LOAN AGREEMENT
between
BANK OF AMERICA, N.A.,
as the Bank
and
SGMS ACQUISITION CORPORATION,
ss the Borrower
Dated: As of November 19, 2003
TABLE OF CONTENTS
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Page
I. DEFINITIONS AND REFERENCE TERMS...................................1
A. Adjusted LIBOR...................................................1
B. Advance Limit....................................................1
C. Advance Rate.....................................................1
D. Affiliate........................................................2
E. Applicable Margin................................................2
F. Borrower's Address...............................................2
G. Business Day.....................................................2
H. Certificate of Designations......................................2
I. Change of Control................................................2
J. Closing Date.....................................................2
K. Collateral.......................................................2
L. Convertible Securities...........................................2
M. Distribution.....................................................3
N. Event of Default.................................................3
O. Governmental Authority...........................................3
P. Guaranties.......................................................3
Q. Guarantors.......................................................3
R. Interest Period..................................................3
S. Loan Document....................................................4
T. Loan.............................................................4
U. Mafco............................................................4
V. Margin Maintenance Certificate...................................4
W. Margin Maintenance Limit.........................................4
X. Margin Rate......................................................4
Y. Maturity Date....................................................4
Z. Note.............................................................4
AA. Obligations......................................................4
BB. Other Collateral.................................................4
CC. Other Collateral Value...........................................5
DD. Person...........................................................5
EE. Pledge Agreements................................................5
FF. Xxxxxxxx.........................................................5
GG. Permitted Indebtedness...........................................5
HH. Price Requirement................................................5
II. Prime Rate.......................................................5
JJ. Purchased Securities Collateral..................................5
KK. Purchased Securities Collateral Value............................5
LL. Purchased Securities Conversion Amount...........................6
MM. Purchased Securities Issuer......................................6
NN. Purchased Securities Issuer Acknowledgment.......................6
OO. Purchased Securities Pledge Agreement............................6
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PP. Registrable Securities...........................................6
QQ. Registration Statement...........................................6
RR. Relevant Per Share Price.........................................6
SS. Rule 144.........................................................6
TT. SEC..............................................................6
UU. Securities Act...................................................7
VV. Seller...........................................................7
WW. Stock Purchase Agreement.........................................7
XX. Stock Purchase Documents.........................................7
YY. Stockholders Agreement...........................................7
ZZ. Termination Date.................................................7
AAA. Trading Securities...............................................7
II. LOAN..............................................................7
A. Making the Loan..................................................7
B. Interest Rate....................................................8
C. Repayment........................................................8
D. Optional Prepayment..............................................8
E. Mandatory Prepayment.............................................8
F. Evidence of Credit Extensions....................................9
G. Payment..........................................................9
H. Computations of Interest; Business Day..........................10
I. Increased Costs, Etc............................................10
J. Illegality......................................................11
K. Funding Losses..................................................11
L. Unavailability..................................................12
M. Use of Proceeds.................................................12
N. Fee.............................................................12
III. CONDITIONS PRECEDENT.............................................12
A. Conditions to the Loan..........................................12
B. Additional Conditions to the Loan...............................14
IV. REPRESENTATIONS AND WARRANTIES...................................14
A. Organization and Qualification..................................14
B. Authority and Compliance........................................14
C. Binding Agreement...............................................15
D. Litigation......................................................15
E. No Conflicting Laws or Agreements...............................15
F. Ownership of Property...........................................16
G. Capitalization..................................................16
H. Compliance with Laws............................................16
I. Taxes...........................................................16
J. Financial Information...........................................16
K. Accuracy of Information.........................................16
L. The Issuer......................................................16
M. Stock Purchase Documents........................................17
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N. Event of Default................................................17
O. Use of Proceeds.................................................17
P. Investment Company Act..........................................17
Q. Special Purpose Entity..........................................17
R. Continuation of Representations and Warranties..................18
S. Registrable Securities; Collateral..............................18
V. AFFIRMATIVE COVENANTS............................................18
A. Financial Statements and Other Information......................18
B. Adverse Conditions or Events....................................19
C. Existence.......................................................19
D. Compliance with Laws............................................19
E. Taxes and Other Obligations.....................................19
F. Intentionally Deleted...........................................19
G. Registrable Securities..........................................19
H. Representations and Warranties..................................20
I. Regulation U....................................................21
VI. NEGATIVE COVENANTS...............................................21
A. Disposition of Property.........................................21
B. Liens and Encumbrances..........................................21
C. Indebtedness....................................................21
D. Mergers.........................................................21
E. Acquisitions....................................................21
F. Transactions with Affiliates....................................21
G. Loans and Investments...........................................22
H. Distributions...................................................22
I. Business........................................................22
J. Stock Purchase Documents........................................22
K. Change of Control...............................................22
VII. REMEDIES UPON DEFAULT............................................22
VIII. NOTICES..........................................................22
IX. COSTS, EXPENSES AND ATTORNEYS' FEES..............................23
X. MISCELLANEOUS....................................................24
A. Cumulative Rights and No Waiver.................................24
B. Applicable Law; Venue and Jurisdiction..........................24
C. Amendment.......................................................24
D. Documents.......................................................24
E. Partial Invalidity..............................................24
F. Indemnification.................................................25
G. Survivability...................................................25
XI. ARBITRATION......................................................25
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A. SPECIAL RULES...................................................25
B. RESERVATION OF RIGHTS...........................................26
XII. WAIVER OF CONSEQUENTIAL DAMAGES..................................26
XIII. WAIVER OF RIGHT TO JURY TRIAL....................................26
XIV. NO ORAL AGREEMENT................................................27
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LOAN AGREEMENT
This Loan Agreement (the "Agreement"), dated as of November 19, 2003,
by and between BANK OF AMERICA, N.A., a national banking association (the
"Bank"), and SGMS ACQUISITION CORPORATION, a Delaware corporation (the
"Borrower").
The Borrower has requested that the Bank finance part of the purchase
price of the Convertible Securities (as defined below) being acquired by the
Borrower.
The Bank has agreed to extend financing for part of the purchase price
of such Convertible Securities subject to the terms and conditions set forth in
this Agreement.
In consideration of the Loan described below and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
Bank and the Borrower agree as follows:
I. DEFINITIONS AND REFERENCE TERMS. In addition to any other terms
defined herein, the following terms shall have the meaning set forth with
respect thereto:
A. ADJUSTED LIBOR. Adjusted LIBOR means, with respect to any
Interest Period, (i) the rate of interest per annum (rounded upward, if
necessary, to the next higher 1/16th of one percent) determined by the Bank, in
accordance with its customary general practice from time to time, to be the rate
equal to the London Interbank Offered Rate (expressed as a percentage) for
dollar deposits as would be quoted by the Bank for 11:00 a.m. London time, or as
soon thereafter as practicable, on the second Business Day immediately preceding
the first day of such Interest Period, for a term comparable to such Interest
Period and (ii) as adjusted from time to time in the Bank's sole discretion for
then applicable reserve requirements, deposit insurance assessment rates and
other regulatory costs.
B. ADVANCE LIMIT. Advance Limit means, at any date, the sum of (i)
the product of (A) the Purchased Securities Collateral Value, and (B) the then
applicable Advance Rate; and (ii) the product of (A) the Other Collateral Value,
and (B) the then applicable Advance Rate, all as calculated in the sole
discretion of the Bank.
C. ADVANCE RATE. Advance Rate means, at any date, (i) in the case of
the Purchased Securities Collateral, (A) during such times, if any, that the
Price Requirement is satisfied, fifty percent (50%), and (B) during such times,
if any, that the Price Requirement is not satisfied, zero percent (0%); and (ii)
in the case of the Other Collateral, if any, a percentage to be determined and
adjusted at the sole discretion of the Bank from time to time.
D. AFFILIATE. Affiliate means, as to any Person (the "relevant
Person"), any other Person that, directly or indirectly, controls, is controlled
by or is under common control with the relevant Person, or is an officer or
director of the relevant Person. The term "control" (including the terms
"controlled by" or "under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise.
