Exhibit 10.37
AGREEMENT
AGREEMENT dated as of November 6, 1995 between AUTOTOTE CORPORATION, a
Delaware corporation (the "Company"), and HARTFORD STOCK FUND and HARTFORD
ADVISERS FUND (together, the "Funds").
The Funds are the beneficial and record holders of $40,000,000
principal amount of the Company's 5-1/2% Convertible Subordinated Debentures due
2001 (the "Debentures").
By letters dated August 10, 1995 and September 8, 1995, the Company
and Wellington Management Company, on behalf of the Funds and any subsequent
holders of the Debentures, agreed that no interest payments on the Debentures
would be made by the Company during the period from August 10, 1995 through and
including October 5, 1995 (including the interest payment in the amount of $1.1
million due on August 15, 1995).
The parties have agreed that the Company will pay the interest due on
the Debentures in the amount of $1.1 million on each of August 15, 1995 and
(absent prior conversion of the Debentures) February 15, 1996 by issuing shares
of its Class A Common Stock, $.01 par value ("Shares"), in lieu of cash, all
upon the terms and subject to the conditions hereinafter provided.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Issuance of Shares in Lieu of Cash Payment of Interest. (a) On
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the basis of the representations, warranties and agreements contained in, and
subject to the terms and conditions of, this Agreement, the Funds (being the
holders of 100% of the Debentures) hereby purchase and accept from the Company,
and the Company hereby issues and sells to the Funds, in lieu of and in full
satisfaction of the cash interest payment due on August 15, 1995 on the
Debentures, an aggregate of 422,500 Shares (the "August/1995 Shares"), such
Shares to be allocated pro rata in accordance with the respective principal
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amount of Debentures held by the Funds (i.e., 40% to Hartford Stock Fund and 60%
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to Hartford Advisers Fund). The Company shall deliver to each of the Funds
certificates representing the August/1995 Shares so purchased by it, duly
registered in its name, within 14 business days after the date hereof. Each of
the Funds hereby waives any Event of Default (as such term is defined pursuant
to the terms of the Debentures) that would otherwise be deemed to arise or have
arisen under the terms of the Debentures solely by reason of the Company's
failure to make the cash interest payment due on August 15, 1995 on the
Debentures, provided the Company issues to the Funds the August/1995 Shares in
accordance with the provisions of this Section 1(a).
(b) The Funds (in their capacity as the holders of 100% of the
Debentures) and the Company hereby agree, pursuant to Section 6(a) of the terms
of the Debentures, that the terms thereof are hereby amended as follows:
(i) The Company shall pay the interest due on February 15, 1996 on
the Debentures then outstanding (aggregating $1.1 million assuming no prior
conversion of the Debentures) by issuing to the holders of the Debentures on
that date (pro rata in accordance with the respective principal amount of
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Debentures held by such holders), in lieu of cash, such whole number of Shares
(the "February/1995 Shares"), rounded up or down to the nearest Share, as shall
equal the product of (A) the quotient obtained by dividing (1) the amount of
interest due on that date on the Debentures by (2) the Market Price per Share
(as hereinafter defined) on that date, times (B) 1.5. The Company shall deliver
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to each such holder certificates representing the February/1995 Shares to be so
issued to it, duly registered in its name, on or prior to March 18, 1996.
Notwithstanding anything to the contrary contained in the terms of the
Debentures, no Event of Default (as such term is defined pursuant to the terms
of the Debentures) shall be deemed to arise or have arisen under the terms of
the Debentures solely by reason of the Company's failure to make the cash
interest payment that (absent this Section 1(b)(i)) would have been due on
February 15, 1996 on the Debentures, provided the Company issues the
February/1995 Shares to the holders of the Debentures in accordance with the
provisions of this Section 1(b)(i).
(ii) As used in this Agreement, "Market Price Per Share" on any date
means the average of the daily closing prices for the 20 consecutive trading
days immediately preceding such date. For this purpose, the closing price for
each day shall be the last reported sale price per Share of the Shares on the
NASDAQ National Market System ("NASDAQ-NMS") on that date or, if there shall
have been no sale of the Shares on that date, the last reported sale price per
Share on the NASDAQ-NMS prior to that date, or, if the Shares shall not at the
time be listed on the NASDAQ-NMS, the average of the last bid and asked prices
per Share for such Shares on that date on the over-the-counter market, as
reported by the National Quotation Bureau, or, if the Shares shall not at the
time be listed on the NASDAQ-NMS and quotations for the Shares shall not at the
time be reported by the National Quotation Bureau, the fair value per Share of
such Shares on that date as determined in good faith by the Board of Directors
of the Company (or a duly authorized committee thereof). For the purposes
hereof, "trading day" means a day on which the NASDAQ-NMS is open for the
transaction of business or, if the Shares are not listed or admitted to trading
on the NASDAQ-NMS, any business day.
