|
x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
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20-0723270
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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7250 S. TENAYA WAY, SUITE 100
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LAS VEGAS, NEVADA
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89113
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
|
x
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Title of each class
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Trading symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.001 par value
|
EVRI
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The New York Stock Exchange
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Page
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PART I: FINANCIAL INFORMATION
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Item 1:
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Financial Statements
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Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2019 and 2018
|
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Unaudited Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018
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Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018
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Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2019 and 2018
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Notes to Unaudited Condensed Consolidated Financial Statements
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Item 2:
|
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3:
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Quantitative and Qualitative Disclosures about Market Risk
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Item 4:
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Controls and Procedures
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PART II: OTHER INFORMATION
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|||
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Item 1:
|
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Legal Proceedings
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Item 1A:
|
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Risk Factors
|
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Item 2:
|
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Unregistered Sales of Equity Securities and Use of Proceeds
|
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Item 3:
|
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Defaults Upon Senior Securities
|
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Item 4:
|
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Mine Safety Disclosures
|
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Item 5:
|
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Other Information
|
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Item 6:
|
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Exhibits
|
|
|
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|
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Signatures
|
|
|
|
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Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Revenues
|
|
|
|
|
|
||
Games revenues
|
|
|
|
|
|
||
Gaming operations
|
$
|
44,286
|
|
|
$
|
40,056
|
|
Gaming equipment and systems
|
23,087
|
|
|
20,154
|
|
||
Gaming other
|
54
|
|
|
7
|
|
||
Games total revenues
|
67,427
|
|
|
60,217
|
|
||
|
|
|
|
||||
FinTech revenues
|
|
|
|
|
|
||
Cash access services
|
40,832
|
|
|
38,218
|
|
||
Equipment
|
7,028
|
|
|
4,419
|
|
||
Information services and other
|
8,488
|
|
|
8,147
|
|
||
FinTech total revenues
|
56,348
|
|
|
50,784
|
|
||
|
|
|
|
||||
Total revenues
|
123,775
|
|
|
111,001
|
|
||
|
|
|
|
||||
Costs and expenses
|
|
|
|
|
|
||
Games cost of revenues
(1)
|
|
|
|
|
|
||
Gaming operations
|
4,124
|
|
|
4,182
|
|
||
Gaming equipment and systems
|
12,529
|
|
|
10,741
|
|
||
Gaming other
|
—
|
|
|
—
|
|
||
Games total cost of revenues
|
16,653
|
|
|
14,923
|
|
||
|
|
|
|
||||
FinTech cost of revenues
(1)
|
|
|
|
|
|
||
Cash access services
|
2,697
|
|
|
2,231
|
|
||
Equipment
|
4,330
|
|
|
2,514
|
|
||
Information services and other
|
958
|
|
|
1,216
|
|
||
FinTech total cost of revenues
|
7,985
|
|
|
5,961
|
|
||
|
|
|
|
||||
Operating expenses
|
34,648
|
|
|
32,187
|
|
||
Research and development
|
7,531
|
|
|
4,311
|
|
||
Depreciation
|
14,789
|
|
|
12,825
|
|
||
Amortization
|
16,297
|
|
|
16,303
|
|
||
Total costs and expenses
|
97,903
|
|
|
86,510
|
|
||
|
|
|
|
||||
Operating income
|
25,872
|
|
|
24,491
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Other expenses
|
|
|
|
|
|
||
Interest expense, net of interest income
|
20,400
|
|
|
20,307
|
|
||
Total other expenses
|
20,400
|
|
|
20,307
|
|
||
|
|
|
|
||||
Income before income tax
|
5,472
|
|
|
4,184
|
|
||
|
|
|
|
||||
Income tax benefit
|
(388
|
)
|
|
(425
|
)
|
||
Net income
|
5,860
|
|
|
4,609
|
|
||
Foreign currency translation
|
504
|
|
|
323
|
|
||
Comprehensive income
|
$
|
6,364
|
|
|
$
|
4,932
|
|
Earnings per share
|
|
|
|
|
|
||
Basic
|
$
|
0.08
|
|
|
$
|
0.07
|
|
Diluted
|
$
|
0.08
|
|
|
$
|
0.06
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
||
Basic
|
70,334
|
|
|
68,686
|
|
||
Diluted
|
75,256
|
|
|
73,285
|
|
|
At March 31,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
139,857
|
|
|
$
|
297,532
|
|
Settlement receivables
|
259,288
|
|
|
82,359
|
|
||
Trade and other receivables, net of allowances for doubtful accounts of $6,281 and $6,425 at March 31, 2019 and December 31, 2018, respectively
|
72,333
|
|
|
64,387
|
|
||
Inventory
|
24,797
|
|
|
24,403
|
|
||
Prepaid expenses and other assets
|
22,293
|
|
|
20,259
|
|
||
Total current assets
|
518,568
|
|
|
488,940
|
|
||
Non-current assets
|
|
|
|
||||
Property, equipment and leased assets, net
|
113,067
|
|
|
116,288
|
|
||
Goodwill
|
673,447
|
|
|
640,537
|
|
||
Other intangible assets, net
|
292,955
|
|
|
287,397
|
|
||
Other receivables
|
12,297
|
|
|
8,847
|
|
||
Other assets
|
21,670
|
|
|
6,252
|
|
||
Total non-current assets
|
1,113,436
|
|
|
1,059,321
|
|
||
Total assets
|
$
|
1,632,004
|
|
|
$
|
1,548,261
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
||
Settlement liabilities
|
$
|
354,402
|
|
|
$
|
334,198
|
|
Accounts payable and accrued expenses
|
152,716
|
|
|
129,238
|
|
||
Current portion of long-term debt
|
8,200
|
|
|
8,200
|
|
||
Total current liabilities
|
515,318
|
|
|
471,636
|
|
||
Non-current liabilities
|
|
|
|
||||
Deferred tax liability
|
27,354
|
|
|
27,867
|
|
||
Long-term debt, less current portion
|
1,153,807
|
|
|
1,155,016
|
|
||
Other accrued expenses and liabilities
|
31,327
|
|
|
2,637
|
|
||
Total non-current liabilities
|
1,212,488
|
|
|
1,185,520
|
|
||
Total liabilities
|
1,727,806
|
|
|
1,657,156
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
|
||
Stockholders’ deficit
|
|
|
|
|
|
||
Common stock, $0.001 par value, 500,000 shares authorized and 95,966 and 95,100 shares issued at March 31, 2019 and December 31, 2018, respectively
|
96
|
|
|
95
|
|
||
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and no shares outstanding at March 31, 2019 and December 31, 2018, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
305,672
|
|
|
298,929
|
|
||
Accumulated deficit
|
(223,597
|
)
|
|
(229,457
|
)
|
||
Accumulated other comprehensive loss
|
(1,494
|
)
|
|
(1,998
|
)
|
||
Treasury stock, at cost, 24,902 and 24,900 shares at March 31, 2019 and December 31, 2018, respectively
|
(176,479
|
)
|
|
(176,464
|
)
|
||
Total stockholders’ deficit
|
(95,802
|
)
|
|
(108,895
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
1,632,004
|
|
|
$
|
1,548,261
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
5,860
|
|
|
$
|
4,609
|
|
Adjustments to reconcile net income to cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation
|
14,789
|
|
|
12,825
|
|
||
Amortization
|
16,297
|
|
|
16,303
|
|
||
Amortization of financing costs and discounts
|
890
|
|
|
905
|
|
||
Loss (gain) on sale or disposal of assets
|
513
|
|
|
(13
|
)
|
||
Accretion of contract rights
|
2,122
|
|
|
2,057
|
|
||
Provision for bad debts
|
2,864
|
|
|
2,182
|
|
||
Deferred income taxes
|
(513
|
)
|
|
(561
|
)
|
||
Reserve for obsolescence
|
441
|
|
|
305
|
|
||
Stock-based compensation
|
1,773
|
|
|
2,350
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Settlement receivables
|
(175,748
|
)
|
|
73,571
|
|
||
Trade and other receivables
|
(12,385
|
)
|
|
(9,715
|
)
|
||
Inventory
|
57
|
|
|
(1,157
|
)
|
||
Other assets
|
(16,756
|
)
|
|
1,251
|
|
||
Settlement liabilities
|
19,931
|
|
|
(74,617
|
)
|
||
Other liabilities
|
27,677
|
|
|
2,456
|
|
||
Net cash (used in) provided by operating activities
|
(112,188
|
)
|
|
32,751
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Capital expenditures
|
(22,194
|
)
|
|
(26,339
|
)
|
||
Acquisition
|
(20,000
|
)
|
|
—
|
|
||
Proceeds from sale of fixed assets
|
33
|
|
|
72
|
|
||
Placement fee agreements
|
(5,329
|
)
|
|
(4,643
|
)
|
||
Net cash used in investing activities
|
(47,490
|
)
|
|
(30,910
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Repayments of credit facilities
|
(2,050
|
)
|
|
(2,050
|
)
|
||
