EXHIBIT 10.53
EXECUTION COPY
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$86,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
MIKOHN GAMING CORPORATION,
AS BORROWER,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO,
TOGETHER WITH THEIR ASSIGNEES
PURSUANT TO SECTION 11.8 HEREOF
AS LENDERS,
AND
FIRST SOURCE FINANCIAL LLP,
AS AGENT
DATED AS OF AUGUST 28, 1998
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TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS...................................................... 1
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1.1 General Definitions.............................................. 1
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Account.......................................................... 1
Acquisition Documents............................................ 1
Acquisitions..................................................... 1
Affiliate........................................................ 1
Agent............................................................ 1
Agent Advances................................................... 1
Annual Fee....................................................... 1
Applicable Gaming Laws........................................... 1
Applicable Lending Office........................................ 1
Assignment and Assumption Agreement.............................. 2
Auditors......................................................... 2
Bankruptcy Code.................................................. 2
Benefit Plan..................................................... 2
Borrower......................................................... 2
Borrowing Base................................................... 2
Borrowing Base Certificate....................................... 2
Business Day..................................................... 2
Capital Expenditures............................................. 2
Cash Equivalents................................................. 3
CEI.............................................................. 3
Change of Control................................................ 3
Change of Control Notice......................................... 4
Closing Document List............................................ 4
Closing Fee...................................................... 4
Code............................................................. 4
Collateral....................................................... 4
Collateral Access Agreement...................................... 4
Collateral Documents............................................. 4
Commitments...................................................... 4
Consolidated Entity.............................................. 5
Contingent Obligation............................................ 5
Credit Documents................................................. 5
Credit Parties................................................... 5
Current Assets................................................... 5
Current Liabilities.............................................. 5
Current Ratio.................................................... 5
Default.......................................................... 5
Defaulting Lender................................................ 5
Default Rate..................................................... 5
(i)
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Default Rate Period............................................. 5
Depreciation and Amortization Expense........................... 6
Dollar(s)....................................................... 6
Domestic Lending Office......................................... 6
EBITDA.......................................................... 6
Effective Date.................................................. 6
Eligible Accounts Receivable.................................... 6
Eligible Inventory.............................................. 7
ERISA........................................................... 8
ERISA Affiliate................................................. 8
Eurocurrency Reserve Requirements............................... 8
Event of Default................................................ 8
Exchange Act.................................................... 8
Excess Cash Flow................................................ 8
Expenses........................................................ 8
Expiration Date................................................. 9
Extension Request............................................... 9
Extraordinary Gains............................................. 9
Federal Funds Rate.............................................. 9
Federal Reserve Board........................................... 9
Fees............................................................ 9
Financial Statements............................................ 9
Fixed Charge Coverage Ratio..................................... 10
Fixed Charges................................................... 10
Foreign Subsidiaries............................................ 10
FSFP............................................................ 10
Funding Date.................................................... 10
GAAP............................................................ 10
Gaming Authorities.............................................. 10
Gaming Equipment................................................ 10
Gaming Jurisdiction............................................. 10
Good Funds...................................................... 10
Governing Documents............................................. 10
Governmental Authority.......................................... 10
Guarantors...................................................... 11
Guaranty........................................................ 11
Gulfport Property............................................... 11
Gulfport Replacement Property................................... 11
Highest Lawful Rate............................................. 11
Income Tax Expense.............................................. 11
Increase Request................................................ 11
Indebtedness.................................................... 11
Insolvency Event................................................ 11
(ii)
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Intangible Assets............................................... 12
Interest Expense................................................ 12
Interest Income................................................. 12
Interest Period................................................. 12
Interest Rate Agreement......................................... 13
Internal Revenue Code........................................... 13
Inventory....................................................... 13
Investment...................................................... 13
Issuing Bank.................................................... 13
Issuing Bank Fees............................................... 13
JRY Property.................................................... 13
JRY Replacement Property........................................ 13
Lender(s)....................................................... 13
Lender Advances................................................. 13
Letter of Credit Fee............................................ 13
Letter of Credit Obligations.................................... 14
Letter of Credit Request........................................ 14
Letters of Credit............................................... 14
LIBOR Lending Office............................................ 14
LIBOR Election Notice........................................... 14
LIBOR Loan...................................................... 14
LIBOR Rate...................................................... 14
LIBOR Rate Determination Date................................... 14
LIBOR Rate Loan................................................. 14
Licenses........................................................ 14
Lien............................................................ 14
Loan Account.................................................... 15
Loans........................................................... 15
Loan Year....................................................... 15
Majority Lenders................................................ 15
Make-Whole Amount............................................... 15
Management Holders.............................................. 15
Material Adverse Effect......................................... 15
Material Contract............................................... 15
Maturity Date................................................... 15
Mikohn Nevada................................................... 15
MGC............................................................. 15
Xxxxx'x......................................................... 15
Multiemployer Plan.............................................. 15
Net Capital Expenditures........................................ 16
Net Cash Proceeds............................................... 16
Net Income...................................................... 16
Net Worth....................................................... 16
(iii)
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Notice of Borrowing............................................. 16
Note............................................................ 16
Obligations..................................................... 16
Original Credit Agreement....................................... 16
P&S Acquisition................................................. 16
P&S Acquisition Documents....................................... 16
P&S Inc......................................................... 17
P&S LLC......................................................... 17
Permitted Investments........................................... 17
Permitted Liens................................................. 17
Person.......................................................... 17
PGI............................................................. 17
PGI Acquisition................................................. 17
PGI Acquisition Documents....................................... 18
Plan............................................................ 18
Post-Closing Agreement.......................................... 18
Prime Lending Rate.............................................. 18
Prime Rate Loan................................................. 18
Principal Balance............................................... 18
Proprietary Gaming Equipment.................................... 18
Pro Rata Share.................................................. 18
Purchase Money Liens............................................ 18
Register........................................................ 18
Regulation D.................................................... 18
Regulation U.................................................... 19
Regulation Z.................................................... 19
Related Fund.................................................... 19
Related Parties................................................. 19
Reportable Event................................................ 19
Requirement of Law.............................................. 19
Retiree Health Plan............................................. 19
Revolving Lender................................................ 19
Revolving Loan.................................................. 19
Revolving Loan Commitment....................................... 19
Revolving Loan Commitment Termination........................... 19
Settlement Date................................................. 20
Revolving Note.................................................. 20
S&P............................................................. 20
Security Agreement.............................................. 20
Subsidiary...................................................... 20
Super-Majority Lenders.......................................... 20
Termination Event............................................... 20
Term Loan A..................................................... 20
(iv)
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Term Loan A Commitment.......................................... 20
Term Loan A Lender.............................................. 21
Term Loan A Note................................................ 21
Term Loan B..................................................... 21
Term Loan B Commitment.......................................... 21
Term Loan B Lender.............................................. 21
Term Loan B Note................................................ 21
Term Loan Lender................................................ 21
Term Loans...................................................... 21
Unused Line Fee................................................. 21
Working Capital................................................. 21
1.2 Accounting Terms and Determinations............................. 21
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1.3 Other Terms; Headings........................................... 22
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ARTICLE 2. LOANS AND TERMS OF PAYMENT...................................... 22
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2.1 Revolving Loan Commitment....................................... 22
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2.2 Term Loan A..................................................... 25
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2.3 Term Loan B..................................................... 25
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2.4 Interest........................................................ 25
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2.5 LIBOR Rate Loans................................................ 26
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2.6 Principal and Interest Payments................................. 28
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2.7 Fees and Expenses............................................... 30
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2.8 Voluntary Termination of Revolving Loan Commitments; Voluntary
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Prepayments of Term Loans; Mandatory Prepayments................ 31
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2.9 Method of Payment; Good Funds................................... 36
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2.10 Indemnification in Certain Events............................... 37
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2.11 Taxes........................................................... 38
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ARTICLE 3. LETTERS OF CREDIT............................................... 40
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3.1 Issuance of Letters of Credit................................... 40
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3.2 Terms of Letters of Credit...................................... 40
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3.3 Notice of Issuance.............................................. 40
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3.4 Revolving Lenders' Participation................................ 40
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3.5 Payments of Amounts Drawn Under Letters of Credit............... 40
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3.6 Payment by Lenders.............................................. 41
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3.7 Obligations Absolute............................................ 41
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3.8 Issuing Bank Documentation; Reliance by Issuing Bank............ 41
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ARTICLE 4. RECORDKEEPING AND SETTLEMENT PROCEDURES......................... 41
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4.1 Maintenance of Loan Account; Statements of Account.............. 41
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4.2 Application of Payments......................................... 42
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4.3 Revolving Loans Periodic Settlement; Interest and Fees;
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Statements...................................................... 42
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4.4 Sharing of Payments............................................. 43
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(v)
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4.5 Defaulting Lenders.............................................. 43
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4.6 Credit Parties' Obligations..................................... 44
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ARTICLE 5. CONDITIONS PRECEDENT............................................ 45
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5.1 Conditions Precedent to Initial Loans........................... 45
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5.2 Conditions Precedent to All Loans and Letters of Credit......... 46
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ARTICLE 6. REPRESENTATIONS AND WARRANTIES.................................. 46
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6.1 Organization and Qualification.................................. 46
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6.2 Authority....................................................... 47
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6.3 Enforceability.................................................. 47
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6.4 No Conflict..................................................... 47
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6.5 Consents and Filings............................................ 47
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6.6 Government Regulation........................................... 48
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6.7 Solvency........................................................ 48
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6.8 Rights in Collateral; Priority of Liens......................... 48
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6.9 Financial Data.................................................. 48
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6.10 Locations of Offices, Records and Inventory..................... 48
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6.11 Subsidiaries; Ownership of Stock................................ 49
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6.12 No Judgments or Litigation...................................... 49
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6.13 No Defaults..................................................... 50
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6.14 Labor Matters................................................... 50
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6.15 Compliance with Law............................................. 50
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6.16 ERISA........................................................... 50
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6.17 Compliance with Environmental Laws.............................. 51
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6.18 Intellectual Property........................................... 51
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6.19 Licenses and Permits............................................ 51
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6.20 Taxes and Tax Returns........................................... 52
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6.21 Material Contracts.............................................. 52
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6.22 Accuracy and Completeness of Information........................ 53
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6.23 No Change....................................................... 53
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ARTICLE 7. AFFIRMATIVE COVENANTS........................................... 54
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7.1 Financial Reporting............................................. 54
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7.2 Collateral Reporting............................................ 55
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7.3 Notification Requirements....................................... 55
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7.4 Corporate Existence............................................. 56
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7.5 Books and Records; Inspections.................................. 57
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7.6 Insurance....................................................... 57
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7.7 Taxes........................................................... 57
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7.8 Compliance with Laws............................................ 57
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7.9 Use of Proceeds................................................. 57
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7.10 Fiscal Year..................................................... 58
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(vi)
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7.11 Maintenance of Property......................................... 58
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7.12 ERISA Documents................................................. 58
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7.13 Environmental and Other Matters................................. 58
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7.14 Further Actions................................................. 59
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ARTICLE 8. NEGATIVE COVENANTS.............................................. 59
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8.1 Minimum Net Worth............................................... 59
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8.2 Minimum Current Ratio........................................... 60
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8.3 Maximum Ratio of Total Debt to EBITDA........................... 60
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8.4 Minimum EBITDA.................................................. 61
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8.5 Minimum Ratio of EBITDA to Interest Expense..................... 62
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8.6 Minimum Fixed Charge Coverage Ratio............................. 63
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8.7 Capital Expenditures............................................ 64
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8.8 Additional Indebtedness......................................... 64
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8.9 Liens........................................................... 65
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8.10 Contingent Obligations.......................................... 66
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8.11 Sale of Assets.................................................. 66
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8.12 Restricted Payments............................................. 67
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8.13 Bank Accounts................................................... 68
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8.14 Affiliate Transactions.......................................... 68
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8.15 Additional Negative Pledges..................................... 68
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8.16 Additional Subsidiaries......................................... 68
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ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES.................................. 68
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9.1 Events of Default............................................... 69
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9.2 Acceleration and Termination of Commitments..................... 70
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9.3 Rescission of Acceleration...................................... 71
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9.4 Remedies........................................................ 71
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9.5 Right of Setoff................................................. 71
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9.6 License of Use of Software and Other Intellectual Property...... 71
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9.7 Application of Proceeds; Surplus; Deficiencies.................. 71
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ARTICLE 10. AGENT.......................................................... 72
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10.1 Appointment of Agent............................................ 72
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10.2 Nature of Duties of Agent....................................... 72
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10.3 Lack of Reliance on Agent....................................... 72
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10.4 Certain Rights of Agent......................................... 73
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10.5 Reliance by Agent............................................... 73
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10.6 Indemnification of Agent........................................ 73
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10.7 Agent in its Individual Capacity................................ 74
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10.8 Holders of Notes................................................ 74
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10.9 Successor Agent................................................. 74
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10.10 Collateral Matters.............................................. 75
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(vii)
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10.11 Actions with Respect to Defaults................................ 75
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10.12 Delivery of Information......................................... 76
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ARTICLE 11. MISCELLANEOUS.................................................. 76
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11.1 GOVERNING LAW................................................... 76
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11.2 SUBMISSION TO JURISDICTION...................................... 76
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11.3 SERVICE OF PROCESS.............................................. 76
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11.4 JURY TRIAL...................................................... 77
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11.5 LIMITATION OF LIABILITY......................................... 77
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11.6 Delays.......................................................... 77
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11.7 Notices......................................................... 77
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11.8 Assignments and Participations.................................. 78
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11.9 Confidentiality................................................. 79
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11.10 Indemnification................................................. 79
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11.11 Amendments and Waivers.......................................... 80
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11.12 Counterparts and Effectiveness.................................. 81
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11.13 Severability.................................................... 81
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11.14 Maximum Rate.................................................... 81
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11.15 Entire Agreement; Successors and Assigns........................ 82
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11.16 Joint and Several Liability of Credit Parties................... 82
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11.17 Continued Effective; No Novation................................ 82
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ARTICLE 12. COMPLIANCE WITH APPLICABLE GAMING LAWS......................... 83
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12.1 Licensing by Gaming Authorities................................. 83
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12.2 Finding of Suitability of Lender................................ 83
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12.3 Cooperation with Gaming Authorities............................. 83
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12.4 Further Limitations............................................. 83
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12.5 Stock Pledge Restrictions....................................... 83
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(viii)
THIS AMENDED AND RESTATED CREDIT AGREEMENT ("CREDIT AGREEMENT") is entered
into as of August 28, 1998, among MIKOHN GAMING CORPORATION, a Nevada
corporation ("BORROWER"), each financial institution identified on ANNEX I
(together with its successors and permitted assigns, hereinafter referred to
individually as a "LENDER" and collectively as "LENDERS"), and FIRST SOURCE
FINANCIAL LLP, an Illinois registered limited liability partnership (in its
individual capacity, hereinafter referred to as "FSFP"), acting in its capacity
as agent for the Lenders (in such capacity, together with its successors in such
capacity, hereinafter referred to as the "AGENT") for the purpose of amending
and restating in its entirety that certain Credit Agreement dated as of October
24, 1997 among Borrower, the lenders party thereto ("ORIGINAL LENDERS") and the
Agent (the "ORIGINAL CREDIT AGREEMENT") to read as herein set forth.
ARTICLE 1. DEFINITIONS.
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1.1 GENERAL DEFINITIONS.
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ACCOUNT has the meaning set forth in the Security Agreement.
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ACQUISITION DOCUMENTS means the PGI Acquisition Documents and the P&S
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Acquisition Documents.
ACQUISITIONS means the PGI Acquisition and the P&S Acquisition.
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AFFILIATE of a Person means another Person who directly or indirectly
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controls, is controlled by, is under common control with or is a director or
officer of, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to vote ten percent (10%) or
more of the securities having ordinary voting power for the election of
directors or the direct or indirect power to direct the management and policies
of a business.
AGENT see Preamble.
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AGENT ADVANCES has the meaning set forth in SECTION 2.1.4.
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ANNUAL FEE means the annual fee payable by Borrower to Agent pursuant to
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SECTION 2.7.2.
APPLICABLE GAMING LAWS means those laws and regulations pursuant to which
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any Gaming Authority possesses regulatory, licensing or permit authority over
gaming activities or the manufacture or distribution of Gaming Equipment by
Borrower or any of its Subsidiaries within any Gaming Jurisdiction, as amended
from time to time.
APPLICABLE LENDING OFFICE means, with respect to each Lender, such
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Lender's LIBOR Lending Office in the case of a LIBOR Rate Loan, and such
Lender's Domestic Lending Office in the case of a Prime Rate Loan.
ASSIGNMENT AND ASSUMPTION AGREEMENT has the meaning set forth in SECTION
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11.8(B).
AUDITORS means a nationally recognized firm of independent public
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accountants selected by Borrower and reasonably satisfactory to Agent and
Majority Lenders; PROVIDED, THAT for purposes of this Credit Agreement, the firm
of Deloitte & Touche L.L.P. or any other so-called "Big Five" firm shall be
deemed to be satisfactory to Agent and Majority Lenders.
BANKRUPTCY CODE means Title 11 of the U.S. Code (11 U.S.C. (S)(S) 101 et
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seq.), as amended from time to time, and any successor statute.
BENEFIT PLAN means a "defined benefit plan" (as defined in Section 3(35)
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of ERISA) for which Borrower, any Subsidiary of Borrower or any ERISA Affiliate
has been an "employer" (as defined in Section 3(5) of ERISA) within the past six
(6) years.
BORROWER see Preamble.
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BORROWING BASE means, at any time, the sum at such time of (A) eighty-five
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percent (85%) of Eligible Accounts Receivable, PLUS (B) sixty percent (60%)
of Eligible Inventory.
BORROWING BASE CERTIFICATE means a certificate of Borrower concerning the
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Borrowing Base, in each case provided under SECTION 7.2 and substantially in the
form of EXHIBIT A.
BUSINESS DAY means any day that is neither a Saturday nor a Sunday nor a
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day on which commercial banks in Chicago, Illinois are required or permitted by
law to be closed and, when used in connection with LIBOR Rate Loans, this
definition will also exclude any day on which commercial banks are not open for
dealing in United States dollar deposits in the London (U.K.) interbank market.
CAPITAL EXPENDITURES means, for any Person for any period, the sum of all
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expenditures which have been, or should have been, capitalized by such Person
for financial statement purposes in accordance with GAAP during such period
(whether payable in cash or other property or accrued as a liability), including
the capitalized portion of capital leases and that portion of Investments made
by such Person allocable to property, plant or equipment (other than Proprietary
Gaming Equipment), without any deduction for trade-ins, salvage values, resales
or similar recoveries; PROVIDED that for purposes of this definition Capital
Expenditures shall exclude:
(A) expenditures made in connection with Proprietary Gaming Equipment
(whether or not the same is currently subject to a lease, operating
agreement, license or revenue sharing agreement, so long as such
Proprietary Gaming Equipment at one time satisfied the definition herein);
(B) up to $2,500,000 in connection with the acquisition or
improvement of the JRY Property pursuant to the provisions of that certain
Agreement dated November 7, 1994, as amended, between Borrower and Xxxx
Xxxxxx Xxxxx et al.;
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(C) in the event Borrower elects to sell the JRY Property, up to
$2,500,000 to acquire and/or improve the JRY Replacement Property, provided
the JRY Property is sold within eighteen months after such amount is
expended to acquire and/or improve the JRY Replacement Property;
(D) in the event Borrower elects to sell the Gulfport Property, up to
$1,000,000 to acquire and/or improve the Gulfport Replacement Property;
(E) proceeds of a Casualty Loss applied to the repair or replacement
of the property affected by such Casualty Loss; and
(F) Permitted Investments permitted by subclauses (f), (g) and (h) of
such definition.
"CASUALTY LOSS", as used herein, means, for any Person, (I) the loss,
damage, or destruction of any asset or property owned or used by such
Person, (II) the condemnation, confiscation, or other taking, in whole or
in part, of any such asset or property, or (III) the diminishment of the
use of any such asset or property so as to render impracticable or
unreasonable the use thereof for its intended purpose.
CASH EQUIVALENTS means either of the following, so long as the same are
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maintained in accounts in which Agent has a perfected security interest: (I)
securities issued, fully guaranteed or insured by the United States, or any of
its agencies or instrumentalities and having maturities of not more than one
year (provided that the full faith and credit of the United States is pledged in
support thereof); (II) time deposits, certificates of deposit and commercial
paper issued by the parent corporation of any domestic commercial bank of
recognized standing having capital and surplus in excess of $200,000,000 and
commercial paper issued by others rated at least A-1 or the equivalent thereof
by S&P or at least P-1 or the equivalent thereof by Xxxxx'x and in each case
having maturities of not more than one year, (III) investments in money market
funds substantially all of whose assets comprise securities of the types
described in clauses (I) and (II) above and (IV) repurchase obligations with a
term of not more than seven days for underlying securities of the type described
in clauses (I) and (II) above entered into with any financial institution
meeting the financial qualification specified in clause (II) above.
CEI means Casino Excitement, Inc., a Nevada corporation.
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CHANGE OF CONTROL means, the occurrence or existence of any of the
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following events or conditions: (I) Borrower shall cease to maintain direct or
indirect voting control over each Guarantor and each of its other Subsidiaries,
including the right to elect a majority of the board of directors of each such
Person unless the same is by reason of a sale of assets permitted under Section
8.11 hereof, or (II) the time that Borrower first determines or reasonably
should have known that any "person" or "group" (as such terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable) is or becomes the "beneficial owner" (as such term is used in Rules
13d-3 and 13d-5 under the Exchange Act, whether or not applicable, except that a
"person" shall be deemed to have "beneficial ownership" of all shares that any
such
3
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly (including as a
result of a merger or consolidation), of more than 30% of the total voting power
in the aggregate of all classes of capital stock of Borrower then outstanding
normally entitled to vote in elections of directors (but excluding from the
percentage of voting power held by any group the voting power of shares owned by
the Management Holders and their Related Parties who are deemed to be members of
the group, provided that such Management Holders and Related Parties
beneficially own a majority of the total voting power of capital stock of
Borrower held by such group), if at such time the Management Holders and their
Related Parties together shall fail to beneficially own, directly or indirectly,
securities representing at least the same percentage of the combined voting
power of such capital stock as the percentage "beneficially owned" by such
person or group or (III) the individuals who on the Effective Date constituted
the board of directors of Borrower (together with any new directors whose
election by such Board or whose nomination for election by the shareholders of
Borrower was approved by a vote of a majority of the directors still in office
who were either directors on the Effective Date or whose election or nomination
for election was previously so approved or who were elected by the vote of one
or more of the Management Holders or their Related Parties) cease for any reason
to constitute a majority of the Board of Directors of Borrower then in office.
CHANGE OF CONTROL NOTICE has the meaning set forth in SECTION 2.6.4(B).
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CLOSING DOCUMENT LIST has the meaning set forth in SECTION 5.1.
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CLOSING FEE means the closing fee payable by Borrower to Agent, for the
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account of the Revolving Lenders and the Term Loan Lenders, pursuant to SECTION
2.7.1.
CODE has the meaning set forth in SECTION 1.3.
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COLLATERAL means the Accounts, Inventory, contract rights, machinery,
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equipment, chattel paper, instruments, documents, general intangibles, fixtures,
deposit accounts, books and records, stock of Borrower's Subsidiaries and other
real and personal property of Borrower and Guarantors identified in the
Collateral Documents as security for the Obligations, and the proceeds thereof.
COLLATERAL ACCESS AGREEMENT means an agreement in form and substance
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reasonably satisfactory to Agent pursuant to which a mortgagee or lessor of real
property on which Collateral is stored or otherwise located, or a warehouseman,
processor or other bailee of Inventory, acknowledges the Liens of Agent and, in
the case of any such agreement with a mortgagee or lessor, permits Agent access
to and use of such real property for a reasonable amount of time following the
occurrence and during the continuance of an Event of Default to assemble,
complete and sell any Collateral stored or otherwise located thereon.
COLLATERAL DOCUMENTS means, collectively, the Security Agreement and all
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other stock pledge agreements, mortgages, documents, agreements and instruments
pursuant to which Liens are now or hereafter granted to Agent to secure any or
all of the Obligations.
4
COMMITMENTS means, collectively, the Revolving Loan Commitments, the Term
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Loan A Commitments and the Term Loan B Commitments.
CONSOLIDATED ENTITY means Borrower and those of its Subsidiaries
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(including in any event each Guarantor) consolidated with it for purposes of
financial reporting.
CONTINGENT OBLIGATION means, with respect to any Person but without
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duplication, any direct, indirect, contingent or non-contingent guaranty or
obligation of such Person for the Indebtedness of another Person, except for
endorsements in the ordinary course of business.
CREDIT DOCUMENTS means, collectively, this Credit Agreement, the Notes,
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the Letters of Credit, the Guaranty, each of the Collateral Documents and all
other documents, agreements and instruments now or hereafter executed in
connection herewith or therewith in each case as modified, amended, extended,
restated or supplemented from time to time.
CREDIT PARTIES means, collectively, Borrower and Guarantors.
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CURRENT ASSETS means, at any date, the amount which, in conformity with
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GAAP, would be set forth opposite the caption "total current assets" (or any
like caption) on a balance sheet of the Consolidated Entity at such date, less
cash and Cash Equivalents at such date.
CURRENT LIABILITIES means, at any date, the amount which, in conformity
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with GAAP, would be set forth opposite the caption "total current liabilities"
(or any like caption) on a balance sheet of the Consolidated Entity at such
date, less any portion thereof attributable to the Notes, leases which have
been, or, in accordance with GAAP, should be, recorded as capitalized leases,
bank overdrafts (but only to the extent repaid in full on the Business Day
following creation thereof), or any other Indebtedness incurred hereunder.
CURRENT RATIO means, at any date, the ratio on such date of (A) Current
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Assets (excluding Intangible Assets), plus, without duplication, the amount by
which cash and Cash Equivalents of the Consolidated Entity exceeds the
outstanding Principal Balance of the Revolving Loans and Letter of Credit
Obligations at such date, to (B) Current Liabilities, less, without duplication,
the aggregate amount of all customer deposits of the Consolidated Entity at such
date, plus, without duplication, the amount by which the outstanding Principal
Balance of the Revolving Loans and Letter of Credit Obligations exceeds the
amount of cash and Cash Equivalents of the Consolidated Entity at such date.
DEFAULT means an event, condition or default which with the giving of
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notice, the passage of time or both would be an Event of Default.
DEFAULTING LENDER has the meaning set forth in SECTION 4.5(A).
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DEFAULT RATE means with respect to any portion of the Principal Balance,
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the per annum interest rate specified in SECTION 2.4.1 with respect to such
portion of the Principal Balance plus 2.0% per annum.
5
DEFAULT RATE PERIOD means a period of time commencing on the date that an
-------------------
Event of Default has occurred and ending on the date that such Event of Default
is cured or waived.
DEPRECIATION AND AMORTIZATION EXPENSE means, for any period, the amount
-------------------------------------
which, in conformity with GAAP, would be set forth opposite the caption
"depreciation and amortization expenses" (or any like caption) on an income
statement of the Consolidated Entity for such period.
DOLLAR(S) and the sign "$" mean lawful money of the United States of
---------
America.
DOMESTIC LENDING OFFICE means, with respect to any Lender, the office of
-----------------------
such Lender specified as its "DOMESTIC LENDING OFFICE" on ANNEX I, as such annex
may be amended from time to time, which office shall in any event be located in
the United States.
EBITDA means, for any period, Net Income for such period, minus, to the
------ -----
extent included in determining such Net Income, Extraordinary Gains and Interest
Income for such period, plus the sum of the following, to the extent deducted in
----
determining such Net Income: (A) Interest Expense for such period, (B) Income
Tax Expense for such period and (C) Depreciation and Amortization Expense for
such period.
EFFECTIVE DATE means the date on which all conditions set forth in
--------------
SECTIONS 5.1 and 5.2 are satisfied.
ELIGIBLE ACCOUNTS RECEIVABLE means Accounts (including Accounts arising
----------------------------
under contracts where payments are due over the term of such contracts) of any
Credit Party. In determining the amount to be so included, the face amount of
such Accounts shall be reduced by the amount of all returns, discounts,
deductions, claims, credits, charges, or other allowances. Unless otherwise
approved in writing by Agent, no Account of any Credit Party shall be deemed to
be an Eligible Account Receivable if:
(A) it arises out of a sale made by such Credit Party to an Affiliate of
such Credit Party or to any other Credit Party; or
(B) it is unpaid more than ninety (90) days after the original payment due
date; or
(C) it is from the same account debtor or its Affiliate and fifty percent
(50%) or more of all Accounts from that account debtor (and its
Affiliates) are ineligible under (b) above; or
(D) the account debtor for the Account is a creditor of such Credit Party,
has asserted in writing a right of setoff against such Credit Party,
has disputed in writing its liability or made any written claim with
respect to the Account or any other Account which has not been
resolved, but in each of the foregoing cases, solely to the extent of
the amount of such actual or asserted right of setoff, or the amount
of such dispute or claim, as the case may be and in all events as
evidenced or asserted in writing; or
6
(E) the account debtor is (or the assets of the account debtor are) the
subject of an Insolvency Event unless the account debtor has obtained
post-petition financing on terms reasonably acceptable to Agent; or
(F) the Account is not payable in United States dollars or Canadian
dollars or the account debtor for the Account is located outside the
continental United States and Canada, unless the Account is supported
by an irrevocable letter of credit satisfactory to Agent (as to form,
substance and issuer) and assigned to and directly drawable by Agent;
or
(G) the sale to the account debtor is on a guaranteed sale, sale-and-
return, sale on approval or consignment basis or made pursuant to any
other written agreement providing for repurchase or return; or
(H) the account debtor is the United States of America or any department,
agency or instrumentality thereof, unless such Credit Party duly
assigns its rights to payment of such Account to Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. (S)(S) 3727 et
seq.); or
(I) except in the case of Accounts arising under contracts where payment
is due over the term of the contract, the goods giving rise to such
Account have not been shipped and delivered to and accepted by the
account debtor, the services giving rise to such Account have not been
performed and accepted or the Account otherwise does not represent a
final sale; or
(J) the Account does not comply in all material respects with all
Requirements of Law; or
(K) the Account is not subject to a valid and perfected first priority
Lien in favor of Agent or does not otherwise conform to the
representations and warranties contained in the Credit Documents.
