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AMENDED AND RESTATED
LOAN AGREEMENT
BY AND BETWEEN
WICO CORPORATION
AND
NATWEST BANK N.A.
October 20, 1995
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AMENDED AND RESTATED LOAN AGREEMENT
AGREEMENT, made this 20th day of October 1995, by and
between:
WICO CORPORATION (formerly known as Wico Distribution
Corp.), a Delaware corporation (the "Borrower"); and
NATWEST BANK N.A., a national banking association (the
"Bank");
W I T N E S S E T H
WHEREAS, the Borrower, certain banks from time to time
party thereto (the "Existing Banks") and National Westminster Bank
USA (the predecessor in interest of the Bank) as agent (in such
capacity, the "Existing Agent") for the Existing Banks entered into
a Loan Agreement dated as of June 14, 1989, as amended by an
Amendment and Supplement to Loan Agreement dated July 24, 1992, an
Amendment and Supplement No. 2 to Loan Agreement dated May 21,
1993, an Amendment and Supplement No. 3 to Loan Agreement dated
June 17, 1994 and an Amendment and Supplement No. 4 to Loan
Agreement dated December 1, 1994 (as so amended, the "Existing Loan
Agreement"), pursuant to which the Existing Banks agreed to make
loans and otherwise extend credit to or for the account of the
Borrower in an aggregate principal amount of up to $35,500,000 (the
"Existing Loans");
WHEREAS, the Borrower's obligations under the Existing
Loan Agreement are secured by, inter alia, a first lien on and
security interest in all of the Borrower's personal property,
tangible and intangible, and a Pledge of all of the issued and
outstanding shares of capital stock of the Borrower's subsidiaries;
WHEREAS, the Borrower's obligations under the Existing
Loan Agreement are guaranteed by certain of the Borrower's
subsidiaries and affiliates, which guaranties (other than the
Individual Guaranties (hereinafter defined)) are secured by a first
lien on and security interest in all of such subsidiaries' and
affiliates' personal property, tangible and intangible;
WHEREAS, the Borrower's obligations under the Existing
Loan Agreement are further secured by a pledge by the respective
owners thereof, of the issued and outstanding shares of capital
stock of the Borrower, Wico Holding Corp., Wico Gaming Supply Corp.
and Conquest Industries Inc.;
WHEREAS, the Borrower desires to obtain additional
financing (the "SBCC Loans") from Sanwa Business Credit Corporation
("SBCC") pursuant to a Loan and Security Agreement dated the date
hereof (as the same may be amended from time to time, the "SBCC
Loan Agreement") between the Borrower and SBCC;
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WHEREAS, not less than $6,000,000 of the proceeds of the
SBCC Loans shall be used to repay the Existing Loans;
WHEREAS, the Bank is the sole Existing Bank;
WHEREAS, it is a condition precedent to the obligations
of SBCC to make the SBCC Loans that SBCC be granted a first lien on
and security interest in certain of the personal property, tangible
and intangible, of the Borrower, Wico Holding Corp. and Wico Gaming
Supply Corp. and that the Bank subordinate its lien on such
personal property of such corporations and release the stock
pledged to it (other than the stock of Conquest Industries Inc.);
WHEREAS, the Borrower desires to amend the Existing Loan
Agreement in certain other respects; and
WHEREAS, the Bank is willing to agree to the foregoing on
the terms and conditions hereinafter set forth,
NOW, THEREFORE, the parties hereto agree as follows:
Article 1. Definitions
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As used in this Agreement, the following terms shall have
the following meanings:.
"Accounts Receivable Projections" - the projections
prepared by the Borrower of the Borrower's accounts receivable as
of the last day of the two months immediately succeeding the
Closing Date.
"Affiliate" - as to any Person, any other Person that
directly or indirectly controls, or is under common control with,
or is controlled by, such Person. As used in this definition,
"control" (including, with its correlative meanings, "controlled
by" and "under common control with") shall mean possession,
directly or indirectly, of power to direct or cause the direction
of management or policies (whether through ownership of securities
or partnership or other ownership interests, by contract or
otherwise), provided that, in any event: (i) any Person which owns
directly or indirectly 5% or more of the securities having ordinary
voting power for the election of directors or other governing body
of a corporation or 5% or more of the partnership or other
ownership interests of any other Person (other than as a limited
partner of such other Person) will be deemed to control such
corporation or other Person; and (ii) each shareholder, director
and officer of the Borrower shall be deemed to be an Affiliate of
the Borrower.
"Amended and Restated Guaranties" - as defined in
subsection 2.12(a) hereof.
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"Applicable Margin" - two and one-half percent (2 1/2%).
"Assignment of Life Insurance" - as defined in subsection
2.13(a)(i)(E) hereof.
"Bank" - as defined in the preamble hereto.
"Bank Debt" - as at any date, the aggregate outstanding
principal amount of the Note.
"Bentley ▇. ▇▇▇▇" - ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, an individual.
"▇▇▇▇ Guaranty" - as defined in subsection 2.12(d)
hereof.
"Borrower" - as defined in the preamble hereto.
"Borrower Copyright Agreement" - as defined in subsection
2.13(a)(i)(D) hereof.
"Borrower Patent Agreement" - as defined in subsection
2.13(a)(i)(B) hereof.
"Borrower Security Agreement" - as defined in subsection
2.13(a)(i)(A) hereof.
"Borrower Security Documents" - as defined in subsection
2.13(a)(iii) hereof.
"Borrower Security Interest Confirmation" - as defined in
subsection 2.13(a)(ii) hereof.
"Borrower Trademark Agreement" - as defined in subsection
2.13(a)(i)(C) hereof.
"Business Day" - any day other than Saturday, Sunday or
other day on which commercial banks in New York City are authorized
or required to close under the laws of the State of New York.
"Capitalized Lease" - any lease the obligations to pay
rent or other amounts under which constitute Capitalized Lease
Obligations.
"Capitalized Lease Obligations" - as to any Person, the
obligations of such Person to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) real
and/or personal property which obligations are required to be
classified and accounted for as a capital lease on a balance sheet
of such Person under generally accepted accounting principles and,
for purposes of this Agreement, the amount of such obligations
shall be the capitalized amount thereof, determined in accordance
with GAAP.
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"Cash" - cash and cash equivalents, as defined in
accordance with GAAP consistently applied.
"Closing Date" - October 20, 1995.
"Code" - the Internal Revenue Code of 1986, as it may be
amended from time to time.
"Collateral" - as defined in the respective security
Documents.
"Compliance Certificate" - a certificate executed by the
Chairman of the Board and Vice President of the Borrower to the
effect that: (i) as of the effective date of the certificate, no
Default or Event of Default under this Agreement exists or would
exist after giving effect to the action intended to be taken by the
Borrower as described in such certificate, and (ii) the representa-
tions and warranties contained in Article 3 hereof are true and
with the same effect as though such representations and warranties
were made on the date of such certificate, except for changes in
the ordinary course of business none of which, either singly or in
the aggregate, have had a material adverse effect on the business,
operations or financial conditions of the Borrower.
"Conquest" - Conquest Industries Inc., a Delaware
corporation formerly known as "Conquest Airlines Corp."
"Conquest Warrant" - the warrant to purchase capital
stock of Conquest dated June 17, 1994 issued to the Bank.
"Controlled Group" - all members of a controlled group of
corporations and all trades or businesses (whether or not incorpo-
rated) under common control which, together with the Borrower, are
treated as a single employer under Section 414(b), 414(c) or 414(m)
of the Code and Section 4001(a)(2) of ERISA.
"Corporate Guarantor" - as defined in subsection 2.12(b)
hereof.
"Corporate Guaranty(ies)" - as defined in subsection
2.12(b) hereof.
"Debt Instrument" - as defined in subsection 8.4(a)
hereof.
"Default" - an event which with notice or lapse of time
or both would constitute an Event of Default.
"Director's Fees" - for any period, all fees, emoluments
or similar compensation paid to officers and directors of the
Borrower in connection with the performance of their duties with
respect to the Borrower.
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"Dollars" and "$" - lawful money of the United States of
America.
"Environmental Laws and Regulations" - all environmental,
health and safety laws, regulations, resolutions, and ordinances
applicable to the Borrower or any other Loan Party, or any of their
respective assets or properties, including, without limitation: (i)
all regulations, resolutions, ordinances, decrees, and other
similar documents and instruments of all courts and governmental
authorities, bureaus and agencies, domestic and foreign, whether
issued by environmental regulatory agencies or otherwise, and (ii)
all laws, regulations, resolutions, ordinances and decrees relating
to Environmental Matters.
"Environmental Liability" - any liability under any
applicable law for any release of a hazardous substance caused by
the seeping, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or
disposing of hazardous wastes or other chemical substances,
pollutants or contaminants into the environment, and any liability
for the costs of any clean-up or other remedial action including,
without limitation, costs arising out of security fencing,
alternative water supplies, temporary evacuation and housing and
other emergency assistance undertaken by any environmental
regulatory body having jurisdiction over the Borrower or any other
Loan Party to prevent or minimize any actual or threatened release
by the Borrower or any other Loan Party of any hazardous wastes or
other chemical substances, pollutants and contaminants into the
environment which would endanger the public health or the environ-
ment.
"Environmental Matter(s)" - a release of any toxic or
hazardous waste or other chemical substance, pollutant or contam-
inant into the environment or the generation, treatment, storage or
disposal of any toxic or hazardous wastes or other chemical
substances.
"Environmental Proceeding" - any judgment, action,
proceeding or investigation pending before any court or govern-
mental authority, bureau or agency, including, without limitations,
any environmental regulatory body, with respect to or threatened
against or affecting the Borrower or any other Loan Party or
relating to the assets or liabilities of any of them, including,
without limitations, in respect of any "facility" owned, leased or
operated by any of them under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or
under any state, local or municipal statute, ordinance or regula-
tion in respect thereof, in connection with any release of any
toxic or hazardous waste or chemical substance, pollutant or
contaminant into the environment, or with the generation, storage
or disposal of any toxic or hazardous wastes or other chemical
substances.
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"ERISA" - the Employee Retirement Income Security Act of
1974, as it may be amended from time to time, and the regulations
thereunder.
"Event of Default" - as defined in Article 8 hereof.
"Existing Agent" - as defined in the recitals hereto.
"Existing Banks" - as defined in the recitals hereto.
"Existing Guaranty(ies)" - as defined in subsection
2.12(c) hereof.
"Existing Loan Agreement" - as defined in the recitals
hereto.
"Existing Loans" - as defined in the recitals hereto.
"Financial Statements" - with respect to the Borrower and
its Affiliates: (i) its audited balance sheet as at September 30,
1994 together with the related audited income statement and
statement of changes in financial position for the fiscal year then
ended, and (ii) its unaudited balance sheet as at June 30, 1995,
together with the related unaudited income statement and statement
of changes in financial position for the 9-month period then ended.
"GAAP" - Generally Accepted Accounting Principles.
"Gaming Supply" - Wico Gaming Supply Corp., a Delaware
corporation formerly known as "Wico I Acquisition Co."
"Gaming Supply Guaranty" - as defined in subsection
2.12(c) hereof.
"Gaming Supply Security Agreement" - as defined in
subsection 2.13(d)(i) hereof.
"Gaming Supply Security Documents" - as defined in
subsection 2.13(d)(iii) hereof.
"Gaming Supply Security Interest Confirmation" - as
defined in subsection 2.13(d)(ii) hereof.
"Guarantor(s)" - as defined in subsection 2.12(c) hereof.
"Guaranty(ies)" - as defined in subsection 2.12(d)
hereof.
"Indebtedness" - with respect to any Person, all:
(i) liabilities or obligations, direct and contingent, which in
accordance with generally accepted accounting principles would be
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included in determining total liabilities as shown on the liability
side of a balance sheet of such Person at the date as of which
Indebtedness is to be determined, including, without limitation,
contingent liabilities which, in accordance with such principles,
would be set forth in a specific Dollar amount on the liability
side of such balance sheet, and Capitalized Lease obligations of
such Person; (ii) liabilities or obligations of others for which
such Person is directly or indirectly liable, by way of guaranty
(whether by direct guaranty, suretyship, discount, endorsement,
take-or-pay agreement, agreement to purchase or advance or keep in
funds or other agreement having the effect of a guaranty) or
otherwise; (iii) liabilities or obligations secured by Liens on any
assets of such Person, whether or not such liabilities or obliga-
tions shall have been assumed by it; and (iv) liabilities or
obligations of such Person, direct or contingent, with respect to
letters of credit issued for the account of such Person and bankers
acceptances created for such Person.
"Individual Guarantors" - as defined in subsection
2.12(a) hereof.
"Individual Guaranty" - as defined in subsection 2.12(a)
hereof.
"Individual Pledge Agreement" - as defined in subsection
2.13(b)(i) hereof.
"Individual Pledge Confirmation" - as defined in
subsection 2.13(b)(ii) hereof.
"Individual Pledge Documents" - as defined in subsection
2.13(b)(iii) hereof.
"Individual Pledgors" - Bentley ▇. ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and any Person to whom any
stock of Conquest owned by such individuals and pledged to the Bank
has been transferred.
"Intercreditor Agreement" - as defined in subsection
4.1(m) hereof.
"Investment" - by any Person: (a) the amount paid or
committed to be paid, or the value of property or services
contributed or committed to be contributed, by such Person for or
in connection with the acquisition by such Person of any stock,
bonds, notes, debentures, partnership or other ownership interests
or other securities of any other Person; and
(b) the amount of any advance, loan or extension of
credit by such Person, to any other Person, or guaranty or other
similar obligation of such Person with respect to any Indebtedness
of such other Person, and (without duplication) any amount
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committed to be advanced, loaned, or extended by such Person to any
other Person, or any amount the payment of which is committed to be
assured by a guaranty or similar obligation by such Person for the
benefit of, such other Person.
"Investors" - First Securities, Geneva, Switzerland and
its associated investors or any other person, firm, corporation or
other entity reasonably satisfactory to the Bank.
"IRS" - Internal Revenue Service.
"Lien" - any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing), any conditional sale or
other title retention agreement, any lease in the nature of any of
the foregoing, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.
"Loan" - as defined in Section 2.1 hereof.
"Loan Documents" - this Agreement, the Note, the
Guaranties, the Guarantor Confirmations, the Security Documents,
the Subordination Agreements, the Warrant Exercise Agreement, the
Conquest Warrant and all other documents executed and delivered in
connection herewith or therewith, including all amendments,
modifications and supplements of or to all such documents.
"Loan Party" - the Borrower, any Subsidiary, WHC, any
Subsidiary of WHC, any Guarantor, any Individual Pledgor and any
other Person (other than the Bank) which now or hereafter executes
and delivers to the Bank any Loan Document.
"Management Fees" - for any period, all fees, emoluments
or similar compensation paid or incurred by any Person to the
Shareholders or any of their Affiliates (other than professional
fees at customary hourly rates payable to ▇▇▇▇▇▇▇ Radin ▇▇▇▇▇▇▇ &
Co. for services actually rendered) in respect of services rendered
in connection with the management or supervision of the management
of the Borrower, WHC or the Subsidiary.
"Management Subordination Agreement" - as defined in
subsection 2.14(a) hereof.
"Management Subordination Confirmation" -as defined in
subsection 2.14(b) hereof.
"Mortgage Assignment" - as defined in subsection 2.13(d)
hereof.
"Note" - as defined in Section 2.2 hereof.
"Obligations" - collectively, all of the Indebtedness,
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liabilities and obligations of the Borrower to the Bank, whether
now existing or hereafter arising, whether or not currently
contemplated, including, without limitation, those arising under
the Loan Documents.
"Operating Income" - for any period, the consolidated net
income of any Person before interest, taxes and charges for
amortization.
"Payment Dates" - the first day of each calendar month.
commencing on October 1, 1996.
"PBGC" - as defined in Section 3.17 hereof.
"Permitted Liens" - as to any Person: (i) pledges or
deposits by such Person under workers' compensation laws, unemploy-
ment insurance laws, social security laws, or similar legislation,
or good faith deposits in connection with bids, tenders, contracts
(other than for the payment of Indebtedness of such Person), or
leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits of Cash
or U.S. Government Bonds to secure surety, appeal, performance or
other similar bonds to which such Person is a party, or deposits as
security for contested taxes or import duties or for the payment of
rent; (ii) Liens imposed by law, such as carriers, warehousements,
materialments and mechanics' liens, or Liens arising out of
judgments or awards against such Person with respect to which such
Person at the time shall currently be prosecuting an appeal or
proceedings for review; (iii) Liens for taxes not yet subject to
penalties for non-payment and Liens for taxes the payment of which
is being contested as permitted by Section 6.6 hereof; and (iv)
survey exceptions, encumbrances, easements or reservations of, or
rights of others for rights of way, highways and railroad cross-
ings, sewers, electric lines, telegraph and telephone lines and
other similar purposes, or zoning or other restrictions as to the
use of real properties, or Liens incidental to the conduct of the
business of such Person or to the ownership of such Person's
property which were not incurred in connection with Indebtedness of
such Person, all of which Liens referred to in the preceding clause
(iv) do not in the aggregate materially detract from the value of
the properties to which they relate or materially impair their use
in the operation of the business taken as a whole of such Person,
and as to all the foregoing only to the extent arising and
continuing in the ordinary course of business.
"Person" - an individual, a corporation, a partnership,
a joint venture, a trust or unincorporated organization, a joint
stock company or other similar organization, a government or any
political subdivision thereof, a court, or any other legal entity,
whether acting in an individual, fiduciary or other capacity.