Proceeds from exercise of stock options
|
4,686
|
|
|
4,088
|
|
||
Purchase of treasury stock
|
(15
|
)
|
|
(38
|
)
|
||
Net cash provided by financing activities
|
2,621
|
|
|
2,000
|
|
||
Effect of exchange rates on cash
|
(343
|
)
|
|
147
|
|
||
Cash, cash equivalents and restricted cash
|
|
|
|
||||
Net (decrease) increase for the period
|
(157,400
|
)
|
|
3,988
|
|
||
Balance, beginning of the period
|
299,181
|
|
|
129,604
|
|
||
Balance, end of the period
|
$
|
141,781
|
|
|
$
|
133,592
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Supplemental cash disclosures
|
|
|
|
|
|
||
Cash paid for interest
|
$
|
12,470
|
|
|
$
|
15,206
|
|
Cash paid for income tax, net of refunds
|
92
|
|
|
66
|
|
||
Supplemental non-cash disclosures
|
|
|
|
|
|
||
Accrued and unpaid capital expenditures
|
$
|
3,209
|
|
|
$
|
4,145
|
|
Accrued and unpaid placement fees added during the year
|
—
|
|
|
363
|
|
||
Transfer of leased gaming equipment to inventory
|
4,673
|
|
|
1,897
|
|
||
Operating lease ROU assets obtained in exchange for lease obligations
|
15,132
|
|
|
—
|
|
||
Fair value of assets acquired
|
50,240
|
|
|
—
|
|
||
Cash paid
|
20,000
|
|
|
—
|
|
||
Accrued and unpaid liability for loyalty acquisition
|
27,556
|
|
|
—
|
|
||
Liabilities assumed
|
2,684
|
|
|
—
|
|
|
|
Common Stock—
Series A |
|
Additional
|
|
Retained Earnings
|
|
Accumulated
Other |
|
|
|
Total
|
|||||||||||||||
|
|
Number of
Shares |
|
Amount
|
|
Paid-in
Capital |
|
(Accumulated
Deficit) |
|
Comprehensive
Income (Loss) |
|
Treasury
Stock |
|
Deficit
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, January 1, 2018
|
|
93,120
|
|
|
$
|
93
|
|
|
$
|
282,070
|
|
|
$
|
(246,202
|
)
|
|
$
|
(253
|
)
|
|
$
|
(176,341
|
)
|
|
$
|
(140,633
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,609
|
|
|
—
|
|
|
—
|
|
|
4,609
|
|
||||||
Cumulative adjustment related to adoption of ASC 606
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,389
|
|
|
—
|
|
|
—
|
|
|
4,389
|
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
324
|
|
|
—
|
|
|
324
|
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
2,350
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,350
|
|
||||||
Exercise of options
|
|
712
|
|
|
1
|
|
|
4,298
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,299
|
|
||||||
Restricted share vesting withholdings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
(38
|
)
|
||||||
Balance, March 31, 2018
|
|
93,832
|
|
|
$
|
94
|
|
|
$
|
288,718
|
|
|
$
|
(237,204
|
)
|
|
$
|
71
|
|
|
$
|
(176,379
|
)
|
|
$
|
(124,700
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, January 1, 2019
|
|
95,100
|
|
|
$
|
95
|
|
|
$
|
298,929
|
|
|
$
|
(229,457
|
)
|
|
$
|
(1,998
|
)
|
|
$
|
(176,464
|
)
|
|
$
|
(108,895
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,860
|
|
|
—
|
|
|
—
|
|
|
5,860
|
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
504
|
|
|
—
|
|
|
504
|
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
1,773
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,773
|
|
||||||
Exercise of options
|
|
864
|
|
|
1
|
|
|
4,970
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,971
|
|
||||||
Restricted share vesting and withholding
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
(15
|
)
|
||||||
Balance, March 31, 2019
|
|
95,966
|
|
|
$
|
96
|
|
|
$
|
305,672
|
|
|
$
|
(223,597
|
)
|
|
$
|
(1,494
|
)
|
|
$
|
(176,479
|
)
|
|
$
|
(95,802
|
)
|
|
|
Three Months Ended
|
||
|
|
March 31, 2019
|
||
|
|
|
||
Contract assets
(1)
|
|
|
||
Balance at January 1
|
|
$
|
11,310
|
|
Balance at March 31
|
|
14,098
|
|
|
Increase
|
|
$
|
2,788
|
|
|
|
|
||
Contract liabilities
(2)
|
|
|
||
Balance at January 1
|
|
$
|
15,470
|
|
Balance at March 31
|
|
24,350
|
|
|
Increase
|
|
$
|
8,880
|
|
(1)
|
Current portion of contract assets is included within trade and other receivables, net, and non-current portion is included within other receivables in our Balance Sheets.
|
(2)
|
Current portion of contract liabilities is included within accounts payable and accrued expenses, and non-current portion is included within other accrued expenses and liabilities in our Balance Sheets.
|
|
Level of
Hierarchy
|
|
Fair Value
|
|
Outstanding
Balance
|
||||
March 31, 2019
|
|
|
|
|
|
|
|
||
Term loan
|
2
|
|
$
|
801,622
|
|
|
$
|
805,650
|
|
Senior unsecured notes
|
1
|
|
$
|
389,063
|
|
|
$
|
375,000
|
|
December 31, 2018
|
|
|
|
|
|
|
|
||
Term loan
|
2
|
|
$
|
784,479
|
|
|
$
|
807,700
|
|
Senior unsecured notes
|
1
|
|
$
|
354,863
|
|
|
$
|
375,000
|
|
|
|
Classification on our Balance Sheets
|
|
March 31, 2019
|
||
Assets
|
|
|
|
|
||
Operating lease ROU assets
|
|
Other assets, noncurrent
|
|
$
|
14,104
|
|
Liabilities
|
|
|
|
|
||
Current operating lease liabilities
|
|
Accounts payable and accrued expenses
|
|
$
|
5,356
|
|
Non-current operating lease liabilities
|
|
Other accrued expenses and liabilities
|
|
$
|
12,604
|
|
|
|
Three Months Ended
|
||
|
|
March 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
$
|
1,434
|
|
Operating lease ROU assets obtained in exchange for lease obligations
(1)
|
|
$
|
15,132
|
|
(1)
|
The amount includes approximately
$14.1 million
of operating lease ROU assets obtained in exchange for existing lease obligations and approximately
$1.0 million
of operating lease ROU assets obtained in exchange for new lease obligations entered into during the
three
months ended
March 31, 2019
, excluding amortization for the period.
|
|
|
March 31, 2019
|
|
Weighted average remaining lease term (in years)
|
|
3.3
|
|
Weighted average discount rate
|
|
5.25
|
%
|
|
|
Three Months Ended
|
||
|
|
March 31, 2019
|
||
Lease Cost:
|
|
|
||
Operating lease cost
|
|
$
|
944
|
|
Variable lease cost
|
|
$
|
439
|
|
Year ending December 31,
|
|
Amount
|
||
2019 (excluding the three months ended March 31, 2019)
|
|
$
|
4,613
|
|
2020
|
|
6,273
|
|
|
2021
|
|
4,953
|
|
|
2022
|
|
2,711
|
|
|
2023
|
|
1,011
|
|
|
Thereafter
|
|
—
|
|
|
Total future minimum lease payments
|
|
$
|
19,561
|
|
Amount representing interest
|
|
1,601
|
|
|
Present value of future minimum lease payments
|
|
$
|
17,960
|
|
Current operating lease obligations
|
|
5,356
|
|
|
Long-term lease obligations
|
|
$
|
12,604
|
|
Year ending December 31,
|
|
Amount
|
||
2019
|
|
$
|
5,570
|
|
2020
|
|
5,680
|
|
|
2021
|
|
4,598
|
|
|
2022
|
|
2,799
|
|
|
2023
|
|
1,074
|
|
|
Thereafter
|
|
—
|
|
|
Total future minimum lease payments
|
|
$
|
19,721
|
|
|
|
Amount
|
||
Purchase consideration
|
|
|
||
Cash consideration paid at closing
|
|
$
|
20,000
|
|
Cash consideration to be paid in subsequent periods
|
|
18,528
|
|
|
Total cash consideration
|
|
38,528
|
|
|
Contingent consideration
|
|
9,028
|
|
|
Total purchase consideration
|
|
$
|
47,556
|
|
|
|
Amount
|
||
Current assets
|
|
$
|
2,896
|
|
Property, equipment and leased assets, net
|
|
8
|
|
|
Operating lease ROU assets
|
|
239
|
|
|
Goodwill
|
|
32,897
|
|
|
Other intangible assets, net
|
|
14,200
|
|
|
Total assets
|
|
50,240
|
|
|
Contract liabilities
|
|
(2,445
|
)
|
|
Current operating lease liabilities
|
|
(105
|
)
|
|
Non-current operating lease liabilities
|
|
(134
|
)
|
|
Total liabilities
|
|
(2,684
|
)
|
|
Net assets acquired
|
|
$
|
47,556
|
|
|
|
Useful Life (Years)
|
|
Estimated Fair Value
|
||
Other Intangible Assets
|
|
|
|
|
||
Developed technology
|
|
3
|
|
$
|
5,000
|
|
Customer contracts
|
|
5
|
|
9,200
|
|
|
Total other intangible assets
|
|
|
|
$
|
14,200
|
|
|
At March 31,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Trade and other receivables, net
|
|
|
|
|
|
||
Games trade and loans receivables
|
$
|
57,080
|
|
|
$
|
53,011
|
|
FinTech trade and loans receivables
|
24,138
|
|
|
18,890
|
|
||
Other receivables
|
3,412
|
|
|
1,333
|
|
||
Total trade and other receivables, net
|
84,630
|
|
|
73,234
|
|
||
Non-current portion of receivables
|
|
|
|
|
|
||
Games trade and loans receivables
|
(1,785
|
)
|
|
(2,922
|
)
|
||
FinTech trade and loans receivables
|
(10,512
|
)
|
|
(5,925
|
)
|
||
Total non-current portion of receivables
|
(12,297
|
)
|
|
(8,847
|
)
|
||
Total trade and other receivables, current portion
|
$
|
72,333
|
|
|
$
|
64,387
|
|
|
At March 31,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Inventory
|
|
|
|
|
|
||
Component parts, net of reserves of $1,695 and $1,468 at March 31, 2019 and December 31, 2018, respectively
|
$
|
20,886
|
|
|
$
|
23,197
|
|
Work-in-progress
|
1,309
|
|
|
280
|
|
||
Finished goods
|
2,602
|
|
|
926
|
|
||
Total inventory
|
$
|
24,797
|
|
|
$
|
24,403
|
|
|
At March 31,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Prepaid expenses and other assets
|
|
|
|
|
|
||
Prepaid expenses
|
$
|
10,810
|
|
|
$
|
8,351
|
|
Deposits
|
8,268
|
|
|
8,241
|
|
||
Other
|
3,215
|
|
|
3,667
|
|
||
Total prepaid expenses and other assets
|
$
|
22,293
|
|
|
$
|
20,259
|
|
|
At March 31,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Other assets
|
|
|
|
|
|
||
Operating lease ROU assets
(1)
|
$
|
14,104
|
|
|
$
|
—
|
|
Prepaid expenses and deposits
|
6,683
|
|
|
5,289
|
|
||
Debt issuance costs of revolving credit facility
|
606
|
|
|
654
|
|
||
Other
|
277
|
|
|
309
|
|
||
Total other assets
|
$
|
21,670
|
|
|
$
|
6,252
|
|
(1)
|
Refer to “Note 3 — Leases” for discussion on operating lease ROU assets recorded on the Balance Sheets as a result of the implementation of ASC 842.