ELIGIBLE INVENTORY means the aggregate amount of Inventory (other than
------------------
Proprietary Gaming Equipment) of the respective Credit Parties. In determining
the amount to be so included, Inventory shall be valued at the lower of cost or
market on a basis consistent with the Credit Parties' current and historical
accounting practice. Unless otherwise approved in writing by Agent, no
Inventory of any Credit Party shall be deemed Eligible Inventory if:
(A) it is not owned solely by such Credit Party or such Credit Party does
not have good, valid and marketable title thereto; or
(B) it is not located in the United States or Canada; or
(C) it is not located on property owned by a Credit Party or by a third
party that has executed and delivered a Collateral Access Agreement
(other than Proprietary
7
Gaming Equipment located on property owned by a third party who has
not executed and delivered a Collateral Access Agreement to the extent
such Proprietary Gaming Equipment is located on such property solely
for the purpose of a temporary field trial) and, in the case of
Inventory located on property owned by such a third party, it is
segregated or otherwise separately identifiable from goods of others,
if any, stored on such property; or
(D) it is not subject to a valid and perfected first priority Lien in
favor of Agent, except, with respect to such Inventory stored at
locations other than locations owned by a Credit Party, for Liens for
unpaid rent or normal and customary warehousing charges; or
(E) it is subject to a reserve for obsolescence established in accordance
with GAAP;
PROVIDED, however, that notwithstanding the foregoing, Inventory of any Credit
Party which has been sold and shipped to the applicable Account Debtor but with
respect to such Account Debtor has not yet been invoiced shall be deemed
Eligible Inventory until issuance of such invoice, PROVIDED, further that such
Inventory constituted Eligible Inventory immediately prior to such sale.
ERISA means the Employee Retirement Income Security Act of 1974, 29
-----
U.S.C. (S)(S) 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
ERISA AFFILIATE means any entity required to be aggregated with Borrower
---------------
or any Subsidiary of Borrower under Sections 414 (b), (c), (m) or (o) of the
Internal Revenue Code.
EUROCURRENCY RESERVE REQUIREMENTS means, for any day as applied to a
---------------------------------
LIBOR Loan, the aggregate (without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System of the
United States or other Governmental Authority having jurisdiction with respect
thereto) prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained by a member
bank of the Federal Reserve System.
EVENT OF DEFAULT has the meaning set forth in ARTICLE 9.
----------------
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended, any
------------
successor statute thereto, and the rules, regulations and legally binding
policies of the Securities and Exchange Commission promulgated thereunder, as
amended and in effect from time to time.
EXCESS CASH FLOW means, for any period, EBITDA for such period plus any
----------------
decrease in Working Capital for such period, minus (A) Interest Expense for such
period (B) principal payments and fees, premiums and other charges on
Indebtedness of Borrower and its Subsidiaries during such period which are due
and payable during such period, (C) income taxes actually paid
8
during such period, (D) Net Capital Expenditures (but adding back the exclusions
listed in subclauses (a) - (f) of the definition of Capital Expenditures) for
such period and (E) any increase in Working Capital.
EXPENSES means all reasonable costs and expenses of Agent incurred in
--------
connection with the Credit Documents and the transactions contemplated therein,
including, without limitation, (I) the costs of conducting record searches,
examining collateral and receiving and transferring funds, (II) the reasonable
fees and expenses of legal counsel and paralegals, accountants, appraisers and
other consultants, experts or advisors retained by Agent, (III) the cost of
title insurance premiums, real estate survey costs, and fees and taxes in
connection with the filing of financing statements, and (IV) the costs of
preparing and recording Collateral Documents, releases of Collateral, and
waivers, amendments, and terminations of any of the Credit Documents; provided,
however, that EXPENSES shall not include any costs or expenses incurred in
--------
connection with the assignments of or sales of participations in the Loans.
EXPENSES also means all reasonable costs and expenses (including the reasonable
--------
fees and expenses of legal counsel and other professionals) paid or incurred by
Agent and any Lender (I) during the continuance of an Event of Default, (II) in
enforcing or defending (or determining whether or how to enforce or defend) its
respective rights under or in respect of this Credit Agreement, the Credit
Documents or any other document or instrument now or hereafter executed and
delivered in connection herewith or therewith, (III) collecting the Loans, (IV)
foreclosing or otherwise collecting upon the Collateral or any part thereof and
(V) in obtaining any legal, accounting or other advice in connection with any of
the foregoing.
EXPIRATION DATE means October 15, 2002 or such later date as may be
---------------
established pursuant to SECTION 2.1.2.
EXTENSION REQUEST means a request by Borrower to Agent to extend the
-----------------
Expiration Date, in the form of EXHIBIT B-1.
EXTRAORDINARY GAINS means, for any period, the amount which, in
-------------------
conformity with GAAP, would be set forth opposite the caption "extraordinary
gains" (or any like captions), as applicable, on an income statement of the
Consolidated Entity for such period.
FEDERAL FUNDS RATE means, for any period, a fluctuating interest rate per
------------------
annum for each day during such period equal to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal Funds brokers of recognized
standing selected by Agent.
FEDERAL RESERVE BOARD means the Board of Governors of the Federal Reserve
---------------------
System or any Governmental Authority succeeding to its functions.
9
FEES means, collectively and without duplication, the Closing Fee, the
----
Annual Fee, the Unused Line Fee, the Letter of Credit Fees, and the Issuing Bank
Fees.
FINANCIAL STATEMENTS means the consolidated and consolidating balance
--------------------
sheets, statements of operations, statements of cash flows and statements of
changes in shareholder's equity of the Consolidated Entity for the period
specified, prepared in accordance with GAAP and consistently with prior
practices.
FIXED CHARGE COVERAGE RATIO means, for any period, the ratio of (A)
---------------------------
EBITDA for such period minus Capital Expenditures made during such period to (B)
-----
Fixed Charges for such period.
FIXED CHARGES means, for any period, the sum of (A) Interest Expense for
-------------
such period, (B) scheduled principal payments and fees, premiums and other
charges on Indebtedness of Borrower and its Subsidiaries for such period which
are due and payable during such period, (C) Income Tax Expense for such period
and (D) all dividends paid on the capital stock of Borrower during such period
and all amounts paid to redeem or purchase any of such capital stock during such
period.
FOREIGN SUBSIDIARIES means the Subsidiaries of Borrower designated as
--------------------
"Foreign Subsidiaries" on SCHEDULE B, PART 6.11.
FSFP see Preamble.
---- --------
FUNDING DATE means the date of disbursement of all or any portion of a
------------
Loan.
GAAP means generally accepted accounting principles in the United States
----
as in effect from time to time.
GAMING AUTHORITIES means, collectively, all international, federal, state
------------------
and local regulatory and licensing agencies and bodies with authority over
gaming in any Gaming Jurisdiction.
GAMING EQUIPMENT means all casino equipment and supplies including,
----------------
without limitation, slot machines, gaming tables, cards, dice, gaming chips,
player tracking systems and all other gaming devices, cashless wagering systems
and associated equipment (as those terms are defined under Applicable Gaming
Laws) and related equipment and supplies used in the operation of a casino.
GAMING JURISDICTION means all jurisdictions and their political
-------------------
subdivisions in which Borrower or any of its Subsidiaries conducts gaming
activities or manufactures or distributes Gaming Equipment.
GOOD FUNDS means United States dollars available in federal funds to
----------
Agent at or before 11:30 a.m., Chicago time, on a Business Day.
10
GOVERNING DOCUMENTS means certificates or articles of incorporation,
-------------------
articles of organization, by-laws, operating agreements and other similar
organizational or governing documents.
GOVERNMENTAL AUTHORITY means any nation or government, any state or other
----------------------
political subdivision thereof and any other entity having and/or exercising
executive, legislative, judicial, regulatory or administrative authority and
performing functions of or pertaining to government, including without
limitation the NAIC and any Gaming Authority.
GUARANTORS means CEI, MGC, Mikohn Nevada, PGI, P&S Inc. and P&S LLC.
----------
GUARANTY means the Guaranty dated as of October 24, 1997 executed by
--------
Guarantors in favor of Agent, as amended, restated, supplemented or otherwise
modified from time to time.
GULFPORT PROPERTY means the real property owned by Borrower housing
-----------------
Borrower's operations in Gulfport, Mississippi and commonly known as 0000 Xxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx.
GULFPORT REPLACEMENT PROPERTY means any real property acquired by
-----------------------------
Borrower in substitution for the Gulfport Property.
HIGHEST LAWFUL RATE means, at any given time during which any Obligations
-------------------
shall be outstanding hereunder, the maximum nonusurious interest rate that at
any time or from time to time may be contracted for, taken, reserved, charged or
received on such Obligations, under the laws of the State of Illinois (or the
law of any other jurisdiction whose laws may be mandatorily applicable
notwithstanding other provisions of this Credit Agreement and any of the other
Credit Documents), or under applicable federal laws which may presently or
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than under the State of Illinois (or such other jurisdiction's) law, in any
case after taking into account, to the extent permitted by applicable law, any
and all relevant payments or charges under this Credit Agreement and any other
Credit Documents executed in connection herewith, and any available exemptions,
exceptions and exclusions.
INCOME TAX EXPENSE means, for any period, the amount which, in conformity
------------------
with GAAP, would be set forth opposite the caption "income tax expense" (or any
like caption) on an income statement of the Consolidated Entity for such period.
INCREASE REQUEST means a request by Borrower to Agent to increase the
----------------
Revolving Loan Commitments, in the form of EXHIBIT B-2.
INDEBTEDNESS of a Person means, without duplication, (A) indebtedness for
------------
borrowed money or for the deferred purchase price of property or services (other
than deferred compensation to employees and trade liabilities incurred in the
ordinary course of business and payable in accordance with customary practices),
whether on open account or evidenced by a note, bond, debenture or similar
instrument, (B) obligations under capital leases, (C) reimbursement
11
obligations for letters of credit, banker's acceptances or other credit
accommodations, whether drawn or undrawn, (D) liabilities, as determined by
Agent, under any Interest Rate Agreement, (E) Contingent Obligations and (F)
Indebtedness secured by any Lien on any property of that Person, even if that
Person has not assumed such Indebtedness.
INSOLVENCY EVENT means, with respect to any Person, the occurrence of any
----------------
of the following: (A) such Person shall be adjudicated insolvent or bankrupt, or
generally fail to pay, or admit in writing its inability to pay, its debts as
they become due, (B) the voluntary commencement of any proceeding or the filing
of any petition under any bankruptcy, insolvency or similar law, (C) the seeking
of dissolution or reorganization or the appointment of a receiver, trustee,
custodian or liquidator for it or a substantial portion of its property, assets
or business or to effect a plan or other arrangement with its creditors, (D) the
filing of any answer admitting the jurisdiction of the court and the material
allegations of an involuntary petition filed against it in any bankruptcy,
insolvency or similar proceeding, (E) the making by such Person of a general
assignment for the benefit of its creditors, or the consent to, or acquiescence
in the appointment of, a receiver, trustee, custodian or liquidator for a
substantial portion of such Person's property, assets or business. INSOLVENCY
----------
EVENT shall also mean, with respect to any Person, the occurrence of any of the
-----
following: an involuntary proceeding or involuntary petition shall be commenced
or filed against such Person under any bankruptcy, insolvency or similar law
seeking the dissolution or reorganization of it or the appointment of a
receiver, trustee, custodian or liquidator for it or of a substantial part of
its property, assets or business, or any writ, judgment, warrant of attachment,
execution or similar process shall be issued or levied against a substantial
part of its property, assets or business, and such proceedings or petitions
shall not be dismissed, or such writ, judgment, warrant of attachment, execution
or similar process shall not be released, vacated or fully bonded, within thirty
(30) days after commencement, filing, or levy, as the case may be, or any order
for relief shall be entered in any such proceeding.
INTANGIBLE ASSETS means, with reference to the Consolidated Entity,
-----------------
licenses, franchises, patents, patent applications, trademarks, trademark
applications, tradenames, copyrights, copyright applications, computer software
rights, goodwill and research and development expense or other like intangibles
shown on the consolidated balance sheet of the Consolidated Entity.
INTEREST EXPENSE means, for any period, the amount which, in conformity
----------------
with GAAP, would be set forth opposite the caption "interest expense" (or any
like caption) on an income statement of the Consolidated Entity for such period,
after giving effect to any payments received by the Consolidated Entity under
Interest Rate Agreements during such period, PROVIDED that for purposes of this
definition Interest Expense shall exclude amortization of capitalized debt
issuance costs.
INTEREST INCOME means, for any period, the amount which, in conformity
---------------
with GAAP, would be set forth opposite the caption "interest income" (or any
like caption) on an income statement of the Consolidated Entity for such period.
INTEREST PERIOD means a period (I) commencing (A) on the applicable
---------------
Funding Date, if Borrower prior thereto has elected pursuant to subsection 2.5.1
to have all or a portion of the Loan
12
to be disbursed on such date bear interest from such date at a LIBOR Rate, (B)
with respect to the conversion of all or a portion of a Prime Rate Loan to a
LIBOR Loan, on the Business Day specified by Borrower in the applicable LIBOR
Election Notice and (C) with respect to the continuation as a LIBOR Loan of all
or a portion of a then existing LIBOR Loan after the expiration of the Interest
Period applicable to such existing LIBOR Loan, on the last day of the Interest
Period applicable to such existing LIBOR Loan, and (II) ending one, three or six
months thereafter, as selected by Borrower in its LIBOR Election Notice;
provided, however, that:
(1) if any Interest Period otherwise would end on a day that is not a
Business Day, such Interest Period shall end on the next succeeding
Business Day, unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day; and
(2) any Interest Period that otherwise would extend beyond the
Maturity Date shall end on the Maturity Date.
INTEREST RATE AGREEMENT means any interest rate protection or hedge
-----------------------
agreement, including, without limitation, interest rate future, option, swap,
and cap agreements.
INTERNAL REVENUE CODE means the Internal Revenue Code of 1986, amendments
---------------------
thereto, successor statutes, and regulations or guidance promulgated thereunder.
INVENTORY has the meaning set forth in the Security Agreement.
---------
INVESTMENT means all expenditures made and all liabilities incurred
----------
(contingently or otherwise) for or in connection with the acquisition of stock
or Indebtedness of, or for loans, advances, capital contributions or similar
transfers of property to, or acquisition of substantially all the assets of, a
Person. In determining the aggregate amount of Investments outstanding at any
particular time, (I) the amount of any Investment represented by a guaranty
shall be taken at not less than the principal amount of the obligations
guaranteed and outstanding; (II) there shall be deducted in respect of each such
Investment any amount received as a return of capital or repayment of a loan or
advance (but only by repurchase, redemption, retirement, repayment, liquidating
dividend or liquidating distribution); (III) there shall not be deducted in
respect of any Investment any amounts received as earnings on such Investment,
whether as dividends, interest or otherwise; and (IV) there shall not be
deducted from the aggregate amount of Investments any decrease in the market
value thereof.
ISSUING BANK means any financial institution that is acceptable to Agent
------------
and Borrower which may at any time issue or be requested to issue a Letter of
Credit for the account of Borrower.
ISSUING BANK FEES has the meaning set forth in SECTION 2.7.4(B).
-----------------
13
JRY PROPERTY means the real property used in connection with Borrower's
------------
outdoor lighting and sign business, which real property is commonly known as
0000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx.
JRY REPLACEMENT PROPERTY means any real property acquired by Borrower in
------------------------
substitution for the JRY Property, which may or may not be acquired prior to any
disposition of the JRY Property.
LENDER(S) see Preamble.
--------- --------
LENDER ADVANCES has the meaning set forth in SECTION 2.1.4.
---------------
LETTER OF CREDIT FEE has the meaning set forth in SECTION 2.7.4(A).
--------------------
LETTER OF CREDIT OBLIGATIONS means, without duplication, the sum of the
----------------------------
aggregate undrawn face amount of all Letters of Credit outstanding, PLUS the
aggregate amount of all drawings under Letters of Credit for which Borrower has
not reimbursed the Issuing Bank, PLUS the aggregate amount of all payments made
by Revolving Lenders to the Issuing Bank for their participations in Letters of
Credit, for which Borrower has not reimbursed such Revolving Lenders.
LETTER OF CREDIT REQUEST has the meaning set forth in SECTION 3.3.
------------------------
LETTERS OF CREDIT means all letters of credit, issued for the account of
-----------------
Borrower under ARTICLE 3 and all amendments, renewals, extensions or
replacements thereof.
LIBOR LENDING OFFICE means, with respect to any Lender, the office of
--------------------
such Lender specified as its "LIBOR LENDING OFFICE" opposite its name on ANNEX
I, as such annex may be amended from time to time (or, if no such office is
specified, its Domestic Lending Office).
LIBOR ELECTION NOTICE means a notice by Borrower to Agent to have a
---------------------
portion of the Principal Balance of the Revolving Loans or Term Loan A bear
interest at a LIBOR Rate, in the form of EXHIBIT C.
LIBOR LOAN means each portion of the Principal Balance of the Revolving
----------
Loans or Term Loan A which bears interest determined by reference to a LIBOR
Rate.
LIBOR RATE means, for any Interest Period, an interest rate per annum
----------
obtained by dividing (I) the rate of interest published in The Wall Street
Journal on the applicable LIBOR Rate Determination Date under the caption "Money
Rates; London Interbank Offered Rates (LIBOR)," with respect to a time period
equal to such Interest Period by (II) 1.00 minus the Eurocurrency Reserve
-----
Requirements, if any, in effect on the applicable LIBOR Rate Determination Date;
provided, however, that if such publication is not available or such rate is not
-------- -------
set forth therein, the LIBOR Rate shall be determined on the basis of any other
source reasonably acceptable to the Lenders holding in the aggregate more than
fifty percent (50%) of the sum of (I) the Principal
14
Balance of the Term Loan A at such time PLUS (II) the Revolving Loan Commitments
outstanding at such time.
LIBOR RATE DETERMINATION DATE means the date for determining a LIBOR
-----------------------------
Rate, which shall be one Business Day prior to the date of commencement of the
applicable Interest Period.
LIBOR RATE LOAN means a Loan that bears interest determined by reference
---------------
to a LIBOR Rate in accordance with the terms and provisions of this Credit
Agreement.
LICENSES has the meaning set forth in SECTION 6.19.
--------
LIEN means any lien, claim, charge, pledge, security interest,
----
assignment, hypothecation, deed of trust, mortgage, lease, conditional sale,
retention of title, or other preferential arrangement having substantially the
same economic effect as any of the foregoing, whether voluntary or imposed by
law.
LOAN ACCOUNT has the meaning set forth in SECTION 4.1.
------------
LOANS means the Revolving Loans, Term Loan A and Term Loan B.
-----
LOAN YEAR means a period of time from the Effective Date or any
---------
anniversary of the Effective Date to the immediately succeeding anniversary of
the Effective Date.
MAJORITY LENDERS means, at any time, those Lenders holding in the
----------------
aggregate more than fifty percent (50%) of the sum of (I) the Principal Balance
of the Term Loans at such time PLUS (II) (a) if the Revolving Credit Commitments
have been terminated, the Principal Balance of the Revolving Loans plus Letter
of Credit Obligations and (b) at all other times, the Revolving Loan Commitments
outstanding at such time.
MAKE-WHOLE AMOUNT has the meaning set forth in SECTION 2.8.3(B).
-----------------
MANAGEMENT HOLDERS means the executive officers and directors of Borrower
------------------
on the Effective Date.
MATERIAL ADVERSE EFFECT means a material adverse effect on (I) the
-----------------------
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of the Credit Parties taken as a whole, (II)
the ability of any Credit Party to perform its obligations under the Credit
Documents to which it is a party, or on the ability of Agent or the Lenders to
enforce the Obligations or realize upon the Collateral, or (III) the value of
the Collateral or the amount which Agent or the Lenders would be likely to
receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral.
MATERIAL CONTRACT means any contract or other arrangement to which a
-----------------
Credit Party or any Subsidiary of a Credit Party is a party (other than the
Credit Documents) for which breach,
15
nonperformance, cancellation or failure to renew could reasonably be expected to
have a Material Adverse Effect.
MATURITY DATE means the earlier of (I) October 15, 2004 or (II) or the
-------------
date on which the Obligations are accelerated and the Commitments are terminated
pursuant to SECTION 9.2 of this Credit Agreement.
MIKOHN NEVADA means Mikohn Nevada, a Nevada corporation.
-------------
MGC means MGC, Inc., a Nevada corporation.
---
MOODY'S means Xxxxx'x Investors Services, Inc., or any successor thereto.
-------
MULTIEMPLOYER PLAN means a "multiemployer plan" (as defined in Section
------------------
4001(a) (3) of ERISA) to which Borrower, any Subsidiary of Borrower or any ERISA
Affiliate has contributed within the past six years or with respect to which
Borrower or any Subsidiary of Borrower could reasonably be expected to incur any
liability.
NET CAPITAL EXPENDITURES shall mean for any period Capital Expenditures
------------------------
minus proceeds from Indebtedness permitted under SECTION 8.8(E) used to finance
Capital Expenditures.
NET CASH PROCEEDS means, with respect to any transaction involving a
-----------------
Credit Party, the gross proceeds thereof in the form of cash or Cash
Equivalents, net of the sum of the following (without duplication): (A)
payments made to retire obligations (other than to a Credit Party) that are
attributable to or secured by the properties that are the subject of a sale,
assignment or other disposition which is part of the transaction, (B) actual
brokerage commissions and other fees and expenses related to such transaction
(including, without limitation, in the case of a sale, assignment or other
disposition of assets or the issuance and sale of capital stock, all offering
related expenses arising in connection with such transaction including, without
limitation, investment banking or similar fees, underwriting discounts and
commissions, legal and accounting fees, transfer agent and registrar fees, and
all other costs and expenses required to be capitalized in accordance with GAAP)
and (C) all taxes actually paid or estimated in good faith to be or become
payable as a result of such transaction.
NET INCOME means, for any period, an amount equal to the net income or
----------
loss of the Consolidated Entity as it would appear on an income statement of the
Consolidated Entity for such period prepared in accordance with GAAP less any
amounts not transferable to Borrower by a Foreign Subsidiary due to any treaty,
foreign law or other limitation.
NET WORTH means, at any date, the amount which, in conformity with GAAP,
---------
would be set forth opposite the caption "shareholders' equity" (or any like
caption) on a balance sheet of the Consolidated Entity at such date.
NOTICE OF BORROWING means notice by Borrower to Agent requesting a
-------------------
Revolving Loan, in the form of EXHIBIT D.
16
NOTE means any Revolving Note, Term Loan A Note or Term Loan B Note.
----
OBLIGATIONS means the unpaid principal and interest hereunder (including
-----------
interest accruing on or after the occurrence of an Insolvency Event) in respect
of the Loans, reimbursement obligations under Letters of Credit, Fees, Expenses,
Prepayment Premiums and all other obligations and liabilities of Borrower to
Agent, the Issuing Bank or any of the Lenders under this Credit Agreement, the
Revolving Notes, the Term Notes or any of the other Credit Documents.
ORIGINAL CREDIT AGREEMENT - See preamble.
-------------------------
P&S ACQUISITION means the acquisition by the Borrower of all the issued
---------------
and outstanding capital stock of P&S Inc. and all the membership interest in P&S
LLC pursuant to the P&S Acquisition Documents.
P&S ACQUISITION DOCUMENTS means the Stock Purchase Agreement dated as of
-------------------------
June 19, 1998 by and among Mikohn, P&S Inc., P&S LLC, Xxxxxxxx X. Xxxx,
individually and as Trustee under the Xxxxxxxx X. Xxxx Trust of April 24, 1989
and Xxxxxxx X. Xxxxxxx.
P&S INC. means P&S Leasing Corporation, Inc., a Mississippi corporation.
-------
P&S LLC means P&S Leasing, LLC, a Louisiana limited liability company.
-------
PERMITTED INVESTMENTS means any of the following:
---------------------
(A) Advances or loans (other than contract receivables) made in the
ordinary course of business not to exceed $350,000 outstanding at any time
to any one Person and $1,000,000 in the aggregate for all Credit Parties
outstanding at any one time;
(B) Loans, investments and advances between a Credit Party and any
other Credit Party;
(C) Cash Equivalents;
(D) Investments in account debtors received in connection with the
bankruptcy or reorganization, or in settlement of delinquent obligations,
of customers, arising in the ordinary course of business and in accordance
with applicable collection and credit policies established by Borrower or
such Subsidiary, as the case may be;
(E) Investments existing as of the Effective Date by any Credit Party
in any of Borrower's Subsidiaries which is not a Credit Party disclosed on
SCHEDULE B, PART 6.11;
(F) Investments made with capital stock of Borrower;
17
(G) Investments by the Borrower for the purpose of acquiring D P
Stud, Inc., a Nevada corporation, provided that the total consideration (cash,
non-cash and assumed Indebtedness) paid by Borrower is not in excess of
$7,000,000;
(H) such other Investments as the Majority Lenders may approve in
writing in the exercise of their sole discretion.
PERMITTED LIENS means the Liens referred to in CLAUSES (A) through (I) of
---------------
SECTION 8.9.
PERSON means any individual, sole proprietorship, partnership, joint
------
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, entity, party or government (including any
division, agency or department thereof), and its successors, heirs and assigns.
PGI means Progressive Games, Inc., a Delaware corporation.
---
PGI ACQUISITION means the acquisition by the Borrower of all the issued
---------------
and outstanding capital stock of PGI pursuant to the PGI Acquisition Documents.
PGI ACQUISITION DOCUMENTS means the Stock Purchase Agreement dated as of
-------------------------
April 9, 1998, as amended, by and among Mikohn, PGI and Xxxxxx X. Xxxxx.
PLAN means any Benefit Plan, Multiemployer Plan, or Retiree Health Plan,
----
or any employee benefit plan, fund, program or arrangement, whether oral or
written, maintained or contributed to by Borrower or any Subsidiary of Borrower,
or with respect to which any of them could reasonably be expected to incur
liability.
POST-CLOSING AGREEMENT means the Post-Closing Agreement of even date
----------------------
herewith between Borrower and Agent.
PREPAYMENT PREMIUMS means the Make Whole Amount and the amounts due under
-------------------
SECTIONS 2.8.1(C) or 2.8.2(B).
PRIME LENDING RATE shall mean the highest "prime rate" of interest
------------------
reported, from time to time, by The Wall Street Journal; provided, however, that
----------------------- -------- -------
in the event that The Wall Street Journal ceases reporting a "prime rate", the
-----------------------
"Prime Rate" shall be determined from a comparable index chosen by the Agent in
good faith. The "Prime Rate" shall change effective on the date of the
publication of any change in the applicable index by which such "Prime Rate" is
determined.
PRIME RATE LOAN means each portion of the Principal Balance of the
---------------
Revolving Loans and Term Loan A other than any portion thereof consisting of
LIBOR Loans.
PRINCIPAL BALANCE means the unpaid principal balance of the Loans or any
-----------------
specified portion thereof outstanding from time to time.
18
PROPRIETARY GAMING EQUIPMENT means equipment owned by Borrower or any of
----------------------------
its Subsidiaries which is the subject of an operating lease, license or revenue
sharing or participation agreement under which Borrower or its Subsidiary is the
lessor, licensor or vendor.
PRO RATA SHARE means (I) with respect to a Revolving Lender, a fraction
--------------
(expressed as a percentage), the numerator of which is the amount of such
Revolving Lender's Revolving Loan Commitment and the denominator of which is the
sum of all Revolving Loan Commitments, (II) with respect to a Term Loan A
Lender, a fraction (expressed as a percentage), the numerator of which is the
amount of such Term Loan A Lender's Term Loan A Commitment and the denominator
of which is sum of all Term Loan A Commitments and (III) with respect to a Term
Loan B Lender, a fraction (expressed as a percentage), the numerator of which is
the amount of such Term Loan B Lender's Term Loan B Commitment and the
denominator of which is the sum of all Term Loan B Commitments.
PURCHASE MONEY LIENS has the meaning set forth in SECTION 8.8(E).
--------------------
REGISTER has the meaning set forth in SECTION 11.8(C).
--------
REGULATION D means Regulation D of the Federal Reserve Board, as in
------------
effect from time to time.