"Plan" - at any time an employee pension benefit plan
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which is covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code and is either: (i)
maintained by the Borrower or any member of the Controlled Group
for employees of the Borrower, or by the Borrower for any other
member of such Controlled Group, or (ii) maintained pursuant to a
collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which the
Borrower or any member of the Controlled Group is then making or
accruing an obligation to make contributions or has within the
preceding five plan years made contributions.
"Post-Default Rate" - in respect of any amounts payable
by the Borrower hereunder not paid when due (whether at stated
maturity, by acceleration or otherwise), a rate per annum during
the period commencing on the due date until such other amounts are
paid in full equal to 4% above the Prime Rate as in effect from
time to time plus the Applicable Margin (but in no event less than
the interest rate in effect on the due date).
"Preferred Stock" - the Series A, Series B, Series D and
Series E convertible preferred stock of Conquest.
"Prime Rate" - the interest rate established from time to
time by the Bank as its prime rate at the Principal Office.
Notwithstanding the foregoing, the Borrower acknowledges the fact
that the Bank may regularly make domestic commercial loans at rates
of interest less than the rate of interest referred to in the
preceding sentence. Each change in any interest rate provided for
herein based upon the Prime Rate resulting from a change in the
Prime Rate shall take effect at the time of such change in the
Prime Rate.
"Principal Office" - the principal office of the Bank
presently located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Purchase Money Security Interest" - as defined in
Section 7.2(d) hereof.
"Restructuring Fee" - as defined in Section 2.5 hereof.
"SBCC" - Sanwa Business Credit Corporation, a Delaware
corporation.
"SBCC Loan Agreement" - as defined in the recitals
hereto.
"SBCC Loans" - as defined in the recitals hereto.
"Security Documents" - as defined in subsection 2.13(f)
hereof.
"Shareholders" - Bentley ▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
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▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
"Subordination Agreements" - as defined in subsection
2.14(b) hereof.
"Subsidiary" - with respect to any Person, any corpo-
ration, partnership or joint venture whether now existing or
hereafter organized or acquired: (i) in the case of a corporation,
of which a majority of the securities having ordinary voting power
for the election of directors (other than securities having such
power only by reason of the happening of a contingency) are at the
time owned by such Person and/or one or more Subsidiaries of such
Person, or (ii) in the case of a partnership or joint venture in
which such Person is a general partner or joint venturer or of
which a majority of the partnership or other ownership interests
are at the time owned by such Person and/or one or more of its
Subsidiaries. Unless the context otherwise requires, references in
this Agreement to "Subsidiary" or "Subsidiaries" shall be deemed to
be references to a Subsidiary or Subsidiaries of the Borrower.
"Suncom U.K." - Suncom Technologies Ltd., a company
organized under the laws of the United Kingdom.
"Suncom U.K. Security Agreement" - as defined in
subsection 2.13(c)(i) hereof.
"Suncom U.K. Security Documents" - as defined in
subsection 2.13(c)(iii) hereof.
"Suncom U.K. Security Interest Confirmation" -as defined
in subsection 2.13(c)(ii) hereof.
"Terrace" - Terrace Realty, Inc., a Delaware corporation.
"Warrant Confirmation" - as defined in Section 2.17.
"Warrant Exercise Agreement" - the agreement dated June
17, 1994 by and among Bentley ▇. ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and the Bank
providing for shares of common stock of Conquest to be made
available by Bentley ▇. ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇, subject to the terms
and conditions of such agreement, upon the exercise of the Conquest
Warrant.
"WHC" - Wico Holding Corp., a Delaware corporation, and
the owner of all of the issued and outstanding capital stock of the
Borrower.
Any accounting terms used in this Agreement which are not specif-
ically defined herein shall have the meanings customarily given to
them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement, except that references in
Article 5 to such principles shall be deemed to refer to such
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principles as in effect on the date of the financial statements
delivered pursuant thereto.
Article 2. Loan; Collateral; Subordinations.
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Section 2.1 The Loan.
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On the Closing Date, without giving effect to the
application of the proceeds of the SBCC Loans made on the Closing
Date pursuant to subsection 2.4(b) hereof, the aggregate outstand-
ing principal amount of the Existing Loans is Eighteen Million Five
Hundred Thirty-Five Thousand Eight Hundred Forty-Eight Dollars
($18,535,848.00), consisting of Term Loans and Credit Loans (as
each such term is defined in the Existing Loan Agreement) under the
Existing Loan Agreement. The Bank's Revolving Credit Commitment
(as defined in the Existing Loan Agreement) is hereby terminated
and all Existing Loans are hereby converted to a term loan in the
principal amount of Eighteen Million Five Hundred Thirty-Five
Thousand Eight Hundred Forty-eight Dollars ($18,535,848.00) (the
"Loan"), payable in accordance with, and otherwise subject to the
terms and conditions of, this Agreement.
Section 2.2 The Note.
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The Loan shall be evidenced by a single promissory note
of the Borrower in substantially the form of Exhibit A annexed
hereto (the "Note"), which Note shall be issued in replacement of
and as a substitution for the "Notes" of the Borrower issued
pursuant to the Existing Loan Agreement. The Note shall be dated
the Closing Date, shall be payable to the order of the Bank in a
principal amount equal to the outstanding principal amount of the
Loan on the Closing Date (without giving effect to the payment
required to be made pursuant to Section 2.4(b) hereof), and shall
otherwise be duly completed. The Note shall be payable as provided
in Section 2.4 hereof. The Bank shall, upon the making and
delivery by the Borrower of the Note, ▇▇▇▇ the Second Substituted
Term Note and the Second Substituted Revolving Credit Note
"Replaced by Substituted Note" and return them to the Borrower.
Section 2.3 Interest Rate.
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(a) The Borrower shall pay to the Bank interest on
the unpaid principal amount of the Loan for the period commencing
on the Closing Date until the Loan shall be paid in full, at the
rate per annum equal to the sum of the Prime Rate plus the
Applicable Margin.
(b) Notwithstanding the foregoing, the Borrower
shall pay interest on the Loan or any installment thereof, and on
any other amount payable by the Borrower hereunder which shall not
be paid in full when due (whether at stated maturity, by accelera-
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tion or otherwise) for the period commencing on the due date
thereof until the same is paid in full at the Post-Default Rate.
(c) Accrued interest on the Loan shall be payable
monthly in arrears commencing on the first day of each month of
each year commencing on the first such date to occur following the
Closing Date and continuing on each such day of each such month
thereafter, except that (i) payment of accrued interest at the rate
of 1/2% per annum shall be deferred until the due date of the last
installment of principal (in accordance with the stated terms
hereof, by acceleration, or otherwise) and (ii) interest which is
payable at the Post-Default Rate shall be payable on demand of the
Bank.
Section 2.4 Principal Repayment.
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(a) The Borrower shall pay to the Bank the
principal of the Loan in 48 consecutive monthly installments
commencing on October 1, 1996 and on each Payment Date thereafter
(provided that the last such payment shall be in an amount
sufficient to repay in full the principal amount of the Loan), with
the amount of the installment paid on each Payment Date to be in
the respective amounts set forth below:
Principal Amount of the
Principal Payment Loan Payable on each
Dates such Payment Date
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The first date of each month $20,833.33
from October 1, 1996 through
and including September 1, 1997
The first date of each month 41,666.67
from October 1, 1997 through
and including September 1, 1998
The first date of each month 62,500.00
from October 1, 1998 through
and including September 1, 1999
The first date of each month 83,333.33
from October 1, 1999 through
and including August 1, 2000
September 1, 2000 10,244,181.37, or
such lesser amount
as shall equal the
the then outstanding
principal amount of
the Loan
(b) In addition to the principal payments set forth
in subsection 2.4(a) hereof, the Borrower shall pay to the Bank on
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15
the Closing Date in payment of the principal of the Loan from the
proceeds of the SBCC Loans an amount equal to (i) Six Million
Dollars ($6,000,000) plus (ii) the amount, if any, by which the
aggregate principal amount of the SBCC Loans made on the Closing
Date exceeds Eight Million Dollars ($8,000,000).
Section 2.5 Restructuring Fee and March Fee.
--------------------------------
(a) The Borrower shall pay to the Bank a restructuring
fee (the "Restructuring Fee"), in consideration of the Bank
restructuring the Existing Loans, in the sum of $125,000, payable
in five (5) installments, each in the amount of $25,000, on the
Closing Date and on each September 1 thereafter, commencing on
September 1, 1996.
(b) The Borrower acknowledges that it owes the Bank the
sum of $175,000, consisting of the unpaid portion of the New
Restructuring Fee provided for in the Existing Loan Agreement that
became due and payable on March 15, 1995 (the "March Fee"). The
Borrower shall pay the March Fee in sixteen (16) equal consecutive
quarterly installments of $10,937.50 each, without interest, on the
first day of January, April, July and October of each year,
commencing on January 1, 1997.
Section 2.6 Prepayments.
-----------
(a) The Borrower shall have the right to prepay the
Loan from time to time in whole or in part, provided that the
Borrower shall give the Bank notice of each such prepayment not
less than one (1) Business Day (and not less than 11:00 a.m. New
York City time on such day) prior to the proposed date of such
prepayment.
(b) In the event that at any time (i) the stock or
assets of Suncom U.K. are included in the borrowing base under the
SBCC Loan Agreement or (ii) a third party that is not an Affiliate
of the Borrower agrees to lend to the Borrower or Suncom U.K.
secured by the stock or assets of Suncom U.K., the Bank shall
release its security interest in the stock of Suncom U.K. and its
charge on the assets of Suncom U.K. upon receipt from the Borrower
of a mandatory prepayment of principal hereunder in the amount of
$591,925.
(c) All prepayments of the Loan shall be made
together with payment of all interest accrued on the amount prepaid
at any time without premium or penalty, and each prepayment shall
be applied to the installments of the Loan in the inverse order of
their maturities.
Section 2.7 Use of Proceeds of the Existing Loans.
-------------------------------------
The Borrower acknowledges that the proceeds of the
Existing Loans were used in accordance with the terms of the
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16
Existing Loan Agreement.
Section 2.8 Time and Method of Payments.
---------------------------
All payments of principal, interest, the Restructuring
Fee, the March Fee and other amounts (including indemnities)
payable by the Borrower hereunder shall be paid to the Bank at the
Principal Office, in Dollars, in immediately available funds, not
later than 11:00 a.m., New York City time, on the date on which
such payment shall become due (and the Bank may, but shall not be
obligated to, debit the amount of any such payment which is not
made by such time to any ordinary deposit account of the Borrower
with the Bank). Any such payment made on such date but after such
time shall, if the amount paid bears interest, be deemed to have
been made on and interest shall continue to accrue and be payable
thereon until the next succeeding Business Day. If any payment of
principal or interest becomes due on day other than a Business Day,
such payment maybe made on the next succeeding Business Day and
such extension shall be included in computing interest in connec-
tion with such payment. All payments hereunder and under the Note
shall be made without set-off or counterclaim and in such amounts
as may be necessary in order that all such payments shall not be
less than the amounts otherwise specified to be paid under this
Agreement and the Note (after withholding for or on account of: (i)
any present or future taxes, levies, imposts, duties or other
similar charges of whatever nature imposed by any government or any
political subdivision or taxing authority thereof, other than any
tax (except those referred to in clause (ii) below) on or measured
by the net income of the Bank pursuant to applicable federal, state
and local income tax laws, and (ii) deduction of amounts equal to
the taxes on or measured by the net income of the Bank payable by
the Bank with respect to the amount by which the payments required
to be made under this sentence exceed the amounts otherwise
specified to be paid in this Agreement and the Note).
Section 2.9 Computations.
------------
Interest on the Loan shall be computed on the basis
of a year of 360 days and actual days elapsed (including the first
day but excluding the last) occurring in the period for which
payable.
Section 2.10 Minimum Amount of Prepayments.
-----------------------------
Each optional prepayment of principal of the Loan
hereunder shall be in an amount not less than $1,000 and shall be
in an integral multiple of $1,000.
Section 2.11 Lending Offices.
---------------
The Loan shall be made and maintained at the Bank's
Principal Office.
-15-
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Section 2.12 Guaranties.
----------
(a) The due payment and performance of $2,000,000
of the Obligations has heretofore been severally guaranteed to the
Bank by Bentley ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (each an "Individual
Guarantor" and collectively, the "Individual Guarantors") in the
amount of $1,000,000 by each of them pursuant to the terms of an
amended and restated guaranty dated May 21, 1993 (each an "Amended
and Restated Guaranty" and collectively, the "Amended and Restated
Guaranties") in favor of the Existing Agent.
(b) The due payment and performance of all of the
Obligations has heretofore been guaranteed to the Bank by Suncom
U.K. (the "Corporate Guarantor") pursuant to the terms of a
guaranty dated November 30, 1993 (the "Corporate Guaranty") in
favor of the Existing Agent.
(c) The due payment and performance of all of the
Obligations has heretofore been guaranteed to the Bank by Gaming
Supply (Gaming Supply, together with the Individual Guarantors and
the Corporate Guarantor, the "Guarantors") pursuant to the terms of
a guaranty dated June 17, 1994 (the "Gaming Supply Guaranty"; and
together with the Amended and Restated Guaranties and the Corporate
Guaranty, individually, an "Existing Guaranty" and collectively,
the "Existing Guaranties") in favor of the Existing Agent.
(d) Simultaneously with the execution and delivery
of this Agreement, (i) Bentley ▇. ▇▇▇▇ shall execute and deliver to
the Bank a second amended and restated guaranty (the "▇▇▇▇
Guaranty"; and together with the Existing Guaranties, individually,
a "Guaranty" and collectively, the "Guaranties"), pursuant to which
Bentley ▇. ▇▇▇▇ shall confirm, amend and restate his obligations
under his Existing Guaranty and increase the maximum principal
amount of the Obligations for which Bentley ▇. ▇▇▇▇ shall be liable
from $1,000,000 to $3,000,000, and (ii) each other Guarantor shall
confirm such Guarantor's obligations under such Guarantor's
Guaranty and confirm that the Indebtedness, liabilities and
obligations guaranteed by such Guarantor under such Guaranty shall
include the Obligations of Borrower to the Bank as amended and
restated by this Agreement, by the execution and delivery of
confirmations and amendments in form and substance satisfactory to
the Bank (the "Guarantor Confirmations"). Each Guarantor shall
execute and deliver, or cause to be executed and delivered, to the
Bank such other agreements, documents and instruments as the Bank
may reasonably require in order to effect the purposes of the
Guarantors and this Section 2.12.
Section 2.13 Security.
--------
(a)(i) The Borrower has heretofore:
(A) Granted to the Existing Agent a first Lien
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on all of the Borrower's personal property and assets, tangible and
intangible, by the execution and delivery to the Existing Agent of
a Borrower Security Agreement dated June 14, 1989 (the "Borrower
Security Agreement");
(B) Granted to the Existing Agent a first Lien
on, and pledged to the Existing Agent, all of its patents by the
execution and delivery to the Existing Agent a Mortgage and
Assignment of Security Interest in Letters Patent dated June 14,
1989 (the "Borrower Patent Agreement");
(C) Granted to the Existing Agent a first Lien
on, and pledged to the Existing Agent, all trademarks held by the
Borrower by the execution and delivery to the Existing Agent of a
Trademark Security Agreement dated June 14, 1989 (the "Borrower
Trademark Agreement");
(D) Granted to the Existing Agent a first Lien
on, and pledged to the Existing Agent, all copyrights held by the
Borrower by the execution and delivery to the Existing Agent a
Copyright Security Agreement dated June 14, 1989 (the "Borrower
Copyright Security Agreement"); and
(E) Granted to the Existing Agent a Lien on,
and assigned to the Existing Agent, all of its right, title and
interest in, to and under the insurance policies on the life of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, by the execution and delivery to the Existing
Agent, a collateral assignment of life insurance. Simultaneously
with the execution and delivery of this Agreement, the Bank shall
release the collateral assignment of the insurance policies on the
life of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, and the Borrower shall, within sixty
(60) days following the date hereof, grant to the Bank a Lien on,
and assign to the Bank, insurance policies in an aggregate amount
not less than $2,000,000 on the life of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, by the
execution and delivery to the Bank of a collateral assignment of
life insurance (the "Assignment of Life Insurance"), such policies
and collateral assignment to be in form and substance satisfactory
to the Bank.
(ii) Simultaneously with the execution and
delivery of this Agreement, the Borrower shall acknowledge and
confirm to the Bank that the term "Obligations" as used and defined
in the Borrower Security Agreement, the Borrower Patent Agreement,
the Borrower Trademark Agreement, the Borrower Copyright Agreement
and the Assignment of Life Insurance (or any other term used
therein to describe the Indebtedness, liabilities and obligations
secured thereby) includes, without limitation, in each case, the
Obligations of the Borrower to the Bank as amended and restated by
this Agreement, and that the collateral covered thereby is subject
to no other Lien, except the Liens described in Section 7.2 hereof,
by the execution and delivery to the Bank of a security interest
confirmation in form and substance satisfactory to the Bank (the
-17-
19
"Borrower Security Interest Confirmation"). The Borrower shall
execute and deliver, or cause to be executed and delivered, to the
Bank such other agreements, documents and instruments as the Bank
may reasonably require in order to effect the purposes of the
Borrower Security Agreement, the Borrower Patent Agreement, the
Borrower Trademark Agreement, the Borrower Copyright Agreement and
the Assignment of Life Insurance and this subsection 2.13(a)(ii).
(iii) The Borrower Security Agreement, the
Borrower Patent Agreement, the Borrower Trademark Agreement, the
Borrower Copyright Agreement, the Assignment of Life Insurance, the
Borrower Security Interest Confirmation and such other agreements,
documents and instruments are sometimes hereinafter referred to as
the "Borrower Security Documents".