|
|
|
|
At March 31, 2019
|
|
At December 31, 2018
|
||||||||||||||||||||
|
Useful Life
(Years)
|
|
Cost
|
|
Accumulated
Depreciation
|
|
Net Book
Value
|
|
Cost
|
|
Accumulated
Depreciation
|
|
Net Book
Value
|
||||||||||||
Property, equipment and leased assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Rental pool - deployed
|
2-4
|
|
$
|
183,669
|
|
|
$
|
106,488
|
|
|
$
|
77,181
|
|
|
$
|
183,309
|
|
|
$
|
105,038
|
|
|
$
|
78,271
|
|
Rental pool - undeployed
|
2-4
|
|
30,285
|
|
|
21,026
|
|
|
9,259
|
|
|
23,825
|
|
|
14,680
|
|
|
9,145
|
|
||||||
FinTech equipment
|
3-5
|
|
27,417
|
|
|
21,731
|
|
|
5,686
|
|
|
27,285
|
|
|
21,000
|
|
|
6,285
|
|
||||||
Leasehold and building improvements
|
Lease Term
|
|
11,870
|
|
|
7,374
|
|
|
4,496
|
|
|
11,857
|
|
|
6,938
|
|
|
4,919
|
|
||||||
Machinery, office and other equipment
|
2-5
|
|
46,439
|
|
|
29,994
|
|
|
16,445
|
|
|
46,322
|
|
|
28,654
|
|
|
17,668
|
|
||||||
Total
|
|
|
$
|
299,680
|
|
|
$
|
186,613
|
|
|
$
|
113,067
|
|
|
$
|
292,598
|
|
|
$
|
176,310
|
|
|
$
|
116,288
|
|
|
|
|
At March 31, 2019
|
|
At December 31, 2018
|
||||||||||||||||||||
|
Weighted Average
Remaining Life
(Years)
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||||||||
Other intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Contract rights under placement fee agreements
|
4
|
|
$
|
57,441
|
|
|
$
|
14,300
|
|
|
$
|
43,141
|
|
|
$
|
57,440
|
|
|
$
|
12,178
|
|
|
$
|
45,262
|
|
Customer contracts
|
6
|
|
60,375
|
|
|
46,816
|
|
|
13,559
|
|
|
51,175
|
|
|
46,162
|
|
|
5,013
|
|
||||||
Customer relationships
|
8
|
|
231,100
|
|
|
89,860
|
|
|
141,240
|
|
|
231,100
|
|
|
84,619
|
|
|
146,481
|
|
||||||
Developed technology and software
|
2
|
|
289,352
|
|
|
198,262
|
|
|
91,090
|
|
|
277,243
|
|
|
190,886
|
|
|
86,357
|
|
||||||
Patents, trademarks and other
|
4
|
|
29,046
|
|
|
25,121
|
|
|
3,925
|
|
|
29,168
|
|
|
24,884
|
|
|
4,284
|
|
||||||
Total
|
|
|
$
|
667,314
|
|
|
$
|
374,359
|
|
|
$
|
292,955
|
|
|
$
|
646,126
|
|
|
$
|
358,729
|
|
|
$
|
287,397
|
|
|
At March 31,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Accounts payable and accrued expenses
|
|
|
|
||||
Trade accounts payable
|
$
|
85,383
|
|
|
$
|
70,796
|
|
Deferred and unearned revenues
|
20,258
|
|
|
12,887
|
|
||
Placement fees
(1)
|
11,164
|
|
|
16,746
|
|
||
Accrued interest
|
8,652
|
|
|
1,374
|
|
||
Payroll and related expenses
|
7,408
|
|
|
15,055
|
|
||
Cash access processing and related expenses
|
6,931
|
|
|
4,160
|
|
||
Other
|
5,773
|
|
|
6,303
|
|
||
Operating lease liabilities
(2)
|
5,356
|
|
|
—
|
|
||
Accrued taxes
|
1,791
|
|
|
1,917
|
|
||
Total accounts payable and accrued expenses
|
$
|
152,716
|
|
|
$
|
129,238
|
|
(1)
|
The total outstanding balance of the placement fee liability was approximately
$11.2 million
and
$16.7 million
as of
March 31, 2019
and
December 31, 2018
, respectively. The placement fee liability was considered current due to the remaining obligation being due within twelve months of
March 31, 2019
and
December 31, 2018
.
|
(2)
|
Refer to “Note 3 — Leases” for discussion on operating lease liabilities recorded on the Balance Sheets as a result of the implementation of ASC 842.
|
|
At March 31,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Long-term debt
|
|
|
|
||||
Senior secured term loan
|
$
|
805,650
|
|
|
$
|
807,700
|
|
Senior unsecured notes
|
375,000
|
|
|
375,000
|
|
||
Total debt
|
1,180,650
|
|
|
1,182,700
|
|
||
Debt issuance costs and discount
|
(18,643
|
)
|
|
(19,484
|
)
|
||
Total debt after debt issuance costs and discount
|
1,162,007
|
|
|
1,163,216
|
|
||
Current portion of long-term debt
|
(8,200
|
)
|
|
(8,200
|
)
|
||
Long-term debt, less current portion
|
$
|
1,153,807
|
|
|
$
|
1,155,016
|
|
(1)
|
The potential dilution excludes the weighted average effect of equity awards to purchase approximately
6.7 million
and
7.0 million
shares of common stock for the
three
months ended
March 31, 2019
and 2018, respectively, as the application of the treasury stock method, as required, makes them anti-dilutive.