REGULATION U means Regulation U of the Federal Reserve Board, as in
------------
effect from time to time.
REGULATION Z means Regulation Z of the Federal Reserve Board, as in
------------
effect from time to time.
RELATED FUND means with respect to any Lender that is a fund that invests
------------
in loans, any other fund that invests in loans and is managed by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.
RELATED PARTIES means (I) any spouse or immediate family member of a
---------------
Management Holder or (II) any trust set up for the benefit of a Management
Holder or any of the Persons specified in clause (I).
REPORTABLE EVENT means any of the events described in Section 4043 of
----------------
ERISA and the regulations thereunder.
REQUIREMENT OF LAW means, with respect to any Person, (A) the Governing
------------------
Documents of such Person, (B) any law, treaty, rule or regulation or
determination of an arbitrator, court or other Governmental Authority binding on
such Person, or (C) any franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, right or approval binding
on a Person or any of its property.
19
RETIREE HEALTH PLAN means an "employee welfare benefit plan" within the
-------------------
meaning of Section 3(1) of ERISA, and any other plan, program or arrangement,
whether oral or written, that provides benefits to persons after termination of
employment, other than as required by Section 601 of ERISA.
REVOLVING LENDER means any Lender having a Revolving Loan Commitment.
----------------
REVOLVING LOAN means any revolving loan to be made by Revolving Lenders
--------------
pursuant to SECTION 2.1.
REVOLVING LOAN COMMITMENT means, with respect to any Lender, such
--------------------------
Lender's commitment, on the terms and subject to the conditions set forth
herein, to make Revolving Loans and to participate in Letters of Credit, up to
the amount set forth below its name on ANNEX I (as amended from time to time
pursuant to SECTION 11.8(B)) opposite the heading "Revolving Loan Commitment
Amount," as such amount may be reduced from time to time and as the same may
from time to time be increased pursuant to SECTION 2.1.2(B) in accordance with
the terms and provisions of this Credit Agreement.
REVOLVING LOAN COMMITMENT TERMINATION DATE means the earliest to occur of
------------------------------------------
(A) the Expiration Date, (B) the date upon which a Change of Control shall occur
and (C) the date on which the Obligations are accelerated and the Commitments
are terminated pursuant to SECTION 9.2 of this Credit Agreement.
REVOLVING LOAN SETTLEMENT DATE has the meaning set forth in SECTION
------------------------------
4.3(A).
REVOLVING NOTE means a promissory note of Borrower payable to the order
--------------
of a Revolving Lender, substantially in the form of EXHIBIT E, as amended,
restated, supplemented or otherwise modified from time to time, and including
all notes issued in replacement of, or in substitution or exchange for, such
Revolving Note.
S&P means Standard & Poor's Ratings Services, a division of The McGraw-
---
Hill Companies, Inc., or any successor thereto.
SECURITY AGREEMENT means the Security Agreement dated as of October 24,
------------------
1997 executed by the Credit Parties in favor of Agent, as amended, restated,
supplemented or otherwise modified from time to time.
STUB PERIOD means the period beginning on the Effective Date through and
-----------
including December 31, 1998.
SUBSIDIARY of a Person means a corporation or other entity in which that
----------
Person directly or indirectly owns or controls the shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or appoint other managers of such corporation or other
entity.
20
SUPER-MAJORITY LENDERS means, at any time, those Lenders holding in the
----------------------
aggregate more than eighty-five percent (85%) of the sum of (I) the Principal
Balance of the Term Loans at such time PLUS (II) (a) if the Revolving Credit
Commitments have been terminated, the Principal Balance of the Revolving Loans
plus Letter of Credit Obligations and (b) at all other times, the Revolving Loan
Commitments outstanding at such time.
TERMINATION EVENT means (I) a Reportable Event with respect to any
-----------------
Benefit Plan or Multiemployer Plan; (II) the withdrawal of Borrower, any
Subsidiary of Borrower or any ERISA Affiliate from a Benefit Plan during a plan
year in which it was a "substantial employer" (as defined in Section 4001(a) (2)
of ERISA); (III) the providing of notice of intent to terminate a Benefit Plan
in a distress termination (as described in Section 4041 (c) of ERISA); (IV) the
institution by the Pension Benefit Guaranty Corporation of proceedings to
terminate a Benefit Plan or Multiemployer Plan; (V) any event or condition (A)
which could reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Benefit Plan or Multiemployer Plan, or (B) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (VI) the partial or
complete withdrawal, within the meaning of Sections 4203 and 4205 of ERISA, of
Borrower, any Subsidiary of Borrower or any ERISA Affiliate from a Multiemployer
Plan.
TERM LOAN A means the term loan to be made by Term Loan A Lenders
-----------
pursuant to SECTION 2.2.
TERM LOAN A COMMITMENT means, with respect to any Lender, such Lender's
----------------------
commitment, on the terms and subject to the conditions set forth herein, to make
Term Loan A, up to the amount set forth below its name on ANNEX I (as amended
from time to time pursuant to SECTION 11.8(B)) opposite the heading "Term Loan A
Commitment Amount," as such amount may be reduced from time to time in
accordance with the terms and provisions of this Credit Agreement.
TERM LOAN A LENDER means any Lender having a Term Loan A Commitment.
------------------
TERM LOAN A NOTE means a promissory note of Borrower payable to the order
----------------
of a Term Loan A Lender or its nominee, substantially in the form of EXHIBIT F,
as amended, restated, supplemented or otherwise modified from time to time, and
including all notes issued in replacement of, or in substitution or exchange
for, such Term Loan A Note.
TERM LOAN B means the term loan to be made by Term Loan B Lenders
-----------
pursuant to SECTION 2.3.
TERM LOAN B COMMITMENT means, with respect to any Lender, such Lender's
----------------------
commitment, on the terms and subject to the conditions set forth herein, to make
Term Loan B, up to the amount set forth below its name on ANNEX I (as amended
from time to time pursuant to SECTION 11.8(B)) opposite the heading "Term Loan B
Commitment Amount," as such amount may be reduced from time to time in
accordance with the terms and provisions of this Credit Agreement.
21
TERM LOAN B LENDER means any Lender having a Term Loan B Commitment.
------------------
TERM LOAN B NOTE means a promissory note of Borrower payable to the order
----------------
of a Term Loan B Lender or its nominee, substantially in the form of EXHIBIT G,
as amended, restated, supplemented or otherwise modified from time to time, and
including all notes issued in replacement of, or in substitution or exchange
for, such Term Loan B Note.
TERM LOAN LENDER means a Term Loan A Lender or a Term Loan B Lender.
----------------
TERM LOANS means, collectively, Term Loan A and Term Loan B.
----------
TERM NOTES means, collectively, the Term Loan A Notes and the Term Loan B
----------
Notes.
UNUSED LINE FEE means the unused line fee payable by Borrower to
---------------
Revolving Lenders pursuant to SECTION 2.7.3.
WORKING CAPITAL shall mean, at any date, the excess of Current Assets
---------------
over Current Liabilities as at said date.
1.2 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise defined or
-----------------------------------
specified herein, all accounting terms used in this Credit Agreement shall be
construed in accordance with GAAP, applied on a basis consistent in all material
respects with the Financial Statements referred to in SECTION 6.9. All
accounting determinations for purposes of determining compliance with the
financial covenants contained in ARTICLE 8 shall be made in accordance with GAAP
as in effect on the Effective Date and applied on a basis consistent in all
material respects with the audited Financial Statements delivered to Agent on or
before the Effective Date. The Financial Statements required to be delivered
hereunder from and after the Effective Date, and all financial records, shall be
maintained in accordance with GAAP. If GAAP shall change from the basis used in
preparing the audited Financial Statements delivered to Agent on or before the
Effective Date, the certificates required to be delivered pursuant to SECTION
7.1 demonstrating compliance with the covenants contained herein shall include,
at the election of Borrower or upon the request of the Majority Lenders,
calculations setting forth the adjustments necessary to demonstrate that
Borrower is in compliance with the financial covenants based upon GAAP as in
effect on the Effective Date.
1.3 OTHER TERMS; HEADINGS. Terms used herein and not otherwise defined in
---------------------
ARTICLE 1 that are defined in the Uniform Commercial Code in effect in the State
of Illinois (the "CODE") shall have the meanings given in the Code. Each of the
words "hereof," "herein," and "hereunder" refer to this Credit Agreement as a
whole. An Event of Default shall "continue" or be "continuing" until such Event
of Default has been waived in accordance with SECTION 11.11 hereof. References
to Articles, Sections, Annexes, Schedules, and Exhibits are internal references
to this Credit Agreement, and to its attachments, unless otherwise specified.
The headings and the Table of Contents are for convenience only and shall not
affect the meaning or construction of any provision of this Credit Agreement.
22
ARTICLE 2. LOANS AND TERMS OF PAYMENT.
--------------------------
2.1 Revolving Loan Commitment.
-------------------------
2.1.1 AMOUNT AND DISBURSEMENT OF REVOLVING LOANS. Subject to the
------------------------------------------
terms and conditions set forth in this Credit Agreement, and in reliance on
the representations and warranties of Borrower set forth herein, after the
Effective Date and to but excluding the Revolving Loan Commitment
Termination Date, each Revolving Lender severally agrees to make revolving
loans to Borrower in an amount not to exceed at any time its Pro Rata Share
of the lesser at such time of (A) the Revolving Loan Commitments and (B)
the Borrowing Base MINUS, in each case, the then outstanding Letter of
Credit Obligations. The proceeds of Revolving Loans shall be disbursed by
Agent directly to the Issuing Bank in the circumstances described in
SECTION 3.5, and in all other circumstances by Agent or the Revolving
Lenders, as the case may be, to or as directed by Borrower.
2.1.2 EXTENSION OF EXPIRATION DATE; INCREASE IN REVOLVING LOAN
--------------------------------------------------------
COMMITMENTS.
-----------
(A) Borrower, pursuant to an Extension Request delivered to
Agent not more than 120, nor less than 30, Business Days prior to the
then scheduled Expiration Date, may request the Revolving Lenders to
extend all or part (as specified in such Extension Request) of the
Revolving Loan Commitment for up to two additional one year periods,
each expiring on the anniversary of the then scheduled Expiration Date
(or, if such date is not a Business Day, on the next succeeding
Business Day). If no Default or Event of Default has occurred and is
continuing on the then scheduled Expiration Date, the Revolving Loan
Commitment shall be extended for an additional one year period as so
requested, but in no event beyond October 15, 2004. On the Expiration
Date, the Revolving Loan Commitment of each Revolving Lender
automatically shall reduce to zero and may not be reinstated.
(B) Borrower, pursuant to an Increase Request delivered to
Agent not more than 120, nor less than 30, Business Days prior to the
date requested for such increase, may request an increase in the
Revolving Loan Commitments to not more than $10,000,000 provided that
(i) such increase must be in a minimum of $2,000,000 or such greater
amount which is an integral multiple of $500,000, (ii) Borrower shall
have secured the commitment of a commercial lender satisfactory to the
Agent, (iii) only two (2) such requests may be made, and (iv) no
Default or Event of Default shall have occurred and be continuing.
Upon the date requested for such increase, Borrower shall deliver or
cause to be delivered to the Agent (i) a Revolving Note for the new
Revolving Lender in the form attached hereto as Exhibit E, (ii) an
Assignment and Assumption Agreement in the form attached hereto as
Exhibit I with respect to any new Revolving Lender, (iii) a recording
fee of $3,000 for the account of the Agent plus all fees, costs and
expenses of the
23
Agent (including legal fees) in connection with such increase, (iv)
and such other documents and instruments as the Agent may reasonably
request.
2.1.3 CONDITIONS OF DISBURSEMENT. The obligation of each Revolving
--------------------------
Lender to disburse its Pro Rata Share of each Revolving Loan is subject to
the satisfaction of the conditions set forth in SECTION 5.2 and the
following conditions:
(A) each Revolving Loan shall be in a minimum amount of
$200,000 and integral multiples of $50,000 in excess of such amount;
and
(B) Agent shall have received a Notice of Borrowing with
respect to each requested Revolving Loan no later than 12:00 p.m.,
Chicago time (I) on the proposed Funding Date (which Funding Date
shall be on a Business Day) with respect to Revolving Loans
constituting Prime Rate Loans and (II) three Business Days in advance
of the proposed Funding Date (which Funding Date shall be on a
Business Day) with respect to Revolving Loans constituting LIBOR Rate
Loans.
Any Notice of Borrowing received by Agent shall be irrevocable. Agent and
Lenders shall have the right without further confirmation to assume that
any Notice of Borrowing received by Agent has been given by a Person duly
authorized to act on behalf of Borrower.
2.1.4 MANNER OF FUNDING. Revolving Loans may be made available to
-----------------
Borrower directly by the Revolving Lenders ("LENDER ADVANCES") or, in
the circumstances described in SUBSECTION 2.1.4(B), from Agent acting
on behalf of the Revolving Lenders ("AGENT ADVANCES").
(A) LENDER ADVANCES. Subject to the determination by Agent and
the Revolving Lenders that the conditions for borrowing contained in
this SECTION 2.1 and in SECTION 5.2 are satisfied, upon receipt of a
Notice of Borrowing from Borrower received by Agent before 12:00 noon
Chicago time on a Business Day, Lender Advances of Revolving Loans
shall be made to the extent of each Revolving Lender's Pro Rata Share
of the requested Revolving Loan.
(B) AGENT ADVANCES. Agent is authorized by the Revolving
Lenders, but is not obligated, to make Agent Advances upon a receipt
of any Notice of Borrowing received by Agent before 3:00 P.M. Chicago
time on a Business Day. Agent Advances shall be subject to periodic
settlement with the Revolving Lenders under SECTION 4.3. Agent
Advances may be made only in the following circumstances:
(I) NORMAL COURSE AGENT ADVANCES. For administrative
convenience, Agent may, but is not obligated, to make Agent
Advances up to the amount available for borrowing under SECTION
2.1.1 in reliance upon
24
the actual or deemed representations of Borrower under SECTION
5.2 that the conditions for borrowing are satisfied.
(II) OTHER AGENT ADVANCES. When the conditions for
borrowing under SECTION 5.2 cannot be fulfilled, and
notwithstanding the Borrowing Base limitation of SECTION 2.1.1,
Agent may, but is not obligated, to continue to make Agent
Advances for seven (7) Business Days or until sooner instructed
by the Majority Lenders to cease, in an aggregate amount at any
time not to exceed $1,000,000.
2.1.5 NOTICE OF REQUEST FOR LENDER ADVANCES. Subject to the last
-------------------------------------
sentence of this SECTION 2.1.5, Agent shall give each Revolving Lender
prompt notice by telephone or facsimile transmission of a Notice of
Borrowing that is received pursuant to SECTION 2.1.3 and is to be satisfied
by Lender Advances. No later than 3:00 P.M. Chicago time on the date of
receipt of such notice, each Revolving Lender shall make available for the
account of its Applicable Lending Office to Agent at Agent's address for
deposit into such account as Borrower may direct, its Pro Rata Share of
such Revolving Loan in immediately available funds. Unless Agent receives
contrary written notice prior to any such Revolving Loan, it is entitled to
assume that each Revolving Lender will make available its Pro Rata Share of
the Revolving Loan and in reliance upon that assumption, but without any
obligation to do so, may advance such Pro Rata Share on behalf of the
Revolving Lender, without the necessity of giving daily notice to each
Revolving Lender of the receipt of a Notice of Borrowing.
2.1.6 REVOLVING NOTE. The Revolving Loans of each Revolving Lender
--------------
shall be evidenced by a Revolving Note dated as of the Effective Date and
executed by Borrower in favor of such Revolving Lender in the amount of
such Revolving Lender's Revolving Loan Commitment.
2.1.7 REBORROWING. Subject to the conditions set forth in this
-----------
Credit Agreement, Borrower from time to time may reborrow all or any
portion of any Revolving Loan which is repaid.
2.2 TERM LOAN A.
-----------
2.2.1 AMOUNT AND DISBURSEMENT. Term Loan A shall consist of a term
-----------------------
loan from the Term Loan A Lenders to Borrower in the aggregate amount of
$67,500,000. Subject to the terms and conditions set forth in this Credit
Agreement, and in reliance on the representations and warranties of
Borrower set forth herein, on the Effective Date each Term Loan A Lender
severally agrees to disburse its Pro Rata Share of Term Loan A to or as
directed by Borrower.
2.2.2 TERM NOTE A. Term Loan A shall be evidenced by a Term Loan A
-----------
Note dated as of the Effective Date and executed by Borrower in favor of
each Term Loan A Lender in the amount of such Term Loan A Lender's Term
Loan A Commitment.
25
2.2.3 REBORROWING. Borrower shall not be entitled to reborrow any
-----------
portion of Term Loan A which is repaid or prepaid.
2.3 TERM LOAN B.
-----------
2.3.1 AMOUNT AND DISBURSEMENT. Term Loan B shall consist of a term
-----------------------
loan from the Term Loan B Lenders to Borrower in the aggregate amount of
$13,500,000. Subject to the terms and conditions set forth in this Credit
Agreement, and in reliance on the representations and warranties of
Borrower set forth herein, on the Effective Date each Term Loan B Lender
severally agrees to disburse its Pro Rata Share of Term Loan B to or as
directed by Borrower.
2.3.2 TERM NOTE B. Term Loan B shall be evidenced by a Term Loan B
-----------
Note dated as of the Effective Date and executed by Borrower in favor of
each Term Loan B Lender in the amount of such Term Loan B Lender's Term
Loan B Commitment.
2.3.3 REBORROWING. Borrower shall not be entitled to reborrow any
-----------
portion of Term Loan B which is repaid or prepaid.
2.4 INTEREST.
--------
2.4.1 INTEREST RATES. Except as provided in subsection 2.4.2, the
--------------
Principal Balance of:
(A) Revolving Loans consisting of (I) Prime Rate Loans shall
bear interest at a rate per annum equal to the Prime Lending Rate PLUS
1.75% per annum and (II) LIBOR Rate Loans shall bear interest at a
rate per annum equal to the LIBOR Rate applicable to such LIBOR Rate
Loans PLUS 2.75% per annum;
(B) Term Loan A consisting of (I) Prime Rate Loans shall bear
interest at a rate per annum equal to the Prime Lending Rate PLUS
2.25% per annum and (II) LIBOR Rate Loans shall bear interest at a
rate per annum equal to the LIBOR Rate applicable to such LIBOR Rate
Loans PLUS 3.25% per annum; and
(C) Term Loan B shall bear interest at a fixed rate equal to
10.25% per annum.
2.4.2 DEFAULT RATE. During a Default Rate Period, the Principal
------------
Balance shall bear interest at the applicable Default Rate.
2.4.3 INTEREST COMPUTATION. Interest on the Principal Balance of
--------------------
Revolving Loans and Term Loan A shall be computed on the basis of a year
consisting of 360 days and charged for the actual number of days during the
period for which interest is being charged. Interest on the Principal
Balance of Term Loan B shall be computed and charged on the basis of a year
consisting of 360 days comprised of twelve months of thirty days
26
each. In computing interest, the date of funding of a Loan shall be
included and the date of payment shall be excluded.
2.5 LIBOR RATE LOANS.
----------------
2.5.1 ELECTION BY BORROWER. Subject to the provisions of this
--------------------
SECTION 2.5 and provided no Default or Event of Default then exists,
Borrower from time to time may elect to have all or a portion of the
Principal Balance of the Revolving Loans and/or Term Loan A bear or
continue to bear interest determined by reference to a LIBOR Rate, such
election to be exercised by delivery of a LIBOR Election Notice to Agent
c/o Loan Administration, First Source Financial, Inc., 0000 Xxxx Xxxx Xxxx,
0xx Xxxxx, Xxxxxxx Xxxxxxx, Xxxxxxxx 00000, Telecopy No. (000) 000-0000, by
facsimile transmission not less than three Business Days prior to the
commencement of the applicable Interest Period. Agent shall determine
(which determination shall, absent manifest error, be presumptively
correct) the LIBOR Rate applicable to the relevant LIBOR Loan on the
applicable LIBOR Rate Determination Date and promptly shall give notice
thereof to Borrower. Agent and Lenders shall have the right without
further confirmation to assume that any LIBOR Election Notice received by
Agent has been given by a Person duly authorized to act on behalf of
Borrower. Any LIBOR Election Notice received by Agent shall be
irrevocable. Upon the expiration of an Interest Period the applicable
LIBOR Loan shall be converted to and become a Prime Rate Loan unless such
LIBOR Loan has been continued as a LIBOR Loan in accordance with this
SECTION 2.5.1. Agent shall give each Revolving Lender and Term Loan A
Lender prompt notice by telephone or facsimile transmission of each LIBOR
Election Notice.
2.5.2 LIBOR AND INTEREST PERIOD LIMITATIONS. Each LIBOR Loan shall
-------------------------------------
be in the amount of not less than $1,000,000 or in integral multiples of
$100,000 in excess thereof. At no time shall more than five Interest
Periods be in effect.
2.5.3 EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
------------------------------------------------
UNASCERTAINABLE. If prior to the commencement of any Interest Period Agent
---------------
determines that dollar deposits of the relevant amount for the relevant
Interest Period are not available in the London Interbank Market or the
rate at which such dollar deposits are being offered will not adequately
and fairly reflect the cost to the Revolving Lenders or the Term Loan A
Lenders, as applicable, of maintaining a LIBOR Rate for such Interest
Period, or that by reason of circumstances affecting such market, adequate
and reasonable means do not exist for ascertaining the LIBOR Rate
applicable to such Interest Period, Agent promptly shall give notice of
such determination to Borrower and any LIBOR Election Notice previously
given by Borrower which has not yet become effective shall be deemed to be
cancelled and the right of Borrower to select or maintain LIBOR Rate Loans
shall be suspended until Agent shall notify Borrower, the Revolving Loan
Lenders and the Term Loan A Lenders that the circumstances causing such
suspension no longer exists.
2.5.4 TAX AND OTHER LAWS. In the event that by reason of any law,
------------------
regulation or requirement or interpretation thereof by any Governmental
Authority, or the imposition
27
of any requirement of any such Governmental Authority, whether or not
having the force of law, including the imposition of any reserve and/or
special deposit requirement (other than reserves included in the
Eurocurrency Reserve Requirements), any Revolving Lender or Term Loan A
Lender shall be subjected to any tax, levy, impost, charge, fee, duty,
deduction or withholding of any kind whatsoever (other than any tax imposed
upon the total net income of such Lender) and if any such measures or any
other similar measure shall result in an increase in the cost to any such
Lender of maintaining its share of any LIBOR Loan or in a reduction in the
amount of principal or interest receivable by any such Lender in respect
thereof, then Borrower shall pay to the affected Lender within 10 days
after receipt of a notice from such Lender (which notice shall be
accompanied by a statement in reasonable detail setting forth the basis for
the calculation thereof, which calculation, in the absence of demonstrable
error, shall be conclusive and binding), an amount equal to such increased
cost or reduced amount. At any time after receipt of such notice Borrower
may convert all LIBOR Loans to Prime Rate Loans, and such conversion shall
be effective three Business Days after Agent has received notice from
Borrower of such conversion.
2.5.5 CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any time
---------------------------------------------
any law, treaty or regulation, or any interpretation thereof by any
Governmental Authority shall make it unlawful for any Lender to fund or
maintain its share of any LIBOR Loan with monies obtained in the London
Interbank Market, such Lender, upon the occurrence of such event, shall
notify Borrower thereof and thereupon the (i) right of Borrower to make any
LIBOR Election shall be suspended for the duration of such illegality and
(ii) if required by such law, regulation or interpretation, on such date as
shall be specified in such notice all Interest Periods then in effect shall
be terminated, and thereafter all LIBOR Loans shall be deemed converted to
Prime Rate Loans.
2.5.6 INDEMNITY. In addition to any other payments payable by
---------
Borrower to Lenders pursuant to the Credit Documents, Borrower shall
indemnify and reimburse each Revolving Lender and each Term Loan A Lender
on demand for any loss or expense which such Lender may sustain as a
consequence of any prepayment of any LIBOR Loan prior to the expiration of
the Interest Period applicable thereto and/or any failure by Borrower to
make any payment when due of any amount payable with respect to any LIBOR
Loan or borrow the amount set forth in any LIBOR Election Notice on the
date specified therefor, including, without limitation, any loss (excluding
loss of anticipated profits), cost or expense incurred by reason of the
liquidation or re-employment of deposits or other funds acquired by such
Lender to fund or maintain the LIBOR Loan to be made or maintained by such
Lender.
2.6 PRINCIPAL AND INTEREST PAYMENTS.
-------------------------------
2.6.1 INTEREST. Except as otherwise provided in SECTIONS 2.6.2(A),
--------
2.6.3, 2.6.4, 2.8.1(B), 2.8.2(C) and 2.8.3(C), interest on the Principal
Balance of:
28
(A) Revolving Loans shall be payable quarterly in arrears on
the fifteenth (15th) day of each January, April, July and October,
beginning with October 15, 1998;
(B) Term Loan A shall be payable quarterly in arrears on the
fifteenth day of each January, April, July and October beginning with
October 15, 1998; and
(C) Term Loan B shall be payable semi-annually in arrears on
the fifteenth (15) day of April and October of each year beginning
with October 15, 1998.
2.6.2 REVOLVING LOAN COMMITMENTS.
--------------------------
(A) REVOLVING LOAN COMMITMENT TERMINATION DATE. On the
------------------------------------------
Revolving Loan Commitment Termination Date, Borrower shall (I) pay to
the Revolving Lenders the Principal Balance of the Revolving Loans
together with all accrued and unpaid interest thereon to the date on
which Agent is in receipt of Good Funds, and any other sums which are
then due and payable to the Revolving Lenders pursuant to terms of any
of the Credit Documents, and (II) subject to the provisions of SECTION
4.2, deposit with Agent for each Letter of Credit then outstanding,
cash or Cash Equivalents in an amount equal to 110% of the greatest
amount drawable thereunder. Such deposit shall be held by Agent and
used to reimburse the Issuing Bank for the amount of each drawing made
under such Letter of Credit, and all other sums owing to the Issuing
Bank with respect to such drawing, as and when each such drawing is
made. If no Event of Default exists, any amounts remaining on deposit
with Agent with respect to any Letter of Credit shall be returned to
Borrower upon the earlier to occur of (i) the expiration of such
Letter of Credit or (ii) the date such Letter of Credit is fully
drawn, otherwise any such amounts remaining shall be applied in
accordance with Section 4.2 hereof.
(B) OVERADVANCE. If at any time the Principal Balance of the
-----------
Revolving Loans PLUS the Letter of Credit Obligations at such time
exceeds the lesser at such time of (I) Revolving Loan Commitment and
(II) the Borrowing Base, Borrower immediately shall pay to the
Revolving Lenders the amount of such excess without the necessity of
any demand.
(C) PERMITTED REPAYMENTS. The amount of any other payment of
--------------------
the Principal Balance of the Revolving Loans shall not be less than
$200,000 or integral multiples of $50,000 in excess thereof. Borrower
shall provide not less than one Business Day's prior written notice to
Agent of any such payment of the Principal Balance of the Revolving
Loans.
2.6.3 PRINCIPAL BALANCE OF TERM LOAN A.
--------------------------------
29
(A) SCHEDULED INSTALLMENTS. The Principal Balance of Term Loan
----------------------
A shall be payable in consecutive semi-annual installments on the
fifteenth (15th) day of April and October of each year commencing with
the fifteenth (15th) day of April, 2002 as follows:
Payment Date Amount of Installment
------------ ---------------------
April 15, 2002 $11,250,000
October 15, 2002 $11,250,000
April 15, 2003 $11,250,000
October 15, 2003 $11,250,000
April 15, 2004 $11,250,000
The remaining Principal Balance of Term Loan A, together with all
accrued and unpaid interest thereon, shall be due and payable in full
on the Maturity Date.
(B) CHANGE OF CONTROL. The Principal Balance of Term Loan A,
-----------------
together with all accrued and unpaid interest thereon (and, if
applicable, a prepayment premium in the amount which would be payable
under Section 2.8.2(b) in the event of a voluntary prepayment of such
Principal Balance), shall be due and payable in full upon a Change of
Control. No such prepayment premium shall be payable if no Event of
Default exists and is continuing at the time of such Change of
Control.
2.6.4 PRINCIPAL BALANCE OF TERM LOAN B.
--------------------------------
(A) SCHEDULED INSTALLMENTS. The Principal Balance of Term Loan
----------------------
B shall be payable in consecutive semi-annual installments on the
fifteenth (15th) day of April and October of each year commencing with
the fifteenth (15th) day of April, 2002 as follows:
Payment Date Amount of Installment
------------ ---------------------
April 15, 2002 $2,250,000
October 15, 2002 $2,250,000
April 15, 2003 $2,250,000
October 15, 2003 $2,250,000
April 15, 2004 $2,250,000
The remaining Principal Balance of Term Loan B, together with all
accrued and unpaid interest thereon, shall be due and payable in full
on the Maturity Date.
