SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and
entered into this 28th day of September, 1999, by and between INTERLOTT
TECHNOLOGIES, INC., a Delaware corporation ("Borrower"), and MERCANTILE BUSINESS
CREDIT INC., a Missouri corporation ("Lender").
WITNESSETH:
WHEREAS, Borrower and Lender have heretofore entered into that certain Loan
Agreement dated October 29, 1997, as amended by that certain First Amendment to
Loan Agreement dated as of October 29. 1998 (as so amended, the "Loan
Agreement"; all capitalized terms used and not otherwise defined in this
Amendment shall have the respective meanings ascribed to them in the Loan
Agreement as amended by this Amendment); and
WHEREAS, Borrower and Lender desire to amend the Loan Agreement in the
manner hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
1. The definitions of "Eligible Lease Payments" and "Lender's
Revolving Credit Commitment" set forth in Section 1.01 of the Loan Agreement
hereby are amended in their entirety to read as follows, respectively:
Eligible Lease Payments shall mean, with respect to each
Eligible Lease, as of any date, the aggregate minimum base rental
payments (excluding any percentage rental payments) due or to become
due under such Eligible Lease for instant lottery vending machines,
prepaid phone card dispensing machines and/or smart card dispensing
machines delivered to and accepted by the lessee(s) under such
Eligible Lease on or prior to such date during the shorter of (a) the
period commencing on such date and ending twenty-four (24) months
thereafter and (b) the remaining term of such Lease (determined
without giving effect to any renewal or extension terms exercisable at
the option of the lessee(s) which have not been exercised by such
lessee(s)).
Lender's Revolving Credit Commitment shall mean the
sum of $25,000,000.00.
2. Section 2.01(b) of the Loan Agreement hereby is deleted in its
entirety and the following substituted in lieu thereof:
(b) For purposes of this Agreement, the "Borrowing Base" shall
mean the sum of:
(i) (A) Eighty-Five Percent (85%) if the Rate of
Dilution of Borrower's Accounts is less than or equal to Five
Percent (5%), (B) Eighty Percent (80%) if the Rate of
Dilution of Borrower's Accounts is greater than Five Percent
(5%) but less than or equal to Eight Percent (8%), (C)
Seventy-Five Percent (75%) if the Rate of Dilution of
Borrower's Accounts is greater than Eight Percent (8%) but
less than or equal to Ten Percent (10%) or (D) such
percentage as Lender may determine in its sole and absolute
discretion if the Rate of Dilution of Borrower's Accounts is
greater than Ten Percent (10%), of the face amount of all
then existing Eligible Accounts (less maximum discounts,
credits and allowances which may be taken by or granted to
Account Debtors in connection therewith and/or adjustments
for reserves and allowances deemed appropriate by Lender in
its good faith discretion exercised in accordance with its
customary business practices and in a commercially
reasonable manner to protect Lender with respect to the
repayment of the Borrower's Obligations); plus
(ii) the lesser of (A) Fifty Percent (50%) of the
Eligible Inventory of Borrower, valued at the lower of cost
or market in accordance with GAAP or (B) $2,500,000.00; plus
(iii) (A) From the date of this Agreement until
September 13, 1999, Sixty-Five Percent (65%) and (B) from and
after September 13, 1999, Seventy Percent (70%), of the
aggregate amount of all Eligible Lease Payments of Borrower;
provided, however, that in no event may the aggregate amount
of all Eligible Lease Payments of Borrower which are due from
lessees who are not the United States of America or a state
of the United States or a department, agency or
instrumentality of any of the foregoing exceed the sum of
$500,000.00; plus
(iv) an amount up to Seven Hundred Fifty Thousand
Dollars ($750,000.00) during the period commencing on
September 13, 1999 and ending June 30, 2000 (the "Overadvance
Amount").
3. Exhibit A to the Loan Agreement (the form of Borrowing, Base
Certificate) referenced in Section 2.01(c) of the Loan Agreement hereby is
deleted in its entirety and Exhibit A attached to this Amendment substituted in
lieu thereof.