|
|
Stock Options
Granted
|
|
Restricted Stock
Awards Granted
|
|
Restricted Stock
Units Granted
|
|||
Outstanding, December 31, 2018
|
15,674
|
|
|
8
|
|
|
1,797
|
|
Granted
|
—
|
|
|
—
|
|
|
84
|
|
Exercised options or vested shares
|
(864
|
)
|
|
(5
|
)
|
|
(2
|
)
|
Canceled or forfeited
|
(56
|
)
|
|
—
|
|
|
(17
|
)
|
Outstanding, March 31, 2019
|
14,754
|
|
|
3
|
|
|
1,862
|
|
|
Number of
Options
(in thousands)
|
|
Weighted Average
Exercise Price
(per Share)
|
|
Weighted
Average Life
Remaining
(Years)
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
Outstanding, December 31, 2018
|
15,674
|
|
|
$
|
5.39
|
|
|
6.0
|
|
$
|
17,733
|
|
Granted
|
—
|
|
|
|
|
|
|
|
|
|||
Exercised
|
(864
|
)
|
|
$
|
5.74
|
|
|
|
|
|
||
Canceled or forfeited
|
(56
|
)
|
|
$
|
4.40
|
|
|
|
|
|
||
Outstanding, March 31, 2019
|
14,754
|
|
|
$
|
5.38
|
|
|
5.8
|
|
$
|
75,894
|
|
Vested and expected to vest, March 31, 2019
|
14,302
|
|
|
$
|
5.43
|
|
|
5.8
|
|
$
|
72,739
|
|
Exercisable, March 31, 2019
|
9,738
|
|
|
$
|
5.92
|
|
|
5.5
|
|
$
|
44,777
|
|
|
Shares
Outstanding
(in thousands)
|
|
Weighted
Average Grant
Date Fair Value
(per share)
|
|||
Outstanding, December 31, 2018
|
8
|
|
|
$
|
6.66
|
|
Granted
|
—
|
|
|
$
|
—
|
|
Vested
|
(5
|
)
|
|
$
|
6.66
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
Outstanding, March 31, 2019
|
3
|
|
|
$
|
6.66
|
|
|
Shares
Outstanding
(in thousands)
|
|
Weighted
Average Grant
Date Fair Value
(per share)
|
|
Weighted
Average Life
Remaining
(years)
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
Outstanding, December 31, 2018
|
1,797
|
|
|
$
|
7.49
|
|
|
2.0
|
|
$
|
9,254
|
|
Granted
|
84
|
|
|
$
|
7.16
|
|
|
|
|
|
|
|
Vested
|
(2
|
)
|
|
$
|
6.79
|
|
|
|
|
|
|
|
Forfeited
|
(17
|
)
|
|
$
|
7.45
|
|
|
|
|
|
|
|
Outstanding, March 31, 2019
|
1,862
|
|
|
$
|
7.47
|
|
|
1.8
|
|
$
|
19,591
|
|
Vested and expected to vest, March 31, 2019
|
1,292
|
|
|
$
|
7.46
|
|
|
1.6
|
|
$
|
13,595
|
|
•
|
The Games segment provides solutions directly to gaming establishments to offer their patrons gaming entertainment- related experiences including: leased gaming equipment; sales of gaming equipment; gaming systems; interactive solutions; and ancillary products and services.
|
•
|
The FinTech 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 POS debit card cash access transactions; check-related services; equipment, including self-service enrollment and loyalty card printing kiosks and a marketing platform that manages and delivers a gaming operator’s marketing programs, and related maintenance services; compliance, audit and data software; casino credit data and reporting services, and other ancillary offerings.
|
|
For the Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Games
|
|
|
|
|
|
||
Revenues
|
|
|
|
|
|
||
Gaming operations
|
$
|
44,286
|
|
|
$
|
40,056
|
|
Gaming equipment and systems
|
23,087
|
|
|
20,154
|
|
||
Gaming other
|
54
|
|
|
7
|
|
||
Total revenues
|
67,427
|
|
|
60,217
|
|
||
Costs and expenses
|
|
|
|
|
|
||
Cost of revenues
(1)
|
|
|
|
|
|
||
Gaming operations
|
4,124
|
|
|
4,182
|
|
||
Gaming equipment and systems
|
12,529
|
|
|
10,741
|
|
||
Gaming other
|
—
|
|
|
—
|
|
||
Cost of revenues
|
16,653
|
|
|
14,923
|
|
||
|
|
|
|
||||
Operating expenses
|
14,667
|
|
|
12,007
|
|
||
Research and development
|
5,847
|
|
|
4,311
|
|
||
Depreciation
|
13,374
|
|
|
11,139
|
|
||
Amortization
|
13,782
|
|
|
13,484
|
|
||
Total costs and expenses
|
64,323
|
|
|
55,864
|
|
||
Operating income
|
$
|
3,104
|
|
|
$
|
4,353
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
FinTech
|
|
|
|
|
|
||
Revenues
|
|
|
|
|
|
||
Cash access services
|
$
|
40,832
|
|
|
$
|
38,218
|
|
Equipment
|
7,028
|
|
|
4,419
|
|
||
Information services and other
|
8,488
|
|
|
8,147
|
|
||
Total revenues
|
56,348
|
|
|
50,784
|
|
||
Costs and expenses
|
|
|
|
|
|
||
Cost of revenues
(1)
|
|
|
|
|
|
||
Cash access services
|
2,697
|
|
|
2,231
|
|
||
Equipment
|
4,330
|
|
|
2,514
|
|
||
Information services and other
|
958
|
|
|
1,216
|
|
||
Cost of revenues
|
7,985
|
|
|
5,961
|
|
||
|
|
|
|
||||
Operating expenses
|
19,981
|
|
|
20,180
|
|
||
Research and development
|
1,684
|
|
|
—
|
|
||
Depreciation
|
1,415
|
|
|
1,686
|
|
||
Amortization
|
2,515
|
|
|
2,819
|
|
||
Total costs and expenses
|
33,580
|
|
|
30,646
|
|
||
Operating income
|
$
|
22,768
|
|
|
$
|
20,138
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Total Games and FinTech
|
|
|
|
|
|
||
Revenues
|
$
|
123,775
|
|
|
$
|
111,001
|
|
Costs and expenses
|
|
|
|
||||
Cost of revenues
(1)
|
24,638
|
|
|
20,884
|
|
||
Operating expenses
|
34,648
|
|
|
32,187
|
|
||
Research and development
|
7,531
|
|
|
4,311
|
|
||
Depreciation
|
14,789
|
|
|
12,825
|
|
||
Amortization
|
16,297
|
|
|
16,303
|
|
||
Total costs and expenses
|
97,903
|
|
|
86,510
|
|
||
Operating income
|
$
|
25,872
|
|
|
$
|
24,491
|
|
|
At March 31,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Total assets
|
|
|
|
|
|
||
Games
|
$
|
912,747
|
|
|
$
|
912,849
|
|
FinTech
|
719,257
|
|
|
635,412
|
|
||
Total assets
|
$
|
1,632,004
|
|
|
$
|
1,548,261
|
|
|
Three Months Ended
|
|
|
|||||||||||||||||
|
March 31, 2019
|
|
March 31, 2018
|
|
2019 vs 2018
|
|||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||
|
|
|
|
|
|
|||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Games revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Gaming operations
|
$
|
44,286
|
|
|
36
|
%
|
|
$
|
40,056
|
|
|
36
|
%
|
|
$
|
4,230
|
|
|
11
|
%
|
Gaming equipment and systems
|
23,087
|
|
|
18
|
%
|
|
20,154
|
|
|
18
|
%
|
|
2,933
|
|
|
15
|
%
|
|||
Gaming other
|
54
|
|
|
—
|
%
|
|
7
|
|
|
—
|
%
|
|
47
|
|
|
671
|
%
|
|||
Games total revenues
|
67,427
|
|
|
54
|
%
|
|
60,217
|
|
|
54
|
%
|
|
7,210
|
|
|
12
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
FinTech revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Cash access services
|
40,832
|
|
|
33
|
%
|
|
38,218
|
|
|
34
|
%
|
|
2,614
|
|
|
7
|
%
|
|||
Equipment
|
7,028
|
|
|
6
|
%
|
|
4,419
|
|
|
5
|
%
|
|
2,609
|
|
|
59
|
%
|
|||
Information services and other
|
8,488
|
|
|
7
|
%
|
|
8,147
|
|
|
7
|
%
|
|
341
|
|
|
4
|
%
|
|||
FinTech total revenues
|
56,348
|
|
|
46
|
%
|
|
50,784
|
|
|
46
|
%
|
|
5,564
|
|
|
11
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total revenues
|
123,775
|
|
|
100
|
%
|
|
111,001
|
|
|
100
|
%
|
|
12,774
|
|
|
12
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Games cost of revenues
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Gaming operations
|
4,124
|
|
|
3
|
%
|
|
4,182
|
|
|
4
|
%
|
|
(58
|
)
|
|
(1
|
)%
|
|||
Gaming equipment and systems
|
12,529
|
|
|
10
|
%
|
|
10,741
|
|
|
9
|
%
|
|
1,788
|
|
|
17
|
%
|
|||
Gaming other
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Games total cost of revenues
|
16,653
|
|
|
13
|
%
|
|
14,923
|
|
|
13
|
%
|
|
1,730
|
|
|
12
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
FinTech cost of revenues
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Cash access services
|
2,697
|
|
|
2
|
%
|
|
2,231
|
|
|
2
|
%
|
|
466
|
|
|
21
|
%
|
|||
Equipment
|
4,330
|
|
|
3
|
%
|
|
2,514
|
|
|
2
|
%
|
|
1,816
|
|
|
72
|
%
|
|||
Information services and other
|
958
|
|
|
1
|
%
|
|
1,216
|
|
|
1
|
%
|
|
(258
|
)
|
|
(21
|
)%
|
|||
FinTech total cost of revenues
|
7,985
|
|
|
6
|
%
|
|
5,961
|
|
|
5
|
%
|
|
2,024
|
|
|
34
|
%
|
|
Three Months Ended
|
|
|
|||||||||||||||||
|
March 31, 2019
|
|
March 31, 2018
|
|
2019 vs 2018
|
|||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||
|
|
|
|
|
|
|||||||||||||||
Operating expenses
|
34,648
|
|
|
29
|
%
|
|
32,187
|
|
|
29
|
%
|
|
2,461
|
|
|
8
|
%
|
|||
Research and development
|
7,531
|
|
|
6
|
%
|
|
4,311
|
|
|
4
|
%
|
|
3,220
|
|
|
75
|
%
|
|||
Depreciation
|
14,789
|
|
|
12
|
%
|
|
12,825
|
|
|
12
|
%
|
|
1,964
