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364-DAY CREDIT AGREEMENT
DATED AS OF NOVEMBER 30, 1999
BY AND AMONG
SCIENTIFIC GAMES HOLDINGS CORP.
AND
SCIENTIFIC GAMES INC.
AS CO-BORROWERS,
AND
FIRST UNION NATIONAL BANK,
AS LENDER
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CREDIT AGREEMENT
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS..............................................................................1
SECTION 1.1 Definitions.................................................................1
SECTION 1.2 General....................................................................14
SECTION 1.3 Accounting Matters.........................................................14
SECTION 1.4 Other Definitions and Provisions...........................................15
SECTION 1.5 Exhibits and Schedules......................................................15
ARTICLE II
CREDIT FACILITY.........................................................................15
SECTION 2.1 Revolver Loans.............................................................15
SECTION 2.2 Procedure for Advances of Revolver Loans...................................15
SECTION 2.3 Repayment of Revolver Loans................................................16
SECTION 2.4 Termination of Revolver Facility...........................................17
SECTION 2.5 Use of Proceeds............................................................17
SECTION 2.6 Co-Borrower and Guarantor Liability........................................17
SECTION 2.7 Subordination of Subrogation and Contribution Claim.......................17
SECTION 2.8 Foreign Subsidiary Guaranties..............................................17
ARTICLE III
GENERAL LOAN PROVISIONS.................................................................17
SECTION 3.1 Interest...................................................................17
SECTION 3.2 Closing Fee................................................................20
SECTION 3.3 Notice and Manner of Conversion or Continuation of Loans...................20
SECTION 3.4 Manner of Payment..........................................................20
SECTION 3.5 Crediting of Payments and Proceeds........................................21
SECTION 3.6 Changed Circumstances......................................................21
SECTION 3.7 Indemnity..................................................................22
SECTION 3.8 Capital Requirements.......................................................23
SECTION 3.9 Taxes......................................................................23
ARTICLE IV
CLOSING: CONDITIONS OF CLOSING AND BORROWING............................................24
SECTION 4.1 Closing....................................................................24
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SECTION 4.2 Conditions to Closing and Initial Loan.....................................24
SECTION 4.3 Conditions to All Loans....................................................27
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CO-BORROWERS..........................................27
SECTION 5.1 Representations and Warranties.............................................27
SECTION 5.2 Survival of Representations and Warranties, Etc............................33
ARTICLE VI
FINANCIAL INFORMATION AND NOTICES.......................................................34
SECTION 6.1 Financial Statements and Projections.......................................34
SECTION 6.2 Officer's Compliance Certificate..........................................35
SECTION 6.3 Other Certificates and Reports.............................................35
SECTION 6.4 Notice of Litigation and Other Matters.....................................36
SECTION 6.5 Accuracy of Information....................................................37
SECTION 6.6 Notice of Demand for Reimbursement, etc....................................37
ARTICLE VII
AFFIRMATIVE COVENANTS...................................................................37
SECTION 7.1 Preservation of Corporate Existence and Related Matters....................38
SECTION 7.2 Maintenance of Property....................................................38
SECTION 7.3 Insurance..................................................................38
SECTION 7.4 Accounting Methods and Financial Records...................................38
SECTION 7.5 Payment and Performance of Obligations.....................................38
SECTION 7.6 Compliance With Laws and Approvals........................................38
SECTION 7.7 Environmental Law..........................................................39
SECTION 7.8 Compliance with ERISA and the Code.........................................39
SECTION 7.9 Compliance With Agreements.................................................39
SECTION 7.10 Conduct of Business.......................................................39
SECTION 7.11 Visits and Inspections....................................................40
SECTION 7.12 Subsidiaries..............................................................40
SECTION 7.13 Further Assurances........................................................40
SECTION 7.14 Year 2000 Compatibility...................................................41
ARTICLE VIII
FINANCIAL COVENANTS.....................................................................41
SECTION 8.1 Leverage Ratio.............................................................41
SECTION 8.2 Fixed Charge Coverage Ratio................................................41
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ARTICLE IX
NEGATIVE COVENANTS......................................................................41
SECTION 9.1 Limitations on Debt........................................................41
SECTION 9.2 Limitations on Contingent Obligations......................................42
SECTION 9.3 Limitations on Liens.......................................................42
SECTION 9.4 Limitations on Loans, Advances, Investments and Acquisitions...............42
SECTION 9.5 Limitations on Mergers and Liquidation.....................................44
SECTION 9.6 Limitations on Sale of Assets..............................................44
SECTION 9.7 Transactions with Affiliates...............................................45
SECTION 9.8 Certain Accounting Changes.................................................45
SECTION 9.9 Licenses...................................................................45
SECTION 9.10 Restrictive Agreements....................................................45
ARTICLE X
DEFAULT AND REMEDIES....................................................................46
SECTION 10.1 Events of Default.........................................................46
SECTION 10.2 Remedies..................................................................48
SECTION 10.3 Rights and Remedies Cumulative; Non-Waiver; etc...........................49
SECTION 10.4 Set-off...................................................................49
SECTION 10.5 Consents..................................................................49
ARTICLE XI......................................................................................50
MISCELLANEOUS...........................................................................50
SECTION 11.1 Notices...................................................................50
SECTION 11.2 Expenses..................................................................50
SECTION 11.3 Governing Law.............................................................51
SECTION 11.4 Consent to Jurisdiction...................................................51
SECTION 11.5 Arbitration...............................................................51
SECTION 11.6 WAIVER OF JURY TRIAL......................................................52
SECTION 11.7 Reversal of Payment.......................................................52
SECTION 11.8 Injunctive Relief.........................................................52
SECTION 11.9 Successors and Assigns; Participations....................................53
SECTION 11.10 Amendments, Waivers and Consents: Renewal.................................54
SECTION 11.11 Performance of Duties....................................................54
SECTION 11.12 Indemnification..........................................................54
SECTION 11.13 All Powers Coupled with Interest.........................................55
SECTION 11.14 Survival of Indemnities..................................................55
SECTION 11.15 Titles and Captions......................................................55
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SECTION 11.16 Severability of Provisions...............................................55
SECTION 11.17 Counterparts.............................................................55
SECTION 11.18 Term of Agreement........................................................55
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EXHIBITS
Exhibit A - Form of Revolver Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Conversion/Continuation
Exhibit D - Form of Officer's Certificate
Exhibit E - Form of Negative Pledge Agreement
Exhibit F - Form of Intercompany Subordination Agreement
Exhibit G - Form of Joinder Agreement
Exhibit H - Form of Foreign Subsidiary Note
Exhibit I - Form of Limited Foreign Guaranty
Exhibit J - Form of Note Pledge Agreement
Exhibit K - Form of Guaranty
Exhibit L - Form of Bid Activity Report
Exhibit M - Form of Contribution Agreement
SCHEDULES
Schedule 5.1(a) - Jurisdictions of Organization and Qualification to Do
Business as Foreign Corporation
Schedule 5.1(b) - Subsidiaries and Capitalization
Schedule 5.1(d) - Compliance of Agreement, Loan Documents and Borrowings with
Laws
Schedule 5.1(g) - Environmental Matters
Schedule 5.1(h) - ERISA Plans
Schedule 5.1(1) - Material Contracts
Schedule 5.1(m) - Labor and Collective Bargaining Agreements
Schedule 5.1(o) - Liabilities Not Reflected in Financial Statements
Schedule 5.1(q) - Real Property
Schedule 5.1(s) - Debt and Contingent Obligations
Schedule 5.1(t) - Litigation
Schedule 9.1 - Existing Debt
Schedule 9.2 - Existing Contingent Obligations
Schedule 9.3 - Existing Liens
Schedule 9.4 - Existing Loans, Advances and Investments
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364-DAY CREDIT AGREEMENT, dated as of the 30th day of November, 1999,
by and among SCIENTIFIC GAMES HOLDINGS CORP., a corporation organized under the
laws of Delaware ("Holdings"), SCIENTIFIC GAMES INC. (the "Company"), a
corporation organized under the laws of Delaware and a wholly-owned indirect
Subsidiary of Holdings (Holdings and the Company together are the
"Co-Borrowers"), and FIRST UNION NATIONAL BANK, a national banking association,
as lender ("Lender").
STATEMENT OF PURPOSE
The Co-Borrowers have requested that the Lender provide the credit
facility hereunder. The parties have agreed that the credit facilities are to
be governed by the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements,
covenants and provisions herein contained and for TEN DOLLARS ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Co-Borrowers and the Lender hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. In addition to the terms defined above and
the terms defined elsewhere herein, the following terms when used in this
Agreement shall have the meanings assigned to them below:
"Accounts Designation Letter" means the letter executed by each of the
Co-Borrowers, delivered on the Closing Date and from time to time thereafter,
designating the accounts of the Co-Borrowers to which proceeds of Revolver
Loans are to be disbursed and authorizing the Lender to disburse such proceeds
to such accounts.
"Administrative Agent" means the "Administrative Agent" as such term
is defined in the Three-Year Credit Agreement.
"Affiliate" means, with respect to any Person, any other Person (other
than a Subsidiary of such Person) which directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, such Person or any Subsidiary of such Person. The term "control" means
(i) the power to vote ten percent (10%) or more of the securities or other
equity interests of a Person having ordinary voting power, or (ii) the
possession, directly or indirectly, of any other 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.
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"Agreement" means this 364-Day Credit Agreement, as amended or
supplemented from time to time.
"Applicable Law" means all applicable provisions of constitutions,
laws, statutes, treaties, rules, regulations and orders of all Governmental
Authorities and all orders and decrees of all courts and arbitrators.
"Applicable Margin" shall have the meaning assigned thereto in Section
3.1(a) and may be a negative number.
"Bankruptcy Code" means the U.S. Bankruptcy Code, 11 U.S.C. ss. 101 et
seq., as amended.
"Banks" means the "Lenders" and "Issuing Bank" as such terms are
defined in the Three-Year Credit Agreement.
"Base Rate" means, at any time, the higher of (a) the Prime Rate or
(b) the Federal Funds Rate plus 1/2 of 1%; each change in the Base Rate shall
take effect simultaneously with the corresponding change or changes in the
Prime Rate or the Federal Funds Rate.
"Base Rate Loan" means any loan under the Revolver bearing interest at
a rate determined with reference to the Base Rate.
"Business Day" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Charlotte, North Carolina, and Atlanta, Georgia, are open for
the conduct of their commercial banking business, and (b) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, any LIBOR Rate Loan, any day that is a Business Day described in
clause (a) and that is also, with respect to LIBOR Rate Loans, a day for
trading by and between banks in dollar deposits in the London interbank market.
"Capital Lease" means, with respect to any Person, any lease of any
property that would, in accordance with GAAP, be required to be classified and
accounted for as a capital lease on its balance sheet.
"Cash Flow Percentage" means, for any corporation, partnership, or
other entity in which either Co-Borrower has any direct or indirect investment
or other interest, for any period of calculation, the percentage derived by
dividing (A) the product of (i) Consolidated EBITR for such corporation,
partnership, or other entity during the period, multiplied by (ii) the
percentage amount of direct or indirect ownership by either or both
Co-Borrowers of all outstanding capital stock or other ownership interests of
the corporation, partnership, or other entity at the end of the period BY (B)
Consolidated EBITR for Holdings and its Subsidiaries during the period.
"Change in Control" means (i) any person or group of persons shall
obtain beneficial ownership or control (within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended) in one or more series of
transactions of more than fifty percent (50%) of the
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common stock of either of the Co-Borrowers, (ii) any person or group of persons
shall obtain more than fifty percent (50%) of the voting power of shareholders
of either of the Co-Borrowers entitled to vote in the election of members of the
Board of Directors, (iii) during any period of twenty-four consecutive months,
individuals who at the beginning of such period constituted the Board of
Directors of Holdings cease for any reason to constitute a majority of the
members of the Board of Directors of such company, or (iv) there shall have
occurred under any indenture or other instrument evidencing any Debt in excess
of $10 million any "change in control" (as defined in such indenture or other
evidence of Debt) obligating either of the Co-Borrowers or any Subsidiary to
repurchase, redeem or repay all or any part of the Debt or capital stock
provided for therein.
"Closing Date" means the date of this Agreement.
"Co-Borrowers" shall have the meaning assigned thereto in the preamble
hereof.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to time.
"Commitment" means the Commitment of the Lender to make Revolver Loans
under Section 2.1 of this Agreement in an aggregate principal amount not to
exceed at any time Twenty-Five Million Dollars ($25,000,000), as the same may
be reduced or modified at any time or from time to time pursuant to Section
2.3(c).
"Company" shall have the meaning assigned thereto in the preamble
hereof.
"Consolidated" means, when used with reference to financial statements
or financial statement items of Holdings or any of its Subsidiaries, such
statements or items on a consolidated basis in accordance with applicable
principles of consolidation under GAAP.
"Contribution Agreement" means that certain Contribution Agreement,
dated of even date, and providing for certain contribution and indemnity claims
among the Co-Borrowers and Material Subsidiaries with respect to amounts paid
in connection with the Obligations, substantially in the form of Exhibit M
attached hereto.
"Contingent Obligation" means, with respect to Holdings and its
Subsidiaries, without duplication, any obligation, contingent or otherwise, of
any such Person pursuant to which such Person has directly or indirectly
guaranteed any Debt or other monetary obligation of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of any such Person (i) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Debt or other
obligation (whether arising by virtue of partnership arrangements, by agreement
to keep well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement condition or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the obligee of
such Debt or other monetary obligation of the payment thereof or to protect
such obligee against loss in respect thereof (in whole or in part); provided,
that the term Contingent Obligation shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be
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deemed to be an amount equal to the stated or determinable amount of the
related obligation (unless the Contingent Obligation is limited by its terms to
a lesser amount, in which case to the extent of such amount) or, if not so
stated or determinable, the reasonably anticipated liability thereof.
"Credit Facility" means the revolving credit facility extended to the
Co-Borrowers pursuant to Section 2.1 in the aggregate principal amount not to
exceed at any time Twenty-Five Million Dollars ($25,000,000).
"Debt" means, with respect to Holdings and its Subsidiaries, at any
date and without duplication, the sum, calculated in accordance with GAAP, of
(i) all liabilities, obligations and indebtedness for borrowed money including
but not limited to obligations evidenced by bonds, debentures, notes or other
similar instruments of any such Person, (ii) all obligations to pay the
deferred purchase price of property or services of any such Person, except
trade payables arising in the ordinary course of business not more than ninety
(90) days past due, (iii) the capitalized obligations of any such Person as
lessee under capital leases, (iv) all Debt of any other Person secured by a
Lien on any asset of any such Person, (v) all obligations, contingent or
otherwise, of any such Person relative to the face amount of letters of credit,
whether or not drawn, exclusive of (A) standby letters of credit (other than
letters of credit securing obligations of a type described in clauses (i),
(ii), (iii) or (iv)) having a term of one year or less and entered into in the
ordinary course of business to the extent such letters of credit have not been
drawn upon and (B) bid, performance, litigation and similar bonds or guarantees
entered into in the ordinary course of business to the extent the same have not
been drawn upon, or if and to the extent drawn upon, such drawing is reimbursed
not later than the 10th Business Day following receipt by Co-Borrowers or a
Subsidiary of a demand for reimbursement on such bonds or guarantees by the
surety or other issuer thereof), (vi) all Contingent Obligations of such Person
for the repayment of money borrowed or the deferred purchase price of property
(including all earn-out obligations), including, without limitation, all
guaranty, surety, accommodation and like undertakings with respect to such
obligations, (vii) all obligations to redeem, repurchase, exchange, defease or
otherwise make payments in respect of capital stock or securities of such
Person and (vii) all termination payments which would be due and payable by any
such Person pursuant to a hedging agreement.
"Deemed Distribution Event" means the delivery by the Company to the
Lender of an opinion (reasonably satisfactory to the Lender) from the Company's
regular outside counsel or its tax advisors to the effect that a foreign
Material Subsidiary's becoming or continuing to be liable under the Guaranty
could reasonably be expected to create taxable income for Co-Borrowers or any
Subsidiary organized in the United States under Section 956 of the Code.
"Default" means any of the events specified in Section 10.1 which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
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"EBITR" means, with respect to any Person, for any period of
calculation and without duplication, Net Income for such period, plus the sum
of the following items, in each case, to the extent deducted in the computation
of such Net Income (i) Interest Expense paid or accrued but not paid during
such period, plus (ii) income, franchise and other tax expenses paid during
such period, plus (iii) rental expense (exclusive of Capital Leases) paid
during such period.
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States or any state thereof and having total assets in
excess of $1,000,000,000, (ii) a commercial bank organized under the laws of
any other country that is a member of the Organization for Economic Cooperation
and Development or any successor thereto (the "OECD") or a political
subdivision of any such country and having total assets in excess of
$1,000,000,000, provided that such bank is acting through a branch or agency
located in the United States, in the country under the laws of which it is
organized or in another country that is also a member of the OECD, (iii) the
central bank of any country that is a member of the OECD, (iv) a finance
company, insurance company or other financial institution or fund that is
engaged in making, purchasing or otherwise investing in loans in the ordinary
course of its business and having total assets in excess of $1,000,000,000, (v)
any Affiliate of the Lender, or (vi) any other Person approved by Lender and
Co-Borrowers, which approval shall not be unreasonably withheld.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (i) is maintained for employees or
former employees of any Co-Borrower or any ERISA Affiliate or (ii) has at any
time within the preceding six years been maintained for the employees or former
employees of any Co-Borrower or any current or former ERISA Affiliate.
"Environmental Law" means any and all applicable federal, state,
provincial and local laws, statutes, ordinances, rules, regulations, permits,
licenses, written approvals and published interpretations, and orders of courts
or Governmental Authorities, relating to the protection of human health or the
environment, including, but not limited to, requirements pertaining to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, handling, reporting, licensing, permitting, investigation or
remediation of Hazardous Materials.
"Equipment" means as to any Person all of such Person's now owned and
hereafter acquired machinery, equipment, furniture, furnishings, fixtures, and
other tangible personal property (except Inventory), including, without
limitation, data processing hardware and software, motor vehicles, aircraft,
dies, tools, jigs, and office equipment, as well as all of such types of
property leased by such Person and all of such Persons' rights and interest
with respect thereto under such leases (including, without limitation, options
to purchase); together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and supplies used
or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with
respect thereto; wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended or modified from time to
time.
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"ERISA Affiliate" means any Person who together with any Co-Borrower
is treated as a single employer within the meaning of Section 414(b), (c), (m)
or (o) of the Code or Section 4001(b) of ERISA.
"Event of Default" means any of the events specified in Section 10.1,
provided that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Judgment" shall have the meaning assigned thereto in Section
10.1(m).
