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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 ‑K

(Mark One)	 	
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the fiscal year ended December 31, 2015	
OR	
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the transition period from                          to                        	
Commission File Number 001 ‑32622
EVERI HOLDINGS INC.
(Exact name of registrant as specified in its charter)

Delaware	 	20 ‑0723270	
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)	
7250 S. Tenaya Way, Suite 100, Las Vegas, Nevada	 	89113	
(Address of principal executive offices)		(Zip Code)	
(800) 833 ‑7110
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class	    	Name of each exchange on which registered	
Common Stock, $0.001 par value per share	 	New York Stock Exchange	
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well ‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ☐  No  ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes  ☐  No  ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒   No  ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒   No  ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ☐	Accelerated filer  ☒	Non ‑accelerated filer  ☐
(Do not check if a
smaller reporting company)	Smaller reporting company  ☐	
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b ‑2 of the Exchange Act). Yes  ☐  No  ☒
As of June 30, 2015, the aggregate market value of the registrant’s common stock held by non-affiliates was approximately $513.5 million .  
There were 66,031,424 shares of the registrant’s common stock issued and outstanding as of the close of business on March 1, 2016
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant’s Definitive Proxy Statement for its 2016 Annual Meeting of Stockholders (which is expected to be filed with the Securities and Exchange Commission within 120 days after the end of the registrant’s 2015 fiscal year) are incorporated by reference into Part III of this Annual Report on Form 10-K. Except as expressly incorporated by reference, the registrant’s Proxy Statement shall not be deemed to be a part of this Annual Report on Form 10-K.

 

 
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EVERI HOLDINGS INC.
ANNUAL REPORT ON FORM 10 ‑K
FOR FISCAL YEAR ENDED DECEMBER 31, 2015
TABLE OF CONTENTS 

PART I  	 	
 	 	 	
Item 1.  	Business. 	
5 	
Item 1A.  	Risk Factors. 	
18 	
Item 1B.  	Unresolved Staff Comments	
36 	
Item 2.  	Properties. 	
36 	
Item 3.  	Legal Proceedings. 	
36 	
Item 4.  	Mine Safety Disclosures. 	
37 	
 	 	 	
PART II  	 	
 	 	 	
Item 5.  	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 	
38 	
Item 6.  	Selected Financial Data. 	
41 	
Item 7.  	Management’s Discussion and Analysis of Financial Condition and Results of Operations. 	
42 	
Item 7A.  	Quantitative and Qualitative Disclosures about Market Risk. 	
62 	
Item 8.  	Financial Statements and Supplementary Data	
63 	
Item 9.  	Changes in and Disagreements with Accountants. 	
112 	
Item 9A.  	Controls and Procedures. 	
112 	
Item 9B.  	Other Information. 	
113 	
 	 	 	
PART III  	 	
 	 	 	
Item 10.  	Directors, Executive Officers and Corporate Governance. 	
115 	
Item 11.  	Executive Compensation. 	
115 	
Item 12.  	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 	
115 	
Item 13.  	Certain Relationships and Related Transactions, and Director Independence. 	
115 	
Item 14.  	Principal Accountant Fees and Services	
115 	
 	 	 	
PART IV  	 	
 	 	 	
Item 15.  	Exhibits and Financial Statement Schedules	
115 	
 	 	 	
SIGNATURES  	 	
121 	

 

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  CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
 
Everi Holdings Inc. (formerly known as Global Cash Access Holdings, Inc.) (“Everi Holdings,” “Holdings” or “Everi”) is a holding company, the assets of which are the issued and outstanding shares of capital stock of each of (a) Everi Games Holding Inc. (formerly known as Multimedia Games Holding Company, Inc.) (“Everi Games Holding”) , which owns all of the issued and outstanding shares of capital stock of Everi Games Inc. (formerly known as Multimedia Games, Inc.) (“Everi Games” or “Games”), and (b) Everi Payments Inc. (formerly known as Global Cash Access, Inc.) (“Everi Payments” or “Payments”). Unless otherwise indicated, the terms the “Company,” “we,” “us” and “our” refer to Holdings together with its consolidated subsidiaries.
 
Our disclosure and analysis in this Annual Report on Form 10-K, including all documents incorporated by reference, and in our 2015 Annual Report to Stockholders contain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. From time to time, we also provide forward-looking statements in other materials we release to the public, as well as oral forward-looking statements. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “project,” “may,” “should,” “will,” “likely,” “will likely result,” “will continue,” “future,” “plan,” “target,” “forecast,” “goal,” “observe,” “seek,” “strategy” and other words and terms of similar meaning. The forward-looking statements in this Annual Report on Form 10-K reflect the Company’s current views with respect to future events and financial performance.
 
Forward-looking statements include, but are not limited to, statements regarding the following matters: trends in gaming establishment and patron usage of our products; benefits of the acquisition of Everi Games ,   including potential synergies; benefits realized by using our products and services; product development, including the unveiling of new themes on our Platinum MPX and The Texan HDX cabinets, changes to our TournEvent solution and whether those changes will improve slot tournaments, and the release of new game features and additional game and system releases in 2016,   and regulatory approval; gaming regulatory, card association and statutory compliance; the implementation of new or amended card association and payment network rules; consumer collection activities; future competition; future tax liabilities; international expansion; resolution of litigation; dividend policy; new customer contracts and contract renewals;  future results of operations (including revenue, expenses, margins, earnings, cash flow and capital expenditures); future interest rates and interest expense; future borrowings; and future equity incentive activity and compensation expense.  
 
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to certain risks and uncertainties, including, without limitation, the risk that our December 2014 acquisition of Everi Games will not produce the expected results we anticipate; our ability to execute on mergers, acquisitions and/or strategic alliances, including our ability to integrate and operate such acquisitions (including Everi Games) consistent with our forecasts; expectations regarding our existing and future installed base and win per day; expectations regarding development and placement fee arrangements; inaccuracies in underlying operating assumptions; expectations regarding customers’ preferences and demands for future gaming offerings; expectations regarding our product portfolio; the overall growth of the gaming industry, if any; our ability to replace revenue associated with terminated contracts; margin degradation from contract renewals; our ability to comply with the Europay, MasterCard and Visa global standard for cards equipped with computer chips; our ability to introduce new products and services, including third party licensed content; gaming establishment and patron preferences; expenditures and product development; anticipated sales performance; employee turnover; national and international economic conditions; changes in gaming regulatory, card association and statutory requirements; regulatory and licensing difficulties; competitive pressures; operational limitations; gaming market contraction; changes to tax laws; uncertainty of litigation outcomes; interest rate fluctuations; business prospects; unanticipated expenses or capital needs; technological obsolescence; and those other risks and uncertainties discussed herein, that could cause actual results to differ materially from historical results or those anticipated. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this Annual Report on Form 10-K will in fact transpire or prove to be accurate. Readers are cautioned to

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consider the specific risk factors described herein and in “Item 1A. Risk Factors” of this Annual Report on Form 10-K, and not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof.
 
The Company undertakes no obligation to update or publicly revise any forward-looking statement whether as a result of new information, future developments or otherwise. All subsequent written or oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this paragraph. You are advised, however, to consult any further disclosures we make on related subjects in our reports and other filings with the Securities and Exchange Commission (the “SEC”). Also note that we provide a cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant to our business under “Item 1A. Risk Factors” of this Annual Report on Form 10-K. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. You should understand it is not possible to predict or identify all such factors.  

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PART   I
Item 1.  Busines  s  .
 
Overview
 
Everi is dedicated to providing video and mechanical reel gaming content and technology solutions, integrated gaming payments solutions and compliance and efficiency software. Everi Games provides: (a) comprehensive content, electronic gaming units and systems for Native American and commercial casinos, including the award winning TournEvent® slot tournament solution; and (b) the central determinant system for the video lottery terminals (“VLTs”) installed at racetracks in the State of New York. Everi Payments provides: (a) access to cash at gaming facilities via Automated Teller Machine (“ATM”) cash withdrawals, credit card cash access transactions, point of sale (“POS”) debit card transactions, and check verification and warranty services; (b) fully integrated gaming industry kiosks that provide cash access and related services; (c) products and services that improve credit decision making, automate cashier operations and enhance patron marketing activities for gaming establishments; (d) compliance, audit and data solutions; and (e) online payment processing solutions for gaming operators in states that offer intrastate, Internet-based gaming and lottery activities.
 
On December 19, 2014, Holdings completed the acquisition of Everi Games Holding. Pursuant to the terms of the Agreement and Plan of Merger, dated as of September 8, 2014 (the “Merger Agreement”), by and among Holdings, Movie Merger Sub, Inc., a wholly owned subsidiary of Holdings (“Merger Sub”), and Everi Games, Merger Sub merged with and into Everi Games Holding, with Everi Games Holding continuing as the surviving corporation (the “Merger”). In the Merger, Everi Games Holding became a wholly owned subsidiary of Holdings. Also, as a result of the Merger, each outstanding share of common stock, par value $0.01 per share, of Everi Games Holding, other than shares held by Holdings, Everi Games Holding, Merger Sub or their respective subsidiaries, was cancelled and converted into the right to receive $36.50 in cash, without interest.  We refer to the consideration paid for the shares of Everi Holdings common stock, together with the consideration paid in connection with the acceleration and full vesting of certain Everi Games Holding equity awards, as the “Total Merger Consideration”.
 
Holdings was formed as a Delaware limited liability company on February 4, 2004 and was converted to a Delaware corporation on May 14, 2004. Our principal executive offices are located at 7250 South Tenaya Way, Suite 100, Las Vegas, Nevada 89113. Our telephone number is (800) 833-7110. Our website address is www.everi.com. The information on our website is not part of this Annual Report on Form 10-K or our other filings with the SEC.
 
Our Business Segments
 
Our operating segments were previously organized and managed under five business segments: (a) Cash Advance, (b) ATM, (c) Check Services, (d) Games, and (e) Other. During the first quarter of 2015, we changed our organizational structure as part of our transformation to a Games and Payments company providing solutions to the gaming industry. Accordingly, since the first quarter of 2015, we have reported our financial performance, and organized and managed our operations, across the following two business segments: (a) Games, and (b) Payments. Each of these segments is monitored by our management for performance against its internal forecast and is consistent with our internal management reporting. We have presented prior period amounts to conform to the way we now internally manage and monitor segment performance beginning in 2015. This change in segment reporting had no impact on our consolidated financial statements.
 
A summary of our segment financial information is contained in “Note 1 9 . Segment Information” of our notes to consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Prior to the Merger, Everi Games operated in a single segment.
 
Our Products and Services
 
Games Products and Services
 
Our Games products and services include commercial products, such as Class III products, Native American Class II products, and other bingo products, lottery systems, and back office systems. In our Games business, we generally retain ownership of the leased gaming equipment installed at customer facilities and receive recurring revenue based on a

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percentage of the net win per day generated by the leased gaming equipment or a fixed daily fee based on the number of player terminals installed at the facility. We also make direct sales of player terminals, licenses, back office systems and other related equipment to customers.   T he majority of these direct sales contracts are for some combination of gaming equipment, player terminals, content, system software, license fees, ancillary equipment and maintenance.
 
With respect to our Games business, we have expanded our licensing into new jurisdictions, increased investment in research and development, and introduced premium game products (which typically include high definition (“HD”) dual-screens, liquid crystal display (“LCD”) panels, and red green blue (“RGB”) top box lighting). From its historical focus on placement of standard games into the Oklahoma and Washington tribal markets, Everi Games has diversified its installed base in recent years with entry into new commercial and tribal markets as well as the development and placement of premium products. Everi Games has grown premium game installations with approximately 1,750 units installed (representing more than 13% of our installed base) since entering the category three years ago. Development of high-earning premium games has supported Everi Games’ ability to enter new markets, expand its footprint, and provide broad and new content across its installed base.
 
Everi Games provides the New York Lottery with an accounting and central determinant system for the VLTs in operation at licensed State of New York racetracks. As of December 31, 2015, this central determinant system connected to approximately 18,000 VLTs and electronic table games (“ETGs”) provided by third-party providers and has the ability to interface with, provide outcomes to, and manage the VLTs as well as interface with and manage the 1,7 50   ETGs. Pursuant to its agreement with the New York Lottery, Everi Games receives a portion of the network-wide net win (generally, cash-in less prizes paid) per day in exchange for provision and maintenance of the central determinant system. In February 2009, the New York Lottery awarded Everi Games a contract extension through December 2017 and provide d Everi Games an opportunity to expand its network as the New York Lottery licenses additional race track gaming facilities or the expansion of existing facilities in the state. Everi Games also provides central determinant system technology to Native American tribes in the State of Washington for which it receives a portion of the revenue generated from the VLTs connected to the system.
 
Our Games products include:
 
Classic Mechanical Reel Games .  Our full range of classic mechanical reel games provides players with a traditional, high denomination slot gaming experience. These games leverage our long-standing experience in building enduring brands, such as Black Diamond ,   Crystal Jackpots, Smokin’ 777, Double Eagle ,   and Jackpot Fire , among others, and feature a unique take on traditional slot games with eye-catching features. The premium Skyline mechanical reel series was released with a vintage-inspired bezel showcasing RGB lighting and a 24-inch LCD display, with titles including Double Jackpot Gems, Ultra Mega Meltdown and Canary Diamonds .
 
Video Reel Games . We offer a growing range of video reel games that provides a uniquely entertaining slot gaming experience. These games leverage the Player HD cabinet to deliver eye-catching graphics and full, rich sound. High denomination, high multi-line themes have been introduced to the market, such as Warrior Legacy, Starry Night-HD, and Smokin’ Hot Gems , along with a batch of gameplay features, such as the Windfall Reels on Fire Lion and Mummy’s Tomb ; the Wild Pairs feature on Antony and Cleopatra and Bonnie and Clyde ;   Blazin’ Streaks on Disco Fever ;   Variable Direction Paylines on Time Twister ; and Multi-Stage “Battle Bonus” on Pirates vs. Ninjas .  
 
Core HDX.  The Core HDX enhances the player gaming experience with its dual widescreen 23” monitors with 1080p HD capability, integrated touchscreens and premium 3-way sound system. Its eye-catching cabinet commands a presence on the casino floor with game-controlled lighting and a custom premium LCD topper. Select Core HDX games feature Everi Bet™, the bet configuration system that gives casino operators the power to optimize the casino floor for max returns.   The vast majority of our standard video library on our MForce platform is designed to be playable on the Core HDX . Newly released games exclusive to the Core HDX cabinet include: Peking Fantasy ,   Goddess of the Realm - Moon Stone ,   Goddess of the Realm - Flame Star ,   Jackpot Inferno , and Bonus Attack .

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High Rise Games . Our current premium participation slot game series features one of the industry’s largest top boxes, a vertically oriented 37-inch LCD screen that eliminates overhead signage, creates new possibilities for gaming action, offers LED lights around the perimeter of the top box screen, as well as unique bonus features. Four themes are being unveiled on the High Rise Games series, including Queen of Diamonds, Pirates Skull & Bones, The Money Man Big Cash Spin, and Smokin’ Hot Diamonds .   Queen of Diamonds is a 9-Reel, 32-Line theme featuring our new Jackpot Jump feature. Once any jackpot trigger is hit, players pick from one of four cards to find a diamond-suited Jackpot Jump card or a Queen of Diamonds card, which will “jump” the progressive prize by one or two tiers, respectively.
 
Platinum MPX and The Texan HDX . The award-winning Platinum MPX represents a premium participation cabinet and game series that offers a 40-inch monitor, full 1080p HD graphics capabilities, a fully-customizable touchscreen button panel, game-controlled runway lighting and six custom speakers, including two speakers in the fully integrated interactive sound chair with Earthquake Shakers technology. The Platinum MPX debuted with two games in 2014, the award-winning Thundering Herd and Invasion 2: The Return , with new themes Smokin’ Hot Dice, Gargoyle, Her Majesty, and Myths & Legends .   The Texan HDX is an 8-foot tall cabinet with twin 42-inch video screens, featuring a two-person bench seat. The cabinet is designed to showcase the Everi Standard Video Library in oversized format, allowing the games to be prominently displayed on the casino floor.
 
TournEvent . Our award-winning slot tournament system is a proven solution that allows operators to switch from in-revenue gaming to out-of-revenue tournaments with the simple click of a mouse. The latest 4.3 version released in 2015 includes an updated user interface that give operators more flexibility in setting up different types of tournaments including a cumulative scoring option that gives casinos the ability to have the system automatically sum players’ scores in multi-session tournaments. The player(s) with the highest accumulated scores from all sessions win or advance. The new version also adds additional tournament sounds, animations, and tournament game options. With the wireless tablet option, casino operators will be able to sign up players for tournaments remotely, allowing for a more efficient tournament registration and an overall better tournament experience for the casinos and players alike. We believe that the out-of-revenue games, Cash Boom Bang with 4 Reel Frenzy and Crown Jewels with 4 Reel Frenzy , will improve slot tournaments, as tournament screens will explode into four sets of reels once a bomb appears. Jump to First and Pop-n-Win features may occur during this time as well. Additional game and system releases are planned for 2016, giving casino operators what we believe will be even more exciting game titles to select from and additional efficiency in the planning and operation of slot tournaments. TournEvent also is available with multiple sign options, consisting of a rotating 55-inch monitor, lighted accent dividers, and the ability to be featured on new bank configurations.
 
Payments Products and Services
 
Our Payments products and services include solutions that we provide directly to gaming establishments to offer their patrons cash access related services and products including: access to cash at gaming facilities via Automated Teller Machine (“ ATM ”) cash withdrawals, credit card cash access transactions and POS debit card transactions; check-related services; fully integrated kiosks and maintenance services; compliance, audit and data software; casino credit data and reporting services and other ancillary offerings.
 
The following is a description of the markets we address with our principal Payments products and services:
 
ATM Cash Withdrawals . ATM cash withdrawal transactions represent the largest category of electronic payment transactions that we process, as measured by dollar and transaction volume. In an ATM cash withdrawal, a patron directly accesses funds from a device enabled with our ATM service by either using an ATM or debit card to withdraw funds from the patron’s demand deposit account , or using a credit card to access the patron’s line of credit. In either event, the patron must use the Personal Identification Number (“PIN”) associated with such card. Our processor then routes the transaction request through an electronic funds transfer (“EFT”) network to the patron’s bank or issuer. Depending upon a number of factors, including the patron’s account balance or credit limit and daily withdrawal limit (which limits are set by the bank or issuer) , the bank or issuer will either authorize or decline the transaction. If the transaction is authorized, then the ATM-enabled device dispenses the cash to the patron. For a transaction using an ATM or debit card, the patron’s bank account is debited by the amount of cash disbursed plus a service fee that we assess the patron for the use of the ATM service. For a transaction using a credit card with a PIN, the patron’s credit card account is charged by the amount of the cash disbursed plus a service fee that we assess the patron for the use of the ATM service. In both cases, the service fee is currently a fixed dollar amount and not a percentage of the transaction size. We also receive a fee, which we refer to as a reverse interchange fee, from the patron’s card-issuing bank for accommodating the bank’s customer. In most circumstances, we

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pay a percentage of the service fee that we receive from the patron and, in some circumstances, a portion of the reverse interchange fees we receive, as a commission to our gaming establishment customers for the right to operate on their premises.
 
Credit Card Cash Access Transactions and POS Debit card Transactions . Patrons can perform credit card cash access transactions and POS debit card transactions using many of our enabled devices. A patron’s credit card cash access limit is usually a sub-limit of the total credit line and is set by the card-issuing bank , not Everi . These limits vary significantly and can be larger or smaller than the POS debit limit. A credit card cash access transaction obligates the patron to repay the issuing bank over time on terms that are preset by the cardholder agreement. A patron’s POS debit card allows the patron to make cash withdrawals at the point of sale in an amount equal to the lesser of the amount of funds in the account , or a daily limit that is generally five to ten times as large as the patron’s daily ATM limit.
 
When a patron requests a credit card cash access or POS debit card transaction, our processor routes the transaction request through one of the card associations , or EFT networks to the issuing bank. Depending upon several factors, such as the available credit or bank account balance, the transaction is either authorized or declined by the issuing bank. If authorized, the patron’s bank account is debited or the patron’s credit card balance is increased, in both cases, by an amount equal to the funds requested plus our service fee. The service fee is a fixed dollar amount, a percentage of the transaction size or a combination of a fixed dollar amount and percentage of the transaction size. If the transaction is authorized, the device informs the patron that the transaction has been approved. The device then further instructs the patron to proceed to the gaming establishment’s cashier, or Company-operated booth, to complete the transaction because credit card cash access and POS debit card transactions must, in most circumstances, be completed in face-to-face environments and a unique signature must be received in order to comply with rules of the card associations. Once at the cashier booth, the patron acknowledges acceptance of the fee. We reimburse the gaming establishment for the amount of cash that it provided to the patron by either issuing a negotiable instrument to the gaming establishment or paying the gaming establishment via wire transfer or other similar form of electronic payment. In addition, we generally pay the gaming establishment a portion of the service fee as a commission for the right to operate on its premises, although this payment as a percentage of the fee is generally smaller for credit card cash access and POS debit card transactions than for ATM withdrawals. In addition, we are obligated to pay interchange fees to the issuing bank and processing costs related to the electronic payment transaction to card associations.
 
Check-Related Services . Patrons are able to cash checks at certain gaming establishments. When a patron presents a check to the cashier, the gaming establishment can accept or deny the transaction based on its own customer information and at its own risk, obtain third-party verification information about the check writer, the bank account number and other information relating to the check to manage its risk, or obtain a warranty on payment of the check, which entitles the gaming establishment to reimbursement of the full face amount of the check if it is dishonored.
 
If a gaming establishment chooses to have a check warranted, it sends a request to a check warranty service provider, asking whether it would be willing to accept the risk of cashing the check. If the check warranty provider accepts the risk and warrants the check, the gaming establishment negotiates the patron’s check by providing cash for the face amount of the check. If the check is dishonored by the patron’s bank upon presentment, the gaming establishment invokes the warranty, and the check warranty service provider purchases the check from the gaming establishment for the full check amount and then pursues collection activities on its own.
 
For those gaming establishments that seek to manage their own risk, we provide a subscription check verification service via a database operated by our subsidiary, Central Credit, which is used by gaming establishments to make credit issuing decisions. Central Credit maintains information on the check cashing and credit history of many gaming establishment patrons. For those gaming establishments that prefer to obtain a warranty, we currently provide check warranty services through a third-party check warranty service provider. We pay this third-party provider to assist with the warranty decision, check processing, billing and collection activities. On our behalf, this third-party provider charges our gaming establishment customers a fee for the check warranty services, which is typically a percentage of the face amount of the check being warranted. In such circumstances, we receive all of the check warranty revenue. We are exposed to risk for the losses associated with any warranted items that cannot be collected from patrons issuing the items. Warranty expenses are defined as any amounts paid by the third-party provider to gaming establishments to purchase dishonored checks that will not be collectible from patrons and any expenses related to the collection on these amounts. We also pay certain fees and operating expenses to our third-party provider related to the provision of these services.

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Our principal Payments products and services consist of the following:
 
Casino Cash Plus 3-in-1 ATMs are unmanned, cash-dispensing machines that enable ATM cash withdrawals, POS debit card transactions, and credit card cash access transactions directly, or using our patented 3-in-1 Rollover functionality. Most financial institutions that issue debit cards impose daily ATM withdrawal limits, and, in many instances, aggregate and count Friday, Saturday and Sunday as a single day in calculating such limits. If a patron has reached his or her daily ATM limit, our patented 3-in-1 Rollover functionality automatically enables the patron to obtain funds via a POS debit card transaction or a credit card cash access transaction instead.
 
Check verification and warranty services allow gaming establishments to manage and reduce risk on patron checks that they cash. A gaming establishment can query our Central Credit database to review the check cashing history of a gaming establishment patron before deciding whether to cash the patron’s check. If the gaming establishment desires additional protection against loss, it can seek a warranty on payment of the check. We have an exclusive relationship with a third-party check warranty service provider to market check warranty services to gaming establishments.
 
Fully Integrated Kiosks are multi-function terminals that combine our cash access 3-in-1 Rollover functionality with slot machine ticket redemption and bill breaking service capabilities. The availability of our cash access services on these slot ticket redemption devices provides us with additional points of contact with gaming patrons at locations that are closer to the slot machines than traditional cash access devices that are typically located on the periphery of the gaming area within the gaming establishment and also provides gaming patrons with more opportunities to access their cash with less cashier involvement, thereby creating labor cost savings for gaming establishments .
 
Jackpot kiosks are multi-function employee kiosks that allow casino personnel to immediately process and dispense taxable jackpots in the form of cash, tickets or a combination of both. Jackpots that exceed established local or federal dollar limits are taxable and require a casino employee to complete the transaction in order to issue the patron a W-2G or 1042-S. The jackpot kiosk, which may also offer our other cash access services, automates and streamlines this process .
 
Central Credit is our gaming patron credit bureau service which, on a subscription basis, allows gaming establishments to improve their credit-granting decisions by obtaining access to a database containing credit information and transaction data on millions of gaming patrons. Our gaming credit reports are comprised of information recorded from patron credit histories at hundreds of gaming establishments. We provide such information to gaming establishments that subscribe to the service. These establishments then use that data, among other things, to determine how much credit, if any, they will grant to a gaming patron. We typically charge our customers for access to gaming patron credit reports on a monthly basis and our fees are generally comprised of a fixed minimum fee plus per-transaction charges for certain requests .
 
Everi Compliance   is our suite of compliance software offerings for gaming operators. These compliance solutions help our gaming establishment customers comply with financial services and gaming regulations. These compliance solutions include software to assist with anti-money laundering regulations, such as filing currency transaction reports (“CTRs”) and suspicious activity reports (“SARs”). Additionally, these compliance solutions also assist casinos in filing required tax forms in connection with the payout of jackpot winnings to patrons and assist casinos with auditing cash on the floor and in casino cages.
 
We also offer:
 
	·		Stand alone, non-ATM terminals that perform authorizations for credit card cash access and POS debit card transactions.	
 
	·		Database services that allow gaming establishments access to information from our proprietary patron transaction database for purposes of player acquisition, direct marketing, market share analysis, and a variety of other patron promotional uses. Our proprietary patron transaction database includes information that is captured from transactions we process. Patrons may “opt out” of having their names included in marketing mailing lists.	
 
	·		An online payment processing solution for gaming operators in states that offer intra-state, Internet-based gaming and lottery activities.	

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Manufacturing
 
We utilize contract manufacturers to produce the cabinets that make up our electronic gaming machines (“EGMs”) and our kiosk products, as well as other sub-assemblies. We have assembly facilities in Austin, Texas and Las Vegas, Nevada, where we assemble the EGMs and our kiosk products, which include the cabinets, computer assemblies, LCD screens, printers, bill validators and acceptors, and other wiring and harnesses. We believe that our sources of supply of component parts and raw materials for our products are generally adequate and we have few sole-sourced parts.
 
Research and Development
 
We conduct research and development activities primarily to develop gaming systems, gaming engines, casino data management systems, casino central monitoring systems, video lottery outcome determination systems, gaming platforms and gaming content, as well as to add enhancements to our existing product lines. We believe our ability to deliver differentiated, appealing products and services to the marketplace is based on our research and development investments, and we expect to continue to make such investments in the future. Research and development costs consist primarily of salaries and benefits, consulting fees and game lab testing fees . Once the technological feasibility of a project has been established, it is transferred from research to development and capitalization of development costs begins until the product is available for general release.
 
Customers
 
As of December 31, 2015, we served over 1,000 casinos and other gaming properties in the United States, Europe, Canada, the Caribbean, Central America and Asia. In certain limited circumstances, we provide our products and services to non-gaming establishments, such as gas stations and other retail businesses associated with gaming establishment customers, however the revenue generated from these operations is not material to our operations and we do not actively market or target non-gaming establishment customers.
 
Sales and Marketing
 
We sell and market our products and services to gaming establishments primarily through the use of a direct sales force, which targets gaming establishments in the United States and in international markets. With respect to our gaming products, we participate in the Class III and Class II gaming machine markets, as well as the central determinant system market in North America, through participation, or revenue share, and fixed fee arrangements and the sale of proprietary EGMs and systems. For the years ended December 31, 2015, 2014, and 2013 , our revenues from our operations outside the United States were 2.9%, 2.7%, and 2.4% of our total revenue, respectively. All of our long-lived assets outside of the United States were immaterial for each of fiscal 2015, 2014, and 2013.
 
Our sales and marketing efforts are directed by a team of customer service executives, each of whom has business development responsibility for gaming establishments in specified geographic regions. These customer service executives direct their efforts at all levels of gaming establishment personnel, including senior executives, finance professionals, marketing staff, slot directors, and cashiers, and seek to educate them on the benefits of our products and services. In some cases , our customer service executives are supported by field account managers, who provide on-site customer s ervice to most of our customers. In other cases our sales executives directly maintain the customer relationships. These customer service executives and field account managers generally reside in the vicinity of the specific gaming establishments that they support to ensure that they respond to the customer service needs of those gaming establishments. We also have joint sales efforts with a number of strategic partners, including independent sales organizations, which allow us to market our products and services to gaming establishments through channels other than our direct sales force.
 
Competition
 
In our Games business, we compete across different gaming markets with a variety of gaming equipment suppliers. Competition is generally based upon the: (a) amount of revenue our products generate for our customers relative to the amount of revenue generated by our competitors’ products, (b) prices and/or fees we and our competitors charge for products and services offered, and (c) appeal of our competitors’ products to gaming patrons, which has a direct effect on

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the volume of play generated by a product and, accordingly, the revenues generated for our customers. To drive customer demand and improve product attractiveness to end users, we are continually working to develop new game themes, gaming engines, hardware platforms and systems that appeal to gaming patrons, all while working to release these new products to the marketplace in a timely manner.
 
In our Payments business, we compete with other providers of cash access services to the gaming industry, as well as with financial institutions and other regional and local banks that operate ATMs on the premises of gaming establishments. Some of these other providers and financial institutions have established cooperative relationships with each other to expand their service offerings. Although almost all gaming establishments outsource their cash access service to third-party providers because providing these services is not a core competency of gaming establishment operators, and because gaming establishment operators are unable to achieve the same scale that can be obtained by third-party providers that deploy cash access services across multiple gaming establishments, we on occasion do face competition from gaming establishments that may choose to operate their own in-house cash access systems. In recent years, we have also faced increased competition from independent sales organizations, which provide basic services and aggressive pricing, from gaming equipment manufacturers and system providers that manufacture kiosks that directly, or through affiliates with third parties, which offer ATM and other cash access products and services, and from traditional transaction processors that have entered the gaming patron cash access services market. This increased competition amongst these various providers of cash access services has resulted in pricing pressure and margin erosion with respect to our core cash access products and services.
 
Proprietary Rights
 
We believe the ability to introduce and respond to technological innovation in the gaming industry will be an increasingly important qualification for the future success of any provider of cash access and gaming-related products and services. Our continued competitiveness will depend on: (a) the pace of our new product development, (b) our patent, copyright, trademark and trade secret protection, and (c) our relationships with customers. Our business development personnel work with gaming establishments, our technology and other strategic partners, and the suppliers of the financial services upon which our cash access services rely, to design and develop innovative products and services that appeal to gaming patrons.
 
We rely on a combination of patents, trademarks, copyrights, trade secrets and contractual restrictions to protect our intellectual property. In our business, we have over 220 patents issued related to games and systems and processes, and have more than 60 patent applications pending world-wide . The expiration dates of these patents vary and are based on their filing and issuances dates. We intend to continue to actively file for patent protection, when such filings are commercially reasonable, within and outside the United States. We also seek trademark protection for our names and products and have registered hundreds of trademarks in the United States and various foreign countries. Under permission or license agreements with third parties, we also sell gaming products covered by independently filed copyrights, trademarks and/or patents. Typically, these contracts require us to pay royalties to the licensing party. Royalty expenses are included in cost of gaming and systems in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. In addition to our patents, trademarks, and copyrights, we also rely on a broader scope of intellectual property including trade secrets, in-house know-how and innovation.
 
Employees
 
As of December 31, 2015, we had approximately 900 employees. We believe that our relations with our employees are good. We have never experienced a work stoppage and none of our employees are subject to a collective bargaining agreement.

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Available Information
 
Our website address is www.everi.com. We make available free of charge on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC. In addition, our earnings conference calls are web cast live via our website. In addition to visiting our website, you may read and copy any document we file with the SEC at the SEC’s Public Reference Room at 100 F. Street NE, Washington, D.C. 20549 or at www.sec.gov. Please call the SEC at 1-800-SEC-0330 for information on the Public Reference Room.
 
REGULATION
Gaming Regulation
 
The gaming industry is highly regulated under legal systems that frequently evolve and change based on governmental public policies. Various aspects of our business are subject to comprehensive laws, regulations and ordinances applicable to the ownership, management and operation of gambling establishments as well as certain financial services conducted at such establishments. These gaming laws, regulations and ordinances require us to be licensed, registered, found suitable, qualified or otherwise approved by various city, county, state, provincial, federal, tribal and foreign government agencies (collectively “Gaming Authorities”) in the jurisdictions where we conduct business.  We must maintain those licenses, registrations, or other approvals in good standing to continue our business, which generally imposes certain (i) financial and operational reporting, and oversight requirements, and (ii) character and fitness suitability requirements, in each case administered by the Gaming Authorities, upon us and our affiliated or subsidiary organizations, as well as the officers, directors, key personnel and, in certain instances, holders of our debt and/or equity securities in each of those organizations, and our material business associates. Gaming Authorities have broad discretion in determining whether to grant a license, registration or other approval.  Subject to complying with certain procedural requirements, Gaming Authorities may deny any application, or limit, condition, restrict, revoke or suspend any license, registration, finding of suitability, qualification or other approval for any cause deemed reasonable to them. 
 
In general, the licensure, qualification and approval requirements and the regulations imposed on non-gaming suppliers and vendors are less stringent than those requirements and regulations imposed on gaming operators, gaming-related manufacturers and suppliers.  However, some jurisdictions do not distinguish between non-gaming and gaming suppliers and vendors while other jurisdictions classify all of our products and services as gaming-related.  In those jurisdictions which classify our products and services as gaming-related, we are subject to the more stringent licensing and regulatory framework. The stated policies and other purposes behind such laws, regulations, and ordinances are generally to: (i) ensure the public’s trust and confidence in legalized gambling through a system of mandated regulation, internal controls, accounting practices, and operating procedures, and (ii) promote economic activity for the state, county and local governments through revenue opportunities emanating from taxes, licensing fees, and other economic benefits arising out of gambling and related activities.
 
Moreover, our gaming devices and certain other products and technologies must be certified or approved by Gaming Authorities in many jurisdictions where we conduct business.  These Gaming Authorities test the gaming devices, systems, and related equipment directly or through an independent testing laboratory and may also require a field trial under the regulator’s technical standards before allowing us to sell the product. Although we collaborate closely with the Gaming Authorities and independent testing laboratories, we cannot control whether our products will be approved or the length of time taken to review our products for sale to third parties.
 
We believe that we are in substantial compliance with all material gaming and financial institution laws applicable to our business.  We can give no assurance, however, that our business activities or the activities of our customers in the gaming industry will not be subject to any regulatory or legal enforcement proceedings in the future and a violation of applicable gaming laws by us or any of our subsidiaries could have a material adverse effect on our financial condition, prospects and results of operations. Depending on the nature of any noncompliance, our failure to comply with such laws, regulations, and ordinances may result in the suspension or revocation of any license, registration, or other approval, a partial or complete cessation of our business, seizure of our assets, as well as the imposition of civil fines and criminal penalties.

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A description of the material regulations to which we are subject is set forth below.
 
Federal Regulation . At the federal level, we are subject to two key pieces of legislation. Our Native American customers are regulated by the National Indian Gaming Commission (“NIGC”), which was established by the Indian Gaming Regulatory Act of 1988 (the “IGRA”). The NIGC has regulatory authority over certain aspects of Native American gaming and defines the boundaries of our dealings with the Native American marketplace and the level of regulatory authority to which these games are subject. IGRA establishes three classes of gaming, each with a different regulatory framework:

Class	 	Type of Games	 	Regulatory Oversight	
I	 	Social gaming for minimal prizes and traditional Indian gaming.	 	Exclusive regulation and oversight by tribal governments.	
II	 	Bingo (both in traditional and electronic form).	 	Regulation by tribal governments with NIGC oversight.	
III	 	Casino style games (including slot machines, blackjack, craps and roulette).	 	Must be permitted by the state in which the tribe is located. The state and the tribe must have negotiated a compact approved by NIGC, and the tribe must have adopted a gaming ordinance approved by the NIGC.	
 
We sell our gaming devices and systems in both Class II and Class III markets.
 
The Johnson Act, as amended by the Federal Gambling Devices Act of 1962 (the “Johnson Act”), requires that we register annually with the Criminal Division of the United States Department of Justice and requires a wide variety of record keeping and equipment identification efforts on our part. Registration is required in order for us to sell, distribute, manufacture, transport, and/or receive gaming equipment, machines or components across state lines. If we fail to comply with the requirements set forth under the Johnson Act, we could become subject to a variety of penalties, including, but not limited to, the seizure and forfeiture of equipment.
 
State and Tribal Gaming Commissions . We are regulated by gaming commissions or similar authorities at the state or tribal level as either a (i) manufacturer of gaming devices, in those jurisdictions where we manufacture gaming devices and systems, (ii) supplier of “associated equipment,” in those jurisdictions where we sell and service fully integrated kiosks and jackpot kiosks, and/or (ii) non-gaming supplier or vendor, in those jurisdictions where we provide cash access and Central Credit services only.
 
The process of obtaining necessary licenses, registrations, or other approvals often involves substantial disclosure of confidential or proprietary information about us and our officers, directors, key personnel and, in certain instances, beneficial owners of our debt and/or equity securities, and requires a determination by the regulators as to our suitability as a manufacturer, supplier, or vendor to gaming establishments. Such suitability examinations may also generally include the following:
 
	·		requiring the licensure or finding of suitability of any of our officers, directors, key employees, or beneficial owners of our debt and/or equity securities as well as our key third-party vendors, suppliers, customers, and other companies with whom we conduct business;	
 
	·		the termination or disassociation with such officer, director, key employee, or beneficial owner of our securities that fails to file an application or to obtain a license or finding of suitability and prohibiting unapproved payments and distributions to such persons;	
 
	·		the submission of detailed financial and operating reports;	
 
	·		the submission of reports of material loans, leases, sales of securities, and financings; and	
 
	·		the regulatory approval of certain material transactions, such as the merger with or acquisition of other  companies, the transfer or pledge of our stock or other equity interests or restrictions on transfer of such interests, or similar financing transactions.	

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These regulatory obligations are imposed upon gaming-related manufacturers, suppliers, or vendors on an ongoing basis, and there are no guaranties that we will be successful in obtaining and maintaining all necessary licenses, permits, and approvals and to continue to hold other necessary gaming licenses, permits, and approvals to conduct our businesses as currently being conducted by us. The expansion of our businesses, the introduction of new games, systems, products or services, or changes to applicable rules and regulations may result in additional regulatory or licensing requiremen ts being imposed upon us. Many Gaming Au thorities will require us to submit software and other key technology components of our gaming devices and systems, as well as our fully integrated kiosks and jackpot kiosks, to government or third-party gaming laboratories for testing and certification prior to deploying such games, systems, and devices in a particular gaming jurisdiction.
 
Gaming regulatory authorities have broad discretion and may require any beneficial holder of our securities, regardless of the number of shares of common stock and/or amount of debt securities owned, to file an application, make personal or confidential disclosures, be investigated, and be subject to a determination of suitability. Many jurisdictions require any person who acquires beneficial ownership of more than a certain percentage of voting securities of a gaming company and, in some jurisdictions, non-voting securities, typically 5%, to report the acquisition to Gaming Authorities, and Gaming Authorities may require such holders to apply for qualification or a finding of suitability, subject to limited exceptions for “institutional investors” that hold a company’s voting securities for investment purposes only. If a beneficial holder of our securities is a corporation, partnership, or trust, such entity must submit detailed business and financial information, which may include information regarding its officers, directors, partners, key personnel, and beneficial owners. Further disclosure by those officers, directors, partners, key personnel, and beneficial owners may also be required. Under some circumstances and in some jurisdictions, an institutional investor, as defined in the applicable gaming regulations, that acquires and holds a specified amount of our securities in the ordinary course of its business may apply to the regulatory authority for a waiver of these licensure, qualification, or finding of suitability requirements, provided that the institutional investor holds the voting securities for investment purposes only, meets certain thresholds relating to the number of securities held, and certifies as to its intentions not to directly or indirectly exert control or influence over the management, policies, and operations of the licensed entity or to change its corporate governance documents.
 
Tribal-State Compacts and Tribal Regulation . Native American gaming is subject to the review of the NIGC and other applicable laws. Native American tribes must adopt and submit for NIGC approval the ordinances that regulate their gaming activities. Pursuant to the requirements of IGRA, our tribal customers require the tribe to have the sole proprietary interest in their gaming activities. Because federally recognized Native American tribes are independent governments with sovereign rights, Native American tribes can enact their own laws and regulate gaming operations and contracts, and, with some exceptions, generally enjoy sovereign immunity from lawsuits similar to that of the individual states and the United States.
 
Class III gaming on Native American tribal lands is subject to the negotiation of a compact between the tribe and the state in which they plan to operate a gaming facility. These tribal-state compacts typically include provisions entitling the state to receive a portion of the tribe’s gaming revenues. While tribal-state compacts are intended to document the agreement between the state and a tribe, these tribal-state compacts can be subject to disputes relative to permitted Class III gaming operations. Currently, we operate in three states where compacts materially affect our business: Oklahoma, Washington and, California.

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	·		Oklahoma . In 2004, the Oklahoma Legislature authorized certain forms of gaming at racetracks and gaming at tribal facilities pursuant to tribal-state compacts. While the racetrack facilities can operate a limited number of instant and bonanza-style bingo games and electronic amusement games, the compacts between the Native American tribes and the state allow tribal facilities to include an unlimited number of electronic instant and bonanza-style bingo games, electronic amusement games and non-house-banked tournament card games. Vendors placing games at any of these facilities are required to gain state licensing approval as well as licensing approval from each individual tribe. Furthermore, all electronic games must receive certification from independent testing laboratories and are subject to technical specifications maintained by the Oklahoma Horse Racing Commission and the individual tribal gaming authorities.	
 
	·		Washington . Our activities in the State of Washington are governed pursuant to compacts between the state government and Native American tribes located in Washington. We offer a range of Class II and Class III player terminals to our customers in Washington that are operated in conjunction with local central determinant systems as described above. Compacts between the state and tribes are recognized by IGRA to permit Class III gaming.	
 
	·		California . Our activities in the State of California are governed pursuant to compacts between the state government and Native American tribes located in California. These compacts are recognized by IGRA and permit the tribes to offer both Class II and Class III gaming machines within their gaming facilities. We offer a range of Class II linked interactive electronic games as well as Class III gaming machines to our customers in California.	
 
Charity Regulation . We have historically supplied bingo games and systems to nonprofit organizations that operate these games for charitable, educational and other lawful purposes. Bingo for charity is not subject to a nationwide regulatory system, such as the system created by IGRA to regulate Native American gaming, and, as a result, regulation for this market is generally on a state-by-state basis, although in some cases it is regulated by county commissions or other local government authorities.
 
Lottery Commissions. Most States and the District of Columbia have lotteries. The operation of lotteries is subject to extensive regulation. Many aspects of lottery operations are determined by state or local legislation, but lottery regulatory authorities exercise significant discretion to ensure the integrity of contract awards and lottery operations, including in the process of selecting suppliers of equipment, technology and services and retailers of lottery products.  Lottery regulatory commissions typically require detailed background disclosure by and investigations of vendors and their subsidiaries, affiliates, principal stockholders, officers, directors, and employees who will be directly responsible for the operation of lottery systems.  These regulators may have authority to order removal of employees who they deem to be unsuitable or whose presence they believe may adversely affect the operational security or integrity of the lottery. Some lottery commissions mandate extensive personal and financial disclosure and background checks from persons and entities beneficially owning a specified percentage (typically 5% or more) of a vendor's securities. The failure of such beneficial owners of our securities to cooperate with the regulators could result in penalties, jeopardize the award of a lottery contract to us, or provide grounds for termination of an existing lottery contract.
 
Internet and Online Gaming Regulation . Several states have passed implementing legislation and/or regulations to allow certain intra-state, wager-based, online casino and/or lottery games, such as online poker, lottery ticket purchases, or lottery ticket subscriptions. This is due, in part, to (a) a rule of construction contained within the Unlawful Internet gaming Enforcement Act (“UIGEA”) that limits and prevents UIGEA application from altering, limiting or extending any federal, state or tribal laws regulating gambling, (b) a definition within UIGEA that excludes certain intra-state, intra-tribal and interstate horseracing transactions from the phrase “unlawful Internet gambling,” provided certain threshold requirements are met, and (c) a memorandum dated September 20, 2011 and published by the United States Department of Justice, Criminal Division, in which the Department concludes, among other things, that the Federal Wire Act of 1961 (the “Wire Act”) does not apply to interstate transmissions of wire communications that do not relate to a sporting event or contest. To date, states such as Delaware, Georgia, Illinois, Michigan, Minnesota, Nevada, New Jersey, North Carolina and North Dakota have some form of internet or online gaming or lottery activities.
 
However, the legislative and regulatory environment surrounding online, wager-based games in the United States remains uncertain and complex, and it is unclear how the legislative and regulatory framework governing these activities will

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evolve in the future. Many states have yet to introduce or finalize regulations regarding the licensing and operational requirements regarding online, wager-based activity, including the licensing and technological requirements relating to the funding and processing of payments relating to online, wager-based casino and lottery games. In addition, the funding of online casino gaming activity is subject to the requirement of the UIGEA, which may prohibit or significantly impede the funding of online, wager-based gaming activity. There is also a possibility that the Wire Act may be amended in the future to prevent or prohibit the use of Internet or mobile-based platforms regardless of the involvement of a sporting event or contest.  
 
Financial Services Regulation
 
Our Payments business is also subject to a number of financial services regulations:
 
Durbin Amendment . On June 29, 2011, the Federal Reserve Board issued a final rule establishing standards for debit card interchange fees, among other things, which took effect on October 1, 2011. This rule, Regulation II (Debit Card Interchange Fees and Routing) was promulgated pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 as modified by the Durbin Amendment (the “Durbin Amendment”) and establishes, among other things, standards for assessing whether debit card interchange fees received by certain debit card issuers are reasonable and proportional to the costs incurred by issuers for electronic debit transactions. Debit card interchange fees are established by payment card networks and ultimately paid by merchants to debit card issuers for each debit transaction.
 
Anti-Money Laundering . The USA PATRIOT Act of 2001 and its implementing federal regulations require us to establish and maintain an anti-money laundering program. Our anti-money laundering program includes: internal policies, procedures and controls designed to identify and report money laundering, a designated compliance officer, an ongoing employee training program, and an independent audit function to test the program. In addition, the cash access services that we provide are subject to record keeping and reporting obligations under the Bank Secrecy Act. Our gaming establishment customers are required to file a SAR with the U.S. Treasury Department’s Financial Crimes Enforcement Network to report any suspicious transactions relevant to a possible violation of law or regulation. We are also required to file a SAR where we provide our cash access services directly to patrons through satellite cages (“booths”) that we staff and operate. To be reportable, such a transaction must meet criteria that are designed to identify the hiding or disguising of funds derived from illegal activities. Our gaming establishment customers, in situations where our cash access services are provided through gaming establishment cashier personnel, and we, in situations where we provide our cash access services through a booth location, are required to file a CTR of each deposit, withdrawal, exchange of currency or other payment or transfer by, through or to us which involves a transaction in currency of more than $10,000 in a single day. Our QCP Web product can assist in identifying transactions that give rise to reporting obligations. When we issue or sell drafts for currency in amounts between $3,000 and $10,000, we maintain a record of information about the purchaser, such as the purchaser’s address and date of birth.
 
Fund Transfers . Our POS debit card transactions and ATM services are subject to the Electronic Fund Transfer Act, which provides cardholders with rights with respect to electronic fund transfers, including the right to dispute unauthorized charges, charges that list the wrong date or amount, charges for goods and services that are not accepted or delivered as agreed, math errors and charges for which a cardholder asks for an explanation or written proof of transaction along with a claimed error or request for clarification. We believe the necessary policies and procedures have been implemented throughout our organization in order to comply with the regulatory requirements for fund transfers.
 
State Money Transmission Laws . Most states in which we issue the negotiable instruments that are used to complete credit card cash access and POS debit card transactions or offer our online payment processing solution require us to have a money transmitter license.
 
Credit Reporting . Our Central Credit gaming patron credit bureau services and check verification and warranty services are subject to the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act of 2003 and their implementing rules, which require consumer credit bureaus, such as Central Credit, to provide credit report information to businesses only for certain purposes and to otherwise safeguard credit report information, to disclose to consumers their credit report on request, and to permit consumers to dispute and correct inaccurate or incomplete information in their credit report. These laws and rules also govern the information that may be contained in a consumer credit report. We continue

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to implement policies and procedures as well as adapt our business practices in order to comply with these laws and regulations. In addition to federal regulations, our Central Credit gaming patron credit bureau services are subject to the state credit reporting regulations that impose similar requirements to the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act of 2003.
 
Debt Collection . We currently outsource most of our debt collection efforts to third parties. However, we do engage in debt collection to collect on chargebacks on our cash access products and unpaid balances for services performed for our check services, Central Credit services, receivables relating to the sale and service of our fully integrated kiosks and jackpot kiosks, and other amounts owing to us in connection with performing various services for our customers. All such collection practices may be subject to the Fair Debt Collection Practices Act, which prohibits unfair, deceptive or abusive debt collection practices, as well as consumer-debt-collection laws and regulations adopted by the various states.
 
Privacy Regulations . Our collection of information from patrons who use our financial products and services, such as our cash access services, are subject to the financial information privacy protection provisions of the Gramm-Leach-Bliley Act and its implementing federal regulations. We gather, as permitted by law, non-public, personally-identifiable financial information from patrons who use our cash access services, such as names, addresses, telephone numbers, bank and credit card account numbers and transaction information. The Gramm-Leach-Bliley Act requires us to safeguard and protect the privacy of such non-public personal information and also requires us to make disclosures to patrons regarding our privacy and information sharing policies and give patrons the opportunity to direct us not to disclose information about them to unaffiliated third parties in certain situations. We are also subject to state privacy regulations which, in some cases, may be even stricter than federal law. We continue to implement policies and programs as well as adapt our business practices in order to comply with federal and state privacy laws and regulations.
 
ATM Operations . The Electronic Fund Transfer Act requires us to disclose certain notices regarding the fees that we charge for performing an ATM transaction as well as to incorporate such notices on the ATM screens to notify patrons of such fees prior to completing an ATM transaction. Our ATM services are also subject to applicable state banking regulations in each jurisdiction in which we operate ATMs which require, among other things, that we register with the state banking regulators as an operator of ATMs, that we provide gaming patrons with notices of the transaction fees assessed upon use of our ATMs, that our transaction fees do not exceed designated maximums, that we offer gaming patrons a means of resolving disputes with us, and that we comply with prescribed safety and security requirements. In addition, the ATMs that we operate are subject to requirements of the Americans with Disabilities Act, which in general require that ATMs be accessible to individuals with disabilities, such as visually-impaired persons.
 
Check Cashing . In jurisdictions in which we serve as a check casher, we are required to be licensed by the applicable state banking regulator to operate as a check casher. Some states also impose restrictions on this activity, such as limits on the amounts of service fees that may be imposed on the cashing of certain types of checks, requirements as to records that must be kept with respect to dishonored checks and requirements as to the contents of receipts that must be delivered to gaming patrons at the time a check is cashed.
 
Network and Card Association Regulations . In addition to the governmental regulation described above, some of our services are also subject to rules promulgated by various payment networks, EFT networks and card associations. For example, we must comply with the Payment Card Industry (“PCI”) Data Security Standard. We have been designated as a compliant service provider under the PCI Data Security Standard. We must be certified to maintain our status as a compliant service provider on an annual basis.
 
In addition, Europay, MasterCard and Visa jointly developed new card security features (“EMV”), designed to deter fraudulent card transactions related to identity theft, counterfeit cards and the misuse of lost or stolen cards via enhanced card authentication, transaction authorization and cardholder verification using chip-based smart-cards. EMV has been adopted in many regions of the world as the global standard for fraud deterrence in chip-based smart-card payments. The U.S. payments industry has until recently continued to rely on magnetic stripe cards instead of EMV-compliant chip-based cards. However, U.S. card issuers are beginning to offer EMV-capable chip-based smart-cards, and, beginning in October 2015, the network and card associations will begin shifting liability for fraudulent POS transactions generated through EMV-capable cards onto merchants whose devices are not capable of processing chip-based smart-card EMV transactions. The liability shift for ATM transactions onto merchants began in October 2015. This shifts the responsibility for chargebacks due to fraudulent transactions on such cards from the card issuer onto the merchant. As a merchant in

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connection with our cash access transactions processed through MasterCard and Visa, we must upgrade or replace our existing fleet of U.S.-based devices to accept the EMV standard. This requires us to upgrade the software on a significant portion of our currently deployed fleet of U.S.-based POS, kiosk and ATM devices. Additionally, we may have to replace a portion of our devices with newer devices equipped with the minimum hardware requirements to support EMV.
 
International Regulation
 
We are also subject to a variety of gaming and financial services regulations and other laws, including the Foreign Corrupt Practices Act, in the international markets in which we operate. We expect to become subject to additional gaming and financial services regulations and other laws in the jurisdictions into which we expand our operations. Our expansion into new markets is dependent upon our ability to comply with the regulatory regimes adopted by such jurisdictions. Difficulties in obtaining approvals, licenses or waivers from the gaming and monetary authorities, in addition to other potential regulatory and quasi-regulatory issues that we have not yet ascertained, may arise in other international jurisdictions into which we wish to enter.  
 
Item 1A.  Risk Factors  . 
 
The following section describes material risks and uncertainties that we believe may adversely affect our business, financial condition, results of operations or the market price of our stock. This section should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements and “Item7. Management’s Discussion and Analysis of Financial Condition and Results of Operations “included elsewhere in this Annual Report on Form 10-K.
 
Risks Related to Our Business
 
We may not remain profitable.
 
We had net loss of $ 105 .0 million and net income of $12.1 million for the years ended December 31, 2015 and 2014, respectively. As a result of the interest payments on the indebtedness incurred in connection with the Merger, amortization of intangible assets associated with the Merger and other acquisitions, other related acquisition and financing costs, asset impairment charges and depreciation and other amortization, we may not be able to remain profitable in the future. We expect to continue to incur charges in the future in connection with the Merger and future acquisitions and we cannot assure you that we will generate net profits from operations in 2016 or subsequent years. Our ability to generate net profits in the future will depend, in part, on our ability to:
 
	·		continue to successfully integrate our Games and Payments businesses;	

	·		establish strategic business relationships with new and existing customers;	

	·		sell our products and services into new markets   and to new customers in existing markets and retain our existing customers;	

	·		develop new games or license third party content in our Games business and develop new products and services in our Payments business;	

	·		effectively manage a larger and more diversified workforce and business;	

	·		react to changes, including technological and regulatory changes, in the markets we target or operate in;	

	·		respond to competitive developments and challenges;	

	·		comply with the Europay, MasterCard and Visa global standard for cards equipped with computer chips; and	

	·		attract and retain experienced and talented personnel.	

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We may not be able to do any of these successfully, and our failure to do so could have a material adverse effect on our business, financial condition, operations or cash flows, which could, among other things, affect our ability to make payments under our Credit Facilities (defined herein) or the Notes (defined herein).
Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in our industry or the economy, expose us to interest rate risk to the extent of our variable rate debt, and prevent us from meeting our obligations with respect to our indebtedness.  
 
As of December 31, 2015, our total indebtedness was approximately $1.2 billion, which included the Credit Facilities and the Notes, and contains restrictive covenants. Our high degree of leverage could have significant adverse effects on our business, including :
 
	·		requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures, and future business opportunities;	

	·		making it more difficult for us to satisfy our obligations with respect to our indebtedness and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the purchase agreement governing the Refinanced Secured Notes and  indenture governing the Unsecured Notes and the agreements governing such other indebtedness;	
 
	·		increasing our vulnerability to adverse economic, industry or competitive developments;	

	·		restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;	

	·		limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes; and	

	·		limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged or may have more resources than us and who therefore may be able to take advantage of opportunities that our leverage prevents us from exploiting.	
We may not be able to generate sufficient cash to service all of our indebtedness, including the Credit Facilities and the Notes, and fund our working capital and capital expenditures, and we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to make scheduled payments on our indebtedness, including the Credit Facilities and the Notes, will depend upon our future operating performance and on our ability to generate cash flow in the future, which is subject to general economic, financial, business, competitive, legislative, regulatory, and other factors that are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations, or that future borrowings, including those under the Credit Facilities, will be available to us in an amount sufficient to pay our indebtedness or to fund other liquidity needs.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investment and capital expenditures or to dispose of material assets or operations, seek additional equity capital, or restructure or refinance our indebtedness. We may not be able to affect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, such alternative actions may not allow us to meet our scheduled debt service obligations. The Credit Facilities and the purchase agreement governing the Refinanced Secured Notes and indenture governing the Unsecured Notes restrict our ability to dispose of assets and use the proceeds from any such disposition.
If we cannot make scheduled payments on our debt, we will be in default and, as a result, the holders of the Notes could

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declare all outstanding principal and interest to be due and payable, the lenders under the Credit Facilities could declare all outstanding amounts under such facilities due and payable and terminate their commitments to loan money, and, in each case, foreclose against the assets securing the borrowings under the Credit Facilities, and we could be forced into bankruptcy or liquidation.
If our indebtedness is accelerated, we may need to refinance all or a portion of our indebtedness before maturity. We may not be able to refinance any of our indebtedness on commercially reasonable terms or at all. There can be no assurance that we will be able to obtain sufficient funds to enable us to repay or refinance our debt obligations on commercially reasonable terms, or at all.
The agreements and instruments governing our debt impose restrictions that may limit our operating and financial flexibility.
The Credit Facilities and the purchase agreement governing the Refinanced Secured Notes and indenture governing the Unsecured Notes contain a number of significant restrictions and covenants that limit our ability to:

	·		incur additional indebtedness;	

	·		sell assets or consolidate or merge with or into other companies;	

	·		pay dividends or repurchase or redeem capital stock;	

	·		make certain investments;	

	·		issue capital stock of our subsidiaries;	

	·		incur liens;	

	·		prepay, redeem or repurchase subordinated debt; and	

	·		enter into certain types of transactions with our affiliates.	
These covenants could have the effect of limiting our flexibility in planning for or reacting to changes in our business and the markets in which we compete. In addition, the Credit Facilities require us to comply with a financial maintenance covenant under certain circumstances. Operating results below current levels or other adverse factors, including a significant increase in interest rates, could result in our being unable to comply with the financial covenants contained in the Credit Facilities, if applicable. If we violate this covenant and are unable to obtain a waiver from our lenders, our debt under the Credit Facilities would be in default and could be accelerated by our lenders. Based on cross-default provisions in the agreements and instruments governing our indebtedness, a default under one agreement or instrument could result in a default under, and the acceleration of, our other indebtedness. In addition, the lenders under the Credit Facilities could proceed against the collateral securing that indebtedness.
If our indebtedness is accelerated, we may not be able to repay our debt or borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms, on terms that are acceptable to us, or at all. If our debt is in default for any reason, our business, financial condition and results of operations could be materially and adversely affected. In addition, complying with these covenants may make it more difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions.

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Our net operating loss and other tax credit carry forwards are subject to limitations that could potentially reduce these tax assets.
 
As of December 31, 2015, we had tax-effected federal and state net operating loss (“NOL”) carry forwards of approximately $76.6 million and $9.4 million, respectively, a federal research and development credit carry forward of approximately $4.3 million, and a federal alternative minimum tax credit carry forward of approximately $1.6 million. The net operating losses will expire starting in 2016.  The federal research and development credits are limited to a 20 year carry forward period and will begin to expire in varying amounts in 2033 if not utilized.  Based on the weight of positive and negative evidence, we believe that it is more likely than not that we will be able to utilize these NOL and other tax credit carry-forwards, with the exception of certain state NOL carry forwards that already have a valuation allowance. However, our ability to utilize these NOL and other tax credit carry forwards to reduce taxable income in future years may be limited for various reasons, including the possibility that projected future taxable income is insufficient to realize the full benefit of these NOL carry forwards prior to their expiration. Additionally, our ability to fully use these tax assets could be adversely affected by the limitations of Sections 382, 383 and 384 of the Internal Revenue Code.  
The gaming industry is intensely competitive, and if we are unable to compete effectively, our business could be negatively impacted.
The market for gaming devices, cash access products, and related services is highly competitive, and we expect competition to increase and intensify in the future. In both our Games business and Payments business, some of our competitors and potential competitors have significant advantages over us, including greater name recognition, longer operating histories, pre-existing relationships with current or potential customers with respect to other financial services, greater financial, research, design, development, marketing, technological and other resources, and more ready access to capital resources, which allow them to respond more quickly to new or changing opportunities, be in a better position to compete as well as, in respect of our cash access business, to pay higher commissions or other incentives to gaming establishments in order to gain new customers. In our Payments business, we compete with other established providers of cash access products and services, including third-party transaction processors, financial institutions and other regional and local banks that operate ATMs on the premises of gaming establishments, as well as from gaming establishments that operate their own proprietary cash access systems. To the extent that we lose customers to these competitors, or competitive pressures force us to offer incentives or less favorable pricing terms to us to establish or maintain relationships with gaming establishments, our business, financial condition, operations or cash flows could be materially and adversely affected.
Our business is dependent upon consumer demand for gaming and overall economic trends specific to the gaming industry. Economic downturns or a decline in the popularity of gaming could reduce the number of patrons that use our products and services or the amounts of cash that they access using our services.
We provide our gaming-related and cash access products and services almost exclusively to gaming establishments. As a result, our business depends on consumer demand for gaming. Gaming is a discretionary leisure activity, participation in which has in the past and may in the future decline during (i) periods of economic growth, due to changes in consumers’ spending habits, (ii) periods of economic downturns, due to decreases in our customers’ disposable income or general tourism activities, and (iii) periods of declining consumer confidence, due to general economic conditions, geopolitical concerns or other factors. Gaming competes with other leisure activities as a form of consumer entertainment and may lose popularity as new leisure activities arise or as other leisure activities become more popular. In addition, gaming in traditional gaming establishments (to which we sell our products and services) competes with Internet-based gaming. The popularity and acceptance of gaming is also influenced by the prevailing social mores and changes in social mores, including changes driven by social responsibility organizations that are dedicated to addressing problem gaming, which could result in reduced acceptance of gaming as a leisure activity or litigation or lobbying efforts focused on limiting gaming activities. To the extent that the popularity or availability of gaming in traditional gaming establishments declines as a result of any of these factors, the demand for our cash access and gaming-related products and services, or the willingness of our customers to spend new capital on acquiring gaming equipment or utilize revenue share agreements, may decline and our business may be harmed.

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Most of our gaming device contracts with our customers are on a month-to-month basis, and if we are unable to maintain our current customers on terms that are favorable to us, our business, financial condition, operations or cash flows may suffer a material adverse effect.
Most of our gaming device contracts with our customers are generally on a month-to-month basis, except for customers with whom we have entered into development and placement fee agreements. We do not rely upon the stated term of our gaming device contracts to retain the business of our customers. We rely instead upon providing competitive player terminals, games and systems to give our customers the incentive to continue doing business with us. At any point in time, a significant portion of our gaming device business is subject to nonrenewal, which may materially and adversely affect our earnings, financial condition and cash flows. To renew or extend any of our customer contracts generally, we may be required to accept financial and other terms that are less favorable to us than the terms of the expired contracts. In addition, we may not succeed in renewing customer contracts when they expire. If we are required to agree to other less favorable terms to retain our customers or we are not able to renew our relationships with our customers upon the expiration of our contracts, our business, financial condition, operations or cash flows could suffer a material adverse effect.
Consolidation among our customers could have a material adverse effect on our revenues and profitability.
We often execute contracts with customers pursuant to which we provide products and services at multiple gaming establishments. Accordingly, the expiration or termination of a single key contract can mean the loss of multiple gaming facilities at which our products and services are used. In addition, consolidation among operators of gaming establishments may also result in the loss of customers if one of our customers is acquired by a business that utilizes one of our competitors.
We derive a significant portion of our revenue from Native American tribal customers, and our ability to effectively operate in Native American gaming markets is vulnerable to legal and regulatory uncertainties, including the ability to enforce contractual rights on Native American land.
We derive a significant percentage of our revenue from the provision of cash access and gaming-related products and services to gaming facilities operated on Native American lands.
Native American tribes are independent governments with sovereign powers and, in the absence of a specific grant of authority by Congress to a state or a specific compact or agreement between a tribal entity and a state that would allow the state to regulate activities taking place on Native American lands, they can enact their own laws and regulate gaming operations and contracts. In this capacity, Native American tribes generally enjoy sovereign immunity from lawsuits similar to that of the individual states and the United States. Accordingly, before we can seek to enforce contract rights with a Native American tribe, or an agency or instrumentality of a Native American tribe, we must obtain from the Native American tribe a waiver of its sovereign immunity with respect to the matter in dispute, which we are not always able to do. Without a limited waiver of sovereign immunity, or if such waiver is held to be ineffective, we could be precluded from judicially enforcing any rights or remedies against a Native American tribe, including the right to enter Native American lands to retrieve our property in the event of a breach of contract by the tribal party to that contract. Even if the waiver of sovereign immunity by a Native American tribe is deemed effective, there could be an issue as to the forum in which a lawsuit may be brought against the Native American tribe. Federal courts are courts of limited jurisdiction and generally do not have jurisdiction to hear civil cases relating to Native American tribes, and we may be unable to enforce any arbitration decision effectively. Although we attempt to agree upon governing law and venue provisions in our contracts with Native American tribal customers, these provisions vary widely and may not be enforceable.
Certain of our agreements with Native American tribes are subject to review by regulatory authorities. For example, our development agreements are subject to review by the NIGC, and any such review could require substantial modifications to our agreements or result in the determination that we have a proprietary interest in a Native American tribe’s gaming activity, which could materially and adversely affect the terms on which we conduct our business. The NIGC has previously expressed the view that some of our development agreements could be in violation of the requirements of the IGRA and Native American tribal gaming regulations, which state that the Native American tribes must hold “sole proprietary interest” in the Native American tribes’ gaming operations, which presents additional risk for our business. The NIGC may also reinterpret applicable laws and regulations, which could affect our agreements with Native American

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tribes. We could also be affected by alternative interpretations of the Johnson Act as the Native American tribes, who are the customers for our Class II games, could be subject to significant fines and penalties if it is ultimately determined they are offering an illegal game, and an adverse regulatory or judicial determination regarding the legal status of our products could have material adverse consequences for our business, financial condition, operations, cash flows or prospects.
Government enforcement, regulatory action, judicial decisions and proposed legislative action have in the past, and will likely continue to affect our business, financial condition, operations, cash flows and prospects in Native American tribal lands. The legal and regulatory uncertainties surrounding our Native American tribal agreements could result in a significant and immediate material adverse effect on our business, financial condition, operations or cash flows. Additionally, such uncertainties could increase our cost of doing business and could take management’s attention away from operations. Regulatory action against our customers or equipment in these or other markets could result in machine seizures and significant revenue disruptions, among other adverse consequences. Moreover, Native American tribal policies and procedures, as well as tribal selection of gaming vendors, are subject to the political and governance environment within each Native American tribe. Changes in tribal leadership or tribal political pressure can affect our business relationships within Native American markets.
Certain Native American tribes require us to contract with entities that are owned, controlled or managed by tribal members to provide a portion of our services. In some instances, these entities are subcontractors of ours in connection with providing our services, while in other instances we are a subcontractor to these entities who contract with the applicable tribal gaming casino or tribe directly to provide cash access services. Our ability to provide our services is dependent upon our relationship with these third parties and their ability to provide services in accordance with the terms of our contractual arrangement with these third parties and, in some instances, the third parties’ relationship or contractual arrangement with the applicable tribal gaming casino or tribe.
Our business depends on our ability to introduce new, commercially viable games, products and services in a timely manner.
Our success is dependent on our ability to develop and sell new games, products and services that are attractive not only to our customers but also to their customers, the gaming patrons. If our games, products, and services do not appeal to gaming operators and patrons, or do not meet or sustain revenue and profitability of contractual obligations and expectations, we may lose business to our competitors. Additionally, we may be unable to enhance existing games, products and services in a timely manner in response to changing regulatory, legal or market conditions or customer requirements, or new games, products and services may not achieve market acceptance in new or existing markets. Delay in regulatory approvals of new gaming devices and equipment may adversely impact new product deployment.  Furthermore, as we attempt to generate new streams of revenue by selling our games, products and services to new customers in new jurisdictions, we will face licensing and approval requirements of Gaming Authorities influencing the timing of our market entry and we may have difficulty implementing an effective sales strategy for these new jurisdictions. If we are unable to keep pace with rapid innovations in new technologies or product design and deployment or if we are unable to quickly adapt our development, manufacturing or sales processes to compete, our business, financial condition, operations or cash flows could suffer a material adverse effect.
We may not successfully enter new markets and potential new markets may not develop quickly or at all.
If and as new and developing domestic markets develop, competition among providers of gaming-related and cash access products and services will intensify. We will face a number of hurdles in our attempts to enter these markets, including the need to expand our sales and marketing presence, compete against pre-existing relationships that our target customers may have with our competitors, the uncertainty of compliance with new or developing regulatory regimes (including regulatory regimes relating to Internet gaming) with which we are not currently familiar, and oversight by regulators that are not familiar with us or our businesses. Each of these risks could materially impair our ability to successfully expand our operations into these new and developing domestic markets.
In addition, as we attempt to sell our gaming-related and cash access products and services into international markets in which we have not previously operated, we may become exposed to political, economic, tax, legal and regulatory risks not

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faced by businesses that operate only in the United States. The legal and regulatory regimes of foreign markets and their ramifications on our business are less certain. Our international operations are subject to a variety of risks, including different regulatory requirements and interpretations, trade barriers, difficulties in staffing and managing foreign operations, higher rates of fraud, compliance with anti-corruption and export control laws, fluctuations in currency exchange rates, difficulty in enforcing or interpreting contracts or legislation, political and economic instability and potentially adverse tax consequences. Difficulties in obtaining approvals, licenses or waivers from the monetary and gaming authorities of other jurisdictions, in addition to other potential regulatory and quasi-regulatory issues that we have not yet ascertained, may arise in international jurisdictions into which we attempt to enter. In these new markets, our operations will rely on an infrastructure of, among other things, financial services and telecommunications facilities that may not be sufficient to support our business needs, such as the authorization and settlement services that are required to implement electronic payment transactions and the telecommunications facilities that would enable us to reliably connect our networks to our products at gaming establishments in these new markets. In these new markets, we may additionally provide services based upon interpretations of applicable law, which interpretation may be subject to regulatory or judicial review. These risks, among others, could materially and adversely affect our business, financial condition and operations. In connection with our expansion into new international markets, we may forge strategic relationships with business partners to assist us. The success of our expansion into these markets therefore may depend in part upon the success of the business partners with whom we forge these strategic relationships. If we do not successfully form strategic relationships with the right business partners or if we are not able to overcome cultural or business practice differences, our ability to penetrate these new international markets could suffer.
We are subject to the risk that the domestic or international markets we attempt to enter or expand into may not develop as quickly as anticipated, or at all. The development of new gaming markets is subject to political, social, regulatory and economic forces beyond our control. The expansion of gaming activities in new markets can be very controversial and may depend heavily on the support and sponsorship of local government. Changes in government leadership, failure to obtain requisite voter support in referendums, failure of legislators to enact enabling legislation and limitations on the volume of gaming activity that is permitted in particular markets may inhibit the development of new markets. Further, our estimates of the potential future opportunities in new markets are based on a variety of assumptions that may prove to be inaccurate. To the extent that we overestimate the potential of a new market, incorrectly gauge the timing of the development of a new market or fail to anticipate the differences between a new market and our existing markets, we may fail in our strategy of growing our business by expanding into new markets. Moreover, if we are unable to meet the needs of our existing customers as they enter markets that we do not currently serve, our relationships with these customers could be harmed.
We may not realize satisfactory returns on money loaned or otherwise funded to new and existing customers to develop or expand gaming facilities.
In our gaming business, we enter into development and placement fee agreements to provide financing for construction, expansion or remodeling of gaming facilities. Under our development and placement fee agreements, we typically secure a long-term revenue share percentage and a fixed number of player terminal placements in the facility in exchange for funding the development and construction of the gaming facility. The success of these ventures is dependent upon the timely completion of the gaming facility, the placement of our player terminals and a favorable regulatory environment. Our development and placement efforts and financing activities may result in operating difficulties, financial and regulatory risks, or required expenditures that could materially and adversely affect our liquidity. In connection with one or more of these transactions, and to obtain the necessary development and placement fee funds, we may need to extend secured and unsecured credit to potential or existing customers that may not be repaid, incur debt on terms unfavorable to us, incur difficulties in perfecting security interests in collateral on Indian lands, or that we are unable to repay, or incur other contingent liabilities. While we believe the increased level of receivables from counterparties to development agreements has allowed us to grow our business, it has also required direct, additional focus of and involvement by management. The failure to maintain controls and processes related to our collection efforts or the deterioration of regulatory or financial condition of our customers could negatively impact our business.