|
|
|
15
|
%
|
|||
Amortization
|
16,297
|
|
|
13
|
%
|
|
16,303
|
|
|
15
|
%
|
|
(6
|
)
|
|
—
|
%
|
|||
Total costs and expenses
|
97,903
|
|
|
79
|
%
|
|
86,510
|
|
|
78
|
%
|
|
11,393
|
|
|
13
|
%
|
|||
Operating income
|
25,872
|
|
|
21
|
%
|
|
24,491
|
|
|
22
|
%
|
|
1,381
|
|
|
6
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Interest expense, net of interest income
|
20,400
|
|
|
16
|
%
|
|
20,307
|
|
|
18
|
%
|
|
93
|
|
|
—
|
%
|
|||
Total other expenses
|
20,400
|
|
|
16
|
%
|
|
20,307
|
|
|
18
|
%
|
|
93
|
|
|
—
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income before income tax
|
5,472
|
|
|
4
|
%
|
|
4,184
|
|
|
4
|
%
|
|
1,288
|
|
|
31
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income tax benefit
|
(388
|
)
|
|
—
|
%
|
|
(425
|
)
|
|
—
|
%
|
|
37
|
|
|
(9
|
)%
|
|||
Net income
|
$
|
5,860
|
|
|
5
|
%
|
|
$
|
4,609
|
|
|
4
|
%
|
|
$
|
1,251
|
|
|
27
|
%
|
•
|
Determination of stand-alone selling price (“SSP”) - We are required to make a significant judgment as to whether there is a sufficient quantity of items sold or renewed on a stand-alone basis and those prices demonstrate an appropriate level of concentration to conclude that a SSP exists. The SSP of our goods and services are generally determined based on observable prices, an adjusted market assessment approach, or an expected cost plus margin approach. We utilize a residual approach only when the SSP for performance obligations with observable prices have been established and the
|
•
|
Contract combinations with multiple promised goods or services - Our contracts may include various performance obligations for promises to transfer multiple goods and services to a customer, especially since our Games and FinTech businesses may enter into multiple agreements with the same customer that meet the criteria to be combined for accounting purposes under ASC 606. For such arrangements, we use our judgment to analyze the nature of the promises made and determine whether each is distinct or should be combined with other promises in the contract based on the level of integration and interdependency between the individual deliverables.
|
|
At March 31,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Balance sheet data
|
|
|
|
|
|
||
Total assets
|
$
|
1,632,004
|
|
|
$
|
1,548,261
|
|
Total borrowings
|
1,162,007
|
|
|
1,163,216
|
|
||
Total stockholders’ deficit
|
(95,802
|
)
|
|
(108,895
|
)
|
||
Cash available
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
139,857
|
|
|
$
|
297,532
|
|
Settlement receivables
|
259,288
|
|
|
82,359
|
|
||
Settlement liabilities
|
(354,402
|
)
|
|
(334,198
|
)
|
||
Net cash position
(1)
|
44,743
|
|
|
45,693
|
|
||
Undrawn revolving credit facility
|
35,000
|
|
|
35,000
|
|
||
Net cash available
(1)
|
$
|
79,743
|
|
|
$
|
80,693
|
|
(1)
|
Non-GAAP measure. In order to enhance investor understanding of our cash balance, we are providing in this Quarterly Report on Form 10-Q net cash position and net cash available, which are not measures of our financial performance or position under GAAP. Accordingly, these measures should not be considered in isolation or as a substitute for, and should be read in conjunction with, our cash and cash equivalents prepared in accordance with GAAP. We define (a) net cash position as cash and cash equivalents plus settlement receivables less settlement liabilities, and (b) net cash available as net cash position plus undrawn amounts available under our Revolving Credit Facility (defined herein). We present net cash position because our cash position, as measured by cash and cash equivalents, depends upon changes in settlement receivables and the timing of payments related to settlement liabilities. As such, our cash and cash equivalents can change substantially based upon the timing of our receipt of payments for settlement receivables and payments we make to customers for our settlement liabilities. We present net cash available as management monitors this amount in connection with its forecasting of cash flows and future cash requirements, both on a short-term and long-term basis.
|
|
Three Months Ended March 31,
|
|
2019 vs 2018
|
||||||||
|
2019
|
|
2018
|
|
Change
|
||||||
Cash flow activities
|
|
|
|
|
|
|
|
|
|||
Operating activities
|
$
|
(112,188
|
)
|
|
$
|
32,751
|
|
|
$
|
(144,939
|
)
|
Investing activities
|
(47,490
|
)
|
|
(30,910
|
)
|
|
(16,580
|
)
|
|||
Financing activities
|
2,621
|
|
|
2,000
|
|
|
621
|
|
|||
Effect of exchange rates on cash
|
(343
|
)
|
|
147
|
|
|
(490
|
)
|
|||
Cash, cash equivalents and restricted cash
|
|
|
|
|
|
|
|
|
|||
Net (decrease) increase for the period
|
(157,400
|
)
|
|
3,988
|
|
|
(161,388
|
)
|
|||
Balance, beginning of the period
|
299,181
|
|
|
129,604
|
|
|
169,577
|
|
|||
Balance, end of the period
|
$
|
141,781
|
|
|
$
|
133,592
|
|
|
$
|
8,189
|
|
|
Total Number of
Shares Purchased
(1)
(in thousands)
|
|
Average Price per
Share
(2)
|
|||
Tax Withholdings
|
|
|
|
|
|
|
1/1/19 - 1/31/19
|
0.5
|
|
|
$
|
5.39
|
|
2/1/19 - 2/28/19
|
0.5
|
|
|
$
|
6.83
|
|
3/1/19 - 3/31/19
|
1.1
|
|
|
$
|
7.83
|
|
Total
|
2.1
|
|
|
$
|
7.02
|
|
(1)
|
Represents withholding of vested shares of restricted stock to satisfy the minimum statutory withholding requirements applicable to the restricted stock vesting. There are no limitations on the number of shares of common stock that may be withheld from restricted stock awards to satisfy the minimum statutory withholding requirements applicable to the restricted stock vesting.
|
(2)
|
Represents the average price per share of common stock withheld from restricted stock awards on the date of withholding
.
|
Exhibit
Number
|
|
Description
|
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|
|
|
|
|
†*10.1
|
|
|
|
|
|
†*10.2
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|
|
|
|
|
†10.3
|
|
|
|
|
|
†10.4
|
|
|
|
|
|
†10.5
|
|
|
|
|
|
*31.1
|
|
|
|
|
|
*31.2
|
|
|
|
|
|
**32.1
|
|
|
|
|
|
*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.
|
May 7, 2019
|
|
|
EVERI HOLDINGS INC.
|
(Date)
|
|
|
(Registrant)
|
|
|
|
|
|
|
By:
|
/s/ Todd A. Valli
|
|
|
|
Todd A. Valli
|
|
|
|
Senior Vice President, Corporate Finance and
Chief Accounting Officer
|
|
|
|
(For the Registrant and as Principal
Accounting Officer)
|
1.1.
|
Position and Term
.
The Company hereby employs Executive to render services to the Company in the position of Executive Vice President, Chief Legal Officer – General Counsel, reporting directly to the Chief Executive Officer of the Company. The Company’s employment of Executive hereunder is contingent upon Executive successfully completing a background investigation. The duties of this position shall include such duties and responsibilities as are reasonably assigned to Executive by the Chief Executive Officer, including, but not limited to, directing all legal, regulatory compliance and product compliance matters for the Company (including authority to determine related vendors and personnel), managing business risk, protecting company assets, and providing legal advice on all business-related matters, as well as any other such duties and responsibilities as are customarily performed by persons holding similar positions at similarly situated corporations. Executive agrees to serve in a similar capacity for the benefit of Everi Holdings and any of Everi Holdings’ direct or indirect, wholly-owned or partially-owned subsidiaries or Everi Holdings’ affiliates. Additionally, Executive shall serve in such other capacity or capacities as the Chief Executive Officer may from time to time reasonably and lawfully prescribe. Executive shall be deemed an “Executive Officer” for purposes of indemnification by the Company pursuant to Article XI of the Company’s bylaws.
|
1.2.
|
Best Efforts; Other Activities
.
