Exhibit 10.30
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TERM LOAN AGREEMENT
Dated as of May 22, 1998
By and Among
AUTOTOTE CORPORATION,
as Borrower,
AUTOTOTE LOTTERY CORPORATION,
as Borrower,
VARIOUS FINANCIAL INSTITUTIONS
as Banks,
and
▇▇▇▇▇▇ FINANCIAL, INC.,
as Agent
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TABLE OF CONTENTS
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SECTION 1. AMOUNT AND TERMS OF TERM LOAN................................................1
1.1. Term Loan..........................................................................1
1.2. Minimum Amount of Each Advance.....................................................1
1.3. Notice of Borrowing; Fixed Rate Notice.............................................1
1.4. Advances...........................................................................2
1.5. Term Notes.........................................................................3
1.6. Conversions........................................................................3
1.7. Pro Rata Borrowing.................................................................3
1.8. Interest...........................................................................4
1.9. Interest Periods...................................................................5
1.10. Increased Costs, Illegality, etc..................................................6
1.11. Compensation......................................................................7
1.12. Change of Lending Office..........................................................8
1.13. Replacement of Banks..............................................................8
1.14. Closing Fee.......................................................................9
SECTION 2. PREPAYMENTS; PAYMENTS; TAXES.................................................9
2.1. Voluntary Prepayments..............................................................9
2.2. Mandatory Repayments...............................................................10
2.3. Method and Place of Payment........................................................12
2.4. Net Payments.......................................................................12
2.5. No Reborrowing.....................................................................14
SECTION 3. EXISTING CREDIT AGREEMENT; SECURITY..........................................14
SECTION 4. CONDITIONS PRECEDENT TO THE EFFECTIVE DATE...................................14
4.1. Execution of Agreement; Term Notes.................................................14
4.2. Fees, etc..........................................................................14
4.3. Opinions of Counsel................................................................15
4.4. Amendments to Credit Documents; Consents...........................................15
4.5. Proceedings; Agreements............................................................15
4.6. Subsidiaries Guaranty Reaffirmation................................................15
4.7. Connecticut Lottery Corporation....................................................15
4.8. Rescission of Collateral Release, Pledge of Intercompany Collateral................15
4.9. Adverse Change, etc................................................................15
4.10. Litigation........................................................................16
4.11. Closing Certificate...............................................................16
SECTION 5. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS....................................16
5.1. No Default; Representations and Warranties.........................................17
5.2. Notice of Borrowing................................................................17
SECTION 6. REPRESENTATIONS AND WARRANTIES...............................................17
SECTION 7. AFFIRMATIVE COVENANTS........................................................18
7.1. Use of Term Loan Proceeds..........................................................18
7.2. Continuing Covenants...............................................................18
SECTION 8. NEGATIVE COVENANTS...........................................................18
SECTION 9. EVENTS OF DEFAULT...........................................................19
9.1. Payments...........................................................................19
9.2. Representations, etc...............................................................19
9.3. Covenants..........................................................................19
9.4. Event of Default Under Credit Agreement............................................19
9.5. Default Under Lottery Agreement....................................................19
SECTION 10. DEFINITIONS AND ACCOUNTING TERMS...........................................20
10.1. Defined Terms.....................................................................20
SECTION 11. AGENT......................................................................29
11.1. Appointment.......................................................................29
11.2. Nature of Duties..................................................................29
11.3. Lack of Reliance on Agent.........................................................29
11.4. Certain Rights of Agent...........................................................30
11.5. Reliance..........................................................................30
11.6. Indemnification...................................................................30
11.7. Agent in its Individual Capacity..................................................30
11.8. Holders...........................................................................31
11.9. Resignation by Agent..............................................................31
SECTION 12. MISCELLANEOUS.............................................................32
12.1. Payment of Expenses, etc..........................................................32
12.2. Right of Setoff...................................................................33
12.3. Notices...........................................................................33
12.4. Benefit of Agreement..............................................................33
12.5. No Waiver; Remedies Cumulative....................................................35
12.6. Payments Pro Rata.................................................................36
12.7. Calculations; Computations........................................................36
12.8. Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial............37
12.9. Counterparts......................................................................38
12.10. Effectiveness....................................................................38
12.11. Headings Descriptive.............................................................38
12.12. Amendment or Waiver, etc.........................................................38
12.13. Survival.........................................................................39
12.14. Domicile of Loans................................................................39
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12.15. Confidentiality..................................................................39
12.16. Register.........................................................................40
12.17. Consent to Forbearance Agreement.................................................41
12.18. Joint and Several Liability......................................................41
12.19. Effect of Certain Actions........................................................41
TERM LOAN AGREEMENT
This Term Loan Agreement is dated as of May 22, 1998 and is entered
into by and among Autotote Corporation, a Delaware corporation ("Parent"),
Autotote Lottery Corporation, a Delaware corporation ("ALC"), and ▇▇▇▇▇▇
Financial, Inc., a Delaware corporation (in its individual capacity "▇▇▇▇▇▇") as
a Bank and as agent for all financial institutions who are or hereafter become
parties to this Agreement as Banks.
R E C I T A L S:
WHEREAS, Borrower desires that Banks extend a term loan facility to
Borrower to finance the manufacture and installation of equipment and software
for the Connecticut lottery and (ii) costs and expenses associated with this
term loan facility; and
WHEREAS, on the terms and conditions set forth herein, Banks have
agreed to extend such term loan facility.
NOW, THEREFORE, Borrower, Banks and Agent agree as follows:
SECTION 1. AMOUNT AND TERMS OF TERM LOAN.
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1.1. Term Loan.
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Subject to the terms and conditions of this Agreement and in reliance
upon the representations and warranties of Borrower made pursuant hereto, each
Bank severally agrees to lend to Borrower its Percentage of the aggregate sum of
up to Twelve Million Dollars ($12,000,000) (the "Term Loan").
1.2. Minimum Amount of Each Advance.
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The Term Loan will be disbursed during the Disbursement Period in up to
five (5) separate Advances, provided that the minimum amount of any aggregate
Advance shall be the lesser of: (a) Two Million Dollars ($2,000,000) (plus
integral multiples of One Hundred Thousand Dollars ($100,000)) and (b) the
difference between Twelve Million Dollars ($12,000,000) and the aggregate amount
of all previous Advances.
1.3. Notice of Borrowing; Fixed Rate Notice.
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(a) Whenever during the Disbursement Period Borrower desires an
Advance, an Authorized Representative of Borrower shall give Agent at its Notice
Office at least one (1) Business Day's prior written notice (or telephonic
notice promptly confirmed in writing) of the Base Rate Portion, if any, and at
least three (3) Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) of the Eurodollar Portion, if any, provided, that
any such notice shall be deemed to have been given on a certain day only if
given before (i) in the case of any Eurodollar Portion, 11:00 A.M. (New York
time) on such day or (ii) in the case of Base Rate
Portion, 12:00 Noon (New York time) on such day. Each such written notice or
written confirmation of telephonic notice (each a "Notice of Borrowing"), except
as otherwise expressly provided in Section 1.10, shall be irrevocable and shall
be given by such Authorized Representative in the form of Exhibit A,
appropriately completed to specify the aggregate principal Advance to be made
pursuant to the Notice of Borrowing, the date of such Advance (which shall be a
Business Day), and the amount of such Advance which will be a Base Rate Portion
or a Eurodollar Portion and, if a Eurodollar Portion, the initial Interest
Period to be applicable thereto. Agent shall promptly give each Bank notice of
each such proposed Advance, of such Bank's Percentage thereof and of the other
matters required by the immediately preceding sentence to be specified in the
Notice of Borrowing.
(b) Upon request of Borrower, Agent will advise Borrower of the
Fixed Rate available for any Advance or applicable conversion of any Term Loan
Portion to a Fixed Rate Portion if such Advance or conversion is made within two
(2) Business Days after such advice. No later than five (5) Business Days before
the expiration of the Disbursement Period, and provided that no Default or Event
of Default then exists, Borrower will have the one-time option, the exercise of
which shall be irrevocable, to elect to cause not less than Ten Million Dollars
($10,000,000) of the Term Loan principal balance (including any Advance to be
requested concurrently with said election) to bear interest at the Fixed Rate
until the Maturity Date. Once the Fixed Rate is elected pursuant to this Section
1.3(b), (i) neither the entire Fixed Rate Portion nor any amount of the Fixed
Rate Portion shall be converted to another Type and (ii) no other Term Loan
Portion may be converted to the Fixed Rate Portion. Borrower shall be
responsible for any compensation due Banks under Section 1.11 resulting from an
election to convert a Eurodollar Portion into all or part of the Fixed Rate
Portion.
1.4. Advances.
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Not later than 12:00 Noon (New York time) on the date specified in each
Notice of Borrowing, each Bank will make available its Percentage portion of the
Advance requested in the Notice of Borrowing. All such amounts shall be made
available in Dollars and in immediately available funds at the Payment Office of
Agent, and Agent will make available to Borrower at the Payment Office the
aggregate of the amounts so made available by the Banks (prior to 1:00 P.M. on
such day, to the extent of funds actually received by Agent prior to 12:00 Noon
on such day). Unless Agent shall have been notified by any Bank prior to the
date of such Advance that such Bank does not intend to make available to Agent
such Bank's Percentage of the Advance to be made on such date, Agent may assume
that such Bank has made such amount available to Agent on such date and Agent
may (but shall not be obligated to), in reliance upon such assumption, make
available to Borrower a corresponding amount. If such corresponding amount is
not in fact made available to Agent by such Bank, Agent shall be entitled to
recover such corresponding amount on demand from such Bank. If such Bank does
not pay such corresponding amount forthwith upon Agent's demand therefor, Agent
shall promptly notify Borrower and Borrower shall immediately pay such
corresponding amount to Agent. Agent shall also be entitled to recover on demand
from such Bank or Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was made
available by Agent to Borrower until the date such corresponding amount is
recovered by Agent, at a rate per annum equal to (i) if recovered from such
Bank, at the overnight Federal Funds Rate and (ii) if recovered from Borrower,
the rate of interest applicable to such Advance, as determined pursuant to
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Section 1.8. Nothing in this Section 1.4 shall be deemed to relieve any Bank
from its obligation to make its required Advance or to prejudice any rights
which Borrower may have against any Bank as a result of any failure by such Bank
to make its required Advance.
1.5. Term Notes.
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Borrower shall execute and deliver to each Bank a Term Note
(substantially in the form of Exhibit B, each a "Term Note") to evidence such
Bank's share of the Term Loan, such Term Note to be in the principal amount of
such Bank's Percentage of the aggregate principal amount of the Term Loan. In
the event the Term Loan amount is less than Twelve Million Dollars ($12,000,000)
or in the event of an assignment of a Term Loan Portion, Borrower shall, upon
surrender, as applicable, of all Term Notes or the Term Note evidencing the
assigned interest, issue a new Term Note or Term Notes to reflect, as
applicable, the actual amount of the Term Loan or the interests of the assigning
Bank and the Person to which interests are to be assigned.
1.6. Conversions.
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Except as provided in Section 1.3(b), Borrower shall have the option to
convert, on any Business Day occurring after the Effective Date, Term Loan
Portions of one Type equal to at least the applicable Minimum Borrowing Amount
into a Term Loan Portion of another Type, provided that (i) except as otherwise
provided in Section 1.10(b), a Eurodollar Portion may be converted into a Base
Rate Portion only on the last day of an Interest Period applicable to the
Eurodollar Portion being converted and no such partial conversion of a
Eurodollar Portion shall reduce the outstanding principal amount of all
Eurodollar Portions to less than the Minimum Borrowing Amount, (ii) Base Rate
Portions may only be converted into Eurodollar Portions if no Default or Event
of Default is in existence on the date of the conversion, and (iii) no
conversion pursuant to this Section 1.6 shall result in more than six (6)
Eurodollar Portions outstanding at any time. Each such conversion shall be
effected by an Authorized Representative of Borrower giving Agent at its Notice
Office prior to 11:00 A.M. (New York time) at least three (3) Business Days'
prior notice (each a "Notice of Conversion") specifying the Term Loan Portions
to be so converted, and, if to be converted into Eurodollar Portions, the
Interest Period to be applicable thereto. Agent shall give each Bank prompt
notice of any such proposed conversion affecting any of its Term Loan Portions.
1.7. Pro Rata Borrowing.
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All Advances under this Agreement shall be made by the Banks pro rata
on the basis of their Percentage. It is understood that no Bank shall be
responsible for any default by any other Bank of its obligation to make
disbursements hereunder and that each Bank shall be obligated to make
disbursements provided to be made by it hereunder, regardless of the failure of
any other Bank to make its disbursements hereunder.
1.8. Interest
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(a) Borrower agrees to pay interest in respect of the unpaid amount of
the Base Rate Portion from the date such Base Rate Portion is made available to
Borrower or, as applicable, the date of conversion of such amount to a Base Rate
Portion pursuant to Section 1.6
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until the earlier of (i) the Maturity Date and (ii) the conversion of all or any
portion (to the extent of such conversion) of such Base Rate Portion to a
Eurodollar Portion or a Fixed Rate Portion pursuant to Section 1.6 or 1.3(b), as
applicable, at a rate per annum which shall be equal to the sum of two percent
(2%) plus the Base Rate in effect from time to time.