(B) CHANGE OF CONTROL. Upon a Change of Control, if any Term
-----------------
Loan B Lender so elects, the Principal Balance of Term Loan B owing to
such Term Loan B Lender, together with all accrued and unpaid interest
thereon and a Make-
30
Whole Amount, if applicable, shall be due and payable in full. If at
the time of such Change of Control no Event of Default exists and is
continuing, the successor to Borrower, if any, has assumed all of the
Obligations and Borrower or such successor would be permitted to incur
at least $1.00 of additional Indebtedness under SECTION 8.8, then no
Make-Whole Amount shall be payable. Borrower shall give to Agent and
each Term Loan B Lender prompt notice (a "CHANGE OF CONTROL NOTICE")
of a Change of Control. No repayment of the Principal Balance of Term
Loan B or any other amount under this CLAUSE (B) owing to a Term Loan
B Lender shall be required unless the such Term Loan B Lender
affirmatively elects in writing to require such repayment within 10
Business Days after the Change of Control Notice is given.
2.7 FEES AND EXPENSES.
-----------------
2.7.1 CLOSING FEE. Borrower shall pay to Agent, for the account of
-----------
the Revolving Lenders and the Term Loan Lenders, a non-refundable and fully
earned closing fee equal to one percent (1%) of the Commitments, and
payable on the Effective Date. Except for Original Lenders which are not
Lenders under this Agreement, no prepayment fees are payable under the
Original Credit Agreement.
2.7.2 ANNUAL FEE. Borrower shall pay to Agent, for its own account,
----------
a non-refundable annual fee of $75,000 on the Effective Date and $50,000 on
August 15 of each year thereafter, except that the payment due on the
August 15 prior to the Expiration Date (after giving effect to any
extensions thereof), shall be in the amount of $8,333.33. Such fee shall
be fully earned and payable on the Effective Date and on August 15 of each
year thereafter.
2.7.3 UNUSED LINE FEE. Borrower shall pay to Agent, for the account
---------------
of the Revolving Lenders, on a quarterly basis, a non-use fee for the
period from and including the date hereof to but excluding the Expiration
Date (or such earlier date on which the Revolving Loan Commitment shall be
terminated pursuant to SECTION 2.8.1 or 9.2 hereof) of one percent (1%) per
annum on the excess of (I) the daily average of the then applicable
Revolving Loan Commitments for the quarter then ending over (II) the daily
average principal amount of outstanding Revolving Loans and Letter of
Credit Obligations for the quarter then ending. Such non-use fee shall be
payable in arrears on the fifteenth (15th) day of each January, April, July
and October (commencing on October 15, 1998) and on the Expiration Date (or
such earlier date on which the Revolving Loan Commitments shall terminate)
for any period then ending for which such fee shall not theretofore have
been paid.
2.7.4 LETTER OF CREDIT FEES.
---------------------
(A) Agent, for the ratable benefit of the Revolving Lenders,
shall be entitled to charge to the account of Borrower, on the
fifteenth day of each quarter, a fee (the "LETTER OF CREDIT FEE") in
an amount equal to two and three-quarters
31
percent (2.75%) per annum of the daily weighted average undrawn amount
of Letters of Credit outstanding during the immediately preceding
quarter.
(B) Agent also shall be entitled to charge to the account of
Borrower, as and when incurred by Agent or any Revolving Lender, the
customary charges, fees, costs and expenses charged to Agent or any
Revolving Lender for Borrower's account by any Issuing Bank (the
"ISSUING BANK FEES") in connection with the issuance, transfer,
drawing, amendment or negotiation of any Letters of Credit by the
Issuing Bank. Each determination by Agent of Letter of Credit Fees,
Issuing Bank Fees and other fees, costs and expenses charged under
this Section shall be conclusive and binding for all purposes, absent
manifest error.
2.7.5 EXPENSES. Borrower shall reimburse the Expenses of Agent or
--------
any Lender, as the case may be, promptly upon demand.
2.8 VOLUNTARY TERMINATION OF REVOLVING LOAN COMMITMENTS; VOLUNTARY
--------------------------------------------------------------
PREPAYMENTS OF TERM LOANS; MANDATORY PREPAYMENTS FROM ASSET SALES AND EQUITY
----------------------------------------------------------------------------
SALES. Borrower may terminate the Revolving Loan Commitments and may prepay the
-----
Principal Balance of the Term Loans only in accordance with the terms and
conditions of this SECTION 2.8.
2.8.1 TERMINATION OF REVOLVING LOAN COMMITMENTS. Borrower may not
-----------------------------------------
voluntarily reduce the Revolving Loan Commitments in part at any time.
Borrower may terminate the Revolving Loan Commitments in whole, but not in
part, at any time prior to the Expiration Date, subject to the following
conditions:
(A) NOTICE OF TERMINATION. Not less than five (5) Business
---------------------
Days prior to the date upon which Borrower desires to terminate the
Revolving Loan Commitments, Borrower shall deliver to Agent notice of
Borrower's intention to terminate, which notice shall be irrevocable
and shall state the termination date.
(B) PAYMENTS. Concurrently with any voluntary termination of
--------
the Revolving Loan Commitments pursuant to this SECTION 2.8.1,
Borrower shall (I) pay to the Revolving Lenders the Principal Balance
of the Revolving Loans together with all accrued and unpaid interest
thereon to the date on which Agent is in receipt of Good Funds, and
any other sums which are due and payable to the Revolving Lenders
pursuant to terms of any of the Credit Documents, including but not
limited to any amounts owing under Section 2.10 hereof, and (II)
deposit with Agent for each Letter of Credit then outstanding, cash or
Cash Equivalents in an amount equal to 110% of the greatest amount
drawable thereunder. Such deposit shall be held by Agent and used to
reimburse the Issuing Bank for the amount of each drawing made under
such Letters of Credit, as and when each such drawing is made.
(C) TERMINATION FEE. Should the Revolving Loan Commitments be
---------------
voluntarily terminated or reduced by Borrower for any reason, Borrower
shall pay
32
to the Revolving Lenders concurrently with such voluntary termination
or reduction a termination fee equal to (I) three percent (3%) of the
amount of the reduction in the Revolving Loan Commitments if such
reduction is made during the first Loan Year, (II) two percent (2%) of
the reduction in the Revolving Loan Commitments if such reduction is
made during the second Loan Year and (III) one percent (1%) of the
reduction in the Revolving Loan Commitments if such reduction is made
during the third Loan Year, and (IV) 0% for any reduction or
termination made during the fourth Loan Year or any subsequent Loan
Year.
2.8.2 VOLUNTARY PREPAYMENTS OF TERM LOAN A. Borrower may at any time
------------------------------------
voluntarily prepay in whole or in part the Principal Balance of Term Loan
A, subject to the following conditions:
(A) NOTICE OF PREPAYMENT; NUMBER AND AMOUNT OF PREPAYMENTS.
------------------------------------------------------
Except as provided in SECTION 2.8.4(D), not less than 20 Business Days
prior to the date upon which Borrower desires to make any voluntary
prepayment of Term Loan A, Borrower shall deliver to Agent notice of
Borrower's intention to prepay, which notice shall be irrevocable and
shall state the prepayment date and the amount of the Principal
Balance of Term Loan A to be prepaid. Except as provided in SECTION
2.8.4(D), the amount of any voluntary partial prepayment of the
Principal Balance of Term Loan A shall be not less than $1,000,000 or
integral multiples of $100,000 in excess thereof. A voluntary partial
prepayment of the Principal Balance of Term Loan A shall not be made
more frequently than once a month.
(B) PREPAYMENT PREMIUM. Except as otherwise provided in
------------------
Section 2.8.4(d) hereof, if any of the Principal Balance of Term Loan
A is voluntarily prepaid for any reason, Borrower shall pay to the
Term Loan A Lenders a prepayment premium equal to a percentage of the
amount of the Principal Balance of Term Loan A prepaid, determined in
accordance with the following schedule:
Percentage of
Principal
Period of Prepayment Balance Prepaid
-------------------- ---------------
First Loan Year 3.0%
Second Loan Year 2.0%
Third Loan Year 1.0%
Thereafter 0.0%
(C) ADDITIONAL PAYMENTS. Concurrently with any voluntary
-------------------
prepayment of the Principal Balance of Term Loan A pursuant to this
SECTION 2.8.2, Borrower shall pay to the Term Loan A Lenders accrued
and unpaid interest on the portion of the Principal Balance of Term
Loan A which is being prepaid to the date on which Agent is in receipt
of Good Funds, and any other sums which are due and
33
payable to the Term Loan A Lenders pursuant to the terms of any of the
Credit Documents, including but not limited to any amounts owing under
Section 2.10 hereof.
(D) APPLICATION OF PARTIAL PREPAYMENTS. Any voluntary partial
----------------------------------
prepayment of the Principal Balance of Term Loan A pursuant to this
SECTION 2.8.2 shall be applied ratably to reduce the remaining
installments of the Principal Balance of Term Loan A on a pro rata
basis in accordance with the relative Principal Balance of Term Loan A
held by each Term Loan A Lender.
2.8.3 VOLUNTARY PREPAYMENTS OF TERM LOAN B. Borrower may at any time
------------------------------------
voluntarily prepay in whole or in part the Principal Balance of Term Loan
B, subject to the following conditions:
(A) NOTICE OF PREPAYMENT; NUMBER AND AMOUNT OF PREPAYMENTS.
------------------------------------------------------
Not less than 20 Business Days prior to the date upon which Borrower
desires to make any voluntary prepayment of Term Loan B, Borrower
shall deliver to Agent notice of Borrower's intention to prepay, which
notice shall be irrevocable and shall state the prepayment date and
the amount of the Principal Balance of Term Loan B to be prepaid. The
amount of any voluntary partial prepayment of the Principal Balance of
Term Loan B shall be not less than $1,000,000 or integral multiples of
$100,000 in excess thereof. A voluntary prepayment of the Principal
Balance of Term Loan B shall not be made more frequently than once a
month.
(B) PREPAYMENT PREMIUM. Concurrently with any voluntary
------------------
prepayment or acceleration of all or any part of the Principal Balance
of Term Loan B, Borrower shall pay to the Term Loan B Lenders the
Make-Whole Amount. As used herein,
The term "MAKE-WHOLE AMOUNT" means, with respect to any Term
Loan B Note, an amount equal to the excess, if any, of the Discounted
Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Term Loan B Note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be less
--------
than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Term Loan B Note,
the principal of such Note that is to be prepaid pursuant to SECTION 2.8.3
OR 2.8.4 or has become or is declared to be immediately due and payable
pursuant to SECTION 9.2, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal
of any Term Loan B Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their
respective scheduled due dates to the Settlement Date with respect to such
Called Principal, in accordance
34
with accepted financial practice and at a discount factor (applied on the
same periodic basis as that on which interest on the Term Loan B Notes is
payable) equal to the Reinvestment Yield with respect to such Called
Principal.
"REINVESTMENT YIELD" means, with respect to the Called
Principal of any Term Loan B Note, one percent (1.00%) plus the yield to
maturity implied by (i) the yields reported, as of 10:00 A.M. (New York
City time) on the second Business Day preceding the Settlement Date with
respect to such Called Principal, on the display designated as of "Page
678" on the Telerate Access Service (or such other display as may replace
Page 678 on Telerate Access Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement date, or (ii) if such yields are not
reported as of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported, for
the latest day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury xxxx
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded
U.S. Treasury security with the duration closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury security
with the duration closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal by (b)
the number of years (calculated to the nearest one-twelfth year) that will
elapse between the Settlement Date with respect to such Called Principal
and the scheduled due date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the
Called Principal of any Term Loan B Note, all payments of such Called
Principal and interest thereon that would be due after the Settlement Date
with respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date, provided that if such
--------
Settlement Date is not a date on which interest payments are due to be made
under the terms of the Term Loan B Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on such
Settlement Date pursuant to this Agreement.
35
"SETTLEMENT DATE" means, with respect to the Called Principal
of any Term Loan B Note, the date on which such Called Principal is to be
prepaid pursuant to SECTION 2.8.3 OR SECTION 2.8.4 or has become or is
declared to be immediately due and payable pursuant to SECTION 9.2, as the
context requires.
(C) ADDITIONAL PAYMENTS. Concurrently with any voluntary
-------------------
prepayment of the Principal Balance of Term Loan B pursuant to this
SECTION 2.8.3, Borrower shall pay to the Term Loan B Lenders accrued
and unpaid interest on the portion of the Principal Balance of Term
Loan B which is being prepaid to the date on which Agent is in receipt
of Good Funds, and any other sums which then are due and payable to
the Term Loan B Lenders pursuant to the terms of any of the Credit
Documents.
(D) APPLICATION OF PARTIAL PREPAYMENTS. Any voluntary partial
----------------------------------
prepayment of the Principal Balance of Term Loan B pursuant to this
SECTION 2.8.3 or any mandatory prepayment required by SECTION 2.6.4(B)
shall be applied ratably to the remaining installments of the
Principal Balance of Term Loan B on a pro rata basis in accordance
with the relative Principal Balance of Term Loan B held by each Term
Loan B Lender.
2.8.4 MANDATORY PREPAYMENTS.
---------------------
(A) PROCEEDS OF ASSET SALES AND EQUITY SALES. Subject to the
----------------------------------------
provisions of SECTION 2.8.4(C), Borrower shall prepay, without
premium, the Term Loans in an amount equal to (I) the Net Cash
Proceeds in excess of $1,000,000 in any fiscal year of asset
dispositions permitted under SECTION 8.11(E), concurrently upon
receipt by Borrower or its applicable Subsidiary of such Net Cash
Proceeds and (II) the Net Cash Proceeds in excess of $5,000,000 in the
aggregate prior to the date the Principal Balance of the Term Loans is
paid in full arising from any sales of capital stock of Borrower
(other than in connection with any management stock options or
incentive plans or any merger, acquisition or other Investment
permitted hereunder), concurrently upon receipt by Borrower of such
Net Cash Proceeds.
(B) EXCESS CASH FLOW. In addition, on the date (each a
----------------
"PAYMENT DATE") as to each Fiscal Year of Borrower which is the earlier of
one hundred (100) days after the end of such Fiscal Year or ten (10)
Business Days after Agent receives the financial statements required to be
provided by Borrower to Lenders' pursuant to SECTION 7.1(A) for such Fiscal
Year, commencing with the first such date with respect to a Fiscal Year
ending after the date hereof, Borrower shall make a payment (the "EXCESS
CASH FLOW PAYMENT") of principal on the Term Loans in addition to the other
payments on the Term Loans required to be made pursuant to this Agreement
or the Term Notes in an amount equal to 75% of "EXCESS CASH FLOW" of
Borrower for such Fiscal Year. Notwithstanding anything contained herein to
the contrary, the Excess Cash Flow Payment for the fiscal year ending
December 31, 1998 shall be calculated based on the Stub Period. No
Prepayment
36
Premium shall be due and payable as a result of the making of any
Excess Cash Flow Payment.
(C) APPLICATION OF MANDATORY PREPAYMENTS. Subject to the
------------------------------------
provisions of SECTION 2.8.4(D), prepayments of the Term Loans pursuant
to SECTION 2.8.4(A) shall be applied to ratably reduce each of the
remaining scheduled installments of the Principal Balance of the Term
Loans and mandatory prepayments of the Term Loans pursuant to SECTION
2.8.4(B) shall be applied to the remaining scheduled installments in
the inverse order of their maturities, in each case in accordance with
the relative aggregate principal amounts thereof held by each Term
Loan Lender.
(D) TERM LOAN B OPT-OUT. With respect to any mandatory
-------------------
prepayments of the Term Loans pursuant to SECTION 2.8.4(A) and SECTION
2.8.4(B), Agent shall ratably pay the Term Loan A Lenders and the Term
Loan B Lenders, as the case may be, as required under SECTION 2.8.4(C)
unless, within seven Business Days after notifying the Term Loan
Lenders of such prepayment, Agent shall have received written notice
from any Term Loan B Lender that such Term Loan B Lender (a "TERM LOAN
B OPT-OUT LENDER") elects not to receive any such prepayment. Any
such prepayment which would have been remitted to a Term Loan B Opt-
Out Lender but for its election not to receive such prepayment shall
be retained by Borrower and may be applied to Term Loan A without
premium under Section 2.8.2(b) if such application is made within five
(5) Business Days of notice from the relevant Term Loan B Opt-Out
Lender.
2.9 METHOD OF PAYMENT; GOOD FUNDS. All payments to be made pursuant to
-----------------------------
the Credit Documents by Borrower shall be made by wire transfer of Good Funds to
the account of Agent at LaSalle National Bank, ABA #000000000, Account No.
0000000 (or such other account as Agent may specify from time to time),
Reference: Mikohn, not later than 11:30 A.M., Chicago time, on the date due; and
funds received after that hour shall be deemed to have been received by Agent on
the next following Business Day. Upon receipt of Good Funds by the Agent by the
Borrower by 11:30 A.M., Chicago time, Agent shall remit to each Lender by wire
transfer of Good Funds its ratable share of any payment so received by not later
than 3 P.M., Chicago time on the date received. Payments received after 11:30
A.M. shall be remitted to the Lenders on the next following Business Day. If
the Agent fails to timely make payment to a Lender as contemplated by either of
the preceding sentences, amounts owed to any such Lender shall bear interest
until paid at the Federal Funds Rate. Borrower hereby authorizes Agent to
charge the Loan Account with the amount of all payments to be made hereunder and
under the other Credit Documents, including all Fees and Expenses, as and when
such payments become due. The obligations of Borrower to the Lenders with
respect to such payments shall be discharged by making such payments to Agent
pursuant to this Section or by the charging of the Loan Account by Agent. If
any payment hereunder becomes due and payable on a day which is not a Business
Day, the due date of such payment shall be extended to the next succeeding
Business Day on which date such payment shall be due and payable. In the case
of any principal falling due on a day which is not a Business Day, interest on
such principal amount shall continue to accrue during
37
such extension at the rate per annum then in effect, which accrued amount shall
be due and payable on the next scheduled date for the payment of interest.
2.10 INDEMNIFICATION IN CERTAIN EVENTS.
---------------------------------
(A) INCREASED COSTS. If after the Effective Date, either (I) any
change in or in the interpretation of any law or regulation is introduced,
including, without limitation, with respect to reserve requirements
applicable to Agent, to any of the Lenders or any other affiliated banking
or financial institution from whom any of the Lenders borrows funds or
obtains credit (a "FUNDING BANK"), or (II) Agent, a Funding Bank or any of
the Lenders complies with any future guideline or request from any central
bank or other Governmental Authority proposed or promulgated after the date
of the Agreement or (III) Agent, a Funding Bank or any of the Lenders
determines that the adoption of any applicable law, rule or regulation
regarding capital adequacy or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof announced after the date of this Credit Agreement
has or would have the effect described below, or Agent, a Funding Bank or
any of the Lenders complies with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency announced after the date of this Credit
Agreement and in the case of any event set forth in this clause (III), such
adoption, change or compliance has or would have the direct or indirect
effect of reducing the rate of return on any of such Person's capital as a
consequence of its obligations hereunder to a level below that which such
Person could have achieved but for such adoption, change or compliance
(taking into consideration such Person's policies with respect to capital
adequacy) by an amount deemed by such Person to be material, and any of the
foregoing events described in CLAUSES (I), (II) OR (III) increases the cost
to Agent, or any of the Lenders of (A) funding or maintaining any Loan or
Commitment or (B) issuing, causing the issuance of making or maintaining
any Letter of Credit or of purchasing or maintaining any participation
therein, or reduces the amount receivable in respect thereof by Agent or
any Lender, then Borrower shall upon demand by Agent at any time within one
hundred eighty (180) days after the date on which an officer of Agent, such
Funding Bank or such Lender, as the case may be, responsible for overseeing
this Credit Agreement knows or has reason to know of its right to
additional compensation under this SECTION 2.10, pay to Agent, for the
account of such Lender or, as applicable, Agent or a Funding Bank,
additional amounts sufficient to reimburse Agent, such Funding Bank and
such Lender against such increase in cost or reduction in amount
receivable; PROVIDED, HOWEVER, that if Agent or any such Lender or Funding
Bank, as the case may be, fails to deliver such demand within such 180 day
period, such entity shall only be entitled to additional compensation for
any such costs incurred from and after the date that is one hundred eighty
(180) days prior to the date Borrower received such demand; and PROVIDED
FURTHER, HOWEVER, that before making any such demand, Agent and each Lender
agree to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to designate a different Applicable
Lending Office if the making of such a designation would avoid the need
for, or reduce the amount of, such increased cost and would not, in the
reasonable judgment of such Lender,
38
be otherwise disadvantageous to such Lender. A certificate as to the amount
of such increased cost, and setting forth in reasonable detail the
calculation thereof, shall be submitted to Borrower by Agent, or the
applicable Lender or Funding Bank, and shall be conclusive absent
demonstrable error.
(B) Each Lender will promptly notify Agent, and Agent will promptly
notify Borrower, of any event of which it has knowledge that would entitle
such entity to additional compensation under this SECTION 2.10. Neither
Agent nor any Lender shall request any additional compensation under this
SECTION 2.10 unless it is generally making similar requests of other
borrowers similarly situated, and Agent and each Lender agrees to use a
reasonable basis for calculating amounts allocable to its commitment to
lend or its Loans and Letter of Credit Obligations, if any, hereunder.
2.11 TAXES. (a) All payments made by the Borrower hereunder, under the
-----
Notes or under any other Credit Document will be made without setoff,
counterclaim, deduction or other defense. All such payments shall be made free
and clear of and without deduction for any present or future income, franchise,
sales, use, excise, stamp or other taxes, levies, imposts, deductions, charges,
fees, withholdings, restrictions or conditions of any nature now or hereafter
imposed, levied, collected, withheld or assessed by any jurisdiction (whether
pursuant to United States Federal, state, local or foreign law) or by any
political subdivision or taxing authority thereof or therein, and all interest,
penalties or similar liabilities, excluding taxes on the overall net income of
the Lenders or any Issuing Bank (such nonexcluded taxes are hereinafter
collectively referred to as the "Taxes"). If the Borrower shall be required by
-----
law to deduct or to withhold any Taxes from or in respect of any amount payable
hereunder, (i) the amount so payable shall be increased to the extent necessary
so that after making all required deductions and withholdings (including Taxes
on amounts payable to the Lenders or any Issuing Bank pursuant to this sentence)
the Lenders or such Issuing Bank receive an amount equal to the sum they would
have received had no such deductions or withholdings been made, (ii) the
Borrower shall make such deductions or withholdings, and (iii) the Borrower
shall pay the full amount deducted or withheld to the relevant taxation
authority in accordance with applicable law. Whenever any Taxes are payable by
the Borrower, as promptly as possible thereafter, the Borrower shall send the
Lenders such Issuing Bank and the Agent an official receipt showing payment. In
addition, the Borrower agrees to pay any present or future taxes, charges or
similar levies (excluding taxes on the overall net income of the Lenders or any
Issuing Bank) which arise from any payment made hereunder or from the execution,
delivery, performance, recordation or filing of, or otherwise with respect to,
this Agreement, the Notes, the Letters of Credit or any other Credit Document
(hereinafter referred to as "Other Taxes").
-----------
(B) The Borrower will indemnify the Lenders and the Issuing Bank for
the amount of Taxes or Other Taxes (including, without limitation, any
Taxes or other Taxes imposed by any jurisdiction on amounts payable under
this Section 2.11) paid by any Lender or any Issuing Bank and any liability
(including penalties, interest and expenses for nonpayment, late payment or
otherwise) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be
39
paid within 30 days from the date on which such Lender or such Issuing bank
makes written demand.
(C) Each Lender which is a foreign person (i.e., a Person other than
----
a United States Person for United States Federal income tax purposes)
hereby agrees that:
(I) it shall, no later than the Effective Date (or, in
the case of a Lender which becomes a party hereto pursuant to
Section 11.8 hereof after the Closing Date, the date upon which
such Lender becomes a party hereto) deliver to the Borrower
through the Agent:
(A) two accurate and complete signed
originals of Form 4224, or
(B) two accurate and complete signed
originals of From 1001,
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the account of
its lending installation under this Agreement free from withholding of United
States Federal income tax;
(II) if at any time such Lender changes its lending
installation or installations or selects an additional lending
installation it shall, at the same time or reasonably promptly
thereafter, deliver to the Borrower through the Agent in
replacement for, or in addition to, the forms previously
delivered by it hereunder:
(A) if such changed or additional lending
installation is located in the United States, two
accurate and complete signed originals of Form
4224, or
(B) otherwise, two accurate and complete
signed originals of Form 1001,
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the account of
such changed or additional lending installation under this Agreement free from
withholding of United States Federal income tax;
(III) it shall, promptly upon the Borrower's reasonable
request to that effect, deliver to the Borrower such other forms
or similar documentation as may be required from time to time by
any applicable law,
40
treaty, rule or regulation in order to establish such Lender's
tax status for withholding purposes.
(D) If the Borrower fails to perform its obligations under this
Section 2.11, the Borrower shall indemnify the Agent, the Lenders and the
Issuing Banks for any incremental taxes, interest or penalties that may
become payable as a result of any such failure.
ARTICLE 3. LETTERS OF CREDIT.
-----------------
3.1 ISSUANCE OF LETTERS OF CREDIT. Subject to the terms and conditions
-----------------------------
hereof and in reliance on the representations and warranties of Borrower set
forth herein, after the Effective Date, at the request of Borrower, as more
specifically described below, Agent shall instruct the Issuing Bank to issue
Letters of Credit. Agent shall not be obligated to cause the Issuing Bank to
issue any Letter of Credit if:
(A) issuance of the requested Letter of Credit (I) would cause the
Letter of Credit Obligations then outstanding to exceed $3,000,000 or (II)
would cause the sum of the Revolving Loans PLUS the Letter of Credit
Obligations then outstanding to exceed the lesser of (X) the Revolving Loan
Commitments and (Y) the Borrowing Base, in each case then in effect; or
(B) issuance of the Letter of Credit is enjoined, restrained or
prohibited by any Governmental Authority, Requirement of Law or any request
or directive of any Governmental Authority (whether or not having the force
of law) or would impose upon Agent or the Issuing Bank any material
restriction, reserve, capital requirement, loss, cost or expense (for which
Agent or the Issuing Bank is not otherwise compensated) not in effect or
known as of the Effective Date.
3.2 TERMS OF LETTERS OF CREDIT. The proposed amount, terms and
--------------------------
conditions, and form of each Letter of Credit (and of any drafts or acceptances
thereunder) shall be subject to approval by the Issuing Bank. The term of each
standby Letter of Credit shall not exceed 360 days, but may be subject to annual
renewal. The term of each documentary Letter of Credit shall not exceed 120
days. No Letter of Credit shall have an expiry date later than five (5) Business
Days prior to the Expiration Date.
3.3 NOTICE OF ISSUANCE. A request for issuance of a Letter of Credit (a
------------------
"LETTER OF CREDIT REQUEST") shall be given in writing. A Letter of Credit
Request must be received by Agent no later than 1:00 P.M. Chicago time at least
ten (10) Business Days (or such shorter period as may be agreed to by the
Issuing Bank) in advance of the proposed date of issuance.
3.4 REVOLVING LENDERS' PARTICIPATION. Immediately upon issuance or
--------------------------------
amendment of any Letter of Credit, each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from the Issuing Bank,
without recourse or warranty, an undivided interest
41
and participation in all rights and obligations under such Letter of Credit
(other than fees and other amounts owing to the Issuing Bank) in accordance with
such Revolving Lender's Pro Rata Share.
3.5 PAYMENTS OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. Agent shall notify
-------------------------------------------------
Borrower of the receipt by Agent of notice from the Issuing Bank of a draft or
other presentation for payment or drawing under a Letter of Credit not later
than 11:00 A.M. Chicago time on the Business Day immediately prior to the date
on which the Issuing Bank intends to honor such drawing. Unless the procedures
set forth in SECTION 2.6.2(A) shall be applicable, Borrower shall be deemed to
have concurrently given a Notice of Borrowing to Agent to make a Revolving Loan
in the amount of and at the time of such drawing (which Revolving Loan shall be
a Prime Rate Loan), the proceeds of which shall be applied directly by Agent to
reimburse the Issuing Bank for the amount of such drawing.
3.6 PAYMENT BY LENDERS. If a Revolving Loan is not made in an amount
------------------
sufficient to reimburse the Issuing Bank in full for the amount of any draw
under a Letter of Credit, Agent shall promptly notify each Revolving Lender of
the unreimbursed amount of such drawing and of such Revolving Lender's
respective participation therein. Each Revolving Lender shall make available to
Agent, for the account of the Issuing Bank, the amount of its participation in
immediately available funds not later than 1:00 P.M. Chicago time on the next
Business Day after such Revolving Lender receives notice from Agent of the
amount of such Lender's participation in such unreimbursed amount. If any
Revolving Lender fails to make available to Agent the amount of such Revolving
Lender's participation, Agent shall be entitled to recover such amount on demand
from such Revolving Lender together with interest at the Federal Funds Rate for
the first three Business Days and thereafter at the Prime Lending Rate. For
each Letter of Credit, Agent shall promptly distribute to each Lender which has
funded the amount of its participation its Pro Rata Share of all payments
subsequently received by Agent from Borrower in reimbursement of honored
drawings.
3.7 OBLIGATIONS ABSOLUTE. The obligations of Borrower to reimburse the
--------------------
Revolving Lenders under SECTION 3.5 hereof shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Credit Agreement under all circumstances including, without limitation, upon the
occurrence and during the continuance of an Event of Default.
