EXHIBIT 10.1
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WAIVER, CONSENT, AGREEMENT AND FIFTH AMENDMENT
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WAIVER, CONSENT, AGREEMENT AND FIFTH AMENDMENT (this "Agreement"), dated as
of July 19, 1995, among AUTOTOTE CORPORATION ("Holdings"), AUTOTOTE SYSTEMS,
INC. (the "Borrower"), the lenders party to the Credit Agreement referred to
below (the "Banks"), and BANKERS TRUST COMPANY, as Agent (the "Agent"). All
capitalized terms used herein and not otherwise defined herein shall have the
respective meanings provided by such terms in the Credit Agreement referred to
below.
W I T N E S S E T H :
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WHEREAS, Holdings, the Borrower, the Banks and the Agent are parties to a
Credit Agreement, dated as of October 31, 1991, and amended and restated as of
October 30, 1992, and amended and restated as of June 4, 1993, and further
amended and restated as of April 28, 1994 (as further amended, modified or
supplemented through the date hereof, the "Credit Agreement") as herein
provided;
WHEREAS, Holdings and the Borrower have requested the amendment to and
waiver of certain provisions of the Credit Agreement as herein provided;
WHEREAS, during the Waiver Period (as hereinafter defined), Holdings
intends to work with its advisors to come up with a plan to raise additional
equity financing and dispose of certain assets of Holding and its Subsidiaries;
and
WHEREAS, subject to and on the terms and conditions set forth herein, the
Banks are willing to grant such amendments and waivers;
NOW THEREFORE, it is agreed:
I. Consents, Waivers and Agreements
1. The Banks hereby waive compliance by Holdings and the Borrower with the
terms and covenants contained in Sections 9.09, 9.10, 9.11 and 9.17 of the
Credit Agreement for the period (the "Waiver Period") beginning on July 14, 1995
and ending on the Waiver Termination Date (as defined in Section II (3) below);
provided, however, that the waiver contained in this Section 1 shall cease to be
of any force or effect (including
with respect to compliance with the covenants contained in Sections 9.09, 9.10,
9.11 and 9.17 of the Credit Agreement for periods which ended during the Waiver
Period) on the Waiver Termination Date.
2. Holdings, the Borrower and the Banks hereby agree that Holdings and the
Borrower shall be required to observe the additional covenants set forth below
in this Section 2:
a) Minimum Consolidated Net Worth. Holdings and the Borrower will
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not permit Holdings' Consolidated Net Worth at any time during a
fiscal month set forth below to be less than the amount set forth
opposite such fiscal month below:
Fiscal Month Ended Amount
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July 31, 1995 $12,237,000
August 31, 1995 $10,798,000
September 30, 1995 $ 9,646,000
October 31, 1995 $ 9,358,000
b) Minimum Consolidated EBITDA. Holdings and the Borrower will not
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permit Consolidated EBITDA for the fiscal quarter ending July 31, 1995
to be less than $8,500,000 (without giving effect to any restructuring
charges, write-offs or other non-recurring charges in an aggregate
amount not to exceed $23,000,000).
c) Supporting Calculations. No later than 30 days after the end of
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each fiscal month set forth in a) or b) above, Holdings shall deliver
a certificate of its chief financial officer setting forth the
calculations required to establish whether Holdings and the Borrower
were in compliance with the provisions of this Section 2 as at the end
of such fiscal month.
3. Notwithstanding anything to the contrary contained in Section 1.09
of the Credit Agreement, during the Waiver Period the Borrower shall not be
permitted to select an Interest Period in excess of a two month period with
respect to any Eurodollar Loan.
4. Notwithstanding anything to the contrary contained in Section
9.02(vi) of the Credit Agreement, during the Waiver Period neither Holdings nor
any of its Subsidiaries may acquire, or commit to acquire, the assets
constituting all or any part of the business of any Person or the capital stock
of any Person (including any such acquisition by way of merger or consolidation)
without the prior written consent of the Required Banks.
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5. Notwithstanding anything to the contrary contained in Section 9.05
of the Credit Agreement, any Indebtedness (other than Loans) incurred, or
committed to be incurred, during the Waiver Period by Holdings or any of its
Subsidiaries in an aggregate principal amount in excess of $100,000 shall be
subject to the prior written consent of the Required Banks.
6. Notwithstanding anything to the contrary contained in Section 9.04
of the Credit Agreement, the aggregate payments (including, without limitation,
any property taxes paid as additional rent or lease payments) payable under any
agreements to rent or lease any real or personal property (or any extension or
renewal of any existing or hereafter entered into agreement to rent or lease any
such property) entered into, or committed to be entered into, during the Waiver
Period by Holdings or any of its Subsidiaries in excess of $1,000,000, either
individually or in the aggregate for all such entities, shall be subject to the
prior written consent of the Required Banks.