(b) Borrower agrees to pay interest in respect of the unpaid amount of
each Eurodollar Portion from the date such Eurodollar Portion is made available
to Borrower or, as applicable, date of conversion of such amount to a Eurodollar
Portion pursuant to Section 1.6 until the earlier of (i) the Maturity Date and
(ii) the conversion of all or any portion (to the extent of such conversion) of
such Eurodollar Portion to a Base Rate Portion or a Fixed Rate Portion pursuant
to Section 1.6, 1.3(b) or 1.10, as applicable, at a rate per annum which shall,
during each Interest Period applicable thereto, be equal to the sum of three
percent (3%) plus the Eurodollar Rate for such Interest Period.
(c) Borrower agrees to pay interest in respect of the unpaid amount of
the Fixed Rate Portion from the date such Fixed Rate Portion is made available
to Borrower, or, as applicable, the date of conversion of such amount to a Fixed
Rate Portion pursuant to Section 1.3(b) until the Maturity Date, at a rate per
annum equal to the Fixed Rate.
(d) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each of the Base Rate Portion, the Eurodollar Portion and
the Fixed Rate Portion and any other overdue amount payable hereunder shall, in
each case, bear interest at a rate per annum equal to the greater of (x) two
percent (2%) per annum in excess of the rate otherwise applicable to Base Rate
Portions from time to time and (y) the rate which is two percent (2%) in excess
of the rate then borne by such Term Loan Portion, in each case with such
interest to be payable on demand.
(e) Accrued (and theretofore unpaid) interest calculated in accordance
with (a) through (c) above shall be payable (i) in respect of the Base Rate
Portion, (x) quarterly in arrears on each Quarterly Payment Date and (y) on the
date of any repayment or prepayment thereof (on the amount repaid and prepaid),
(ii) in respect of each Eurodollar Portion, (x) on the last day of each Interest
Period applicable thereto, except that in the case of an Interest Period in
excess of three months, on each date occurring at three month intervals after
the first day of such Interest Period and (y) on the date of any repayment or
prepayment thereof (on the amount repaid or prepaid), (iii) in respect of the
Fixed Rate Portion, (x) quarterly in arrears on each Quarterly Payment Date and
(y) on the date of any repayment or prepayment thereof (on the amount repaid or
prepaid), and (iv) in respect of each Term Loan Portion, at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(f) Upon each Interest Determination Date, Agent shall determine the
Eurodollar Rate for each Interest Period applicable to Eurodollar Portions and
shall promptly notify Borrower and the Banks thereof. Each such determination
shall, absent manifest error, be final and conclusive and binding on all parties
hereto.
1.9. Interest Periods.
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At the time it gives any Notice of Borrowing or Notice of Conversion in
respect of the making of, or conversion into, any Eurodollar Portion (in the
case of the initial Interest Period applicable thereto) or on the third Business
Day prior to the expiration of an Interest
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Period applicable to such Eurodollar Portion (in the case of any subsequent
Interest Period), Borrower shall have the right to elect, by having an
Authorized Representative of Borrower give Agent notice thereof, the interest
period (each, an "Interest Period") to be applicable to such Eurodollar Portion,
which Interest Period shall, at the option of Borrower, be a one, two, three or
six-month period; provided that:
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(i) the Eurodollar Portion of an Advance, if any, shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Portion shall
commence on the date of the Advance in respect of such Eurodollar
Portion (or the date of the initial conversion thereto from a Base Rate
Portion) and each Interest Period occurring thereafter in respect of
such Eurodollar Portion shall commence on the day on which the next
preceding Interest Period applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Portion
begins on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period, such Interest
Period shall end on the last Business Day of such calendar month;
(iv) if any Interest Period for any Eurodollar Portion would
otherwise expire on a day which is not a Business Day, such Interest
Period shall expire on the next succeeding Business Day, provided,
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however, that if any Interest Period for a Eurodollar Portion would
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otherwise expire on a day which is not a Business Day but is a day of
the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(v) no Interest Period may be selected at any time when a
Default or an Event of Default is then in existence; and
(vi) no Interest Period shall be selected which extends beyond
the Maturity Date.
If upon the expiration of any Interest Period applicable to a
Eurodollar Portion, Borrower has failed to elect, or is not permitted to elect,
a new Interest Period to be applicable to such Eurodollar Portion as provided
above, Borrower shall be deemed to have elected to convert such Eurodollar
Portion into a Base Rate Portion effective as of the expiration date of such
current Interest Period.
1.10. Increased Costs, Illegality, etc.
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(a) In the event that any Bank shall have determined in good faith
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto but, with respect to clause (i) below, may be
made only by Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the Effective Date affecting the interbank
Eurodollar
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market, adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of
Eurodollar Rate; or
(ii) at any time, that such Bank shall incur material increased
costs or material reductions in the amounts received or receivable
hereunder with respect to any Eurodollar Portion because of (x) any
change since the Effective Date in any applicable law or governmental
rule, regulation, order, guideline or request (whether or not having
the force of law) or in the interpretation or administration thereof
and including the introduction of any new law or governmental rule,
regulation, order, guideline or request, such as, for example, but not
limited to: (A) a change in the basis of taxation of payment to such
Bank of the principal of or interest on such Eurodollar Portion or any
other amounts payable hereunder (except for changes in the rate of tax
on, or determined by reference to, the net income or profits of such
Bank pursuant to the laws of the jurisdiction in which it is organized
or in which its principal office or applicable lending office is
located or any subdivision thereof or therein) or (B) a change in
official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation
of the Eurodollar Rate and/or (y) other circumstances since the
Effective Date affecting such Bank or the interbank Eurodollar market
or the position of such Bank in such market; or
(iii) at any time, that the making or continuance of any
Eurodollar Portion has been made (x) unlawful by any law or
governmental rule, regulation or order, (y) impossible by compliance by
such Bank in good faith with any governmental request (whether or not
having force of law) or (z) impracticable as a result of a contingency
occurring after the Effective Date which materially and adversely
affects the interbank Eurodollar market;
then, and in any such event, such Bank (or Agent, in the case of clause (i)
above) shall promptly give notice (by telephone confirmed in writing) to
Borrower and, except in the case of clause (i) above, to Agent of such
determination (which notice Agent shall promptly transmit to each of the other
Banks). Thereafter (x) in the case of clause (i) above, Eurodollar Portions
shall no longer be available until such time as Agent notifies Borrower and the
Banks that the circumstances giving rise to such notice by Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion given by Borrower
with respect to Eurodollar Portions which have not yet been incurred (including
by way of conversion) shall be deemed rescinded by Borrower, (y) in the case of
clause (ii) above, Borrower shall pay to such Bank, upon written demand
therefor, such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Bank in its sole
discretion shall determine) as shall be required to compensate such Bank for
such increased costs or reductions in amounts received or receivable hereunder
(a written notice as to the additional amounts owed to such Bank, showing the
basis for the calculation thereof, submitted to Borrower by such Bank in good
faith shall, absent manifest error, be final and conclusive and
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binding on all the parties hereto) and (z) in the case of clause (iii) above,
Borrower shall take one of the actions specified in Section 1.10(b) as promptly
as possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Portion is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), Borrower may (and in
the case of a Eurodollar Portion affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Portion is
then being advanced, cancel the respective Advance by giving Agent telephonic
notice (confirmed in writing) on the same date that Borrower was notified by the
affected Bank or Agent pursuant to Section 1.10(a)(ii) or (iii) or (y) if the
affected Eurodollar Portion is then outstanding, upon at least three (3)
Business Days' written notice to Agent, require the affected Bank to convert
such Eurodollar Portion into a Base Rate Portion; provided that if more than one
Bank is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If at any time after the Effective Date any Bank determines that
the introduction of or any change in any applicable law or governmental rule,
regulation, order, guideline, directive or request (whether or not having the
force of law) concerning capital adequacy, or any change in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency, will have the effect of increasing the amount of capital required or
expected to be maintained by such Bank or any corporation controlling such Bank
based on the existence of such Bank's commitments or obligations hereunder, then
Borrower shall pay to such Bank, upon its written demand therefor, such
additional amounts as shall be required to compensate such Bank or such other
corporation for the increased cost to such Bank or such other corporation or the
reduction in the rate of return to such Bank or such other corporation as a
result of such increase of capital. In determining such additional amounts, each
Bank will act reasonably and in good faith and will use averaging and
attribution methods which are reasonable; provided that such Bank's reasonable
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good faith determination of compensation owing under this Section 1.10(c) shall,
absent manifest error, be final and conclusive and binding on all the parties
hereto. Each Bank, upon determining that any additional amounts will be payable
pursuant to this Section 1.10(c), will give prompt written notice thereof to
Borrower, which notice shall show the basis for calculation of such additional
amounts.
1.11. Compensation.
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(a) Borrower shall compensate each Bank, upon its written request
(which request shall (x) set forth the basis for requesting such compensation
and (y) absent manifest error, be final and conclusive and binding upon all the
parties hereto), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Portions but excluding any loss of anticipated profit) which
such Bank may sustain: (i) if for any reason (other than a default by such Bank
or Agent) an Advance of, or conversion from or into, a Eurodollar Portion does
not occur on a date specified therefor in a Notice of Borrowing or Notice of
Conversion (whether or not withdrawn by Borrower or deemed withdrawn pursuant to
Section 1.10(a)); (ii) if any repayment (including any mandatory repayment made
pursuant to Section 2.2 or as a result of an acceleration of the Term Loan
pursuant to Section 9) or conversion of any Eurodollar Portion occurs on a date
which is not the last day of an Interest Period with respect thereto; (iii) if
any prepayment of any Eurodollar
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Portion is not made on the date specified in a notice of prepayment given by
Borrower; or (iv) as a consequence of (x) any other default by Borrower of its
obligation to repay the Term Loan when required by the terms of this Agreement
or the Term Note held by such Bank or (y) any election made pursuant to Section
1.10(b).
(b) Upon any prepayment, whether voluntary or upon the acceleration of
the Maturity Date, with respect to any Fixed Rate Portion, Borrower shall pay
each Lender with respect to the amount prepaid its Percentage of the Fixed Rate
Breakage Fee. The Fixed Rate Breakage Fee shall not apply to any mandatory
repayments under Section 2.2, but shall apply to any payment upon acceleration
of the Maturity Date.
1.12. Change of Lending Office.
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Each Bank agrees that on the occurrence of any event giving rise to the
operation of Section 1.10(a)(ii) or (iii), Section 1.10(c) or Section 2.4 with
respect to such Bank, it will, if requested by Borrower, use reasonable efforts
(subject to overall policy considerations of such Bank) to designate another
lending office for any Eurodollar Portions affected by such event; provided that
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such designation is made on such terms that such Bank and its lending office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of such
Section. Nothing in this Section 1.12 shall affect or postpone any of the
obligations of Borrower or the right of any Bank provided in Sections 1.10 and
2.4.
1.13. Replacement of Banks.
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(a) If any Bank (x) becomes a Defaulting Bank or (y) refuses to consent
to certain proposed changes, waivers, discharges or terminations with respect to
this Agreement which have been approved by the Required Banks as provided in
Section 12.12(b), Borrower shall have the right in accordance with the
requirements of Section 12.4(b), if no Default or Event of Default will exist
immediately after giving effect to such replacement, to replace such Bank (the
"Replaced Bank") with one or more other Eligible Transferees, none of which
shall constitute a Defaulting Bank at the time of such replacement
(collectively, the "Replacement Bank") and each of which shall be required to be
acceptable to Agent and reasonably acceptable to Borrower; provided that:
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(i) at the time of any replacement pursuant to this Section 1.13,
the Replacement Bank shall enter into one or more Assignment and
Assumption Agreements pursuant to Section 12.4(b) (and with all fees
payable pursuant to said Section 12.4(b) to be paid by the Replacement
Bank) pursuant to which the Replacement Bank shall acquire all
obligations and Term Loan Portions of the Replaced Bank and, in
connection therewith, shall pay to the Replaced Bank in respect thereof
an amount equal to the principal of, and all accrued interest on, all
outstanding Term Loan Portions of the Replaced Bank with all then
unpaid interest with respect thereto at such time; and
(ii) all obligations of Borrower owing to the Replaced Bank
(including all obligations, if any, owing pursuant to Section 1.11, but
excluding those specifically described in clause (i) above in respect
of
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which the assignment purchase price has been, or is concurrently being,
paid) shall be paid in full to such Replaced Bank concurrently with
such replacement.
(b) Upon the execution of the respective Assignment and Assumption
Agreements referred to in the immediately preceding clause (a), the payment of
the amounts referred to in the immediately preceding clauses (a)(i) and (a)(ii)
and, if so requested by the Replacement Bank, delivery to the Replacement Bank
of the appropriate Term Note executed by Borrower, the Replacement Bank shall
become a Bank hereunder and the Replaced Bank shall cease to constitute a Bank
hereunder, except with respect to indemnification provisions under this
Agreement (including, without limitation, Sections 1.10, 1.11, 2.4, 12.1 and
12.16), which shall survive as to such Replaced Bank.