3.8 ISSUING BANK DOCUMENTATION; RELIANCE BY ISSUING BANK. Agent shall be
----------------------------------------------------
authorized to execute, deliver and perform on behalf of the Revolving Lenders
such letter of credit applications, shipping indemnities, letter of credit
modifications and consents and other undertakings for the benefit of the Issuing
Bank as may be reasonably necessary or appropriate in connection with the
issuance or modification of Letters of Credit requested by Borrower hereunder.
The Revolving Lenders, Agent and Borrower all expressly agree that the terms of
this ARTICLE 3 and various other provisions of this Credit Agreement identifying
the Issuing Bank are also intended to benefit the Issuing Bank and the Issuing
Bank shall be entitled to enforce the provisions hereof which are for its
benefit.
ARTICLE 4. RECORDKEEPING AND SETTLEMENT PROCEDURES.
---------------------------------------
42
4.1 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF ACCOUNT. Agent shall
--------------------------------------------------
maintain an account on its books in the name of Borrower (the "LOAN ACCOUNT") in
which Borrower will be charged with all loans and advances made by the Lenders
to Borrower or for the account of Borrower, including the Revolving Loans and
all Letter of Credit Obligations, Term Loan A and Term Loan B, all accrued and
unpaid interest on the Principal Balance, the Fees, the Expenses and any other
Obligations, as and when such amounts are incurred by Borrower. The Loan
Account will be credited with all payments received by Agent from Borrower or
for the account of Borrower. After the end of each month, Agent shall send
Borrower a monthly statement accounting for the charges, loans, advances and
other transactions occurring among and between Agent, the Lenders and Borrower
during that month, PROVIDED, THAT the failure of Agent to send such statement to
Borrower shall not relieve Borrower of any Obligations. Absent demonstrable
error, each monthly statement shall be an account stated and shall be final,
conclusive and binding on Borrower.
4.2 APPLICATION OF PAYMENTS. All payments and other amounts received by
-----------------------
Agent from Borrower shall be credited to the Loan Account and distributed by the
Agent as provided in Section 2.9; provided, however, that if an Event of Default
has occurred and is continuing, all payments and other amounts received by Agent
shall be distributed and applied in the following order: FIRST, to the payment
-----
of any Fees, Expenses or other Obligations due and payable to Agent (solely in
its capacity as Agent and not as Lender) under any of the Credit Documents,
including Agent Advances and any other amounts advanced by Agent on behalf of
the Lenders; SECOND, to the payment of any Fees, Expenses or other Obligations
------
due and payable to the Issuing Bank under any of the Credit Documents; THIRD, to
-----
the ratable payment of any Fees, Expenses, Prepayment Premium, if applicable, or
other Obligations due and payable to the Lenders under any of the Credit
Documents other than those Obligations specifically referred to in this Section;
FOURTH, to the ratable payment of interest due on the Loans; FIFTH, to the
------ -----
ratable payment of principal due on the Loans and outstanding Letter of Credit
Obligations; and, SIXTH, any remainder, to Borrower or such other Person or
-----
Person(s) legally entitled thereto. Any such ratable payment on account of
outstanding Letter of Credit Obligations pursuant to the preceding clause FIFTH
-----
shall be held by Agent in a cash collateral account to secure each Letter of
Credit then outstanding until the amount on deposit in such cash collateral
account is equal to 110% of the greatest amount drawable under all such Letters
of Credit, and any such amount so held by Agent shall be applied in accordance
with the procedures set forth in Section 2.6.2(a).
4.3 REVOLVING LOANS PERIODIC SETTLEMENT; INTEREST AND FEES; STATEMENTS.
------------------------------------------------------------------
(A) THE SETTLEMENT DATE; ALLOCATION OF INTEREST AND FEES. The amount
of each Revolving Lender's Loans shall be computed weekly (or more
frequently in Agent's discretion) and shall be adjusted upward or downward
based on all Revolving Loans (including Agent Advances) made and repayments
received by Agent as of 5:00 P.M. Chicago time on the last Business Day of
the period specified by Agent (such date, the "REVOLVING LOAN SETTLEMENT
DATE").
(B) SUMMARY STATEMENTS; SETTLEMENTS. Agent shall deliver to each of
the Revolving Lenders promptly after the Revolving Loan Settlement Date a
summary
43
statement of the account of outstanding Revolving Loans (including
Agent Advances) for the period, the amount of repayments received for the
period, and the amount allocated to each Revolving Lender of the interest
and Unused Line Fee for the period. After application of payments under
SECTION 4.2, as reflected on the summary statement, (I) Agent shall
transfer to each Revolving Lender its allocated share of interest, its
ratable share of repayments of the Revolving Loans Principal Balance
received by Agent in respect of the period covered by such summary
statement and Unused Line Fee; and (II) each Revolving Lender shall
transfer to Agent, or Agent shall transfer to each Revolving Lender, such
amounts as are necessary to insure that, after giving effect to all such
transfers, the amount of Revolving Loans made by each Revolving Lender
shall be equal to such Revolving Lender's Pro Rata Share of the aggregate
amount of Revolving Loans outstanding as of such Revolving Loan Settlement
Date. If the summary statement requires transfers to be made to Agent by
the Revolving Lenders and is received by the Revolving Lenders prior to
12:00 noon Chicago time on a Business Day, such transfers shall be made in
immediately available funds no later than 3:00 P.M. Chicago time that day;
and, if received after 12:00 noon Chicago time, then no later than 3:00
P.M. Chicago time on the next Business Day. The obligation of each
Revolving Lender to transfer such funds is irrevocable, unconditional and
without recourse to or warranty by Agent.
(C) DISTRIBUTION OF INTEREST AND UNUSED LINE FEES. Interest on the
Revolving Loans (including Agent Advances) and the Unused Line Fee shall be
allocated by Agent to each Revolving Lender (I) in the case of interest, in
accordance with the Revolving Loans actually advanced by such Revolving
Lender and (II) in the case of the Unused Line Fee, in accordance with the
excess of (X) the daily average of the then applicable Pro Rata Share of
each Revolving Lender for the applicable quarter over (Y) the daily average
Principal Balance of outstanding Revolving Loans actually made by such
Revolving Lender for the applicable quarter. Promptly after the end of
each month, Agent shall distribute to each Revolving Lender its portion,
allocated as provided above, of the interest and Unused Line Fee which has
been received by Agent during such month.
4.4 SHARING OF PAYMENTS. If any Lender shall obtain any payment (whether
-------------------
made voluntarily or involuntarily, or through the exercise of any right of set-
off, or otherwise) on account of the Loans made by it or its participation in
the Letter of Credit Obligations in excess of its ratable share of payments on
account of the Loans and Letter of Credit Obligations obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Loans made by them or in their participation in Letters of
Credit as shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them; PROVIDED, THAT if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender, such
purchase from each other Lender shall be rescinded and each such other Lender
shall repay to the purchasing Lender the purchase price to the extent of such
recovery, together with an amount equal to such other Lender's ratable share
(according to the proportion of (I) the amount of such Lender's required
repayment to (II) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
to the total amount so recovered. Borrower agrees that any Lender so purchasing
a participation from another Lender pursuant to this SECTION 4.4, to the fullest
extent permitted by
44
law, may exercise all of its rights of payment (including the right of set-off)
with respect to such participation as fully as if such Lender were the direct
creditor of Borrower in the amount of such participation.
4.5 DEFAULTING LENDERS.
------------------
(A) A Revolving Lender who fails to pay Agent its Pro Rata Share of
any Revolving Loans (including Agent Advances) made available by Agent on
such Revolving Lender's behalf, or who fails to pay any other amounts owing
by it to Agent, is a "DEFAULTING LENDER." Agent is entitled to recover
from such Defaulting Lender all such amounts owing by such Defaulting
Lender on demand. If the Defaulting Lender does not pay such amounts on
Agent's demand, Agent shall promptly notify the Borrower and Borrower shall
pay such amounts to Agent (to the extent Agent has made such amounts
available to or for the account of Borrower) within five (5) Business Days
of the receipt by the Borrower of such notice. In addition, the Defaulting
Lender or Borrower shall pay to Agent for its own account interest on such
amount for each day from the date it was made available by Agent to
Borrower to the date it is recovered by Agent at a rate per annum equal to
(I) the overnight Federal Funds Rate if paid by the Defaulting Lender, or
(II) the then applicable rate of interest calculated under SECTION 2.4.1,
if paid by Borrower; plus, in each case, the Expenses and losses, if any,
incurred as a result of the Defaulting Lenders' failure to perform its
obligations. Nothing herein shall be deemed to relieve any Revolving
Lender of its obligation to fulfill its commitments hereunder or to
prejudice any rights which Borrower may have against any Revolving Lender
as a result of any default by such Revolving Lender hereunder, including,
without limitation, the right of Borrower to seek reimbursement from any
Defaulting Lender for any amounts paid by Borrower under CLAUSE (I) above
on account of such Defaulting Lender's default.
(B) The failure of any Revolving Lender to fund its Pro Rata Share of
a Revolving Loan shall not relieve any other Revolving Lender of its
obligation to fund its Pro Rata Share of a Revolving Loan. Conversely, no
Revolving Lender shall be responsible for the failure of another Revolving
Lender to fund its Pro Rata Share of a Revolving Loan.
(C) Agent shall not be obligated to transfer to a Defaulting Lender
any payments made by Borrower to Agent for the Defaulting Lender's benefit;
nor shall a Defaulting Lender be entitled to the sharing of any payments
hereunder. Amounts payable to a Defaulting Lender shall instead be paid to
or retained by Agent. Agent may hold and, in its discretion, relend to
Borrower the amount of all such payments received by it for the account of
such Defaulting Lender. For purposes of voting or consenting to matters
with respect to the Credit Documents and determining Pro Rata Shares, such
Defaulting Lender shall be deemed not to be a "LENDER" and such Defaulting
Lender's Commitment shall be deemed to be zero. This section shall remain
effective with respect to such Defaulting Lender until (I) the Obligations
shall have been declared or shall have become immediately due and payable
or (II) the Majority Lenders, Agent and Borrower shall have waived such
Defaulting Lender's default in writing. The operation of this Section
shall not be
45
construed to increase or otherwise affect the Commitment of any Revolving
Lender, or relieve or excuse the performance by Borrower of their
respective duties and obligations hereunder.
4.6 CREDIT PARTIES' OBLIGATIONS. The Credit Parties maintain an
---------------------------
integrated cash management system reflecting their interdependence on one
another and the mutual benefits shared among them as a result of their
respective operations. In order to fund and operate their respective businesses
efficiently and to minimize the number of borrowings which Borrower will make
under this Credit Agreement and thereby reduce the administrative costs and
record keeping required in connection therewith, including the necessity to
enter into and maintain separately identified and monitored borrowing
facilities, Borrower has requested, and Agent and the Lenders have agreed that,
subject to SECTION 11.16, (I) all Loans will be advanced to and for the account
of Borrower and (II) all Letters of Credit will be issued pursuant to an
application therefor executed by Borrower on its own behalf. Borrower, on its
own behalf and on behalf of each Guarantor, hereby acknowledges that each Credit
Party will be receiving a direct benefit from each Loan made and each Letter of
Credit issued pursuant to this Credit Agreement.
ARTICLE 5. CONDITIONS PRECEDENT.
--------------------
5.1 CONDITIONS PRECEDENT TO INITIAL LOANS. The obligation of each Lender
-------------------------------------
to fund its Pro Rata Share of Term Loan A, Term Loan B and the Revolving Loans
on the Effective Date is in each case subject to the prior or contemporaneous
satisfaction or waiver of the following conditions precedent on or before
September 3, 1998:
(A) MINIMUM AVAILABILITY. After giving effect to the funding of Term
Loan A and Term Loan B, as the case may be, Borrower shall be entitled to
borrow Revolving Loans in an aggregate amount of not less than $5,000,000.
(B) CLOSING DOCUMENTS. Agent and the Lenders shall have received
each of the agreements, opinions, reports, approvals, consents,
certificates and other documents set forth on the List of Closing Documents
attached hereto as SCHEDULE A (the "CLOSING DOCUMENT LIST")[, OTHER THAN
THOSE ITEMS DESCRIBED IN THE POST-CLOSING AGREEMENT].
(C) FEES AND EXPENSES. All Fees and Expenses payable by Borrower
hereunder or under the Original Credit Agreement on or before the Effective
Date shall have been paid in full.
(D) OTHER DOCUMENTS. Borrower shall have delivered or caused to be
delivered to Agent and each Lender, in each case in form and substance
satisfactory to Agent, (I) all information required pursuant to (A) SECTION
7.1(A) for fiscal year ending December 31, 1997, (B) SECTION 7.1(B) for the
quarter ending June 30, 1998, and (C) SECTION 7.2 and (II) such other
business and/or financial and data and other information as Agent or any
Lender shall reasonably request.
46
(E) OFFICER'S CERTIFICATE. Agent shall have received a certificate
dated the Effective Date signed on behalf of Borrower by the Chairman or
President of Borrower stating that all of the conditions set forth in
SECTION 5.1(A), and SECTIONS 5.2(A) through (C), inclusive, have been
satisfied on and as of such date.
(F) CUSIP NUMBERS. Borrower shall have obtained "CUSIP" numbers for
each of the Notes.
(G) ACQUISITIONS. The Lenders shall have received and approved true
and correct copies of the Acquisition Documents and the Acquisitions each
shall have been consummated on terms acceptable to the Lenders.
(H) PROFORMA FINANCIAL INFORMATION. Agent shall have received and the
same shall be acceptable in all respects to the Lenders, in each case as of
June 30, 1998 but after giving effect to the Acquisitions and the other
transactions contemplated hereunder: (I) Proforma capitalization of the
Consolidated Entity showing, not less than $46.0 million common equity;
(II) a proforma balance sheet of the Consolidated Entity; and (III)
proforma projections, income statements, balance sheets and funds flow
statements of the Consolidated Entity through fiscal year 2004, such
statements to be on a quarterly basis for fiscal years 1999 and 2000, and
on an annual basis for each fiscal year thereafter.
5.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTERS OF CREDIT. The
-------------------------------------------------------
obligation of each Lender to fund its Pro Rata Share of any requested Loan (or
of Agent to cause the Issuing Bank to issue any requested Letter of Credit and
of each Lender to purchase a participation therein) is in each case subject to
the satisfaction of the conditions precedent set forth below. Each Notice of
Borrowing and each Letter of Credit Request shall constitute a representation
and warranty to Agent and each Lender by Borrower that such conditions are
satisfied.
(A) All representations and warranties contained in this Credit
Agreement and the other Credit Documents shall be true and correct in all
material respects on and as of the date of such Notice of Borrowing or
Letter of Credit Request, both before and after giving effect thereto and
to the application of the proceeds thereof [(BUT SUBJECT TO COMPLIANCE WITH
THE TERMS OF THE POST-CLOSING AGREEMENT)], in each case as if then made,
other than representations and warranties that expressly relate solely to
an earlier date (in which case such representations and warranties shall
have been true and accurate in all material respects on and as of such
earlier date);
(B) No Default or Event of Default shall have occurred or could
reasonably be expected to result from the making of the requested Loan or
the issuance of the requested Letter of Credit, which has not been waived;
and
(C) Since December 31, 1997 no event shall have occurred which has
had or could reasonably be expected to have a Material Adverse Effect.
47
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.
------------------------------
To induce Agent and the Lenders to enter into this Credit Agreement and to
induce the Lenders to make the Loans and other financial accommodations
described herein, Borrower hereby represents and warrants to Agent and the
Lenders that the representations and warranties contained in this ARTICLE 6 are
true and correct in all material respects, both prior and after giving effect to
Loans and the other transactions contemplated by this Agreement. Such
representations and warranties, and all other representations and warranties
made by any Credit Party in any other Credit Documents, shall survive the
execution and delivery of this Credit Agreement and such other Credit Documents.
6.1 ORGANIZATION AND QUALIFICATION. Borrower and each of its Subsidiaries
------------------------------
except P&S LLC (I) are corporations duly organized, validly existing and in good
standing under the laws of the respective states or other jurisdictions of their
incorporation, (II) have the power and authority to own their respective
properties and assets and to transact their respective businesses in which they
presently are, or propose to be, engaged and (III) are duly qualified and are
authorized to do business and are in good standing in each of the respective
jurisdictions where they presently are, or propose to be, engaged in business,
in each case, except where any failures to do so could not reasonably be
expected singly or in the aggregate to have a Material Adverse Effect. P&S LLC
(I) is a limited liability company duly organized and validly existing under the
laws of the state of its organization, (II) has the power and authority to own
its properties and assets and to transact its business in which it presently is,
or proposes to be, engaged and (III) is duly qualified and is authorized to do
business in each of the jurisdictions where it presently is, or proposes to be,
engaged in business, in each case, except where any failures to do so could not
reasonably be expected to have a Material Adverse Effect on the Consolidated
Entity. SCHEDULE B, PART 6.1 lists all jurisdictions in which Borrower and each
of its Subsidiaries are qualified to do business as foreign corporations.
6.2 AUTHORITY. Borrower and each of its Subsidiaries has the requisite
---------
corporate or limited liability company power and authority to execute, deliver
and perform the respective Credit Documents to which it is a party. All
corporate and limited liability company action (as the case may be) necessary
for the execution, delivery and performance of any of the Credit Documents by
each Credit Party which is a party thereto has been taken.
6.3 ENFORCEABILITY. This Credit Agreement and each of the other Credit
--------------
Documents are the legal, valid and binding obligations of each Credit Party
which is a party thereto, enforceable in accordance with their respective terms,
except as such enforceability may be limited by (I) bankruptcy, insolvency or
similar laws affecting creditors' rights generally, (II) general principles of
equity and (III) the possible need to obtain the consent of a Governmental
Authority to the pledge or negative pledge of equity interests contemplated
hereunder and under the other Credit Documents, Applicable Gaming Laws.
6.4 NO CONFLICT. The execution, delivery and performance of each Credit
-----------
Document by each Credit Party which is a party thereto are not in contravention
of (I) the Governing Documents of such Persons, or (II) any Requirement of Law,
or (III) any indenture, contract,
48
agreement or instrument or other commitment to which any or all of such Persons
are parties or by which any of such Persons or any of their properties are
bound, and will not, except as contemplated herein, result in the imposition of
any Liens upon any of the properties of any of such Persons.
6.5 CONSENTS AND FILINGS. No consent, authorization, permit or filing is
--------------------
required in connection with the execution, delivery and performance of this
Credit Agreement or any Credit Document by any Credit Party which is a party
thereto, or in connection with the continuing operations of such Persons, except
(I) those that have been obtained or made, (II) those to be obtained in
accordance with the terms of the Post-Closing Agreement, (III) those described
in ARTICLE 12 and (IV) filings necessary to create, perfect or retain the
perfection of Liens against the Collateral.
6.6 GOVERNMENT REGULATION. Neither Borrower nor any Subsidiary of
---------------------
Borrower is subject to regulation under the Public Utility Holding Company Act
of 1935, the Investment Company Act of 1940, the Federal Power Act or any other
similar Requirement of Law other than Applicable Gaming Laws which limit the
respective abilities of such Persons to pledge or refrain from pledging equity
interests as contemplated in this Credit Agreement and the other Credit
Documents.
6.7 SOLVENCY. The fair saleable value of the assets of each Credit Party
--------
exceeds all probable liabilities of such Credit Party, in each case, including
those to be incurred pursuant to this Credit Agreement and the other Credit
Documents. No Credit Party (I) has unreasonably small capital in relation to
the business in which it is or proposes to be engaged and (II) has incurred and
believes that it will incur, after giving effect to the transactions
contemplated by this Credit Agreement, debts beyond its ability to pay as such
debts become due.
6.8 RIGHTS IN COLLATERAL; PRIORITY OF LIENS. All property constituting
---------------------------------------
Collateral is owned or leased by the respective Credit Parties, free and clear
of any and all Liens in favor of third parties, other than Permitted Liens.
Subject to compliance with the Post-Closing Agreement, and assuming the proper
filing of the UCC financing and termination statements, deeds of trust, the
patent security agreement and the trademark security agreement, in each case
listed in the Closing Document List, all filings and other actions necessary to
cause the security interests granted pursuant to the Credit Documents to
constitute valid and enforceable first, prior (subject to Permitted Liens) and
perfected Liens on the Collateral, to the extent such Liens can be perfected by
the filing of such financing statements, deeds of trust, mortgages, patent
security agreement and trademark security agreement, will have been made and
taken.
6.9 FINANCIAL DATA. Borrower has provided or caused to be provided to
--------------
Agent and each of the Lenders complete and accurate copies of the following
Financial Statements:
(A) Annual Reports dated December 31, 1997, December 31, 1996 and
December 31, 1995, certified by Deloitte & Touche L.L.P. (including Annual
Report on Form 10-K, for the year ended December 31, 1997); and
49
(B) Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 1998.
All such Financial Statements have been prepared in accordance with GAAP
consistently applied throughout the periods involved and fairly present the
respective consolidated financial positions, results of operations and cash
flows of Persons indicated for each of the periods covered subject, in the case
of interim Financial Statements, to normal year-end audit adjustments. The
Consolidated Entity has no Contingent Obligation (or any other material
liabilities which were not incurred by the Credit Parties subsequent to June 30,
1998 in the ordinary course of business) which is not reflected in such
Financial Statements or the footnotes thereto, or is not otherwise disclosed on
SCHEDULE B, PART 6.9.
6.10 LOCATIONS OF OFFICES, RECORDS AND INVENTORY.
-------------------------------------------
(A) The address of the principal place of business and, if there is
more than one principal place of business, the chief executive office, of
each Credit Party is set forth on SCHEDULE B, PART 6.10(A), as the same may
be amended after the Effective Date in accordance with SECTION 11.11. The
books and records of each Credit Party, and all its chattel paper, if any,
and records of Accounts, are maintained exclusively at one or more of such
locations.
(B) There is no location in which any Credit Party has any
Collateral (except for vehicles and Inventory in transit) other than those
locations identified on SCHEDULE B, PART 6.10(B), as the same may be
amended after the Effective Date in accordance with SECTION 11.11. A
complete list of the legal name and address of each warehouse at which
Inventory of any Credit Party is stored is set forth on SCHEDULE B, PART
6.10(B), as the same may be amended after the Effective Date in accordance
with SECTION 11.11. None of the receipts received and to be received by any
Credit Party from any warehouseman state that the Inventory covered thereby
is to be delivered to bearer or to the order of a named Person or to a
named Person and such named Person's assigns, in each case other than such
Credit Party.
6.11 SUBSIDIARIES; OWNERSHIP OF STOCK. As of the Effective Date, (I)
--------------------------------
the only direct or indirect Subsidiaries of Borrower are those listed on
SCHEDULE B, PART 6.11, and no Subsidiary of Borrower (other than Guarantors and
the Foreign Subsidiaries whose stock or equity interests have been pledged to
the Agent pursuant to the Collateral Documents) conducts any business or has any
assets having a fair market value in excess of $50,000), (II) except as
described on SCHEDULE B, PART 6.11, each Credit Party is the record and
beneficial owner of all of the respective shares of capital stock of each of its
Subsidiaries listed on SCHEDULE B, PART 6.11, (III) there are no proxies,
irrevocable or otherwise, with respect to such shares, and no equity securities
of any of such Subsidiaries are or may become required to be issued by reason of
any options, warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights convertible into
or exchangeable for, shares of any capital stock of any such Subsidiary, and
(IV) there are no contracts, commitments, understandings or arrangements by
which any such Subsidiary is or may become bound to issue additional shares of
its capital stock or securities convertible into or exchangeable for such shares
to any Person other than
50
Borrower, except that in the event Borrower elects to proceed with the second
closing specified in that certain Agreement dated November 7, 1994, as amended,
between Borrower and Xxxx Xxxxxx Xxxxx et al., Borrower will be obligated to
-- --
cause CEI to issue to the successor in interest to Xxxx Xxxxxx Young (who is
deceased) not more than 66,666 shares of the common stock of CEI, which shares
at the option of such successor in interest to Xxxx Xxxxxx Xxxxx will be
exchangeable at or after such second closing for an equal number of shares of
the common stock of Borrower. All of such shares so owned by any Credit Party
are owned by such Credit Party free and clear of any Liens.
6.12 NO JUDGMENTS OR LITIGATION. Except as identified on SCHEDULE B,
--------------------------
PART 6.12, no judgments, orders, writs or decrees are outstanding against any
Credit Party or any Subsidiary of any Credit Party, nor, to any Credit Party's
knowledge, is there now any pending or threatened litigation, contested claim,
investigation, arbitration, or governmental proceeding by or against any Credit
Party or any Subsidiary of any Credit Party that singly or in the aggregate
could not reasonably be expected to have a Material Adverse Effect.
6.13 NO DEFAULTS. Neither Borrower nor any of its Subsidiaries is in
-----------
default under any term of any other indenture, contract, lease, agreement,
instrument or commitment to which any of them is a party or by which any of them
is bound, the default under which, singly or in the aggregate, could reasonably
be expected to have a Material Adverse Effect. No Credit Party knows of any
dispute regarding any such indenture, contract, lease, agreement, instrument or
other commitment.
6.14 LABOR MATTERS. SCHEDULE B, PART 6.14 accurately sets forth all labor
-------------
union contracts to which Borrower or any of its Subsidiaries is a party as of
the Effective Date (including their dates of expiration). There are no existing
strikes or, to the knowledge of Borrower, threatened strikes, lockouts or other
disputes relating to any collective bargaining or similar agreement to which
Borrower or any of its Subsidiaries is a party that singly or in the aggregate
could reasonably be expected to have a Material Adverse Effect.
6.15 COMPLIANCE WITH LAW. Neither Borrower nor any of its Subsidiaries
-------------------
has violated or failed to comply with any Requirements of Law the violation of
which reasonably could be expected to have a Material Adverse Effect.
6.16 ERISA. (a) Neither Borrower nor any Subsidiary nor any ERISA
-----
Affiliate maintains or contributes to any Plan other than those listed on
SCHEDULE B, PART 6.16. The Borrower and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted and could not reasonably be
expected to result in a Material Adverse Effect. Neither the Borrower nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit
plans (as defined in Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by the Borrower or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of the
Borrower or any ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax
51
provisions or to Section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not have, individually or in the aggregate, a
Material Adverse Effect.
(b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "BENEFIT LIABILITIES" has the
meaning specified in Section 4001 of ERISA and the terms "CURRENT VALUE" and
"PRESENT VALUE" have the meanings specified in Section 3 of ERISA.
(c) The Borrower and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are material.
(d) The expected postretirement benefit obligation (determined as of the
last day of the Borrower's most recently ended fiscal year in accordance with
FASB Statement No. 106, without regard to liabilities attributable to
continuation coverage mandated by Section 4980B of the Code) of the Borrower and
its Subsidiaries is not material.
(e) The execution and delivery of this Agreement and the Notes will not
involve any transaction which is subject to the prohibitions of Section 406 of
ERISA or in connection with which tax could be imposed pursuant to Section
4975(c)(1)(A)-(D) of the Code.
6.17 COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as disclosed on SCHEDULE
----------------------------------
B, PART 6.17 or, with respect to matters arising after the Effective Date, as
could not singly or in the aggregate reasonably be expected to have a Material
Adverse Effect, (I) the operations of Borrower and each of its Subsidiaries
comply with all applicable federal, state and local environmental, health and
safety statutes, regulations, directions, ordinances, criteria and guidelines;
(II) no Credit Party has received notice that any of the operations of Borrower
or any of its Subsidiaries is the subject of any judicial or administrative
proceeding alleging the violation of any federal, state or local environmental,
health or safety statute, regulation, direction, ordinance, criteria or
guideline; (III) none of the operations of Borrower or any of its Subsidiaries
is the subject of any federal or state investigation evaluating whether Borrower
or any of its Subsidiaries disposed of any hazardous or toxic waste, substance
or constituent or other substance at any site that may require remedial action,
or any federal or state investigation evaluating whether any remedial action is
needed to respond to a release of any hazardous or toxic waste, substance or
constituent or other substance into the environment; (IV) neither Borrower nor
any of its Subsidiaries has filed any notice under any federal or state law
indicating past or present treatment, storage or disposal of a hazardous or
toxic waste, substance or constituent or reporting a spill or release of a
hazardous or toxic waste, substance or constituent or other substance into the
environment; and (V) neither Borrower nor any of its Subsidiaries has any
contingent liability of which Borrower or such Subsidiary has knowledge, or
reasonably should have knowledge, in connection with any release or potential
release of any hazardous or toxic waste, substance or constituent or other
substance into the environment, nor has Borrower or any of its Subsidiaries
52
received any notice, letter or other indication of potential liability arising
from the disposal of any hazardous or toxic waste, substance or constituent or
other substance into the environment.
6.18 INTELLECTUAL PROPERTY. Borrower and each of its Subsidiaries
---------------------
possesses such assets, licenses, patents, patent applications, copyrights,
service marks, trademarks and trade names as are necessary or advisable to
continue to conduct their respective present business activities, except for
those the absence of which could not reasonably be expected to have a Material
Adverse Effect.
6.19 LICENSES AND PERMITS. Borrower and each of its Subsidiaries has
--------------------
obtained and holds in full force and effect, all franchises, licenses, leases,
permits, certificates, authorizations, qualifications, easements, rights of way
and other rights and approvals (collectively "LICENSES") which are necessary or
advisable for the operation of its business as presently conducted, except for
those the absence of which could not reasonably be expected to have a Material
Adverse Effect.