(b)(i) The Individual Pledgors have heretofore
granted to the Existing Agent a first Lien on, and pledged to the
Existing Agent all of the issued and outstanding capital stock of
Conquest owned by the Individual Pledgors, excluding the Preferred
Stock and any common stock issued on conversion thereof and the
common stock issued upon exercise of the warrants held by First
Securities (Firsec S.A.), ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and the ▇▇▇▇
Family Trust, by the execution and delivery to the Existing Agent
of a pledge agreement dated May 21, 1993 (as amended, the "Individ-
ual Pledge Agreement").
(ii) Simultaneously with the execution and
delivery of this Agreement, the Individual Pledgors shall acknowl-
edge and confirm to the Bank that the term "Obligations" as used
and defined in the Individual Pledge Agreement (or any other term
used therein to describe the Indebtedness, liabilities and
obligations secured thereby) includes, without limitation, the
Obligations of the Borrower to the Bank as amended and restated by
this Agreement, by the execution and delivery to the Bank of a
pledge agreement confirmation in form and substance satisfactory to
the Bank (the "Individual Pledge Confirmation"). Each Individual
Pledgor shall execute and deliver, or cause to be executed and
delivered, to the Bank such other agreements, documents and
instruments as the Bank may reasonably require in order to effect
the purposes of the Individual Pledge Agreement and this subsection
2.13(b)(ii).
(iii) The Individual Pledge Agreement, the
Individual Pledge Confirmation and such other agreements, documents
and instruments are sometimes hereinafter referred to as the
"Individual Pledge Documents".
(c)(i) Suncom U.K. has heretofore granted to the
Existing Agent a first Lien on all of Suncom U.K.'s real and
personal properties and assets, by the execution and delivery to
the Existing Agent a mortgage debenture dated November 30, 1993,
1993 (the "Suncom U.K. Security Agreement").
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20
(ii) Simultaneously with the execution and
delivery of this Agreement, Suncom U.K. shall acknowledge and
confirm to the Bank that the Indebtedness, liabilities and
obligations secured by the Suncom U.K. Security Agreement includes,
without limitation, the Obligations of the Borrower to the Bank as
amended and restated by this Agreement, and that the collateral
covered thereby is subject to no other Lien, except the Liens
described in Section 7.2 hereof, by the execution and delivery to
the Bank of a security interest confirmation in form and substance
satisfactory to the Bank (the "Suncom U.K. Security Interest
Confirmation"). Suncom U.K. shall execute and deliver, or cause to
be executed and delivered, to the Bank such other agreements,
documents and instruments as the Bank may reasonably require in
order to effect the purposes of the Suncom U.K. Security Agreement
and this subsection 2.13(c)(ii).
(iii) The Suncom U.K. Security Agreement, the
Suncom U.K. Security Interest Confirmation and such other agree-
ment, documents and instruments are sometimes hereinafter referred
to as the "Suncom U.K. Security Documents".
(d)(i) Gaming Supply has heretofore granted to
the Existing Agent a first lien on all of Gaming Supply's personal
property and assets, by the execution and delivery to the Existing
Agent a security agreement dated June 17, 1994 (the "Gaming Supply
Security Agreement").
(ii) Simultaneously with the execution and
delivery of this Agreement, Gaming Supply shall acknowledge and
confirm to the Bank that the term "Obligations" as used and defined
in the Gaming Supply Security Agreement (or any other term used
therein to describe the Indebtedness, liabilities and obligations
secured thereby) includes, without limitation, the Obligations of
the Borrower to the Bank as amended and restated by this Agreement,
and that the collateral covered thereby is subject to no other
Lien, except the Liens described in Section 7.2 hereof, by the
execution and delivery to the Bank of a security interest confirma-
tion in form and substance satisfactory to the Bank (the "Gaming
Supply Security Interest Confirmation"). Gaming Supply shall
execute and deliver, or cause to be executed and delivered, to the
Bank such other agreements, documents and instruments as the Bank
may reasonably require in order to effect the purposes of the
Gaming Supply Security Agreement and this subsection 2.13(d)(ii).
(iii) The Gaming Supply Security Agreement, the
Gaming Supply Security Interest Confirmation and such other
agreements, documents and instruments are sometimes hereinafter
referred to as the "Gaming Supply Security Documents".
(e) In order to secure the due payment and
performance by the Borrower of the Obligations, Terrace shall,
simultaneously with the execution and delivery of this Agreement,
-19-
21
assign to the Bank a mortgage in the outstanding principal amount
of $2,790,076 covering real property in New Castle County,
Delaware, pursuant to an assignment of mortgage in form and
substance satisfactory to the Bank the ("Mortgage Assignment"), and
shall, simultaneously with the execution and delivery of this
Agreement, execute and deliver, or cause to be executed and
delivered, such other agreements, certificates, documents and
instruments as the Bank may reasonably require in connection
therewith.
(f) The Borrower Security Documents, the Individual
Pledge Documents, the Suncom U.K. Security Documents, the Gaming
Supply Security Documents, the Mortgage Assignment and the other
agreements, documents and instruments referred to in subsections
2.13(a), (b), (c), (d) and (e) are sometimes hereinafter referred
to as the "Security Documents".
(g) Upon the fulfillment to the satisfaction of the
Bank of the conditions precedent contained in Article 4 hereof, the
Bank shall release to the Borrower or its designee the capital
stock of the Borrower, WHC and any Subsidiary of WHC held by the
Bank prior to the Closing Date.
Section 2.14 Subordination.
-------------
(a) The Borrower and the Shareholders have
heretofore subordinated the payments permitted to be made by the
Borrower to the Shareholders and their Affiliates, as set forth in
subsection 7.13(a) hereof, by the execution and delivery to the
Existing Agent of a Management Subordination Agreement dated June
14, 1989 (the "Management Subordination Agreement").
(b) Simultaneously with the execution and delivery
of this Agreement, the Borrower and the Shareholders shall
acknowledge and confirm to the Bank that the term "Senior Debt" as
used and defined in the Management Subordination Agreement
includes, without limitation, the Obligations of the Borrower to
the Bank as amended and restated by this Agreement, by the
execution and delivery to the Bank of a Management Subordination
Confirmation satisfactory in form and substance to the Bank (the
"Management Subordination Confirmation"; the Management Subordina-
tion Agreement and the Management Subordination Confirmation are
hereinafter referred to together as, the "Subordination Agree-
ments").
Section 2.15 Additional Costs.
----------------
In the event that any existing or future law or
regulation or guideline or interpretation thereof by any court or
administrative or governmental authority Charged with the adminis-
tration thereof, or compliance by the Bank with any request or
directive (whether or not having the force of law) of any such
-20-
22
authority shall impose, modify or deem applicable or result in the
application of, any capital maintenance, capital ratio or similar
requirement against the Loan, and the result of any event referred
to above is to impose upon the Bank or increase any capital
requirement applicable as a result of the making or maintenance of,
the Loan or the obligation of the Borrower hereunder with respect
to the Loan (which imposition of capital requirements may be
determined by the Bank's reasonable allocation of the aggregate of
such capital increases or impositions), then, upon demand made by
the Bank as promptly as practicable after it obtains knowledge that
such law, regulation, guideline, interpretation, request or
directive exists and determines to make such demand, the Borrower
shall immediately pay to the Bank from time to time as specified by
the Bank additional commitment fees which shall be sufficient to
compensate the Bank for such imposition of or increase in capital
requirements together with interest on each such amount from the
date demanded until payment in full thereof at the post-Default
Rate. A certificate setting forth in reasonable detail the amount
necessary to compensate the Bank as a result of an imposition of or
increase in capital requirements submitted by the Bank to the
Borrower shall be conclusive, absent manifest error or bad faith,
as to the amount thereof.
Section 2.16 Set-Off.
-------
The Borrower hereby agrees that, in addition to (and
without limitation of) any right of set-off, banker's lien or
counterclaim the Bank may otherwise have, the Bank shall be
entitled, at its option, to offset balances held by it at any of
its offices against any principal of or interest on the Loan, or
any fee payable to it, which is not paid when due (regardless of
whether or such balances are then due to the Borrower), in which
case it shall promptly notify the Borrower provided that its
failure to give such notice shall not affect the validity thereof.
Section 2.17 Conquest Warrant.
----------------
Conquest has previously delivered to the Bank the
Conquest Warrant, which as of the Closing Date grants to the Bank
the right to purchase 400,000 shares of common stock, .001 par
value, of Conquest, for an exercise price of $.01 per share without
giving effect to the antidilution provisions of the Conquest
Warrant. Simultaneously with the execution and delivery of this
Agreement, the Borrower shall cause Conquest to confirm to the Bank
that the Conquest Warrant remains in full force and effect by the
execution and delivery to the Bank of a confirmation in form and
substance satisfactory to the Bank (the "Warrant Confirmation").
Article 3. Representations and Warranties.
------------------------------
The Borrower hereby represents and warrants to the
Bank that:
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23
Section 3.1 Organization.
-------------
(a) Each of the Borrower and its Subsidiary and
each other Loan party is duly organized and validly existing under
the laws of its state of organization and has the power to own its
assets and to transact the business in which it is presently
engaged and in which it proposes to be engaged. Exhibit B annexed
hereto accurately and completely lists, as to each of the Borrower
and the Subsidiary and each other Loan party: (i) the state of
incorporation or organization of each such entity, and the type of
legal entity which each of them is, (ii) as to each of them which
is a corporation, the classes and number of authorized and
outstanding shares of capital stock of each such corporation, and
the owners of such outstanding shares of capital stock, (iii) as to
each of them which is a legal entity other than a corporation (but
not a natural person), the type and amount of equity interests
authorized and outstanding of each such entity, and the owners of
such equity interests, (iv) and the business in which each of such
entities is engaged. All of the foregoing shares or other equity
interests which are issued and outstanding have been duly and
validly issued and are fully paid and non-assessable, and are owned
by the Persons referred to on Exhibit B, free and clear of any Lien
except as otherwise provided for herein. Except as set forth on
Exhibit B, there are not outstanding any warrants, options,
contracts or commitments of any kind entitling any Person to
purchase or otherwise acquire any shares of capital stock or other
equity interests of the Borrower or any Subsidiary or any other
Loan Party nor are there outstanding any securities which are
convertible into or exchangeable for any shares of capital stock or
other equity interests of the Borrower or any Subsidiary or any
other Loan party. Except as set forth on Exhibit B, neither the
Borrower nor any Subsidiary nor any other Loan Party has any
Subsidiary.
(b) Each of the Borrower and its Subsidiaries and
each other Loan party is in good standing in its state of organi-
zation and in each state in which it is qualified to do business.
There are no jurisdictions other than as set forth on Exhibit B
hereto in which the character of the properties owned or proposed
to be owned by the Borrower or its Subsidiaries or any other Loan
Party or in which the transaction of the business of the Borrower
or its Subsidiaries or any other Loan party as now conducted or as
proposed to be conducted requires or will require the Borrower or
its Subsidiaries or any other Loan party to qualify to do business
and as to which failure so to qualify could have a material adverse
effect on the business, operations, financial condition or
properties of the Borrower or any Subsidiary or any other Loan
party.
(c) Wico Nevada, Inc., a Delaware corporation, was
merged into the Borrower, with the Borrower being the surviving
corporation.
-22-
24
(d) Exhibit B accurately and completely lists, as
of the Closing Date, the classes and number of authorized shares of
capital stock of Conquest and the number of shares of each such
class outstanding as of the Closing Date. All of such outstanding
shares have been duly and validly issued and are fully paid and
non-assessable. Except as set forth on Exhibit B, there are not
outstanding any warrants, options, contracts or commitments of any
kind entitling any person to purchase or otherwise acquire any
shares of capital stock or other equity interests of Conquest, nor
are there outstanding any securities which are convertible into or
exchangeable for any shares of capital stock or other equity
interests of Conquest. Exhibit B accurately and completely sets
forth all changes to the capital structure of Conquest (including,
without limitation, stock splits, reverse stock splits, redemptions
of shares and issuances of shares) since June 17, 1994.
Section 3.2 Power, Authority, Consents.
--------------------------
(i) The Borrower and each other Loan party has the
power to execute, deliver and perform the Loan Documents to be
executed by it, (ii) the Borrower has the power to borrow hereunder
and has taken all necessary corporate action to authorize the
borrowing hereunder on the terms and conditions of this Agreement,
and (iii) the Borrower and each Loan Party has taken all necessary
action, corporate or otherwise, to authorize the execution,
delivery and performance of the Loan Documents to be executed by
it. No consent or approval of any Person (including, without
limitation, any stockholder of any corporate Loan Party or any
partner in any partnership Loan Party), no consent or approval of
any landlord or mortgagee, no waiver of any Lien or right of
distraint or other similar right and no consent, license, certifi-
cate of need, approval, authorization or declaration of any
governmental authority, bureau or agency, is or will be required in
connection with the execution, delivery or performance by the
Borrower or any other Loan Party, or the validity, enforcement or
priority, of the Loan Documents or any Lien created and granted
thereunder, except as set forth on Exhibit C annexed hereto, each
of which either has been duly and validly obtained on or prior to
the date hereof and is now in full force and effect, or is
designated on Exhibit C as waived by the Bank.
Section 3.3 No Violation of Law or Agreements.
---------------------------------
The execution and delivery by the Borrower and each
other Loan Party of each Loan Document to which it is a party and
performance by it hereunder and thereunder, will not violate any
provision of law and will not, except as set forth on Exhibit C
annexed hereto, conflict with or result in a breach of any order,
writ, injunction, ordinance, resolution, decree, or other similar
document or instrument of any court or governmental authority,
bureau or agency, domestic or foreign, or any certificate of
incorporation or by-laws of the Borrower or any other corporate
-23-
25
Loan Party or partnership agreement or other organizational
document or instrument of any Loan Party which is not a corporation
or create (with or without the giving of notice or lapse of time,
or both) a default under or breach of any agreement, bond, note or
indenture to which the Borrower or any other Loan Party is a party,
or by which any of them is bound or any of their respective
properties or assets is affected, or result in the imposition of
any Lien of any nature whatsoever upon any of the properties or
assets owned by or used in connection with the business of the
Borrower or any other Loan Party, except for the Liens created and
granted pursuant to the Security Documents.
Section 3.4 Due Execution, Validity, Enforceability.
---------------------------------------
This Agreement and each other Loan Document to which
any Loan Party is a party has been duly executed and delivered by
the Loan Party which is a party thereto and each constitutes the
valid and legally binding obligation of the Borrower or such Loan
Party which is a party thereto, enforceable in accordance with its
terms.
Section 3.5 Properties, Priority of Liens.
-----------------------------
All of the properties and assets owned by the
Borrower and the Subsidiary and each other Loan Party which is
executing a Security Document are owned by each of them, respec-
tively, free and clear of any Lien of any nature whatsoever, except
for the Liens permitted by Section 7.2 hereof. The Liens which
have been created and granted by the Security Documents constitute
valid perfected Liens on the properties and assets covered by the
Security Documents, subject to no prior or equal Lien except as
permitted by Section 7.2 hereof.
Section 3.6 Judgments, Actions, Proceedings.
-------------------------------
Except as set forth on Exhibit D annexed hereto,
there are no outstanding judgments, actions or proceedings,
including, without limitation, any Environmental Proceeding,
pending before any court or governmental authority, bureau or
agency, with respect to or, to the best of the Borrower's knowl-
edge, threatened against or affecting the Borrower or any Subsid-
iary or any other Loan Party, involving, in the case of any court
proceeding, a claim in excess of Twenty Five Thousand Dollars
($25,000), nor, to the best of the Borrower's knowledge, is there
any reasonable basis for the institution of any such action or
proceeding which is probable of assertion, nor are there any such
actions or proceedings in which the Borrower or any Subsidiary or
any other Loan Party is a plaintiff or complainant.
Section 3.7 No Defaults, Compliance With Laws.
---------------------------------
Neither the Borrower nor any Subsidiary nor any
-24-
26
other Loan Party is in default under any agreement, ordinance,
resolution, decree, bond, note, indenture, order or judgment to
which it is a party or by which it is bound, or any other agreement
or other instrument by which any of the properties or assets owned
by it or used in the conduct of its business is affected, which
default could have a material adverse effect on the business,
operations, financial condition or properties of the Borrower or
any Subsidiary or any other Loan Party or on the ability of the
Borrower or any other Loan Party to perform its obligations under
the Loan Documents to which it is a party. The Borrower and its
Subsidiaries have complied and are in compliance in all material
respects with all applicable laws, ordinances and regulations,
resolutions, ordinances, decrees and other similar documents and
instruments of all courts and governmental authorities, bureaus and
agencies, domestic and foreign, including, without limitation, all
applicable Environmental Laws and Regulations, non-compliance with
which could have a material adverse effect on the business,
operations, financial condition or properties of the Borrower or
its Subsidiaries or any Loan Party or on the ability of the
Borrower or the Subsidiary or any Loan Party to perform its
obligations under the Loan Documents to which it is a party.
Section 3.8 Burdensome Documents.
--------------------
Neither the Borrower nor any other Loan Party is a
party to or bound by, nor are any of the properties or assets owned
by the Borrower or any other Loan Party used in the conduct of
their respective businesses affected by, any agreement, ordinance,
resolution, decree, bond, note, indenture, order or judgment,
including, without limitation, any of the foregoing relating to any
Environmental Matter, which materially and adversely affects its
business, assets or condition, financial or otherwise.
Section 3.9 Financial Statements; Accounts
Receivable Projections.
------------------------------
(a) Each of the Financial Statements is correct and
complete and presents fairly the consolidated financial position of
the Borrower and its Subsidiaries, and each other entity to which
it relates, as at its date, and has been prepared in accordance
with GAAP, except with respect to those financial statements which
are unaudited and which are subject to: normal year end audit
adjustments; and the absence of footnotes and disclosures otherwise
required pursuant to GAAP. Neither the Borrower nor its Subsidiar-
ies, nor any other entity to which any of the Financial Statements
relates, has any material obligation, liability or commitment,
direct or contingent (including, without limitation, any Environ-
mental Liability), which is not reflected or referred to in the
Financial Statements. The Borrower's fiscal year is the
twelve-month period ending on September 30 in each year.