E. APPLICABLE MARGIN. Applicable Margin means 1.85% per annum.
F. BORROWER'S ADDRESS. Borrower's Address means c/o Mafco Holdings
Inc., 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
G. BUSINESS DAY. Business Day means any day other than a Saturday,
Sunday or other day on which commercial banks in New York City, New York, or in
Charlotte, North Carolina, are authorized or required by law to close; provided
that in the case of matters pertaining to the Adjusted LIBOR Rate, such day is
also a day on which dealings between banks are carried on in U.S. dollar
deposits in the London interbank market.
H. CERTIFICATE OF DESIGNATIONS. Certificate of Designations means
the Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights of Preferred Stock and Qualifications,
Limitations and Restrictions Thereof of the Purchased Securities Issuer, dated
as of September 6, 2000, as in effect on the Closing Date and filed with the
Secretary of State of the State of Delaware.
I. CHANGE OF CONTROL. Change of Control means if Xxxxxxxx shall at
any time fail to own and control, directly or indirectly, (i) one hundred
percent (100%) of the issued and outstanding capital stock of all classes of the
Borrower, or (ii) one hundred percent (100%) of the issued and outstanding
capital stock of all classes of the Mafco.
J. CLOSING DATE. Closing Date means the date on which the conditions
set forth in Section III A. are satisfied.
K. COLLATERAL. Collateral means, collectively, (i) the Purchased
Securities Collateral, (ii) any Other Collateral and (iii) all other property
described as collateral security for the Obligations in any Loan Document,
including, without limitation, the Pledge Agreements.
L. CONVERTIBLE SECURITIES. Convertible Securities means the "Series
A Convertible Preferred Stock" of the Purchased Securities Issuer established
pursuant to the Certificates of Designation. Neither Trading Securities nor the
Series B Preferred Stock of the Purchased Securities Issuer constitute
Convertible Securities.
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M. DISTRIBUTION. Distribution means (i) any dividend or other
distribution on the capital stock or other equity interests of the Borrower; and
(ii) any redemption, repurchase, defeasance or acquisition of the capital stock
or other equity interests of the Borrower or of warrants, rights or other
options to purchase such capital stock or other equity interest.
N. EVENT OF DEFAULT. Event of Default has the meaning specified in
the Note.
O. GOVERNMENTAL AUTHORITY. Governmental Authority means any nation
or government, any federal, state, city, town, municipality, county, local or
other political subdivision thereof or thereto and any department, commission,
board, bureau, instrumentality, agency or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
P. GUARANTIES. Guaranties means, collectively, the Continuing and
Unconditional Guaranties of the Guarantors, dated as of the date hereof, and
such other guaranties hereafter executed by any Guarantor in respect of the all
or any part of the Obligations, and as such agreements may be amended, restated,
modified, extended or replaced from time to time.
Q. GUARANTORS. Guarantors means, collectively, (i) Xxxxxxxx, (ii)
Mafco, (iii) GSB Guarantor Corp., a Delaware corporation, and (iv) all other
guarantors of the Obligations identified in any Loan Document.
R. INTEREST PERIOD. Interest Period means each one month period
during which interest on the Loan shall be calculated by reference to Adjusted
LIBOR, determined as of the second Business Day before the commencement of that
Interest Period; PROVIDED, HOWEVER, that:
(i) the initial Interest Period shall commence on the date on
which the Loan is made and end on the day which numerically
corresponds to such date one month thereafter (or, if such
month has no numerically corresponding day, on the last
Business Day of such month);
(ii) each subsequent Interest Period shall commence on the last
day of the immediately preceding Interest Period and end on
the day which numerically corresponds to such date one month
thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month);
and
(iii) any Interest Period which would otherwise extend beyond the
Termination Date shall end on the Termination Date.
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S. LOAN DOCUMENT. Loan Document means any of this Agreement, the
Note, the Pledge Agreements, the Guaranty Agreements, the Purchased Securities
Issuer Acknowledgment and all other instruments, agreements and other documents
executed and delivered pursuant hereto or thereto, in each case, as amended,
restated, modified, extended or replaced from time to time.
T. LOAN. Loan mean the term loan made by the Bank to the Borrower
pursuant to Section II of this Agreement.
U. MAFCO. Mafco means Mafco Holdings Inc., a Delaware corporation.
V. MARGIN MAINTENANCE CERTIFICATE. Margin Maintenance Certificate
means the certification of the Borrower, in the form of EXHIBIT A hereto.
W. MARGIN MAINTENANCE LIMIT. Margin Maintenance Limit means, at any
date, the sum of (i) the product of (A) the Purchased Securities Collateral
Value, and (B) the then applicable Margin Rate; and (ii) the product of (A) the
Other Collateral Value, if any, and (B) the then applicable Margin Rate, all as
calculated in the sole discretion of the Bank.
X. MARGIN RATE. Margin Rate means, at any date, (i) in the case of
the Purchased Securities Collateral, (A) during such times, if any, that the
Price Requirement is satisfied, fifty-five percent (55%), and (B) during such
times, if any, that the Price Requirement is not satisfied, zero percent (0%);
and (ii) in the case of Other Collateral, if any, a percentage to be determined
and adjusted at the sole discretion of the Bank from time to time.
Y. MATURITY DATE. Maturity Date means November 19, 2004.
Z. NOTE. Note means the promissory note of the Borrower, dated as of
the date hereof, evidencing the Obligations of the Borrower with respect to the
Loan and delivered to the Bank, as such promissory note may be amended,
restated, modified or extended from time to time, and any promissory note or
notes issued in exchange or replacement thereof.
AA. OBLIGATIONS. Obligations means (i) the obligations of the
Borrower to pay, as and when due and payable (by mandatory prepayment, by
scheduled maturity or otherwise), all amounts from time to time owing by it
pursuant to any Loan Document, whether for principal, interest, fees or
otherwise and (ii) the obligations of the Borrower to perform or observe all of
Borrower's other obligations from time to time existing under any Loan Document.
BB. OTHER COLLATERAL. Other Collateral means property satisfactory
to the Bank, other than the Purchased Securities Collateral, which property
shall be provided by the Borrower as collateral security for all of the
Obligations pursuant to Section II E.1., Section II E.2. or Section III B.3. and
described in a Pledge Agreement at the time such property has been pledged to
and accepted by the Bank.
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CC. OTHER COLLATERAL VALUE. Other Collateral Value means the value
of any Other Collateral, as determined and adjusted at the sole discretion of
the Bank from time to time.
DD. PERSON. Person means any individual, corporation, partnership,
limited liability company, association, joint-stock company, trust,
unincorporated organization, joint venture, or Governmental Authority.
EE. PLEDGE AGREEMENTS. Pledge Agreements means the Purchased
Securities Pledge Agreement and such other pledge or security agreements or
mortgages or deeds of trust hereafter executed by the Borrower or any other
Person pursuant to which the Borrower or such other Person pledges to the Bank
any Collateral as collateral security for all the Obligations, and as such
agreements may be amended, restated, modified, extended or replaced from time to
time.
FF. XXXXXXXX. Xxxxxxxx means Xxxxxx X. Xxxxxxxx.
GG. PERMITTED INDEBTEDNESS. Permitted Indebtedness means financing
(in addition to the Loan) in a principal amount not to exceed Forty Million
Dollars ($40,000,000) in the aggregate for the purpose of financing part of the
purchase price of the Convertible Securities that do not constitute part of the
Purchased Securities Collateral, and, subject to the foregoing limitations, any
extension, renewal, refinancing or replacement of such additional financing.
HH. PRICE REQUIREMENT. Price Requirement means, at any date, that
the Relevant Per Share Price is not less than Seven Dollars ($7.00) (as adjusted
for stock splits occurring after the Closing Date).
II. PRIME RATE. Prime Rate means the fluctuating rate of interest
established by the Bank from time to time, at its discretion, whether or not
such rate shall be otherwise published. The Prime Rate is established by the
Bank as an index and may or may not at any time be the best or lowest rate
charged by the Bank on any loan. To the extent to the Loan or any other amount
under the Loan Documents bear interest at the Prime Rate, the floating interest
rate shall be adjusted automatically with respect to each such amount as and
when the Prime Rate shall change.