(c) The Funds shall promptly (and in no event later than ten days
after the date hereof) deliver to the Company the Debentures so that the Company
may place an appropriate notation on the Debentures about the amendment provided
for in Section 1(b)(i), whereupon the Debentures shall be returned to the Funds.
Such amendment shall be conclusive and binding on the Funds and any future
holders of the Debentures (including any Debentures issued upon the registration
of transfer thereof or exchange therefor or in lieu thereof), whether or not
notation of such amendment is made thereon.
2. Registration Rights Agreement. Concurrently with the execution
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and delivery hereof, the parties have entered into a Registration Rights
Agreement dated as of the date hereof (the "Registration Rights Agreement"),
providing the Funds with certain
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registration rights with respect to the August/1995 Shares and the February/1995
Shares issued or to be issued to the Funds.
3. Representations and Warranties of the Company. The Company
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hereby represents and warrants to, and agrees with, the Funds as follows:
(a) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware.
(b) Neither the execution, delivery and performance by the Company of
this Agreement or the Registration Rights Agreement nor the consummation by the
Company of any of the transactions contemplated hereby or thereby (including,
without limitation, the issuance and sale by the Company of the August/1995
Shares or the February/1996 Shares) will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or result in
the breach of any term or provision of, or constitute a default (or an event
which with notice or lapse of time or both would constitute a default) under, or
require any consent or waiver under, or result in the execution or imposition of
any lien, charge or encumbrance upon any properties or assets of the Company or
any subsidiary thereof pursuant to the terms of, any indenture, mortgage, deed
of trust or other agreement or instrument to which the Company or any subsidiary
thereof is a party or by which they or any of their properties or business is
bound, or any franchise, license, permit, judgment, decree, order, statute, rule
or regulation applicable to the Company or any subsidiary thereof or violate any
provision of the charter or by-laws of the Company or any subsidiary thereof,
except for such consents or waivers that have already been obtained and are in
full force and effect, or require any consent, approval, authorization or other
order of or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official.
(c) The August/1995 Shares and, when issued and delivered in
accordance with Section 1(b), the February/1996 Shares will be validly issued,
fully paid and nonassessable and free of any preemptive or similar rights.
(d) All necessary corporate and shareholder action has been duly and
validly taken to authorize the execution, delivery and performance by the
Company of this Agreement and the Registration Rights Agreement. Each of this
Agreement and the Registration Rights Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
(e) The Company has furnished each of the Funds with copies of its
Annual Report on Form 10-K for the fiscal year ended October 31, 1994 (the "1994
Form 10-K")
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and all documents heretofore filed with the Securities and Exchange Commission
(the "Commission") pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), since the filing of the 1994 Form 10-K (the 1994 Form 10-K
and such other documents being referred to collectively as the "Exchange Act
Documents").
4. Representations and Warranties of the Funds. Each of the Funds
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hereby represents and warrants to, and agrees with, the Company as follows:
(a) All necessary corporate and shareholder action has been duly and
validly taken to authorize the execution, delivery and performance by such Fund
of this Agreement and the Registration Rights Agreement. Each of this Agreement
and the Registration Rights Agreement has been duly and validly authorized,
executed and delivered by such Fund (Wellington Management Company having full
power and authority to execute and deliver each of this Agreement and the
Registration Rights Agreement on behalf of such Fund) and constitutes the legal,
valid and binding obligation of such Fund enforceable against such Fund in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
(b) Neither the execution, delivery and performance by such Fund of
this Agreement or the Registration Rights Agreement nor the consummation of any
of the transactions contemplated hereby or thereby will conflict with or result
in the breach of any term or provision of, or constitute a default (or an event
which with notice or lapse of time or both would constitute a default) under, or
require any consent or waiver under, any indenture, mortgage, deed of trust or
other agreement or instrument to which such Fund is a party or by which it or
any of its properties or business is bound, or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation applicable to such Fund or
violate any provision of the charter or by-laws of such Fund, except for such
consents or waivers that have already been obtained and are in full force and
effect, or require any consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency or official.
(c) Such Fund understands that the August/1995 Shares have not been,
and when issued and delivered in accordance herewith the February/1996 Shares
will not be, registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon the exemption from registration provided for
under Section 4(2) of the Securities Act, and that the reliance of the Company
on such exemption is predicated, in part, upon the truth and accuracy of the
representations and warranties of such Fund set forth herein. Accordingly, such
Fund agrees that, if any of such representations or warranties is no longer
accurate, it shall promptly notify the Company. The August/1995 Shares and the
February/1996 Shares acquired or to be acquired by such Fund are being acquired
for investment for such Fund's own account and not as nominee or agent for any
other person and without any view to any distribution of all or any part thereof
(and, without limiting the generality of the foregoing, not for offer or sale in
any manner that would be in violation of
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federal securities or state blue sky or securities laws). Such Fund is an
"investment company," as such term is defined in the Investment Company Act of
1940, as amended, and an "accredited investor," as such term is defined under
Regulation D promulgated pursuant to the Securities Act, and has such knowledge
and experience in financial and business matters and in making high risk
investments that it is capable of evaluating the merits and risks of an
investment in such Shares, it being acknowledged that an investment in such
Shares will involve a high degree of risk that can result in substantial or even
a total loss of the investment. Such Fund understands that it must bear, and is
capable of bearing, the economic risk of its investment in such Shares for an
indefinite period of time, as such Shares may not be sold, transferred or
otherwise disposed of in the absence of an effective registration statement
covering such Shares or an available exemption from registration under the
Securities Act (and in a manner consistent with the representations, warranties
and agreements of such Fund set forth herein). Such Fund understands that,
except as provided for in the Registration Rights Agreement, the Company has no
obligation or intention to register the August/1995 Shares or the February/1996
Shares under any federal or state securities laws in the United States.