(b) The Accounts Receivable Projections have been
-25-
27
prepared on the basis of the assumptions accompanying them and
reflect as of the date thereof the Borrower's good faith projec-
tions, after reasonable analysis, of the accounts receivable of the
Borrower and its Subsidiaries, including a projected aged accounts
receivable trial balance, as of the last day of the two months
immediately succeeding the Closing Date.
Section 3.10 Tax Returns.
-----------
Each of the Borrower, its Subsidiaries and the other
Loan Parties has filed all federal, state and local tax returns
required to be filed by it and has not failed to pay any taxes, or
interest and penalties relating thereto, on or before the due dates
thereof. Except to the extent that reserves therefor are reflected
in the Financial Statements: (i) there are no material federal,
state or local tax liabilities of the Borrower, its Subsidiaries or
any other Loan Party due or to become due for any tax year ended on
or prior to the date of the most recent balance sheet included in
the Financial Statements relating to such entity, whether incurred
in respect of or measured by the income of such entity, which are
not properly reflected in such balance sheet relating to such
entity, and (ii) there are no material claims pending or, to the
knowledge of the Borrower, proposed or threatened against any of
the Borrower, its Subsidiaries or any Loan Party for past federal,
state or local taxes, except those, if any, as to which proper
reserves are reflected in the Financial Statements.
Section 3.11 Intangible Assets.
-----------------
Each of the Borrower and its Subsidiaries possesses
all necessary patents, trademarks, service marks, trade names, and
copyrights, and rights with respect to the foregoing necessary to
conduct its business as now conducted and as proposed to be
conducted, without any conflict with the patents, trademarks,
service marks, trade names, and copyrights and rights with respect
to the foregoing of others, and each of such patents, trademarks,
service marks, tradenames, copyrights and rights with respect
thereto, together with any pending applications therefor, are
listed on Exhibit E annexed hereto.
Section 3.12 Regulation U.
-------------
No part of the proceeds received by the Borrower or
its Subsidiaries from the Loan will be used directly or indirectly
for the purpose of purchasing or carrying, or for payment in full
or in part of Indebtedness which was incurred for the purposes of
purchasing or carrying, any margin stock as such terms is defined in
SEC. SEC. 221.3 of Regulation U of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II, Part 221.
Section 3.13 Name Changes, Mergers, Acquisitions;
Location of Collateral.
----------------------
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28
(a) Except as set forth on Exhibit F annexed
hereto, neither the Borrower nor any Subsidiary nor any other Loan
Party which has granted Liens on its assets (other than shares of
stock) pursuant to any Security Document has within the six-year
period immediately preceding the date of this Agreement changed its
name, been the surviving entity of a merger or consolidation, or
acquired all or substantially all of the assets of any Person.
(b) No Collateral constituting personal property
having an aggregate fair market value in excess of $50,000 covered
by the Security Documents has, at any time during the four-month
period immediately preceding the date hereof, been located anywhere
other than at its location on the date hereof, except as set forth
on Exhibit F annexed hereto.
Section 3.14 Licenses and Approvals.
----------------------
The Borrower, its Subsidiaries and each other Loan
Party has all necessary licenses, permits and governmental
authorizations, including, without limitation, licenses, permits
and authorizations relating to Environmental Matters, to own and
operate its properties and to carry on its business as now
conducted.
Section 3.15 Labor Disputes.
---------
There are no actions or proceedings pending or, to
the best of the knowledge of the Borrower, threatened against the
Borrower or its Subsidiaries, by or on behalf of, or with, its
employees, other than employee grievances arising in the ordinary
course of business which are not, in the aggregate, material.
Section 3.16 Condition of Assets.
-------------------
All of the assets and properties of the Borrower and
the Subsidiary, which are reasonably necessary for the operation of
its business, are in good working condition, ordinary wear and tear
excepted, and are able to serve the function for which they are
currently being used.
Section 3.17 ERISA.
-----------
(a) The Borrower does not have and has never had,
any Plan in connection with which there could arise a direct or
contingent liability of the Borrower to the Pension Benefit
Guaranty Corporation ("PBGC"), the Department of Labor or the
Internal Revenue Service ("IRS"). The Borrower is not a partic-
ipating employer in: (i) any Plan under which more than one
employer makes contributions as described in Sections 4063 and 4064
of ERISA, or (ii) a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
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29
(b) All references to the Borrower in this Section
3.17 or in any other Section of this Agreement relating to ERISA,
shall be deemed to refer to the Borrower and all other entities
which are, together with the Borrower, part of a Controlled Group.
Article 4. The Closing.
-----------
Section 4.1 Conditions to Effectiveness of Agreement.
----------------------------------------
The effectiveness of this Agreement shall be subject
to the fulfillment (to the satisfaction of the Bank) of the
following conditions precedent:
(a) The Borrower shall have executed and delivered
to the Bank the Note.
(b) The Borrower shall have: (i) executed and
delivered to the Bank the Borrower Security Documents and (ii)
otherwise duly complied with all of the terms and conditions of the
Borrower Security Documents.
(c) Bentley ▇. ▇▇▇▇ shall have executed and
delivered the ▇▇▇▇ Guaranty and each other Guarantor shall have
executed and delivered to the Bank a Guarantor Confirmation and
each Guarantor otherwise shall have duly complied with all of the
terms and conditions of the Guaranty to which it is a party.
(d) The Individual Pledgors shall have: (i)
executed and delivered to the Bank the Individual Pledge Confirma-
tion and (ii) otherwise duly complied with all of the terms and
conditions of the Individual Pledge Documents.
(e) Suncom U.K. shall have: (i) executed and
delivered to the Bank the Suncom U.K. Security Interest Confirma-
tion and (ii) otherwise duly complied with all of the terms and
conditions of the Suncom U.K. Security Documents.
(f) Gaming Supply shall have: (i) executed and
delivered to the Bank the Gaming Supply Security Interest Confirma-
tion and (ii) otherwise duly complied with all of the terms and
conditions of the Gaming Supply Security Documents.
(g) Conquest shall have executed and delivered to
the Bank the Warrant Confirmation.
(h) Terrace shall have executed and delivered to
the Bank the Mortgage Assignment and caused to be executed and
delivered such other agreements, certificates, documents and
instruments in connection therewith, in form and substance
satisfactory to the Bank, as the Bank may reasonably request,
including the following: (A) a mortgagee title policy naming the
Bank as assured in an amount equal to the outstanding principal
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30
amount of the mortgage covered by the Mortgage Assignment, with a
negative amortization endorsement, (B) estoppel certificates from
each of the mortgagor and the ground lessee, (C) a letter from Bank
of Delaware, as first mortgagee, stating that the first mortgage
held by it is not in default and reflecting the outstanding amount
thereof, and (D) evidence of termination of the assignment of the
mortgage in favor of Barclays Bank.
(i) The Borrower and the Shareholders shall have
executed and delivered to the Bank the Management Subordination
Confirmation and shall otherwise have duly complied with all of the
terms and conditions thereof.
(j) Kronish, Lieb, Weiner & ▇▇▇▇▇▇▇ LLP, counsel to
the Borrower, Gaming Supply, WHC and the Individual Pledgors shall
have delivered their opinion, to, and in form and substance
satisfactory to, the Bank, with such reliance on such opinions of
special counsel in jurisdictions other than New York as shall be
attached thereto as are satisfactory in form and substance to the
Bank and on which Kronish, Lieb, Weiner & ▇▇▇▇▇▇▇ LLP shall state
that they and the Bank are, in their opinion, justified in relying.
(k) Each of the Individual Guarantors shall have
delivered to the Bank financial statements, on the standard form of
individual financial statement prepared by the Bank, as of the
Closing Date.
(l) The Bank shall have received copies of the
following:
(i) The Financial Statements and the Accounts
Receivable Projections;
(ii) All of the consents, approvals and waivers
referred to on Exhibit C annexed hereto, except only those which,
as stated on Exhibit C, shall not be delivered;
(iii) The certificates of incorporation of the
Borrower and the other Loan Parties that are corporations,
certified by the Secretary of State of their respective states of
incorporation;
(iv) The by-laws of the Borrower and the other
Loan Parties that are corporations, certified by their respective
secretaries;
(v) All corporate action taken by the Borrower
and the other Loan Parties to authorize the execution, delivery and
performance of each of the Loan Documents to which it is a party
pursuant hereto or in connection herewith;
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31
(vi) Good standing certificates with respect to
each of the Borrower and the other Loan Parties that are corpora-
tions from the Secretary of State of their respective states of
incorporation and qualification;
(vii) An incumbency certificate (with specimen
signatures) with respect to the Borrower and the other Loan Parties
that are corporations; and
(viii) True, correct and complete copies of the
SBCC Loan Agreement and all agreements, documents and instruments
executed and delivered in connection therewith, certified by the
secretary of the Borrower.
(m) The Bank and SBCC shall have entered into an
intercreditor agreement in form and substance satisfactory to the
Bank (the "Intercreditor Agreement");
(n) (i) The Borrower shall have complied and shall
then be in compliance with all of the terms, covenants and
conditions of this Agreement;
(ii) There shall exist no Default or Event of
Default hereunder; and
(iii) The representations and warranties
contained in Article 3 hereof shall be true and correct on the date
hereof;
and the Bank shall have received a Compliance Certificate dated the
Closing Date certifying, inter alia, that the conditions set forth
in this subsection 4.1(n) are satisfied on such date.
(o) All legal matters incident to the execution and
delivery of this Agreement shall be satisfactory to special counsel
to the Bank.
Article 5. Delivery of Financial Reports,
Documents and other Information.
-------------------------------
After the payment and discharge of all indebtedness
owing to SBCC arising out of the SBCC Loans and the termination of
the obligation of SBCC to lend under the SBCC Loan Agreement, so
long as the Borrower is indebted to the Bank and until payment in
full of the Note and full and complete performance of all of its
other obligations arising hereunder, the Borrower shall deliver to
the Bank:
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32
Section 5.1 Annual Financial Statements.
---------------------------
Annually, as soon as available, but in any event
within ninety (90) days after the last day of each of its fiscal
years, a consolidated and consolidating balance sheet of the
Borrower, its Subsidiaries, WHC and any Subsidiary of WHC as at
such last day of the fiscal year, and consolidated and consolidat-
ing statements of income and retained earnings and changes in
financial position, for such fiscal year, each prepared in
accordance with generally accepted accounting principles consis-
tently applied, in reasonable detail, and, as to the consolidated
statements, certified without qualification by BDO ▇▇▇▇▇▇▇ or
another firm of independent certified public accountants satisfac-
tory to the Bank, or certified, as to the consolidating statements,
by the chief financial officer of the Borrower, as fairly present-
ing the financial position and the results of operations of the
Borrower, its Subsidiaries, WHC and any Subsidiary of WHC as at and
for the year ending on its date and as having been prepared in
accordance with GAAP.
Section 5.2 Quarterly Financial Statements.
------------------------------
As soon as available, but in any event within
forty-five (45) days after the end of the Borrower's first three
fiscal quarterly periods, a consolidated and consolidating balance
sheet of the Borrower, its Subsidiaries, WHC and any Subsidiary of
WHC as of the last day of such quarter and consolidated and
consolidating statements of retained earnings and changes in
financial position, for such quarter, and on a comparative basis
figures for the corresponding period of the immediately preceding
fiscal year, all in reasonable detail, each such statement to be
certified in a certificate of the president or chief financial
officer of the Borrower as fairly presenting the financial position
and the results of operations of the Borrower, its Subsidiaries,
WHC and any Subsidiary of WHC as at its date and for such quarter
and as having been prepared in accordance with generally accepted
accounting principles consistently applied (subject to year-end
audit adjustments and the absence of footnote requirements under
GAAP).
Section 5.3 Monthly Financial Statements.
----------------------------
As soon as available, but in any event within thirty
(30) days after the end of each calendar month, a consolidated and
consolidating balance sheet of the Borrower, its Subsidiaries, WHC
and any Subsidiary of WHC as of the last day of such month and
consolidated and consolidating statements of retained earnings for
such month, and on a comparative basis figures for the correspond-
ing month of the immediately preceding fiscal year, all in
reasonable detail, each such statement to be in the form custom-
arily prepared by the management of the Borrower for its internal
use.
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33
Section 5.4 Compliance Information.
----------------------
Promptly after a written request therefor, such
other financial data or information evidencing compliance with the
requirements of this Agreement, the Note and the other Loan
Documents, as the Bank may reasonably request from time to time.
Section 5.5 No Default Certificate.
----------------------
At the same time as it delivers the financial
statements required under the provisions of Section 5.1 and 5.2, a
certificate of the president or chief executive officer of the
Borrower to the effect that no Event of Default hereunder and that
no default under any other agreement to which the Borrower, its
Subsidiaries, WHC and any Subsidiary of WHC is a party or by which
it is bound, or by which, to the best knowledge of the Borrower,
any of any such Person's respective properties or assets, taken as
a whole, may be materially affected, and no event which, with the
giving of notice or the lapse of time, or both, would constitute
such an Event of Default, exists, or, if such cannot be so
certified, specifying in reasonable detail the exceptions, if any,
to such statement.
Section 5.6 Certificate of Accountants.
--------------------------
At the same time as it delivers the financial
statements required under the provisions of Section 5.1, a
certificate of the independent certified public accountants of the
Borrower addressed specifically both to the Borrower and the Bank
to the effect that during the course of their audit of the
operations of the Borrower and its condition as of the end of the
fiscal year, nothing has come to their attention which would
indicate that an Event of Default or Default hereunder has
occurred, or, if such cannot be so certified, specifying in
reasonable detail the exceptions, if any, to such statement.
Section 5.7 Accountants' Reports.
--------------------
Promptly upon receipt thereof, copies of all other
reports submitted to the Borrower by its independent accountants in
connection with any annual or interim audit or review of the books
of the Borrower made by such accountants.
Section 5.8 Copies of Documents.
-------------------
Promptly upon their becoming available, copies of
any: (i) financial statements, projections, non-routine reports,
notices (other than routine correspondence), requests for waivers
and proxy statements, in each case, delivered by the Borrower, its
Subsidiaries, WHC or any Subsidiary of WHC to any lending institu-
tion other than the Banks; (ii) correspondence or notices received
by the Borrower, its Subsidiaries, WHC or any Subsidiary of WHC
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34
from any federal, state or local governmental authority which
regulates the operations of the Borrower, its Subsidiaries, WHC or
any Subsidiary of WHC relating to an actual or threatened change or
development which would be materially adverse to the Borrower, its
Subsidiaries, WHC or any Subsidiary of WHC; (iii) registration
statements and any amendments and supplements thereto, and any
regular and periodic reports, if any, filed by Conquest, the
Borrower, its Subsidiaries, WHC or any Subsidiary of WHC with any
securities exchange or with the Securities and Exchange Commission
or any governmental authority succeeding to any or all of the
functions of the said Commission; (iv) letters of comment or
correspondence sent to Conquest, the Borrower, its Subsidiaries,
WHC or any Subsidiary of WHC by any such securities exchange or
such commission in relation to Conquest, the Borrower, its
Subsidiaries, WHC or any Subsidiary of WHC and their respective
affairs; (v) written reports submitted by the Borrower, its
Subsidiaries, WHC or any Subsidiary of WHC by its independent
accountants in connection with any annual or interim audit of the
books of the Borrower, its Subsidiaries, WHC or any Subsidiary of
WHC made by such accountants; and (vi) any appraisals received by
the Borrower, its Subsidiaries, WHC or any Subsidiary of WHC with
respect to the properties or assets of the Borrower, its Subsidiar-
ies, WHC or any Subsidiary of WHC.
Section 5.9 Notices of Defaults.
--------------------
Promptly, notice of the occurrence of any event
which constitutes, or with notice to it or lapse of time, or both,
would constitute, an Event of Default hereunder or under SBCC Loan
Agreement, or would constitute or cause a material adverse change
in the condition, financial or otherwise, or the operations of
Conquest, the Borrower, its Subsidiaries, WHC or any Subsidiary of
WHC.
Article 6. Affirmative Covenants.
----------------------
After the payment and discharge of any indebtedness
owing to SBCC arising out of the SBCC Loans, so long as the
Borrower is indebted to the Bank, and until payment in full of the
Note and full and complete performance of all of its other
obligations arising hereunder, the Borrower shall and shall cause
WHC and each Subsidiary of the Borrower or WHC and each Guarantor
to:
Section 6.1 Books and Records.
------------------
Keep proper books of record and account in a manner
reasonably satisfactory to the Bank in which full, true and correct
entries shall be made of all dealings or transactions in relation
to its business and activities.
Section 6.2 Inspections and Audits.
-----------------------
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35
Permit the Bank to make or cause to be made, at the
Borrower's expense, inspections and field audits of any books,
records and papers of the Borrower, and to make extracts therefrom
and copies thereof, and to make inspections and examinations of any
properties and facilities of the Borrower, WHC and each Subsidiary
of the Borrower or WHC, on reasonable notice, at all such reason-
able times and as often as the Bank may reasonably require, using
internal or outside auditors or examiners, in order to assure that
the Borrower is and will be in compliance with its obligations
under the Loan Documents or to evaluate the Bank's investment in
the Note.
Section 6.3 Maintenance and Repairs.
------------------------
Maintain in good repair, working order and condi-
tion, subject to normal wear and tear, all material properties and
assets from time to time owned by it and used in or necessary for
the operation of its business, and make all reasonable repairs,
replacements, additions and improvements thereto.