Executive will expend Executive’s best efforts on behalf of the Company, Everi Holdings and their respective subsidiaries and affiliates, and will abide by all policies and decisions made by the Company and Everi Holdings, as well as all applicable federal, state and local laws, regulations or ordinances. Executive will act in the best interest of the Company, Everi Holdings and their respective subsidiaries and affiliates at all times. Executive shall devote Executive’s full business time and efforts to the performance of Executive’s assigned duties and responsibilities under this Agreement and, except upon the prior written consent of the Board of Directors of the Company (the “Board”), Executive will not (a) accept any other employment, or (b) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be in conflict with, or that might place Executive in a conflicting position to that of, the Company, Everi Holdings and/or their respective subsidiaries and affiliates. Notwithstanding the foregoing, Executive shall be permitted to (i) provide necessary and appropriate transition services to Executive’s former employer, Bally Gaming, Inc. and its affiliated companies (“Prior Employer”) for a period of six months following the Effective Date as may be reasonably requested by Prior Employer), including up to two (2) weeks of full time transition services (i.e., Effective Date through January 14, 2018), (provided that such services shall relate to the transition of Executive’s duties and knowledge and shall not include providing legal advice), and (ii) engage in occasional charitable activities outside the scope of Executive's employment hereunder so long as such activities (A) do not conflict with the actual or proposed business of the Company, Everi Holdings and/or their respective subsidiaries and affiliates, and (B) do not affect the performance of Executive's duties hereunder. In addition, subject to the prior written consent of the Board and subject to the satisfaction of Executive’s fiduciary duties to the Company, Everi Holdings and/or their respective subsidiaries and affiliates, Executive may be permitted to serve as a director of other corporations provided that the businesses of such other corporations are not competitive with the actual or proposed business of the Company, Everi Holdings and/or their respective subsidiaries and affiliates and provided further that Executive’s service as a director of such other corporations does not interfere with Executive's performance of Executive's duties hereunder. In the sole discretion of the Board, any such prior written consent may be subsequently revoked in the event that the Chief Executive Officer or Board determines that Executive’s position as a director of any such other corporation has developed into a conflict of interest.
|
1.3.
|
Location
.
Executive’s principal place of employment shall be the Company’s corporate headquarters, which is located in Las Vegas, Nevada. USA.
|
1.4.
|
Proprietary Information
.
Executive recognizes that Executive’s employment with the Company will involve contact with information of substantial value to the Company, Everi Holdings and their respective subsidiaries and affiliates, which is not generally known in the trade, and which gives the Company, Everi Holdings and their respective subsidiaries and affiliates an advantage over their competitors who do not know or use it. As a condition precedent to Executive’s employment by the Company, Executive agrees to execute and deliver to the Company, concurrent with Executive's execution and delivery of this Agreement, a copy of the “Employee Proprietary Information and Inventions Agreement” attached hereto as
Exhibit A.
|
1.5.
|
No Inconsistent Obligations
. Executive acknowledges and agrees that Executive is free to enter into this Agreement as of today and, as of the Effective Date, Executive reasonably believes that Executive will not be bound by any restrictive covenants, including but not limited to, covenants not to compete and will be permitted to be employed by the Company as contemplated hereby. Executive further agrees and covenants that Executive has not and will never use any confidential information or trade secrets belonging to any third party, including, but not limited to, Executive’s Prior Employer, to the extent Executive has any,
|
1.6.
|
Regulatory Approval
.
Due to the nature of the business of the Company, Everi Holdings and their respective subsidiaries and affiliates and Executive’s position with the Company and Everi Holdings, and, in addition to normal employment-related credit, reference and background investigations, Executive may also be required to complete applications required by various regulatory, tribal, state, local or other international governmental authorities in and under whose jurisdiction the Company, Everi Holdings and their respective subsidiaries and affiliates conduct business, as well as other applications that may be required by regulatory authorities with jurisdiction over the Company, Everi Holdings and their respective subsidiaries and affiliates. Such applications may require complete disclosure of personal and financial information, criminal convictions or arrests (expunged or not) and business associations. As an ongoing condition of Executive’s employment, Executive must be able to satisfy all applicable requirements of such governmental and regulatory authorities and obtain all necessary regulatory approvals and licenses.
|
2.1.
|
Base Salary
.
In consideration of the services to be rendered under this Agreement, while employed by the Company, the Company shall pay Executive an annual base salary (“Base Salary”), less required deductions for state and federal withholding tax, social security and all other employment taxes and payroll deductions, payable in regular periodic payments in accordance with Company payroll policy, as follows: (a) for the period from the Effective Date through December 31, 2018, a Base Salary at the rate of Three Hundred Fifty Thousand United States Dollars (US$350,000.00) per year, (b) for the period from January 1, 2019 through December 31, 2019, a Base Salary at the rate of Three Hundred Seventy-Five Thousand United States Dollars (US$375,000.00) per year, and (c) effective as of January 1, 2020, a Base Salary at the rate of Four Hundred Thousand United States Dollars (US$400,000.00) per year. Such Base Salary shall be prorated for any partial month of employment on the basis of a 30-day fiscal month. Such Base Salary shall be subject to
|
2.2.
|
Bonus
.
For each full fiscal year of Executive’s employment with the Company, Executive shall be eligible for an annual discretionary bonus (the “Cash Bonus”) with a target amount equal to seventy-five percent (75%) of Executive’s then current base salary and a maximum amount equal to one-hundred fifty percent (150%) of Executive’s then current base salary. The actual amount of any such Cash Bonus is to be determined by the Compensation Committee based (a) twenty-five percent (25%) on Executive’s individual performance, and (b) seventy-five percent (75%) on the achievement of certain corporate performance criteria or goals, in each case as established for the applicable calendar year by the Compensation Committee prior to or as soon as practicable after the commencement of such calendar year, but in no event later than March 15 of the applicable calendar year, and set forth in a written plan. Except as provided otherwise in this Agreement, Executive shall only be eligible to receive a Cash Bonus for a calendar year if Executive is employed on the last day of such calendar year. Any Cash Bonus awarded for a calendar year, if any, shall be paid in cash when other senior executives of the Company are paid, and, in any event, on or before March 15
th
of the calendar year subsequent to the calendar year in which the Cash Bonus is earned.
|
2.3.
|
Benefits
.
Executive shall be entitled to participate in any of the Company’s group medical, dental, life insurance, 401(k) or other benefit plans and programs on the same terms and conditions as other members of the Company’s senior executive management, based upon the eligibility dates described in the applicable benefit plan documents and subject to the terms and conditions of such plans. Executive shall be provided such perquisites of employment as are provided to all other members of the Company’s senior executive management. Executive understands that the Company has adopted an “unlimited” vacation policy pursuant to which the Company does not limit senior executive officers’ vacation time or sick days; accordingly, like the Company’s other senior executive officers, Executive will not “accrue” paid time off days and will not be compensated for “unused” paid time off upon termination.
|
2.5.
|
Equity Awards
. Executive will be eligible to receive restricted stock, restricted stock units, performance awards, stock options or other equity awards in a quantity and with a frequency substantially similar to those regularly awarded to other members of the Company’s senior executive management, other than the Chief Executive Officer, (each, an “Equity Award”) under the applicable equity incentive plan of Everi Holdings as then in effect (the “Plan”), as determined by the Compensation Committee. Any such Equity Award will be subject to and governed by the terms and conditions of the Plan and an applicable form of agreement for such Equity Award specified by the Compensation Committee, which Executive will be required to sign as a condition of retaining the Equity Award.
|
2.6.
|
Other
. In connection with the execution and delivery of this Agreement, the Company will (a) on or before the Effective Date, pay Executive a lump sum signing bonus of Fifty Thousand United States Dollars (US$50,000.00), less required withholdings and deductions,
|
4.1.
|
Termination by Executive
.
During the Term, Executive may terminate Executive's employment upon written notice to the Company. In the event that, during the Term, Executive terminates Executive's employment for any reason other than for Good Reason (as defined below in Section 4.3), all of the Company’s duties and obligations under this Agreement shall cease as of the last day of Executive’s employment and the Company shall pay Executive, and Executive shall be entitled to receive, only the following: all Base Salary earned by Executive through the last day of Executive’s employment but not yet paid, all reimbursable business expenses properly incurred by Executive pursuant to Section 2.4 through the last day of Executive’s employment but not yet reimbursed, and all benefits earned by Executive pursuant to Section 2.3 through the last day of Executive's employment (the “Accrued Amounts”); provided however, in the event the Company elects to enforce the Noncompete Term (as defined in Section 7.2)
following a termination under this Section 4.1, the Company will continue to pay Executive’s then-current Base Salary in installments in accordance with the Company’s regular payroll procedures during the pendency of the Noncompete Term.
|
4.2.
|
Termination by the Company for Cause
.