JJ. PURCHASED SECURITIES COLLATERAL. Purchased Securities Collateral
means the Convertible Securities and the Series B Preferred Stock of the
Purchased Securities Issuer described on EXHIBIT A to the Pledge Agreement and
pledged by the Borrower to the Bank pursuant to the Pledge Agreement, together
with the Trading Securities, if any, resulting from the conversion of such
Convertible Securities.
KK. PURCHASED SECURITIES COLLATERAL VALUE. Purchased Securities
Collateral Value means, at any date, the sum of (i) for that portion of the
Purchased Securities Collateral that constitutes Convertible Securities, the
product of (A) the Relevant Per Share Price at the close of trading on the
immediately preceding Business Day, and (B) the Purchased Securities Conversion
Amount; and (ii) for that portion, if any, of Purchased Securities Collateral
that constitutes Trading Securities, the
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product of (A) the Relevant Per Share Price at the close of trading on the
immediately preceding Business Day, and (B) the number of shares of such Trading
Securities.
LL. PURCHASED SECURITIES CONVERSION AMOUNT. Purchased Securities
Conversion Amount means, at any date, the product of (i) the Conversion Rate (as
defined in the Certificate of Designations), and (ii) the number of shares of
Convertible Securities comprising part of the Purchased Securities Collateral.
MM. PURCHASED SECURITIES ISSUER. Purchased Securities Issuer means
Scientific Games Corporation (f/k/a Autotote Corporation), a Delaware
corporation.
NN. PURCHASED SECURITIES ISSUER ACKNOWLEDGMENT. Purchased Securities
Issuer Acknowledgment means the Purchased Securities Issuer Acknowledgment of
the Issuer, in the form of EXHIBIT B hereto.
OO. PURCHASED SECURITIES PLEDGE AGREEMENT. Pledge Agreement means
the Pledge Agreement of the Borrower pursuant to which the Borrower pledges to
the Bank the property described therein, including, without limitation, the
Purchased Securities Collateral listed and described on EXHIBIT A thereto, as
collateral security for all the Obligations, and as such Pledge Agreement may be
amended, restated, modified, extended or replaced from time to time.
PP. REGISTRABLE SECURITIES. Registrable Securities means (i) the
shares of the Trading Securities issued or issuable upon conversion of the
Convertible Securities being acquired by the Purchaser, and (ii) any other
shares of capital stock of the Purchased Securities Issuer issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, the shares described in the preceding clause
(i).
QQ. REGISTRATION STATEMENT. Registration Statement shall mean any
registration statement or comparable document under the Securities Act through
which a public sale or disposition of the Registrable Securities may be
registered on the appropriate form pursuant to the Securities Act and all
amendments and supplements thereto, including post-effective amendments, in each
case including the prospectus contained therein, all exhibits thereto and all
materials incorporated by reference therein.
RR. RELEVANT PER SHARE PRICE. Relevant Per Share Price means the per
share price of the Trading Securities on the trading exchange or stock market
for the Trading Securities, as reported by THE WALL STREET JOURNAL or any
successor publication.
SS. RULE 144. Rule 144 means Rule 144 (or a successor rule) under
the Securities Act.
TT. SEC. SEC means the United States Securities and Exchange
Commission.
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UU. SECURITIES ACT. Securities Act means the Securities Act of 1933,
as amended.
VV. SELLER. Seller means Cirmatica Gaming, S.A., a Spanish
corporation.
WW. STOCK PURCHASE AGREEMENT. Stock Purchase Agreement means the
Stock Purchase Agreement, dated as of October 10, 2003, between Mafco and the
Seller.
XX. STOCK PURCHASE DOCUMENTS. Stock Purchase Documents means the
Certificate of Designations and the Stock Purchase Agreement, together with each
other agreement, instrument and document executed in connection therewith or
related thereto (including, without limitation, the Existing Agreements (as
defined in the Stock Purchase Agreement)), including all exhibits, schedules and
disclosure letters referred to therein or delivered pursuant thereto, if any,
and all amendments thereto, waivers relating thereto and other side letters or
agreements affecting the terms thereof.
YY. STOCKHOLDERS AGREEMENT. Stockholders' Agreement means the
Stockholders' Agreement, dated as of September 6, 2000, among the Seller, The
Oak Fund, Peconic Fund Ltd., Ramius Securities, LLC, Olivetti International
S.A., and the Purchased Securities Issuer, as supplemented by the Supplemental
Stockholders' Agreement, dated as of June 26, 2002, between the Seller and the
Purchased Securities Issuer, as further supplemented by the Letter Agreement,
dated as of October 10, 2003, between the Purchased Securities Issuer and Mafco.
ZZ. TERMINATION DATE. Termination Date means the earlier of (i) the
Maturity Date and (ii) the date on which the Loan is accelerated following an
Event of Default.
AAA. TRADING SECURITIES. Trading Securities means the Class A common
stock of the Purchased Securities Issuer. Convertible Securities do not
constitute Trading Securities until lawfully converted in accordance with the
Certificate of Designation. The Series B Preferred Stock of the Purchased
Securities Issuer does not constitute Trading Securities.
All accounting terms not specifically defined or specified herein shall
have the meanings attributed to such terms under U.S. generally accepted
accounting principles ("GAAP"), as in effect from time to time, consistently
applied.
II. LOAN.
A. MAKING THE LOAN. The Bank hereby agrees, on the terms and
conditions hereinafter set forth, to make the Loan to the Borrower in a
principal amount equal to the lesser of (i) Twenty-Five Million Dollars
($25,000,000), and (ii) the Advance Limit. The Borrower shall make a request for
the Loan in writing (a "Notice of Borrowing"), which Notice of Borrowing shall
specify the proposed amount of the Loan and the requested funding date (which
shall be a Business Day), together with
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disbursement instructions. On the funding date specified in the Notice of
Borrowing and upon fulfillment of the applicable terms and conditions set forth
in Article III hereof, the Bank will make the proceeds of the Loan available to
the Borrower in accordance with the disbursement instructions contained in the
Notice of Borrowing, not later than 5:00 P.M. (Eastern time) on such date;
PROVIDED, HOWEVER, if the funding date specified in the Notice of Borrowing is
the Closing Date and the closing shall not have occurred prior to 2:00 P.M.
(Eastern time) on such date, the Bank will, subject to the fulfillment of the
applicable terms and conditions set forth in Article III hereof (other than
delivery of a new Notice of Borrowing), make the proceeds of the Loan available
to the Borrower in accordance with such disbursement instructions, not later
than 5:00 P.M. (Eastern time) on the first Business Day following the Closing
Date. Once the Loan is made pursuant to this Section II A., the Borrower may
prepay the Loan in whole or in part pursuant to this Article II, but the
Borrower may not reborrow the Loan in whole or in part once prepaid or repaid.
B. INTEREST RATE. The outstanding principal balance of the Loan will
bear interest at a rate per annum equal at all times during each Interest Period
to the sum of (i) Adjusted LIBOR for such Interest Period, plus (ii) the
Applicable Margin; PROVIDED, HOWEVER, that after the occurrence and during the
continuance of an Event of Default, the principal of and interest on the Loan
and any other amounts owing hereunder or under the other Loan Documents shall
bear interest at a rate per annum equal to the Prime Rate plus 4%. Absent the
existence of an Event of Default, on the last day of each Interest Period for
the Loan, the Loan shall be continued for a subsequent Interest Period.
C. REPAYMENT. The Borrower will pay all accrued interest on the Loan
quarterly on the first Business Day of each calendar quarter commencing with the
calendar quarter beginning on January 1, 2004. The Borrower will repay the
entire unpaid principal amount of the Loan and all accrued and unpaid interest
thereon in full on the Termination Date.
