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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
GAMING LOTTERY CORPORATION (formerly Laser Friendly, Inc.)
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(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
364910 10 9
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(CUSIP Number)
Peter Cawdron
Coutts & Co AG, New York Branch
65 East 55th Street New York, New York 10022 phone: (202) 303-2972
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(Name, Address, Telephone Number of Person Authorized to Receive Notices and
Communications)
August 20, 1996
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(Date of Event which Requires Filing of this Statement)
THE FILING OF THIS STATEMENT SHALL NOT BE CONSTRUED AS AN ADMISSION OR
EVIDENCE THAT COUTTS & CO AG, NEW YORK BRANCH IS OR HAS BEEN, FOR THE
PURPOSES OF SECTION 13(D) OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, OR ANY OTHER PURPOSE, THE BENEFICIAL OWNER OF ANY SECURITIES
COVERED BY THIS STATEMENT.
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [X]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
CUSIP NO. 364910 10 9 PAGE 2 OF 6 PAGES
------------------------- --- ---
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1 NAME OF REPORTING PERSON; S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Coutts & Co AG, New York Branch 521677023
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [ ]
(B) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
Incorporated as a banking institution in Switzerland
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7 SOLE VOTING POWER
0%
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NUMBER OF 8 SHARED VOTING POWER
SHARES 0%
BENEFICIALLY
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER(1)
REPORTING 0
PERSON
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER(1)
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON(1)
0
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* NO[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)(1)
0%
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14 TYPE OF REPORTING PERSON*
BK
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
(1) However, the reporting person is the pledgee of 9,583,020 shares of the
outstanding common stock of the Issuer (as defined below), representing a
37.8% interest therein.
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ITEM 1. SECURITY AND ISSUER
Common Stock
Gaming Lottery Corporation (the "Issuer") (formerly Laser Friendly, Inc.)
160 Nashdene Road
Scarborough, Ontario
Canada M1V 4C4
ITEM 2. IDENTITY AND BACKGROUND
(a) Name: Coutts & Co AG, New York Branch ("Coutts")
(b) Place of Organization: Coutts is a Swiss bank licensed to
conduct a banking business by the
State of New York
(c) Principal Business: Banking
(d) Address of Principal Business: 65 East 55th Street New
York, New York 10022
(e) Address of Principal Office: 65 East 55th Street New
York, New York 10022
(f) Criminal Convictions: None
(g) Civil Proceedings under any
Securities Laws: None
ITEM 3. SOURCE AND AMOUNT OF FUNDS
In 1995, Coutts extended four loans (the "Old Loans") to four parties (the "Old
Debtors"), each of which gave Coutts, inter alia, a security interest in shares
of common stock ("Common Shares") of the Issuer (the "Old Pledged Shares"). As
each of the Old Loans was in default immediately prior to the consummation of
this transaction, Coutts caused the sale of the 5,183,020 Old Pledged Shares,
representing a 20.4% interest in the Issuer, by the Old Debtors to Jacques
Benquesus ("Banks") and Larry H. Weltman ("Weltman") pursuant to the terms of
the relevant loan and collateral agreements with the Old Debtors.
ITEM 4. PURPOSE OF TRANSACTION
The purpose of this transaction is for Coutts to reduce certain financial risks
presented by the Old Loans, which were in default immediately prior to the
consummation of this transaction. To this end, Coutts caused the sale of the
Old Pledged Shares to Banks and Weltman.
(a) 5,000,000 of the Old Pledged Shares were sold to Banks and the remaining
183,020 Old Pledged Shares were sold to Weltman. Following the transaction,
Coutts holds a security interest in 9,583,020 Common Shares of the Issuer
pursuant to pledge agreements with Banks and Weltman.
(b) No extraordinary corporation transaction planned.
(c) No material asset transfer planned.
(d) No change in board of directors or management envisioned.
(e) No material change in the present capitalization or dividend policy of the
Issuer planned.
(f) No material change in Issuer's business or corporate structure anticipated.
(g) No change in the Issuer's charter planned.
(h) No delisting planned.
