke its rights under this Section 5.11 upon the occurrence of a Regulatory Event with respect to such Other Holder.  Upon the occurrence of a Regulatory Event, each of the Stockholders agrees, from time to time, as and when requested by any Other Holder, to consent to an amendment to this Agreement as such Other Holder may reasonably request in order to appropriately address the issues giving rise to the Regulatory Event, the sole effect of which amendment is to limit the rights of such Other Holder (a) to participate in the nomination, election or removal of Directors designated pursuant to clause (iv), (v) or (vi) of Section 2.01 or (b) to take Necessary Action to cause the nomination, election or removal of Directors as contemplated by Article II.   If as a result of any such amendment (or any waiver of such rights pursuant to Section 5.06), the rights of any Other Holder are so limited in respect of any Shares held by such Other Holder, such Other Holder shall no longer be deemed to Beneficially Own such Shares for purposes of determining whether the Other Holders Minimum Ownership Condition is satisfied.

Section 5.12    Descriptive Headings.  The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 5.13    Counterparts.  This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the Parties and delivered to the other Parties.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission or by e-mail of a .pdf attachment shall be effective as delivery of a manually executed counterpart of this Agreement.

[Signature Page Follows]

13

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the date first written above.

AFFINITY GAMING 

	
			
	By:
	/s/ Marc H. Rubinstein

	Name:
	Marc H. Rubinstein

	Title:
	SVP, General Counsel & Secretary

[Company Signature Page to Settlement Agreement]

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the date first written above. 

	
					
	Z CAPITAL PARTNERS, L.L.C.
	 
	ZENNI HOLDINGS, LLC

	 
	 
	 
	 
	 

	By:
	/s/ James J. Zenni, Jr.
	 
	By:
	/s/ James J. Zenni, Jr.

	Name:
	James J. Zenni, Jr.
	 
	Name:
	James J. Zenni, Jr.

	Title:
	President
	 
	Title:
	Sole Owner

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	Z CAPITAL SPECIAL SITUATIONS ADVISER, L.P.
	 
	Z CAPITAL SPECIAL SITUATIONS GP, L.P.

	 
	 
	 
	 
	 

	By:
	/s/ James J. Zenni, Jr.
	 
	By:
	/s/ James J. Zenni, Jr.

	Name:
	James J. Zenni, Jr.
	 
	Name:
	James J. Zenni, Jr.

	Title:
	President
	 
	Title:
	President

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	Z CAPITAL SPECIAL SITUATIONS UGP, L.L.C.
	 
	Z CAPITAL SPECIAL SITUATIONS FUND II-B, LP

	 
	 
	 
	 
	 

	By:
	/s/ James J. Zenni, Jr.
	 
	By:
	/s/ James J. Zenni, Jr.

	Name:
	James J. Zenni, Jr.
	 
	Name:
	James J. Zenni, Jr.

	Title:
	President
	 
	Title:
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	SPH MANAGER, LLC
	 
	SPECTRUM GROUP MANAGEMENT, LLC

	 
	 
	 
	 
	 

	By:
	/s/ Edward Mulé
	 
	By:
	/s/ Jeffrey Schaffer

	Name:
	Edward Mulé
	 
	Name:
	Jeffrey Schaffer

	Title:
	Member
	 
	Title:
	Managing Member

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	HIGHLAND CAPITAL MANAGEMENT, LP
	 
	STRAND ADVISORS, INC.

	 
	 
	 
	 
	 

	By:
	/s/ Frank Waterhouse
	 
	By:
	/s/ Frank Waterhouse

	Name:
	Frank Waterhouse
	 
	Name:
	Frank Waterhouse

	Title:
	Assistant Treasurer
	 
	Title:
	Assistant Treasurer

[Stockholders Signature Page 1 of 2 to Settlement Agreement]

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the date first written above.

	
					
	COURAGE CAPITAL MANAGEMENT, LLC
	 
	COURAGE INVESTMENTS, INC.

	 
	 
	 
	 
	 

	By:
	/s/ Richard C. Patton
	 
	By:
	/s/ Elizabeth F. Bothner

	Name:
	Richard C. Patton
	 
	Name:
	Elizabeth F. Bothner

	Title:
	Chief Manager
	 
	Title:
	Assistant Vice President

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	COURAGE CREDIT OPPORTUNITIES FUND II, L.P.
	 
	 
	 

	 
	 
	 
	 
	 

	By:
	/s/ Elizabeth F. Bothner
	 
	 
	 

	Name:
	Elizabeth F. Bothner
	 
	 
	 

	Title:
	Assistant Vice President of the General Partner
	 
	 
	 

[Stockholders Signature Page 2 of 2 to Settlement Agreement]EX 10.2  Second Amendment to Credit Agreement

EXHIBIT 10.2

SECOND AMENDMENT AND WAIVER TO CREDIT AGREEMENT

THIS SECOND AMENDMENT AND WAIVER TO CREDIT AGREEMENT (this “Amendment”), dated as of July 22, 2014 and effective as of the Second Amendment Effective Date (as hereinafter defined), is made and entered into by and among AFFINITY GAMING, a Nevada corporation, successor in interest to Affinity Gaming, LLC (the “Borrower”), DEUTSCHE BANK TRUST COMPANY AMERICAS, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent”), and each of the Lenders (as hereinafter defined) party hereto.

RECITALS

A.    The Borrower, the Administrative Agent and the Lenders are parties to that certain Credit Agreement, dated as of May 9, 2012 (as amended, restated, amended and restated, refinanced, extended, supplemented or otherwise modified from time to time prior to the date hereof, the “Credit Agreement”), by and among the Borrower, the Administrative Agent, the banks, financial institutions and other entities from time to time party thereto in the capacity of lenders (the “Lenders”), and the other agents and arrangers party thereto.

B.    The Borrower has requested that the Lenders agree, subject to the express conditions and on the terms set forth in this Amendment, to amend certain provisions of the Credit Agreement as set forth herein.