"Existing Letter of Credit and Reimbursement Agreement" means that
certain Letter of Credit and Reimbursement Agreement dated as of August 25,
1999, among First Union, Co-Borrowers, Scientific Games Finance Corporation,
SGIL and Scientific Games Royalty Corporation, as the same may be amended,
modified, restated or supplemented from time to time.
"Expiration Date" means the date which is 364 days after the Closing
Date.
"Federal Funds Rate" means, for any day, a fluctuating interest rate
per annum (rounded upward, if necessary, to the next 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published at 11:00 a.m. (Eastern Standard or Daylight Time) for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by First Union from three Federal funds brokers of
recognized standing selected by it in good faith as reasonably representative
of such rate.
"First Union" means First Union National Bank.
"Fiscal Year" means each fiscal year of Holdings and its Subsidiaries
ending on December 31.
"Fixed Charge Coverage Ratio" means, for any period of calculation,
EBITR divided by (i) Interest Expense paid or accrued but not paid during such
period, and (ii) rental expense (exclusive of Capital Leases) paid during such
period.
"Foreign Subsidiary Note" means each and every promissory note made to
the Company or Holdings from a foreign Material Subsidiary, whether or not
executing a Limited Foreign Guaranty and made to evidence the loans to be made
by the Company or Holdings to the foreign Material Subsidiary from proceeds of
the Loans and other cash sources.
"GAAP" means, as of any date of determination, generally accepted
accounting principles, as recognized by the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board, consistently
applied and maintained on a consistent basis for Holdings and its Subsidiaries
throughout the period indicated and consistent with the prior financial
practice
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of Holdings and the Subsidiaries. The term "consistently applied" as used in
connection therewith, means that the accounting principles applied as at a date
or for a period specified are consistent in all material respects to those
applied as at prior dates or for prior periods.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing having
jurisdiction over the Person and the subject matter.
"Guaranty" means that certain Guaranty of even date, executed by each
of the Guarantors and by which each of the Guarantors (other than SGIL, which
shall execute a Limited Foreign Guaranty) shall guarantee the payment of the
full amount of the Obligations substantially in the form of Exhibit K attached
hereto, as amended or supplemented from time to time.
"Guarantors" means those Persons who have executed a Guaranty or a
Limited Foreign Guaranty, including, without limitation, Scientific Games
Finance Corporation, a Delaware corporation and a Subsidiary of Holdings,
Scientific Games Royalty Corporation, a Delaware corporation and a Subsidiary
of Holdings, SGIL and all other Material Subsidiaries.
"Hazardous Materials" means any substances or materials (i) which are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (ii) which are
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or similar in kind and harmful to human health or the environment and
are or become regulated by any Governmental Authority, (iii) the presence of
which require investigation or remediation under any Environmental Law, (iv)
the discharge or emission or release of which requires a permit or license
under any Environmental Law or other Governmental Approval, (v) which are
deemed to constitute a nuisance, a trespass or pose a health or safety hazard
to persons or neighboring properties, (vi) which are materials consisting of
underground or aboveground storage tanks, whether empty, filled or partially
filled with any substance, or (vii) which contain, without limitation,
asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation,
petroleum hydrocarbons, petroleum derived substances or waste, crude oil,
nuclear fuel, natural gas or synthetic gas.
"Holdings" shall have the meaning assigned thereto in the preamble
hereof.
"Intercompany Subordination Agreement" means the Intercompany
Subordination Agreement of even date by and among, certain Subsidiaries of
Co-Borrowers identified therein and the Lender, substantially in the form of
Exhibit F attached hereto, as amended or supplemented from time to time.
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"Initial Interest Period" means the period during which all Loans shall
be Base Rate Loans, which period shall commence on the Closing Date and end on
the date three (3) Business Days thereafter.
"Interest Expense" means, with respect to Holdings and its Consolidated
Subsidiaries, for any period of calculation and without duplication, gross
interest expense (including without limitation, interest expense attributable
in accordance with GAAP to Capital Leases and all net obligations pursuant to
hedging agreements), determined on a Consolidated basis for such period in
accordance with GAAP.
"Interest Payment Date" means, with respect to Base Rate Loans, the
last Business Day of each calendar quarter commencing with the first calendar
quarter ending after the Closing Date, and with respect to LIBOR Rate Loans,
the last day of each Interest Period applicable thereto.
"Interest Period" shall have the meaning assigned thereto in Section
3.1(b).
"Joinder Agreement" means a Joinder Agreement substantially in the form
of Exhibit G executed by each Subsidiary in accordance with Section 7.12, as
amended or supplemented from time to time.
"Lender" shall have the meaning assigned thereto in the preamble
hereof.
"Lending Office" means the Lender's office located at its address set
forth on the signature pages hereof or such other office as the Lender may
hereafter designate as its Lending Office by notice to the Co-Borrowers, to
which payments due are to be made and at which Loans will be disbursed.
"Leverage Ratio" means at any date the ratio of (i) the Consolidated
Debt of Holdings and its Subsidiaries as of such date to (ii) the sum of (A)
the Consolidated Net Worth of Holdings and its Subsidiaries plus (B) the
Consolidated Debt of Holdings and its Subsidiaries, each as of such date.
"LIBOR" means the prevailing rate of interest determined on the basis
of the rate for deposits in dollars for a period equal to the applicable
Interest Period commencing on the first day of such Interest Period appearing
on Telerate Page 3750 as of 11:00 a.m. (London time) two Business Days prior to
the first day of the applicable Interest Period. In the event that such rate
does not appear on Telerate Page 0000, "XXXXX" shall be the rate per annum at
which deposits in Dollars are offered by leading reference banks in the London
interbank market to First Union at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of the applicable Interest Period for a
period equal to such Interest Period and in an amount substantially equal to
the amount of the applicable Loan.
"LIBOR Rate" means (i) LIBOR divided by (ii) one (1) less the Reserve
Percentage (such rate to be rounded upward to the next whole multiple of 1/16
of 1%).
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"LIBOR Rate Loan" means any loan under the Revolver bearing interest at
a rate determined with reference to the LIBOR Rate.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to
a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"Limited Foreign Guaranty" means the Limited Foreign Guaranty executed
by any Material Subsidiary (other than SG Austria) not organized in the United
States of America and for which the Company has established that there is a
Deemed Distribution Event.
"Loan" means any loan or advance made by the Lender pursuant to this
Agreement.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Intercompany Subordination Agreement, any Joinder Agreement, the Guaranty, the
Limited Foreign Guaranty, the Negative Pledge Agreement, the Note Pledge
Agreement and each other document, instrument and agreement executed and
delivered by either Co-Borrower or any Subsidiary pursuant to and in connection
with this Agreement.
"Loan Year" means the period of twelve (12) consecutive months
commencing on the Closing Date and each succeeding period of twelve (12)
consecutive months commencing on each anniversary of the Closing Date.
"Material Adverse Effect" means, with respect to Holdings and its
Subsidiaries taken as a whole, a material adverse effect on the properties,
business, prospects, operations or condition (financial or otherwise) of any
such Person so as to impair the ability of any such Person to perform its
obligations under the Loan Documents to which it is a party.
"Material Contract" means any contract or other agreement, written or
oral, of Holdings or any of its Subsidiaries involving monetary liability of or
to any such Person in an amount in excess of $1,000,000 per annum.
"Material Judgment Amount" means $1,000,000.
"Material Subsidiary" means Scientific Games Finance Corporation,
Scientific Games Royalty Corporation, SGIL, SG Austria and any other Subsidiary
(i) having, at any time, total assets equal to or greater than ten percent
(10%) of the then total consolidated assets of Holdings or (ii) having at any
Fiscal Year end (or as of the end of any fiscal quarter as may be required
pursuant to 6.2(d)), a Cash Flow Percentage, for the consecutive four quarter
period ending on such Fiscal Year end (or, as requested by the Lender, fiscal
quarter end), equal to or greater than ten percent (10%).
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"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which any Co-Borrower or any ERISA Affiliate has made,
or accrued an obligation to make, contributions within the preceding six years.
"Negative Pledge Agreement" means the agreement executed by each of the
Co-Borrowers and the Material Subsidiaries and prohibiting the sale or
collateral conveyance of the signatories' assets.
"Net Income" means for any period and without duplication, net income
(or loss) of Holdings and its Consolidated Subsidiaries for such period
determined in accordance with GAAP; provided, that other than in the
calculation called for by subsection (ii) of the definition of Material
Subsidiary, there shall be excluded from the calculation of such Net Income the
income of any Subsidiary (other than a Material Subsidiary) if and to the
extent that a Co-Borrower or a Material Subsidiary has not received the income
in a cash distribution.
"Net Worth" means, as of any date, the total of all amounts which
would, in accordance with GAAP, be included on a Consolidated balance sheet of
Holdings and its Consolidated Subsidiaries as of such date as (a) the par or
stated value of all outstanding capital stock of Holdings and its Consolidated
Subsidiaries, (b) paid-in capital or capital surplus relating to such capital
stock, and (c) any retained earnings or earned surplus, less any accumulated
deficit.
"Notes" means the Revolver Notes.
"Note Pledge Agreement" means each Note Pledge Agreement substantially
in the form of Exhibit J attached hereto.
"Notice of Borrowing" shall have the meaning assigned thereto in
Section 2.2(a).
"Notice of Conversion/Continuation" shall have the meaning assigned
thereto in Section 3.3.
"Obligations" means, in each case, whether now in existence or
hereafter arising: (i) the principal of and interest on (including interest
accruing after the filing of any bankruptcy or similar petition) the Loans,
(ii) all payment and other obligations owing under any hedging agreement and
(iii) all other fees and commissions (including attorney's fees), charges,
indebtedness, loans, liabilities, obligations, covenants and duties owing to
the Lender, of every kind, nature and description, direct or indirect, absolute
or contingent, due or to become due, contractual or tortious, liquidated or
unliquidated, and whether or not evidenced by any note, and whether or not for
the payment of money in each case under or in respect of this Agreement, the
Note or any of the other Loan Documents.
"Officer's Compliance Certificate" shall have the meaning assigned
thereto in Section 6.2.
"Other Taxes" shall have the meaning assigned thereto in Section
3.9(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
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"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (i) is maintained for employees or former
employees of any Co-Borrower or any ERISA Affiliates or (ii) has at any time
within the preceding six years been maintained for the employees or former
employees of any Co-Borrower or any of their current or former ERISA
Affiliates.
"Permissible Restrictive Agreement" means an agreement entered into by
either or both Co- Borrowers or one or more Subsidiary that restricts the
payment of dividends by the Co-Borrower or Subsidiary party to the agreement,
but only restricts such dividend payment to the extent it, when added to all
other dividend payments since the inception of the agreement, would exceed more
than half of the cumulative net income earned by the Co-Borrower or Subsidiary
since the inception of the agreement.
"Permitted Acquisition" shall have the meaning assigned thereto in
Section 9.4(b)(x).
"Permitted Business" means (i) any business segment of the lottery and
promotional game industry, including, without limitation, the production,
distribution and sale of lottery tickets, game design, inventory management and
distribution, retailer telemarketing, field services, on line lottery or gaming
systems and components, lottery ticket accounting and validation hardware and
software, central site computers and communications hardware, support and
maintenance services or any combination thereof, (ii) any related, ancillary or
complimentary business, including, without limitation, the production,
distribution and sale of prepaid telephone cards, the production, distribution
and sale of hardware, software and support services for sports betting and
credit card processing, the production, distribution and sale of any printed
products utilizing manufacturing processes or equipment similar to the
processes or equipment then employed by the Company or otherwise employed in
the lottery and gaming industry and the production, distribution and sale of
products and services for which a useful or necessary component is the
utililization of concealed, encoded or encrypted information or data.
"Permitted Liens" means (i) Liens for taxes, assessments and other
governmental charges or levies (excluding any Lien imposed pursuant to any of
the provisions of ERISA or Environmental Law) not yet due or as to which the
period of grace, if any, related thereto has not expired or which are being
contested in good faith and by appropriate proceedings or procedures if
adequate reserves are maintained (to the extent required by GAAP), (ii) the
claims of materialmen, mechanics, carriers, warehousemen, processors or
landlords for labor, materials, supplies or rentals incurred in the ordinary
course of business, (A) which are not overdue for a period of more than thirty
(30) days or (B) which are being contested in good faith and by appropriate
proceedings or procedures, (iii) Liens consisting of deposits or pledges made
in the ordinary course of business in connection with, or to secure payment of,
obligations under workers' compensation, unemployment insurance or similar
legislation or obligations under customer service contracts, (iv) Liens
constituting covenants, conditions, encumbrances in the nature of zoning
restrictions and other Applicable Law restricting the right, use or enjoyment
of real property, easements and rights or restrictions of record on the use of
real property, facilities or Equipment which in the aggregate do not materially
detract from the value of such property, facilities or Equipment or materially
impair the use thereof in the ordinary conduct of business, including, without
limitation: (A) easements, exceptions, reservations,
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or other agreements for the purpose of pipelines, conduits, cables, wire
communication lines, power lines and substations, streets, trails, walkways,
drainage, irrigation, water, and sewerage purposes, dikes, canals, ditches, the
removal of oil, gas, other minerals, and other like purposes affecting real
property, facilities, or Equipment which, in the aggregate, do not materially
burden or impair the value or use of such property for the purposes for which
it is or may reasonably be expected to be held; (B) easements, exceptions,
reservations, or other agreements for the purpose of facilitating the joint
or common use of property in a development or similar real property project
affecting real property which, in the aggregate, do not materially burden or
impair the value or use of such property for the purposes for which it is or
may reasonably be expected to be held; and (C) rights reserved to or vested in
any Governmental Authority by Applicable Law to control or regulate, or
obligations or duties under Applicable Law to any Governmental Authority with
respect to, the use of any real property; (v) inchoate Liens incident to
construction or maintenance of real property or Liens incident to construction
or maintenance of real property now or hereafter filed of record for which
adequate reserves have been established (to the extent required by GAAP) and
which are being contested in good faith by appropriate proceedings or
procedures and have not proceeded to judgment; (vi) rights reserved to or
vested in any Governmental Authority by Applicable Law to control or regulate
or obligations or duties under Applicable Law to any Governmental Authority
with respect to any right, power, franchise, grant, license, or permit; (vii)
statutory Liens or other Liens which arise by operation of Applicable Law,
other than those described in clauses (i) or (ii) above, arising in the
ordinary course of business with respect to (A) obligations which are not
delinquent or are being contested in good faith by appropriate proceedings or
procedures, provided that adequate reserves have been established (to the
extent required by GAAP) with respect thereto and, by reason of nonpayment, no
property is subject to a material risk of loss or forfeiture; or (B) in favor
of unpaid sellers of goods or prepaying buyers of goods, or Liens in items of
any accompanying documents or proceeds of either arising in favor of a
collecting bank; (viii) Liens of the Administrative Agent for the benefit of
the Administrative Agent and the Banks to secure Co-Borrowers obligations under
the the Three-Year Credit Agreement, including, without limitation, Liens
granted in favor of First Union pursuant to the Note Pledge Agreement to secure
the obligations of Co-Borrowers under this Agreement and the Three-Year Credit
Agreement and related loan documents; (ix) Existing Liens described on Schedule
9.3; (x) Liens on Debt permitted by Section 9.1, including Real Estate
Financing Debt; and (xi) any judgment Lien in connection with the Existing
Judgment so long as the Existing Judgement is discharged or stayed within 10
Business Days after the date of the creation or imposition of such Lien.
"Person" means an individual, corporation, partnership, association,
trust, business trust, limited liability company, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group.
"Prime Rate" means, at any time, the rate of interest per annum
publicly announced from time to time by First Union as its prime rate. Each
change in the Prime Rate shall be effective as of the opening of business on
the day such change in the Prime Rate occurs. The parties hereto acknowledge
that the rate announced publicly by First Union as its Prime Rate is an index
or base rate and shall not necessarily be its lowest or best rate charged to
its customers or other banks.
"Projections" shall have the meaning assigned thereto in Section
6.1(c).
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"Real Estate Financing Debt" shall have the meaning assigned thereto in
Section 9.1(x).
"Receivables" means as to any Person any right to payment from or on
behalf of any obligor, whether constituting an account, chattel paper,
instrument, letter of credit, general intangible or otherwise, arising from the
sale or financing by such Person of merchandise or services, and monies due
thereunder, security in the merchandise and services financed thereby, records
related thereto, and the right to payment of any interest or finance charges
and other obligations with respect thereto, proceeds from claims on insurance
policies related thereto, any other proceeds related thereto, and any other
related rights.
"Reserve Percentage" means the maximum daily arithmetic reserve
requirement imposed by the Board of Governors of the Federal Reserve System (or
any successor) under Regulation D on Eurocurrency liabilities (as defined in
Regulation D) for the applicable Interest Period as of the first day of such
Interest Period, but subject to any changes in such reserve requirement
becoming effective during the Interest Period. For purposes of calculating the
Reserve Percentage, the reserve requirement shall be as set forth in Regulation
D without benefit of credit for prorations, exemptions or offsets under
Regulation D, and further without regard to whether or not the Lender elects to
actually fund any Loan or portion thereof with Eurocurrency liabilities. Each
calculation by Lender of the LIBOR Rate shall be entitled to a presumption of
correctness, absent manifest error.
"Responsible Officer" of any Person means the chief executive officer,
president, chief financial officer, general counsel or chief accounting officer
of such Person.
"Revolver Loan" means any loan made to the Co-Borrowers pursuant to
Section 2.1, and all such Loans collectively as the context requires.
"Revolver Notes" means the separate Revolving Credit Notes made by the
Co-Borrowers payable to the order of the Lender, substantially in the form of
Exhibit A hereto, evidencing the Credit Facility, and any amendments and
modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extension thereof, in whole or in part; "Revolver
Note" means any of such Notes.
"SEC" means the Securities and Exchange Commission.
"SG Austria" means Scientific Games International GmbH, a limited
liability company organized under the laws of the Republic of Austria.
"SGIL" means Scientific Games International Limited.
"Solvent" means, with respect to Holdings and each of its Subsidiaries,
that such Person (i) has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to engage
and is able to pay its debts as they mature, (ii) owns property having a value,
both at fair valuation and at present fair saleable value, greater than the
amount required to pay its probable liabilities (including contingencies), and
(iii) does not believe that it will incur debts or liabilities beyond its
ability to pay such debts or liabilities as they mature.
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"Subsidiary" means any corporation, partnership or other entity of
which more than fifty percent (50%) of the outstanding capital stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other managers of such corporation, partnership or other
entity is at the time, directly or indirectly, owned by either of the
Co-Borrowers or the management is otherwise controlled by such Person
(irrespective of whether, at the time, capital stock or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening
of any contingency).