Section 6.4 Continuance of Business.
------------------------
Do, or cause to be done, all things reasonably
necessary to preserve and keep in full force and effect its
corporate existence and all permits, rights and privileges
necessary for the proper conduct of its business and continue to
engage in the same line of business.
Section 6.5 Copies of Corporate Documents.
------------------------------
Subject to the prohibitions set forth in Section
7.12 hereof, promptly deliver to the Bank copies of any amendments
or modifications to its, WHC's and any Subsidiary's and any
Guarantor's certificate of incorporation and by-laws, certified
with respect to the certificate of incorporation by the Secretary
of State of its state of incorporation and, with respect to the
by-laws, by the secretary or assistant secretary of the corpora-
tion.
Section 6.6 Perform Obligations.
--------------------
Pay and discharge all of its obligations and
liabilities, including, without limitation, all taxes, assessments
and governmental charges upon its income and properties, when due,
unless and to the extent only that such obligations, liabilities,
taxes, assessments and governmental charges shall be contested in
good faith and by appropriate proceedings and that, to the extent
required by generally accepted accounting principles then in
effect, proper and adequate book reserves relating thereto are
established by the Borrower, or, as the case may be, by WHC or the
appropriate Subsidiary or Guarantor, and then only to the extent
that a bond is filed in cases where the filing of a bond is
-34-
36
necessary to avoid the creation of a Lien against any of its
properties.
Section 6.7 Notice of Litigation.
---------------------
Promptly notify the Bank in writing of any litiga-
tion, legal proceeding or dispute, other than disputes in the
ordinary course of business or, whether or not in the ordinary
course of business, involving amounts in excess of Twenty Five
Thousand Dollars ($25,000), affecting the Borrower, WHC, any
Subsidiary of the Borrower or WHC or any Guarantor whether or not
fully covered by insurance, and regardless of the subject matter
thereof (excluding, however, any actions relating to workers'
compensation claims or negligence claims relating to use of motor
vehicles, if fully covered by insurance, subject to deductibles).
Section 6.8 Insurance.
----------
(a) (i) Maintain with responsible insurance
companies such insurance on such of its properties, in such amounts
and against such risks as is customarily maintained by similar
businesses; (ii) file with the Bank upon its request a detailed
list of the insurance then in effect, stating the names of the
insurance companies, the amounts and rates of the insurance, the
dates of the expiration thereof and the properties and risks
covered thereby; and (iii) within twenty (20) days after notice in
writing from the Bank, obtain such additional insurance as the Bank
may reasonably request.
Section 6.9 Notice of Certain Events.
-------------------------
(a) Promptly notify the Bank in writing if the
Borrower or any other Loan Party receives: (i) any notice of any
violation or administrative or judicial complaint or order having
been filed or about to be filed against the Borrower or such other
Loan Party alleging violations of any Environmental Law and
Regulation, or (ii) any notice from any governmental body or any
other Person alleging that the Borrower or such other Loan Party is
or may be subject to any Environmental Liability; and promptly upon
receipt thereof, provide the Bank with a copy of such notice
together with a statement of the action the Borrower or such other
Loan Party intends to take with respect thereto.
Section 6.10 Comply with ERISA.
-----------------
Comply with all applicable provisions of ERISA now
or hereafter in effect.
Section 6.11 Environmental Compliance.
-------------------------
Operate all property owned or leased by it such that
no obligation, including a clean-up obligation, shall arise under
-35-
37
any Environmental Law and Regulation, which obligation would
constitute a material Lien or charge (prior to that in favor of the
Bank) on any property of the Borrower or any other Loan Party;
provided, however, that in the event that any such claim is made or
any such obligation arises, the Borrower or such other Loan Party
shall, at its own cost and expense, immediately satisfy such claim
or obligation.
Section 6.12 Conduct of Business Operations.
-------------------------------
The Borrower and any Subsidiary of the Borrower
shall conduct its business in a manner which is separate from and
independent of the business of Conquest, and, more particularly,
the Borrower shall:
(a) maintain separate books and records (including,
where applicable, tax, financial reporting, accounting, payroll and
employee benefits administration, and legal) and separate bank
accounts;
(b) keep its assets separately identified and
segregated and not commingle its assets with any other entity,
whether or not such entity is an Affiliate;
(c) provide for reasonable reimbursement to it for
any tax-sharing or other similar arrangements entered into with any
Affiliate; provided, however, that it shall enter into any such
arrangement with an Affiliate only pursuant to an agreement which
shall have been submitted to and approved in writing by the Bank;
(d) maintain separate stationery, business forms
and telephone numbers from any Affiliate; and
(e) continue to have directors and officers who are
not substantially identical with those of Conquest so that the
independent nature of its activities will be observed and main-
tained.
Article 7. Negative Covenants.
-------------------
After the payment and discharge of all indebtedness
owing to SBCC arising out of the SBCC Loans and the termination of
the obligation of SBCC to lend under the SBCC Loan Agreement, so
long as the Borrower is indebted to the Bank and until payment in
full of the Note and full and complete performance of all of its
other obligations arising hereunder, the Borrower shall not and not
permit WHC, any Subsidiary of the Borrower, any Subsidiary of WHC
or any Guarantor (other than an Individual Guarantor) to do, agree
to do, or permit to be done, any of the following:
Section 7.1 Indebtedness.
-------------
-36-
38
Create, incur, permit to exist or have outstanding
any Indebtedness, except:
(a) Indebtedness of the Borrower to the Bank and
under this Agreement and the Note;
(b) Indebtedness of the Borrower to SBCC under the
SBCC Loan Agreement;
(c) Taxes, assessments and governmental charges,
non-interest bearing accounts payable and accrued liabilities, in
any case not more than 90 days past due from the original due date
thereof, and non-interest bearing deferred liabilities other than
for borrowed money (e.g., deferred compensation and deferred
taxes), in each case incurred and continuing in the ordinary course
of business;
(d) Indebtedness secured by the security interests
referred to in subsection 7.2(d) hereof; and
(e) As set forth on Exhibit G annexed hereto.
Section 7.2 Liens.
------
Create, or assume or permit to exist, any Lien on
any of the properties or assets of the Borrower or any of its
Subsidiary, whether now owned or hereafter acquired, except:
(a) Those created and granted by the Security
Documents;
(b) Liens in favor of SBCC securing the Indebted-
ness under the SBCC Loan Agreement;
(c) Permitted Liens;
(d) Purchase money mortgages or security inter-
ests, conditional sale arrangements and other similar security
interests, on motor vehicles and equipment acquired by the Borrower
or any Subsidiary (hereinafter referred to individually as a
"Purchase Money Security Interest") with the proceeds of the
Indebtedness referred to in subsection 7.1(d) hereof; provided,
however, that:
(i) The transaction in which any Purchase
Honey Security Interest is proposed to be created is not then
prohibited by this Agreement;
(ii) Any Purchase Money Security Interest shall
attach only to the property or asset acquired in such transaction
and shall not extend to or cover any other assets or properties of
the Borrower or, as the case may be, a Subsidiary; and
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39
(iii) The Indebtedness secured or covered
by any Purchase Money Security Interest shall not exceed the lesser
of the cost or fair market value of the property or asset acquired
and shall not be renewed, extended or prepaid from the proceeds of
any borrowing by the Borrower or any Subsidiary; and
(e) As set forth on Exhibit H annexed hereto.
Section 7.3 Guaranties.
-----------
Except as set forth on Exhibit G annexed hereto,
assume, endorse, be or become liable for, or guarantee, the
obligations of any Person, except by the endorsement of negotiable
instruments for deposit or collection in the ordinary course of
business. For the purposes hereof, the term "guarantee" shall
include any agreement, whether such agreement is on a contingency
or otherwise, to purchase, repurchase or otherwise acquire
Indebtedness of any other Person, or to purchase, sell or lease, as
lessee or lessor, property or services, in any such case primarily
for the purpose of enabling another person to make payment of
Indebtedness, or to make any payment (whether as an advance,
capital contribution, purchase of an equity interest or otherwise)
to assure a minimum equity, asset base, working capital or other
balance sheet or financial condition, in connection with the
Indebtedness of another Person, or to supply funds to or in any
manner invest in another Person in connection with such Person's
Indebtedness.
Section 7.4 Mergers, Acquisitions.
----------------------
Merge or consolidate with any Person or acquire all
or substantially all of the assets or any of the capital stock of
any Person.
Section 7.5 Redemptions; Distributions.
---------------------------
(a) Purchase, redeem, retire or otherwise acquire,
directly or indirectly, or make any sinking fund payments with
respect to, any shares of any class of stock of the Borrower or any
Subsidiary now or hereafter outstanding or set apart any sum for
any such purpose; or,
(b) Declare or pay any dividends or make any
distribution of any kind on the Borrower's outstanding stock, or
set aside any sum for any such purpose PROVIDED, that Borrower may
declare and pay dividends to WHC, provided that (a) no Defaults or
Events of Default then exist or would be caused by the payment
thereof, (b) such dividend payments do not exceed Five Hundred
Eighty-One Thousand Dollars ($581,000) per fiscal year of Borrower
minus the sum of (i) cash received by Conquest during such fiscal
year from Air L.A., Inc. or its Affiliates in connection with the
sale by Conquest to Air L.A., Inc. of the outstanding capital stock
-38-
40
of Conquest Airlines Corp. and (ii) the amount of dividends paid by
Gaming Supply to WHC during such fiscal year, and (c) such
distributions are distributed by WHC to Conquest and are used by
Conquest solely to satisfy current obligations owing in respect of
(x) Series A, Series B, Series C, Series D and Series E preferred
stock of Conquest and (y) certain promissory notes issued by
Conquest in connection with a July, 1994 private placement in an
aggregate amount of $2,737,500.00.
Section 7.6 Stock Issuance.
---------------
Issue any additional shares or any right or option
to acquire any shares, or any security convertible into any shares,
of the capital stock of the Borrower, WHC or any subsidiary.
Section 7.7 Changes in Business.
--------------------
Make any material change in its business, or in the
nature of its operation, or liquidate or dissolve itself (or suffer
any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, assets or
business except in the ordinary course of business and for a fair
consideration or dispose of any shares of stock or any Indebted-
ness, whether now owned or hereafter acquired, or discount, sell,
pledge, hypothecate or otherwise dispose of accounts receivable.
Section 7.8 Prepayments.
------------
Make any voluntary or optional prepayment of any
Indebtedness for borrowed money incurred or permitted to exist
under the terms of this Agreement, other than the SBCC Loans and
Indebtedness evidenced by the Note.
Section 7.9 Investments.
------------
Make, or suffer to exist, any Investment in any
Person, including, without limitation, any shareholder, director,
officer or employee of the Borrower or any of the Subsidiaries,
except:
(a) Investments in:
(i) obligations issued or guaranteed by the
United States of America;
(ii) certificates of deposit, bankers accep-
tances and other "money market instruments" issued by any bank or
trust company organized under the laws of the United State of
America or any State thereof and having capital and surplus in an
aggregate amount not less than $100,000,000;
(iii) open market commercial paper bearing the
-39-
41
highest credit rating issued by Standard & Poor's Corp. or by
another nationally recognized credit rating firm;
(iv) repurchase agreements entered into with
any bank or trust company organized under the laws of the United
States of America or any State thereof and having capital and
surplus in an aggregate amount not less than $100,000,000 relating
to United States of America government obligations; and
(v) shares of "money market funds", each
having net assets of not less than $100,000,000; in each case
maturing or being due or payable in full not more than 180 days
after the Borrower's acquisition thereof;
(b) Investments in the form of loans to employees
of the Borrower or any Subsidiary or any Guarantor, provided that
the outstanding principal amount of all such loans to any one
employee shall at no time exceed $25,000 and that the aggregate
outstanding principal amount of all such loans shall at no time
exceed $100,000; and,
(c) Investments by the Borrower in any Subsidiary
and by any Subsidiary in the Borrower.
Section 7.10 Fiscal Year.
------------
Change its fiscal year.
Section 7.11 ERISA Obligations.
------------------
(a) Be or become obligated to the PBGC other than
in respect of annual premium payments in excess of $50,000.
(b) Be or become obligated to the IRS with respect
to excise or other penalty taxes provided for in those provisions
of Section 4975 the Code, as in effect or hereafter amended or
supplemented, in excess of $50,000.
Section 7.12 Amendment of Documents.
-----------------------
Modify, amend, supplement or terminate, or agree to
modify, amend, supplement or terminate its certificate of incorpo-
ration or by-laws, or any of the subordinated notes or other
agreements or evidences of indebtedness covered by the Subordina-
tion Agreements.
Section 7.13 Management Fees.
----------------
(a) Pay, or be or become obligated to pay, any
Management Fees to any Shareholder or any Affiliate thereof, or any
interest on any deferred obligation therefor.
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42
(b) Pay, or be or become obligated to pay, any
Director's Fees to any person, or any interest on any deferred
obligation therefor, including, without limitation, to any
shareholder, director, officer or employee of the Borrower.
Section 7.14 Transactions with Affiliates.
-----------------------------
Except as expressly permitted by this Agreement,
directly or indirectly: (i) make any Investment in an Affiliate;
(ii) transfer, sell, lease, assign or otherwise dispose of any
assets to an Affiliate; or (iii) merge into or consolidate with or
purchase or acquire assets from an Affiliate; or enter into any
other transaction directly or indirectly with or for the benefit of
any Affiliate (including, without limitation, guarantees and
assumptions of obligations of an Affiliate); provided, however,
that (a) payments on Investments expressly permitted by Section 7.9
hereof may be made, (b) any Affiliate who is an individual may
serve as an employee or director of the Borrower, WHC or any
Subsidiary and receive reasonable compensation for his services in
such capacity, and (c) the Borrower or any Subsidiary may enter
into any transaction with an Affiliate providing for the leasing of
property, the rendering or receipt of services or the purchase or
sale of product, inventory and other assets in the ordinary course
of business if the monetary or business consideration arising
therefrom would be substantially as advantageous to the Borrower or
such Subsidiary as the monetary or business consideration which
would obtain in a comparable arm's length transaction with a Person
not an Affiliate.
Section 7.15 Independent Business Operations.
--------------------------------
Engage in any business activities with Conquest,
whether or not in accordance with the provisions of Section 7.14
hereof.
Article 8. Events of Default.
------------------
If any one or more of the following events ("Events of
Default") shall occur and be continuing, the entire unpaid balance
of the principal of and interest on the Note outstanding and all
other obligations and Indebtedness of the Borrower to the Bank
arising hereunder and under the other Loan Documents shall
immediately become due and payable upon written notice to that
effect given to the Borrower by the Bank (except that in the case
of the occurrence of any Event of Default described in Section 8.6
no such notice shall be required), without presentment or demand
for payment, notice of non-payment, protest or further notice or
demand of any kind, all of which are expressly waived by the
Borrower:
Section 8.1 Payments.
---------
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43
Failure to make any payment or mandatory prepayment
of principal or interest upon any Note or to make any payment of
the Restructuring Fee, the March Fee or any other amount payable
hereunder when due; or
Section 8.2 Covenants.
----------
After the payment and discharge of all indebtedness
owing to SBCC arising out of the SBCC Loans and the termination of
the obligation of SBCC to lend under the SBCC Loan Agreement,
failure to perform or observe any of the agreements of the
Borrower, WHC or any Subsidiary of the Borrower or WHC or any
Guarantor contained in Article 7 hereof; or
Section 8.3 Other Covenants.
----------------
(a) After the payment and discharge of all
indebtedness owing to SBCC arising out of the SBCC Loans and the
termination of the obligation of SBCC to lend under the SBCC Loan
Agreement,
(i) Failure by the Borrower to perform or
observe any term, condition or covenant (other than those provided
for Section 8.1 or 8.2 hereof) of this Agreement or of any of the
other Loan Documents to which it is a party, which shall remain
unremedied for a period of 30 days after notice thereof shall have
been given to the Borrower by the Bank; or
(ii) Failure by any Loan Party other than the
Borrower to perform or observe any term, condition or covenant of
any of the Loan Documents to which it or he is a party, which shall
remain unremedied for a period of 30 days after notice thereof
shall have been given to the Borrower by the Bank; or
Section 8.4 Other Defaults.
---------------
(a) The declaration by SBCC that the Liabilities
(as defined in the SBCC Loan Agreement) are immediately due and
payable (unless such declaration shall have been rescinded); or the
acceleration of such Liabilities without such declaration; or the
taking of any action by SBCC to foreclose or realize upon or
enforce any of its rights against property of the Borrower, WHC,
Gaming Supply or the Subsidiaries of the Borrower or WHC; or
(b) After the payment and discharge of all
indebtedness owing to SBCC arising out of the SBCC Loans and the
termination of the obligation of SBCC to lend under the SBCC Loan
Agreement,
(i) Failure to perform or observe any term,
condition or covenant of any bond, note, debenture, loan agreement,
indenture, guaranty, trust agreement, mortgage or similar instru-
-42-
44
ment to which the Borrower, WHC or any Subsidiary of the Borrower
or WHC is a party or by which it is bound, or by which any of its
properties or assets may be affected including, without limitation,
the SBCC Loan Agreement or any of the subordinated notes or other
agreements or evidences of Indebtedness covered by any Subordina-
tion Agreement (a "Debt Instrument"), so that, as a result of any
such failure to perform, the Indebtedness included therein or
secured or covered thereby may be declared due and payable prior to
the date on which such Indebtedness would otherwise become due and
payable; or
(ii) Any event or condition referred to in any
Debt Instrument shall occur or fail to occur, so that, as a result
thereof, the Indebtedness included therein or secured or covered
thereby is declared due and payable prior to the date on which such
Indebtedness would otherwise become due and payable; or
(iii) Failure to pay any Indebtedness for
borrowed money in accordance with its stated terms, or when due at
final maturity or pursuant to demand under any Debt Instrument;
provided, however that the provisions of this Section 8.4 shall not
be applicable to any Debt Instrument which relates to or evidences
Indebtedness which, on the date this Section 8.4 would otherwise be
applicable thereto, evidences Indebtedness in a principal amount of
less than $100,000.