C.    The Borrower has advised the Administrative Agent and Lenders that (i) an Event of Default may exist under Section 10.07(a) of the Credit Agreement arising as a result of the Interest Expense Coverage Ratio for the Test Period ending June 30, 2014 being less than 2.00:1.00 and (ii) an Event of Default may exist under Section 10.07(b) of the Credit Agreement arising as a result of the Total Net Leverage Ratio for the Test Period ending June 30, 2014 being greater than 6.50:1.00 (such Events of Default, together with any Default or Event of Default resulting from Borrower’s failure to comply with representations and covenants (including notice provisions) in the Credit Agreement solely related to such Events of Default, collectively, the “Specified Defaults”).

D.    The Borrower has requested that the Lenders waive the Specified Defaults as described herein, subject to the express conditions and on the terms set forth in this Amendment. 

E.    The Lenders are willing to agree to such amendments and waivers, subject to the express conditions and on the terms set forth below.

F.    Deutsche Bank Trust Company Americas (“DBTCA”) may resign its appointment as the existing Administrative Agent, Collateral Agent, Swingline Lender and Issuing Lender (collectively, the "Existing Agent") under the Credit Agreement and the Credit Documents referred to therein and (ii) Deutsche Bank AG New York Branch (“DBNY”) upon such resignation desires to be appointed by the Lenders as the successor Administrative Agent, Collateral Agent, Swingline Lender and Issuing Issuer (collectively, the “Successor Agent”) under the Credit Agreement and the Credit Documents referred to therein, pursuant to a resignation and assignment agreement in form and substance acceptable to the Borrower, the Existing Agent and the Successor Agent (the “Resignation and Assignment Agreement”).

G.    The Existing Agent requests that the Lenders, if necessary, waive the requirement set forth in Section 12.09(a) of the Credit Agreement that the Existing Agent provide 30 days' prior written notice of its resignation to the Lenders and the Borrower. 

H.    The Lenders intend to appoint upon DBTCA's potential resignation, DBNY as the successor (i) Administrative Agent, (ii) Collateral Agent (iii) Swingline Lender and (iv) Issuing Lender under the Credit Agreement and the Credit Documents referred to pursuant to the terms of the Resignation and Assignment Agreement.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower and each of the Lenders party hereto agree as follows:

1.    Definitions.  Except as otherwise expressly provided herein, capitalized terms used in this Amendment shall have the meanings given in the Credit Agreement, and the interpretative provisions set forth in the Credit Agreement shall apply to this Amendment.

2.    Amendments to Credit Agreement.  The Credit Agreement is hereby amended as of the Second Amendment Effective Date (defined below) as follows:

(a)    Section 1.01 of the Credit Agreement is hereby amended by inserting the following new definitions into Section 1.01 in appropriate alphabetical order:

(i)“Affiliated Lender” shall mean any Affiliate of the Borrower (other than Borrower or any Subsidiary of the Borrower).

(ii)“First Lien Senior Secured Leverage Ratio” shall mean, on any date of determination, the ratio of (a) the aggregate outstanding principal amount of all Consolidated Indebtedness (without giving effect to clause (B) of the definition thereof) that is secured by a Lien on any assets or property of the Borrower or any of its Subsidiaries on such date (other than Liens that are junior and subordinated to the Liens of the Collateral Agent in the Collateral pursuant to intercreditor arrangements that are reasonably satisfactory to the Administrative Agent) to (b) Consolidated EBITDA for the Calculation Period most recently ended on or prior to such date.

(iii)    “Permitted Cure Securities” shall mean any common stock, limited or general partnership interest, limited liability company membership interest, or other Equity Interests reasonably acceptable to the Required Lenders issued pursuant to the Cure Right.

(iv)    “Permitted Intercreditor Terms” shall mean terms by which Liens securing Indebtedness are subordinated in right to the Liens securing the Obligations, which terms (taken as a whole) shall be at least as favorable to the Lenders as those contained on Exhibit O or on terms substantially consistent with the terms set forth on Exhibit O annexed hereto together with (A) any immaterial changes and (B) material changes thereto in light of prevailing market conditions, which material changes shall be posted to the Lenders not 

- 2 -

less than five Business Days before execution thereof and, if the Required Lenders shall not have objected to such changes within five Business Days after posting, then the Required Lenders shall be deemed to have agreed that the Administrative Agent’s and/or Collateral Agent’s entry into such intercreditor agreement (with such changes) is reasonable and to have consented to such intercreditor agreement (with such changes) and to the Administrative Agent’s and/or Collateral Agent’s execution thereof, in each case in form and substance reasonably satisfactory to the Administrative Agent and/or Collateral Agent.

		
	(i)
	“Second Amendment Effective Date” shall mean July 22, 2014.

(vi)    “Settlement Agreement” shall mean that certain Settlement Agreement, made and entered into after the date hereof, by and among the Borrower, Z Capital Partners, L.L.C., a Delaware limited liability company and its Affiliates (as defined in the Settlement Agreement), SPH Manager, LLC, a Delaware limited liability company and the other entities party thereto.

(b)    Clause (i) of the definition of “Applicable Margin” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows: “(i) in the case of Initial Term Loans maintained as (x) Base Rate Loans, 3.00%, and (y) Eurodollar Loans, 4.00%;”

(c)    The definition of “Base Rate” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Base Rate” shall mean, at any time, the highest of (i) the Prime Lending Rate at such time, (ii) 1/2 of 1% in excess of the overnight Federal Funds Rate at such time, (iii) the Eurodollar Rate for a Eurodollar Loan with a one-month Interest Period commencing on such day plus 1.00% and (iv) with respect to Initial Term Loans only, 2.25%.  For purposes of this definition, the Eurodollar Rate shall be determined using the Eurodollar Rate as otherwise determined by the Administrative Agent in accordance with the definition of Eurodollar Rate, except that (x) if a given day is a Business Day, such determination shall be made on such day (rather than two Business Days prior to the commencement of an Interest Period) or (y) if a given day is not a Business Day, the Eurodollar Rate for such day shall be the rate determined by the Administrative Agent pursuant to preceding clause (x) for the most recent Business Day preceding such day.  Any change in the Base Rate due to a change in the Prime Lending Rate, the Federal Funds Rate or such Eurodollar Rate shall be effective as of the opening of business on the day of such change in the Prime Lending Rate, the Federal Funds Rate or such Eurodollar Rate, respectively.”