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We typically rely on a single third-party processor to process substantially all of our cash access transactions that are processed through various card associations and payment networks, and the failure of our third-party processor to adequately provide such processing services could have a material adverse effect on our business, financial condition, operations or cash flows.
We typically rely on a single third party to provide processing services for the substantial majority of our cash access transactions by obtaining authorizations for ATM cash withdrawal, POS debit card and credit card cash access transactions and to provide settlement transaction files to card associations and payment networks for some of these transactions. If our third-party processor fails to adequately provide these services, it could result in our systems being unable to process our cash access transactions intermittently or for extended periods of time, which could have a material adverse effect on our business, financial condition, operations or cash flows.
We depend on third-party transaction processors, telecommunication networks and other third-party technology providers to provide our cash access and related services, and if we, or any of these third parties, experience system or service failures, the products and services we provide could be delayed or interrupted, which could harm our business and reputation.
Our ability to provide uninterrupted and high levels of services depends upon the performance of the third-party processors, telecommunication networks and other third-party technology providers that we use. Any significant interruptions in or degradation of the quality of the services that these third parties provide to us could severely harm our business and reputation and lead to the loss of customers and revenue. Our third-party providers and their systems are potentially vulnerable to computer viruses, physical or electronic security breaches, natural disasters and similar disruptions, which could lead to interruptions or outages of our services, delays, loss of data or public release of confidential data, all of which could have a material adverse effect on our business, financial condition, operations or cash flows. In some instances, such failures could cause us to fail to meet contractual deadlines or specifications and force us to renegotiate contracts on less favorable terms, pay penalties or liquidated damages or suffer major losses if the customer exercises its right to terminate. We are parties to certain agreements that could require us to pay damages resulting from loss of revenues if our systems are not properly functioning or as a result of a system malfunction. For example, our agreement with the New York Lottery permits termination of the contract at any time for failure by us or our system to perform properly, and any such unforeseen downtime could subject us to liquidated damages. In addition, if we fail to meet the terms specified in our contracts, we may not realize their full benefits. Failure to perform under any contract could result in substantial monetary damages, as well as contract termination. Our results of operations are dependent on our ability to maximize our earnings from our contracts.
An unexpectedly high level of chargebacks, as the result of fraud or otherwise, including in connection with new technology standards being implemented in the United States regarding chip-based cards, could materially and adversely affect our cash access business.
In 1994, Europay, MasterCard and Visa jointly developed EMV, designed to deter fraudulent card transactions related to identity theft, counterfeit cards and the misuse of lost or stolen cards via enhanced card authentication, transaction authorization and cardholder verification using chip-based smart-cards. EMV has been adopted in many regions of the world as the global standard for fraud deterrence in chip based smart-card pa yments. Historically, the U.S. p ayments industry has relied on magnetic stripe cards instead of EMV compliant chip-based cards. Recently, however, U.S. card issuers have begun to offer EMV-capable chip-based smart-cards, and as of October 1, 2015, the U.S. payment card industry shifted the liability for fraudulent transactions generated through EMV-enabled cards onto merchants whose devices are not capable of processing chip-based smart-card EMV transactions. This shifted the responsibility for chargebacks due to fraudulent transactions on such cards from the card issuer onto the merchant. We bear the risk and are subject to trailing chargeback risk for fraudulent transactions generated through EMV-enabled cards from October 1, 2015 until such time that our customer base is fully converted to the EMV standards.  
When patrons use our cash access services, we either dispense cash or produce a negotiable instrument that can be exchanged for cash. If a completed cash access transaction is subsequently disputed, and if we are unsuccessful in establishing the validity of the transaction, we may not be able to collect payment for such transaction and such transaction

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becomes a chargeback. In the event that we incur chargebacks in excess of specified levels, we could lose our sponsorship into the card associations or be censured by the card associations by way of fines or otherwise. Our failure to adequately manage our chargebacks could have a material adverse effect on our business, financial condition, operations or cash flows.
Changes in consumer willingness to pay a fee to access their funds could reduce the demand for our cash access products and services.
Our cash access business depends upon the willingness of patrons to pay a service fee to access their own funds on the premises of a gaming establishment. In most retail environments, consumers typically do not pay an additional fee for using non-cash payment methods such as credit cards, POS debit cards or checks. Gaming patrons could bring more cash with them to gaming establishments or access cash outside of gaming establishments without paying a fee for the convenience of not having to leave the gaming establishment. To the extent that gaming patrons become unwilling to pay these fees for convenience or lower cost cash access alternatives become available, the demand for cash access services within gaming establishments will decline and our business could suffer.
If we are unable to protect our intellectual property adequately or obtain intellectual property rights and agreements, we may lose valuable competitive advantages, be forced to incur costly litigation to protect our rights, or be restricted in our ability to provide various products in our markets  
Our success depends, in part, on developing and protecting our intellectual property. We rely on copyright, patent, trademark and trade secret laws to protect our intellectual property. We also rely on other confidentiality and contractual agreements and arrangements with our employees, affiliates, business partners and customers to establish and protect our intellectual property and similar proprietary rights. While we expect these agreements and arrangements to be honored, we cannot assure you that they will be and, despite our efforts, our trade secrets and proprietary know-how could become known to, or independently developed by, competitors. Any litigation relating to the defense of our intellectual property, whether successful or unsuccessful, could result in substantial costs to us and potentially cause a diversion of our resources.
In addition, we may face claims of infringement that could interfere with our ability to use technology or other intellectual property rights that are material to our business operations. In the event a claim of infringement against us is successful, we may be required to pay royalties to use technology or other intellectual property rights that we had been using, or we may be required to enter into a license agreement and pay license fees, or we may be required to stop using the technology or other intellectual property rights that we had been using. We may be unable to obtain necessary licenses from third parties at a reasonable cost or within a reasonable amount of time. Any litigation of this type, whether successful or unsuccessful, could result in substantial costs to us and potentially cause a diversion of our resources.
We rely on hardware, software and games licensed from third parties, and on technology provided by third-party vendors, the loss of which could materially and adversely affect our business, increase our costs and delay deployment or suspend development of our gaming systems and player terminals.
We have entered into license agreements with third parties for the exclusive use of their technology and intellectual property rights in the gaming industry, such as our license to use portions of the software infrastructure upon which our cash access systems operate, and we also rely on third-party manufacturers to manufacture our gaming devices, fully integrated kiosks and jackpot kiosks. We rely on these other parties to maintain and protect this technology and the related intellectual property rights. If our licensors fail to protect their intellectual property rights in material that we license and we are unable to protect such intellectual property rights, the value of our licenses may diminish significantly and our business could be significantly harmed. In addition, if these agreements expire and we are unable to renew them, or if the manufacturers of this software or hardware, or functional equivalents of this software or hardware, were either no longer available to us or no longer offered to us on commercially reasonable terms, we may lose a valuable competitive advantage and our business could be harmed.
Acts of God, adverse weather and shipping difficulties, particularly with respect to international third-party suppliers of our components, could cause significant production delays. If we are unable to obtain these components from our established third-party vendors, we could be required to either redesign our product to function with alternate third-party

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products or to develop or manufacture these components ourselves, which would result in increased costs and could result in delays in the deployment of our gaming systems and player terminals. Furthermore, we might be forced to limit the features available in our current or future offerings.
We rely on intellectual property licenses from one or more third-party competitors, the loss of which could materially and adversely affect our business and the sale or placement of our products. Various third-party gaming manufacturers with which we compete are much larger than us and have substantially larger intellectual property assets. The gaming manufacturer industry is very competitive and litigious, and a lawsuit brought by one of our larger competitors, whether or not well-founded, may have a material adverse effect on our business, financial condition, operations or cash flows and our ability to sell or place our products.
Our inability to identify business opportunities and future acquisitions, or successfully execute any of our identified business opportunities or future acquisitions could limit our future growth.
From time to time, we pursue strategic acquisitions in support of our strategic goals. In connection with any such acquisitions, we could face significant challenges in timely securing required approvals of Gaming Authorities, or managing and integrating our expanded or combined operations, including acquired assets, operations and personnel. There can be no assurance that acquisition opportunities will be available on acceptable terms or at all or that we will be able to obtain necessary financing or regulatory approvals to complete potential acquisitions.
 
We may not achieve the intended benefits of our recent acquisitions or future acquisitions, if any, nor may we be able to integrate those businesses successfully, and any such acquisitions may disrupt our current plans and operations.
 
Our ability to succeed in implementing our strategy will depend to some degree upon the ability of our management to successfully integrate commercially viable acquisitions.  Acquisition transactions may disrupt our ongoing business and distract management from other responsibilities.  There can be no assurance that we will be able to successfully integrate the businesses we have acquired, including our acquisition of Everi Games Holding, or do so within the intended timeframes or otherwise realize the expected benefits of such acquisitions. The expected cost synergies associated with such acquisitions may not be fully realized in the anticipated amounts or within the contemplated timeframes or cost expectations, which could result in increased costs and have an adverse effect on our prospects, results of operations, cash flows and financial condition. Our businesses may be negatively impacted if we are unable to effectively manage our expanded operations. The integration of these acquisitions will require significant time and focus from management and may divert attention from the day ‑to ‑day operations of the combined business or delay the achievement of our strategic objectives. We expect to incur incremental costs and capital expenditures related to our contemplated integration activities.
The risks we commonly encounter in acquisitions include:

	·		if, in addition to our current indebtedness, we incur significant debt to finance a future acquisition and our combined business does not perform as expected, we may have difficulty complying with debt covenants;	

	·		we may be unable to make a future acquisition which is in our best interest due to our current level of  indebtedness;	

	·		if we use our stock to make a future acquisition, it will dilute existing stockholders;	

	·		we may have difficulty assimilating the operations and personnel of any acquired company;	

	·		the challenge and additional investment involved with integrating new products and technologies into our sales and marketing process;	

	·		we may have difficulty effectively integrating any acquired technologies or products with our current products and technologies, particularly where such products reside on different technology platforms or overlap with our products;	

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	·		our ongoing business may be disrupted by transition and integration issues;	

	·		the costs and complexity of integrating the internal information technology infrastructure of each acquired business with ours may be greater than expected and may require additional capital investments;	

	·		we may not be able to retain key technical and managerial personnel from an acquired business;	

	·		we may be unable to achieve the financial and strategic goals for any acquired and combined businesses;	

	·		we may have difficulty in maintaining controls, procedures and policies during the transition and integration period following a future acquisition;	

	·		our relationships with partner companies or third-party providers of technology or products could be adversely affected;	

	·		our relationships with employees and customers could be impaired;	

	·		our due diligence process may fail to identify significant issues with product quality, product architecture, legal or tax contingencies, customer obligations and product development, among other things;	

	·		as successor we may be subject to certain liabilities of our acquisition targets;	
 
	·		we may face new intellectual property challenges; and	

	·		we may be required to sustain significant exit or impairment charges if products acquired in business combinations are unsuccessful.	
 
Our failure to effectively integrate any future acquisition would adversely affect the benefit of such transaction, including potential synergies or sales growth opportunities, in the time frame anticipated.
We operate our business in regions subject to natural disasters. Any interruption to our business resulting from a natural disaster will adversely affect our revenues and results of operations.
In the event of a natural disaster, the operations of gaming establishments could be negatively impacted or consumer demand for gaming could decline, or both, and as a result, our business could be interrupted, which could materially and adversely affect our revenues and results of operations. Adverse weather conditions, particularly flooding, hurricanes, tornadoes, heavy snowfall and other extreme weather conditions often deter our customer’s end users from traveling or make it difficult for them to frequent the sites where our games are installed. If any of those sites experienced prolonged adverse weather conditions, or if the sites in the State of Oklahoma, where a significant number of our games are installed, simultaneously experienced adverse weather conditions, our results of business, financial condition and operations could be materially and adversely affected.  
 
Changes by M&C International and First Data Corporation to certain of their tax returns may have an impact on the value of a component of our deferred tax asset, which could require us to recalculate the starting balance of the deferred tax asset and the annual amortization thereof.
 
In connection with a recapitalization and private equity restructuring that occurred in 2004 involving our former owners, First Data Corporation (“First Data”), M&C International (“M&C”) and entities affiliated with Bank of America, N.A., we recorded a deferred tax asset of $247.0 million. In connection with this deferred tax asset, we expect to pay a significantly lower amount in United States federal income taxes than we provide for in our C onsolidated S tatements of (Loss)   Income and C omprehensive (Loss) I ncome . Our calculation of the starting balance of the deferred tax asset is based upon information we received from First Data and M&C about the gains they recorded in the transaction. If First Data or M&C change their calculation of the gains and file amended tax returns, we may be required to recalculate the starting

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balance of the deferred tax asset and the annual amortization thereof. In addition, unanticipated changes in applicable income tax rates or laws or changes in our tax position or our ability to utilize our deferred tax asset, which may be affected by factors beyond our control, could have a material adverse effect on our future business, financial condition, operations or cash flows.  
Risks Related to Regulation of Our Industry
We may be subject to fines, penalties, liabilities and legal claims resulting from unauthorized disclosure of cardholder and patron data, whether through a security breach of our computer systems, our third-party processor’s computer systems or otherwise, or through our unauthorized use or transmission of such data.
We collect and store personally identifiable information about cardholders and patrons that perform certain cash access and Central Credit transactions, including names, addresses, social security numbers, driver’s license numbers and account numbers, and we maintain a database of cardholder and patron data, including account numbers, in order to process our cash access and Central Credit transactions. We also rely on our third-party processor and certain other technology partners to process and store cardholder and patron data relating to our cash access and Central Credit transactions. As a result, we, as well as our third-party processor, certain of our other technology providers and some of our gaming establishment customers, are required to comply with various federal and state privacy statutes and regulations and the PCI Data Security Standard. Compliance with these regulations and requirements, which are subject to change at any time, is often difficult and costly, and our failure, or the failure of these other third parties, to comply may result in significant fines or civil penalties, regulatory enforcement action, liability to our sponsor bank and termination of our agreements with our gaming establishment customers, each of which could have a material adverse effect on our business, financial condition, operations or cash flows. If our computer systems or those of our third-party processor or other technology providers suffer a security breach, we may be subject to liability, including claims for unauthorized transactions with misappropriated bank card information, impersonation or similar fraud claims, as well as for any failure to comply with laws governing required notifications of such a breach, and these claims could result in protracted and costly litigation, penalties or sanctions from the card associations and payment networks, and damage to our reputation, which could reduce and limit our ability to provide cash access and related services to our gaming establishment customers.
The personally identifiable information we collect also includes our patrons’ transaction behavioral data and credit history data, which we may use to provide marketing and data intelligence services to gaming establishments. This information is increasingly subject to federal, state and card association laws and regulations as well as laws and regulations in numerous jurisdictions around the world. Governmental regulations are typically intended to protect the privacy and security of such data and information as well as to regulate the collection, storage, transmission, transfer, use and distribution of such data and information. We could be materially and adversely affected if domestic or international laws or regulations are expanded to require changes in our business practices or if governing jurisdictions interpret or implement their laws or regulations in ways that negatively affect our business or even prohibit us from offering certain marketing and data intelligence or other services. Similarly, if we are required to allocate significant resources to modify our internal operating systems and procedures to enable enhanced protection of patron data that we transmit, store and use, our business results could be adversely affected. In addition, we may face requirements that pose compliance challenges in new international markets that we seek to enter as various foreign jurisdictions have different laws and regulations concerning the storage, transmission and use of gaming patron data. Such variation could subject us to costs, liabilities or negative publicity that could impair our ability to expand our operations into some countries and therefore limit our future growth.
We are subject to extensive governmental gaming regulation, which may harm our business.
Our operation of gaming activities, including the sale and manufacturing of gaming devices, fully integrated kiosks, the provision of cash access services at gaming establishments and the operation of central determinant systems, is subject to extensive regulation by the jurisdictions where we operate. The gaming laws, regulations and ordinances vary from jurisdiction to jurisdiction, but generally concern the antecedents, acumen, financial stability and character of our owners, officers and directors, as well as those persons financially interested or involved in our companies. Our violation of these gaming laws, regulations and ordinances could result in the imposition of substantial fines, or in the conditioning, limitation, suspension or revocation of a required license, registration or other approval, either of which could have a

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material adverse impact on our business depending on the specific circumstances.  In addition, we are subject to the possible increase at any time by various state and federal legislatures and officials of gaming taxes or fees, which could adversely affect our results. For a summary of gaming regulations that could affect our business, see “Item 1. Business—Regulation.”
Our ability to conduct both our gaming and cash access businesses, expand operations, develop and distribute new games, products and systems, and expand into new gaming markets is also subject to significant federal, state, local, Native American and foreign regulations. In the United States and many other countries, gaming must be expressly authorized by law. Once authorized, such activities are subject to extensive and evolving governmental regulation. While we seek to comply with the standards and regulations set forth by each jurisdiction, a governmental agency or court could disagree with our interpretation of these standards and regulations or determine that the manufacturing and use of certain of our electronic player terminals, and perhaps other key components of our gaming systems that rely to some extent upon electronic equipment to run a game, is impermissible under applicable law. An adverse regulatory or judicial determination regarding the legal status of our products could have material adverse consequences for us in other jurisdictions, including with gaming regulators, and our business, operating results and prospects could suffer and we and our officers and directors could be subject to significant fines and penalties. Furthermore, the failure to become licensed, or the loss or conditioning of a license, in one market may have the adverse effect of preventing licensing in other markets or the revocation of licenses we already maintain.
As we expand into new markets, we expect to encounter business, legal, operational and regulatory uncertainties as well as additional responsibilities. As we enter new jurisdictions, we are subject to increasing legal, regulatory and reporting requirements that will require substantial additional resources, such as new licenses, permits and approvals, including third-party certifications that our games comply with a particular jurisdiction’s stated regulations, in order to meet our expectations for new market entry, and such licenses, permits or approvals may not be timely granted to us, or granted to us at all, which could have a material effect on our business in general and new market entry specifically. Obtaining and maintaining all required licenses, findings of suitability, registrations, permits or approvals is time consuming, expensive and potentially distracting to management. As we enter new jurisdictions, our reporting systems will need to be developed and/or updated, and we may fail to provide timely or adequate notifications or reporting requirements within these new jurisdictions, which could have adverse regulatory consequences for us in that, or in other, jurisdictions, which could affect our business. In addition, entry into new markets may require us to make changes to our gaming systems to ensure that they comply with applicable regulatory requirements. We may also encounter additional legal and regulatory challenges that are difficult or impossible to foresee and which could result in an unforeseen adverse impact on planned revenues or costs associated with the new market opportunity. If we are unable to effectively develop and operate within these new markets, then our business, operating results and financial condition would be impaired.
Generally, our placement of systems, games and technology into new market segments involves a number of business uncertainties, including whether:

	·		the technical platform on which our gaming units, systems and products are based will comply, or can be modified to comply, with the minimum technical requirements for each of the identified new gaming markets;	

	·		we are able to successfully pass required field trials and comply with the initial game/system installation requirements for each new jurisdiction;	

	·		our resources and expertise will enable us to effectively operate and grow in such new markets, including meeting regulatory requirements;	

	·		our internal processes and controls will continue to function effectively within these new segments;	

	·		we have enough experience to accurately predict revenues and expenses in these new markets;	

	·		the diversion of management attention and resources from our traditional business, caused by entering into new market segments, will have harmful effects on our traditional business;	

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	·		we will be able to successfully compete against larger companies who dominate the markets that we are trying to enter; and	

	·		we can timely perform under our agreements in these new markets because of other unforeseen obstacles.	
In addition, the suspension, revocation, nonrenewal or limitation of any of our licenses could have a material adverse effect on our business operations, financial condition, and results of operations and our ability to maintain key employees. The gaming authorities may deny, limit, condition, suspend or revoke a gaming license or related approval for violations of applicable gaming laws and regulations and may impose substantial fines and take other actions, any one of which could have a significant adverse effect on our business, financial condition and results of operations.
Further, changes in existing gaming laws or regulations or new interpretations of existing gaming laws may hinder or prevent us from continuing to operate in those jurisdictions where we currently do business, which could harm our operating results. In particular, the enactment of unfavorable legislation or government efforts affecting or directed at manufacturers or gaming operators, such as referendums to increase gaming taxes or requirements to use local distributors, could have a negative impact on our operations. Moreover, in addition to the risk of enforcement action, we are also at risk of loss of business reputation in the event of any potential legal or regulatory investigation, whether or not we are ultimately accused of or found to have committed any violation.
Many of the financial services that we provide are subject to extensive rules and regulations, which may harm our business.
Our Central Credit gaming patron credit bureau and check verification and warranty services are subject to the Fair Credit Reporting Act, the Fair and Accurate Credit Transactions Act of 2003 and similar state laws. The collection practices that are used by our third-party providers and us may be subject to the Fair Debt Collection Practices Act and applicable state laws relating to debt collection. All of our cash access services and patron marketing services are subject to the privacy provisions of state and federal law, including the Gramm-Leach-Bliley Act. Our POS debit card transactions and ATM withdrawal services are subject to the Electronic Fund Transfer Act. Our ATM services are subject to the applicable state banking regulations in each jurisdiction in which we operate ATMs. Our ATM services may also be subject to state and local regulations relating to the imposition of daily limits on the amounts that may be withdrawn from ATMs, the location of ATMs, our ability to surcharge cardholders who use our ATMs, our ability to accept EBT card types, and the form and type of notices that must be disclosed regarding the provision of our ATM services. The cash access services we provide are subject to record keeping and reporting obligations under the Bank Secrecy Act and the USA PATRIOT Act of 2001. We are required to file SARs with respect to transactions completed at all gaming establishments at which our cash access services are provided. If we are found to be noncompliant in any way with these laws, we could be subject to substantial civil and criminal penalties. In jurisdictions in which we serve as a check casher, we are subject to the applicable state licensing requirements and regulations governing check cashing activities. We are also subject to various state licensing requirements and regulations governing money transmitters.
We are subject to formal or informal audits, inquiries or reviews from time to time by the regulatory authorities that enforce these financial services rules and regulations. In the event that any regulatory authority determines that the manner in which we provide cash access, patron marketing or gaming patron credit bureau services is not in compliance with existing rules and regulations, or the regulatory authorities adopt new rules or regulations that prohibit or restrict the manner in which we provide cash access, patron marketing or gaming patron credit bureau services, then these regulatory authorities may force us to modify the manner in which we operate or force us to stop processing certain types of cash access transactions or providing patron marketing or gaming patron credit bureau services altogether. We may also be required to pay substantial penalties and fines if we fail to comply with applicable rules and regulations. For example, if we fail to file CTRs or SARs on a timely basis or if we are found to be noncompliant in any way with either the Bank Secrecy Act or the USA PATRIOT Act of 2001, we could be subject to substantial civil and criminal penalties. In addition, our failure to comply with applicable rules and regulations could subject us to private litigation.

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We are subject to extensive rules and regulations of card associations, including VISA, MasterCard and electronic payment networks that are always subject to change, which may harm our business.
Our cash access business is subject to the extensive rules and regulations of the leading card associations, VISA and MasterCard. The rules and regulations do not expressly address some of the contexts and settings in which we process cash access transactions or do so in a manner subject to varying interpretations. As an example, we and certain of our providers must comply with the PCI Data Security Standard. The failure by any of such providers to comply with such standards could result in our being fined or being prohibited from processing transactions through VISA, MasterCard and other card and payment networks. We also process transactions involving the use of the proprietary credit cards such as those offered by Discover Card and American Express, as well as other regional cards issued in certain international markets. The rules and regulations of the proprietary credit card networks that service these cards present risks to us that are similar to those posed by the rules and regulations of VISA, MasterCard and other payment networks.
The card associations’ and payment networks’ rules and regulations are always subject to change, and the card associations or payment networks may modify their rules and regulations from time to time. Our inability to anticipate changes in rules and regulations, or the interpretation or application thereof, may result in substantial disruption to our business. In the event that the card associations, payment networks or our sponsoring banks determine that the manner in which we process certain types of card transactions is not in compliance with existing rules and regulations, or if the card associations or payment networks adopt new rules or regulations that prohibit or restrict the manner in which we process certain types of card transactions, we may be forced to pay a fine, modify the manner in which we operate our business or stop processing certain types of cash access transactions altogether, any of which could have a material adverse effect on our business, financial condition, operations or cash flows.
Card associations and EFT networks may change interchange reimbursement rates or network operating fees or assess new fees associated with the processing and settlement of our cash access transactions or otherwise change their operating rules and regulations without our consent and such changes may affect our revenues, cost of revenues (exclusive of depreciation and amortization), net income and our business generally.
We receive income from issuers of ATM, credit and debit cards for certain transactions performed on our ATMs related to cash dispensing or certain other non-financial transactions such as balance inquiries. The EFT networks may also charge certain fees related to the performance of these transactions. We refer to the net of this income and fees as reverse interchange. The amount of this reverse interchange income is determined by the card associations and EFT networks, and this income is subject to decrease at their discretion.
We pay interchange and other network fees for services to the credit card associations and EFT networks that they provide in settling transactions routed through their networks. Collectively we call these charges interchange fees. Subject to the limitations imposed by federal regulations such as the Durbin Amendment or other regulations that may be enacted, the amounts of these interchange fees are determined based upon the sole discretion of the card associations and EFT networks and are subject to increase at any time. Although certain of our contracts enable us to pass through increases in interchange or other network processing fees to our customers, competitive pressures might prevent us from passing all or some of these fees through to our customers in the future. To the extent that we are unable to pass through to our customers all or any portion of any increase in interchange or other network processing fees, our cost of revenues (exclusive of depreciation and amortization) would increase and our net income would decrease, assuming no change in transaction volumes. Any such decrease in net income could have a material adverse effect on our business, financial condition, operations or cash flows.
The card associations and EFT networks may also elect to impose new membership or other fees, or implement new rules and regulations with respect to processing transactions through their networks, and any such new fees, rules or regulations could have a material adverse effect on our business, financial condition, operations or cash flows.

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The provision of our credit card access, POS debit and ATM services are dependent upon our continued sponsorship into the VISA and MasterCard card associations, and the suspension or termination of our sponsorship would result in a material adverse effect on our business, financial condition, operations or cash flows.
We process virtually all of our credit card cash access, POS debit and ATM service transactions through the VISA and MasterCard card associations, both domestically and internationally, and virtually all of the revenue that we derive from our credit card cash access, POS debit and ATM services is dependent upon our continued sponsorship into the VISA and MasterCard associations. We cannot provide these services without sponsorship into the VISA and MasterCard associations by a member financial institution. Our failure to maintain our current sponsorship arrangements or secure alternative sponsorship arrangements into the VISA and MasterCard associations could have a material adverse effect on our business, financial condition, operations or cash flows.
Our ATM service business is subject to extensive rules and regulations, which may harm our business.
Our ATM services are subject to the applicable federal, state and local banking regulations in each jurisdiction in which we operate ATMs, which regulations relate to the imposition of daily limits on the amounts that may be withdrawn from ATMs, the location of ATMs, our ability to surcharge cardholders who use our ATMs, our ability to accept EBT card types, and the form and type of notices that must be disclosed with respect to the fees we charge to patrons in connection with our ATM services. ATMs are also subject to requirements of the Americans with Disabilities Act, which in general require that ATMs be accessible to individuals with disabilities, such as visually-impaired persons. These laws and regulations may impose significant burdens on our ability to operate ATMs profitably in some locations, or at all, and our business, financial condition, operations or cash flows could be materially adversely affected. Moreover, because these regulations are subject to change, we may be forced to modify our ATM operations in a manner inconsistent with the assumptions upon which we relied when entering into contracts to provide ATM services at gaming establishments. If federal, state, local or foreign authorities adopt new laws or regulations or raise enforcement levels on existing laws and regulations that make it more difficult for us to operate our ATM business, then our revenues and earnings may be negatively affected. If legislation or regulations are enacted in the future that adversely impact our ATM business, we may be forced to modify our operations in a manner inconsistent with the assumptions upon which we relied when entering into contracts to provide ATMs at gaming establishments and our business, financial condition, operations or cash flows could suffer a material adverse effect.
Consumer privacy laws may change, requiring us to change our business practices or expend significant amounts on compliance with such laws.
Our patron marketing and database services depend on our ability to collect and use non-public personal information relating to patrons who use our products and services and the transactions they consummate using our services. We are required by federal and state privacy laws and rules to safeguard and protect the privacy of such information, to make disclosures to patrons regarding our privacy and information sharing policies and, in some cases, to provide patrons an opportunity to “opt out” of the use of their information for certain purposes. The failure or circumvention of the means by which we safeguard and protect the privacy of information we gather may result in the dissemination of non-public personal information, which may harm our reputation and may expose us to liability to the affected individuals and regulatory enforcement proceedings or fines. Regulators reviewing our policies and practices may require us to modify our practices in a material or immaterial manner or impose fines or other penalties if they believe that our policies and practices do not meet the necessary standard. To the extent that our patron marketing and database services have failed, are now failing or in the future fail to comply with applicable law, our privacy policies or the notices that we provide to patrons, we may become subject to actions by a regulatory authority or patrons which cause us to pay monetary penalties or require us to modify the manner in which we provide patron marketing and database services. To the extent that patrons exercise their right to “opt out,” our ability to leverage existing and future databases of information would be curtailed. Consumer and data privacy laws are evolving, and due to recent high profile thefts and losses of sensitive consumer information from protected databases, such laws may be broadened in their scope and application, impose additional requirements and restrictions on gathering, encrypting and using patron information or narrow the types of information that may be collected or used for marketing or other purposes or require patrons to “opt-in” to the use of their information for specific purposes, or impose additional fines or potentially costly compliance requirements which will hamper the value of our patron

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marketing and database services.
 
Risks Related to Our Stock
Our common stock has been publicly traded since September 2005 and we expect that the price of our common stock will fluctuate substantially.
There has been a public market for our common stock since September 2005. The market price of our common stock may fluctuate significantly in response to a number of factors, some of which are beyond our control, including those described above under “—Risks Related to Our Business,” “—Risks Related to Regulation of Our Industry” and the following:

	·		our failure to maintain our current customers, including because of consolidation in the gaming industry;	

	·		increases in commissions paid to gaming establishments as a result of competition;	

	·		increases in interchange rates, processing fees or other fees paid by us;	

	·		decreases in reverse interchange rates paid to us;	

	·		actual or anticipated fluctuations in our or our competitors’ revenue, operating results or growth rate;	

	·		our inability to adequately protect or enforce our intellectual property rights;	

	·		any adverse results in litigation initiated by us or by others against us;	

	·		our inability to make payments on our outstanding indebtedness as they become due or our inability to undertake actions that might otherwise benefit us based on the financial and other restrictive covenants contained in the Credit Facilities and the purchase agreement governing the Refinanced Secured Notes and indenture governing the Unsecured Notes;	

	·		the loss, or failure, of a significant supplier or strategic partner to provide the goods or services that we require from them;	

	·		our inability to introduce successful, new products and services in a timely manner or the introduction of new products or services by our competitors that reduce the demand for our products and services;	

	·		our failure to successfully enter new markets or the failure of new markets to develop in the time and manner that we anticipate;	

	·		announcements by our competitors of significant new contracts or contract renewals or of new products or services;	

	·		changes in general economic conditions, financial markets, the gaming industry or the payments processing industry;	

	·		the trading volume of our common stock;	

	·		sales of common stock or other actions by our current officers, directors and stockholders;	

	·		acquisitions, strategic alliances or joint ventures involving us or our competitors;	
 
	·		future sales of our common stock or other securities;	

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	·		the failure of securities analysts to cover our common stock or changes in financial estimates or recommendations by analysts;	
 
	·		our failure to meet the revenue, net income or earnings per share estimates of securities analysts or investors;	
 
	·		additions or departures of key personnel;	
 
	·		terrorist acts, theft, vandalism, fires, floods or other natural disasters; and	
 
	·		rumors or speculation as to any of the above which we may be unable to confirm or deny due to disclosure restrictions imposed on us by law or which we otherwise deem imprudent to comment upon.	
Some provisions of our amended and restated certificate of incorporation and amended and restated bylaws may delay or prevent transactions that many stockholders may favor.
Some provisions of our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying, discouraging, or preventing a merger or acquisition that our stockholders may consider favorable or a change in our management or our Board of Directors. These provisions:

	·		divide our Board of Directors into three separate classes serving staggered three-year terms, which will have the effect of requiring at least two annual stockholder meetings instead of one, to replace a majority of our directors, which could have the effect of delaying or preventing a change in our control or management;	
 
	·		provide that special meetings of stockholders can only be called by our Board of Directors, Chairman of the Board or Chief Executive Officer. In addition, the business permitted to be conducted at any special meeting of stockholders is limited to the business specified in the notice of such meeting to the stockholders;	
 
	·		provide for an advance notice procedure with regard to business to be brought before a meeting of stockholders which may delay or preclude stockholders from bringing matters before a meeting of stockholders or from making nominations for directors at a meeting of stockholders, which could delay or deter takeover attempts or changes in management;	
 
	·		eliminate the right of stockholders to act by written consent so that all stockholder actions must be effected at a duly called meeting;	
 
	·		provide that directors may only be removed for cause with the approval of stockholders holding a majority of our outstanding voting stock;	
 
	·		provide that vacancies on our Board of Directors may be filled by a majority, although less than a quorum, of directors in office and that our Board of Directors may fix the number of directors by resolution;	
 
	·		allow our Board of Directors to issue shares of preferred stock with rights senior to those of the common stock and that otherwise could adversely affect the rights and powers, including voting rights and the right to approve or not to approve an acquisition or other change in control, of the holders of common stock, without any further vote or action by the stockholders; and	
 
	·		do not provide for cumulative voting for our directors, which may make it more difficult for stockholders owning less than a majority of our stock to elect any directors to our Board of Directors. In addition, we are also subject to Section 203 of the Delaware General Corporation Law, which provides, subject to enumerated exceptions, that if a person acquires 15% or more of our voting stock, the person is an “interested stockholder” and may not engage in “business combinations” with us for a period of three years from the time the person acquired 15% or more of our voting stock.	

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These provisions may have the effect of entrenching our management team and may deprive our stockholders of the opportunity to sell shares to potential acquirers at a premium over prevailing prices. This potential inability to obtain a premium could reduce the price of our common stock.
 
Item 1B.  Unresolved Staff Comment  s  .
 
None.
 
Item 2.  Propertie  s  .
 
Our headquarters are located in a facility in Las Vegas, Nevada, consisting of approximately 59,000 square feet of office space, which is under a lease through April 2023. In connection with the Merger, we assumed certain lease obligations of Everi Games, including approximately 84,000 square feet of office space in Austin, Texas, which is under a lease through March 2021. We also lease several other properties that are used to support all our products and services.
 
We believe that these facilities are adequate for our business as presently conducted.
 
Item 3.  Legal Proceeding  s  .
 
Everi Games Shareholder Litigation
 
As discussed in “Note 13. Commitments and Contingencies” of our notes to consolidated financial statements included elsewhere in this Annual Report on Form 10-K, in connection with the Merger, certain actions were filed by putative shareholders of Everi Games Holding in the United States District Court for the Western District of Texas (the “Texas Federal Action”) and the District Court of Travis County, Texas (the “Texas State Court Action”) alleging that directors of Everi Games Holding directors breached their fiduciary duties in connection with the Merger. The complaints further alleged that Everi Holdings and its formerly wholly-owned merger subsidiary, Merger Sub, aided and abetted those purported breaches of fiduciary duty.
 
The parties agreed to settle all claims asserted in the Texas Federal Action. Everi Games Holding agreed to make certain additional disclosures in its proxy statement related to the Merger, and made those disclosures in a Current Report on Form 8-K filed on November 21, 2014. In addition, the defendants agreed not to oppose plaintiffs’ application for an attorneys’ fee award of up to $310,000. The court in the Texas Federal Action approved the settlement, awarded attorneys’ fees of $310,000, and entered judgment. The deadline to file any appeal from the judgment has expired and no appeal has been filed.
 
The judgment in the Texas Federal Action includes a release of the claims asserted in the Texas State Court Action. The Texas State Court Action has been dismissed with prejudice.
 
Alabama Litigation
 
The Company is currently involved in one lawsuit related to Everi Games’ former charity bingo operations in the State of Alabama, which we believe is not material from a damages perspective. The lawsuit is currently pending in federal court and includes claims related to the alleged illegality of electronic charity bingo in the State of Alabama.
 
Ozetta Hardy v. Whitehall Gaming Center, LLC, et al., a civil action, was filed against Whitehall Gaming Center, LLC (an entity that does not exist), Cornerstone Community Outreach, Inc., and Freedom Trail Ventures, Ltd., in the Circuit Court of Lowndes County, Alabama. On June 3, 2010, Everi Games Holding and other manufacturers were added as defendants. The plaintiffs, who claim to have been patrons of White Hall, allege that Everi Games Holding participated in gambling operations that violated Alabama state law by supplying to White Hall purportedly unlawful electronic bingo machines played by the plaintiffs, and the plaintiffs seek recovery of the monies lost on all electronic bingo games played by the plaintiffs in the six months prior to the filing of the complaint under Ala. Code, Sec 8-1-150(A). The plaintiffs requested that the court certify the action as a class action. On July 2, 2010, the defendants removed the case to the United States District Court for the Middle District of Alabama, Northern Division. The court has not ruled on the plaintiffs'

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motion for class certification. The Company continues to vigorously defend this matter. Given the inherent uncertainties in this litigation, however, the Company is unable to make any prediction as to the ultimate outcome.
 
Item 4.  Mine Safety Disclosure  s  .
 
Not applicable.

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PART I   I
 
Item 5.   Market for Registrant’s Common Equit  y, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 
Our common stock is listed for trading on the New York Stock Exchange under the symbol “EVRI.” On March 1 , 2016, there were three holders of re cord of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders represented by these record holders.
 
The following table sets forth for the indicated periods, the high and low sale prices per share of our common stock:

 	 	Price Range	 	
 	 	High	 	Low	 	
2015	    	 	 	    	 	 	 	
First Quarter	 	$	
8.53	 	$	
6.41	 	
Second Quarter	 	 	
8.50	 	 	
7.16	 	
Third Quarter	 	 	
7.87	 	 	
4.39	 	
Fourth Quarter	 	 	
5.35	 	 	
3.27	 	
2014	 	 	 	 	 	 	 	
First Quarter	 	$	
9.93	 	$	
6.37	 	
Second Quarter	 	 	
9.29	 	 	
6.38	 	
Third Quarter	 	 	
9.13	 	 	
6.56	 	
Fourth Quarter	 	 	
7.75	 	 	
6.04	 	
 
On March 1, 2016 , the closing sale price of our common stock on the New York Stock Exchange was $3. 02 .
 
Dividend Policy
 
We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all our earnings for the repayment of our outstanding debt and to finance the growth and development of our business. Any future change in our dividend policy will be made at the discretion of our Board of Directors and will depend on contractual restrictions, our results of operations, earnings, capital requirements and other factors considered relevant by our Board of Directors. In addition, the Credit Facilities, the purchase agreement governing the Refinanced Secured Notes and indenture governing the Unsecured Notes limit our ability to declare and pay cash dividends.
 
Sales of Unregistered Securities
 
On April 15, 2015, in connection with the Refinanced Secured Notes and pursuant to the terms of the Note Purchase Agreement (defined below ), Holdings issued to CPPIB Credit Investments III Inc. (the “Purchaser”) a warrant to purchase 700,000 shares of Holdings’ common stock, with an exercise price equal to $9.88 per share, representing a 30% premium to the volume-weighted average price of Holdings’ common stock for the ten trading days prior to the issuance of the warrant (the “Warrant”). The Warrant expires on the sixth anniversary of the date of issuance. The number of shares issuable pursuant to the Warrant and the warrant exercise price are subject to adjustment for stock splits, reverse stock splits, stock dividends, mergers and certain other events. The Warrant was issued in a private placement under Section 4(a)(2) of the Securities Act.  
 
Common Stock Repurchases
 
We did not have a share repurchase program in effect for the year ended December 31, 2015. Our most recent share repurchase program expired on December 31, 2014 .

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Issuer Purchases and Withholding of Equity Securities
 
We repurchased or withheld from restricted stock awards 32,617, 55,502, and 14,901 shares of our common stock at an aggregate purchase price of $0.2 million, $0.5 million, and $0.1 million to satisfy the minimum applicable tax withholding obligations incident to the vesting of such restricted stock awards for the years ended December 31, 2015, 2014, and 2013, respectively. The following table includes the monthly repurchases or withholdings of our common stock during the fourth quarter ended December 31, 2015:

 
 	 	 	 	 	 	 	
 	 	Total Number of	 	Average Price	 	
 	 	Shares	 	per Share	 	
 	 	Purchased or	 	Purchased or	 	
 	    	Withheld	 	Withheld	 	
 	 	(000’s)	 	 	 	
Tax Withholdings	 	 	 	 	 	 	
10/1/15 - 10/31/15	 	
23.2	(1)   	$	
4.69	(2)	
11/1/15 - 11/30/15	 	
0.7	(1)   	 	
4.45	(2)	
12/1/15 - 12/31/15	 	
0.8	(1)   	 	
3.42	(2)	
 	 	 	 	 	 	 	
Sub-Total	 	
24.7	(1)   	 	
4.65	(2)	
 	 	 	 	 	 	 	
Total	 	
24.7	 	$	
4.65	 	

	(1)		Represents the shares of common stock that were withheld from restricted stock awards to satisfy the minimum applicable tax withholding obligations incident to the vesting of such restricted stock awards. There are no limitations on the number of shares of common stock that may be withheld from restricted stock awards to satisfy the minimum tax withholding obligations incident to the vesting of restricted stock awards.	
 
	(2)		Represents the average price per share of common stock withheld from restricted stock awards on the date of withholding.	
 
Stock Performance Graph
 
The line graph below compares the cumulative total stockholder return on our common stock with the cumulative total return of the Standard & Poor’s (“S&P”) 500 Index and the S&P Information Technology Index during the five year period ended December 31, 2015.
 
The graph assumes that $100 was invested on December 31, 2010 in our common stock, in the S&P 500 Index and the S&P Information Technology Index, and that all dividends were reinvested. Research Data Group, Inc. furnished this data and the cumulative total stockholder returns for our common stock, the S&P 500 Index and the S&P Information Technology Index are based on the calendar month end closing prices. The comparisons in the graph are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock.

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This graph is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference in any filing by us under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

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Item 6.  Selected Financial Dat  a  .
 
The following selected historical financial data has been derived from, and should be read in conjunction with, the audited consolidated financial statements and the notes to consolidated financial statements and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K. Our selected consolidated financial data may not be indicative of our future financial condition or results of operations (in thousands, except per share amounts).

 	 	Year Ended December 31,	 	
 	 	2015 (1)	 	2014 (2)	 	2013	 	2012	 	2011	 	
Income Statement Data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	    	$	
826,999	    	$	
593,053	    	$	
582,444	    	$	
584,486	    	$	
544,063	 	
Operating (loss) income	 	 	
(9,730)	 	 	
33,782	 	 	
49,150	 	 	
55,982	 	 	
38,296	 	
Net (loss) income	 	 	
(104,972)	 	 	
12,140	 	 	
24,398	 	 	
25,689	 	 	
9,129	 	
 
Basic (loss) earnings per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income	 	$	
(1.59)	 	$	
0.18	 	$	
0.37	 	$	
0.39	 	$	
0.14	 	
 
Diluted (loss) earnings per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income	 	$	
(1.59)	 	$	
0.18	 	$	
0.36	 	$	
0.38	 	$	
0.14	 	
 
Weighted average common shares outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	
65,854	 	 	
65,780	 	 	
66,014	 	 	
65,933	 	 	
64,673	 	
Diluted	 	 	
65,854	 	 	
66,863	 	 	
67,205	 	 	
67,337	 	 	
64,859	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	At and For the Year Ended December 31,	 	
 	 	2015 (1)	 	2014 (2)	 	2013	 	2012	 	2011	 	
Balance sheet data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	    	$	
102,030	    	$	
89,095	    	$	
114,254	    	$	
153,020	    	$	
55,535	 	
Working capital (3)	 	 	
2,452	 	 	
12,550	 	 	
(1,682)	 	 	 —	 	 	 —	 	
Total assets	 	 	
1,574,065	 	 	
1,707,285	 	 	
527,327	 	 	
553,895	 	 	
529,067	 	
Total borrowings	 	 	
1,163,579	 	 	
1,188,787	 	 	
103,000	 	 	
121,500	 	 	
174,000	 	
Stockholders’ equity	 	 	
137,420	 	 	
231,473	 	 	
218,604	 	 	
198,759	 	 	
159,858	 	
Cash flow data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	 	$	
124,416	 	$	
24,531	 	$	
4,334	 	$	
157,488	 	$	
54,252	 	
Net cash used in investing activities	 	 	
(85,045)	 	 	
(1,085,847)	 	 	
(13,990)	 	 	
(12,531)	 	 	
(18,183)	 	
Net cash (used in) provided by financing activities	 	 	
(24,884)	 	 	
1,037,423	 	 	
(29,183)	 	 	
(46,783)	 	 	
(41,227)	 	

	(1)		2015 amounts include a full year of financial results for Everi Games.  During 2015, the Games reporting unit had a goodwill impairment of $75.0 million.	
 
	(2)		2014 amounts affected by the Merger for which Total Merger Consideration of $1. 1  billion on December 19, 2014 was paid and results of operations were recorded from the date of acquisition through December 31, 2014.	
 
	(3)		As a result of the Merger on December 19, 2014, we now provide a classified balance sheet as a significant portion of our business relates to gaming manufacturing. Starting with the year of the Merger, a calculation of working capital has been included.	

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Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations  .
 
The following discussion and analysis of financial condition and results of operations should be read in conjunction with “Item 6. Selected Financial Data” and the audited consolidated financial statements and notes to consolidated financial statements included elsewhere in this Annual Report on Form 10-K and the information included in our other filings with the SEC. This discussion includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. See “Cautionary Note Regarding Forward-Looking Statements” above.
 
Overview
 
Everi is dedicated to providing video and mechanical reel gaming content and technology solutions, integrated gaming payments solutions and compliance and efficiency software. Everi Games provides: (a) comprehensive content, electronic gaming units and systems for Native American and commercial casinos, including the award winning TournEvent® slot tournament solution; and (b) the central determinant system for the VLTs installed at racetracks in the State of New York. Everi Payments provides: (a) access to cash at gaming facilities via ATM cash withdrawals, credit card cash access transactions, POS debit card transactions, and check verification and warranty services; (b) fully integrated gaming industry kiosks that provide cash access and related services; (c) products and services that improve credit decision making, automate cashier operations and enhance patron marketing activities for gaming establishments; (d) compliance, audit and data solutions; and (e) online payment processing solutions for gaming operators in states that offer intrastate, Internet-based gaming and lottery activities.
 
Significant Trends and Developments Impacting Our Business
 
Merger with Everi Games
 
In December 2014, Holdings completed its acquisition of Everi Games Holding Inc. (formerly known as Multimedia Games Holding Company, Inc.) (“Everi Games Holding”) . Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Everi Games Holding, with Everi Games Holding continuing as the surviving corporation. In the Merger, Everi Games Holding became a wholly owned subsidiary of Holdings. Also, as a result of the Merger, each outstanding share of common stock, par value $0.01 per share, of Everi Games Holding, other than shares held by Holdings, Everi Games Holding, Merger Sub or their respective subsidiaries, was cancelled and converted into the right to receive $36.50 in cash, without interest, together with consideration paid in connection with the acceleration and full vesting of certain Everi Games Holding equity awards. We completed the Merger and paid the Total Merger Consideration of approximately $1.1 billion in cash. To fund the Merger, we entered into a credit facility consisting of a $500.0 million, six year senior secured term loan facility that matures in 2020 (the “Term Loan”), and a $50.0 million, five year senior secured revolving credit facility that matures in 2019 (“Revolving Credit Facility,” and together with the Term Loan, the “Credit Facilities”) and issued $350.0 million aggregate principal amount of 7.75% Senior Secured Notes due 2021 (the “Secured Notes”), and $350.0 million aggregate principal amount of 10.00% Senior Unsecured Notes due 2022 (the “Unsecured Notes,” and, together with the Secured Notes or the Refinanced Secured Notes (defined below), as applicable , the “Notes”). The Secured Notes were subsequently refinanced, as discussed below. The Revolving Credit Facility remained undrawn at the closing of the Merger. In relation to the Merger, we incurred expenses of approximately $52.6 million associated with debt issuance costs and original issue discounts.  These amounts were capitalized and are being amortized to interest expense based upon the related debt agreements using the straight-line method.
 
We expensed approximately $ 2.7 million and $10.7 million of costs incurred related to the acquisition of Everi Games Holding for financial advisory services, financing related fees, accounting and legal fees and other transaction-related expenses for the years ended December 31, 2015 and 2014, respectively. These expenses are included in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income within operating expenses. These expenses do not include any costs related to additional site consolidation or rationalization that we might consider in the future.
 
Gain Contingency Settlement
 
In January 2014, we filed a complaint against certain third party defendants alleging conspiracy in restraint of competition regarding interchange fees, monopolization by defendants in the relevant market, and attempted monopolization of the

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defendants in the relevant market. We demanded a trial by jury of all issues so triable. The defendants filed a motion to dismiss on March 13, 2014. A settlement agreement was made as of January 16, 2015, and, on January 22, 2015, the settlement agreement was executed and delivered in connection with respect to which we received $14.4 million in cash and recorded the settlement proceeds in the first quarter of 2015 . This settlement is included as a reduction of operating expenses in our Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the year ended December 30, 2015. The Company utilized the proceeds along with cash on hand to make a $15.0 million principal reduction payment on the Secured Notes in the first quarter of 2015.
 
Refinance of Secured Notes
 
The terms of the Secured Notes purchase agreement stipulated that the Company was required to use commercially reasonable efforts to aid the initial purchasers in the resale of the Secured Notes. Alternatively, we had the ability to redeem the Secured Notes from the initial purchasers without penalty. On April 15, 2015, the Company entered into a note purchase agreement (the “Note Purchase Agreement”), among Everi Payments, CPPIB Credit Investments III Inc. (the “Purchaser”) and Deutsche Bank Trust Company Americas, as collateral agent (the “Collateral Agent”) and issued $335.0 million in aggregate principal amount of its 7.25% Senior Secured Notes due 2021 (the “Refinanced Secured Notes”) in a private offering to the Purchaser. With the proceeds from the issuance of the Refinanced Secured Notes, we redeemed, in full, the Company’s outstanding Secured Notes from the note holders thereof in accordance with the terms of the indenture governing the Secured Notes. In connection with this transaction during the second quarter of 2015, we expensed approximately $13.0 million of related debt issuance costs and fees to “Loss on extinguishment of debt” associated with the redeemed Senior Secured Notes that were outstanding prior to the refinance transaction.
 
In connection with the Refinanced Secured Notes and pursuant to the terms of the Note Purchase Agreement, the Company issued to the Purchaser a warrant to purchase 700,000 shares of Holdings’ common stock, with an exercise price equal to $9.88 per share, representing a 30% premium to the volume-weighted average price of Holdings’ common stock for the ten trading days prior to the issuance of the warrant. The warrant expires on the sixth anniversary of the date of issuance. The number of shares issuable pursuant to the warrant and the warrant exercise price are subject to adjustment for stock splits, reverse stock splits, stock dividends, mergers and certain other events. The warrants were valued at $2.2 million using a modified Black-Scholes model and were accounted for as a debt discount.
 
Unsecured Notes Syndication
 
In connection with the terms of the Unsecured Notes purchase agreement for which we were required to use commercially reasonable efforts to aid the initial purchasers in the resale of the Unsecured Notes, the Company prepared an updated offering memorandum and participated in reasonable marketing efforts including road shows, to the extent required therein. The Unsecured Notes were resold by the initial purchasers to third parties in the second quarter of 2015.
 
Unsecured Notes Registration
 
In connection with the issuance of the Unsecured Notes, the Company entered into a registration rights agreement pursuant to which the Company agreed, for the benefit of the initial holders of the Unsecured Notes, to file with the SEC, and use its commercially reasonable efforts to cause to become effective, a registration statement relating to an offer to exchange the Unsecured Notes for an issue of SEC-registered notes with terms identical to the Unsecured Notes. On October 23, 2015, we filed a registration statement on Form S-4 with the SEC in accordance with the registration rights agreement outlining our offer to exchange the Unsecured Notes for substantially identical notes without transfer restrictions. The registration statement was declared effective on November 3, 2015, and the exchange offer for the Unsecured Notes was completed on December 4, 2015 with 100% percent participation.

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Other Trends and Developments
 
Our strategic planning and forecasting processes include the consideration of economic and industry wide trends that may impact our Games and Payments businesses. We have identified the more material positive and negative trends affecting our business as the following:
 
	·		Casino gaming is dependent upon discretionary consumer spending, which is typically the first type of spending that is restrained by consumers when they are uncertain about their jobs and income. Economic uncertainty in North America, specifically in markets impacted by declining energy prices may have an impact casino gaming and ultimately the demand for new gaming equipment.	
 
	·		The total North American installed slot base has remained relatively flat to the prior year.  The volume of net unit replacements, increased only slightly in 2015. The North American gaming industry is expected to have a flat to moderate growth in the forward replacement cycle for EGMs. 	
 
	·		The volume of new casino openings and new market expansions (e.g., Ohio and Massachusetts) have slowed from previous years.  The reduced demand as a result of fewer new market expansions will reduce the overall demand for slot machines.	
 
	·		There continues to be a migration from the use of traditional paper checks and cash to electronic payments which may impact the type of cash access used by our customers.	
 
	·		The Payments Card Industry has implemented significant changes in the card acceptance requirements, specifically implementing standards surrounding cash access equipment’s ability to accept cards enabled with EMV compliant chips.  The effective dates for certain of these requirements will continue for the next couple of years and will impact our ability to accept certain card based transactions in the future, our development efforts surrounding our core processing platform, and required capital expenditures to obtain equipment and technology to support EMV.	
 
	·		We face continued competition from smaller competitors in the gaming cash access market and face additional competition from larger gaming equipment manufacturers and systems providers. This increased competition has resulted in pricing pressure for both our Games and Payments businesses.	
 
	·		There is increasing governmental oversight related to the cost of transaction processing and related fees to the consumer. We expect the financial services and payments industry to respond to these legislative acts by changing other fees and costs, which may negatively impact the Payments business in the future.	
 
	·		Casino operators continue to try to broaden their appeal by focusing on investments in the addition of non-gaming amenities to their facilities, which could impact casino operator’s capital allocation.	
 
	·		The credit markets in the United States and around the world are volatile and unpredictable.	
 
Factors Affecting Comparability
Our consolidated financial statements included in this report that present our financial condition and results of operations reflect the following transactions and events:

	·		In October 2015, we conducted our annual impairment test for our reporting units during the fourth quarter of 2015.   A portion of our goodwill was impaired by approximately $75.0 million for the year ended December 31, 2015 based upon the results of our testing.	
 
	·		In August 2015, we acquired certain assets of Resort Advantage, LLC (“Resort Advantage”) , a supplier of comprehensive and integrated solutions for complete Financial Crimes Enforcement Network (“FinCEN”) and IRS regulatory compliance to the gaming industry. The Resort Advantage acquisition did not have a material impact on our results of operations or financial condition.	

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	·		In April 2015, we redeemed, in full, the Secured Notes and issued the Refinanced Secured Notes. The Refinanced Secured Notes will reduce the amount of interest expense paid by the Company by approximately $1.7 million per annum.  As a result, we expensed $13.0 million of debt issuance costs and fees to “Loss on extinguishment of debt.”	
 
	·		In January 2015, a settlement agreement was made in connection with a lawsuit we participated in as plaintiffs for which we received and recorded the settlement proceeds in the first quarter of 2015. This settlement is included as a reduction of operating expenses in our Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the year ended December 30, 2015.	
 
	·		In December 2014, we acquired all of the outstanding capital stock of Everi Games. The results contributed by the Everi Games business from the date of consummation of the Merger are reflected in our Games segment and C onsolidated F inancial S tatements. We incurred additional acquisition ‑related expenses, which are reflected in operating expenses for the years ended December 31, 2015 and 2014. In addition, depreciation amortization expenses increased due to the purchase price allocation, which included tangible fixed assets and definite-lived intangible assets with relatively short amortization periods and interest expense increased in connection with the debt incurred to fund the Merger.	
 
	·		In December 2014, to effect the Merger, we entered into the Credit Facilities and issued the Notes and we used a portion of these proceeds to repay the outstanding amounts owed under prior credit facilities of $210.0 million and $35.0 million for Everi Payments and Everi Games, respectively (the “Prior Credit Facilities”). As a result, we expensed $2.7 million of related debt issuance costs and fees to “Loss on extinguishment of debt” associated with the Prior Credit Facilities of Everi Payments and Everi Games that were in effect prior to the consummation of the Merger.	
 
	·		We recorded an asset impairment charge of approximately $3.1 million in the fourth quarter of 2014 related to certain definite ‑lived intangible assets.	
 
	·		In April 2014, we acquired all of the outstanding capital stock of NEWave, Inc. (“NEWave”), a supplier of compliance, audit and data efficiency software to the gaming industry. The NEWave acquisition did not have a material impact on our results of operations and financial condition.	
 
	·		In March 2014, our contract with Caesars Entertainment Corporation expired and was not renewed. As such, our Payments revenues and cost of revenues were impacted for the remainder of 2014 and the first quarter of 2015.	
 
As a result of the above transactions and events, the results of operations and earnings per share in the periods covered by the consolidated financial statements may not be directly comparable.
Operating Segments
 
Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-making group in deciding how to allocate resources and in assessing performance ; o ur chief operating decision-making group consists of the Chief Executive Officer and the Chief Financial Officer . This group manages the business, allocates resources and measures profitability based on our operating segments. The operating segments are reviewed separately because each represents products that can be sold separately to our customers.
Since the most recent filing of our Annual Report on Form 10-K for the year ended December 31, 2014 , and in connection with the Merger, our chief operating decision-making group has determined the following to be the operating segments for which we conduct business: (a) Games, and (b) Payments. Therefore, beginning in the first quarter of 2015, we are reporting our financial performance based on our new segments in both the current and prior period s. This change had no impact on our consolidated financial statements. Each of these segments is monitored by our management for performance against its internal forecast and is consistent with our internal management reporting.  

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	·		The Games segment provides solutions directly to gaming establishments to offer their patrons gaming entertainment related experiences including: leased gaming equipment; sales and maintenance related services of gaming equipment; gaming systems; and ancillary products and services.	
 
	·		The Payments segment provides solutions directly to gaming establishments to offer their patrons cash access related services and products including: access to cash at gaming facilities via ATM cash withdrawals, credit card cash access transactions and point of sale debit card transactions; check-related services; fully integrated kiosks and maintenance services; compliance, audit and data software; casino credit data and reporting services and other ancillary offerings.	
 
Corporate overhead expenses have been allocated to the segments either through specific identification or based on a reasonable methodology. In addition, we allocate depreciation and amortization expenses to the business segments.
 
Our business is predominantly domestic, with no specific regional concentrations and no significant assets in foreign locations.
 
Results of Operations
Year ended December 31, 2015 compared to the year ended December 31, 2014
The following table presents our consolidated results of operations (in   thousands)*:

 	December 31,	 	December 31,	 	December 31,	 	
 	2015	 	2014	 	2015 Vs 2014	 	
 	$	 	%	 	$	 	%	 	$ Variance	 	% Variance	 	
Revenues	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Games	$	
214,424	 	
26	%  	$	
7,406	 	
1	%  	$	
207,018	 	
2,795	%	
Payments	 	
612,575	 	
74	%  	 	
585,647	 	
99	%  	 	
26,928	 	
5	%	
Total revenues	 	
826,999	 	
100	%  	 	
593,053	 	
100	%  	 	
233,946	 	
39	%	
Costs and expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Games cost of revenue (exclusive of depreciation and amortization)	 	
47,017	 	
6	%  	 	
1,753	 	 —	%  	 	
45,264	 	
2,582	%	
Payments cost of revenue (exclusive of depreciation and amortization)	 	
463,380	 	
56	%  	 	
438,318	 	
74	%  	 	
25,062	 	
6	%	
Operating expenses	 	
101,202	 	
12	%  	 	
95,452	 	
16	%  	 	
5,750	 	
6	%	
Research and development	 	
19,098	 	
2	%  	 	
804	 	 —	%  	 	
18,294	 	
2,275	%	
Goodwill impairment	 	
75,008	 	
9	%  	 	 —	 	 —	%  	 	
75,008	 	 —	%	
Depreciation	 	
45,551	 	
6	%  	 	
8,745	 	
1	%  	 	
36,806	 	
421	%	
Amortization	 	
85,473	 	
10	%  	 	
14,199	 	
3	%  	 	
71,274	 	
502	%	
Total costs and expenses	 	
836,729	 	
101	%  	 	
559,271	 	
94	%  	 	
277,458	 	
50	%	
Operating (loss) income	 	
(9,730)	 	
(1)	%  	 	
33,782	 	
6	%  	 	
(43,512)	 	
(129)	%	
Other expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense, net of interest income	 	
100,290	 	
12	%  	 	
10,756	 	
2	%  	 	
89,534	 	
832	%	
Loss on extinguishment of debt	 	
13,063	 	
2	%  	 	
2,725	 	 —	%  	 	
10,338	 	
379	%	
Total other expenses	 	
113,353	 	
14	%  	 	
13,481	 	
2	%  	 	
99,872	 	
741	%	
(Loss) income from operations before tax	 	
(123,083)	 	
(15)	%  	 	
20,301	 	
4	%  	 	
(143,384)	 	
(706)	%	
Income tax (benefit) provision	 	
(18,111)	 	
(2)	%  	 	
8,161	 	
2	%  	 	
(26,272)	 	
(322)	%	
Net (loss) income	$	
(104,972)	 	
(13)	%  	$	
12,140	 	
2	%  	$	
(117,112)	 	
(965)	%	

* Rounding may cause variances.

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Total Revenues
Total revenues increased by $233.9 million, or 39%, to $827.0 million for the year ended December 31, 2015, as compared to the same period in the prior year.
Games revenues increased to  $ 207.0 million or 2,795%  to $214.4 million as a result of a full year of operations related to the acquired Games business in late 2014 .
Payments revenues increased by $26.9 million, or 5%, to $612.6 million for the year ended December 31, 2015, as compared to the same period in the prior year. This was primarily due to higher dollar and transaction volumes   and sales of compliance related solutions.
Costs and Expenses
Games c ost of revenues (exclusive of depreciation and amortization) increased by $ 45.3 million, or 2,582 %, to $ 47.0 million for the year ended December 31, 2015, as compared to the prior year. This was primarily due to the cost of revenues associated with a full year of operations related to the acquired Games business .  
Payments c ost of revenues (exclusive of depreciation and amortization) increased by $ 25.1 million, or 6 %, to $ 463.4 million for the year ended December 31, 2015, as compared to the prior year. This was primarily due to variable costs related to additional revenues from the Payments business.
Operating expenses increased by $ 5.8 million, or 6 %, to $10 1 . 2 million for the year ended December 31, 2015, as compared to the prior year. This was primarily due to the operating costs from the acquired Games business offset by $14.4 million of legal settlement proceeds .
Research and development costs increased by $1 8.3 million, or 2, 275 %, to $1 9. 1 million for the year ended December 31, 2015, as compared to the prior year.  The increase in research and development is associated with the acquired Games business.
Goodwill impairment was $75.0 million for the year ended December 31, 2015. This non-cash charge was a result of our October 1, 2015 annual goodwill assessment and attributable to our Games reporting unit.
Depreciation increased by $36.8 million, or 421%, to $45.6 million for the year ended December 31, 2015, as compared to the prior year. This was primarily related to tangible assets from the acquired Games business. In connection with our fourth quarter 2015 annual impairment review, we concluded that certain of our gaming fixed assets either: (a) had economic lives that were no longer supportable and such lives were shortened, which resulted in an accelerated depreciation charge of approximately $2.6 million in the current period; or (b) were fully impaired, which resulted in an accelerated depreciation charge of approximately $1.0 million in the current period.
Amortization increased by $71. 3 million, or 50 2 %, to $85. 5 million for the year ended December 31, 2015, as compared to the prior year. This was primarily related to the definite-lived intangible assets from the acquired Games business.
Primarily as a result of the factors described above, operating income decreased by $43.5 million, or 129%, to an operating loss of $9.7 million for the year ended December 31, 2015, as compared to the prior year. The operating (loss) income margin decreased to (1%) for the year ended December 31, 2015, as compared to 6% for the prior year.  Excluding the 2015 goodwill impairment, the 2015 operating margin would have been approximately 8%.
Interest expense, net of interest income, increased by $89.5 million, or 832%, to $100.3 million for the year ended December 31, 2015, as compared to the prior year. This was associated with the additional indebtedness incurred to fund the acquisition of the Games business.
Loss on extinguishment of debt increased by $ 10 .3 million, or 379%, to $13.1 million for the year ended December 31, 2015, as compared to the prior year. This was related to the loss on extinguishment on the refinancing of our Senior Secured

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Notes in the current year compared to extinguishment of unamortized deferred loan fees associated with the Prior Credit Facilities that were paid in full in connection with the Merger in the prior year .
Income tax expense decreased by $26.3 million, or 322%, to a benefit of $18.1 million for the year ended December 31, 2015, as compared to the prior year. This was primarily due to the decrease in income from operations before income tax expense   of $143.4 million, excluding the goodwill impairment for w hich no tax benefit is provided . The provision for income tax reflected an effective income tax rate of 14.7% for the year ended December 31, 2015, which was less than the statutory federal rate of 35.0% primarily due to the impairment of goodwill for which no tax benefit is provided for book purposes. The provision for income tax reflected an effective income tax rate of 40.2% for the prior year, which was greater than the statutory federal rate of 35.0% primarily due to non-deductible acquisition related costs associated with the Merger and partially offset by the lower tax rate on foreign earnings.
Primarily as a result of the foregoing, net income decreased by $1 17.1 million, or 965 %, to $ 105.0 million for the year ended December 31, 2015 , as compared to the prior year.
Year ended December 31, 2014 compared to year ended December 31, 2013
 
The following table presents our consolidated results of operations (in thousands)*:

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	December 31,	 	December 31,	 	December 31,	 	
 	2014	 	2013	 	2014 Vs 2013	 	
 	$	 	%	 	$	 	%	 	$ Variance	 	% Variance	 	
Revenues	    	 	    	 	  	 	 	    	 	  	 	 	    	 	 	
Games	$	
7,406	 	
1	%  	$	 —	 	 —	%  	$	
7,406	 	 —	%	
Payments	 	
585,647	 	
99	%  	 	
582,444	 	
100	%  	 	
3,203	 	
1	%	
Total revenues	 	
593,053	 	
100	%  	 	
582,444	 	
100	%  	 	
10,609	 	
2	%	
Costs and expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of revenues (exclusive of depreciation and amortization)	 	
440,071	 	
74	%  	 	
439,794	 	
76	%  	 	
277	 	 —	 	
Operating expenses	 	
95,452	 	
16	%  	 	
76,562	 	
13	%  	 	
18,890	 	
25	%	
Research and development	 	
804	 	 —	%  	 	 —	 	 —	%  	 	
804	 	 —	%	
Depreciation	 	
8,745	 	
1	%  	 	
7,350	 	
1	%  	 	
1,395	 	
19	%	
Amortization	 	
14,199	 	
3	%  	 	
9,588	 	
2	%  	 	
4,611	 	
48	%	
Total costs and expenses	 	
559,271	 	
94	%  	 	
533,294	 	
92	%  	 	
25,977	 	
5	%	
Operating income	 	
33,782	 	
6	%  	 	
49,150	 	
8	%  	 	
(15,368)	 	
(31)	%	
Other expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense, net of interest income	 	
10,756	 	
2	%  	 	
10,265	 	
2	%  	 	
491	 	
5	%	
Loss on extinguishment of debt	 	
2,725	 	 —	%  	 	 —	 	 —	%  	 	
2,725	 	 —	%	
Total other expenses	 	
13,481	 	
2	%  	 	
10,265	 	
2	%  	 	
3,216	 	
31	%	
Income from operations before tax	 	
20,301	 	
4	%  	 	
38,885	 	
6	%  	 	
(18,584)	 	
(48)	%	
Income tax provision	 	
8,161	 	
2	%  	 	
14,487	 	
2	%  	 	
(6,326)	 	
(44)	%	
Net income	$	
12,140	 	
2	%  	$	
24,398	 	
4	%  	$	
(12,258)	 	
(50)	%	

* Rounding may cause variances.
Total Revenues
Total revenues increased by $10.6 million, or 2%, to $593.1 million for the year ended December 31, 2014, as compared to the prior year. This was primarily due to the revenues generated as a result of the Merger as well as, within our Payments segment, higher Cash Advance and Other revenues, partially offset by lower ATM and Check Services revenues.
Payments revenues increased by $3.2 million, or 1 %, to $585.6 million for the year ended December 31, 2014, as compared to the prior year. This was due to due to higher international and domestic cash advance revenues; combined with a greater

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dollar volume processed per transaction, and as a result of our compliance, audit, and data services offerings, partially offset by lost business and lower transaction volume from ATM cash withdrawals and check services transactions.
Games revenues of $7.4 million were generated as a result of the Merger.
Costs and Expenses
Cost of revenues (exclusive of depreciation and amortization) increased by $0.3 million, to $440.1 million for the year ended December 31, 2014, as compared to the prior year. This was primarily due to increased warranty expenses in our check services operations as well as the variable costs related to higher revenues in the Games and Payments segments, offset by a reduction in costs in the ATM cash withdrawal operations due to lost business and lower transaction volume.
Operating expenses increased by $18.9 million, or 25%, to $95.5 million for the year ended December 31, 2014, as compared to the prior year. This was primarily due to the acquisition-related costs and operating expenses incurred following the consummation of the Merger, an asset impairment charge and increases in non-cash stock compensation expense.
Depreciation increased by $1.4 million, or 19%, to $8.7 million for the year ended December 31, 2014, as compared to the prior year. This was primarily due to depreciation expense post-Merger.
Amortization increased by $4.6 million, or 48%, to $14.2 million for the year ended December 31, 2014, as compared to the prior year. This was primarily due to other intangible assets associated with the NEWave acquisition and the Merger.
Primarily as a result of the factors described above, operating income decreased by $15.4 million, or 31%, to $33.8 million for the year ended December 31, 2014, as compared to the prior year. Operating margin decreased to 6% for the year ended December 31, 2014 from 8% for the prior year. Exclusive of acquisition-related costs and asset impairment charges, the operating margin for 2014 would have been 8%.
Interest expense, net of interest income, increased by $0.5 million, or 5%, to $10.8 million for the year ended December 31, 2014, as compared to the prior year. This was primarily due to a $3.4 million increase in interest charges and amortization of debt issuance costs associated with the Merger; partially offset by a $2.1 million reduction in interest charges due to the lower outstanding debt balance and lower weighted average interest rate on the Prior Credit Facilities in 2014 that were paid in full in connection with the Merger and $0.8 million increase in interest income primarily related to the refund of a goods and services tax due to a favorable ruling from the Canadian Court of Appeals holding that commissions paid to Canadian casinos were not subject to such tax.
Loss on early extinguishment of debt was $2.7 million for the year ended December 31, 2014. This was due to the extinguishment of unamortized deferred loan fees associated with the Prior Credit Facilities that were paid in full in connection with the Merger.
Income tax expense decreased by $6.3 million, or 44%, to $8.2 million for the year ended December 31, 2014, as compared to the prior year. This was primarily due to the decrease in income from operations before income tax expense of $18.6 million. The provision for income tax reflected an effective income tax rate of 40.2% for the year ended December 31, 2014, which was greater than the statutory federal rate of 35.0% due primarily to non-deductible acquisition related costs associated with the Merger and partially offset by the lower tax rate on foreign earnings. The provision for income tax reflected an effective income tax rate of 37.3% for the prior year, which was greater than the statutory federal rate of 35.0% due in part to state taxes and the non-cash compensation expenses related to stock options.
Primarily as a result of the foregoing, net income decreased by $12.3 million, or 50%, to $12.1 million for the year ended December 31, 2014, as compared to the prior year.

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Games Revenues and Participation Units
 
The following table includes the revenues from our Games segment and the related participation units (amounts in thousands):

 	 	For the year ended December 31,	 	
 	 	2015	 	
 	    	 	    	 	 	    	% of Total Games	 	
 	 	Total EGMs	 	Revenue	 	Revenue	 	
Games revenues and participation units	 	 	 	 	 	 	 	 	
Contractual agreement	 	
5,528	 	$	
42,230	 	
20	%	
Participation revenue	 	
7,812	 	 	
96,777	 	
45	%	
Sales	 	 —	 	 	
51,142	 	
24	%	
NY Lottery	 	 —	 	 	
17,510	 	
8	%	
Other	 	 —	 	 	
6,765	 	
3	%	
Total	 	
13,340	 	$	
214,424	 	
100	%	
 
As the Merger occurred on December 19, 2014, Games revenue for the year ended December 31, 2014 was not material to our financial statements and there was no Games revenue for the year ended December 31, 2013. N o comparative financial information was provided for year s ended December 31, 2014 and 2013 .
 