4. Section 2.02(a)(iii) of the Loan Agreement hereby is deleted in
its entirety and the following substituted in lieu thereof:
(iii) whether such Revolving Credit Loan is to be a
Prime Loan or a LIBOR Loan; provided, however, any Revolving
Credit Loan constituting an Overadvance Amount under Section
2.01 (b) (iv) shall be a Prime Loan.
5. Section 2.03(a) of the Loan Agreement hereby is deleted in its
entirety and the following substituted in lieu thereof:
(a) the Revolving Credit Loans of Lender to Borrower
shall be evidenced by an Amended and Restated Revolving
Credit Note dated September 13, 1999 and payable to the order
of Lender in the principal amount of $25,000,000.00, which
Amended and Restated Revolving Credit Note shall be in
substantially the form of Exhibit B attached hereto and
incorporated herein by reference (as the same may from time
to time be amended, modified, extended, renewed or restated,
the "Revolving Credit Note")
6. Exhibit B to the Loan Agreement hereby is deleted in its entirety
and Exhibit B attached to this Amendment substituted in lieu thereof.
7. Section 2.05(x) of the Loan Agreement hereby is deleted in its
entirety and the following substituted in lieu thereof:
2.05 Interest Rates. (a) So long as no Event of
Default under this Agreement has been declared by Lender and
is continuing, (i) each Prime Loan (other than a Prime Loan
constituting all or part off the Overadvance Amount) shall
bear interest prior to maturity at a rate per annum equal to
the Prime Rate (fluctuating as and when the Prime Rate shall
change) and (ii) each Prime Loan constituting all or part of
the Overadvance Amount shall bear interest prior to maturity
at a rate per annum equal to One-Half of One Percent (.5%)
over and above the Prime Rate (fluctuating as and when the
Prime Rate shall change). So long as any Event of Default
under this Agreement has been declared by Lender and is
continuing, (i) each Prime Loan (other than a Prime Loan
constituting all or part of the Overadvance Amount) shall
bear interest prior to maturity at a rate per annum equal to
Four Percent (4%) over and above the Prime Rate (fluctuating
as and when the Prime Rate shall change) and (ii) each Prime
Loan constituting all or part of the Overadvance Amount shall
bear interest prior to maturity at a rate per annum equal to
Four and One Half Percent (4.5%) over and above the Prime
Rate (fluctuating as and when the Prime Rate shall change).
Interest on Prime Loans shall be payable monthly in arrears
on the first (1st) day of each month, commencing on the first
such date after such Prime Loan is made, and at the maturity
of the Revolving Credit Note, whether by reason of
acceleration or otherwise. From and after the maturity of the
Revolving Credit Note, whether by reason of acceleration or
otherwise, (i) each Prime Loan (other than a Prime Loan
constituting all or part of the Overadvance Amount) shall
bear interest payable on demand until paid at a rate per
annum equal to Four Percent (4(degree)/a) over and above the
Prime Rate (fluctuating as and when the Prime Rate shall
change) and (ii) each Prime Loan constituting all or part of
the Overadvance Amount shall bear interest payable on demand
until paid at a rate per annum equal to Four and One-Half
Percent (4.5%) over and above the Prime Rate (fluctuating as
and when the Prime Rate shall change).
8. New subsection (g) hereby is added to Section 2.08 of the Loan
Agreement immediately following subsection (f) as follows:
(g) Borrower hereby agrees to pay Lender a
nonrefundable commitment fee (the "Commitment Fee") at the
rate of One Quarter of One Percent (1/4%) per annum on the
amount, if any, by which the Total Revolving Credit
Outstandings is less than the amount of Lender's Revolving
Credit Commitment, which Commitment Fee shall be computed on
a daily basis and shall be payable monthly in arrears on the
first (lst) day of each month during the Revolving Credit
Period commencing September 1, 1999, and on the last day of
the Revolving Credit Period. Said Commitment Fee shall be
calculated on an actual day, 360-day year basis.
9. Borrower hereby agrees to pay to Lender on the date hereof
an amendment fee in the amount of Twelve Thousand Five Hundred Dollars
($12,500.00).