6.20 TAXES AND TAX RETURNS.
---------------------
(A) Except as set forth on SCHEDULE B, PART 6.20, all income tax
returns required to be filed by Borrower and each of its Subsidiaries have
been timely filed after giving effect to any legally permitted extensions.
The information filed is complete and accurate in all material respects.
All deductions taken in such income tax returns are appropriate and in
accordance with applicable laws and regulations, except deductions that may
have been disallowed but are being challenged in good faith and for which
adequate reserves have been made in accordance with GAAP.
(B) All taxes, assessments, fees and other governmental charges for
periods beginning prior to the date hereof, other than such taxes,
assessments, fees and other governmental charges that are not yet due and
payable, have been timely paid and to the knowledge of Borrower neither
Borrower nor any of its Subsidiaries has any liability for taxes in excess
of the amounts so paid or reserves so established.
(C) Except as set forth in SCHEDULE B, PART 6.20, no material
deficiencies for taxes have been claimed, proposed or assessed by any
taxing or other Governmental Authority against Borrower or any of its
Subsidiaries and no tax liens have been filed. Except as set forth in
SCHEDULE B, PART 6.20, to the knowledge of Borrower there are no pending or
threatened audits, investigations or claims for or relating to any
liability for taxes and there are no matters under discussion with any
Governmental Authority which could reasonably be expected to result in a
material additional liability for taxes. As of the Effective Date, either
the federal income tax returns of each Credit Party have been audited by
the Internal Revenue Service and such audits have been closed, or the
period during which any assessments may be made by the Internal Revenue
Service has expired without waiver or extension for all years up to and
including the fiscal year of the Credit Parties ended December 31, 1993.
Except as set forth in SCHEDULE B, PART 6.20, as of the Effective Date, no
extension of a statute of limitations relating to taxes, assessments, fees
53
or other governmental charges is in effect with respect to Borrower or any
of its Subsidiaries.
(D) Except as set forth on SCHEDULE B, PART 6.20, neither Borrower
nor any of its Subsidiaries has any obligation under any written tax
sharing agreement or agreement regarding payments in lieu of taxes.
6.21 MATERIAL CONTRACTS. SCHEDULE B, PART 6.21, contains a true, correct
------------------
and complete list of all the Material Contracts in effect on the Effective Date.
Except as described on SCHEDULE B, PART 6.21, no Material Contract contains any
unduly burdensome restrictions on Borrower or any of its Subsidiaries or any of
their respective properties that could prevent in any material respect Borrower
or such Subsidiary from conducting its business as conducted on the Effective
Date. As of the Effective Date, all of the Material Contracts are in full force
and effect, and no defaults currently exist thereunder by Borrower or any of its
Subsidiaries that is a party thereto, or to the knowledge of Borrower, any other
party thereto, the effect of which defaults could reasonably be expected to have
a Material Adverse Effect.
6.22 ACCURACY AND COMPLETENESS OF INFORMATION. The Borrower has delivered
----------------------------------------
to the Lenders a copy of the draft memorandum attached hereto as SCHEDULE B,
PART 6.22, (the "MEMORANDUM"), relating to the transactions contemplated hereby.
The Memorandum fairly describes, in all material respects, the general nature of
the business and principal properties of the Borrower and its Subsidiaries. This
Agreement, the Memorandum, the documents, certificates or the writings delivered
to the Lenders by or on behalf of the Borrower in connection with the
transactions contemplated hereby and the financial statements described in
SECTION 6.9, taken as a whole, do not contain any untrue statement of a material
act or omit to state any material fact necessary to make the statements therein
not misleading in light of the circumstances under which they are made.
6.23 NO CHANGE. Since December 31, 1997, no event has occurred which has
---------
had or could reasonably be expected to have a Material Adverse Effect. There is
no fact known to the Borrower that could reasonably be expected to have a
Material Adverse Effect that has not been set forth herein or in the Memorandum
or in the other documents, certificates and other writings delivered to the
Lenders by or on behalf of the Borrower specifically for use in connection with
the transactions contemplated hereby.
6.24. YEAR 2000. Borrower shall take, and shall cause each Subsidiary
---------
to take, all action necessary to assure that there will be no Material Adverse
Effect by reason of the advent of the year 2000, including, without limitation,
that all computer based systems, embedded micro-chips and other processing
capabilities effectively recognize and process dates after December 31, 1999.
At Agent's request, Borrower shall provide to Agent assurance reasonably
acceptable to it that Borrower's and each Subsidiary's computer-based systems,
embedded micro-chips and other processing capabilities are year 2000 compatible.
6.25. ACQUISITIONS; STRUCTURAL MATTERS. At the time of the making of the
--------------------------------
initial Loans: (a) the Acquisitions will have been consummated in accordance
with the terms of the Acquisition
54
Documents; (b) all consents and approvals of, and filings and registrations
with, and all other actions in respect of, all governmental agencies,
authorities or instrumentalities required in order to make or consummate the
Acquisitions will have been obtained, given, filed or taken and shall be in full
force and effect, and all required waiting periods will have elapsed; and (c)
all actions by Borrower and other parties to the Acquisition Documents pursuant
to or in furtherance of the Acquisitions will have been taken in compliance with
all Requirements of Law, except, in the case of clauses (b) and (c) hereof,
where the failure to do so would not have a Material Adverse Effect.
6.26. PRIVATE OFFERING BY THE COMPANY. Neither the Borrower nor anyone
-------------------------------
acting on its behalf has offered the Notes or any similar securities for sale
to, or solicited any offer to buy any of the same from, or otherwise approached
or negotiated in respect thereof with, any person other than the Agent and the
Lenders and not more than five (5) other institutional investors (not including
related Funds), each of which has been offered the Notes at a private sale for
investment.
6.27. FOREIGN ASSETS CONTROL REGULATIONS. Neither the issuance of the
----------------------------------
Notes by the Borrower hereunder nor its use of the proceeds thereof will violate
the Trading with the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto.
ARTICLE 7. AFFIRMATIVE COVENANTS.
---------------------
Until termination of this Credit Agreement and payment and satisfaction of
all Obligations due hereunder:
7.1 FINANCIAL REPORTING. Borrower shall timely deliver to each Lender
-------------------
the following information:
(A) ANNUAL FINANCIAL STATEMENTS. As soon as available, but not
later than 90 days after each fiscal year end: (I) the annual audited
consolidated, and unaudited consolidating, Financial Statements of the
Consolidated Entity; (II) a comparison in reasonable detail to the prior
year annual audited and unaudited Financial Statements; (III) the Auditors'
unqualified opinion, "Management Letter" (if any) and statement indicating
whether the Auditors have obtained knowledge of the existence of any
Default or Event of Default during their audit; (IV) a narrative discussion
of the consolidated financial condition and results of operations and the
consolidated liquidity and capital resources of the Consolidated Entity for
such fiscal year, prepared by the chief financial officer of Borrower; and
(V) a compliance certificate substantially in the form of EXHIBIT H with an
attached schedule of calculations demonstrating compliance with the
financial covenants set forth in SECTIONS 8.1 through 8.7.
(B) ANNUAL PROJECTIONS. Not later than 45 days after each fiscal
year end, beginning with the fiscal year ended December 31, 1997, an annual
projection of the financial condition and results of operations of the
Consolidated Entity for the succeeding
55
fiscal year, in each case containing projected consolidating balance
sheets, statements of operations, statements of cash flows and statements
of changes in shareholders equity.
(C) QUARTERLY FINANCIAL STATEMENTS. As soon as available, but not
later than 45 days after each end of each of the first three fiscal
quarters, and 90 days after the end of the last fiscal quarter: (I)
Financial Statements of the Consolidated Entity as of the fiscal quarter
then ended, and for the fiscal year to date; (II) a comparison in
reasonable detail to the Financial Statements for the corresponding periods
of the prior fiscal year; (III) the certification of the chief executive
officer or chief financial officer of Borrower that such Financial
Statements have been prepared in accordance with GAAP (subject to year-end
audit adjustments); (IV) a narrative discussion of the consolidated
financial condition and results of operations and the consolidated
liquidity and capital resources of the Consolidated Entity for such fiscal
quarter and fiscal year to date, prepared by the chief financial officer of
Borrower; and (V) a compliance certificate substantially in the form of
EXHIBIT H with an attached schedule of calculations demonstrating
compliance with the financial covenants set forth in SECTIONS 8.1 through
8.7.
(D) PUBLIC REPORTING. Promptly upon their becoming available, copies
of all regular and periodic reports, proxy statements and other materials,
if any, filed by Borrower with the Securities and Exchange Commission, or
any Governmental Authority succeeding to any or all of the functions of
such Commission, or with any national securities exchange, or distributed
to the stockholders of Borrower.
7.2 COLLATERAL REPORTING. Borrower shall timely deliver or cause to be
--------------------
delivered to Agent the following certificates and reports:
(A) QUARTERLY BORROWING BASE CERTIFICATES. As soon as available, but
not later than 45 days after the end of each fiscal quarter, and at any
other time reasonably requested by Agent, a Borrowing Base Certificate,
which shall be: (I) substantially in the form of EXHIBIT A, detailing the
Eligible Accounts Receivable and Eligible Inventory, in each case of each
Credit Party, as of the last day of the immediately preceding quarter, or
as of such other date as Agent may request; and (II) prepared by or under
the supervision of the chief executive officer or chief financial officers
of each Credit Party and certified by such officer subject only to
adjustment upon completion of the normal annual audit of physical
inventory. Each Borrowing Base Certificate shall have attached to it such
additional schedules and other information as Agent may reasonably request,
including, without limitation, an aging of Accounts.
(B) FURTHER ASSURANCES. When requested by Agent, any further
information regarding the Collateral, business affairs and financial
condition of Borrower, any other Credit Party or any Subsidiary of any
Credit Party which may be developed or obtained without unreasonable effort
or expense.
7.3 NOTIFICATION REQUIREMENTS. Borrower shall timely give to Agent and
-------------------------
each of the Lenders the following notices:
56
(A) NOTICE OF DEFAULTS. Promptly, and in any event within two (2)
Business Days after becoming aware of the occurrence of a Default or Event
of Default, a certificate of the chief executive officer or chief financial
officer of Borrower specifying the nature thereof and the proposed response
of the Credit Parties with respect thereto, each in reasonable detail.
(B) PROCEEDINGS OR ADVERSE CHANGES. Promptly, and in any event within
five (5) Business Days after any Credit Party becomes aware of (I) any
proceedings being instituted or threatened to be instituted by or against
such Credit Party or any of its Subsidiaries in any federal, state, local
or foreign court or before any commission or other regulatory body
(federal, state, local or foreign) which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect, (II) any order,
judgment or decree in excess of $250,000 being entered against such Credit
Party or any of its Subsidiaries or any of their respective properties or
assets or (III) any actual or prospective change, development or event
which has had or could reasonably be expected to have a Material Adverse
Effect, a written statement describing such proceeding, order, judgment,
decree, change, development or event and any action being taken with
respect thereto by such Credit Party or such Subsidiary.
(C) ERISA NOTICES. (I) Promptly, and in any event within ten (10)
Business Days after Borrower, any of its Subsidiaries or any ERISA
Affiliate knows or has reason to know that a Termination Event has
occurred, a written statement of the chief financial officer of Borrower
describing such Termination Event and any action that is being taken with
respect thereto by Borrower, such Subsidiary or such ERISA Affiliate, and
any action taken or threatened by the Internal Revenue Service, Department
of Labor or Pension Benefit Guaranty Corporation. Borrower, each Subsidiary
of Borrower and each ERISA Affiliate shall be deemed to know all facts
known by the administrator of any Benefit Plan of which it is the plan
sponsor; (II) promptly, and in any event within three (3) Business Days
after the filing thereof with the Internal Revenue Service, a copy of each
funding waiver request filed with respect to any Benefit Plan and all
communications received by Borrower, any Subsidiary of Borrower or any
ERISA Affiliate with respect to such request; and (III) promptly, and in
any event within three (3) Business Days after receipt by Borrower, any
Subsidiary of Borrower or any ERISA Affiliate, of the PBGC's intention to
terminate a Benefit Plan or to have a trustee appointed to administer a
Benefit Plan, copies of each such notice.
(D) ENVIRONMENTAL AND HEALTH AND SAFETY NOTICES. Promptly, and in any
event within ten (10) Business Days after receipt by any Credit Party or
any Subsidiary of any Credit Party of any notice, complaint or order
alleging any actual or prospective material violation of any environmental,
health or safety Requirement of Law or alleging responsibility for costs of
a cleanup, together with a copy of such notice, complaint, or order and a
written statement describing any action being taken with respect thereto by
such Credit Party or Subsidiary.
57
(E) MATERIAL CONTRACTS. Promptly, and in any event within ten (10)
Business Days after any Material Contract of any Credit Party or any
Subsidiary of any Credit Party is terminated or amended or any new Material
Contract is entered into, a written statement describing such event, with
copies of amendments or new contracts, and an explanation of any actions
being taken with respect thereto.
(F) COLLATERAL MATTERS. At least thirty (30) Business Days prior
written notice to Agent of any additional location of any Collateral of any
Credit Party (other than Proprietary Gaming Equipment, vehicles and
inventory in transit) or in the location of the chief executive office or
places of business of any Credit Party or any Subsidiary of any Credit
Party from the respective locations specified in SCHEDULE B, PART 6.10. At
least twenty (20) Business Days prior to any such change, Borrower shall
cause to be executed and delivered to Agent any financing statements or
other lien perfection documents reasonably required by Agent, all in form
and substance reasonably satisfactory to Agent.
7.4 CORPORATE EXISTENCE. Borrower shall, and shall cause each of its
-------------------
Subsidiaries to, (I) maintain its corporate existence (except that Subsidiaries
of Borrower may merge with each other and with Borrower and that Borrower may
liquidate or dissolve Games of Nevada, Inc., a Nevada corporation ("GNI"), and
Mikohn International, Inc., a Nevada corporation ("MII"), PROVIDED, THAT (a)
Agent receives five (5) Business Days prior written notice thereof and (b)
neither GNI nor MII has any assets unless prior to such liquidation or
dissolutions, such assets are transferred to the Borrower or a Guarantor, (II)
maintain in full force and effect all licenses, bonds, franchises, leases,
trademarks and qualifications to do business, and all patents, contracts and
other similar rights necessary or advisable for the profitable conduct of their
businesses, the loss of which could reasonably be expected to have a Material
Adverse Effect, (III) continue in, and limit their operations to, the same
general lines of business as presently conducted by them and (IV) maintain all
material terms and provisions of its corporate charter and bylaws in the form in
effect on the Effective Date.
7.5 BOOKS AND RECORDS; INSPECTIONS. Borrower agrees to maintain, and to
------------------------------
cause each of its Subsidiaries to maintain, books and records pertaining to the
Collateral in such detail, form and scope as is consistent with good business
practice. Borrower agrees that Agent (accompanied by any Lender) or any Lender
with at least 20% of the Commitments, or their respective agents, may enter upon
the premises of Borrower or any of its Subsidiaries at any time and from time to
time, during normal business hours and upon reasonable notice under the
circumstances, and at any time at all upon the occurrence and during the
continuance of an Event of Default, for the purposes of (I) inspecting and
verifying the Collateral, (II) inspecting and/or copying (at the expense of
Borrower) any and all records pertaining thereto, and (III) discussing the
affairs, finances and business of Borrower and its Subsidiaries with the
Auditors or any officers, employees and directors of Borrower or its
Subsidiaries.
7.6 INSURANCE. Borrower agrees to maintain, and to cause each of its
---------
Subsidiaries to maintain, public liability insurance, fire and extended coverage
insurance and replacement value insurance on the Collateral under such policies
of insurance, with such insurance companies, in such amounts and covering such
risks as are at all times satisfactory to Agent in its commercially
58
reasonable judgment. All policies covering the Collateral are to name Agent as
an additional insured and/or the loss payee in case of loss, and are to contain
such other provisions as Agent may reasonably require to fully protect Agent's
interest in the Collateral and to any payments to be made under such policies.
7.7 TAXES. Borrower agrees to pay, when due, and to cause each of its
-----
Subsidiaries to pay when due, all taxes lawfully levied or assessed against
Borrower, such Subsidiary or any of the Collateral before any penalty or
interest accrues thereon; PROVIDED, THAT, unless such taxes have become a
federal tax or ERISA Lien on any of the assets of such Credit Party or such
Subsidiary, no such tax need be paid if the same is being contested, in good
faith, by appropriate proceedings promptly instituted and diligently conducted
and if an adequate reserve or other appropriate provision shall have been made
therefor as required in order to be in conformity with GAAP.
7.8 COMPLIANCE WITH LAWS. Borrower agrees to comply, and to cause each of
--------------------
its Subsidiaries to comply, in all respects with all Requirements of Law
applicable to the Collateral or any part thereof, or to the operation of its
business or its assets generally, unless Borrower or such Subsidiary contests
any such Requirements of Law in a reasonable manner and in good faith or the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect.
7.9 USE OF PROCEEDS. Borrower shall use the proceeds of the initial
---------------
Revolving Loan, Term Loan A and Term Loan B (i) to repay all Indebtedness of the
Credit Parties not permitted to exist under this Credit Agreement, (ii) to
consummate the Acquisitions in accordance with the terms of the Acquisition
Documents, (iii) to convert the Obligations evidenced by the Notes under and as
defined in the Original Credit Agreement to Obligations evidenced by the Notes
under this Agreement, (iv) to pay the costs and expenses of the transactions
contemplated by this Credit Agreement, including without limitation the Fees and
Expenses payable pursuant to ARTICLE 2 hereof, (v) to pay any other Obligations
owing under the Original Credit Agreement which are not being converted to
Obligations hereunder, including, without limitation, any prepayment premiums or
make-whole amounts, and (vi) after satisfying clauses (i) through (v) herein,
for working capital and other general corporate purposes. The proceeds of
Revolving Loans and other extensions of credit made hereunder shall be
used by Borrower solely for ongoing working capital requirements and other
general corporate purposes. Borrower shall not use, or permit any of its
Subsidiaries to use, any portion of the proceeds of any Revolving Loans for the
purpose of purchasing or carrying any "margin stock" (as defined in Regulation
U) in any manner which violates the provisions of Regulation U or X or of the
terms and conditions of this Credit Agreement or any other Credit Document.
Borrower has not utilized the services of any broker/dealer in violation of
Regulation T.
7.10 FISCAL YEAR. Borrower agrees to maintain, and to cause each of its
-----------
Subsidiaries to maintain, its fiscal year as a year ending December 31st.
7.11 MAINTENANCE OF PROPERTY. Borrower agrees to keep, and to cause each
-----------------------
of its Subsidiaries to keep, all property useful and necessary to their
respective businesses in good
59
working order and condition (ordinary wear and tear excepted) in accordance with
their past operating practices and not to commit or suffer any waste with
respect to any of their properties.
7.12 ERISA DOCUMENTS. Borrower will cause to be delivered to Agent,
---------------
upon Agent's request, each of the following: (I) a copy of each Plan (or, where
any such plan is not in writing, complete description thereof) (and if
applicable, related trust agreements or other funding instruments) and all
amendments thereto, all written interpretations thereof and written descriptions
thereof that have been distributed to employees or former employees of Borrower
or any of its Subsidiaries; (II) the most recent determination letter issued by
the Internal Revenue Service with respect to each Benefit Plan; (III) for the
three most recent plan years, Annual Reports on Form 5500 Series required to be
filed with any governmental agency for each Benefit Plan; (IV) all actuarial
reports prepared for the last three plan years for each Benefit Plan; (V) a
listing of all Multiemployer Plans, with the aggregate amount of the most recent
annual contributions required to be made by Borrower or any ERISA Affiliate to
each such plan and copies of the collective bargaining agreements requiring such
contributions; (VI) any information that has been provided to Borrower or any
ERISA Affiliate regarding withdrawal liability under any Multiemployer Plan; and
(VII) the aggregate amount of the most recent annual payments made to former
employees of Borrower or any ERISA Affiliate under any Retiree Health Plan.
7.13 ENVIRONMENTAL AND OTHER MATTERS.
-------------------------------
(A) Borrower shall, and shall cause each of its Subsidiaries to,
conduct their businesses so as to comply in all respects with all
environmental, land use, occupational, safety or health laws, regulations,
directions, ordinances, criteria and guidelines in all jurisdictions in
which any of them is or may at any time be doing business, except to the
extent that the failure to so comply reasonably could be expected to have
a Material Adverse Effect or to the extent that Borrower or such
Subsidiary is contesting, in good faith by appropriate legal proceedings,
any such law, regulation, direction, ordinance, criteria, guideline, or
interpretation thereof or application thereof; PROVIDED, THAT Borrower and
each of its Subsidiaries shall comply with the order of any court or other
Governmental Authority relating to such laws unless Borrower or such
Subsidiary shall currently be prosecuting an appeal or proceedings for
review and shall have secured a stay of enforcement or execution or other
arrangement postponing enforcement or execution pending such appeal or
proceedings for review.
(B) If Agent reasonably believes, or the Majority Lenders reasonably
believe, that the facts or circumstances evidence or suggest that Borrower
or any Subsidiary of Borrower is in material non-compliance with any
environmental law and that such non-compliance could reasonably be
expected to have a Material Adverse Effect, then at the written request of
Agent or the Majority Lenders, which request shall specify in reasonable
detail the basis therefor, at any time and from time to time, Borrower
will provide at its sole cost and expense a Phase I or Phase II
environmental site assessment report or update report concerning the site
owned, operated or leased by Borrower or such Subsidiary in respect of
which such material non-compliance is believed to have occurred and be
continuing, such report to be prepared by an environmental consulting firm
approved by
60
Agent and the Majority Lenders, indicating the presence, release or
absence of hazardous materials on or from such site and the potential cost
of any removal, remedial or corrective action in connection with any such
hazardous materials on such site.
7.14 FURTHER ACTIONS. Borrower shall take, and shall cause each of
---------------
its Subsidiaries to take, all such further actions and execute all such further
documents and instruments as Agent may at any time determine in its reasonable
judgment to be necessary or desirable to further carry out and consummate the
transactions contemplated by the Credit Documents, to cause the execution,
delivery and performance of the Credit Documents to be duly authorized and to
perfect or protect the Liens (and the priority status thereof) of Agent on the
Collateral (subject to Permitted Liens).
ARTICLE 8. NEGATIVE COVENANTS.
------------------
Until termination of this Credit Agreement and payment and satisfaction of
all Obligations due hereunder, Borrower shall comply with, and, where required,
shall cause each of its Subsidiaries to comply with, the following covenants:
8.1 MINIMUM NET WORTH. Borrower shall not permit Net Worth (excluding the
-----------------
effect of foreign currency adjustments) on the last day of each quarter set
forth below to be less than the amount set forth below opposite such day:
Minimum
Quarter Ending Net Worth
------------------ -----------
December 31, 1998 $47,000,000
March 31, 1999 $48,000,000
June 30, 1999 $49,000,000
September 30, 1999 $50,000,000
December 31, 1999 $51,500,000
March 31, 2000 $53,000,000
June 30, 2000 $55,000,000
September 30, 2000 $57,000,000
December 31, 2000 $59,000,000
March 31, 2001 $61,500,000
June 30, 2001 $64,000,000
September 30, 2001 $67,000,000
December 31, 2001 $70,000,000
61
March 31, 2002 $73,000,000
June 30, 2002 $76,000,000
September 30, 2002 $79,500,000
December 31, 2002 $83,500,000
Last Day of Each
Quarter Thereafter $85,000,000
8.2 MINIMUM CURRENT RATIO. Borrower shall not permit the Current Ratio on
---------------------
the last day of any quarter to be less than 2.50 to 1.00. Borrower shall not,
in anticipation of any measuring date of this Current Ratio covenant, take any
actions primarily intended to increase or decrease the amount of cash or Cash
Equivalents. These actions could include, for example and not by way of
limitation, prepayment or accelerated payment of Borrower's or its Subsidiaries'
trade payables, other obligations or discretionary expenditures or making short
term investments (whether with Revolving Loan proceeds or other available cash).
8.3 MAXIMUM RATIO OF TOTAL DEBT TO EBITDA. Borrower shall not permit the
-------------------------------------
ratio of the Indebtedness of the Consolidated Entity as of the last day of each
quarter during each period set forth below to EBITDA for the four quarter period
ending on such last day (or in the case of periods ending on or before September
30, 1999, for the period from and including October 1, 1998 to the end of such
period, treated as a single accounting period) to be greater than the amount set
forth below opposite such period:
Maximum
Period Ratio
------ --------
December 31, 1998 18.50:1.00
March 31, 1999 8.75:1.00
June 30, 1999 5.50:1.00
September 30, 1999 3.90:1.00
December 31, 1999 3.55:1.00
March 31, 2000 3.30:1.00
June 30, 2000 3.15:1.00
September 30, 2000 3.00:1.00
December 31, 2000 2.85:1.00
March 31, 2001 2.70:1.00
June 30, 2001 2.65:1.00
September 30, 2001 2.60:1.00
December 31, 2001 2.40:1.00
March 31, 2002 2.40:1.00
June 30, 2002 2.30:1.00
62
September 30, 2002 2.20:1.00
December 31, 2002 2.00:1.00
March 31, 2003 1.75:1.00
June 30, 2003 1.50:1.00
September 30, 2003 1.50:1.00
December 31, 2003 1.25:1.00
Last Day of Each
Quarter Thereafter 1.00:1.00
8.4 MINIMUM EBITDA. Borrower shall not permit EBITDA for the four quarter
--------------
period ending on the last day of each quarter set forth below (or in the case of
periods ending on or before September 30, 1999, for the period from and
including October 1, 1998 to the end of such period, treated as a single
accounting period) to be less than the amount set forth below opposite such day:
Minimum
Quarter Ending EBITDA
-------------- -------
December 31, 1998 $ 4,500,000
March 31, 1999 $ 9,500,000
June 30, 1999 $ 15,000,000
September 30, 1999 $ 21,000,000
December 31, 1999 $ 23,000,000
March 31, 2000 $ 24,500,000
June 30, 2000 $ 25,500,000
September 30, 2000 $ 26,500,000
December 31, 2000 $ 27,500,000
March 31, 2001 $ 29,000,000
June 30, 2001 $ 29,500,000
September 30, 2001 $ 30,000,000
December 31, 2001 $ 31,000,000
March 31, 2002 $ 31,000,000
June 30, 2002 $ 31,500,000
September 30, 2002 $ 32,000,000
December 31, 2002 $ 32,500,000
March 31, 2003 $ 32,500,000
June 30, 2003 $ 33,000,000
September 30, 2003 $ 33,500,000
63
December 31, 2003 $ 34,000,000
March 31, 2004 $ 34,000,000
June 30, 2004 $ 34,500,000
September 30, 2004 $ 35,000,000
8.5 MINIMUM RATIO OF EBITDA TO INTEREST EXPENSE. Borrower shall not permit
-------------------------------------------
the ratio of EBITDA for the four quarter period ending on the last day of each
quarter during each period set forth below (or in the case of periods ending on
or before September 30, 1999, for the period from the quarter ending December
31, 1998 to the end of such period, treated as a single accounting period) to
Interest Expense for such four quarter period (or in the case of periods ending
on or before September 30, 1999, for the period from and including October 1,
1998 to the end of such period, treated as a single accounting period) to be
less than the amount set forth below opposite such period:
Minimum
Period Ratio
------ ------
December 31, 1998 2.00:1.00
March 31, 1999 2.25:1.00
June 30, 1999 2.50:1.00
September 30, 1999 2.50:1.00
December 31, 1999 2.75:1.00
March 31, 2000 2.75:1.00
June 30, 2000 3.00:1.00
September 30, 2000 3.25:1.00
December 31, 2000 3.50:1.00
March 31, 2001 3.50:1.00
June 30, 2001 3.75:1.00
September 30, 2001 4.00:1.00
December 31, 2001 4.25:1.00
March 31, 2002 4.25:1.00
June 30, 2002 4.50:1.00
September 30, 2002 4.75:1.00
December 31, 2002 5.00:1.00
March 31, 2003 5.00:1.00
June 30, 2003 5.00:1.00
September 30, 2003 5.00:1.00
December 31, 2003 5.00:1.00
64
Last Day of Each
Quarter Thereafter 5.00:1.00
8.6 MINIMUM FIXED CHARGE COVERAGE RATIO. Borrower shall not permit the
-----------------------------------
Fixed Charge Coverage Ratio for the four quarter period ending on the last day
of each quarter during each period set forth below (or in the case of periods
ending on or before September 30, 1999, for the period from and including
October 1, 1998 to the end of such period, treated as a single accounting
period) to be less than the amount set forth below opposite such period:
Minimum
Period Ratio
------ -------
March 31, 1999 0.25:1.00
June 30, 1999 0.50:1.00
September 30, 1999 0.75:1.00
December 31, 1999 1.00:1.00
March 31, 2000 1.25:1.00
June 30, 2000 1.25:1.00
September 30, 2000 1.25:1.00
December 31, 2000 1.25:1.00
March 31, 2001 1.50:1.00
June 30, 2001 1.50:1.00
September 30, 2001 1.50:1.00
December 31, 2001 1.50:1.00
March 31, 2002 1.00:1.00
June 30, 2002 1.00:1.00
September 30, 2002 1.00:1.00
December 31, 2002 1.00:1.00
Last Day of Each
Quarter Thereafter 1.00:1.00
8.7 CAPITAL EXPENDITURES. Borrower shall not, and shall not permit any of
--------------------
its Subsidiaries to, make any Capital Expenditures (i) during the Stub Period in
excess of $6,000,000, (ii) during the fiscal year of the Consolidated Entity
ending December 31, 1999 in excess of $4,700,000 plus the Rollover Amount, if
any, (iii) during the fiscal year of the Consolidated Entity ending December 31,
2000 in excess of $4,000,000 plus the Rollover Amount, if any, and (iv) during
the fiscal year of the Consolidated Entity ending December 31, 2001 and each
fiscal year of the Consolidated Entity thereafter in excess of $3,500,000 plus
the Rollover Amount, if any. The "Rollover Amount" means 50% of the remainder,
if any, of (a) the aggregate amount of all Capital Expenditures permitted under
this SECTION 8.7 for the preceding fiscal year of the
65
Consolidated Entity MINUS (B) the aggregate amount of all Capital Expenditures
of the Consolidated Entity actually made during such preceding fiscal year.