7. Notwithstanding anything to the contrary contained in Section 9.08
of the Credit Agreement, any Capital Expenditures made, or committed to be made,
during the Waiver Period by Holdings or any of its Subsidiaries in excess of
$1,000,000, either individually or in the aggregate for all such entities, shall
be subject to the prior written consent of the Required Banks in each case
without giving effect to any written commitments with third parties to make
Capital Expenditures which were entered into prior to the Agreement Effective
Date (as defined in Section III (5) below).
8. On or prior to August 10, 1995, Holdings hereby agrees to have a
conference call with the Banks for the purpose of discussing the results of
operations for Holdings and its Subsidiaries during the Waiver Period (assuming
for the purpose of this Section I (8) that the Waiver Period ends on October 14,
1995), the status of Holdings' plans to raise additional equity financing and
disposal of certain assets and the items to be delivered pursuant to Section I
(11) of this Agreement.
9. Holdings hereby agrees to have, on September 14, 1995, a meeting
with the Banks for the purpose of discussing the results of operations for
Holdings and its Subsidiaries during the Waiver Period (assuming for the purpose
of this Section I (9) that the Waiver Period ends on October 14, 1995) and the
status of Holdings' plans to raise additional equity financing and dispose of
certain assets.
10. Subject to the terms of this Section I (10), Holdings
acknowledges that the Banks will retain (at Holdings' and the Borrower's
expense, which shall be reimburseable pursuant to Section 13.01 of the Credit
Agreement) Coopers & Xxxxxxx for the purpose of analyzing Holdings' cash flow,
capital requirements and other matters to be determined by the Required Banks
and for a period to be determined by the Required Banks. Holdings will have the
opportunity to review Coopers & Xxxxxxx'x estimate for its scope of work
(including the payment of any retainer as well as the scope of work itself with
such estimate (including the retainer amount and related fees and expenses) to
be payable to Coopers & Xxxxxxx and the scope of Coopers & Xxxxxxx'x analysis to
be
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mutually satisfactory to Holdings and the Required Banks.
11. (a) Holdings hereby agrees to, on or prior to August 10, 1995:
(i) deliver to the Banks a certificate in form and substance
satisfactory to the Agent and the Required Banks executed by the chief
financial officer of Holdings setting forth in reasonable detail the
projected sources and uses of cash during each weekly period during
the Waiver Period (assuming for the purpose of this clause (ii) that
the Waiver Period ends on October 31, 1995) (the "Initial Cash Flow
Statement") as well as the projected amount of Revolving Loans and/or
Swingline Loans to be incurred by the Borrower during each such weekly
period (the "Weekly Projected Borrowing Amount"); and
(ii) cause the Borrower to grant to the Collateral Agent for the
benefit of the Secured Creditors a security interest in the Real
Property owned by the Borrower located in Windsor Locks, Connecticut
and New Haven, Connecticut pursuant to the terms and conditions
contained in Section 8.11(b) of the Credit Agreement.
(b) In addition, Holdings shall continue to deliver a
certificate, executed by the chief financial officer of Holdings (each
a "Revised Cash Flow Statement") to each of the Banks on the first
Thursday occurring after the Agreement Effective Date and on each
Thursday thereafter in each case indicating the actual sources and
uses of cash for the immediately preceding Monday through Friday, the
actual Borrowings of Loans during such weekly period, and (for those
Revised Cash Flow Statements delivered after the Initial Cash Flow
Statement has been delivered) any revisions to the Initial Cash Flow
Statement (including an updated twelve week projected borrowing amount
and an updated 12-weekly cash flow schedule); As used with respect to
each Revised Cash Flow Statement, "updated twelve week" shall refer to
each of the 12 weeks following the date of such Revised Cash Flow
Statement even if some or all of such weeks occur after the end of the
Waiver Period.
(c) Holdings hereby further agrees that the scope, form and
substance of the report to be delivered pursuant to Section I (10) of
this Agreement, and the results of such report, are required to be
satisfactory to the Agent and the Required Banks.