Critical Accounting Policies
The preparation of our financial statements in conformity with Generally Accepted Accounting Principles (“ GAAP ”) requires us to make estimates and assumptions that affect our reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in our consolidated financial statements. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the financial condition and results of operations, and which require management to make the most difficult and subjective judgments, often as a result of the need to make estimates about matters that are inherently uncertain. Based on this definition, we have identified our critical accounting policies as those addressed below. We also have other key accounting policies that involve the use of estimates, judgments and assumptions. You should review the notes to our consolidated financial statements for a summary of these policies. We believe that our estimates and assumptions are reasonable, based upon information presently available; however, actual results may differ from these estimates under different assumptions or conditions.
Segment Reporting. We apply the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 280, “Segment Reporting”, in accounting for our business segments. This defines operating segments as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. In addition, ACS 280-10-50-34, as well as Rule 3-03(e) of Regulation S-X, requires us to recast financial information from prior years for segments if we change our internal organization in a way that effects the compositions of our reportable segments. Our operating segments were previously organized and managed under five business segments: (a) Cash Advance, (b) ATM, (c) Check Services, (d) Games, and (e) Other. During the first quarter of 2015, we changed our organizational structure as part of our transformation to a Games and Payments company providing solutions to the gaming industry. Accordingly, since the first quarter of 2015, we have reported our financial performance, and organized and managed our operations, across the following two business segments: (a) Games, and (b) Payments. Each of these segments is monitored by our management for performance against its internal forecast and is consistent with our internal management reporting. We have presented prior period amounts to conform to the way we now internally manage and monitor segment performance beginning in 2015. This change in segment reporting had no impact on our consolidated financial statements
Business Combinations.  We apply the provisions of the ASC 805 ,   Business Combinations in the accounting for acquisitions. It requires us to recognize separately from goodwill the assets acquired and the liabilities assumed, at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Significant estimates and assumptions are required to value assets acquired and liabilities assumed at the acquisition date as well as contingent

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consideration, where applicable. These estimates are preliminary and typically include the calculation of an appropriate discount rate and projection of the cash flows associated with each acquired asset over its estimated useful life. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. In addition, deferred tax assets, deferred tax liabilities, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date and any adjustments to its preliminary estimates are recorded to goodwill ,   in the period of identification, i f identified within the measurement period. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the C onsolidated S tatements of (Loss)   Income and C omprehensive (Loss) I ncome .
Acquisition ‑related Costs.  We recognize a liability for acquisition ‑related costs when the expense is incurred. Acquisition ‑related costs include, but are not limited to: financial advisory, legal and debt fees; accounting, consulting, and professional fees associated with due diligence, valuation and integration; severance; and other related costs and adjustments.
Property, Equipment and Leased Assets .   We have approximately $ 106.3  million in net property, equipment and leased assets on our Consolidated Balance S heet s at December 31, 2015 .   Property, equipment and leased assets are stated at cost, less accumulated depreciation, and computed using the straight-line method over the lesser of the estimated life of the related assets, generally three to five years, or the related lease term.  Player terminals and related components and equipment are included in our rental pool. The rental pool can be further delineated as “rental pool – deployed,” which consists of assets deployed at customer sites under participation arrangements, and “rental pool – undeployed,” which consists of assets held by us that are available for customer use. Rental pool – undeployed consists of both new units awaiting deployment to a customer site and previously deployed units currently back with us to be refurbished awaiting re-deployment.  Routine maintenance of property, equipment and leased gaming equipment is expensed in the period incurred, while major component upgrades are capitalized and depreciated over the estimated remaining useful life of the component. Sales and retirements of depreciable property are recorded by removing the related cost and accumulated depreciation from the accounts. Gains or losses on sales and retirements of property are reflected in our C onsolidated S tatements of (Loss)   Income and C omprehensive (Loss) I ncome.   Property, equipment and leased assets are reviewed for impairment whenever events or circumstances indicate that their carrying amounts may not be recoverable. Impairment is indicated when undiscounted future cash flows do not exceed the asset’s carrying value.
Goodwill.  We had approximately $ 789.8  million of goodwill on o ur Consolidated Balance S heet s at December 31, 2015 resulting from acquisitions of other businesses. All of our goodwill was subject to our annual goodwill impairment testing. We test for impairment annually on a reporting unit basis, as of October 1, or more often under certain circumstances. The annual impairment test is completed using either: a qualitative Step 0 assessment based on reviewing relevant events and circumstances; or a quantitative Step 1 assessment using an income approach that discounts future cash flows based on the estimated future results of the reporting units and a market approach that compares market multiples of comparable companies to determine whether or not any impairment exists. If the fair value of a reporting unit is less than its carrying amount, we use the Step 2 assessment to determine the impairment. Our most recent annual assessment was performed as of October 1, 2015 , following which it was determined that a portion of our goodwill was impaired related to our Games reporting unit and an   impairment charge   in the amount of approximately $75.0 million was recorded . The annual evaluation of goodwill and other non ‑amortizing intangible assets requires the use of estimates about future operating results of each reporting unit to determine their estimated fair value. Changes in forecasted operations can materially affect these estimates, which could materially affect our results of operations. Our reporting units are identified as operating segments or one level below an operating segment. Reporting units must: (a) engage in business activities from which they earn revenues and incur expenses; (b) have operating results that are regularly reviewed by our chief operating decision maker s to ascertain the resources to be allocated to the segment and assess its performance; and (c) have discrete financial information available. As of December 31, 2015 , our reporting units included: Everi Games, Cash Advance, ATM, Check Services, Kiosk Sales and Service, Central Credit, and Everi Compliance. The use of different assumptions, estimates or judgments in either step of the goodwill impairment testing process, such as the estimated future cash flows of our reporting units, the discount rate used to discount such cash flows, or the estimated fair value of the reporting units’ tangible and intangible assets and liabilities, could significantly increase or decrease the estimated fair value of a reporting unit or its net assets, and therefore, impact the related impairment charge, if any. At the annual impairment test date, the above ‑noted

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conclusion that an indication of goodwill impairment existed at the test date would not have changed had the test been conducted assuming: 1) a 100 basis point increase in the discount rate used to discount the aggregate estimated cash flows of our reporting units to their net present value in determining their estimated fair values (without any change in the aggregate estimated cash flows of our reporting units), or 2) a 100 basis point decrease in the estimated sales growth rate or terminal period growth rate without a change in the discount rate of each reporting unit.
Other Intangible Assets.  We have approximately $38 2 . 5  million in net unamortized other intangible assets on our Consolidated Balance S heet s at December 31, 2015 .   Other intangible assets are stated at cost, less accumulated amortization , computed primarily using the straight-line method .   Our other intangible assets consist primarily of customer contracts (rights to provide Games and Payments services to gaming establishment customers) acquired through business combinations, capitalized software development costs , trade names, trademarks and the acquisition cost of our patent related to the 3 ‑in ‑1 Rollover technology acquired in 2005, which expires in 2018. Customer contracts require us to make renewal assumptions, which impact the estimated useful lives of such assets. Capitalized software development costs require us to make certain judgments as to the stages of development and costs eligible for capitalization. Capitalized software costs placed in service are amortized over their useful lives, generally not to exceed five years. We review intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events or circumstances include, but are not limited to, a significant decrease in the fair value of the underlying business or market price of the asset, a significant adverse change in legal factors or business climate that could affect the value of an asset, or a current period operating or cash flow loss combined with a history of operating or cash flow losses. We group intangible assets for impairment analysis at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of intangible assets is measured by a comparison of the carrying amount of the asset to future, net cash flows expected to be generated by the asset, undiscounted and without interest. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Income Taxes.  We are subject to income taxes in the United States as well as various states and foreign jurisdictions in which we operate. We account for income taxes in accordance with accounting guidance whereby deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or income tax returns. Deferred tax assets and liabilities are determined based upon differences between financial statement carrying amounts of existing assets and their respective tax bases using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. We also follow accounting guidance to account for uncertainty in income taxes as recognized in our consolidated financial statements. The effect on the income tax provision and deferred tax assets and liabilities for a change in rates is recognized in the C onsolidated S tatements of (Loss)   Income and C omprehensive (Loss) I ncome in the period that includes the enactment date. We believe that it is more likely than not that we will be able to utilize our deferred tax assets. Therefore, we have not provided material valuation allowances against our recorded deferred tax assets.
Revenue Recognition.  We recognize revenue when evidence of an arrangement exists, services have been rendered, the price is fixed or determinable and collectability is reasonably assured. We evaluate our revenue streams for proper timing of revenue recognition. Revenue is recognized as products are delivered and or services are performed.
Games Revenues
Games revenues are primarily generated by our gaming operations under development, placement, and participation a rrangements in which we provide our customers with player terminals, player terminal ‑content licenses and back ‑ office equipment, collectively referred to herein as leased gaming equipment. Under these arrangements, we retain ownership of the leased gaming equipment installed at customer facilities, and we receive revenue based on a percentage of the net win per day generated by the leased gaming equipment or a fixed daily fee based on the number of player terminals installed at the facility. Revenue from lease participation or daily fee arrangements are considered both realizable and earned at the end of each gaming day.
Games revenues generated by player terminals deployed at sites under development or placement fee agreements is reduced by the accretion of contract rights acquired as part of those agreements. Contract rights are amounts allocated to intangible assets for dedicated floor space resulting from such agreements, described under “Development and Placement Fee

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Agreements.” The related amortization expense, or accretion of contract rights, is netted against our resp ective revenue category in the Consolidated S tatements of (Loss) Income and C omprehensive (Loss) I ncome.
We also generate games revenues from back ‑office fees with certain customers. Back ‑office fees cover the service and maintenance costs for back ‑office servers installed in each gaming facility to run our gaming equipment, as well as the cost of related software updates. Back ‑office fees are considered both realizable and earned at the end of each gaming day.
Payments Revenues
Cash advance revenues are comprised of transaction fees assessed to gaming patrons in connection with credit card cash access and POS debit card transactions and are recognized at the time the transactions are authorized. Such fees are based on a combination of a fixed amount plus a percentage of the face amount of the credit card cash access or POS debit card transaction amount.
ATM revenues are comprised of transaction fees in the form of cardholder surcharges assessed to gaming patrons in connection with ATM cash withdrawals at the time the transactions are authorized and reverse interchange fees paid to us by the patrons’ issuing banks. Cardholder surcharges are recognized as revenue when a transaction is initiated and reverse interchange is recognized as revenue on a monthly basis based on the total transactions occurring during the month. The cardholder surcharges assessed to gaming patrons in connection with ATM cash withdrawals are currently a fixed dollar amount and not a percentage of the transaction amount.
Check services revenues are principally comprised of check warranty revenues and are generally based upon a percentage of the face amount of checks warranted. These fees are paid to us by gaming establishments.
Other revenues include amounts derived from the sale of cash access devices, such as the provision of certain professional services, software licensing, and certain other ancillary fees associated with the sale, installation and maintenance of those devices. In addition, other revenues consist of Central Credit revenues that are based upon either a flat monthly unlimited usage fee or a variable fee structure driven by the volume of patron credit histories generated. Also included in other revenues are revenues generated from ancillary marketing, database and Internet gaming activities.
Equipment and Systems Revenues
We sell gaming equipment, fully integrated kiosks and gaming systems directly to our customers under independent sales contracts through normal credit terms, or may grant extended credit terms under contracts secured by the related equipment.
For sales arrangements with multiple deliverables, we apply the guidance from ASC 605-25, “Revenue Recognition - Multiple-Element Arrangements.” In addition, we apply the guidance from ASC 985-605, “Software – Revenue Recognition” which affects vendors that sell or lease tangible products in an arrangement that contains software that is more than incidental to the tangible product as a whole and clarifies what guidance should be used in allocating and measuring revenue.
The majority of our multiple element sales contracts are for some combination of gaming equipment, player terminals, content, system software, license fees, ancillary equipment and maintenance.
Revenue related to systems arrangements that contain both software and non ‑software deliverables requires allocation of the arrangement fee to the separate deliverables using the relative selling price method. Revenue for software deliverables is recognized under software revenue recognition guidance. Revenue resulting from the sale of non ‑software deliverables, such as gaming devices and other hardware, are accounted for based on other applicable revenue recognition guidance as the devices are tangible products containing both software and non ‑software components that function together to deliver the product’s essential functionality.
In allocating the arrangement fees to separate deliverables, we evaluate whether we have vendor ‑specific objective evidence (“VSOE”) of selling price, third party evidence (“TPE”) or estimate of selling price (“ESP”) for gaming devices, maintenance and product support fees and other revenue sources. We generally use ESP to determine the selling price used

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in the allocation of separate deliverables, as VSOE and TPE are generally not available. We determine the ESP on separate deliverables by estimating a margin typically received on such items and applying that margin to the product cost incurred.
Generally, player terminal sales include ancillary equipment, such as networking gear, bases, chairs, and occasionally signage, some of which may be necessary for the full functionality of the player terminals in a casino. This ancillary equipment comprises an install kit that is shipped simultaneously with the player terminals. Although our products are analyzed as multiple deliverable arrangements, revenue for the player terminal and ancillary equipment is not recognized until all elements essential for the functionality of the product have been shipped or delivered. This includes game theme software and essential ancillary equipment. If elements that are not essential to the functionality of the player terminals are shipped after the unit, such as signage, chairs, or bases, these items would be classified as deferred revenue until shipped or delivered.
Stock ‑Based Compensation.  Stock ‑based compensation expense for all awards is based on the grant date fair value estimated. We estimate the weighted ‑ average fair value of options granted for our time ‑based and cliff vesting time ‑based options using the Black ‑Scholes Option Pricing Model. We estimate the weighted ‑average fair value of options granted for our market ‑based options using a lattice ‑based option valuation model. Each model is based on assumptions regarding expected volatility, dividend yield, risk ‑free interest rates, the expected term of the option and the expected forfeiture rate. Each of these assumptions, while reasonable, requires a certain degree of judgment and the fair value estimates could vary if the actual results are materially different than those initially applied.
Recent Accounting Guidance
Recently Adopted Accounting Guidance
In November 2015, the FASB issued Accounting Standards Update (“ASU”)  2015-17 Balance Sheet Classification of Deferred Taxes, which requires that deferred tax assets and deferred tax liabilities be classified as noncurrent in the balance sheet. ASU No. 2015-17 is effective for the interim and annual periods beginning after December 15, 2016. Early adoption is permitted. During the fourth quarter of 2015, we elected to prospectively adopt this standard. The prior reporting period was not retrospectively adjusted. The adoption of this guidance had no impact on our Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income.
  In September 2015, the FASB issued ASU No. 2015-16, which provides guidance on business combinations. The ASU requires an acquirer recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. The standard is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. We implemented this guidance during the current period as it impacted the final purchase price allocation adjustments associated with our acquisition of Multimedia Games Holdings Inc.
Recent Accounting Guidance Not Yet Adopted
In February 2016, the FASB issued ASU No. 2016-02, which provides guidance on the accounting treatment of leases.  The ASU establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of adopting this guidance on our C onsolidat ed Financial S tatements and disclosures included within Notes to the Consolidated Financial Statements.
In July 2015, the FASB issued ASU No. 2015-11, which provides guidance on the measurement of inventory value.  The amendments require an entity to measure in scope inventory at the lower of cost and net realizable value. Net realizable

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value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. The pronouncement is effective for annual periods beginning after December 15, 2016, and interim periods within those fiscal years, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our Consolidated F inancial S tatements and disclosures included within Notes to the Consolidated Financial Statements.
In April 2015, the FASB issued ASU No. 2015-03, which provides guidance to simplify the presentation of debt issuance costs.  These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The pronouncement is effective for annual periods beginning after December 15, 2015, and interim periods within those fiscal years, and early adoption is permitted for financial statements that have not been previously issued. This guidance was further clarified in ASU No. 2015-15 which addressed the treatment of debt issuance costs related to line-of credit arrangements. It noted that as ASU No. 2015-03 did not provide guidance on debt issuance costs related to line-of credit arrangements, the SEC would not object to an entity deferring and presenting these specific debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement . We expect to adopt the guidance in ASU No. 2015-03 and 2015-15 to reclassify all debt issuance costs not associated with line-of-credit arrangements from other assets, non-current to contra-liabilities to long-term debt on our Consolidated Balance Sheets and related notes for the year ending December 31, 2016 .  
In January 2015, the FASB issued ASU No. 2015-01, which eliminates the require ment that an entity separately classify, present and disclose extraordinary events and transactions. The pronouncement is effective for annual periods ending after December 15, 2015. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We expect to implement this guidance for the year ended December 31, 2016 and do not anticipate the ASU to have a material impact on our results of operations or financial condition.
In August 2014, the FASB issued ASU No. 2014-15, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The pronouncement is effective for annual periods ending after December 15, 2016, and interim periods thereafter, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our Consolidated F inancial S tatements and disclosures included within Notes to the Consolidated Financial Statements.
In June 2014, the FASB issued ASU No. 2014-12, which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. The standard is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. We expect to implement this guidance for the year ended December 31, 2016 and do not anticipate the ASU to have a material impact on our results of operations or financial condition.

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In May 2014, the FASB issue d ASU No. 2014-09, which created ASC Topic 606, “Revenue from Contracts with Customers” and supersedes ASC Topic 605, “Revenue Recognition”. The guidance replaces industry-specific guidance and establishes a single five-step model to identify and recognize revenue. The core principle of the guidance is that an entity should recognize revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires the entity to disclose further quantitative and qualitative information regarding the nature and amount of revenues arising from contracts with customers, as well as other information about the significant judgments and estimates used in recognizing revenues from contracts with customers. This guidance was originally effective for interim and annual reporting periods beginning after December 15, 2016; however, in August 2015, the FASB issued ASU No. 2015-14, which extended the effective date to interim and annual periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2015, including interim reporting periods within that reporting period . This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. We are currently evaluating the impact of adopting this guidance on our C onsolidated F inancial S tatements and disclosures included within our Notes to the Consolidated Financial Statement .
 
Liquidity and Capital Resources
 
Overview
 
The following table presents selected information about our financial position (in thousands):

 	 	At December 31,	 	
 	 	2015	 	2014	 	
Balance sheet data	    	 	    	    	 	    	 	
Total assets	 	$	
1,574,065	 	$	
1,707,285	 	
Total borrowings	 	 	
1,163,579	 	 	
1,188,787	 	
Stockholders’ equity	 	 	
137,420	 	 	
231,473	 	
 	 	 	 	 	 	 	 	
Net available cash*	 	 	 	 	 	 	 	
Cash and cash equivalents	 	 	
102,030	 	 	
89,095	 	
Add: Settlement receivables	 	 	
44,933	 	 	
43,288	 	
Less: Settlement liabilities	 	 	
(139,819)	 	 	
(119,157)	 	
Total net available cash	 	$	
7,144	 	$	
13,226	 	

* Non ‑GAAP measure
Cash Resources
Our cash balance, cash flows and Credit Facilities are expected to be sufficient to meet our recurring operating commitments and to fund our planned capital expenditures for the foreseeable future. Cash and cash equivalents at December 31, 2015 included cash in non ‑U.S. jurisdictions of approximately $11.1 million. Generally, these funds are available for operating and investment purposes within the jurisdiction in which they reside, but are subject to taxation in the U.S. upon repatriation.
We provide cash settlement services to our customers. These services involve the movement of funds between the various parties associated with cash access transactions. These activities result in a balance due to us at the end of each business day that we recoup over the next few business days and classify as settlement receivables. These activities also result in a balance due to our customers at the end of each business day that we remit over the next few business days and classify as settlement liabilities. As of December 31, 2015 , we had $44.9 million in settlement receivables for which we received payment in January 2016. As of December 31, 2015 , we had $139.8 million in settlement liabilities due to our customers for these settlement services that were paid in January 2016. As the timing of cash received from settlement receivables

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and payment of settlement liabilities may differ, the total amount of cash held by us will fluctuate throughout the year. As of December 31, 2015 and 2014 , the net cash available after considering settlement amounts was $7.1 million and $13.2 million, respectively.
Cash Flows
The following table summarizes our cash flows for the years ended December 31, 2015, 2014 and 2013 (in thousands):

 	 	Year Ended December 31,	 	Increase/(Decrease)	 	
 	 	2015	 	2014	 	2013	 	2015 Vs 2014	 	2014 Vs 2013	 	
Cash flow activities	    	 	    	    	 	    	    	 	    	    	 	    	    	 	    	 	
Net cash provided by operating activities	 	$	
124,587	 	$	
24,531	 	$	
4,334	 	$	
100,056	 	$	
20,197	 	
Net cash used in investing activities	 	 	
(85,549)	 	 	
(1,085,847)	 	 	
(13,990)	 	 	
1,000,298	 	 	
(1,071,857)	 	
Net cash (used in)/provided by financing activities	 	 	
(24,551)	 	 	
1,037,423	 	 	
(29,183)	 	 	
(1,061,974)	 	 	
1,066,606	 	
Effect of exchange rates on cash	 	 	
(1,552)	 	 	
(1,266)	 	 	
73	 	 	
(286)	 	 	
(1,339)	 	
Cash and cash equivalents	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net increase/(decrease) for the period	 	 	
12,935	 	 	
(25,159)	 	 	
(38,766)	 	 	
38,094	 	 	
13,607	 	
Balance, beginning of the period	 	 	
89,095	 	 	
114,254	 	 	
153,020	 	 	
(25,159)	 	 	
(38,766)	 	
Balance, end of the period	 	$	
102,030	 	$	
89,095	 	$	
114,254	 	$	
12,935	 	$	
(25,159)	 	
 
Cash flows provided by operating activities were $124.6  million, $24.5 million , and $4.3 million, for the years ended December 31, 2015, 2014 and 2013, respectively . Cash flows provided by operating activities increased by $ 100.1  million for the year ended December 31, 2015 as compared to the prior year. This was primarily due to increased operations from the acquisition of our Games segment in December 2014. Cash flows provided by operating activities increased by $20.2 million for the year ended December 31, 2014 as compared to the prior year. This was primarily due to an increase in non-cash adjustments and the timing of our settlement receivables and settlement liabilities based on the number of business days outstanding prior to the settlement of our cash access transactions at the end of each period for the year ended December 31, 2014 as compared to the prior year, partially offset by a decrease in net income
Cash flows used in investing activities were $85. 5 million, $1 .1 billion, and $14.0 million for the years ended December 31, 2015, 2014 and 2013, respectively . Cash flows used in investing activities decreased by $1 .0 billion for the year ended December 31, 2015 as compared to the prior year. This was primarily due to the use of proceeds raised to fund the Merger in 2014, partially offset by an increase in capital expenditures in 2015 . Cash flows used in investing activities increased by $1 .1 billion for the year ended December 31, 2014 as compared to the prior year. This was primarily due to the use of proceeds raised to fund the Merger.
Cash flows used in financing activities were $24. 6  million and $29.2 million for the years ended December 31, 2015 and 2013, respectively. Cash flows provided by financing activities were $1 .0 billion for the year ended December 31, 2014. Cash flows used in financing activities in creased by $1 .1 billion for the year ended December 31, 2015 as compared to the prior year. This was primarily due to the Company not acquiring additional funds from debt issuances in 2015 as well as reductions in debt issuance costs incurred and treasury stock acquired for the year ended December 31, 2015.   Cash flows provided by financing activities increased by $1 .1 billion for the year ended December 31, 2014 as compared to the prior year. This was primarily due to the proceeds raised to fund the Merger offset by repayments on debt on the Prior Credit Facilities, debt issuance costs and purchase of treasury stock.

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Long ‑Term Debt
The following table summarizes our indebtedness at December 31, 2015 (in thousands):

 	 	At December 31,	 	
 	 	2015	 	2014	 	
Long-term debt	    	 	    	    	 	    	 	
Senior secured term loan	 	$	
490,000	 	$	
500,000	 	
Senior secured notes	 	 	
335,000	 	 	
350,000	 	
Senior unsecured notes	 	 	
350,000	 	 	
350,000	 	
Total debt	 	 	
1,175,000	 	 	
1,200,000	 	
Less: debt issuance costs and warrant discount	 	 	
(11,421)	 	 	
(11,213)	 	
Total debt after discount	 	 	
1,163,579	 	 	
1,188,787	 	
Less: current portion of long-term debt	 	 	
(10,000)	 	 	
(10,000)	 	
Long-term debt, less current portion	 	$	
1,153,579	 	$	
1,178,787	 	
 
I n connection with the Merger, we refinanced all of our indebtedness outstanding under the Prior Credit Facilities with proceeds from the Credit Facilities and the Notes.
Credit Facilities
In December 2014, Everi Payments, as borrower, and Holdings entered into a credit agreement among Everi Payments, Holdings, Bank of America, N.A. , as administrative agent, collateral agent, swing line lender and letter of credit issuer; Deutsche Bank Securities Inc., as syndication agent; and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Deutsche Bank Securities, Inc. as joint lead arrangers and joint book managers, which governs the Credit Facilities (the “Credit Agreement”). The Credit Facilities consist of the $500.0 million Term Loan that matures in 2020 and the $50.0 million Revolving Credit Facility that matures in 2019.  The fees associated with the Credit Facilities included discounts of approximately $7.5 million and debt issuance costs of approximately $13.9 million. All borrowings under the Credit Facilities are subject to the satisfaction of customary conditions, including the absence of a default and compliance with representations and warranties.
We are required to repay the Term Loan in an amount equal to 0.50% per quarter of the initial aggregate principal with the final principal repayment installment on the maturity date. Interest is due in arrears each March, June, September and December and at the maturity date; however, interest may be remitted within one to three months of such dates.
The Term Loan had an applicable interest rate of 6.25% as of December 31, 2015 and December 31, 2014.  
The interest rate per annum applicable to the Revolving Credit Facility is, at our option, the base rate or London Interbank Offered Rate   (“ LIBOR ”) plus, in each case, an applicable margin. The interest rate per annum applicable to the Term Loan is also, at our option, the base rate or LIBOR plus, in each case, an applicable margin. LIBOR will be reset at the beginning of each selected interest period based on the LIBOR rate then in effect; provided that, with respect to the Revolving Credit Facility, if LIBOR is below zero, then such rate will be equal to zero plus the applicable margin, and, with respect to the Term Loan, if LIBOR is below 1.0%, then such rate will be equal to 1.0% plus the applicable margin. The base rate is a fluctuating interest rate equal to the highest of (a) the prime lending rate announced by the administrative agent, (b) the federal funds effective rate from time to time plus 0.50%, and (c) LIBOR (after taking account of any applicable floor) applicable for an interest period of one month plus 1.00%. The applicable margins of 4.75% and 5.25% for the Revolving Credit Facility and Term Loan, respectively, are subject to adjustment based on our consolidated secured leverage ratio.
Voluntary prepayments of the Term Loan and the Revolving Credit Facility and voluntary reductions in the unused commitments are permitted in whole or in part, in minimum amounts as set forth in the Credit Agreement, with prior notice but without premium or penalty .  
Subject to certain exceptions, the obligations under the Credit Facilities are secured by substantially all of the present and after acquired assets of each of Everi Payments, Holdings and the subsidiary guarantors (the “Collateral”) including: (a) a

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perfected first priority pledge of all the capital stock of Everi Payments and each domestic direct, wholly owned material restricted subsidiary held by Holdings, Everi Payments or any such subsidiary guarantor; and (b) a perfected first priority security interest in substantially all other tangible and intangible assets of Holdings, Everi Payments, and such subsidiary guarantors (including, but not limited to, accounts receivable, inventory, equipment, general intangibles, investment property, real property, intellectual property and the proceeds of the foregoing). Subject to certain exceptions, the Credit Facilities are unconditionally guaranteed by Holdings and such subsidiary guarantors and Everi Games and its material domestic subsidiaries.
The Credit Agreement contains certain covenants that, among other things, limit Holdings’ ability, and the ability of certain of its subsidiaries, to incur additional indebtedness; sell assets or consolidate or merge with or into other companies; pay dividends or repurchase or redeem capital stock; make certain investments; issue capital stock of subsidiaries; incur liens; prepay, redeem or repurchase subordinated debt; and enter into certain types of transactions with our affiliates. The Credit Agreement also requires Holdings, together with its subsidiaries, to comply with a consolidated secured leverage ratio as well as an annual excess cash flow requirement.
Events of default under the Credit Agreement include customary events such as a cross-default provision with respect to other material debt (which includes the Refinanced Secured Notes and the Unsecured Notes).  In addition, an event of default will occur if Holdings undergoes a change of control. This is defined to include the case where Holdings ceases to own 100% of the equity interests of Everi Payments, or where any person or group acquires a percentage of the economic or voting interests of Holdings’ capital stock of 35% or more (determined on a fully diluted basis), or where a majority of the board of directors of Everi Payments ceases to consist of persons who are directors of Holdings on the closing date of the Credit Facilities or other directors whose nomination for election to the board of directors of Holdings was recommended by a majority of the then continuing directors.
At December 31, 2015, we had approximately $490.0   million of borrowings outstanding under the Term Loan and $50.0 million of additional borrowing availability under the Revolving Credit Facility, based upon borrowing base calculations as of such date.  We were in compliance with the terms of the Credit Facilities as of December 31, 2015.
We expect that our cash provided by operating activities will be sufficient for our operating and debt servicing needs during the next 12 months. If not, we have sufficient borrowings available under our Credit Facilities to meet additional funding requirements. We monitor the financial strength of our lenders on an ongoing basis using publicly-available information. Based upon that information, we believe there is not a likelihood that any of our lenders might not be able to honor their commitments under the Credit Agreement.
Senior Secured Notes and Refinance of Senior Secured Notes
In December 2014, we issued $350.0 million in aggregate principal amount of 7.75% Secured Notes due 2021 . The fees associated with the Secured Notes included debt issuance costs of approximately $13.6 million. The Secured Notes were acquired by the initial purchasers pursuant to the terms of a purchase agreement. Under the terms of the purchase agreement, during a one year period following the closing and upon prior notice from the initial purchasers, the Company was required to use commercially reasonable efforts to aid the purchasers in the resale of the Secured Notes, including by preparing an updated offering memorandum and participating in reasonable marketing efforts including road shows, to the extent required therein. Alternatively, we had the ability to redeem the Secured Notes from the initial purchasers without penalty. On April 15, 2015, the Company entered into the Note Purchase Agreement, among Everi Payments, the Purchaser, and the Collateral Agent, and issued $335.0 million in aggregate principal amount of the 7.25% Refinanced Secured Notes due 2021 to the Purchaser in a private offering. With the proceeds from the issuance of the Refinanced Secured Notes, we redeemed, in full, the Company’s then outstanding Secured Notes from the initial purchasers in accordance with the terms of the indenture governing the Secured Notes. In connection with the issuance of the Refinanced Secured Notes during the second quarter of 2015, we expensed $13.0 million of related debt issuance costs and fees to “Loss on extinguishment of debt” associated with the redeemed Senior Secured Notes that were outstanding prior to the refinance transaction.
In connection with the issuance of the Refinanced Secured Notes and pursuant to the terms of the Note Purchase Agreement, the Company issued the Warrant to the Purchaser. The Warrant expires on the sixth anniversary of the date of

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issuance. The number of shares issuable pursuant to the Warrant and the warrant exercise price are subject to adjustment for stock splits, reverse stock splits, stock dividends, mergers and certain other events. The Warrant was valued at $2.2 million using a modified Black-Scholes model and was accounted for as a debt discount.
Interest is due quarterly in arrears each January, April, July and October.
We were in compliance with the terms of the Refinanced Secured Notes as of December 31, 2015.
Senior Unsecured Notes
In December 2014, we issued $350.0 million in aggregate principal amount of 10.0% Unsecured Notes due 2022 . The fees associated with the Unsecured Notes included original issue discounts of approximately $3.8 million and debt issuance costs of approximately $14.0 million.
Interest is due semi-annually in arrears each January and July.
The Unsecured Notes were acquired by the initial purchasers pursuant to the terms of a purchase agreement. Under the terms of the purchase agreement, during a one-year period following the closing and upon prior notice from the initial purchasers, the Company was required to use commercially reasonable efforts to aid the purchasers in the resale of the Unsecured Notes, including by preparing an updated offering memorandum and participating in reasonable marketing efforts including road shows, to the extent required therein. The Unsecured Notes were resold by the initial purchasers to third parties in the second quarter of 2015.
In connection with the issuance of the Unsecured Notes, the Company entered into a registration rights agreement pursuant to which the Company agreed, for the benefit of the initial holders of the Unsecured Notes, to file with the SEC, and use its commercially reasonable efforts to cause to become effective, a registration statement relating to an offer to exchange the Unsecured Notes for an issue of SEC-registered notes with terms identical to the Unsecured Notes. On October 23, 2015, we filed a registration statement on Form S-4 with the SEC in accordance with the registration rights agreement outlining our offer to exchange the Unsecured Notes for identical notes without transfer restrictions. The registration statement was declared effective on November 3, 2015, and the exchange offer for the Unsecured Notes was completed on December 4, 2015 with 100% percent participation.
We were in compliance with the terms of the Unsecured Notes as of December 31, 2015.
Contractual Obligations
 
The following summarizes our contractual cash obligations as of December 31, 2015 (in thousands):

 	 	At December 31, 2015	 	
 	 	Total	 	2016	 	2017	 	2018	 	2019	 	2020	 	Thereafter	 	
Contractual obligations	   	 	 	   	 	 	   	 	 	   	 	 	   	 	 	   	 	 	   	 	 	 	
Debt obligations (1)	 	$	
1,175,000	 	$	
10,000	 	$	
10,000	 	$	
10,000	 	$	
10,000	 	$	
450,000	 	$	
685,000	 	
Estimated interest obligations (2)	 	 	
484,675	 	 	
90,184	 	 	
89,465	 	 	
88,831	 	 	
88,198	 	 	
86,643	 	 	
41,354	 	
Operating lease obligations	 	 	
26,534	 	 	
4,410	 	 	
4,171	 	 	
4,064	 	 	
4,064	 	 	
3,925	 	 	
5,900	 	
Purchase obligations (3)	 	 	
56,457	 	 	
45,364	 	 	
4,782	 	 	
6,311	 	 	 —	 	 	 —	 	 	 —	 	
Total contractual obligations	 	$	
1,742,666	 	$	
149,958	 	$	
108,418	 	$	
109,206	 	$	
102,262	 	$	
540,568	 	$	
732,254	 	

	(1)		We are required to make principal payments of 2% annually under the Term Loans and may also be required to make an excess cash flow payment that is based on full year end earnings and our leverage ratio in effect at that time. The above table does not reflect any amounts related to excess cash flow payments.	
 
	(2)		Estimated interest payments were computed using the interest rate in effect at December 31, 2015 multiplied by the principal balance outstanding after scheduled principal amortization payments. For the Credit Facilities, the weighted average rate assumed was approximately 7.70 % until 2021 when the weighted average rate would increase to approximately 9.51 %.	
 
	(3)		Included in purchase obligations are minimum transaction processing services from various third ‑party processors used by us as well as open gaming purchase orders.	

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Deferred Tax Asset
The Company recognized a deferred tax asset upon its conversion from a limited liability company to a corporation on May 14, 2004. Prior to that time, all tax attributes flowed through to the members of the limited liability company. The principal component of the deferred tax asset is a difference between our assets for financial accounting purposes and tax purposes. This difference results from a significant balance of acquired goodwill of approximately $687.4 million that was generated as part of the conversion to a corporation plus approximately $97.6 million in preexisting goodwill carried over from periods prior to the conversion. Both of these assets are recorded for tax purposes but not for accounting purposes. This asset is amortized over 15 years for tax purposes, resulting in annual pretax income being $52.3 million lower for tax purposes than for financial accounting purposes. At an estimated blended domestic statutory tax rate of 37.2%, this results in tax payments being approximately $19.5 million less than the annual provision for income taxes shown on the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for financial accounting purposes, or the amount of the annual provision, if less. There is an expected aggregate of $64.9 million in cash savings over the remaining life of the portion of the deferred tax asset related to the conversion. This deferred tax asset may be subject to certain limitations. We believe that it is more likely than not that it will be able to utilize the deferred tax asset. However, the utilization of this tax asset is subject to many factors including our earnings, a change of control of the Company and future earnings.  
Other Liquidity Needs and Resources
We need cash to support our foreign operations. For some foreign jurisdictions, such as the United Kingdom, applicable law and cross ‑border treaties allow us to transfer funds between our domestic and foreign operations efficiently. For other foreign jurisdictions, we must rely on the cash generated by our operations in those foreign jurisdictions, and the cost of repatriation is prohibitive. For example, Global Cash Access (Canada), Inc. (“GCA Canada”), the subsidiary through which we operate in Canada, generates cash that is suffi cient to support its operations .   If we expand our Payments business into new foreign jurisdictions, we must rely on treaty ‑favored cross ‑border transfers of funds, the cash generated by our operations in those foreign jurisdictions or alternate sources of working capital.
Off ‑Balance Sheet Arrangements
Our Contract Cash Solutions Agreement with Wells Fargo Bank, N.A. (“Wells Fargo”) allows us to use funds owned by Wells Fargo to provide the currency needed for normal operating requirements for our ATMs. For the use of these funds, we pay Wells Fargo a cash usage fee on the average daily balance of funds utilized multiplied by a contractually defined cash usage rate. These cash usage fees, reflected as interest expense within the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income, were $2.3 million, $2.3 million and $2.2 million for the years ended December 31, 2015, 2014 and 2013, respectively. We are exposed to interest rate risk to the extent that the applicable LIBOR increases.
Under this agreement, all currency supplied by Wells Fargo remains the sole property of Wells Fargo at all times until it is dispensed, at which time Wells Fargo obtains an interest in the corresponding settlement receivable which is recorded on a net basis. As these funds are not our assets, supplied cash is not reflected on the Consolidated Balance Sheets. The outstanding balances of ATM cash utilized by us from Wells Fargo were $364.5 million, $396.3 million and $427.1 million as of December 31, 2015, 2014 and 2013, respectively.
In November 2014, we amended the Contract Cash Solutions Agreement to extend the term one year until November 30, 2015.
In June 2015, we amended the Contract Cash Solutions Agreement to decrease the maximum amount of cash to be provided to us from $500.0 million to $425.0 million and to extend the term of the agreement from November 30, 2015 to June 30, 2018. 
We are responsible for any losses of cash in the ATMs under this agreement and we self-insure for this risk. We incurred no material losses related to this self-insurance for the years ended December 31, 2015 and 2014 .  

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Effects of Inflation
Our monetary assets, consisting primarily of cash, receivables, inventory and our non ‑monetary assets, consisting primarily of the deferred tax asset, goodwill and other intangible assets, are not significantly affected by inflation. We believe that replacement costs of equipment, furniture and leasehold improvements will not materially affect our operations. However, the rate of inflation affects our operating expenses, such as those for salaries and benefits, armored carrier expenses, telecommunications expenses and equipment repair and maintenance services, which may not be readily recoverable in the financial terms under which we provide our Games and Payments products and services to gaming establishments and their patrons.
Item 7A.  Quantitative and Qualitative Disclosures about Market Ris  k.
In the normal course of business, we are exposed to foreign currency exchange risk. We operate and conduct business in foreign countries and, as a result, are exposed to movements in foreign currency exchange rates. Our exposure to foreign currency exchange risk related to our foreign operations is not material to our results of operations, cash flows or financial position. At present, we do not hedge this risk, but continue to evaluate such foreign currency translation risk exposure.
Wells Fargo supplies us with currency needed for normal operating requirements of our domestic ATMs pursuant to the Contract Cash Solutions Agreement. Under the terms of this agreement, we pay a monthly cash usage fee based upon the product of the average daily dollars outstanding in all such ATMs multiplied by a margin that is tied to LIBOR. We are, therefore, exposed to interest rate risk to the extent that the applicable LIBOR increases. As of December 31, 2015, the currency supplied by Wells Fargo was $364.5 million. Based upon this outstanding amount of currency supplied by Wells Fargo, each 1% increase in the applicable LIBOR would have a $3.6 million impact on income before taxes over a 12 ‑month period. Foreign gaming establishments supply the currency needs for the ATMs located on their premises.
The Credit Facilities bear interest at rates that can vary over time. We have the option of having interest on the outstanding amounts under the Credit Facilities paid based on a base rate or based on LIBOR and we have historically elected to pay interest based on LIBOR, and we expect to continue to pay interest based on LIBOR of various maturities. The weighted average interest rate on the Credit Facilities was approximately 7.69 % for the year ended December 31, 2015. Based upon the outstanding balance on the Credit Facilities of $4 9 0 million as of December 31, 2015, each 1% increase in the applicable LIBOR would have a $4. 9  million impact on interest expense over a 12 ‑month period. The interest rates on the notes are fixed and therefore an increase in LIBOR does not impact the interest expense associated with the notes.

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Item 8.  Financial Statements and Supplementary Dat  a.
Index to Consolidated Financial Statement  s

Report of BDO USA, LLP, Independent Registered Public Accounting Firm  	64	
Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm  	65	
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the three years ended December 31, 2015  	66	
Consolidated Balance Sheets as of December 31, 2015 and 2014  	67	
Consolidated Statements of Cash Flows for the three years ended December 31, 2015  	68	
Consolidated Statements of Stockholders’ Equity for the three years ended December 31, 2015  	70	
Notes to Consolidated Financial Statements  	71	

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 
Board of Directors and Stockholders
Everi Holdings Inc. 
Las Vegas, Nevada
We have audited the accompanying consolidated balance sheet of Everi Holdings Inc. and subsidiaries (the “Company”) as of December 31, 2015 and the related consolidated statements of loss and comprehensive loss, stockholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the finan cial position of Everi Holdings Inc. and subsidiaries at December 31, 2015, and the results of their operations and their cash flows for the year then ended , in conformity with accounting principles generally accepted in the United States of America.
 
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013)   issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 15, 2016 expressed an unqualified opinion thereon.
 
/s/ BDO USA, LLP
 
Las Vegas, Nevada
March 15, 2016

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING  FIRM
 
To the Board of Directors and Stockholders of
Everi Holdings Inc.
Las Vegas, NV
We have audited the accompanying consolidated balance sheet of Global Cash Access Holdings, Inc. (now known as Everi Holdings Inc.) and subsidiaries (the "Company") as of December 31, 2014, and the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Global Cash Access Holdings, Inc. and subsidiaries as of December 31, 2014, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
Las Vegas, NV
March 16, 2015 (October 23, 2015 as to Notes 19 and 21   and March 15, 2016 as to the reclassifications to the 2014 consolidated financial statements discussed in Note 2 )

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EVERI HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF (LOSS) INCOM  E AND COMPREHENSIVE (LOSS)   INCOM  E
(In thousands, except earnings per share amounts)

 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	Year Ended December 31,	 	
 	    	 	 	2015	    	 	2014	    	 	2013	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	 	 	 	 	 	 	 	 	 	 	 	
Games	 	 	$	
214,424	 	$	
7,406	 	$	 —	 	
Payments	 	 	 	
612,575	 	 	
585,647	 	 	
582,444	 	
Total revenues	 	 	 	
826,999	 	 	
593,053	 	 	
582,444	 	
Costs and expenses	 	 	 	 	 	 	 	 	 	 	 	
Games cost of revenue (exclusive of depreciation and amortization)	 	 	 	
47,017	 	 	
1,753	 	 	 —	 	
Payments cost of revenue (exclusive of depreciation and amortization)	 	 	 	
463,380	 	 	
438,318	 	 	
439,794	 	
Operating expenses	 	 	 	
101,202	 	 	
95,452	 	 	
76,562	 	
Research and development	 	 	 	
19,098	 	 	
804	 	 	 —	 	
Goodwill impairment	 	 	 	
75,008	 	 	 —	 	 	 —	 	
Depreciation	 	 	 	
45,551	 	 	
8,745	 	 	
7,350	 	
Amortization	 	 	 	
85,473	 	 	
14,199	 	 	
9,588	 	
Total costs and expenses	 	 	 	
836,729	 	 	
559,271	 	 	
533,294	 	
Operating (loss) income	 	 	 	
(9,730)	 	 	
33,782	 	 	
49,150	 	
Other expenses	 	 	 	 	 	 	 	 	 	 	 	
Interest expense, net of interest income	 	 	 	
100,290	 	 	
10,756	 	 	
10,265	 	
Loss on extinguishment of debt	 	 	 	
13,063	 	 	
2,725	 	 	 —	 	
Total other expenses	 	 	 	
113,353	 	 	
13,481	 	 	
10,265	 	
(Loss) income from operations before tax	 	 	 	
(123,083)	 	 	
20,301	 	 	
38,885	 	
Income tax (benefit) provision	 	 	 	
(18,111)	 	 	
8,161	 	 	
14,487	 	
Net (loss) income	 	 	 	
(104,972)	 	 	
12,140	 	 	
24,398	 	
Foreign currency translation	 	 	 	
(1,251)	 	 	
(1,258)	 	 	
269	 	
Comprehensive (loss) income	 	 	$	
(106,223)	 	$	
10,882	 	$	
24,667	 	
(Loss) earnings per share	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	$	
(1.59)	 	$	
0.18	 	$	
0.37	 	
Diluted	 	 	$	
(1.59)	 	$	
0.18	 	$	
0.36	 	
Weighted average common shares outstanding	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	 	
65,854	 	 	
65,780	 	 	
66,014	 	
Diluted	 	 	 	
65,854	 	 	
66,863	 	 	
67,205	 	
 
See notes to consolidated financial statements.

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EVERI HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET   S
(In thousands, except par value amounts)

 	 	At December 31,	 	At December 31,	 	
 	    	2015	    	2014	 	
 	 	 	 	 	 	 	 	
ASSETS	    	    	 	    	 	 	 	
Current assets	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	
102,030	 	$	
89,095	 	
Settlement receivables	 	 	
44,933	 	 	
43,288	 	
Trade receivables, net of allowances for doubtful accounts of $3.9 million and $2.8 million at December 31, 2015 and December 31, 2014 respectively	 	 	
52,382	 	 	
37,697	 	
Other receivables	 	 	
4,928	 	 	
20,553	 	
Inventory	 	 	
28,738	 	 	
27,163	 	
Prepaid expenses and other assets	 	 	
20,772	 	 	
18,988	 	
Deferred tax asset	 	 	 —	 	 	
9,591	 	
Total current assets	 	 	
253,783	 	 	
246,375	 	
Non-current assets	 	 	 	 	 	 	 	
Property, equipment and leased assets, net	 	 	
106,308	 	 	
106,085	 	
Goodwill	 	 	
789,803	 	 	
857,913	 	
Other intangible assets, net	 	 	
382,462	 	 	
436,785	 	
Other receivables, non-current	 	 	
6,655	 	 	
9,184	 	
Other assets, non-current	 	 	
35,054	 	 	
50,943	 	
Total non-current assets	 	 	
1,320,282	 	 	
1,460,910	 	
Total assets	 	$	
1,574,065	 	$	
1,707,285	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	
Settlement liabilities	 	$	
139,819	 	$	
119,157	 	
Accounts payable and accrued expenses	 	 	
101,512	 	 	
104,668	 	
Current portion of long-term debt	 	 	
10,000	 	 	
10,000	 	
Total current liabilities	 	 	
251,331	 	 	
233,825	 	
Non-current liabilities	 	 	 	 	 	 	 	
Deferred tax liability, non-current	 	 	
27,644	 	 	
57,333	 	
Long-term debt, less current portion	 	 	
1,153,579	 	 	
1,178,787	 	
Other accrued expenses and liabilities	 	 	
4,091	 	 	
5,867	 	
Total non-current liabilities	 	 	
1,185,314	 	 	
1,241,987	 	
Total liabilities	 	 	
1,436,645	 	 	
1,475,812	 	
 	 	 	 	 	 	 	 	
Commitments and Contingencies (Note 13)	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	
Stockholders’ Equity	 	 	 	 	 	 	 	
Common stock, $0.001 par value, 500,000 shares authorized and 90,877 and 90,405 shares issued at December 31, 2015 and December 31, 2014, respectively	 	 	
91	 	 	
90	 	
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and 0 shares outstanding at December 31, 2015 and December 31, 2014, respectively	 	 	 —	 	 	 —	 	
Additional paid-in capital	 	 	
258,020	 	 	
245,682	 	
Retained earnings	 	 	
55,180	 	 	
160,152	 	
Accumulated other comprehensive income	 	 	
318	 	 	
1,569	 	
Treasury stock, at cost, 24,849 and 24,816 shares at December 31, 2015 and December 31, 2014, respectively	 	 	
(176,189)	 	 	
(176,020)	 	
Total stockholders’ equity	 	 	
137,420	 	 	
231,473	 	
Total liabilities and stockholders’ equity	 	$	
1,574,065	 	$	
1,707,285	 	
See notes to consolidated financial statements.

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EVERI HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW   S
(In thousands)

 	 	Year Ended December 31,	 	
 	    	2015	    	2014	    	2013	 	
 	 	 	 	 	 	 	 	 	 	 	
Cash flows from operating activities	 	 	 	 	 	 	 	 	 	 	
Net (loss) income	 	$	
(104,972)	 	$	
12,140	 	$	
24,398	 	
Adjustments to reconcile net (loss) income to cash provided by operating activities:	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	
131,024	 	 	
22,944	 	 	
16,938	 	
Amortization of financing costs	 	 	
7,109	 	 	
2,035	 	 	
1,793	 	
(Gain) loss on sale or disposal of assets	 	 	
(2,789)	 	 	
55	 	 	
178	 	
Accretion of contract rights	 	 	
7,614	 	 	
301	 	 	 —	 	
Provision for bad debts	 	 	
10,135	 	 	
8,991	 	 	
7,874	 	
Reserve for obsolescence	 	 	
1,243	 	 	
270	 	 	
150	 	
Other asset impairment	 	 	 —	 	 	
3,129	 	 	 —	 	
Goodwill impairment	 	 	
75,008	 	 	 —	 	 	 —	 	
Loss on early extinguishment of debt	 	 	
13,063	 	 	
2,725	 	 	 —	 	
Stock-based compensation	 	 	
8,284	 	 	
8,876	 	 	
5,078	 	
Other non-cash items	 	 	
(149)	 	 	
(19)	 	 	 —	 	
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	 	 	
Settlement receivables	 	 	
(1,830)	 	 	
(5,156)	 	 	
(8,793)	 	
Trade and other receivables	 	 	
(5,070)	 	 	
(12,256)	 	 	
(13,335)	 	
Inventory	 	 	
(1,075)	 	 	
(1,120)	 	 	
(2,436)	 	
Prepaid and other assets	 	 	
(5,553)	 	 	
904	 	 	
(9,482)	 	
Deferred income taxes	 	 	
(19,878)	 	 	
6,613	 	 	
13,643	 	
Settlement liabilities	 	 	
21,229	 	 	
(25,523)	 	 	
(37,200)	 	
Other liabilities	 	 	
(8,806)	 	 	
(378)	 	 	
5,528	 	
Net cash provided by operating activities	 	 	
124,587	 	 	
24,531	 	 	
4,334	 	
Cash flows from investing activities	 	 	 	 	 	 	 	 	 	 	
Acquisitions, net of cash acquired	 	 	
(10,857)	 	 	
(1,068,000)	 	 	 —	 	
Capital expenditures	 	 	
(76,988)	 	 	
(18,442)	 	 	
(13,986)	 	
Proceeds from sale of fixed assets	 	 	
2,102	 	 	
421	 	 	
86	 	
Repayments under development agreements	 	 	
3,104	 	 	
276	 	 	 —	 	
Advances under placement agreements	 	 	
(2,813)	 	 	 —	 	 	 —	 	
Changes in restricted cash and cash equivalents	 	 	
(97)	 	 	
(102)	 	 	
(90)	 	
Net cash used in investing activities	 	 	
(85,549)	 	 	
(1,085,847)	 	 	
(13,990)	 	
Cash flows from financing activities	 	 	 	 	 	 	 	 	 	 	
Repayments of prior credit facility	 	 	 —	 	 	
(103,000)	 	 	
(18,500)	 	
Repayments of credit facility	 	 	
(10,000)	 	 	 —	 	 	 —	 	
Repayments of secured notes	 	 	
(350,000)	 	 	 —	 	 	 —	 	
Proceeds from securing credit facility	 	 	 —	 	 	
500,000	 	 	 —	 	
Proceeds from issuance of secured notes	 	 	
335,000	 	 	
350,000	 	 	 —	 	
Proceeds from issuance of unsecured notes	 	 	 —	 	 	
350,000	 	 	 —	 	
Debt issuance costs	 	 	
(1,221)	 	 	
(52,735)	 	 	
(764)	 	
Proceeds from exercise of stock options	 	 	
1,839	 	 	
5,338	 	 	
8,431	 	
Purchase of treasury stock	 	 	
(169)	 	 	
(12,180)	 	 	
(18,350)	 	
Net cash (used in) provided by financing activities	 	 	
(24,551)	 	 	
1,037,423	 	 	
(29,183)	 	
Effect of exchange rates on cash	 	 	
(1,552)	 	 	
(1,266)	 	 	
73	 	
Cash and cash equivalents	 	 	 	 	 	 	 	 	 	 	
Net increase (decrease) for the period	 	 	
12,935	 	 	
(25,159)	 	 	
(38,766)	 	
Balance, beginning of the period	 	 	
89,095	 	 	
114,254	 	 	
153,020	 	
Balance, end of the period	 	$	
102,030	 	$	
89,095	 	$	
114,254	 	
 
See notes to consolidated financial statements.

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 	 	 	Year Ended December 31,	
 	 	 	2015	    	2014	    	2013	
 	 	 	 	 	 	 	 	 	 	 	
Supplemental cash disclosures	 	 	 	 	 	 	 	 	 	 	
Cash paid for interest	 	$	
98,361	 	$	
59,274	 	$	
8,634	 	
Cash paid for income tax, net	 	$	
2,098	 	$	
962	 	$	
711	 	
Cash refunded for income taxes from acquisitions, net	 	$	
14,477	 	$	 —	 	$	 —	 	
 	 	 	 	 	 	 	 	 	 	 	
Supplemental non-cash disclosures	 	 	 	 	 	 	 	 	 	 	
Non-cash tenant improvements paid by landlord	 	$	 —	 	$	 —	 	$	
2,930	 	
Accrued and unpaid capital expenditures	 	$	
5,578	 	$	
731	 	$	
1,073	 	
Accrued and unpaid contingent liability for acquisitions	 	$	
4,681	 	$	
2,463	 	$	 —	 	
Issuance of warrants	 	$	
2,246	 	$	 —	 	$	 —	 	

See notes to consolidated financial statements.

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EVERI HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUIT   Y
(In thousands)

 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Common Stock—	 	 	 	 	 	 	 	Accumulated	 	 	 	 	 	 	 	
 	 	Series A	 	Additional	 	Retained	 	Other	 	 	 	 	 	 	 	
 	    	Number of	    	 	 	    	Paid-in	    	Earnings	    	Comprehensive	    	 	 	    	Total	 	
 	 	Shares	 	Amount	 	Capital	 	(Deficit)	 	Income	 	Treasury Stock	 	Equity	 	
Balance, December 31, 2012	 	
87,545	 	$	
87	 	$	
217,990	 	$	
123,614	 	$	
2,558	 	$	
(145,490)	 	$	
198,759	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 —	 	 	 —	 	 	 —	 	 	
24,398	 	 	 —	 	 	 —	 	 	
24,398	 	
Foreign currency translation	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
269	 	 	 —	 	 	
269	 	
Stock-based compensation expense	 	 —	 	 	 —	 	 	
5,078	 	 	 —	 	 	 —	 	 	 —	 	 	
5,078	 	
Exercise of options	 	
1,618	 	 	
2	 	 	
8,448	 	 	 —	 	 	 —	 	 	 —	 	 	
8,450	 	
Treasury share repurchases	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
(18,241)	 	 	
(18,241)	 	
Restricted share vesting withholdings	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
(109)	 	 	
(109)	 	
Restricted shares vested	 	
70	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2013	 	
89,233	 	$	
89	 	$	
231,516	 	$	
148,012	 	$	
2,827	 	$	
(163,840)	 	$	
218,604	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 —	 	 	 —	 	 	 —	 	 	
12,140	 	 	 —	 	 	 —	 	 	
12,140	 	
Foreign currency translation	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
(1,258)	 	 	 —	 	 	
(1,258)	 	
Stock-based compensation expense	 	 —	 	 	 —	 	 	
8,876	 	 	 —	 	 	 —	 	 	 —	 	 	
8,876	 	
Exercise of options	 	
971	 	 	
1	 	 	
5,290	 	 	 —	 	 	 —	 	 	 —	 	 	
5,291	 	
Treasury share repurchases	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
(11,721)	 	 	
(11,721)	 	
Restricted share vesting withholdings	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
(459)	 	 	
(459)	 	
Restricted shares vested	 	
201	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2014	 	
90,405	 	$	
90	 	$	
245,682	 	$	
160,152	 	$	
1,569	 	$	
(176,020)	 	$	
231,473	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	 —	 	 	 —	 	 	 —	 	 	
(104,972)	 	 	 —	 	 	 —	 	 	
(104,972)	 	
Foreign currency translation	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
(1,251)	 	 	 —	 	 	
(1,251)	 	
Stock-based compensation expense	 	 —	 	 	 —	 	 	
8,258	 	 	 —	 	 	 —	 	 	 —	 	 	
8,258	 	
Exercise of options	 	
343	 	 	 1	 	 	
1,834	 	 	 —	 	 	 —	 	 	 —	 	 	
1,835	 	
Restricted share vesting withholdings	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
(169)	 	 	
(169)	 	
Restricted shares vested	 	
129	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	
Issuance of warrants	 	 —	 	 	 —	 	 	
2,246	 	 	 —	 	 	 —	 	 	 —	 	 	
2,246	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2015	 	
90,877	 	$	
91	 	$	
258,020	 	$	
55,180	 	$	
318	 	$	
(176,189)	 	$	
137,420	 	
 
See notes to consolidated financial statements.

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EVERI HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIA  L STATEMENT  S
1. BUSINESS AND BASIS OF PRESENTATION
Everi Holdings Inc. (formerly known as Global Cash Access Holdings, Inc.) (“Everi Holdings,” “Holdings” or “Everi”) is a holding company, the assets of which are the issued and outstanding shares of capital stock of each of Everi Games Holding Inc. (formerly known as Multimedia Games Holding Company, Inc.), which owns all of the issued and outstanding shares of capital stock of Everi Games Inc. (formerly known as Multimedia Games, Inc.) (“Everi Games” or “Games”) and Everi Payments Inc. (formerly known as Global Cash Access, Inc.) (“Everi Payments” or “Payments”). Unless otherwise indicated, the terms the “Company,” “we,” “us” and “our” refer to Holdings together with its consolidated subsidiaries.
Everi is dedicated to providing video and mechanical reel gaming content and technology solutions, integrated gaming payments solutions and compliance and efficiency software. Everi Games provides: (a) comprehensive content, electronic gaming units and systems for Native American and commercial casinos, including the award winning TournEvent® slot tournament solution; and (b) the central determinant system for the video lottery terminals installed at racetracks in the State of New York. Everi Payments provides: (a) access to cash at gaming facilities via Automated Teller Machine cash withdrawals, credit card cash access transactions, point of sale (“POS”) debit card transactions, and check verification and warranty services; (b) fully integrated gaming industry kiosks that provide cash access and related services; (c) products and services that improve credit decision making, automate cashier operations and enhance patron marketing activities for gaming establishments; (d) compliance, audit and data solutions; and (e) online payment processing solutions for gaming operators in states that offer intrastate, Internet-based gaming and lottery activities.  
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
All intercompany transactions and balances have been eliminated in consolidation.
Business Combinations
We apply the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, “Business Combinations”, in the accounting for acquisitions. It requires us to recognize separately from goodwill the assets acquired and the liabilities assumed, at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Significant estimates and assumptions are required to value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable. These estimates are preliminary and typically include the calculation of an appropriate discount rate and projection of the cash flows associated with each acquired asset over its estimated useful life. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. In addition, deferred tax assets, deferred tax liabilities, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date and any adjustments to its preliminary estimates are recorded to goodwill, in the period of identification, if identified within the measurement period. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income.

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Acquisition-related Costs
We recognize a liability for acquisition-related costs when the expense is incurred. Acquisition-related costs include financial advisory, legal and debt fees; accounting, consulting, and professional fees associated with due diligence, valuation and integration; severance; and other related costs and adjustments.
Cash and Cash Equivalents
Cash and cash equivalents include cash and all balances on deposit in banks and financial institutions. We consider all highly liquid investments with maturities of three months or less at the time of purchase to be cash and cash equivalents. Such balances generally exceed the federal insurance limits. However, we periodically evaluate the creditworthiness of these institutions to minimize risk.
ATM Funding Agreements
We obtain all of the cash required to operate our Automated Teller Machines (“ATM” or “ATMs”) through various ATM Funding Agreements. Some gaming establishments provide the cash utilized within the ATM (“Site ‑Funded”). The Site ‑Funded receivables generated for the amount of cash dispensed from transactions performed at our ATMs are owned by us and we are liable to the gaming establishment for the face amount of the cash dispensed. In the Consolidated Balance Sheets, the amount of the receivable for transactions processed on these ATM transactions is included within settlement receivables and the amount due to the gaming establishment for the face amount of dispensing transactions is included within settlement liabilities.
For the Non ‑Site ‑Funded locations, our Contract Cash Solutions Agreement with Wells Fargo allows us to use funds owned by Wells Fargo to provide the currency needed for normal operating requirements for our ATMs. For the use of these funds, we pay Wells Fargo a cash usage fee on the average daily balance of funds utilized multiplied by a contractually defined cash usage rate. Under this agreement, all currency supplied by Wells Fargo remains the sole property of Wells Fargo at all times until it is dispensed, at which time Wells Fargo obtains an interest in the corresponding settlement receivable. As the cash is never an asset of ours, supplied cash is not reflected on our balance sheet. We are charged a cash usage fee for the cash used in these ATMs, which is included as interest expense in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income. We recognize the fees as interest expense due to the similar operational characteristics to a revolving line of credit, the fact that the fees are calculated on a financial index and the fees are paid for access to a capital resource.
Allowance for Doubtful Accounts
We maintain an allowance for doubtful accounts related to our trade and other receivables and notes receivable that have been deemed to have a high risk of uncollectibility. Management reviews its accounts and notes receivable on a quarterly basis to determine if any receivables will potentially be uncollectible. Management analyzes historical collection trends and changes in our customer payment patterns, customer concentration, and creditworthiness when evaluating the adequacy of our allowance for doubtful accounts. In our overall allowance for doubtful accounts we include any receivable balances for which uncertainty exists as to whether the account balance has become uncollectible. Based on the information available, management believes the allowance for doubtful accounts is adequate; however, actual write-offs may exceed the recorded allowance.
Settlement Receivables and Settlement Liabilities
In the credit card cash access and POS debit card cash access transactions provided by us, the gaming establishment is reimbursed for the cash disbursed to gaming patrons through the issuance of a negotiable instrument or through electronic settlement. We receive reimbursement from the patron’s credit or debit card issuer for the transaction in an amount equal to the amount owing to the gaming establishment plus the fee charged to the patron. This reimbursement is included within the settlement receivables on the Consolidated Balance Sheets. The amounts owed to gaming establishments are included within settlement liabilities on the Consolidated Balance Sheets.

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Warranty Receivables
If a gaming establishment chooses to have a check warranted, it sends a request to our third party check warranty service provider, asking whether it would be willing to accept the risk of cashing the check. If the check warranty provider accepts the risk and warrants the check, the gaming establishment negotiates the patron’s check by providing cash for the face amount of the check. If the check is dishonored by the patron’s bank upon presentment, the gaming establishment invokes the warranty, and the check warranty service provider purchases the check from the gaming establishment for the full check amount and then pursues collection activities on its own. In our Central Credit Check Warranty product under our agreement with the third party service provider, we receive all of the check warranty revenue. We are exposed to risk for the losses associated with any warranted items that cannot be collected from patrons issuing the items. Warranty receivables are defined as any amounts paid by the third party check warranty service provider to gaming establishments to purchase dishonored checks. Additionally, we pay a fee to the third party check warranty service provider for its services.
The warranty receivables amount is recorded in other receivables, net on our Consolidated Balance Sheets. On a monthly basis, the Company evaluates the collectability of the outstanding balances and establishes a reserve for the face amount of the expected losses on these receivables. The warranty expense associated with this reserve is included within cost of revenues (exclusive of depreciation and amortization) on our Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income.
Inventory
Our inventory primarily consists of component parts as well as finished goods and work-in-progress. The cost of inventory includes cost of materials, labor, overhead and freight. The inventory is stated at the lower of cost or market and accounted for using the first in, first out method.
Property, Equipment and Leased Assets
Property, equipment and leased assets are stated at cost, less accumulated depreciation, computed using the straight-line method over the lesser of the estimated life of the related assets, generally three to five years, or the related lease term.  Player terminals and related components and equipment are included in our rental pool. The rental pool can be further delineated as “rental pool – deployed,” which consists of assets deployed at customer sites under participation arrangements, and “rental pool – undeployed,” which consists of assets held by us that are available for customer use. Rental pool – undeployed consists of both new units awaiting deployment to a customer site and previously deployed units currently back with us to be refurbished awaiting re-deployment.  Routine maintenance of property, equipment and leased gaming equipment is expensed in the period incurred, while major component upgrades are capitalized and depreciated over the estimated remaining useful life of the component. Sales and retirements of depreciable property are recorded by removing the related cost and accumulated depreciation from the accounts. Gains or losses on sales and retirements of property are reflected in our Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income. Property, equipment and leased assets are reviewed for impairment whenever events or circumstances indicate that their carrying amounts may not be recoverable. Impairment is indicated when undiscounted future cash flows do not exceed the asset’s carrying value.
Development and Placement Fee Agreements
We enter into development and placement fee agreements to provide financing for new gaming facilities or for the expansion of existing facilities. All or a portion of the funds provided under development agreements are reimbursed to us, while funds provided under placement fee agreements are not reimbursed. In return, the facility dedicates a percentage of its floor space to placement of our player terminals, and we receive a fixed percentage of those player terminals' hold per day over the term of the agreement which is generally for 12 to 83 months. Certain of the agreements contain player terminal performance standards that could allow the facility to reduce a portion of our guaranteed floor space. In addition, certain development agreements allow the facilities to buy out floor space after advances that are subject to repayment have been repaid. The agreements typically provide for a portion of the amounts retained by the gaming facility for their share of the operating profits of the facility to be used to repay some or all of the advances recorded as notes receivable.

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Goodwill
Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired plus liabilities assumed arising from business combinations. We test for impairment annually on a reporting unit basis, at the beginning of our fourth fiscal quarter, or more often under certain circumstances. The annual impairment test is completed using either: a qualitative Step 0 assessment based on reviewing relevant events and circumstances; or a quantitative Step 1 assessment, which determines the fair value of the reporting unit, using an income approach that discounts future cash flows based on the estimated future results of our reporting units and a market approach that compares market multiples of comparable companies to determine whether or not any impairment exists. If the fair value of a reporting unit is less than its carrying amount, we use the Step 2 assessment to determine the impairment. Our reporting units are identified as operating segments or one level below. Reporting units must: (a) engage in business activities from which they earn revenues and incur expenses; (b) have operating results that are regularly reviewed by our chief operating decision makers to ascertain the resources to be allocated to the segment and assess its performance; and (c) have discrete financial information available. As of December 31, 2015, our reporting units included: Games, Cash Advance, ATM, Check Services, Kiosk Sales and Service, Central Credit, and Everi Compliance.
Other Intangible Assets
Other intangible assets are stated at cost, less accumulated amortization, computed primarily using the straight-line method. Other intangible assets consist primarily of: (i) customer contracts (rights to provide Games and Payments services to gaming establishment customers), developed technology, trade names and trademarks and contract rights acquired through business combinations; (ii) capitalized software development costs; and (iii) the acquisition cost of our patent related to the 3-in-1 rollover technology acquired in 2005. Customer contracts require us to make renewal assumptions, which impact the estimated useful lives of such assets. Capitalized software development costs require us to make certain judgments as to the stages of development and costs eligible for capitalization. Capitalized software costs placed in service are amortized over their useful lives, generally not to exceed five years. The acquisition cost of the 3-in-1 Rollover patent is being amortized over the term of the patent, which expires in 2018. We review intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events or circumstances include, but are not limited to, a significant decrease in the fair value of the underlying business or market price of the asset, a significant adverse change in legal factors or business climate that could affect the value of an asset, or a current period operating or cash flow loss combined with a history of operating or cash flow losses. We group intangible assets for impairment analysis at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of intangible assets is measured by a comparison of the carrying amount of the asset to future, net cash flows expected to be generated by the asset, undiscounted and without interest. Any impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Debt Issuance Costs
Debt issuance costs incurred in connection with long-term borrowings are capitalized and amortized to interest expense based upon the related debt agreements using the straight-line method, which approximates the effective interest method. Debt issuance costs related to line-of-credit arrangements are included in other assets, non-current, on the Consolidated Balance Sheets.  All other debt issuance costs are included in long-term debt.
Original Issue Discounts
Original issue discounts incurred in connection with long-term borrowings are capitalized and amortized to interest expense based upon the related debt agreements using the straight-line method, which approximates the effective interest method. These amounts are recorded as contra-liabilities and included in long-term debt on the Consolidated Balance Sheets.

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Deferred Revenue
Deferred revenue represents amounts from the sale of fully integrated kiosks and related service contracts, anti-money laundering and tax compliance software, and gaming equipment and systems that have been billed, or for which notes receivable have been executed, but which transaction has not met our revenue recognition criteria. The cost of the fully integrated kiosks and related service contracts, anti-money laundering and tax compliance software, and gaming equipment and systems is deferred and recorded at the time revenue is recognized. Amounts are classified between current and long-term liabilities, based upon the expected period in which the revenue will be recognized.
Revenue Recognition
Overall
We recognize revenue when evidence of an arrangement exists, services have been rendered, the price is fixed or determinable and collectability is reasonably assured. We evaluate our revenue streams for proper timing of revenue recognition. Revenue is recognized as products are delivered and or services are performed.
Games Revenues
Games revenues are primarily generated by our gaming operations under development, placement, and participation arrangements in which we provides our customers with player terminals, player terminal-content licenses and back-office equipment, collectively referred to herein as leased gaming equipment. Under these arrangements, we retain ownership of the leased gaming equipment installed at customer facilities, and we receive revenue based on a percentage of the net win per day generated by the leased gaming equipment or a fixed daily fee based on the number of player terminals installed at the facility. Revenue from lease participation or daily fee arrangements are considered both realizable and earned at the end of each gaming day.
Games revenues generated by player terminals deployed at sites under development or placement fee agreements is reduced by the accretion of contract rights acquired as part of those agreements. Contract rights are amounts allocated to intangible assets for dedicated floor space resulting from such agreements, described under “Development and Placement Fee Agreements.” The related amortization expense, or accretion of contract rights, is netted against our respective revenue category in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income.
We also generate games revenues from back-office fees with certain customers. Back-office fees cover the service and maintenance costs for back-office servers installed in each gaming facility to run our gaming equipment, as well as the cost of related software updates. Back-office fees are considered both realizable and earned at the end of each gaming day.
Payments Revenues
Cash advance revenues are comprised of transaction fees assessed to gaming patrons in connection with credit card cash access and POS debit card transactions and are recognized at the time the transactions are authorized. Such fees are based on a combination of a fixed amount plus a percentage of the face amount of the credit card cash access or POS debit card transaction amount.
ATM revenues are comprised of transaction fees in the form of cardholder surcharges assessed to gaming patrons in connection with ATM cash withdrawals at the time the transactions are authorized and reverse interchange fees paid to us by the patrons’ issuing banks. Cardholder surcharges are recognized as revenue when a transaction is initiated and reverse interchange is recognized as revenue on a monthly basis based on the total transactions occurring during the month. The cardholder surcharges assessed to gaming patrons in connection with ATM cash withdrawals are currently a fixed dollar amount and not a percentage of the transaction amount.
Check services revenues are principally comprised of check warranty revenues and are generally based upon a percentage of the face amount of checks warranted. These fees are paid to us by gaming establishments.

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Other revenues include amounts derived from the sale of cash access devices, such as the provision of certain professional services, software licensing, and certain other ancillary fees associated with the sale, installation and maintenance of those devices. In addition, other revenues consist of Central Credit revenues that are based upon either a flat monthly unlimited usage fee or a variable fee structure driven by the volume of patron credit histories generated. Also included in other revenues are revenues generated from ancillary marketing, database and Internet gaming activities.
Equipment and Systems Revenues
We sell gaming equipment, fully integrated kiosks and gaming systems directly to our customers under independent sales contracts through normal credit terms, or may grant extended credit terms under contracts secured by the related equipment.
For sales arrangements with multiple deliverables, we apply the guidance from ASC 605-25, “Revenue Recognition - Multiple-Element Arrangements.” In addition, we apply the guidance from ASC 985-605, “Software – Revenue Recognition”  which affects vendors that sell or lease tangible products in an arrangement that contains software that is more than incidental to the tangible product as a whole and clarifies what guidance should be used in allocating and measuring revenue.
The majority of our multiple element sales contracts are for some combination of gaming equipment, player terminals, content, system software, license fees, ancillary equipment and maintenance.
Revenue related to systems arrangements that contain both software and non-software deliverables requires allocation of the arrangement fee to the separate deliverables using the relative selling price method. Revenue for software deliverables is recognized under software revenue recognition guidance. Revenue resulting from the sale of non-software deliverables, such as gaming devices and other hardware, are accounted for based on other applicable revenue recognition guidance as the devices are tangible products containing both software and non-software components that function together to deliver the product's essential functionality.
In allocating the arrangement fees to separate deliverables, we evaluate whether we have vendor-specific objective evidence (“VSOE”) of selling price, third party evidence (“TPE”) or estimate of selling price (“ESP”) for gaming devices, maintenance and product support fees and other revenue sources. We generally use ESP to determine the selling price used in the allocation of separate deliverables, as VSOE and TPE are generally not available. We determine the ESP on separate deliverables by estimating a margin typically received on such items and applying that margin to the product cost incurred.
Generally, player terminal sales include ancillary equipment, such as networking gear, bases, chairs, and occasionally signage, some of which may be necessary for the full functionality of the player terminals in a casino. This ancillary equipment comprises an install kit that is shipped simultaneously with the player terminals. Although our products are analyzed as multiple deliverable arrangements, revenue for the player terminal and ancillary equipment is not recognized until all elements essential for the functionality of the product have been shipped or delivered. This includes game theme software and essential ancillary equipment. If elements that are not essential to the functionality of the player terminals are shipped after the unit, such as signage, chairs, or bases, these items would be classified as deferred revenue until shipped or delivered.  
Cost of Revenues (exclusive of depreciation and amortization)
The cost of revenues (exclusive of depreciation and amortization) represents the direct costs required to perform revenue generating transactions. The principal costs included within cost of revenues (exclusive of depreciation and amortization) are commissions paid to gaming establishments, interchange fees paid to credit and debit card networks, transaction processing fees to our transaction processor, inventory and related costs associated with the sale of our fully integrated kiosks, electronic gaming machines and system sales, check cashing warranties, field service and network operations personnel.

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Advertising, Marketing and Promotional Costs
We expense advertising, marketing and promotional costs as incurred. Total advertising, marketing and promotional costs, included in operating expenses in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income, were $0.9  million, $1.1  million and $0.7  million for the years ended December 31, 2015, 2014 and 2013, respectively.
Research and Development Costs
We conduct research and development activities primarily to develop gaming systems, gaming engines, casino data management systems, casino central monitoring systems, video lottery outcome determination systems, gaming platforms and gaming content, as well as to add enhancements to our existing product lines. We believe our ability to deliver differentiated, appealing products and services to the marketplace is based on our research and development investments, and we expect to continue to make such investments in the future. Research and development costs consist primarily of salaries and benefits, consulting fees and game lab testing fees . Once the technological feasibility of a project has been established, it is transferred from research to development and capitalization of development costs begins until the product is available for general release.
 
Research and development costs were $19.1 million and $0.8 million for the years ended December 31, 2015 and 2014, respectively.  As research and development costs relate to our Games segment which was acquired in 2014, there were no material research and development costs for the year ended December 31, 2013.
Income Taxes
Income tax expense includes U.S. and international income taxes, plus the provision for U.S. taxes on undistributed earnings of international subsidiaries not deemed to be permanently invested. Since it is management’s practice and current intent to reinvest the earnings in the international operations of our foreign subsidiaries, U.S. federal income taxes have not been provided on the undistributed earnings of any foreign subsidiaries except for GCA Macau. Some items of income and expense are not reported in tax returns and the consolidated financial statements in the same year. The tax effect of such temporary differences is reported as deferred income taxes.
Employee Benefits Plan
In connection with the acquisition of Everi Games Holding Inc., we merged the Everi Payments 401(k) Plan (“Merged 401(k) Plan”) into the Everi Games Holding Inc. 401(k) Plan (“Surviving 401(k) Plan”), which was adopted for domestic employees of Everi Games and Everi Payments and their domestic subsidiaries. The Surving 401(k) Plan Participant investment elections were not mapped from the current provider as the Merged Plan assets were liquidated from their current investments and the proceeds were provided to the new provider. The Participant contributions were sent to the new provider into the Plan’s default fund until such time that a Participant made investment elections. The Surviving 401(k) Plan structure is similar to the Merged 401(k) Plan and allows employees to defer up to the lesser of the Internal Revenue Code prescribed maximum amount or 100% of their income on a pre-tax basis through contributions to the plan. As a benefit to employees, we match a percentage of these employee contributions (as defined in the plan document). Expenses related to the matching portion of the contributions to the 401(k) Plan were $1.3 million, $0.5 million and $0.5 million for the years ended December 31, 2015, 2014 and 2013, respectively.