(d)    The definition of “Change of Control” in Section 1.01 of the Credit Agreement is hereby amended to add the following at the end of such definition:

“Notwithstanding the foregoing, neither (i) the entry into or performance of the Settlement Agreement, nor (ii) the formation of a “group” among all or some of the parties to the Settlement Agreement or their affiliates (but no other Person that is not, or whose affiliates are not, parties to the Settlement Agreement) in connection with the performance of the Settlement Agreement or any other agreement in existence on July 14, 2014, shall constitute a Change of Control”

- 3 -

(e)    The definition of “Consolidated EBITDA” in Section 1.01 of the Credit Agreement is hereby amended by adding the following new subclauses at the end of clause (A):

“(xvi) all payments made pursuant to Section 10.06(ix); and

(xvii) expenses and payments (including legal and lobbying fees) related to (A) litigation, (B) proposed legislation or changes in gaming regulations affecting jurisdictions or feeder markets where the Borrower or any of its Subsidiaries operates, (C) executive search fees, (D) severance, (E) data breach remediation and control design expenses, (F) self-insured retention or deductible expenses incurred for insured liability or casualty events and (G) expenses related to changes in board or committee structure of the Borrower and its Subsidiaries, including regulatory licensing; provided, that such amounts added back pursuant to this clause (xvii) during any Test Period shall not exceed 10.0% of Consolidated EBITDA for such Test Period (calculated prior to giving effect to this clause (xvii)).”

(f)    Clause (y) of the definition of “Consolidated Indebtedness” in Section 1.01 of the Credit Agreement is amended by deleting “$25,000,000” and replacing it with “$40,000,000”.

(g)    The definition of “Continuing Directors” in Section 1.01 of the Credit Agreement is hereby amended by adding the following proviso at the end of such definition:

“; provided that all directors appointed in accordance with the Settlement Agreement or by any Stockholder (as defined in the Settlement Agreement) party to the Settlement Agreement shall constitute Continuing Directors.”

(h)    The definition of “Credit Documents” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Credit Documents” shall mean this Agreement and, after the execution and delivery thereof pursuant to the terms of this Agreement, each Note, the Guaranty and Collateral Agreement, each other Security Document, each Joinder Agreement, each Incremental Term Loan Commitment Agreement, each Incremental RL Commitment Agreement and each intercreditor agreement having Permitted Intercreditor Terms.

(i)    The definition of “Eligible Transferee” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Eligible Transferee” shall mean and include a commercial bank, an insurance company, a finance company, a financial institution, any fund that invests in loans or any other “accredited investor” (as defined in Regulation D of the Securities Act), but excluding (i) individuals and (ii) the Borrower and its Subsidiaries (except to the limited extent permitted by Section 2.17) and Affiliates of the Borrower or any of its Subsidiaries (except to the limited extent permitted by Section 13.04(h)).”

(j)    Clause (ii) of the definition of “Eurodollar Rate” in Section 1.01 of the Credit Agreement is hereby amended by deleting the percentage “1.00%” set forth therein and substituting therefor the percentage “1.25%”.

- 4 -

(k)    Clause (iii)(I)(y) of the definition of “Incremental Commitment Requirements” in Section 1.01 of the Credit Agreement is amended by replacing both references to “Total Net Leverage Ratio” with “First Lien Senior Secured Net Leverage Ratio”.

(l)    The definition of “Minimum Hedge Requirement” is hereby deleted in its entirety.

(m)    The definition of “Permitted Holders” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Permitted Holder” shall mean each Person who, together with its Affiliates, directly or indirectly, beneficially owns or controls as of the Second Amendment Effective Date at least 20% or more on a fully diluted basis of the Voting Equity Interests of the Borrower.

(n)    Clause (iv) of the definition of “Permitted Refinancing” in Section 1.01 of the Credit Agreement is amended by adding “(or secured subject to Permitted Intercreditor Terms)” at the end of such clause.

(o)    The definition of “Subject Permitted Holders” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Subject Permitted Holder” shall mean any Permitted Holder who, together with its Affiliates and other Permitted Holders (together with their affiliates), on any date of determination, directly or indirectly beneficially owns or controls at least 20% or more on a fully diluted basis of the Voting Equity Interests of the Borrower.

(p)    Section 1.08(a) of the Credit Agreement is hereby amended by amending and restating the proviso to such section in its entirety as follows:

“provided that, notwithstanding anything to the contrary in clause (b), (c) or (d) of this Section 1.08, when calculating the Total Net Leverage Ratio, the First Lien Senior Secured Net Leverage Ratio, First Lien Senior Secured Leverage Ratio and the Interest Expense Coverage Ratio, as applicable, for purposes of (i) the Applicable Excess Cash Flow Repayment Percentage and the Applicable Commitment Commission Percentage and (ii) determining actual compliance (and not compliance on a pro forma basis) with Section 10.07, the events described in this Section 1.08 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect.”

(q)    Section 4.01(h) of the Credit Agreement is hereby amended by deleting the words “First Amendment Effective Date” set forth therein and substituting therefor the words “Second Amendment Effective Date”.

(r)    Clause (vi) of Section 5.01(a) of the Credit Agreement is hereby amended by deleting the words “First Amendment Effective Date” set forth therein and substituting therefor the words “Second Amendment Effective Date”.

(s)    Section 9.01(a) of the Credit Agreement is hereby amended by adding the following proviso to the end of such section:

- 5 -

“; provided, that no reports or information required under this Section 9.01(a) shall be required to be delivered to the extent the First Lien Senior Secured Net Leverage Ratio is less than 2.50:1.00 as of the last day of the immediately preceding fiscal quarter for which financial statements have been delivered pursuant to Section 9.01(b).”