D. OPTIONAL PREPAYMENT. The Borrower may, subject to the provisions
of Section II K., prepay the Loan in whole at any time or in part from time to
time, without penalty or premium, each such prepayment to be accompanied by the
payment of accrued interest to the date of such prepayment on the amount
prepaid; PROVIDED, HOWEVER, that (i) each partial prepayment shall be in a
principal amount equal to $100,000 or an integral multiple thereof and (ii) the
Borrower shall give the Bank irrevocable written notice at least one (1)
Business Day prior to the date of the prepayment of the Loan. Each notice of
prepayment shall be irrevocable and shall specify the date and the amount of the
prepayment.
E. MANDATORY PREPAYMENT.
1. If at any time the Bank, with the advice of counsel,
determines that the transactions contemplated by this Agreement or any of the
other Loan Documents violate any provision of Regulations T, U or X of the
Federal Reserve Board, the Borrower will, upon three (3) Business Days' written
notice from the Bank, either
8
(i) prepay the Loan by an amount sufficient such that, after such prepayment,
the transactions contemplated by the Loan Documents will not violate any
provision of Regulations T, U or X of the Federal Reserve Board (as determined
by the Bank in its sole discretion), or (ii) provide for a grant to the Bank, as
collateral security for the Obligations, a perfected, first priority security
interest in, and lien or mortgage on, Other Collateral that is in such amounts
and having such market values, liquidity, volatility, marketability,
concentration and other characteristics as the Bank may, in its sole discretion,
determine to be sufficient to cause, after the grant of such additional security
interest, the transactions contemplated by the Loan Documents not to violate any
provision of Regulations T, U or X of the Federal Reserve Board. In connection
with such grant, the Borrower will execute and deliver (or cause to be executed
and delivered) a Pledge Agreement, in form and substance satisfactory to the
Bank, and such agreements, financing statements, instruments, assignments, legal
opinions and other documents that are, in the opinion of the Bank, necessary or
advisable to grant and perfect a first priority security interest, lien or
mortgage in favor of the Bank in such Other Collateral.
2. If at any time the Bank determines that the outstanding
principal amount of the Loan equals or exceeds an amount equal to the Margin
Maintenance Limit, the Borrower will, upon two (2) Business Days' written notice
from the Bank, either (i) prepay the Loan by an amount such that, after such
prepayment, the outstanding principal amount of the Loan does not exceed an
amount equal to the Advance Limit or (ii) pledge to the Bank, as collateral
security for the Obligations, a perfected, first priority security interest in,
and lien or mortgage on, Other Collateral that is in such amounts and having
such market values, liquidity, volatility, marketability, concentration and
other characteristics as the Bank may, in its sole discretion, determine to be
sufficient to cause, after the grant of such additional security interest, the
outstanding principal amount of the Loan not to exceed an amount equal to the
Advance Limit. In connection with such grant, the Borrower will execute and
deliver (or cause to be executed and delivered) a Pledge Agreement, in form and
substance satisfactory to the Bank, and such agreements, financing statements,
instruments, assignments, legal opinions and other documents that are, in the
opinion of the Bank, necessary or advisable to grant and perfect a first
priority security interest, lien or mortgage in favor of the Bank in such Other
Collateral.
F. EVIDENCE OF CREDIT EXTENSIONS. The Loan shall be evidenced by the
Note. The Bank shall record advances and principal payments thereof, in its
records, which shall be conclusive absent demonstrable error. Notwithstanding
the foregoing, the failure to make or an error in making a notation with respect
to the Loan or any payment shall not limit or otherwise affect the Obligations
of the Borrower hereunder or under the Note.
G. PAYMENT. Payment of principal, interest and any other sums due
under this Agreement, the Note or any other Loan Document shall be made without
set-off or counterclaim in United States dollars and in immediately available
funds on the day such payment is due not later than 12:00 noon New York time.
All sums received after such time shall be deemed received on the next Business
Day, and
9
principal payments or sums (other than interest) due hereunder shall bear
interest for an additional day or days, as applicable. All payments shall be
made to the Bank in accordance with the Bank's written instructions.
H. COMPUTATIONS OF INTEREST; BUSINESS DAY. All computations of
interest under this Agreement and the Note shall be made on the basis of a year
of three hundred and sixty (360) days and actual days elapsed. Interest shall
accrue daily on the outstanding principal balance of the Loan from and including
the date the Loan is made by the Bank to but excluding the date on which the
Loan is repaid. Payment of all amounts due hereunder shall be made on a Business
Day. Any payment due on a day that is not a Business Day shall be made on the
next Business Day unless the next Business Day would fall in the next calendar
month, in which case such payment shall be made on the Business Day immediately
preceding the due date.
I. INCREASED COSTS, ETC. If, after the date of this Agreement, due
to either (i) the introduction of or any change in or in the interpretation of
any law or regulation or (ii) the compliance with any guideline or request from
any central bank or other Governmental Authority (whether or not having the
force of law), there shall be any (x) change in the basis of taxation of
payments to the Bank of the principal of or interest on the Loan (excluding
changes in the rate of tax payable on the Bank's overall income and bank
franchise taxes) or (y) imposition or change in any reserve or similar
requirement, and the result of any of the foregoing is an increase in the cost
to the Bank of agreeing to make or making, funding or maintaining the Loan, then
the Borrower shall from time to time, upon demand by the Bank, pay to the Bank
an additional amount sufficient to compensate the Bank for such increased cost.
A certificate as to the amount of such increased cost, submitted to the Borrower
by the Bank, shall be conclusive and binding for all purposes, absent
demonstrable error.
1. If the Bank determines that compliance with any law or
regulation or any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by the Bank
or any corporation controlling the Bank and that the amount of such capital is
increased by or based upon the existence of the Loan, then the Borrower shall,
upon demand by the Bank, pay to the Bank an additional amount sufficient to
compensate the Bank or such corporation in the light of such circumstances, to
the extent that the Bank reasonably determines such increase in capital to be
allocable to the existence of the Loan. A certificate as to such amounts,
submitted to the Borrower by the Bank, shall be conclusive and binding for all
purposes, absent demonstrable error.
2. Prior to making any demand for compensation under this Section
II I., (i) the Bank will use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to file any certificate or
document reasonably requested by the Borrower or to change the jurisdiction of
its lending office if the making of such a filing or change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the judgment of the Bank, be otherwise disadvantageous
to the Bank, and (ii) the Bank will permit the
10
Borrower to prepay all or any part of the Loan, together with interest to the
date of payment, provided that nothing herein shall relieve the Borrower from
its obligation to compensate the Bank for increased costs or reduced return
incurred prior to the taking of the actions contemplated by clauses (i) and (ii)
above.
J. ILLEGALITY. If, after the date of this Agreement, the adoption of
any applicable law, rule or regulation, or any change in an existing law, rule
or regulation, or any change in the interpretation or administration thereof by
any Governmental Authority charged with the interpretation or administration
thereof, or compliance by the Bank with any request or directive (whether or not
having the force of law) of any such Governmental Authority, makes it unlawful
or impossible for the Bank to maintain or fund the Loan at an interest rate
based on Adjusted LIBOR, the Bank shall forthwith give notice thereof to the
Borrower, whereupon the obligation of the Bank to maintain or fund the Loan at a
rate based on Adjusted LIBOR shall be suspended until the Bank notifies the
Borrower that the circumstances giving rise to such suspension no longer exist.
The Bank will use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to file any certificate or document requested
by the Borrower if the making of such a filing would avoid the need for, or
reduce the amount of, any such additional amounts that may thereafter accrue and
would not, in the judgment of the Bank, be otherwise disadvantageous to the
Bank. If the Bank makes a reasoned determination that it may not lawfully
continue to maintain or fund the Loan at a rate based on Adjusted LIBOR and so
specifies in such notice, then effective on the date specified in such notice,
the Loan shall bear interest at the Prime Rate.