"Taxes" shall have the meaning assigned thereto in Section 3.9(a).
"Termination Date" means the earliest of the dates referred to in
Section 2.4.
"Termination Event" means: (i) a "Reportable Event" described in
Section 4043 of ERISA (other than a Reportable Event as to which the provision
of 30 days' notice has been waived by the PBGC under applicable regulations or
is not subject to the provision for 30 days notice to the PBGC); (ii) the
withdrawal of any Co-Borrower or any ERISA Affiliate from a Pension Plan during
a plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; (iii) the termination of a Pension Plan, the filing of a
notice of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a distress termination under Section 4041(c) of ERISA; (iv) the
institution of proceedings to terminate, or the appointment of a trustee with
respect to, any Pension Plan by the PBGC; (v) any other event or condition
which is reasonably expected to constitute grounds under Section 4042(a) of
ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan; (vi) the partial or complete withdrawal of any Co-Borrower or
any ERISA Affiliate from a Multiemployer Plan; (vii) the imposition of a Lien
pursuant to Section 412 of the Code or Section 302 of ERISA; (viii) any event
or condition which results in the reorganization or insolvency of a
Multiemployer Plan under Sections 4241 or 4245 of ERISA; or (ix) any event or
condition which results in the termination of a Multiemployer Plan under
Section 4041A of ERISA or the institution by PBGC of proceedings to terminate a
Multiemployer Plan under Section 4042 of ERISA.
"Three-Year Credit Agreement" means that certain Credit Agreement dated
as of the date hereof, by and among the Co-Borrowers, the Administrative Agent
and the Banks.
"United States" means the United States of America.
SECTION 1.2 General. All terms of an accounting nature not specifically
defined herein shall have the meanings assigned thereto by GAAP. Unless
otherwise specified, a reference in this Agreement to a particular section,
subsection, Schedule or Exhibit is a reference to that section, subsection,
Schedule or Exhibit of this Agreement. Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include
the singular and plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, the feminine and the neuter. Any
reference herein to "Atlanta time" shall refer to the applicable time of day in
Atlanta, Georgia.
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SECTION 1.3 Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including without limitation, all computations utilized by
Co-Borrowers or any Subsidiary thereof to determine compliance with any
covenant contained herein, shall, except as otherwise expressly contemplated
hereby or unless there is an express written direction by the Lender to the
contrary agreed to by the Co-Borrowers, be performed in accordance with GAAP.
In the event that changes in GAAP (as in effect on the Closing Date) shall be
mandated by the Financial Accounting Standards Board or any similar accounting
body of comparable standing or shall be recommended by the Co-Borrowers'
certified public accountants, to the extent that such changes would modify such
accounting terms or the interpretation or computation thereof, such changes
shall be followed in defining such accounting terms only from and after the
date the Co-Borrowers and the Lender shall have entered into an amendment of
this Agreement to the extent necessary to reflect any such changes in the
financial covenants and other terms and conditions of this Agreement and to
conform the covenants for evaluating Co-Borrowers financial condition to
substantially the same criteria as were in effect prior to such change in GAAP.
SECTION 1.4 Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings
when used in this Agreement, the Notes and the other Loan Documents and any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) Miscellaneous. The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
SECTION 1.5 Exhibits and Schedules. All Exhibits and Schedules to this
Agreement, either as originally existing or as the same may from time to time
be supplemented, modified, or amended are incorporated herein by reference. A
matter disclosed on any Schedule shall be deemed disclosed on all Schedules.
The disclosure of any matter, if such matter constitutes a Default or an Event
of Default, will not cure any such Default or Event of Default.
ARTICLE II
CREDIT FACILITY
SECTION 2.1 Revolver Loans. Subject to the terms and conditions of this
Agreement, the Lender agrees to make Revolver Loans to the Co-Borrowers jointly
and severally from time to time from the Closing Date through the Termination
Date as requested by the Company, on behalf of Co-Borrowers, in accordance
with the terms of Section 2.2; provided that the sum of the aggregate principal
amount of all outstanding Revolver Loans shall not exceed the Commitment. Each
Revolver Loan by the Lender shall be in a principal amount equal to the
aggregate principal amount of Revolver Loans requested on such occasion, up to
a principal amount at any time outstanding under the Credit Facility equal to
the Commitment. If at any time the Lender shall make Revolver
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Loans to the Co-Borrowers such that the aggregate amount of Revolver Loans
outstanding hereunder exceeds the Commitment, such Revolver Loans shall
nonetheless constitute Obligations hereunder. Subject to the terms and
conditions hereof, the Co-Borrowers may borrow, repay and reborrow Revolver
Loans hereunder until the Termination Date.
SECTION 2.2 Procedure for Advances of Revolver Loans.
(a) Requests for Borrowing. The Company, on behalf of the
Co-Borrowers, shall give the Lender irrevocable prior written notice in the
form attached hereto as Exhibit B (a "Notice of Borrowing") not later than
11:00 a.m. (Atlanta time) (i) on the date of borrowing with respect to each
Base Rate Loan and (ii) at least three (3) Business Days before each LIBOR Rate
Loan, of its intention to borrow, specifying (A) the date of such borrowing,
which shall be a Business Day, (B) the amount of such borrowing, which shall,
with respect to LIBOR Rate Loans, be in an aggregate principal amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof, and, with
respect to Base Rate Loans, be in an aggregate principal amount of $500,000 and
or a whole multiple of $100,000 in excess thereof, (C) whether the Loans are to
be LIBOR Rate Loans or Base Rate Loans, and (D) in the case of a LIBOR Rate
Loan, the duration of the Interest Period applicable thereto. Notices received
after 11:00 a.m. (Atlanta time) shall be deemed received on the next Business
Day.
(b) Disbursement of Revolver Loans. Not later than 1:00 p.m. (Atlanta
time) on the proposed borrowing date for any Revolver Loan, the Lender will
make available for the account of the Co-Borrowers at the appropriate Lending
Office in Dollars the Revolver Loans requested. The proceeds of each borrowing
requested pursuant to this Section 2.2(b) shall be disbursed in immediately
available funds by crediting such proceeds to the account of Co-Borrowers
designated in the Accounts Designation Letter.
SECTION 2.3 Repayment of Revolver Loans.
(a) Repayment on Termination Date. The Co-Borrowers shall repay the
outstanding principal amount of all Revolver Loans made to such Co-Borrowers in
full, together with all accrued but unpaid interest thereon, on the Termination
Date.
(b) Mandatory Repayment of Excess Loans. If at any time the sum of
the outstanding principal amount of all Revolver Loans exceeds the Commitment ,
the Co-Borrowers shall repay such excess, and such payment shall be applied in
the following order: (i) first, to Revolver Loans which are Base Rate Loans;
and (ii) second, to LIBOR Loans. Each such repayment shall be accompanied by
accrued interest on the amount repaid and any amount required to be paid
pursuant to Section 3.7 hereof.
(c) Optional Repayments and Commitment Reductions. Without fee or
penalty, the Co-Borrowers may at any time and from time to time repay the
Revolver Loans made thereto, in whole or in part, upon irrevocable notice to
the Lender not later than 11:00 a.m. (Atlanta time) on the date of repayment
with respect to Base Rate Loans and at least three (3) Business Days before
with respect to LIBOR Rate Loans, specifying the date and amount of repayment
and whether the repayment is of Base Rate Loans or LIBOR Rate Loans, or a
combination thereof, and, if of a
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combination thereof, the amount allocable to each. If any such notice is given,
the amount specified in such notice shall be due and payable on the date set
forth in such notice. Partial repayments shall be in an aggregate amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof with respect to
LIBOR Rate Loans, and $500,000 or a whole multiple of $100,000 in excess
thereof with respect to Base Rate Loans. Each such repayment shall be
accompanied by any amount required to be paid pursuant to Section 3.7. Upon the
repayment of any Loan, the Co-Borrowers, without fee or penalty, upon
irrevocable notice to the Lender at least five (5) Business Days prior to the
proposed commitment reduction, may reduce the Commitment for more or less than
the repaid Loan amount, but with such commitment reduction to be in a minimum
amount of $10,000,000 or a whole multiple of $1,000,000 in excess thereof.
(d) Limitation on Repayment of LIBOR Rate Loans. No Co-Borrower may
repay any LIBOR Rate Loan hereunder on any day other than on the last day of
the Interest Period applicable thereto unless such repayment is accompanied by
any amount required to be paid pursuant to Section 3.7.
SECTION 2.4 Termination of Revolver Facility. The Lender's Commitment
under Section 2.1 shall terminate on the earlier of (i) the Expiration Date or
(ii) the date of termination by the Lender pursuant to Section 10.2(a).
SECTION 2.5 Use of Proceeds. The Co-Borrowers shall use the proceeds of
the Loans for working capital and general corporate requirements of the
Co-Borrowers, including, without limitation, stock repurchases in respect of
Holding's capital stock and Permitted Acquisitions.
SECTION 2.6 Co-Borrower and Guarantor Liability. With respect to the
respective liabilities for the Obligations, the Co-Borrowers and Guarantors
have executed with the Lender that certain Contribution Agreement, of even
date, providing for certain contribution and other rights among the
Co-Borrowers and Guarantors.
SECTION 2.7 Subordination of Subrogation and Contribution Claim. Each
Co-Borrower and Guarantor hereby subordinates, to the collection and payment in
full of the Obligations and to the fullest extent possible, and irrevocably
agrees to delay until full and final payment of the Obligations any enforcement
of, any and all rights, whether at law, in equity, by agreement or otherwise,
to subrogation, indemnity, reimbursement, contribution, or any other similar
claim, cause of action or remedy that otherwise would arise out of such
Co-Borrower's or Guarantor's payment or performance of the Obligations,
including, without limitation, any and all claims under the Contribution
Agreement.
SECTION 2.8 Foreign Subsidiary Guaranties. If at any time and from time
to time the Company shall establish for any foreign Material Subsidiary (other
than SG Austria) a Deemed Distribution Event, the foreign Material Subsidiary
shall execute a Limited Foreign Guaranty, and, upon such execution, be relieved
of liability under the Guaranty.
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ARTICLE III
GENERAL LOAN PROVISIONS
SECTION 3.1 Interest.
(a) Interest Rate Options. Loans made on the Closing Date and during
the Initial Interest Period shall be Base Rate Loans and shall bear interest at
the Base Rate plus the Applicable Margin (the "Applicable Margin") as set forth
below in this Section 3.1. Thereafter, Base Rate Loans shall bear interest at
the Base Rate plus the Applicable Margin and, LIBOR Rate Loans shall bear
interest at the LIBOR Rate plus the Applicable Margin. On behalf of the
Co-Borrowers, the Company shall determine whether a Revolving Loan is to be a
Base Rate Loan or LIBOR Rate Loan and select the Interest Period, if any,
applicable to any Revolving Loan at the time a Notice of Borrowing is given
pursuant to Section 2.2 or at the time a Notice of Conversion/Continuation is
given pursuant to Section 3.3. Any Loan or any portion thereof as to which the
Company has not duly specified an interest rate as provided herein shall be
deemed a Base Rate Loan, and, if it is a LIBOR Rate Loan for which an Interest
Period has ended, shall, so long as no Event of Default has occurred and shall
be continuing, be deemed renewed as a Base Rate Loan and, in each case, no
Event of Default shall arise as a result thereof.
(b) Interest Periods. In connection with each LIBOR Rate Loan, the
Company, on behalf of the Co-Borrowers, by giving notice at the times described
in Section 3.1(a), shall elect an interest period (each, an "Interest Period")
to be applicable to such Loan, which Interest Period shall be a period of one,
two or three months; provided that:
(i) the Interest Period shall commence on the date of advance
of or conversion to any LIBOR Rate Loan and, in the case of immediately
successive Interest Periods, each successive Interest Period shall
commence on the date on which the next preceding Interest Period
expires;
(ii) if any Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided, that, with respect to any LIBOR
Rate Loan, if any Interest Period would otherwise expire on a day that
is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on
the next preceding Business Day;
(iii) with respect to any LIBOR Rate Loan, any Interest Period
that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period;
(iv) no Interest Period for Revolver Loans shall extend beyond
the Termination Date;
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(v) there shall be no more than four Types of LIBOR Rate Loans
outstanding at any time; for purposes of this provision, a "Type" of
Loan shall refer to Loans with Interest Periods beginning and ending on
the same date; and
(vi) such right of election is subject to Section 3.1(e)(i).
(c) Applicable Margin. On and after the Closing Date until
adjustments, if any, pursuant to Subsection 3.1(d) below after receipt by the
Lender of financial statements for Holdings and Subsidiaries for the quarter
ended September 30, 1999, the Applicable Margin (which may be a negative
number) for LIBOR Rate Loans will be 0.75% and for Base Rate will be 0.00%,
and, thereafter, the Applicable Margin with respect to Base Rate Loans and
LIBOR Rate Loans shall be determined as provided below by reference to the
Leverage Ratio at the end of each fiscal quarter of Holdings as follows:
------------------------------------------------
Applicable Margin
------------------------------------------------
Leverage LIBOR Base
Ratio Margin Rate
Margin
------------------------------------------------
Less than or equal to 0.75% 0.00%
25%
------------------------------------------------
Greater than 25%, but 1.00% 0.00%
less than or equal to
40%
------------------------------------------------
Greater than 40% 1.25% 0.25%
------------------------------------------------
(d) Adjustments to Applicable Margin. Adjustments, if any, in the
Applicable Margin shall be made by the Lender ten (10) Business Days after
receipt by the Lender of quarterly financial statements for Holdings and its
Subsidiaries and the accompanying Officer's Compliance Certificate setting
forth the Leverage Ratio for Holdings and its Subsidiaries as of the most
recent fiscal quarter end. In the event Holdings fails to deliver such
financial statements and certificate within the time required by Sections
6.1(a) or (b) and Section 6.2 hereof, the Applicable Margin shall be the
highest Applicable Margin set forth above until five (5) Business Days after
the delivery of such financial statements and certificate.
(e) Default Rate. Upon the occurrence and during the continuance of
an Event of Default, (i) the Co-Borrowers shall no longer have the option to
request LIBOR Rate Loans, (ii) (A) prior to the acceleration of any of the
Obligations pursuant to Section 10.2, the amount of any overdue Loan or other
Obligation shall bear interest at a rate per annum two percent (2.0%) in excess
of the highest rate otherwise then applicable to the Loans, and (B) after the
acceleration of any of the Obligations pursuant to Section 10.2, all of the
Obligations shall bear interest at a rate per
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annum two percent (2.0%) in excess of the highest rate otherwise then
applicable to the Loans, and (iii) all LIBOR Rate Loans at the end of their
applicable Interest Period shall be converted to Base Rate Loans. Interest
shall continue to accrue on the Notes after the filing by or against either or
both Co- Borrowers of any petition seeking any relief in bankruptcy or under
any act or law pertaining to insolvency or debtor relief, whether state,
federal or foreign.
(f) Interest Payment and Computation. Interest on each Loan shall be
payable in arrears on each Interest Payment Date. Interest on Base Rate Loans
shall be computed on the basis of a year of 365 or 366 days, as the case may
be, and assessed for the actual number of days elapsed, and interest on all
other Loans shall be computed on the basis of a year of 360 days and assessed
for the actual number of days elapsed.
(g) Maximum Rate. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the Notes
charged or collected pursuant to the terms of this Agreement or pursuant to any
of the Notes exceed the highest rate permissible under any Applicable Law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lender
has charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the
maximum rate permitted by Applicable Law and the Lender at its option promptly
refund to the applicable Co-Borrower or Co-Borrowers any interest received by
Lender in excess of the maximum lawful rate or shall apply such excess to the
principal balance of the Obligations. It is the intent hereof that the
Co-Borrowers not pay or contract to pay, and that the Lender not receive or
contract to receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may be paid by the Co-Borrowers under Applicable Law.
SECTION 3.2 Closing Fee. Co-Borrowers hereby jointly and severally
agree to pay to Lender a closing fee (the "Closing Fee") in an amount equal to
.175% of the Commitment, which closing fee shall be payable in advance in four
(4) equal installments payable on Closing Date and on February 28, 2000, May
31, 2000 and August 31, 2000; provided, however, that upon the termination of
the Credit Facility the Co-Borrowers' obligation to pay any outstanding portion
of the Closing Fee that is not then due and payable shall terminate.
Notwithstanding anything in the immediately preceding sentence to the contrary,
the entire outstanding balance of the Closing Fee shall be payable in full on
the date of the initial funding of any Loans under this Agreement.
SECTION 3.3 Notice and Manner of Conversion or Continuation of Loans.
After the Initial Interest Rate Period, provided that no Default or Event of
Default has occurred and is then continuing, the Co-Borrowers shall have the
option to (i) convert at any time all or any portion of their outstanding Base
Rate Loans in a principal amount equal to $5,000,000 or any whole multiple of
$1,000,000 in excess thereof into LIBOR Rate Loans, (ii) upon the expiration of
any Interest Period, convert all or any part of their outstanding LIBOR Rate
Loans in a principal amount equal to $500,000 or a whole multiple of $100,000
in excess thereof into Base Rate Loans, and (iii) upon the expiration of its
Interest Period, continue any LIBOR Rate Loan in a principal amount of
$5,000,000 or any whole multiple of $1,000,000 in excess thereof as a LIBOR
Rate Loan. Whenever the Co-Borrowers desire to convert or continue Loans as
provided above, the Company, on behalf of the Co-Borrowers, shall give the
Lender irrevocable prior written notice in the form
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attached hereto as Exhibit C (a "Notice of Conversion/Continuation") not later
than 11:00 a.m. (Atlanta time) three (3) Business Days before the Business Day,
in the case of a conversion to or a continuation of a LIBOR Rate Loan, and the
same Business Day, in the case of a conversion to a Base Rate Loan, on which a
proposed conversion or continuation of such Loan is to be effective specifying
(i) the Loans to be converted or continued and, with respect to any LIBOR Rate
Loan to be converted or continued, the last day of the current Interest Period
therefor, (ii) the effective date of such conversion or continuation (which
shall be a Business Day), and (iii) the principal amount of such Loans to be
converted or continued.
SECTION 3.4 Manner of Payment.
(a) Each payment (including repayments described in Article II) by
any Co-Borrower on account of the principal of or interest on the Loans or of
any fee, commission or other amounts payable to the Lender under this Agreement
or any Note shall be made not later than 1:00 p.m. (Atlanta time) on the date
specified for payment under this Agreement to the Lender at the Lending Office,
in immediately available funds, and shall be made without any set-off,
counterclaim or deduction whatsoever. Any payment received after such time but
before 2:00 p.m. (Atlanta time) on such day shall be deemed a payment on such
date for the purposes of Section 10.1, but for all other purposes shall be
deemed to have been made on the next succeeding Business Day. Any payment
received after 2:00 p.m. (Atlanta time) shall be deemed to have been made on
the next succeeding Business Day for all purposes. All Loans shall be repayable
in Dollars.