12. Holdings and the Borrower hereby covenant and agree to use their
best efforts to cause the holders of the Wellington Subordinated Debt to agree
to defer all cash payments (including payments of interest) which would
otherwise be owing with respect thereto during the Waiver Period (assuming for
purposes of this Section I(12) that the Waiver Period ends on October 14, 1995)
until at least February 14, 1996. No
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consideration shall be payable to the holders of the Wellington Subordinated
Debt in connection with any such agreement unless otherwise agreed by the
Required Banks. Furthermore, on or prior to August 10, 1995, Holdings shall
have delivered to the Banks a report stating the status of the negotiations with
the holders of the Wellington Subordinated Debt and any agreement reached with
respect thereto. On August 10, 1995, the Waiver Termination Date shall occur
unless the Required Banks are satisfied with the arrangements arrived at by
Holdings and the Borrower, on the one hand, and the holders of the Wellington
Subordinated Debt, on the other hand, with respect to the deferral of the cash
payments which would otherwise be owing with respect to the Wellington
Subordinated Debt as described above. Furthermore, Holdings and the Borrower
acknowledge and agree that, if the Waiver Termination Date occurs on August 10,
1995, then on such date an Event of Default shall exist permitting acceleration
of the obligations owing under the Credit Agreement.
13. On or prior to September 14, 1995:
(i) Holdings shall have made arrangements satisfactory to the
Agent and the Required Banks to raise additional cash either through
the issuance of equity interests in Holdings or the sale of assets of
Holdings or any of its Subsidiaries satisfactory to the Supermajority
Banks in an aggregate amount of at least $5,000,000; and
(ii) Holdings shall have delivered to the Banks a plan of
recapitalization (in reasonable detail) for Holdings and its
Subsidiaries approved by the Board of Directors of Holdings, which
plan of recapitalization shall be in form and substance satisfactory
to the Supermajority Banks and shall include, inter alia, information
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sufficient to indicate that Holdings and its Subsidiaries shall have
sufficient liquidity to operate their respective businesses through
the first anniversary of the Final Maturity Date, with such plan to
take into account the reductions to the Total Revolving Loan
Commitment to occur on December 31, 1995 in the amount of $10,000,000
and on April 30, 1996 in the amount of $25,000,000.
14. Holdings, the Borrower and the Banks hereby expressly acknowledge
and agree that (i) the waivers set forth in this Section I are conditioned on
Holdings and the Borrower complying with each of the covenants and agreements
contained in this Section I and there not occurring any Event of Default on or
prior to the Waiver Termination Date (assuming for purposes of this Section
I(14) that the Waiver Termination Date would otherwise occur on October 14,
1995) after giving effect to this Agreement and such waivers shall cease to
exist upon the failure by Holdings or the Borrower to comply with any such
covenant or agreement or the occurrence of such Event of Default and (ii) the
Agent and the Banks shall have all of the rights and remedies provided for in
the Credit Documents upon the failure by Holdings or the Borrower to comply with
any such covenant or agreement or the occurrence and continuance of any Event of
Default on or prior to the
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Waiver Termination Date.
15. Notwithstanding anything to the contrary contained in Section
9.03, during the Waiver Period Holdings will not, and will not permit any of its
Subsidiaries to, authorize, declare or pay any Dividends with respect to
Holdings or any of its Subsidiaries of the type referred to in any of the
following clauses of said Section 9.03 (v), (vi), (vii), (viii) and (ix).
II. Amendments to Credit Agreement
1. On and after the Amendment Effective Date, Section 3.03 of the
Credit Agreement shall be amended by (i) deleting clauses (b), (c) and (d)
contained therein in their entirety and (ii) inserting in lieu thereof the
following new clauses (b), (c) and (d):
"(b) The Total Revolving Loan Commitment shall be permanently
reduced on April 30, 1996 by an amount equal to $25,000,000.
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date after the Restatement
Effective Date upon which Holdings or any of its Subsidiaries receives
any proceeds (net of underwriting or placement discounts and
commissions and other reasonable costs associated therewith) from (i)
any sale or issuance of its equity (including, without limitation, the
issuance of capital stock, or options or warrants to purchase such
capital stock) or from the exercise of options or warrants to purchase
such equity or (ii) from any incurrence by Holdings or any of its
Subsidiaries of Indebtedness for borrowed money (other than
Indebtedness for borrowed money to be incurred under Section 9.05 as
said Section is in effect on the Restatement Effective Date), the
Total Revolving Loan Commitment shall be permanently reduced by an
amount equal to the net cash proceeds of the respective issuance of
equity or incurrence of Indebtedness or such lesser amount as agreed
to by the Required Banks; provided, however, that proceeds in an
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aggregate amount equal to or less than $10,000,000 shall not be
required to permanently reduce the Total Revolving Loan Commitment so
long as the Borrower utilizes such proceeds to prepay Revolving Loans
pursuant to Section 4.01 (without giving effect to Section 4.01(ii)).