K. FUNDING LOSSES. The Borrower agrees to reimburse the Bank and to
hold the Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of:
(i) the failure of the Borrower to make any payment or required
prepayment of principal of the Loan (including payments made
after any acceleration thereof);
(ii) the failure of the Borrower to make any prepayment permitted
hereunder after giving notice thereof;
(iii) the repayment of all or any portion of the Loan bearing
interest at a rate based on Adjusted LIBOR on a day which is
not the last day of an Interest Period (whether at maturity,
due to acceleration or otherwise); or
(iv) the failure for any reason (other than a wrongful default by
the Bank) of the Borrower to borrow the Loan after notice
has been given to the Bank in accordance with Section II A.
hereof (whether or not such notice is withdrawn).
11
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain the Loan hereunder at a rate based on
Adjusted LIBOR or from fees payable to terminate the deposits from which such
funds were obtained. Solely for purposes of calculating amounts payable by the
Borrower to the Bank under this section, to the extent that all or any portion
of the Loan bears interest at a rate based on Adjusted LIBOR (and each related
reserve, special deposit or similar requirement), the Loan or such portion
thereof shall be conclusively deemed to have been funded by a matching deposit
in dollars in the interbank Eurodollar market for a comparable amount and for
the respective Interest Period, whether or not the Loan or such portion was in
fact so funded.
L. UNAVAILABILITY. If the Bank determines that for any reason
adequate and reasonable means do not exist for ascertaining Adjusted LIBOR for
any Interest Period, the Bank will forthwith give notice of such determination
to the Borrower. Commencing at the end of each Interest Period then in effect,
the Loan shall bear interest at the Prime Rate (rather than at a rate based on
Adjusted LIBOR) until the Bank revokes such notice in writing.
M. USE OF PROCEEDS. All of the proceeds of the Loan will be used by
the Borrower solely to finance (i) part of the purchase price of the Convertible
Securities being acquired by the Borrower, (ii) the Commitment Fee and (iii)
transaction expenses in connection with the Loan.
N. FEE. At closing, the Borrower will pay to the Bank a
non-refundable commitment fee of Two Hundred Fifty Thousand Dollars ($250,000)
(the "Commitment Fee"), which Commitment Fee will be fully-earned by the Bank on
the Closing Date.
III. CONDITIONS PRECEDENT.
A. CONDITIONS TO THE LOAN. The obligation of the Bank to make the
Loan under this Agreement is subject to the condition precedent that the Bank
shall have received on or prior to the Closing Date the following (in the case
of agreements, instruments and documents, each duly executed and in form and
substance satisfactory to the Bank and its counsel and, unless indicated
otherwise, dated the Closing Date):
1. AGREEMENT. This Agreement, duly executed by the Borrower.
2. NOTE. The Note, duly executed by the Borrower.
3. GUARANTIES. The Guaranties, each duly executed by the
appropriate Guarantor.
4. PLEDGE AGREEMENT, ETC. The Pledge Agreement, duly executed by
the Borrower.
12
5. PURCHASED SECURITIES ISSUER ACKNOWLEDGEMENT. The Purchased
Securities Issuer Acknowledgement, duly executed by the Purchased Securities
Issuer.
6. STOCK CERTIFICATES, ETC. Original certificates representing the
Purchased Securities Collateral together with an undated stock or note power for
each such certificate, duly executed in blank by the Borrower (or, if any item
of Purchased Securities Collateral is uncertificated, confirmation and evidence
that appropriate book entries have been made in the relevant books and records
of a securities intermediary under applicable law).
7. STOCK PURCHASE DOCUMENTS. True, correct and complete copies of
(i) the Certificate of Designations; (ii) the Stock Purchase Documents, duly
executed by the Borrower, the Seller, the Purchased Securities Issuer or such
other Persons, as appropriate; (iii) a counterpart of the Stockholders
Agreement, duly executed by the Borrower; and (iv) a written request pursuant to
Section 5(c) of the Stockholders Agreement for the Purchased Securities Issuer
to effect a registration on Form S-3, duly executed by the Borrower and
acknowledged by signature of the Purchased Securities Issuer. The
representations and warranties contained in the Stock Purchase Documents shall
be true and correct in all material respects. The transactions contemplated by
the Stock Purchase Documents shall have been (or shall simultaneously be)
consummated in all material respects in accordance with the Stock Purchase
Documents.
8. PAYMENTS AT CLOSING. The Borrower shall have paid (i) to the
Bank, the Commitment Fee, and (ii) to Blank Rome LLP, counsel to the Bank, its
fees, disbursements and other charges in connection with the preparation,
negotiation, execution and delivery of the Loan Documents.
9. FINANCING STATEMENTS. Uniform Commercial Code financing
statements and other notices and other documents and instruments, duly executed
by the Borrower, each ready for filing in such office or offices as may be
necessary or, in the opinion of the Bank, desirable to perfect the security
interests of the Bank in the Purchased Securities Collateral.
10. LIEN REPORTS. A current search report from the Borrower's and
each entity Guarantor's state of incorporation showing no Uniform Commercial
Code filings, judgments or federal or state tax liens to be of record.
11. OPINION OF COUNSEL. One or more opinion letters, dated the
Closing Date, of counsel to the Borrower and the Guarantors as to such matters
as the Bank may require.
12. INTENTIONALLY DELETED.
13. OTHER DOCUMENTS. All other promissory notes, loan agreements,
security agreements, financing statements, assignments, guaranties, corporate
resolutions, appraisals and other documents and instruments that are, in the
opinion of the Bank, necessary in connection with the Loan.
13
14. OTHER INFORMATION. Such other financial or other information
as the Bank may reasonably require.
B. ADDITIONAL CONDITIONS TO THE LOAN. Without limiting the
foregoing, the obligation of the Bank to make the Loan is further subject to the
conditions precedent that:
1. The following statements shall be true, and the acceptance of
the proceeds of the Loan by the Borrower shall be deemed to be a representation
and warranty of the Borrower on the date of the Loan that, (i) the
representations and warranties contained in Article IV of this Agreement and in
each other Loan Document and certificate or other writing delivered by or on
behalf of the Borrower to the Bank pursuant hereto on or prior to the date of
the Loan are true, correct and complete on and as of such date as though made on
and as of such date; (ii) no Event of Default (or event which after the giving
of notice, the passage of time, or both, would become an Event of Default) has
occurred and is continuing or would result from the making of the Loan to be
made on such date; and (iii) no material adverse change in the financial
condition, properties or prospects of the Borrower or any other Person liable
for repayment of the Loan shall have occurred and be continuing on such date;
2. The Bank shall have received a Notice of Borrowing in
accordance with Section II A. with respect to the Loan, and a Margin Maintenance
Certificate in accordance with Section V A.1.; and
3. The Borrower shall have executed and delivered to the Bank a
Pledge Agreement, in form and substance satisfactory to the Bank, with respect
to any Collateral to be purchased by the Borrower with the proceeds of the Loan,
together with such other agreements, financing statements, instruments,
assignments, legal opinions and other documents that are, in the opinion of the
Bank, necessary or advisable to grant and perfect a first priority security
interest, lien or mortgage in favor of the Bank in such property upon its
acquisition by the Borrower.
IV. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Bank as follows:
A. ORGANIZATION AND QUALIFICATION. Borrower is a corporation, duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware (which state is the only jurisdiction in which the Borrower is
incorporated), with the requisite corporate power and authority to consummate
the transaction contemplated by the Stock Purchase Documents and the Loan
Documents, to own and use its property and to carry on its business as currently
conducted. The exact legal name of the Borrower is as set forth in the preamble
to this Agreement and the Borrower's organizational identification number issued
by the State of Delaware is 3715639.
B. AUTHORITY AND COMPLIANCE.
1. The Borrower has full power and authority to execute and
deliver the Loan Documents to which it is a party and to incur and perform
14
the obligations provided for herein and therein. The execution and delivery of
and performance under this Agreement, the Note and the other Loan Documents by
the Borrower have been duly authorized by all necessary action on the part of
the Borrower and no further action is required by the Borrower. The Borrower is
not in violation of any of the provisions of its respective certificate of
incorporation, by-laws or other charter documents.