SECTION 3.5 Crediting of Payments and Proceeds. In the event that
Co-Borrowers shall fail to pay any of the Obligations when due and the
Obligations have been accelerated pursuant to Section 10.2, all payments
received by the Lender shall be applied first, to all Lender's fees and
expenses then due and payable, then to all other expenses then due and payable
by the Co-Borrowers hereunder, then to all indemnity obligations then due and
payable by the Co-Borrowers hereunder, then to all commitment and other fees
and commissions then due and payable, then to accrued and unpaid interest on
the Obligations (pro rata in accordance with all such amounts due), then to the
principal amount of the Obligations, in that order.
SECTION 3.6 Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate Availability. If with respect
to any Interest Period the Lender shall determine that by reason of
circumstances affecting the foreign exchange and interbank markets generally,
deposits in Eurodollars in the applicable amounts are not being offered
(through Telerate Page 3750 or otherwise) to the Lender for such Interest
Period, then the Lender shall forthwith give notice thereof to the
Co-Borrowers. Thereafter, until the Lender notifies the Co- Borrowers that such
circumstances no longer exist, the right of the Co-Borrowers to convert any
Loan to or continue any Loan as a LIBOR Rate Loan, shall be suspended, and the
applicable Co- Borrower or Co-Borrowers shall repay in full (or cause to be
repaid in full) the then-outstanding principal amount of each such LIBOR Rate
Loan, together with accrued interest thereon, on the last day of the then
current Interest Period applicable to such LIBOR Rate Loan or convert the then
outstanding principal amount of each such LIBOR Rate Loan to a Base Rate Loan,
if available, as of the last day of such Interest Period.
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(b) Laws Affecting LIBOR Rate Availability. If, after the date
hereof, the introduction of, or any change in, any Applicable Law or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Lender (or any of its Lending
Offices) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank or comparable agency, shall
make it unlawful or impossible for the Lender (or any of its Lending Offices)
to honor its obligations hereunder to make or maintain any LIBOR Rate Loan the
Lender shall promptly give notice thereof to the Co-Borrowers. Thereafter,
until the Lender notifies the Co-Borrowers that such circumstances no longer
exist (which notification shall be given promptly, but in any event within
thirty (30) days after the Lender obtains actual knowledge that such
circumstances no longer exist), (i) the obligations of the Lender to make LIBOR
Rate Loans and the right of the Co-Borrowers to convert any Loan or continue
any Loan as a LIBOR Rate Loan shall be suspended and thereafter the
Co-Borrowers may select only Base Rate Loans hereunder, and (ii) if the Lender
may not lawfully continue to maintain a LIBOR Rate Loan to the end of the then
current Interest Period applicable thereto, the applicable Loan shall
immediately be converted to a Base Rate Loan for the remainder of such Interest
Period, and the applicable Co-Borrower or Co-Borrowers shall pay any amount
required to be paid pursuant to Section 3.7.
(c) Increased Costs. If, after the date hereof, the introduction of,
or any change in, any Applicable Law, or in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by the Lender (or any of its Lending Offices) with any request or
directive (whether or not having the force of law) of such Governmental
Authority, central bank or comparable agency:
(i) shall subject the Lender (or any of its Lending Offices) to
any tax, duty or other charge with respect to any LIBOR Rate Loan or any Note
or shall change the basis of taxation of payments to the Lender (or any of its
Lending Offices) of the principal of or interest on any LIBOR Rate Loan or any
Note or any other amounts due under this Agreement in respect thereof (except
for changes in the rate of tax on the overall net income of the Lender or any
of its Lending Offices imposed by the jurisdiction in which such Lender is
organized or is or should be qualified to do business or such Lending Office is
located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit, insurance or capital or similar
requirement against assets of, deposits with or for the account of, or credit
extended by the (or any of its Lending Offices) or shall impose on the Lender
(or any of its Lending Offices) or the foreign exchange and interbank markets
any other condition affecting any LIBOR Rate Loan or any Note;
and the result of any of the foregoing is to increase the costs to the Lender
of maintaining any LIBOR Rate Loan or to reduce the yield or amount of any sum
received or receivable by the Lender under this Agreement or under the Notes in
respect of a LIBOR Rate Loan, then the Lender shall promptly notify the the
Co-Borrowers of such fact and demand compensation therefor and, within fifteen
(15) days after such notice by the Lender, the Co-Borrowers shall pay to the
Lender such
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additional amount or amounts as will compensate the Lender for such increased
cost or reduction. The Lender will promptly notify the Co-Borrowers of any
event of which it has knowledge that will entitle the Lender to compensation
pursuant to this Section 3.6(c); provided, that the Lender shall incur no
liability whatsoever to the Co-Borrowers in the event it fails to do so. A
certificate of the Lender setting forth the basis for determining such
additional amount or amounts necessary to compensate the Lender shall be
conclusively presumed to be correct absent manifest error. If the Lender claims
compensation under this Section, a Co-Borrower may at any time, upon at least
four (4) Business Days' prior notice to the Lender and upon payment through the
date of such payment plus any prepayment fee required or charges imposed under
Section 3.7 hereof, pay in full the affected LIBOR Rate Loans of the Lender or
request that such LIBOR Rate Loans be converted to Base Rate Loans.
SECTION 3.7 Indemnity. Each Co-Borrower jointly and severally shall and
hereby do indemnify the Lender against any loss or expense (including without
limitation any foreign exchange costs) which may arise or be attributable to
the Lender's obtaining, liquidating or employing deposits or other funds
acquired to effect, fund or maintain the Loans (i) as a consequence of any
failure by the Co-Borrowers to make any payment when due of any amount due
hereunder in connection with a LIBOR Rate Loan, (ii) due to any failure of the
Co-Borrowers to borrow on a date specified therefor in a Notice of Borrowing or
Notice of Continuation/Conversion with respect to any LIBOR Rate Loan or (iii)
due to any payment, prepayment or conversion of any LIBOR Rate Loan on a date
other than the last day of the Interest Period therefor. The Lender's
calculations of any such loss or expense shall be furnished to the Co-Borrowers
and shall be presumed to be correct, absent manifest error.
SECTION 3.8 Capital Requirements. If either (i) the introduction of, or
any change in, or in the interpretation of, any Applicable Law or (ii)
compliance with any guideline or request from any central bank or comparable
agency or other Governmental Authority (whether or not having the force of
law), has or would have the effect of reducing the rate of return on the
capital of, or has affected or would affect the amount of capital required to
be maintained by, the Lender or any corporation controlling the Lender as a
consequence of, or with reference to the Commitment and other commitments of
this type, below the rate which such Lender or such other corporation could
have achieved but for such introduction, change or compliance, then within five
(5) Business Days after written demand by any such Lender, the Co-Borrowers
shall pay to such Lender from time to time as specified by such Lender
additional amounts sufficient to compensate such Lender or other corporation
for such reduction. A certificate as to such amounts submitted to the
Co-Borrowers and the Lender, shall, in the absence of manifest error, be
presumed to be correct and binding for all purposes.
SECTION 3.9 Taxes.
(a) Payments Free and Clear. Any and all payments by the Co-Borrowers
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholding, and all liabilities with respect thereto excluding, (i)
in the case of the Lender, income and franchise taxes imposed by the
jurisdiction under the laws of which the Lender (as the case may be) is
organized or is or should be
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qualified to do business or any political subdivision thereof and (ii) in the
case of the Lender, income and franchise taxes imposed by the jurisdiction of
the Lender's Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Co-Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to the Lender, (A) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
3.9) the Lender receives an amount equal to the amount such party would have
received had no such deductions been made, (B) such Co-Borrower shall make such
deductions, (C) such Co-Borrower shall pay the full amount deducted to the
relevant taxing authority or other authority in accordance with Applicable Law,
and (D) such Co-Borrower shall deliver to the Lender evidence of such payment
to the relevant taxing authority or other authority in the manner provided in
Section 3.9(d). Notwithstanding the foregoing, "Taxes" shall not include any
taxes, levies, imposts, duties, deductions, fees, charges or withholdings which
are the result of any one or more of the following events: (A) the failure of
the Lender to properly or timely file any tax return required to be filed by
the Lender, (B) any transfer of the Lender's Commitment or the Notes, or any
part thereof, or any participation therein, by the Lender, or (C) the gross
negligence or willful misconduct of the Lender or any Affiliate thereof or any
breach by the Lender of its obligations hereunder.
(b) Stamp and Other Taxes. In addition, the Co-Borrowers shall pay
any present or future stamp, registration, recordation or documentary taxes or
any other similar fees or charges or excise or property taxes, levies of the
United States or any state or political subdivision thereof or any applicable
foreign jurisdiction which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement, the Loans, the other Loan Documents, or the perfection of any rights
in respect thereto (hereinafter referred to as "Other Taxes").
(c) Indemnity. The Co-Borrowers jointly and severally shall and do
hereby indemnify the Lender for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes and Other Taxes imposed by any
jurisdiction on amounts payable under this Section 3.9) paid by the Lender (as
the case may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. Such indemnification shall be made
within thirty (30) days from the date the Lender (as the case may be) makes
written demand therefor.
(d) Evidence of Payment. Within thirty (30) days after the date of
any payment of Taxes or Other Taxes, the affected Co-Borrower shall furnish to
the Lender, at its address referred to in Section 11.1, the original or a
certified copy of a receipt evidencing payment thereof or other evidence of
payment satisfactory to the Lender.
(e) Survival. Without prejudice to the survival of any other
agreement of the Co-Borrowers hereunder, the agreements and obligations of the
Co-Borrowers contained in this Section 3.9 shall survive the payment in full of
the Obligations and the termination of the Commitment.
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ARTICLE IV
CLOSING: CONDITIONS OF CLOSING AND BORROWING
SECTION 4.1 Closing. The closing shall take place at the offices of
Xxxxxxxxxx, Xxxxxx & Xxxxxxx, L.L.P., at First Union Plaza, 999 Peachtree
Street, N.E., 23rd Floor, Atlanta, Georgia at 10:00 a.m. on the Closing Date or
at such other time and place as the parties shall agree.
SECTION 4.2 Conditions to Closing and Initial Loan. The obligation of
the Lender to make the initial Loans is subject to the satisfaction of each of
the following conditions:
(a) Executed Loan Documents. (i) This Agreement, (ii) the Notes,
(iii) the Guaranty executed by each Material Subsidiary existing on the Closing
Date (other than foreign Material Subsidiaries for which the Company shall have
established a Deemed Distribution Event), (iv) the Limited Foreign Guaranty
executed by SGIL and any other foreign Material Subsidiary existing on the
Closing Date (other than SG Austria) for which the Company shall have
established a Deemed Distribution Event, (v) the Negative Pledge Agreement,
(vi) the Note Pledge Agreement with respect to the Foreign Subsidiary Notes
executed by SGIL, SG Austria and each other foreign Material Subsidiary for
which the Company shall have established a Deemed Distribution Event, and (vii)
the other Loan Documents shall have been duly authorized and executed by the
parties thereto in form and substance satisfactory to the Lender, shall be in
full force and effect and no Default or Event of Default shall exist hereunder
or thereunder, and the Co-Borrowers shall have delivered original counterparts
thereof to the Lender.
(b) Closing Certificates; etc.
(i) Officer's Certificate. The Lender shall have received a
certificate from the chief executive officer or chief financial officer of, on
behalf of the Co-Borrowers, in form and substance reasonably satisfactory to
the Lender, to the effect that, to the best knowledge and belief of such
officer, all representations and warranties of the Co-Borrowers contained in
this Agreement and the other Loan Documents are true and correct in all
material respects; that the Co-Borrowers are not in violation of any of the
covenants contained in this Agreement and the other Loan Documents; that, after
giving effect to the transactions contemplated by this Agreement, no Default or
Event of Default has occurred and is continuing; that the Co-Borrowers have
satisfied each of the closing conditions to be satisfied thereby; and that the
Co-Borrowers have filed all required tax returns and owe no delinquent taxes.
(ii) Officer's Compliance Certificate. The Lender shall have
received an Officer's Compliance Certificate stating that no Default or Event
of Default exists and setting forth the calculations required to establish
whether or not the Co-Borrower and their Subsidiaries are in compliance with
the financial covenants set forth in Article VIII hereof as of the Closing
Date, in form and substance reasonably satisfactory to the Lender.
(iii) Certificate of Secretary of each Co-Borrower. The Lender
shall have received a certificate of the secretary or assistant secretary (or,
in the case of any Person organized or
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incorporated other than pursuant to the laws of the United States or any state
thereof, a director or such other officer as such Person may reasonably
designate) of each Co-Borrower and Guarantor certifying, as applicable, that
attached thereto is a true and complete copy of the articles of incorporation
or other charter documents of such Co-Borrower or Guarantor and all amendments
thereto, certified as of a recent date by the appropriate Governmental
Authority in its jurisdiction of incorporation; that attached thereto is a true
and complete copy of the bylaws of such Co-Borrower or Guarantor as in effect
on the date of such certification; that attached thereto is a true and complete
copy of resolutions duly adopted by the Board of Directors of such Co-Borrower,
authorizing the borrowings or guarantee contemplated hereunder or thereunder
and the execution, delivery and performance of this Agreement and the other
Loan Documents to which it is a party; and as to the incumbency and genuineness
of the signature of each officer of such Co-Borrower or Guarantor executing
Loan Documents to which such Co-Borrower or Guarantor is a party, provided,
however, that in the case of any foreign Guarantor, the secretary's certificate
shall be limited solely to matters concerning the incumbency and genuineness of
the signature of each officer of such foreign Guarantor so long as the Lender
shall have received a favorable opinion of counsel as provided in clause (vi)
below.
(iv) Certificates of Good Standing. The Lender shall have
received certificates as of a recent date of the good standing or valid
existence of each Co-Borrower and Guarantor (exclusive of any Guarantor
incorporated under the laws of any jurisdiction located outside the United
States) under the laws of Delaware, and Georgia.
(v) Accounts Designation Letter. The Accounts Designation
Letter to be delivered by the Co-Borrowers pursuant to Section 2.2, dated as of
the Closing Date.
(vi) Opinions of Counsel. The Lender shall have received
favorable opinions of outside counsel to the Co-Borrowers and Guarantors
(including each foreign Guarantor) and addressed to the Lender with respect to
the Co-Borrowers and the Guarantors, the Loan Documents, the transactions
contemplated thereby, regulatory matters and such other matters as the Lender
may reasonably request, reasonably satisfactory in form and substance to the
Lender. Such opinions, with respect to United States law matters, may be
rendered by its regular outside counsel or combination thereof without regard
to whether such counsel is admitted to or authorized to practice in any
jurisdiction other than the State of Georgia.
(c) Consents; No Adverse Change.
(i) Governmental and Third Party Approvals. All necessary
approvals, authorizations and consents, if any be required, of any Person and
of all Governmental Authorities and courts having jurisdiction with respect to
the execution and delivery of this Agreement and the other Loan Documents shall
have been obtained.
(ii) Permits and Licenses. All material permits and licenses,
including material permits and licenses required under Applicable Law,
necessary to the conduct of business by the Co-Borrowers and their
Subsidiaries as currently conducted shall have been obtained.
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(iii) No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority to enjoin, restrain, or prohibit, or to
obtain substantial damages in respect of, or which is related to or arises out
of this Agreement or the other Loan Documents or the consummation of the
transactions contemplated hereby or thereby, or which, in the Lender's
reasonable discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement and such other Loan Documents.
(iv) No Material Adverse Change. Since December 31, 1998,
there shall not have occurred any event or condition (other than matters of
general economic or political nature) that has had or is reasonably likely to
have a Material Adverse Effect.
(v) No Event of Default. No Default or Event of Default shall
have occurred and be continuing.
(d) Financial Statements. The Lender shall have received recent
annual and interim financial statements and other financial information with
respect to Holdings and its Subsidiaries prepared in accordance with GAAP.
Without limitation of the foregoing, the Lender shall have received audited
financial statements for Holdings and Subsidiaries for the Fiscal Year ended
December 31, 1998 and unaudited financial statements for Holdings and
Subsidiaries for the nine month period ended September 30, 1999.
(e) Miscellaneous.
(i) Notice of Borrowing. The Lender shall have received
written instructions from the Company, on behalf of the Co-Borrowers, directing
the payment of any proceeds of Loans made under this Agreement that are to be
made on the Closing Date.
(ii) Proceedings and Documents. All opinions, certificates and
other instruments and all proceedings in connection with the transactions
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to the Lender. The Lender shall have received copies of all other
instruments and other evidence as the Lender may reasonably request, in form
and substance reasonably satisfactory to the Lender, with respect to the
transactions contemplated by this Agreement and the taking of all actions in
connection therewith.
(iii) Due Diligence and Other Documents. The Co-Borrowers and
Material Subsidiaries shall have delivered to the Lender such other documents,
certificates and opinions as the Lender reasonably request.
SECTION 4.3 Conditions to All Loans. The obligation of the Lender to
make any Loans is subject to the satisfaction of the following conditions
precedent on the relevant borrowing date:
(i) Continuation of Representations and Warranties. The
representations and warranties contained in Article V shall be true and correct
in all material respects on and as of such borrowing date with the same effect
as if made on and as of such date except any of which speak
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as of a specific date, in which event such representations and warranties shall
be true and correct in all material respects on and as of such specific date.
(ii) No Existing Default. No Default or Event of Default shall
have occurred and be continuing hereunder on the borrowing date with respect to
such Loan or after giving effect to the Loans to be made on such date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CO-BORROWERS
SECTION 5.1 Representations and Warranties. To induce the Lender to
enter into this Agreement and to induce the Lender to make the Loans, the
Co-Borrowers hereby jointly and severally represent and warrant to the Lender
that:
(a) Organization; Power; Qualification. Each Co-Borrower, their
Material Subsidiaries and each Guarantor is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
formation, has the power and authority to own its properties and to carry on
its business as now being conducted. Each Co-Borrower, their Material
Subsidiaries and each Guarantor is duly qualified and authorized to do business
in each jurisdiction where its business requires such qualification and
authorization, except where the failure to be so qualified and authorized to do
business could not reasonably be expected to have a Material Adverse Effect.
The jurisdictions in which the Co-Borrowers and its Material Subsidiaries are
organized and qualified to do business as of the Closing Date are described on
Schedule 5.1(a). On the Closing Date the only Subsidiaries of the Co-Borrowers
that are Material Subsidiaries are Scientific Games Finance Corporation,
Scientific Games Royalty Corporation, SGIL and SG Austria.