(d) In addition to any other mandatory commitment reductions
pursuant to Section 3.03, on each date after the Restatement Effective
Date upon which Holdings or any of its Subsidiaries receives proceeds
from any sale of assets (excluding (i) sales of inventory in the
ordinary course of business and (ii) sales of equipment and related
software to customers of the Borrower or any other Subsidiary of
Holdings in the ordinary course of business pursuant to the terms of
the respective wagering systems equipment contracts or similar
contracts to which such Person is a party), the Total
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Revolving Loan Commitment shall be permanently reduced by an amount
equal to 100% of the Net Sale Proceeds thereof or such lesser amount
as agreed to by the Supermajority Banks; provided, however, that
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proceeds in an aggregate amount equal to or less than $10,000,000
shall not be required to permanently reduce the Total Revolving Loan
Commitment so long as the Borrower utilizes such proceeds to prepay
Revolving Loans pursuant to Section 4.01 (without giving effect to
Section 4.01(ii)).".
2. On and after the Agreement Effective Date, Section 10 of the
Credit Agreement is hereby amended by (i) inserting the word "or" immediately
after the semi-colon contained in Section 10.10 and (ii) adding the following
new Section 10.11 immediately after Section 10.10:
"10.11 Other Events. (i) Holdings or the Borrower shall fail to
observe or perform any of the covenants contained in the July 1995
Agreement, (ii) for any other reason (including without limitation the
failure to obtain the agreements specified in Section I(12) of the July
1995 Agreement) the Waiver Termination Date shall occur before October 14,
1995, (iii) Holdings or the Borrower shall fail to comply with any of the
agreements contained in Section III(1) of the July 1995 Agreement to the
satisfaction of the Required Banks or (iv) the report to be delivered to
the Banks pursuant to Section I (10) of the July 1995 Agreement is not
delivered on or prior to August 10, 1995;".
3. On and after the Agreement Effective Date, Section 11 of the
Credit Agreement shall be amended by inserting in the appropriate alphabetical
order the following new definitions:
"July 1995 Agreement" shall mean the Waiver, Consent, Agreement and
Amendment to this Agreement, dated as of July 19, 1995.
"July 1995 Agreement Effective Date" shall mean the Agreement
Effective Date as defined in the July 1995 Agreement.
"Supermajority Banks" shall mean those Non-Defaulting Banks which
would constitute the Required Banks under, and as defined in, this Agreement if
the percentage "50%" contained therein were changed to "66-2/3%".
"Waiver Termination Date" shall mean the earliest to occur of (x)
August 10, 1995, unless all actions required to be taken by Sections I(12) and
III(1)(b) of the July 1995 Agreement have been taken to the satisfaction of the
Required Banks on or prior to such date, (y) October 14, 1995 and (z) any date
occurring after the July 1995 Agreement Effective Date and prior to October 14,
1995 upon which Holdings or the Borrower have failed to comply with any of the
covenants and agreements contained in the July 1995 Agreement or upon which an
Event of Default has occurred pursuant to the Credit Agreement; provided that if
any provision of the July 1995 Agreement requires that an action be taken to the
satisfaction of the Required Banks, the Required Banks may declare that the
Waiver Termination Date has occurred (in which case it shall occur) if the
Required
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Banks determine that the respective action has not been taken to their
satisfaction.
4. On and after the Agreement Effective Date, Section 13.06(a) of the
Credit Agreement is hereby amended by inserting the following sentence at the
end thereof:
"Notwithstanding anything to the contrary contained in this Agreement,
if at any time when a payment of principal, interest or fees is due
and owing with respect to more than one Tranche of Loans and the
Borrower repays less than the full amount of all such Obligations in
respect of all such Tranches of Loans, then the payment or payments
received by the Agent in respect of such Obligations shall be
allocated proportionally among the respective Tranches of Loans based
on the relative Total Revolving A Loan Commitment and Total Revolving
B Loan Commitment as then in effect (or after the termination thereof,
based on the aggregate outstanding principal amounts of such Tranche
of Loans).
5. Notwithstanding anything to the contrary contained in this
Agreement or in the Credit Agreement, any determination required to be made by
the Agent, the Required Banks or the Supermajority Banks, or any documentation
which is required to be satisfactory to the Agent, the Required Banks or the
Supermajority Banks, shall, unless otherwise expressly provided, be made by (or
required to be satisfactory to) the Agent, the Required Banks or the
Supermajority Banks in their sole discretion.