10. Borrower hereby agrees to reimburse Lender upon demand for all
out-of-pocket costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) incurred by Lender in the preparation, negotiation
and execution of this Amendment and any and all other agreements, documents,
instruments and/or certificates relating to the amendment of Borrower's existing
credit facilities with Lender (collectively, the "Loan Documents"). Borrower
further agrees to pay or reimburse
Lender for (a) any stamp or other taxes (excluding income or gross receipts
taxes) which may be payable with respect to the execution, delivery, filing
and/or recording of the Loan Documents and (b) the cost of any filings and
searches, including, without limitation, Uniform Commercial Code filings and
searches. All of the obligations of Borrower under this paragraph shall survive
the payment of the Borrower's Obligations and the termination of the Loan
Agreement.
11. All references in the Loan Agreement to "this Agreement" and any
other references of similar import shall henceforth mean the Loan Agreement as
amended by this Amendment.
12. Except to the extent specifically amended by this Amendment, all
of the terms, provisions, conditions, covenants, representations and warranties
contained in the Loan Agreement shall be and remain in full force and effect
and the same are hereby ratified and confirmed.
13. This Amendment shall be binding upon and inure to the benefit of
Borrower and Lender and their respective successors and assigns, except that
Borrower may not assign, transfer or delegate any of its rights or obligations
under the Loan Agreement as amended by this Amendment.
14. Borrower hereby represents and warrants to Lender that:
(a) the execution, delivery and performance by Borrower of
this Amendment are within the corporate powers of Borrower, have been
duly authorized by all necessary corporate action and require no
action by or in respect of, consent of or filing or recording with,
any governmental or regulatory body, agency or official or any other
Person;
(b) the execution, delivery and performance by Borrower of
this Amendment do not conflict with, or result in a breach of the
terms, conditions or provisions of, or constitute a default under or
result in any violation of, the terms of the Certificate or Articles
of Incorporation or By-Laws of Borrower, any applicable law, rule,
regulation, order, writ, judgment or decree of any court or
governmental or regulatory agency or instrumentality or any agreement,
document or instrument to which Borrower is a party or by which
Borrower or any of its Property or assets is bound or to which
Borrower or any of its Property or assets is subject;
(c) this Amendment has been duly executed and delivered by
Borrower and constitutes the legal, valid and binding obligation of
Borrower enforceable against Borrower in accordance with its terms,
except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(d) all of the representations and warranties of Borrower set
forth in the Loan Agreement and the other Transaction Documents are
true and correct in all material respects on and as of the date of
this Amendment as if made on and as of the date of this Amendment; and
(e) as of the date of this Amendment, no Default or Event of
Default under or within the meaning of the Loan Agreement has occurred
and is continuing.
15. In the event of any inconsistency or conflict between this
Amendment and the Loan Agreement, the terms, provisions and conditions
contained in this Amendment shall govern and control.
16. This Amendment shall be governed by and construed in
accordance with the substantive laws of the State of Missouri
(without reference to conflict of law principles).
17. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING
PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO
PROTECT BORROWER AND LENDER FROM MISUNDERSTANDING OR DISAPPOINTMENT,
ANY AGREEMENTS REACHED BY BORROWER AND LENDER COVERING SUCH MATTERS
ARE CONTAINED IN THE LOAN AGREEMENT AS AMENDED BY THIS AMENDMENT AND
THE OTHER TRANSACTION DOCUMENTS, WHICH LOAN AGREEMENT AS AMENDED BY
THIS AMENDMENT AND OTHER TRANSACTION DOCUMENTS ARE A COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENTS BETWEEN BORROWER AND LENDER,
EXCEPT AS BORROWER AND LENDER MAY LATER AGREE IN WRITING TO MODIFY
THEM.
18. Notwithstanding any provision contained in this
Amendment to the contrary, this Amendment shall not be effective
unless and until Lender shall have received:
(a) this Amendment, duly executed by Borrower;
(b) The Amended and Restated Revolving Credit Note
payable to the order of Lender in the principal amount of
up to $25,000,000.00, duly executed by Borrower; and
(c) a Secretary's Certificate certifying as to
duly adopted resolutions of the Board of Directors of
Borrower which authorize the execution, delivery and
performance of this Amendment and containing an incumbency
certificate, which shall identify by name and title and
bear the signatures of all of the officers of Borrower
executing this Amendment.