Section 8.5 Representations and Warranties.
-------------------------------
Any representation or warranty made in writing to
the Bank in any of the Loan Documents or in connection with the
making of the Loan, or any certificate, statement or report made or
delivered in compliance with this Agreement, shall have been false
or misleading in any material respect when made or delivered; or
Section 8.6 Bankruptcy.
-----------
(a) The Borrower, WHC or any Subsidiary of the
Borrower or WHC or any Guarantor shall make an assignment for the
benefit of creditors, file a petition in bankruptcy, be adjudicated
insolvent, petition or apply to any tribunal for the appointment of
a receiver, custodian, or any trustee for it or him or a substan-
tial part of its or his assets, or shall commence any proceeding
under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdic-
tion, whether now or hereafter in effect, or the Borrower, WHC or
any Subsidiary of the Borrower or WHC or any Guarantor shall take
any corporate action to authorize any of the foregoing actions; or
there shall have been filed any such petition or application, or
any such proceeding shall have been commenced against it or him
which remains undismissed for a period of thirty (30) days or more;
or any order for relief shall be entered in any such proceeding; or
-43-
45
the Borrower, WHC or any Subsidiary of the Borrower or WHC or any
Guarantor by any act or omission shall indicate its or his consent
to, approval of or acquiescence in any such petition, application
or proceeding or the appointment of a custodian, receiver or any
trustee for it or him or any substantial part of any of its or his
properties, or shall suffer any custodianship, receivership or
trusteeship to continue undischarged for a period of thirty (30)
days or more; or
(b) The Borrower, WHC or any Subsidiary of the
Borrower or WHC or any Guarantor shall generally not pay its or his
debts as such debts become due; or
(c) The Borrower, WHC or any Subsidiary of the
Borrower or WHC or any Guarantor shall have concealed, removed, or
permitted to be concealed or removed, any part of its or his
property, with intent to hinder, delay or defraud its or his
creditors or any of them or made or suffered a transfer of any of
its or his property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or shall have made any
transfer of its or his property to or for the benefit of a creditor
at a time when other creditors similarly situated have not been
paid; or shall have suffered or permitted, while insolvent, any
creditor to obtain a Lien upon any of its or his property through
legal proceedings or distraint which is not vacated within thirty
(30) days from the date thereof; or
Section 8.7 Judgments.
----------
After the payment and discharge of all indebtedness
owing to SBCC arising out of the SBCC Loans and the termination of
the obligation of SBCC to lend under the SBCC Loan Agreement, any
judgment against the Borrower, WHC or any Subsidiary of the
Borrower or WHC or any attachment, levy or execution against any of
its properties for any amount in excess of Fifty Thousand Dollars
($50,000) shall remain unpaid, unstayed on appeal, undischarged,
unbonded or undismissed for a period of thirty (30) days or more;
or
Section 8.8 ERISA.
------
After the payment and discharge of all indebtedness
owing to SBCC arising out of the SBCC Loans and the termination of
the obligation of SBCC to lend under the SBCC Loan Agreement,
(i) The termination of any Plan or the institution
by the PBGC of proceedings for the involuntary termination of any
Plan, in either case, by reason of, or which results or could
result in, a "material accumulated funding deficiency" under
Section 412 of the Code; or
(ii) Failure by the Borrower to make required
-44-
46
contributions, in accordance with the applicable provisions of
ERISA, to each of the Plans hereafter established or assumed by it;
or
Section 8.9 Ownership of Stock of Borrower
WHC and Conquest.
-----------------
After the payment and discharge of all indebtedness
owing to SBCC arising out of the SBCC Loans and the termination of
the obligation of SBCC to lend under the SBCC Loan Agreement,
(i) WHC shall at any time own, beneficially and
of record, less than 100% in the aggregate of the issued and
outstanding capital stock of the Borrower having ordinary voting
rights for the election of directors; or
(ii) Conquest shall at any time own, beneficially
and of record, less than 100% of the aggregate of the issued and
outstanding capital stock of WHC having ordinary voting rights for
the election of directors; or
(iii) The Individual Pledgors (or in the event of
the death of any of them, his estate, legal representative or
heirs) shall at any time own, beneficially and of record, less than
30% in the aggregate of the issued and outstanding capital stock
of Conquest having ordinary voting rights for the election of
directors.
Section 8.10 Liens.
------
After the payment and discharge of all indebtedness
owing to SBCC arising out of the SBCC Loans and the termination of
the obligation of SBCC to lend under the SBCC Loan Agreement, any
of the Liens created and granted to the Bank under the Security
Documents shall fail to be valid, first, perfected Liens, subject
to no prior or equal Lien, except as permitted by Section 7.2
hereof.
Article 9. Miscellaneous Provisions.
-------------------------
Section 9.1 Fees and Expenses; Indemnity.
-----------------------------
The Borrower will promptly pay all costs of the Bank
in preparing the Loan Documents and all costs and expenses of the
issue of the Note and of the Borrower's and any other Loan Party's
performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with
(including, without limitation, all costs of filing or recording
any assignments, mortgages, financing statements and other
documents), and the reasonable fees and expenses and disbursements
of special counsel to the Bank, in connection with the preparation,
execution and delivery, administration, interpretation and
-45-
47
enforcement of this Agreement, the other Loan Documents and all
other agreements, instruments and documents relating to this
transaction, the consummation of the transactions contemplated by
all such documents, the preservation of all rights of the Bank, the
negotiation, preparation and execution and delivery of any
amendment, modification or supplement of or to, or any consent or
waiver under, any such document (or any such instrument which is
proposed but not executed and delivered) and in connection with any
claim or action threatened, made or brought against the Bank
arising out of or relating to any extent to this Agreement, the
other Loan Documents or the transactions contemplated hereby or
thereby. In addition, the Borrower will promptly pay all costs and
expenses (including, without limitation, reasonable fees and
disbursements of counsel) suffered or incurred by the Bank in
connection with its enforcement of the payment of the Note or any
other sum due to it under this Agreement or any of the other Loan
Documents or any of its other rights hereunder or thereunder. In
addition to the foregoing, the Borrower shall indemnify the Bank
and its respective directors, officers, employees, attorneys and
agents against, and hold each of them harmless from, any loss,
liabilities, damages, claims, costs and expenses (including
reasonable attorneys' fees and disbursements of counsel) suffered
or incurred by any of them arising out of, resulting from or in any
manner connected with, the execution, delivery and performance of
each of the Loan Documents, the Loan and any and all transactions
related to or consummated in connection with the Loan, including,
without limitation, losses, liabilities, damages, claims, costs and
expenses suffered or by the Bank or any of its respective direc-
tors, officers, employees, attorneys or agents arising out of or
related to any Environmental Matter, Environmental Liability or
Environmental Proceeding, or in investigating, preparing for,
defending against, or providing evidence, producing documents or
taking any other action in respect of any commenced or threatened
litigation, administrative proceeding or investigation under any
federal securities law or any other statute of any jurisdiction, or
any regulation, or at common law or otherwise, which is alleged to
arise out of or is based upon: (i) any untrue statement or alleged
untrue statement of any material fact of the Borrower and its
Affiliates contained in any document or schedule filed with the
Securities and Exchange Commission or any other governmental body;
(ii) any omission or alleged omission to state any material fact
required to be stated in such document or schedule, or necessary to
make the statements made therein, in light of the circumstances
under which made, not misleading; (iii) any acts, practices or
omission or alleged acts, practices or omissions of the Borrower or
its agents related to the making of any acquisition, purchase of
shares or assets pursuant thereto, financing of such purchases or
the consummation of any other transactions contemplated by any such
acquisitions which are alleged to be in violation of any federal
securities law or of any other statute, regulation or other law of
any jurisdiction applicable to the making of any such acquisition,
the purchase of shares or assets pursuant thereto, the financing of
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48
such purchases or the consummation of the other transactions
contemplated by any such acquisition; or (iv) any withdrawals,
termination or cancellation of any proposed such acquisition for
any reason whatsoever. The indemnity set forth herein shall be in
addition to any other obligations or liabilities of the Borrower to
the Bank hereunder or at common law or otherwise. The provisions
of this section 9.1 shall survive the payment of the Note and the
termination of this Agreement.
Section 9.2 Taxes.
------
If, under any law in effect on the Closing Date, or
under any retroactive provision of any law subsequently enacted, it
shall be determined that any Federal, state or local tax is payable
in respect of the issuance of the Note, or in connection with the
filing or recording of any assignments, mortgages, financing
statements, or other documents (whether measured by the amount of
indebtedness secured or otherwise) as contemplated by this
Agreement, then the Borrower will pay any such tax and all interest
and penalties, if any, and will indemnify the Bank against and save
it harmless from any loss or damage resulting from or arising out
of the nonpayment or delay in payment of any such tax. If any such
tax or taxes shall be assessed or levied against any Bank or any
other holder of the Note, the Bank, or such other holder, as the
case may be, may notify the Borrower and make immediate payment
thereof, together with interest or penalties in connection
therewith, and shall thereupon be entitled to and shall receive
immediate reimbursement therefor from the Borrower. Notwithstand-
ing any other provision contained in this Agreement, the covenants
and agreements of the Borrower in this Section 9.2 shall survive
payment of the Note and the termination of this Agreement.
Section 9.3 Survival of Agreements and
Representations; Waiver of Trial by Jury.
-----------------------------------------
All agreements, representations and warranties made
herein shall survive the delivery of this Agreement and the Note.
THE BORROWER WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT
WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF, THIS
AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY INSTRUMENT OR
DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, OR THE VALIDITY,
PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.
Section 9.4 Lien on and Set-off of Deposits.
--------------------------------
As security for the due payment and performance of
all the Obligations, the Borrower hereby grants to Bank a Lien on
any and all deposits or other sums at any time credited by or due
from the Bank to the Borrower, whether in regular or special
depository accounts or otherwise, and any and all monies, securi-
ties and other property of the Borrower, and the proceeds thereof,
now or hereinafter held or received by or in transit to the Bank
-47-
49
from or for the Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, and any such deposits, sums,
monies, securities and other property, may at any time after the
occurrence and during the continuance of any Event of Default be
set-off, appropriated and applied by the Bank against any of the
Obligations, whether or not any of such Obligations is then due or
is secured by any collateral, or, if it is so secured, whether or
not the collateral held by the Bank is considered to be adequate,
all as set forth in and pursuant to Section 2.16 hereof.
Section 9.5 Modifications, Consents and
Waivers; Entire Agreements.
---------------------------
No modification, amendment or waiver of or with
respect to any provision of this Agreement, the Note, the Security
Documents, or any of the other Loan Documents and all other
agreements, instruments and documents delivered pursuant hereto or
thereto, nor consent to any departure by the Borrower from any of
the terms or conditions thereof, shall in any event be effective
unless it shall be in writing and signed by the Bank. Any such
waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No consent to or demand on
the Borrower in any case shall, of itself, entitle it to any other
or further notice or demand in similar or other circumstances.
This Agreement embodies the entire agreement and understanding
among the Bank and the Borrower and supersedes all prior agreements
and understandings relating to the subject matter hereof.
Section 9.6 Remedies Cumulative.
--------------------
Each and every right granted to the Bank hereunder
or under any other document delivered hereunder or in connection
herewith, or allowed it by law or equity, shall be cumulative and
may be exercised from time to time. No failure on the part of the
Bank or the holder of the Note to exercise, and no delay in
exercising, any right shall operate as a waiver thereof, nor shall
any single or partial exercise of any right preclude any other or
future exercise thereof or the exerCise of any other right. The
due payment and performance of the Borrower's indebtedness,
liabilities and obligations under the Note and this Agreement shall
be without regard to any counterclaim, right of offset or any other
claim whatsoever which the Borrower may have against the Bank and
without regard to any other obligation of any nature whatsoever
which the Bank may have to the Borrower, and no such counterclaim
or offset shall be asserted by the Borrower in any action, suit or
proceeding instituted by the Bank for payment or performance of the
Borrower's indebtedness, liabilities or obligations under the Note,
this Agreement, the Security Documents or any of the other Loan
Documents or otherwise.
Section 9.7 Further Assurances.
-------------------
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50
At any time and from time to time, upon the request
of the Bank, the Borrower shall execute, deliver and acknowledge or
cause to be executed, delivered and acknowledged, such further
documents and instruments and do such other acts and things as the
Bank may reasonably request in order to fully effect the purposes
of this Agreement, the other Loan Documents and any other agree-
ments, instruments and documents delivered pursuant hereto or in
connection with the Loan, including, without limitation, the
execution and delivery to the Bank of mortgages in form and
substance satisfactory to the Bank covering all real property or
interests therein acquired by the Borrower, and all leases of real
property entered into by the Borrower as tenant or lessee, after
the date of this Agreement, promptly after such acquisition or the
entering into of any such lease.
Section 9.8 Notices.
--------
All notices, requests, reports and other communi-
cations pursuant to this Agreement shall be in writing, either by
letter (delivered by hand or commercial messenger service or sent
by certified mail, return receipt requested, except for routine
reports delivered in compliance with Article 5 hereof which may be
sent by ordinary first-class mail) or telegram, addressed as
follows:
(a) If to the Borrower:
Wico Corporation
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with copies to:
Kronish, Lieb, Weiner & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
(b) If to the Bank:
NatWest Bank N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Vice President
with a copy (other than in the
case of Borrowing Notices and
reports and other documents
delivered in compliance with
-49-
51
Article 5 hereof) to:
Winston & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Any notice, request or communication hereunder shall be deemed to
have been given on the day on which it is delivered by hand or such
commercial messenger service to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day
deposited in the mail, postage prepaid, or in the case of tele-
graphic notice, when delivered to the telegraph company, addressed
as aforesaid. Any party may change the person or address to whom
or which notices are to be given hereunder, by notice duly given
hereunder; provided, however, that any such notice shall be deemed
to have been given hereunder only when actually received by the
party to which it is addressed.
Section 9.9 Counterparts.
-------------
This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument.
Section 9.10 Construction; Governing Law;
Consent to Jurisdiction.
------------------------
(a) The headings used in this Agreement and the
table of contents are for convenience only and shall not be deemed
to constitute a part hereof. All uses herein of the masculine
gender or of singular or plural terms shall be deemed to include
uses of the feminine or neuter gender or plural or singular terms,
as the context may require. This Agreement, the other Loan
Documents and all other documents and instruments executed and
delivered in connection herewith and therewith, shall be governed
by, and construed and interpreted in accordance with, the laws of
the State of New York.
(b) THE BORROWER IRREVOCABLY CONSENTS THAT ANY
LEGAL ACTION OR PROCEEDING AGAINST IT UNDER, ARISING OUT OF OR IN
ANY MANNER RELATING TO THIS AGREEMENT, AND EACH OTHER LOAN DOCUMENT
MAY BE BROUGHT IN ANY COURT OF THE STATE OF NEW YORK OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK.
THE BORROWER, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
EXPRESSLY AND IRREVOCABLY ASSENTS AND SUBMITS TO THE PERSONAL
JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEED-
ING. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
ANY COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS RELATING TO ANY
SUCH ACTION OR PROCEEDING BY DELIVERY THEREOF TO IT BY HAND OR BY
MAIL IN THE MANNER PROVIDED FOR IN SECTION 9.8 HEREOF. THE
BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR
-50-
52
DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON-CONVENIENCE
OR ANY SIMILAR BASIS. THE BORROWER SHALL NOT BE ENTITLED IN ANY
SUCH ACTION OR PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR ALLOWED
UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF NEW YORK UNLESS
SUCH DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF
NEW YORK. NOTHING IN THIS SECTION 9.10 SHALL AFFECT OR IMPAIR IN
ANY MANNER OR TO ANY EXTENT THE RIGHT OF THE BANK TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY
JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
Section 9.11 Severability.
-------------
The provisions of this Agreement are severable, and
if any clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect only such clause or
provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdic-
tion, or any other clause or provision in this Agreement in any
jurisdiction. Each of the covenants, agreements and conditions
contained in this Agreement is independent and compliance by the
Borrower with any of them shall not excuse non-compliance by the
Borrower with any other. All covenants hereunder shall be given
independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limita-
tions of, another covenant shall not avoid the occurrence of an
Event of Default or Default if such action is taken or condition
exists. The Borrower shall not take any action the effect of which
shall constitute a breach or violation of any provision of this
Agreement.
Section 9.12 Binding Effect; No Assignment
or Delegation by Borrower.
--------------------------
This Agreement shall be binding upon and inure to
the benefit of the Borrower and its successors and to the benefit
of the Bank and its respective successors and assigns. The rights
and obligations of the Borrower under this Agreement shall not be
assigned or delegated without the prior written consent of the
Bank, and any purported assignment or delegation without such
consent shall be void.
Section 9.13 Assignments and Participations by Bank.
---------------------------------------
(a) The Bank may assign or sell participations to
one or more banks or other entities all or a portion of its rights
and obligations under this Agreement (including, without limita-
tion, all or a portion of the Loan and the Note).
(b) The Bank may, in connection with any assignment
-51-
53
or participation or proposed assignment or participation pursuant
to this Section 9.13, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the
Borrower or any other Loan Party furnished to the Bank by or on
behalf of the Borrower; provided that, prior to any such disclo-
sure, the assignee or participant or proposed assignee or partici-
pant shall agree to preserve the confidentiality of any confiden-
tial information relating to the Borrower received by it from the
Bank.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the date first above written.