(b) Ownership. Each Subsidiary of the Co-Borrowers as of the Closing
Date is listed on Schedule 5.1(b). As of the Closing Date, the capitalization
of the Co-Borrowers and each of its Subsidiaries consists of the number of
shares, authorized, issued and outstanding, of such classes and series, with or
without par value, described on Schedule 5.1(b). All outstanding shares have
been duly authorized and validly issued and are fully paid and nonassessable.
As of the Closing Date, the shareholders of the Company and each of its
Subsidiaries of the Co-Borrowers and the number of shares owned by each are
described on Schedule 5.1(b). As of the Closing Date, there are no outstanding
stock purchase warrants, subscriptions, options, securities, instruments or
other rights of any type or nature whatsoever, which are convertible into,
exchangeable for or otherwise provide for or permit the issuance of capital
stock of the Co-Borrowers, or any of its Subsidiaries, except as described on
Schedule 5.1(b).
(c) Authorization of Agreement, Loan Documents and Borrowing. Each
of the Co-Borrowers and Guarantors has the right, power and authority and has
taken all necessary corporate and other action to authorize the execution,
delivery and performance of this Agreement and each of the other Loan Documents
to which it is a party in accordance with their respective terms. This
Agreement and each of the other Loan Documents have been duly executed and
delivered by the
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duly authorized officers of the Co-Borrowers and Guarantors and each such Loan
Document executed and delivered by a Co-Borrower or a Guarantor constitutes the
legal, valid and binding obligation of the Co-Borrowers or the Guarantor, as
the case may be, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar state or federal debtor relief laws from time to time in
effect which affect the enforcement of creditors' rights in general or by
general principles of equity.
(d) Compliance of Agreement, Loan Documents and Borrowing with Laws,
Etc. The execution, delivery and performance by the Co-Borrowers and each
Guarantor of the Loan Documents to which each such Person is a party in
accordance with their respective terms, the borrowings hereunder and the
transactions contemplated hereby do not and will not, by the passage of time,
the giving of notice or otherwise, (i) except as set forth on Schedule 5.1(d)
hereto, require any Governmental Approval or violate any Applicable Law
relating to Co-Borrower or any of its Subsidiaries, (ii) conflict with, result
in a breach of or constitute a default under the articles of incorporation,
bylaws or other organizational documents of Co-Borrower or any of its
Subsidiaries or any Material Contract to which such Person is a party or by
which any of its properties may be bound or any Governmental Approval relating
to such Person or (iii) result in or require the creation or imposition of any
Lien upon or with respect to any material property now owned or hereafter
acquired by such Person.
(e) Compliance with Law; Governmental Approvals. Each of the
Co-Borrowers and each Subsidiary (i) has all material Governmental Approvals
required by any Applicable Law for it to conduct its business and (ii) is in
material compliance with each Governmental Approval applicable to it and in
compliance with all other Applicable Law relating to it or any of its
respective properties because of the conduct of its business. Each such
material Governmental Approval is in full force and effect, is final and not
subject to review on appeal and is not the subject of any pending or, to the
best knowledge of the Co-Borrowers, threatened attack by direct or collateral
proceeding, except for such failures to be in full force and effect that could
not reasonably be expected to have a Material Adverse Effect.
(f) Tax Returns and Payments. Each of Co-Borrowers and their
Subsidiaries has duly filed or caused to be filed all federal, state, local and
other tax returns required by Applicable Law to be filed, and has paid, or made
adequate provision for the payment of, all federal, state, local and other
taxes, assessments and governmental charges or levies upon it and its property,
income, profits and assets which are due and payable, except where the payment
of such tax is being disputed in good faith and adequate reserves have been
established (if and to the extent required by GAAP). No Governmental Authority
has asserted any Lien or other claim against Co-Borrowers or any Subsidiary
thereof with respect to the payment of all material state and federal taxes
which has not been discharged or resolved or is not being disputed in good
faith. The charges, accruals and reserves on the books of Co-Borrowers and any
of its Subsidiaries in respect of federal, state, local and other taxes for all
Fiscal Years and portions thereof are in the judgment of the Co-Borrowers
adequate, and the Co-Borrowers do not anticipate any additional material taxes
or assessments for any of such years.
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(g) Environmental Matters. Except as set forth on Schedule 5.1(g),
the properties of each Co-Borrower and all Subsidiaries are in compliance in
all respects with all applicable Environmental Law, and there is no
contamination at, under or about such properties or such operations which could
interfere in any respect with the continued operation of such properties or
impair in any respect the fair saleable value thereof, except for such failures
to comply and contamination that could not reasonably be expected to have a
Material Adverse Effect. Except as set forth on Schedule 5.1(g), neither
Co-Borrower nor any of their Subsidiaries has received any written notice of
material violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Law
with regard to any of its properties or the operations conducted in connection
therewith, nor does either Co-Borrower nor any of its Subsidiaries have
knowledge that any such notice will be received or is being threatened.
(h) ERISA.
(i) Neither Co-Borrower nor any ERISA Affiliate maintains or
contributes to, or has any obligation under, any Employee Benefit Plans other
than those identified on Schedule 5.1(h);
(ii) Each Co-Borrower and each ERISA Affiliate is in material
compliance with all applicable provisions of ERISA and all other laws
applicable to any Employee Benefit Plans and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans except
for any required amendments for which the remedial amendment period as defined
in Section 401(b) of the Code has not yet expired. Each Employee Benefit Plan
that is intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and each trust
related to such plan has been determined to be exempt under Section 501(a) of
the Code. Each such Employee Benefit Plan has been operated in a manner to
preserve such qualification. No liability has been incurred by any Co-Borrower
or any ERISA Affiliate which remains unsatisfied for any taxes or penalties
with respect to any Employee Benefit Plan or any Multiemployer Plan;
(iii) No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code) been
incurred (without regard to any waiver granted under Section 412 of the Code),
nor has any funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has either Co-Borrower or any
ERISA Affiliate failed to make any contributions or to pay any amounts due and
owing as required by Section 412 of the Code, Section 302 of ERISA or the terms
of any Pension Plan prior to the due dates of such contributions under Section
412 of the Code or Section 302 of ERISA, nor has there been any event requiring
any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to
any Pension Plan;
(iv) Neither any Co-Borrower nor any ERISA Affiliate has: (A)
engaged in a nonexempt prohibited transaction described in Section 406 of ERISA
or Section 4975 of the Code; (B) incurred any liability to the PBGC which
remains outstanding other than the payment of premiums and there are no premium
payments which are due and unpaid; (C) failed to make a
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required contribution or payment to a Multiemployer Plan; or (D) failed to make
a required installment or other required payment under Section 412 of the
Code;
(v) The execution and delivery by Co-Borrowers of this
Agreement and the borrowings hereunder will not involve any prohibited
transaction under ERISA or the Code;
(vi) No Termination Event has occurred or is reasonably
expected to occur; and
(vii) No material proceeding, claim, lawsuit and/or
investigation is existing or, to the best knowledge of Co-Borrowers, threatened
concerning or involving any (A) employee welfare benefit plan (as defined in
Section 3(1) of ERISA) maintained or contributed to by any Co-Borrower or any
ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan.
(i) Margin Stock. Neither Co-Borrower nor any Subsidiary thereof is
engaged principally or as one of its activities in the business of extending
credit other than in connection with any employee benefit plan for the purpose
of "purchasing" or "carrying" any "margin stock" (as each such term is defined
or used in Regulations G and U of the Board of Governors of the Federal Reserve
System). No part of the proceeds of any of the Loans will be used for
purchasing or carrying margin stock or for any purpose which violates, or which
would be inconsistent with, the provisions of Regulation G, T, U or X of such
Board of Governors.
(j) Government Regulation. Neither Co-Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company" (as each such term is defined or used in the Investment Company Act of
1940, as amended) and neither Co-Borrower nor any Subsidiary thereof is, or
after giving effect to any Loan will be, a "Holding Company" or a "Subsidiary
Company" of a "Holding Company" or an "affiliate" of a "Holding Company" within
the respective meanings of each of the quoted terms of the Public Utility
Holding Company Act of 1935 as amended, or any other Applicable Law which
materially limits its ability to incur or consummate the transactions
contemplated hereby.
(k) Patents, Copyrights and Trademarks. Co-Borrowers and their
Material Subsidiaries own or possess all patent, copyright and trademark rights
which are required to conduct their business without infringing upon any
validly asserted rights of others. To the best knowledge and belief of
Co-Borrowers, no event has occurred which permits, or after notice or lapse of
time or both would permit, the revocation or termination of any such rights
which revocation or termination constitutes a Material Adverse Effect. Neither
Co-Borrower nor any of their Subsidiaries has been threatened with any
litigation regarding patents, copyrights or trademarks that would present a
material impediment to the business of any such Person.
(l) Material Contracts. Schedule 5.1(1) sets forth a complete and
accurate list of all contracts or other agreements, written or oral, of
Holdings or any of its Subsidiaries involving monetary liability of or to any
such Person in an amount in excess of $5,000,000 per annum in effect as of the
Closing Date not listed on any other Schedule hereto; other than as set forth
in Schedule 5.1(1), each Co-Borrower and any Subsidiary thereof party thereto
has performed or is performing all of its material obligations under all
Material Contracts and, to the best knowledge of the Co-
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Borrowers, each other party thereto is in substantial compliance with each
Material Contract, and each Material Contract is, and after giving effect to
the consummation of the transactions contemplated by the Loan Documents will
be, in full force and effect in accordance with the terms thereof. Each
Co-Borrower and its Subsidiaries have made available on a confidential basis
for inspection by the Lender a true and complete copy of each written contract
or agreement of Holdings or any of its Subsidiaries required to be listed on
Schedule 5.1(1).
(m) Employee Relations. As of the Closing Date, each of Co-Borrowers
and their Subsidiaries is not, except as set forth on Schedule 5.1(m), party to
any collective bargaining agreement nor has any labor union been recognized as
the representative of its employees. Except as set forth on Schedule 5.1(m),
each Co-Borrower knows of no pending, threatened or contemplated strikes, work
stoppage or other collective labor disputes involving their employees or those
of its Subsidiaries that reasonably could be expected to have a Material
Adverse Effect.
(n) Burdensome Provisions. Neither Co-Borrower nor any Subsidiary
thereof is a party to any indenture, agreement, lease or other instrument, or
subject to any corporate or partnership restriction, Governmental Approval or
Applicable Law which is so unusual or burdensome as in the foreseeable future
could reasonably be expected to have a Material Adverse Effect. Neither Co-
Borrower or its Subsidiaries presently anticipate that future expenditures
needed to meet the provisions of any statutes, orders, rules or regulations of
a Governmental Authority will be so burdensome as to have a Material Adverse
Effect.
(o) Financial Statements. All balance sheets, statements of income,
retained earnings, stockholders' equity and cash flows, and all other financial
information of Co-Borrowers and their Subsidiaries (exclusive of any financial
projection under Section 6.1(c) or otherwise) which have been furnished by each
Co-Borrower to the Lender for the purposes of or in connection with this
Agreement, including without limitation the financial statements described in
Section 4.2 (d), have been prepared in all material respects in accordance with
GAAP consistently applied throughout the periods involved and present fairly in
accordance with GAAP in all material respects the matters reflected therein
subject, in the case of unaudited statements, to changes resulting from normal
year-end audit adjustments and items that would be disclosed in footnotes to
the audited statements. As of the Closing Date, except as set forth on Schedule
5.1(o), neither Co-Borrower nor any of its Subsidiaries has any contingent
liability or liability for taxes, long-term leases or unusual forward or
long-term commitments which are not reflected in the financial statements
described above or in the notes thereto.
(p) Solvency. As of the Closing Date and after giving effect to each
Loan made hereunder, each Co-Borrower and each of their Material Subsidiaries
will be Solvent.
(q) Titles to Properties. Each Co-Borrower and their Subsidiaries has
such title to the real property owned or leased by it as is necessary or
desirable to the conduct of its business and good and valid title to all of its
personal property sufficient to carry on its business as presently conducted,
except such property as has been disposed of by either Co-Borrower or its
Subsidiaries subsequent to such date which dispositions have been in the
ordinary course of business or as
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otherwise expressly permitted hereunder. Schedule 5.1(q) hereto sets forth the
address of all real property owned or leased by a Borrower (and if leased, the
record owner thereof).
(r) Liens. None of the properties and assets of either Co-Borrower or
any Subsidiary thereof is subject to any Lien, except in each case Permitted
Liens. No financing statement under the Uniform Commercial Code of any state
which names either Co-Borrower or any Subsidiary thereof or any of their
respective trade names or divisions as debtor and which is still in effect, has
been filed in any state or other jurisdiction and neither Co-Borrower nor any
Subsidiary thereof has signed any such financing statement or any security
agreement authorizing any secured party thereunder to file any such financing
statement, except to perfect Permitted Liens.
(s) Debt and Contingent Obligations. Schedule 5.1(s) is a complete
and correct listing as of the Closing Date of all Debt and Contingent
Obligations of Co-Borrowers and their Subsidiaries exceeding individually the
amount of $500,000. Each Co-Borrower and their Subsidiaries have performed and
are in material compliance with all of the terms of such Debt and Contingent
Obligations and all instruments and agreements relating thereto, and no default
or event of default, or event or condition which with notice or lapse of time
or both would constitute such a default or event of default on the part of
either Co-Borrower or their Subsidiaries exists with respect to any such Debt
or Contingent Obligation. Schedule 5.1(s) sets forth a complete and correct
listing of all bid, performance, litigation and similar bonds or guarantees
entered into by Holdings or any of its Subsidiaries as in effect on the Closing
Date.
(t) Litigation. Except as set forth on Schedule 5.1(t), there are no
actions, suits or proceedings pending nor, to the knowledge of the
Co-Borrowers, threatened against or in any other way relating adversely to or
affecting either Co-Borrower or any Subsidiary thereof or any of their
respective properties in any court or before any arbitrator of any kind or
before or by any Governmental Authority which, if adversely determined, is
reasonably likely to have a Material Adverse Effect. Except as set forth on
Schedule 5.1(t), there is no attachment, judgment, lien, levy or order
exceeding the Material Judgment Amount that has been placed upon or assessed
against either Co-Borrower or any of their Subsidiaries and remains
undischarged or unstayed.
(u) Franchise and License Fees. Each Co-Borrower and each of its
Subsidiaries have paid all material franchise, license or other fees and
charges which have become due pursuant to any Governmental Approval in respect
of its business and has made appropriate provisions as is required by GAAP for
any such fees and charges which have accrued.
(v) Absence of Defaults. No event has occurred or is continuing which
constitutes a Default or an Event of Default, or which constitutes, or which
with the passage of time or giving of notice or both would constitute, a
default or event of default by either Co-Borrower or any Subsidiaries thereof
under any Material Contract or material judgment, decree or order of a court of
competent jurisdiction to which either Co-Borrower or its Subsidiaries is a
party or by which either Co-Borrower or their Subsidiaries or any of their
respective properties may be bound or which would require either Co-Borrower or
their Subsidiaries to make any payment thereunder prior to the scheduled
maturity date therefor.
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(w) Accuracy and Completeness of Information. All written
information, reports and other papers and data produced by or on behalf of
either Co-Borrower or any of their Subsidiaries thereof and furnished to the
Lender were, at the time the same were so furnished, complete and correct in
all material respects. No document furnished or written statement made to the
Lender by either Co- Borrower or any Subsidiary thereof in connection with the
negotiation, preparation or execution of this Agreement or any of the Loan
Documents contains or will, when considered as a whole, contain any untrue
statement of a fact material to the creditworthiness of Co-Borrower or its
Subsidiaries or omits or will omit to state a material fact necessary in order
to make the statements contained therein not misleading. Neither Co-Borrower is
aware of any facts which it has not disclosed in writing to the Lender having a
Material Adverse Effect, or insofar as either Co-Borrower can now foresee,
could reasonably be expected to have a Material Adverse Effect.
(x) Year 2000. The Co-Borrowers have (i) undertaken a sufficient
inventory, review and assessment of all areas within their business and
operations that could be adversely affected by the failure of the Co-Borrowers
to be Year 2000 Compliant on a timely basis, (ii) developed a plan and timeline
for becoming Year 2000 Compliant on a timely basis, (iii) to date, implemented
that plan in accordance with that timeline in all material respects, and (iv)
made inquiry of its key suppliers, vendors and customers as to whether such
person(s) will, on a timely basis, be Year 2000 Compliant in all material
respects and on the basis of such inquiry reasonably believes that all such
person(s) will be Year 2000 Compliant. "Year 2000 Compliant" shall means that,
in all material respects, all computer and software related applications shall
be able to recognize and perform properly, date sensitive functions involving
dates prior to and after December 31, 1999. The Co-Borrowers shall take all
action reasonably necessary to ensure that the Borrowers shall be Year 2000
Compliant and that no material adverse change will arise in the Co-Borrowers'
financial condition as a result of its efforts or failure to be Year 2000
Compliant.
(y) No Material Adverse Change. Since December 31, 1998, there shall
not have occurred any event or condition (other than matters of general
economic or political nature) that has had or is reasonably likely to have a
Material Adverse Effect.
SECTION 5.2 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article V and all
representations and warranties contained in any certificate or in any of the
Loan Documents (including without limitation, any such representation or
warranty made in or in connection with any amendment thereto) shall constitute
representations and warranties made under this Agreement. All representations
and warranties made under this Agreement (a) shall be made or deemed to be made
at and as of the Closing Date and as of each borrowing date with the same
effect as if made on and as of the Closing Date, except to the extent that such
representations and warranties relate solely to an earlier date, in which case
such representations and warranties shall have been true and correct on and as
of such earlier date, and (b) shall survive the Closing Date and shall not be
waived by the execution and delivery of this Agreement, any investigation made
by or on behalf of the Lender or any borrowing hereunder.
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ARTICLE VI
FINANCIAL INFORMATION AND NOTICES
Until payment in full of the Obligations and termination of the
Commitment, unless consent has been obtained in the manner set forth in Section
11.10 hereof, the Co-Borrowers will furnish or cause to be furnished to the
Lender at its address set forth in Section 11.1 hereof, or such other address
as may be designated by the Lender from time to time:
SECTION 6.1 Financial Statements and Projections.