(t)    Section 9.09 of the Credit Agreement is hereby deleted in its entirety and replaced by:

“Reserved.”

(u)    Section 9.14 of the Credit Agreement is hereby amended by:

(i) amending and restating clause (iv) in its entirety as follows:

“(iv) (x) the Borrower shall be in compliance with the financial covenants contained in Sections 10.07(a) and 10.07(b) on a pro forma basis as if the respective Permitted Acquisition (as well as all other Permitted Acquisitions theretofore consummated after the first day of such Calculation Period) had occurred on the first day of such Calculation Period and (y) the Borrower shall be in compliance with a Total Net Leverage Ratio that is not greater than 6.40 to 1.00 on a pro forma basis as if the respective Permitted Acquisition (as well as all other Permitted Acquisitions theretofore consummated after the first day of such Calculation Period) had occurred on the first day of such Calculation Period;”

(ii) amending and restating the proviso in clause (vi) in its entirety as follows:

“provided, however, notwithstanding the foregoing requirements of this clause (vi), the aggregate amount of consideration paid in respect of Permitted Acquisitions of Acquired Entities or Businesses that do not become Subsidiary Guarantors or the assets of which are not subject to the Security Documents shall not exceed $10,000,000;”

(v)    Section 10.03 of the Credit Agreement is hereby amended by:

(i) amending and restating clause (vii) in its entirety as follows:

“(vii)    the Borrower may pay or make additional cash Dividends (including to purchase, redeem or otherwise acquire for cash any Equity Interests issued by the Borrower) in an amount not to exceed the Cumulative Retained Excess Cash Flow Amount as in effect immediately before the respective Dividend, so long as (i) in the event Dividends in excess of $15,000,000 in the aggregate are made pursuant to this clause (vii), the First Lien Senior Secured Leverage Ratio (on a pro forma basis) for the respective Calculation Period is less than or equal to 3.00:1.00, (ii) no Default or Event of Default then exists or would result therefrom, (iii) at the time that any such Dividend is paid or made (and immediately after giving effect thereto), the Borrower shall be in compliance, on a pro forma basis, with a First Lien Senior Secured Net Leverage Ratio of less than or equal to 2.85:1.00, and (iv) prior to the making of such Dividend, the Borrower shall have delivered to the Administrative Agent a certificate executed by an Authorized Officer of the Borrower, certifying to the best of such officer’s knowledge, compliance with the requirements of preceding clauses (i), (ii), and (iii), and containing the calculations (in reasonable detail) required by preceding clauses (i) and (iii);”

- 6 -

(ii) amending and restating clause (ix) in its entirety as follows:

“(ix)    the Borrower may make or pay Dividends so long as such Dividends are paid or made (x) solely with net proceeds from an issuance of Equity Interests (other than Permitted Cure Securities) of the Borrower permitted to be issued hereunder and (y) within 90 days of the date of such receipt of such net proceeds.”

(w)    Section 10.04 of the Credit Agreement is hereby amended by amending and restating clause (v)(y) in its entirety as follows:

“(y) the aggregate principal amount of all Indebtedness permitted by this clause (v) shall not exceed $10,000,000 at any one time outstanding;”

(x)    Section 10.05 of the Credit Agreement is hereby amended by:

(i) amending and restating clause (vii) in its entirety as follows:

“(vii) (A) the Borrower and the Subsidiary Guarantors may make Investments (I) between and among (or for the benefit of) one another and (II) so long as the First Lien Senior Secured Leverage Ratio is less than or equal to 3.65:1.00, to (or for the benefit of) Non-Guarantor Subsidiaries in an aggregate amount not at any time to exceed, when added to the aggregate amount of Investments made pursuant to Section 10.05(xxi), $25,000,000, and (B) Non-Guarantor Subsidiaries may make Investments to (or for the benefit of) any other Non-Guarantor Subsidiaries and any Credit Party;”

(ii) amending and restating clause (xix) in its entirety as follows:

“(xix)    the Borrower and its Subsidiaries may make additional Investments to or in a Person, so long as (i) the aggregate amount of all Investments made pursuant to this clause (xix) does not exceed the Cumulative Retained Excess Cash Flow Amount as in effect immediately before the respective Investment, (ii) no Default or Event of Default then exists or would result therefrom, (iii) at the time that any such Investment is made (and immediately after giving effect thereto), the Borrower shall be in compliance, on a pro forma basis, with a First Lien Senior Secured Leverage Ratio of less than or equal to 3.65:1.00, and (iv) prior to the making of such Investment, the Borrower shall have delivered to the Administrative Agent a certificate executed by an Authorized Officer of the Borrower, certifying to the best of such officer’s knowledge, compliance with the requirements of preceding clauses (i), (ii), and (iii), and containing the calculations (in reasonable detail) required by preceding clauses (i) and (iii);”

(iii) amending and restating clause (xxi) in its entirety as follows:

“(xxi)    so long as at the time any such Investment is made (and immediately after giving effect thereto), the Borrower shall be in compliance, on a pro forma basis, with a First Lien Senior Secured Leverage Ratio of less than or equal to 3.65:1.00, the Borrower and its Subsidiaries may make Investments in joint ventures in an aggregate amount not to exceed at any time, when added to the aggregate amount of Investments made pursuant to Section 

- 7 -

10.05(vii)(A)(II), $25,000,000; provided that the Borrower or a Subsidiary thereof is party to a management agreement with such joint venture; and”

(y)    Section 10.06 of the Credit Agreement is hereby amended by:

(i) adding a new clause (ix):

“(ix) payment of management fees (excluding intercompany management fees) not to exceed in any fiscal year the greater of (i) $1,500,000 and (ii) 3.00% of Consolidated EBITDA for such fiscal year;”

(ii) adding a new clause (x):

“(x) payments to consultants (including operational consultants) who are Affiliates, in each case to the extent such payments are made as an arm’s length transaction (and treated as operating expense for the purposes of calculating Consolidated EBITDA).”; and

(iii) deleting the following language from the end of Section 10.06:

“Notwithstanding anything to the contrary contained above in this Section 10.06, in no event shall the Borrower or any of its Subsidiaries pay any management, consulting or similar fee to any of their respective Affiliates except as specifically provided in clause (vi) of this Section 10.06.”