III. Miscellaneous Provisions
1. In order to induce the Banks to enter into this Agreement,
Holdings agrees:
(a) to pay to each Bank which has signed a copy of this Agreement and
delivered by facsimile transmission an executed signature page hereof to
Bankers Trust Company, Attention: Xxxxxxxxxxx Xxxxxxx (Facsimile No. (212)
250-7218), a fee equal to 1% of such Bank's Revolving Loan Commitment as in
effect on July 19, 1995. Such fee shall be deemed earned and payable on
the Agreement Effective Date. However, the Agent and the Banks hereby
agree that, notwithstanding the foregoing, it shall not be an Event of
Default under the Credit Agreement (and the time for payment thereof by
Holdings is hereby extended to) the earliest of (w) the date, if any, that
the maturity of the Loans is accelerated in accordance with the provisions
of Section 10 of the Credit Agreement, (x) June 30, 1996 or (y) the date
upon which Holdings or any of its Subsidiaries receives cash proceeds from
the sale of assets and/or the issuance of equity in an aggregate amount
equal to or in excess of $10,000,000 for Holdings and its Subsidiaries on a
consolidated basis; and
(b) to deliver to the Agent, for distribution to the Banks based upon
such Bank's Percentage as in effect on the Agreement Effective Date,
warrants to
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purchase 385,000 shares of common stock of Holdings (adjusted to account
for dilutive events, if any, occurring on or after the Agreement Effective
Date), such warrants to contain an exercise price of $3.00 per share (which
is the closing price of Holdings' common stock on July 18, 1995) (subject
to adjustment for dilutive events, etc.), with the documentation relating
to such warrants (to be prepared by counsel to the Agent and at the expense
of the Borrower) and all of the terms and conditions contained therein to
be in form and substance satisfactory to the Required Banks, such warrants
to be delivered to the Agent on or prior to August 10, 1995.
2. In order to induce the Banks to enter into this Agreement, each of
Holdings and the Borrower hereby represents and warrants that:
(a) no Default or Event of Default exists on the Agreement Effective
Date, after giving effect to this Agreement; and
(b) on the Agreement Effective Date, after giving effect to this
Agreement, all representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct in all
material respects.
3. This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts of this Agreement shall be lodged with Holdings, the Borrower and
the Agent.
4. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
5. This Agreement shall become effective on the date (the "Agreement
Effective Date") when (i) each of Holdings, the Borrower and the Required Banks
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Agent and (ii) Holdings shall confirm to the Banks
that Holdings and Coopers & Xxxxxxx have established a payment schedule with
respect to fees due and owing to Coopers & Xxxxxxx, satisfactory to Holdings and
Coopers & Xxxxxxx, and Holdings shall remain current pursuant to such payment
schedule during the Wavier Period and thereafter.
6. From and after the Agreement Effective Date, all references in the
Credit Agreement and each of the other Credit Documents to the Credit Agreement
shall be deemed to be references to the Credit Agreement as modified hereby.
7. This Agreement is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Consent to be duly executed and delivered as of the date
first above written.
AUTOTOTE CORPORATION
By /s/ Xxxxxx X. Xxxxxxx
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Title: Vice President
AUTOTOTE SYSTEMS, INC.
By /s/ Xxxxxx X. Xxxxxxx
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Title: Vice President
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/ Xxxxxxxxxxx Xxxxxxx
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Title: Vice President
BANK OF IRELAND,
GRAND CAYMAN BRANCH
By /s/ Xxxx Xxxxxx
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Title: Assident Treasurer
BANK POLSKA KASA OPIEKI, S.A.
By /s/ Xxxxxxx X. Xxxx
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Title: Vice President
Senior Lending Officer
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BHF-BANK AG
By /s/ Xxxxxx Xxxxxxxxx
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Title: Senior Vice President
By /s/ Xxxx Xxxxxx
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Title: Vice President
CREDITANSTALT CORPORATE
FINANCE, INC.
By /s/ X.X. Xxxxxx
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Title: Vice President
By /s/ Xxxxx Xxxxxx
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Title: Vice President
DELAWARE TRUST COMPANY
By /s/ Xxxxx X. Noon
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Title: Vice President
EUROPEAN AMERICAN BANK
By /s/ Xxxxxx Xxxxxxxxx
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Title: Assistant Vice President
FLEET BANK OF MASSACHUSETTS, N.A.
By /s/ Xxxxxxx Xxxxxx
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Title: Vice President
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GIROCREDIT BANK AG DER SPARKASSEN,
GRAND CAYMAN ISLAND BRANCH
By /s/ Xxxxxxx X. Xxxxx
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Title: First Vice President
By /s/ Xxxxxx Xxxxx
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Title: Vice President
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