8.8 ADDITIONAL INDEBTEDNESS. Borrower shall not, and shall not permit any
-----------------------
of its Subsidiaries to, directly or indirectly incur, create, assume or suffer
to exist any Indebtedness other than:
(A) Indebtedness under the Credit Documents;
(B) Indebtedness in the ordinary course of business under Interest
Rate Agreements, in each case in form and substance satisfactory to Agent;
(C) Indebtedness of any Subsidiary of Borrower to a Credit Party or
any Subsidiary of a Credit Party;
(D) Indebtedness described on SCHEDULE B, PART 8.8 and any
refinancing of such Indebtedness, so long as the aggregate principal amount
of the Indebtedness so refinanced shall not be increased, nor the maturity
of such principal amount reduced, and the refinancing shall be on terms and
conditions no more restrictive than the terms and conditions of the
Indebtedness to be refinanced;
(E) Indebtedness, other than the Obligations and Indebtedness
described on SCHEDULE B, PART 8.8, incurred to purchase tangible personal
property or Indebtedness incurred to lease tangible personal property
pursuant to capital leases, or which is being assumed (directly or
indirectly) as part of a purchase of tangible personal property, in an
aggregate amount not in excess of $3,000,000 in any fiscal year of the
Consolidated Entity, so long as (i) such Indebtedness is on customary terms
and conditions, (ii) each Lien ("PURCHASE MONEY LIEN") granted to secure
such Indebtedness shall attach only to the property to be acquired or
leased, (iii) a description shall have been furnished to Agent for any item
of equipment for which the purchase price or fair market value is greater
than $500,000, (iv) the Indebtedness incurred shall not exceed one hundred
percent (100%) of the lesser of the fair market value or the purchase price
of the item or items of equipment purchased or leased and (v) the aggregate
principal amount of such Indebtedness outstanding at any one time shall not
exceed 10% of the total assets of the Consolidated Entities;
(F) Indebtedness incurred by any Foreign Subsidiary and each other
Subsidiary of Borrower hereafter incorporated or formed under the laws of
any foreign jurisdiction under one or more credit facilities in an
aggregate maximum amount not in excess of (i) $12,000,000 for all such
credit facilities and (ii) $2,000,000 for any such Subsidiary, which may be
secured by a Lien ("FOREIGN LIEN") on the assets of such Subsidiary;
(G) provided the Principal Balance of the Revolving Loans is at least
50% of the Revolving Loan Commitments and is not repaid from the proceeds
of such Indebtedness, Indebtedness up to $5,000,000 in the aggregate for
Borrower and its
66
Subsidiaries outstanding at any one time to a casino or other customer of
Borrower or any of its Subsidiaries in order to finance the development or
acquisition of Proprietary Gaming Equipment for such casino or other
customer, which Indebtedness may be secured only by a Lien (a "PGE LIEN")
on such Proprietary Gaming Equipment and related Intangible Assets upon
which such Proprietary Gaming Equipment is based;
(H) Indebtedness in an aggregate amount not to exceed $2,500,000
incurred by Borrower and secured only by a Lien (the "JRY MORTGAGE LIEN")
on the JRY Property, provided such Indebtedness is repaid in full
concurrently with any sale of the JRY Property;
(I) Indebtedness in an aggregate amount not to exceed $2,500,000
incurred by Borrower and secured only by a Lien (the "JRY REPLACEMENT
MORTGAGE LIEN") on the JRY Replacement Property, provided such Indebtedness
(I) is repaid in full concurrently with any sale of the JRY Replacement
Property and (II) is not outstanding at the same time as any Indebtedness
permitted under CLAUSE (H) above is outstanding for more than eighteen
months;
(J) Indebtedness in an aggregate amount not to exceed $1,000,000
incurred by Borrower and secured only by a Lien (the "GULFPORT REPLACEMENT
MORTGAGE LIEN") on the Gulfport Replacement Property, provided such
Indebtedness is repaid in full concurrently with any sale of the Gulfport
Replacement Property; and
(K) other unsecured Indebtedness in an aggregate amount not in excess
of $5,000,000, provided that no Default or Event of Default exists at the
time such Indebtedness is incurred or would be created by the incurrence of
such Indebtedness.
(L) Extensions and renewals of any of the foregoing so long as the
aggregate amount of extended or renewed Indebtedness is not increased, nor
the maturity of such Indebtedness reduced, and is on terms and conditions
not materially more restrictive than the terms and conditions of the
Indebtedness extended or renewed.
8.9 LIENS. Borrower shall not, and shall not permit any of its
-----
Subsidiaries to, directly or indirectly create, incur, assume, or suffer to
exist any Lien on any of its property now owned or hereafter acquired except:
(A) Liens granted to Agent under the Credit Documents;
(b) Liens listed on SCHEDULE B, PART 8.9;
(c) Purchase Money Liens, Foreign Liens, any PGE Lien, the JRY
Mortgage Lien, the JRY Replacement Mortgage Lien and the Gulfport
Replacement Mortgage Lien, to the extent permitted under SECTION 8.8;
67
(D) Liens of warehousemen, mechanics, materialmen, workers,
repairmen, common carriers, or landlords, liens for taxes, assessments or
other governmental charges, and other similar Liens arising by operation of
law, in each case for amounts that are not yet due and payable or that are
being diligently contested in good faith by Borrower or a Subsidiary of
Borrower, so long as Agent has been notified thereof and adequate reserves
are maintained by such Person for their payment in accordance with GAAP;
(E) Attachment or judgment Liens not to exceed an aggregate of
$250,000 for the Consolidated Entity, excluding amounts (i) bonded to the
reasonable satisfaction of Agent or (ii) covered by insurance to the
reasonable satisfaction of Agent;
(F) Deposits or pledges to secure obligations under workmen's
compensation, social security or similar laws, under unemployment
insurance, or to secure public or statutory obligations not to exceed an
aggregate of $100,000 for the Consolidated Entity;
(G) Deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations,
surety and appeal bonds and other obligations of like nature arising in the
ordinary course of business not to exceed an aggregate of $100,000 for the
Consolidated Entity;
(H) Easements, rights-of-way, restrictions and other similar
encumbrances on title to, or restrictions on the use of, real property,
which, in the aggregate, do not materially detract from the value of the
item of property subject thereto or materially interfere with the ordinary
conduct of the business of Borrower or any of its Subsidiaries; and
(I) Extensions and renewals of any of the foregoing so long as the
aggregate amount of extended or renewed Liens are not increased, nor the
maturity of the Indebtedness secured thereby reduced, and are on terms and
conditions not materially more restrictive than the terms and conditions of
the Liens extended or renewed.
8.10 CONTINGENT OBLIGATIONS. Borrower shall not, and shall not permit any
----------------------
of its Subsidiaries to, directly or indirectly incur, assume, or suffer to exist
any Contingent Obligation, excluding Contingent Obligations for Indebtedness
permitted to be incurred under Section 8.8, and Investments permitted under
Section 8.12.
8.11 SALE OF ASSETS. Borrower shall not, and shall not permit any of its
--------------
Subsidiaries to, directly or indirectly, sell, lease, assign, transfer or
otherwise dispose of any assets other than (a) Inventory in the ordinary course
of business and Proprietary Gaming Equipment; (b) obsolete or worn out property
disposed of in the ordinary course of business; (c) the sale of the JRY Property
for cash consideration not less than that portion of the Indebtedness secured by
any JRY Mortgage Lien not assumed by the buyer thereof provided that at the time
of such sale Borrower is released from any and all liability in connection with
such assumed Indebtedness; (d) the Gulfport Property and (e) dispositions of
assets not otherwise permitted under this SECTION 8.11, PROVIDED, that (i) such
dispositions are for fair value, (ii) at least 85% of the aggregate
consideration is paid in cash
68
and/or the assumption by the buyer of Indebtedness of Borrower at the time of
disposition PROVIDED that at the time of disposition Borrower is released from
any and all liability in connection with any such assumed Indebtedness, (iii)
the aggregate consideration for all such dispositions does not exceed $2,000,000
in the aggregate for any fiscal year and (iv) Borrower complies with the
provisions of SECTION 2.8.4.
8.12 RESTRICTED PAYMENTS. Borrower shall not, and shall not permit any of
-------------------
its Subsidiaries to, directly or indirectly, (A) declare or pay any dividend
(other than dividends payable solely in capital stock (or other similar equity
securities) of such Person) on, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any shares of any class of
capital stock (or other similar equity securities) of such Borrower or any
Subsidiary or any warrants, options or rights to purchase any such capital
stock, whether now or hereafter outstanding, or make any other distribution in
respect thereof, either directly or indirectly, whether in cash or property or
in obligations of such Person or any of its Subsidiaries; (B) make any optional
payment or optional prepayment on or optional redemption (including, without
limitation, by making payments to a sinking or analogous fund) or optional
repurchase of any Indebtedness (other than Indebtedness pursuant to this Credit
Agreement); or (C) make any Investment in any Person, whether in cash,
securities, or other property of any kind including, without limitation, any
Subsidiary or Affiliate of Borrower, other than Permitted Investments; PROVIDED,
THAT, notwithstanding the foregoing (I) any Subsidiary of Borrower may make
payments on account of Indebtedness owing to Borrower or any Subsidiary of
Borrower, (II) any Subsidiary of Borrower may declare and pay dividends to
Borrower or distribute assets to Borrower as a result of a dissolution of such
Subsidiary permitted under this Credit Agreement and (III) provided no Default
or Event of Default then exists or would be created by the payment of any such
dividend or the making of any such Investment, Borrower may declare and pay
dividends on and repurchase its capital stock and may make Investments other
than Permitted Investments (collectively, "RESTRICTED PAYMENTS") PROVIDED THAT
prior to the repayment in full of the Obligations and the termination of the
Commitments, the aggregate amount of all such Restricted Payments shall not
exceed the sum of (A) the Net Cash Proceeds of any issuance of capital stock by
Borrower not required to be used to prepay the Term Loans pursuant to SECTION
2.8.4(A) PLUS (B) the greater of (1) $4,000,000 or (2) the remainder of (X) the
product of 0.50 multiplied by the positive Net Income for the period commencing
on the Effective Date through the date the proposed Restricted Payment is to be
made MINUS (Y) the negative Net Income for the period commencing on the
Effective Date through the date the proposed Restricted Payment is to be made.
Anything to the contrary contained herein notwithstanding, the Borrower shall
not at any time prior to the second anniversary of the Effective Date, either
(A) declare any dividends or (B) make stock repurchases or redemptions otherwise
permitted hereunder exceeding $2,000,000 in aggregate amount.
8.13 BANK ACCOUNTS. Borrower shall not, and shall not permit any of its
Subsidiaries other than any Foreign Subsidiary to, maintain any depositary,
checking, investment or other account of any kind whatsoever with any financial
institution unless such financial institution has entered into a bank agency
agreement with Agent in form and substance satisfactory to Agent pursuant to
which such financial institution agrees to act as Agent's pledgee-in-possession
for purposes of perfection of Agent's security interest in such account, other
than (A) xxxxx cash
69
accounts PROVIDED the aggregate amount of funds on deposit in each such xxxxx
cash account does not exceed $5,000 at any time and (b) payroll accounts,
PROVIDED the aggregate amount of funds on deposit in each such payroll account
at any time does not exceed the sum of all payroll and payroll taxes then
payable (or to become payable on the next payroll payment date) by Borrower or
one of its Subsidiaries (other than any Foreign Subsidiaries) on account of
payroll obligations payable from such account.
8.14 AFFILIATE TRANSACTIONS. Borrower shall not, and shall not permit any
----------------------
of its Subsidiaries to, directly or indirectly, enter into any transaction with
(including, without limitation, the purchase, sale or exchange of property or
the rendering of any service to) any Subsidiary or Affiliate of Borrower, except
in the ordinary course of and pursuant to the reasonable requirements of
Borrower's or such Subsidiary's business, as the case may be, and upon fair and
reasonable terms no less favorable in any material respect to Borrower or such
Subsidiary than could be obtained in a comparable arm's-length transaction with
an unaffiliated Person, except for transactions otherwise permitted under
SECTION 8.12.
8.15 ADDITIONAL NEGATIVE PLEDGES. Subject to Section 12.5, Borrower shall
---------------------------
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective, (A) any
prohibition or restriction (including any agreement to provide equal and ratable
security to any other Person in the event a Lien is granted to or for the
benefit of Agent and the Lenders) on the creation or existence of any Lien upon
the assets of Borrower or any of its Subsidiaries; or (B) any contractual
obligation which may restrict or inhibit Agent's rights or ability to sell or
otherwise dispose of the COLLATERAL or any part thereof after the occurrence of
an Event of Default.
8.16 ADDITIONAL SUBSIDIARIES. Borrower shall not, and shall not permit any
-----------------------
of its Subsidiaries to, directly or indirectly, form or acquire any new
Subsidiaries, unless (a) Borrower pledges, or causes its applicable Subsidiary
to pledge, all of the capital stock of each such new Subsidiary owned by
Borrower or the applicable Subsidiary to Agent as security for the Obligations
pursuant to a pledge agreement in form and substance satisfactory to Agent and
(b) each such new Subsidiary executes and delivers to Agent a joinder to the
Guaranty and the Security Agreement in form and substance satisfactory to Agent
and such other Collateral Documents and financing statements, in form and
substance satisfactory to Agent, as Agent may require. In the event any
Subsidiary of Borrower (other than Guarantors and the Foreign Subsidiaries)
existing on the Effective Date begins to conduct business or acquires any assets
with a fair market value in excess of $50,000, such Subsidiary shall be deemed a
new Subsidiary of Borrower for purposes of the preceding sentence.
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES.
------------------------------
9.1 EVENTS OF DEFAULT. The occurrence of any of the following events
-----------------
shall constitute an event of default hereunder immediately after notice thereof
(except for subsections (a), (f) and (g) hereof, in which case such event of
default shall occur without notice to any Person) has been given by the Agent
(on behalf of the Majority Lenders or by the Majority Lenders if Agent fails
70
to act) to Borrower pursuant to Section 11.7, whether or not actually received
by Borrower (each an "EVENT OF DEFAULT"):
(A) FAILURE TO PAY. Borrower shall fail to pay (I) the Principal
Balance, or any installment thereof, or any Letter of Credit Obligations,
when the same shall become due and payable, (II) any interest or fees due
hereunder within 5 days of the date the same are due and payable or (III)
any other Obligations due hereunder within 5 days after demand therefor by
Agent or the Majority Lenders.
(B) BREACH OF CERTAIN COVENANTS. Borrower shall fail to comply with
any covenant contained in ARTICLE 7 or ARTICLE 8.
(C) BREACH OF REPRESENTATION OR WARRANTY. Any representation or
warranty made or deemed to be made by any Credit Party in this Credit
Agreement or in any other Credit Document (and in any statement or
certificate given under this Credit Agreement or any other Credit
Document), shall be false or misleading in any material respect when made
or deemed to be made.
(D) BREACH OF OTHER COVENANTS. Any Credit Party shall fail to comply
with any covenant contained in this Credit Agreement or any other Credit
Document, other than as set forth in SECTION 9.1(B), and such failure shall
continue for thirty (30) days after its occurrence.
(E) DISSOLUTION. Any Credit Party shall dissolve, wind up or
otherwise cease its business.
(F) INSOLVENCY EVENT. Any Credit Party shall become the subject of an
Insolvency Event.
(G) CROSS DEFAULT. A default or event of default shall occur under
any note, agreement or instrument evidencing any other Indebtedness of any
Credit Party or any Subsidiary of any Credit Party, which default or event
of default results in or permits the acceleration of its maturity, PROVIDED
THAT the aggregate principal amount of all such Indebtedness for which the
default or event of default has occurred exceeds $1,000,000.
(H) JUDGMENTS. The sum of all judgments, awards or decrees, or orders
of attachment, garnishment or any other writ, entered against Borrower or
any of its Subsidiaries exceeds $250,000 at any one time outstanding,
excluding judgments, awards, decrees, orders or writs (I) for which there
is full insurance and with respect to which the insurer has assumed
responsibility in writing, (II) for which there is full indemnification
(upon terms and by creditworthy indemnitors which are satisfactory to the
Majority Lenders) or (III) which have been in force for less than the
applicable period for filing an appeal so long as execution is not levied
thereunder (or in respect of which Borrower shall at the time in good faith
be prosecuting an appeal or proceeding for review and in respect
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of which a stay of execution or appropriate appeal bond shall have been
obtained pending such appeal or review).
(I) ERISA. Except to the extent that any of the following is
expressly permitted hereunder or does not give rise to the incurrence by
Borrower, any of its Subsidiaries or any of ERISA Affiliate of any
liability in excess of $250,000 (in the aggregate), or except to the extent
any of the following is adequately reserved on the balance sheet of the
Consolidated Entity or an ERISA Affiliate, the institution of any steps by
Borrower or any other Person, including the PBGC, (I) to amend, modify or
terminate a Benefit Plan or to enter into any new Benefit Plan or (II) to
cause a complete or partial withdrawal from any Multiemployer Plan.
(J) FAILURE OF ENFORCEABILITY OF CREDIT DOCUMENTS; SECURITY. Any
covenant, agreement or obligation of any Credit Party contained in or
evidenced by any of the Credit Documents shall cease to be enforceable, or
shall be determined to be unenforceable, in accordance with its terms; any
Credit Party shall deny or disaffirm its obligations under any of the
Credit Documents or any Liens granted in connection therewith; or, any
Liens granted on any of the Collateral shall be determined to be void,
voidable, invalid or unperfected, are subordinated or not given the
priority contemplated by this Credit Agreement.
(K) LOSS OF CERTAIN LICENSES. Any License(s), pursuant to which the
Borrower or any of its Subsidiaries sells products accounting for 10% or
more of the consolidated revenues of the Borrower and its Subsidiaries
during any one of the immediately preceding three fiscal years, shall cease
to be effective for any reason unless the same has been replaced by a
similar license or the existing license of another Credit Party.
9.2 ACCELERATION AND TERMINATION OF COMMITMENTS. Upon the occurrence and
-------------------------------------------
during the continuance of any Event of Default, without prejudice to the rights
of Agent or any Lender to enforce its claims against the Credit Parties:
(A) ACCELERATION. Upon the written request of the Majority Lenders
and by delivery of written notice to Borrower from Agent or the Majority
Lenders, all Obligations shall be immediately due and payable (except with
respect to any Event of Default set forth in SECTION 9.1(F), in which case
all Obligations shall automatically become immediately due and payable
without the necessity of any request of the Majority Lenders or notice or
other demand to Borrower or any other Credit Party) without presentment,
demand, protest or any other action or obligation of Agent or any Lender.
(B) TERMINATION OF COMMITMENTS. Upon the written request of the
Majority Lenders, and by delivery of written notice to Borrower from Agent
(except with respect to any Event of Default set forth in SECTION 9.1(F)),
in which case all of the Commitments shall automatically and immediately
terminate without the necessity of any request of the Majority Lenders or
notice or other demand to Borrower or any other Credit Party) the
Commitments shall be immediately terminated and, at all times thereafter,
all Revolving
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Loans made by any Lender pursuant to this Credit Agreement shall be at such
Lender's sole discretion, unless such Event of Default is waived in
accordance with SECTION 11.11, in which case the Commitments shall be
automatically reinstated.
9.3 RESCISSION OF ACCELERATION. After acceleration of the maturity of all
--------------------------
or any part of the Obligations, if Borrower pays all accrued interest and all
principal due and any Prepayment Premium (other than by reason of the
acceleration) and all Events of Default are waived in accordance with SECTION
11.11, the Majority Lenders may elect in their sole discretion, to rescind the
acceleration and return to Borrower any cash collateral, if any, deposited with
Agent pursuant to SECTION 2.6.2(A) or SECTION 4.2. (This Section is intended
only to bind all of the Lenders to a decision of the Majority Lenders and not to
confer any right on Borrower, even if the described conditions for the Majority
Lenders' election may be met.)
9.4 REMEDIES. Subject to Applicable Gaming Laws, upon the occurrence and
--------
during the continuance of an Event of Default, upon the written request and at
the direction of the Majority Lenders, Agent may exercise any rights and
remedies available to it under applicable law (including under the Code) and
under the Collateral Documents. The foregoing rights and remedies are not
intended to be exhaustive and the full or partial exercise of any right or
remedy shall not preclude the full or partial exercise of any other right or
remedy available under this Credit Agreement, any other Credit Document, at
equity or at law.
9.5 RIGHT OF SETOFF. In addition to and not in limitation of all rights
---------------
of offset that any Lender may have under applicable law, upon the occurrence and
during the continuance of any Event of Default, and whether or not any Lender
has made any demand or the Obligations of any Credit Party have matured, each
Lender shall have the right to appropriate and apply to the payment of the
Obligations of such Credit Party all deposits and other obligations then or
thereafter owing by such Lender to such Credit Party. Each Lender exercising
such rights shall notify Agent thereof and any amount received as a result of
the exercise of such rights shall be shared by the Lenders in accordance with
SECTION 4.4.
9.6 LICENSE OF USE OF SOFTWARE AND OTHER INTELLECTUAL PROPERTY. Unless
----------------------------------------------------------
expressly prohibited by the licensor thereof, if any, Agent is hereby granted a
license to use all computer software programs, data bases, processes and
materials used by Borrower and its Subsidiaries in connection with their
respective businesses or in connection with any Collateral, except for those
which cannot reasonably be demonstrated to have any use other than in slot
machines or cashless wagering systems unless Agent obtains all required licenses
as a manufacturer and distributor pursuant to Applicable Gaming Laws. Agent
agrees not to use any such license prior to the occurrence of an Event of
Default, without giving Borrower prior notice.
9.7 APPLICATION OF PROCEEDS; SURPLUS; DEFICIENCIES. The net cash proceeds
----------------------------------------------
resulting from Agent's exercise of any of the foregoing rights against any
Collateral (after deducting all of Agent's Expenses related thereto) shall be
applied by Agent to the payment of the Obligations, whether due or to become
due, in the order set forth in SECTION 4.2. Borrower shall remain liable to
Agent and the Lenders for any deficiencies, and Agent and the Lenders in turn
agree to remit to Borrower or its successors or assigns, any surplus resulting
therefrom.
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ARTICLE 10. AGENT.
-----
10.1 APPOINTMENT OF AGENT.
--------------------
(A) Each Lender hereby designates FSFP as Agent to act as herein
specified. Each Lender hereby irrevocably authorizes, and each holder of
any Note, by the acceptance of such Note, shall be deemed irrevocably to
authorize Agent to take such action on its behalf under the provisions of
this Credit Agreement and the other Credit Documents and any other
instruments and agreements referred to herein and therein and to exercise
such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. Agent
shall hold all Collateral and all payments of principal, interest, Fees
(other than Fees that are exclusively for the account of Agent), charges
and Expenses received pursuant to this Credit Agreement or any other Credit
Document for the ratable benefit of the Lenders. Agent may perform any of
its duties hereunder by or through its agents or employees.
(B) Other than rights of the Credit Parties under SECTION 10.9, the
provisions of this ARTICLE 10 are for the benefit of Agent and the Lenders
only and none of the Credit Parties or any other Persons shall have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Credit Agreement and the
other Credit Documents, Agent shall act only for the Lenders and does not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Credit Party.
10.2 NATURE OF DUTIES OF AGENT. Agent has no duties or responsibilities
-------------------------
except those expressly set forth in the Credit Documents. Neither Agent nor any
of its officers, directors, employees or agents shall be liable for any action
taken or omitted hereunder or in connection herewith, unless caused by its or
their gross negligence or willful misconduct. The duties of Agent shall be
mechanical and administrative in nature; Agent shall not have by reason of this
Credit Agreement or any of the other Credit Documents a fiduciary relationship
in respect of any Lender or any participant of any Lender; and nothing in this
Credit Agreement or any other Credit Document, expressed or implied, is intended
to or shall be so construed as to impose upon Agent any obligations in respect
of this Credit Agreement or any other Credit Document, except as expressly set
forth herein or therein.
10.3 LACK OF RELIANCE ON AGENT.
-------------------------
(A) Independently and without reliance upon Agent, each Lender, to
the extent it deems appropriate, has made and shall continue to make (I)
its own independent investigation of the financial or other condition and
affairs of each Credit Party in connection with the taking or not taking of
any action in connection herewith and (II) its own appraisal of the
creditworthiness of each Credit Party, and, except as expressly provided in
this Credit Agreement, Agent shall have no duty or responsibility, either
74
initially or on a continuing basis, to provide any Lender with any credit
or other information with respect thereto, whether coming into its
possession before the making of the Loans or at any time or times
thereafter.
(B) Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Credit Agreement or any of
the other Credit Documents or the financial or other condition of any
Credit Party. Agent shall not be required to make any inquiry concerning
either the performance or observance of any other terms, provisions or
conditions of this Credit Agreement or any of the other Credit Documents,
or the financial condition of any Credit Party, or the existence or
possible existence of any Default or Event of Default, unless specifically
requested to do so in writing by any Lender.
10.4 CERTAIN RIGHTS OF AGENT. Agent shall have the right to request
-----------------------
instructions from the Lenders by notice to each of such Lenders. If Agent shall
request instructions from the Lenders with respect to any act or action
(including the failure to act) in connection with this Credit Agreement, Agent
shall be entitled to refrain from such act or taking such action unless and
until Agent shall have received instructions from such Lenders, and Agent shall
not incur liability to any Person by reason of so refraining. Without limiting
the foregoing, no Lender shall have any right of action whatsoever against Agent
as a result of Agent acting or refraining from acting hereunder in accordance
with the instructions of the requisite Lenders required to give such
instructions hereunder. Agent may give any notice required under ARTICLE 9
hereof without the consent of any of the Lenders unless otherwise directed by
the Majority Lenders in writing and will, at the direction of the Majority
Lenders, give any such notice required under ARTICLE 9.
10.5 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
-----------------
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other documentary, facsimile or telephone message believed
by it to be genuine and correct and to have been signed, sent or made by the
proper person. Agent may consult with legal counsel (including counsel for the
Credit Parties with respect to matters concerning the Credit Parties),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.
10.6 INDEMNIFICATION OF AGENT. To the extent Agent is not reimbursed and
------------------------
indemnified by Borrower, each Lender will reimburse and indemnify Agent, in
proportion to its respective Commitment, for and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including counsel fees and disbursements) or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or asserted against
Agent in performing its duties hereunder, in any way relating to or arising out
of this Credit Agreement; PROVIDED, THAT no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
negligence or willful misconduct, and PROVIDED FURTHER THAT no Term Loan Lender
75
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
relating solely to the administration and disbursement of any Revolving Loan.
10.7 AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its obligation to
--------------------------------
lend under this Credit Agreement, the Loans made by it and the Notes issued to
it and its participation in Letters of Credit issued hereunder, Agent shall have
the same rights and powers hereunder as any other Lender or holder of a Note or
participation interests and may exercise the same as though it was not
performing the duties specified herein; and the terms "Lenders," "Lenders,"
"Majority Lenders," "holders of Notes," or any similar terms shall, unless the
context clearly otherwise indicates, include Agent in its individual capacity.
Agent may accept deposits from, lend money to, acquire equity interests in, and
generally engage in any kind of banking, trust, financial advisory or other
business with any Credit Party or any Affiliate of any Credit Party as if it
were not performing the duties specified herein, and may accept fees and other
consideration from any Credit Party for services in connection with this Credit
Agreement and otherwise without having to account for the same to the Lenders.
10.8 HOLDERS OF NOTES. Agent may deem and treat the payee of any Note as
----------------
the owner thereof for all purposes hereof unless and until a written notice of
the assignment or transfer thereof shall have been filed with Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
10.9 SUCCESSOR AGENT.
---------------
(A) Agent may, and, in the event Agent has no further interest under
this Credit Agreement in its capacity as a Lender, shall, upon twenty (20)
Business Days' notice to the Lenders and Borrower, resign at any time
(effective upon the appointment of a successor Agent pursuant to the
provisions of this SECTION 10.9) by giving written notice thereof to the
Lenders and Borrower. Upon any such resignation, the Majority Lenders
shall have the right, upon five (5) days' notice and approval by the Credit
Parties (which approval shall not be unreasonably withheld or delayed) to
appoint a successor Agent. If no successor Agent shall have been so
appointed by the Majority Lenders and accepted such appointment, within
thirty (30) days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint
a successor Agent, which shall be a bank or a trust company or other
financial institution which maintains an office in the United States, or a
commercial bank organized under the laws of the United States of America or
of any State thereof, or any Affiliate of such bank or trust company or
other financial institution which is engaged in the banking business,
having a combined capital and surplus of at least $500,000,000.