(z)    Section 10.07(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“(a) The Borrower will not permit the Interest Expense Coverage Ratio for any Test Period ending on the last day of any fiscal quarter of the Borrower set forth below to be less than the ratio set forth opposite such fiscal quarter below:
 

- 8 -

	
		
	Fiscal Quarter Ending
	Ratio

	June 30, 2012
	1.80:1.00

	September 30, 2012
	1.80:1.00

	December 31, 2012
	1.80:1.00

	March 31, 2013
	1.90:1.00

	June 30, 2013
	1.90:1.00

	September 30, 2013
	1.90:1.00

	December 31, 2013
	1.90:1.00

	March 31, 2014
	2.00:1.00

	June 30, 2014
	1.50:1.00

	September 30, 2014
	1.50:1.00

	December 31, 2014
	1.50:1.00

	March 31, 2015
	1.50:1.00

	June 30, 2015
	1.50:1.00

	September 30, 2015
	1.50:1.00

	December 31, 2015
	1.50:1.00

	March 31, 2016
	1.50:1.00

	June 30, 2016
	1.50:1.00

	September 30, 2016
	1.50:1.00

	December 31, 2016
	1.50:1.00

	March 31, 2017
	1.50:1.00

	June 30, 2017
	1.50:1.00

	September 30, 2017 and the last day of each fiscal quarter thereafter
	1.50:1.00

(aa)     Section 10.07(b) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“(b) The Borrower will not permit the First Lien Senior Secured Net Leverage Ratio on the last day of any fiscal quarter of the Borrower set forth below to be greater than the ratio set forth opposite such fiscal quarter below:

- 9 -

  
	
		
	Fiscal Quarter Ending
	Ratio

	June 30, 2014
	3.75:1.00

	September 30, 2014
	3.75:1.00

	December 31, 2014
	3.75:1.00

	March 31, 2015
	3.75:1.00

	June 30, 2015
	3.75:1.00

	September 30, 2015
	3.75:1.00

	December 31, 2015
	3.75:1.00

	March 31, 2016
	3.75:1.00

	June 30, 2016
	3.50:1.00

	September 30, 2016
	3.25:1.00

	December 31, 2016
	3.00:1.00

	March 31, 2017
	3.00:1.00

	June 30, 2017
	3.00:1.00

	September 30, 2017 and the last day of each fiscal quarter thereafter
	3.00:1.00

(bb)    Section 10.08 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“10.08    Limitations on Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements; Limitations on Voluntary Prepayments, etc.  The Borrower will not, and will not permit any of its Subsidiaries to:

(i)    on and after the execution and delivery of any Senior Note Document, any Permitted Unsecured Debt Document or any document in respect of Indebtedness subject to Permitted Intercreditor Terms, make (or give any notice (other than any such notice that is expressly contingent upon the repayment in full in cash of all Obligations (other than contingent obligations not then due and payable) and the termination of the Total Revolving Loan Commitment) any voluntary or optional payment or prepayment on or redemption, repurchase or acquisition for value of, or any prepayment or redemption as a result of any asset sale, change of control or similar event of (including, in each case without limitation, by way of depositing with the trustee with respect thereto or any other Person money or securities before due for the purpose of paying when due), any Senior Note, Permitted Unsecured Debt or Indebtedness subject to Permitted Intercreditor Terms; provided, however, the Borrower may make voluntary or optional payments, prepayments, redemptions, repurchases or acquisitions of or with respect to any Senior Notes, Permitted Unsecured Debt or Indebtedness subject to Permitted Intercreditor Terms:

(A) so long as (i) the aggregate amount of all such payments, prepayments, redemptions, repurchases and acquisitions does not to exceed the Cumulative Retained Excess Cash Flow Amount as in effect immediately before the respective payment, prepayment, redemption, repurchase or acquisition, (ii) no Default or Event of Default then exists or would result therefrom, (iii) at the time that any such payment, prepayment, 

- 10 -

redemption, repurchase or acquisition is paid or made (and immediately after giving effect thereto), the Borrower shall be in compliance, on a pro forma basis, with a First Lien Senior Secured Net Leverage Ratio of less than or equal to 3.10:1.00, (iv) in the event payments, prepayments, redemptions, repurchases and acquisitions in excess of $15,000,000 are made, the First Lien Senior Secured Leverage Ratio (on a pro forma basis) for the respective Calculation Period is less than or equal to 3.00:1.00 and (v) prior to the payment or making of such payment, prepayment, redemption, repurchase or acquisition the Borrower shall have delivered to the Administrative Agent a certificate executed by an Authorized Officer of the Borrower, certifying to the best of such officer’s knowledge, compliance with the requirements of preceding clauses (i), (ii) and (iii), and containing the calculations (in reasonable detail) required by preceding clauses (i) and (iii);

(B) in the case of the Senior Notes, (i) with proceeds of Permitted Refinancings thereof and (ii) exchanges thereof for Senior Exchange Notes; and

(C) to the extent consisting solely of the conversion or exchange of such Senior Notes, Permitted Unsecured Debt or Indebtedness subject to Permitted Intercreditor Terms into Equity Interests of the Borrower permitted to be issued hereunder; ”

(ii)    make (or give any notice in respect of) any principal, interest or other payment on, or any redemption or acquisition for value of, any Shareholder Subordinated Note, except to the extent permitted by Section 10.03(iii);