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Fair Values of Financial Instruments
The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument. 
 
The carrying amount of cash and cash equivalents, settlement receivables, trade receivables, other receivables, settlement liabilities, accounts payable and accrued expenses approximates fair value due to the short-term maturities of these instruments. The fair value of our borrowings are estimated based on various inputs to determine a market price, such as: market demand and supply, size of tranche, maturity and similar instruments trading in more active markets. 

 	 	Year Ended December 31,	    	
 	 	2015	 	
 	    	Level of	    	 	 	    	Outstanding	 	
 	 	Hierarchy	 	Fair Value	 	Balance	 	
Term loan	 	1	 	$	
445,900	 	$	
490,000	 	
Senior secured notes	 	3	 	$	
314,900	 	$	
335,000	 	
Senior unsecured notes	 	1	 	$	
297,500	 	$	
350,000	 	
 
The senior secured notes were fair valued using a Level 3 input by evaluating the trading activities of similar debt instruments as there was no market activity as of December 31, 2015.  The senior unsecured notes were syndicated in April 2015 and transitioned from level 3 to level 1 on the fair value hierarchy.
 
At December 31,   2014, the fair value of our long-term debt was considered to approximate the carrying amount as our acquisition of   Everi Games   occurred on December 19, 2014, for which our long-term debt was incurred.
Foreign Currency Translation
Foreign currency denominated assets and liabilities for those foreign entities for which the local currency is the functional currency are translated into U.S. dollars based on exchange rates prevailing at the end of each year. Revenues and expenses are translated at average exchange rates during the year. The effects of foreign exchange gains and losses arising from these translations are included as a component of other comprehensive income on the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income. Translation adjustments on intercompany balances of a long-term investment nature are recorded as a component of Accumulated Other Comprehensive Income on our Consolidated Balance Sheets.
Use of Estimates
We have made estimates and judgments affecting the amounts reported in these financial statements and the accompanying notes. The actual results may differ from these estimates. These accounting estimates incorporated into the consolidated financial statements include, but are not limited to:

	·		the estimates and assumptions related to the preparation of the unaudited pro forma financial information contained herein;	
	·		the estimates and assumptions related to the preliminary purchase price allocation based on the estimated fair values of the assets acquired and liabilities assumed related to any of our acquisitions;	
	·		the estimated reserve for warranty expense associated with our check warranty receivables;	
	·		the valuation and recognition of share based compensation;	
	·		the valuation allowance on our deferred income tax assets;	
	·		the estimated cash flows in assessing the recoverability of long lived assets;	
	·		the estimates of future operating performance, weighted average cost of capital (“WACC”) and growth rates as well	

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as other factors used in our annual goodwill and assets impairment evaluations;	
	·		the renewal assumptions used for customer contracts to estimate the useful lives of such assets; and	
	·		the judgments used to determine the stages of development and costs eligible for capitalization as internally developed software.	
Earnings Applicable to Common Stock
Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the effect of potential common stock resulting from assumed stock option exercises and vesting of restricted stock unless it is antidilutive .
Share ‑Based Compensation
Share-based payment awards result in a cost that is measured at fair value on the award’s grant date.
Our time-based stock options, including our cliff vesting time-based awards, expected to be exercised currently, and in future periods, were measured at fair value on the grant date using the Black Scholes model. Our restricted stock awards expected to be vested currently, and in future periods, were measured at fair value based on the stock price on the grant date. The compensation expense is recognized on a straight-line basis over the vesting period of the awards.
Our market-based stock options will vest if our average stock price in any period of 30 consecutive trading days meets certain target prices during a four year period that commenced on the grant date of these options. If these target prices are not met during the four year period, the unvested shares underlying the options will terminate except if there is a change in control of the Company, as defined in the 2014 Equity Incentive Plan, in which case, the unvested shares underlying such options shall become fully vested on the effective date of such change in control transaction. The options were measured at fair value on the grant date using a lattice-based valuation model based on the median time horizon from the date of grant for these options to the vesting date for those paths that achieved the target threshold(s). The compensation expense is recognized on a straight-line basis over the median vesting periods calculated under such valuation model.
Forfeitures are estimated at the grant date for our time-based and market-based awards, with such estimates updated periodically; and with actual forfeitures recognized currently to the extent they differ from the estimates.
Unless otherwise provided by the administrator of our equity incentive plans, stock options granted under our plans generally expire ten years from the date of grant. In connection with our annual grant in 2015, certain market-based stock option awards were issued that expire seven years from the date of grant. The exercise price of stock options is generally the closing market price of our common stock on the date of the stock option grant.
Reclassification of Prior Year Balances
Reclassifications were made to the prior-period financial statements to conform to the current period presentation.
Recent Accounting Guidance
Recently Adopted Accounting Guidance
In November 2015, the FASB issued Accounting Standards Update (“ASU”)  2015-17 Balance Sheet Classification of Deferred Taxes, which requires that deferred tax assets and deferred tax liabilities be classified as noncurrent in the balance sheet. ASU No. 2015-17 is effective for the interim and annual periods beginning after December 15, 2016. Early adoption is permitted. During the fourth quarter of 2015, we elected to prospectively adopt this standard. The prior reporting period was not retrospectively adjusted. The adoption of this guidance had no impact on our Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income.
In September 2015, the FASB issued ASU No. 2015-16, which provides guidance on business combinations. The ASU requires an acquirer recognize adjustments to estimated amounts that are identified during the measurement period in the

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reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. The standard is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. We implemented this guidance during the current period as it impacted the final purchase price allocation adjustments associated with our acquisition of Multimedia Games Holdings Inc.
Recent Accounting Guidance Not Yet Adopted
In February 2016, the FASB issued ASU No. 2016-02, which provides guidance on the accounting treatment of leases.  The ASU establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements and disclosures included within Notes to the Consolidated Financial Statements.
In July 2015, the FASB issued ASU No. 2015-11, which provides guidance on the measurement of inventory value.  The amendments require an entity to measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. The pronouncement is effective for annual periods beginning after December 15, 2016, and interim periods within those fiscal years, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements and disclosures included within Notes to the Consolidated Financial Statements.
In April 2015, the FASB issued ASU No. 2015-03, which provides guidance to simplify the presentation of debt issuance costs.  These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The pronouncement is effective for annual periods beginning after December 15, 2015, and interim periods within those fiscal years, and early adoption is permitted for financial statements that have not been previously issued. This guidance was further clarified in ASU No. 2015-15 which addressed the treatment of debt issuance costs related to line-of credit arrangements. It noted that as ASU No. 2015-03 did not provide guidance on debt issuance costs related to line-of credit arrangements, the SEC would not object to an entity deferring and presenting these specific debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We expect to adopt the guidance in ASU No. 2015-03 and 2015-15 to reclassify all debt issuance costs not associated with line-of-credit arrangements from other assets, non-current to contra-liabilities to long-term debt on our Consolidated Balance Sheets and related notes for the year ending December 31, 2016.
In January 2015, the FASB issued ASU No. 2015-01, which eliminates the requirement that an entity separately classify, present and disclose extraordinary events and transactions. The pronouncement is effective for annual periods ending after December 15, 2015. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We expect to implement this guidance for the year ended December 31, 2016 and do not anticipate the ASU to have a material impact on our results of operations or financial condition.
In August 2014, the FASB issued ASU No. 2014-15, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The pronouncement is effective for annual

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periods ending after December 15, 2016, and interim periods thereafter, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements and disclosures included within Notes to the Consolidated Financial Statements.
In June 2014, the FASB issued ASU No. 2014-12, which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. The standard is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. We expect to implement this guidance for the year ended December 31, 2016 and do not anticipate the ASU to have a material impact on our results of operations or financial condition.
In May 2014, the FASB issued ASU No. 2014-09, which creates FASB ASC Topic 606, “Revenue from Contracts with Customers” and supersedes ASC Topic 605, “Revenue Recognition”. The guidance replaces industry-specific guidance and establishes a single five-step model to identify and recognize revenue. The core principle of the guidance is that an entity should recognize revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires the entity to disclose further quantitative and qualitative information regarding the nature and amount of revenues arising from contracts with customers, as well as other information about the significant judgments and estimates used in recognizing revenues from contracts with customers. This guidance was originally effective for interim and annual reporting periods beginning after December 15, 2016;  however, in August 2015, the FASB issued ASU No. 2015-14, which extended the effective date to interim and annual periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2015, including interim reporting periods within that reporting period. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements and disclosures included within our Notes to the Consolidated Financial Statements.
3. BUSINESS COMBINATIONS
We account for business combinations in accordance with ASC 805, which requires that the identifiable assets acquired and liabilities assumed be recorded at their estimated fair values on the acquisition date separately from goodwill, which is the excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities. We include the results of operations of an acquired business as of the acquisition date.
NEWave, Inc.
In April 2014, we acquired all of the outstanding capital stock of NEWave, Inc. (“NEWave”) for an aggregate purchase price of approximately $14.9 million, of which we estimated that approximately $2.5 million would be paid in the second quarter of 2015. On June 30, 2015, a final payment of $2.3 million was remitted. NEWave is a supplier of anti-money laundering compliance, audit and data efficiency software to the gaming industry. The NEWave acquisition did not have a material impact on our results of operations or financial condition.
We have not provided the supplemental pro forma impact of the NEWave acquisition on the revenue and earnings of the combined entity as if the acquisition date had been January 1, 2014, and the amount of revenue and earnings derived from NEWave have not been presented on a supplemental basis as such amounts are not material for the twelve months ended December 31, 2015 and 2014, respectively.
Everi Games Holding Inc.
On December 19, 2014, Holdings completed its acquisition of Everi Games Holding Inc. (formerly known as Multimedia Games Holding Company, Inc.) (“Everi Games Holding”) . Pursuant to the terms of the Agreement and Plan of Merger, dated as of September 8, 2014 (the “Merger Agreement”), by and among Holdings, Movie Merger Sub, Inc., a wholly owned subsidiary of Holdings (“Merger Sub”), and Everi Games Holding, Merger Sub merged with and into Everi Games Holding, with Everi Games Holding continuing as the surviving corporation (the “Merger”). In the Merger, Everi Games

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Holding became a wholly owned subsidiary of Holdings. Also, as a result of the Merger, each outstanding share of common stock, par value $0.01 per share, of Everi Games, other than shares held by Holdings, Everi Games Holding, Merger Sub or their respective subsidiaries, was cancelled and converted into the right to receive $36.50 in cash, without interest (“Merger Consideration”), together with the acceleration and full vesting of Everi Games Holding equity awards, (collectively, the “Total Merger Consideration”).
Everi Games designs, manufactures and supplies gaming machines and systems to commercial and Native American casino operators as well as select lottery operators and commercial bingo facility operators. Everi Games’ revenue is generated from the operation of gaming machines in revenue sharing or lease arrangements and from the sale of gaming machines and systems that feature proprietary game themes.
Our combination with Everi Games Holding creates a provider of Payments and Games solutions for our gaming establishment customers. The business combination provides us with: (a) growth opportunities, (b) enhanced scale, diversification and margins, and (c) the ability to increase profitability through cost synergies.
The total purchase consideration for Everi Games Holding was as follows (in thousands, except per share amounts):

 	    	Amount	 	
Purchase consideration	 	 	 	 	
Total purchase price for Everi Games common stock (29,948 shares at $36.50 per share)	 	$	
1,093,105	 	
Payment in respect to Everi Games outstanding equity awards	 	 	
56,284	 	
Total merger consideration	 	 	
1,149,389	 	
Repayments of Everi Games debt and other obligations	 	 	
25,065	 	
Less: Everi Games outstanding cash at acquisition date	 	 	
(118,299)	 	
Total purchase consideration	 	$	
1,056,155	 	
 
The Merger was accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and liabilities assumed be recognized at their respective fair values as of the acquisition date. The excess of the purchase price over those fair values was recorded as goodwill, none of which was deductible for tax purposes. The goodwill recognized is attributable primarily to the income potential from Everi Games penetrating into the Class III commercial casino market, the assembled workforce of Everi Games and expected synergies.
The estimates and assumptions used include the projected timing and amount of future cash flows and discount rates reflecting risk inherent in the future cash flows. The estimated fair values of Multimedia’s assets acquired and liabilities assumed and resulting goodwill were subject to adjustment as the Company finalized its fair value analysis. The significant items for which a final fair value adjustment was applicable and included in the filing of this Annual Report on Form 10-K were most notably: accrued liabilities, the valuation and estimated useful lives of tangible and intangible assets and deferred income taxes. We completed our fair value determinations and recorded the final measurement period adjustments to goodwill during the fourth quarter of 2015 in accordance with the newly adopted guidance set forth in ASU No. 2015-16 with no material change in our fair value determinations; however, there were differences compared to those amounts at December 31, 2014. In accordance with this new guidance and the immaterial nature of the measurement period adjustments, the goodwill associated with the acquisition as shown in this Note 3 section did not change from the amounts disclosed in our 2014 Annual Report on Form 10-K.
We analyzed our inventory and fixed asset groups in conjunction with a review of our accrual amounts recorded in connection with the original purchase price allocation estimates. The nature of the identified inventory and undeployed fixed assets were gaming machines and related equipment with no future use that should not have been allocated any value in the original purchase price allocation. The final measurement period adjustments to goodwill were approximately $0.9 million, comprised of $1.1 million related to tangible assets and accrued liabilities and $0.2 million associated with deferred income taxes, partially offset by approximately $0.4 million associated with the tax effect of these measurement period adjustments. We determined the final measurement period adjustments to be immaterial on both a quantitative and a qualitative basis .

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The information below reflects the purchase price allocation (in thousands):

 	    	Amount	 	
Purchase price allocation	 	 	 	 	
Current assets	 	$	
68,548	 	
Property, equipment and leasehold improvements, net	 	 	
87,283	 	
Goodwill	 	 	
669,542	 	
Other intangible assets, net	 	 	
403,300	 	
Other receivables, non-current	 	 	
5,030	 	
Other assets, long-term	 	 	
3,392	 	
Deferred tax asset, non-current	 	 	
22,287	 	
Total assets	 	 	
1,259,382	 	
Current liabilities	 	 	
44,291	 	
Deferred tax liability, non-current	 	 	
158,418	 	
Other accrued expenses and liabilities	 	 	
518	 	
Total liabilities	 	 	
203,227	 	
Net assets acquired	 	$	
1,056,155	 	
 
Trade receivables acquired of $24.7 million were considered to be collectible and therefore the carrying amounts were considered to approximate fair value. Inventory acquired of $16.5 million was fair valued based on model-based valuations for which inputs and value drivers were observable.
The following table summarizes acquired tangible assets (in thousands):

 	 	Useful Life	 	Estimated	 	
 	    	(years)	    	Fair Value	  	
Property, equipment and leased assets	 	 	 	 	 	 	 	 	
Gaming equipment	 	
2	-	4	 	$	
78,201	 	
Leasehold and building improvements	 	Lease Term	 	 	
2,105	 	
Machinery and equipment	 	
3	-	5	 	 	
4,126	 	
Other	 	
2	-	7	 	 	
2,851	 	
Total property, equipment and leased assets	 	 	 	 	 	$	
87,283	 	
 
The fair value of property, equipment and leased assets was determined using the cost approach as the primary approach for valuing the majority of the personal property. The market approach was used to estimate the value of vehicles. The income approach was used to quantify any economic obsolescence that may be present in the personal property. No economic obsolescence adjustments were made to the personal property, as the business enterprise valuation indicated sufficient cash flows to support the values established through the cost and market approaches.
The following table summarizes acquired intangible assets (in thousands):

 	 	Useful Life	 	Estimated	 	
 	    	(years)	    	Fair Value	 	
Other intangible assets	 	 	 	 	 	 	 	 	
Tradenames and trademarks	 	
3	-	7	 	$	
14,800	 	
Computer software	 	
3	-	5	 	 	
3,755	 	
Developed technology	 	
2	-	6	 	 	
139,645	 	
Customer relationships	 	
8	-	12	 	 	
231,100	 	
Contract rights	 	
1	-	7	 	 	
14,000	 	
Total other intangible assets	 	 	 	 	 	$	
403,300	 	
 
The fair values of trade names and trademarks and developed technology were determined by applying the income approach utilizing the relief from royalty methodology. The fair value of customer relationships was determined by applying the income approach utilizing the excess earnings methodology. The fair value of contract rights was considered

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to approximate the carrying amount based on contractual obligations associated with these other intangible assets. The discount rates utilized to estimate the fair value of these other intangible assets ranged from 10.0% to 11.0%.
Everi Payments and Everi Games Holding had different fiscal year ends. Accordingly, the unaudited pro forma combined statements of income for the year ended December 31, 2014 combined historical Everi Consolidated Statements of Income and Comprehensive Income for its year ended December 31, 2014 with historical Everi Games Holding Consolidated Statements of Operations for its year ended September 30, 2014, giving effect to the Merger as if it had occurred on January 1, 2013. The unaudited pro forma combined statements of income for the year ended December 31, 2013 combined historical Everi Consolidated Statements of Income and Comprehensive Income for its year ended December 31, 2013 with historical Everi Games Consolidated Statements of Operations for its year ended September 30, 2013, giving effect to the Merger as if it had occurred on January 1, 2013.
 
The unaudited pro forma combined financial information does not purport to represent the results of operations of Everi that would have actually resulted had the Merger been completed as of the dates indicated, nor should the information be taken as indicative of the future results of operations or financial position of the combined company. The unaudited pro forma combined financial statements do not reflect the impacts of any potential operational efficiencies, cost savings or economies of scale that Everi may achieve with respect to the combined operations of Everi and Everi Games Holding. The unaudited pro forma amounts include the historical operating results of the Company and Everi Games Holding prior to the Merger, with adjustments directly attributable to the Merger. The unaudited pro forma results include increases to depreciation and amortization expense based on the purchased intangible assets and the step-up in basis associated with tangible assets acquired and increases to interest expense, related to debt issued to fund the Merger. Also reflected in the year ended December 31, 2014 are adjustments for the impact of acquisition-related costs and other cost as a result of the Merger of $27.4 million. There were no acquisition-related costs incurred for the year ended December 31, 2013. All adjustments utilized an effective federal statutory tax rate of 35.0%.
The following table reflects selected financial data from the unaudited pro forma consolidated financial information assuming the Merger occurred as of January 1, 2013 (in thousands): 

 	 	Year Ended December 31,	 	
 	    	2014	    	2013	 	
Unaudited pro forma results of operations (in thousands, except per share amounts)	 	 	 	 	 	 	 	
Revenues	 	$	
800,732	 	$	
771,810	 	
Net (loss)	 	 	
(5,083)	 	 	
(7,003)	 	
Basic loss per share	 	 	
(0.08)	 	 	
(0.11)	 	
Diluted loss per share	 	 	
(0.08)	 	 	
(0.10)	 	
 
The financial results for Everi Games Holding included in our Consolidated Statements of Income and Comprehensive Income since the acquisition date of December 19, 2014 reflected revenues of approximately $7.4 million and net loss of approximately $3.0 million, including acquisition-related costs of $1.3 million.
During the years ended December 31, 2015 and 2014, we expensed approximately $2.7 and $10.7 million, respectively, of costs related to the acquisition of Everi Games for financial advisory services, financing related fees, accounting and legal fees and other transaction-related expenses and are included in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income within Operating Expenses. These costs do not include any costs related to additional site consolidation or rationalization that we might consider following the closing of the Merger.
 
Resort Advantage, LLC
 
In August 2015, we acquired certain assets of Resort Advantage, LLC (“Resort Advantage”) for an aggregate purchase price of approximately $14.0 million, of which we estimated that approximately $4.7 million would be paid under the provisions of the agreement over a period of 40 months. Resort Advantage is a supplier of comprehensive and integrated solutions for complete Financial Crimes Enforcement Network (“FinCEN”) and IRS regulatory compliance to the gaming industry. The Resort Advantage acquisition did not have a material impact on our results of operations or financial condition.

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We have not provided the supplemental pro forma impact of the Resort Advantage acquisition on the revenue and earnings of the combined entity as if the acquisition date had been January 1, 2014, and the amount of revenue and earnings derived from Resort Advantage have not been presented on a supplemental basis as such amounts are not material for the twelve months ended December 31, 2015 and 2014, respectively.
 
4. ATM FUNDING AGREEMENTS
Contract Cash Solutions Agreement
Our Contract Cash Solutions Agreement with Wells Fargo Bank, N.A. (“Wells Fargo”) allows us to use funds owned by Wells Fargo to provide the currency needed for normal operating requirements for our ATMs. For the use of these funds, we pay Wells Fargo a cash usage fee on the average daily balance of funds utilized multiplied by a contractually defined cash usage rate. These cash usage fees, reflected as interest expense within the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income, were $2.3  million, $2.3  million and $2.2  million for the years ended December 31, 2015, 2014 and 2013, respectively. We are exposed to interest rate risk to the extent that the applicable London Interbank Offered Rate (“ LIBOR ”) increases.
Under this agreement, all currency supplied by Wells Fargo remains the sole property of Wells Fargo at all times until it is dispensed, at which time Wells Fargo obtains an interest in the corresponding settlement receivable which is recorded on a net basis. As these funds are not our assets, supplied cash is not reflected on the Consolidated Balance Sheets. The outstanding balances of ATM cash utilized by us from Wells Fargo were $364.5  million and $396.3  million as of December 31, 2015 and 2014, respectively.
In November 2014, we amended the Contract Cash Solutions Agreement to extend the term one year until November 30, 2015.
In June 2015, we amended the Contract Cash Solutions Agreement to decrease the maximum amount of cash to be provided to us from $500.0 million to $425.0 million and to extend the term of the agreement from November 30, 2015 to June 30, 2018. 
We are responsible for any losses of cash in the ATMs under this agreement and we self - insure for this risk. We incurred no material losses related to this self-insurance for the years ended December 31, 2015 and 2014.
Site ‑Funded ATMs
We operate ATMs at certain customer gaming establishments where the gaming establishment provides the cash required for the ATM operational needs. We are required to reimburse the customer for the amount of cash dispensed from these Site-Funded ATMs. The Site-Funded ATM liability is included within “Settlement liabilities” in the accompanying Consolidated Balance Sheets and was $84.9  million and $69.3  million as of December 31, 2015 and 2014, respectively.
 
5. TRADE RECEIVABLES
Trade receivables represent short-term credit granted to customers for which collateral is generally not required. The balance of trade receivables consists of outstanding balances owed to us by gaming establishments and casino patrons. The balance of trade receivables consisted of the following (in thousands):

 	At December 31,	 	At December 31,	 	
 	2015	    	2014	 	
 	 	 	 	 	 	 	
Trade receivables, net	 	 	 	 	 	 	
Games trade receivables	$	
38,064	 	$	
28,270	 	
Payments trade receivables	 	
14,318	 	 	
9,427	 	
Total trade receivables, net	$	
52,382	 	$	
37,697	 	
 
A significant portion of the balance of the allowance for doubtful accounts for trade receivables is from warranty receivables. On a monthly basis, we evaluate the collectability of the outstanding balances and establish a reserve for the

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face amount of the expected losses on these receivables. The warranty expense associated with this reserve is included within cost of revenues (exclusive of depreciation and amortization) in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income.
A summary activity of the reserve for warranty losses is as follows (in thousands):

 	    	Amount	 	
Balance, December 31, 2012	 	$	
6,908	 	
Warranty expense provision	 	 	
7,874	 	
Charge offs against reserve	 	 	
(12,005)	 	
Balance, December 31, 2013	 	$	
2,777	 	
Warranty expense provision	 	 	
9,029	 	
Charge offs against reserve	 	 	
(9,022)	 	
Balance, December 31, 2014	 	$	
2,784	 	
Warranty expense provision	 	 	
9,263	 	
Charge offs against reserve	 	 	
(9,074)	 	
Balance, December 31, 2015	 	$	
2,973	 	

 
 
While the reserve for warranty losses comprises the majority of the Company’s total allowance for trade receivables, the Company had bad debt expense of $0.9 million during the year ended December 31, 2015. The amount expensed for other charge-offs during the year ended December 31, 2014 was not material. As of December 31, 2015, the Company had $0.9 million reserves exclusive of the warranty reserve. The combined balance of other reserves was not material as of December 31, 2014.

 

6. OTHER RECEIVABLES
Other receivables include the balance of notes and loans receivable on our games and fully integrated kiosk products, development agreements, which are generated from reimbursable amounts advanced to tribal customers generally used by the customer to build, expand or renovate its facility, and an agreement with Bee Caves Games, Inc. (“Bee Caves Games”) in July 2014, under which the Company agreed to make a loan pursuant to a secured promissory note in the amount of $4.5 million. In association with the promissory note, the Company received warrants to purchase Bee Caves Games common stock, and recorded a discount to the note for the fair value of the warrants received. The warrants are included in the balance of other assets, non-current.  The note, which bears interest at 7% , requires interest only payments for the first 24 months followed by repayments of principal and interest in 48 equal monthly installments.
 
Other receivables also include income taxes receivable and other miscellaneous receivables. The balance of other receivables consisted of the following (in thousands):

 	At December 31,	 	At December 31,	 	
 	2015	    	2014	 	
Other receivables	 	 	 	 	 	 	
Notes and loans receivable, net of discount of $699 and $853, respectively	$	
9,930	 	$	
13,939	 	
Federal and state income tax receivable	 	
421	 	 	
15,092	 	
Other	 	
1,232	 	 	
706	 	
Total other receivables	 	
11,583	 	 	
29,737	 	
Less: Notes and loans receivable, non-current	 	
6,655	 	 	
9,184	 	
Total other receivables, current portion	$	
4,928	 	$	
20,553	 	

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7. PREPAID AND OTHER ASSETS
Prepaid and other assets include the balance of prepaid expenses, deposits, debt issuance costs , restricted cash and other assets.  The short-term portion of these assets is included in prepaid and other assets and the long-term portion is included in other assets, non-current. 
The balance of prepaid and other assets, current consisted of the following (in thousands):

 	At December 31,	 	At December 31,	 	
 	2015	    	2014	 	
Prepaid expenses and other assets	 	 	 	 	 	 	
Prepaid expenses	$	
8,255	 	$	
7,163	 	
Deposits	 	
8,946	 	 	
8,781	 	
Other	 	
3,571	 	 	
3,044	 	
Total prepaid expenses and other assets	$	
20,772	 	$	
18,988	 	
 
The balance of other assets, non-current consisted of the following (in thousands):

 	At December 31,	 	At December 31,	 	
 	2015	    	2014	    	
Other assets, non-current	 	 	 	 	 	 	
Debt issuance costs	$	
24,599	 	$	
41,109	 	
Prepaid expenses and deposits, non-current	 	
4,521	 	 	
3,956	 	
Other	 	
5,934	 	 	
5,878	 	
Total other assets, non-current	$	
35,054	 	$	
50,943	 	

 
 
8. INVENTORY
Our inventory primarily consists of component parts as well as finished goods and work-in-progress. The cost of inventory includes cost of materials, labor, overhead and freight. The inventory is stated at the lower of cost or market and accounted for using the first in, first out method .
Inventory consisted of the following (in thousands):

 
 	 	 	 	 	 	 	
 	At December 31,	 	At December 31,	 	
 	2015	    	2014	 	
Inventory	 	 	 	 	 	 	
Raw materials and component parts, net of reserves of $912 and $22, respectively	$	
23,663	 	$	
21,151	 	
Work in progress	 	
1,495	 	 	
803	 	
Finished goods	 	
3,580	 	 	
5,209	 	
Total inventory	$	
28,738	 	$	
27,163	 	

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9. PROPERTY, EQUIPMENT AND LEASED ASSETS
Property, equipment and leased assets consist of the following (amounts in thousands):

 	 	 	 	At December 31, 2015	 	At December 31, 2014	 	
 	 	Useful   Life	 	 	 	 	Accumulated	 	Net   Book	 	 	 	Accumulated	 	Net Book	 	
 	   	(Years)	    	   Cost  	    	Depreciation	    	Value	    	Cost	    	Depreciation	    	Value	 	
Property, equipment and leased assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Rental pool - deployed	 	
2	-	4	 	$	
91,743	 	$	
29,993	 	$	
61,750	 	$	
70,295	 	$	
876	 	$	
69,419	 	
Rental pool - undeployed	 	
2	-	4	 	 	
11,950	 	 	
3,361	 	 	
8,589	 	 	
10,562	 	 	
151	 	 	
10,411	 	
ATM equipment	 	 	5	 	 	 	
20,601	 	 	
12,885	 	 	
7,716	 	 	
23,572	 	 	
16,544	 	 	
7,028	 	
Leasehold and building improvements	 	Lease Term	 	 	
7,564	 	 	
2,038	 	 	
5,526	 	 	
6,289	 	 	
895	 	 	
5,394	 	
Cash advance equipment	 	 	3	 	 	 	
7,662	 	 	
2,711	 	 	
4,951	 	 	
3,372	 	 	
1,873	 	 	
1,499	 	
Machinery, office and other equipment	 	
2	-	5	 	 	
32,313	 	 	
14,537	 	 	
17,776	 	 	
21,405	 	 	
9,071	 	 	
12,334	 	
Total	 	 	 	 	 	$	
171,833	 	$	
65,525	 	$	
106,308	 	$	
135,495	 	$	
29,410	 	$	
106,085	 	
 
Depreciation expense related to other property, equipment and leased assets totaled approximately $45.6 million, $8.7 million and $7.4 million for the years ended December 31, 2015, 2014 and 2013, respectively. In connection with our fourth quarter 2015 annual financial statement review, we determined that certain of our gaming fixed assets either: (a) had economic lives that were no longer supportable and shortened given approximately one year of experience with the Games segment that resulted in an accelerated depreciation charge of approximately $2.6 million in the current period; or (b) were fully impaired as there was little to no movement in the portfolio with recent shipments having been returned and no future deployment anticipated that resulted in an accelerated depreciation charge of approximately $1.0 million in the current period. Our property, equipment and leased assets were not impaired for the years ended December 31, 2014 and 2013.
 
In connection with the sale of certain assets related to our PokerTek products during the year ended December 31, 2015 for a purchase price of $5.4 million, we recorded a gain of approximately $3.9 million, which was included in operating expenses in our Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income.

 
10. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired plus liabilities assumed arising from business combinations.
In accordance with ASC 350, we test goodwill at the reporting unit level, which in certain cases may be a component of an operating segment, for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
Goodwill Testing
In performing the 2015 annual impairment test, we utilized the two-step approach prescribed under ASC 350. The first step required a comparison of the carrying value of each reporting unit to its estimated fair value. To estimate the fair value of our reporting units for Step 1, we used a combination of the income approach and the market approach. The income approach is based on a discounted cash flow (“DCF”) analysis. This method involves estimating the after-tax cash flows attributable to a reporting unit and then discounting the after-tax cash flows to a present value, using a risk-adjusted discount rate. Assumptions used in the DCF require the exercise of significant judgment, including, but not limited to: appropriate discount rates and terminal values, growth rates and the amount and timing of expected future cash flows. The forecasted cash flows are based on our most recent annual budget and projected years beyond. Our budgets and forecasted cash flows are based on estimated future growth rates. We believe our assumptions are consistent with the plans and estimates used to manage the underlying businesses. The discount rates, which are intended to reflect the risks inherent in future cash flow projections, used in the DCF are based on estimates of the weighted average cost of capital (“WACC”) of market participants relative to each respective reporting unit. The market approach considers comparable market data based on multiples of revenue or earnings before taxes, depreciation and amortization (“EBITDA”).

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If the carrying amount of a reporting unit exceeds its estimated fair value, we are required to perform the second step of the goodwill impairment test to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of a reporting unit’s goodwill to its carrying amount. The implied fair value of goodwill is derived by performing a hypothetical purchase price allocation for the reporting unit as of the measurement date, allocating the reporting unit’s estimated fair value to its assets and liabilities. The residual amount from performing this allocation represents the implied fair value of goodwill. To the extent this implied fair value is below the carrying amount of goodwill, an impairment charge is recorded.
Key assumptions used in estimating fair value under the discounted cash flow approach included a discount rate of: (a) 11.0% for the Cash Advance, ATM ,   Check Services and Central Credit reporting units ; (b) 10.0% for the Games reporting unit; (c) 12.5% for the Kiosk Sales and Services reporting unit; and (d) 16.0% , for the Compliance reporting unit. In addition, projected compound average revenue growth rates o f approximately   (3.3)% to 14.0% and terminal value growth rates o f approximately   (1.0)% to 3.1% were used in the analyses. The discounted cash flow analyses for our reporting units included estimated future cash inflows from operations and estimated future cash outflows for capital expenditures.
Key assumptions used in estimating fair value under the market approach were based on observed market multiples of enterprise value to revenue and EBITDA for both comparable publicly traded companies and recent merger and acquisition transactions involving similar companies to estimate appropriate controlling basis multiples to apply to each of the reporting units. Based on the multiples implied by this market data, we selected multiples of revenue o f approximately   0.9 to 10.6 times and multiples of EBITDA of 5.0 to 8.7 times.
The estimate of fair value requires significant judgment. We based our fair value estimates on assumptions that we believe to be reasonable; but that are unpredictable and inherently uncertain, including: estimates of future growth rates, operating margins and assumptions about the overall economic climate as well as the competitive environment for our reporting units. There can be no assurance that our estimates and assumptions made for purposes of our goodwill testing will prove to be accurate predictions of the future. If our assumptions regarding business plans, competitive environments or anticipated growth rates are not correct, we may be required to record goodwill impairment charges in future periods, whether in connection with our next annual impairment testing, or earlier, if an indicator of an impairment is present prior to our next annual evaluation.
We conduct our annual impairment test for our reporting units during the fourth quarter of each reporting period .  
In connection with our annual goodwill impairment testing process for 2015 , we determined that our Games reporting unit did not pass the step one test and therefore we were required to conduct a step two analysis to determine the amount of impairment which was approximately $75 million for the year ended December 31, 2015 . This conclusion was primarily based upon limited growth and capital expenditure constraints in the gaming industry, consolidation and increased competition in the gaming manufacturing space, stock market volatility, global and domestic economic uncertainty, and lower than expected operating profits and cash flows in 2015. Based on these indicators, we   revised our estimates and assumptions for the Games reporting unit, which resulted in a goodwill impairment charge.
Our goodwill was not impaired for the years ended December 31, 2014 and 2013 based upon the results of our testing.

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The changes in the carrying amount of goodwill are as follows (in thousands):

 	    	Cash
Advance	    	ATM	    	Check
Services	    	Games	    	Other	    	Total	 	
Goodwill	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2013	 	$	
100,880	 	$	
33,051	 	$	
23,281	 	$	 —	 	$	
22,872	 	$	
180,084	 	
Goodwill acquired during the year	 	 	 —	 	 	 —	 	 	 —	 	 	
669,452	 	 	
8,439	 	 	
677,891	 	
Foreign translation adjustment	 	 	
(62)	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
(62)	 	
Balance, December 31, 2014	 	$	
100,818	 	$	
33,051	 	$	
23,281	 	$	
669,452	 	$	
31,311	 	$	
857,913	 	
Goodwill acquired during the year	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
6,117	 	 	
6,117	 	
Goodwill impairment	 	 	 —	 	 	 —	 	 	 —	 	 	
(75,008)	 	 	 —	 	 	
(75,008)	 	
Foreign translation adjustment	 	 	
(115)	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
(115)	 	
Other*	 	 	 —	 	 	 —	 	 	 —	 	 	
896	 	 	 —	 	 	
896	 	
Balance, December 31, 2015	 	$	
100,703	 	$	
33,051	 	$	
23,281	 	$	
595,340	 	$	
37,428	 	$	
789,803	 	
 
* Includes the final 2015 measurement period adjustments associated with the acquisition of our Games business in late 2014.
 
Other Intangible Assets
 
Other intangible assets consist of the following (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	At December 31, 2015	 	At December 31, 2014	
 	 	Useful Life	 	 	 	 	Accumulated	 	Net   Book	 	 	 	 	Accumulated	 	Net   Book	
 	    	(years)	    	Cost	    	Amortization	    	Value	    	Cost	    	Amortization	    	Value	
Other intangible assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Contract rights under development and placement fee agreements	 	
1	-	7	 	$	
16,453	 	$	
7,612	 	$	
8,841	 	$	
14,000	 	$	
301	 	$	
13,699	
Customer contracts	 	
7	-	14	 	 	
50,177	 	 	
34,755	 	 	
15,422	 	 	
43,938	 	 	
29,931	 	 	
14,007	
Customer relationships	 	
8	-	12	 	 	
231,100	 	 	
21,723	 	 	
209,377	 	 	
231,100	 	 	
733	 	 	
230,367	
Developed technology and software	 	
1	-	6	 	 	
197,658	 	 	
63,591	 	 	
134,067	 	 	
174,417	 	 	
14,604	 	 	
159,813	
Patents, trademarks and other	 	
1	-	17	 	 	
28,240	 	 	
13,485	 	 	
14,755	 	 	
27,856	 	 	
8,957	 	 	
18,899	
Total	 	 	 	 	 	$	
523,628	 	$	
141,166	 	$	
382,462	 	$	
491,311	 	$	
54,526	 	$	
436,785	
 
On a quarterly basis, we evaluate our other intangible assets for potential impairment as part of our quarterly review process. There was no material impairment identified for any of our other intangible assets for the years ended December 31, 2015 and 2013. For the year ended December 31, 2014, our online payment processing intangible assets were identified for further testing. We determined that these definite-lived intangible assets were potentially impaired primarily due to a combination of the following factors: (a) legislative constraints at the state and federal level; (b) significant changes in management; and (c) lower than anticipated operating results.
These definite-lived intangible assets were evaluated using an undiscounted cash flow approach to determine if an impairment existed.  As impairment was indicated based on the undiscounted cash flow approach, we discounted the cash flows and applied probability factors to calculate the resulting fair values and compared to the existing carrying value to determine the amount of impairment. The amount of impairment was approximately $3.1 million leaving a revised cost basis of $1.6 million and a remaining life of three years at December 31, 2014. This amount was recorded in Operating Expenses in our Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income. These assets have been valued using level 3 fair value inputs.
Amortization expense related to other intangible assets totaled approximately $85.5 million, $14.2 million and $9.6 million for the years ended December 31, 2015, 2014 and 2013, respectively. We capitalized and placed into service $6.1  million, $ 8.2  million and $ 5.1  million of software development costs for the years ended December 31, 2015, 2014 and 2013, respectively.
The total net book value of amortizable intangible assets was approximately $382.5 million at December 31, 2015. The total net book value of amortizable intangible assets was approximately $436.8 million at December 31, 2014. The

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anticipated amortization expense related to other intangible assets, assuming no subsequent impairment of the underlying assets, is as follows (in thousands):

 	    	Amount	 	
Anticipated amortization expense (1)	 	 	 	 	
2016	 	$	
95,077	 	
2017	 	 	
53,775	 	
2018	 	 	
40,479	 	
2019	 	 	
37,923	 	
2020	 	 	
35,748	 	
Thereafter	 	 	
110,119	 	
Total	 	$	
373,121	 	

	(1)		For the year ended December 31, 2015, the Com pany had $9.3 million in other intangible assets which had not yet been placed into service .	
 
We enter into development and placement fee agreements to provide financing for new gaming facilities or for the expansion or improvement of existing facilities. All or a portion of the funds provided under development agreements are reimbursed to us, while funding under placement fee agreements is not reimbursed. In return for the fees under these agreements, each facility dedicates a percentage of its floor space, or an agreed upon unit count, for the placement of our EGMs over the term of the agreement, generally 12 to 83 months, and we receive a fixed percentage or flat fee of those machines’ hold per day. Certain of the agreements contain EGM performance standards that could allow the respective facility to reduce a portion of our guaranteed floor space.
 
In addition, certain development agreements allow the facilities to buy out floor space after advances that are subject to repayment have been repaid. The development agreements typically provide for a portion of the amounts retained by each facility for its share of the operating profits of the facility to be used to repay some or all of the advances recorded as notes receivable which are included as part of other receivables current and non-current in the Consolidated Balance Sheets .     Placement fees and amounts advanced in excess of those to be reimbursed by the customer for real property and land improvements are allocated to intangible assets and are generally amortized over the term of the contract, which is recorded as a reduction of revenue generated from the facility. In the past we have, and in the future, we may, by mutual agreement, amend these agreements to reduce our floor space at the facilities. Any proceeds received for the reduction of floor space is first applied against the intangible asset for that particular development or placement fee agreement, if any, and the remaining net book value of the intangible asset is prospectively amortized on a straight-line method over the remaining estimated useful life.
 
During the year ended December 31, 2015, we paid approximately $2.8 million to a customer for certain of its locations in Oklahoma to extend the placement of nearly 300 units for an additional term of up to 60 months.

 
11. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
The following table presents our accounts payable and accrued expenses (amounts in thousands):

 	At December 31,	 	At December 31,	 	
 	2015	    	2014	 	
Accounts payable and accrued expenses	 	 	 	 	 	 	
Trade accounts payable	$	
67,139	 	$	
48,962	 	
Accrued interest	 	
73	 	 	
3,387	 	
Payroll and related expenses	 	
8,565	 	 	
10,889	 	
Deferred and unearned revenues	 	
10,836	 	 	
8,016	 	
Cash access processing and related expenses	 	
4,662	 	 	
4,414	 	
Accrued taxes	 	
1,654	 	 	
3,195	 	
Other	 	
8,583	 	 	
25,805	 	
Total accounts payable and accrued expenses	$	
101,512	 	$	
104,668	 	

 

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12. LONG-TERM DEBT
The following table summarizes our indebtedness (in thousands):

 	At December 31,	 	At December 31,	 	 	
 	2015	    	2014	 	 	
Long-term debt	 	 	 	 	 	 	 	
Senior secured term loan	$	
490,000	 	$	
500,000	 	 	
Senior secured notes	 	
335,000	 	 	
350,000	 	 	
Senior unsecured notes	 	
350,000	 	 	
350,000	 	 	
Total debt	 	
1,175,000	 	 	
1,200,000	 	 	
Less: debt issuance costs and warrant discount	 	
(11,421)	 	 	
(11,213)	 	 	
Total debt after discount	 	
1,163,579	 	 	
1,188,787	 	 	
Less: current portion of long-term debt	 	
(10,000)	 	 	
(10,000)	 	 	
Long-term debt, less current portion	$	
1,153,579	 	$	
1,178,787	 	 	
 
In connection with the Merger, we refinanced all of our indebtedness outstanding under the Prior Credit Facilities with proceeds from the Credit Facilities and the Notes.
Credit Facilities
In December 2014, Everi Payments, as borrower, and Holdings entered into a credit agreement among Everi Payments, Holdings, Bank of America, N.A. as administrative agent, collateral agent, swing line lender and letter of credit issuer; Deutsche Bank Securities Inc., as syndication agent; and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Deutsche Bank Securities, Inc. as joint lead arrangers and joint book managers, which governs the Credit Facilities (the “Credit Agreement”). The Credit Facilities consist of the $500.0 million Term Loan that matures in 2020 and the $50.0 million Revolving Credit Facility that matures in 2019.  The fees associated with the Credit Facilities included discounts of approximately $7.5 million and debt issuance costs of approximately $13.9 million. All borrowings under the Credit Facilities are subject to the satisfaction of customary conditions, including the absence of a default and compliance with representations and warranties.
We are required to repay the Term Loan in an amount equal to 0.50% per quarter of the initial aggregate principal with the final principal repayment installment on the maturity date. Interest is due in arrears each March, June, September and December and at the maturity date; however, interest may be remitted within one to three months of such dates.
The Term Loan had an applicable interest rate of 6.25% as of December 31, 2015 and December 31, 2014.
The interest rate per annum applicable to the Revolving Credit Facility is, at our option, the base rate or LIBOR plus, in each case, an applicable margin. The interest rate per annum applicable to the Term Loan is also, at our option, the base rate or LIBOR plus, in each case, an applicable margin. LIBOR will be reset at the beginning of each selected interest period based on the LIBOR rate then in effect; provided that, with respect to the Revolving Credit Facility, if LIBOR is below zero, then such rate will be equal to zero plus the applicable margin, and, with respect to the Term Loan, if LIBOR is below 1.0%, then such rate will be equal to 1.0% plus the applicable margin. The base rate is a fluctuating interest rate equal to the highest of (a) the prime lending rate announced by the administrative agent, (b) the federal funds effective rate from time to time plus 0.50% , and (c) LIBOR (after taking account of any applicable floor) applicable for an interest period of one month plus 1.00% . The applicable margins of 4.75% and 5.25% for the Revolving Credit Facility and Term Loan, respectively, are subject to adjustment based on our consolidated secured leverage ratio.
Voluntary prepayments of the Term Loan and the Revolving Credit Facility and voluntary reductions in the unused commitments are permitted in whole or in part, in minimum amounts as set forth in the Credit Agreement, with prior notice but without premium or penalty.
Subject to certain exceptions, the obligations under the Credit Facilities are secured by substantially all of the present and after acquired assets of each of Everi Payments, Holdings and the subsidiary guarantors (the “Collateral”) including: (a) a

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perfected first priority pledge of all the capital stock of Everi Payments and each domestic direct, wholly owned material restricted subsidiary held by Holdings, Everi Payments or any such subsidiary guarantor; and (b) a perfected first priority security interest in substantially all other tangible and intangible assets of Holdings, Everi Payments, and such subsidiary guarantors (including, but not limited to, accounts receivable, inventory, equipment, general intangibles, investment property, real property, intellectual property and the proceeds of the foregoing). Subject to certain exceptions, the Credit Facilities are unconditionally guaranteed by Holdings and such subsidiary guarantors and Everi Games and its material domestic subsidiaries.
The Credit Agreement contains certain covenants that, among other things, limit Holdings’ ability, and the ability of certain of its subsidiaries, to incur additional indebtedness; sell assets or consolidate or merge with or into other companies; pay dividends or repurchase or redeem capital stock; make certain investments; issue capital stock of subsidiaries; incur liens; prepay, redeem or repurchase subordinated debt; and enter into certain types of transactions with our affiliates. The Credit Agreement also requires Holdings, together with its subsidiaries, to comply with a consolidated secured leverage ratio as well as an annual excess cash flow payment requirement.
Events of default under the Credit Agreement include customary events such as a cross-default provision with respect to other material debt (which includes the Refinanced Secured Notes and the Unsecured Notes).  In addition, an event of default will occur if Holdings undergoes a change of control. This is defined to include the case where Holdings ceases to own 100% of the equity interests of Everi Payments, or where any person or group acquires a percentage of the economic or voting interests of Holdings’ capital stock of 35% or more (determined on a fully diluted basis), or where a majority of the board of directors of Everi Payments ceases to consist of persons who are directors of Holdings on the closing date of the Credit Facilities or other directors whose nomination for election to the board of directors of Holdings was recommended by a majority of the then continuing directors.
At December 31, 2015, we had approximately $490.0 million of borrowings outstanding under the Term Loan and $50.0 million of additional borrowing availability under the Revolving Credit Facility, based upon borrowing base calculations as of such date.  We were in compliance with the terms of the Credit Facilities as of December 31, 2015.
We expect that our cash provided by operating activities will be sufficient for our operating and debt servicing needs during the next 12 months. If not, we have sufficient borrowings available under our Credit Facilities to meet additional funding requirements. We monitor the financial strength of our lenders on an ongoing basis using publicly-available information. Based upon that information, we believe there is not a likelihood that any of our lenders might not be able to honor their commitments under the Credit Agreement.
Senior Secured Notes and Refinance of Senior Secured Notes
In December 2014, we issued $350.0 million in aggregate principal amount of 7.75% Secured Notes due 2021. The fees associated with the Secured Notes included debt issuance costs of approximately $13.6 million. The Secured Notes were acquired by the initial purchasers pursuant to the terms of a purchase agreement. Under the terms of the purchase agreement, during a one year period following the closing and upon prior notice from the initial purchasers, the Company was required to use commercially reasonable efforts to aid the purchasers in the resale of the Secured Notes, including by preparing an updated offering memorandum and participating in reasonable marketing efforts including road shows, to the extent required therein. Alternatively, we had the ability to redeem the Secured Notes from the initial purchasers without penalty. On April 15, 2015, the Company entered into the Note Purchase Agreement, among Everi Payments, the Purchaser, and the Collateral Agent, and issued $335.0 million in aggregate principal amount of the 7.25% Refinanced Secured Notes due 2021 to the Purchaser in a private offering. With the proceeds from the issuance of the Refinanced Secured Notes, we redeemed, in full, the Company’s then outstanding Secured Notes from the initial purchasers in accordance with the terms of the indenture governing the Secured Notes. In connection with the issuance of the Refinanced Secured Notes during the second quarter of 2015, we expensed $13.0 million of related debt issuance costs and fees to “Loss on extinguishment of debt” associated with the redeemed Senior Secured Notes that were outstanding prior to the refinance transaction.
In connection with the issuance of the Refinanced Secured Notes and pursuant to the terms of the Note Purchase Agreement, the Company issued the Warrant to the Purchaser. The Warrant expires on the sixth anniversary of the date of

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issuance. The number of shares issuable pursuant to the Warrant and the warrant exercise price are subject to adjustment for stock splits, reverse stock splits, stock dividends, mergers and certain other events. The Warrant was valued at $2.2 million using a modified Black-Scholes model and was accounted for as a debt discount.
Interest is due quarterly in arrears each January, April, July and October.
We were in compliance with the terms of the Refinanced Secured Notes as of December 31, 2015.
Senior Unsecured Notes
In December 2014, we issued $350.0 million in aggregate principal amount of 10.0% Unsecured Notes due 2022. The fees associated with the Unsecured Notes included original issue discounts of approximately $3.8 million and debt issuance costs of approximately $14.0 million.
Interest is due semi-annually in arrears each January and July.
The Unsecured Notes were acquired by the initial purchasers pursuant to the terms of a purchase agreement. Under the terms of the purchase agreement, during a one -year period following the closing and upon prior notice from the initial purchasers, the Company was required to use commercially reasonable efforts to aid the purchasers in the resale of the Unsecured Notes, including by preparing an updated offering memorandum and participating in reasonable marketing efforts including road shows, to the extent required therein. The Unsecured Notes were resold by the initial purchasers to third parties in the second quarter of 2015.
In connection with the issuance of the Unsecured Notes, the Company entered into a registration rights agreement pursuant to which the Company agreed, for the benefit of the initial holders of the Unsecured Notes, to file with the SEC, and use its commercially reasonable efforts to cause to become effective, a registration statement relating to an offer to exchange the Unsecured Notes for an issue of SEC-registered notes with terms identical to the Unsecured Notes. On October 23, 2015, we filed a registration statement on Form S-4 with the SEC in accordance with the registration rights agreement outlining our offer to exchange the Unsecured Notes for identical notes without transfer restrictions. The registration statement was declared effective on November 3, 2015, and the exchange offer for the Unsecured Notes was completed on December 4, 2015 with 100% percent participation.
We were in compliance with the terms of the Unsecured Notes as of December 31, 2015.
Principal Repayments
The maturities of our borrowings at December 31, 2015 are as follows (in thousands):

 	    	Amount	 	
Maturities of borrowings	 	 	 	 	
2016	 	$	
10,000	 	
2017	 	 	
10,000	 	
2018	 	 	
10,000	 	
2019	 	 	
10,000	 	
2020	 	 	
450,000	 	
Thereafter	 	 	
685,000	 	
Total	 	$	
1,175,000	 	

 

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13. COMMITMENTS AND CONTINGENCIES
Lease Obligations
We lease office facilities and operating equipment under cancelable and non ‑cancelable agreements. Total rent expense was approximately $5.5 million, $1.9 million and $1.8 million for the years ended December 31, 2015, 2014 and 2013, respectively.
In October 2012, we entered into a long ‑term lease agreement related to office space for our corporate headquarters located in Las Vegas, Nevada, which we occupied in the first half of 2013.
In September 2014, the long-term lease agreement for office space in Austin, Texas, was extended through March 2021.
As of December 31, 2015, the minimum aggregate rental commitment under all non ‑cancelable operating leases were as follows (in thousands):

 	    	Amount	 	
Minimum aggregate rental commitments	 	 	 	 	
2016	 	$	
4,410	 	
2017	 	 	
4,171	 	
2018	 	 	
4,064	 	
2019	 	 	
4,064	 	
2020	 	 	
3,925	 	
Thereafter	 	 	
5,900	 	
Total	 	$	
26,534	 	
 
Litigation Claims and Assessments
Everi Games Holding Shareholder Litigation
Putative shareholders of Everi Games Holding filed suits in the United States District Court for the Western District of Texas (the “Texas Federal Action”) and the District Court of Travis County, Texas (the “Texas State Court Action”) alleging that the directors of Everi Games Holding breached their fiduciary duties in connection with the Merger. The complaints further alleged that Everi Holdings and its formerly wholly-owned merger subsidiary, Merger Sub, aided and abetted those purported breaches of fiduciary duty.
The parties agreed to settle all claims asserted in the Texas Federal Action. Everi Games Holding agreed to make certain additional disclosures in its proxy statement related to the Merger, and made those disclosures in a Current Report on Form 8-K filed on November 21, 2014. In addition, the defendants agreed not to oppose plaintiffs’ application for an attorneys’ fee award of up to $310,000. The court in the Texas Federal Action approved the settlement, awarded attorneys’ fees of $310,000, and entered judgment. The deadline to file any appeal from the judgment has expired and no appeal has been filed.
The judgment in the Texas Federal Action includes a release of the claims asserted in the Texas State Court Action. The Texas State Court Action has been dismissed with prejudice.
Alabama Litigation
The Company is currently involved in one lawsuit related to Everi Games Holding’s former charity bingo operations in the State of Alabama, which we believe is not material from a damages perspective. The lawsuit is currently pending in federal court and includes claims related to the alleged illegality of electronic charity bingo in the State of Alabama.
 
Ozetta Hardy v. Whitehall Gaming Center, LLC, et al., a civil action, was filed against Whitehall Gaming Center, LLC (an entity that does not exist), Cornerstone Community Outreach, Inc., and Freedom Trail Ventures, Ltd., in the Circuit Court of Lowndes County, Alabama. On June 3, 2010, Everi Games Holding and other manufacturers were added as

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defendants. The plaintiffs, who claim to have been patrons of White Hall, allege that Everi Games participated in gambling operations that violated Alabama state law by supplying to White Hall purportedly unlawful electronic bingo machines played by the plaintiffs, and the plaintiffs seek recovery of the monies lost on all electronic bingo games played by the plaintiffs in the six months prior to the filing of the complaint under Ala. Code, Sec 8-1-150(A). The plaintiffs requested that the court certify the action as a class action. On July 2, 2010, the defendants removed the case to the United States District Court for the Middle District of Alabama, Northern Division. The court has not ruled on the plaintiffs' motion for class certification. The Company continues to vigorously defend this matter. Given the inherent uncertainties in this litigation, however, the Company is unable to make any prediction as to the ultimate outcome.
 
We are also subject to other claims and suits that arise from time to time in the ordinary course of business. We do not believe the liabilities, if any, which may ultimately result from the outcome of such matters, individually or in the aggregate, will have a material adverse impact on our financial position, liquidity or results of operations.
 
14. SHAREHOLDERS’ EQUITY
Preferred Stock.  Our amended and restated certificate of incorporation, as amended, allows our Board of Directors, without further action by stockholders, to issue up to 50,000,000 shares of preferred stock in one or more series and to fix the designations, powers, preferences, privileges and relative participating, optional, or special rights as well as the qualifications, limitations or restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences. As of December 31, 2015 and 2014, we had no shares of preferred stock outstanding.
Common Stock.  Subject to the preferences that may apply to shares of preferred stock that may be outstanding at the time, the holders of outstanding shares of common stock are entitled to receive dividends out of assets legally available at the times and in the amounts as our Board of Directors may from time to time determine. All dividends are non-cumulative. In the event of the liquidation, dissolution or winding up of Everi, the holders of common stock are entitled to share ratably in all assets remaining after the payment of liabilities, subject to the prior distribution rights of preferred stock, if any, then outstanding. Each stockholder is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Cumulative voting for the election of directors is not provided for. The common stock is not entitled to preemptive rights and is not subject to conversion or redemption. There are no sinking fund provisions applicable to the common stock. Each outstanding share of common stock is fully paid and non-assessable. As of December 31, 2015 and 2014, we had 90,877,273 and 90,405,450 shares of common stock issued, respectively.
Common Stock Repurchase Program.  There were no share repurchases for the year ended December 31 , 2015. Our most recent share repurchase program commenced in the first quarter of 2013 and expired at the end of the fourth quarter of 2014, wherein we repurchased approximately 1.5 million shares of common stock for cash of approximately $11.7 million under the share repurchase program for the year ended December 31, 2014.
Treasury Stock. Employees may direct us to withhold vested shares of restricted stock to satisfy the minimum statutory withholding requirements applicable to their restricted stock vesting. We repurchased or withheld from restricted stock awards 32,617 and 55,502 shares of common stock at an aggregate purchase price of $0.2 million and $0.5 million, for the years ended December 31, 2015 and 2014, respectively, to satisfy the minimum applicable tax withholding obligations related to the vesting of such restricted stock awards.

 

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15. WEIGHTED AVERAGE SHARES OF COMMON STOCK
The weighted average number of common stock outstanding used in the computation of basic and diluted earnings per share is as follows (in thousands):

 	 	 	 	 	 	 	 	
 	 	At December 31,	 	
 	    	2015	    	2014	    	2013	 	
Weighted average shares	 	 	 	 	 	 	 	
Weighted average number of common shares outstanding - basic	 	
65,854	 	
65,780	 	
66,014	 	
Potential dilution from equity grants (1)	 	 —	 	
1,083	 	
1,191	 	
Weighted average number of common shares outstanding - diluted	 	
65,854	 	
66,863	 	
67,205	 	

	(1)		The Company was in a net loss position for the year ended December 31, 2015, and therefore, potential dilution from the application of the treasury stock method was not applicable. The potential dilution excludes the weighted average effect of equity awards to acquire 7.6  million and 5.9  million shares of our common stock at December 31, 2014 and 2013, respectively, as the application of the treasury stock method, as required, makes them anti ‑dilutive.	
 
16. SHARE ‑BASED COMPENSATION
Equity Incentive Awards
 
Our 2014 Equity Incentive Plan (the “2014 Plan”) is used to attract and retain the best available personnel, to provide additional incentives to employees, directors and consultants and to promote the success of our business.  The 2014 Plan superseded the then current 2005 Stock Incentive Plan (the “2005 Plan”). The 2014 Plan is administered by the Compensation Committee of our Board of Directors, which has the authority to select individuals who are to receive options or other equity incentive awards and to specify the terms and conditions of grants of options or other equity incentive awards, the vesting provisions, the term and the exercise price.
 
Generally, we grant the following award types: (a) time-based options, (b) cliff-vesting time-based options, (c) market-based options, and (d) restricted stock.   These awards have varying vesting provisions and expiration periods. For the year ended December 31, 2015, we granted time-based options and market-based options.  
 
Our time-based stock options granted under the 2014 Plan vest at a rate of 25% per year on each of the first four yearly anniversaries of the option grant dates. These options expire after a ten-year period.
 
Our market-based stock options granted under the 2014 Plan vest if our average stock price in any period of 30 consecutive trading days meets certain target prices during a four -year period that commenced on the date of grant for these options.  If these target prices are not met during such four-year period, the unvested shares underlying the options will terminate; however, upon the Participant’s termination of Service, if the Participant’s Service is terminated by the Company without Cause within ten days prior to, or within 18 months after, the date a Change in Control is consummated, the unvested options granted would become fully vested.  These options expire after a seven -year period.
A summary of award activity is as follows (in thousands):

 	 	 	 	 	 	
 	    	Stock Options	    	Restricted Stock	 	
 	 	Granted	 	Granted	 	
Outstanding, December 31, 2014	 	
13,626	 	
440	 	
Additional authorized shares	 	 —	 	 —	 	
Granted	 	
6,512	 	 —	 	
Exercised options or vested shares	 	
(343)	 	
(128)	 	
Canceled or forfeited	 	
(2,355)	 	
(2)	 	
Outstanding, December 31, 2015	 	
17,440	 	
310	 	

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The maximum number of shares available for future equity awards under the 2014 Plan is approximately 6.6  million shares of our common stock. There are no shares available for future equity awards under the 2005 Plan.
Stock Options
The fair value of options was determined as of the date of grant using the Black ‑Scholes option pricing model with the following weighted ‑average assumptions:

 	 	Year ended	 	
 	 	December 31,	 	
 	    	2015	    	2014	    	2013	 	
Risk-free interest rate	 	
1	%  	
1	%  	
1	%	
Expected life of options (in years)	 	
4	 	
4	 	
4	 	
Expected volatility	 	
43	%  	
54	%  	
61	%	
Expected dividend yield	 	
0	%  	
0	%  	
0	%	
 
The fair value of our cliff vesting time-based options granted in the second quarter of 2014 was determined using the Black Scholes option pricing model as of the date of grant. For the five year cliff vesting time-based options, the assumptions were: (a) risk-free interest rate of 2%; (b) expected term of five years; (c) expected volatility of 52%; and (d) no expected dividend yield. For the six year cliff vesting time-based options, the assumptions were: (a) risk-free interest rate of 2%; (b) expected term of six years; (c) expected volatility of 58%; and (d) no expected dividend yield.
The fair value of our market-based options was determined using a lattice-based option valuation model as of the date of grant. For the market-based options issued during 2015, the assumptions were: (a) risk-free interest rate of 1%; (b) measurement period of four years; (c) expected volatility of 4 7 %; and (d) no expected dividend yield. For the market-based options issued in the second quarter 2014, the assumptions were: (a) risk-free interest rate of 1%; (b) measurement period of four years; (c) expected volatility of 52%; and (d) no expected dividend yield. For the market-based options issued in the first quarter 2014, the assumptions were: (a) risk-free interest rate of 1%; (b) measurement period of four years; (c) expected volatility of 51%; and (d) no expected dividend yield.
The fair value of the converted options related to the Merger was recalculated upon consummation of the acquisition and it was determined that the original fair value approximated the value upon conversion and was still applicable and will continue to amortize to stock compensation expense over the remaining life of the award.
The following tables present the options activity:

 	 	 	 	 	 	 	 	 	 	 	 	
 	    	 	    	 	 	    	Weighted	    	 	 	 	
 	 	Number of	 	Weighted Average	 	Average Life	 	Aggregate	 	
 	 	Common Shares	 	Exercise Price	 	Remaining	 	Intrinsic Value	 	
 	 	(in thousands)	 	(per share)	 	(years)	 	(in thousands)	 	
Outstanding, December 31, 2014	 	
13,626	 	$	
7.64	 	
6.5	 	$	
9,148	 	
Granted	 	
6,512	 	 	
7.68	 	 	 	 	 	 	
Exercised	 	
(343)	 	 	
5.35	 	 	 	 	 	 	
Canceled or forfeited	 	
(2,355)	 	 	
9.82	 	 	 	 	 	 	
Outstanding, December 31, 2015	 	
17,440	 	$	
7.41	 	
6.6	 	$	
1,212	 	
Vested and expected to vest, December 31, 2015	 	
14,503	 	$	
7.35	 	
6.4	 	$	
1,212	 	
Exercisable, December 31, 2015	 	
6,908	 	$	
7.13	 	
4.4	 	$	
1,212	 	

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 	 	 	 	 	 	Options Outstanding	 	Options Exercisable	 	
 	 	    	 	 	    	 	    	Weighted	    	 	 	    	 	    	 	 	 	
 	 	 	 	 	 	 	 	Average	 	Weighted	 	 	 	Weighted	 	
 	 	 	 	 	 	Number	 	Remaining	 	Average	 	Number	 	Average	 	
 	 	 	 	 	 	Outstanding	 	Contract	 	Exercise	 	Exercisable	 	Exercise	 	
Range of Exercise Prices	 	(000’s)	 	Life (Years)	 	Prices	 	(000’s)	 	Price	 	
$	 —	 	$	
5.99	 	
2,195	 	
5.4	 	$	
4.43	 	
2,104	 	$	
4.40	 	
 	
6.00	 	 	
8.99	 	
13,973	 	
7.2	 	 	
7.54	 	
3,535	 	 	
7.33	 	
 	
9.00	 	 	
12.99	 	
1,007	 	
1.9	 	 	
9.99	 	
1,004	 	 	
9.99	 	
 	
13.00	 	 	
13.99	 	
5	 	
0.6	 	 	
13.79	 	
5	 	 	
13.79	 	
 	
14.00	 	 	
14.99	 	
60	 	
1.4	 	 	
14.58	 	
60	 	 	
14.58	 	
 	
15.00	 	 	
15.99	 	
100	 	
0.7	 	 	
15.08	 	
100	 	 	
15.08	 	
 	
16.00	 	 	
18.99	 	
100	 	
0.8	 	 	
16.05	 	
100	 	 	
16.05	 	
 	 	 	 	 	 	
17,440	 	 	 	 	 	 	
6,908	 	 	 	 	
 
There were 6.5 million, 6.6 million and 1.2 million options granted for the years ended December 31, 2015, 2014 and 2013, respectively. The weighted average grant date fair value per share of the options granted was $2.48 ,   $3.20 and $3.31 for the years ended December 31, 2015, 2014 and 2013, respectively. The total intrinsic value of options exercised was $0.8  million, $2.8  million and $4.6  million for the years ended December 31, 2015, 2014 and 2013, respectively.
There was $18.1  million in unrecognized compensation expense related to options expected to vest as of December 31, 2015. This cost was expected to be recognized on a straight ‑line basis over a weighted average period of 2.6 years. We received $1.8  million in proceeds from the exercise of options and recorded $7.4  million in non ‑cash compensation expense related to options granted that were expected to vest for the year ended and as of December 31, 2015.
We recorded $7.6  million and $4.4  million in non ‑cash compensation expense related to options granted that were expected to vest as of December 31, 2014 and 2013, respectively. We received $5.3  million and $8.4  million in cash from the exercise of options for the years ended December 31, 2014 and 2013, respectively.
Restricted Stock
The following is a summary of non ‑vested share awards for our time ‑based restricted shares:

 	 	 	 	 	 	 	
 	    	 	    	Weighted	 	
 	 	Shares	 	Average Grant	 	
 	 	Outstanding	 	Date Fair Value	 	
 	 	(in thousands)	 	(per share)	 	
Outstanding, December 31, 2014	 	
440	 	$	
7.11	 	
Granted	 	 —	 	 	 —	 	
Vested	 	
(128)	 	 	
7.11	 	
Forfeited	 	
(2)	 	 	
7.09	 	
Outstanding, December 31, 2015	 	
310	 	$	
7.11	 	
 
There were no shares of restricted stock granted for the year ended December 31, 2015 but 0.3 million and 0.4 million shares of restricted stock were granted for the years ended December 31, 2014, and 2013, respectively. The weighted average grant date fair value per share of restricted stock granted was $7.12 and $7.09 for the years ended December 31, 2014 and 2013. The total fair value of restricted stock vested was $0.6 million,   $1.4 million and $0.7 million for the years ended December 31, 2015, 2014 and 2013 respectively.
There was $2.0  million in unrecognized compensation expense related to shares of time ‑based restricted shares expected to vest as of December 31, 2015 and is expected to be recognized on a straight ‑line basis over a weighted average period of 2.4  years. There were 0.2 million shares, 0.2 million shares and 0.1 million shares of restricted stock that vested and we recorded $0.9  million, $1.2 million and $0.7 million in non ‑cash compensation expense related to the restricted stock granted that was expected to vest during 2015, 2014, and 2013, respectively.

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17. INCOME TAXES
The following presents consolidated (loss) income before tax for domestic and foreign operations (in thousands):

 
 	 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended December 31,	 	
 	 	2015	    	2014	    	2013	 	
Consolidated (loss) income before tax	 	 	 	 	 	 	 	 	 	 	
Domestic	 	$	
(129,602)	 	$	
13,870	 	$	
35,473	 	
Foreign	 	 	
6,519	 	 	
6,431	 	 	
3,412	 	
Total	 	$	
(123,083)	 	$	
20,301	 	$	
38,885	 	
The income tax (benefit) provision attributable to (loss) income from operations before tax consists of the following components (in thousands):

 	 	Year Ended December 31,	 	
 	 	2015	    	2014	    	2013	 	
Income tax (benefit) provision	 	 	 	 	 	 	 	 	 	 	
Domestic	 	$	
(19,746)	 	$	
6,637	 	$	
13,626	 	
Foreign	 	 	
1,635	 	 	
1,524	 	 	
861	 	
Total income tax (benefit) provision	 	$	
(18,111)	 	$	
8,161	 	$	
14,487	 	
Income tax provision components	 	 	 	 	 	 	 	 	 	 	
Current	 	$	
1,767	 	$	
1,598	 	$	
844	 	
Deferred	 	 	
(19,878)	 	 	
6,563	 	 	
13,643	 	
Total income tax (benefit) provision	 	$	
(18,111)	 	$	
8,161	 	$	
14,487	 	
 
A reconciliation of the federal statutory rate and the effective income tax rate is as follows:

 
 	 	 	 	 	 	 	 	
 	 	Year Ended	 	
 	 	December 31,	 	
 	    	2015	    	2014	    	2013	 	
Income tax reconciliation	 	 	 	 	 	 	 	
Federal statutory rate	 	
35.0	%  	
35.0	%  	
35.0	%	
Foreign provision	 	
0.6	%  	
(3.6)	%  	
(1.0)	%	
State/province income tax	 	
1.1	%  	
0.9	%  	
1.3	%	
Non-deductible compensation cost	 	
(1.1)	%  	
0.7	%  	
1.1	%	
Non-deductible acquisition cost	 	
0.0	%	
5.9	%	
0.0	%	
Adjustment to carrying value	 	
0.6	%  	
1.9	%  	
0.3	%	
Research credit	 	
0.6	%  	
0.0	%  	
0.0	%  	
Goodwill impairment	 	
(21.3)	%  	
0.0	%  	
0.0	%  	
Other	 	
(0.8)	%  	
(0.6)	%  	
0.6	%	
Effective tax rate	 	
14.7	%  	
40.2	%  	
37.3	%	

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The major tax ‑effected components of the deferred tax assets and liabilities are as follows (in thousands):

 	 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended December 31,	 	
 	 	2015	    	2014	    	2013	 	
Deferred income tax assets related to:	 	 	 	 	 	 	 	 	 	 	
Intangibles	 	$	 —	 	$	 —	 	$	
44,845	 	
Net operating losses	 	 	
81,531	 	 	
64,357	 	 	
37,333	 	
Stock compensation expense	 	 	
10,212	 	 	
8,841	 	 	
7,066	 	
Accounts receivable allowances	 	 	
1,444	 	 	
1,613	 	 	
1,703	 	
Accrued and prepaid expenses	 	 	
3,958	 	 	
7,917	 	 	
1,331	 	
Long-term debt	 	 	
300	 	 	
290	 	 	
348	 	
Other	 	 	
658	 	 	
373	 	 	
406	 	
Tax credits	 	 	
5,896	 	 	
5,146	 	 	 —	 	
Property, equipment and leasehold improvements	 	 	 —	 	 	 —	 	 	
333	 	
Valuation allowance	 	 	
(1,442)	 	 	
(2,319)	 	 	
(1,379)	 	
Total deferred income tax assets	 	$	
102,557	 	$	
86,218	 	$	
91,986	 	
Deferred income tax liabilities related to:	 	 	 	 	 	 	 	 	 	 	
Property, equipment and leased assets	 	 	
18,274	 	$	
23,785	 	$	 —	 	
Intangibles	 	 	
108,727	 	 	
109,103	 	 	 —	 	
Other	 	 	
3,200	 	 	
1,072	 	 	
942	 	
Total deferred income tax liabilities	 	 	
130,201	 	$	
133,960	 	$	
942	 	
Deferred income taxes, net	 	$	
(27,644)	 	$	
(47,742)	 	$	
91,044	 	
 
The Company prospectively adopted the provisions of ASU No. 2015-17 as of December 31, 2015. The adoption of the provision caused us to reclassify current deferred tax assets to noncurrent (netted within noncurrent liabilities) on our Consolidated Balance Sheets. The prior reporting period was not retrospectively adjusted.
 
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):

 	 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended December 31,	 	
 	    	2015	    	2014	    	2013	 	
Unrecognized tax benefit	 	 	 	 	 	 	 	 	 	 	
Unrecognized tax benefit at the beginning of the period	 	$	
729	 	$	 —	 	$	 —	 	
Gross increases - tax positions in prior period	 	 	 —	 	 	 —	 	 	 —	 	
Gross decreases - tax positions in prior period	 	 	 —	 	 	 —	 	 	 —	 	
Gross increases - tax positions in current period	 	 	 —	 	 	
729	 	 	 —	 	
Settlements	 	 	 —	 	 	 —	 	 	 —	 	
Unrecognized tax benefit at the end of the period	 	$	
729	 	$	
729	 	$	 —	 	
 
For all of our investments in foreign subsidiaries, except for GCA (Macau), deferred taxes have not been provided on unrepatriated foreign earnings. Unrepatriated earnings were approximately $17.1 million as of December 31, 2015. These earnings were considered permanently reinvested, as it was management’s intention to reinvest foreign earnings in foreign operations. We project sufficient cash flow or sufficient borrowings available under our Credit Facilities in the U.S. and therefore do not need to repatriate these foreign earnings to finance U.S. operations at this time.
 
As a result of certain realization requirements under the accounting guidance on share based payments, the table of deferred tax assets and liabilities shown above does not include certain deferred tax assets that arose directly from tax deductions related to equity compensation in excess of compensation recognized for financial reporting at December 31, 2015, 2014 and 2013, respectively. Equity will be increased by $4.6 million if, and when, such deferred tax assets are ultimately realized. We use the accounting guidance on income taxes ordering for purposes of determining when excess tax benefits have been realized.
 
We had $218.8 million, or $76.6 million, tax effected , of accumulated federal net operating losses as of December 31,

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2015. The net operating losses can be carried forward and applied to offset taxable income for 20 years and will expire starting in 2024.   We had $4.3 million, tax effected, of federal research and development credit carry forwards and $1.6 million of federal alternative minimum tax credit carry forwards as of December 31, 2015. The research and development credits are limited to a 20 year carry forward period and will expire starting in 2033. The federal alternative minimum tax credit carry forwards do not expire.
 
We had tax effected state net operating loss carry forwards of approximately $9.4 million as of December 31, 2015. The state net operating loss carry forwards will expire between 2016 and 2036. The determination and utilization of these state net operating loss carry forwards are dependent upon apportionment percentages and other respective state laws, which can change from year to year. As of December 31, 2015, $1.2 million of our valuation allowance relates to certain state net operating loss carry forwards which are expected to expire before utilization, due to shorter carry forward periods and decreased apportionment percentages in those states. The remaining valuation allowance of $0.2 million relates to foreign net operating losses.
 