1.14. Closing Fee.
-----------
On the Effective Date, Borrower shall pay to ▇▇▇▇▇▇ the fee specified
in that certain letter agreement dated March 12, 1998 (the "Commitment Letter").
SECTION 2. PREPAYMENTS; PAYMENTS; TAXES.
---------------------------------------
2.1. Voluntary Prepayments.
---------------------
Borrower shall have the right to prepay the Term Loan in whole or in
part at any time and from time to time on the following terms and conditions:
(a) Borrower shall give Agent prior to 12:00 Noon (New York time) at
its Notice Office (x) at least one (1) Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of its intent to prepay any
Base Rate Portion and (y) at least three (3) Business Days' prior written notice
(or telephonic notice promptly confirmed in writing) of its intent to prepay any
Eurodollar Portion or Fixed Rate Portion, the total amount of such prepayment
and the amount and Types of each Term Loan Portion to be prepaid and, in the
case of Eurodollar Portions, the specific Eurodollar Portions to be prepaid,
which notice Agent shall promptly transmit to each of the Banks;
(b) each prepayment shall be in an aggregate principal amount of at
least Two Hundred Fifty Thousand Dollars ($250,000); provided that if any
--------
partial prepayment of a Eurodollar Portion shall reduce the outstanding
Eurodollar Portion having the same Interest Period to an amount less than the
Minimum Borrowing Amount applicable thereto, then such Eurodollar Portion may
not be continued as a Eurodollar Portion and any election of an Interest Period
with respect thereto given by Borrower shall have no force or effect;
(c) prepayments of any Eurodollar Portion made pursuant to this Section
2.1 (other than pursuant to clause (e) below) may only be made on the last day
of an Interest Period applicable thereto;
(d) each prepayment in respect of any Term Loan Portion shall be
applied pro rata among the Bank in proportion to their Percentages; and
--------
-9-
(e) in the event of certain refusals by a Bank as provided in Section
12.12(b) to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks, Borrower may, upon five (5) Business Days' written notice to
Agent at its Notice Office (which notice Agent shall promptly transmit to each
of the Banks), repay all Term Loan Portions, together with accrued and unpaid
interest, and other amounts owing to such Bank.
2.2. Mandatory Repayments.
--------------------
(a) Borrower shall repay the Term Loan in quarterly installments (the
"Scheduled Installments") each equal to one-twentieth (1/20th) of the principal
balance of the Term Loan as of the expiration of the Disbursement Period (and
after giving effect to all Advances). The first Scheduled Installment will be
due on October 31, 1998 and a Scheduled Installment will be due every Quarterly
Payment Date thereafter until the Maturity Date. The remaining unpaid principal
balance of the Term Loan will be due on the Maturity Date. At the request of
Agent at any time after the Disbursement Period expires, Borrower will execute
an acceptance and acknowledgment of a schedule to be attached to each Term Note
setting forth the actual original principal amount thereof and the amount and
due date of each Scheduled Installment.
(b) In addition to any other mandatory repayments pursuant to this
Section 2.2, on each date on or after the Effective Date upon which Parent or
ALC or any of their Subsidiaries receives proceeds from any incurrence by ALC or
any of its Subsidiaries of Indebtedness for borrowed money (other than
Indebtedness for borrowed money permitted to be incurred under Section 9.5 of
the Credit Agreement), an amount equal to one hundred percent (100%) of the cash
proceeds of the respective incurrence of Indebtedness (net of underwriting or
placement discounts and commissions and other reasonable costs associated
therewith) shall be due and payable and shall be first applied as a repayment of
the Term Loan in the inverse order of maturity and the balance to any
outstanding Indebtedness under the Credit Agreement to the extent required
thereby.
(c) In addition to any other mandatory repayments pursuant to this
Section 2.2, on each date on or after the Effective Date upon which Parent or
ALC or any of its Subsidiaries receives proceeds from any sale of ALC's or any
of its Subsidiaries' capital stock or newly issued shares or assets (excluding
(i) sales of inventory in the ordinary course of business, (ii) sales of
equipment and related software to customers of ALC or any of its Subsidiaries in
the ordinary course of business pursuant to the terms of the respective wagering
systems equipment contracts or similar contracts to which such Person is a
party, and (iii) sales of assets in the ordinary course of business), an amount
equal to one hundred percent (100%) of the Net Sale Proceeds therefrom shall be
due and payable and shall be first applied as a repayment of the Term Loan in
the inverse order of maturity and the balance shall be applied to any
outstanding Indebtedness under the Credit Agreement to the extent required
thereby, provided that as long as no Default or Event of Default then exists, no
such mandatory repayment shall be required to the extent that Borrower has
delivered a certificate to Agent on or prior to such date stating that such
proceeds shall be reinvested by Borrower in the assets of ALC and its
Subsidiaries within nine months following the date of such sale of assets.
(d) In addition to any other mandatory repayments pursuant to this
Section 2.2, within ten (10) days following each date on or after the Effective
Date upon which Borrower
-10-
or ALC or any of its Subsidiaries receives any proceeds from any Recovery Event,
an amount equal to one hundred percent (100%) of the proceeds of such Recovery
Event (net of reasonable costs and any taxes incurred in connection with such
Recovery Event and any amounts required to be applied (and are applied) to the
repayment of any other Indebtedness secured by a prior perfected security
interest (to the extent permitted by this Agreement) in the property subject to
such Recovery Event) shall be due and payable and applied (1) if the Recovery
Event is with respect to the assets of ALC or its Subsidiaries, as a repayment
of the Term Loan in the inverse order of maturity with any balance as a
repayment of the Indebtedness then outstanding under the Credit Agreement to the
extent required thereby and (2) if the Recovery Event is with respect to assets
other than those of ALC or its Subsidiaries, as a repayment of the Indebtedness
then outstanding under the Credit Agreement to the extent required thereby with
any balance as a repayment of the Term Loan in inverse order of maturity,
provided that so long as no Default or Event of Default then exists, no such
--------
mandatory repayment shall be required to the extent that Borrower has delivered
a certificate to Agent on or prior to such date stating that such proceeds shall
be used to replace or restore any properties or assets in respect of which such
proceeds were paid within twelve months following the date of such Recovery
Event (which certificate shall set forth the estimates of the proceeds to be so
expended); and provided further, that (i) if the amount of such proceeds exceeds
-------- -------
Five Million Dollars ($5,000,000) (other than as a result of a Recovery Event
that has occurred with respect to property located at a racetrack or any other
wagering facility, including but not limited to, property located at any CLC
location, in which case such proceeds shall be applied as provided elsewhere in
this Section 2.2(d) without regard to the terms of this subclause (i)), then an
amount equal to the portion in excess of Five Million Dollars ($5,000,000) shall
be applied as provided in this Section 2.2(d) and (ii) if all or any portion of
such proceeds not required to be applied as provided in the immediately
preceding proviso are not so used within twelve months after the date of the
respective Recovery Event, then on the date which is the first anniversary of
the respective Recovery Event an amount equal to the remaining portion of such
proceeds not so used shall be applied as provided in this Section 2.2(d).
(e) In addition to any other mandatory repayments pursuant to this
Section 2.2, within one hundred (100) days after the end of each fiscal year of
ALC, an amount equal to fifty percent (50%) of the amount by which ALC Excess
Cash Flow for such fiscal year exceeds Five Hundred Thousand Dollars ($500,000)
shall be due and payable and applied as a repayment of the Term Loan in the
inverse order of maturity.
(f) With respect to each repayment of the Term Loan required by this
Section 2.2, Borrower may designate the Types and amount of each Term Loan
Portion which is to be repaid and, in the case of Eurodollar Portions, the
specific Eurodollar Portion to be repaid; provided that (i) repayments of
--------
Eurodollar Portion pursuant to this Section 2.2 may only be made on the last day
of an Interest Period applicable thereto unless all Eurodollar Portions with
Interest Periods ending on such date of required repayment and all Base Rate
Portions have been paid in full, and (ii) if any repayment of a Eurodollar
Portion made pursuant to a single Advance shall reduce the outstanding
Eurodollar Portion having the same Interest Period to an amount less than the
Minimum Borrowing Amount, such Eurodollar Portion shall be converted at the end
of the then current Interest Period into a Base Rate Portion. In the absence of
a designation by Borrower as described in the preceding sentence, Agent shall,
subject to the above, make such designation in its sole discretion.
-11-
(g) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, the then outstanding principal balance of the Term Loan shall be
repaid in full on the Maturity Date.
2.3. Method and Place of Payment.
---------------------------
Except as otherwise specifically provided herein, all payments under
this Agreement or any Term Note shall be made to Agent for the account of the
Bank or Banks entitled thereto not later than 12:00 Noon (New York time) on the
date when due and shall be made in Dollars in immediately available funds at the
Payment Office of Agent. Whenever any payment to be made, hereunder or under any
Term Note shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable at the applicable
rate during such extension.
2.4. Net Payments.
------------
(a) All payments made by Borrower hereunder or under any Term Note will
be made without setoff, counterclaim or other defense. Except as provided in
Section 2.4(b), all such payments will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding, except as
provided in the second succeeding sentence, any tax imposed on or measured by
the net income or profits of a Bank pursuant to the laws of the jurisdiction in
which it is organized or the jurisdiction in which the principal office or
applicable lending office of such Bank is located or any subdivision thereof or
therein) and all interest, penalties or similar liabilities with respect thereto
(all such non-excluded taxes, levies, imports, duties, fees, assessments or
other charges being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed, Borrower agrees to pay the full amount of such Taxes, and
such additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or under any Term Note, after withholding or deduction
for or on account of any Taxes, will not be less than the amount provided for
under this Agreement or under any Term Note. If any amounts are payable in
respect of Taxes pursuant to the preceding sentence, Borrower agrees to
reimburse each Bank, upon the written request of such Bank, for taxes imposed on
or measured by the net income or profits of such Bank pursuant to the laws of
the jurisdiction in which such Bank is organized or in which the principal
office or applicable lending office of such Bank is located or under the laws of
any political subdivision or taxing authority of any such jurisdiction in which
such Bank is organized or in which the principal office or applicable lending
office of such Bank is located and for any withholding of income or similar
taxes imposed by the United States of America as such Bank shall determine are
payable by, or withheld from, such Bank in respect of such amounts so paid to or
on behalf of such Bank pursuant to the preceding sentence and in respect of any
amounts paid to or on behalf of such Bank pursuant to this sentence. Borrower
will furnish to Agent within forty-five (45) days after the date the payment of
any Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by Borrower. Borrower agrees to indemnify and hold
harmless each Bank, and reimburse such Bank upon its written request, for the
amount of any Taxes so levied or imposed and paid by such Bank.
-12-
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to Borrower and
Agent on or prior to the Effective Date, or in the case of a Bank that is an
assignee or transferee of an interest under this Agreement pursuant to Section
1.13 or 12.4 (unless the respective Bank was already a Bank hereunder
immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Bank, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Term Note, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit E (any such certificate, a "Section
2.4(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Bank's entitlement to a complete exemption from United States withholding
tax with respect to interest payments to be made under this Agreement and under
any Term Note. In addition, each Bank agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, it will
deliver to Borrower and Agent two new accurate and complete original signed
copies of Internal Revenue Service Form 4224 or 1001, or Form W-8 and a Section
2.4(b)(ii) Certificate, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Bank to a
continued exemption from United States withholding tax with respect to payments
under this Agreement and any Term Note, or it shall immediately notify Borrower
and Agent of its inability to deliver any such Form or Certificate.
Notwithstanding anything to the contrary contained in Section 2.4(a), but
subject to Section 12.4(b) and the immediately succeeding sentence, (x) Borrower
shall be entitled, to the extent it is required to do so by law, to deduct or
withhold income or similar taxes imposed by the United States (or any political
subdivision or taxing authority thereof or therein) from interest, fees or other
amounts payable hereunder for the account of any Bank which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
U.S. Federal income tax purposes to the extent that such Bank has not provided
to Borrower U.S. Internal Revenue Service Forms (and, if applicable, a Section
2.4(b)(ii) Certificate) that establish a complete exemption from such deduction
or withholding and (y) Borrower shall not be obligated pursuant to Section
2.4(a) hereof to gross-up payments to be made to a Bank in respect of income or
similar taxes imposed by the United States if (I) such Bank has not provided to
Borrower the Internal Revenue Service Forms (and, if applicable, a Section
2.4(b)(ii) Certificate) required to be provided to Borrower pursuant to this
Section 2.4(b) or (II) in the case of a payment, other than interest, to a Bank
described in clause (ii) above, to the extent that such Forms do not establish a
complete exemption from withholding of such taxes. Notwithstanding anything to
the contrary contained in the preceding sentence or elsewhere in this Section
2.4 and except as set forth in Section 12.4(b), Borrower agrees to pay
additional amounts and to indemnify each Bank in the manner set forth in Section
2.4(a) (without regard to the identity of the jurisdiction requiring the
deduction or withholding) in respect of any amounts deducted or withheld by it
as described in the immediately preceding sentence as a result of any changes
after the Effective Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of income or similar Taxes.