WICO CORPORATION
By: ??????? CEO
-------------------------
Title
NATWEST BANK N.A.
By: ??????? VP
-------------------------
Title
-52-
54
LIST OF EXHIBITS
Exhibit A - Form of Note
Exhibit B - States of Incorporation and Qualification;
Capitalization and Ownership of Stock
Exhibit C - Consents, Waivers, Approval; Violation of
Agreements
Exhibit D - Judgments, Actions, Proceedings
Exhibit E - Patents, Trademarks, Trade Names, Service
Marks, Copyrights
Exhibit F - Name Changes, Mergers, Acquisitions
Exhibit G - Permitted Indebtedness and Guarantees
Exhibit H - Permitted Security Interests, Liens, and
Encumbrances
-53-
55
TABLE OF CONTENTS
Page
Article 1. Definitions . . . . . . . . . . . . . . . . -2-
Article 2. Loan; Collateral; Subordinations . . . . . . -12-
Section 2.1 The Loan. . . . . . . . . . . . . . . . -12-
Section 2.2 The Note . . . . . . . . . . . . . . . -12-
Section 2.3 Interest Rate . . . . . . . . . . . . . -12-
Section 2.4 Principal Repayment . . . . . . . . . . -13-
Section 2.5 Restructuring Fee and March . . . . . -14-
Section 2.6 Prepayments . . . . . . . . . . . . . . -14-
Section 2.7 Use of Proceeds of the Existing Loans. -14-
Section 2.8 Time and Method of Payments . . . . . . -15-
Section 2.9 Computations. . . . . . . . . . . . . . -15-
Section 2.10 Minimum Amount of Prepayments . . . . . -15-
Section 2.11 Lending Offices. . . . . . . . . . . . -15-
Section 2.12 Guaranties. . . . . . . . . . . . . . . -16-
Section 2.13 Security. . . . . . . . . . . . . . . . -16-
Section 2.14 Subordination. . . . . . . . . . . . . -20-
Section 2.15 Additional Costs. . . . . . . . . . . . -20-
Section 2.16 Set-Off. . . . . . . . . . . . . . . . -21-
Article 3. Representations and Warranties . . . . . . . -21-
Section 3.1 Organization . . . . . . . . . . . . . -22-
Section 3.2 Power, Authority, Consents. . . . . . . -23-
Section 3.3 No Violation of Law or Agreements. . . -23-
Section 3.4 Due Execution, Validity, Enforceability.
. . . . . . . . . . . . . . . . . . . . . . . -24-
Section 3.5 Properties, Priority of Liens. . . . . . -24-
Section 3.6 Judgments, Actions, Proceedings. . . . -24-
Section 3.7 No Defaults, Compliance With Laws. . . -24-
Section 3.8 Burdensome Documents. . . . . . . . . . -25-
Section 3.9 Financial Statements; Accounts
Receivable Projections . . . . . . . . -25-
Section 3.10 Tax Returns. . . . . . . . . . . . . . -26-
Section 3.11 Intangible Assets. . . . . . . . . . . -26-
Section 3.12 Regulation U. . . . . . . . . . . . . . -26-
Section 3.13 Name Changes, Mergers, Acquisitions;
Location of Collateral . . . . . . . . -27-
Section 3.14 Licenses and Approvals. . . . . . . . . -27-
Section 3.15 Labor Disputes. . . . . . . . . . . . . -27-
Section 3.16 Condition of Assets . . . . . . . . . . -27-
Section 3.17 ERISA. . . . . . . . . . . . . . . . . -27-
Article 4. The Closing. . . . . . . . . . . . . . . . . -28-
Section 4.1 Conditions to Effectiveness of Agreement
. . . . . . . . . . . . . . . . . . . . . . . . -28-
Article 5. Delivery of Financial Reports,
-i-
56
Documents and other Information . . . . . . -30-
Section 5.1 Annual Financial Statements. . . . . . -31-
Section 5.2 Quarterly Financial Statements. . . . . -31-
Section 5.3 Monthly Financial Statements. . . . . . -31-
Section 5.4 Compliance Information. . . . . . . . . -32-
Section 5.5 No Default Certificate. . . . . . . . . -32-
Section 5.6 Certificate of Accountants. . . . . . . -32-
Section 5.7 Accountants' Reports. . . . . . . . . . -32-
Section 5.8 Copies of Documents. . . . . . . . . . -32-
Section 5.9 Notices of Defaults. . . . . . . . . . -33-
Article 6. Affirmative Covenants . . . . . . . . . . . -33-
Section 6.1 Books and Records. . . . . . . . . . . -33-
Section 6.2 Inspections and Audits. . . . . . . . . -33-
Section 6.3 Maintenance and Repairs. . . . . . . . -34-
Section 6.4 Continuance of Business. . . . . . . . -34-
Section 6.5 Copies of Corporate Documents. . . . . -34-
Section 6.6 Perform Obligations. . . . . . . . . . -34-
Section 6.7 Notice of Litigation. . . . . . . . . . -35-
Section 6.8 Insurance. . . . . . . . . . . . . . . -35-
Section 6.9 Notice of Certain Events. . . . . . . . -35-
Section 6.10 Comply with ERISA. . . . . . . . . . . -35-
Section 6.11 Environmental Compliance. . . . . . . . -35-
Section 6.12 Conduct of Business Operations. . . . . -36-
Article 7. Negative Covenants . . . . . . . . . . . . . -36-
Section 7.1 Indebtedness. . . . . . . . . . . . . . -36-
Section 7.2 Liens . . . . . . . . . . . . . . . . . -37-
Section 7.3 Guaranties. . . . . . . . . . . . . . . -38-
Section 7.4 Mergers, Acquisitions. . . . . . . . . -38-
Section 7.5 Redemptions; Distributions. . . . . . . -38-
Section 7.6 Stock Issuance. . . . . . . . . . . . . -39-
Section 7.7 Changes in Business. . . . . . . . . . -39-
Section 7.8 Prepayments. . . . . . . . . . . . . . -39-
Section 7.9 Investments. . . . . . . . . . . . . . -39-
Section 7.10 Fiscal Year. . . . . . . . . . . . . . -40-
Section 7.11 ERISA Obligations. . . . . . . . . . . -40-
Section 7.12 Amendment of Documents. . . . . . . . . -40-
Section 7.13 Management Fees. . . . . . . . . . . . -40-
Section 7.14 Transactions with Affiliates. . . . . . -41-
Section 7.15 Independent Business Operations. . . . -41-
Article 8. Events of Default . . . . . . . . . . . . . -41-
Section 8.1 Payments. . . . . . . . . . . . . . . . -41-
Section 8.2 Covenants. . . . . . . . . . . . . . . -42-
Section 8.3 Other Covenants. . . . . . . . . . . . -42-
Section 8.4 Other Defaults. . . . . . . . . . . . . -42-
Section 8.5 Representations and Warranties. . . . . -43-
Section 8.6 Bankruptcy. . . . . . . . . . . . . . . -43-
Section 8.7 Judgments. . . . . . . . . . . . . . . -44-
Section 8.8 ERISA. . . . . . . . . . . . . . . . . -44-
Section 8.9 Ownership of Stock of Borrower
-ii-
57
WHC and Conquest. . . . . . . . . . . . -45-
Section 8.10 Liens. . . . . . . . . . . . . . . . . -45-
Article 9. Miscellaneous Provisions . . . . . . . . . -45-
Section 9.1 Fees and Expenses; Indemnity. . . . . . -45-
Section 9.2 Taxes. . . . . . . . . . . . . . . . . -47-
Section 9.3 Survival of Agreements and
Representations; Waiver of Trial by Jury -47-
Section 9.4 Lien on and Set-off of Deposits. . . . -47-
Section 9.5 Modifications, Consents and
Waivers; Entire Agreements . . . . . . -48-
Section 9.6 Remedies Cumulative. . . . . . . . . . -48-
Section 9.7 Further Assurances. . . . . . . . . . . -48-
Section 9.8 Notices. . . . . . . . . . . . . . . . -49-
Section 9.9 Counterparts. . . . . . . . . . . . . . -50-
Section 9.10 Construction; Governing Law,;
Consent to Jurisdiction . . . . . . . . -50-
Section 9.11 Severability. . . . . . . . . . . . . . -51-
Section 9.12 Binding Effect; No Assignment
or Delegation-by Borrower . . . . . . . -51-
Section 9.13 Assignments and Participations
by Bank . . . . . . . . . . . . . . . . -51-
-iii-
58
THIRD SUBSTITUTED TERM NOTE
---------------------------
$18,535,848.00 New York, New York
October 20, 1995
FOR VALUE RECEIVED, the undersigned, WICO CORPORATION (f/k/a
Wico Distribution Corp .) a Delaware corporation (the "Borrower"),
promises to pay to the order of NATWEST BANK N.A. (f/k/a National
Westminster Bank USA), a national banking association organized and
existing under and by virtue of the laws of the United States of
America (the "Bank") the principal sum of EIGHTEEN MILLION FIVE
HUNDRED THIRTY-FIVE THOUSAND EIGHT HUNDRED FORTY-EIGHT AND 00/100
DOLLARS ($18,535,848.00), payable in 48 consecutive monthly
installments commencing on October 1, 1996 and on the first day of
each calendar month thereafter (each such date, a "Repayment Date")
(provided that the last such payment shall be in an amount
sufficient to repay in full the principal amount hereof), with the
amount of the installment paid on each Payment Date to be in the
respective amounts set forth below:
Principal Amount of the
Principal Payment Loan Payable on each
Dates such Payment Date
----------------- ------------------------
The first date of each month $20,833.33
from October 1, 1996 through
and including September 1, 1997
The first date of each month 41,666.67
from October 1, 1997 through
and including September 1, 1998
The first date of each month 62,500.00
from October 1, 1998 through
and including September 1, 1999
The first date of each month 83,333.33
from October 1, 1999 through
and including August 1, 2000
September 1, 2000 10,244,181.37, or
such lesser amount
as shall equal the
the then outstanding
principal amount of
this Note
and to pay interest on the unpaid principal amount hereof at the
rates per annum, for the periods set forth in and at the times
provided for in the Amended and Restated Loan Agreement, dated
October 20, 1995, by and between the Borrower and the Bank (as the
same may hereafter be amended, modified or supplemented, the "Loan
Agreement") and as calculated therein.
59
EXHIBIT B
TO
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
STATES OF INCORPORATION AND QUALIFICATION
AND CAPITALIZATION AND OWNERSHIP
OF STOCK OF WICO CORPORATION AND WICO HOLDING CORP.
---------------------------------------------------
WICO CORPORATION (the "Borrower")
(a) (i) The Borrower is a corporation
incorporated under the laws of the State of Delaware.
(ii) There are 2,000 authorized and 1,000
issued and outstanding shares of common stock, no par value, of
the Borrower. All 1,000 issued and outstanding shares are held
by Wico Holding Corp. and the stock certificate number for the
1,000 shares is 16.
(iii) If not a corporation, type and amount
of equity interests authorized and outstanding of the entity and
the owners of such equity interests:
Not applicable
(iv) The Borrower is engaged in the
manufacture and distribution of accessories for computers and
video games and other electronic or electronic-related products.
(v) Liens on issued and outstanding shares
of stock of the Borrower:
All issued and outstanding shares have been
pledged to National Westminster Bank USA, as Agent, such lien to
be released and such shares to be pledged to Sanwa Business
Credit Corporation.
(vi) Outstanding warrants, option contracts
or commitments of any kind entitling any Person to purchase or
otherwise acquire any shares of capital stock or other equity
interests of the Borrower:
None
(vii) Outstanding securities which are
convertible into or exchangeable for any shares of capital stock
or other equity interests of the Borrower:
None
(viii) Subsidiaries of the Borrower:
60
Suncom Technologies Limited, a corporation
incorporated under the laws of the United Kingdom.
(b) Jurisdictions where the Borrower is qualified
to do business and where failure to so qualify could have a
material adverse effect on the business, operations, financial
condition or properties of the Borrower:
California, Georgia, Illinois, Nevada, New Jersey,
Pennsylvania and Texas
WICO HOLDING CORP. ("WHC")
(a) (i) WHC is a corporation incorporated under
the laws of the State of Delaware.
(ii) There are 1,000 authorized and 10
issued shares of common stock, $1.00 par value of WHC. All
issued and outstanding shares are held by Conquest Industries.
(iii) If not a corporation, type and amount
of equity interests authorized and outstanding of the entity and
the owners of such equity interests.
Not applicable
(iv) WHC is a distributor of replacement
parts, accessories and supplies to game operators and
distributors of coin-operated amusement/arcade games, billiard
tables, vending machines and gaming machines.
(v) Liens on issued and outstanding shares
of stock of WHC:
All issued and outstanding shares have been
pledged to National Westminster Bank USA, as Agent, such lien to
be released and such shares to be pledged to Sanwa Business
Credit Corporation.
(vi) Outstanding warrants, option contracts
or commitments of any kind entitling any Person to purchase or
otherwise acquire any shares of capital stock or other equity
interests of WHC:
None
(vii) Outstanding securities which are
convertible into or exchangeable for any shares of capital stock
or other equity interests of WHC:
None
2
61
(viii) Subsidiaries:.
Wico Corporation, Wico Gaming Supply Corp.
(b) Jurisdictions where WHC is qualified to do
business and when failure to so qualify could have a material
adverse effect on the business, operations, or financial
condition or properties of the WHC:
Mississippi
SUNCOM TECHNOLOGIES, LTD. ("SUNCOM U.K.")
(a) (i) Suncom U.K. is a corporation
incorporated under the laws of the United Kingdom.
(ii) There are 1,000 authorized and 2 issued
and outstanding shares of common stock, (pound sterling) 1 par value of Suncom
U.K.
The 2 shares are held by the Borrower and the
stock certificates for the 2 shares are No. 3 and No. 4.
(iii) If not a corporation, type and amount
of equity interests authorized and outstanding of the entity and
the owners of such equity interests:.
Not applicable.
(iv) Suncom U.K. is engaged in the
distribution of computer joysticks.
(v) Liens on issued and outstanding shares
of stock of Suncom:
All issued and outstanding shares are
pledged to National Westminster Bank USA, as Agent.
(vi) Outstanding warrants, option contacts
or commitments of any kind entitling any person to purchase or
otherwise acquire any shares of capital stock or other equity
interests of Suncom U.K.:
None
(vii) Outstanding securities which are
convertible into or exchangeable for any shares of capital stock
or other equity interests of Suncom U.K.:
None
3
62
(viii) Subsidiaries of Suncom U.K.:
None
(b) Jurisdictions where Suncom U.K. is qualified
to do business and where failure to so qualify could have a
material adverse effect on the business, operations, financial
conditions or properties of Suncom U.K.:
Not Applicable
WICO GAMING SUPPLY CORP. ("Gaming")
(a) (i) Gaming is a corporation incorporated
under the laws of the State of Delaware.
(ii) There are 3,000 authorized and 100
issued shares of common stock, $1.00 par value, of Gaming. All
100 issued and outstanding shares are held by Wico Holding Corp.
and the stock certificate number for the 100 shares is 1.
(iii) If not a corporation, type and amount
of equity interests authorized and outstanding of the entity and
the owners of such equity interests:
Not Applicable
(iv) Gaming is Las Vegas, Nevada
manufacturer and distributor of casino supplies.
(v) Liens on issued and outstanding shares
of stock of Gaming:
All issued and outstanding shares of
Gaming are pledged to National Westminster Bank USA, as Agent,
such lien to be released and such shares to be pledged to Sanwa
Business Credit Corporation.
(vi) Outstanding warrants, option contracts
or commitments of any kind entitling any Person to purchase or
otherwise acquire any shares of capital stock or other equity
interests of Gaming:
None.
(vii) Outstanding securities which are
convertible into or exchangeable for any shares of capital stock
or other equity interests of Gaming:
None.
(viii) Subsidiaries:
4
63
None.
(b) Jurisdictions where Gaming is qualified to do
business and where failure to so qualify could have a material
adverse effect on the business, operations, financial condition
or properties of the Borrower:
Indiana, Mississippi, Missouri, New Jersey and Nevada
CONQUEST INDUSTRIES INC. ("Conquest")
(i) Conquest's Certificate of Incorporation
authorizes 25,000,000 shares of common stock , $.001 par value
("Conquest Common Stock") and 5,000,000 shares of preferred
stock. As of the date hereof there are 11,445,824 shares of
Conquest Common Stock, 7,550 shares of Series A Preferred Stock,
2,000,000 shares of Series B Preferred Stock and 800,000 shares
of Series E Preferred Stock issued and outstanding.
(ii) Outstanding warrants, option contracts or
commitments of any kind entitling any Person to purchase or
otherwise acquire any shares of capital stock or other equity
interests of Conquest:
a. The Series A Preferred Stock, Series B
Preferred Stock and Series E Preferred Stock are convertible
into Conquest Common Stock;
b. $2,737,500 of the outstanding 10% notes
issued in connection with Conquest's 1994 private placement
("1994 Notes") are convertible into Conquest Common Stock.