We recognized a deferred tax asset upon our conversion from a limited liability company to a corporation on May 14, 2004. Prior to that time, all tax attributes flowed through to the members of the limited liability company. The principal component of the deferred tax asset is a difference between our assets for financial accounting and tax purposes. This difference results from a significant balance of acquired goodwill of approximately $687.4 million that was generated as part of the conversion to a corporation plus approximately $97.6 million in pre-existing goodwill carried over from periods prior to the conversion. Both of these assets are recorded for tax purposes but not for accounting purposes. This asset is amortized over 15 years for tax purposes, resulting in annual pretax income being $52.3 million lower for tax purposes than for financial accounting purposes. At an estimated blended domestic statutory tax rate of 37.2%, this results in tax payments being approximately $19.5 million less than the annual provision for income taxes shown on the income statement for financial accounting purposes, or the amount of the annual provision, if less. There is an expected aggregate of $64.9 million in cash savings over the remaining life of the portion of our deferred tax asset related to the conversion. This deferred tax asset may be subject to certain limitations. We believe that it is more likely than not that we will be able to utilize our deferred tax asset. However, the utilization of this tax asset is subject to many factors including, but not limited to, a change of control of the Company and future earnings.
 
We have analyzed filing positions in all of the federal, state and foreign jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. As part of the Merger in 2014, the Company recorded $0.7 million of unrecognized tax benefits. The Company has not accrued any penalties and interest for its unrecognized tax benefits. Other than the unrecognized tax benefit related to the Merger, we believe that our income tax filing positions and deductions will be sustained upon audit and we do not anticipate any other adjustments that will result in a material change to our financial position. We may from time to time be assessed interest or penalties by tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. Our policy for recording interest and penalties associated with audits and unrecognized tax benefits is to record such items as a component of income tax expense.
 
We are subject to taxation in the U.S. and various states and foreign jurisdictions. We have a number of federal and state income tax years still open for examination as a result of our net operating loss carry forwards. Accordingly, we are subject to examination for both U.S. federal and some of the state tax returns for the years 2004 to present. For the remaining state, local and foreign jurisdictions, with some exceptions, we are no longer subject to examination by tax authorities for years before 2012.
 
18 .   RELATED PARTY TRANSACTIONS
A member of our Board of Directors served as a member of the board of directors of a gaming company until April 2013 for which we provide various cash access products and services that are insignificant to our net income. This board member received customary both cash and equity compensation from this gaming company in consideration for serving on its board of directors, however, none of this consideration was tied in any manner to our performance or obligations under our cash access agreements with the gaming company. In addition, this board member was not involved in the negotiation of our cash access agreements with this gaming company.

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In October 2012, we entered into a long-term lease agreement related to office space for our corporate headquarters in which we moved into during the first half of 2013. We had engaged a brokerage firm in connection with the search for our corporate headquarters. An executive officer of this brokerage firm is the brother of our former Chief Financial Officer. This brokerage firm received approximately $0.4 million as compensation for acting as our broker.
 
1 9 . SEGMENT INFORMATION
Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-making group in deciding how to allocate resources and in assessing performance. Our chief operating decision-making group consists of the Chief Executive Officer and the Chief Financial Officer . This group manages the business, allocates resources and measures profitability based on our operating segments. The operating segments are reviewed separately because each represents products that can be sold separately to our customers.
Since the most recent filing of our Annual Report on Form 10-K for the year ended December 31, 2014 , and in connection with the Merger, our chief operating decision-making group has determined the following to be the operating segments for which we conduct business: (a) Games, and (b) Payments. Therefore, beginning in the first quarter of 2015, we are reporting our financial performance based on our new segments in both the current and prior period s. This change had no impact on our consolidated financial statements. Each of these segments is monitored by our management for performance against its internal forecast and is consistent with our internal management reporting.  

	·		The Games segment provides solutions directly to gaming establishments to offer their patrons gaming entertainment related experiences including: leased gaming equipment; sales and maintenance related services of gaming equipment; gaming systems; and ancillary products and services.	
 
	·		The Payments segment provides solutions directly to gaming establishments to offer their patrons cash access related services and products including: access to cash at gaming facilities via ATM cash withdrawals, credit card cash access transactions and point of sale debit card transactions; check-related services; fully integrated kiosks and maintenance services; compliance, audit and data software; casino credit data and reporting services and other ancillary offerings.	
 
Corporate overhead expenses have been allocated to the segments either through specific identification or based on a reasonable methodology. In addition, we allocate depreciation and amortization expenses to the business segments.
 
Our business is predominantly domestic, with no specific regional concentrations and no significant assets in foreign locations.
The accounting policies of the operating segments are generally the same as those described in the summary of significant accounting policies.
 
T he following tables present segment information (in thousands):

 	 	For the Year Ended December 31,	 	
 	 	2015	    	2014	 	2013	 	
 	 	 	 	 	 	 	 	 	 	 	
Revenues	 	 	 	 	 	 	 	 	 	 	
Games	 	$	
214,424	 	$	
7,406	 	$	 —	 	
Payments	 	 	
612,575	 	 	
585,647	 	 	
582,444	 	
Total revenues	 	$	
826,999	 	$	
593,053	 	$	
582,444	 	
 	 	 	 	 	 	 	 	 	 	 	
Operating (loss) income	 	 	 	 	 	 	 	 	 	 	
Games	 	$	
(73,503)	 	$	
(1,423)	 	$	 —	 	
Payments	 	 	
63,773	 	 	
35,205	 	 	
49,150	 	
Total operating (loss) income	 	$	
(9,730)	 	$	
33,782	 	$	
49,150	 	

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 	 	At	
 	 	December 31, 2015	   	December 31, 2014	
Total assets	 	 	 	 	 	 	
Games	 	$	
1,086,147	 	$	
1,242,822	
Payments	 	 	
487,918	 	 	
464,463	
Total assets	 	$	
1,574,065	 	$	
1,707,285	
 
Major customers.  For the years ended December 31, 2015, 2014 and 2013, no single customer accounted for more than 10% of our revenues. Our five largest customers accounted for approximately 30% ,   28% and 33% of our total revenue in 2015, 2014 and 2013, respectively.

 
20 .   SELECTED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The unaudited selected quarterly results of operations are as follows (in thousands, except for per share amounts):

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Quarter	 	
 	 	First	    	Second	    	Third	    	Fourth	    	Year	 	
2015	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	 	$	
207,473	 	$	
206,364	 	$	
208,746	 	$	
204,416	 	$	
826,999	 	
Operating income (loss)	 	 	
28,141	 	 	
16,336	 	 	
14,716	 	 	
(68,923)	 	 	
(9,730)	 	
Net income (loss)	 	 	
469	 	 	
(12,741)	 	 	
(6,110)	 	 	
(86,590)	 	 	
(104,972)	 	
Basic earnings (loss) per share	 	$	
0.01	 	$	
(0.19)	 	$	
(0.09)	 	$	
(1.31)	 	$	
(1.59)	 	
Diluted earnings (loss) per share	 	$	
0.01	 	$	
(0.19)	 	$	
(0.09)	 	$	
(1.31)	 	$	
(1.59)	 	
Weighted average common shares outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	
65,623	 	 	
65,844	 	 	
65,941	 	 	
66,004	 	 	
65,854	 	
Diluted	 	 	
66,492	 	 	
65,844	 	 	
65,941	 	 	
66,004	 	 	
65,854	 	
2014	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	 	$	
150,571	 	$	
144,946	 	$	
145,481	 	$	
152,055	 	$	
593,053	 	
Operating income	 	 	
13,013	 	 	
9,622	 	 	
10,771	 	 	
376	 	 	
33,782	 	
Net income (loss)	 	 	
7,489	 	 	
4,724	 	 	
5,676	 	 	
(5,749)	 	 	
12,140	 	
Basic earnings (loss) per share	 	$	
0.11	 	$	
0.07	 	$	
0.09	 	$	
(0.09)	 	$	
0.18	 	
Diluted earnings (loss) per share	 	$	
0.11	 	$	
0.07	 	$	
0.09	 	$	
(0.09)	 	$	
0.18	 	
Weighted average common shares outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	
65,910	 	 	
65,970	 	 	
65,589	 	 	
65,608	 	 	
65,780	 	
Diluted	 	 	
67,370	 	 	
67,087	 	 	
66,747	 	 	
66,397	 	 	
66,863	 	

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21. CONDENSED CONSOLIDATING FINANCIAL INFORMATION
We conduct substantially all of our business through our U.S. and foreign subsidiaries. Everi Payments’ (“Subsidiary Issuer”) obligations under the Unsecured Notes are fully and unconditionally guaranteed, subject to certain customary release provisions, on a joint and several basis by Holdings (“Parent”) and substantially all of our 100%-owned U.S. subsidiaries other than Subsidiary Issuer (the “Guarantor Subsidiaries” and, together with Parent, the “Guarantors” and each a “Guarantor” ). The guarantees of our Unsecured Notes will be released under the following customary circumstances: (i) the sale or disposition of all or substantially all of the assets of the Guarantor (by way of merger, consolidation, or otherwise) to a person that is not (either before or after giving effect to such transaction) Parent, Subsidiary Issuer or a restricted subsidiary; (ii) the sale or disposition of sufficient capital stock of the Guarantor to a person that is not (either before or after giving effect to such transaction) Parent, Subsidiary Issuer or a restricted subsidiary and the Guarantor ceases to be a restricted subsidiary of Subsidiary Issuer as a result of the sale or other disposition; (iii) the designation of the Guarantor as an unrestricted subsidiary in accordance with the Indenture; or (iv) the legal or covenant defeasance of the Unsecured Notes or the satisfaction and discharge of the Indenture.
Presented below is condensed consolidating financial information for (a) Parent, (b) Subsidiary Issuer, (c) the Guarantor Subsidiaries and (d) our U.S. subsidiaries that are not Guarantor Subsidiaries and our foreign subsidiaries (collectively, the “Non-Guarantor Subsidiaries”) as of December 31, 2015 and December 31, 2014 and for the years ended December 31, 2015, 2014 and 2013. The condensed consolidating financial information has been presented to show the nature of assets held and the results of operations and cash flows of Parent, Subsidiary Issuer, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries assuming that the guarantee structure of the Unsecured Notes had been in effect at the beginning of the periods presented.

 	Year Ended December 31, 2015	
 	Parent	    	Subsidiary
Issuer	    	Guarantor
Subsidiaries	    	Non-Guarantor
Subsidiaries	    	Eliminations	    	Total	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	$	 —	 	$	
566,634	 	$	
243,974	 	$	
17,219	 	$	
(828)	 	$	
826,999	
Costs and expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of revenues (exclusive of depreciation and amortization)	 	 —	 	 	
444,990	 	 	
56,382	 	 	
9,025	 	 	 —	 	 	
510,397	
Operating expenses	 	 —	 	 	
61,615	 	 	
38,554	 	 	
1,861	 	 	
(828)	 	 	
101,202	
Research and development	 	 —	 	 	 —	 	 	
19,098	 	 	 —	 	 	 —	 	 	
19,098	
Goodwill impairment	 	 —	 	 	 —	 	 	
75,008	 	 	 —	 	 	 —	 	 	
75,008	
Depreciation	 	 —	 	 	
7,635	 	 	
37,734	 	 	
182	 	 	 —	 	 	
45,551	
Amortization	 	 —	 	 	
9,842	 	 	
73,195	 	 	
2,436	 	 	 —	 	 	
85,473	
Total costs and expenses	 	 —	 	 	
524,082	 	 	
299,971	 	 	
13,504	 	 	
(828)	 	 	
836,729	
Operating income (loss)	 	 —	 	 	
42,552	 	 	
(55,997)	 	 	
3,715	 	 	 —	 	 	
(9,730)	
Other expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense, net of interest income	 	 —	 	 	
7,639	 	 	
92,343	 	 	
308	 	 	 —	 	 	
100,290	
Income (loss) from subsidiaries	 	
104,972	 	 	
(13,777)	 	 	 —	 	 	 —	 	 	
(91,195)	 	 	 —	
Loss on extinguishment of debt	 	 —	 	 	
13,063	 	 	 —	 	 	 —	 	 	 —	 	 	
13,063	
Total other expenses	 	
104,972	 	 	
6,925	 	 	
92,343	 	 	
308	 	 	
(91,195)	 	 	
113,353	
(Loss) income from operations before tax	 	
(104,972)	 	 	
35,627	 	 	
(148,340)	 	 	
3,407	 	 	
91,195	 	 	
(123,083)	
Income tax provision (benefit)	 	 —	 	 	
8,342	 	 	
(27,673)	 	 	
1,220	 	 	 —	 	 	
(18,111)	
Net (loss) income	 	
(104,972)	 	 	
27,285	 	 	
(120,667)	 	 	
2,187	 	 	
91,195	 	 	
(104,972)	
Foreign currency translation	 	
(1,251)	 	 	 —	 	 	 —	 	 	
(1,251)	 	 	
1,251	 	 	
(1,251)	
Comprehensive (loss) income	$	
(106,223)	 	$	
27,285	 	$	
(120,667)	 	$	
936	 	$	
92,446	 	$	
(106,223)	

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 	Year Ended December 31, 2014	
 	Parent	    	Subsidiary
Issuer	    	Guarantor
Subsidiaries	    	Non-Guarantor
Subsidiaries	    	Eliminations	    	Total	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	$	 —	 	$	
542,206	 	$	
35,689	 	$	
15,891	 	$	
(733)	 	$	
593,053	
Costs and expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of revenues (exclusive of depreciation and amortization)	 	 —	 	 	
422,544	 	 	
10,864	 	 	
6,663	 	 	 —	 	 	
440,071	
Operating expenses	 	 —	 	 	
88,087	 	 	
5,719	 	 	
2,379	 	 	
(733)	 	 	
95,452	
Research and development	 	 —	 	 	 —	 	 	
804	 	 	 —	 	 	 —	 	 	
804	
Depreciation	 	 —	 	 	
7,428	 	 	
1,134	 	 	
183	 	 	 —	 	 	
8,745	
Amortization	 	 —	 	 	
11,180	 	 	
2,454	 	 	
565	 	 	 —	 	 	
14,199	
Total costs and expenses	 	 —	 	 	
529,239	 	 	
20,975	 	 	
9,790	 	 	
(733)	 	 	
559,271	
Operating income	 	 —	 	 	
12,967	 	 	
14,714	 	 	
6,101	 	 	 —	 	 	
33,782	
Other (income) expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense, net of interest income	 	 —	 	 	
7,675	 	 	
3,290	 	 	
(209)	 	 	 —	 	 	
10,756	
Income from subsidiaries	 	
(12,140)	 	 	
(15,218)	 	 	 —	 	 	 —	 	 	
27,358	 	 	 —	
Loss on extinguishment of debt	 	 —	 	 	
2,523	 	 	
202	 	 	 —	 	 	 —	 	 	
2,725	
Total other (income) expense	 	
(12,140)	 	 	
(5,020)	 	 	
3,492	 	 	
(209)	 	 	
27,358	 	 	
13,481	
Income from operations before tax	 	
12,140	 	 	
17,987	 	 	
11,222	 	 	
6,310	 	 	
(27,358)	 	 	
20,301	
Income tax expense	 	 —	 	 	
2,801	 	 	
3,784	 	 	
1,576	 	 	 —	 	 	
8,161	
Net income	 	
12,140	 	 	
15,186	 	 	
7,438	 	 	
4,734	 	 	
(27,358)	 	 	
12,140	
Foreign currency translation	 	
(1,258)	 	 	 —	 	 	 —	 	 	
(1,258)	 	 	
1,258	 	 	
(1,258)	
Comprehensive income	$	
10,882	 	$	
15,186	 	$	
7,438	 	$	
3,476	 	$	
(26,100)	 	$	
10,882	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Year Ended December 31, 2013	
 	Parent	    	Subsidiary
Issuer	    	Guarantor
Subsidiaries	    	Non-Guarantor
Subsidiaries	    	Eliminations	    	Total	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	$	 —	 	$	
541,002	 	$	
28,277	 	$	
13,838	 	$	
(673)	 	$	
582,444	
Costs and expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of revenues (exclusive of depreciation and amortization)	 	 —	 	 	
424,129	 	 	
7,905	 	 	
7,760	 	 	 —	 	 	
439,794	
Operating expenses	 	 —	 	 	
71,623	 	 	
3,445	 	 	
2,167	 	 	
(673)	 	 	
76,562	
Depreciation	 	 —	 	 	
7,186	 	 	
1	 	 	
163	 	 	 —	 	 	
7,350	
Amortization	 	 —	 	 	
9,217	 	 	 —	 	 	
371	 	 	 —	 	 	
9,588	
Total costs and expenses	 	 —	 	 	
512,155	 	 	
11,351	 	 	
10,461	 	 	
(673)	 	 	
533,294	
Operating income	 	 —	 	 	
28,847	 	 	
16,926	 	 	
3,377	 	 	 —	 	 	
49,150	
Other expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense, net of interest income	 	 —	 	 	
10,342	 	 	 —	 	 	
(77)	 	 	 —	 	 	
10,265	
Income from subsidiaries	 	
(24,398)	 	 	
(13,596)	 	 	 —	 	 	 —	 	 	
37,994	 	 	 —	
Total other expenses	 	
(24,398)	 	 	
(3,254)	 	 	 —	 	 	
(77)	 	 	
37,994	 	 	
10,265	
Income from operations before tax	 	
24,398	 	 	
32,101	 	 	
16,926	 	 	
3,454	 	 	
(37,994)	 	 	
38,885	
Income tax provision	 	 —	 	 	
7,703	 	 	
5,924	 	 	
860	 	 	 —	 	 	
14,487	
Net income	 	
24,398	 	 	
24,398	 	 	
11,002	 	 	
2,594	 	 	
(37,994)	 	 	
24,398	
Foreign currency translation	 	
269	 	 	 —	 	 	 —	 	 	
269	 	 	
(269)	 	 	
269	
Comprehensive income	$	
24,667	 	$	
24,398	 	$	
11,002	 	$	
2,863	 	$	
(38,263)	 	$	
24,667	

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 	At December 31, 2015	
 	Parent	    	Subsidiary
Issuer	    	Guarantor
Subsidiaries	    	Non-Guarantor
Subsidiaries	    	Eliminations	    	Total	
ASSETS	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	$	
6	 	$	
87,078	 	$	
3,900	 	$	
11,046	 	$	 —	 	$	
102,030	
Settlement receivables	 	 —	 	 	
42,437	 	 	 —	 	 	
2,496	 	 	 —	 	 	
44,933	
Trade receivables, net	 	 —	 	 	
10,750	 	 	
41,634	 	 	
(2)	 	 	 —	 	 	
52,382	
Other receivables	 	 —	 	 	
4,063	 	 	
833	 	 	
32	 	 	 —	 	 	
4,928	
Inventory	 	 —	 	 	
12,772	 	 	
15,966	 	 	 —	 	 	 —	 	 	
28,738	
Prepaid expenses and other assets	 	 —	 	 	
6,464	 	 	
5,160	 	 	
9,148	 	 	 —	 	 	
20,772	
Deferred tax asset	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	
Intercompany balances	 	 —	 	 	
39,810	 	 	
168,659	 	 	
1,431	 	 	
(209,900)	 	 	 —	
Total current assets	 	
6	 	 	
203,374	 	 	
236,152	 	 	
24,151	 	 	
(209,900)	 	 	
253,783	
Non-current assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property, equipment and leasehold improvements, net	 	 —	 	 	
26,472	 	 	
79,514	 	 	
322	 	 	 —	 	 	
106,308	
Goodwill	 	 —	 	 	
154,395	 	 	
634,811	 	 	
597	 	 	 —	 	 	
789,803	
Other intangible assets, net	 	 —	 	 	
32,000	 	 	
343,629	 	 	
6,833	 	 	 —	 	 	
382,462	
Other receivables, non-current	 	 —	 	 	
3,256	 	 	
3,399	 	 	 —	 	 	 —	 	 	
6,655	
Investment in subsidiaries	 	
137,414	 	 	
159,735	 	 	 —	 	 	
86	 	 	
(297,235)	 	 	 —	
Deferred tax asset, non-current	 	 —	 	 	
65,577	 	 	 —	 	 	 —	 	 	
(65,577)	 	 	 —	
Other assets, non-current	 	 —	 	 	
30,936	 	 	
3,667	 	 	
451	 	 	 —	 	 	
35,054	
Intercompany balances	 	 —	 	 	
1,136,505	 	 	 —	 	 	 —	 	 	
(1,136,505)	 	 	 —	
Total non-current assets	 	
137,414	 	 	
1,608,876	 	 	
1,065,020	 	 	
8,289	 	 	
(1,499,317)	 	 	
1,320,282	
Total assets	$	
137,420	 	$	
1,812,250	 	$	
1,301,172	 	$	
32,440	 	$	
(1,709,217)	 	$	
1,574,065	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Settlement liabilities	$	 —	 	$	
136,109	 	$	
162	 	$	
3,548	 	$	 —	 	$	
139,819	
Accounts payable and accrued expenses	 	 —	 	 	
67,736	 	 	
32,593	 	 	
1,183	 	 	 —	 	 	
101,512	
Current portion of long-term debt	 	 —	 	 	
10,000	 	 	 —	 	 	 —	 	 	 —	 	 	
10,000	
Intercompany balances	 	 —	 	 	
170,091	 	 	
32,732	 	 	
7,077	 	 	
(209,900)	 	 	 —	
Total current liabilities	 	 —	 	 	
383,936	 	 	
65,487	 	 	
11,808	 	 	
(209,900)	 	 	
251,331	
Non-current liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Deferred tax liability, non-current	 	 —	 	 	 —	 	 	
93,221	 	 	 —	 	 	
(65,577)	 	 	
27,644	
Long-term debt, less current portion	 	 —	 	 	
1,153,579	 	 	 —	 	 	 —	 	 	 —	 	 	
1,153,579	
Other accrued expenses and liabilities	 	 —	 	 	
3,624	 	 	
467	 	 	 —	 	 	 —	 	 	
4,091	
Intercompany balances	 	 —	 	 	 —	 	 	
1,136,505	 	 	 —	 	 	
(1,136,505)	 	 	 —	
Total non-current liabilities	 	 —	 	 	
1,157,203	 	 	
1,230,193	 	 	 —	 	 	
(1,202,082)	 	 	
1,185,314	
Total liabilities	 	 —	 	 	
1,541,139	 	 	
1,295,680	 	 	
11,808	 	 	
(1,411,982)	 	 	
1,436,645	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stockholders’ Equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Common stock	 	
91	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
91	
Additional paid-in capital	 	
258,020	 	 	
80,443	 	 	
3,670	 	 	
21,101	 	 	
(105,214)	 	 	
258,020	
Retained earnings	 	
55,180	 	 	
190,375	 	 	
1,797	 	 	
1,180	 	 	
(193,352)	 	 	
55,180	
Accumulated other comprehensive income	 	
318	 	 	
293	 	 	
25	 	 	
(1,649)	 	 	
1,331	 	 	
318	
Treasury stock, at cost	 	
(176,189)	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
(176,189)	
Total stockholders’ equity	 	
137,420	 	 	
271,111	 	 	
5,492	 	 	
20,632	 	 	
(297,235)	 	 	
137,420	
Total liabilities and stockholders’ equity	$	
137,420	 	$	
1,812,250	 	$	
1,301,172	 	$	
32,440	 	$	
(1,709,217)	 	$	
1,574,065	

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 	At December 31, 2014	
 	Parent	    	Subsidiary
Issuer	    	Guarantor
Subsidiaries	    	Non-Guarantor
Subsidiaries	    	Eliminations	    	Total	
ASSETS	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	$	 —	 	$	
68,143	 	$	
6,489	 	$	
14,463	 	$	 —	 	$	
89,095	
Settlement receivables	 	 —	 	 	
40,157	 	 	 —	 	 	
3,131	 	 	 —	 	 	
43,288	
Trade receivables, net	 	 —	 	 	
6,578	 	 	
31,116	 	 	
3	 	 	 —	 	 	
37,697	
Other receivables	 	 —	 	 	
3,416	 	 	
16,992	 	 	
145	 	 	 —	 	 	
20,553	
Inventory	 	 —	 	 	
10,595	 	 	
16,568	 	 	 —	 	 	 —	 	 	
27,163	
Prepaid expenses and other assets	 	 —	 	 	
7,143	 	 	
2,821	 	 	
9,024	 	 	 —	 	 	
18,988	
Deferred tax asset	 	 —	 	 	
2,743	 	 	
6,848	 	 	 —	 	 	 —	 	 	
9,591	
Intercompany balances	 	 —	 	 	
18,038	 	 	
151,179	 	 	
1,623	 	 	
(170,840)	 	 	 —	
Total current assets	 	 —	 	 	
156,813	 	 	
232,013	 	 	
28,389	 	 	
(170,840)	 	 	
246,375	
Non-current assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property, equipment and leasehold improvements, net	 	 —	 	 	
17,864	 	 	
87,898	 	 	
323	 	 	 —	 	 	
106,085	
Goodwill	 	 —	 	 	
148,278	 	 	
708,922	 	 	
713	 	 	 —	 	 	
857,913	
Other intangible assets, net	 	 —	 	 	
24,771	 	 	
402,816	 	 	
9,198	 	 	 —	 	 	
436,785	
Other receivables, non-current	 	 —	 	 	
4,411	 	 	
4,773	 	 	 —	 	 	 —	 	 	
9,184	
Investment in subsidiaries	 	
231,473	 	 	
147,195	 	 	 —	 	 	
86	 	 	
(378,754)	 	 	 —	
Deferred tax asset, non-current	 	 —	 	 	
78,229	 	 	 —	 	 	 —	 	 	
(78,229)	 	 	 —	
Other assets, non-current	 	 —	 	 	
47,508	 	 	
3,366	 	 	
69	 	 	 —	 	 	
50,943	
Intercompany balances	 	 —	 	 	
1,130,380	 	 	 —	 	 	 —	 	 	
(1,130,380)	 	 	 —	
Total non-current assets	 	
231,473	 	 	
1,598,636	 	 	
1,207,775	 	 	
10,389	 	 	
(1,587,363)	 	 	
1,460,910	
Total assets	$	
231,473	 	$	
1,755,449	 	$	
1,439,788	 	$	
38,778	 	$	
(1,758,203)	 	$	
1,707,285	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Settlement liabilities	$	 —	 	$	
111,375	 	$	
140	 	$	
7,642	 	$	 —	 	$	
119,157	
Accounts payable and accrued expenses	 	 —	 	 	
61,544	 	 	
41,395	 	 	
1,729	 	 	 —	 	 	
104,668	
Current portion of long-term debt	 	 —	 	 	
10,000	 	 	 —	 	 	 —	 	 	 —	 	 	
10,000	
Intercompany balances	 	 —	 	 	
152,802	 	 	
8,159	 	 	
9,879	 	 	
(170,840)	 	 	 —	
Total current liabilities	 	 —	 	 	
335,721	 	 	
49,694	 	 	
19,250	 	 	
(170,840)	 	 	
233,825	
Non-current liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Deferred tax liability, non-current	 	 —	 	 	
1,072	 	 	
134,490	 	 	 —	 	 	
(78,229)	 	 	
57,333	
Long-term debt, less current portion	 	 —	 	 	
1,178,787	 	 	 —	 	 	 —	 	 	 —	 	 	
1,178,787	
Other accrued expenses and liabilities	 	 —	 	 	
5,377	 	 	
490	 	 	 —	 	 	 —	 	 	
5,867	
Intercompany balances	 	 —	 	 	 —	 	 	
1,130,380	 	 	 —	 	 	
(1,130,380)	 	 	 —	
Total non-current liabilities	 	 —	 	 	
1,185,236	 	 	
1,265,360	 	 	 —	 	 	
(1,208,609)	 	 	
1,241,987	
Total liabilities	 	 —	 	 	
1,520,957	 	 	
1,315,054	 	 	
19,250	 	 	
(1,379,449)	 	 	
1,475,812	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stockholders’ Equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Common stock	 	
90	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
90	
Convertible preferred stock	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	
Additional paid-in capital	 	
245,682	 	 	
69,654	 	 	
2,269	 	 	
21,115	 	 	
(93,038)	 	 	
245,682	
Retained earnings	 	
160,152	 	 	
163,269	 	 	
122,465	 	 	
(1,006)	 	 	
(284,728)	 	 	
160,152	
Accumulated other comprehensive income	 	
1,569	 	 	
1,569	 	 	 —	 	 	
(581)	 	 	
(988)	 	 	
1,569	
Treasury stock, at cost	 	
(176,020)	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
(176,020)	
Total stockholders’ equity	 	
231,473	 	 	
234,492	 	 	
124,734	 	 	
19,528	 	 	
(378,754)	 	 	
231,473	
Total liabilities and stockholders’ equity	$	
231,473	 	$	
1,755,449	 	$	
1,439,788	 	$	
38,778	 	$	
(1,758,203)	 	$	
1,707,285	

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 	Year Ended December 31, 2015	
 	Parent	    	Subsidiary
Issuer	    	Guarantor
Subsidiaries	    	Non-Guarantor
Subsidiaries	    	Eliminations	    	Total	
Cash flows from operating activities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income	$	
(104,972)	 	$	
27,285	 	$	
(120,667)	 	$	
2,187	 	$	
91,195	 	$	
(104,972)	
Adjustments to reconcile net (loss) income to cash provided by operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 —	 	 	
17,477	 	 	
110,929	 	 	
2,618	 	 	 —	 	 	
131,024	
Amortization of financing costs	 	 —	 	 	
7,109	 	 	 —	 	 	 —	 	 	 —	 	 	
7,109	
Loss/(gain) on sale or disposal of assets	 	 —	 	 	
75	 	 	
(2,864)	 	 	 —	 	 	 —	 	 	
(2,789)	
Accretion of contract rights	 	 —	 	 	 —	 	 	
7,614	 	 	 —	 	 	 —	 	 	
7,614	
Provision for bad debts	 	 —	 	 	
51	 	 	
10,084	 	 	 —	 	 	 —	 	 	
10,135	
Reserve for obsolescence	 	 —	 	 	
140	 	 	
1,103	 	 	 —	 	 	 —	 	 	
1,243	
Goodwill impairment	 	 —	 	 	 —	 	 	
75,008	 	 	 —	 	 	 —	 	 	
75,008	
Loss on early extinguishment of debt	 	 —	 	 	
13,063	 	 	 —	 	 	 —	 	 	 —	 	 	
13,063	
Equity loss (income)	 	
104,972	 	 	
(13,777)	 	 	 —	 	 	 —	 	 	
(91,195)	 	 	 —	
Stock-based compensation	 	 —	 	 	
6,883	 	 	
1,401	 	 	 —	 	 	 —	 	 	
8,284	
Other non-cash items	 	 —	 	 	 —	 	 	
(149)	 	 	 —	 	 	 —	 	 	
(149)	
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net settlement receivables and liabilities	 	 —	 	 	
22,455	 	 	
22	 	 	
(3,078)	 	 	 —	 	 	
19,399	
Other changes in operating assets and liabilities	 	
(4)	 	 	
(3,299)	 	 	
(36,278)	 	 	
(801)	 	 	 —	 	 	
(40,382)	
Net cash (used in) provided by operating activities	 	
(4)	 	 	
77,462	 	 	
46,203	 	 	
926	 	 	 —	 	 	
124,587	
Cash flows from investing activities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Acquisitions, net of cash acquired	 	 —	 	 	
(10,857)	 	 	 —	 	 	 —	 	 	 —	 	 	
(10,857)	
Capital expenditures	 	 —	 	 	
(25,796)	 	 	
(51,108)	 	 	
(84)	 	 	 —	 	 	
(76,988)	
Proceeds from sale of fixed assets	 	 —	 	 	
102	 	 	
2,000	 	 	 —	 	 	 —	 	 	
2,102	
Repayments under development agreements	 	 —	 	 	 —	 	 	
3,104	 	 	 —	 	 	 —	 	 	
3,104	
Advances under development and placement agreements	 	 —	 	 	 —	 	 	
(2,813)	 	 	 —	 	 	 —	 	 	
(2,813)	
Changes in restricted cash and cash equivalents	 	 —	 	 	
(97)	 	 	 —	 	 	 —	 	 	 —	 	 	
(97)	
Intercompany investing activities	 	
(3,906)	 	 	
6,593	 	 	
25	 	 	
(9)	 	 	
(2,703)	 	 	 —	
Net cash used in investing activities	 	
(3,906)	 	 	
(30,055)	 	 	
(48,792)	 	 	
(93)	 	 	
(2,703)	 	 	
(85,549)	
Cash flows from financing activities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Repayments of credit facility	 	 —	 	 	
(10,000)	 	 	 —	 	 	 —	 	 	 —	 	 	
(10,000)	
Repayments of secured notes	 	 —	 	 	
(350,000)	 	 	 —	 	 	 —	 	 	 —	 	 	
(350,000)	
Proceeds from issuance of secured notes	 	 —	 	 	
335,000	 	 	 —	 	 	 —	 	 	 —	 	 	
335,000	
Debt issuance costs	 	 —	 	 	
(1,221)	 	 	 —	 	 	 —	 	 	 —	 	 	
(1,221)	
Issuance of warrants	 	
2,246	 	 	
(2,246)	 	 	 —	 	 	 —	 	 	 —	 	 	 —	
Proceeds from exercise of stock options	 	
1,839	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
1,839	
Purchase of treasury stock	 	
(169)	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
(169)	
Intercompany financing activities	 	 —	 	 	
(5)	 	 	 —	 	 	
(2,698)	 	 	
2,703	 	 	 —	
Net cash provided by (used in) financing activities	 	
3,916	 	 	
(28,472)	 	 	 —	 	 	
(2,698)	 	 	
2,703	 	 	
(24,551)	
Effect of exchange rates on cash	 	 —	 	 	 —	 	 	 —	 	 	
(1,552)	 	 	 —	 	 	
(1,552)	
Cash and cash equivalents	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net increase (decrease) for the period	 	
6	 	 	
18,935	 	 	
(2,589)	 	 	
(3,417)	 	 	 —	 	 	
12,935	
Balance, beginning of the period	 	 —	 	 	
68,143	 	 	
6,489	 	 	
14,463	 	 	 —	 	 	
89,095	
Balance, end of the period	$	
6	 	 	
87,078	 	 	
3,900	 	 	
11,046	 	 	 —	 	 	
102,030	

109

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 	Year Ended December 31, 2014	
 	Parent	    	Subsidiary
Issuer	    	Guarantor
Subsidiaries	    	Non-Guarantor
Subsidiaries	    	Eliminations	    	Total	
Cash flows from operating activities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	$	
12,140	 	$	
15,186	 	$	
7,438	 	$	
4,734	 	$	
(27,358)	 	$	
12,140	
Adjustments to reconcile net (loss) income to cash provided by operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 —	 	 	
18,608	 	 	
3,588	 	 	
748	 	 	 —	 	 	
22,944	
Amortization of financing costs	 	 —	 	 	
2,035	 	 	 —	 	 	 —	 	 	 —	 	 	
2,035	
Loss on sale or disposal of assets	 	 —	 	 	
54	 	 	 —	 	 	
1	 	 	 —	 	 	
55	
Accretion of contract rights	 	 —	 	 	 —	 	 	
301	 	 	 —	 	 	 —	 	 	
301	
Provision for bad debts	 	 —	 	 	 —	 	 	
8,991	 	 	 —	 	 	 —	 	 	
8,991	
Reserve for obsolescence	 	 —	 	 	
270	 	 	 —	 	 	 —	 	 	 —	 	 	
270	
Other asset impairment	 	 —	 	 	
3,129	 	 	 —	 	 	 —	 	 	 —	 	 	
3,129	
Loss on early extinguishment of debt	 	 —	 	 	
2,523	 	 	
202	 	 	 —	 	 	 —	 	 	
2,725	
Equity income	 	
(12,140)	 	 	
(15,218)	 	 	 —	 	 	 —	 	 	
27,358	 	 	 —	
Stock-based compensation	 	 —	 	 	
8,849	 	 	
27	 	 	 —	 	 	 —	 	 	
8,876	
Other non-cash items	 	 —	 	 	
(2)	 	 	
(17)	 	 	 —	 	 	 —	 	 	
(19)	
Changes in operating assets and liabilities:	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	 —	
Net settlement receivables and liabilities	 	 —	 	 	
(31,414)	 	 	
141	 	 	
594	 	 	 —	 	 	
(30,679)	
Other changes in operating assets and liabilities	 	
(47)	 	 	
34,504	 	 	
(20,047)	 	 	
(20,647)	 	 	 —	 	 	
(6,237)	
Net cash (used in) provided by operating activities	 	
(47)	 	 	
38,524	 	 	
624	 	 	
(14,570)	 	 	 —	 	 	
24,531	
Cash flows from investing activities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Acquisitions, net of cash acquired	 	 —	 	 	
(11,845)	 	 	
(1,056,155)	 	 	 —	 	 	 —	 	 	
(1,068,000)	
Capital expenditures	 	 —	 	 	
(5,886)	 	 	
(3,464)	 	 	
(9,092)	 	 	 —	 	 	
(18,442)	
Proceeds from sale of fixed assets	 	 —	 	 	
421	 	 	 —	 	 	 —	 	 	 —	 	 	
421	
Repayments under development agreements	 	 —	 	 	 —	 	 	
276	 	 	 —	 	 	 —	 	 	
276	
Changes in restricted cash and cash equivalents	 	 —	 	 	
(102)	 	 	 —	 	 	 —	 	 	 —	 	 	
(102)	
Intercompany investing activities	 	
6,889	 	 	
(1,085,709)	 	 	 —	 	 	
(1,425)	 	 	
1,080,245	 	 	 —	
Net cash provided by (used in) investing activities	 	
6,889	 	 	
(1,103,121)	 	 	
(1,059,343)	 	 	
(10,517)	 	 	
1,080,245	 	 	
(1,085,847)	
Cash flows from financing activities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Repayments of prior credit facility	 	 —	 	 	
(103,000)	 	 	 —	 	 	 —	 	 	 —	 	 	
(103,000)	
Proceeds from securing credit facility	 	 —	 	 	
500,000	 	 	 —	 	 	 —	 	 	 —	 	 	
500,000	
Proceeds from issuance of secured notes	 	 —	 	 	
350,000	 	 	 —	 	 	 —	 	 	 —	 	 	
350,000	
Proceeds from issuance of unsecured notes	 	 —	 	 	
350,000	 	 	 —	 	 	 —	 	 	 —	 	 	
350,000	
Debt issuance costs	 	 —	 	 	
(52,735)	 	 	 —	 	 	 —	 	 	 —	 	 	
(52,735)	
Proceeds from exercise of stock options	 	
5,338	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
5,338	
Purchase of treasury stock	 	
(12,180)	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
(12,180)	
Intercompany financing activities	 	 —	 	 	
(12,098)	 	 	
1,063,059	 	 	
29,284	 	 	
(1,080,245)	 	 	 —	
Net cash (used in) provided by financing activities	 	
(6,842)	 	 	
1,032,167	 	 	
1,063,059	 	 	
29,284	 	 	
(1,080,245)	 	 	
1,037,423	
Effect of exchange rates on cash	 	 —	 	 	 —	 	 	 —	 	 	
(1,266)	 	 	 —	 	 	
(1,266)	
Cash and cash equivalents	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (decrease) increase for the period	 	 —	 	 	
(32,430)	 	 	
4,340	 	 	
2,931	 	 	 —	 	 	
(25,159)	
Balance, beginning of the period	 	 —	 	 	
100,573	 	 	
2,149	 	 	
11,532	 	 	 —	 	 	
114,254	
Balance, end of the period	$	 —	 	$	
68,143	 	$	
6,489	 	$	
14,463	 	$	 —	 	$	
89,095	

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 	Year Ended December 31, 2013	
 	Parent	    	Subsidiary
Issuer	    	Guarantor
Subsidiaries	    	Non-Guarantor
Subsidiaries	    	Eliminations	    	Total	
Cash flows from operating activities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	$	
24,398	 	$	
24,398	 	$	
11,002	 	$	
2,594	 	$	
(37,994)	 	$	
24,398	
Adjustments to reconcile net (loss) income to cash provided by operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 —	 	 	
16,403	 	 	
1	 	 	
534	 	 	 —	 	 	
16,938	
Amortization of financing costs	 	 —	 	 	
1,793	 	 	 —	 	 	 —	 	 	 —	 	 	
1,793	
Loss (gain) on sale or disposal of assets	 	 —	 	 	
180	 	 	 —	 	 	
(2)	 	 	 —	 	 	
178	
Provision for bad debts	 	 —	 	 	 —	 	 	
7,874	 	 	 —	 	 	 —	 	 	
7,874	
Reserve for obsolescence	 	 —	 	 	
150	 	 	 —	 	 	 —	 	 	 —	 	 	
150	
Equity income	 	
(24,398)	 	 	
(13,596)	 	 	 —	 	 	 —	 	 	
37,994	 	 	 —	
Stock-based compensation	 	 —	 	 	
5,078	 	 	 —	 	 	 —	 	 	 —	 	 	
5,078	
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net settlement receivables and liabilities	 	 —	 	 	
(44,264)	 	 	 —	 	 	
(1,729)	 	 	 —	 	 	
(45,993)	
Other changes in operating assets and liabilities	 	
19	 	 	
13,241	 	 	
(18,880)	 	 	
(462)	 	 	 —	 	 	
(6,082)	
Net cash provided by (used in) operating activities	 	
19	 	 	
3,383	 	 	
(3)	 	 	
935	 	 	 —	 	 	
4,334	
Cash flows from investing activities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Capital expenditures	 	 —	 	 	
(13,450)	 	 	
(330)	 	 	
(206)	 	 	 —	 	 	
(13,986)	
Proceeds from sale of fixed assets	 	 —	 	 	
86	 	 	 —	 	 	 —	 	 	 —	 	 	
86	
Changes in restricted cash and cash equivalents	 	 —	 	 	
(90)	 	 	 —	 	 	 —	 	 	 —	 	 	
(90)	
Intercompany investing activities	 	
9,900	 	 	
(4,676)	 	 	 —	 	 	 —	 	 	
(5,224)	 	 	 —	
Net cash provided by (used in) investing activities	 	
9,900	 	 	
(18,130)	 	 	
(330)	 	 	
(206)	 	 	
(5,224)	 	 	
(13,990)	
Cash flows from financing activities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Repayments of prior credit facility	 	 —	 	 	
(18,500)	 	 	 —	 	 	 —	 	 	 —	 	 	
(18,500)	
Debt issuance costs	 	 —	 	 	
(764)	 	 	 —	 	 	 —	 	 	 —	 	 	
(764)	
Proceeds from exercise of stock options	 	
8,431	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
8,431	
Purchase of treasury stock	 	
(18,350)	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	
(18,350)	
Intercompany financing activities	 	 —	 	 	
(7,056)	 	 	
2,000	 	 	
(168)	 	 	
5,224	 	 	 —	
Net cash (used in) provided by financing activities	 	
(9,919)	 	 	
(26,320)	 	 	
2,000	 	 	
(168)	 	 	
5,224	 	 	
(29,183)	
Effect of exchange rates on cash	 	 —	 	 	 —	 	 	 —	 	 	
73	 	 	 —	 	 	
73	
Cash and cash equivalents	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (decrease) increase for the period	 	 —	 	 	
(41,067)	 	 	
1,667	 	 	
634	 	 	 —	 	 	
(38,766)	
Balance, beginning of the period	 	 —	 	 	
141,640	 	 	
482	 	 	
10,898	 	 	 —	 	 	
153,020	
Balance, end of the period	$	 —	 	$	
100,573	 	$	
2,149	 	$	
11,532	 	$	 —	 	$	
114,254	

22 . SUBSEQUENT EVENTS
 
As of the date of the filing of our Annual Report on Form 10-K, we had not identified, and were not aware of, any material subsequent events that occurred for the year ended December 31, 2015.

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Item 9.  Changes in and Disagreements with Accountant  s.
None .
Item 9A.  Controls and Procedure  s.
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Interim Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15(b) promulgated under the Exchange Act, our management, with the participation of our Interim Chief Executive Officer and Chief Financial Officer, evaluated the design and operating effectiveness as of December 31, 2015 of our disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation our Interim Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2015.
Attached as exhibits to this Annual Report on Form 10-K are certifications of our Interim Chief Executive Officer and Chief Financial Officer, which are required pursuant to Rule 13a-14 of the Exchange Act. This “Controls and Procedures” section of this Annual Report on Form 10-K includes information concerning management’s assessment of our internal control over financial reporting and the controls evaluation referenced in the certifications. The report of BDO USA, LLP, our independent registered public accounting firm, is also included below. BDO USA, LLP’s report addresses their audit of our internal control over financial reporting. This section of the Annual Report on Form 10-K should be read in conjunction with the certifications and the report of BDO USA, LLP for a more complete understanding of the matters presented .
Management’s Report of Internal Control over Financial Reporting
Management is responsible for establishing and maintaining effective internal control over financial reporting, as such term is defined in Exchange Act Rule 13a ‑15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”).
Our internal control over financial reporting includes those policies and procedures that:

	(a)		pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;	
	(b)		provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and	
	(c)		provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.	
Because of its inherent limitation, our internal control systems and procedures may not prevent or detect misstatements. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in condition, or that the degree of compliance with the policies and procedures may deteriorate.

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Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2015. BDO USA, LLP has audited our internal control over financial reporting as of December 31, 2015 as stated in their attestation report which is included herein.
Changes in Internal Control over Financial Reporting during the Quarter Ended December 31, 2015
No change in our internal control over financial reporting (as defined in Rules 13a ‑15(f) and 15d ‑15(f) under the Exchange Act) occurred during the fourth quarter ended December 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  
Item 9B.  Other Informatio  n.
None.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Everi Holdings Inc. 
Las Vegas, Nevada
 
We have audited Everi Holdings Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Everi Holdings Inc. and subsidiaries’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
In our opinion, Everi Holdings Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on the COSO criteria .
 
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Everi Holdings Inc. and subsidiaries as of December 31, 2015, and the related consolidated statements of loss and comprehensive loss, stockholders’ equity, and cash flows for the year then ended and our report dated March 15, 2016 expressed an unqualified opinion thereon.
 
/s/ BDO USA, LLP
 
Las Vegas, NV
March 15, 2016

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PART II  I
Item 10.  Directors, Executive Officers and Corporate Governanc  e.
The information regarding our directors, executive officers and corporate governance, including information about our Audit and Nominating and Corporate Governance Committees, is set forth in our Definitive Proxy Statement in connection with the 2016 Annual Meeting of Stockholders (the “2016 Proxy Statement”), which will be filed with the SEC within 120 days after the fiscal year ended December 31, 2015, under the captions “Proposal 1—Election of Class II Directors,” “Executive Officers” and “Board and Corporate Governance Matters” is incorporated herein by reference.
The information required by Item 405 of Regulation S-K set forth in our 2016 Proxy Statement under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” is incorporated herein by reference.
We have adopted a Code of Business Conduct, Standards and Ethics that is designed to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. The Code of Business Conduct, Standards and Ethics is available on our website at www.everi.com. To the extent required by law, any amendments to, or waivers from, any provision of the Code of Business Conduct, Standards and Ethics will be promptly disclosed to the public. To the extent permitted by such legal requirements, we intend to make such public disclosure by posting the relevant material on our website in accordance with SEC rules.
Item 11.  Executive Compensatio  n.
The information set forth in our 2016 Proxy Statement under the captions “Executive Compensation,” “—Director Compensation” and “Compensation Committee Report” is incorporated herein by reference.
Item 12.  Security Ownership of Certain Beneficial Owners  and Management and Related Stockholder Matters.
The information set forth in our 2016 Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plans” is incorporated herein by reference.
Item 13.  Certain Relationships and Related Transactions, and Director Independenc  e.
The information set forth in our 2016 Proxy Statement under the captions “Transactions with Related Persons” and “—Director Independence” is incorporated herein by reference.
Item 14.  Principal Accountant Fees and Service  s.
The information set forth in our 2016 Proxy Statement under the caption “—Audit and Non ‑Audit Fees” is incorporated herein by reference.
PART IV 
Item 15.  Exhibits and Financial Statement Schedule  s.
(a) The following documents are filed as part of this Annual Report on Form 10 ‑K:
1. Financial Statements

Report of BDO USA, LLP, Independent Registered Public Accounting Firm  	
64 	
Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm  	
65 	
Consolidated Statements of (Loss) Income and Comprehensive (Loss)Income for the three years ended December 31, 2015  	
66 	
Consolidated Balance Sheets as of December 31, 2015 and 2014  	
67 	
Consolidated Statements of Cash Flows for the three years ended December 31, 2015  	
68 	
Consolidated Statements of Stockholders’ Equity for the three years ended December 31, 2015  	
70 	
Notes to Consolidated Financial Statements  	
71 	
 
2. Financial Statement Schedules
All schedules have been omitted as they are either not required or not applicable or the required information is included in the consolidated financial statements or notes thereto.
3. See Item 15(b)

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(b) Exhibit  s:

Exhibit
Number	 	Exhibit Description	

2.1 	 	Agreement and Plan of Merger, dated as of September 8, 2014, by and among Everi Holdings Inc. (formerly known as Global Cash Access Holdings, Inc.) (“Holdings”), Movie Merger Sub, Inc. and Everi Games Holding Inc. (formerly known as Multimedia Games Holding Company, Inc.) (“Everi Games”) (incorporated by reference to Exhibit 2.1 of Holdings’ Current Report on Form 8-K filed with the SEC on September 8, 2014).	

3.1 	 	Amended and Restated Certificate of Incorporation of Holdings (incorporated by reference to Exhibit 3.1 of Holdings’ Registration Statement on Form S-1 (Registration No. 333-123514) filed with the SEC on May 26, 2005).	

3.2 	 	Certificate of Amendment of Amended and Restated Certificate of Incorporation of Holdings (incorporated by reference to Exhibit 3.1 of Holdings’ Current Report on Form 8-K filed with the SEC on April 30, 2009).	

3.3 	 	Certificate of Amendment of Amended and Restated Certificate of Incorporation of Holdings  (incorporated by reference to Exhibit 3.1 of Holdings’ Current Report on Form 8-K filed with the SEC on August 14, 2015)	

3.4 	 	Second Amended and Restated Bylaws of Holdings (effective as of August 24, 2015) (incorporated by reference to Exhibit 3.2 of Holdings’ Current Report on Form 8-K filed with the SEC on August 14, 2015).	

4.1 	 	Indenture governing 7.75% Senior Secured Notes due 2021, dated as of December 19, 2014, between Everi Payments Inc. (formerly known as Global Cash Access, Inc.) (“Everi Payments”), as issuer, and Deutsche Bank Trust Company Americas, as collateral agent and trustee, related to the (incorporated by reference to Exhibit 4.1 of Holdings’ Current Report on Form 8-K filed with the SEC on December 22, 2014).	

4.2 	 	Supplemental Indenture, dated as of December 19, 2014, among Everi Payments, as issuer, Holdings, as a guarantor, the subsidiary guarantors party thereto and Deutsche Bank Trust Company Americas, as collateral agent and trustee, related to the 7.75% Senior Secured Notes due 2021 (incorporated by reference to Exhibit 4.2 of Holdings’ Current Report on Form 8-K filed with the SEC on December 22, 2014).	

4.3 	 	Indenture governing 10.0% Senior Unsecured Notes Due 2022, dated as of December 19, 2009, between Everi Payments and Deutsche Bank Trust Company Americas, as trustee and collateral agent (incorporated by reference to Exhibit 4.1 to Holdings’ Current Report on Form 8-K filed with the SEC on December 22, 2014).	

4.4 	 	Supplemental Indenture, dated as of December 19, 2014, among Everi Payments, as issuer, Holdings, as a guarantor, the subsidiary guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, related to the 7.75% Senior Unsecured Notes due 2022 (incorporated by reference to Exhibit 4.2 to Holdings’ Current Report on Form 8-K filed with the SEC on December 22, 2014).	

4.5 	 	Second Supplemental Indenture, dated as of August 4, 2015, among Everi Payments, as issuer, Holdings, as a guarantor, the subsidiary guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, related to the 7.75% Senior Unsecured Notes due 2022 (incorporated by reference to Exhibit 10.5 to Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 6, 2015).	

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4.6 	 	Registration Rights Agreement, dated as of December 19, 2014, among Movie Escrow, Inc. (and, by a joinder agreement, Everi Payments, Holdings, as a guarantor and the subsidiary guarantors party thereto) and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative for the initial purchasers listed therein, related to the 10.00% Senior Unsecured Notes due 2022 (incorporated by reference to Exhibit 4.5 of Holdings’ Current Report on Form 8-K filed with the SEC on December 22, 2014).	

4.7 	 	Warrant, dated as of April 15, 2015, issued by Holdings to CPPIB Credit Investments III Inc. (incorporated by reference to Exhibit 4.1 to Holdings’ Current Report on Form 8-K filed with the SEC on April 15, 2015).	

10.1 	 	Purchase Agreement, dated as of December 17, 2014, among Movie Escrow, Inc. (a former wholly owned subsidiary of Everi Payments), as issuer, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative for the initial purchasers listed therein (incorporated by reference to Exhibit 10.1 of Holdings’ Current Report on Form 8-K filed with the SEC on December 22, 2014).	

10.2 	 	Security Agreement, dated as of December 19, 2014, among Everi Payments, as issuer, Holdings, as a guarantor, the subsidiary guarantors party thereto and Deutsche Bank Trust Company Americas, as collateral agent, related to the 7.75% Senior Secured Notes due 2021 (incorporated by reference to Exhibit 10.2 of Holdings’ Current Report on Form 8-K filed with the SEC on December 22, 2014).	

10.3 	 	Credit Agreement, dated as of December 19, 2014, among Everi Payments, Holdings, Bank of America, N.A. as administrative agent, collateral agent, swing line lender and letter of credit issuer; Deutsche Bank Securities Inc., as syndication agent; and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Deutsche Bank Securities, Inc., as joint lead arrangers and joint book managers (incorporated by reference to Exhibit 10.3 of Holdings’ Current Report on Form 8-K filed with the SEC on December 22, 2014).	

10.4 	 	Security Agreement, dated December 19, 2014, among Everi Payments, Holdings, as a guarantor, the subsidiary guarantors party thereto, and Bank of America, N.A., as collateral agent, related to the Credit Agreement (incorporated by reference to Exhibit 10.4 of Holdings’ Current Report on Form 8-K filed with the SEC on December 22, 2014).	

10.5 	 	Guaranty, dated December 19, 2014, by Holdings, as a guarantor, and the subsidiary guarantors party thereto, in favor of the lenders party from time to time to the Credit Agreement and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.5 of Holdings’ Current Report on Form 8-K filed with the SEC on December 22, 2014).	

10.6 	 	Note Purchase Agreement, dated as of April 15, 2015, among Everi Payments, as issuer, Holdings, as parent, CPPIB Credit Investments III Inc., as purchaser, and Deutsche Bank Trust Company Americas, as collateral agent (incorporated by reference to Exhibit 10.1 to Holdings’ Current Report on Form 8-K filed with the SEC on April 15, 2015).	

10.7 	 	Security Agreement, dated as of April 15, 2015, among Everi Payments, as issuer, Holdings, as a guarantor, the subsidiary guarantors party thereto and Deutsche Bank Trust Company Americas, as collateral agent, related to the 7.75% Senior Secured Notes due 2021 (incorporated by reference to Exhibit 10.2 to Holdings’ Current Report on Form 8-K filed with the SEC on April 15, 2015).	

10.8 	 	Guaranty, dated as of April 15, 2015, among Holdings, as a guarantor, and the subsidiary guarantors party thereto in favor of Deutsche Bank Trust Company Americas, as collateral agent, related to the 7.75% Senior Secured Notes due 2021 (incorporated by reference to Exhibit 10.3 to Holdings’ Current Report on Form 8-K filed with the SEC on April 15, 2015).	

10.9 	 	Patent Purchase and License Agreement, dated as of March 22, 2005, by and between Everi Payments and USA Payments, Inc. (incorporated by reference to Exhibit 10.28 of Holdings’ Registration Statement on Form S-1 (Registration No. 333-123514) filed with the SEC on March 22, 2005).	
+*10.10	 	Agreement for Processing Services, effective as of August 20, 2013, by and between Columbus Data Services, LLC and Everi Payments.	

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* 10. 11	 	Contract Cash Solutions Agreement, dated November 12, 2010, between Everi Payments and Wells Fargo Bank, N.A.	

10.12 	 	Second Amendment to Contract Cash Solutions Agreement, dated June 4, 2012, between Everi Payments and Wells Fargo Bank, N.A. (incorporated by reference to Exhibit 10.1 of Holdings’ Current Report on Form 8-K filed with the SEC on June 7, 2012).	

10.13 	 	Third Amendment to Contract Cash Solutions Agreement, dated November 4, 2013, between Everi Payments and Wells Fargo Bank, N.A. (incorporated by reference to Exhibit 10.1 of Holdings’ Quarterly Report on Form 10-Q filed with the SEC on November 5, 2013).	

10.14 	 	Fourth Amendment to Contract Cash Solutions Agreement, dated January 29, 2015, between Everi Payments and Wells Fargo Bank, N.A. (incorporated by reference to Exhibit 10.1 of Holdings’ Current Report on Form 8-K filed with the SEC on July 1, 2015).	
+ 10.1 5	 	Sponsorship Agreement, dated February 11, 2011, between Everi Payments and American State Bank (incorporated by reference to Exhibit 10.54 of Holdings’ Annual Report on Form 10-K filed with the SEC on March 14, 2011).	
†10.1 6	 	Holdings 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.25 of the Annual Report on Form 10-K of Everi Payments filed with the SEC on March 10, 2005).	
†10.1 7	 	Form of Stock Option Award for Performance Price Vesting under the 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).	
†10.1 8	 	Form of Stock Option Award for Cliff Vesting under the 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).	
†10. 19	 	Form of Stock Option Award for Non-Employee Directors under the 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).	
†10.2 0	 	Form of Stock Option Award for Executives under the 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).	
†10.2 1	 	Form of Stock Option Award for Employees under the 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.5 to Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).	
†10.2 2	 	Holdings 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.6 to Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).	
†10.2 3	 	Form of Stock Option Agreement under the 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.7 to Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).	
†10.2 4	 	Form of Stock Option Award for Non-Employee Directors under the 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.8 to Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).	
†10.2 5	 	Form of Stock Option Award for Executives (Single Trigger Acceleration) under the 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 to Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).	

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†10.2 6	 	Form of Stock Option Award for Employees under the 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.10 to Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).	
†10.2 7	 	Everi Games 2012 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 to Holdings’ Current Report on Form 8-K filed with the SEC on March 16, 2015).	
†10. 28	 	Amendment to the Everi Games 2012 Equity Incentive Plan (incorporated by reference to Exhibit 99.2 to Holdings’ Current Report on Form 8-K filed with the SEC on March 16, 2015).	
†10. 29	 	Form of Indemnification Agreement between Holdings and each of its executive officers and directors (incorporated by reference to Exhibit 10.27 to Holdings’ Registration Statement on Form S-1 (Registration No. 333-123514) filed with the SEC on March 22, 2005).	
†10.3 0	 	Employment Agreement with Ram V. Chary (effective January 27, 2014) (incorporated by reference to Exhibit 10.1 of Holdings’ Current Report on Form 8-K filed with the SEC on January 28, 2014).	
†10.3 1	 	Amendment No.1 to Employment Agreement with Ram V. Chary (effective as of August 5, 2014) (incorporated by reference to Exhibit 10.4 of Holdings’ Current Report on Form 8-K filed with the SEC on August 5, 2014).	
†10.3 2	 	Form of Stock Option Agreement for Ram V. Chary (incorporated by reference to Exhibit 10.2 of Holdings’ Current Report on Form 8-K filed with the SEC on January 28, 2014).	
†10.3 3	 	Form of Indemnification Agreement for Ram V. Chary (incorporated by reference to Exhibit 10.3of Holdings’ Current Report on Form 8-K filed with the SEC on January 28, 2014).	
†10.3 4	 	Employment Agreement with Randy L. Taylor (effective as of August 5, 2014) (incorporated by reference to Exhibit 10.1 of Holdings’ Current Report on Form 8-K filed with the SEC on August 5, 2014).	
†10.3 5	 	Employment Agreement with Juliet A. Lim (effective as of August 5, 2014) (incorporated by reference to Exhibit 10.34 of Holdings’ Annual Report on Form 10-K filed with the SEC on March 16, 2015).	
†10. 36	 	Employment Agreement with David Lucchese (effective as of August 5, 2014) (incorporated by reference to Exhibit 10.2 of Holdings’ Current Report on Form 8-K filed with the SEC on August 5, 2014).	
†10.37	 	Employment Agreement with Edward A. Peters (effective January 15, 2015) (incorporated by reference to Exhibit 10.1 of Holdings’ Current Report on Form 8-K filed with the SEC on January 22, 2015).	
†10. 38	 	Employment Agreement with Michael Rumbolz (effective February 13, 2016) (incorporated by reference to Exhibit 10.1 of Holdings’ Current Report on Form 8-K filed with the SEC on March 2, 2016).	
† 10.39	 	Notice of Grant of Stock Option with Michael Rumbolz, dated February 13, 2016 (incorporated by reference to Exhibit 10.1 of Holdings’ Current Report on Form 8-K filed with the SEC on February 16, 2016).	
†10.4 0	 	Form of Notice of Stock Option Award and Stock Option Award Agreement for Michael Rumbolz (effective August 30, 2010) (incorporated by reference to Exhibit 10.3 of Holdings’ Current Report on Form 8-K filed with the SEC on September 2, 2010).	

16.1 	 	Letter to Securities and Exchange Commission from Deloitte & Touche LLP, dated March 20, 2015 ( incorporated by reference to Exhibit 16.1 to Holdings’ Current Report on Form 8-K filed with the SEC on March 23, 2015).	
*21.1	 	Subsidiaries of Holdings.	
*23.1	 	Consent of BDO USA, LLP.	
*23.2	 	Consent of Deloitte & Touche LLP.	

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*24.1	 	Power of Attorney (see the signature page).	
*31.1	 	Certification of Chief Executive Officer of Holdings in accordance with Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
*31.2	 	Certification of Chief Financial Officer of Holdings in accordance with Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
**32	 	Certification of the Chief Executive Officer and Chief Financial Officer of Holdings in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
*101.INS	 	XBRL Instance Document.	
*101.SCH	 	XBRL Taxonomy Extension Schema Document.	
*101.CAL	 	XBRL Taxonomy Extension Calculation Linkbase Document.	
*101.DEF	 	XBRL Taxonomy Extension Definition Linkbase Document.	
*101.LAB	 	XBRL Taxonomy Extension Label Linkbase Document.	
*101.PRE	 	XBRL Taxonomy Extension Presentation Linkbase Document.	

* Filed herewith.
 
** Furnished herewith.
 
† Management contracts or compensatory plans or arrangements.
 
+ Confidential treatment has been requested for certain portions of this exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The confidential information has been omitted and filed separately with the SEC.

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SIGNATURE  S
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 	EVERI HOLDINGS INC.	

 	By:	/s/ RANDY L. TAYLOR	
 	 	Randy L. Taylor
Chief Financial Officer
( Principal Financial Officer )	
 
Dated: March 15, 2016
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael D. Rumbolz, Randy L. Taylor, and Todd A. Valli and each of them, his attorneys ‑in ‑fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on Form 10 ‑K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys ‑in ‑fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10 ‑K has been signed by the following persons on behalf of the registrant in the capacities and on the date indicated.

Signature	Title	Date	
 	 	 	
/s/ MICHAEL D. RUMBOLZ
Michael D. Rumbolz	Interim President and Chief Executive Officer (Interim Principal Executive Officer) and Director	March 15, 2016	
 	 	 	
/s/ RANDY L. TAYLOR
Randy L. Taylor	Chief Financial Officer (Principal
Financial Officer)	March 15, 2016	
 	 	 	
/s/ TODD A. VALLI
Todd A. Valli	Chief Accounting Officer (Principal
Accounting Officer)	March 15, 2016	
 	 	 	
/s/ RONALD V. CONGEMI
Ronald V. Congemi	Director	March 15, 2016	
 	 	 	
/s/ E. MILES KILBURN
E. Miles Kilburn	Director	March 15, 2016	
 	 	 	
/s/ GEOFFREY P. JUDGE
Geoffrey P. Judge	Director	March 15, 2016	
 	 	 	
/s/ FRED C. ENLOW
Fred C. Enlow	Director	March 15, 2016	
 	 	 	
/s/ EILEEN F. RANEY
Eileen F. Raney	Director	March 15, 2016	

 

121

Exhibit 10.10
 
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETED ASTERISKS [****] , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

COLUMBUS DATA SERVICES, LLC
AGREEMENT FOR PROCESSING SERVICES
 
This Agreement for Processing Services (the “ Agreement ”) is entered into as of August 20 , 2013, by and between Columbus Data Services, LLC (“ CDS ”) and Global Cash Access, Inc. (“ Customer ”).
 
WHEREAS, Customer desires to place or has placed at the Sites (as defined herein) automated teller machines, full-service kiosks, point-of-sale terminals, Tombstones (as defined herein), Virtual Terminals (as defined herein) or other electronic cash or cash-equivalent dispensing machines (whether or not owned by Customer) (collectively, the “ Terminals ”) and desires to engage CDS as a non-exclusive processor of transactions initiated at Terminals located at the Sites; and
 
WHEREAS, CDS is a processor that has access to one or more Networks (as defined herein) that transmit and settle electronic funds transfers and is willing to provide the Services (as defined herein) to Customer on the terms and conditions set forth herein.
 
NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties, intending to be legally bound, agree as follows:
 
I.  DEFINITIONS
 
Capitalized terms used in this Agreement that are not otherwise defined herein shall have the meanings set forth on Exhibit “A”.
 
II.  SERVICES PROVIDED BY CDS
 
2.1  Services .  Subject to the terms and conditions of this Agreement, CDS shall provide processing services as requested by Customer to drive Terminals located at the Sites, to link Terminals with one or more Networks, to transmit Transactions initiated at Terminals through a Network, to transmit electronic messages to Terminals, to provide to Customer periodic electronic reports of Transactions generated at Terminals or to switch Transactions to/from Terminals and Networks (the “ Processing Services ”) .  CDS shall also provide other services in support of the Processing Services as requested by Customer and detailed in Exhibit “D” (the “ Other Services ”), as well as the conversion services to prepare for the Processing Services as detailed in Exhibit “D” (the “ Conversion Services ”) .  The parties acknowledge and agree that Exhibit “D” has not been finalized as of the date of this Agreement but the parties will agree to a final version of Exhibit “D” no later than four (4) weeks after the date of this Agreement, it being understood that such final version shall be appended to this Agreement . 

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
1

 
CDS acknowledges and agrees that the rights and benefits granted to Customer hereunder   (including the right to receive the Processing Services, the Other Services, the Conversion Services and the Deconversion Services) include the right for such rights and benefits to be   exercised and received by Customer’s Affiliates, it being understood that Customer hereby assumes all liability for any actions of its Affiliates in breach of this Agreement.
 
2.2  Non-Exclusive Engagement .  During the term of this Agreement, CDS shall, on a non-exclusive basis, be a provider of Customer’s requirements for the Processing Services at Terminals located at the Sites.
 
2.3  Standard of Care and Service Levels .  In performing the Services and in the selection and use of facilities, equipment, machines and personnel required for such performance, CDS shall exercise reasonable and appropriate care and diligence and conduct such activities in a professional manner consistent with industry standards .  For any breach of the foregoing warranty, CDS shall, without additional charge to Customer, make such replacements or corrections as may be necessary or appropriate .  In addition, CDS shall provide or otherwise make available the Processing Services on a 24-hour per day basis, seven days a week in accordance with the service levels set forth in Exhibit “C” (the “ Service Levels ”) on and after the date (the “ Trigger Date ”) that is the earlier of (a) the first day of the calendar month following the first calendar month in which Transactions processed pursuant to this Agreement exceed [****] or (b) [****] after completion of the first conversion of processing services to CDS pursuant to the Conversion Services.
 
2.4  Changes to Processing Services .  CDS reserves the right to modify the Processing Services provided during the term of this Agreement after appropriate testing to confirm that such modification will operate in accordance with its specifications in a reliable manner compatible with the applicable information technology environment .  CDS will provide Customer with at least [****] prior written notice (or any shorter period to the extent mandated by a Network) of any material modifications adequately describing such modifications with respect to any modifications that involve a change to any protocol, network configuration, infrastructure or other hardware used in providing the Processing Services if such modifications will have an adverse impact on, degrade or interfere with Customer’s ability to obtain the Processing Services (including any modification that requires a change to Customer’s or its merchants, customers or partners, facilities, systems, software or equipment, with such modifications described in this parenthetical being subject to Customer’s reasonable consent) .  Customer acknowledges that (a) CDS regularly performs enhancements to its products and services for the benefit of all its customers, and (b) CDS is required to maintain, update and upgrade its connections to Networks and third party gateways in accordance with the requirements of a Network, it being understood that any such actions will not constitute a material modification to a Processing Service .  If CDS modifies a Processing Service and such modification constitutes a material change to such Processing Service or interferes with Customer’s ability to obtain the prior benefit from the Processing Services, then Customer may cancel the modified Processing Service, without penalty and with an equitable adjustment to the Minimum Monthly Fee (as defined in Section 5.1 ), by delivering to CDS written notice of cancellation within [****] after Customer’s receipt of notice describing the applicable modification, such cancellation to be effective [****] after CDS receives such written notice of cancellation from

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
2

 
Customer .  Any such cancellation of a Processing Service pursuant to this Section shall not affect the parties’ rights and obligations under this Agreement with respect to any other Services.
 
2.5  Additional Products and Services Offered by CDS .  CDS may, but is not obligated to, offer to provide Customer with equipment or other services (such as custom application development or third party ATM software enhancements) either through itself or through third parties not included within the Services .  The sale of such equipment or services to Customer shall be effected through separate agreements with Customer .  Except as otherwise expressly set forth in this Agreement, CDS will have no responsibility or liability with regard to equipment purchases or services from or through third parties.
 
2.6  Additional Requested Services .  Upon the written request of Customer for CDS to provide additional services to further the integration of various Customer products and services for Customer’s customers (e.g., with respect to gateways, networks and platforms to allow GCA to do preferential routing transactions), CDS and Customer will mutually agree upon a separate statement of work to set forth the terms and conditions for the provision of such additional services.
 
2.7  Dedicated Relationship Manager .  CDS will designate a “ Relationship Manager ” who will be the principal point of contact with Customer for all matters relating to this Agreement .  CDS may designate a new Relationship Manager from time-to-time by written notice to Customer .  Additionally, the Relationship Manager :  (a) must be reasonably acceptable to Customer; (b) will have overall responsibility for managing and coordinating the delivery of the services to be provided by CDS under this Agreement; (c) will meet regularly with Customer’s designated representatives, and will be available at GCA’s designated location as frequently as needed for the performance of the services to be provided by CDS under this Agreement; and (d) will have the discretion and authority to make decisions with respect to actions to be taken by CDS in the ordinary course of day-to-day management of its obligations under this Agreement.
 
III.  CUSTOMER OBLIGATIONS AND OTHER MATTERS
 
3.1  Network Rules; Applicable Law .  Each party shall comply with all Network Rules and all Applicable Laws in performing its obligations under this Agreement .  Customer will comply with all requirements, policies and procedures set forth by the Sponsoring Bank, and CDS will comply with all Sponsoring Bank requirements, policies and procedures that pertain to third party processors .  Customer will also cause each Terminal owner, the party or parties responsible for cash replenishment of the Terminals, the owner or operator and employees of the business at which the Terminals are placed and all other persons (other than CDS) related to the ownership of the Terminals (collectively, the “ Terminal Related Parties ”) to be trained and comply with the requirements of any banking systems or other third parties whose services are used in connection with the Terminals and all Applicable Laws, including those requirements relating to the placement and lighting of the Terminals and other safety or security requirements that relate to the Terminals.
 
3.2  Sponsoring Bank .  Customer shall maintain a Sponsoring Bank to provide all Terminals with Network access and shall comply with all requirements of the Sponsoring Bank with respect thereto.

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
3

 
3.3  Prerequisites for Processing Services .  CDS shall not be required to provide any Processing Services with respect to a Terminal until:   (a) Customer has obtained a Sponsoring Bank providing Network access for such Terminal; (b) Customer has delivered to CDS Terminal information; (c) Customer has completed and delivered to CDS an ACH Authorization for the applicable Account; and (d) CDS has, by notice to Customer or commencement of Services to such Terminal, accepted such Terminal information and ACH Authorization .  Customer will operate each of its Terminals only at the Site designated for such Terminal at the time of Terminal set-up.
 
3.4  Maintenance of Accounts .  During the term of the Agreement and for at least [****] after any termination or expiration hereof, Customer will maintain all necessary Accounts with such financial institutions as may be required for Network sponsorship and will maintain in such Accounts such balances as may be required for Settlement of transaction activity, Adjustments or the performance of the Processing Services.
 
3.5  Responsibility for Terminal or Cardholder .  CDS shall not be responsible for maintaining any Terminal or communicating with any Cardholder .  Any maintenance inquiries relating to a Terminal or customer support inquiries relating to a Cardholder shall be directed promptly by CDS to Customer.
 
IV.  TERMINAL INFORMATION; ACH AUTHORIZATION; SETTLEMENT
 
4.1  Delivery .  Customer shall provide CDS with Terminal information and an ACH Authorization for each Terminal subject to this Agreement prior to the date on which the Processing Services are to commence being provided by CDS with respect to such Terminal .  Prior to the delivery of Processing Services by CDS, the parties will enter into a mutually agreeable process for boarding services .  Customer represents and warrants that all information provided for each Terminal and contained in each ACH Authorization will be correct and complete upon delivery in all material respects .  Customer shall promptly notify CDS in writing of any change in the Terminal information or ACH Authorization.
 
4.2  Settlement .  All Settlements shall be effected through automated clearing house transfers .  IT IS THE RESPONSIBILITY OF CUSTOMER TO VERIFY THAT ALL INFORMATION PROVIDED FOR A TERMINAL, CONTAINED IN AN ACH AUTHORIZATION OR ANY MODIFICATION THEREOF IS CORRECT AND COMPLETE .  CDS HAS NO RESPONSIBILITY TO VERIFY ANY SUCH INFORMATION.
 