(a) Quarterly Financial Statements. As soon as practicable and in any
event no later than forty-five (45) days after the end of each fiscal quarter,
an unaudited Consolidated and consolidating balance sheet of each Holdings and
the Subsidiaries as of the close of such fiscal quarter and unaudited
Consolidated and consolidating statements of income, retained earnings and cash
flows for the fiscal quarter then ended and that portion of the Fiscal Year
then ended, including the notes thereto, all in reasonable detail setting forth
in comparative form the corresponding budgeted figures for the portion of the
Fiscal Year then ended and the corresponding figures for the preceding Fiscal
Year for the portion of the Fiscal Year then ended and prepared by in
accordance with GAAP, and certified by the chief financial officer of Holdings
to present fairly in all material respects the financial condition of Holdings
and its Subsidiaries as of their respective dates and the results of operations
of Holdings and its Subsidiaries for the respective periods then ended.
(b) Annual Financial Statements. As soon as practicable and in any
event no later than ninety (90) days after the end of each Fiscal Year, an
unaudited consolidating balance sheet of Holdings and Subsidiaries and an
audited Consolidated balance sheet of Holdings and Subsidiaries as of the close
of such Fiscal Year and audited Consolidated statements of income, retained
earnings and cash flows for the Fiscal Year then ended, including the notes
thereto, all in reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year and prepared by an
independent certified public accounting firm of nationally recognized standing
in accordance with GAAP, and accompanied by a report thereon by such certified
public accountants that is not qualified with respect to scope limitations
imposed by either Co-Borrower or any of their Subsidiaries or with respect to
accounting principles followed by Co-Borrowers or any of their Subsidiaries not
in accordance with GAAP.
(c) Annual Business Plan and Financial Projections. As soon as
practicable and in any event within sixty (60) days after the beginning of each
Fiscal Year, a business plan of Co-Borrowers and their Material Subsidiaries
for the ensuring four fiscal quarters, such plan to include, on a quarterly
basis, the following: a quarterly operating and capital budget, a projected
income statement, statement of cash flows and balance sheet and a report
containing management's discussion and analysis of such projections (such
business plan and projections, the "Projections"), accompanied by a certificate
from the chief financial officer of each Co-Borrowers to the effect that, to
the best of such officer's knowledge, the Projections are good faith estimates
of the financial condition and operations of each Co-Borrowers and their
Subsidiaries for such four quarter period.
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SECTION 6.2 Officer's Compliance Certificate At each time financial
statements are delivered pursuant to Sections 6.1(a) or (b), a certificate of
the chief financial officer of each Co-Borrower in the form of Exhibit D
attached hereto (an "Officer's Compliance Certificate"):
(a) stating that such officers have reviewed such financial
statements and such statements fairly present the financial condition of each
Co-Borrower and their Subsidiaries as of the dates indicated and the results of
their operations and cash flows for the periods indicated;
(b) stating that to such officer's knowledge, based on a reasonable
examination, no Default or Event of Default exists, or, if such is not the
case, specifying such Default or Event of Default and its nature, when it
occurred, whether it is continuing and the steps being taken by the Co-
Borrowers with respect to such Default or Event of Default;
(c) setting forth as at the end of such fiscal quarter or Fiscal
Year, as the case may be, the calculations required to establish whether or not
each Co-Borrower and their Subsidiaries were in compliance with the financial
covenants set forth in Article VIII hereof as at the end of each respective
period and the Applicable Margin pursuant to Section 3.1(c) as at the end of
each respective period;
(d) setting forth as at the end of such Fiscal Year (or, upon the
request of the Lender in its sole discretion, as at the end of such fiscal
quarter), for each corporation, partnership, or other entity in which either or
both Co-Borrowers has any ownership interest at the end of such period, the
Cash Flow Percentage for such entity for the consecutive four quarter period
ending on such Fiscal Year end (or, as requested by the Lender, fiscal quarter
end); and
(e) stating all amounts outstanding under each outstanding Foreign
Subsidiary Note, as of the end of such fiscal quarter or Fiscal Year, as the
case may be.
SECTION 6.3 Other Certificates and Reports
(a) Promptly upon receipt thereof, copies of any management report
and any management responses thereto submitted to any Co-Borrower or their
Board of Directors by their independent public accountants in connection with
their auditing function;
(b) Promptly after a request therefor, such other information
regarding the operations, business affairs and financial condition of each
Co-Borrower or any of their Subsidiaries as the Lender may reasonably request;
(c) Promptly upon filing or receipt of any filing made with the SEC
by or with respect to Holdings or any Subsidiary pursuant to Section 13 or
15(d) of the Exchange Act, copies of the same, and copies of all notices and
proxy and other information provided by Holdings to its shareholders;
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(d) At each time financial statements are required to be delivered
pursuant to Section 6.1(b) a listing setting forth as of the end of such Fiscal
Year all Material Contracts constituting lottery or promotional game customer
contracts; and
(e) At each time financial statements are required to be delivered
pursuant to Section 6.1(a), a report setting forth bid activity (and specifying
bids won and lost) in respect of all lottery and promotional game contracts or
other agreements, written or oral, bid upon by Co-Borrowers or any of their
Subsidiaries and involving revenue to Co-Borrowers or any of their Subsidiaries
of $5,000,000 or more over the stated life of such contract or agreement,
substantially in the form of Exhibit L.
SECTION 6.4 Notice of Litigation and Other Matters. Promptly (but in no
event later than ten (10) days after a Responsible Officer of any Co-Borrower
or Guarantor obtains actual knowledge thereof) give telephonic and written
notice of:
(a) the commencement of all material proceedings and investigations
by or before any Governmental Authority and all material actions and
proceedings in any court or before any arbitrator against or involving either
Co-Borrower or any Subsidiary thereof or any of their respective properties,
assets or businesses;
(b) any notice of any material violation received by either
Co-Borrower or any Subsidiary thereof from any Governmental Authority,
including without limitation, any notice of a material violation of
Environmental Law;
(c) any labor controversy that has resulted in, or could reasonably
be expected to result in, a strike or other work action against either
Co-Borrower or any Subsidiary thereof;
(d) any attachment, judgment, lien, levy or order exceeding the
Material Judgment Amount that may be placed upon or assessed against either
Co-Borrower or any of their Subsidiaries;
(e) any Default or Event of Default, or any event, of which a
Responsible Officer has actual knowledge, which constitutes or which with the
passage of time or giving of notice or both would constitute a default or event
of default under any Material Contract to which either Co- Borrower or any of
their Subsidiaries is a party or by which either Co-Borrower or any Subsidiary
thereof or any of their respective properties may be bound;
(f) (i) the failure of either Co-Borrower or any ERISA Affiliate to
make a required installment or payment under Section 302 of ERISA or Section
412 of the Code by the due date, (ii) any Termination Event or "prohibited
transaction," as such term is defined in Section 406 of ERISA or Section 4975
of the Code, in connection with any Employee Benefit Plan or any trust created
thereunder, along with a description of the nature thereof, what action such
Co-Borrower has taken, is taking or proposes to take with respect thereto and,
when known, any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto, (iii) all notices
received by either Co-Borrower or any ERISA Affiliate of the PBGC's intent to
terminate
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any Pension Plan or to have a trustee appointed to administer any Pension Plan,
(iv) all notices received by any Borrower or any ERISA Affiliate from a
Multiemployer Plan sponsor concerning the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA, (v) any Borrower obtaining
knowledge or reason to know that either Co-Borrower or any ERISA Affiliate has
filed or intends to file a notice of intent to terminate any Pension Plan under
a distress termination within the meaning of Section 4041(c) of ERISA, and (vi)
the requirement to file any notice with the Internal Revenue Service,
Department of Labor, PBGC or any plan participant, beneficiary or alternate
payee required under Sections 101(d), 302(f)(4), 303 and 307 of ERISA or under
Section 401(a)(29) of the Code with respect to any Employee Benefit Plan of
either Co-Borrower or any ERISA Affiliate; or
(g) any event which makes any of the representations set forth in
Section 5.1 inaccurate in any material respect.
SECTION 6.5 Accuracy of Information. All written information, reports,
statements and other papers and data furnished by or on behalf of either
Co-Borrower to the Lender whether pursuant to this Article VI or any other
provision of this Agreement, or any of the Loan Documents, shall be, at the
time the same is so furnished, complete and correct in all material respects
based on the applicable Co-Borrower's knowledge thereof.
SECTION 6.6 Notice of Demand for Reimbursement, etc. Promptly (but in
no event later than three (3) Business Days) after any demand or request is
made against any Co-Borrower or any of its Subsidiaries for reimbursement or
repayment of any drawing or payments under or pursuant to any bid, performance,
litigation and similar bonds or guarantees entered into in the ordinary course
of business that individually, or in the aggregate for all such bonds or
guarantees, exceeds $5,000,000, Co-Borrowers shall give the Lender written
notice of each such request for reimbursement or repayment thereof, together
with (i) pro forma financial statements prepared based upon the most recent
quarterly or annual financial statements required to be delivered to the Lender
pursuant to Section 6.1 hereof and adjusted to reflect the financial impact of
the reimbursement of such bonds and guarantees and, if unreimbursed, such
unreimbursed portion of such bonds and guarantees shall be counted as Debt, and
(ii) an Officer's Compliance Certificate demonstrating on a pro forma basis,
after giving effect to the adjustments as required in the immediately preceding
clause (i), compliance with the financial covenants set forth in Article VIII
hereof as of the date of required delivery of said certificate.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until payment in full of the Obligations and termination of the
Commitment, unless consent has been obtained in the manner provided for in
Section 11.10, each Co-Borrower will, and will cause each of their Subsidiaries
to:
SECTION 7.1 Preservation of Corporate Existence and Related Matters.
Except as permitted by Section 9.5, preserve and maintain its separate
corporate existence and all material
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rights, franchises, licenses and privileges necessary to the conduct of its
business, and qualify and remain qualified as a foreign corporation and
authorized to do business in each jurisdiction where it is doing business so as
to require such qualification and authorization.
SECTION 7.2 Maintenance of Property. Take commercially reasonable
actions to protect and preserve all material properties useful in and material
to its business, including material copyrights, patents, trade names and
trademarks; maintain in good working order and condition (reasonable wear and
tear excepted) all buildings, equipment and other tangible real and personal
property; and from time to time make or cause to be made all renewals,
replacements and additions to such property necessary in the reasonable
judgement of such Co-Borrower for the conduct of its business, so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.
SECTION 7.3 Insurance. Maintain insurance with financially sound and
reputable insurance companies against such risks and in such amounts as are
customarily maintained by similar businesses and as may be required by
Applicable Law, and on the Closing Date and from time to time thereafter
deliver on a confidential basis to the Lender upon its request a detailed list
of the insurance then in effect, stating the names of the insurance companies,
the amounts and rates of the insurance, the dates of the expiration thereof and
the properties and risks covered thereby.
SECTION 7.4 Accounting Methods and Financial Records. Maintain a system
of accounting, and keep such books, records and accounts (which shall be true
and complete in all material respects) as may be required or as may be
necessary to permit the preparation of financial statements in accordance with
GAAP and in compliance with the regulations of any Governmental Authority
having jurisdiction over it or any of its properties.
SECTION 7.5 Payment and Performance of Obligations. Pay and perform all
Obligations under this Agreement and the other Loan Documents, subject to
notice and cure provisions, and pay or perform (i) all taxes, assessments and
other governmental charges that may be levied or assessed upon it or any of its
property, and (ii) all other indebtedness, obligations and liabilities in
accordance with customary trade practices; provided, however, that each
Co-Borrower and its Subsidiaries may contest or dispute any item described in
clauses (i) and (ii) hereof in good faith so long as adequate reserves are
maintained with respect thereto in accordance with GAAP.
SECTION 7.6 Compliance With Laws and Approvals. In jurisdictions where
doing business, observe and remain in material compliance with all Applicable
Law and maintain in full force and effect all material Governmental Approvals,
in each case applicable or necessary to the conduct of its business.
SECTION 7.7 Environmental Law. In addition to and without limiting the
generality of Section 7.6, (i) comply in all material respects with, and use
commercially reasonable efforts to ensure such compliance by all of its tenants
and subtenants, if any, with, all applicable Environmental Law and obtain and
comply with and maintain, and use commercially reasonable efforts to ensure
that all of its tenants and subtenants obtain and comply with and maintain, any
and all material licenses, approvals, notifications, registrations or permits
required by applicable
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Environmental Law, provided, that allegations of noncompliance may be contested
in good faith by reasonable procedures so long as the failure to comply would
not reasonably be expected to result in a Material Adverse Effect; (ii) conduct
and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Law, and
timely comply with all lawful orders and directives of any Governmental
Authority regarding Environmental Law; and (iii) defend, indemnify and hold
harmless the Lender, and their respective parents, Subsidiaries, Affiliates,
employees, agents, officers and directors, from and against any claims,
demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of, noncompliance with
or liability under any Environmental Law applicable to the operations of such
Co-Borrower or its Subsidiaries, or any orders, requirements or demands of
Governmental Authorities related thereto, including, without limitation,
reasonable attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent that
any of the foregoing arise out of or relate to the breach of law, gross
negligence or willful misconduct of any party who would otherwise be entitled
to indemnification therefor.
SECTION 7.8 Compliance with ERISA and the Code. In addition to and
without limiting the generality of Section 7.6, make timely payment of
contributions required to meet the minimum funding standards set forth in ERISA
or the Code with respect to any Employee Benefit Plan; not take any action or
fail to take action the result of which could be a material liability to the
PBGC or to a Multiemployer Plan; not participate in any prohibited transaction
that could result in any material civil penalty under ERISA or material tax
under the Code; furnish to the Lender upon the Lender's request such additional
information about any Employee Benefit Plan as may be reasonably requested by
the Lender; and operate each Employee Benefit Plan in such a manner that such
plan would not reasonably be expected to incur any material tax liability under
Section 4980B of the Code or any material liability to any qualified
beneficiary as defined in Section 4980B of the Code.
SECTION 7.9 Compliance With Agreements. Comply in all material respects
with each term, condition and provision of all material leases, agreements and
other instruments entered into in the conduct of its business including,
without limitation, any Material Contract in each instance in which failure to
comply could reasonably be expected to have a Material Adverse Effect,
provided, that whether or not failure to comply could reasonably be expected to
have a Material Adverse Effect, each Co-Borrower and its Subsidiaries shall
always attempt in good faith to comply in all material respects with all such
leases, agreements, and other instruments.
SECTION 7.10 Conduct of Business. The Company will not, and will not
permit any Material Subsidiary to, engage in any business other than a
Permitted Business, except to such extent as would not be material to the
Company and its Material Subsidiaries, taken as a whole, provided, however,
that the Company and any Material Subsidiary also may engage in a business
other than a Permitted Business, so long as such non-Permitted Business is
acquired in connection with the acquisition of a Permitted Business and such
non-Permitted Business is held for disposition and disposed of within 365 days
of its acquisition.
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SECTION 7.11 Visits and Inspections. Upon reasonable prior notice
therefrom and during normal business hours, permit representatives of the
Lender, from time to time, in each case subject to reasonable security
procedures, (i) to visit and inspect its properties; (ii) inspect, audit and
make extracts from its books, records and files, including, but not limited to,
management letters prepared by independent accountants; and (iii) discuss with
its principal officers, and its independent accountants, its business, assets,
liabilities, financial condition, results of operations and business prospects.
SECTION 7.12 Subsidiaries. Co-Borrowers and their Subsidiaries may
acquire new Subsidiaries or form new Subsidiaries and use such Subsidiaries to
acquire any business permitted under Section 7.10 or a substantial portion of
the assets of any Person or to enter into and perform any contract involving
the conduct of business permitted by Section 7.10, subject to the provisions of
this Section 7.12 and to the other terms of this Agreement and so long as any
such acquisition is a Permitted Acquisition under Section 9.4(x). Unless a new
Subsidiary is, as a part of an acquisition transaction, merged upon the
consummation thereof into one of the Co-Borrowers with such Co-Borrower being
a surviving entity, then the Co-Borrowers shall cause each new Subsidiary,
which is a Material Subsidiary or a Guarantor, to cause to be executed and
delivered to the Lender: (i) unless the new Subsidiary is a foreign Subsidiary
for which the Company has established that there is a Deemed Distribution
Event, in which case the Subsidiary will execute a Limited Foreign Guaranty, a
Joinder Agreement and the documents referred to therein, (ii) such other
documents reasonably requested by the Lender consistent with the terms of this
Agreement which provide that such Subsidiary shall become bound by all of the
terms, covenants and agreements contained in the Loan Documents and (iii) such
other documents as the Lender shall reasonably request, including without
limitation, officers' certificates, financial statements, opinions of counsel,
board resolutions, charter documents, certificates of existence and authority
to do business and any other closing certificates and Loan Documents described
in Section 4.2.
As soon as practicable upon any corporation, partnership or other
entity's becoming a Material Subsidiary, the corporation, partnership, or other
entity, unless it is an entity for which the Company has established that there
is a Deemed Distribution Event, in which case the entity will execute a Limited
Foreign Guaranty, will execute (i) a Joinder Agreement and the documents
referred to therein, (ii) such other documents reasonably requested by the
Lender consistent with the terms of this Agreement which provide that such
entity shall become bound by all of the terms, covenants and agreements
contained in the Loan Documents and (iii) such other documents as the Lender
shall reasonably request, including without limitation, officers' certificates,
financial statements, opinions of counsel, board resolutions, charter
documents, certificates of existence and authority to do business and any other
closing certificates and Loan Documents described in Section 4.2.
SECTION 7.13 Further Assurances. Make, execute and deliver all such
additional and further acts, things and instruments as the Lender may
reasonably require to and consummate the transactions contemplated hereby and
to vest completely in and insure the Lender its rights under this Agreement,
the Notes and the other Loan Documents.
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SECTION 7.14 Year 2000 Compatibility. Promptly and in no event later
than December 31, 1999, take all action necessary to ensure that Co-Borrowers'
computer based systems are able to operate and effectively process data
including dates on and after December 31, 1999. At the request of the Lender,
Co-Borrowers shall provide the Lender assurances in form and substance
satisfactory to the Lender of Co-Borrowers' year 2000 compatibility.
ARTICLE VIII
FINANCIAL COVENANTS
Until payment in full of the Obligations and termination of the
Commitment, unless consent has been obtained in the manner set forth in Section
11.10 hereof, Holdings and its Subsidiaries on a Consolidated basis will not:
SECTION 8.1 Leverage Ratio. As of any fiscal quarter end and as of the
date that any Officer's Compliance Certificate is required to be delivered
pursuant to Section 6.6 hereof, permit the Leverage Ratio to exceed fifty
percent (50%).
SECTION 8.2 Fixed Charge Coverage Ratio. At each fiscal quarter end and
as of the date that any Officer's Compliance Certificate is required to be
delivered pursuant to Section 6.6 hereof, permit the Fixed Charge Coverage
Ratio for Holdings and its Subsidiaries for the four quarter period consisting
of such quarter and the immediately preceding three quarters to be less than
3.00 to 1.00.