(i) Not applicable.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) 0 Common Shares, representing, 0% interest in the Issuer. However, Coutts
is the pledgee of 9,583,020 Common Shares of the Issuer, representing a 37.8%
interest therein.
3
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ITEM 6. CONTRACTS, ETC., WITH RESPECT TO SECURITIES OF THE ISSUER
In 1995, Coutts made a loan to Silva Run Worldwide Limited ("Silva Run")
which was secured, inter alia, by shares of the Issuer, pledged by Silva
Run.
In 1995, Coutts made a loan to Compania Di Investimento Antilliana S.A.
("Compania") which was secured, inter alia, by shares of the Issuer,
pledged by Compania.
In 1995, Coutts made a loan to Willsboro Universal Corporation
("Willsboro") which was secured, inter alia, by shares of the Issuer,
pledged by Willsboro.
In 1995, Coutts made a loan to Panola Worldwide Corporation ("Panola")
which was secured, inter alia, by shares of the Issuer, pledged by Panola.
Coutts has made loans to Banks which are secured by Common
Shares of the Issuer, pledged by Banks and by Weltman.
Coutts has made a loan to Weltman which is secured by 183,020 Common
Shares of the Issuer, pledged by Weltman and by Banks.
See Item 3.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Banks Master Agreement, dated August 19, 1996
Banks Loan Agreement, dated August 20, 1996
Banks Share Purchase Loan Agreement, dated August 20, 1996
Banks Pledge Agreement, dated August 20, 1996
Amended Banks Pledge Agreement, dated August 20, 1996
Banks Share Purchase Agreement, dated August 20, 1996
Banks Share Purchase Agreement, dated August 20, 1996
Banks Share Purchase Agreement, dated August 20, 1996
Banks Share Purchase Agreement, dated August 20, 1996
Banks Limited Guarantee, dated August 20, 1996
Weltman Master Agreement, dated August 19, 1996
Weltman Share Purchase Loan Agreement, dated August 20, 1996
Weltman Pledge Agreement, dated August 20, 1996
Weltman Share Purchase Agreement, dated August 20, 1996
4
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Loan Documents between Coutts and Silva Run:
Facility Letter, dated March 16, 1995
Facility Letter, dated June 26, 1995
Loan and Collateral Agreement, dated January 11, 1995
Note, dated June 26, 1995
Loan Documents between Coutts and Compania:
Facility Letter, dated March 16, 1995
Facility Letter, dated April 5, 1995
Facility Letter, dated June 29, 1995
Amendment to June 29, 1995 Facility letter, dated February 23, 1996
Loan and Collateral Agreement, dated January 10, 1995
Note, dated June 27, 1995
Loan Documents between Coutts and Willsboro:
Facility Letter, dated December 20, 1995
Loan and Collateral Agreement, dated December 14, 1995
Note, dated December 21, 1995
Loan Documents between Coutts and Panola:
Facility Letter, dated December 20, 1995
Loan and Collateral Agreement, dated December 14, 1995
Note, dated December 21, 1995
5
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After reasonable inquiry and to the best of our knowledge and belief, we
certify that the information set forth in this statement is true, complete and
correct.
