9. COMMITMENTS AND CONTINGENCIES Litigation The Company is subject to legal proceedings, claims and investigations in the ordinary course of business, including claims of alleged infringement of third- party patents and other intellectual property rights, indemnification claims, commercial, employment, regulatory and other matters. Liabilities related to such matters are recorded when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated. All legal costs associated with litigation are expensed as incurred. In February 2012, HBG Connex S.P.A. ( HBG ) filed requests for arbitration in the National and International Chamber of Arbitration of Milan, Italy, against the Company s Dutch and Italian subsidiaries ( Bally Netherlands  and  Bally Italy , respectively). HBG alleged breach of contract (i) by Bally Netherlands in connection with a contractual arrangement pursuant to which the Company agreed to supply certain gaming equipment and (ii) by Bally Italy in connection with ¬15 million in financial assistance provided by Bally Italy for HBG s acquisition of licenses to operate gaming equipment in certain Italian markets. The Company responded in March 2012 denying the allegations and seeking to dismiss HBG s claims, asserting counterclaims against HBG for breach of contract, and seeking equitable relief compelling HBG to perform its contractual obligations as well as an undetermined amount of monetary damages. On July 29, 2013, the parties entered into a settlement agreement pursuant to which they agreed to waive all claims, terminate the arbitration and all contractual arrangements, and HBG agreed to repay the Company ¬15 million in graduated monthly installments over four years from July 2013 to June 2017. The Arbitral Tribunal approved the parties  joint requests for termination in September 2013. The Company is also a party to various claims and lawsuits relating to routine matters that arise from time to time in the ordinary course of its  business. Al