(iii)    (A) on and after the execution and delivery of any Permitted Unsecured Debt Document, amend, modify or change, or permit the amendment, modification or change of, any provision of any Permitted Unsecured Debt Document to the extent that the Permitted Unsecured Debt Document in the amended, modified or changed form would not be able to be incurred at such in accordance with the terms of Section 10.04(xv) and (B) on and after the execution and delivery of any document in respect of Indebtedness subject to Permitted Intercreditor Terms, amend, modify or change, or permit the amendment, modification or change of, any provision of such document to the extent that any such amendment, modification or change could reasonably be expected to be adverse to the interests of the Lenders in any material respect;

(iv)    amend, modify or change, or permit the amendment, modification or change of, any provision of any Senior Notes Document to the extent that any such amendment, modification or change could reasonably be expected to be adverse to the interests of the Lenders in any material respect; it being understood that this clause (iv) shall not prohibit Permitted Refinancings consummated in accordance with the requirements of the definition thereof;

(v)    amend, modify or waive, or permit the amendment, modification or waiver of, any provision of any Shareholder Subordinated Note, other than any amendment, modification or waiver that extends the maturity thereof or reduces the rate of interest thereon or other modifications which are not adverse to the interests of the Lenders in any material respect and have been consented to by the Administrative Agent; or

- 11 -

(vi)    amend, modify or change its certificate or articles of incorporation (including, without limitation, by the filing or modification of any certificate or articles of designation), certificate of formation, limited liability company agreement or by-laws (or the equivalent organizational documents), as applicable, in any manner that could reasonably be expected to be materially adverse to the interests of the Lenders; provided that amendments necessary to convert the Borrower from a limited liability company to a corporation are permitted.”

(cc)    Section 10.13 of the Credit Agreement is hereby amended by amending and restating clause (c)(iii) in its entirety as follows:

“(iii) at the time that any such Capital Expenditure is made (and immediately after giving effect thereto), the First Lien Senior Secured Net Leverage Ratio shall not be greater than 3.10:1.00 on a pro forma basis;”

(dd)    Section 13 of the Credit Agreement is hereby amended by adding the following as a new Section 13.23:

“13.23    Right to Cure.  Notwithstanding anything to the contrary contained in Section 11, in the event that Borrower fails (or, but for the operation of this Section 13.23, would fail) to comply with Section 10.07 as of the last day of any Test Period, at any time after such last day until the day that is fifteen (15) Business Days after the date the Compliance Certificate for such fiscal quarter is required to be delivered pursuant to Section 9.01(f), the Borrower shall have the right to issue Permitted Cure Securities for cash or otherwise receive cash contributions to the capital of the Borrower (collectively, the “Cure Right”), which cash shall be contributed as common equity to the Borrower (or other equity investments reasonably acceptable to the Required Lenders) (such contributed amount, the “Cure Amount”), Section 10.07 shall be recalculated by increasing Consolidated EBITDA with respect to such Test Period (and such increase shall be effective for all periods that include the fiscal quarter of the Borrower for which such Cure Right was exercised), solely for the purpose of measuring compliance with Section 10.07 and not for any other purpose under this Agreement (including any “baskets” or the Cumulative Retained Excess Cash Flow Amount), by an amount equal to the Cure Amount; provided that, (i) in each four-fiscal-quarter period there shall be no more than one fiscal quarter in which the Cure Right is exercised, (ii) no more than two Cure Rights will be exercised in the aggregate during the term of this Agreement, (iii) for purposes of this Section 13.23, the Cure Amount shall be no greater than the amount required for purposes of complying with Section 10.07, (iv) no Lender shall be required to make any Loan or issue any Letter of Credit during the fifteen (15) Business Day period referred to above unless Borrower has received the Cure Amount, and (v) for the avoidance of doubt, in recalculating compliance with Section 10.07 by increasing Consolidated EBITDA as set forth above, there shall be no pro forma effect given to any reduction of Indebtedness (whether pursuant to netting or otherwise) with the Cure Amount in such recalculation of Section 10.07.  If, after giving effect to the adjustments in this paragraph, Borrower shall then be in compliance with the requirements of Section 10.07, Borrower shall be deemed to have satisfied the requirements of Section 10.07 for the relevant Test Period with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of Section 10.07 that had occurred shall be 

- 12 -

deemed cured for the purposes of this Agreement.  Notwithstanding the foregoing, (i) if the Borrower has given notice that it intends to exercise such Cure Right, no Event of Default arising from the failure to comply with Section 10.07 shall be deemed to exist until the expiration of the period in which the Cure Right may be exercised (provided that during such period until cash from the Cure Right has been received, the Borrower will not be permitted to borrow Revolving Loans or issue Letters of Credit) and (ii) if at any time a Cure Right to remedy such Event of Default is available, then until the expiration of such Cure Period, neither the Administrative Agent nor any Lender shall have the right to exercise any remedies as a result of the occurrence and continuance of an Event of Default arising from the failure to comply with Section 10.07.”

(ee)    Section 13.04 of the Credit Agreement is hereby amended by adding the following as a new clause (h):

“(h)    Notwithstanding anything to the contrary contained herein, any Lender may assign all or any portion of its Term Loans hereunder to any Affiliated Lender, provided that:

		
	(i)
	No Event of Default has occurred or is continuing or would result therefrom;

		
	(ii)
	the assigning Lender and Affiliated Lender purchasing such Lender’s Term Loans, as applicable, shall execute and deliver to the Administrative Agent an assignment agreement substantially in the form of Exhibit P hereto in lieu of an Assignment and Acceptance, which may include a customary “big boy” disclaimer by the parties thereto;

		
	(iii)
	for the avoidance of doubt, Lenders shall not be permitted to assign Revolving Loan Commitments or Revolving Loans to any Affiliated Lender; and

		
	(iv)
	no Term Loan may be assigned to an Affiliated Lender pursuant to this Section 13.04(h) if, after giving effect to such assignment, Affiliated Lenders in the aggregate would own Term Loans with a principal amount in excess of 20% of the original principal amount of the Term Loans.

Affiliated Lenders will be subject to the restrictions specified in Section 13.24.”