2. The execution, delivery and performance of this Agreement, the
Note and the other Loan Documents by the Borrower and the consummation by the
Borrower of the transactions contemplated thereby and by the Stock Purchase
Documents do not and will not (i) conflict with or violate any provision of its
certificate of incorporation, bylaws or other charter documents (each as amended
through the date hereof), or (ii) conflict with, or constitute a default under,
or give to others any right of termination, amendment, acceleration or
cancellation of, or result in a loss of contractual benefits under any
agreement, credit facility, indenture or instrument to which the Borrower is
party or by which any property of the Borrower is bound or affected, or (iii)
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any Governmental Authority to which the Borrower
is subject or by which any property of the Borrower is bound or affected.
3. No consent or approval of any Governmental Authority or other
third party is or will be required as a condition to the enforceability of any
Loan Document or Stock Purchase Document (other than, in the case of the Stock
Purchase Documents, those consents and approvals which have heretofore been
obtained), and the Borrower is and will be in compliance in all material
respects with all laws and regulatory requirements to which the Borrower is
subject.
C. BINDING AGREEMENT. This Agreement and the other Loan Documents
executed and delivered by the Borrower and to be executed and delivered by the
Borrower to the Bank are or shall be (on the date of their execution and
thereafter) duly executed and delivered by the Borrower and are and shall be (on
the date of their execution and thereafter) enforceable against the Borrower in
accordance with their terms except as enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting creditors' rights generally or by general equitable principles
(whether in a suit, at law or in equity).
D. LITIGATION. There is no litigation or proceeding involving the
Borrower pending or, to the knowledge of the Borrower, threatened before any
court, tribunal or Governmental Authority, which may in any way materially
adversely affect the financial condition, operations or prospects of the
Borrower.
E. NO CONFLICTING LAWS OR AGREEMENTS. There is no law, rule,
regulation (including, without limitation, Regulations T, U or X of the Federal
Reserve Board) or order pertaining to the Borrower and no provision of any
agreement, mortgage or contract binding on the Borrower or affecting the
Borrower's property, which would conflict with, be breached by, be in default or
in any way prevent, the execution, delivery or carrying out of the terms of this
Agreement and the other Loan Documents. Without
15
limiting the generality of the foregoing, the Borrower further represents and
warrants to the Bank that, as of the Closing Date and, if different, the actual
funding date of the Loan, the Convertible Securities do not constitute "margin
stock" within the meaning of Regulation U of the Federal Reserve Board.
F. OWNERSHIP OF PROPERTY. The Borrower has good and transferable
title to all of the Purchased Securities Collateral, the other Collateral, if
applicable, and the Borrower's other property, free and clear of all liens and
encumbrances, except liens granted to the Bank on the Collateral and liens
granted to the holders of the Permitted Indebtedness on Convertible Securities
that do not constitute part of the Collateral.
G. CAPITALIZATION. As of the Closing Date, one hundred percent of
the issued and outstanding capital stock of all classes of the Borrower is
directly owned and controlled by Mafco, and one hundred percent of the issued
and outstanding capital stock of all classes of Mafco is owned and controlled,
directly or indirectly, by Xxxxxxxx.
H. COMPLIANCE WITH LAWS. The Borrower is not in violation of any
applicable statute, ordinance, law, rule or regulation (including without
limitation environmental, health and safety laws, rules and regulations) of any
Governmental Authority in any material respect.
I. TAXES. All material taxes and assessments due and payable by the
Borrower have been paid or are being contested in good faith by appropriate
proceedings and the Borrower has filed all tax returns which he is required to
file.
J. FINANCIAL INFORMATION. To the extent that delivery of financial
statements of the Borrower or any Guarantor is required hereunder, the most
recent financial statements of such Person which have been delivered to the Bank
fairly present such Person's financial condition as of the date thereof, and
there has occurred no material adverse change in the financial condition of such
Person since the date of such financial statements. The Borrower has not failed
to disclose to the Bank any information that could materially affect the
Borrower's or any Guarantor's properties, prospects or business or financial
condition.
K. ACCURACY OF INFORMATION. All information furnished by the
Borrower to the Bank in connection with this Agreement and the other Loan
Documents is and will be accurate and complete in all material respects on the
date as of which such information is delivered to the Bank and is not and will
not be incomplete by the omission of any material fact necessary to make such
information not misleading.
L. THE ISSUER. As of the Closing Date, the Borrower has no knowledge
of (i) any insolvency or bankruptcy proceeding of any type instituted by or with
respect to the Purchased Securities Issuer or any other issuer of Collateral or
(ii) any event that could reasonably be expected to have a material adverse
effect on the properties, prospects or business or financial condition of the
Purchased Securities Issuer
16
or on the Purchased Securities Issuer's properties, except as disclosed in a
statement or report heretofore filed by the Purchased Securities Issuer with the
Securities and Exchange Commission.
M. STOCK PURCHASE DOCUMENTS.
1. The Bank has received true and complete copies of the Stock
Purchase Documents. None of such documents and agreements has been amended or
supplemented, nor have any of the provisions thereof been waived, except
pursuant to a written agreement or instrument which has heretofore been
delivered to the Bank;
2. No default has occurred under any of the Stock Purchase
Documents;
3. The transactions contemplated by the Stock Purchase Documents
have been consummated in accordance with the terms thereof and all applicable
laws (including, without limitation, gaming laws);
4. Each Stock Purchase Document, when delivered, will be valid
and binding upon each party thereto and enforceable in accordance with its
terms; and
5. At the time of consummation of the transactions contemplated
by the Stock Purchase Documents, all third party approvals and other consents
and approvals of, and filings and registrations with, and all other actions in
respect of, all Governmental Authorities (including, without limitation, gaming
authorities) required in order to make or consummate the transactions
contemplated by the Stock Purchase Documents have been obtained, given, filed or
taken and are in full force and effect. Additionally, there does not exist any
judgment, order or injunction prohibiting the transactions contemplated by the
Stock Purchase Documents or the performance by any party to the Stock Purchase
Documents.
N. EVENT OF DEFAULT. No Event of Default has occurred and is
continuing.
O. USE OF PROCEEDS. The proceeds of the Loan will not be used in any
manner that would violate any law, rule, regulation or order of any Governmental
Authority, including without limitation, Regulations T, U and X of the Federal
Reserve Board.
P. INVESTMENT COMPANY ACT. The Borrower is not an "investment
company" or a company "controlled" by an investment company, within the meaning
of the Investment Company Act of 1940, as amended.
Q. SPECIAL PURPOSE ENTITY. The Borrower was formed to effect the
transactions contemplated by the Stock Purchase Documents. The Borrower has no
material property (other than the Purchased Securities Collateral, other
Convertible
17
Securities that do not constitute part of the Purchased Securities Collateral
and its rights under the Stock Purchase Documents) and no material liabilities
(other than liability for the Obligations and Permitted Indebtedness).
R. CONTINUATION OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made under this Agreement shall be deemed to be
made at and as of the Closing Date (and, if the date of the making of the Loan
is after the Closing Date, at and as of the date of the making of the Loan) and,
pursuant to Section V H., all such representations and warranties (other than
the representations and warranties expressly made solely as of the Closing Date)
shall constitute continuing covenants on the part of the Borrower.
S. REGISTRABLE SECURITIES; COLLATERAL.
1. No consent or approval of any Governmental Authority or any
other Person is or will be required as a condition to the conversion of the
Convertible Securities into Trading Securities.
2. Upon conversion of the Convertible Securities into Trading
Securities, such securities shall constitute "Registrable Securities" for
purposes hereof as well as for purposes of the Stockholders Agreement.
3. The Collateral does not (and will not at any time) constitute
more than five (5%) of the equity securities of the Purchased Securities Issuer.