-13-
2.5. No Reborrowing.
--------------
No amount of the Term Loan repaid or prepaid may be reborrowed.
SECTION 3. EXISTING CREDIT AGREEMENT; SECURITY.
----------------------------------------------
Parent, ▇▇▇▇▇▇, as Agent and as a Bank, and DLJ Capital Funding, Inc.
("DLJ"), as a Bank, are parties to a certain Credit Agreement dated as of July
18, 1997 (as amended by that certain Agreement dated December 31, 1997 among the
parties to the Credit Agreement and as further amended and supplemented from
time to time, the "Credit Agreement") pursuant to which ▇▇▇▇▇▇ and the other
Banks party thereto from time to time have agreed to make revolving loans to
Borrower. The term loan facility described in this Agreement is being extended
to Borrower in conjunction with the revolving credit facility described in the
Credit Agreement, notwithstanding that the Banks (as defined in the Credit
Agreement) may not be now or at one or more times in the future the same as
Banks (as defined herein). It is the intention of the parties that the
Obligations, as defined in the Credit Agreement, and the Obligations, as herein
defined, be secured by the Collateral on a pari passu basis, except as provided
in any intercreditor agreement among the parties to the Credit Agreement and
this Agreement.
SECTION 4. CONDITIONS PRECEDENT TO THE EFFECTIVE DATE.
-----------------------------------------------------
The occurrence of the Effective Date pursuant to Section 12.10 and the
obligation of each Bank to disburse its Percentage of the first Advance is
subject at the time of such Credit Event (except as hereinafter indicated) to
the satisfaction of each of the following conditions:
4.1. Execution of Agreement; Term Notes.
----------------------------------
On or prior to the Effective Date (i) this Agreement shall have been
executed and delivered in accordance with Section 12.10 and (ii) there shall
have been delivered to Agent for the account of each of the Banks the
appropriate Term Note executed by Borrower, in each case in the amount, maturity
and as otherwise provided herein.
4.2. Fees, etc.
---------
On the Effective Date, Borrower shall have paid to Agent and the Banks
all costs, fees and expenses (including, without limitation, reasonable legal
fees and expenses, UCC filing fees and title insurance later date charges)
payable to Agent and the Banks to the extent then due.
4.3. Opinions of Counsel.
-------------------
On the Effective Date, Agent shall have received (i) from Kramer,
Levin, Naftalis & ▇▇▇▇▇▇▇, special counsel to Borrower and the other Credit
Parties, an opinion addressed to Agent and each of the Banks and dated the
Effective Date covering the matters incident to the transactions contemplated
herein as Agent may reasonably request and (ii) from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.,
General Counsel of Parent and its Subsidiaries, an opinion
-14-
addressed to Agent and each of the Banks and dated the Effective Date covering
the matters incident to the transactions contemplated herein as Agent may
reasonably request.
4.4. Amendments to Credit Documents; Consents.
----------------------------------------
Borrower, as applicable, and all required parties to the Credit
Documents, as defined in the Credit Agreement, have executed such amendments to
the Credit Documents, and such intercreditor agreements, acknowledgments and
consents as Agent and the Required Banks may reasonably require to effectuate
the transactions described in this Agreement, including the granting and
perfection of the security interests in the Collateral to secure the Obligations
hereunder and under the Term Notes.
4.5. Proceedings; Agreements.
-----------------------
All corporate and legal proceedings and all instruments and agreements
in connection with the transactions contemplated by this Agreement and the other
documents contemplated hereby shall be reasonably satisfactory in form and
substance to Agent and the Required Banks, and Agent shall have received all
information and copies of all documents and papers, including records of
corporate proceedings, governmental approvals, good standing certificates and
bring-down telegrams or facsimiles, if any, which Agent reasonably may have
requested in connection therewith, such documents and papers where appropriate
to be certified by proper corporate or governmental authorities.
4.6. Subsidiaries Guaranty Reaffirmation.
-----------------------------------
On the Effective Date, each Subsidiary Guarantor shall have reaffirmed
its Subsidiaries Guaranty as to the transactions described herein and the
Subsidiaries Guaranty, shall be in full force and effect.
4.7. Connecticut Lottery Corporation.
-------------------------------
CLC and Agent shall have entered into the Forbearance Agreement.
4.8. Rescission of Collateral Release, Pledge of Intercompany Collateral.
-------------------------------------------------------------------
The Agreement dated as of January 6, 1998 among Borrower, Agent and DLJ
Capital Funding, Inc. releasing the Collateral owned by ALC shall have been
rescinded in writing.
4.9. Adverse Change, etc.
-------------------
(a) On the Effective Date, nothing shall have occurred (and the Banks
shall have become aware of no facts, conditions or other information not
previously known) which Agent or the Required Banks shall determine has, or
could reasonably be expected to have, a material adverse effect on the rights or
remedies of Agent or the Banks, or on the ability of any Credit Party to perform
their respective obligations to Agent and the Banks or which has, or could
reasonably be expected to have, a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of Parent and its Subsidiaries taken as a whole.
-15-
(b) On or prior to the Effective Date, all necessary governmental
(domestic and foreign) and third party approvals in connection with the
transactions contemplated by the Credit Documents and otherwise referred to
herein or therein shall have been obtained and remain in effect, and all
applicable waiting periods shall have expired without any action being taken by
any competent authority which restrains, prevents or imposes materially adverse
conditions upon the consummation of the transactions contemplated by this
Agreement. Additionally, there shall not exist any judgment, order, injunction
or other restraint issued or filed or a hearing seeking injunctive relief or
other restraint pending or notified prohibiting or imposing materially adverse
conditions upon the consummation of the transactions contemplated by this
Agreement.
4.10. Litigation.
----------
On the Effective Date, no litigation by any entity (private or
governmental) shall be pending or, to the knowledge of Borrower, threatened with
respect to this Agreement or any documentation executed in connection herewith
or therewith, or the transactions contemplated hereby, or with respect to any
material Indebtedness of Borrower or any of its Subsidiaries, or which Agent or
the Required Banks shall determine could reasonably be expected to have a
materially adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
4.11. Closing Certificate.
-------------------
On the Effective Date, Agent shall have received a certificate signed
by the Chairman of the Board, the President, any Vice President or the Treasurer
of Borrower stating that all representations and warranties contained in the
Credit Agreement and in this Agreement are true in all material respects and
that no Default or Event of Default as defined in this Agreement or the Credit
Agreement has occurred and is continuing.
SECTION 5. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS.
----------------------------------------------------
The occurrence of the Effective Date pursuant to Section 12.10 and the
obligation of each Bank to maintain and/or make Advances (including Advances
made on the Effective Date) is subject, at the time of each such Credit Event
(except as hereinafter indicated), to the satisfaction of the following
conditions:
5.1. No Default; Representations and Warranties.
------------------------------------------
At the time of each such Credit Event and also after giving effect
thereto (i) there shall exist no Default or Event of Default hereunder or
Default as defined in the Credit Agreement and (ii) all representations and
warranties contained herein, in the other Credit Documents and in the Credit
Agreement shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on the date
of the making of such Credit Event (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date).
-16-
5.2. Notice of Borrowing.
-------------------
Prior to the making of each Advance, Agent shall have received a Notice
of Borrowing required by Section 1.3(a). The occurrence of the Effective Date
and the acceptance of the proceeds or benefits of each Credit Event shall
constitute a representation and warranty by Borrower to Agent and each of the
Banks that all the conditions specified in Section 4 and in this Section 5 and
applicable to the Effective Date and such Credit Event exist as of that time.
All of the Term Notes, certificates, legal opinions and other documents and
papers referred to in Section 4 and in this Section 5, unless otherwise
specified, shall be delivered to Agent at the Notice Office for the account of
(and for delivery to) each of the Banks and, except for the Term Notes, in
sufficient counterparts for each of the Banks and shall be in form and substance
reasonably satisfactory to the Banks.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
-----------------------------------------
In order to induce the Banks to enter into this Agreement and to
maintain and/or make the Term Loan, as provided herein, Borrower makes each
representation and warranty set forth in Section 7 of the Credit Agreement and,
in addition, warrants and represents that the Lottery Agreement is in full force
and effect without default by either party which would give the other party the
right to terminate the Lottery Agreement, make any material set off against
payments or withhold performance, all of which representations and warranties
shall survive the execution and delivery of this Agreement and the Term Notes
and the Advances, with the occurrence of the Effective Date and each Credit
Event on or after the Effective Date being deemed to constitute a representation
and warranty that the matters specified in this Section 6 and in Section 7 of
the Credit Agreement are true and correct in all material respects on and as of
the Effective Date and on the date of each such Credit Event (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct in all
material respects only as of such specified date).
SECTION 7. AFFIRMATIVE COVENANTS.
--------------------------------
7.1. Use of Term Loan Proceeds.
-------------------------
Borrower covenants that the proceeds of the Term Loan will be used
solely for the purpose of (a) reimbursing Borrower for the costs and expenses
associated with this term loan facility and (b) manufacturing and installing
equipment and software for use in connection with the Lottery Agreement.
7.2. Continuing Covenants.
--------------------
Borrower hereby covenants and agrees that on and after the Effective
Date and until the Term Loan, together with interest, fees and all other
Obligations incurred hereunder,
-17-
are paid in full, Borrower will perform each of the covenants in effect as of
the Effective Date set forth in Section 8 of the Credit Agreement as and when
required by said Section 8 (whether or not the Credit Agreement is still in
effect or such covenant has been waived or amended by the Agent or the Banks (as
therein defined) under the Credit Agreement, unless such waiver or amendment has
been approved pursuant to Section 12.12 hereof), and in addition thereto will
furnish to each Bank:
(a) Officer's Certificates. At the time of the delivery of the annual
----------------------
financial statements provided for in Section 8.01(c)(ii) of the Credit
Agreement, a certificate (in the form of Exhibit C) of the chief financial
officer of Parent showing a calculation of ALC Excess Cash Flow, if any, and the
amount of any repayment due under Section 2.2(e).
(b) Notice of Default Under Lottery Agreement.
-----------------------------------------
Promptly, and in any event within three (3) Business Days after an
officer of Parent or ALC obtains knowledge thereof, notice of any default under
the Lottery Agreement which would give either party thereto a right as a result
of such default to terminate the Lottery Agreement or withhold payment or
services thereunder.
SECTION 8. NEGATIVE COVENANTS.
-----------------------------
Borrower hereby covenants and agrees that on and after the Effective
Date and until the Term Loan, together with interest, and all other Obligations
incurred hereunder, is paid in full; that it will observe all negative covenants
in effect as of the Effective Date set forth in Section 9 of the Credit
Agreement as and when required by said Section 9 (whether or not the Credit
Agreement is still in effect or such covenant has been waived or amended by the
Agent or the Banks (as therein defined) under the Credit Agreement, unless such
waiver or amendment has been approved pursuant to Section 12.12 hereof), and, in
addition thereto, ALC will not, without the consent of Agent, which consent will
not be unreasonably withheld or delayed, modify, terminate or assign the Lottery
Agreement.
SECTION 9. EVENTS OF DEFAULT.
----------------------------
Upon the occurrence of any of the following specified events (each an
"Event of Default"):
9.1. Payments.
--------
Borrower shall (i) default in the payment when due of any principal of
the Term Loan or any Term Note or (ii) default, and such default shall continue
unremedied for five (5) or more Business Days, in the payment when due of
interest on any Term Loan Portion or any Term Note, or any other amounts owing
hereunder or thereunder; or
9.2. Representations, etc.
--------------------
Any representation, warranty or statement made by any Credit Party
herein or in any other Credit Document or in the Credit Agreement or in any
certificate delivered
-18-
pursuant hereto or thereto shall prove to be untrue in any material respect on
the date as of which made or deemed made; or
9.3. Covenants.
---------
Borrower shall default in the due performance or observance of any
other term, covenant or agreement contained in this Agreement and such default
shall continue unremedied for a period of thirty (30) days after written notice
to Borrower by Agent or any Bank; or
9.4. Event of Default Under Credit Agreement.
---------------------------------------
An Event of Default as defined in the Credit Agreement occurs; or
9.5. Default Under Lottery Agreement.
-------------------------------
Any default under the Lottery Agreement occurs pursuant to which CLC
has given notice that the Lottery Agreement is or will be terminated by CLC and
such termination becomes effective or ALC or its successor or assignee is
replaced as a party thereto;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, Agent may (whether or not CLC has exercised its rights
under the Forbearance Agreement), and upon the written request of the Required
Banks, shall by written notice to Borrower, take any or all of the following
actions, without prejudice to the rights of Agent, any Bank or the holder of any
Term Note to enforce its claims against any Credit Party (provided that, if an
--------
Event of Default specified in Section 10.05 of the Credit Agreement shall occur,
the result which would occur upon the giving of written notice by Agent to
Borrower as specified in clauses (i) and (ii) below shall occur automatically
without the giving of any such notice): (i) declare the principal of and any
accrued interest in respect of the Term Loan and the Term Notes and all
Obligations owing hereunder and under the Term Notes to be, whereupon the same
shall become, forthwith due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by each Credit Party;
(ii) terminate any obligation to make Advances hereunder; and (iii) enforce,
subject to any intercreditor agreement, as Collateral Agent, any or all of the
liens and security interests created pursuant to the Security Documents.