(B) Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be
76
discharged from its duties and obligations under this Credit Agreement and
the other Credit Documents. After any retiring Agent's resignation
hereunder as Agent, the provisions of this ARTICLE 10 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Agent under or in connection with this Credit Agreement.
10.10 COLLATERAL MATTERS.
------------------
(A) Each Lender authorizes and directs Agent to enter into the
Collateral Documents for the benefit of the Lenders. Each Lender hereby
agrees, and each holder of any Note by the acceptance thereof will be
deemed to agree, that, except as otherwise set forth herein or in the other
Credit Documents, any action taken by the Majority Lenders in accordance
with the provisions of this Credit Agreement and the other Credit
Documents, and the exercise by the Majority Lenders of the powers set forth
herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon all of the
Lenders. Agent is hereby authorized on behalf of all of the Lenders,
without the necessity of any notice to or further consent from any Lender,
from time to time so long as an Event of Default shall not then exist, to
take any action with respect to any Collateral or Collateral Documents
which may be necessary to perfect and maintain the perfection of the Liens
upon the Collateral granted pursuant to the Collateral Documents.
(B) The Lenders hereby authorize Agent, at its option and in its
discretion, to release any Lien granted to or held by Agent upon any
Collateral (I) upon termination of the Commitments and payment and
satisfaction of all of the Obligations at any time arising under or in
respect of this Credit Agreement or the other Credit Documents or the
transactions contemplated hereby or thereby or (II) if approved, authorized
or ratified in writing by the Majority Lenders, unless such release is
required to be approved by all of the Lenders pursuant to SECTION 11.11.
Upon request by Agent at any time, the Lenders will confirm in writing
Agent's authority to release particular types or items of Collateral
pursuant to this SECTION 10.10.
(C) Agent shall have no obligation whatsoever to the Lenders or to
any other Person to assure that the Collateral exists or is owned by any
Credit Party or is cared for, protected or insured or that the Liens
granted to Agent in or pursuant to any of the Collateral Documents have
been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise or to
continue exercising at all or in any manner or under any duty of care,
disclosure or fidelity any of the rights, authorities and powers granted or
available to Agent in this SECTION 10.10 or in any of the Collateral
Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, Agent may act in
any manner it may deem appropriate, in its sole discretion, given Agent's
own interest in the Collateral as one of the Lenders and that Agent shall
have no duty or liability whatsoever to the Lenders, except for its gross
negligence or willful misconduct.
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10.11 ACTIONS WITH RESPECT TO DEFAULTS. In addition to Agent's right to
--------------------------------
take actions on its own accord as permitted under this Credit Agreement, Agent
shall take such action with respect to a Default or Event of Default as shall be
directed by the Majority Lenders; PROVIDED, THAT until Agent shall have received
such directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable and in the best interests of the Lenders.
10.12 DELIVERY OF INFORMATION. Agent shall not be required to deliver to
-----------------------
any Lender originals or copies of any documents, instruments, notices,
communications or other information received by Agent from any of the Credit
Parties or any Subsidiary of any of the Credit Parties, the Majority Lenders,
any Lender or any other Person under or in connection with this Credit Agreement
or any other Credit Document except (I) as specifically provided in this Credit
Agreement or any other Credit Document and (II) as specifically requested from
time to time in writing by any Lender with respect to a specific document,
instrument, notice or other written communication received by and in the
possession of Agent at the time of receipt of such request and then only in
accordance with such specific request.
ARTICLE 11. MISCELLANEOUS.
-------------
11.1 GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
-------------
CREDIT AGREEMENT AND EACH OF THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS,
WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS.
11.2 SUBMISSION TO JURISDICTION. ALL DISPUTES AMONG THE LENDERS AND THE
--------------------------
CREDIT PARTIES (OR AGENT OR BORROWER, RESPECTIVELY, ACTING ON THEIR BEHALF),
WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY
BY STATE AND FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, AND THE COURTS TO
WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT AGENT ON BEHALF
OF THE LENDERS, SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
TO PROCEED AGAINST BORROWER OR ANY CREDIT PARTY OR THEIR RESPECTIVE PROPERTIES
IN ANY LOCATION REASONABLY SELECTED BY AGENT IN GOOD FAITH TO ENABLE AGENT TO
REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR
OF AGENT. BORROWER AND EACH OF THE OTHER CREDIT PARTIES AGREE THAT NONE OF SUCH
PERSONS WILL ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY
PROCEEDING BROUGHT BY AGENT OR ANY LENDER. BORROWER AND EACH OF THE OTHER
CREDIT PARTIES WAIVE ANY OBJECTION THAT ANY OF SUCH PERSONS MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH AGENT OR ANY LENDER HAS COMMENCED A PROCEEDING,
INCLUDING, WITHOUT
78
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON
CONVENIENS.
11.3 SERVICE OF PROCESS. EACH OF BORROWER AND THE OTHER CREDIT PARTIES
------------------
HEREBY WAIVES PERSONAL SERVICE UPON IT AND, AS ADDITIONAL SECURITY FOR THE
OBLIGATIONS, HEREBY IRREVOCABLY DESIGNATES AND APPOINTS CT CORPORATION SYSTEM,
WITH AN OFFICE ON THE DATE HEREOF AT 000 XXXXX XXXXXXX XXXXXX, XXXXXXX, XXXXXXXX
00000, AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY SUCH PERSON WHICH
IRREVOCABLY AGREE IN WRITING TO SO SERVE AS ITS AGENT, TO RECEIVE ON ITS BEHALF
SERVICE OF ALL PROCESS ISSUED BY ANY COURT IN ANY LEGAL ACTION OR OTHER
PROCEEDING WITH RESPECT TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT,
SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY SUCH PERSON TO BE EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE
MAILED BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS PROVIDED HEREIN EXCEPT
THAT, UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY
SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY
BORROWER OR ANY OTHER CREDIT PARTIES REFUSES TO ACCEPT SERVICE, EACH SUCH PERSON
HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE
AND EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. NOTHING HEREIN SHALL AFFECT
THE RIGHT OF AGENT OR ANY LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY APPLICABLE LAW OR SHALL LIMIT THE RIGHT OF AGENT OR ANY LENDER TO BRING
PROCEEDINGS AGAINST BORROWER OR ANY OTHER CREDIT PARTY IN THE COURTS OF ANY
OTHER JURISDICTION.
11.4 JURY TRIAL. BORROWER, EACH OF THE OTHER CREDIT PARTIES, AGENT AND THE
----------
LENDERS HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY. INSTEAD, ANY DISPUTES WILL BE
RESOLVED IN A BENCH TRIAL.
11.5 LIMITATION OF LIABILITY. NEITHER AGENT NOR ANY LENDER SHALL HAVE ANY
-----------------------
LIABILITY TO BORROWER OR ANY OTHER CREDIT PARTY (WHETHER SOUNDING IN TORT,
CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY ANY SUCH PERSON IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS
CONTEMPLATED BY THIS CREDIT AGREEMENT, OR ANY OF THE OTHER CREDIT DOCUMENTS, OR
ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS
DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON AGENT
OR ANY SUCH LENDER, THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS
CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
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11.6 DELAYS. No delay or omission of Agent or the Lenders in exercising any
------
right or remedy hereunder shall impair any such right or operate as a waiver
thereof.
11.7 NOTICES. Except as otherwise provided herein or changed by any party
-------
hereto by written notice to the Agent, all notices and correspondences hereunder
shall be in writing and sent by certified or registered mail, return receipt
requested, or by overnight delivery service, with all charges prepaid, if to
Agent, then to First Source Financial, Inc., 0000 Xxxx Xxxx Xxxx, 0xx Xxxxx,
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000 Attention: Contract Administration, if to any
Lender then to its address specified opposite its name on the signature pages
hereto, if to Borrower or any other Credit Party, then to Mikohn Gaming
Corporation at 0000 Xxxxx Xxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000, Attention:
President, or by facsimile transmission, promptly confirmed in writing sent by
first class mail, if to Agent, at (000) 000-0000, if to any Lender then to its
facsimile number specified opposite its name on the signature pages hereto, and
if to Borrower or any other Credit Party at (000) 000-0000. All such notices and
correspondence shall be deemed given (I) if sent by certified or registered
mail, three Business Days after being postmarked, (II) if sent by overnight
delivery service, when received at the above stated addresses or when delivery
is refused and (III) if sent by telex or facsimile transmission, when receipt of
such transmission is acknowledged.
11.8 ASSIGNMENTS AND PARTICIPATIONS.
------------------------------
(A) BORROWER ASSIGNMENT. Neither Borrower nor any of the other Credit
Parties shall have any right to assign this Credit Agreement or any of the
other Credit Documents, or any rights or obligations hereunder or
thereunder, without the prior written consent of Agent and the Lenders.
(B) LENDER ASSIGNMENTS. Each Lender may assign to one or more banks
or other financial institutions or a Related Fund all or a portion of its
rights and obligations under this Credit Agreement, the Notes and the other
Credit Documents, with the consent of Agent in the event any such
assignment is to be made by any Revolving Lender, and with the consent of
Borrower in the event any such assignment is to be made to any third party
engaged in any gaming business, any business involving the manufacture of
Gaming Equipment or any related business; and upon execution and delivery
to Agent, for its acceptance and recording in the Register, of an agreement
in substantially the form of EXHIBIT I (an "ASSIGNMENT AND ASSUMPTION
AGREEMENT"), together with surrender of any Note or Notes subject to such
assignment and a processing and recordation fee of $3,000, such assignment
shall be effective and ANNEX I hereto shall be deemed to be modified
accordingly. No such assignment shall be for less than $5,000,000 of the
Commitments unless it is to another Lender or a Related Fund or is an
assignment of all of such Lender's rights and obligations under this Credit
Agreement unless the Agent, in its sole discretion, has consented to such
lesser amount. (This Section does not apply to branches and Affiliates of
a Lender, it being understood that a Lender may make, carry or transfer
Loans at or for the account of any of its branch offices or Affiliates
without consent of Borrower, Agent or any other Lender.)
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(C) AGENT'S REGISTER. Agent shall maintain a register of the names
and addresses of the Lenders, their Commitments, and the principal amount
of their Loans (the "REGISTER") at the address specified for Agent in
SECTION 11.7. Agent shall also maintain a copy of each Assignment and
Assumption Agreement delivered to and accepted by it, and modify the
Register to give effect to each Assignment and Assumption Agreement. Upon
its receipt of each Assignment and Assumption Agreement and surrender of
the affected Note or Notes, Agent will give prompt notice thereof to
Borrower and deliver to Borrower a copy of the Assignment and Assumption
Agreement and the surrendered Note or Notes. Within five Business Days
after its receipt of such notice, Borrower shall execute and deliver to
Agent a substitute Note or Notes to the order of the assignee in the amount
of the Commitment or Commitments assumed by it and to the assignor in the
amount of the Commitment or Commitments retained by it, if any. Such
substitute Note or Notes shall re-evidence the Indebtedness outstanding
under the surrendered Note or Notes and shall be dated as of the Effective
Date. Agent shall be entitled to rely upon the Register exclusively for
purposes of identifying the Lenders hereunder. The Register shall be
available for inspection by the Credit Parties and the Lenders (or any of
them) at any reasonable time and from time to time upon reasonable notice
to Agent.
(D) PARTICIPATIONS. Each Lender may sell participations (without the
consent of Agent, any Credit Party or any other Lender) to one or more
parties in or to all or a portion of its rights and obligations under this
Credit Agreement, the Notes and the other Credit Documents.
Notwithstanding a Lender's sale of a participation interest, its
obligations hereunder shall remain unchanged. The Credit Parties, Agent,
and the other Lenders shall continue to deal solely and directly with such
Lender. No participant shall have rights to approve any amendment or
waiver of this Credit Agreement or any of the other Credit Documents except
to the extent such amendment or waiver would (I) increase the participant's
obligation in respect of the Commitment of the Lender from whom the
participant purchased its participation interest; (II) reduce the principal
of, or stated rate or amount of interest on, the Loans subject to such
participation, (III) postpone any maturity date fixed for final payment of
principal of the Loans subject to the participation interest, and (IV)
release any guarantor of the Obligations or all or a substantial portion of
the Collateral, other than when otherwise permitted hereunder.
11.9 CONFIDENTIALITY. Each Lender agrees that it will use its best efforts
---------------
in accordance with its customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking
practices, not disclose to any Person, without the prior consent of the
Borrower, any information with respect to any of the Credit Parties or any
Subsidiary of any of the Credit Parties which is furnished pursuant to this
Credit Agreement and which is designated by the respective Credit Parties to the
Lenders in writing as confidential, PROVIDED, THAT, each Lender may disclose any
such information (A) to its employees, auditors, or counsel, or to another
Lender if the disclosing Lender or such disclosing Lender's holding or parent
company in its sole discretion determines that any such party should have access
to such information, (B) as has become generally available to the public, (C) as
may be required in any report, statement or testimony submitted to any
Governmental Authority having or claiming to have jurisdiction over such Lender,
(D) as may be required or appropriate in response to any
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summons or subpoena or in connection with any litigation, (E) in order to comply
with any Requirement of Law, (F) to any actual or prospective transferee or
participant in connection with any contemplated transfer or participation of any
of the Notes or Commitments or any interest therein by such Lender, (G) to
independent financial rating agencies (including, without limitation, Xxxxx'x
and S&P) or (H) to such Lender's own funding sources, provided the Persons
receiving such disclosures agree to maintain the confidentiality of such
disclosures on terms substantially the same as the foregoing clauses (A) through
(G).
11.10 INDEMNIFICATION. Borrower indemnifies and agrees to defend and hold
---------------
harmless Agent and each of the Lenders and their respective directors, officers,
agents, employees and counsel from and against any and all losses, claims,
damages, liabilities, deficiencies, judgments or expenses incurred by any of
them (except to the extent that it is finally judicially determined to have
resulted from their own gross negligence or willful misconduct) arising out of
or by reason of (A) any litigations, investigations, claims or proceedings which
arise out of or are in any way related to (I) this Credit Agreement or the
transactions contemplated hereby, (II) the issuance of the Letters of Credit,
(III) the failure of the Issuing Bank to honor a drawing under any Letter of
Credit, as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or Governmental Authority, (IV)
any actual or proposed use by Borrower of the proceeds of the Loans or (V)
Agent's or the Lenders' entering into this Credit Agreement, the other Credit
Documents or any other agreements and documents relating hereto, including,
without limitation, amounts paid in settlement, court costs and the fees and
disbursements of counsel incurred in connection with any such litigation,
investigation, claim or proceeding or any advice rendered in connection with any
of the foregoing and (B) any remedial or other action taken by Borrower or any
of the Lenders in connection with compliance by Borrower or any Subsidiary of
Borrower, or any of their respective properties, with any federal, state or
local environmental laws, acts, rules, regulations, orders, directions,
ordinances, criteria or guidelines.
11.11 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
----------------------
this Credit Agreement, any part of SCHEDULE B, or any other Credit Document
shall be effective unless in writing and signed by the Majority Lenders (or by
Agent on their behalf), except that:
(A) the consent of all the Lenders is required to (I) increase the
Commitments, (II) reduce the principal of, or interest on, any Note, any
Letter of Credit reimbursement obligations or any Fees hereunder (other
than Fees that are exclusively for the account of Agent), (III) postpone
any date fixed for any payment in respect of principal of, or interest on,
any Note, any Letter of Credit reimbursement obligations or any Fees
hereunder (provided that (A) the consent of the Majority Lenders only is
required to waive any mandatory prepayment of the Loans from Net Cash
Proceeds of any disposition of assets of less than $20,000,000 under
SECTION 2.8.4(A), (B) the consent of the Super-Majority Lenders only is
required to waive mandatory prepayment of the Loans from Net Cash Proceeds
of any disposition of assets of $20,000,000 or more under Section 2.8.4(a),
(C) the consent of the Majority Lenders only is required to waive any
mandatory prepayment of the Loans from Net Cash Proceeds of any sales of
capital stock and (D) the consent of the Super-Majority Lenders only is
required to waive any mandatory prepayment of the
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Loans by reason of an Excess Cash Flow Payment under Section 2.8.4, (IV)
change the percentage of the Commitments, or any minimum requirement
necessary for the Lenders or the Majority Lenders to take any action
hereunder, (V) amend or waive this SECTION 11.11(A), or change the
definition of Majority Lenders or Super-Majority Lenders, (VI) except as
otherwise expressly provided in this Credit Agreement, and other than in
connection with the financing, refinancing, sale or other disposition of
any asset of a Credit Party permitted under this Credit Agreement, release
any Liens in favor of Agent on any of the Collateral or release any
Guarantor from its obligations under the Credit Documents or (VII) amend,
waive or modify the provisions set forth in SECTION 2.8.4 except as
permitted pursuant to the preceding CLAUSE (III);
(B) the consent of those Revolving Lenders holding in the aggregate
more than fifty percent (50%) of all Revolving Loan Commitments shall be
required to the extent any such amendment or waiver would result in an
obligation to make any Revolving Loan or to purchase a participation in any
Letter of Credit; and
(C) the consent of Agent shall be required for any amendment, waiver
or consent affecting the rights or duties of Agent under any Credit
Document, in addition to the consent of the Lenders otherwise required by
this Section.
Neither the consent of Borrower nor any other Credit Party shall be
required for any amendment, modification or waiver of the provisions of ARTICLE
10 (other than SECTION 10.9). Borrower, the other Credit Parties and the Lenders
each hereby authorize Agent to modify this Credit Agreement by unilaterally
amending or supplementing ANNEX I to reflect assignments of the Commitments.
Notwithstanding the foregoing, the Credit Parties may amend SCHEDULE B, PARTS
6.1, 6.10 and 6.14, without the consent of the Majority Lenders.
11.12 COUNTERPARTS AND EFFECTIVENESS. This Credit Agreement and any waiver
------------------------------
or amendment hereto may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. This Credit Agreement shall become
effective on the date on which all of the parties hereto shall have signed a
copy hereof (whether the same or different copies) and shall have delivered the
same to Agent and all conditions to the making of Loans have been satisfied in
full.
11.13 SEVERABILITY. In case any provision in or obligation under this
------------
Credit Agreement, the Notes or any of the other Credit Documents shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
11.14 MAXIMUM RATE. Notwithstanding anything to the contrary contained
------------
elsewhere in this Credit Agreement or in any other Credit Document, Borrower,
Agent, and the Lenders hereby agree that all agreements among them under this
Credit Agreement and the other Credit Documents, whether now existing or
hereafter arising and whether written or oral, are expressly
83
limited so that in no contingency or event whatsoever shall the amount paid, or
agreed to be paid, to Agent or any Lender for the use, forbearance, or detention
of the money loaned to Borrower and evidenced hereby or thereby or for the
performance or payment of any covenant or obligation contained herein or
therein, exceed the Highest Lawful Rate. If due to any circumstance whatsoever,
fulfillment of any provisions of this Credit Agreement or any of the other
Credit Documents at the time performance of such provision shall be due shall
exceed the Highest Lawful Rate, then, automatically, the obligation to be
fulfilled shall be modified or reduced to the extent necessary to limit such
interest to the Highest Lawful Rate, and if from any such circumstance any
Lender should ever receive anything of value deemed interest by applicable law
which would exceed the Highest Lawful Rate, such excessive interest shall be
applied pursuant to the terms hereof to the reduction of the principal amount
then outstanding hereunder or on account of any other then outstanding
Obligations and not to the payment of interest, or if such excessive interest
exceeds the principal unpaid balance then outstanding hereunder and such other
then outstanding Obligations, such excess shall be refunded to Borrower. All
sums paid or agreed to be paid to Agent or any Lender for the use, forbearance,
or detention of the Obligations and other Indebtedness of Borrower to Agent or
any Lender, to the extent permitted by applicable law, shall be amortized,
prorated, allocated and spread throughout the full term of such Indebtedness,
until payment in full thereof, so that the actual rate of interest on account of
all such Indebtedness does not exceed the Highest Lawful Rate throughout the
entire term of such Indebtedness. The terms and provisions of this SECTION 11.14
shall control over every other provision of this Credit Agreement, the other
Credit Documents, and all agreements among Borrower, Agent and the Lenders.
11.15 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Credit Agreement
----------------------------------------
and the other Credit Documents constitute the entire agreement among the Credit
Parties, Agent and the Lenders, supersede any prior agreements among them, and
shall bind and benefit each of such Persons and their respective successors and
permitted assigns.
11.16 JOINT AND SEVERAL LIABILITY OF CREDIT PARTIES. Each Credit Party
---------------------------------------------
shall be jointly and severally liable hereunder and under each of the other
Credit Documents with respect to all Obligations, regardless of which Credit
Party actually receives the proceeds of the Loans or the benefit of any other
extensions of credit hereunder, or the manner in which Borrower, Agent or the
Lenders account therefor in their respective books and records. Notwithstanding
the foregoing, (A) each Credit Party's obligations and liabilities with respect
to proceeds of Loans which it receives or Letters of Credit issued for the
account of Borrower, and related fees, costs and expenses, and (B) each Credit
Party's obligations and liabilities arising as a result of the joint and several
liability of the Credit Parties hereunder with respect to proceeds of Loans it
receives or Letters of Credit issued for the account of Borrower, together with
the related fees, costs and expenses, shall be separate and distinct
obligations, both of which are primary obligations of such Credit Party.
Neither the joint and several liability of, nor the Liens granted to Agent under
the Collateral Documents by, any Credit Party shall be impaired or released by
any action or inaction on the part of Agent or any Lender, or any other event or
condition with respect to any other Credit Party, including any such action or
inaction or other event or condition, which might otherwise constitute a defense
available to, or a discharge of, such Credit Party, or a guarantor or surety of
or for any or all of the Obligations.
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11.17 CONTINUED EFFECTIVE; NO NOVATION. Notwithstanding anything
--------------------------------
contained herein, this Agreement is not intended to and does not serve to effect
a novation of the Obligations. Instead, it is the express intention of the
parties hereto to reaffirm the indebtedness created under the Original Credit
Agreement which is evidenced by the notes provided for therein and secured by
the Collateral. Borrower acknowledges and confirms that the liens and security
interests granted pursuant to the Credit Documents secure the indebtedness,
liabilities and obligations of Borrower to Agent and Original Lenders under the
Original Credit Agreement, as amended and restated hereby, and that the term
"Obligations" as used in the Loan Documents (or any other term used therein to
describe or refer to the indebtedness, liabilities and obligations of Borrower
to Agent and Lenders) includes, without limitation, the indebtedness,
liabilities and obligations of Borrower under the Notes to be delivered
hereunder, and under this Agreement, as amended and restated hereby, as the same
may be further amended, modified, supplemented or restated from time to time.
The Credit Documents and all agreements, instruments and documents executed or
delivered in connection with any of the foregoing shall each be deemed to be
amended to the extent necessary to give effect to the provisions of this
Agreement. Cross-references in the Credit Documents to particular section
numbers in the Original Credit Agreement shall be deemed to be cross-references
to the corresponding sections, as applicable, of this Agreement.
ARTICLE 12. COMPLIANCE WITH APPLICABLE GAMING LAWS.
--------------------------------------
12.1 LICENSING BY GAMING AUTHORITIES. Borrower and Guarantors are
-------------------------------
registered or licensed by Gaming Authorities in the Gaming Jurisdictions and are
therefore subject to Applicable Gaming Laws. Each Lender and Agent acknowledges
and understands that, as a result: (A) it may be subject to being called
forward by the Gaming Authorities, in their discretion, for licensing or a
finding of suitability as a lender, and (B) to the extent the prior approval of
the Gaming Authorities is required pursuant to Applicable Gaming Laws for the
exercise, operation and effectiveness of any remedy under this Credit Agreement
or under any other Credit Document, or the taking of any action that may be
taken by Lenders or Agent hereunder or under any other Credit Document, in each
case to the extent such remedy or action relates to the pledge of equity
interest or enforcement of security interest in gaming devices or slot machines
contemplated hereunder and under the other Credit Documents such remedy or
action shall be subject to such prior approval of the Gaming Authorities.
12.2 FINDING OF SUITABILITY OF LENDER. If the Gaming Authorities shall
--------------------------------
determine that any Lender does not meet the suitability standards under
Applicable Gaming Laws (a "FORMER LENDER"), Agent or Borrower shall have the
right to designate another bank or financial institution (a "SUBSTITUTE LENDER")
that has agreed to assume the rights and obligations of the Former Lender,
subject to receipt by Agent of evidence that such Substitute Lender is permitted
assignee pursuant to Section 11.8 hereof. The Former Lender shall be required to
execute any and all documents required pursuant to Section 11.8 to allow the
Substitute Lender to assume the Former Lender's rights and obligations
hereunder. Such Former Lender shall be entitled to receive payment of all
Obligations owing to it hereunder, but not Prepayment Premiums if a Gaming
Authority's finding of unsuitability arises from the acts of such Former Lender
after the Effective Date.
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12.3 COOPERATION WITH GAMING AUTHORITIES. Agent and each Lender shall
-----------------------------------
cooperate with the Gaming Authorities in connection with the administration of
their regulatory jurisdiction over Borrower and its Subsidiaries, including the
provision of such documents or other information as may be requested by the
Gaming Authorities relating to Borrower or its Subsidiaries or to this Credit
Agreement or any other Credit Document.
12.4 FURTHER LIMITATIONS. All rights, remedies and powers provided in
-------------------
this Credit Agreement and the other Credit Documents may be exercised only to
the extent that the exercise thereof does not violate any applicable provision
of Applicable Gaming Laws, and all provisions of this Credit Agreement and the
other Credit Documents are intended to be subject to Applicable Gaming Laws and
to be limited to the extent necessary so that they will not render this Credit
Agreement or any of the other Credit Documents invalid or unenforceable, in
whole or in part.
12.5 STOCK PLEDGE RESTRICTIONS. Notwithstanding anything to the contrary
-------------------------
contained in this Credit Agreement or any other Credit Document, it is
understood and agreed that (A) the pledge of the capital stock or other equity
securities of any Subsidiary of Borrower that is registered or licensed under
Applicable Gaming Laws ("STOCK PLEDGES") and (B) any restrictions on the
transfer of or agreements not to encumber such capital stock or other equity
securities (collectively, "STOCK RESTRICTIONS"), require the prior approval of
the relevant Gaming Authorities ("STOCK APPROVALS") in order to become
effective. Notwithstanding anything to the contrary contained in this Credit
Agreement or in any other Credit Document, unless and until the relevant Stock
Approvals have been obtained, the Stock Pledges and the Stock Restrictions shall
not be effective. To the extent the relevant Stock Approvals are obtained, the
capital stock or other equity securities of the relevant entity shall promptly
be pledged pursuant to the relevant Credit Document.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the respective parties hereto have caused this Credit
Agreement to be executed and delivered by their duly authorized officers as of
the date first set forth above.
MIKOHN GAMING CORPORATION, a
Nevada corporation
By:______________________________________
Name:____________________________________
Title:___________________________________
FIRST SOURCE FINANCIAL LLP, an Illinois
registered limited liability partnership,
individually and in its capacity as Agent
By: First Source Financial, Inc.,
its Agent/Manager
By:________________________________
Name:______________________________
Title:_____________________________
THE TRAVELERS INSURANCE COMPANY,
a Connecticut corporation
By:______________________________________
Name:____________________________________
Title:___________________________________
ALLSTATE INSURANCE COMPANY, an
Illinois insurance company
By:______________________________________
Name:____________________________________
Title:___________________________________
By:______________________________________
Name:____________________________________
Title:___________________________________
ALLSTATE LIFE INSURANCE COMPANY,
an Illinois insurance company
By:______________________________________
Name:____________________________________
Title:___________________________________
By:______________________________________
Name:____________________________________
Title:___________________________________
FIDELITY & GUARANTY LIFE INSURANCE CO.,
a Maryland corporation
By: Mt. Washington Investment Group
By:________________________________
Name:______________________________
Title:_____________________________
UNITED STATES FIDELITY & GUARANTY COMPANY,
a Maryland corporation
By: Mt. Washington Investment Group
By:________________________________
Name:______________________________
Title:_____________________________
SENIOR DEBT PORTFOLIO, a mutual fund
By: Boston Management and Research, as
Investment Advisors
By:______________________________________
Name:____________________________________
Title:___________________________________
CIBC XXXXXXXXXXX CORP., a Delaware
corporation
By:______________________________________
Name:____________________________________
Title: Vice President
SANWA BUSINESS CREDIT CORPORATION,
a Delaware corporation
By:______________________________________
Name:____________________________________
Title:___________________________________
CHANCELLOR\TRITON CBO, LIMITED, an entity
organized and existing under the laws of
the Cayman Islands
By:______________________________________
Name:____________________________________
Title:___________________________________
CARAVELLE INVESTMENT FUND, L.L.C.,
a Delaware limited liability company
By:______________________________________
Name:____________________________________
Title:___________________________________