IN WITNESS WHEREOF, Borrower and Lender have executed this
Second Amendment to Loan Agreement as of the date first set forth
above.
INTERLOTT TECHNOLOGIES, INC.
By: /s/Xxxxx X. Xxxxxxx
Title: President and CEO
MERCANTILE BUSINESS CREDIT INC.
By: /s/Xxxxxx X. Xxxxxx
Title: CFO
EXHIBIT A
BORROWING BASE CERTIFICATE
This Borrowing Base Certificate is delivered pursuant to Section 2.01(c) of
that certain Loan Agreement dated October 29, 1997, by and among Interlott
Technologies, Inc. ("Borrower") and Mercantile Business Credit Inc. ("Lender"),
as the same may from time to time be amended, modified, extended, renewed or
restated (the "Loan Agreement"). All capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to them in the Loan
Agreement.
Borrower hereby represents and warrants to Lender that the following
information is true and correct as of , 19__
1. 85% of face amount of Eligible Accounts of Borrower $
-------------
2. 50% of Eligible Inventory of Borrower, valued in
accordance with GAAP $
-------------
3. Inventory Sub limit $2,500,000.00
4. Inventory Availability (Lesser of Item 2 or Item 3) $
-------------
5. 70% of Eligible Lease Payments $
-------------
6. Overadvance Amount (limit $750,000) $25,000,000.00
7. Borrowing Base (Sum of Item 1 plus Item 4 plus Item 5
plus Item 6) $
-------------
8. Lender's Revolving Credit Commitment $
-------------
9. Borrower's Maximum Availability (Lesser of Item 7 or
Item 8) $
-------------
10. Aggregate principal amount of outstanding Revolving
Credit Loans $
-------------
11. Aggregate undrawn face amount of outstanding Letters
of Credit $
-------------
12. Total Outstandings [Sum of Item 10 pl Item 11] $
-------------
13. Borrowing Availability Excess (Deficit) [Item 9 minus
Item 12] (Negative amount represents mandatory
repayment) $
-------------
If Item 13 above is negative, this Certificate is accompanied by the
mandatory repayment required by Section 2.01(d) of the Loan Agreement.
This Borrowing Base Certificate is dated the day
of , 19
INTERLOTT TECHNOLOGIES, INC.
By
Title:
EXHIBIT B
AMENDED AND RESTATED
REVOLVING CREDIT NOTE
$25,000,000.00 St. Louis, Missouri
September 28, 1999
FOR VALUE RECEIVED, on the last day of the Revolving Credit Period,
the undersigned, INTERLOTT TECHNOLOGIES, INC., a Delaware corporation
("Borrower"), hereby promises to pay to the order of MERCANTILE BUSINESS CREDIT
INC., a Missouri corporation ("Lender"), the principal sum of Twenty-Five
Million Dollars ($25,000,000.00), or such lesser sum as may then constitute the
aggregate unpaid principal amount of all Revolving Credit Loans made by Lender
to Borrower pursuant to the Loan Agreement referred to below. The aggregate
principal amount of Revolving Credit Loans which Lender shall be committed to
have outstanding under this Note at any one time shall not exceed Twenty-Five
Million Dollars ($25,000,000.00), which amount may be borrowed, paid,
reborrowed and repaid, in whole or in part, subject to the terms and conditions
of this Note and of the Loan Agreement referred to below.
Borrower further promises to pay to the order of Lender interest on
the unpaid principal balance from time to time outstanding under this Note on
the dates and at the rates set forth in the Loan Agreement referred to below.
All payments received by Lender under this Note shall be allocated among the
principal, interest, collection costs and expenses and other amounts due under
this Note as follows: (a) so long as no Event of Default under the Loan
Agreement has occurred and is continuing, as directed by Borrower; and (b) so
long as any Event of Default under the Loan Agreement has occurred and is
continuing, in such order and manner as Lender shall elect. The amount of
interest accruing under this Note shall be computed on an actual day, 360-day
year basis.