SECTION 10. DEFINITIONS AND ACCOUNTING TERMS.
--------------------------------------------
10.1. Defined Terms.
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As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Additional Collateral" shall mean all property (whether real or
personal) in which security interests are granted (or have been purported to be
granted) (and continue to be in effect at the time of determination) pursuant to
Section 8.11 of the Credit Agreement.
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"Additional Security Documents" shall mean all mortgages, pledge
agreements, security agreements and other security documents entered into
pursuant to Section 8.11 of the Credit Agreement with respect to Additional
Collateral.
"Adjusted Certificate of Deposit Rate" shall mean, on any day, the sum
(rounded to the nearest 1/100 of 1%) of (1) the rate obtained by dividing (x)
the most recent weekly average dealer offering rate for negotiable certificates
of deposit with a three-month maturity in the secondary market as published in
the most recent Federal Reserve System publication entitled "Select Interest
Rates," published weekly on Form H.15 as of the date hereof, or if such
publication or a substitute containing the foregoing rate information shall not
be published by the Federal Reserve System for any week, the weekly average
offering rate determined by Agent on the basis of quotations for such
certificates received by it from three certificate of deposit dealers in New
York of recognized standing or, if such quotations are unavailable, then on the
basis of other sources reasonably selected by Agent, by (y) a percentage equal
to one hundred percent (100%) minus the stated maximum rate of all reserve
requirements as specified in Regulation D applicable on such day to a three-(3)
month certificate of deposit of a member bank of the Federal Reserve System in
excess of One Hundred Thousand Dollars ($100,000) (including, without
limitation, any marginal, emergency, supplemental, special or other reserves),
plus (2) the then daily net annual assessment rate as estimated by Agent for
determining the current annual assessment payable by Agent to the Federal
Deposit Insurance Corporation for insuring three-month certificates of deposit.
"Advance" shall mean, as the context requires: (a) an advance of a Term
Loan Portion by a Bank and (b) with respect to all Banks, the aggregate advance
of a Term Loan Portion, in each case pursuant to a Notice of Borrowing.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person; provided, however, in no event shall any Bank
-------- -------
or any affiliate thereof be considered an Affiliate of Borrower or any of its
Subsidiaries. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise.
"Agent" shall mean ▇▇▇▇▇▇ Financial, Inc., in its capacity as Agent for
the Banks hereunder, and shall include any successor to Agent appointed pursuant
to Section 11.9.
"Agreement" shall mean this Term Loan Agreement, as modified,
supplemented, amended, restated, extended, renewed or replaced from time to
time.
"ALC" shall have the meaning provided in the first paragraph of this
Agreement.
"ALC Excess Cash Flow" shall mean the amount calculated as illustrated
on Exhibit C.
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"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit D (appropriately
completed).
"Authorized Representative" of Borrower shall mean any of the
President, the Chief Financial Officer, the Treasurer or any Assistant Treasurer
of Borrower (or any other officer of Borrower which is designated in writing to
Agent by any of the foregoing officers of Borrower as being authorized to give
such notices under this Agreement) with Borrower, by its execution and delivery
of this Agreement, irrevocably appointing any of the foregoing officers of
Borrower as its Authorized Representative hereunder with respect to delivering
Notices of Borrowing, Notices of Conversion and similar notices.
"Bank" shall mean each financial institution listed on Schedule I, as
well as any Person which becomes a "Bank" hereunder pursuant to 12.4(b).
"Bank Default" shall mean the refusal (which has not been retracted) of
a Bank to make available its Percentage of any Advance, whether as a result of
any takeover of such Bank by any regulatory authority or agency or otherwise.
"Base Rate" at any time shall mean the higher of (i) 1/2 of 1% in
excess of the Adjusted Certificate of Deposit Rate and (ii) the Prime Lending
Rate.
"Base Rate Portion" shall mean any or, as the context requires, that
portion of the outstanding principal amount of the Term Loan designated or
deemed designated as such by Borrower at the time of the Advance thereof or
conversion thereto.
"Borrower" means, individually and collectively (as the context
requires), jointly and severally, Parent and ALC.
"Borrowing" shall mean the borrowing of one Type of Term Loan Portion
from all the Banks.
"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day except Saturday, Sunday and any day which shall be in
Chicago, Illinois or the State of Pennsylvania a legal holiday or a day on which
banking institutions are authorized or required by law or other government
action to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, a Eurodollar
Portion, any day which is a Business Day described in clause (i) above and which
is also a day for trading by and between banks in the New York Interbank
Eurodollar market.
"CLC" shall mean the Connecticut Lottery Corporation, a Connecticut
quasi-public agency.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
Section references to Code are to the Code, as in effect at the date of this
Agreement, and to any subsequent provision of the Code, amendatory thereof,
supplemental or substituted therefor.
"Collateral" shall mean all property (whether real or personal) with
respect to which any security interests have been granted (or purported to be
granted) pursuant to any Security Document.
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"Collateral Agent" shall mean Agent acting as collateral agent for the
Secured Creditors (as defined in the Security Documents) pursuant to the
Security Documents.
"Commitment Letter" shall have the meaning provided in Section 1.14.
"Consolidated Subsidiaries" shall mean, as to any Person, all
Subsidiaries of such Person which are consolidated with such Person for
financial reporting purposes in accordance with generally accepted accounting
principles.
"Credit Agreement" shall have the meaning provided in Section 3.
"Credit Documents" shall mean this Agreement, each Term Note, each
Security Document, the Subsidiaries Guaranty and, after the execution and
delivery thereof, each additional guaranty and Additional Security Document
executed pursuant to Section 8.11 of the Credit Agreement.
"Credit Event" shall mean (x) the occurrence of the Effective Date and
(y) the making of any Advance.
"Credit Party" shall mean Borrower and each Subsidiary Guarantor.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
Disbursement Period" shall mean the period ending on the earliest of:
(i) sixty (60) days after the Effective Date, (ii) the date on which the fifth
Advance is made and (iii) the date on which the total of all Advances equals
Twelve Million Dollars ($12,000,000).
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"Domestic Subsidiary" shall mean each Subsidiary of Borrower
incorporated or organized in the United States or any State or territory
thereof.
"Effective Date" shall have the meaning provided in Section 12.10.
"Eligible Transferee" shall mean and include: (i) a commercial bank
having total assets in excess of One Billion Dollars ($1,000,000,000) or (ii)
any other financial institution or other "accredited investor" (as defined in
Regulation D of the Securities Act), in each case approved by Borrower (which
approval shall not be unreasonably withheld or delayed).
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demand letters, directives, written
claims, liens, notices of noncompliance or violation, or proceedings relating in
any way to any Environmental Law or any permit issued, or any written approval
given, under any such Environmental Law (hereafter, "Claims"), including,
without limitation, (a) any and all Claims by governmental or
-22-
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (b)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment due
to the presence of Hazardous Materials.
"Environmental Law" shall mean any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy and rule of common
law now or hereafter in effect and in each case as amended, and any judicial
interpretation thereof, including any judicial or administrative order, consent
decree or judgment relating to the environment, public health or safety or
Hazardous Materials, including, without limitation: CERCLA; RCRA; the Federal
Water Pollution Control Act, 33 U.S.C, ss. 1251 et seq.; the Toxic Substances
-- ---
Control Act, 15 U.S.C, ss. 2601 et seq.; the Clean Air Act, 42 U.S.C, ss. 7401
-- ---
et seq.; the Safe Drinking Water Act, 42 U.S.C, ss. 3803 et seq.; the Oil
-- --- -- ---
Pollution Act of 1990, 33 U.S.C, ss. 2701 et seq.; the Emergency Planning and
-- ---
the Community Right-to-Know Act of 1986, 42 U.S.C. ss. 11001 et seq.; the
-- ---
Hazardous Material Transportation Act, 49 U.S.C. ss. 1801 et seq.; and the
-- ---
Occupational Safety and Health Act, 29 U.S.C. ss. 651 et seq. (to the extent it
-- ---
regulates occupational exposure to Hazardous Materials); and any state and local
or foreign counterparts or equivalents, in each case as amended from time to
time.
"Eurodollar Portion" shall mean each portion of the outstanding
principal amount of the Term Loan designated as such by Borrower at the time of
the Advance thereof or conversion thereto, a Eurodollar Portion shall be that
portion of the outstanding principal balance of the Term Loan bearing interest
by reference to the Eurodollar Rate for an Interest Period commencing on a given
date.
"Eurodollar Rate" shall mean (a) the offered quotation to first-class
banks in the New York interbank Eurodollar market by Chase Manhattan Bank for
Dollar deposits of amounts in immediately available funds comparable to the
outstanding principal amount of the Eurodollar Loan of Chase Manhattan Bank with
maturities comparable to the Interest Period applicable to such Eurodollar Loan
commencing two (2) Business Days thereafter as of 10:00 A.M. (New York time) on
the date which is two (2) Business Days prior to the commencement of such
Interest Period, divided (and rounded off to the nearest 1/16 of 1%) by (b) a
percentage equal to one hundred percent (100%) minus the then stated maximum
rate of all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves required by applicable law)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency funding or liabilities as defined in Regulation D (or any successor
category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 9.
"Federal Funds Rate" shall mean for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on
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such transactions received by Agent from three Federal Funds brokers of
recognized standing selected by Agent.
"Fixed Rate" shall mean the rate determined by reference to the
Commitment Letter upon Borrower's election to designate a Term Loan Portion as
the Fixed Rate Portion.
"Fixed Rate Breakage Fee" shall mean an amount equal to the present
value, for each successive month in the remaining term of the Fixed Rate
Portion, of (1) the yield as reported in the Federal Reserve statistical release
H.15 (519) under the caption "U.S. Government Securities/Treasury Constant
Maturities" (hereinafter "H.15 (519)") for a Treasury Note with a term equal to
that remaining on the Fixed Rate Portion (which will be obtained by
interpolating between the yield reported on the H.15 (519) for specific whole
years) on the date the Fixed Rate Portion became effective less (2) the yield as
reported on the date of such prepayment in the H.15 (519) for a Treasury Note
with a term equal to that remaining on the Fixed Rate Portion (which will be
obtained by interpolating between the yield reported on the H.15 (519) for
specific whole years) on the date of such prepayment, multiplied by (a) the
-------------
outstanding amount of the Fixed Rate Portion at the time of prepayment for
purposes of calculating such amount for the month during which such prepayment
occurs and by (b) the principal balance that would have been outstanding at the
beginning of each successive month in the remaining term of the Fixed Rate
Portion had the amortization schedule set forth for such Fixed Rate Portion been
adhered to; provided, that the rate determined in (2) above will be used as the
--------
discount rate in computing such present value.
"Fixed Rate Portion" shall mean: (a) with respect to a Bank, the Term
Loan Portion of such Bank designated by Borrower to bear interest at the Fixed
Rate and (b) with respect to the Term Loan as a whole, from time to time, that
portion of the outstanding principal balance of the Term Loan designated by
Borrower to bear interest at the Fixed Rate.
"Forbearance Agreement" means an agreement among Agent, CLC and
Borrower substantially in the form of Exhibit F.
"Foreign Subsidiary" shall mean any Subsidiary of Borrower that is not
a Domestic Subsidiary.
"Former Bank" shall have the meaning provided in Section 12.4(c).
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products, radioactive materials, friable asbestos, urea formaldehyde foam
insulation, transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas; (b) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous waste," "hazardous materials," "extremely
hazardous substances," "restricted hazardous waste," "toxic substances," "toxic
pollutants," "contaminants," or "pollutants," or words of similar import, under
any applicable Environmental Law; and (c) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
governmental authority under Environmental Laws.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the maximum amount
-24-
available to be drawn under all letters of credit issued for the account of such
Person and all unpaid drawings in respect of such letters of credit, (iii) all
Indebtedness of the types described in clause (i), (ii), (iv), (v), (vi) or
(vii) of this definition secured by any lien on any property owned by such
Person, whether or not such Indebtedness has been assumed by such Person (to the
extent of the value of the respective property), (iv) the aggregate amount
required to be capitalized under leases under which such Person is the lessee,
(v) all obligations of such person to pay a specified purchase price for goods
or services, whether or not delivered or accepted, i.e., take-or-pay and similar
---
obligations, (vi) all contingent obligations of such Person (other than
endorsements of instruments for deposit or collection in the ordinary course of
business) and (vii) all obligations under any Interest rate protection agreement
or any other hedging agreement or under any similar type of agreement.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Portion, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Portion.
"Interest Period" shall have the meaning provided in Section 1.9.
"Leaseholds" of any Person means all the right, title and interest of
such Person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
"Lottery Agreement" shall mean that certain Memorandum of Understanding
dated December 5, 1997 (including the exhibits thereto) between ALC and CLC.