ARTICLE IX
NEGATIVE COVENANTS
Until payment in full of the Obligations and termination of the
Commitment, unless consent has been obtained in the manner set forth in Section
11.10 hereof, each Co-Borrower will not and will not permit any of their
Subsidiaries to:
SECTION 9.1 Limitations on Debt. Create, incur, assume or suffer to
exist any Debt except (i) the Obligations, (ii) Debt set forth on Schedule 9.1,
and renewals, refinancings or extensions thereof in principal amount not in
excess of that outstanding as of the date of such renewal, refinancing or
extension and having the terms, collateral and guarantors not materially less
favorable to Co-Borrowers, taken as a whole, than as the renewed Debt, (iii)
Debt consisting of Contingent Obligations permitted by Section 9.2, (iv) Debt
of any Co-Borrower or Guarantor to any other Co- Borrower or Guarantor, but
only if such Debt is subordinated to the Obligations pursuant to the terms and
conditions of the Intercompany Subordination Agreement, (v) Debt that may be
payable with respect to hedging agreements entered into in order to manage
existing or anticipated interest rate, exchange rate or commodity price risks
and not for speculative purposes; (vi) Debt and obligations owing under
documentary letters of credit generally; (vii) Debt in the principal amount of
up to $80,000,000 incurred by Co-Borrowers under the Three-Year Credit
Agreement, (viii) Debt incurred by Co-Borrowers under the Existing Letter of
Credit and Reimbursement Agreement, (ix)
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Debt not in excess of Fifteen Million Dollars ($15,000,000), constituting real
estate financing incurred in connection with the construction of certain new
facilities of Scientific Games International Limited so long as the scheduled
maturity of such Debt is after the Revolver Facility Termination Date ("Real
Estate Financing Debt"), and (x) other Debt that, together with any Real Estate
Financing Debt permitted to be incurred pursuant to clause (ix) above, is not
in excess of twenty Million Dollars ($20,000,000). Each of the categories of
Permitted Debt referred to in clauses (i) through (x) above is cumulative and
independent of each other category.
SECTION 9.2 Limitations on Contingent Obligations. Other than as
provided in Schedule 9.2, or as otherwise permitted by Section 9.1 (including
any guarantee by Holdings or any of its Subsidiaries of (i) any Real Estate
Financing Debt, (ii) any obligations of any Co-Borrower or any of their
Subsidiaries under the Three-Year Credit Agreement or the Existing Letter of
Credit and Reimbursement Agreement), create, incur, assume or suffer to exist
any Contingent Obligations, except Contingent Obligations arising under hedging
agreements entered into in order to manage existing or anticipated interest
rate, exchange rate or commodity price risks and not for speculative purposes.
SECTION 9.3 Limitations on Liens. Create, incur, assume or suffer to
exist, any Lien on or with respect to any of its assets or properties
(including shares of capital stock), real or personal, whether now owned or
hereafter acquired, except Permitted Liens, including those set forth on
Schedule 9.3.
SECTION 9.4 Limitations on Loans, Advances, Investments and
Acquisitions.
(a) Allow its aggregate loans, investments (measured at the time of
the making of the investments), and interests (measured at the time of
obtaining the interests) in other than Material Subsidiaries that are
Guarantors to exceed at any time an amount equal to ten percent (10%) of the
then Consolidated shareholders equity of Holdings.
(b) Except as provided in subsections (i) through (xi) below,
purchase, own, invest in or otherwise acquire, directly or indirectly, any
capital stock, interests in any partnership or joint venture, evidence of Debt
or other obligation or security, substantially all or a material portion of the
business or assets of any other Person or any other investment or interest
whatsoever in any other Person; or make or permit to exist, directly or
indirectly, any loans, advances or extensions of credit to, or any investment
in cash or by delivery of property in, any Person; or enter into, directly or
indirectly, any commitment or option in respect of the foregoing:
(i) investments in Material Subsidiaries that are Guarantors and the
other existing loans, advances and investments described on
Schedule 9.4 (other than existing loans, advances and
investments in SG Austria, which shall be permitted only to the
extent provided for in clause (xi) below);
(ii) investments in (A) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or
any agency thereof (or if the investment is made by a foreign
Subsidiary, by the government or agency thereof of
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the country in which such funds, instruments or obligations are
denominated) ("Government Securities") maturing within one (1)
year from the date of acquisition thereof, (B) commercial paper
maturing no more than 120 days from the date of creation thereof
and currently having the highest rating obtainable from either
Standard & Poor's Corporation, Xxxxx'x Investors Service, Inc.,
or Fitch's Investors Services, Inc., (C) certificates of deposit
issued by bankers' acceptances of, and reverse repurchase
agreements covering Government Securities issued by, the Lender
or any other commercial bank incorporated under the laws of the
United States of America or any state thereof (or, if the
investment is made by a foreign Subsidiary, by the government or
agency thereof in which such funds, instruments or obligations,
as the case may be are denominated, if any), each having
combined capital, surplus and undivided profits of not less than
$500,000,000 and having, in the case of institutions organized
in the United States, a rating of "A" or better by a nationally
recognized rating agency; provided, that the aggregate amount
invested in such certificates of deposit shall not at any time
exceed $5,000,000 for any one such certificate of deposit and
$10,000,000 for any one such bank, or (D) demand or time
deposits maturing no more than one year from the date of
creation thereof with commercial banks or savings banks or
savings and loan associations each having membership either in
the Federal Deposit Insurance Corporation ("FDIC") or the
deposits of which are insured by the FDIC and in amounts not
exceeding the maximum amounts of insurance thereunder;
(iii) investments in either Co-Borrowers or Material Subsidiaries
created or acquired after the Closing Date; provided, that such
Material Subsidiaries become Guarantors hereunder pursuant to
the requirements of Section 7.12 hereof;
(iv) loan and advances to officers, directors and employees of one or
more of the Co-Borrowers or their Subsidiaries in an aggregate
amount not to exceed $2 million at any time outstanding;
(v) deposits for utilities, security deposits, leases and similar
prepaid expenses incurred in the ordinary course of business;
(vi) trade accounts created in the ordinary course of business;
(vii) shares of money market funds, including those of the Lender,
that invest solely in permitted investments of the kinds
described in clause (ii) above;
(viii) investments consisting of hedging agreements as permitted under
Section 9.1;
(ix) investments received in connection with the settlement of
litigation or in settlement of delinquent obligations of, and
other disputes with, customers and suppliers arising in the
ordinary course of business or in connection with the bankruptcy
or reorganization of any Person; and
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(x) investments by either Co-Borrower or any Subsidiary in the form
of acquisitions of all or substantially all of the business or a
line of business (whether by the acquisition of capital stock,
assets or any combination thereof) of any other Person so long
as each of the following conditions are met: (A) (I) the
acquisition does not result in Holdings or any of its Material
Subsidiaries engaging in any business other than a Permitted
Business, except as otherwise permitted pursuant to Section 7.10
hereof, (B) no Default or Event of Default is in existence at
the time of such acquisition or would be created as a
consequence of such acquisition, (C) Co-Borrowers shall have
furnished to the Lender an Officer's Compliance Certificate
demonstrating, on a pro forma basis after giving effect to the
consummation of the subject acquisition, compliance with the
financial covenants contained in Article VIII of this Agreement,
and (D) Co-Borrowers shall promptly deliver to the Lender such
other documents and information as the Lender shall reasonably
request. Each acquisition consummated in accordance with the
provisions of this subsection 9.4(b)(x) shall be referred to as
a "Permitted Acquisition"; and
(xi) investments in the form of loans, advances or extensions of
credit by either Co-Borrower to SG Austria so long as (i) the
aggregate amount of all such investments does not at any time
exceed $12,000,000, and (ii) each such loan, advance or
extension of credit is evidenced by a promissory note which has
been duly executed by SG Austria and pledged to the
Administrative Agent pursuant to the Note Pledge Agreement.
SECTION 9.5 Limitations on Mergers and Liquidation. Merge, consolidate
or enter into any similar combination with any other Person or liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution) except
(i) any Co-Borrowers or any Material Subsidiary of either Co-Borrower that is
a Guarantor may merge with either Co-Borrower or any other Material Subsidiary
of either Co-Borrower that is a Guarantor and (ii) any Material Subsidiary may
merge with or into any other Person for the purpose of consummating any
acquisition permitted by Section 9.4 as long as either a Co-Borrower or a
Material Subsidiary that is a Guarantor is the surviving Person and no Default
or Event of Default shall have occurred before and after giving effect to such
merger.
SECTION 9.6 Limitations on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, the sale of any receivables and leasehold
interests and any sale-leaseback or similar transaction), whether now owned or
hereafter acquired except:
(i) the sale of inventory in the ordinary course of business;
(ii) the sale of investments in the ordinary course of business;
(iii) the sale of obsolete or surplus assets no longer used or usable
in the business of either Co-Borrower or any of its Subsidiaries or as
otherwise permitted by Section 7.2;
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(iv) the sale or discount without recourse of Receivables arising in
the ordinary course of business in connection with the compromise or collection
thereof;
(v) the sale by any Co-Borrower or any Subsidiary of any of its
property to any Co-Borrower or to any Subsidiary which is or becomes a
Guarantor; or
(vi) the sale of property and assets not contemplated by the
foregoing clauses, which, when added to other sales of property and assets in
the same Loan Year, were not conveyed for total gross consideration of more
than twenty million Dollars ($20,000,000) and which, when added to other sales
of property and assets since the Closing Date, were not for total gross
consideration payable of more than twenty-five million Dollars ($25,000,000).
SECTION 9.7 Transactions with Affiliates. Except as otherwise permitted
by Section 9.4(b)(iv), directly or indirectly: (i) make any loan or advance to,
or purchase or assume any note or other obligation to or from, any of its
officers, directors, shareholders or other Affiliates, or to or from any member
of the immediate family of any of its officers, directors, shareholders or
other Affiliates, or (ii) enter into, or be a party to, any transaction with
any of its Affiliates, except (A) upon fair and reasonable terms that are fully
disclosed to the Lender and are no less favorable to it than it would obtain in
a comparable arm's length transaction with a Person not its Affiliate, or (B)
transactions between Co-Borrowers and any Material Subsidiary or other
Guarantor or between Material Subsidiaries or Guarantors, or (C) any employee
or director compensation arrangement of the Co-Borrowers or their Subsidiaries
which has been approved by a majority of Holdings' disinterested directors. No
director shall be deemed not to be a "disinterested director" by reason of his
or her receipt of normal directors fees or participation in director benefit
plans, including, without limitation, director stock grant or stock option
plans, deferred compensation plans or other forms of director remuneration as
shall be reasonable and customary.
SECTION 9.8 Certain Accounting Changes. Change its Fiscal Year end, or
make any material change in its accounting treatment and reporting practices
except as required by GAAP.
SECTION 9.9 Licenses. Terminate any Governmental Approval or any
Material Contract unless the Board of Directors of the Co-Borrower or
Subsidiary proposing to effect the termination has determined that such
termination would not have a Material Adverse Effect.
SECTION 9.10 Restrictive Agreements. Except as to any Debt permitted by
clauses (vii), (viii) and (x) of Section 9.1 of this Agreement, enter into (i)
any agreement providing for Debt of either Co-Borrower or their Subsidiaries
which contains any negative pledge on assets or any covenants materially more
restrictive than the provisions of this Agreement hereof, or which restricts,
limits or otherwise encumbers its ability to incur Liens on or with respect to
any of its assets or properties other than the assets or properties securing
such Debt, or (ii) any agreement other than a Permissible Restrictive Agreement
which shall restrict, limit or otherwise encumber (by covenant or otherwise)
the ability to make any payment to either Co-Borrower or any of their
Subsidiaries, in the form of dividends, intercompany advances or otherwise.
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ARTICLE X
DEFAULT AND REMEDIES
SECTION 10.1 Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority or otherwise:
(a) Default in Payment of Principal of Loans. Either Co-Borrower
shall default in any payment of principal of any Loan or Note when and as due
(whether at maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. Either Co-Borrower shall fail to pay
interest on any Loan or Note or any fee or any other Obligation within five
Business Days of the date the same shall be due.
(c) Misrepresentation. Any representation or warranty made or deemed
to be made by either Co-Borrower or any of its Subsidiaries under this
Agreement, any Loan Document or any amendment hereto or thereto, shall at any
time prove to have been incorrect or misleading in any material respect when
made or deemed made.
(d) Default in Performance of Certain Covenants. There shall be a
default in the performance or observance of any covenant or agreement contained
in Sections 6.4, 7.1, 7.11, 7.12 or Articles VIII or IX of this Agreement
(other than a default caused by a reduction or downgrade in the ratings
required for investments under Section 9.4(b)(ii) after the investments have
been made, so long as the investments have been fully disposed of within ten
(10) Business Days after the reduction or downgrade).
(e) Default in Performance of Other Covenants and Conditions. Either
Co-Borrower or Subsidiary thereof shall default in the performance or
observance of any term, covenant, condition or agreement contained in this
Agreement (other than as specifically provided for otherwise in this Section
10.1) or any other Loan Document and such default shall continue for a period
of ten (10) days after written notice thereof has been given to such
Co-Borrower or Subsidiary by the Lender.
(f) Debt Cross-Default. Either Co-Borrower or any of its
Subsidiaries shall (i) default in the payment of any Debt (exceeding five
million ($5,000,000) in outstanding principal amount) beyond the period of
grace, if any, provided in the instrument or agreement under which such Debt
was created; or (ii) default in the observance or performance of any other
agreement or condition relating to any Debt (exceeding five million
($5,000,000) in outstanding principal amount) or contained in any instrument or
agreement evidencing, securing or relating thereto or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Debt (or a
trustee or agent on behalf of such holder or holders) to cause, with the giving
of notice if required, any such Debt to become due prior to its stated maturity
(any applicable grace period having expired).
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(g) Other Cross-Defaults. Either Co-Borrower or any of their
Subsidiaries shall default in the payment when due, or in the performance or
observance, of any obligation or condition of any Material Contract the breach
of which could reasonably be expected to have a Material Adverse Effect unless,
but only as long as, the existence of any such default is being contested by
such Co-Borrower or such Subsidiary in good faith by appropriate proceedings
and adequate reserves in respect thereof have been established on the books of
or such Subsidiary to the extent required by GAAP. There shall have occurred an
event of default under either (i) the Three-Year Credit Agreement and such
event of default shall not have been waived by the requisite lenders under Co-
Borrower's Three-Year Credit Agreement, or (ii) the Existing Letter of Credit
and Reimbursement Agreement and such event of default shall not have been
waived by the issuing bank under the Existing Letter of Credit and
Reimbursement Agreement.
(h) Change in Control. A Change in Control shall occur.
(i) Voluntary Bankruptcy Proceeding. Either Co-Borrower or any
Subsidiary thereof shall (i) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect); (ii) file a petition seeking
to take advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or composition for
adjustment of debts; (iii) consent to or fail to contest within sixty (60) days
of the filing thereof any petition filed against it in an involuntary case
under such bankruptcy laws or other laws; (iv) apply for or consent to, or fail
to contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee, or liquidator of
itself or of a substantial part of its property; (v) fail or admit in writing
its failure or inability to pay its debts as they become due; (vi) make a
general assignment for the benefit of creditors; or (vii) take any corporate
action for the purpose of authorizing any of the foregoing; provided that it
shall not constitute an event of default for a debtor relief proceeding to be
instituted and remain unstayed if instituted under laws other than the federal
or state laws of the United States of America by a Subsidiary not constituting
a Material Subsidiary or by a Person or Persons not controlled, directly or
indirectly by either Co-Borrower (including the Subsidiary itself, if its board
of directors is not subject to control by a Co-Borrower).
(j) Involuntary Bankruptcy Proceeding. A case or other proceeding
shall be commenced against either Co-Borrower or any Subsidiary thereof in any
court of competent jurisdiction seeking (i) relief under the federal bankruptcy
laws (as now or hereafter in effect) or under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding up or
adjustment of debts; or (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like for either Co-Borrower or any Subsidiary thereof or for
all or any substantial part of their respective assets, and such case or
proceeding shall continue undismissed or unstayed for a period of sixty (60)
consecutive calendar days, or an order granting the relief requested in such
case or proceeding (including, but not limited to, an order for relief under
such federal bankruptcy laws) shall be entered; provided that it shall not
constitute an event of default for a debtor relief proceeding to be instituted
and remain unstayed if instituted under laws other than the federal or state
laws of the United States of America against a Subsidiary not constituting a
Material Subsidiary or by a Person or Persons not controlled, directly or
indirectly by either Co-Borrower (including the Subsidiary itself, if its board
of directors is not subject to control by a Co-Borrower).
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(k) Failure of Agreements. Any material provision of any other Loan
Document shall for any reason cease to be valid and binding on either
Co-Borrower or Subsidiary thereof party thereto.
(l) Termination Event. The occurrence of any of the following
events: (i) either Co- Borrower or any ERISA Affiliate fails to make full
payment when due of all amounts which, under the provisions of any Pension Plan
or Section 412 of the Code, such Borrower or ERISA Affiliate is required to pay
as contributions thereto; (ii) an accumulated funding deficiency in excess of
$250,000 occurs or exists, whether or not waived, with respect to any Pension
Plan; (iii) a Termination Event; or (iv) either Co-Borrower or any ERISA
Affiliate as employers under one or more Multiemployer Plan makes a complete or
partial withdrawal from any such Multiemployer Plan and the plan sponsor of
such Multiemployer Plan notifies such withdrawing employer that such employer
has incurred a withdrawal liability requiring payments in an amount exceeding
$250,000.
(m) Judgment. A judgment or order for the payment of money (other
than the judgment in the amount of $7,000,000 (the "Existing Judgment") entered
by Seguros del Estudo against Scientific Games Inc. and described on Schedule
5.1(t) hereof ) which exceeds in amount the Material Judgment Amount shall be
entered formally against either Co-Borrower or any of their Subsidiaries by any
court and such judgment or order shall continue undischarged or unstayed for a
period of sixty (60) days. The Existing Judgment is not discharged or stayed
within 10 Business Days after the date any Lien is imposed or created in
connection with the Existing Judgment.
(n) Attachment. A warrant or writ of attachment or execution or
similar process shall be issued against any property of either Co-Borrower or
any Subsidiary thereof which exceeds in value the Material Judgment Amount and
such warrant or process shall continue undischarged or unstayed for a period of
thirty (30) days.