In the event that, during the Term, the Company terminates Executive’s employment for Cause (as defined below), all of the Company’s duties and obligations under this Agreement shall cease as of the last day of Executive’s employment and the Company shall pay Executive, and Executive shall be entitled to receive, only the Accrued Amounts; provided however, in the event the Company elects to enforce the Noncompete Term following a termination under this Section 4.1, the Company will continue to pay Executive’s then-current Base Salary in installments in accordance with the Company’s regular payroll procedures during the pendency of the Non-Compete Term. For the purposes of this Agreement, termination shall be for “Cause” if (a) Executive refuses or fails to act in accordance with any lawful order or instruction of the Chief Executive Officer or Board, and such refusal or failure to act has not been cured within five (5) days following Executive's receipt of written notice from the Chief Executive Officer or Board, as applicable, of such failure, (b) Executive is determined by the Chief Executive Officer or Board to have failed to devote reasonable attention and time to the business affairs of the Company, Everi Holdings and their subsidiaries and affiliates, (c) Executive is reasonably determined by the Chief Executive Officer or Board to have been (i) unfit for service (i.e., denied any license, permit or qualification required by, or found unsuitable by, any gaming regulator or other governmental authority), (ii) unavailable for service (other than as a result of an Incapacity (as defined below)), or (iii) grossly negligent in connection with the performance of Executive's duties on behalf of the Company, Everi Holdings and their subsidiaries and affiliates, which unfitness, unavailability or gross negligence has not been cured within five (5) days following Executive's receipt of written notice from the Chief Executive Officer or Board of the same; (d) Executive is reasonably determined by the Chief Executive Officer or Board to have committed a material act of dishonesty or willful misconduct or to have acted in bad faith to the material detriment of the Company, Everi Holdings and/or their subsidiaries and affiliates in connection with the performance of Executive's duties hereunder; (e) Executive is convicted of a felony or other crime involving dishonesty, breach of trust, moral turpitude or physical harm to any person, or (f) Executive materially breaches any agreement with the Company or Everi Holdings which material breach has not been cured within five (5) days following Executive's receipt of written notice from the Chief Executive Officer or Board of the same.
|
4.3.
|
Termination by the Company without Cause, or Termination by Executive for Good Reason
.
In the event that, during the Term, the Company terminates Executive’s employment without Cause (as defined below), or Executive terminates Executive’s employment for Good Reason (as defined below), all of the Company’s duties and obligations under this Agreement shall cease as of the last day of Executive’s employment and the Company shall pay Executive, and Executive shall be entitled to receive, the Accrued Amounts. In addition, and subject to the conditions set forth in Section 4.8 below, the Company shall pay to Executive the severance payments and benefits set forth below in Sections 4.3.1- 4.3.4 in accordance with the terms thereof. For purposes of this Agreement, the term “without Cause” shall mean termination of Executive’s employment by the Company for reasons other than for “Cause” (and excluding any such termination resulting from Executive’s Incapacity or death). For the purposes of this Agreement, termination shall be for “Good Reason” if (a) there is a material diminution of Executive’s responsibilities or authority with the Company or Everi Holdings, or a material adverse change in the Executive’s reporting responsibilities or title, in each case as they existed prior to such diminution or change without Executive’s consent; (b) there is a material reduction by the Company in the Executive’s compensation as then in effect, without Executive’s consent; or (c) Executive’s principal work locations are relocated outside of the Las Vegas, Nevada, USA metropolitan area without Executive’s consent. Executive will be deemed not to have terminated Executive’s employment for Good Reason unless (i) Executive has delivered written notice to the Company of Executive's intent to exercise the rights pursuant to this Section within thirty (30) days following the first occurrence of a condition that would constitute Good Reason and identifying the facts constituting such condition, and (ii) the Company has failed to remedy such condition within thirty (30) days following its receipt of such written notice, and (iii) the Executive’s termination of employment for Good Reason is effective no later than one-hundred fifty (150) days following the first occurrence of such condition. Executive agrees that Executive may be required to travel from time to time as required by the Company’s business and that such travel shall not constitute grounds for Executive to terminate Executive's employment for Good Reason.
|
4.4.
|
Termination by the Company for Incapacity
.
In the event that, during the Term, Executive suffers an “Incapacity” (defined below) as determined by the Company in its reasonable discretion, the Company may elect to terminate Executive’s employment pursuant to this Section 4.4. In such event, all of the Company’s duties and obligations under this Agreement shall cease as of the last day of Executive’s employment and the Company shall pay Executive, and Executive shall be entitled to receive, only the Accrued Amounts; provided, however, that nothing contained in this Agreement shall limit Executive’s rights to payments or other benefits under any long-term disability plans of the Company in which Executive participates, if any. For the purposes of this Agreement, Executive shall be deemed to have suffered an “Incapacity” if Executive, due to any mental or physical illness, injury or limitation, has been unable to perform the essential duties and responsibilities of Executive’s position for a period of at least one-hundred eighty (180) days in any rolling three hundred and sixty-five (365) day period.
|
4.5.
|
Termination upon Death
.
In the event that, during the Term, Executive dies, Executive’s employment shall be deemed to have terminated upon the date of death and all of the Company’s duties and obligations under this Agreement shall cease. In such event, the Company shall pay Executive’s estate, and Executive’s estate shall be entitled to receive, only the Accrued Amounts; provided, however, that nothing contained in this Agreement shall limit Executive’s estate’s or Executive’s beneficiaries’ rights to payments or other benefits under any life insurance plan or policy in which Executive participated or with respect to which Executive has designated a beneficiary, if any.
|
4.6.
|
Change in Control and Termination Payments
.
|
4.7.
|
No Other Compensation or Benefits/No Duty to Mitigate
.
Executive acknowledges that except as expressly provided in this Agreement, Executive shall not be entitled to any compensation, severance payments or benefits upon the termination of Executive’s employment. The Company acknowledges that Executive is under no duty to seek other employment or otherwise mitigate the obligations of the Company under this Agreement and the Company shall have no right of off-set against the amounts owed to Executive by the Company on account of any remuneration or other benefit earned or received by Executive after Executive’s termination by the Company.
|
4.8.
|
Conditions to Severance
. Executive will only be entitled to receive the severance payments and benefits set forth in Sections 4.3.1- 4.3.4 if, on or before the sixtieth (60
th
) day following the date of termination of Executive's employment (the “
Release Deadline
”), Executive executes a full general release of claims agreement in a form similar to
Exhibit B
hereto or the Company’s then-current version thereof, releasing all claims, known or unknown, that Executive may have against the Company, Everi Holdings and their respective subsidiaries and affiliates, and each of their respective officers, directors, and employees arising out of or in any way related to Executive’s employment or termination of employment with the Company, and the period for revocation, if any, of such release agreement has lapsed without the release having been revoked. In the event that Executive breaches any of the covenants contained in Sections 7 or 8, the Company shall have the right to (a) terminate further provision of any portion of the severance payments and benefits set forth in Sections 4.3.1-4.3.4 not yet paid or provided to Executive, (b) seek reimbursement in gross from Executive for any and all portions of the severance payments and benefits set forth in Sections 4.3.1-4.3.4 previously paid or provided to Executive, (c) recover from Executive all shares of Everi Holdings stock acquired by Executive pursuant to Equity Awards the vesting of which was accelerated by reason of Executive’s termination of employment (or the proceeds therefrom, reduced by any exercise or purchase price paid to acquire such shares), and (d) immediately cancel all portions of Equity Awards the vesting of which was accelerated by reason of Executive’s termination of employment.
|
4.9.
|
Expiration of the Term
.
For the avoidance of doubt, the exercise by the Company of its right to not extend the Agreement, or the expiration of this Agreement by its terms at the end of the Term, shall constitute a termination at the election of the Company without Cause.
|
5.1.
|
Return of Company’s Property
.
Without in any way limiting Executive’s obligations and the Company’s rights under the Employee Proprietary Information and Inventions Agreement described in Section 1.4, Executive hereby acknowledges and agrees that all books, manuals, records, reports, notes, contracts, lists, spreadsheets and other documents or materials, or copies thereof, and equipment furnished to or prepared by Executive in the course of or incident to Executive’s employment, belong to Company and shall be promptly returned to Company upon termination of Executive’s employment with the Company for any reason.
|
5.2.
|
Cooperation in Pending Work
.
Following any termination of Executive’s employment with the Company for any reason, Executive shall, at the Company’s request, reasonably cooperate with the Company in all matters relating to the winding up of pending work on behalf of the Company, Everi Holdings and their respective subsidiaries and affiliates and the orderly transfer of work to other employees of the Company, Everi Holdings and their respective subsidiaries and affiliates. Executive shall also cooperate, at the Company’s request, in the defense of any action brought by any third party against the Company, Everi Holdings and/or their respective subsidiaries and affiliates that relates in any way to Executive’s acts or omissions while employed by the Company.
|
5.3.
|
Resignation
.
Upon the termination of Executive’s employment with the Company for any reason, Executive shall be deemed to have resigned from all positions as an employee, officer, director or manager then held with the Company, Everi Holdings or any of their respective subsidiaries or affiliates. Executive agrees to execute and deliver such documents or instruments as are reasonably requested by the Company, Everi Holdings or any such subsidiary or affiliate to evidence such resignations.
|
5.4.
|
Survival
.