Conquest has asked that the holders of the 1994 Notes, waive
this conversion right in exchange for certain accommodations
including receipt of warrants to purchase shares of Conquest
Common Stock at $5.00 per share through June 20, 1999
("Private Placement Warrants"). If all such conversion
rights are waived, a total of 54,750 Private Placement
Warrants will be issued.
c. 195,000 Public Warrants exercisable at $5.00
per share through June 1999;
d. Warrants to purchase an aggregate of 650,000
shares of Conquest Common Stock at $0.875 per share through
April 2000;
e. Warrants to purchase an aggregate of 100,000
shares of Conquest Common Stock at $1.41 per share through
June 2000;
f. Class B Warrants to purchase an aggregate of
1,961,925 shares of Conquest Common Stock at $5.00 per share
through June 20, 1999;
5
64
g. NatWest Warrant to purchase 400,000 shares of
Conquest Common Stock for an aggregate purchase price of
$400 which warrant is exercisable through June 20, 1999.
h. BAT Warrants to purchase an aggregate of
625,000 shares of Conquest Common Stock at $.3333 per share
through June 20, 1999;
i. SIG Warrants to purchase 900,000 shares of
Conquest Common Stock at the last bid price on October 12,
1995 which expire on October 12, 2000.
j. Warrants to purchase units, exercisable at
$10.00 per unit for a period ending four years from the
effective date of Conquest's pending registration statement
("Expiration Date"), each unit Consisting of the right to
purchase one shares of Conquest Common Stock and one
Warrants to purchase Conquest Common Stock, exercisable at
$1.00 per share through the Expiration Date;
k. In connection with this transaction, Conquest
will issue 500,000 shares of Conquest Common Stock and will
potentially issue Warrants to purchase an aggregate of
1,250,000 shares of Conquest Common Stock at market.
(iii) Changes to Conquests capital structure
since June 17, 1994:
a. On September 1, 1994, Conquest increased it
authorized capital to 250,000,000 shares of Conquest Common
Stock and 100,000,000 shares of preferred stock.
b. On November 18, 1994, in connection with a
reverse split, Conquest decreased it authorized capital to
25,000,000 shares of Conquest Common Stock and 10,000,000
shares of preferred stock.
c. On January 13, 1995, Conquest increased the
number of authorized Series B Preferred Stock to 2,800,000
and amended the conversion provisions to decrease the
conversion rate for such shares.
d. On May 12, 1995, Conquest (i) decreased the
number of authorized Series C Preferred Stock to zero, (ii)
further modified the terms of the Series B Preferred Stock,
(iii) designated 600,000 shares of preferred stock as Series
D Preferred Stock and (iv) designated 800,000 shares of
preferred stock as Series E Preferred Stock.
6
65
EXHIBIT C
TO
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
CONSENTS, WAIVERS, APPROVAL;
VIOLATION OF AGREEMENTS
-----------------------
Consent of Shuffle Master, Inc. to the granting of liens with
respect to certain equipment owned by Wico Gaming Supply Corp.,
which consent has been obtained.
1
66
EXHIBIT D
TO
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
JUDGEMENTS, ACTIONS PROCEEDINGS
-------------------------------
1. Suncom Technologies, a division of Wico Corporation
("Suncom") received a letter on March 1, 1995 from the attorneys
representing Thrustmaster, Inc. ("Thrustmaster") informing Suncom
of its belief that several of Suncom's joystick products may
infringe on Thrustmaster patents. On March 22, 1995, after review
of such claims by Suncom's patent counsel, such counsel responded
to Thrustmaster stating that Suncom's existing products do not
infringe on the specified patents. No further action has been
taken by either party with respect to this matter.
2. Suncom received a letter on August 8, 1995 from the attorneys
representing CH Products claiming that Suncom's description of
several of its products as "flight stick" violated CH Products'
trademark on the term "Flightstick" and demanding that Suncom
cease and desist from use of the term. On August 21, 1995, after
preliminary review of such claims by Suncom's intellectual
property counsel, such counsel responded to CH Products stating
that trademarked term was nothing more than a combination into a
single work of the two word noun "flight stick" has long been
used as the name of a component of an airplane. In addition,
counsel undertook to do a more comprehensive study of the matter
and respond formally to the allegations in due course. Such
study is still underway at this time.
4. Worldwide Aircraft Service, Inc. has filed suit against
Conquest Airlines, Inc., a subsidiary of Conquest, in ▇▇▇▇▇▇
County Missouri for labor, material and services provided for
aircrafts in the principal amount of $216,997.66.
5. Conquest has settled ending distribution of stock pursuant
to a registration statement actions for payment of outstanding
legal fees and printing fees.
6. Litigation has been threatened against Conquest by a number
of its creditors, including the lessors of four aircrafts owned
by Conquest Airlines Corp.
1
67
EXHIBIT E
TO
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
PATENTS
-------
A. Utility Patents in the United States
------------------------------------
===========================================================================
▇▇▇.
NO TITLE ISSUE DATE
---------------------------------------------------------------------------
4128222 LEG ASSEMBLY FOR PINBALL GAME 12/05/78
---------------------------------------------------------------------------
4168067 POST FOR PINBALL GAME APPARATUS 09/18/79
---------------------------------------------------------------------------
4240634 ELASTIC BAND FOR PINBALL GAME 12/23/80
---------------------------------------------------------------------------
4324403 POST ASSEMBLY FOR PINBALL GAME 04/13/82
---------------------------------------------------------------------------
4331324 LIFT DEVICE FOR PINBALL GAME 05/25/82
---------------------------------------------------------------------------
4361827 VEHICLE ALARM SYSTEM 11/30/82
---------------------------------------------------------------------------
4362300 CAP FOR PINBALL GAME REBOUND DEVICE 12/07/82
---------------------------------------------------------------------------
4382166 JOYSTICK WITH BUILT-IN FIRE BUTTON 05/03/83
---------------------------------------------------------------------------
4426081 DROP TARGET APPARATUS 01/17/84
---------------------------------------------------------------------------
4470320 JOYSTICK ASSEMBLY WITH WEAR MEMBER 09/11/84
---------------------------------------------------------------------------
4473725 MODULAR JOYSTICK CONTROLLER 09/25/84
---------------------------------------------------------------------------
4492830 JOYSTICK WITH SINGLE-LEAF SPRING SWITCH 01/08/85
---------------------------------------------------------------------------
4493992 ADAPTER CIRCUIT FOR TRACKBALL DEVICE 01/15/85
---------------------------------------------------------------------------
4505165 TRACKBALL DEVICE 03/19/85
---------------------------------------------------------------------------
4558609 JOYSTICK CONTROLLER WITH INTERCHANGEABLE 12/17/85
HANDLES
---------------------------------------------------------------------------
5068498 JOYSTICK FOR MOUNTING ON DUAL-WIDTH 11/26/91
PANELS
---------------------------------------------------------------------------
5406040 JOYSTICK WITH IMPROVED ACTUATOR 04/11/95
---------------------------------------------------------------------------
4533092 VIDEO CASSETTE RAPID REWIND/FAST FORWARD 08/06/85
DEVICE
---------------------------------------------------------------------------
4628713 LOCK UP FOR VIDEOTAPE CASSETTES 12/16/86
---------------------------------------------------------------------------
4864272 JOYSTICK CONTROLLER 09/05/89
===========================================================================
2
68
PATENTS
B. Design Patents in the United States
-----------------------------------
===================================================================
▇▇▇. NO TITLE ISSUE DATE
-------------------------------------------------------------------
D269608 VIDEO GAME CONTROL UNIT 07/05/83
-------------------------------------------------------------------
D269609 VIDEO GAME 07/05/83
-------------------------------------------------------------------
D272921 CONTROL FOR A VIDEO GAME OR THE LIKE 03/06/84
-------------------------------------------------------------------
D276247 CURSOR CONTROL 11/06/84
-------------------------------------------------------------------
D278919 CONTROL FOR A VIDEO GAME OR THE LIKE 05/21/85
-------------------------------------------------------------------
D279202 CONTROL FOR A VIDEO GAME OR THE LIKE 06/11/85
-------------------------------------------------------------------
D279203 CONTROL FOR A VIDEO GAME 06/11/85
-------------------------------------------------------------------
D281164 MOUSE 10/29/85
-------------------------------------------------------------------
D285201 KEYBOARD INCLUDING TRACKBALL 08/19/86
-------------------------------------------------------------------
D289306 TRACKBALL 04/14/87
-------------------------------------------------------------------
D291318 COMBINATION TRACKBALL AND MOUSE 08/11/87
-------------------------------------------------------------------
D291574 KEYBOARD INCLUDING TRACKBALL 08/25/87
-------------------------------------------------------------------
D292927 MOUSE FOR CONTROLLING THE CURSOR ON 11/24/87
COMPUTER DISPLAY SCREEN
-------------------------------------------------------------------
D303405 JOYSTICK 09/12/89
-------------------------------------------------------------------
D303815 JOYSTICK 10/03/89
-------------------------------------------------------------------
D311218 JOYSTICK 10/09/90
===================================================================
3
69
PATENTS
-------
C. Utility Patents in Foreign Countries
------------------------------------
======================================================================
COUNTRY ▇▇▇. TITLE ISSUE DATE
NO.
----------------------------------------------------------------------
Canada 1182157 JOYSTICK WITH BUILT-IN FIRE 02/05/85
BUTTON
----------------------------------------------------------------------
Canada 1192246 MODULAR JOYSTICK CONTROLLER 08/20/85
----------------------------------------------------------------------
Canada 1192285 TRACKBALL DEVICE 08/20/85
======================================================================
4
70
PATENTS
D. Design Patents in Foreign Countries
-----------------------------------
===============================================================================
COUNTRY ▇▇▇. NO. TITLE ISSUE DATE
-------------------------------------------------------------------------------
Benelux 10302 VIDEO GAME CONTROL UNIT 12/21/82
-------------------------------------------------------------------------------
France 824448 VIDEO GAME CONTROL UNIT 12/21/82
-------------------------------------------------------------------------------
France 883795 JOYSTICK 06/10/88
-------------------------------------------------------------------------------
Germany MR29904 JOYSTICK 06/03/88
-------------------------------------------------------------------------------
Italy 34425 VIDEO GAME CONTROL UNIT 10/10/85
-------------------------------------------------------------------------------
Italy 53722 JOYSTICK 03/22/90
-------------------------------------------------------------------------------
Sweden 45425 JOYSTICK 04/05/89
-------------------------------------------------------------------------------
United 1010405 VIDEO GAME CONTROL UNIT 12/02/83
Kingdom
-------------------------------------------------------------------------------
United 1050881 JOYSTICK 05/11/89
Kingdom
===============================================================================
5
71
TRADEMARKS
----------
A. Trademark Registrations in the United States
--------------------------------------------
===============================================================================
REG. NO. TITLE ISSUE
DATE
-------------------------------------------------------------------------------
996355 WICO 10/22/74
-------------------------------------------------------------------------------
1222886 WICO 01/04/83
-------------------------------------------------------------------------------
1281665 FAMOUS RED BALL 06/12/84
-------------------------------------------------------------------------------
1281718 THE BOSS 06/12/84
-------------------------------------------------------------------------------
1281759 THE BOSS & DESIGN 06/12/84
-------------------------------------------------------------------------------
1302811 COMPUTER COMMAND 10/30/84
-------------------------------------------------------------------------------
1320239 WICO 02/19/85
-------------------------------------------------------------------------------
1350421 WICO 07/23/85
-------------------------------------------------------------------------------
1515790 THE SOURCE 12/06/88
-------------------------------------------------------------------------------
1533398 WONDER RUBBER 04/04/89
-------------------------------------------------------------------------------
1371945 ANIMATION STATION 11/19/85
-------------------------------------------------------------------------------
1657216 ICONTROLLER 09/17/91
===============================================================================
6
72
TRADEMARKS
----------
B. Trademark Registrations in Foreign Countries
--------------------------------------------
===============================================================================
COUNTRY REG. NO. TITLE ISSUE
DATE
-------------------------------------------------------------------------------
Australia A398201 WICO 07/14/87
-------------------------------------------------------------------------------
Benelux 396313 WICO 08/01/84
-------------------------------------------------------------------------------
Canada 369472 ERGOSTICK 06/15/90
-------------------------------------------------------------------------------
Canada 282677 WICO 08/26/83
-------------------------------------------------------------------------------
France 1507323 ERGOSTICK 09/13/88
-------------------------------------------------------------------------------
Germany 1148916 ERGOSTICK 11/02/89
-------------------------------------------------------------------------------
Ireland 109619 WICO 06/18/85
-------------------------------------------------------------------------------
Italy 549559 ERGOSTICK 09/24/91
-------------------------------------------------------------------------------
Italy 458421 WICO 12/09/86
-------------------------------------------------------------------------------
Japan ▇▇▇▇▇▇▇ ERGOSTICK 12/25/91
-------------------------------------------------------------------------------
Japan ▇▇▇▇▇▇▇ WICO 04/26/88
-------------------------------------------------------------------------------
South 83/7702 WICO 10/12/84
Africa
-------------------------------------------------------------------------------
Switzerland 319254 WICO 12/31/82
-------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ WICO 04/16/82
-------------------------------------------------------------------------------
United 1148636 WICO 01/19/83
Kingdom
================================================================================
7
73
COPYRIGHTS
================================================================================
REGISTRATION DATE OF
NUMBER TITLE OF WORK REGISTRATION
-------------------------------------------------------------------------------
TX333937 1980 CATALOG 09/24/79
-------------------------------------------------------------------------------
TX579372 1981 CATALOG 11/10/80
-------------------------------------------------------------------------------
TX787249 1982 CATALOG 10/21/81
-------------------------------------------------------------------------------
TX1009861 1983 CATALOG 11/09/82
-------------------------------------------------------------------------------
TX1135147 ENGINEERING MANUAL 06/10/83
-------------------------------------------------------------------------------
TX1135180 GAMING CATALOG 06/10/83
-------------------------------------------------------------------------------
TX1226147 1984 CATALOG 11/14/83
-------------------------------------------------------------------------------
TX1439886 1985 CATALOG 10/01/84
-------------------------------------------------------------------------------
TX1505610 SMARTCARD MANUAL 01/25/85
-------------------------------------------------------------------------------
TX1527504 SMARTBOARD MANUAL 02/22/85
-------------------------------------------------------------------------------
TX1558602 SMARTBOARD COMPUTER PROGRAM 01/16/86
-------------------------------------------------------------------------------
TX1563157 PROGRAMMABLE CONTROLLER INTERFACE 01/22/85
- MODEL 2
-------------------------------------------------------------------------------
TX2254587 1988 CATALOG 02/18/88
-------------------------------------------------------------------------------
TX2486350 1989 CATALOG 01/17/89
-------------------------------------------------------------------------------
TX2501450 1986 CATALOG 01/09/89
-------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ 1987 CATALOG 02/10/89
-------------------------------------------------------------------------------
TX2679578 PENN-RAY SUTRA 1989 CATALOG 11/02/89
-------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ 1990 BOTTLING CATALOG 05/07/90
-------------------------------------------------------------------------------
TX2824494 1990 GAMING CATALOG 05/08/90
-------------------------------------------------------------------------------
TX2867802 1990 CATALOG 06/25/90
-------------------------------------------------------------------------------
TX2955875 1991 CATALOG 11/16/90
-------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ PENN-RAY 1991 CATALOG 10/01/91
-------------------------------------------------------------------------------
TX3206369 1992 CATALOG 12/09/91
-------------------------------------------------------------------------------
TX3471201 1993 CATALOG 01/14/93
-------------------------------------------------------------------------------
TX3700775 1994 VENDING SUPPLIES 12/09/93
-------------------------------------------------------------------------------
TX3763663 1994 CATALOG 12/01/93
-------------------------------------------------------------------------------
8
74
-------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ 1995 CATALOG 10/31/94
-------------------------------------------------------------------------------
TX3921909 1995 VENDING SUPPLIES 10/31/94
===============================================================================
9
75
EXHIBIT F
TO
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
Name Changes; Mergers; Acquisitions
-----------------------------------
WICO CORPORATION
I. Name Changes:
Original Name: "Wico
Holding Corp."
a) From "Wico Holding Corp." to "Wico
Distribution Corp." on April 26, 1988.
b) From "Wico Distribution Corp." to "Wico
Corporation" on August 7, 1990.
II. Mergers:
The following corporations merged into Wico
Corporation on the dates listed next to their names:
Wico Management & Development Corp. October 12, 1988
Suncom, Incorporated June 29, 1989
Wico Nevada June 29, 1989
III. Acquisitions:
Penn-Ray Sutra Corp
WICO GAMING SUPPLY CORP.
I. Name Changes:
Original Name: "Wico I
Acquisition Co."
10
76
a) From "Wico I Acquisition Co." to "Wico
Gaming Supply Corp." on May 2, 1994.
II. Mergers:
None
III. Acquisitions:
Acquisition of ▇▇▇▇▇▇▇▇▇▇ Casino Supply, Inc. ("▇▇▇▇▇▇▇▇▇▇"), a
Nevada corporation, pursuant to that certain Asset Purchase
Agreement by and among Wico I Acquisition Co., a Delaware
corporation, ▇▇▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. The acquisition was
consummated on June 20, 1994.
Acquisition of certain assets of Shuffle Master, Inc. was
consummated on April 28, 1995.
WICO HOLDING CORP.
I. Name Changes:
None
II. Acquisitions:
Merger with Conquest Airlines Corp., ("Conquest") pursuant to
that certain Restated Agreement and Plan of Merger, dated as of
June 8, 1994, by and among Conquest, CAC Acquisition, Inc., a
Delaware corporation, and WICO Holding Corp., a Delaware
corporation. A Certificate of Merger was filed with the
Secretary of State of the State of Delaware on June 17, 1994.
11
77
EXHIBIT G
TO
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
PERMITTED INDEBTEDNESS AND GUARANTEES
-------------------------------------
$168,996.11 Replacement Promissory Note dated April 28, 1995 by
Wico Gaming Supply Corp. in favor of Shuffle Master, Inc.
12
78
EXHIBIT H
TO
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
PERMITTED SECURITY INTERESTS
LIENS AND ENCUMBRANCES
----------------------
All obligations under the Security Agreement dated April 28, 1995
by Wico Gaming Supply Corp. in favor of Shuffle Master, Inc.
13