V. AFFIRMATIVE COVENANTS. Until full payment and performance of all
Obligations of the Borrower under the Loan Documents, the Borrower will do all
of the following (without limiting any requirement contained in any other Loan
Document):
A. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Borrower will
maintain a system of accounting satisfactory to the Bank and in accordance with
GAAP consistently applied throughout the periods involved, permit the Bank's
officers or authorized representatives to visit and inspect the Borrower's books
of account and other records upon reasonable notice and at such reasonable times
during normal business hours and as often as the Bank may reasonably desire, and
pay the reasonable fees and disbursements of any accountants or other agents of
the Bank selected by the Bank for the foregoing purposes. Unless written notice
of another location is given to the Bank, the Borrower's books and records will
be located at the Borrower's Address. All financial information, reports and
statements called for below shall be prepared in form and content reasonably
acceptable to the Bank. In addition, the Borrower will furnish to the Bank:
1. a Margin Maintenance Certificate upon request for the Loan
and, thereafter, at least monthly not later than the 15th day of each month (or
more frequently if requested by the Bank);
18
2. a copy of any material notice delivered under any of the
Stock Purchase Documents, promptly after receipt; and
3. such information, reports and statements respecting the
financial condition of the Borrower or any Guarantor as the Bank may reasonably
request from time to time, promptly after receipt of such request.
B. ADVERSE CONDITIONS OR EVENTS. The Borrower will promptly advise
the Bank in writing of (i) any condition, event or act which comes to the
attention of the Borrower that would or might materially adversely affect any of
the Collateral or the Borrower's financial condition, prospects or operations or
the Bank's rights under the Loan Documents, (ii) any litigation filed by or
against the Borrower and (iii) any event that has occurred that would constitute
an Event of Default. Notwithstanding anything to the contrary contained in the
preceding CLAUSE (i) of this Section, the Borrower will not be required to
advise the Bank of any non-public information pertaining to the Purchased
Securities Issuer.
C. EXISTENCE. The Borrower will preserve and maintain its separate
corporate existence and all rights, privileges, and franchises in connection
therewith, and maintain its qualification and good standing in states in which
such qualification is necessary in order for the Borrower to conduct its
business in such states. The Borrower will maintain in full force and effect all
licenses, permits, charters and registrations which are material to the conduct
of its business.
D. COMPLIANCE WITH LAWS. The Borrower will duly observe and conform
to in all material respects, all laws, rules and regulations made by any
Governmental Authority.
E. TAXES AND OTHER OBLIGATIONS. The Borrower will pay all taxes,
assessments and other obligations, including, but not limited to taxes, costs or
other expenses arising out of the transactions contemplated by the Loan
Documents, as the same become due and payable, except to the extent the same are
being contested in good faith by appropriate proceedings in a diligent manner.
F. INTENTIONALLY DELETED.
G. REGISTRABLE SECURITIES.
1. The Borrower will cause the Purchased Securities Issuer, at
the sole cost and expense of the Purchased Securities Issuer or the Borrower, to
file a Registration Statement on Form S-3 with the SEC (which Registration
Statement will have the characteristics described in the last sentence of this
paragraph) within forty-five (45) days after the Closing Date; PROVIDED, HOWEVER
that if the Purchased Securities Issuer exercises its rights under Section
5(a)(iii) or Section 5(c)(ii)(ii) of the Stockholders Agreement such period will
be extended by twenty (20) days. The Borrower agrees to give the Bank prompt
written notice of such exercise, and the Borrower will further cause such
Registration Statement to be declared effective by the SEC as soon as
practicable thereafter, but in no event later than March 19, 2004. Such
Registration Statement will
19
(A) cover all of the Registrable Securities (whether or not any conversion has
taken place), and (B) provide for the registration under the Securities Act of
the Registrable Securities to the extent necessary to permit the public
disposition thereof by the Borrower (and its successors and assigns) upon the
effectiveness of the Registration Statement and by the Bank following an Event
of Default.
2. Once effective, the Borrower will cause the effectiveness of
such Registration Statement to be continuously maintained (with any updates,
amendments or supplements) until the earlier of (A) the date that all of the
Registrable Securities have been disposed of (it being acknowledged that any
disposition by the Borrower of the Registrable Securities will be subject to
Section VI A.), and (B) the date that the Borrower receives an opinion of
counsel to the Purchased Securities Issuer (addressed to the Borrower and the
Bank) that is reasonably acceptable to the Bank that all of the Registrable
Securities may be freely traded (without limitation or restriction as to
quantity or timing and without registration under the Securities Act) pursuant
to Rule 144 or otherwise. Subject to the foregoing, the Borrower will promptly
notify the Bank upon becoming aware of any event which could reasonably be
expected to adversely impact the continued effectiveness of the Registration
Statement.
3. The Borrower shall further take, and cause the Purchased
Securities Issuer to take, at the sole cost and expense of the Purchased
Securities Issuer or the Borrower, all other actions reasonably requested by the
Bank from time to time (whether or not an Event of Default exists) to facilitate
the public disposition by the Bank of the Registrable Securities following an
Event of Default in accordance with the Securities Act and all applicable laws,
rules and regulations made by any Governmental Authority.
4. The Borrower (A) will use all available means to protect and
enforce its rights under the Stockholders Agreement, including without
limitation assuring that the Purchased Securities Issuer complies with all of
the provisions of Section 5 thereof, and (B) will comply with all of its
obligations to the other parties under the Stockholders Agreement.
5. The Borrower will not sell any securities or permit any Person
whose sales of securities would be aggregated with sales by the Bank under Rule
144(e) promulgated under the Securities Act to sell any securities, the result
of which would be to require the Bank to aggregate any Registrable Securities
constituting part of the Collateral to be sold by the Bank following an Event of
Default with any securities to be sold by the Borrower or any other Person for
purposes of Rule 144(e).
H. REPRESENTATIONS AND WARRANTIES. The Borrower will cause all the
representations and warranties (other than the representations and warranties
expressly made solely as of the Closing Date) to be true and correct in all
material respects at all times until full payment and performance of all
Obligations of the Borrower under the Loan Documents.
20
I. REGULATION U. Upon each conversion of the Convertible Securities
constituting part of the Collateral (or more frequently upon the Bank's request
if at any time the Bank, with the advice of counsel, determines that the
transactions contemplated by this Agreement or any of the other Loan Documents
are or may become subject to Regulation U of the Federal Reserve Board), the
Borrower will promptly complete, execute and deliver a Federal Reserve Form FR
U-1 (the statements made in which shall be reasonably acceptable to the Bank)
and such other documentation as the Bank may reasonably require from time to
time in order to maintain continuing compliance with Regulation U.
VI. NEGATIVE COVENANTS.Until full payment and performance of all
Obligations of the Borrower under the Loan Documents, the Borrower will not do
any of the following (without limiting any requirement contained in any other
Loan Document):
A. DISPOSITION OF PROPERTY. The Borrower will not sell, lease,
transfer, assign, or otherwise dispose of any of the Collateral or any
substantial portion of its other property.
B. LIENS AND ENCUMBRANCES. The Borrower will not (i) grant or permit
to exist any lien upon any of its property of any kind, except for liens in
favor of the Bank on the Collateral and liens in favor of the holders of the
Permitted Indebtedness on Convertible Securities that do not constitute part of
the Collateral, or (ii) enter into any other agreement with any other Person
(other than in favor of the holders of Permitted Indebtedness, which agreements
with such holders shall not restrict the Borrower's ability to grant any lien on
any of the Collateral in favor of the Bank) which shall contain a covenant
substantially similar to that set forth in clause (i) of this Section VI B.
C. INDEBTEDNESS. The Borrower will not incur, create, assume, or
permit to exist any indebtedness, guaranty or similar liability or obligation,
except for the Obligations and the Permitted Indebtedness.
D. MERGERS. The Borrower will not merge with or into or consolidate
or otherwise combine with any other Person or enter into any liquidation or
dissolution.
E. ACQUISITIONS. The Borrower will not acquire all or a substantial
portion of the property or capital stock or other equity interests of any Person
other than investments permitted under Section VI G.
F. TRANSACTIONS WITH AFFILIATES. The Borrower will not enter into,
or be a party to, any transaction with any of its Affiliates or enter into any
partnership, joint venture or operating management agreement with any of its
Affiliates, except for transactions not expressly prohibited by this Agreement
or the other Loan Documents which are on fair and reasonable terms no less
favorable to the Borrower than it would obtain in a comparable arm's length
transaction with a Person not its Affiliate.