The representations and warranties contained herein and Executive’s and the Company’s obligations under Sections 3, 4, 5, 6, 7, 8 and 9 and under the Employee Proprietary Information and Inventions Agreement shall survive termination of Executive’s employment with the Company for any reason and the expiration of this Agreement.
|
6.2.
|
No amount payable pursuant to this Agreement on account of Executive’s termination of employment with the Company which constitutes a “deferral of compensation” within the meaning of Section 409A shall be paid unless and until Executive has incurred a “separation from service” within the meaning of Section 409A. Furthermore, to the extent that Executive is a “specified employee” within the meaning of Section 409A (determined using the identification methodology selected by Company from time to time, or if none, the default methodology) as of the date of Executive’s separation from service, no amount that constitutes a deferral of compensation which is payable on account of Executive’s separation from service shall paid to Executive before the date (the “
Delayed Payment Date
”) which is first day of the seventh month after the date of Executive’s separation from service or, if earlier, the date of Executive’s death following such separation from service. All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid in a lump sum on the Delayed Payment Date. Thereafter, any payments that remain outstanding as of the day immediately following the Delayed Payment Date shall be paid without delay over the time period originally scheduled, in accordance with the terms of this Agreement.
|
6.3.
|
Any right of Executive to receive installment payments under this Agreement shall, for all purposes of Section 409A, be treated as a right to a series of separate payments.
|
7.1.
|
Reasons for Restrictions
.
Executive acknowledges that the nature of the business of the Company, Everi Holdings and/or their respective subsidiaries and affiliates is such that it would be extremely difficult for Executive to honor and comply with Executive's obligations under the Employee Proprietary Information and Inventions Agreement described in Section 1.4 to keep secret and confidential the trade secrets of the Company, Everi Holdings and/or their respective subsidiaries and affiliates if Executive were to become employed by or substantially interested in the business of a competitor of the Company, Everi Holdings and/or their respective subsidiaries and affiliates is such that soon following the termination of Executive's employment with the Company, and it would also be extremely difficult to determine in any reasonably available forum the extent to which Executive was or was not complying with Executive's obligations under such circumstances
.
|
7.2.
|
Duration of Restriction
.
In consideration for the Company’s and Everi Holdings’ undertakings and obligations under this Agreement, and in light of Executive’s unique position and substantial knowledge of the operations, plans and projects of the Company, Everi Holdings and their respective subsidiaries and affiliates, Executive agrees that, during the Noncompete Term (as defined below), Executive shall not directly or indirectly engage in (whether as an employee, consultant, proprietor, partner, director or otherwise), or have any ownership interest in, or participate in the financing, operation, management or control of, any person, firm, corporation or business that engages in any line of business in which the Company, Everi Holdings and/or their respective subsidiaries and affiliates engages at the time of such termination, in the United States Canada, the United Kingdom or such other countries in which the Company, Everi Holdings and/or their respective subsidiaries and affiliates conducts business at the time of such termination (“Restricted Territory”). For the avoidance of doubt, the foregoing shall not prohibit Executive from engaging in, owning an interest in, or participating in any business that processes credit card, debit card or automated teller machine transactions originated from outside of gaming establishments, unless the Company has expanded its operations to encompass such activities at the time of
|
7.3
|
Assignment
.
Executive expressly understands and agrees that all restrictions on employment and solicitation as set for in Sections 7 and 8 are fair and reasonable, and are a material part of this Agreement which would not be entered into by the parties absent mutual agreement to the assignability of the same. Executive further expressly understands and agrees that Executive's duties and obligations as set forth in Sections 7 and 8 of this Agreement may be assigned by the Company upon a Change in Control at Company's discretion. Executive agrees that Executive has received separate valuable and sufficient consideration in exchange for Company's right to assign Executive's obligations and duties as set for in Sections 7 and 8, such consideration to be paid in the amount of $5,000 upon all parties executing this Agreement.
|
9.1.
|
Agreement to Arbitrate Claims
.
The Company and Executive hereby agree that, to the fullest extent permitted by law, any and all claims or controversies between them (or between Executive and any present or former officer, director, agent, or employee of the Company or any parent, subsidiary, or other entity affiliated with the Company) relating in any manner to the employment or the termination of employment of Executive shall be resolved by final and binding arbitration pursuant to the terms and conditions set forth in that certain National Mutual Arbitration Agreement for Employees of the Company executed by Executive (the “Arbitration Agreement”) in the form attached hereto as
Exhibit C
Claims subject to the Arbitration Agreement shall include contract claims, tort claims, claims relating to
|
9.2.
|
Enforcement Actions
.
Either the Company or Executive may bring an action in court to compel arbitration under this Agreement and to enforce an arbitration award. Except as otherwise provided in this Agreement, neither party shall initiate or prosecute any lawsuit in any way related to any arbitrable claim, including, without limitation, any claim as to the making, existence, validity, or enforceability of the agreement to arbitrate. All arbitration hearings under this Agreement shall be conducted in Las Vegas, Nevada.
|
9.3.
|
Exceptions
.
Nothing in this Agreement precludes a party from filing an administrative charge before an agency that has jurisdiction over an arbitrable claim. In addition, either party may, at its option, seek injunctive relief in a court of competent jurisdiction for any claim or controversy arising out of or related to the matters described in Sections 7 and 8 above or the unauthorized use, disclosure, or misappropriation of the confidential and/or proprietary information of either party in contravention of the Employee Proprietary Information and Inventions Agreement or otherwise. By way of example, the Company may choose to use the court system to seek injunctive relief to prevent disclosure of its proprietary information or trade secrets; similarly, Executive may elect to use the court system to seek injunctive relief to protect Executive’s own inventions or trade secrets.
|
9.4.
|
Attorneys’ Fees
.
Each party shall pay its own costs and attorney’s fees, unless a party prevails on a statutory claim, and the statute provides that the prevailing party is entitled to payment of its attorneys' fees. In that case, the arbitrator may award reasonable attorneys' fees and costs to the prevailing party as provided by law. The costs and fees of the arbitrator shall be borne equally by Executive and the Company.
|
9.5.
|
Survival
.
The parties’ obligations under this Agreement, where applicable including Section 7 and 8, shall survive the termination of Executive’s employment with the Company for any reason and the expiration of this Agreement.
|
9.6.
|
Acknowledgements
.
THE PARTIES UNDERSTAND AND AGREE THAT THIS SECTION 9 CONSTITUTES A WAIVER OF THEIR RIGHT TO A TRIAL BY JURY OF ANY CLAIMS OR CONTROVERSIES COVERED BY THIS SECTION 9. THE PARTIES AGREE THAT NONE OF THOSE CLAIMS OR CONTROVERSIES SHALL BE RESOLVED BY A JURY TRIAL. THE PARTIES FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN GIVEN THE OPPORTUNITY TO DISCUSS THIS SECTION 9 WITH THEIR LEGAL COUNSEL AND HAVE AVAILED THEMSELVES OF THAT OPPORTUNITY TO THE EXTENT THEY WISH TO DO SO.
|
If to Company:
|
Everi Payments Inc.
Attn: CEO w/ copy to General Counsel
7250 S. Tenaya Way, Ste. 100 Las Vegas, NV 89113 |
If to Executive:
|
Harper Ko
10216 Hailey Lynne Road
Las Vegas, Nevada 89183
|
EVERI PAYMENTS INC.
|
|
EXECUTIVE
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Michael D. Rumbolz
|
|
/s/ Harper H. Ko
|
|
Michael D. Rumbolz
|
|
Harper H. Ko
|
|
President and Chief Executive Officer
|
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EVERI HOLDINGS INC.
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EXECUTIVE
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By:
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/s/ Michael D. Rumbolz
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/s/ Harper H. Ko
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Michael D. Rumbolz
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Harper H. Ko
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President and Chief Executive Officer
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1.
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Prior Inventions. Except as set forth below, there are no ideas, processes, inventions, technology, writings, programs, designs, formulas, discoveries, patents, copyrights, or trademarks, or any claims, rights, or improvements to the foregoing, that I wish to exclude from the operation of this Agreement:
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2.
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Prior Agreements. Except as set forth below, I am aware of no prior agreements between me and any other person or entity concerning proprietary information or inventions (attach copies of all agreements in your possession):
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Dated:
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, 20__
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By:
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EVERI PAYMENTS INC.
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Dated:
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, 20__
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By:
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Indemnitee:
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The Company:
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EVERI HOLDINGS INC.
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Address:
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By:
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Name:
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Title:
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Everi Holdings Inc.;
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2.
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Based on my knowledge, this report 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 report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this 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 report;
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4.
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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:
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a)
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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 report is being prepared;
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b)
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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;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report 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
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5.
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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):
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a)
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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
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b)
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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.
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Dated: May 7, 2019
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By:
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/s/ Michael D. Rumbolz
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Michael D. Rumbolz
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President and Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Everi Holdings Inc.;
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2.
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Based on my knowledge, this report 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 report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this 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 report;
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4.
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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:
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a)
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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 report is being prepared;
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b)
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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;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report 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
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5.
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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):
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a)
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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
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b)
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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.
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Dated: May 7, 2019
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By:
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/s/ Randy L. Taylor
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Randy L. Taylor
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Chief Financial Officer
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(1)
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the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.
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Dated:
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May 7, 2019
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By:
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/s/ Michael D. Rumbolz
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Michael D. Rumbolz
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President and Chief Executive Officer
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Dated:
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May 7, 2019
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/s/ Randy L. Taylor
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Randy L. Taylor
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Chief Financial Officer
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