4.3  Settlement Disputes .  As of the date of this Agreement, it is the intention of the parties that the Networks will be performing Settlements directly (“direct settling”) to an Account established by Customer, and as such CDS shall not be responsible for Settlements; provided, however, to the extent the parties agree that CDS will maintain a Settlement Account on behalf of Customer, the following provisions of this Section 4.3 shall apply .  (For the avoidance of doubt, to the extent any other provisions of this Agreement contemplate CDS effecting Settlements, such specific provisions shall only be applicable at such time, if any, the parties agree CDS will be assume such responsibility.) CDS shall deliver all Settlement and capture reports to Customer as promptly as possible after such reports were received by CDS, but in no event later than [****]  

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
4

 
after such reports were received by CDS .  Customer shall review the data contained in such reports provided by CDS and shall promptly, but in no event more than [****] after the date of the disputed item (the “ Notice Date ”) notify CDS in writing of any disputed item in such reports in accordance with Section 5.4 .  If it is agreed or otherwise mutually determined that any disputed item was credited or debited in error by CDS, CDS shall correct the error .  Notwithstanding, CDS shall not be liable for any recovery, reimbursement or otherwise of any amounts relating to periods prior to [****] before the Notice Date .  CDS shall not be liable for any damages, interest or other costs associated with the error other than correcting the error.
 
V.  FEES
 
5.1  Fees .  Customer shall pay fees to CDS for the Services provided under this Agreement in accordance with the “ Pricing Schedule ” attached hereto as Exhibit “B” .  For each calendar month after March 1, 2015 (i.e., inclusive of the month of March 2015) during which CDS provides the Processing Services (during the term of this Agreement or after its termination, including during the Deconversion Period (as defined in Section 6.5 )), such fees for the Processing Services shall be an amount at least equal to the “ Minimum Monthly Fee ” as set forth on such Pricing Schedule (as prorated for any partial calendar month) .  All Network fees, financial sponsorship fees and other pass-through expenses relating to a Network or transactions initiated at the Terminals (“ Pass-Through Expenses ”) shall be the responsibility of Customer .  CDS will render a billing invoice for the fees for all Services and Pass-Through Expenses incurred by Customer in each calendar month no later than the 15 th day of the following month .  Such invoice shall include an itemized summary of all transactions processed, all fees and Pass-Through Expenses incurred in such calendar month and such other information as reasonably requested by Customer .  All undisputed amounts shall be due and payable [****] after receipt of the applicable invoice .  All undisputed amounts invoiced and outstanding after the due date shall bear interest from the due date to the date of payment at a rate equal to the lesser of [****] per annum or the highest legally allowable rate .  All fees and other amounts due by Customer hereunder are subject to dispute in accordance with Section 5.4 and reduction for Service Levels credits pursuant to Exhibit “C”.
 
5.2  Fee Changes .  All fees and other amounts due by Customer hereunder shall be guaranteed during the term of this Agreement, except that CDS may adjust Pass-Through Expenses to (a) directly reflect any increase or decrease in the Pass-Through Expenses charged to CDS by the applicable third party and (b) to incorporate as a Pass-Through Expense any new variable charge to CDS by reason of a change to any Network Rule or any Applicable Law .  CDS shall provide Customer with at least [****] prior written notice to Customer of any such adjustments to Pass-Through Expenses (or any shorter time period so long as CDS promptly notifies Customer of such adjustment as soon as CDS itself is notified of such adjustment).
 
5.3  Taxes .  All charges hereunder are exclusive of applicable federal, state and local taxes, and Customer shall pay, or reimburse CDS for, any such taxes that may be levied on the Services rendered under this Agreement, other than taxes levied on or based on CDS’s ownership of property or net income .  CDS shall include such taxes as separate line items on each applicable billing invoice and shall timely remit payment of such taxes to the applicable taxing authority .  In no event shall Customer be liable for the payment of any interest or penalties relating to any taxes

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
5

 
that arise due to the failure of CDS to properly invoice, pay or administer such taxes .  If it is later held that any taxes paid by Customer hereunder were not owed, CDS shall use commercially reasonable efforts to obtain a refund of the applicable amount and, upon receipt of any refund, provide such refund to Customer .  CDS shall reasonably cooperate with Customer to minimize any taxes imposed on Customer in relation to this Agreement.
 
5.4  Disputes .  Either party may dispute any of the fees and charges invoiced or billed by CDS hereunder by providing a written dispute notice to the other party (“ Billing Dispute Notice ”) either via facsimile or e-mail (to be followed by signed letter sent by United States mail pursuant to Section 11.10 ) to be sent (a) in case of receipt by CDS, to the executive account manager at CDS responsible for the relationship with Customer and (b) in the case of receipt by Customer, to Customer’s Chief Financial Officer .  Any Billing Dispute Notice shall include a reasonably detailed description of the exact items and amounts disputed and the nature of the dispute and shall be received no later than 90 days after GCA first became aware of such billing error, and in no event shall a Billing Dispute Notice be received later than 12 months after the date of the applicable invoice or bill .  Customer may withhold from payment hereunder any disputed amounts under a Billing Dispute Notice until the dispute is resolved, provided that any undisputed amounts in an invoice will be paid by Customer pursuant to Section 5.1 .  Other than with respect to Network fees and other third party fees (where such third party is set forth on Exhibit “B”) that result from a verifiable billing error from the Network or such third party, CDS shall not invoice any fees and charges (including any amount to compensate for the inaccurate reporting or calculation of CDS fees or charges) more than 12 months after the end of the calendar month to which such fees and charges relate (it being understood that failure by CDS to invoice within such period shall constitute a conclusive and binding waiver to any claim for payment by Customer for such fees and charges).
 
VI.  TERM; TERMINATION
 
6.1  Term .  The term of this Agreement shall commence on the date of this Agreement and shall continue for a period of [****] from the Trigger Date (the “ Initial Term ”) and shall automatically renew thereafter for successive [****] terms (each a “ Renewal Term ”) unless either party gives the other at least [****] prior written notice of its intent to terminate this Agreement at the end of the Initial Term or any Renewal Term.
 
6.2  Termination Prior to End of Term .  This Agreement may be terminated prior to the end of the Initial Term or any Renewal Term only as follows:
 
(a)  Either party may terminate this Agreement immediately upon written notice to the other party upon the occurrence of a material breach or default by such other party of any of its representations, warranties or covenants set forth in this Agreement that is not cured within 30 days after delivery of written notice to such other party specifying the breach or default claimed.
 
(b)  Either party may terminate this Agreement immediately upon written notice to the other party upon if the other party (i) makes a general assignment for the benefit of creditors, (ii) applies for the appointment of a trustee, liquidator or receiver for its business or property, or one is assigned involuntarily and not dismissed within 60 days, (iii) is subject to a proceeding for

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
6

 
bankruptcy, receivership, insolvency or liquidation not dismissed within 60 days or (iv) is adjudicated insolvent or bankrupt.
 
(c)  CDS may terminate this Agreement (or curtail or restrict the provision of the Services hereunder, including on a Terminal-by-Terminal basis to the extent necessary) effective immediately upon written notice to Customer if:
 
(i)  Customer does not pay any undisputed fee or charge when due hereunder and such failure continues for a period of [****] after CDS gives written notice thereof to Customer’s Chief Executive Officer, Chief Information Officer and General Counsel;
 
(ii)  the Sponsoring Bank withdraws its sponsorship of Customer for any reason and Customer fails to secure a replacement Sponsoring Bank within [****] thereof; or
 
(iii)  Customer (A) engages in activities that cause or are reasonably likely to cause CDS or Sponsoring Bank to violate any Network Rule or Applicable Law or (B) participates in fraudulent activity, including making misrepresentations regarding the business operations of Customer.
 
(d)  CDS may terminate this Agreement (or curtail or restrict the provision of the Services hereunder, including on a Terminal-by-Terminal basis to the extent necessary) immediately upon written notice to Customer following the issuance of any order, rule or regulation or the enactment of any law by any governmental authority (including any Gaming Authority (as defined in Section 6.2(e) ), Network or card association having jurisdiction over CDS or the decision of any court of competent jurisdiction over CDS that (i) prohibits CDS from providing the Services or (ii) provides that the provision or use of the Services violates Applicable Laws; provided, however, in the case of any such curtailment or restriction of the provision of Services on a Terminal-by-Terminal basis as a result of an order from a Network, Customer shall have a [****] cure period to remedy any issues that are the subject of such order (or such shorter period to the extent required by such notice from the applicable governmental authority).
 
(e)  Customer may terminate this Agreement immediately upon written notice to CDS if Customer or any of its Affiliates receive written notice at any time from any governmental or quasi-governmental authorities responsible for or involved in the regulation of gaming or gaming activities (“ Gaining Authorities ”), or otherwise reasonably believes (as determined by Customer’s Compliance Committee following its standard policies and procedures) at any time based on the advice of legal counsel, that the provision or use of the Services, this Agreement or the association between the parties within the applicable jurisdiction is reasonably likely to be in violation of Applicable Laws related to gaming or is otherwise reasonably likely to jeopardize any of the privileged licenses (including gaming licenses) held by Customer and its Affiliates; provided, however, that any termination under this Section 6.2(e) shall only apply to those Terminals under the jurisdiction of the specific Gaming Authority issuing the written notice described in this Section 6.2(e) (with an equitable adjustment to the Minimum Monthly Fee (as defined in Section 5.1 )); and provided, further, that such termination described in this Section

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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6.2(e) shall only be effective after 90 days’ notice given by Customer to CDS if such condition is not cured within such 90-day period (or such shorter period to the extent required by such notice from the applicable Gaming Authority or as otherwise required to protect any of the privileged licenses (including gaming licenses) held by Customer and its Affiliates as contemplated by this Section 6.2(e) ).
 
(f)  Customer may terminate this Agreement upon [****] prior written notice to CDS for any reason; provided, however, that Customer agrees to pay CDS an early termination fee in accordance with Section 6.4 .
 
(g)  Customer may terminate this Agreement immediately upon written notice to Customer in accordance with the Service Levels availability provisions set forth in Exhibit “C”.
 
(h)  Customer may terminate this Agreement immediately upon written notice to CDS if CDS closes a Critical Change of Control Transaction for which Customer has not provided its prior written consent pursuant to Section 11.4 .  A “ Change of Control Transaction ” shall mean any transaction or series of related transactions that, whether by virtue of a merger, consolidation, reorganization, plan of exchange or otherwise, could result in (x) a person or entity acquiring, directly or indirectly, or having the right to acquire, directly or indirectly, (A) control of all or substantially all of the assets of CDS (including, without limitation, through an exclusive license) or (B) 50% or more of the outstanding equity securities of CDS or (y) CDS’s equityholders immediately prior to such transaction or series of related transactions owning less than a majority of the voting securities of CDS (or any successor thereto or, in the event CDS becomes a wholly-owned subsidiary, parent thereof) immediately following the consummation of such transaction or series of related transactions, in each case on an as-converted basis .  A “ Critical Change of Control Transaction ” shall mean a Change of Control Transaction where (i) Customer determines that the effects of such Change of Control Transaction is reasonably likely to jeopardize any of the privileged licenses (including gaming licenses) held by Customer or any of its Affiliates or (ii) a material portion of the business of such acquiring person or entity, or any Affiliate thereof, is providing Cash Access Transactions for gaming or otherwise related to the gaming industry, whether land based, online or otherwise.
 
6.3  Continuing Obligations .  Termination or expiration of this Agreement shall not relieve either party from any obligations accrued through the date of termination or expiration .  In addition, the terms and conditions set forth in Sections 3.4 ,   5.3 ,   5.4 ,   6.4 ,   6.5 ,   7.1 and 7.2 and Articles IX, X and XI shall survive any termination or expiration of this Agreement.
 
6.4  Charges Upon Termination .  If this Agreement is terminated by Customer pursuant to Section 6.2(f) , Customer shall, within [****] of such termination, pay to CDS a compensatory payment in an amount equal to a percentage of the product of (a) the Minimum Monthly Fee multiplied by (b) the number of full calendar months remaining in the then-current term of this Agreement .  Such percentage shall be [****] if such notice was provided during the first 12 months of the Initial Term, [****] if such notice was provided during the second 12 months of the Initial Term, [****] if such notice was provided during the third 12 months of the Initial Term and [****] if such notice was provided at any time thereafter .  Customer and CDS agree that such compensatory payment is a reasonable estimation, as of the date of this Agreement, of the

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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actual damages that CDS would suffer if it failed to receive the processing business contemplated by this Agreement for the full term of this Agreement.
 
6.5  Deconversion .  Beginning upon either party’s issuance of any notice of termination (regardless of the basis for termination) and during the term of this Agreement and thereafter (the “ Deconversion Period ”), CDS shall provide deconversion services as requested by Customer in transferring processing promptly and smoothly to any other processor designated by Customer (the “ Deconversion Services ”) or to Customer directly if Customer has elected to terminate this Agreement pursuant to Section 6.2(e) , provided that (a) all amounts due CDS under this Agreement being paid in full and (b) such transfer complies with Network Rules and Applicable Law .  Customer will pay all of CDS’s reasonable costs for Deconversion Services; provided, however, CDS shall provide Customer with transaction data, database information, and configuration data (along with any other similar customer information that is customarily transferred upon a deconversion) in a format and by a method mutually agreed upon by the parties without any additional cost to Customer .  Such costs will be billed at an hourly rate as set forth on the Pricing Schedule for testing services .  As part of but without limiting the Deconversion Services, CDS shall make available to such other processor, subject to Network Rules and Applicable Law, all data and information CDS possesses regarding Customer’s merchants, customers, partners and/or accounts, in such form and format as Customer may reasonably request, together with reasonable and adequate instructions concerning the format and means of accessing such data and information .  CDS shall provide the Deconversion Services in accordance with any written plan for such deconversion established by Customer and reasonably approved by CDS (which approval shall not be unreasonably withheld or delayed) and otherwise use commercially reasonable efforts to ensure that the Deconversion Services is structured to prevent any degradation of quality or level of the Processing Services, or interruption to the Processing Services, during the Deconversion Period .  Throughout the Deconversion Period until a complete deconversion is achieved and Customer’s data files have been delivered to Customer or such other processor designated by Customer, CDS agrees to maintain and retain offsite storage for each of Customer’s data files used in connection with the Processing Services for a period of at least 7 years (or such longer period as may be required by Network Rules or Applicable Laws) in accordance with reasonable accessibility guidelines and requirements mutually agreed by the parties (which agreement shall not be unreasonably withheld or delayed), as well as reasonable backup for power supply systems and online communications .  CDS shall (i) regenerate from CDS’s media any transactional data, reporting data or other data, programs or information of Customer that is lost or damaged by CDS and is required to be maintained by CDS by Network Rules or Applicable Laws and (ii) provide Customer with access to and/or copies of Customer’s data files, in each case within a reasonable period of time if and when requested by Customer in writing .  Throughout the Deconversion Period until a complete deconversion is achieved and Customer’s data files have been delivered to Customer or such other processor designated by Customer, the parties shall continue to operate under the terms and conditions of this Agreement, including Customer’s obligation to make payments to CDS for fees for the Services (including the Minimum Monthly Fee for the Processing Services) under Section 5.1 ; provided, however, that upon the effective date of termination of this Agreement, Customer will cease to add new Terminals to the CDS system.
 
VII.  CONFIDENTIALITY; INTELLECTUAL PROPERTY

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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7.1  Confidentiality Obligations .  “ Confidential Information ” means a party’s proprietary or confidential information designated in writing as such or that by nature of the circumstances surrounding the disclosure ought to, in good faith, be treated as proprietary or confidential, including the Services and any trade secrets contained therein .  Each party agrees that:   (a) during the course of its performance of this Agreement it may have access to or be provided with Confidential Information of the other party; (b) such Confidential Information shall remain the property of the other party, such Confidential Information is made available on a limited use basis solely in connection with this Agreement and such Confidential Information shall be disclosed only to authorized employees and agents; (c) it will advise its employees to whom such Confidential Information is disclosed of their obligations under this Agreement; (d) it will not sell, disclose or otherwise make available any such Confidential Information, in whole or in part, to any third party without the prior written consent of the other party; (e) it will not use such Confidential Information except pursuant to this Agreement; and (f) it will use the same degree of care it uses for its own confidential information, but in no case less than a reasonable degree of care, to prevent disclosure of such Confidential Information to any unauthorized person .  Furthermore, each party acknowledges and agrees that the existence of this Agreement (including any Exhibits attached hereto) and its terms and conditions shall be considered Confidential Information of the other party, which shall not be revealed to any third party without the express prior written consent of the other party except (x) as required by applicable securities laws or securities exchange rules (including requirements to file a copy of this Agreement (redacted to the extent reasonably permitted by applicable law) or to disclose information regarding the provisions hereof or performance hereunder) or (y) in confidence to legal counsel, accountants or other advisors, banks and financing sources or proposed acquiring parties .  Upon termination of this Agreement, all copies of Confidential Information shall be returned to the owner thereof upon request .  The restrictions under this Section shall not apply to information that :  (i) is or becomes publicly known through no wrongful act of the party receiving the such information; (ii) becomes known to a party without confidential or proprietary restriction from a source other than the disclosing party; or (iii) a party can show by written records was in its possession prior to disclosure by the other party .  If a party is legally compelled to disclose any Confidential Information of the other party, it will be entitled to do so provided it gives the other party prompt notice and cooperates in protecting against any such disclosure or obtaining a protective order narrowing the scope of such disclosure.
 
7.2  Ownership of Inventions and Other Property .  All inventions and improvements, whether patentable or not, technical or other information, computer designs and materials, policies, processes, formulae, techniques, know-how and other knowledge, information, trade secrets, trade practices and/or facts relating to design, construction or implementation of the Services or related hardware or software (the “ Inventions ”) that CDS develops in connection with this Agreement and any and all amendments, modifications, derivative works, revisions, changes, customizations or other improvements thereto (whether made by CDS or a third party on its behalf) shall be the sole and exclusive property of CDS, provided however, that any Inventions that CDS develops (independently or jointly with Customer) at the direction of and exclusively for Customer as mutually agreed by the parties in writing shall be the sole and exclusive property of Customer .  All Inventions that Customer develops in connection with this Agreement and any and all amendments, modifications, derivative works, revisions, changes, customizations or other improvements thereto (whether made by Customer or a third party on its behalf) shall be the sole

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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and exclusive property of Customer, including (a) any software and associated documentation or manuals provided or made available by Customer in connection with this Agreement and modifications or enhancements thereto (by whomever produced) or (b) any data, information, content, and other materials prepared by or transmitted by, to or for Customer or its merchants, customers or partners through the use of or by or through the Processing Services (including nonpublic personal information and other data generated in connection with processing transactions) (collectively, “ Customer Property ”) .  In addition, Customer shall solely and exclusively own   any Settlement receivables by or through the Processing Services originating from transactions at the Customer’s Terminals (it being understood that CDS shall not to assert any lien, claim or encumbrance or right of offset against any such Settlement receivables) .  Each party agrees to execute and deliver any reasonable documents or instruments as may be necessary to memorialize and acknowledge the foregoing as may be requested by the other party from time to time.
 
7.3  Software and Hardware .    
 
(a)  If CDS provides any software to Customer, CDS hereby grants to   Customer a personal, non-exclusive, non-transferable license to use that software during the term of this Agreement solely in connection with the Services.
 
(b)  Subject to the Service Levels availability and related obligations, CDS’s   sole obligation with respect to any such software is to replace any defective software at no charge to Customer .  Any purchases of equipment (including Terminals) by Customer from CDS related to the delivery of the Services will be pursuant to separate purchase agreements for which such equipment would be delivered FOB CDS and carry with it the manufacturer’s warranty, if any.
 
7.4  Gramm-Leach-Bliley Act .  The parties intend that this Agreement comply, if   and to the extent necessary, with the applicable provisions of the Gramm-Leach-Bliley Act and any rules and regulations promulgated thereunder, as the same may be amended from time to time (the “ Act ”), and any other Applicable Laws relating to the privacy and security of personal information and Cardholder/Transaction data (together with the Act, “ Data Laws ”) .  In connection with such compliance, with regard to any information that is provided to CDS by Customer under this Agreement, CDS is prohibited from disclosing or using such information in any manner which is, or would cause Customer to be, in violation of Data Laws protecting the confidentiality of nonpublic personal information .  Both parties agree to otherwise comply with Data Laws to the extent applicable to them in connection with this Agreement .  Without limiting the foregoing, CDS agrees that it shall :  (a) not disclose or use any nonpublic personal information except to the extent necessary to carry out its obligations under this Agreement and for no other purpose; (b) not disclose nonpublic personal information to any third party (including its third party service providers) without an agreement in writing from the third party to use or disclose such nonpublic personal information only to the extent necessary to carry out CDS’s obligations under this Agreement and for no other purposes; (c) maintain, and shall require all third parties receiving any nonpublic personal information pursuant to the immediately preceding clause to maintain, effective information security measures to protect nonpublic personal information from unauthorized disclosure or use; and (d) promptly provide Customer with information regarding any known failure of such security measures or any security breach related to nonpublic personal

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information and, thereafter, diligently keep Customer advised as to the status and process of such failure or security breach (including any claims arising therefrom) and cooperate with Customer as required by the circumstances arising therefrom (including by promptly providing information known by it that is reasonably requested by Customer with respect thereto) .  Notwithstanding the foregoing or any other provision set forth herein, nothing herein prohibits CDS from responding to and/or disclosing nonpublic personal information or other Confidential Information in response to or in connection with a   governmental inquiry or subpoena provided it gives Customer prompt notice thereof .
 
7.5  Market Exclusivity .  During the term of this Agreement, and so long as   Customer [****] , CDS shall not, and shall cause its Affiliates not to, directly or indirectly, anywhere in the world market, sell, license or otherwise provide to any third party other than Customer:
 
(a)  any product or service for use in processing Cash Access Transactions for   the purpose of gaming or otherwise related to the gaming industry, whether land based, online or otherwise, except with respect to the following existing customers of CDS :  [****] ;
 
(b)  any product or service for use in processing Cash Access Transactions for   any purpose or otherwise related to any industry to the extent such product or service or any Invention, enhancement, feature or functionality thereof is developed by CDS at the request of Customer for Customer or any of its Affiliates; or
 
(c)  divert or attempt to divert from Customer or any of its Affiliates any   business of any kind in which it is engaged (including the solicitation of or interference with any of its suppliers or merchants, customers or partners).
 
“ Cash Access Transactions ” means any transaction involving the use of a financial instrument (including a check, ACH, credit card, ATM card, debit card, wallet transfer, virtual currency instrument, pre-paid access card or redeemable ticket) for the primary purpose of obtaining cash, cash equivalents or credit.
 
VIII.  UNAUTHORIZED USE
 
Customer shall ensure that procedures are maintained that are reasonably designed to avoid an Unauthorized Use of the Terminals or Cards and the Services provided by CDS .  CDS shall have no liability, whether to Customer, to a Cardholder or to any other person, for any Unauthorized Use of any Terminal, any Card, any Network or the Services unless such liability is caused by the Unauthorized Use by CDS, its employees, agents or contractors.
 
IX.  CDS WARRANTY; LIMITATION OF LIABILITY
 
9.1  No Other Warranty .  CUSTOMER ACKNOWLEDGES THAT IT HAS INDEPENDENTLY EVALUATED THE SERVICES AND THE APPLICATION OF THE SERVICES TO ITS NEEDS AND THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, CDS MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY,   INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR THAT THE SERVICES WILL BE UNINTERRUPTED OR

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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ERROR FREE, FROM A COURSE OF DEALING OR USAGE OR TRADE OR ARISING OTHERWISE BY LAW.
 
9.2  Third Parties .  CDS shall have no liability to third parties (including for theft,   vandalism, assault or any other misconduct of any person that occurs in the proximity of a Terminal or at a Site) arising out of the performance or non-performance of Services or the use or operation of the Terminals.
 
9.3  [****] ; Limitation of Liability .  [****] .  The foregoing remedy and damage limitations are reasonable in light of all present and predictable circumstances, including the amount of fees charged by CDS under this Agreement and the possible amount of actual damages to Customer .  Each party acknowledges that it has read and understands such limitations, which serve as part of the consideration hereunder.
 
X.  GENERAL INDEMNITIES
 
10.1  Customer Indemnification .  Customer shall indemnify, defend and hold CDS harmless for, from and against any and all third party loss, damage, claim or expense (including reasonable attorneys’ fees and court costs) that CDS may incur, suffer or become liable for, directly or indirectly, arising from or related to :  (a) Customer’s breach of any of its representations, warranties, covenants or agreements under this Agreement; (b) fraud, intentional misconduct or negligence of Customer or its directors, officers, employees, agents, contractors or subcontractors; (c) use or operation of the Terminals; (d) any event that may occur in the proximity of a Terminal or at a Site (including theft, vandalism, or assault); (e) any Unauthorized Use of any Card; or (f) a claim that use of any Customer Property infringes or misappropriates any patent, copyright or trade secret of a third party, except to the extent that the alleged infringement or misappropriation is based upon :  (i) any modification of Customer Property by a person or entity other than Customer or any of its Affiliates; (ii) any use or combination of Customer Property with any service, software or equipment not supplied or approved in writing by Customer or any of its Affiliates; or (iii) any use of Customer Property not permitted by this Agreement .  If any allegation of infringement or misappropriation is made or Customer believes   that such an allegation is likely, then Customer shall be entitled to demand CDS to immediately cease use of the applicable Customer Property and CDS shall so comply.
 
10.2  CDS Indemnification .  CDS shall indemnify, defend and hold Customer harmless for, from and against any and all third party loss, damage, claim or expense (including reasonable attorneys’ fees and court costs) that Customer may incur, suffer or become liable for, directly or indirectly, arising from or related to :  (a) CDS’s breach of any of its representations, warranties, covenants or agreements under this Agreement; (b) fraud, intentional misconduct or negligence of CDS or its directors, officers, employees, agents, contractors or subcontractors; or (c) a claim that the use of a Service or related software or equipment infringes or misappropriates any patent, copyright or trade secret of a third party, except to the extent that the alleged infringement or misappropriation is based upon :  (i) any modification of a Service or to related software or equipment by a person or entity other than CDS or any of its Affiliates; (ii) any use or combination of a Service or related software or equipment with any service, software or equipment not supplied or approved in writing by CDS or any of its Affiliates; (iii) any use of a Service or related software

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or equipment not permitted by this Agreement; or (iv) products or processes developed pursuant to Customer’s direction, design or specification .  If any allegation of infringement or misappropriation is made or CDS believes that such an allegation is likely, then CDS may, at its option :  (A) procure the right for Customer to continue to use the applicable Service or related software or equipment; (B) replace the applicable Service or related software or equipment with a functionally-equivalent, non-infringing service; or (C) modify the applicable Service or related software or equipment to be non-infringing but otherwise functionally equivalent.
 
10.3  Indemnification Procedures .  The indemnified party shall notify the   indemnifying party within 10 days of receiving notice of any claim covered by this Section 10 ; provided, however, that the right of indemnification hereunder shall not be adversely affected by a failure to timely provide such notice unless, and only to the extent that, the indemnifying party is materially prejudiced thereby .  The indemnifying party may assume sole control of the defense of any such claim if (a) the indemnifying party acknowledges its obligation to indemnify the indemnified party for any losses resulting from such claim and (b) such claim does not seek to impose any liability on the indemnified party other than money damages, it being understood that the indemnified party may, at its own cost and expense, participate through its own counsel or otherwise in such defense .  The indemnifying party shall not settle any such claim without the indemnified party’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), unless such settlement is solely for monetary damages for which the indemnified party is fully indemnified under this Agreement and does not result in or require any admission or other liability of the indemnified party .  If the indemnifying party does not assume full control over the defense of any such claim within 30 days of receiving notice from the indemnified party, then the indemnified party shall have the sole right to defend or settle such claim at the cost and expense of the indemnifying party in such manner as the indemnified party deems appropriate, it being understood that the indemnifying party may, at its own cost and expense, participate through its own counsel or otherwise in such defense.
 
XI.  MISCELLANEOUS
 
11.1  Regulatory Access; Records .  Each party agrees to provide reasonable access for audit purposes to any government agencies with jurisdiction over such party (including federal bank examiners and representatives of other federal and state regulatory agencies) .  Without limiting the foregoing, if CDS is requested by any Gaming Authority to provide any information or obtain any approval from any Gaming Authority, then CDS shall provide all requested information and apply for and obtain all reasonably necessary approvals required or requested of CDS by such Gaming Authority, at the cost of Customer .  If CDS thereafter fails to provide such requested information or apply for and obtain such necessary approvals or if Customer or any of Customer’s Affiliates is directed to cease business with CDS by a Gaming Authority, then CDS shall exercise its best efforts, in good faith, to remedy such issues .  During the term of this Agreement and for 4 years thereafter (or such longer period as may be required by the Network Rules or any Applicable Law), CDS shall maintain complete and accurate records of and supporting documentation for the Settlements, Adjustments and the amounts billable to and payments made by Customer hereunder in accordance with generally accepted accounting principles applied on a consistent basis.

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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11.2  Insurance .  Each party agrees to obtain all insurance coverage that is required by Applicable Law in connection with the provision or use of the Services .  Without limiting the foregoing, CDS agrees to obtain and maintain throughout the term of this Agreement:   (a) insurance on its property for the replacement value of such property and to retain general liability insurance (including broad form contractual insurance), each in an amount not less than $ [****] per occurrence and $ [****] in the aggregate; (b) excess liability insurance in an amount not less than $ [****] per occurrence or in the aggregate; (c) fidelity/crime insurance in an amount not less than $ [****] per occurrence and $ [****] in the aggregate; (d) errors and omissions insurance in an amount not less than $ [****] per occurrence and $ [****] in the aggregate; and (e) data breach and privacy insurance in an amount not less than $ [****] per occurrence and $ [****] in the aggregate .  The insurers for such insurance shall have an A.M. Best rating of A- or better or, if such ratings are no longer available, with a comparable rating from a recognized insurance rating agency .  CDS shall furnish Customer, prior to commencing the Services under this Agreement and at any time upon Customer’s request, with certificate(s) of insurance (in form and substance reasonably satisfactory to Customer) evidencing such coverage and CDS shall notify Customer at least 30 days prior to any cancellation or material change in coverage .  Upon any cancellation of any insurance required hereby, and prior to the effective date thereof, CDS shall provide Customer with certificate(s) regarding any replacement insurance .  The property, general liability, excess liability policies to be obtained and maintained hereunder shall be endorsed to provide that such policies provide primary coverage on all claims arising from or in connection with the Services performed for or on behalf of Customer.
 
11.3  Force Majeure .  Neither party shall be in default of this Agreement or liable for any loss or damage of any kind resulting from any delay or failure to perform its responsibilities under this Agreement (other than an obligation to pay money) due to causes beyond its reasonable control, including acts of God, weather conditions, wars, embargos, fires, riots, failures or fluctuations in electrical power or other similar events; provided, however, that such party gives the other party prompt written notice of such delay or failure and uses commercially reasonable efforts to limit the impact and duration of such delay or failure .  Notwithstanding the foregoing, the foregoing shall not apply with respect to CDS’s failure to comply with its obligations under Section 11.12 or to perform any other duties or obligations resulting from a   failure to comply with Section 11.12 .
 
11.4  Binding Effect; Assignment .  This Agreement is binding on the parties hereto and their respective successors and permitted assigns .  Neither party may assign, delegate or subcontract this Agreement, in whole or in part, without the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed (except, in the case of a Critical Change of Control Transaction, which shall be deemed an assignment by CDS for purposes of this sentence, the prior written consent of Customer shall be in its sole and absolute discretion); provided, however, that Customer may, without such consent of CDS, assign all of its rights and obligations hereunder to a purchaser of all or substantially all of its assets or direct or indirect successor entity of such party (whether by merger, stock or asset purchase, business combination, consolidation restructuring, exchange offer or otherwise).
 
11.5  Construction .  If any provision of this Agreement is held to be invalid, illegal or unenforceable, then the validity, legality or enforceability of the remainder of this Agreement shall

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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not in any way be affected .  Neither party shall be deemed the agent, partner or coventurer of the other by reason of this Agreement or Customer’s use of the Services .  The failure of either party to enforce at any time any provision of this Agreement or to exercise any right provided herein shall not in any way be construed to be a waiver of the provision or right and shall not in any way affect the validity of this Agreement or limit, prevent or impair the right of either party to subsequently enforce the provision or exercise the right .  This Agreement has been negotiated by the parties and by their respective counsel and, as such, this Agreement shall be fairly interpreted in accordance with its terms and without any strict construction in favor or against any party .  The use of the words “include,” “includes” and “including” followed by one or more examples is intended to be illustrative and does not limit the scope of the description or term for which the examples are provided.
 
11.6  Governing Law .  This Agreement shall be governed by the laws of the State of Delaware without regard to principles of conflicts of laws .  Except as otherwise provided in this Agreement, any action or proceeding arising out of or relating to this Agreement shall be brought in the U.S. federal courts within the State of Delaware, and each of the parties irrevocably submits to the exclusive jurisdiction of each such court in any such action or proceeding, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect of such action or proceeding shall be heard and determined only in any such court, and agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court .  Process in any action or proceeding referred to in the first sentence of this Section 11.6 may be served on any party anywhere in the world, including by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 11.10 .
 
11.7  Disputes .  
 
(a)  The parties shall attempt to settle any dispute, controversy or claim arising   out of this Agreement through consultation and negotiation in good faith and a spirit of cooperation .  In the event that any dispute arises between the parties in connection with any subject matter of this Agreement, the dispute shall be referred to a senior-level representative of each party (as identified in Section 5.4 if such dispute relates to a Billing Dispute Notice), who   shall promptly confer and endeavor to resolve the dispute .  In the event such individuals are unable to resolve such dispute within 10 days, then the dispute shall be deemed an unresolved dispute and either party may commence any action at law or in equity in a court of competent jurisdiction.
 
(b)  Notwithstanding Section 11.7(a) , either party, without delay, may   commence any action at law or in equity in a court of competent jurisdiction if relief from a court is necessary to prevent serious and irreparable injury to that party (including the enforcement of the parties’ respective obligations under this Agreement with respect to intellectual property or confidentiality) .  The prevailing party in any such action shall be entitled to collect from the other party all costs and fees incurred by such prevailing party in connection with such action (including court fees, travel expenses, out-of-pocket expenses such as copying, telephone and facsimile charges, witness fees and reasonable attorneys’ fees).

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11.8  Entire Agreement .  This Agreement (including all exhibits attached hereto) constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all existing agreements and all other communications, written or oral .  This Agreement may not be released, discharged or modified in any manner except in writing signed by both parties .  No purchase order or other form of either party shall modify, supersede, add to or in any way vary the terms of this Agreement.
 
11.9  Counterparts .  This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one in the same agreement.
 
11.10  Notice .  Any notice required or permitted hereunder shall be in writing and may be given by personal service, reputable overnight courier or the United States mail, first class postage prepaid, to the address of the party receiving notice as it appears on the signature page hereto, as such address may be changed through like written notice to the other party.
 
11.11  PCI Compliance .
 
(a)  Notwithstanding anything in this Agreement to the contrary, the parties   shall each:   (i) comply with and adhere to the payment card industry data security standard (“ PCI-DSS ”) in effect from time to time; (ii) comply with and adhere to the payment application data security standard (“ PA-DSS ”) in effect from time to time; (iii) implement and maintain appropriate measures to comply with PCI-DSS and PA-DSS; and (iv) to the extent required by any applicable third parties, such party shall require its vendors and suppliers to comply with PCI-DSS and PA-DSS .  In the event a payment card industry (“ PCI ”) representative or PCI authorized third-party seeks to conduct a security audit or review of a party at any time (including after an alleged or actual security intrusion) for the purpose of validating such party’s status, effectiveness or compliance with the PCI-DSS or PA-DSS, such party shall cooperate with such audit or review .  Each party shall immediately notify the other party in the event it has suffered any data breach or other similar system intrusion.
 
(b)  Without limiting the foregoing, CDS shall use commercially reasonable   (but no less than industry standard) security measures for its computer systems and physical   facilities designed to safeguard against (i) the unauthorized destruction, loss, alteration of or access to Customer’s Confidential Information and Customer’s data file, whether such information is at or on CDS’s systems or facilities or in transit, and (ii) the Services being provided to Customer hereunder being adversely affected or interrupted in any manner .  During the term of this Agreement on an annual basis (and prior to the completion of Customer’s fiscal year), or as otherwise required by a Network or a Sponsoring Bank, CDS shall (x) have an accredited accounting firm conduct a “SSAE16 SOC 2” audit in accordance with the Statement of Auditing Standards developed by the American Institute of Certified Public Accountants and have such accounting firm issue a Service Auditor’s Report (or substantially similar report in the event the SSAE16 SOC 2 auditing standard and/or a Service Auditors Report are no longer an industry standard), which shall cover, at a minimum, security policies and procedures and controls (including system security and physical security), and (y) have an accredited and certified auditor reasonably acceptable to Customer conduct a TR-39 audit .  CDS shall provide Customer and its

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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independent auditors with a copy of such SSAE16 SOC 2 and TR-39 audit reports promptly upon the completion thereof along with any additional information requested by Customer to the extent such information is required for Customer to remain in compliance with the Sarbanes Oxley Act of 2002 and any regulations promulgated thereunder (including, without limitation, a “bring down” letter from the accounting firm that performed the Service Auditor’s Report confirming that there have been no material changes to the Services Auditor’s Report .If Customer reasonably believes that CDS may breach or has breached its obligations under this Section 11.1 or if the SSAE16 SOC 2 or TR-39 audit reports identify any issues or non - compliance (including risks to CDS’s computer systems and/or physical facilities that could result in the unauthorized destruction, loss, alteration of or access to Customer’s Confidential Information or Customer’s data file or the Services otherwise being materially and adversely affected), then a senior technology executive of CDS shall promptly meet with a representative of Customer to discuss the matter and CDS shall promptly take all reasonable and appropriate action to address the matter to cure such issues or non-compliance and otherwise reduce the risk to Customer’s Confidential Information, Customer’s data file and the Services.
 
(c)  CDS shall conduct background checks and maintain records on all   employees or contractors who may have access to any of Customer’s Confidential Information or Customer’s data file or who will otherwise be performing services contemplated by this Agreement .  Individuals who have been convicted of a crime involving dishonesty, breach of trust, or money laundering are prohibited from having any such access and otherwise providing services to Customer unless Customer has expressly granted permission in writing .  CDS shall use commercially reasonable efforts to determine whether its employees or contractors who may have access to any of Customer’s Confidential Information or Customer’s data file or who will otherwise perform services have been convicted of any such crime or if charges for such offenses are pending or if the individual has entered into a pretrial diversion program or has been granted a deferred entry of judgment with respect thereto .  If CDS learns of such circumstances with respect to any such employee or contractor, CDS shall notify Customer in writing prior to the use of such employee or contractor in connection with this Agreement to the extent permitted by applicable law .  If CDS becomes aware of such circumstances after any such employee or contractor gains such access or begins performing hereunder, CDS shall so notify Customer as soon as reasonably possible under the circumstances upon obtaining knowledge thereof to the extent permitted by applicable law .  Upon receiving such notice, Customer shall determine, in its sole discretion, whether to allow the applicable employee or contractor to continue to have such   access or perform hereunder.
 
11.12  Business Continuity .  
 
(a)  CDS has created and shall maintain and comply with a comprehensive   disaster recovery plan (“ Disaster Recovery Plan ”) and comprehensive business continuity plan (the “ Business Continuity Plan ” and, together with the Disaster Recovery Plan, the “ DR/BC   Plans ”) through which it will be able to perform its obligations under this Agreement with minimal disruptions or delays .  CDS represents and warrants that the Disaster Recovery Plan requires CDS to maintain fully redundant processing centers at a minimum of [****] separate locations and an additional/third secured data storage facility with full backups of all data relating to this Agreement .  CDS shall (x) provide a reasonably detailed summary of its DR/BC Plans, backup

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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capabilities and redundant processing facilities to Customer on the date of this Agreement and again each time a material change is made and (y) provide Customer with access, from time to time upon written request, to a complete copy of its DR/BC Plans and proof of backup capabilities and redundant processing facilities for review by Customer.
 
(b)  CDS shall fully and successfully exercise all aspects of the DR/BC Plans   at least annually in a live production environment .  CDS shall immediately identify to Customer any deficiencies found in the applicable plan or its execution and remediate such deficiencies within [****] thereof.
 
(c)  CDS shall revise the DR/BC Plans to reflect changes in its environment   and infrastructure and as necessary to meet or exceed regulatory agency contingency planning requirements .  CDS shall notify Customer of any material change that it wishes to make to a DR/BC Plan and not make any change that will degrade the quality of the DR/BC Plans.
 
(d)  CDS shall notify Customer as soon as reasonably possible under the   circumstances after the occurrence of any event that materially effects or could materially affect any component of the Services or that otherwise warrants execution of either of the DR/BC Plans (a “ Plan Event ”) and shall immediately execute the DR/BC Plans in response to a Plan Event .  CDS shall provide Customer with regular updates during a Plan Event and the recovery process and a means of communication whereby Customer can receive regular updates and monitor progress as information becomes available.
 
11.13  Right of First Refusal; Right of Notice .  
 
(a)  CDS shall provide Customer with prompt (and in any event within [****] ) notice of the receipt by CDS of any bona fide proposal that CDS intends to pursue that would result in a Critical Change of Control Transaction (each such bona fide proposal, a “ Critical Offer ”) .  Such notice to Customer of a Critical Offer (a “ Critical Offer   Notice ”) shall include [****] .
 
(b)  [****] .
 
[SIGNATURE PAGE FOLLOWS]

 

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19

 
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to be executed by their undersigned representatives, thereunto duly authorized.

GLOBAL CASH ACCESS, INC.	 	COLUMBUS DATA SERVICES, LLC	
 	 	 	 	 	
By:	/s/ David Lopez	 	By:	/s/ Joseph C. Canizaro	
Name:	David Lopez	 	Name:	Joseph C. Canizaro	
Title:	CEO	 	Title:	Manager	

Address For Notice Purposes :	 	Address For Notice Purposes :	
 	 	 	 	 	
Global Cash Access, Inc.	 	Columbus Data Services, LLC	
7250 S. Tenaya Way, Suite 100	 	5220 Spring Valley Road, Suite 300	
Las Vegas, NV 89120	 	Dallas, TX 75254	
Phone:  (702) 855-3000	 	Phone:  (214) 242-0650	
Fax:  (702) 262-5039	 	Fax: 	
Attn:  General Counsel	 	Attn:  Chief Executive Officer	

 	 	 	AND	

 	 	 	Joe Canizaro	
 	 	 	Manager	
 	 	 	Columbus Data Services, LLC	
 	 	 	909 Poydras Street, Suite 1700	
 	 	 	New Orleans, LA  70112	
 	 	 	Joe Canizaro	

LIST OF EXHIBIT’S
 
Exhibit A Definitions
 
Exhibit B Pricing Schedule
 
Exhibit C Service Level Agreement
 
Exhibit D Business Requirements Document
 
Exhibit E Additional Requirements, Duties, and Obligations
 
ATTACHMENTS
 
1. ACH Authorization Form

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20

 
EXHIBIT A
 
DEFINITIONS
 
“ACH Authorization” means an authorization signed by Customer authorizing CDS to debit or credit the applicable Account for Settlement and Adjustments and any Fees due CDS.
 
“Account” means a deposit account maintained by Customer with a clearing institution acceptable to CDS to facilitate the Settlement of monetary Transactions and the payment of all Fees and other amounts due hereunder.
 
“Adjustment” means an electronic credit or debit initiated by CDS for the purpose of (a) correcting Network errors, (b) correcting inaccurate records of monetary Transactions, (c) correcting Settlement errors or (d) settling a disputed monetary Transaction.
 
“Affiliate” means, with respect to a specified person or entity, any person or entity that directly or indirectly controls, is controlled by or is under common control with the specified person or entity .  A person or entity shall be deemed to control another person or entity if such first person or entity has the power to direct or cause the direction of the management and policies of such other person or entity, whether through ownership of voting securities, by contract or otherwise.
 
“Applicable Law” means any applicable federal, state or local laws, rules or ordinances then in effect.
 
“Card” means any Network debit or credit card (or other card equivalent) issued by a financial institution associated with a deposit account at the issuing financial institution and used by a cardholder to obtain cash or pay for goods and services.
 
“Cardholder” means any person issued a Card by a financial institution.
 
“Fees” means the fees charged by CDS to Customer for the Services provided pursuant to this Agreement.
 
“Network” means an organization to which CDS has access that operates computer hardware and software and telecommunications facilities in order to transmit electronic messages and settle electronic funds transfers between its members.
 
“Network Rules” means the operating rules and procedures of each applicable Network as adopted by such Network’s board of directors or equivalent body, as amended from time to time, including all exhibits and addenda thereto.
 
“Scope of Work” means a document listing the written specifications, functionality, designs, plans, time frames, benchmarks, actual or estimated costs and other requirements of Customer for software development and/or support by CDS.
 
“Services” means the Processing Services, the Other Services, the Conversion Services and the Deconversion Services.

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“Settlement” means the crediting of an Account (or a third party deposit account designated in writing by Customer with a clearing institution acceptable to CDS for settlement) with the settlement amount, interchange income, surcharge income or the like arising out of Transactions.
 
“Sites” means the locations at which Customer has sold to or placed (or sells to or places) Terminals for which CDS provides Services in accordance with this Agreement, whether physical or electronic locations.
 
“Sponsoring Bank” means the bank that sponsors a Terminal on behalf of Customer pursuant to the applicable Network Rules.
 
“Tombstone” means an unattended point-of-sale device deployed by Customer within the gaming cash access environment that connects to the CDS platform to deliver debit card and credit card quasi cash advances and point-of-sale debit transactions for authorization .  The word is an industry specific description of the physical appearance of the device as deployed.
 
“Transaction” means any function that (a) can be initiated at the Terminal, (b) is processed by CDS and (c) complies with the Network Rules and all Applicable Laws .  For the avoidance of doubt but without limitation, Transaction includes any function initiated at a Virtual Terminal where the Cardholder does not physically present his or her Card, which is commonly known as a “card-not-present transaction” within the industry.
 
“Unauthorized Use” means (a) with respect to credit cards, the same meaning as such term has under Federal Reserve Board Regulation Z, 12 C.F.R. 226.12(b)(1), footnote 22, and the commentary thereto and (b) with respect to debit cards, the same meaning as “unauthorized electronic fund transfer” under Federal Reserve Board Regulation E, 12 C.F.R. 205.2(1) and the commentary thereto.
 
“Virtual Terminal” means any e-commerce platform or other software application that may be accessed by a computer, smartphone or other similar machine or device running a web browser or other similar software application (rather than using dedicated hardware such as an automated teller machine or a point-of-sale terminal) that meets applicable Network requirements and is capable of initiating and performing a Transaction.

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Exhibit B
 
Pricing Schedule
 
1. Initial Program Implementation Fee
 
Initial Program Implementation Fee:	$ [****]	
 
Implementation Fee to be invoiced as follows :  [****]
 
2. Transaction Processing Fees; Services Fees; Other Fees
 
The Fees in Section A and Section C will apply prior to March 1, 2015 unless Financial Transaction volumes exceed [****] per month, in which case the Fees in Section B and Section C will apply for such month .  For the avoidance of doubt, the Transaction Processing Fees set forth in Section A are considered to include appropriate compensation to cover the “Service Fees” set forth in Section B (e.g., the Switch Access Fee, Terminal Driving Fee, and Per User Webtools Access Fee) and such Service Fees are not to be billed separately until the Fees in Section B and Section C are applied pursuant to the first sentence of this paragraph.
 
SECTION A
 
Transaction Processing Fees
 
Transaction Type	Monthly Volume	Rate Per Transaction	
Financial Transaction	[****]	$ [****]	
 	[****]	[****] .	
iGaming / eCommerce Transaction	[****]	$ [****]	

 
SECTION B
 
Transaction Processing Fees
 
Transaction Type	Monthly Volume Tier*	Rate Per Transaction	
Financial Transaction	[****]  	$ [****]	
 	[****]	$ [****]	
 	[****]  	$ [****]	
iGaming / eCommerce Transaction	[****]	$ [****]	
Minimum Monthly Fee	$ [****]	 	
 	 	 	
*All transactions charged at the applicable tiered rate (fill a tier)	

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Service Fees
 
Fee Description	Fee	
Switch Access Fee	$ [****]	
Terminal Driving Fee	$ [****]	
Per User Webtools Access Fee	$ [****]	
(First 20 Users will be included in the Switch Access Fee)	 	
 	 	
Adjustment/Chargeback Filing – Network Fees	[****]	
 
Section C
 
Optional Fees (charged only upon request for service by Customer)
 
Fee Description	Fee	
Automated Monitoring & Dispatch Services	$ [****]	
New Site Setup (Standard Setup)	$ [****]	
Software Development	$ [****]	
Testing Services	$ [****]	
Implementation Fees	[****]	
Sponsorship Fees	[****]	
Shipping	[****]	
Adjustment/Chargeback Filing – CDS Fees	$ [****]	

NOTES
 
	1.		Customer will be responsible for all communication connections between Customer Terminals and CDS sites.	
 
	2.		All network application and annual fees for sponsorship are the responsibility of the Customer .  Customer’s financial sponsor must verify that Customer is registered with the networks in which the Customer participates and notify networks that Customer utilizes CDS as a processor before terminals may be activated at CDS.	
 
	3.		Customer is responsible for all Travel and Expenses where CDS is required to attend customer sites at Customer’s request .	

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Service Descriptions
 
Transaction Processing
 
Transaction processing fees paid for the receipt, processing and routing of a financial transaction request processed within the CDS environment .  The fee also includes settlement, fund distribution, reporting, and archiving of the transaction in a secure and compliant manner.
 
Switch Access
 
Switch Access provides base access for use of services developed for the provision of transaction processing .  This includes access to web services designed to accept and respond to transaction requests from various Customer owned systems and sources, and required access to payments networks (MasterCard, Pulse etc.) .  Switch Access includes the provision of test system access and authorization such that Customer may connect various Customer owned test systems for the purpose of pre-production testing and evaluation.
 
Terminal Driving
 
Terminal driving fees pay for the connection, management and handling of state driven or open architecture ATMs or Kiosks .  The fee includes the overall management of the load image, inclusive of screens, states, timers required for the proper functionality of the device .  Basic device monitoring is included in the terminal driving fee .  Basic monitoring provides event monitoring tools (Webtools) and the capability to deliver alerts to endpoints defined by the Customer .  In, addition, CDS provides minor load image changes inclusive of screen changes, minor flow or functionality modifications as part of the base terminal driving fee .  Additions or modifications to the overall terminal estate (adding or removing ATMs to existing sites) are included in the terminal driving fee.
 
Webtools User Access
 
Webtools User Access provides a named user account with access to the Webtools and the required functions granted to the user within their security profile .  Functions are defined by CDS or a Customer representative who has been granted the appropriate authorization level by Customer.
 
Adjustment Chargeback Filing
 
CDS will invoice a CDS Adjustment or Chargeback filing fee if a Customer elects to have CDS collect the required documentation and file on their behalf .  Customers who perform their own documentation and dispute management will only be responsible for fees levied by the networks.
 
Automated Monitoring & Dispatch Services
 
Automated Monitoring & Dispatch (AMD) services include all services described in Terminal Driving .  Additionally, all terminals will be monitored directly by CDS with automated dispatch to first and second line maintenance providers as defined by the Customer .  Availability and dispatch event reporting are included .  Automated Monitoring and Dispatch services are available to ATM portfolios with 100 or more terminals .  The AMD service fees are inclusive of the base Terminal Driving fee, Customer will pay only the AMD fee if the service is elected.
 
New Site Setup
 
A New Site Setup is required where a new top level entity is required for distinct management, reporting, settlement of maintenance of an associated group of terminals .  This may include specific reporting delivery, customization of alert distribution or settlement funds delivery .  A site in this instance is better considered as a logical grouping of terminals rather than a physical location.
 
Sponsorship Fees
 
Sponsorship fees are applicable if Customer elects to discontinue being a registered/sponsored ISO and elects to have

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CDS become the ISO and obtain sponsorship for Customer’s terminals.
 
Software Development
 
CDS charges for software development at an hourly rate for minor customizations .  Larger scale projects may be quoted through a scope of work document with fixed or time and materials based pricing, as mutually agreed upon with the Customer.

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Exhibit C
 
Service Levels
 
Service Level:  Transaction Processing
 
Service	Measurement	Target	Comments	
Switch Availability
 
(Defined as the ability for the platform to receive, route and authorize transactions)	 [****]	[****]	 [****]	
 
In the event CDS fails to achieve the Switch Availability target during any SLA Period, Customer shall be entitled to receive a Service Level Reimbursement as follows:
 
	·		for Switch Availability of less than [****] % but equal to or greater than [****] %, Customer shall be entitled to a reimbursement credit on the following month’s invoice of [****] %;	
 
	·		for Switch Availability of less than [****] % but equal to or greater than [****] %, Customer shall be entitled to a reimbursement credit on the following month’s invoice of [****] %;	
 
	·		for Switch Availability of less than [****] %, Customer shall be entitled to a reimbursement credit on the following month’s invoice of [****] %.	
 
If CDS fails to attain Switch Availability monthly average of [****] % during [****] consecutive months, [****] months in any rolling [****] period or [****] months in any rolling [****] period, Customer may subsequently either (in Customer’s sole discretion) (i) terminate the Agreement with [****] advance written notice and without penalty or (ii) terminate the obligation to pay [****] .

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 
Service Level:  Device Driver Availability - Terminal Availability
 
Service	Measurement	Target	Comments	
Terminal Device Driver
 
(Defined as the terminal driver that receives and routes transactions)	 [****]	[****]	 [****]	
 
In the event CDS fails to achieve the Terminal Device Driver availability target during any SLA Period, Customer shall be entitled to receive a Service Level Reimbursement as follows:
 
	·		for Terminal Device Driver availability of less than [****] % but equal to or greater than [****] %, Customer shall be entitled to a reimbursement credit on the following month’s invoice of [****] %;	
 
	·		for Terminal Device Driver availability of less than [****] % but equal to or greater than [****] %, Customer shall be entitled to a reimbursement credit on the following month’s invoice of [****] %;	
 
	·		for Terminal Device Driver availability of less than [****] %, Customer shall be entitled to a reimbursement credit on the following month’s invoice of [****] %.	
 
	·		Device driver availability reimbursements are applicable only in cases where greater than [****] % of the GCA device portfolio is impacted as a result of the failure or service degradation.	
 
If CDS fails to attain Terminal Device Driver availability monthly average of [****] % during [****] consecutive months, [****] months in any rolling [****] period or [****] in any rolling [****] period, Customer may subsequently either (in Customer’s sole discretion) (i) terminate the Agreement with [****] advance written notice and without penalty or (ii) terminate the obligation to pay [****] .

 

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Service Levels:  Web Services
 
(This includes real time transaction feed)
 
Service	Measurement	Target	Comments	
Availability of Web Services	 [****]	[****]	 [****]	

In the event CDS fails to achieve the Web Services Availability target during any SLA Period, Customer shall be entitled to receive a Service Level Reimbursement as follows:
 
	·		for Web Services Availability of less than [****] % but equal to or greater than [****] %, Customer shall be entitled to a reimbursement credit on the following month’s invoice of [****] %;	
 
	·		for Web Services Availability of less than [****] % but equal to or greater than [****] %, Customer shall be entitled to a reimbursement credit on the following month’s invoice of [****] %;	
 
	·		for Web Services Availability of less than [****] %, Customer shall be entitled to a reimbursement credit on the following month’s invoice of [****] %.	
 
If CDS fails to attain Web Services Availability monthly average of [****] % during [****] consecutive months, [****] months in any rolling 6- month period or [****] in any rolling [****] period, Customer may either (in Customer’s sole discretion) (i) terminate the Agreement with [****] advance written notice and without penalty or (ii) terminate the obligation to pay [****].

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Service Levels:  Tools Category
 
Service	Measurement	Target	Comments	
Web Tools Availability	 [****]	[****]	 [****]	

In the event of a service level issue that prevents access to WebTools, CDS will notify GCA in advance with updated availability timeframes as information becomes available. Furthermore, in the event of file delivery delays or errors;
 
o More than [****] times in a calendar month
 
	§		An invoice credit of the greater of; [****] or [****]	
 
	§		An incident report and action plan for remediation if required will be delivered to GCA within [****] business days	

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Service Levels:  Batch File & Report Delivery
 
Service	Measurement	Target	Comments	
Batch File and Network Report Availability	 [****]	[****]	 [****]	

In the event of a service level issue that causes a delay in delivering files to GCA, CDS will notify GCA in advance with updated delivery timeframes as information becomes available. Furthermore, in the event of file delivery delays or errors;
 
 When a file/report is delayed and is within CDS’s system or control;
 
o More than [****] times in a calendar month
 
	§		An invoice credit of $ [****] will be applied to the next GCA invoice	
 
	§		An incident report and action plan for remediation if required will be delivered to GCA within [****] business days	

 

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	1.		SERVICE LEVEL REIMBURSEMENTS	
 
Service Level Reimbursements/Commitments and right to termination are effective as of the Trigger Date.
 
Service Level Reimbursements are based on the Processing Fees paid (or payable).   Service Level Reimbursements will be credited by CDS to Customer on the month’s invoice following the month of the missed Service Level.
 
Service Level Reimbursements shall not be due or payable by CDS as a direct result of an event or incident involving Customer’s own technology environment or systems.
 
In the event of a system or facility issue that causes CDS to miss service levels in multiple categories as a result of a single or multiple demonstrably linked events, reimbursement will be limited to the single service category with the greatest required reimbursement amount.
 
	2.		RETURN TO SERVICE COMMITMENTS	
 
Severity Level and Return to Service (RTS) SLA

Severity Level	Description	Response Timeframe	
Severity 1	A failure of one or more components of a the service implemented as part of a production environment that (a) is resulting in the complete failure of the affected components such that the affected components are unusable by end users, Customer (i.e., resulting in downtime for the affected components) and/or (b) is causing a business-critical Customer system to be non-operational (i.e., resulting in downtime for the affected system).	CDS will initially respond (i.e., commence the process of developing knowledge of the Error or other situation and communicating with Customer regarding the Resolution) immediately after identifying the problem or receipt of the Support Request and will dedicate resources to the issue until resolved. CDS will provide Customer with an Interim Resolution within [****] hours after such problem has been successfully reproduced by CDS and verified to be caused by a failure of one or more components of a Switch. CDS will use commercially reasonable efforts to duplicate and verify such issue as soon as possible. CDS will provide Customer with a Final Resolution within [****] thereafter. CDS will devote a sufficient amount	

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 	 	of qualified personnel and resources in order to persistently and diligently work on the Resolution of each Severity 1 Error.

Severity 2	A failure of one or more components of the service implemented as part of a production environment that (a) is affecting significant functionality of the affected components and/or preventing end users from successfully completing transactions using a the service without resulting in downtime for the affected components and/or (b) is causing a significant impact to a Customer system without resulting in downtime for such system.	CDS will initially respond (i.e., commence the process of developing knowledge of the Error or other situation and communicating with Customer regarding the Resolution) immediately after identifying the problem or after receipt of the Support Request. CDS will use commercially reasonable efforts to duplicate and verify such issue as soon as possible. CDS will provide Customer with an Interim Resolution within [****] hours after such problem has been successfully reproduced by GCA and verified to be caused by a failure of one or more components of the Services. GCA will provide Customer with a Final Resolution within [****] month thereafter.

Severity 3	All other failures of one or more components of a the Service implemented as part of a production environment.	CDS will initially respond (i.e., commence the process of developing knowledge of the Error or other situation and communicating with Customer regarding the Resolution) within [****] after receipt of the Support Request. CDS will include the failure in CDS’s standard error-review cycle in order to address and fix the failure in a future update or upgrade, if any.

Severity 4	All other failures of one or more components of a the Services implemented in any test or development environment, as well as clarification or correction of any GCA Documentation.	CDS will use commercially reasonable efforts to resolve Severity 4 [****] in accordance with a schedule reasonably agreed to by the Parties.

 
 
“ Interim Resolution ” means a temporary correction of an Error (which may include a reasonable workaround).   “ Final Resolution ” means a permanent repair, correction of or workaround for an Error so that a Lottery Client, Customer and Authorized Players can

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continue to use a Switch as contemplated by the Agreement.
 
“ Resolve ” or “ Resolution ” means a CDS-provided Interim Resolution, where applicable, and Final Resolution for an Error.
 
Service	Measurement	Target	Comments	
RTS (Return to Service)	 RTS is measured from the time a Major Incident (MI) is identified until the time a Resolution or Interim Resolution is in place .	CDS will ensure t hat Return to Service for all MI ’s (major incidents) is less than or equal to an aggregate [****] on a monthly basis.	 Non-Critical Service Level
 
 Major Incident is either a Severity 1 or 2	

 In the even the RTS SLA is missed an SLA Penalty of $ [****] will be assessed
 
 This SLA measure will be started [****] after the Trigger Date.

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EXHIBIT D
 
BUSINESS REQUIREMENTS DOCUMENT
 
Note :  A final version of this Exhibit “D” shall be agreed upon by the parties no later than two (2) weeks after the date of the Agreement.
 
OTHER SERVICES
 
1. Terminal Driving
 
a. Customer will provide CDS with functional specifications in order for CDS to test and certify each terminal type to the transaction set specified by Customer.
 
b. Customer will provide, at Customer’s expense, CDS with a physical test unit for each terminal type used by Customer .  These test units will reside in the CDS ATM test lab during the term of this Agreement and will be returned to Customer, at Customer’s expense, at the termination of the Agreement .  The test units are and will remain the property of Customer.
 
c. Customer will provide CDS with the following interface specifications:
 
i. ATM 912 load set and specification
 
ii. FSK specification
 
iii. Pangaea interface specification
 
iv. NRT Kiosk specification
 
v. Macau/Jetco/CUP specification
 
d. CDS will develop ATM and FSK load sets to perform the terminal functions providing the same functionality as is deployed today.
 
e. CDS will, from time to time and as mutually agreed to and documented in a Scope of Work, develop or enable additional functionality for Customer terminals.
 
f. CDS will develop functionality to drive existing terminal functionality on the NRT Kiosks based on specifications provided by Customer.
 
g. CDS will develop an interface to support functionality currently deployed on the “Tombstone” terminals based on specifications provided by Customer.

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h. CDS will support differential surcharging and surcharge waiver based on specifications provided by Customer.
 
i. CDS will support EMV for connections to or in support of the Peoples Bank of China and Macau.
 
j. CDS will support bill mix at the terminals based on denominations and parameters set by Customer.
 
2. Webtools Enhancements
 
CDS will develop or provide specific enhancements to CDS’s webtools product for   Customer as follows:
 
a. Specific Customer user security requirements specified by Customer including the ability of for Customer’s clients have different password complexity and password expiration requirements, provided the requirements meet or exceed applicable rules.
 
b. Enhanced support for automated trouble ticket creation, escalation, and closure functions as specified by Customer.
 
c. Terminal affiliation grouping and permissions hierarchy by terminal and by property/location.
 
d. Personalized or branded webtools screens by property/location.
 
e. Self-exclusion registration, within webtools or as a separate web based product as specified by Customer, for casino patrons who want to limit their access to gaming cash at the terminals, kiosks, or other cash access devices operated by Customer at casino locations serviced under this Agreement.
 
f. BIN blocking requests support through webtools.
 
3. Dynamic Currency Conversion (“DCC”)
 
CDS will support DCC for MasterCard international card transactions acquired at Customer terminals which are DCC enabled.
 
4. Retrieval System
 
CDS will work collaboratively with Customer to develop and support a “Retrieval System” whereby information from cash advance transactions and other such transaction types that require completion at the casino cage will be stored in the CDS environment for access and retrieval by Customer’s casino cage application used by the casino cage .  The Retrieval System will initially support:

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a. Storage of any authorized transaction that requires completion at the casino cage.
 
b. A time based auto void of any authorized transaction that is not retrieved at the casino cage.
 
Customer and CDS will discuss and architecture future Retrieval System support, to be mutually agreed upon and documented in a Scope of Work, to support the following functionality:
 
a . Potential storage of casino patron information if requested by Customer.
 
b . Potential store and forward functionality to update Customer with casino patron information sent to CDS by the casino cage application.
 
c . Links to Customer/BHMI core systems for the provision of real time casino patron and transaction information.
 
5. Additional Web Services
 
Based on specifications from Customer, to be mutually agreed upon and documented in a Scope of Work, CDS will develop and support a suite of web based services to support transaction and information requests from the casino cage application and Customer’s   call center to support the following:
 
a. The ability of the casino cage application and/or Customer’s call center to submit cash advance transaction requests for authorization.
 
b. The ability of the casino cage application and/or Customer’s call center to submit cash advance transaction void requests as necessary.
 
c. The ability of the casino cage application and/or Customer’s call center to query and receive information from the Retrieval System.
 
d. The ability for Customer to manage all user access permissions a nd limits .

CONVERSION SERVICES 
 
[BE SURE TO INSERT CONVERSION TASKS AND REQUIREMENTS HERE] .

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Pr o ject   D e l i v era bl es
 
The project deliverables encompass the full scope of work for the project.  Successful delivery is highly dependent on strong collaboration, communication, coordination, and teamwork between the GCA and CDS teams.  CDS will be delivering to GCA the following products and services during the life of the project;
 
Payme n t s   Proces s i n g
 
CD S   wil l pro v i de a pa y m e n ts   p roc e ss i n g so l uti o n   th a t   a ll o w s   G C A to l e v e r a g e CD S ’ e x p e rt i se in t e r m i n a l ma n a g eme n t   w h il e a l so de l i v eri n g   a  t ra n sa c t i on   g a te w ay   th a t   G C A   can u t ili z e   t o   r o u te   a n y   a c q u i red  t ra n sacti o n thro u g h .
 
Ter min a l   P r o ce ssing
 
CD S   wil l   comp l ete   the   f o l l o w i ng   t e rm i n a l   ma n a g e me n t   d e li v erab l es;
 
1. P r ovide  p r o c e s s i n g   ser vi ces   for GC A’ s   A T M s   r un ni n g   Wi n cor P r o fle x ;   inc l u di n g  t e s ti n g , cer t i f ica t ion,   a n d con f i g urat i on
a. CDS w ill c ertify   and  t e st   G CA   pro v ide   T e st  A TM u n i t .   A TM t o   b e sent  t o   CDS ’ s   D all a s   of f i c e.
b. GCA   will t r a in   CDS   sta f f   o n   use of A TM.
c. GCA  t o p r ovide P r oflex   s p e c i f i cat i ons   i n c l ud i n g   k ey  b uffe r s, s cr e en   updat e s, r e s po n se s t ate s , tra n s a ction   se t s, et c . as   r e q u i red   f or u se in   AT M a n d   3   in   1   tra n s a ct i on   se t s.
d. Create a   l oad s et p er G CA   W i n c or P rof l ex   sp e ci f i cat i ons (i n clu d i n g   k ey  b uffe rs ,   tra n sa c t ion   t y p e s, sc r een   fo r ma t s, r e spo n se   to state n u m b er, f o r mat o f su r char g e)
e. CDS w ill   s upport   t h e fol lo wing   t ra n sa c t ion   at t h e   A TM:   Bala n ce I nq u i r y ,   A c co unt   Tra n s fe r s,   W i t h drawa l s, P i nn ed Q u a si   C a s h   and   P i n l e ss   Q u a si   Ca s h
f. Support  b i ll   m ix   func t ion a lity

2. P r o c e s s i n g   ser v i c es   f or G CA ’ s   F ull S e r v i c e K i o s k s   i n clu d i n g  t e s ti n g ,   cert i f i ca t i on,   and   co n f i g ura t ion
a. CDS w ill c ertify   and  t e st   G CA   pro v ide   T e st  A TM u n i t .   A TM t o   b e sent  t o   CDS ’ s   Dall a s   of f i c e.
b. GCA   will t r a in   CDS   sta f f   o n   use of A TM.
c. GCA  t o p r ovide P r oflex   s p e c i f i cat i ons   i n c l ud i n g   k ey  b uffe r s, s cr e en   updat e s, r e s po n se s t ate s , tra n s a ction   se t s, et c . as   r e q u i red   f or u se in   AT M a n d   3   in   1   tra n s a ct i on   se t s.
d. Create a   l oad s et p er G CA   W i n c or P rof l ex   sp e c i f i cat i ons (i n clu d i n g   k ey  b uffe rs ,   tra n sa c t ion   t y p e s,   sc r een   fo r ma t s, r e spo n se   to state n u m b er, f o r mat o f su r char g e ) C D S   w ill   sup p ort   the fo l lowi n g tra n s a ction   at t h e   A TM:   B ala n ce

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 
I nq u ir y ,   Ac c o unt  T ra n sfe r s,   W i t h drawa l s, P i nn ed Qua s i   C a sh and Pinle s s   Q u as i C a sh
e. CDS w ill   s upport   t h e fol lo wing   t ra n sa c t ion   at t h e   A TM:   Bala n ce I nq u i r y ,   A c co unt   Tra n s fe r s,   W i t h drawa l s, P i nn ed Q u a si   C a s h and   P i n l e ss   Q u a si   Ca s h
f. Support  b i ll   m ix   func t ion a lity
 
3. P r o c e s s i n g   ser v i c es   f or G CA ’ s   N R T   d ev i c e s   i n clu d i n g  t e s ti n g ,   cer t i f ica t ion,   a n d   confi g urat i on
a. CDS w ill c ertify   and  t e st   G CA   pro v ide   T e st  A TM u n i t .   A TM t o   b e sent  t o   CDS ’ s   Dall a s   of f i c e.
b. GCA   will t r a in   CDS   sta f f   o n   use of A TM.
c. NRT d evi c es   w ill   u se s t an d ard   T r iton   F o r mat t o p r o ce s s   w i t h C D S.
d. 3 in   1   r ollover   fu n c t iona l i ty   w ill   b e supp o rted  b y   N RT, n ot C D S.
e. CDS w ill   s upport   t h e fol lo wing   t ra n sa c t ion   at t h e   A TM:   Bala n ce I nq u i r y ,   A c co unt   Tra n s fe r s, W i t h drawa l s, P i nn ed Q u a si   C a s h and   P i n l e ss   Q u a si   Ca s h
 
4. P r o c e s s i n g   ser v i c es   f or G CA ’ s   G lory   de v i c e s   i n clu d i n g  t e s ti n g ,   cer t i f ica t ion,   a n d   confi g u r at i on
a. CDS w ill c ertify   and  t e st   G CA   pro v ide   T e st  A TM u n i t .   A TM t o   b e sent  t o   CDS ’ s   Dall a s   of f i c e.
b. GCA   w ill   t r a in   CDS   sta f f   o n   use of A TM.
c. Glory  d ev i ces   w ill   u se s ta n dard   T r iton   F or m at t o p r o c e ss   w ith C DS.
d. 3 in   1   r ollover   fu n c t i ona l i ty   w ill   b e supp o rted  b y   G lory,  n ot C D S.
e. CDS w ill   s upport   t h e fol lo wing   t ra n sa c t ion   at t h e   A TM:   Bala n ce I nq u i r y ,   A c co unt   Tra n s fe r s, W i t h drawa l s, P i nn ed Q u a si   C a s h and   P i n l e ss   Q u a si   Ca s h
 
5. P r ovide   con n e c t io n s/ g a t wa y s   t o ap p rop r iate   spo n sored   f i n a n cial n e t w orks f or G CA
a. Work   w i t h spo n sor b ank   t o p r epare n etw o rk  p ape r work   for   en r ol l i n g   G CA   in   the n etwor k s.   C o mplete p a p erwork   for   GCA   settl e ment   o f fun d s.
b. Coor d i n ate e x cept i on   pr o ce s s i n g   se t - up for G CA   wi t h   n etwor k s
c. ICA   /   B IN   setup a n d   P se u do A B A / P seu d o   T er m i n a l   set up   ( a s   r eq u ired  b y   e a c h   n etwor k )
d. P r ovide app r opr i ate p a y men t s   r ou t i n g
 
6. EMV   cert i f i ed P ayme n t s   P latfo r m
a. P r ovide a M a ste r Card / V i s a cer t if i ed E M V   p ay m en t s   platfo r m
b. CDS t o   a s s i st   GCA   w i t h fu t ure E M V   V i s a &   Ma s t erC a rd   MTIP   cert i f i ca t ion s .

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 
Tra nsa c t ion Ga te w a y   for   T RANSIT
 
CD S   wil l pro v i de a t ra n s acti o n   g ate w ay   thro u g h  w h i ch G C A can   ro u te   tr a ns a ct i o n s   to   the v ari o us   d e b i t n e t w or k s   a n d   o th e r   m ut u a l l y   a g r e ed u p on   e n d p o i nts.   T he   g ate w ay  i nte r f a ce w i l l be a Po s tbr i g e   I S O8 5 83 co n n e ct i o n .

1. P r ovide GCA   w ith pa y me n t s   inter f a c e   t o allow   TR A NS I T   g ateway  p r o c e s s i n g   to spo n sored n et w orks.
a. CDS w ill   p r ov i de a P o st b r i d g e i n terf a ce to   al l ow   G C A  t o   g ateway  t raff i c   fr o m   TR AN S I T
b. P r ovide D CC   G ate w ay   for   Pin n ed &   P i n le s s   Q u a s i   C a sh tra n sa c t ion   to P lanet   P ayme n t

DCC
 
CD S   wil l   su p p o rt   D y n a m i c   C ur r e n cy  C o n v ersi o n   ( DCC )   v i a spec i f i ed   g a t e w a y s.    A   se p ar a te add e n d um   w il l be uti li z ed to supp o rt   the D C C b u s i n e ss   c o mp o n e n t s   a n d   p r i c i n g .

1. P r ovide D CC f or Pinl e ss   Q ua s i   C a sh tra n s a ctio n s   v ia   P lanet   Pa y men t s   ( P ha s e   I )
a. GCA   w ill   s ettle   w i t h   V i s a / MC di r e c tly   b y   se n d i n g fu l f i l l ment   tra ns a c t ion   to P l a n et v ia C D S
b. CDS w ill   c r eate and   send   s ettle m ent   file d ir e ctly  t o   D i s cov e r
c. CDS t o p r ovide G CA   with   BIN f i le of D CC   a v a ilable   b i n s   ( Pla n et t o p r ovide a B I N fi l e to   C D S, w h i c h CDS w ill   ftp   to G CA).
d. DCC tra n s a ctio n s   t o   b e   p r ovided b o t h thr o ugh T r ans I T   inter f a c e a n d   Ti t ani u m.
2. P r ovide D CC   f or A TM t ra n sa c t io n s   v ia S ha z a m / Eu r o n et ( Phase 2)

W e b   S er v ice s
 
CD S   wil l pro v i de a su i te o f   w eb ser vi ce based   fu n ct i o n a li ty   th a t   G C A   w il l acc e ss   for   v ari o us t r a n sa c t i on a n d a d m i n i str a t i v e   f u n ct i o n s .