(ff)    Section 13 of the Credit Agreement is hereby amended by adding the following as a new Section 13.24:

“13.24    Affiliated Lender.  
(a)    Subject to clause (b) below, each Affiliated Lender, in connection with any consent (or decision not to consent) to any amendment, modification, waiver, consent or other action with respect to any of the terms of any Credit Document, agrees that, except with respect to any amendment, modification, waiver, consent or other action described in clause (i) or (v) (with respect to reducing the voting rights of any Lender) of the first proviso of Section 13.12(a) or that adversely affects such Affiliated Lender as compared to other Lenders, shall be deemed to have voted its interest as a Lender without discretion in such proportion as the allocation of voting with respect to such matter by Lenders who are not Affiliated Lenders.  Subject to clause (b) below, the Borrower and each Affiliated Lender hereby agrees that if (x) a case under the Bankruptcy Code is commenced against the Borrower or the other Credit Parties, with respect to any plan of reorganization that does not adversely affect any Affiliated Lender as compared to other Lenders, the Borrower shall seek (and each Affiliated Lender shall consent) to designate the 

- 13 -

vote of any Affiliated Lender, and the vote of any Affiliated Lender, with respect to any such plan of reorganization of the Borrower or any Affiliate of the Borrower shall not be counted and (y) that if any Credit Party shall be subject to any voluntary or involuntary proceeding commenced under any debtor relief law, each Affiliated Lender, in such capacity, shall vote at the instruction of the Administrative Agent and shall not object to any use of cash collateral (including, without limitation, any and all terms of any cash collateral order) and/or any debtor-in-possession financing (including, without limitation, any and all terms of any financing agreement, related documents and financing order) that does not adversely affect any Affiliated Lender as compared to other Lenders and that is supported by or consented to by the Administrative Agent.  
(b)    Notwithstanding anything to the contrary in this Agreement, no Affiliated Lender shall have any right to (i) attend (including by telephone) any meeting or discussions (or portion thereof) among the Administrative Agent or any Lender to which representatives of the Credit Parties are not then present, (ii) receive any information or material prepared by Administrative Agent or any Lender or any communication by or among Administrative Agent and/or one or more Lenders, except to the extent such information or materials have been made available to the Credit Parties or their representatives and other than the right to receive notices of prepayment and administrative notices required to be delivered to all Lenders under Section 2.03 and Section 5 of this Agreement or (iii) make or bring (or participate in, other than as a passive participant in or recipient of its pro rata benefits of) any claim, in its capacity as a Lender, against Administrative Agent, the Collateral Agent or any other Lender with respect to any duties or obligations or alleged duties or obligations of such Agent or any other such Lender under the Credit Documents (other than a claim against another Lender for performance of its obligations under Section 13.06(b)).”

3.    Waiver.  Subject to the satisfaction or waiver of the conditions set forth in Section 6 below, and in reliance on the representations and warranties contained in Section 4 below, the Administrative Agent and Lenders hereby waive the Specified Defaults.  This is a limited waiver and shall not be deemed to constitute a waiver of any other Event of Default or any future breach of the Credit Agreement or any other Loan Documents.
4.    Appointment of Successor Agent.  

(a)    It is acknowledged and agreed that, pursuant to Section 12.09 of the Credit Agreement, DBTCA, in its capacities as the existing Administrative Agent, Collateral Agent, Swingline Lender and Issuing Lender has notified the Lenders of its desire to potentially resign from its appointment as Administrative Agent, Collateral Agent, Swingline Lender and Issuing Lender, respectively, under the Credit Documents with such resignation to become effective on the effective date of the relevant Resignation and Assignment Agreement.

(b)    The Lenders hereby (i) expressly waive the requirement pursuant to Section 12.09 of the Credit Agreement that DBTCA, as the existing Administrative Agent provide 30 days' notice of its resignation, (ii) consent to (A) the potential resignation of DTBCA as the existing Administrative Agent, Collateral Agent, Swingline Lender and Issuing Lender and (B) upon any such resignation, the appointment of DBNY as the successor Administrative Agent, Collateral Agent, Swingline Lender and Issuing Lender under the Credit Documents, in each case, on the terms set forth in the Resignation and Assignment Agreement, and (iii) authorize the Existing Agent and the Successor Agent to enter into the Resignation and Assignment Agreement.

- 14 -

(c)    Notwithstanding anything to the contrary, it is acknowledged and agreed that the potential resignation and appointment set forth above shall be subject to the consent of the Borrower to the extent required pursuant to Section 12.09 of the Credit Agreement.

5.    Representations and Warranties.  In order to induce the Lenders to enter into this Amendment, the Borrower makes the following representations and warranties to each of the Lenders, in each case after giving effect to the Amendment, all of which survive the execution and delivery of this Amendment:

(a)    Power and Authority.  The Borrower has the corporate power and authority to execute, deliver and perform the terms and provisions of this Amendment and has taken all necessary corporate action to authorize the execution, delivery and performance by it of this Amendment.  The Borrower has duly executed and delivered this Amendment, and this Amendment constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought at equity or at law).

(b)    No Violation.  Neither the execution, delivery or performance by the Borrower of this Amendment, nor compliance by it with the terms and provisions hereof, (i) will contravene any provision of any law, statute, rule or regulation (including any Gaming Regulation) or any order, writ, injunction or decree of any court or governmental instrumentality, (ii) will conflict with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except as permitted under the Credit Documents) upon any of the property or assets of the Borrower or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other agreement, contract or instrument, in each case to which the Borrower or any of its Subsidiaries is a party or by which it or any its property or assets is bound or to which it may be subject, except, in the case of preceding clauses (i) and (ii), to the extent that any such contravention, conflict, breach, default, or creation of a Lien, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, or (iii) will violate any provision of the articles of incorporation or by-laws of the Borrower.