"Maturity Date" shall mean the earliest of: (a) February 15, 2001, (b)
the date on which the Term Loan is declared to be due under Section 9, and (c)
the date on which the Credit Agreement terminates by reason of all Revolving
Loans and Letter of Credit Outstanding having been paid (or cash collateralized
) and the Total Revolving Loan Commitment having been permanently reduced to
zero, unless, at the election of the Required Banks and on such terms (such as
continued compliance with the affirmative and negative covenants set forth in
the Credit Agreement) as the Required Banks shall impose, the Maturity Date is
extended to a date no later than February 15, 2001.
"Minimum Borrowing Amount" shall mean $500,000.
"Mortgage" shall mean each of the mortgages executed and delivered
pursuant to Section 8.11 of the Credit Agreement.
"Net Sale Proceeds" shall mean for any sale of assets, the gross cash
proceeds (including any cash received by-way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received)
received from any sale of assets, net of reasonable transaction costs and
payments of unassumed liabilities relating to the assets sold at the time of, or
within thirty (30) days after, the date of such asset sale, the amount of such
gross cash proceeds required to be used to repay any Indebtedness (other than
Indebtedness of the Banks pursuant to this Agreement) which is secured by the
respective assets which were sold, and the estimated marginal increase in income
taxes which will be payable by Borrower's consolidated group with respect to the
fiscal year in which the asset sale occurs as a result of such asset sale.
-25-
"Non-Defaulting Bank" shall mean and include each Bank other than a
Defaulting Bank.
"Notice of Borrowing" shall have the meaning provided in Section
1.3(a).
"Notice of Conversion" shall have the meaning provided in Section 1.6.
"Notice Office" shall mean the office of Agent located at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Finance Group,
Facsimile No.: 312/441-7367, or such other office as Agent may hereafter
designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to Agent, the Collateral
Agent or any Bank pursuant to the terms of this Agreement or any other Credit
Document.
"Parent" shall have the meaning provided in the first paragraph of this
Agreement.
"Payment Office" shall mean the office of Agent located at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Finance Group,
Facsimile No.: 312/441-7367, or such other office as Agent may hereafter
designate in writing as such to the other parties hereto.
"Percentage" shall mean the percentage of the Term Loan a Bank is
obligated to advance and the percentage of the outstanding principal balance of
the Term Loan owed to such Bank (as long as it is a Non-Defaulting Bank).
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Pledge Agreement" shall mean the Pledge Agreement, dated as of July
28, 1997, executed and delivered by Borrower and each Subsidiary Guarantor, as
the same may be amended, modified or supplemented from time to time.
"Prime Lending Rate" shall mean the rate which Chase Manhattan Bank
announces from time to time as its prime lending rate, the Prime Lending Rate to
change when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer.
"Quarterly Payment Date" shall mean the last Business Day of each
January, April, July, and October.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by Borrower or any of its
Subsidiaries of any cash insurance proceeds or condemnation award payable (i) by
reason of theft, loss, physical destruction or damage or any other similar event
with respect to any property or
-26-
assets of Borrower or any of its Subsidiaries and (ii) under any policy of
insurance required to be maintained by Borrower under the Credit Agreement.
"Register" shall have the meaning provided in Section 12.16.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Required Banks" shall mean at any time one or more Banks holding at
least fifty-one percent (51%) of the Percentages held by the Banks, provided
--------
that at any time when two or three Banks are party to this Agreement, Required
Banks shall mean at least two Banks.
"Scheduled Installments" shall have the meaning provided in Section
2.2(a).
"Section 2.4(b)(ii) Certificate" shall have the meaning provided in
Section 2.4(b).
"Security Agreement" shall mean the Security Agreement, dated as of
July 28, 1997, executed and delivered by each Subsidiary Guarantor, as the same
may be amended, modified or supplemented from time to time.
"Security Document" shall mean and include the Pledge Agreement, the
Security Agreement, each Mortgage and, after the execution and delivery thereof,
each Additional Security Document.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than fifty percent (50%) of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person and/or one
or more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a fifty percent (50%) equity interest at the time.
Notwithstanding the above, the definition of "Subsidiary" shall not include (i)
SJC Video Corporation, but only so long as the majority of the Board of
Directors of such Person are not nominees of the Borrower or any of its
Subsidiaries and (ii) any Person designated by the Board of Directors not to be
a Subsidiary for purposes of this Agreement or any other Credit Document;
provided that (w) at the time of such designation no Event of Default exists,
(x) at the time of such designation the Company certifies to the Agent that the
aggregate fair market value of the net assets of all such Persons so designated
(determined at the time of designation) does not exceed $5,000,000, (y) any such
Person so designated shall not own any equity securities of, or own or hold any
Lien on any property of, the Borrower or any other Subsidiary of the Borrower
that has not been so designated, and (z) each Person to be so designated and
each of
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its Subsidiaries has not at the time of such designation, and will not
thereafter, create, incur, issue, assume, guarantee or otherwise become directly
or indirectly liable with respect to any Indebtedness pursuant to which the
lender has recourse to any of the assets of the Borrower or any Subsidiary of
the Borrower not so designated.
"Subsidiaries Guaranty" shall mean the Subsidiary Guaranty, dated as of
July 28, 1997, executed and delivered by the Subsidiary Guarantors, as the same
may be amended, modified or supplemented from time to time.
"Subsidiary Guarantor" shall mean each Subsidiary of Borrower which is
party to Subsidiaries Guaranty.
"Taxes" shall have the meaning provided in Section 2.4(a).
"Term Loan" shall have the meaning provided in Section 1.1.
"Term Loan Portion" shall mean: (a) with respect to a Bank, the
outstanding principal balance of the Term Loan owed to such Bank from time to
time and (b) with respect to the various Types, that portion of the outstanding
principal balance of the Term Loan of that Type.
"Term Note" shall have the meaning provided in Section 1.5.
"Type" shall mean the type of Term Loan Portion determined with regard
to the interest option applicable thereto, i.e., the Base Rate Portion, a
Eurodollar Portion or the Fixed Rate Portion.
"United States" and "U.S." shall each mean the United States of
America.
"Withdrawal Period" shall have the meaning provided in Section 12.4(d).
SECTION 11. AGENT.
-----------------
11.1. Appointment.
-----------
The Banks hereby designate ▇▇▇▇▇▇ as Agent (for purposes of this
Section 11, the term "Agent" shall include ▇▇▇▇▇▇ in its capacity as Collateral
Agent pursuant to the Security Documents) to act as specified herein and in the
other Credit Documents. Each Bank hereby irrevocably authorizes, and each holder
of a Term Note by the acceptance of such Term Note shall be deemed irrevocably
to authorize, Agent to take such action on its behalf under the provisions of
this Agreement, the other Credit Documents and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. Agent may perform any of its duties hereunder by
or through its respective officers, directors, agents, employees or affiliates.
Each Bank acknowledges that ▇▇▇▇▇▇ is Agent under the Credit Agreement and the
Collateral Agent under the Security Documents and that at all times either the
Banks party to this Agreement and the Banks (as defined in the Credit Agreement)
may not be the same or the Percentage of a Bank under this Agreement may not be
the same as the Percentage of such Bank under the Credit Agreement (each as
defined in the Credit
-28-
Agreement). Nonetheless, each Bank agrees that ▇▇▇▇▇▇, as Collateral Agent, is
authorized to act on behalf of all Banks (defined herein and in the Credit
Agreement) subject and pursuant to any intercreditor agreement in effect from
time to time.
11.2. Nature of Duties.
----------------
Agent shall not have any duties or responsibilities except those
expressly set forth in this Agreement and in the other Credit Documents. Neither
Agent nor any of its respective officers, directors, agents, employees or
affiliates shall be liable for any action taken or omitted by it or them
hereunder or under any other Credit Document or in connection herewith or
therewith, unless caused by its or their gross negligence or willful misconduct.
The duties of Agent shall be mechanical and administrative in nature; Agent
shall not have by reason of this Agreement or any other Credit Document a
fiduciary relationship in respect of any Bank or the holder of any Term Note;
and nothing in this Agreement or any other Credit Document, expressed or
implied, is intended to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement or any other Credit Document except as
expressly set forth herein or therein.
11.3. Lack of Reliance on Agent.
-------------------------
Independently and without reliance upon Agent, each Bank and the holder
of each Term Note, to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of Borrower and its Subsidiaries in connection with the
making of Advances and the taking or not taking of any action in connection
herewith and (ii) its own appraisal of the creditworthiness of Borrower or any
of its Subsidiaries and, except as expressly provided in this Agreement, Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to provide any Bank or the holder of any Term Note with any credit or
other information with respect thereto, whether coming into its possession
before the making of the Advances or at any time or times thereafter. Agent
shall not be responsible to any Bank or the holder of any Term Note for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of this Agreement or any
other Credit Document or the financial condition of Borrower or any of its
Subsidiaries or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Credit Document, or the financial condition of Borrower
or any of its Subsidiaries or the existence or possible existence of any Default
or Event of Default.
11.4. Certain Rights of Agent.
-----------------------
If Agent shall request instructions from the Required Banks with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Credit Document, Agent shall be entitled to refrain from
such act or taking such action unless and until Agent shall have received
instructions from the Required Banks; and Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the foregoing, no Bank or
the holder of any Term Note shall have any right of action whatsoever against
Agent as a result of Agent acting, or refraining from acting hereunder or under
any other Credit Document in accordance with the instructions of the Required
Banks.
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--------------------------------------------------------------------------------
11.5. Reliance.
--------
Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram, radiogram, order or other
document or telephone message signed, sent or made by any Person that Agent
believed to be the proper Person, and, with respect to all legal matters
pertaining to this Agreement and any other Credit Document and its duties
hereunder and thereunder, upon advice of counsel selected by Agent.
11.6. Indemnification.
---------------
To the extent Agent is not reimbursed and indemnified by Borrower, the
Banks will reimburse and indemnify Agent, in proportion to their respective
Percentages, for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, costs, expenses or disbursements
of whatsoever kind or nature which may be imposed on, asserted against or
incurred by Agent in performing its respective duties hereunder or under any
other Credit Document, in any way relating to or arising out of this Agreement
or any other Credit Document; provided that no Bank shall be liable for any
--------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
negligence or willful misconduct.
11.7. Agent in its Individual Capacity.
--------------------------------
With respect to its obligation to make Advances, Agent shall have the
rights and powers specified herein for a "Bank" and may exercise the same rights
and powers as though it were not performing the duties specified herein; and the
term "Banks," "Required Banks," "holders of Term Notes" or any similar terms
shall, unless the context clearly otherwise indicates, include Agent in its
individual capacity. Agent may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with any Credit
Party or any Affiliate of any Credit Party as if they were not performing the
duties specified herein, and may accept fees and other consideration from
Borrower or any other Credit Party for services in connection with this
Agreement and otherwise without having to account for the same to the Banks.
11.8. Holders.
-------
Agent shall deem and treat the payee of a Term Note as the owner
thereof for all purposes hereof unless and until a written notice of the
assignment, transfer or endorsement thereof, as the case may be, shall have been
filed with Agent. Any request, authority or consent of any Person who, at the
time of making such request or giving such authority or consent, is the holder
of any Term Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or endorsee, as the case may be, of such Term Note or of
any Term Note or Term Notes issued in exchange therefor.
11.9. Resignation by Agent.
--------------------
(a) Agent may resign from the performance of all its functions and
duties hereunder and/or under the other Credit Documents at any time by giving
fifteen (15) Business
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Days' prior written notice to Borrower and the Banks. Such resignation shall
take effect upon the appointment of a successor Agent pursuant to clauses (b)
and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Required Banks shall
appoint a successor Agent hereunder or thereunder who shall be a commercial bank
or trust company reasonably acceptable to Borrower.
(c) If a successor Agent shall not have been so appointed within such
fifteen (15) Business Day period, Agent, with the consent of Borrower (which
consent shall not be unreasonably withheld), shall then appoint a commercial
bank or trust company with capital and surplus of not less than Five Hundred
Million Dollars ($500,000,000) as successor Agent who shall serve as Agent
hereunder or thereunder until such time, if any, as the Required Banks appoint a
successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b) or
(c) above by the twentieth (20th) Business Day after the date such notice of
resignation was given by Agent, Agent's resignation shall become effective and
the Banks shall thereafter perform all the duties of Agent hereunder and/or
under any other Credit Document until such time, if any, as the Required Banks
appoint a successor Agent as provided above.
SECTION 12. MISCELLANEOUS.