21
G. LOANS AND INVESTMENTs. The Borrower will not make any loans to,
or purchase any debt or equity securities of, or otherwise make any investment
in, any Person, other than investments in the Purchased Securities Issuer or
such other issuer of the Collateral as may be approved by the Bank.
H. DISTRIBUTIONS. The Borrower will not declare or pay or make any
form of Distribution if an Event of Default has occurred and is continuing.
I. BUSINESS. The Borrower will not conduct or engage in any business
or operations other than acquiring the Convertible Securities and the Trading
Securities. The Borrower will not (i) change its state of incorporation or
incorporate in another state other than Delaware, or (ii) change its legal name.
J. STOCK PURCHASE DOCUMENTS. The Borrower will not enter into, or
permit Mafco to enter into, any material amendment, waiver or modification of
the Certificate of Designations or the Stockholders Agreement without the prior
written consent of the Bank, it being agreed that any modification to the
Certificate of Designations or the Stockholders Agreement impacting the
Conversion Rate (as defined in the Certificate of Designations), or the
registration rights with respect to the Purchased Securities Collateral, will be
considered to be material.
K. CHANGE OF CONTROL. The Borrower will not permit a Change of
Control to occur.
VII. REMEDIES UPON DEFAULT.If an Event of Default shall occur, the Bank
may exercise all rights, powers and remedies available to it under each of the
Loan Documents, as well as all rights and remedies available at law or in
equity.
VIII. NOTICES.All notices, requests or demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to the other party at the following
address:
Borrower:
c/o Mafco Holdings Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Fax No.: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Fax No.: (000) 000-0000
22
Bank:
Bank of America, N.A.
Private Client Group
000 Xxxxx Xxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx Xxxx
Fax No.: (000) 000-0000
with a copy to:
Bank of America, N.A.
Private Client Group
000 Xxxxx Xxxxxx, Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Fax No.: (000) 000-0000
and
Blank Rome LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax No.: (000) 000-0000
or to such other address as any party may designate by written notice to the
other party. Each such notice, request and demand shall be deemed given or made
as follows:
A. If sent by mail, upon the earlier of (x) the date of receipt or
(y) five (5) days after deposit in the mail, certified and postage prepaid:
B. If sent by any other means, upon delivery.
IX. COSTS, EXPENSES AND ATTORNEYS' FEES.The Borrower shall pay to the
Bank immediately upon demand the full amount of (a) all reasonable costs and
expenses, including, without limitation, reasonable attorneys' fees (to include
outside counsel fees and all allocated costs of the Bank's in-house counsel if
permitted by applicable law), incurred by the Bank in connection with
negotiation and preparation of this Agreement and each of the Loan Documents,
whether or not the Loan actually closes, and (b) all other reasonable costs and
attorneys' fees incurred by the Bank for which the Borrower is obligated to
reimburse the Bank in accordance with the terms of the Loan Documents.
23
X. MISCELLANEOUS.The Borrower and the Bank further covenant and agree
as follows, without limiting any requirement of any other Loan Document:
A. CUMULATIVE RIGHTS AND NO WAIVER. Each and every right granted
to the Bank under any Loan Document, or allowed it by law or equity shall be
cumulative of each other right and may be exercised in addition to any and all
other rights of the Bank, and no delay in exercising any right shall operate as
a waiver thereof, nor shall any single or partial exercise by the Bank of any
right preclude any other future exercise thereof or the exercise of any other
right. The Borrower expressly waives any presentment, demand, protest or other
notice of any kind, including but not limited to notice of intent to accelerate
and notice of acceleration. No notice to or demand on the Borrower in any case
shall, of itself, entitle the Borrower to any other or future notice or demand
in similar or other circumstances.
B. APPLICABLE LAW; VENUE AND JURISDICTION. This Agreement and the
rights and obligations of the parties hereunder shall be governed by and
interpreted in accordance with the laws of the State of New York for contracts
made and performed within that state and applicable United States federal law.
In any litigation in connection with or to enforce this Agreement or any Loan
Document, the Borrower irrevocably consents to and confers personal jurisdiction
on the courts of the State of New York or the United States located within the
State of New York and expressly waives any objection as to venue in any such
courts. Nothing contained herein shall, however, prevent the Bank from bringing
any action or exercising any rights within any other state or jurisdiction or
from obtaining personal jurisdiction by any other means available under
applicable law.
C. AMENDMENT. No modification, consent, amendment or waiver of
any provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
an officer that is at least a vice president of the Bank, and then shall be
effective only in the specified instance and for the purpose for which given.
This Agreement is binding upon the Borrower, its successors and assigns, and
inures to the benefit of the Bank, its successors and assigns; PROVIDED,
HOWEVER, that (i) no assignment or other transfer of the Borrower's rights or
obligations hereunder shall be made or be effective without the Bank's prior
written consent, nor shall it relieve the Borrower of any obligations hereunder;
and (ii) if, and only if, no Event of Default has occurred and is continuing, no
assignment or other transfer of the Bank's rights or obligations hereunder shall
be made without the Borrower's prior written consent, which consent by the
Borrower may not be unreasonably withheld, conditioned or delayed. There is no
third party beneficiary of this Loan Agreement.
D. DOCUMENTS. All documents, certificates and other items
required under this Agreement to be executed and/or delivered to the Bank shall
be in form and content satisfactory to the Bank and its counsel.
E. PARTIAL INVALIDITY. The unenforceability or invalidity of any
provision of this Agreement shall not affect the enforceability or validity of
any other
24
provision herein and the invalidity or unenforceability of any provision of any
Loan Document to any Person or circumstance shall not affect the enforceability
or validity of such provision as it may apply to other Persons or circumstances.
F. INDEMNIFICATION. The Borrower shall indemnify, defend and hold
the Bank, its Affiliates and each of their respective officers, directors,
employees, agents, attorneys-in-fact, successors and assigns (each an
"Indemnified Person") harmless from and against any and all claims, demands,
suits, losses, damages, assessments, fines, penalties, reasonable costs or other
expenses (including reasonable attorneys' fees and court costs) arising from or
in any way related to any of the transactions contemplated hereby and the Loan
Documents (collectively, the "Indemnified Liabilities"). Notwithstanding the
foregoing, the Borrower shall have no obligation under this paragraph to any
Indemnified Party with respect to any Indemnified Liability that a court of
competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Party. The Borrower's
obligations under this paragraph shall survive the repayment of the Loan and any
foreclosure upon any Collateral.
G. SURVIVABILITY. All covenants, agreements, representations and
warranties made herein or in the other Loan Documents shall survive the making
of the Loan and shall continue in full force and effect so long as any
Obligation is outstanding.
XI. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS, INCLUDING ANY
CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING
ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT
APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR
THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR ANY SUCCESSOR
THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF
ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY
ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO
THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING,
TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT
APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY
OF THE BORROWER'S DOMICILE AT TIME OF THE EXECUTION OF THIS AGREEMENT AND
ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE
OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION,
25
THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS
WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE
ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION
SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR
(II) BE A WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. ss.
91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE
BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO)
SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR
(C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT
LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A
RECEIVER. THE BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSURE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
AGREEMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR
MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES
SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN
ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
RESORT TO SUCH REMEDIES.
XII. WAIVER OF CONSEQUENTIAL DAMAGES.
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, The borrower
KNOWINGLY AND INTENTIONALLY WAIVES ANY RIGHT TO CLAIM OR RECOVER FROM THE BANK
ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO, ACTUAL DAMAGES, IN CONNECTION WITH ANY CONTROVERSY OR
CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY other loan DOCUMENT,
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT.
XIII. WAIVER OF RIGHT TO JURY TRIAL.
26
EACH PARTY TO THIS AGREEMENT KNOWINGLY AND INTENTIONALLY WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY
KIND ARISING OUT OF or related to THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
obligations.
XIV. NO ORAL AGREEMENT.
THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives as of the date first
above written.
BORROWER:
SGMS ACQUISITION CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President, Secretary,
Treasurer, and General Counsel
BANK:
BANK OF AMERICA, N.A.
By: /s/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