Date: August 30, 1996
COUTTS & CO AG, NEW YORK BRANCH
By: /s/ Leland D. Montgomery
---------------------------
Name: Leland D. Montgomery
Title: Vice President
and General Counsel
6
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EXHIBIT INDEX
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Exhibit
No. Description
- ------- -----------
Ex-99.A Banks Master Agreement, dated August 19, 1996
Ex-99.B Banks Loan Agreement, dated August 20, 1996
Ex-99.C Banks Share Purchase Loan Agreement, dated August 20, 1996
Ex-99.D Banks Pledge Agreement, dated August 20, 1996
Ex-99.E Amended Banks Pledge Agreement, dated August 20, 1996
Ex-99.F Banks Share Purchase Agreement, dated August 20, 1996
Ex-99.G Banks Share Purchase Agreement, dated August 20, 1996
Ex-99.H Banks Share Purchase Agreement, dated August 20, 1996
Ex-99.I Banks Share Purchase Agreement, dated August 20, 1996
Ex-99.J Banks Limited Guarantee, dated August 20, 1996
Ex-99.K Weltman Master Agreement, dated August 19, 1996
Ex-99.L Weltman Share Purchase Loan Agreement, dated August 20, 1996
Ex-99.M Weltman Pledge Agreement, dated August 20, 1996
Ex-99.N Weltman Share Purchase Agreement, dated August 20, 1996
Ex-99.O Loan Documents between Coutts and Silva Run:
Facility Letter, dated March 16, 1995
Facility Letter, dated June 26, 1995
Loan and Collateral Agreement, dated January 11, 1995
Note, dated June 26, 1995
Ex-99.P Loan Documents between Coutts and Compania:
Facility Letter, dated March 16, 1995
Facility Letter, dated April 5, 1995
Facility Letter, dated June 29, 1995
Amendment to June 29, 1995 Facility letter, dated February 23, 1996
Loan and Collateral Agreement, dated January 10, 1995
Note, dated June 27, 1995
Ex-99.Q Loan Documents between Coutts and Willsboro:
Facility Letter, dated December 20, 1995
Loan and Collateral Agreement, dated December 14, 1995
Note, dated December 21, 1995
Ex-99.R Loan Documents between Coutts and Panola:
Facility Letter, dated December 20, 1995
Loan and Collateral Agreement, dated December 14, 1995
Note, dated December 21, 1995
<PAGE> 1
BANKS MASTER AGREEMENT
THIS AGREEMENT made this 19th day of August, 1996
BETWEEN:
COUTTS & CO AG, New York Branch, a Swiss banking institution
("Coutts")
- and -
JACQUES BENQUESUS of the City of Jerusalem, Israel
("Mr. Banks")
WHEREAS:
A. Coutts has loans (the "Client Loans") outstanding to
certain of its clients in the aggregate amount of
approximately $42 million, which loans were made for
the purposes of financing the acquisition from
treasury of common shares of Gaming Lottery
Corporation ("Gaming"), The Instant Publisher Inc.
("TIPI") and/or Warp 10 Technologies Inc. ("Warp 10"
and collectively with Gaming and TIPI, the
"Companies" and each a "Company");
B. Mr. Banks and his wife, Biba Banks ("Mrs. Banks" and,
together with Mr. Banks, the "Banks"), have pledged
certain securities of Gaming and TIPI beneficially
owned by them as security for the repayment of the
Client Loans;
C. The Client Loans are now, and have been for some
time, in default and Coutts is permitted under the
terms of the agreements governing the Client Loans
and its agreement with the Banks to sell the shares
of the Companies which have been pledged to Coutts by
the Clients and by the Banks as security for the
Client Loans; and
D. Mr. Banks has entered into this Agreement and certain
other agreements and arrangements contemplated and
provided for by this Agreement in order to acquire
5,000,000 common shares of Gaming and 834,231 common
shares of Warp 10 and to preclude the immediate sale
of the securities of TIPI and Gaming pledged by the
Banks as security for the Client Loans.