-------------------------
12.1. Payment of Expenses, etc.
------------------------
Borrower shall: (i) whether or not the transactions herein contemplated
are consummated, pay all out-of-pocket costs and expenses of Agent (including,
without limitation, the reasonable fees and disbursements of Goldberg, Kohn,
Bell, Black, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd. and local counsel) in connection with the
preparation, execution and delivery of this Agreement and the documents and
instruments referred to herein and therein and any amendment, waiver or consent
relating hereto or thereto, of Agent and in connection with its syndication
efforts with respect to this Agreement and of Agent and, following and during
the continuation of an Event of Default, each of the Banks in connection with
the enforcement of this Agreement and the other Credit Documents and the
documents and instruments referred to herein and therein (including, without
limitation, the reasonable fees and disbursements of counsel for Agent and,
following and during the continuation of an Event of Default, for each of the
Banks); (ii) pay and hold each of the Banks harmless from and against any and
all present and future stamp, excise and other similar taxes with respect to the
foregoing matters and save each of the Banks harmless from and against any and
all liabilities with respect to or resulting from any delay or omission (other
than to the extent attributable to such Bank) to pay such taxes; (iii) indemnify
Agent and each Bank, and each of their respective officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all liabilities, obligations (including removal or remedial
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actions), losses, damages, penalties, claims, actions, judgments, suits, costs,
expenses and disbursements (including reasonable attorneys' and consultants'
fees and disbursements) incurred by, imposed on or assessed against any of them
as a result of, or arising out of, or in any way related to, or by reason of,
(a) any investigation, litigation or other proceeding (whether or not Agent or
any Bank is a party thereto) related to the entering into and/or performance of
this Agreement or any other document or the proceeds of the Term Loan or the
consummation of any transactions contemplated herein or in any other Credit
Document or the exercise of any of their rights or remedies provided herein or
in the other Credit Documents, or (b) the actual or alleged presence of
Hazardous Materials in the air, surface water or groundwater or on the surface
or subsurface of any Real Property owned or at any time operated by Borrower or
any of its Subsidiaries, the generation, storage, transportation, handling or
disposal of Hazardous Materials at any location, whether or not owned or
operated by Borrower or any of its Subsidiaries, the non-compliance of any Real
Property with foreign, federal, state and local laws, regulations, and
ordinances (including applicable permits thereunder) applicable to any Real
Property, or any Environmental Claim asserted against Borrower, any of its
Subsidiaries or any Real Property owned or at any time operated by Borrower or
any of its Subsidiaries, including, in each case, without limitation, the
reasonable fees and disbursements of counsel and other consultants incurred in
connection with any such investigation, litigation or, other proceeding; and
(iv) pay all fees and expenses (including costs of investigation and reasonable
legal fees and expenses) incurred by any Bank in connection with any
qualification (or exemption or waiver therefrom) of any Bank under, or
compliance with, the gaming regulations of any jurisdiction to the extent that
any such event arises in connection with this Agreement (but excluding any
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified). To the extent that the undertaking to indemnify, pay or hold
harmless Agent or any Bank set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, Borrower
shall make the maximum contribution to the payment and satisfaction of each of
the indemnified liabilities which is permissible under applicable law.
12.2. Right of Setoff.
---------------
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Bank is hereby authorized at any time or
from time to time, without presentment, demand, protest or other notice of any
kind to Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special) and any other Indebtedness at any time held or owing by such Bank
(including, without limitation, by branches and agencies of such Bank wherever
located) to or for the credit or the account of Borrower or any Subsidiary
Guarantor against and on account of the Obligations and liabilities of Borrower
or such Subsidiary Guarantor to such Bank under this Agreement or under any of
the other Credit Documents, including, without limitation, all interests in
Obligations purchased by such Bank pursuant to Section 12.6(b), and all other
claims of any nature or description arising out of or connected with this
Agreement or any other Credit Document, irrespective of whether or not such Bank
shall have made any demand hereunder and although said Obligations, liabilities
or claims, or any of them, shall be contingent or unmatured.
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12.3. Notices.
-------
Except as otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telex, telecopier or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered: if to Borrower, at Parent's address
specified opposite its signature below; if to any Bank, at its address specified
on Schedule I or on the applicable assignment and assumption agreement; and if
to Agent, at its Notice Office; or, as to any Credit Party or Agent, at such
other address as shall be designated by such party in a written notice to the
other parties hereto and, as to each Bank, at such other address as shall be
designated by such Bank in a written notice to Borrower and Agent. All such
notices and communications shall, when mailed, telegraphed, telexed, telecopied,
or cabled or sent by overnight courier, be effective when deposited in the
mails, delivered to the telegraph company, cable company or overnight courier,
as the case may be, or sent by telex or telecopier, except that notices and
communications to Agent and Borrower shall not be effective until received by
Agent or Borrower, as the case may be.
12.4. Benefit of Agreement.
--------------------
(a) This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto; provided, however, Borrower may not assign or transfer any of its
-------- -------
rights, obligations or interest hereunder or under any other Credit Document
without the prior written consent of the Banks and, provided further, that,
-------- -------
although any Bank may transfer, assign or grant participations in its rights
hereunder, such Bank shall remain a "Bank" for all purposes hereunder (and may
not transfer or assign all or any portion of its obligations hereunder except as
provided in Section 12.4(b)) and the transferee, assignee or participant, as the
case may be, shall not constitute a "Bank" hereunder and, provided further, that
-------- -------
no Bank shall transfer or grant any participation under which the participant
shall have rights to approve any amendment to or waiver of this Agreement or any
other Credit Document except to the extent such amendment or waiver would (i)
extend the final scheduled maturity of the Term Loan, in which such participant
is participating, or reduce the rate or extend the time of payment of interest
thereon (except in connection with a waiver of applicability of any post-default
increase in interest rates) or reduce the principal amount thereof, or increase
the amount of the participant's participation over the amount thereof then in
effect (it being understood that a waiver of any Default or Event of Default
shall not constitute a change in the terms of such participation, and that an
increase in the Term Loan shall be permitted without the consent of any
participant if the participant's participation is not increased as a result
thereof), (ii) consent to the assignment or transfer by Borrower of any of its
rights and obligations under this Agreement or (iii) release all or
substantially all of the Collateral under all of the Security Documents (except
as expressly provided in the Credit Documents) supporting the Term Loan
hereunder. In the case of any such participation, the participant shall not have
any rights under this Agreement or any of the other Credit Documents (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by Borrower hereunder
shall be determined as if such Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together with
one or more other Banks) may (x) assign all or a portion of its obligation to
make Advances to its parent company and/or any affiliate of such Bank which is
at least fifty percent (50%) owned by
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such Bank or its parent company or to one or more Banks or (y) assign all, or if
less than all, a portion equal to at least Five Million Dollars ($5,000,000) in
the aggregate for the assigning Bank or assigning Banks, of such Bank's or
Banks' obligation to make Advances and such Bank's or Banks' Term Loan Portion
to one or more Eligible Transferees, each of which assignees shall become a
party to this Agreement as a Bank by execution of an Assignment and Assumption
Agreement, provided, that: (i) at such time Schedule I shall be deemed modified
to reflect the Percentages of such new Bank and of the existing Banks; (ii) upon
surrender of the old Term Notes, new Term Notes will be issued, at Borrower's
expense, to such new Bank and to the assigning Bank, such new Term Notes to be
in conformity with the requirements of Section 1.5 (with appropriate
modifications) to the extent needed to reflect the revised Percentages; (iii)
the consent of Agent shall be required in connection with any such assignment
(which consent shall not be unreasonably withheld); and (iv) Agent shall receive
at the time of each such assignment, from the assigning or assignee Bank, the
payment of a non-refundable assignment fee of Two Thousand Five Hundred Dollars
($2,500); and, provided further, that such transfer or assignment will not be
-------- -------
effective until recorded by, Agent on the Register pursuant to Section 12.16
hereof. To the extent of any assignment pursuant to this Section 12.4(b), the
assigning Bank shall be relieved of its obligations hereunder with respect to
its assigned Percentage. At the time of each assignment pursuant to this Section
12.4(b) to a Person which is not already a Bank hereunder and which is not a
United States person (as such term is defined in Section 7701(a)(30) of the
Code) for Federal income tax purposes, the respective assignee Bank shall
provide to Borrower and Agent the appropriate Internal Revenue Service Forms
(and, if applicable, a Section 2.4(b)(ii) Certificate) described in Section
2.4(b) except to the extent that the assigning Bank was not, at the time of such
assignment, entitled to such exemption. To the extent that an assignment of all
or any portion of a Bank's Percentage pursuant to Section 1.13 or this Section
12.4(b) would, at the time of such assignment, result in increased costs under
Section 1.10 or 2.4 from those being charged by the respective assigning Bank
prior to such assignment, then Borrower shall not be obligated to pay such
increased costs (although Borrower shall be obligated to pay any other increased
costs of the type described above resulting from changes after the date of the
respective assignment).
(c) If the Nevada gaming authorities shall determine that any Bank does
not meet the "Suitability Standards" under the Nevada gaming regulations or any
other gaming authority with jurisdiction over the business of Borrower and its
Subsidiaries shall determine that any Bank does not meet its suitability
standards (in any such case, a "Former Bank"), Borrower shall have the right
(but not the duty) to designate an Eligible Transferee (in each case, a
"Substitute Bank," which may be any Bank or Banks that agree to become a
Substitute Bank) reasonably acceptable to Agent and each Bank that has agreed to
assume the rights and obligations of the Former Bank under this Agreement
pursuant to an Assignment and Assumption Agreement, which assignment and
assumption shall be required to comply with, and shall become effective in
accordance with, the provisions of Section 12.4(b), provided that the purchase
--------
price to be paid by the Substitute Bank to Agent for the account of the Former
Bank for such assignment and assumption shall equal the unpaid principal amount
of the Term Note held by the Former Bank plus accrued interest thereon, and,
provided further, Borrower shall pay all obligations owing to the Former Bank
-------- -------
under the Credit Documents (including all obligations, if any, owing pursuant to
Section 1.11, but excluding those amounts in respect of which the purchase price
is being paid as provided above). Each Bank agrees that if it becomes a Former
Bank, upon payment to it of all such amounts, if any, owing to it under the
Credit Documents, it
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will execute and deliver an Assignment and Assumption Agreement, upon payment of
such purchase price.
(d) Notwithstanding the provisions of subsection (c) of this Section
12.4, if any Bank becomes a Former Bank, and if Borrower fails to find a
Substitute Bank pursuant to subsection (c) of this Section 12.4 within any time
period specified by the applicable gaming authorities for the withdrawal of a
Former Bank (the "Withdrawal Period"), Borrower shall, immediately (i) prepay in
full the outstanding principal amount of the Term Note held by such Former Bank,
together with accrued interest thereon to the earlier of (x) the date of payment
or (y) the last day of any Withdrawal Period.
(e) Nothing in this Agreement shall prevent or prohibit any Bank from
pledging its Term Loan Portions and Term Note hereunder to a Federal Reserve
Bank in support of borrowings made by such Bank from such Federal Reserve Bank.
12.5. No Waiver; Remedies Cumulative.
------------------------------
No failure or delay on the part of Agent or any Bank or any holder of
any Term Note in exercising any right, power or privilege hereunder or under any
other Credit Document and no course of dealing between Borrower or any other
Credit Party and Agent or any Bank or the holder of any Term Note shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or under any other Credit Document preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights, powers and remedies herein or in
any other Credit Document expressly provided are cumulative and not exclusive of
any rights, powers or remedies which Agent or any Bank or the holder of any Term
Note would otherwise have. No notice to or demand on any Credit Party in any
case shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of Agent or
any Bank or the holder of any Term Note to any other or further action in any
circumstances without notice or demand.
12.6. Payments Pro Rata.
-----------------
(a) Except as otherwise provided in this Agreement, Agent agrees that
promptly after its receipt of each payment from or on behalf of Borrower in
respect of any Obligations hereunder (other than Obligations payable solely to
Agent), it shall distribute such payment to the Banks (other than any Bank that
has consented in writing to waive its Percentage of any such payment) pro rata
--- ----
based upon their respective Percentages, if any, of the Obligations with respect
to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or interest
on, the Term Loan, of a sum which with respect to the related sum or sums
received by other Banks is in a greater proportion than the total of such
Obligation then owed and due to such Bank bears to the total of such Obligation
then owed and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash without recourse
or warranty from the other Banks an interest in the Obligations of the
respective
-35-
Credit Party to such Banks in such amount as shall result in a
proportional participation by all the Banks in such amount; provided that if all
--------
or any portion of such excess amount is thereafter recovered from such Bank,
such purchase shall be rescinded and the purchase price restored to the extent
of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 12.6(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
12.7. Calculations; Computations.
--------------------------
(a) The financial statements to be furnished to the Banks pursuant
hereto shall be made and prepared in accordance with generally accepted
accounting principles in the United States (or the equivalent thereof in any
country in which a Foreign Subsidiary is doing business, as applicable)
consistently applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by Borrower to the Banks).
(b) All computations of interest hereunder shall be made on the basis
of a year of three hundred sixty (360) days for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable.
(c) All determinations of any amount of Indebtedness and/or any other
amount denominated in a currency other than Dollars shall be made by converting
same into Dollars at the "official" exchange rate, if applicable, or the spot
exchange rate for the currency in question in effect at the time of such
determination.
12.8. Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial.
----------------------------------------------------------------------
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE
PROVIDED IN CERTAIN OF THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF ILLINOIS. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN
THE COURTS OF THE STATE OF ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OF ILLINOIS, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER
HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. BORROWER HEREBY
IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM, WITH
OFFICES AT ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, AS ITS DESIGNEE, APPOINTEE
AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN
RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES
AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY
REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS
SUCH, BORROWER AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW
YORK CITY ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION
-36-
SATISFACTORY TO AGENT UNDER THIS AGREEMENT. BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS SET FORTH OPPOSITE
ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER
SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF AGENT UNDER THIS
AGREEMENT, ANY BANK OR THE HOLDER OF ANY TERM NOTE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION.