(d) Such Fund understands that the certificates evidencing the
August/1995 Shares and the February/1996 Shares shall bear substantially the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. ANY SALE OR OTHER
TRANSFER OF SUCH SECURITIES WILL BE INVALID UNLESS A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS IS IN EFFECT AS TO SUCH SALE OR TRANSFER OR, IN THE OPINION OF
COUNSEL TO THE COMPANY, SUCH REGISTRATION IS UNNECESSARY FOR SUCH SALE
OR TRANSFER TO COMPLY WITH THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS."
(e) Such Fund acknowledges that it has received copies of the
Exchange Act Documents and press releases dated October 16, 1995, October 19,
1995 and October 31, 1995, and that it has been furnished access to the business
records of the Company and such additional information and documents as such
Fund has requested, and has been afforded the opportunity to ask questions of
and receive answers from representatives of the Company concerning the business,
operations, market potential, capitalization, financial condition and prospects,
and all other matters deemed relevant by such Fund, and that any information
received by such Fund pursuant to the aforesaid procedures is not inconsistent
with the information contained in the Exchange Act Documents and such press
releases. Such Fund
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further acknowledges that it has neither requested nor received any material,
non-public information. In evaluating the suitability of an investment in the
Shares, such Fund has not relied on any statement or information (whether oral
or written), other than as set forth in the Exchange Act Documents and such
press releases. Such Fund is not and will not be acquiring the August/1995
Shares or the February/1996 Shares as a result of any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or presented at any seminar or
general meeting.
(f) Such Fund has not taken any action that would cause the Company
to be subject to any claim for brokerage commissions, finders' fees or similar
compensation by any broker, finder or other person and such Fund hereby
indemnifies the Company against any such claim caused by the actions of such
Fund or any of its employees or agents.
(g) All of the Debentures are owned (and since their original date of
issuance have been owned) by the Funds.
5. Covenants of the Company. For a period of five years after the
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date of this Agreement, the Company shall furnish to the Funds, in addition to
copies of such financial statements and other periodic and special reports as
the Company may from time to time distribute generally to the holders of the
Shares, a copy of each annual or other report filed by the Company with the
Commission.
6. Miscellaneous. (a) The respective agreements, representations
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and warranties of the Company and of the Funds set forth in or made pursuant to
this Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Fund or the Company, and shall survive
delivery of the August/1995 Shares and the February/1996 Shares.
(b) This Agreement, together with the Registration Rights Agreement
and the Debentures, is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. This Agreement, together with the Registration Rights
Agreement and the Debentures, supersedes all prior agreements and understandings
between the parties with respect to such subject matter (including the letter
agreement dated September 28, 1995 between the Company and Wellington Management
Company, on behalf of the Funds).
(c) This Agreement has been and is made for the benefit of the Funds
and their respective successors and assigns, and the Company and directors and
officers of the Company and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include (except as
otherwise provided herein) any purchaser of Debentures from any Fund merely
because of such purchase.
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(d) For the purposes of this Agreement, (i) the term "business day"
means any day that is not a Saturday or Sunday or a day on which banks located
in the City of New York are authorized or required to be closed; and (ii) the
term "person" means an individual, partnership, corporation, joint venture,
trust, estate, unincorporated organization, or a government or agency or
political subdivision thereof.
(e) All notices and communications hereunder shall be in writing and
mailed or delivered or by facsimile if subsequently confirmed in writing, (a) if
to the Funds, c/o Wellington Management Company, 00 Xxxxx Xxxxxx, Xxxxxx, XX
00000, Attn: Legal Department, facsimile no. 000-000-0000, and (b) if to the
Company, to Autotote Corporation, 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxx, Esq., with copies to Kronish,
Lieb, Weiner & Xxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxx X. Xxxxxxxx, Esq.
(f) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to conflicts of laws
principles thereof.
(g) This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
AUTOTOTE CORPORATION HARTFORD STOCK FUND
HARTFORD ADVISERS FUND
By
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Name: By: WELLINGTON MANAGEMENT COMPANY
Title:
By
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Name:
Title:
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