SECTION 10.2 Remedies. Upon the occurrence of an Event of Default and
at any time thereafter so long as such Event of Default shall be continuing,
the Lender shall by notice to the Co-Borrowers:
(a) Acceleration: Termination of Facilities. Declare the principal
of and interest on the Loans and the Notes at the time outstanding, and all
other amounts owed to the Lender under this Agreement or any of the other Loan
Documents and all other Obligations, to be forthwith due and payable, whereupon
the same shall immediately become due and payable without presentment, demand,
protest or other notice of any kind, all of which are expressly waived,
anything in this Agreement or the other Loan Documents to the contrary
notwithstanding, make the election regarding interest on the Loans pursuant to
Section 3.1(e)(ii), and terminate the Credit Facility and the Commitment and
any right of the Co-Borrowers to request borrowings thereunder; provided, that
upon the occurrence of an Event of Default specified in Section 10.1(j) or (k),
the Credit Facility and the Commitment shall be automatically terminated and
all Obligations shall automatically become due and payable, and the interest
rate election pursuant to Section 3.1(e)(ii) shall be deemed to have been made.
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(b) Rights of Collection. Exercise all of its other rights and
remedies under this Agreement, the other Loan Documents and Applicable Law, in
order to satisfy all of the Co-Borrowers' Obligations.
SECTION 10.3 Rights and Remedies Cumulative; Non-Waiver; etc. The
enumeration of the rights and remedies of the Lender set forth in this
Agreement is not intended to be exhaustive and the exercise by the Lender of
any right or remedy shall not preclude the exercise of any other rights or
remedies, all of which shall be cumulative, and shall be in addition to any
other right or remedy given hereunder or under the Loan Documents or that may
now or hereafter exist in law or in equity or by suit or otherwise. No delay or
failure to take action on the part of the Lender in exercising any right, power
or privilege shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or
shall be construed to be a waiver of any Event of Default. No course of dealing
between the Co-Borrowers, the Lender or their respective agents or employees
shall be effective to change, modify or discharge any provision of this
Agreement or any of the other Loan Documents or to constitute a waiver of any
Event of Default.
SECTION 10.4 Set-off. Except to the extent prohibited by law, in
addition to any rights now or hereafter granted under Applicable Law and not by
way of limitation of any such rights, upon and after the occurrence of any
Event of Default and during the continuance thereof after acceleration pursuant
to Section 10.2(a), the Lender and any assignee or participant of a Lender in
accordance with Section 11.9 are hereby authorized by the Co-Borrowers at any
time or from time to time, without notice to the Co-Borrowers or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, time or
demand, including, but not limited to, indebtedness evidenced by certificates
of deposit, whether matured or unmatured, excluding government securities
required by Applicable Law to be held as security for worker's compensation and
similar claims) and any other indebtedness at any time held or owing by the
Lender, or any such assignee or participant to or for the credit or the account
of the Co-Borrowers against and on account of the obligations irrespective of
whether or not (a) the Lender shall have made any demand under this Agreement
or any of the other Loan Documents or (b) the Lender shall have declared any or
all of the Obligations to be due and payable as permitted by Section 10.2.
SECTION 10.5 Consents. The Co-Borrowers acknowledge that certain
transactions contemplated by this Agreement and the other Loan Documents and
certain actions which may be taken by the Lender in the exercise of its rights
under this Agreement and the other Loan Documents may require the consent of a
Governmental Authority. If counsel to the Lender reasonably determines that the
consent of a Governmental Authority is required in connection with the
execution, delivery and performance of any of the aforesaid Loan Documents or
any Loan Documents delivered to the Lender in connection therewith or as a
result of any action which may be taken pursuant thereto, then the
Co-Borrowers, at the Lender's sole cost and expense, agree to use their
reasonable efforts to secure such consent and to cooperate with the Lender in
any action commenced by the Lender to secure such consent.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to
be received by a party hereto (i) on the date of delivery if a Business Day (or
the next Business Day is the day of delivery is not a Business Day) if
delivered by hand or sent by telecopy and if delivered or transmitted during
normal business hours, otherwise on the next Business Day, (ii) on the next
Business Day if sent by recognized overnight courier service and (iii) on the
third Business Day following the date sent by certified mail, return receipt
requested. A telephonic notice to the Lender as understood by the Lender will
be deemed to be the controlling and proper notice in the event of a discrepancy
with or failure to receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to it
at the following addresses, or any other address as to which all the other
parties are notified in writing.
If to either Co-Borrower: Scientific Games Holdings Corp.
0000 Xxxxxxxxx Xxxxx Xxxxxxx.
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to First Union: First Union National Bank
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
SECTION 11.2 Expenses. Subject to the limitations contained in the Term
Sheet, the Co-Borrowers will pay the reasonable out-of-pocket expenses of the
Lender in connection with: (i) the preparation, execution and delivery of this
Agreement and each of the other Loan Documents, whenever the same shall be
executed and delivered, including all syndication and due diligence expenses,
appraiser's fees, search fees, recording fees, taxes and the reasonable fees
and disbursements of counsel for the Lender; (ii) the preparation, execution
and delivery of any waiver, amendment or consent by the Lender requested by the
Co-Borrowers relating to this Agreement or any of the other Loan Documents
including reasonable fees and disbursements of counsel for the Lender, search
fees, appraiser's fees, recording fees and taxes imposed in connection
therewith; and (iii) after the occurrence and during the continuance of an
Event of Default, consulting with one or
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more Persons, including appraisers, accountants, engineers and attorneys,
concerning or related to the nature, scope or value of any right or remedy of
the Lender hereunder or under any of the other Loan Documents, including any
review of factual matters in connection therewith, which expenses shall include
the reasonable fees and disbursements of such Persons. In addition, after the
occurrence and during the continuance of an Event of Default, the Co-Borrowers
will pay the reasonable out-of-pocket expenses of the the Lender in connection
with prosecuting or defending any claim in any way arising out of, related to,
connected with, or enforcing any provision of, this Agreement or any of the
other Loan Documents, which expenses shall include the reasonable fees and
disbursements of counsel and of experts and other consultants retained by the
Lender; provided, however, that in connection with any litigation or other
proceeding (i) between the Co-Borrowers and the Lender, the Co-Borrowers shall
not be obligated to pay any expenses or costs of the Lender (including, without
limitation, reasonable attorneys' fees and expenses) that are attributable to
any issue raised in such litigation or other proceeding with respect to which
the Co-Borrowers shall have prevailed (the determination, if necessary, of
which party shall have prevailed may be made by the court or arbitration panel
in the trial or appeal of such action or other proceeding) and (ii) solely
between the Lender and the lenders under the Three-Year Credit Agreement, the
Co-Borrowers shall not be obligated to pay any expenses or costs of the Lender,
the lenders under the Three-Year Credit Agreement or the Administrative Agent.
SECTION 11.3 Governing Law. This Agreement, the Notes and the other
Loan Documents, unless otherwise expressly set forth therein, shall be governed
by, construed and enforced in accor dance with the laws of the State of
Georgia, without reference to the conflicts or choice of law principles
thereof.
SECTION 11.4 Consent to Jurisdiction. The Co-Borrowers hereby
irrevocably consent to the personal jurisdiction of the state and federal
courts located in Xxxxxx County, Georgia, in any action, claim or other
proceeding arising out of any dispute in connection with this Agreement, the
Notes and the other Loan Documents, any rights or obligations hereunder or
thereunder, or the performance of such rights and obligations. The Co-Borrowers
and the Lender hereby irrevocably consent to the service of a summons and
complaint and other process in any action, claim or proceeding brought by any
party hereto in connection with this Agreement, the Notes or the other Loan
Documents, any rights or obligations hereunder or thereunder, or the
performance of such rights and obligations, on behalf of itself or its
property, in the manner specified in Section 11.1, if and to the extent
otherwise in compliance with Applicable Law. Nothing in this Section 11.4 shall
affect the right of the Co-Borrowers or the Lender to serve legal process in
any other manner permitted by Applicable Law or affect the right of the
Co-Borrowers or the Lender to serve legal process in any other manner permitted
by Applicable Law or affect the right of the Lender to bring any action or
proceeding against any party hereto or its properties in the courts of any
other jurisdictions.
SECTION 11.5 Arbitration.
(a) Binding Arbitration. Upon demand of any party, whether made
before or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to the Notes or any
other Loan Documents ("Disputes"), between or among parties
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to the Notes or any other Loan Document shall be resolved by binding
arbitration as provided herein. Institution of a judicial proceeding by a party
does not waive the right of that party to demand arbitration hereunder.
Disputes may include, without limitation, tort claims, counterclaims, claims
brought as class actions, claims arising from Loan Documents executed in the
future, or claims concerning any aspect of the past, present or future
relationships arising out of or connected with the Loan Documents. Arbitration
shall be conducted under and governed by the Commercial Financial Disputes
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in Atlanta, Georgia. The expedited procedures set forth in
Rule 51, et seq. of the Arbitration Rules shall be applicable to claims of less
than $1,000,000. All applicable statutes of limitation shall apply to any
Dispute. A judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall be
comprised of licensed attorneys. The single arbitrator selected for expedited
procedure shall be a retired judge from the highest court of general
jurisdiction, state or federal, of the state where the hearing will be
conducted. The arbitrators shall be appointed as provided in the Arbitration
Rules.
(b) Preservation of Certain Remedies. Notwithstanding the preceding
binding arbitration provisions, the Lender preserves, without diminution,
certain remedies that the Lender may employ or exercise freely, either alone,
in conjunction with or during a Dispute. The Lender shall have and hereby
reserve the right to proceed in any court of proper jurisdiction or by self
help to exercise or prosecute the following remedies: (i) all rights to
foreclose against any real or personal property or other security by exercising
a power of sale granted in the Loan Documents or under applicable law or by
judicial foreclosure and sale, (ii) all rights of self help including peaceful
occupation of property and collection of rents, set off, subject to the
provisions of Section 10.4, and peaceful possession of property, (iii) when
applicable, a judgement by confession of judgement and (iv) obtaining
provisional or ancillary remedies including injunctive relief, sequestration,
garnishment, attachment, appointment of receiver and in filing an involuntary
bankruptcy proceeding. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in
a Dispute.
SECTION 11.6 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE LENDER AND EACH CO-BORROWER HEREBY IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER
PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE
NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
SECTION 11.7 Reversal of Payment. To the extent any Co-Borrower makes a
payment or payments to the Lender which payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under
any bankruptcy law, state or federal law, common law or equitable cause, then,
to the extent of such payment or proceeds repaid, the Obligations or part
thereof intended to be satisfied shall be revived and continued in full force
and effect as if such payment or proceeds had not been received by the Lender.
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SECTION 11.8 Injunctive Relief. The Co-Borrowers and the Lender
recognize that, in the event any of them fail to perform, observe or discharge
any of their obligations or liabilities under this Agreement, any remedy of law
may prove to be inadequate relief to the other parties. Therefore, the
Co-Borrowers and the Lender agree that the other parties, at such parties'
option, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
SECTION 11.9 Successors and Assigns; Participations.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns; provided that the Co-Borrowers may not assign or otherwise transfer
any of their rights under this Agreement. The Lender and each Eligible Assignee
who becomes a Lender under this Agreement may assign to one or more other
Eligible Assignees or, during the existence and continuance of an Event of
Default, to any Person (each, an "Assignee"), all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the outstanding Loans made by it and the Note or
Notes held by it); provided, however, that if a Default or Event of Default has
not occurred and is not continuing, any such assignment (other than an
assignment by the Lender to an Affiliate of such Lender) shall not be made
without the prior written consent of the Co-Borrowers, which consent shall not
be unreasonably withheld.
(b) The Lender may, without the consent of the Co-Borrowers, sell to
one or more other Persons (each, a "Participant") participations in any portion
comprising less than all of its rights and obligations under this Agreement
(including, without limitation, a portion of its Commitment, the outstanding
Loans made by it and the Note or Notes held by it); provided, however, that (i)
such Lender's obligations under this Agreement shall remain unchanged and such
Lender shall remain solely responsible for the performance of such obligations,
(ii) any such participation shall not exceed fifty percent (50%) of the
Lender's post assignment Commitment, (iii) the Co-Borrowers shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, and the Lender shall not permit
any Participant to have any voting rights or any right to control the vote of
the Lender with respect to any amendment, modification, waiver, consent or
other action hereunder or under any other Loan Document (except as to actions
that would (w) reduce or forgive the principal amount of, or rate of interest
on, any Loan, or reduce or forgive any fees or other Obligations, (x) extend
any date (including without limitation, the Termination Date) fixed for the
payment of any principal of or interest on any Loan, any fees or any other
Obligations, or (y) increase any Commitment of the Lender), and (iv) no
Participant shall have any rights under this Agreement or any of the other Loan
Documents, each Participant's rights against the granting Lender in respect of
any participation to be those set forth in the participation agreement, and all
amounts payable by the Co-Borrowers hereunder shall be determined as if the
Lender had not granted such participation.
(c) Nothing in this Agreement shall be construed to prohibit the
Lender from pledging or assigning all or any portion of its rights and interest
hereunder or under any Note to any Federal Reserve Bank as security for
borrowings therefrom; provided, however, that no such pledge or assignment
shall release the Lender from any of its obligations hereunder.
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(d) Disclosure of Information; Confidentiality. The Lender shall
treat as confidential all non-public information, including, without
limitation, all financial projections, obtained pursuant to the Loan Documents
and shall disclose such information outside their organizations only as may be
deemed appropriate by the Lender in the exercise of its or its rights under the
Loan Documents with respect to the repayment or administration of, or transfer
or assignment of participations or interests in, the Loans or, to the extent
permitted by Applicable Law, upon reasonable prior notice to the Co-Borrowers,
as compelled by judicial or administrative process or by other requirements of
Applicable Law.
SECTION 11.10 Amendments, Waivers and Consents: Renewal. Except as set
forth below, any term, covenant, agreement or condition of this Agreement or
any of the other Loan Documents may be amended or waived by the Lender upon
request of the Co-Borrowers, and any consent given by the Lender in response to
a request by the Co-Borrowers, if, but only if, such amendment, waiver or
consent is in writing signed by the Lender and, in the case of an amendment,
signed by the Co-Borrowers.
SECTION 11.11 Performance of Duties. The Co-Borrowers' obligations
under this Agreement and each of the Loan Documents shall be performed at the
joint and several sole cost and expense of the Co-Borrowers.
SECTION 11.12 Indemnification.
(a) Each Co-Borrower jointly and severally agrees to reimburse the
Lender for all reasonable costs and expenses, including reasonable counsel or
other out-of-pocket fees and disbursements reasonably incurred, and the
Co-Borrowers hereby indemnify and hold the Lender (collectively, the
"Indemnified Parties" and individually, an "Indemnified Party") harmless from
and against all losses suffered by the Lender in connection with (i) the
exercise by the Lender, after the occurrence and during the continuance of an
Event of Default, of any remedy granted to them by Co-Borrowers under this
Agreement or any of the other Loan Documents, (ii) any claim by any third party
against the Lender arising out of or in any way connected with the acts or
omissions of the Co-Borrowers or any Subsidiary thereof under or pursuant to
this Agreement or any of the other Loan Documents, and (iii) the collection or
enforcement of the Obligations or any of them against the Co-Borrowers, after
the occurrence and during the continuance of an Event of Default; provided,
that no reimbursement obligation or undertaking to indemnify contained herein
shall apply (A) to any expenses that are attributable to any issue raised in
any litigation or other proceeding with respect to which the Co-Borrowers shall
have prevailed (the determination, if necessary, of which party shall have
prevailed may be made by the court or arbitration panel in the trial or appeal
of such action or other proceeding), or (B) to the extent that such losses,
claims, damages, liabilities or other expenses result from the breach by any
Indemnified Party of its obligations hereunder or under any Loan Document, the
violation of Applicable Law, gross negligence or willful misconduct of any
Indemnified Party.
(b) The following shall apply to all claims for indemnity under this
Section 11.12 or otherwise under the Loan Documents:
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(i) If any Indemnified Party has knowledge of any claim or
matter for which it believes it is entitled to indemnification hereunder, it
shall give prompt written notice thereof to the Co- Borrowers; provided,
however, that the failure of an Indemnified Party to give such notice shall not
relieve the Co-Borrowers of its obligations hereunder.
(ii) Each claim against an Indemnified Party by a third party
shall, if reasonably requested by the Co-Borrowers, be contested by the
Indemnified Party in good faith by appropriate proceedings, provided that the
Co-Borrowers shall indemnify such Indemnified Party in full in respect of any
out-of-pocket fees, costs or expenses actually incurred by such Indemnified
Party in conducting such contest and the amount of any interest or penalties,
if any, which are required to be paid as a direct result of contesting such
claim.
(iii) In connection with any litigation or other proceeding
between the Co-Borrowers and the Lender, the Co-Borrowers shall not be
obligated to pay any expenses or costs of the Lender (including, without
limitation, reasonable attorneys' fees and expenses) that are attributable to
any issue raised in such litigation or other proceeding with respect to which
the Co-Borrowers shall have prevailed (the determination, if necessary, of
which party shall have prevailed may be made by the court or arbitration panel
in the trial or appeal of such action or other proceeding).
SECTION 11.13 All Powers Coupled with Interest. All powers of attorney
and other authorizations granted to the Lender and any Persons designated by
the Lender pursuant to any provisions of this Agreement or any of the other
Loan Documents shall be deemed coupled with an interest and shall be
irrevocable so long as any of the Obligations remain unpaid or unsatisfied or
the Credit Facility have not been terminated.
SECTION 11.14 Survival of Indemnities. Notwithstanding any termination
of this Agreement, the indemnities to which the Lender is entitled under the
provisions of this Article XI and any other provision of this Agreement and the
Loan Documents shall continue in full force and effect and shall protect the
Lender against events arising after such termination as well as before.
SECTION 11.15 Titles and Captions. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and
neither limit nor amplify the provisions of this Agreement.
SECTION 11.16 Severability of Provisions. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions hereof or thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 11.17 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and shall be binding upon all parties, their successors and assigns, and all of
which taken together shall constitute one and the same agreement.
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SECTION 11.18 Term of Agreement. This Agreement shall remain in effect
from the Closing Date through and including the date upon which all Obligations
shall have been indefeasibly and irrevocably paid and satisfied in full and the
Commitment have been terminated. No termination of this Agreement shall affect
the rights and obligations of the parties hereto arising prior to such
termination.
[Remainder of page intentionally blank; next page is signature page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, all as of the day and year first
written above.
[CORPORATE SEAL] SCIENTIFIC GAMES HOLDINGS CORP.
By:
----------------------------------
Name:
----------------------------
Title:
---------------------------
[CORPORATE SEAL] SCIENTIFIC GAMES INC.
By:
----------------------------------
Name:
----------------------------
Title:
---------------------------
FIRST UNION NATIONAL BANK, as
Lender
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
Lending Xxxxxx
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
[SIGNATURE PAGE TO 364-DAY CREDIT AGREEMENT]