1
EXHIBIT 10.21
Amendment Number One to Loan and Security Agreement
AMENDMENT NUMBER ONE TO
LOAN AND SECURITY AGREEMENT
AND WAIVER
THIS AMENDMENT NUMBER ONE TO LOAN AND SECURITY AGREEMENT AND WAIVER, dated
as of December 22, 1999 (this "Amendment"), amends that certain Loan and
Security Agreement, dated as of July 16, 1999 (as amended from time to time, the
"Loan Agreement"), among MULTIMEDIA GAMES, INC., a Texas corporation, MEGABINGO,
INC., a Delaware corporation, and MULTIMEDIA CREATIVE SERVICES, INC., a Delaware
corporation (collectively the "Borrower"), on the one hand, and COAST BUSINESS
CREDIT, a division of Southern Pacific Bank, a California corporation ("Coast"),
on the other hand. All initially capitalized terms used in this Amendment shall
have the meanings ascribed thereto in the Loan Agreement unless specifically
defined herein.
RECITALS
WHEREAS, Borrower and Coast wish to amend and waive certain provisions of
the Loan Agreement pursuant to the terms and provisions set forth in this
Amendment; and
NOW, THEREFORE, the parties hereto agree as follows:
AMENDMENT AND WAIVER
Section 1. Waiver Regarding NGI Lawsuit, Judgment and Settlement Agreement.
In reference to the lawsuit and claims between Borrower and Network Gaming, Inc.
("NGI") and the judgment in favor of NGI (the "Judgment") all as addressed by
the settlement agreement attached hereto (the "Settlement Agreement"), Coast
hereby agrees that the Judgment and the execution and delivery by Borrower of
the Settlement Agreement shall not constitute an Event of Default under the Loan
Agreement. Such agreement by Coast shall not prevent Coast from declaring an
Event of Default in the future if Borrower shall in the future breach any of its
obligations to Coast under the Loan Agreement or otherwise due in whole or in
part to Borrower's performance of its obligations to NGI under the Settlement
Agreement (e.g., a payment by Borrower to NGI under the Settlement Agreement
results in Borrower failing to maintain the Tangible Net Worth required under
the Loan Agreement). Furthermore, any breach by Borrower of NGI of the
obligations of either of them under the Settlement Agreement shall constitute an
Event of Default under the Loan Agreement.
Section 2. Waiver and Amendment of Section 8.1-1 of the Schedule to the
Loan Agreement. Borrower's compliance with Section 8.1-1 of the Schedule to the
Loan Agreement is hereby waived
-1-
2
for the month ending September 30, 1999, and such Section is hereby amended,
effective as of the month ending November 30, 1999, as follows:
1. Tangible Net Worth Covenant
Commencing with the month ending November 30, 1999, and monthly
thereafter, Borrower shall maintain a Tangible Net Worth of not
less than Seven Million Five Hundred Thousand Dollars
($7,500,000), increased quarterly (commencing with the quarter
ending December 31, 1999) by eighty percent (80%) of Borrower's
after tax net income for such quarter.
Section 3. Amendment of Section 9.2 of the Schedule to the Loan Agreement.
Section 9.2 of the Schedule to the Loan Agreement is hereby deleted in its
entirety and replaced by the following:
Section 9.2 Early Termination Fee: An amount equal to five percent
(5%) of the Maximum Dollar Amount (as defined in the Schedule), if
termination occurs on or before July 31, 2000, four percent (4%) of
the Maximum Dollar Amount, if termination occurs after July 31, 2000,
and on or before July 31, 2001; and three percent (3%) of the Maximum
Dollar Amount, if termination occurs after July 31, 2001; provided,
however, prior to the Maturity Date and absent an Event of Default, if
Borrower is able to obtain a credit facility from another lender with
a credit limit in excess of the Maximum Dollar Amount, then the Early
Termination Fee referenced above shall be reduced by one half.
Section 4. Condition Precedent. The effectiveness of this Amendment is
expressly conditioned upon the receipt by Coast of (i) this Amendment executed
by Borrower; (ii) the fully executed Settlement Agreement; (iii) a Subordination
Agreement executed by NGI in the form attached to the Settlement Agreement; and
(iv) payment by Borrower of a $100,000 modification fee.
Section 5. Entire Agreement. The Loan Agreement, as amended hereby,
embodies the entire agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings relating to the subject
matter hereof. Borrower represents, warrants and agrees that in entering into
the Loan Agreement and consenting to this Amendment, it has not relied on any
representation, promise, understanding or agreement, oral or written, of, by or
with, Coast or any of its agents, employees, or counsel, except the
representations, promises, understandings and agreements specifically contained
in or referred to in the Loan Agreement, as amended hereby.
Section 6. Conflicting Terms. In the event of a conflict between the terms
and provisions of this Amendment and the terms and provisions of the Loan
Agreement, the terms of this Amendment shall govern. In all other respect, the
Loan Agreement, as amended and supplemented hereby, shall remain in full force
and effect.
-2-
3
Section 7. Miscellaneous. This Amendment shall be governed by and construed
in accordance with the laws of the State of California. This Amendment may be
executed in any number of counterparts, all of which taken, together shall
constitute one agreement, and any party hereto may execute this Amendment by
signing such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
date first above written.
BORROWER:
MULTIMEDIA GAMES, INC.,
a Texas Corporation
By:
---------------------------------
Chairman of the Board
By:
---------------------------------
Secretary or Ass't Secretary
MEGABINGO, INC.,
a Delaware Corporation
By:
---------------------------------
Chairman of the Board
By:
---------------------------------
Secretary or Ass't Secretary
-3-
4
REAFFIRMATION OF GUARANTY
The undersigned has executed a Continuing Guaranty ("Guaranty") in favor of
Coast Business Credit, a division of Southern Pacific Bank, a California
corporation ("Coast") respecting the obligations of MULTIMEDIA GAMES, INC., a
Texas corporation, MEGABINGO, INC., a Delaware corporation, and MULTIMEDIA
CREATIVE SERVICES, INC., a Delaware corporation (collectively the "Borrower")
owing to Coast. The undersigned acknowledges the terms of Amendment Number One
to Loan and Security Agreement, dated December 22, 1999, and reaffirms and
agrees that (a) his Guaranty remains in full force and effect, (b) nothing in
such Guaranty obligates Coast to notify the undersigned of any changes in the
financial accommodations made available to Borrower or to seek reaffirmations of
the Guaranty, and (c) no requirement to so notify the undersigned or to seek
reaffirmations in the future shall be implied by the execution of the
reaffirmation.
Dated: December 22, 1999
-------------------------------
Xx. Xxxxxx Xxxxxx
-4-