(b) BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
(c) BORROWER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
12.9. Counterparts.
------------
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with Borrower and Agent.
12.10. Effectiveness.
-------------
This Agreement shall become effective on the date (the "Effective
Date") on which (i) each of Borrower, Agent and the Banks shall have signed a
counterpart hereof (whether the same or different counterparts) and shall have
delivered the same to Agent at its Notice Office or, in the case of the Banks,
shall have given to Agent telephonic (confirmed in writing), written or telex
notice (actually received) at such office that the same has been signed and
mailed to it and (ii) all conditions contained in Sections 4 and 5 are met to
the satisfaction of Agent and the Banks. Unless Agent has received actual notice
from any Bank that the condition described in clause (ii) of the preceding
sentence has not been met to its satisfaction, upon the satisfaction of the
conditions described in clause (i) of the immediately preceding sentence, the
Effective Date shall be deemed to have occurred, regardless of any subsequent
determination that one or more of the conditions thereto had not been met
(although the occurrence of the Effective Date shall not release Borrower from
any liability or prevent the existence of an Event of Default based upon failure
to satisfy one or more of the
-37-
applicable conditions contained in Sections 4 and 5). Agent shall give Borrower
and each Bank written notice of the occurrence of the Effective Date.
12.11. Headings Descriptive.
--------------------
The headings of the several sections and subsections of this Agreement
are inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
12.12. Amendment or Waiver, etc.
------------------------
(a) Neither this Agreement nor any other Credit Document nor any terms
hereof or thereof may be changed, waived, discharged or terminated unless such
change, waiver, discharge or termination is in writing signed by the respective
Credit Parties party thereto and the Required Banks; provided, that no such
--------
change, waiver, discharge or termination shall, without the consent of each Bank
(other than a Defaulting Bank) (with Obligations being directly affected in the
case of following clause (i)): (i) extend the final scheduled maturity of the
Term Loan beyond February 15, 2001, or reduce the rate or extend the time of
payment of interest thereon, or reduce the principal amount thereof (except to
the extent repaid in cash); (ii) release all or substantially all of the
Collateral (except as expressly provided in the Credit Documents) under all the
Security Documents; (iii) amend, modify or waive any provision of this Section
12.12; (iv) reduce the percentage specified in the definition of Required Banks;
or (v) consent to the assignment or transfer by Borrower of any of its rights
and obligations under this Agreement; provided further, that no such change,
-------- -------
waiver, discharge or termination shall (x) increase the obligation of any Bank
to make Advances over the amount thereof then in effect without the consent of
such Bank (it being understood that waivers or modifications of conditions
precedent, covenants, Defaults or Events of Default shall not constitute an
increase of the obligation of any Bank to make Advances); (y) without the
consent of Agent, amend, modify or waive any provision of Section 11 as the same
applies to Agent or any other provision as the same relates to the rights or
obligations of Agent; or (z) without the consent of the Collateral Agent, amend,
modify or waive any provision relating to the rights or obligations of the
Collateral Agent.
(b) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (v), inclusive, of the first proviso to Section 12.12(a),
the consent of the Required Banks is obtained but the consent of one or more of
such other Banks whose consent is required is not obtained, then Borrower shall
have the right, so long as all nonconsenting Banks whose individual consent is
required are treated as described in either clauses (A) or (B) below, to either
(A) replace each such non-consenting Bank or Banks with one or more Replacement
Banks pursuant to Section 1.13 so long as at the time of such replacement, each
such Replacement Bank consents to the proposed change, waiver, discharge or
termination or (B) terminate such non-consenting Bank's obligation to make
Advances, if any, and repay such non-consenting Bank's Term Loan Portion,
provided, that unless the obligation to make Advances, if any, that are
--------
terminated, and Term Loan Portions that are repaid, pursuant to preceding clause
(B) are immediately replaced in full at such time through the addition of new
Banks or the increase of the obligation to make Advances, if any, of existing
Banks (who in each case must specifically consent thereto), then in the case of
any action pursuant to preceding clause (B) the Required Banks (determined
before giving effect to the proposed action) shall specifically consent thereto;
provided further, that in any event Borrower shall not have the right to replace
-------- -------
a Bank solely as a
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result of the exercise of such Bank's rights (and the withholding of any
required consent by such Bank) pursuant to the second proviso to Section
12.12(a).
12.13. Survival.
--------
All indemnities set forth herein including, without limitation, in
Sections 1.10, 1.11, 2.4, 12.1 and 12.16 shall survive the execution, delivery
and termination of this Agreement and the Term Notes and the making and
repayment of the Term Loan.
12.14. Domicile of Loans.
-----------------
Each Bank may transfer and carry its Term Loan Portion at, to or for
the account of any office, Subsidiary or Affiliate of such Bank. Notwithstanding
anything to the contrary contained herein, to the extent that a transfer of Term
Loan Portion pursuant to this Section 12.14 would, at the time of such transfer,
result in increased costs under Section 1.10, 1.11 or 2.4 from those being
charged by the respective Bank prior to such transfer, then Borrower shall not
be obligated to pay such increased costs (although Borrower shall be obligated
to pay any other increased costs of the type described above resulting from
changes after the date of the respective transfer).
12.15. Confidentiality.
(a) Subject to the provisions of clause (b) of this Section 12.15,
each Bank agrees that it will use its best efforts not to disclose without the
prior consent of Borrower (other than to its employees, auditors, advisors or
counsel or to another Bank if the Bank or such Bank's holding or parent company
in its sole discretion determines that any such party should have access to such
information, provided such Persons shall be subject to the provisions of this
Section 12.15 to the same extent as such Bank) any information with respect to
Borrower or any of its Subsidiaries which is now or in the future furnished
pursuant to this Agreement or any other Credit Document and which is designated
by Borrower to the Banks in writing as confidential (it being understood that
the Projections (as defined in the Credit Agreement) are hereby designated by
Borrower as being confidential); provided, that any Bank may disclose any such
--------
information (a) as has become generally available to the public, (b) as may be
required or appropriate in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Bank or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors, (c) as may be required or appropriate
in respect to any summons or subpoena or in connection with any litigation, (d)
in order to comply with any law, order, regulation or ruling applicable to such
Bank, (e) to Agent or the Collateral Agent and (f) to any prospective or actual
transferee or participant in connection with any contemplated transfer or
participation of any of the Term Notes or any interest therein by such Bank;
provided, that such prospective transferee agrees with such Bank to abide by the
provisions contained in this Section 12.15.
(b) Borrower hereby acknowledges and agrees that each Bank may share
with any of its affiliates any information related to Borrower or any of its
Subsidiaries (including, without limitation, any nonpublic customer information
regarding the creditworthiness of Borrower and its Subsidiaries, provided such
Persons shall be subject to the provisions of this Section 12.15 to the same
extent as such Bank).
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12.16. Register
--------
Borrower hereby designates Agent to serve as Borrower's agent, solely
for purposes of this Section 12.16, to maintain a register (the "Register") on
which it will record the Percentage from time to time of each of the Banks, the
Advances made by each of the Banks and each repayment in respect of the Term
Loan Portion of each Bank. Failure to make any such recordation, or any error in
such recordation shall not affect Borrower's obligations in respect of the Term
Loan. With respect to any Bank, the transfer of the obligation to make Advances,
if any, of such Bank and the rights to the principal of, and interest on, any
Advances made by it shall not be effective until such transfer is recorded on
the Register maintained by Agent with respect to ownership of such Percentage
and Term Loan Portion and prior to such recordation all amounts owing to the
transferor with respect to such Percentage and Term Loan Portion shall remain
owing to the transferor. The registration of assignment or transfer of all or
part of the Percentages and Term Loan Portions shall be recorded by Agent on the
Register only upon the acceptance by Agent of a properly executed and delivered
Assignment and Assumption Agreement pursuant to Section 12.4(b). Coincident with
the delivery of such an Assignment and Assumption Agreement to Agent for
acceptance and registration of assignment or transfer of all or part of a
Percentage and Term Loan Portion, or as soon thereafter as practicable, the
assigning or transferor Bank shall surrender the Term Note evidencing such
Percentages and Term Loan Portions, and thereupon one or more new Term Notes in
the same aggregate principal amount shall be issued to the assigning or
transferor Bank and/or the new Bank. Borrower agrees to indemnify Agent from and
against any and all losses, claims, damages and liabilities of whatsoever nature
which may be imposed on, asserted against or incurred by Agent in performing its
duties under this Section 12.16, except to the extent caused by Agent's gross
negligence or willful misconduct.
12.17. Consent to Forbearance Agreement.
--------------------------------
Borrower and each Bank hereby consents to and agrees to be bound by the
terms of the Forbearance Agreement.
12.18. Joint and Several Liability.
---------------------------
The liability of Parent and ALC under this Agreement and the Term Notes
shall be joint and several, primary and not secondary. The remedies of Agent and
the Banks hereunder may be exercised against Parent or ALC individually, against
one or the other or jointly.
12.19. Effect of Certain Actions.
-------------------------
Unless specifically provided otherwise, all requests, reports,
certificates, notices, consents or approvals which Borrower is required or
entitled to give or receive under this Agreement shall be effective against
Parent and ALC if given to or received by Parent and given by or received from
Parent in the manner required by this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
-------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ AUTOTOTE CORPORATION
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇ By:
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ---------------------------
Name:
Title:
with a copy to:
Autotote Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
Address:
-------
Autotote Lottery Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ AUTOTOTE LOTTERY CORPORATION
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇ By:
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ---------------------------
Name:
Title:
▇▇▇▇▇▇ FINANCIAL, INC.,
as Agent and Bank
By:
-------------------------
Name:
Title:
-41-
SCHEDULE I
Bank Addresses and Percentages
------------------------------
▇▇▇▇▇▇ Financial, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Finance Group
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ ________%
-42-
EXHIBIT A
to
Term Loan Agreement
Form of Notice of Borrowing
---------------------------
Form of Notice of Borrowing
---------------------------
[Date]
▇▇▇▇▇▇ Financial, Inc., as
Agent for the Banks party
to the Loan Agreement
referred to below
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
--------------------
Gentlemen:
The undersigned, an Authorized Representative of Autotote Corporation
and Autotote Lottery Corporation (collectively, "Borrowers"), refers to the Term
Loan Agreement, dated as of May ___, 1998 (as further modified, supplemented and
amended from time to time, the "Loan Agreement", the terms defined therein being
used herein as therein defined), among Borrowers, various Banks from time to
time party thereto, and you, as Agent for such Banks, and hereby gives you
notice on behalf of Borrowers, irrevocably, pursuant to Section 1.3(a) of the
Loan Agreement, that Borrowers hereby request an Advance under the Loan
Agreement, and in that connection sets forth below the information relating to
such Advance (the "Proposed Advance") as required by Section 1.3 of the Loan
Agreement:
(i) The Business Day of the Proposed Advance is _____________,
19___./1/
(ii) The aggregate amount of the Proposed Advance is
____________________________ Dollars ($_____________).
(iii) The Eurodollar Portion of the Proposed Advance is
_________________________ Dollars ($____________).
(iv) The Base Rate Portion of the Proposed Advance is
____________________________ Dollars ($_________).
(v) The Fixed Rate Portion of the Proposed Advance is
____________________________ Dollars ($_________).
-----------------------------
/1/ Shall be a Business Day at least one (1) Business Day in the case of a
Base Rate Portion, three (3) Business Days in the case of a Eurodollar Portion
and ___________ (____) Business Days in the case of of the Fixed Rate Portion,
in each case, after the date hereof. 2 To be included for a Proposed Advance of
a Eurodollar Portion.
(vi) The initial Interest Period for the Eurodollar Portion is
_____________ (____) month(s)./2/
The undersigned hereby certifies on behalf of Borrowers that the
following statements are true and correct on the date of the Proposed Advance:
(A) the representations and warranties contained in the Loan Agreement
and in the other Credit Documents are and will be true and correct in all
material respects, both before and after giving effect to the Proposed Advance
and to the application of the proceeds thereof, as though made on such date (it
being understood and agreed that any representation or warranty which, by its
terms, is made as of a specified date shall be required to be true and correct
in all material respects only as of such specified date); and
(B) no Default or Event of Default has occurred and is continuing, or
would result from such Proposed Advance or from the application of the proceeds
thereof.
Very truly yours,
AUTOTOTE CORPORATION
AUTOTOTE LOTTERY CORPORATION
By:
-----------------------------------------------
Authorized Representative of Borrowers
Name:
Title:
--------------------------------
/2/ To be included for a Proposed Advance of a Eurodollar Portion.
EXHIBIT B
to
Term Loan Agreement
Form of Term Note
-----------------
EXHIBIT C
to
Term Loan Agreement
Form of Excess Cash Flow Certificate
------------------------------------
EXHIBIT D
to
Term Loan Agreement
Form of Assignment and Assumption
---------------------------------
EXHIBIT E
to
Term Loan Agreement
Form of Section 2.4(b)(ii) Certificate
--------------------------------------