1. P r ovide web   s er v i c e s   for   GC A’ s   C a sh C lu b , C a ll Cen t er, a n d   to m b sto n e   vi a   G C A’ s   T i ta n i u m   A p p l i ca t ion; i n cl u di n g  t e s t i n g   a n d   cer t i f i c ation:
a. CDS t o   d evelop t h e fol l o w i n g   web   ser v i ce that w ill i n terfa c e   w ith   Tita n i u m   f o r   tra n sa c t ion proc e s si ng .
 
i. Qua s i   C a sh P i n le s s   P re A u thor i zat i on
ii. Qua s i   C a sh P i n le s s   V o i d   P r e   A utho r iza t ion
iii. Qua s i   C a sh P i nn ed A ut h o r iza t ion
iv. Qua s i   C a sh P i nn ed V o i d   A utho r iza t ion
v. Qua s i   C a sh P i n le s s   V o i ce   A utho r iza t ion
vi. A ddre s s   V er i f i cat i on   ( Z ip   Code O n l y )

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 
vii. Pin n ed/ P i n l e s s   B ala n c e   I nq u i ry
viii. Ge n eral De b it
ix. Ge n eral Cr e dit
x. DCC E l i g i b ility  R ate   C h e ck
xi. DCC Q ua s i   C a sh P i n l e ss   P r e   A utho r iza t ion
xii. DCC Q ua s i   C a sh P i nn ed A utho r iza t ion
xiii. DCC Q ua s i   C a sh F u l f i l l m e n t
xiv. Qua s i   C a sh F u l f i l l ment

2. P r ovide   Te r mi n al M ana g e ment   Web   Ser v i c e s   t o al l o w   GCA  t o o nb oard a n d   m a n a g e the i r   te r m i n al s .
a. CDS t o   d evelop   t h e fol l o w i n g   w eb   ser v i c e s:
i. A dd   ter m i n al
ii. Edit   T er m i n al
iii. Query   Te r m i n al
iv. R e - key  r e mote k ey   A TMs
v. Send  O pen   C o m mand
vi. Send   Cl o se   C o m m and
vii. Send   L oad C o m mand
viii. Create F ee   Table
ix. A dd  F ee Table
x. Edit  F ee   Ta b le
xi. Q uery   F ee T able

S el f   E x cl u sion
 
1. P r ovide GCA   w ith S elf E xc lu s ion   fu n ct i onality   for   A T M s   a n d  F S K s   d ir e ctly  p r o c e s s i n g   w ith C D S .
a. CDS   m u st   pro v i de S e lf E x c lu s ion   fu n ct i onality   for   all   d ire c t ly  d ri v en  A T M s   &  F SK s .
b. CDS t o   d evelop t h e fol l o w i n g   Self E x c l u s ion   C ard   M ana g e m ent   web  s er v i c e s.
i. Self E x cl u sion  A dd
ii. Self E x cl u sion   E dit   C ard   H older N a m e
iii. Self E x cl u sion   E dit   C ard   D a i ly   Li mit
iv. Self E x cl u sion   E dit   C ard   B lo c k   E x pi r ation   D ate
v. Self E x cl u sion   D elete
vi. Self E x cl u sion  L im it In q u i ry

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 
I n fr a struc t ure
 
CD S a n d   G C A   w il l mut u a l l y   arch i te c t   a   te l ec o m m u n i cati o ns so l uti o n   th a t   me e ts   the   r e q u i reme n ts   o f   the b u s i n e ss   b e i ng su p p o rt e d.
 
1. [****]   C on n e c t ion
a. [****]   d ata   c en t er
b. Setup f or t e s t i n g   a n d   cer t i fying   t er m i n al de v i c e s   a n d   web   ser v i c e s.
c. CDS to p r ovide   a test   en vi ro n ment   f o r   GCA  t o   u se a s  n eeded
d. GCA  t o s c he d ule all   at t en d ed t e s t   t i me w ith C DS   at   le a s t   [****]   h ou r s   in   ad v a n ce
e. [****] .
2. [****] Con n e ction
a. [****]   d ata   c en t er
b. [****]   d ata   cen t er
c. Tel e c om mun i ca t io n s   ar ch itec t ure d e si g n   f o r   con n e c ti n g   G CA ’ s   p r i mary   a n d   s e condary  s it e s   a n d CDS ’ s   A cti v e /  A cti v e   sit e s .
d. Backup   and  r e covery  p lan
e. F a i lover   t e sti n g   a n d   c erti f ica t ion
f. GCA  t o p r ovide   for alter n a te r outi n g  t o t h e   [****] in   the e v ent   o n e   s hould  b e c o me una v a i lab l e due to [****]

Monitoring
 
1. Real T i m e Tra n s a ct i on  F eed of GCA  t ra n sa c t io n s
a. Uti l ize t he stan d ard   C DS   P o s t b r i d g e   i n ter f a c e   p r o c e ss   t o p r ovide a   copy   of a ll  G CA   tra n s a ct i ons proc e s sed v ia   CDS   e x cept   for tra n s a c t ions v i a TR A N SI T .

Back Office
 
G C A   w il l p e r f o rm   b a c k   o f f i ce   s e tt l eme n t,   d i sp u te   ma n a g eme n t   a n d   fu n ds   d i str i b u t i o n .  CD S   w il l pro v i de re p o r t i ng as   fo ll o w s   to   s u p p ort th e se   a c t i v i t i es;
 
1. Deta i l   Tra n s a ction  F i l e   ( . D E T )   f ile
a. P r ovide a . DET   f i le t o   G CA   d a i ly  p er G CA   s p e c i f ica t i o n s
2. Dy n a m i c   C urre n cy   Co nv e rs i on   (.D C C) fi l e
a. P r ovide a . DCC f ile t o   G CA   from   P l anet   Pa y men t s
3. No r ma l ized E OD d ata   f il e s
a. P r ovide an   end   o f day   tr a n sa c t io n s   fi l e to   GCA  p er   GCA   B HMI sp ec if i ca t ions
4. P r ovide f i n an c ial n etwork   r e c o n ci l iat i on,   r e con   f i l e s ,   a n d   reports.
a. P r ovide F i n a n c i al n etwo r k   re c on c i l iat i on  b etween   CDS a n d   f i n an c ial n et w o r ks
b. P r ovide d a ily   fi n a n c i al n e t work  r aw   data r e con   f i les
c. P r ovide d a ily   fi n a n c i al n e t work  r eport   f il e s

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 
5. Settl e ment   a n d   E x c ept i on   P r o c e s s i n g
a. GCA   w ill   hand l e all   te r mi n al Settl e ment  p r o c e s s i n g ,   a c h pr o c e s si n g
b. GCA   w ill   hand l e all   e xc ep t ion   ma n a g e m ent  p ro c e s s i n g   ser v i c e s :
c. GCA   w ill   hand l e all   e xc ep t ion   and  r e con c il i at i on   of   s ettle m ent   b a s ed   on  n etw o rk  r aw   data fi l es   a n d reports   in   c o m b i n a t ion   w i th the C D S   R TT F ,   . DET   and   G CA   .GCA   f i l es
d. GCA   w ill   p r ov i de t he . G CA   inter n ally
e. GCA   w ill   s ettle w i t h the n etwor k s   f or fun d s, f e e s ,   a n d   ad j u s t m en t s   d ir e ctly  ( i f a v a i lable)   and   w ill ha n dle t h e i r   own  r e co n ci l iat i on.
f. CDS w ill   do n etw o rk   le v el   re c o n ci l ia t ion   and  p ro v i d e supp o rting   r epor t s
g. GCA   w ill   r e ce i v e dir e ct   s e t tlement   f r om   n et w orks
h. GCA   w ill   hand l e th e ir   own   r e c o n ci l iat i on   with t he n e t w orks a n d   wi t h ot h er g atewa y s,   s u ch a s   P lanet Pa y me nt
i. GCA   w ill   a l so s ettle d ir e ct l y   w ith th e ir   m e r c ha n ts f o r   any   mer c ha n t   fu n d e d   t e rmi n a l s .
j. GCA   w ill   s ettle d i re c tly   w i th the i r   me r c h an t s   f o r   any   fun d s   o w ed   or due t he m   for   e x cep t ion s , fe e s, i nv o i ci n g , e t c.
k. GCA  t o handle t heir   own   e x ception   mana g e ment   fu n cti o n s   u si n g  t h e ir   i n ter n a l   syst e m   a n d   e a ch   n etwor k’ s   p orta l .
l. GCA  t o handle t e r m i n al l e v el b ala n ci n g   for   t heir   t e r mi n a l s
m. GCA  t o handle t e r m i n al d i sput e s   ( c har g eb a cks, a d j u st m en t s, re - pr e sen t men t s , retrieva l s, a n d ar b itrat i on/ c o m p l ia n ce c a s e s).
n. GCA   w ill   hand l e a n y   n etwork   c o mpl i ance r epor t i n g   or q uarterly  r ep o rting   r e q u i red   e it h er d i r e c tly or t hrou g h th e ir   spo n sor   b an k , unle s s   oth e r w i se a g reed t o   w i t h C D S
o. GCA   w ill   per f orm   me r c h a n t   under w riti n g   f o r   th e ir   portfo l io
p . No c u s t om   settl e ment   re p orts are r equ e sted
 
Deploym e n t / C o n v e rsion

CD S   wil l pro v i de su p p o rt   t h ro u g h o ut   the   d e p l o y me n t   a n d   co n v ersi o n pr oc ess.
 
1. Tr a i n i n g   a n d   sup p orti n g   do c u men t ation
a. GCA   settl e ment   staff
b. GCA  t e c h n i c al st a ff
c. Tr a i n i n g   on   Web  T oo l s, C DS   r epor t s
2. A s s ist   w ith P i l ot s ite Con v er s ion
a. Pilot   s olu t ion   at a   GCA   s e l e c ted   P r o p erty
3. A s s ist   GCA   w ith P ro p erty   co nv e r sio n s
a. Defi n e re q u i r e men t s
b. Populate   da t aba s e of e xc l uded c ards   f or s el f - e x c l u s i on   fu n c t iona l it y .

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 	 	 	 	
Project Name:	CDS Conversion	 	
Project Manager:	Tom Field / Marty Otzenberger / Jason Koko	 	
 	 	 	 	
CDS Project Transition Checklist	
ID	Activity	Status	Detailed Updates	
 	Production Support, Operations, Network and Help Desk	 	 	
1	Develop detailed support plan with clearly defined roles & responsibilities. Secured approval from key stakeholders.	 	 	
2	Engage operations team to define: primary and secondary support groups, distribution lists for communication and customer escalation contacts.	 	 	
3	Provide new system/enhancement implementation dates to help desk at least 10 days prior to implementation.  Ensure helpdesk is aware of criticality of support levels.	 	 	
4	Develop and conduct training to ensure help desk, primary and secondary support teams are equipped to handle calls once system implemented.	 	 	
5	Provide instructional documentation, Frequently Asked Questions and scenarios/scripts to help support and analyze problems.	 	 	
6	Engage Monitoring group to ensure production environment system monitoring requirements have been documented, implemented and are clearly understood by monitoring team.	 	 	
7	Engage Monitoring group to shut down monitoring on the old system.	 	 	
8	Engage Production Scheduling to ensure production cycles are added/changed/deleted, tested and ready for execution.	 	 	
9	Engage Network team for: bandwidth analysis,  Circuit Maintenance, DNS, TCP/IP and WAN connections	 	 	
10	Determine additional support needed for stabilization of application.	 	 	
 	Application and Database	 	 	
11	Identify/train application support team.  Roles & responsibilities documented and clearly understood.	 	 	
12	Identify/train database support team. Roles & responsibilities documented and clearly understood.	 	 	
13	Define and test support documentation.	 	 	
14	Develop scenarios/scripts to help support and analyze problems.	 	 	
15	Define and test system recovery procedures.	 	 	
16	 	 	 	
17	Define and test restore procedures.	 	 	
18	Update production support list (primary and secondary).	 	 	

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 
 	 	 	 	
 	Replication Settlement and Reporting DB	 	 	
19	.DET file	 	 	
20	.GCA file	 	 	
21	Recon	 	 	
22	DB back up plan (JOB)	 	 	
23	DB Clean Up and Index Rebuild (Job)	 	 	
24	Record maint Jobs	 	 	
25	Define and test restore procedures.  	 	 	
26	Update production support list (primary and secondary).	 	 	
 	Business Processes and Workflows Changes	 	 	
27	Developed/revised business processes and workflows.	 	 	
28	Communicated and implemented process and workflow changes. 	 	 	
29	Engaged business to create/update Essential Service Functions (ESFs).  This is used to ensure system availability is aligned with criticality of system.  This ties to Business Continuity (BC)  and Disaster Recovery (DR) plans.	 	 	
 	Training and Documentation	 	 	
30	Developed detailed training plans for:  support staff,  business users and other key stakeholders	 	 	
31	Created/published training and user guides; scheduled and conducted training sessions.  Created process to keep documentation current.	 	 	
32	Scheduled/conducted training and/or provided online video training & announced availability	 	 	
 	Set Up	 	 	
33	Set up of the SQL Server DB	 	 	
34	Set up of the Web Servers/Services	 	 	
35	Set up of the Websites	 	 	
36	·          XView	 	 	
37	·          Call Center	 	 	
38	·          IMRS	 	 	
39	·          SQL	 	 	
40	Set up of the Titanium system	 	 	
41	·          Follow the Manual that Omar Provided	 	 	
42	Report Directory	 	 	
43	File Server	 	 	
44	CDS Merchant Accounts	 	 	
45	Discover Merchant Accounts	 	 	

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

 	Connections	 	 	
45	Connection CDS need RTTF feed to App Server 4	 	 	
46	Connection Webserver 2 with natted IP address to CDS	 	 	
47	SFTP Acct with Login	 	 	
48	 	 	 	
49	 	 	 	
50	 	 	 	
51	 	 	 	
 	Access	 	 	
52	Set up of Application Users	 	 	
53	Grant access rights for users	 	 	
54	Define User groups for	 	 	
55	·          XVIEW	 	 	
56	·          Call Center	 	 	
57	·          Cash Club	 	 	
58	·          Merchants	 	 	
59	Determine what user groups are needed by department and what access is needed for each	 	 	
60	·          Assign Users	 	 	
61	Detailing and setting up of support staff in IMRS	 	 	
 	Security	 	 	
62	Security Role based documentation	 	 	
63	Security Set Up Procedures Doc	 	 	
64	Audit controls for who setting up users Docs for pre and post production	 	 	
65	URL and CERT's for prod	 	 	
66	Engage Security team to complete security vulnerability assessment, firewall forms.	 	 	
67	Engage Security team to conduct Risk Assessment ( if the design does not meet policy )	 	 	
68	 	 	 	
 	Configuration	 	 	
69	General Config	 	 	
70	Credit/Debit Config	 	 	
71	AVS Config	 	 	
72	Resort Advantage(Not Needed for Alpha Phase)	 	 	
73	NEWave Interface(Not Needed for Alpha Phase)	 	 	

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 
 	 	 	 	
73	NEWave Interface(Not Needed for Alpha Phase)	 	 	
74	 	 	 	
75	 	 	 	
 	Misc	 	 	
76	Clean up old roles  - Validation	 	 	
77	Create auto clean up process for users	 	 	
78	Login Information user and password from TSYS	 	 	
79	 	 	 	
80	 	 	 	
81	 	 	 	
82	 	 	 	
 	Control Process	 	 	
83	Open Change Management Ticket	 	 	
84	Present change to Review Board & secure approval	 	 	
85	Establish Transition window i.e., time between Go Live and Production hand off	 	 	
86	Received acceptance of pre defined success criteria from Transition plan	 	 	
87	Walk through of Go Live checklist and gain approval	 	 	
88	 	 	 	

 

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 
EXHIBIT E
 
ADDITIONAL REQUIREMENTS, DUTIES AND OBLIGATIONS
 
1. Settlement, Funds Distribution, and Reconciliation
 
a. Customer requires CDS to settle all settlement and transaction fees to Customer’s accounts.
 
b. Customer will perform all Customer client distributions.
 
c. Customer will perform all dispute and chargeback processing.
 
d. Customer may, at Customer’s option, use CDS’s Payout Module for the distribution of funds, if any, due Customer’s clients.
 
2. Architecture
 
a. CDS will provide, or have a definitive time line for implementation of, an active/active processing environment that will enable Customer’s endpoints to communicate and transact with either of CDS’s Richardson, Texas or Kansas City, MO processing facilities or other facilities as CDS sees fit .
 
b. Customer and CDS will work to architect a communications strategy ensuring redundancy throughout the design of the Services to be provided under this Agreement.

 

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 
ATTACHMENT 1
 
ACH AUTHORIZATION RELEASE
 
___________________________ (“Customer”) authorizes Columbus Data Services, (“CDS”) to initiate ACH   transfer entries and to debit and/or credit the account identified herein for all Processing Services .  CDS shall have the right to credit or debit account, on behalf of the Customer, for settlement of transactions, settlement error corrections, transaction adjustments and any amounts or fees due CDS by Customer .  Customer agrees to keep account funded to the extent needed to reasonably support transaction adjustments .  All shortages and adjustments are the full responsibility of the Customer .  Customer agrees to comply with all electronic fund transfer regulations, requirements and rules .  This Authorization shall remain in effect unless cancelled by Customer by providing written notice of cancellation to CDS and after such time as all settlements and adjustments have been processed/cleared through the account .  Any debits and credits pursuant to this Authorization will be effected through the Federal Reserve System automated clearing house (ACH) system.
 
Settlement Disputes
 
Customer shall audit and balance the data contained in the periodic statements and reports provided by CDS and shall promptly, but in no event more than 30 days after the date of the disputed item, notify CDS in writing (the “Notice Date”) of any disputed item or items on such periodic statements and reports .  If CDS determines that the disputed item was credited or debited in error by CDS, CDS shall correct the error .  Notwithstanding, CDS shall not be liable for any recovery, reimbursement or otherwise of any amounts more than 30 days prior to the Notice Date .  CDS will, however, use its commercially reasonable efforts to recover any amounts prior to such 30-day period .  CDS shall not be liable for any damages, interest or costs associated with the error other than correcting the error.
 
The undersigned represents and warrants to CDS that (a) the person executing the Authorization is authorized signatory on the Account referenced above and all information regarding the Account and the Account Holder is true and correct.
 
Authorized by:_______________________________________ Date: ___________________
 
Print Name and Title:  _________________________________________________________	

Daily Cash Settlement Account Information***
 
*** This form Must be accompanied by a printed voided check or a letter from the Bank to which the funds are settling referencing the Customer’s name, routing number and account number.
 
Financial Institution: _____________________________________________________________
 
Address: _______________________________________________________________________ _
 
City: __________________________ State: _______________________ Zip Code: ___________
 
Contact Name: ____________________________________________ Phone Number: ________
 
Routing/Transit Number (9 digits) :  ___  ___  ___  ___  ___  ___  ___  ___  ___ 
 
Account Number: _____________________________________________________
 
_____________________________________________________________________

 

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 
Business Name as it Appears on the Account

CDS use only

 	 	 	 	 	 	
Date received:	 	 	 	 	 	
 	 	 	 	 	 	
Date entered:	 	 	Entered by:	 	 	

[****] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

EXHIBIT 10.11
 
EXECUTION VERSION

 
CONTRACT CASH SOLUTIONS AGREEMENT
 
DATED AS OF NOVEMBER 12, 2010
 
BETWEEN
 
GLOBAL CASH ACCESS, INC.
 
AND
 
WELLS FARGO BANK, N. A.

 

 
This CONTRACT CASH SOLUTIONS AGREEMENT (this “ Agreement ”) is entered into as of November 12, 2010 (the “Effective Date”), by and between GLOBAL CASH ACCESS, INC. (“GCA” or “Client”), a Delaware corporation, with its principal office located at 3525 E. Post Road, Suite 120, Las Vegas, NV 89120 and WELLS FARGO BANK, N.A. (“ Wells Fargo ”), a national banking association organized and existing under the laws of the United States with an office located at 3800 Howard Hughes Parkway, Suite 400, Las Vegas NV 89169. Client and Wells Fargo may be referred to herein as a “ Party ,” or “ Parties ” when referring to both of them.
 
Recitals
 
1. Client, directly or through its affiliates, owns leases, operates, provides cash for or manages a network of automated teller machines and other similar types of devices that can dispense currency (collectively, “ ATMs ” or “ Machines ”).
 
2. The Machines that are subject to this Agreement (the “ Covered Machines ”) are listed in Exhibit A to this Agreement; as such exhibit may be amended from time to time pursuant to the terms of this Agreement.
 
3. Client may, from time to time, replace existing Machines with other Machines in accordance with the terms of this Agreement.
 
4. Subject to the terms of this Agreement, Wells Fargo desires (a) to provide the currency needed for the dispensing requirements of all of the Covered Machines (the “ Contract Cash Services ”) in the amounts to be specified by Client from time to time pursuant to the terms of this Agreement, and (b) to perform balancing and processing services (“ Balancing and Processing Services ”) (and collectively, the “ Work ”) for the Covered Machines.
 
5. Wells Fargo, through its vault network, Federal Reserve Bank vaults, and various third-party providers (each a “ Cash Supplier ”) will cause the Cash to be made available to the Armored Carriers for use in the Covered Machines, and Armored Carriers shall transport and replenish the Cash in the Covered Machines in accordance with this Agreement and the Armored Carrier Letter Agreements.
 
6. Client has entered into contracts with each of the persons and entities listed on Exhibit B as servicers (together with any successor or assign, individually, a “ Servicer ” and collectively, “ Servicers ”) to perform certain services in connection with the Covered Machines pursuant to separate agreements with Servicers (hereinafter referred to individually as a “ Servicer Agreement ” and collectively as the “ Servicer Agreements ”). In the event Client desires to add a new service provider to provide certain services in connection with one or more Covered Machines (other than dispensing change incidental to the service), Client may add such new service provider as a Servicer to Exhibit B by providing 30 days written notice to Wells Fargo and submitting an amended Exhibit B to Wells Fargo listing the new and current Servicers and an executed Servicer Letter for the new service provider.
 
7. Client has entered into, and will, with respect to future services, enter into prior to any Servicer providing any services, a letter agreement with each Servicer, in substantially the form attached hereto as Exhibit C (each, a “ Servicer Letter ”) by which the parties thereto acknowledge or will acknowledge their rights and obligations with respect to the Cash and Receivables (as defined therein) and the procedures for settlement of transactions involving the dispensing of Cash from Covered Machines.
 
8. Client has entered into contracts with one or more armored carriers (together with any successor or assign, and individually, “ Armored Carrier ” and collectively, “ Armored Carriers ”) for purposes, among other things, of delivering Cash to, and retrieving Cash from, the Covered Machines (collectively, the “ Armored Carrier Contracts ,” and individually, an “ Armored Carrier Contract ”) and has entered into a separate letter agreement in substantially the form attached hereto as Exhibit D with each Armored Carrier in connection with the Covered Machines among Client, Wells Fargo and Armored Carrier (individually, “ Armored Carrier Letter Agreement ” and collectively the “ Armored Carrier Letter Agreements ”).
 
9. Client may contract with one or more third-parties (together with any successor or assign, individually, a “ Maintenance Provider ,” and collectively, the “ Maintenance Providers ”) who in connection with its duties to maintain the Covered Machines, may have access to the Cash in the Covered Machines. Each such agreement with a Maintenance Provider shall be referred to individually herein as a “ Maintenance Contract ” and collectively, “ Maintenance Contracts ”. Client has entered into, and will, with respect to future Maintenance Providers, enter into a separate letter agreement with each Maintenance Provider in substantially the form attached hereto as Exhibit E (individually a “ Maintenance Letter ” and collectively, the “ Maintenance Letters ”).
 
Agreement
 
ACCORDINGLY, the Parties to t his Agreement agree as follows:
 
I.       General .
 
A.     Inconsistencies; Incorporation of Recitals . In the case of inconsistencies between this Agreement and any other agreements between Wells Fargo and Client that deal with the subject matter of this Agreement (including Wells Fargo account

 

 
agreements), the terms of this Agreement shall prevail. The Recitals set forth above are incorporated herein by reference as part of this Agreement.
 
B.     Effect of non-Business Days on deadlines . If any deadline specified in this Agreement falls upon a non-Business Day, such deadline shall be extended to the next day that is a Business Day.
 
C.     Recovery Plan . The provisions of the current cash retrieval and disaster recovery plans attached hereto as Exhibit F   (“ Recovery Plan ”) are incorporated in and supplement the terms of this Agreement. The locations and delivery times of Wells Fargo Network Locations and other information in the cash recovery plan attached as Exhibit F will be supplemented or otherwise restated monthly based upon updated information from Client and upon Client’s addition or deletion of a Covered Machine. Any other supplements or restatements of the Recovery Plan shall become effective only upon the prior written consent of Client.
 
D.     Covered Machines . The current list of Covered Machines is set forth in Exhibit A. Subject to Section I.F . below, Client may (i) upon five Business Days prior written notice to Wells Fargo, delete Machines listed as Covered Machines (such deletion to be effective only after all Cash is removed from the Covered Machines by the Armored Carrier) or (ii) add new Covered Machines to Exhibit A from time to time upon written notice to Wells Fargo according to the procedure set forth in this Paragraph. If the new Covered Machines can be serviced by an existing Wells Fargo Network Location and the aggregate number of Covered Machines being added does not exceed 10, Client will provide Wells Fargo fourteen calendar days’ prior written notice of the change. If the new Covered Machines will require a new Wells Fargo Network Location or if the aggregate number of Covered Machines being added exceeds 10 but is less than 50, Client will provide Wells Fargo 30 calendar days’ prior written notice of the change. If the aggregate number of new Covered Machines equals or exceeds 50, Client will provide notice to Wells Fargo and the parties will work together to establish a reasonable time frame within which the new Covered Machines will be added. Wells Fargo agrees to supply the Cash to the new Covered Machines in the continental United States from the nearest Wells Fargo Network Location. Wells Fargo will respond to Client’s request for a new Wells Fargo Network Location in writing within 10 Business Days of Client’s request to add new Covered Machine(s), and such response will indicate the proposed Wells Fargo Network Location that Wells Fargo intends to use to supply the Cash to the new Covered Machine(s). Client will respond in writing to Wells Fargo within 10 Business Days, either approving or rejecting the proposed Wells Fargo Network Location for the proposed Covered Machine(s) and describing the reasons for a rejection. If Client rejects the proposed Wells Fargo Network Location(s) for a proposed Covered Machine(s), Client may supply the new Machine(s) with currency and coin from another source, and such new Machine(s) shall not be added to Exhibit A as a Covered Machine(s). Notwithstanding any other provision to the contrary, any Covered Machines being added during the first or last week of a month (the “Freeze Period”) will be done solely on a best efforts basis. In no event will Work be performed for Covered Machines except by Wells Fargo.
 
E.     Exceptions . For avoidance of doubt and in addition to any exclusions set forth in this Agreement, the Parties agree that nothing herein shall be deemed to prohibit Client from procuring currency and coin for the Covered Machines from any source other than Wells Fargo if Wells Fargo is unable to provide Cash (on account of a Force Majeure Event or otherwise) so long as (i) any Cash is first removed from the applicable Covered Machine (at which time the Machine will be deleted from Exhibit A ), and (ii) Cash is never commingled with currency or coin of Client or any other person or source.
 
F.     Annual Covered Machines Count . On the Effective Date and on each May 1 during the term hereof, Client will provide to Wells Fargo a forecast of the number of Machines that will be Covered Machines during the following calendar year.
 
II.      Contract Cash Services; Work .
 
A.     Wells Fargo’s General Obligation to Supply Cash . Subject to the terms of this Agreement, Wells Fargo agrees to furnish or cause to be furnished all United States currency in denominations and that either is new or is in a physical condition suitable for dispensing from a Machine in the amounts to be ordered by Client, on behalf of Client or any of its affiliates (such new or ATM fit United States currency as provided or arranged by Wells Fargo, the “ Cash ”).
 
B.     Orders . Subject to Section II.C below, Wells Fargo agrees to supply (or cause to be supplied) all of the Covered Machines with adequate Cash to meet Client’s Cash order requests for each of the Covered Machines. Prior to the date that Wells Fargo begins supplying Cash under this Agreement, Client will provide Wells Fargo with a forecast of Cash needed per Wells Fargo Network Location and denomination to meet operating activities and Wells Fargo and Client acknowledge and agree that Client has provided an initial forecast of Cash needed prior to the Effective Date. Client will also provide at least ten calendar days’ prior written notice of the forecasted amount and denomination of Cash needed per Wells Fargo Network Location to accommodate holiday spikes, new locations and increased activities. Client shall give Wells Fargo an order for Cash by the time(s) designated for each Wells Fargo, Cash Supplier, Federal Reserve or other vault location (each a “ Wells Fargo Network Location ”). Client shall specify the amount and denomination of Cash to be supplied in the manner required under Wells Fargo’s cash vault ordering requirements. In the event that any applicable Wells Fargo Network Location cannot supply a Client with the volume of adequate Cash required to meet each Cash order for the Covered Machines, Wells Fargo

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shall use commercially reasonable efforts to obtain from other sources as much of such Cash as is practicable to fill Client’s order.
 
C.     Maximum Amount of Cash to be Supplied . The aggregate total of Cash to be provided by Wells Fargo under this Agreement shall at no time exceed $400 Million Dollars including (i) all Cash with Armored Carriers, (ii) all Cash in Covered Machines, and (iii) all payments owed by Servicers, including any amount to be reimbursed by way of credit to the Settlement Account in immediately available funds, net of all adjustments, chargebacks, representations and other corrections to all transactions under the Servicing Agreements (the “ Maximum Available Amount ”); provided, however, Wells Fargo acknowledges that Client may require Cash not to exceed $50 Million Dollars in excess of the Maximum Available Amount (the “Additional Requested Amount”) for a particular calendar day (e.g. New Year’s Eve), on an occasional basis but in no event more than four times in any calendar year, and in such a situation, Client shall use best efforts to notify Wells Fargo with reasonable advance notice of the anticipated calendar day and the anticipated amount of the Additional Requested Amount”) and Wells Fargo shall provide the Maximum Available Amount and shall use best efforts to provide Cash in an amount equal to the Additional Requested Amount.
 
D.     No Commingling of Cash . Client agrees that during the term of this Agreement the only currency to be placed in any of the cash cassettes used for dispensing currency from a Covered Machine shall be Wells Fargo’s Cash. This restriction on commingling applies irrespective of whether Client intends to supply currency to a particular Covered Machine from another cash provider and regardless of whether Wells Fargo failed to supply the Covered Machine or otherwise.
 
E.     Cash May Only be Used in Covered Machines . Client agrees that at no time will Cash (i) be used or placed in Machines other than the Covered Machines, or (ii) be used for a purpose other than dispensing currency needs at the Covered Machines.
 
F.     Work . Subject to the terms and conditions hereof, Wells Fargo will provide Work for the Covered Machines during the term of this Agreement in a manner consistent with the terms of this Agreement.
 
G.     Third-Party Premises . Except as otherwise provided below, all agreements between Client and its affiliates and their respective customers (“Customer(s)”) for the placement of a Machine on such Customer’s premises (each a “ Machine Placement Agreement ”) shall comply with the following requirements before such Machine shall be deemed a Covered Machine:
 
1.     Ownership of Cash . The Machine Placement Agreement, or equivalent agreement, shall not grant any ownership interest or other right to Customer in and to the Cash contained in the Covered Machines.
 
2.     Wells Fargo Access to Covered Machines . At least between the hours of 8:00 a.m. and 5:00 p.m. local time and such additional time periods that a Customer may deem to be its normal business hours (and upon reasonable request during non-business hours), Wells Fargo, and its authorized agents, shall be permitted by a Customer to enter on the premises on which the Covered Machines are located to inspect the Covered Machines, deliver Cash to and retrieve Cash from the Covered Machines, supervise and/or inspect the servicing and repair of Covered Machines and otherwise protect Wells Fargo’s interest in the Cash contained in the Covered Machines; subject to a Customer’s licensing and security policies and procedures regarding vendors performing services on a Customer’s premises.
 
3.     Third-Party Access to Cash Prohibited . The Machine Placement Agreement shall not allow or grant Customer any right to access the Cash in any Covered Machine without the express written consent of Client.
 
III.    Plan and Procedures . To ensure repayment of the Cash dispensed from the Covered Machines (the “ Dispensed Cash ”) and to enable Wells Fargo to perform the Work, the Parties agree to the settlement, and balancing and processing procedures set forth below:
 
A.     Pilot Period and Pilot Machines . Before the Work begins under this Agreement, Wells Fargo and Client agree that Wells Fargo will conduct a test pilot of Contract Cash Services (the “Pilot”) at one or more mutually agreed upon locations covering a mutually agreed upon number of Machines. The Pilot will commence as soon as possible after the execution of this Agreement by the Parties and will terminate on November 29, 2010, unless an extension is separately agreed to in writing by the Parties. The aggregate total of Cash to be provided during the Pilot shall at no time exceed $4 million including (i) all Cash with Armored Carriers, (ii) all Cash in Pilot Machines, and (iii) all payments owed by Client in accordance with Exhibit G hereto. Client agrees to use commercially reasonable efforts to cause any required third parties to fully cooperate with Well Fargo in connection with the Pilot. With respect to any Cash dispensed from any Machine during the Pilot, the Parties agree to the settlements and reconciliation procedures set forth on Exhibit G attached hereto. The Pilot may be terminated (i) by either Party for convenience upon notice to the other Party; or, (ii) immediately upon notice by Wells Fargo to Client in the event Client fails to pay the settlement for the Pilot Cash as set forth in Exhibit G. The Parties agree that the Pilot Machines shall be Covered Machines for the purposes of this Agreement and the rights and responsibilities of the Parties during the Pilot shall be governed by the terms of this Agreement except as such terms are modified specifically for the Pilot in this Section or in Exhibit G.

3

B.     Commencement . The settlement procedures for Covered Machines shall become effective on a date to be agreed upon in writing by the Parties (the “ Settlement Start Date ”). The Settlement Start Date shall be the date the Wells Fargo currency is placed in the cash cassette at one or more of the initial Covered Machines, or is in the Armored Carrier’s vault or is in transit with the Armored Carrier, in each case intended for use in such Covered Machines (the “ Starting Cash ”). The Starting Cash shall be effected as orders are placed and Cash is dispensed from each Covered Machine, and as Cash is in the Armored Carrier’s vault or is in transit with the Armored Carrier, in each case intended for use in Covered Machines.
 
C.     Daily Reports .
 
1.     By 7:00 a.m., Central Time, on each Business Day, Client shall deliver to Wells Fargo daily reports (“ Daily Reports ”) as follows:
 
a.     File 1 . A report (a “ File 1 Report ”) that provides the amount of Cash dispensed from each Covered Machine between 3 p.m. Pacific Time (the “Beginning Measurement Time”) through settlement, which is 3:00 p.m. Pacific Time of the immediately preceding Business Day (“ Daily Dispensed Cash ”); and
 
b.     File 2 . A report (a “ File 2 Report ”) that provides the amount of Cash dispensed from each Covered Machine serviced since the preceding Business Day from the Beginning Measurement Time until such Covered Machine was serviced and cash cassettes swapped by the Armored Carrier on the immediately preceding Business Day.
 
2.     Armored Carrier Service Report . Utilizing the iCom Reporting System selected by Wells Fargo, by 12:00 p.m. local time (unless an exception is granted in writing by Wells Fargo) on each Business Day, the Armored Carriers shall deliver to Wells Fargo a report reflecting each Covered Machine serviced and the Cash balance in each Covered Machine at the time of service (together with corrections and adjustments input in such system, the “ Service Report ”). Service Reports shall be used by Wells Fargo as part of the reconciliation process contemplated hereby. Wells Fargo will provide, without additional cost to Client, training for agreed upon systems changes.
 
3.     Daily Report by Wells Fargo . By 4:00 p.m. Pacific Time on each Business Day (provided Wells Fargo has timely received all reports and information provided for hereunder from third-parties), Wells Fargo shall deliver to Client daily reports (each a “ Bank Report ”) in substantially the form attached hereto as Exhibit H which provides daily information for the Covered Machines. Reports will be for the activity occurring two Business Days prior to the current date.
 
4.     Daily Report of Transfer Activity . By 11:00 a.m. Pacific Time on each Business Day, Wells Fargo shall deliver to Client a report detailing funds transfers between the Settlement Account and the Operating Account (the “ Funds Transfer Report ”).
 
5.     Other Reports . Client shall provide access and passwords to Wells Fargo, when and as needed by Wells Fargo to satisfy its agreement to provide Work hereunder, so that Wells Fargo can determine load amounts (as well as expected return) by Machine. All information will be in an electronic file format readily usable by Wells Fargo.
 
D.     Settlement Accounts . The Wells Fargo account designated by WF to Client separately in writing shall be used as the settlement account (the “ Settlement Account ). Wells Fargo may from time to time designate a different account to be used as the Settlement Account by giving 30 Business Days prior written notice to Client.
 
E.     Settlements . All settlements with Servicers or Client for Dispensed Cash shall be effected by wire transfer directly into the Settlement Account. By 9:00 a.m., Pacific Time, on each Business Day, Client shall wire transfer into the Settlement Account an amount equal to the difference, if any, between the Daily Dispensed Cash and the amounts received from Servicers on such Business Day. At or after 1:00 p.m. Pacific Time each Business Day, Wells Fargo shall debit the Settlement Account for an amount not to exceed the Daily Dispensed Cash for the previous day and thereafter shall either (i) credit the Operating Account by the amount, if any, by which the balance in the Settlement Account prior to debit exceeds the Daily Dispensed Cash or (ii) debit the Operating Account by the amount, if any, by which the balance in the Settlement Account is negative. For the avoidance of doubt, the Parties agree that the provisions of this Section shall be suspended in the event and during the period of a temporary system failure that may not rise to the level of a Force Majeure Event, but nonetheless prevents Client from making payments of Cash Settlement, provided that Client notifies Wells Fargo of the reason for such failure and provides Wells Fargo with supporting documentation substantiating the reason for such failure.
 
Client hereby acknowledges and understands that it is completely responsible for any loss to Wells Fargo as the result of the misrouting of Dispensed Cash by any network processor, whether or not a Servicer.
 
F.     Viewing of Settlement Accounts . Client shall have viewing access to the Settlement Account until Final Settlement occurs. “ Final Settlement ” means, with regards to the Parties, Servicers, Armored Carriers, the Maintenance Providers, and each and every other related party, the closing settlement of the Settlement Account and the Operating Account, including all fees and expenses, all Cash and other funds, and all obligations and duties owed which are subject to this Agreement, at the time of the expiration or termination of this Agreement.

4

 
G.     Reconciliation .
 
1.      Ongoing Reconciliation . Following receipt of the Daily Reports each Business Day, Wells Fargo shall endeavor to reconcile all out-of-balance amounts of Cash from the amounts reported in the Daily Reports and the Service Reports. If at any time Wells Fargo learns that Cash is out-of-balance (by use of the Bank Reports or otherwise), Wells Fargo shall notify Client of the imbalance within five days of such discovery, and within 60 days of the Business Day on which the Machine was out-of-balance, Wells Fargo shall credit or debit, as applicable, the Operating Account for any remaining overage or shortage.
 
2.      Final Reconciliation . The Parties will use commercially reasonable efforts to complete a final reconciliation of Cash amounts upon termination or expiration of this Agreement within 10 Business Days after the effective date of such termination or expiration.
 
H.      Client Operating Account . Client shall designate a Wells Fargo deposit account as their operating account (the “ Operating Account ”). The Operating Account shall be used for (i) all credits and debits of imbalances, and (ii) for debit by Wells Fargo of fees owing pursuant to this Agreement. Client may designate a different account at Wells Fargo to be used as the Operating Account from time to time upon 30 Business Days’ prior written notice to Wells Fargo.
 
I.      Business Day . “ Business Day ” shall mean any day other than weekends or holidays observed by the Federal Reserve Banks or Wells Fargo, and with respect to each Covered Machine, the Cash Supplier that is making Cash available to such Covered Machine.
 
IV.    Risk of Loss .
 
A.     Risk of Loss — Cash in Covered Machines . As between Wells Fargo and Client, Client shall bear all risk of loss and all liability with respect to the Cash during the time the Cash is located in the Covered Machines, including, but not limited to, loss due to theft or destruction of any of the Cash (whether or not such theft or destruction is due to an event beyond Client’s reasonable control), malfunction of equipment, or misfeasance or malfeasance of Client, Maintenance Provider, and their agents or employees. Notwithstanding the foregoing, Client shall not be liable or responsible for any loss of Cash:
 
1.     to the extent due to the intentional acts or omissions of Wells Fargo, its agents, or employees;
 
2.     where specifically provided otherwise herein;
 
3.     before Cash ordered under this Agreement has been picked up by an Armored Carrier.
 
B.     Risk of Loss — Cash In Possession of Wells Fargo or a Wells Fargo Network Location . As between Wells Fargo and Client, Wells Fargo shall bear all risk of loss with respect to Cash both (1) after such Cash has been returned to a Wells Fargo Network Location, and (2) before such Cash has been picked up by an Armored Carrier pursuant to Client’s order for the ultimate purpose of supplying a Covered Machine. The foregoing risk of loss includes without limitation, loss due to theft or destruction of any of the Cash (whether or not such theft or destruction is due to an event beyond Wells Fargo’s reasonable control), malfunction of Wells Fargo equipment, or misfeasance or malfeasance of Wells Fargo, its agents or employees.
 
C.     Risk of Loss — Cash in Possession of Armored Carrier . Except as otherwise provided herein, as between Wells Fargo and Client, Client expressly assumes and agrees to indemnify Wells Fargo for any and all liability with respect to a Cash shortage, or loss, theft, disappearance, robbery, or destruction of any of the Cash during the time the same is (or should be) in the possession of an Armored Carrier until it is returned to a Wells Fargo Network Location.
 
1.     Notwithstanding the foregoing, Client shall not be liable to Wells Fargo for any loss, theft, or destruction of the Cash to the extent due to the gross negligence or intentional misconduct of Wells Fargo, any Cash Supplier or their respective agents or employees. Nothing herein shall be deemed to relieve an Armored Carrier of its responsibilities with regard to the Cash.
 
2.     Wells Fargo shall assign to Client all of Wells Fargo’s rights to collect any Cash losses, theft or destruction from the Armored Carrier upon collection by Wells Fargo from Client for such losses, theft or destruction. Wells Fargo shall use commercially reasonable efforts to cooperate with, and assist, Client in collecting such unpaid amounts after such assignment, including providing Client with any evidence of the claimed shortage, loss, theft or destruction. All such efforts by Wells Fargo shall be at Client’s expense.
 
3.     Notwithstanding anything to the contrary herein, any risk of loss during redelivery upon a Wells Fargo Event of Default of the Cash shall be borne by Wells Fargo, provided that Client shall remain liable for Cash shortages in the Covered Machines prior to pick-up. Nothing herein shall be deemed to relieve an Armored Carrier of its responsibilities with regard to the Cash.

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D.     Risk of Loss — Nonpayment by Servicer . Client agrees to indemnify and hold Wells Fargo harmless from, for, and against non-payment or any losses from nonpayment by any Servicer.
 
V.      Ownership of Cash .
 
A.     Cash Remains the Property of Wells Fargo . Wells Fargo shall have absolute ownership, title and control of all of the Cash used in the Covered Machines at all times. No ownership of the Cash or payments owing from Servicers for Dispensed Cash shall accrue, transfer, or otherwise inure to Client or any other person. Client and Wells Fargo agree that:
 
1.     all of the Cash shall remain the property of Wells Fargo, and Wells Fargo shall have all right, title, and interest in and to the Cash and may treat the Cash as its asset until such time as it is dispensed from any of the Covered Machines in a cash dispensing transaction; and
 
2.     none of the Cash shall at any time become the property of Client, or any other person until such time as it is dispensed from any of the Covered Machines in a cash dispensing transaction.
 
Client shall take no action inconsistent with the terms of this Agreement or the intent of the Parties that all Cash provided to an Armored Carrier by a Wells Fargo Network Location, regardless of physical location, remains the property of Wells Fargo until it is dispensed from the Covered Machines or surrendered by the Armored Carrier to a Wells Fargo Network Location as set forth in this Agreement.
 
B.     No Client or Third-Party Interest in Cash . It is expressly agreed between the Parties that neither Client nor any other person or entity has any possessory or ownership rights to the Cash or Receivables (as defined in the Servicer Letters) under Section 362 of the Bankruptcy Code or otherwise. It is expressly understood that no other financial institution, including without limitation, any Cash Supplier, can utilize the Cash to satisfy its own reserve requirements. Neither Client, nor any other person (other than an Armored Carrier and the Maintenance Providers for purposes of maintenance of the Covered Machines pursuant to the Maintenance Contracts) shall have any access to, or use of, any of the Cash after delivery of the same to Armored Carrier, whether during transportation or storage by Armored Carrier or while it is stored in the vaults of the Covered Machines, except as such use relates to the dispensing of any of the Cash in a cash dispensing transaction from one of the Covered Machines. Once any of the Cash is delivered to Armored Carrier, it shall only be transported or stored by Armored Carrier and finally placed in one of the Covered Machines or handled by the Maintenance Providers in a way that is consistent with the terms of the Maintenance Contracts. Under no circumstances shall Client hold itself out as the owner of the Cash or in any way represent to any person or entity that it owns the Cash.
 
C.     Redelivery . Client can initiate a redelivery of Cash upon a Wells Fargo Event of Default or a Termination Trigger Event invoked by Client, and Wells Fargo can initiate redelivery of Cash upon a Client Event of Default or a Termination Trigger Event invoked by it.
 
VI.    Armored Carrier Service .
 
A.     Armored Carrier — General . Each Armored Carrier selected to handle the Cash, including all loading of any of the Cash into any of the Covered Machines, shall be a duly qualified armored car operator, selected by Client (and reasonably acceptable to Wells Fargo) and contracted for by Client. Client may replace any Armored Carrier only upon prior written notice and with Wells Fargo’s express written consent which may not be unreasonably withheld, conditioned or delayed, Client will provide at least 30 days prior written notice to Wells Fargo prior to such replacement, but in no event later than is reasonably necessary to ensure that the replacement Armored Carrier is a duly qualified armored car operator. For avoidance of doubt, a “duly qualified armored carrier operator” is one that is properly licensed, has provided to the Wells Fargo Network Locations a signature list of those authorized to pick up Cash and the photos of whom are on file, for whom an authorization letter is on file from Client indicating what actions Wells Fargo is to take with respect to a particular Armored Carrier, whose trucks, uniforms and other identifications match and who otherwise meets the security and operational standards of such Wells Fargo Network Locations. Wells Fargo will use commercially reasonable efforts to assist Client to transition from any Armored Carrier who Wells Fargo determines is no longer a “duly qualified armored car operator” to another Armored Carrier.
 
B.     Cash Held by Armored Carrier . Client shall contractually obligate Armored Carrier to segregate Cash held by Armored Carrier from all other currency and coin until such time as the Cash is required to be placed in specific Covered Machines or until it is requested to be returned to Wells Fargo and to meet the standards set forth in Section VI.A above.
 
C.     Covered Machine Access . No employee of Armored Carrier shall have the authority to access the Cash stored in any Covered Machine, except as provided below. The only parties having authorized access to the Cash stored in the Covered Machines shall be (i) Armored Carriers for the purposes of loading Cash in, or removing Cash from, the Covered Machines, as provided in the Armored Carrier Contracts, (ii) Armored Carriers for purposes of redelivery of the Cash to Wells Fargo Network Locations pursuant to this Agreement, and (iii) the Maintenance Providers for purposes of Machine maintenance as set forth in the Maintenance Contracts.

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D.     Responsibilities . Wells Fargo and Client each agree that they shall not conceal or misrepresent any material fact or circumstance concerning the Cash delivered to Armored Carrier pursuant to this Agreement and the Armored Carrier Contracts.
 
1.     Wells Fargo agrees to supply all the Cash to Armored Carrier directly through any of the applicable Wells Fargo Network Location(s) in a sealed or locked bag, together with a shipping document verifying the value of the Cash in the bag. The value of the Cash set forth in such shipping document that accompanies the release by the applicable Wells Fargo Network Location of any sealed or locked bag shall be conclusively deemed the amount of the Cash invoiced. Client’s contract with each Armored Carrier shall, in the event of any reportable shortage claimed in the contents of a sealed or locked cash bag received by Armored Carrier from the Wells Fargo Network Location, obligate Armored Carrier to promptly notify Client and Wells Fargo of the shortage. With respect to cash bags received from the Federal Reserve Bank or a Cash Supplier, each such contract shall also obligate the Armored Carrier to (i) provide reasonable assistance to Wells Fargo in presenting difference claims to the relevant Federal Reserve Bank or Cash Supplier in accordance with Federal Reserve Bank regulations or operating circular, if any; and (ii) comply with any requirements imposed by the Federal Reserve Bank or the relevant Cash Supplier in connection with the reporting of such shortages. In the event that such difference cannot be resolved, Wells Fargo and Client will in good faith attempt to resolve the difference between them. If such efforts are unsuccessful (i) with respect to sums which Client claims in writing are owed to it, within 60 days of receipt of the claim by Wells Fargo, or (ii) with respect to sums which Wells Fargo claims in writing are owed to it, within 60 days of receipt of the claim by Client, the parties agree to resolve the issue in accordance with the arbitration provisions of this Agreement. The parties will from time to time mutually agree upon any minimal differences that need not be reported and such threshold amounts that must be reported on a same-day or next-Business-Day basis.
 
E.     Armored Carrier Letter Agreements . Prior to utilizing any Armored Carrier, each Client, Wells Fargo and the Armored Carrier shall enter into an Armored Carrier Letter Agreement substantially in the form set forth in Exhibit D .
 
F.     Vault Security . Wells Fargo shall inform Client in writing of any regulatory requirements imposed upon Wells Fargo with respect to security measures that are applicable to the maintenance of the Cash in each Armored Carrier’s vault facilities. Client shall promptly but in no event more than two Business Days communicate such information to each Armored Carrier. Client shall take commercially reasonable steps to ensure that each Armored Carrier agrees to comply with any such regulatory requirements.
 
VII.   Fees .
 
A.     General . Client agrees to pay Wells Fargo the fees for the Work calculated in accordance with the terms of a separate fee letter between Wells Fargo and Client (the “ Fee Letter ”), which is hereby incorporated into this Agreement, and which may be amended after the initial term of this Agreement as provided herein. Following the initial term of this Agreement, Well Fargo may change the fees for the Work with respect to any renewal term by providing Client with written notice of such fee changes at least 120 days prior to the commencement of such renewal term and Client is free to accept such changes or terminate this Agreement; and provided further that Wells Fargo may only change such fees once with respect to each applicable renewal term. For the avoidance of doubt, it is understood and agreed that the fees referenced in this Section are the fees for the Work only and do not include any fees charged for other services provided by Wells Fargo to Client.
 
B.     Taxes . Client shall pay or reimburse Wells Fargo for any applicable taxes levied, imposed or assessed upon Wells Fargo as a result of its provision of Cash to Client under this Agreement, excluding personal property taxes assessed against or payable by Wells Fargo (except for taxes relating to personal property owned by Client), taxes based upon Wells Fargo’s net income and Wells Fargo’s corporate franchise taxes. Alternatively to such payment or reimbursement, Client may satisfy its obligation in this paragraph by providing Wells Fargo with an exemption certificate that establishes that no tax is due. Wells Fargo shall furnish Client with invoices showing separately itemized amounts due under this paragraph with respect to applicable taxes (if any). If Client pays or reimburses Wells Fargo for any taxes pursuant to this paragraph, Wells Fargo hereby assigns and transfers to Client all of Wells Fargo’s rights, title and interest in and to any refund for taxes paid. Any claim for refund of taxes against the assessing authority may be made in the name of Client or Wells Fargo, or both at Client’s option. Client may initiate and manage litigation brought in the name of Client or Wells Fargo, or both, to obtain refunds of amounts of taxes paid under this paragraph. Wells Fargo shall cooperate fully with Client in pursuing any refund claims, including any related litigation or administration procedures. Wells Fargo and Client each acknowledge that it is not aware of any taxes owing contemplated by this Section VII.B with respect to the Cash as of the Effective Date.
 
C.     Costs and Expenses . Client and Wells Fargo each shall be responsible for any legal and other costs and expenses incurred by it in connection with the preparation, negotiation and delivery of this Agreement and its Exhibits and any amendments or waivers thereto.
 
D.     Monthly Servicing Fees and Billing Statement . All fees and charges payable by Client pursuant to this Agreement will be detailed for Client in a monthly billing statement using Wells Fargo’s standard account analysis format which will be

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provided to Client on the first Business Day after the 10th of each calendar month. Such statement shall contain categories of information as set forth in an Exhibit to the Fee Letter or as otherwise mutually agreed in writing by the Parties from time to time. Wells Fargo shall debit the Operating Account for all billed amounts on an agreed-upon day of the month that is no later than the 20th day after delivery of such monthly billing statement. To the extent that the Operating Account contains insufficient funds to accommodate such debit, the unpaid amount shall become immediately due and payable upon notice to Client and Client shall immediately pay the unpaid amount to Wells Fargo.
 
E.     Service Level Adjustments . Adjustments to fees set forth herein may be made under the following circumstances:
 
1.     If Wells Fargo fails to either (i) provide Cash for any particular Covered Machine pursuant to Section II.A (unless otherwise excused pursuant to the terms of this Agreement), or (ii) provide Cash as required in Section II.B. above, then Wells Fargo shall either pay those additional expenses to Client which have been incurred by Client related solely to the failure on the part of Wells Fargo to deliver Cash to the Armored Carrier, or credit such amounts to Client against the above referenced billing statement, at the election of Wells Fargo.
 
2.     If at any time during the term of this Agreement, the number of Covered Machines is less than 920 and the average outstanding daily balance of Cash is less than $225 million during any 90 consecutive day period (the “Baseline”), Wells Fargo shall be entitled to adjust the fees provided for hereunder so that its expected fees, yields and returns are at least equal to those that would have been achieved had the Baseline been maintained.
 
VIII.        Insurance .
 
A.     Required Insurance . During the initial and any renewal term of this Agreement, Client, at its sole cost and expense shall, at a minimum, maintain insurance through a third party insurance provider as described in this Section VIII, as follows:
 
1.     Commercial Crime Policy including coverage for employee theft/dishonesty/fidelity; Inside the Premises — the theft of money including disappearance, destruction and robbery; Outside the Premises — the theft of money, including disappearance, destruction and robbery; Computer Crime with limits not less than $5,000,000 per loss. Wells Fargo will be included as joint loss payable under the policy.
 
2.     Errors and Omissions with limits not less th an $1,000,000 per occurrence.
 
3.     Commercial General Liability/Umbrella insurance providing coverage for premises-operations liability, products-completed operations liability, independent contractors liability, personal and advertising and contractual liability with limits of at least $10,000,000.
 
4.     Statutory workers’ compensation and employers liability insurance with limits no less than $1,000,000 each accident for bodily injury; $1,000,000 each accident for disease per employee and $1,000,000 bodily injury for disease in the aggregate.
 
5.     Comprehensive Automobile Liability Insurance/Umbrella in the minimum amount of $10,000,000 combined single limits for bodily injury and property damage covering owned and non-owned hired vehicles.
 
B.     Additional Requirements . In addition, Client agrees that:
 
1.     Client, at the request of Wells Fargo, shall furnish certificates of insurance to Wells Fargo at the time of the signing of this Agreement and upon renewal thereafter. Client will ensure that the insurance carrier and/or Client will provide 10 days advance written notice to Wells Fargo before termination, change or cancellation takes effect of any coverage under such policies evident on such certificate, regardless of whether cancelled by Client or the insurance company.
 
2.     The insurance required hereunder will be primary and noncontributory to any insurance maintained by Wells Fargo.
 
3.     All of the insurance policies required hereunder will be maintained with companies licensed to do business in the state where the services will be performed and rated no less than “A-” as to policy holder’s rating in the then current edition of Best’s Insurance Guide (or with an association of companies each of the members of which are so rated).
 
4.     Client will add Wells Fargo as an additional insured to Client’s commercial general/umbrella liability and automobile/umbrella policies.
 
C.     No Relief From Liability . The foregoing requirements as to the types and limits of insurance coverage to be maintained by Client and any approval or waiver of said insurance by Wells Fargo are not intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise assumed by Client pursuant to this Agreement, including but not limited to the provisions concerning the indemnification obligations of Client; provided that any amounts paid to Wells Fargo pursuant

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to Client’s indemnification obligations shall be reduced dollar for dollar by the amount of any insurance proceeds that are paid to Wells Fargo pursuant to Section VIII of this Agreement.
 
IX.    Default; Termination Trigger Events .
 
A.     Termination Upon Default . Wells Fargo shall have the right to immediately terminate this Agreement upon written notice to Client in the event of a Client Event of Default. Client shall have the right to immediately terminate this Agreement upon written notice to Wells Fargo in the event of a Wells Fargo Event of Default.
 
B.     Client Events of Default . “ Client Event of Default ” shall mean the occurrence and continuance of any of the following events, acts, occurrences or conditions described in Paragraphs 1 through 8 below, for whatever reason:
 
1.     Any of the following occur: (i) Client shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled “ Bankruptcy ,” as amended from time to time, and any successor statute or statutes (“ Bankruptcy Code ”); or (ii) an involuntary case is commenced against Client under the Bankruptcy Code and the petition is not controverted within 10 days, or is not dismissed within 90 days after commencement of the case; or (iii) a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of Client, or Client commences any other proceedings under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to Client or there is commenced against Client any such proceeding which remains undismissed for a period of 90 days; or (iv) any order for relief or other order approving any such case or proceeding is entered; or (v) Client is adjudicated insolvent or bankrupt; or (vi) Client suffers any appointment of any custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 90 days; or (vii) Client makes a general assignment for the benefit of creditors; or (viii) Client fails to pay, or states that it is unable to pay, or is unable to pay its debts generally as they become due; or (ix) Client calls a meeting of its creditors generally with a view of arranging a composition or adjustment of its debts; or (x) Client by any act or failure to act consents to, approves of or acquiesces in any of the foregoing; or (xi) Client takes any corporate action for the purpose of effecting any of the foregoing.
 
2.     Any creditor or group of creditors of Client shall attempt for any reason to levy upon, seize under color of law, attach or make a bona   fide claim against any Cash.
 
3.     Client takes any action or makes any material representation that is inconsistent with Wells Fargo’s sole and exclusive ownership, title and control of the Cash.
 
4.     Client defaults in (a) the payment under the terms of any contract, instrument or document extending a credit facility of $25 Million or more pursuant to which Client has incurred any debt or other liability to any person or entity, including Wells Fargo (each, a “Credit Facility”), or (b) the performance of any other obligation, or any defined event of default unrelated to payment, (each, a “Non-payment Default”) under a Credit Facility, provided that Client shall have 60 days following notice to it by Wells Fargo to cure a Non-payment Default.
 
5.     Client either (a) breaches any representation, warranty or covenant in this Agreement (other than failure to make any payments or other monetary obligations or as otherwise provided herein) and such failure continues for a period of more than 30 days after Client’s receipt of written notice from Wells Fargo of such breach, or (b) fails to make timely payments for Fees upon 15 days notice and opportunity to cure, or (c) fails to make payments for Cash Settlement for any reason other than a temporary system failure, or fails to meet any other undisputed monetary obligations (other than Fees) under this Agreement, and the same continues, not more than once in any 12-month period, for a period of two Business Days if Client notifies Wells Fargo of the reason for such failure and has provided Wells Fargo with supporting documentation substantiating the reason for such failure. Notwithstanding the foregoing, Wells Fargo may terminate the Agreement if at the conclusion of the applicable cure periods described above Client fails to pay the Wells Fargo determined estimated settlement amounts into the Settlement Account for the day(s) of such failure.
 
6.     Inability or failure by Client to deliver the Daily Reports or to satisfy any reporting, certification, notification or documentation requirements under this Agreement, in each case where such inability or failure continues, not more than once in any 12 month period, for a period of two Business Days if Client notifies Wells Fargo of the reason for such inability or failure and has provided Wells Fargo with supporting documentation substantiating the reason for such inability or failure.
 
7.     If any Armored Carrier is unable, for any reason (except as the result of a Force Majeure Event or due to the malfunction of a Covered Machine), to obtain independent access to any Covered Machine pursuant to this Agreement subject to Customer’s licensing and security policies and procedures regarding vendors performing services on or at a Customer’s premises.
 
8.     Client sells or otherwise transfers all or a substantial portion of its Covered Machines and the Baseline of Covered Machines is not met after giving effect to such sale or transfer.

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C.     Wells Fargo Event of Default . “ Wells Fargo Event of Default ” shall mean the occurrence of any of the following events, acts, occurrences or conditions described in Paragraphs 1 and 2 below, for whatever reason:
 
1.     Any of the following occur: (i) the Office of the Comptroller of the Currency (“ OCC ”), the Federal Deposit Insurance Corporation (“ FDIC ”) or any successor regulatory agencies thereto determines that Wells Fargo is insolvent; or (ii) the OCC or the FDIC appoints a receiver, custodian or the like or initiates proceedings for relief or other order for all or any substantial part of its property; or (iii) Wells Fargo fails to pay, or states that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or (iv) Wells Fargo calls a meeting of its creditors generally with a view of arranging a composition or adjustment of its debts; or (v) Wells Fargo by any act or failure to act consents to, approves of or acquiesces in any of the foregoing; or (vi) Wells Fargo takes any corporate action for the purpose of effecting any of the foregoing.
 
2.     Wells Fargo breaches any representation, warranty or covenant or fails to perform under this Agreement or any related agreements, and such breach remains uncured 30 days after Client provides notice to Wells Fargo describing the alleged breach in reasonable detail. The Parties agree that Wells Fargo shall be in breach of this Agreement without further right to cure if it is unable to furnish sufficient Cash to comply with this Agreement at any time and such failure continues for three or more consecutive Business Days after written notice from Client, unless applicable regulations specifically prohibit the furnishing of such Cash or because of Force Majeure Event.
 
D.     Termination Trigger Events . “ Termination Trigger Event ” shall mean the occurrence and continuance of any of the following events, acts, occurrences or conditions described in Paragraphs 1 through 9 below, for whatever reason. This Agreement may be terminated without penalty upon the occurrence of any of the following Termination Trigger Events:
 
1.     Immediately upon a Party giving written notice to the other Parties:
 
a.     in the event that (i) any federal or state regulatory authority takes any action, including, but not limited to, the issuance of a ruling, formal or informal opinion, or interpretation of any kind whatsoever that makes the continued performance of this Agreement illegal or exposes Wells Fargo to civil penalties, (ii) any law is adopted or regulation promulgated that makes the continued performance of this Agreement illegal or exposes Wells Fargo to civil penalties, or (iii) any law or regulation is interpreted by a court of competent jurisdiction, any of which, in the opinion of Wells Fargo’s legal counsel, would prohibit Wells Fargo from providing the Cash to Client as described in this Agreement, then in such event, Wells Fargo shall have the right to cancel this Agreement immediately by notifying Client in writing of its intent to do so;
 
b.     upon cancellation, reduction, or non-renewal of insurance required to be carried by Client, Armored Carrier, or any Servicer pursuant to this Agreement, unless such insurance is replaced by a similar or better carrier, or unless such new carrier is otherwise reasonably acceptable to Wells Fargo;
 
c.     upon termination of a Servicer Letter with respect to the Covered Machines serviced by that Servicer under which Cash would be dispensed, unless the outgoing Servicer is promptly (i.e., within 30 days) replaced by a successor service provider (and the termination of the Servicer is not effective until such successor service provider is in place) or such service is discontinued by Client;
 
d.     subject to Force Majeure Event provisions herein, if a Servicer fails to (i) make payments pursuant to the applicable Servicer Letter when due on three or more consecutive Business Days; (ii) satisfy any material regulatory reporting, certification, notification, or documentation requirements; (iii) observe or perform any material covenant outlined in its Servicer Letter, or (iv) meet any agreed-upon performance and financial tests unless replaced within 90 days by a Servicer reasonably acceptable to Wells Fargo.
 
2.     With respect to both Client and Wells Fargo, an event or series of events (a “ Change of Control ”) by which any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire (such right, an “ option right ”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the equity securities of such Party entitled to vote for members of the board of directors or equivalent governing body of such Party on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right) and 90 days elapses without Wells Fargo or Client, as applicable, consenting in writing to such Change of Control or ratifying in writing that an Actual Termination Date has not occurred and Client has accepted in writing any changes in pricing proposed by Wells Fargo as a result of such Change of Control.

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3.     Subject to the Force Majeure Event provisions hereof, immediately upon written notice by Client in the event Wells Fargo at any time does not have the availability of sufficient vault cash to furnish Client with sufficient Cash as specified by Client or if Wells Fargo has exercised its right to demand redelivery according to this Agreement.
 
4 .     Immediately by Wells Fargo in the event the following conditions have not been satisfied by Client prior to the commencement of the Work:
 
a.     No Client Event of Default shall then be existing;
 
b.     All Agreement requirements have been satisfied;
 
c.     Satisfactory review of the material contracts to the extent not already in Wells Fargo’s possession;
 
d.     Satisfactory review of bonding and insurance requirements specified herein (which review the Parties agree has been accomplished and the insurances tendered in writing accepted by Wells Fargo);
 
e.     Satisfactory regulatory and compliance review; and
 
f.     Such other due diligence and investigation as Wells Fargo deems necessary.
 
5.     In the event any agreements with a Servicer are terminated by Client due to a material default of an obligation to process accurate and timely transmissions under such agreement, Wells Fargo may immediately terminate the service with respect to the affected Machines and Client shall immediately reimburse Wells Fargo for any outstanding Cash relating to the terminated Machines.
 
6.     In the event Client fails to implement, not later than March 31, 2011 (or as may otherwise be agreed to by the Parties in writing before March 31, 2011), the corrective actions required and as are separately documented by the Parties, as a result of the November 2010 MSB audit conducted on Client’s operations by Wells Fargo.
 
7.     In the event Client fails to pass a satisfactory MSB audit conducted by Wells Fargo of its operations at any time, provided that Client shall have 45 days following the conclusion of such unsatisfactory audit to respond and comment and seek a mutually agreeable resolution thereof with Wells Fargo.
 
8.     Immediately upon notice to Client in the event Client fails to make payments for Cash Settlement and such failure is a result of a temporary system failure that may not rise to the level of a Force Majeure Event, but nonetheless prevents Client from making payment(s), and such failure continues for a period of three Business Days, if Client notifies Wells Fargo of the reason for such failure and has provided Wells Fargo with supporting documentation substantiating the reason for such failure. In addition, in the event there are excessive temporary system failures resulting in Client’s failure to make payments for Cash Settlement, Wells Fargo may terminate this Agreement regardless of whether or not such failures have continued for a period of three Business Days.
 
9.     In the event of the inability or failure of any Armored Carrier to deliver required Daily Reports or other documentation requirements under the Armored Carrier Agreements, and the same continues, not more than once in any 12 month period, for a period of two Business Days, and such failure is not cured within such two day period, Wells Fargo may immediately terminate the service with respect to the affected Machines and Client shall immediately reimburse Wells Fargo for any outstanding Cash relating to the terminated Machines.
 
X.     Indemnification; Limitations on Liability .
 
A.     Covered Machines . Subject to the risk of loss provisions set forth in Section IV and the limitations of liability set forth in Section X.D., Client shall indemnify, defend and hold Wells Fargo harmless from, for, and against any loss of any of the Cash, and all adjustments, chargebacks, representments, and other corrections to all Cash dispensing transactions under the Servicing Agreements or otherwise, however caused, including, but not limited to, any loss resulting from the operation of the Covered Machines, including any malfunctions thereof, or losses resulting from actions of each Armored Carrier, Servicer or Maintenance Provider while performing services on behalf of Client. Wells Fargo shall promptly notify Client of any regulations or changes of applicable laws which might affect the terms of this Agreement or a Party’s obligations hereunder, and if Wells Fargo and Client determine that it is necessary to amend this Agreement as a result thereof, the parties agree to negotiate in good faith and execute such an amendment. Notwithstanding the foregoing, but subject to the risk of loss provisions set forth in Section IV, Client shall have no indemnity liability hereunder for any claim or loss resulting to the extent that such claim or loss results from the act or omission of Wells Fargo or its employees, agents, or representatives.
 
B.     Actions of a Party and its Representatives . In addition to the indemnification set forth in Section X.A. above, each Party agrees to indemnify, defend and hold harmless the other Party, its officers, directors, and employees from, for, and against

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any and all losses, damages, claims, liabilities, penalties (including, but not limited to, any penalties imposed by any governmental entity or agency), and expenses (including, but not limited to, to the extent permitted by law, reasonable attorneys’ fees) suffered or incurred by such other Party as a result of or arising out of, or attributed, directly or indirectly, to the breach of any obligation under this Agreement by the indemnifying party, its agents or representatives.
 
C.     Taxes . Client agrees to indemnify, defend and hold Wells Fargo harmless from, for and against any loss of the Cash or Receivables (as defined in the Servicer Letters) caused by any loss from Client’s failure to pay taxes, including local and special assessments and governmental and other charges, as well as all public and/or private utility charges, of any type or description, that may from time to time be imposed, assessed and levied against the Covered Machines, against transactions resulting in dispensed Cash, or against Client.
 
D.     No Consequential Damages . IN NO EVENT WILL ANY PARTY BE LIABLE UNDER ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER, SUFFERED BY ANOTHER PARTY OR ITS AFFILIATES, EMPLOYEES OR AGENTS, INCLUDING, WITHOUT LIMITATION, LOST PROFITS, BUSINESS INTERRUPTIONS OR OTHER ECONOMIC LOSS ARISIN G OUT OF THE PERFORMANCE OR NON- PERFORMANCE HEREUNDER, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. For the avoidance of doubt, the Parties agree that the foregoing limitation does not apply to limit a Party’s obligation to indemnify or defend the other Party as provided in this Agreement.
 
E.     Acknowledgement . EACH OF THE PARTIES UNDERSTANDS THE LEGAL AND ECONOMIC RAMIFICATIONS OF THIS SECTION, AND ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION WERE NEGOTIATED BETWEEN THE PARTIES AND THAT SUCH PROVISIONS WERE CONSIDERED BY EACH PARTY IN DETERMINING THE SPECIFIC RISKS THAT IT ASSUMED IN AGREEING TO ITS OBLIGATIONS SET FORTH IN THE AGREEMENT, AND THE AMOUNTS OF THE PAYMENTS TO BE MADE UNDER THE AGREEMENT.
 
F.     Acts or Omissions . It is the understanding and agreement of the Parties to this Agreement that (i) Wells Fargo shall not be liable for any acts or omissions on the part of Client or any third party whether with respect to any transactions generated through Covered Machines or otherwise, and (ii) Client shall not be liable for any acts or omissions on the part of Wells Fargo or any third party whether with respect to any transactions under this Agreement or otherwise.
 
G.     Force Majeure . No Party shall be deemed to be in default of any provision herein or to be liable to another Party for any delay, failure of performance, or interruption of service arising due to acts or events beyond such Party’s control including by way of illustration, but not limitation, acts of God, civil and military authority, terrorism, civil disturbance, war, fires, delay of Armored Carrier suppliers, interruptions in telecommunications or networking facilities, or those of its subcontractors for like causes (each a “Force Majeure Event”). The Parties agree that the provisions of this paragraph do not relieve them of their respective risks of loss with respect to Cash as set forth in Section IV of this Agreement.
 
XI.    Term; Survival; Early Termination Fee .
 
A.     General . The initial term of this Agreement shall begin on the Effective Date and continue through November 30, 2013 and shall be renewed for additional one-year periods unless a Party gives at least 90 days’ prior written notice of its intent not to renew, provided, however, that each such renewal shall be subject to a written agreement about pricing and such other terms and conditions to be mutually agreed upon among the Parties (the “ Stated Termination Date ”), unless earlier terminated by a Party as provided in this Agreement (the “ Actual Termination Date ”).
 
B.     Redelivery . Upon redelivery as provided in this Agreement, Client shall be responsible and liable for: (i) collecting and delivering to Wells Fargo all payments due from Servicers for Dispensed Cash; and (ii) using its best commercially reasonable efforts to ensure that the Armored Carriers effect redelivery of the Cash in accordance with the terms of this Agreement. In the event Client terminates the Agreement as provided herein, Wells Fargo shall use its best commercially reasonable efforts to effect redelivery and shall not delay or otherwise obstruct the efforts of Client to transition currency and coin services to another provider and shall provide commercially reasonable transition assistance to Client if Client has elected to engage another provider of Cash Services.
 
C.     Survival . Notwithstanding the termination of this Agreement as provided herein, the obligations of the Parties hereto under (i) Sections II.D, II.E, III (until Final Settlement), IV, V, VI, VII, VIII, IX, XI and XII shall survive and continue in full force and effect until such time as all Cash then outstanding has been returned to Wells Fargo (or reimbursed to Client for any corrective payments of shortfall or overpayment by Client), all payments due from Servicers for Dispensed Cash then outstanding have been paid to Wells Fargo, and all fees owing pursuant to the terms of this Agreement have been paid and (ii) Section X shall survive and continue in full force and effect until the expiration of the applicable period of limitations.

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D.     Failure to Furnish Cash . If Client terminates this Agreement because Wells Fargo is unable to furnish sufficient Cash to comply with this Agreement, the Cash shall either be redelivered within the timeframe and in the manner mutually agreed-to between Client and Wells Fargo or transferred via Fedwire to Wells Fargo in an amount equal to the then outstanding Cash within such timeframe. Wells Fargo shall be liable for any actual costs incurred by Client in connection with such redelivery. Subject to Section IV (Risk of Loss) and Section VII.E. (Service Level Adjustments), Wells Fargo shall not otherwise be liable for any damages incurred by Client on account of redelivery instituted by Client due to Wells Fargo’s inability to furnish the Cash, nor shall Wells Fargo be liable for any damages resulting from the inability of cardholders to use the Covered Machines because they then contain no currency.
 
E.     Certain Costs . Client shall not be liable for the cost of redelivery as a result of a Wells Fargo Event of Default.
 
F.     Early Termination Fee . In the event this Agreement is, for any reason other than a Wells Fargo Default or because of Wells Fargo’s election to terminate the Agreement before the Stated Termination Date when no Client Event of Default exists, terminated prior to the Stated Termination Date, Client shall pay to Wells Fargo a termination fee of (i) $450,000 if such termination occurs during the first year of the Agreement; or (ii) $250,000 if such termination occurs during the second or third year of the Agreement.
 
G.     Purchase Option . Wells Fargo hereby grants Client an option to purchase the Cash under the following circumstances and subject to the following conditions: (i) this Agreement is terminated for any reason, (ii) the purchase is evidenced by a Currency Bill of Sale in form and substance mutually satisfactory to Client and Wells Fargo and (iii) the purchase is exercised and purchase price paid immediately at termination.
 