(c)    Approvals. No order, consent, approval, license, permit, authorization or validation of, notice or filing, recording or registration with, or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to be given, obtained or made by, or on behalf of, the Borrower to authorize, or is required to be obtained or made by, or on behalf of, the Borrower in connection with, (i) the execution, delivery and performance of this Amendment or (ii) the legality, validity, binding effect or enforceability of any this Amendment (except (in each case) for (A) those that have otherwise been obtained or made and (B) the approval of one or more Gaming Authorities that may be required in connection with foreclosure and the exercise of rights and remedies under the Security Documents).

(d)    True and Complete Disclosure. All factual information (taken as a whole) furnished by or on behalf of the Borrower in writing to any Lender for purposes of or in connection with this Amendment and the transactions contemplated hereby, is true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not materially misleading at such time in light of the circumstances under which such information was provided, it being understood and agreed that for purposes of this Section 

- 15 -

4(d), such factual information shall not include projections, forward looking statements, budgets, estimates, or general market data.

(e)    Credit Documents.  Each of the representations and warranties contained in Section 8 of the Credit Agreement shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on the date this representation and warranty is made (it being understood and agreed that (x) any representation and warranty that is qualified by materiality or Material Adverse Effect shall be required to be true and correct in all respects and (y) any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects (or all respects, as the case may be) only as of such specified date).

(f)    No Default or Event of Default.  Both immediately before and after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing (other than the Specified Defaults).

6.    No Waiver.  Notwithstanding anything to the contrary set forth in this Amendment, this Amendment does not constitute a waiver of any Default or Event of Default (other than the Specified Defaults as set forth herein), or waiver of compliance with, or, except as explicitly set forth herein, modification or amendment of, any other term or condition, under the Credit Documents.

7.    Effectiveness of this Amendment.  This Amendment shall be effective upon the satisfaction (or waiver) of the following:

(a)    this Amendment is signed by the Borrower,  the Required Lenders and each such party shall have delivered their fully executed signature pages hereto to Credit Suisse Securities (USA), LLC, as sole lead arranger of this Amendment (in such capacity, the “Second Amendment Arranger”);

(b)    the Second Amendment Arranger shall have received payment of a consent fee on behalf of each Lender consenting to this Amendment in an amount equal to 0.20% of such consenting Lender’s Loans and Revolving Obligations on the Second Amendment Effective Date;

(c)     on the Second Amendment Effective Date, the Borrower shall have paid (i) to the Second Amendment Arranger all invoiced reasonable costs, fees and out-of-pocket expenses (including, without limitation, reasonable legal fees and expenses of Cahill Gordon & Reindel LLP, counsel to the Second Amendment Arranger) and other compensation payable to the Second Amendment Arranger pursuant to separate agreements entered into between the Borrower and the Second Amendment Arranger and (ii) to the Administrative Agent all invoiced reasonable costs, fees and out-of-pocket expenses (including, without limitation, reasonable legal fees and expenses) payable to the Administrative Agent pursuant to the Credit Agreement; and

(d)    on the Second Amendment Effective Date and immediately after giving effect to this Amendment (x) there shall exist no Default or Event of Default and (ii) all representations and warranties contained in Section 4 of this Amendment shall be true and correct in all material respects (it being understood and agreed that (x) any representation and warranty that is qualified by materiality or Material Adverse Effect shall be required to be true and correct in all respects and (y) any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects (or all respects, as the case may be) only as of such specified date).
 

- 16 -

This Amendment shall be deemed to be effective on the date (the “Second Amendment Effective Date”) on which each of the foregoing conditions is satisfied.

8.    Acknowledgements.  By executing this Amendment, the Borrower (a) consents to this Amendment and the performance by the Borrower of its obligations hereunder, (b) acknowledges that notwithstanding the execution and delivery of this Amendment, the obligations of the Borrower under the Credit Documents to which the Borrower is a party are not impaired or affected and each such Credit Document continues in full force and effect and (c) affirms and ratifies, to the extent it is a party thereto, each Credit Document with respect to all of the Obligations as expanded or amended hereby.

9.    No Novation.  The amendments to the Credit Agreement as contemplated hereby shall not be construed to (and is not intended to) novate, discharge or release the Borrower or any Credit Party from any obligations owed to the Lenders or the Administrative Agent under the Credit Agreement or any other Credit Document, which shall remain owing under the Credit Agreement and the other Credit Documents.  In furtherance of the foregoing, this Amendment shall not extinguish the Obligations outstanding under the Credit Agreement or any other Credit Document.

10.    Miscellaneous.  This AMENDMENT AND THE RIGHTS OF THE PARTIES HEREUNDER SHALL, SUBJECT TO THE APPLICATION OF THE GAMING REGULATIONS, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES).  This Amendment may be executed in one or more duplicate counterparts and, subject to the other terms and conditions of this Amendment, when signed by all of the parties listed below shall constitute a single binding agreement.  Delivery of an executed signature page to this Amendment by facsimile transmission or electronic mail shall be as effective as delivery of a manually signed counterpart of this Amendment.  Except as amended hereby, all of the provisions of the Credit Agreement and the other Credit Documents shall remain in full force and effect except that each reference to the “Credit Agreement” or words of like import in any Credit Document, shall mean and be a reference to the Credit Agreement amended hereby.  This Amendment shall be deemed a “Credit Document” as defined in the Credit Agreement.  Sections 13.01, 13.08, 13.16, 13.18 and 13.20 of the Credit Agreement shall apply to this Amendment as if expressly set forth herein.

11.    Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

- 17 -

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed by their officers or partners thereunto duly authorized as of the day and year first above written.

AFFINITY GAMING

	
			
	By:
	/s/ Donna Lehmann

	Name:
	Donna Lehmann

	Title:
	SVP, Chief Financial Officer & Treasurer

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Administrative Agent

	
			
	By:
	/s/ Mary Kay Coyle

	Name:
	Mary Kay Coyle

	Title:
	Managing Director

	
			
	By:
	/s/ Michael Winters

	Name:
	Michael Winters

	Title:
	Vice President

[Signature Page to Second Amendment to Credit Agreement]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00233-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00233-of-00352.parquet"}]]