All payments of principal and interest under this Note shall be made
in lawful currency of the United States at the office of Lender situated at 000
Xxxxx Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000, or at such
other place as the holder of this Note may from time to time designate in
writing.
Lender shall record in its books and records the date and amount of
each Revolving Credit Loan made by it to Borrower and the date and amount of
each payment of principal and/or interest made by Borrower with respect
thereto; provided, however, that the obligation of Borrower to repay each
Revolving Credit Loan made to Borrower under this Note shall be absolute and
unconditional, notwithstanding any failure of Lender to make any such
recordation or any mistake by Lender in connection with any such recordation.
The books and records of Lender showing the account between Lender and Borrower
shall be admissible in evidence in any action or proceeding and shall
constitute prima facie proof of the items therein set forth in the absence of
manifest error.
Subject to the terms of the Loan Agreement referred to below, Borrower
shall have the right to prepay all at any time or any portion from time to time
of the unpaid principal of this Note prior to maturity, without penalty or
premium.
This Note is the Revolving Credit Note referred to in that certain
Loan Agreement dated October 29, 1997 by and between Borrower and Lender, as
amended by that certain First Amendment to Loan Agreement dated as of October
29, 1998 and that certain Second Amendment to Loan Agreement dated the date
hereof (as so amended, and as the same may from time to time be further
amended, modified, extended,
renewed or restated, the "Loan Agreement"). The Loan Agreement, among other
things, contains provisions for acceleration of the maturity of this Note upon
the occurrence of certain stated events and also for prepayments on account of
the principal of this Note and interest on this Note prior to the maturity of
this Note upon the terms and conditions specified therein. All capitalized
terms used and not otherwise defined in this Note shall have the respective
meanings ascribed to them in the Loan Agreement.
This Note is secured by, among other things, that certain Security
Agreement dated October 29, 1997 and executed by Borrower in favor of Lender
(as the same may from time to time be amended, modified, extended, renewed or
restated, the "Security Agreement") and that certain Patent, Trademark and
License Security Agreement dated October 29, 1997 and executed by Borrower in
favor of Lender (as the same may from time to time be amended, modified,
extended, renewed or restated, the "Patent, Trademark and License Security
Agreement"), to which Security Agreement and Patent, Trademark and License
Security Agreement reference is hereby made for a description of the security
and a statement of the terms and conditions upon which this Note is secured.
If any Event of Default under the Loan Agreement shall occur and be
continuing, then Lender's obligation to make additional Revolving Credit Loans
under this Note may be terminated in the manner and with the effect as provided
in the Loan Agreement and the entire outstanding principal balance of this Note
and all accrued and unpaid interest thereon may be declared to be immediately
due and payable in the manner and with the effect as provided in the Loan
Agreement.
In the event that arty payment of any principal of or interest on
this Note is not paid when due, whether by reason of maturity, acceleration or
otherwise, and this Note is placed in the hands of an attorney or attorneys for
collection or for foreclosure of the Security Agreement or the Patent,
Trademark and License Security Agreement, or if this Note is placed in the
hands of an attorney or attorneys for representation of Lender in connection
with bankruptcy or insolvency proceedings relating hereto, Borrower promises to
pay to the order of Lender, in addition to all other amounts otherwise due
hereon, the costs and expenses of such collection, foreclosure and
representation, including, without limitation, reasonable attorneys' fees and
expenses (whether or not litigation shall be commenced in aid thereof). All
parties hereto severally waive presentment for payment, demand for payment,
protest, notice of protest and notice of dishonor.
This Note shall be governed by and construed in accordance with the
substantive laws of the State of Missouri (without reference to conflict of law
principles).
This Note is an amendment, restatement and continuation of that certain
Revolving Credit Note of Borrower dated October 29, 1997 and payable to the
order of Lender in the principal amount of $15,000,000.00 and is not a novation
thereof. All interest accrued on the instrument being amended and restated by
this Note shall continue to be due and payable to Lender until paid.
1NTERLOTT TECHNOLOGIES, INC.
By: /s/Xxxxx X. Xxxxxxx
Title: President and CEO
By: /s/Xxxxxx X. Xxxxxx
Title: CFO