XII.   Representations Warranties and Covenants .
 
A.     Representations and Warranties of Client . Client represents and warrants to, and covenants with Wells Fargo as follows (such representations and warranties being deemed to be made and renewed on each day during the term of this Agreement):
 
1.     Organization : Client (i) is a duly organized and validly existing corporation or partnership in good standing under the laws of the jurisdiction of its formation, (ii) has the corporate or partnership power and authority to own its property and assets and to transact the business in which it is engaged or presently proposes to engage and (iii) has duly qualified and is authorized to do business and is in good standing in every jurisdiction in which it owns or leases real property or in which the nature of its business requires it to be so qualified, except to the extent that any failure to be so qualified, authorized or in good standing does not have a reasonable likelihood of materially affecting the operations, properties, or business of Client.
 
2.     Authorization : Client has the corporate or partnership power and authority to execute, deliver and carry out the terms and provisions of this Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement. Client has duly executed and delivered this Agreement, and this Agreement constitutes its legal, valid and binding obligation, enforceable in accordance with its terms except as such enforceability may be affected by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally and (ii) by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
 
3.     No Conflicts : Neither the execution, delivery or performance by Client of this Agreement, nor compliance by it with the terms and provisions hereof, (i) will contravene any applicable provision of any material law, statute, rule, regulation, order, writ, injunction or decree of any court or governmental instrumentality, or (ii) will conflict or be inconsistent with or result in any material 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 pursuant to this Agreement) upon any of the property or assets of Client pursuant to the terms of any indenture, mortgage, deed of trust, agreement or other instrument to which Client is a party or by which it or any of its property or assets is bound or to which it may be subject.
 
4.     No Actions : Client represents and warrants that there are no actions, suits or proceedings pending, to the best of its knowledge, or threatened with respect to this Agreement or the transactions contemplated hereby or that adversely affect the ability or capacity of Client, any Servicer or any Maintenance Provider to perform as agreed-upon hereunder, in its Servicer Letter or Maintenance Provider Letter.
 
5.     Servicer Contracts : Client represents and warrants that following notice of any such regulatory requirements from Wells Fargo, Client shall notify Wells Fargo if Client becomes aware that a Servicer has failed to conform to any regulatory requirement imposed upon Wells Fargo with respect to the Cash, the Covered Machines, and any related record keeping or reporting requirements imposed on Wells Fargo, including, without limiting the generality of the foregoing, the provisions of the regulations of the OCC, if any, regarding minimum security devices and procedures and the provisions

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of the Bank Protection Act of 1968, as amended, 12 USC § 1881 et seq., as such provisions relate to automated teller or cash dispensing machines in off-premises locations.
 
6.     Access to Covered Machines : No employee of Client or any retail establishment where a Covered Machine is located has access to the Cash stored in any Covered Machine, except through a cash dispensing transaction.
 
7.     No Liens : To the best of its knowledge, Client represents and warrants that the ownership interest of Wells Fargo in the Cash is and at all times will be free and clear of any and all liens, rights or claims of all other persons. Client shall defend the Cash against all claims and demands of a Servicer claiming the same or any interest therein adverse to Wells Fargo. To the knowledge of Client, no financing statement or other evidence of lien covering or purporting to cover any of the Cash is on file in any public office.
 
8.     No Defaults : Client is not currently in default under or with respect to any contractual obligation that would, either individually or in the aggregate, reasonably be expected to have a material adverse effect on Client’s operation of the Machines or its performance under this Agreement. To the best of Client’s knowledge, no default under or with respect to any contractual obligation would result from the consummation of the transactions contemplated by this Agreement or any other document related to this Agreement.
 
9.     Location of Covered Machines : All Covered Machines owned, leased, operated or managed by Client are and at all times will be at the business establishments listed on Exhibit A , as modified from time to time in accordance with this Agreement.
 
B.     Representations and Warranties of Wells Fargo . Wells Fargo represents and warrants to, and covenants with, Client as follows:
 
1.     Organization : Wells Fargo (i) is a duly organized and validly existing national bank in good standing under the laws of the United States of America, (ii) has the corporate power and authority to own its property and assets and to transact the business in which it is engaged or presently proposes to engage and (iii) has duly qualified and is authorized to do business as a bank in every jurisdiction in which it owns or leases real property or in which the nature of its business requires it to be so qualified, except to the extent that any failure to be so qualified, authorized or in good standing does not have a reasonable likelihood of materially affecting the operations, properties, or business of Wells Fargo.
 
2.     Authorization : Wells Fargo has the corporate power and authority to execute, deliver and carry out the terms and provisions of this Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement. Wells Fargo has duly executed and delivered this Agreement, and this Agreement constitutes its legal, valid and binding obligation, enforceable in accordance with its terms except that such enforceability may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally and (ii) by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
 
3.     No Conflicts : Neither the execution, delivery or performance by Wells Fargo of this Agreement, nor compliance by it with the terms and provisions hereof, (i) will contravene any applicable provision of any material law, statute, rule, regulation, order, writ, injunction or decree of any court or governmental instrumentality or (ii) will conflict or be inconsistent with or result in any material 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 upon any of the property or assets of Wells Fargo pursuant to the terms of any indenture, mortgage, deed of trust, agreement or other instrument to which Wells Fargo is a party or by which it or any of its property or assets is bound or to which it may be subject.
 
4.     No Actions : There are no actions, suits or proceedings pending or, to its knowledge, threatened with respect to this Agreement or the transactions contemplated hereby.
 
5.     No Defaults : Wells Fargo is not currently in default under or with respect to any contractual obligation that could, either individually or in the aggregate, reasonably be expected to have a material adverse effect on Wells Fargo’s ability to perform under this Agreement. To Wells Fargo’s best knowledge, no default under or with respect to any contractual obligation would result from the consummation of the transactions contemplated by this Agreement or any other document related to this Agreement.
 
C.     Covenants of Client . Client covenants and agrees with Wells Fargo that from and after the Effective Date of this Agreement:
 
1.      Further Assurances : Upon the request of Wells Fargo, and at the expense of Wells Fargo (unless such cooperation is related to a breach by Client), Client will cooperate with Wells Fargo to the extent Wells Fargo may reasonably deem necessary in protecting its ownership interest in the Cash and in the payments from Servicers for Dispensed Cash, and in complying with applicable laws and regulations.

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2.      Change of Name or Entity Structure : Client shall notify Wells Fargo within 30 days of changing its name, jurisdiction of incorporation, or entity structure or moving its principal executive office outside of the metropolitan Las Vegas, Nevada area.
 
3.      Right of Inspection : If a discrepancy arises in connection with the Cash settlement, Client will provide Wells Fargo with access, during normal business hours and upon reasonable prior notice to Client to all books, correspondence and records of Client directly relating to the discrepancy. Wells Fargo and its representatives may examine the same, take extracts therefrom and make photocopies thereof, at the cost and expense of Client. Client agrees to render to Wells Fargo, without cost or expense, such clerical and other assistance as may be reasonably requested with regard thereto.
 
4.      Compliance with Laws Affecting Cash : Client will comply in all material respects with all requirements of law applicable to the Cash or any part thereof; provided however, that Client may contest any requirement of law in any reasonable manner which shall not adversely affect Wells Fargo’s rights in the Cash.
 
5.      Electronic Reports; Access : Client will provide any data deliverable in connection with this Agreement to Wells Fargo in the agreed-to format and will provide access as required in Section III.C.5 hereof.
 
6.      Negative Pledge : Client will not create, incur or permit to exist, will defend the Cash against, and will take such other action as is necessary to remove, any lien or claim on or to the Cash against the claims and demands of a Servicer or an Armored Carrier (except arising through or on account of Wells Fargo).
 
7.      Notice : Upon becoming aware thereof, Client will promptly advise Wells Fargo, in reasonable detail, in accordance with the provisions hereof, (i) of any breach under this Agreement, (ii) of any lien on, or claim asserted against, any of the Cash, and (iii) of the occurrence of any other event which could reasonably be expected to have a material adverse effect on the aggregate value of the Cash or on the liens created hereunder.
 
8.      Compliance with Rules and Regulations : Client will abide by and operate in accordance with all applicable network rules and regulations and all applicable banking laws and regulations following notice by Wells Fargo of such rules or regulations. Client will comply with the applicable regulations of any network processor and all state and federal regulations, including Regulation E.
 
9.      Notice to Wells Fargo : Client shall deliver to Wells Fargo, within three Business Days of receipt, a copy of all notices or correspondence it receives from any third-party relating to the operation of the Covered Machines or the provisioning of Cash for the Covered Machines that may materially affect another Party’s performance of its obligations under this Agreement. Client shall promptly inform Wells Fargo of the location of all Covered Machines and will advise in advance of any proposed relocation, in each case in accordance with the terms of this Agreement.
 
10.    Financial Statements : To the extent that Global Cash Access Holdings, Inc. (“Holdings”), Client’s parent entity, is no longer a public reporting company under the securities laws of the United States, Client will, from time to time, deliver to Wells Fargo copies of its quarterly and annual financial statements and reports as reasonably requested by Wells Fargo, together with any financial information supporting such financial statements and reports. Quarterly financial statements will be due within 45 days of the end of each quarter and annual financial statements within 90 days of the end of each fiscal year.
 
11.    Maintenance of Records . Client agrees to maintain sufficient records to permit an audit by Wells Fargo as is necessary for the settlement of all Cash transactions; provided, however, that neither Client nor their agents shall be required to maintain records beyond six months unless a dispute exists or other circumstances reasonably warrant a longer period of time. Client shall maintain its records as mutually agreed by the Parties in order to permit Wells Fargo additional information to confirm the contents of the Daily Reports and to confirm information on a transaction-by-transaction basis.
 
D.     Covenants of Wells Fargo . Wells Fargo covenants and agrees with Client that from and after the date of this Agreement:
 
1.     Compliance with Laws Affecting Cash: Wells Fargo will comply in all material respects with all requirements of law applicable to the Cash or any part thereof; provided however, that Wells Fargo may contest any requirement of law in any reasonable manner.
 
2.     Notice: Upon becoming aware thereof, Wells Fargo will advise Client promptly, in reasonable detail, in accordance with the provisions hereof, (i) of any breach under this Agreement, (ii) of any lien on, or claim asserted against, any of the Cash, and (iii) of the occurrence of any other event which could reasonably be expected to have a material adverse effect on the aggregate value of the Cash or its agreements hereunder.

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3.     Compliance with Rules and Regulations: Wells Fargo will abide by and operate in accordance with all applicable network rules and regulations and all applicable banking laws and regulations. Wells Fargo will comply with the applicable regulations of any network processor and all state and federal regulations, including Regulation E.
 
XIII.        General Provisions .
 
A.     Counterparts . This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.
 
B.     Relationship of the Parties . Wells Fargo and Client shall at all times be deemed to be independent contractors. Except as expressly provided herein to the contrary, neither Wells Fargo nor Client will have authority to enter into contracts on each other’s behalf, to hire or fire employees of one another, nor in any way to obligate each other to any third party.
 
C.     Entire Agreement; Modification . This Agreement, along with the appendices, exhibits, the Fee Letter, and the addenda referenced herein, constitutes the entire agreement between Wells Fargo and Client relating to the subject matter herein and may not be changed orally but only by a written instrument signed by both Parties. There are no restrictions, promises, warranties, covenants, or undertakings relating to the subject matter of this Agreement, other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.
 
D.     Assignment . No Party may assign this Agreement to any other person or business entity without the other Party’s prior written consent; provided, however, that either Party may assign this Agreement, in whole or in part, with written notice to the other Party, to its parent company, a wholly owned direct or indirect subsidiary of the parent company, its affiliate, or subsidiary corporation, provided that such assignment shall be contingent upon the assigning Party agreeing to continue to guarantee any and all obligations owed hereunder by such assignee under this Agreement and the Servicer Letters and shall document such continuing guaranty in a form acceptable to the non-assigning Parties.
 
E.     Notices . All notices, requests and approvals required by this Agreement shall: (a) be in writing; (b) be addressed to the Parties as indicated below unless notice is given in writing of a change in address; (c) be deemed to have been given when received; and (d) unless otherwise provided in this Agreement, be sent by certified first class mail, return receipt requested, postage prepaid, or other receipted express delivery service, or telecopy with written acknowledgment of receipt:
 
If to Wells Fargo:	
 	
Wells Fargo Bank, N.A.	
Attn: Olga Wisnicky	
3800 Howard Hughes Pkwy, Suite 400	
Las Vegas, Nevada 89169	
(866) 935-4452 e-fax	
 	
With 2 nd notice to:	
Wells Fargo Bank, N.A.	
Attn: Management — Urgent Attention Required	
3800 Howard Hughes Pkwy, Suite 400	
Las Vegas, Nevada 89169	
(702) 791-6365 fax	
 	
If to Client:	
 	
Global Cash Access, Inc.	
3525 E. Post Road, Suite 120	
Las Vegas, NV 89120	
Attn: General Counsel	
Fax: _________________	
 
Notices given under this Section may be given by electronic mail provided that both of the Parties agree to this method of communication for the notices, requests or approvals for which electronic mail is desired to be used.
 
F.     Governing Law and Venue . This Agreement shall be governed by and interpreted under the laws of the State of Delaware (“ Governing Law ”), without regard to conflicts of laws principles. Subject to the arbitration provisions in Section XIII.H below, the Parties hereby irrevocably submit to the jurisdiction of any state or federal court in Las Vegas, Nevada with respect to any action or proceeding arising out of or relating to this Agreement. Subject to the arbitration provisions in Section XIII.H below, the Parties hereby consent to and grant to any such court jurisdiction over the persons of such Parties

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and over the subject matter of any such dispute and agree that delivery or mailing of any process or other papers in the manner provided herein, or in such other manner as may be permitted by law, shall be valid and sufficient service thereof.
 
G.     Section Headings . The section headings in the Agreement are for purposes of reference only and shall not limit or affect any of the terms herein.
 
H.     Arbitration .
 
1.      Arbitral Process : Upon the demand of either Party, any “Dispute” shall be resolved by binding arbitration (except as set forth below in “Judicial Review of Awards”) in accordance with the terms of this Agreement. A “ Dispute ” shall mean any action, dispute, claim, or controversy of any kind, whether in contract or tort, statutory or common law, legal or equitable, now existing or hereafter arising under or in connection with, or in any way pertaining to, the subject matter of this Agreement, or any past, present, or future activities, transactions, or obligations of any kind related directly or indirectly to the subject matter of this Agreement, including, without limitation, any of the foregoing arising in connection with the exercise of any self-help or any ancillary or other remedies or actions taken relating to the subject matter of this Agreement. Any Party may by summary proceedings bring an action in court to compel arbitration of a Dispute. Any Party who fails or refuses to submit to arbitration following a lawful demand by any other Party shall bear all costs and expenses incurred by such other Party in compelling arbitration of any Dispute.
 
2.      Rules Governing Arbitration : Arbitration proceedings shall be administered by the American Arbitration Association (“ AAA ”) or such other administrator as the parties shall mutually agree upon in accordance with the AAA Commercial Arbitration Rules. All Disputes submitted to arbitration shall be resolved in accordance with the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in this Agreement. The arbitration shall be conducted at a location in Las Vegas, Nevada selected by the AAA or other administrator. If there is any inconsistency between the terms hereof and any such rules, the terms and procedures set forth herein shall control. All statutes of limitation applicable to any Dispute shall apply to any arbitration proceeding. All discovery activities shall be expressly limited to matters directly relevant to the Dispute being arbitrated. Judgment upon any award rendered in an arbitration may be entered in any court having jurisdiction; provided, however, that nothing contained herein shall be deemed to be a waiver by either Party which is a bank of the protections afforded to it under 12 USC § 91 or any similar applicable state law.
 
3.      Arbitration; Provisional Remedies : Except as otherwise provided in this Agreement, no provision hereof shall limit the right of either Party to exercise self-help remedies such as setoff, or to obtain provisional or ancillary remedies, including, without limitation, injunctive relief, sequestration, attachment, garnishment, or the appointment of a receiver, from a court of competent jurisdiction before, after, or during the pendency of any arbitration or other proceeding. The exercise of any such remedy shall not waive the right of either Party to compel arbitration hereunder.
 
4.      Arbitrator Qualifications and Awards; Powers : All Arbitrators shall be selected in accordance with the AAA Commercial Arbitration Rules. Arbitrators must (a) be active members of the State Bar of Nevada with expertise in the substantive laws applicable to the subject matter of the Dispute, (b) not be affiliated with either of the Parties and (c) have at least five years experience in arbitrating sophisticated commercial contract disputes. Arbitrators are empowered to resolve Disputes by summary rulings in response to motions filed prior to the final arbitration hearing. Arbitrators (i) shall resolve all Disputes in accordance with the Governing Law, (ii) may grant any remedy or relief that a federal or state court of Nevada could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award, and (iii) shall have the power to award recovery of all costs and fees, to impose sanctions and to take such other actions as they deem necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the Rules of Civil Procedure of the State of Nevada, or other applicable law. Disputes less than $5,000,000 shall be decided by a single arbitrator mutually agreed by the Parties. If the Parties cannot mutually agree on a single arbitrator within five Business Days of initiation of arbitration, then the AAA shall select an arbitrator on behalf of the Parties. Disputes of $5,000,000 or more shall be decided by majority vote of a panel of three arbitrators; provided, however, that all three arbitrators must actively participate in all hearings and deliberations. The panel of arbitrators will be comprised of three arbitrators, with one arbitrator selected by each of Wells Fargo and Client and the third arbitrator selected by the two arbitrators chosen by the Parties. If an arbitrator is unable to serve, his or her replacement will be selected in the same manner as the arbitrator to be replaced.
 
5.      Judicial Review of Awards : Notwithstanding anything herein to the contrary, in any arbitration in which the amount in controversy exceeds $25,000,000, the arbitrators shall be required to make specific, written findings of fact and conclusions of law. In such arbitrations (i) the arbitrators shall not have the power to make any award which is not supported by substantial evidence or which is based on legal error, (ii) an award shall not be binding upon the parties unless the findings of fact are supported by substantial evidence and the conclusions of law are not erroneous under the Governing Law, and (iii) the parties shall have, in addition to the grounds referred to in the Federal Arbitration Act for vacating, modifying or correcting an award, the right to judicial review of (a) whether the findings of fact rendered by the arbitrators are supported by substantial evidence, and (b) whether the conclusions of law are erroneous under the

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Governing Law. Judgment confirming an award in such a proceeding may be entered only if a court determines the award is supported by substantial evidence and not based on legal error under the Governing Law.
 
6.      Arbitration; Other Matters : To the maximum extent practicable, the AAA, the arbitrators and the Parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the Dispute with the AAA. No arbitrator or other Party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a Party required in the ordinary course of its business, by applicable law or regulation, or to the extent necessary to exercise any judicial review rights set forth herein. If more than one agreement for arbitration by or between the Parties potentially applies to a Dispute, the arbitration provision most directly related to the subject matter of the Dispute shall control. This arbitration provision shall survive the termination of this Agreement.
 
I.      Attorneys’ Fees . In the event either Party to this Agreement shall be required to initiate legal or arbitration proceedings   (a) to interpret or enforce performance of any term or condition of this Agreement, (b) to enjoin any action prohibited hereunder, or (c) to gain any other form of relief whatsoever, the prevailing Party shall be entitled to recover, to the extent permitted by law, in addition to any other damages or compensation received, reasonable attorneys’ fees and court costs incurred by it on account thereof notwithstanding the nature of the claim or cause of action asserted by the prevailing Party. “Attorneys’ fees” includes the reasonable expense to any corporation of the service of its in-house counsel.
 
J .      Waiver . If a Party waives any of its rights on any one or more occasions it will not be deemed to be a waiver of that Party’s rights on any other occasion. No delay on the part of any Party hereto in exercising any right, power, or privilege hereunder shall operate as a waiver thereof, and no single or partial exercise of any right, power, or privilege hereunder shall preclude other or further exercise thereof, or be deemed to establish a custom or course of dealing or performance between the Parties hereto, or preclude the exercise of any other right, power, or privilege.
 
K .     No Third Party Beneficiaries . Nothing in this Agreement is intended or shall be construed to give any person, other than the Parties to or Parties indemnified under this Agreement, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained in this Agreement.
 
L .     Remedies Cumulative . The rights and remedies herein expressly provided are cumulative and may be exercised singly or concurrently and as often and in such order as the Party entitled to such right or remedy deems expedient and are not exclusive of any rights or remedies which such Party would otherwise have whether by agreement or now or hereafter existing under applicable law.
 
M.     Severability . In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
 
N.     Examinations and Audits .
 
1.      Of Armored Carrier : Client shall take all steps reasonably necessary to ensure to the satisfaction of Wells Fargo that each Armored Carrier shall allow Wells Fargo, Client, their respective designees, and any regulatory or supervisory body to which Wells Fargo or its affiliates is subject (“ Auditors ”), access to its facilities that maintain inventories of the Cash, subject to the terms and conditions of this Section. Such access shall be for the purpose of allowing the Auditors to perform a physical audit of the Cash, and shall be permitted on regular Business Days during the Armored Carrier’s regular business hours at any time without prior notice, but subject to the Armored Carrier’s regular security policies. The Auditors must present proper credentials to the manager of the Armored Carrier’s facilities prior to gaining admission. The Party on whose behalf the audit is to be conducted (which, in the case of an audit by any regulatory or supervisory body, shall be the Party subject to the regulation or supervision of such body) shall indemnify, defend and hold harmless the other Party and the Armored Carrier from any liability, loss, damage, cost, or expense, including reasonable attorney’s fees, arising out of any bodily injury, death, or damage to property sustained by an Auditor as a result of being on the Armored Carrier’s premises or entering or leaving therefrom, to the extent that such bodily injury, death, or damage to property does not arise from the negligence or intentional misconduct of the Armored Carrier or any of its officers, agents, or employees. In addition, Client (provided the audit is to be conducted by or on behalf of Wells Fargo) and Armored Carrier shall furnish to the Auditors their respective records relating to the Cash and the performance of Client’s obligations under this Agreement. Client (provided the audit is to be conducted by or on behalf of Wells Fargo) and Armored Carrier shall have the right to have an employee or agent present at all times during any examination or audit of their respective records. Armored Carrier shall have the right to have an employee present at all times during any audit conducted pursuant to this section.
 
2.      Of Wells Fargo : Wells Fargo shall allow Client or its designees (“ Client’s Auditors ”), reasonable access to Wells Fargo’s records relating to the Cash and the performance of its obligations under this Agreement for the purpose of allowing the Client’s Auditors to perform a review of the services provided by Wells Fargo under this Agreement. Such access shall be permitted on regular Business Days during Wells Fargo’s regular business hours at times mutually agreed upon by

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Wells Fargo and the Client’s Auditor. If Wells Fargo elects to give Client’s Auditors access to its records on Wells Fargo’s premises, Client’s Auditors may be required to present proper credentials to the manager of such premises prior to gaining admission. Client shall indemnify, defend and hold harmless Wells Fargo from any liability, loss, damage, cost, or expense, including reasonable attorney’s fees, arising out of any bodily injury, death, or damage to property sustained by Client’s Auditor as a result of gaining access to Wells Fargo’s premises or entering or leaving therefrom, to the extent that such bodily injury, death, or damage to property does not arise from the negligence or intentional misconduct of Wells Fargo or any of its officers, agents, or employees. Wells Fargo shall have the right to have an employee or agent present at all times during any examination or audit of its records.
 
3.      Of Amounts in Covered Machines : At least monthly, Armored Carrier shall swap the cash cassettes in and balance each Covered Machine and report the balances to Wells Fargo using iCom Reporting Systems. In the event there is a discrepancy between the balances in any Covered Machine reported by Armored Carrier and the balances reported to Client by Wells Fargo for those Covered Machines, Wells Fargo shall promptly, and in any event within 5 days following discovery of such discrepancy, report such discrepancy to Client.
 
4.      MSB Audit of Client : At least annually, and more frequently if required in Wells Fargo’s sole discretion, Wells Fargo will conduct an MSB audit of Client’s operations. Wells Fargo will provide reasonable notice to Client of any such audit. Client agrees to fully cooperate in any such audit and to make available to Wells Fargo all records and other information that are requested by Wells Fargo and are necessary for the Bank to perform such audit.
 
O.     SEC Reporting Requirements . Wells Fargo hereby acknowledges that Holdings may be required by law to file this Agreement as an exhibit to one or more of its public filings or reports with the Securities and Exchange Commission and Wells Fargo consents to the filing of this Agreement as an exhibit to any such report or filing; provided that Client shall seek confidential treatment with respect to the amount of fees set forth in Section VII.A of this Agreement for purposes of redacting such fee information from any public filings or reports filed by Holdings with the Securities and Exchange Commission.
 
P.     Wells Fargo’s Records Presumed Correct . Except as otherwise expressly set forth in this Agreement, if at any time during the term of this Agreement there is a discrepancy between the records of Wells Fargo and the records of Client or any third party, the records of Wells Fargo shall be rebuttably presumed to be correct.
 
Q.     Construction . The Parties acknowledge that this Agreement was jointly drafted and the provisions herein shall not be construed against any Party.
 
R.     Wholesaling Prohibited . The services provided under this Agreement to Client are intended for the direct benefit of Client and no other person. If at any time Wells Fargo, in its sole determination, concludes that Cash supplied to a Covered Machine is in furtherance of a transaction in which the services provided by Wells Fargo to Client under this Agreement are being directly or indirectly resold to a third party, Wells Fargo may immediately terminate its obligations under this Agreement with respect to such Covered Machine.
 
S.     Patriot Act Notice; OFAC and Bank Secrecy Act . Wells Fargo hereby notifies Client that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies Client, which information includes the name and address of Client in accordance with the Patriot Act. Client will provide such information and take such actions as are reasonably requested by Wells Fargo in order to assist Wells Fargo in maintaining compliance with the Patriot Act. “ Patriot Act ” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, signed into law October 26, 2001. In addition, Client shall (a) ensure that no person, firm or entity who owns a controlling interest in or otherwise controls Client or any subsidiary of Client is or shall be listed on the Specially Designated National and Blocked Persons List or similar lists maintained by the Office of Foreign Assets Control (“ OFAC ”), the Department of Treasury or included in any Executive Orders, (b) not use or permit to use any funds to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, the Bank Secrecy Act, the Money Laundering Act of 1986, or any other law or legal requirement relating to money laundering, all as amended from time to time, and (c) comply, and cause its subsidiaries to comply, with all such laws and other legal requirements.
 
[REMAINDER OF PAGE INTENTIONALLY   LEFT BLANK]

19

 
IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed on its behalf by its duly authorized officers, as of the date and year written above.
 
GLOBAL CASH ACCESS, INC.	 	WELLS FARGO BANK, N. A.	
 	 	 	 	 	
By:	/s/ Scott Betts	 	By:	/s/ Olga E. Wisinicky	
 	Name: Scott Betts	 	 	Name: Olga E. Wisinicky	
 	Title: CEO	 	 	Title: Vice President	

 

20

 
 
EXHIBIT A
 
Covered Machines
 
See Exhibit F (Recovery Plan) which includes the list of Covered Machines

 

 
 
EXHIBIT B
 
Servicer Settlement Accounts

Servicer Names	 	Settlement Account Number	
 	 	 	
*	 	*	
 	 	 	
*	 	*	
 	 	 	
*       Identified in separate writing between Wells Fargo and Client.	 	 	

 

 

 
EXHIBIT C
 
Servicer Letter
(Processor)
 
[INSERT DATE]	 	

 	 	
Attention:	 	 	
 
Ladies and Gentlemen:
 
Wells Fargo Bank, National Association (“ Wells Fargo ”) has entered into, or intends to enter into, a Contract Cash Solutions Agreement with _____ (“ Client ”) (the “ Contract Cash Solutions Agreement ”) pursuant to which Wells Fargo shall provide U.S. currency for the operation of ATM machines owned, operated or managed by Client and listed on Exhibit A as the same may be supplemented from time to time by joint written notice from Wells Fargo and Client to Servicer (the “ Covered Machines ”). Client has also contracted with the above named addressee (“ Servicer ”) to perform certain services in connection with the Covered Machines pursuant to a separate agreement between Servicer and Client (the “ Servicing Agreement ”). The purpose of this letter agreement is to set forth certain rights and obligations of Servicer, Wells Fargo and Client.
 
1.      Definitions . For purposes of this letter agreement the following words shall have the corresponding meanings below:
 
(a)     “ Cash ” shall mean the U.S. currency provided by Wells Fargo for the operation of the Covered Machines pursuant to the Contract Cash Solutions Agreement.
 
(b)     “ Receivables ” shall mean, for any period, an amount equal to the total amount of Cash dispensed from the Covered Machines for any given period for which Servicer is required to reimburse Wells Fargo pursuant to Section 4 of this Agreement.
 
2.      Ownership of Cash and Receivables . Notwithstanding that the Cash or the Receivables may be in the physical possession or custody of a party other than Wells Fargo, Servicer and Client agree that Wells Fargo shall have absolute control of all of the Cash at all times, that the Cash and the Receivables are the sole and exclusive property of Wells Fargo and that Servicer shall not at any time have any interest (including any security interest) in such Cash or Receivables.
 
3.      Access to Cash; Regulatory Requirements . Servicer acknowledges that it has no access to or control of the Cash and that Servicer shall not, and shall not instruct its agents and subcontractors (if any) to, physically remove the Cash from Covered Machines or hinder Wells Fargo’s physical access to the Cash. Servicer shall cooperate with Wells Fargo by furnishing all information in the possession of Servicer and reasonably required by Wells Fargo to meet regulatory requirements that Wells Fargo notifies Servicer of in writing.
 
4.      Settlement of Cash . Wells Fargo maintains depository accounts (each a “ Settlement Account ”) which shall be used to settle transactions, including electronic transfer of funds, that are consummated at the Covered Machines when Cash is dispensed from a Covered Machine. Servicer’s settlement of transactions with respect to Cash dispensed from a Covered Machine pursuant to the terms of the Servicing Agreement shall be made by wire transfer of the required amount of funds in immediately available funds into the appropriate Settlement Account. Client and Servicer each acknowledges that all Cash dispensing transactions with respect to the Covered Machines, including all charges with respect thereto, and all adjustments, chargebacks, representments and other corrections thereto will be settled to the appropriate Settlement Account. The Settlement Account shall be Wells Fargo account no. _____. The designation of a Settlement Account may be changed only in writing by Client and Wells Fargo and Servicer shall not make payment of any settlement amounts attributable to the Covered Machines to any other account unless so instructed jointly by Client and Wells Fargo.
 
5.      No Obligation . Servicer shall have no rights or obligations under the Contract Cash Solutions Agreement. Wells Fargo shall have no rights or obligations under the Servicing Agreement. The sole rights or obligations between Servicer and Wells Fargo are set forth herein.
 
6.      Term and Termination .
 
(a)     Client shall promptly provide Wells Fargo with notice of any notice of termination of the Servicing Agreement. This letter agreement shall automatically terminate upon the termination of the Servicing Agreement or the Contract Cash Solutions Agreement.
 
(b)     Wells Fargo and Client shall each promptly provide Servicer with notice of any notice of termination of the Contract Cash Solutions Agreement.

 
____, 20___
Page 2

(c)     No party shall have liability to the other party for any delay beyond the control of such party in the provision of notice pursuant to subsections (a) or (b) above.
 
(d)     Nothing contained herein is intended to alter the provisions for termination of the Servicing Agreement and the Contract Cash Solutions Agreement found therein, which termination shall be permissible solely to the extent permitted under the relevant agreements and pursuant to the terms thereof.
 
7.      Representations and Warranties .
 
(a)     Representations of Client . Client represents and warrants to, and covenants with, Wells Fargo as follows:
 
1.     Organization . Client is a corporation, validly existing and in good standing under the laws of the jurisdiction of its formation and has all necessary power and authority to own or lease its properties and to carry on its business as now being conducted.
 
2.     Authorization . Client has the power to enter into this letter agreement, and the execution, delivery and performance of this letter agreement has been duly authorized by all requisite action. This letter agreement when executed and delivered shall constitute the valid and binding obligation of Client.
 
(b)     Representations of Servicer . Servicer represents and warrants to, and covenants with, Wells Fargo as follows:
 
1.     Organization . Servicer is duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation and has all necessary corporate power and authority to own or lease its properties and to carry on its business.
 
2.     Authorization . Servicer has the corporate power to enter into this letter agreement, and the execution, deliver and performance of this letter agreement has been duly authorized by all requisite corporate action. This letter agreement when executed and delivered shall constitute the valid and binding obligation of Servicer.
 
(c)     Representations of Wells Fargo . Wells Fargo represents and warrants to, and covenants with, Client and Servicer as follows:
 
1.     Organization . Wells Fargo is duly organized, validly existing and in good standing under the laws of the United States and has all necessary corporate power and authority to own or lease its properties and to carry on its business as now being conducted, and possesses all licenses, franchises, rights and privileges material to the conduct of its business, taken as a whole.
 
2.     Authorization . Wells Fargo has the corporate power to enter into this letter agreement, and the execution, delivery and performance of this letter agreement has been duly authorized by all requisite corporate action. This letter agreement when executed and delivered shall constitute the valid and binding obligation of Wells Fargo.
 
8.      Conflicts . In the event of a conflict between the terms set forth in Section 2 of this letter agreement and the Servicing Agreement, the terms set forth in Section 2 of this letter agreement shall prevail.
 
9.      Governing Law . This letter agreement shall be governed by [INSERT STATE] law.
 
10.     Notices . All notices under this letter agreement shall be sent by certified first class mail, return receipt requested, postage prepaid, or other receipted express delivery services, or by facsimile with written acknowledgment of receipt, and shall be effective upon receipt:
 
If to Client to:
 
If to Servicer to:
 
If to Wells Fargo to:
 
Wells Fargo Bank, National Association
 
11.     Amendments . The terms of this letter agreement may not be amended without the prior written consent of each party hereto.
 
12.     Counterparts . This letter agreement may be executed in one or more counterparts, each of which shall be deemed an original. All counterparts executed shall constitute one agreement binding all of the parties.
 
13.     Waiver . If a party waives any of its rights on any one or more occasions it will not be deemed to be a waiver of that party’s rights on any other occasion.

 

____, 20___
Page 3

14.     Severability . Any provision of this letter agreement held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this letter agreement and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
 
Please acknowledge your receipt and agreement with the provisions of this letter agreement by having your authorized officer execute the copy included herewith and returning it to the undersigned.
 
 	 	Sincerely,	
 	 	 	 	
 	 	[CLIENT]	
 	 	 	 	
 	 	By:	 	
 	 	 	Name:	
 	 	 	Title:	
 	 	 	 	
ACKNOWLEDGED AND AGREED TO THIS________ DAY OF_____,20_____.	
 	 	 	 	
[ SERVICER ]	 	 	
 	 	 	 	
By:	 	 	 	
 	Name:	 	 	
 	Title:	 	 	
 	 	 	 	
WELLS FARGO BANK, NATIONAL ASSOCIATION	 	 	
 	 	 	 	
By:	 	 	 	
 	Name:	 	 	
 	Title:	 	 	

 

 
EXHIBIT D
 
ARMORED CARRIER LETTER AGREEMENT
 
[INSERT DATE]
 
Ladies and Gentlemen:
 
Wells Fargo Bank, National Association, a national banking association organized under the laws of the United States (“ Wells Fargo ”) has entered into, or intends to enter into, a Contract Cash Solutions Agreement with _____ (“ Client ”) (the “ Contract Cash Solutions Agreement ”) pursuant to which Wells Fargo shall provide U.S. currency for the cash dispensement operations of the ATM machines owned, operated or managed by Client and listed on Exhibit A as the same may be supplemented from time to time by joint written notice from Wells Fargo and Client to Armored Carrier (the “ Covered Machines ”). Client has also contracted with the above named addressee (“ Armored Carrier ”) to perform certain currency and coin delivery and retrieval services with respect to the Covered Machines pursuant to a separate agreement between Armored Carrier and Client (the “ Armored Carrier Agreement ”). Client, Wells Fargo, and Armored Carrier may be referred to herein as a “Party” or “Parties” when referring to each of them.
 
1.      Definition . For purposes of this letter agreement, “Cash” shall mean the U.S. currency provided by Wells Fargo for the cash dispensing operations of the Covered Machines pursuant to the Contract Cash Solutions Agreement.
 
2.      Ownership of Cash . Armored Carrier agrees that the Cash is the sole and exclusive property of Wells Fargo and that Armored Carrier shall not at any time have any interest (including any security interest or right of setoff) in such Cash and shall not setoff against the Cash any claims it may now have or claims that may accrue to it in the future against Client, Wells Fargo or any other person. Armored Carrier agrees that Wells Fargo shall have all right, title, and interest in and to the Cash, regardless of physical location, and may treat the Cash as its asset until it is dispensed from the Covered Machines. Upon demand by Wells Fargo, all Cash shall be surrendered by Armored Carrier to Wells Fargo. At no time shall Armored Carrier assert or otherwise claim any interest in the Cash that would under any circumstances be contrary to Wells Fargo’s treatment of the Cash as “vault cash” as defined in section 204.2(k) of Regulation D.
 
3.      Commingling of Cash . Armored Carrier acknowledges that it will not at any time commingle the Cash with any other funds it is holding or transporting; provided, that the holding of Cash in an armored vehicle or vault with other funds shall not constitute commingling of the Cash with other funds so long as the Cash shall remain segregated and separately identified from such other funds at all times.
 
4.      Armored Carrier Services .
 
(a)     Redelivery of Cash . Notwithstanding any provision of any Armored Carrier Agreement to the contrary, Wells Fargo may demand at any time, without prior notice or qualification, that all or any part of the Cash stored in the Covered Machines or otherwise in possession of Armored Carrier be redelivered to Wells Fargo. In response to any such demand, Armored Carrier shall use its best efforts to redeliver the Cash to Wells Fargo as fast as is reasonably practicable. Unless otherwise agreed to in advance, such redelivery shall be made at Wells Fargo’s expense at such reasonable service charge as shall then be determined in good faith by Armored Carrier. Such Cash shall be returned to Wells Fargo at the address that corresponds to each Covered Machine that is specified in Exhibit A.
 
(b)     Cash Held by Armored Carrier . When Cash is held by Armored Carrier in the Armored Carrier’s vault, all such Cash shall be kept in separate inventory until such time as the Cash is required to be placed in a specific Covered Machine or until it is requested to be returned to Wells Fargo pursuant to this letter. The Cash shall not be commingled with any other cash in the possession, custody or control of Armored Carrier.
 
(c)     Cash Control . At no time shall Client be given access to the Cash held by Armored Carrier, nor shall Armored Carrier give Client access to the Cash held in any Covered Machine.
 
(d)     Covered Machine Access. Except as may be necessary to perform the services under any Armored Carrier Agreement, including, but not limited to, loading and removing Cash to and from the Covered Machines or redelivery of Cash to Wells Fargo provided for in this letter agreement, no employee of Armored Carrier shall have the authority to access the Cash stored in any Covered Machine. Armored Carrier shall not give access to the Cash stored in any of the Covered Machines to any third party without first obtaining the agreement of Wells Fargo. Client’s maintenance providers may have access to the Covered Machines independent of Armored Carrier.
 
5.     Cash Discrepancy . The amount set forth in the shipping document released by a Federal Reserve Bank in connection with the release by such Federal Reserve Bank to Armored Carrier of any sealed or locked bag shall be deemed the amount of the Cash received. In the event of any discrepancy between such shipping document and the contents of a sealed or locked cash bag received by Armored Carrier from a Federal Reserve Bank, Armored Carrier shall notify Client and Wells Fargo in writing immediately of the discrepancy, and Armored Carrier shall provide reasonable assistance to Wells Fargo in presenting difference

 

claims to the Federal Reserve Bank in accordance with Federal Reserve Bank regulations. With respect to any Cash made available to Armored Carrier from any one of the Cash Suppliers listed on Exhibit B (each a “ C ash Supplier ”) or a Wells Fargo cash vault, the amount set forth on the packing slip for that Cash shipment shall be deemed the amount of Cash received. In the event of any Cash shipment discrepancy between such packing slip provided by a Cash Supplier and the contents as counted by Armored Carrier, Armored Carrier shall notify Client and Wells Fargo in writing immediately of the discrepancy, and Armored Carrier shall provide reasonable assistance to Wells Fargo in presenting difference claims. Wells Fargo and Client each agree that they shall not conceal or misrepresent any material fact or circumstance concerning the Cash delivered to Armored Carrier pursuant to this letter agreement.
 
6.     Reporting Requirement . Each Business Day, Armored Carrier shall use commercially reasonable efforts to provide a report to Wells Fargo by 12:00 p.m. local time, which shall contain: (i) the amount of Cash placed in each Covered Machine by Armored Carrier the immediately preceding Business Day, (ii) the amount of Cash returned to the Armored Carrier’s vault from the Covered Machines the immediately preceding Business Day, (iii) the total amount of all Cash shipments from Wells Fargo’s vault to Armored Carrier’s vault the immediately proceeding Business Day, (iv) the total amount of all Cash shipments from Armored Carrier’s vault to Wells Fargo the immediately proceeding Business Day, (v) the closing vault balance of Armored Carrier’s vault the immediately preceding Business Day, and (vi) such other additional information as Wells Fargo may reasonably request. All reports delivered by Armored Carrier shall be completed by the reporting systems selected by Wells Fargo. “ Business Day ” shall mean any day other than weekends or holidays observed by the Federal Reserve Banks or Wells Fargo, and with respect to each Covered Machine, the Cash Supplier that is making Cash available to such Covered Machine. Recovery Plan . Armored Carrier agrees to comply with the terms of the Recovery Plan attached hereto as Exhibit C, as the same may be supplemented from time to time by joint written notice from Wells Fargo and Client to Armored Carrier.
 
7.     Insurance . Armored Carrier, at its own expense, shall provide and maintain insurance coverage during the complete term of the Agreement, that conforms in all material respects with the following requirements:
 
(a)     Workers’ Compensation Insurance . Statutory Workers’ Compensation coverage for all of its employees, including occupational disease coverage, as required by applicable law, and employer’s liability with limits of at least $1,000,000 bodily injury each accident, $1,000,000 bodily injury by disease per employee, and $1,000,000 bodily injury by disease in the aggregate. If any class of employees providing any services under the Agreement is not protected by the Workers’ Compensation statute, Armored Carrier shall provide special insurance for the protection of such employees not otherwise protected that is similar to the coverage required above. The policy shall be endorsed to include “all states” coverage (if applicable). If any Services are to be performed by Armored Carrier in North Dakota, Ohio, Washington, West Virginia or Wyoming, Armored Carrier shall purchase, in each of the aforementioned states in which Armored Carrier will be performing Services, (i) Workers’ Compensation in the State Fund established by each such state, and (ii) Stop Gap coverage providing Employer’s liability coverage in each such state.
 
(b)     Commercial General Liability Insurance . Commercial General Liability Insurance written on an “occurrence” basis with a combined single limit of at least $2,000,000 per occurrence, and a general aggregate of $5,000,000, in forms providing coverage not less than the standard commercial general liability policy including hazards of operation, broad form property damage liability coverage, products/completed operations coverage, independent contractor coverage and broad form contractual coverage for liability assumed under this Agreement, to the extent insurable under the policy. The policy shall insure against claims for personal injury, bodily injury (including death), and property damage occurring on or about the site of any Services following the date of the Agreement by reason of, or as a result of, the negligent acts or omissions of Armored Carrier or any of its employees, agents or contractors. Coverage shall include (a) liability arising out of acts of agents or contractors of Armored Carrier and (b) provisions that the insurance company has a duty to defend all insureds under the policy and that defense costs are paid in addition to and do not deplete the policy limits.
 
(c)     Automobile Liability Insurance . Coverage for all motor vehicles operated by or for Armored Carrier, including protection for automobiles and trucks used by Armored Carrier either on or away from Client’s and Wells Fargo’s facilities or other sites at which Armored Carrier’s services are provided, with a combined single limit of at least $1,000,000 per occurrence for bodily injury and property damage. The policy shall include coverage for all hired, owned and non-owned vehicles.
 
(d)     Commercial Umbrella/Follow Form Excess Policy . Excess liability policy with limits of not less than $10,000,000 per occurrence in excess of the primary underlying policy limits. The policy must provide coverage at least as broad as the underlying policies.
 
(e)     All-Risk Property Insurance . Replacement cost coverage on all buildings, equipment and other property used in the performance of the Services, and Armored Carrier hereby waives any right of subrogation against Client and Wells Fargo (including, their respective officers, directors and employees) for any loss or damage to same. Armored Carrier shall have the option to self-insure for such coverage, but if Armored Carrier elects to self-insure, Armored Carrier shall protect Client and Wells Fargo (including their respective officers, directors and employees) to the same extent as it would if it had obtained an “all risk” property coverage policy covering such property.

-   2  -

 
(f)     Comprehensive . Comprehensive Crime/Money and Securities insurance with a limit of not less than the greater of (i) $50,000,000 for any Armored Carrier facility ($50,000,000 for an Armored Carrier facility without a Class II vault), (ii) $50,000,000 for property in transit, or (iii) an amount equal to the maximum amount of cash, currency and valuables held for all Clients at each Armored Carrier facility (determined on a facility by facility basis) covering all loss, damage or destruction of “Property” (as defined in this Agreement) while same is in the care, custody and control of Armored Carrier, its employees, agents or contractors or as may otherwise be the responsibility of Armored Carrier under this Agreement. The insurance shall include, but not be limited to, the following coverages:
 
(i)     Employee Theft/Dishonesty Coverage (including Client and Wells Fargo Property endorsement)
 
(ii)     In transit coverage
 
(iii)     On premises coverage
 
(iv)     Computer theft and funds transfer coverage
 
(v)     Joint loss payable endorsement in favor of Client and Wells Fargo
 
(vi)     Legal Liability coverage for loss of and/or damage or destruction of Property
 
(g)     General Requirements . The following general requirements shall apply to all insurance policies required to be obtained by Armored Carrier hereunder:
 
(i)     Armored Carrier shall maintain the foregoing insurance coverage in force at all times during the performance of any Services under the Agreement.
 
(ii)    Armored Carrier shall furnish Client and Wells Fargo with certificates of insurance evidencing the insurance required by this Agreement prior to the commencement of any services and at least annually from the date of the Agreement and as policies are renewed, replaced, or modified. Failure to provide the certificates will constitute a material breach and entitle Client and Wells Fargo to terminate the Agreement.
 
(iii)    All policies shall be written by insurance companies that are (a) lawfully authorized to do business in the jurisdiction (s) where work is being performed or services are provided and (b) carry an A.M. Best rating of “A” or better and financial category of “X” or higher. Should any policy be written on a surplus lines and non-admitted basis, Client and Wells Fargo reserve the right to approve the insurance company.
 
(iv)    Each policy shall include a provision requiring that at least 30 days prior written notice be given to Client and Wells Fargo in the event of cancellation, non-renewal, lowering of policy limits or exhaustion of aggregates. Armored Carrier shall provide Client and Wells Fargo with 30 days prior written notice of any material change in any policy.
 
(v)    Armored Carrier shall pay the premiums on all required insurance policies and the cost for such premiums shall be deemed included in the compensation payable to Armored Carrier for its services pursuant to the terms of the Armored Carrier Agreement.
 
(vi)    All required insurance policies, except for Workers’ Compensation and “All Risk” Property Insurance, to the extent permitted by applicable law, shall name Client and Wells Fargo and their respective officers, directors and employees as “additional insureds.” Any General Liability and Umbrella policy must utilize ISO endorsement form CG2010 (11/85) Additional Insured — Owners, Lessees, or Contractors (Form B) or equivalent endorsement that names Client and Wells Fargo and their respective officers, directors and employees as additional insureds for both ongoing operations of Armored Carrier and completed operations of Armored Carrier.
 
(vii)    Except where prohibited by law, all insurance policies required by this Agreement shall include a Waiver of Subrogation in favor of Client and Wells Fargo and their respective officers, directors and employees.
 
(viii)    Each of Armored Carrier’s insurance policies shall be written so as to provide primary coverage and to be non-contributing with respect to any other insurance or self insurance which may be maintained by Client and Wells Fargo.
 
(ix)    The insurance requirements set forth herein shall in no way limit the liability of Armored Carrier or its contractors arising under the Armored Carrier Agreement, this letter or any other agreement or as a result of any related activities.
 
(x)    Armored Carrier shall be responsible for the payment of any and all deductibles or SIR (“Self Insurance Retention”) applicable under its insurance policies. Armored Carrier’s deductible and/or SIR shall not exceed Armored Carrier’s current limits on any given policy, unless approved in writing by Client and Wells Fargo. Client and Wells Fargo acknowledge that Armored Carrier’s deductibles on Armored Carrier’s policies in existence at the inception of this letter

-   3  -

 
 
agreement are acceptable and Armored Carrier agrees to notify Client and Wells Fargo in writing at least thirty (30) days in advance of any future proposed changes in such deductible and to obtain Client’s and Wells Fargo’s written approval prior to increasing any deductibles.
 
(xi)    Client and Wells Fargo shall have the right to request from time to time that Armored Carrier obtain additional insurance in connection with Armored Carrier’s performance of any of its services.
 
8.     Examinations and Audits Of Armored Carrier . Armored Carrier shall allow Wells Fargo, Client, their respective designees, and any regulatory or supervisory body to which Wells Fargo is subject (“Auditors”), access to its facilities that maintain inventories of the Cash. Such access shall be for the purpose of allowing the Auditors to perform a physical audit of the Cash, and shall be permitted on regular business days during the Armored Carrier’s regular business hours at times to be determined by the Party on whose behalf the audit is being conducted. The Auditors must present proper credentials to the manager of the Armored Carrier’s facilities prior to gaining admission and Armored Carrier shall have the right to independently verify with Wells Fargo that such auditors are authorized prior to having access to such facilities. The Party on whose behalf the audit is being conducted shall indemnify, defend and hold harmless the Armored Carrier from any liability, loss, damage, cost, or expense, including reasonable attorneys’ fees, arising out of any bodily injury, death or damage to property sustained by an Auditor as a result of being on the Armored Carrier’s premises or entering or leaving therefrom, to the extent that such bodily injury, death or damage to property does not arise from the negligence or intentional misconduct of the Armored Carrier or any of its officers, agents, or employees. In addition, Client (provided the audit is being conducted by or on behalf of Wells Fargo) and Armored Carrier shall furnish to the Auditors their respective records relating to any discrepancy in Cash settlement. Client (provided the audit is being conducted by or on behalf of Wells Fargo) and Armored Carrier shall have the right to have an employee or agent present at all times during any examination or audit of their respective records. Armored Carrier shall have the right to have an employee present at all times during any such audit.
 
9.     Representations, Warranties and Covenants of Armored Carrier . Armored Carrier represents, warrants, and covenants to Client and Wells Fargo as follows:
 
(a)     Organization . Armored Carrier is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and has all necessary corporate power and authority to own or lease its properties and to carry on its business as now being conducted, and possesses all licenses, franchises, rights and privileges material to the conduct of its business, taken as a whole.
 
(b)     Authorization . Armored Carrier has the corporate power to enter into this letter agreement, and the execution, delivery and performance of this letter agreement has been duly authorized by all requisite corporate action. This letter agreement when executed and delivered shall constitute the valid and binding obligation of Armored Carrier.
 
(c)     Amendment of Armored Carrier Agreement . Armored Carrier agrees to provide Wells Fargo with at least 60 days prior written notice of any amendment to any Armored Carrier Agreement that may have a material adverse effect on Wells Fargo.
 
(d)     Compliance with Insurance Requirements . Armored Carrier represents and warrants that at no time shall the amount of Cash contained in any delivery vehicle of Armored Carrier exceed the truck load limit set for that vehicle by Armored Carrier’s insurance carrier.
 
(e)     Vault Security . Armored Carrier agrees that it shall conform to any regulatory requirements imposed upon Wells Fargo with respect to security measures that are applicable to the maintenance of the Cash in Armored Carrier’s vaults.
 
10.     Indemnification . As between Wells Fargo and Armored Carrier, Armored Carrier shall bear all risk of loss with respect to Cash in its possession or control, including, without limitation, loss due to theft or destruction of any of the Cash, or misfeasance of malfeasance of Armored Carrier, its agents or employees; provided that the foregoing sentence shall not supersede any limitations on liability as agreed by Client and Armored Carrier and set forth in the Armored Carrier Agreement. Armored Carrier agrees to indemnify, defend and hold harmless Wells Fargo for loss, theft or destruction of the Cash to the same extent it is required to indemnify Client under the Armored Carrier Agreement. Armored Carrier shall not be liable or responsible for any loss of Cash: (i) due solely to the intentional act or omission of Wells Fargo, its agents, or employees, (ii) that occurs after such Cash has been returned to a Cash Supplier, a Federal Reserve Bank or Wells Fargo, or (iii) that occurs before such Cash has been delivered to Armored Carrier.
 
11.     No Obligation . Armored Carrier shall have no rights or obligations under the Contract Cash Solutions Agreement. Wells Fargo shall have no rights or obligations under the Armored Carrier Agreement. The sole rights or obligations between Armored Carrier and Wells Fargo are set forth herein.

-   4  -

 
12.     Term and Termination .
 
(a)     Client shall promptly provide Wells Fargo and Armored Carrier with any notice of termination of the Armored Carrier Agreement. This letter agreement shall automatically terminate upon the termination of the Armored Carrier Agreement or the Contract Cash Solutions Agreement.
 
(b)     Wells Fargo and Client shall each promptly provide Armored Carrier with notice of any notice of termination of the Contract Cash Solutions Agreement.
 
(c)     In the event of any regulatory requirements imposed on Wells Fargo with regards to security measures in which Wells Fargo has notified Client in writing and which Client is unable to or unwilling to comply, Client may terminate this letter agreement without any liability on 30 days’ written notice to Wells Fargo.
 
(d)     No Party shall have liability to any other Party for any delay beyond the control of such Party in the provision of notice pursuant to subsections (a) or (b) above.
 
13.     Settlement of Disputes .
 
(a)     Conflicts . To the extent any dispute resolution terms in this letter are inconsistent with any such terms in the Contract Cash Solutions Agreement, the terms of this letter shall prevail.
 
(b)     Arbitration . Upon the demand of any Party, any “Dispute” shall be resolved by binding arbitration (except as set forth below in “Judicial Review of Arbitration Awards”) in accordance with the terms of this letter agreement. A “Dispute“ shall mean any action, dispute, claim or controversy of any kind, whether in contract or tort, statutory or common law, legal or equitable, now existing or hereafter arising under or in connection with, or in any way pertaining to, the subject matter of this letter agreement, or any past, present or future activities, transactions or obligations of any kind related directly or indirectly to the subject matter of this letter agreement, including, without limitation, any of the foregoing arising in connection with the exercise of any self-help or any ancillary or other remedies or actions taken relating to the subject matter of this letter agreement. Notwithstanding the foregoing, a “Dispute” shall not include any claim arising out of the bodily injury to, or death of, any person. Any Party may by summary proceedings bring an action in court to compel arbitration of a Dispute. Any Party who fails or refuses to submit to arbitration following a lawful demand by any other Party shall bear all costs and expenses incurred by such other Party in compelling arbitration of any Dispute.
 
(c)     Rules Governing Arbitration . Arbitration proceedings shall be administered by the American Arbitration Association (“ AAA ”) or such other administrator as the Parties shall mutually agree upon in accordance with the AAA Commercial Arbitration Rules. All Disputes submitted to arbitration shall be resolved in accordance with the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in this letter agreement. The arbitration shall be conducted at a location in [INSERT STATE] selected by the AAA or other administrator. If there is any inconsistency between the terms hereof and any such rules, the terms and procedures set forth herein shall control. All statutes of limitation applicable to any Dispute shall apply to any arbitration proceeding. All discovery activities shall be expressly limited to matters directly relevant to the Dispute being arbitrated. Judgment upon any award rendered in an arbitration may be entered in any court having jurisdiction.
 
(d)     Arbitration; Provisional Remedies . Except as otherwise provided in this letter agreement, no provision hereof shall limit the right of any Party to exercise self-help remedies such as setoff, or to obtain provisional or ancillary remedies, including, without limitation, injunctive relief, sequestration, attachment, garnishment or the appointment of a receiver, from a court of competent jurisdiction before, after or during the pendency of any arbitration or other proceeding. The exercise of any such remedy shall not waive the right of any Party to compel arbitration hereunder.
 
(e)     Arbitrator Qualifications and Awards; Powers . Arbitrators must be active members of the Bar in [INSERT STATE] or retired judges of the state or federal judiciary of [INSERT STATE] with expertise in the substantive laws applicable to the subject matter of the Dispute. Arbitrators are empowered to resolve Disputes by summary rulings in response to motions filed prior to the final arbitration hearing. Arbitrators (i) shall resolve all Disputes in accordance with the Governing Law,   (ii) may grant any remedy or relief that a federal or state court of [INSERT STATE] could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award, and (iii) shall have the power to award recovery of all costs and fees, to impose sanctions and to take such other actions as they deem necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the Rules of Civil Procedure of the State of [INSERT STATE] or other applicable law. Disputes shall be decided by majority vote of a panel of three arbitrators; provided, however, that all three arbitrators must actively participate in all hearings and deliberations.
 
(f)     Judicial Review of Awards . Notwithstanding anything herein to the contrary, in any arbitration in which the amount in controversy exceeds $25,000,000, the arbitrators shall be required to make specific, written findings of fact and conclusions of law. In such arbitrations (i) the arbitrators shall not have the power to make any award which is not supported by

-   5  -

 
substantial evidence or which is based on legal error, (ii) an award shall not be binding upon the Parties unless the findings of fact are supported by substantial evidence and the conclusions of law are not erroneous under the Governing Law, and   (iii) the Parties shall have, in addition to the grounds referred to in the Federal Arbitration Act for vacating, modifying or correcting an award, the right to judicial review of (a) whether the findings of fact rendered by the arbitrators are supported by substantial evidence, and (b) whether the conclusions of law are erroneous under the Governing Law. Judgment confirming an award in such a proceeding may be entered only if a court determines the award is supported by substantial evidence and not based on legal error under the Governing Law.
 
(g)     Arbitration; Other Matters . To the maximum extent practicable, the AAA, the arbitrators and the Parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the Dispute with the AAA. No arbitrator or other Party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a Party required in the ordinary course of its business, by applicable law or regulation, or to the extent necessary to exercise any judicial review rights set forth herein. If more than one agreement for arbitration by or between the Parties potentially applies to a Dispute, the arbitration provision most directly related to the subject matter of the Dispute shall control. This arbitration provision shall survive the termination of this letter agreement.
 
14.     Notices . All notices under this letter agreement shall be sent by certified first class mail, return receipt requested, postage prepaid, or other receipted express delivery services, or by facsimile with written acknowledgment of receipt, and shall be effective upon receipt:
 
If to Client to:
 
If to Servicer to:
 
If to Wells Fargo to:
 
Wells Fargo Bank, National Association
 
15.     Governing Law . This letter agreement shall be governed by [INSERT STATE] law.
 
16.     Amendments . The terms of this letter agreement may not be amended without the prior written consent of each Party hereto.
 
17.     Counterparts . This letter agreement may be executed in one or more counterparts, each of which shall be deemed an original. All counterparts executed shall constitute one agreement binding all of the Parties.
 
18.     Waiver . If a Party waives any of its rights on any one or more occasions it will not be deemed to be a waiver of that Party’s rights on any other occasion. Please acknowledge your receipt and agreement to the representations, covenants, warranties, and provisions of this letter agreement by having your authorized officer execute the copy included herewith and returning it to the undersigned.
 
 	 	Sincerely,	
 	 	 	 	
 	 	[CLIENT]	
 	 	 	 	
 	 	By:	 	
 	 	 	Name:	
 	 	 	Title:	
 	 	 	 	
ACKNOWLEDGED AND AGREED TO THIS ______ DAY OF______,20_____.	
 	 	 	 	
[ ARMORED CARRIER ]	 	 	
 	 	 	 	
By:	 	 	 	
 	Name:	 	 	
 	Title:	 	 	
 	 	 	 	
WELLS FARGO BANK, NATIONAL ASSOCIATION	 	 	
 	 	 	 	
By:	 	 	 	
 	Name:	 	 	
 	Title:	 	 	
 	 	 	 	
EXHIBIT A	 	 	

-   6  -

 
 
Covered Machines
 
EXHIBIT B
 
Cash Suppliers
 
EXHIBIT C
 
Recovery Plan

-   7  -

 
EXHIBIT E
 
Maintenance Provider Letter

_______________, 20____	 	

 	 	
Attention:	 	 	
 
Ladies and Gentlemen:
 
Wells Fargo Bank, National Association (“ Wells Fargo ”) has entered into a Contract Cash Solutions Agreement with _____ (“ Client ”) (the “ Contract Cash Solutions Agreement ”) pursuant to which Wells Fargo shall provide U.S. currency for the dispensing from the ATM machines (the “ Cash ”) owned, operated or managed by Client (the “ Covered Machines ”). Client has also contracted with the above named addressee (“ Maintenance Provider ”) to perform certain maintenance services in connection with certain of the Covered Machines (the “ Serviced Machines ”) pursuant to one or more written agreements between Maintenance Provider and Client (the “ Maintenance Contracts ”). The purpose of this letter agreement is to set forth certain rights and obligations of Maintenance Provider, Wells Fargo and Client.
 
1. Ownership of Cash . Maintenance Provider and Client agree that Wells Fargo shall have absolute control of all of the Cash in the Serviced Machines at all times, that the Cash is the sole and exclusive property of Wells Fargo and that Maintenance Provider shall not at any time have any interest (including any security interest) in such Cash.
 
2.   Access to Cash . Maintenance Provider acknowledges that it has no right of control of the Cash and that Maintenance Provider shall not, and shall not instruct its agents and subcontractors (if any) to, physically remove the Cash from Serviced Machines or hinder any Armored Carrier’s physical access to the Cash. “ Armored Carrier ” shall mean one or more armored carriers that Client and Wells Fargo have contracted with for purposes of delivering monies to, and retrieving monies from the Covered Machines.
 
3.   Conflicts . In the event of a conflict between the terms set forth in Section 2 of this letter agreement and the Maintenance Contracts, the terms set forth in Section 2 of this letter agreement shall prevail.
 
4.   Counterparts . This letter agreement may be executed in one or more counterparts, each of which shall be deemed an original. All counterparts executed shall constitute one agreement binding all of the parties.
 
5.   Term . This letter is effective until Maintenance Provider receives notice of termination from Wells Fargo.
 
Please acknowledge your receipt and agreement with the provisions of this letter agreement by having your authorized officer execute the copy included herewith and returning it to the undersigned. Addresses for notices can be found in Exhibit E-1 to this letter.
 
 	 	Sincerely,	
 	 	 	 	
 	 	[CLIENT]	
 	 	 	 	
 	 	By:	 	
 	 	 	Name:	
 	 	 	Title:	
 	 	 	 	
ACKNOWLEDGED AND AGREED TO THIS_____ DAY OF ______, 20_____.	
 	 	 	 	
[MAINTENANCE PROVIDER]	 	 	
 	 	 	 	
By:	 	 	 	
 	Name:	 	 	
 	Title:	 	 	
 	 	 	 	
WELLS FARGO BANK, NATIONAL ASSOCIATION	 	 	
 	 	 	 	
By:	 	 	 	
 	Name:	 	 	
 	Title:	 	 	

 

 

Exhibit E-1
 
Addresses for Notices
 
If to Client to:
 
If to Maintenance Provider to:
 
If to Wells Fargo to:
 
Wells Fargo Bank, National Association

-   2  -

 
EXHIBIT F
 
Recovery Plan
 
See Attached

-   1  -

 
 
EXHIBIT G
 
Pilot Settlement and Reconciliation Procedures
 
1.     Commencement . The settlement procedures for Pilot Machines (as defined below) shall become effective at 12:00 a.m. Pacific Time on a date mutually agreed upon by Wells Fargo and Client (the “Pilot Start Date”). For purposes of the Pilot, the Pilot Machines shall include only those ATMs separately agreed to in writing. One week prior to the Pilot Start Date, Client shall provide a detailed written description of the currency and coin balances required for the initial cash orders to Wells Fargo intended for use in the Pilot Machines (the “Starting Pilot Cash”). Upon Client’s receipt of the Starting Pilot Cash (which will be deemed to be the time when the Armored Carrier receives the Cash from the Wells Fargo Network Location), the U.S. currency and coin for the dispensing from the Pilot Machines as of the Pilot Start Date shall be the property of Wells Fargo and shall be referred to as the “Pilot Cash.” Client shall remove any Cash that is not Starting Pilot Cash from the Pilot Machines before the Starting Pilot Cash is loaded into the Pilot Machines and the only Cash in the Pilot Machines shall be Wells Fargo owned Cash.
 
2.     Reports .
 
A.     Daily Reports . By 9:00 a.m., Central Time, on each Business Day after the Pilot Start Date, Client shall deliver to Wells Fargo two daily reports (“Daily Reports”) as follows:
 
(i)     File 1 . A report (the “File 1 Report”) that provides the amount of Cash dispensed from each Pilot Machine between 3:00 p.m. Pacific Time on the day immediately preceding the day on which the immediately preceding File 1 Report was delivered and 3 p.m. Pacific Time of the immediately preceding Business Day (“Daily Dispensed Cash”); and
 
(ii)     File 2 . A report (the “File 2 Report”) that provides the amount of Pilot Cash dispensed from each Pilot Machine serviced since the preceding Business Day from 3:00 p.m. Pacific Time until such Pilot Machine was serviced and cash cassettes swapped by the applicable armored carrier on the immediately preceding Business Day.
 
B.     Armored Carrier Service Report . Utilizing iCom Reporting Systems, on each Business Day, the applicable Armored Carrier shall deliver to Wells Fargo a report reflecting each Pilot Machine serviced and cash cassettes swapped since the preceding report and the Pilot Cash balance in each Pilot Machine at the time of service (together with corrections and adjustments input in the iCom Reporting System, the “Service Report(s)”). Service Reports shall be used by Wells Fargo as part of the reconciliation process contemplated hereby.
 
C.     Daily Report by Wells Fargo . Although the Bank Report will not be supplied to Customer, Wells Fargo will supply Customer similar information for each Pilot Machine daily.
 
3.     Settlements . All settlements with Client of Pilot Cash shall be effected by wire transfer directly into the Settlement Account by 9 a.m. Pacific Time on the same day Client receives the funds from its current provider.
 
4.     Viewing of Settlement Account . Client shall have viewing access to the Settlement Account during the Pilot if such access is available. If such access is not available during the Pilot, Wells Fargo shall use commercially reasonable efforts to provide information about the Settlement Account requested by Client.
 
5.     Reconciliation . Following receipt of the Daily Reports each Business Day, Wells Fargo shall endeavor to reconcile all out-of-balance amounts of Pilot Cash from the amounts reported in the Daily Reports and the Service Reports. If at any time Wells Fargo learns that the Pilot Cash is out-of-balance (by use of the bank reports or otherwise), Wells Fargo shall notify Client of the imbalance within three (3) days of such discovery, and within sixty (60) days of providing such notice to Client, Wells Fargo shall credit or debit, as applicable, the Operating Account (as defined below) for such overage or shortage. Variances will be settled as of the last Business Day of the month when the difference reaches sixty (60) days.
 
6.     Receivables . Notwithstanding anything in this letter agreement to the contrary, Wells Fargo and Client agree that during the Pilot, Wells Fargo owns the Pilot Cash and any receivables arising from such Pilot Cash being dispensed.
 
7.     Fees . Client agrees to pay Wells Faro the Fees for the Pilot calculated in accordance with the terms of the Fee Letter.

 

 
 
EXHIBIT G
 
Form of Bank Report
 
See attached

EXHIBIT 21.1
SUBSIDIARIES OF EVERI HOLDINGS INC.

 	 	 	 	 	
Name	 	Jurisdiction of Incorporation or Organization	 	Name(s) under which doing business	
Everi Payments Inc.	 	Delaware	 	 	
Everi Logistics, LLC	 	Nevada	 	 	
Global Cash Access (Canada) Inc.	 	Ontario, Canada	 	 	
Global Cash Access (Panama), Inc.	 	Panama	 	 	
Game Financial Caribbean, N.V.	 	Netherlands, Antilles	 	 	
Global Cash Access (Belize),  LTD.	 	Belize	 	 	
Central Credit, LLC	 	Delaware	 	Louisiana – Central Credit, a Delaware LLC
New Hampshire - Central Credit (Delaware)
Nebraska – Delaware Central Credit, LLC
Ohio – Central Credit Delaware, LLC (Central Credit, LLC)
Vermont – Delaware Central Credit	
Global Cash Access (BVI) Inc.	 	British Virgin Islands	 	 	
Arriva Card, Inc.	 	Delaware	 	GCA Access Card, Inc.	
Global Cash Access Switzerland AG	 	Switzerland	 	 	
Global Cash Access (HK) Ltd.	 	Hong Kong	 	 	
GCA (Macau) S.A.	 	Macau SAR	 	 	
Global Cash Access (Belgium) S.A.	 	Belgium	 	 	
Global Cash Access (UK) Limited	 	United Kingdom	 	 	
GCA India Private Limited	 	India	 	 	
GCA MTL, LLC	 	Delaware	 	 	
Everi Games Holding Inc.	 	Texas	 	 	
Everi Games Inc.	 	Delaware	 	 	
MGAM Technologies, LLC	 	Delaware	 	 	
MGAM Canada, Inc.	 	British Columbia	 	 	
MegaBingo International, LLC	 	Delaware	 	 	
Multimedia Games de Mexico	 	Mexico	 	 	
Multimedia Games de Mexico 1	 	Mexico	 	 	
Servicios de Wild Basin	 	Mexico	 	 	
MGAM Peru SRL	 	Peru	 	 	

Exhibit 23.1
 
Consent of Independent Registered Public Accounting Firm

Everi Holdings Inc.
Las Vegas, Nevada
 
We hereby consent to the incorporation by reference in the Registration Statements on Forms S-8 (File Nos. 333-131904, 333-140878, 333-149496, 333-157512, 333-165264, 333-172358, 333-187199, 333-197860 and 333-202798) of Everi Holdings Inc. of our reports dated March 15, 2016, relating to the consolidated financial statements, and the effectiveness of Everi Holdings Inc.’s internal control over financial reporting, which appear in this Form 10-K.
 
/s/ BDO USA, LLP
 
Las Vegas, Nevada
March 15, 2016

EXHIBIT 23. 2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-131904, 333-140878, 333-149496, 333-157512, 333-165264, 333-172358, 333-187199, 333-197860 and 333-202798 each on Form S-8 of our report dated March 16, 2015 (October 23, 2015 as to Notes 19 and 21 and March 15, 2016 as to the reclassifications to the 2014 consolidated financial statements discussed in Note 2 ), relating to the consolidated financial statements of Global Cash Access Holdings, Inc. (now known as Everi Holdings Inc.) and subsidiaries appearing in this Annual Report on Form 10-K of Everi Holdings Inc. for the year ended December 31, 2015.

/s/ DELOITTE & TOUCHE LLP
Las Vegas, Nevada
March 1 5 , 2016	 	

EXHIBIT 31.1
Certification of Principal Executive Officer
Pursuant to Exchange Act Rule 13a ‑14(a) and 15d ‑14(a)
as Adopted Pursuant to Section 302 of the Sarbanes ‑Oxley Act of 2002
I, Michael D. Rumbolz , certify that:
1. I have reviewed this Annual Report on Form 10 ‑K of Everi Holdings Inc.;
2. Based on my knowledge, this Annual Report on Form 10 ‑K does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report on Form 10 ‑K;
3. Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Annual Report;
4. The registrant ’ s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a ‑15(e) and 15d ‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a ‑15(f) and 15d ‑15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Annual Report on Form 10 ‑K is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant ’ s disclosure controls and procedures and presented in this Annual Report on Form 10 ‑K our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Annual Report on Form 10 ‑K based on such evaluation; and
d) Disclosed in this Annual Report on Form 10 ‑K any change in the registrant ’ s internal control over financial reporting that occurred during the registrant ’ s most recent fiscal quarter (the registrant ’ s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant ’ s internal control over financial reporting; and
5. The registrant ’ s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant ’ s auditors and the audit committee of the registrant ’ s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant ’ s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant ’ s internal control over financial reporting.

Chief Executive Officer
(Principal Executive Officer)	
Date: March 1 5 , 2016	/s/ MICHAEL D. RUMBOLZ
Michael D. Rumbolz
Interim Chief Executive Officer
( Interim Principal Executive Officer)	

EXHIBIT 31.2
Certification of Principal Financial Officer
Pursuant to Exchange Act Rule 13a ‑14(a) and 15d ‑14(a)
as Adopted Pursuant to Section 302 of the Sarbanes ‑Oxley Act of 2002
I, Randy L. Taylor, certify that:
1. I have reviewed this Annual Report on Form 10 ‑K of Everi Holdings Inc.;
2. Based on my knowledge, this Annual Report on Form 10 ‑K does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report on Form 10 ‑K;
3. Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Annual Report;
4. The registrant ’ s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a ‑15(e) and 15d ‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a ‑15(f) and 15d ‑15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Annual Report on Form 10 ‑K is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant ’ s disclosure controls and procedures and presented in this Annual Report on Form 10 ‑K our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Annual Report on Form 10 ‑K based on such evaluation; and
d) Disclosed in this Annual Report on Form 10 ‑K any change in the registrant ’ s internal control over financial reporting that occurred during the registrant ’ s most recent fiscal quarter (the registrant ’ s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant ’ s internal control over financial reporting; and
5. The registrant ’ s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant ’ s auditors and the audit committee of the registrant ’ s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant ’ s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant ’ s internal control over financial reporting.

Chief Financial Officer, Secretary & Treasurer
(Principal Financial and Accounting Officer)	
Date: March 1 5 ,   2016	/s/ Randy L. Taylor
Randy L. Taylor
Chief Financial Officer
(Principal Financial Officer)	

EXHIBIT 32
Certification of Principal Executive Officer and Principal Financial Officer
Pursuant to 18 U.S.C. Section 1350
as Adopted Pursuant to Section 906 of the Sarbanes ‑Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes ‑Oxley Act of 2002, each of the undersigned hereby certify, in his capacity as an officer of Everi Holdings Inc. (the “ Company ” ), that, to his knowledge:
1. The Annual Report on Form 10 ‑K for the period ended Decemb er 31, 2015 of the Company (the “ Report ” ), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Chief Executive Officer (Principal Executive Officer)	
Date: March 1 5 , 2016	By:	/s/ MICHAEL D. RUMBOLZ
Michael D. Rumbolz
Interim Chief Executive Officer ( Interim Principal Executive Officer)	
 	 	 	
Date: March 1 5 , 2016	By:	/s/ Randy L. Taylor
Randy L. Taylor
Chief Financi al Officer (Principal Financial Officer )