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NOW THEREFORE the parties agree as follows;
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS - Whenever used in this Agreement, unless there is
something inconsistent in the subject matter or context, the following words
and terms shall have the meanings set out below:
"AGREEMENT" means this agreement, including the schedules, and all
instruments supplementing or amending or confirming this Agreement;
"hereof", "hereto", and "hereunder" and similar expressions mean and
refer to this Agreement and not to any particular article or section;
"Article" or "Section" means and refers to the specified article or
section of this Agreement;
"AMENDED BANKS PLEDGE" means the Banks Pledge, as supplemented and
amended in the form attached hereto as Schedule A, which provides for
the retention by Coutts of the 1,916,918 Gaming Shares and 12,334,974
TIPI Shares currently pledged by Mr. Banks to, and held by, Coutts as
security for the Client Loans, as security for the New Loans and
pursuant to which 1,000,000 Warp 10 Shares and an additional 2,483,082
Gaming Shares and 2,665,026 TIPI Shares are to be pledged by Mr. Banks
as additional security for the New Loans;
"BANKS EXCHANGED PLEDGED SHARES" has the meaning ascribed thereto in
subsection 3.1(i) of this Agreement;
"BANKS EXCHANGED PURCHASED SHARES" has the meaning ascribed thereto in
subsection 3.1(i) of this Agreement;
"BANKS FORBEARANCE CONSIDERATION LOAN AGREEMENT" means the loan
agreement to be entered into between Mr. Banks and Coutts pursuant to
which Coutts will advance funds to Mr. Banks which Mr. Banks will use
to fund the payment required by Subsection 2.1(f) of this Agreement,
in the form attached hereto as Schedule B;
"BANKS GAMING SHARE PURCHASE AGREEMENTS" means the Silva Run Gaming
Share Purchase Agreement, the Compania Gaming Share Purchase
Agreement, the Willsboro Gaming Share Purchase Agreement and the
Panola Gaming Share Purchase Agreement;
"BANKS LOAN AGREEMENTS" means the Banks Forbearance Consideration Loan
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Agreement and the Banks Share Purchase Loan Agreement;
"BANKS PLEDGE" means the agreements among Coutts, Mr. Banks and Mrs.
Banks pursuant to which the Banks pledged 4,126,918 Gaming Shares and
22,092,090 TIPI Shares to Coutts as collateral for the Client Loans;
"BANKS PLEDGED SHARES" means the shares of the Companies held from
time to time by Coutts as security for the New Loans under the Amended
Banks Pledge;
"BANKS PURCHASED PLEDGED SHARES" means the Banks Purchased Shares held
from time to time by Coutts as security for the New Loans under the
Banks Purchased Share Pledge;
"BANKS PURCHASED GAMING SHARES" means the 5,000,000 Gaming Shares
purchased by Mr. Banks pursuant to the Banks Gaming Share Purchase
Agreements;
"BANKS PURCHASED SHARES" means the Banks Purchased Gaming Shares and
the Banks Purchased Warp 10 Shares;
"BANKS PURCHASED SHARE PLEDGE" means the pledge agreement to be
entered into between Coutts and Mr. Banks in the form attached hereto
as Schedule C in respect of the pledge of the Banks Purchased Shares;
"BANKS PURCHASED WARP 10 SHARES" means the 834,231 Warp 10 Shares
purchased by Mr. Banks pursuant to the Banks Warp 10 Share Purchase
Agreements;
"BANKS SHARE PURCHASE AGREEMENTS" means the Banks Gaming Share
Purchase Agreements and the Banks Warp 10 Share Purchase Agreements;
"BANKS SHARE PURCHASE LOAN AGREEMENT" means the loan agreement to be
entered into between Mr. Banks and Coutts pursuant to which Coutts
will advance funds to Mr. Banks which Mr. Banks will use to complete
the transactions contemplated in the Banks Share Purchase Agreements
and to pay certain expenses incurred by Mr. Banks and Coutts in
connection with the preparation of this Agreement and the other
documents contemplated hereby and the consummation of the transactions
provided for herein, in the form attached hereto as Schedule B;
"BANKS WARP 10 SHARE PURCHASE AGREEMENTS" means the Bayfront Warp 10
Share Purchase Agreement, the Willsboro Warp 10 Share Purchase
Agreement and the Panola Warp 10 Share Purchase Agreement;
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"BAYFRONT" means Bayfront Intervest Limited;
"BAYFRONT WARP 10 SHARE PURCHASE AGREEMENT" means a Share Purchase
Agreement to be entered into between Bayfront and Mr. Banks to effect
the sale of 544,231 Warp 10 Shares by Bayfront to Mr. Banks;
"CLAIMS" means any claim, demand, action, cause of action, damage,
loss, costs, liability or expense, including, without limitation,
reasonable legal, accounting and other professional fees, and all
costs incurred in investigating or pursuing any of the foregoing or
any proceeding relating to any of the foregoing;
"CLIENT LOANS" means the loans made by Coutts to each of the Clients
and includes all amounts outstanding and payable to Coutts thereunder
as at the date of Closing including for principal, interest, fees
owing and other charges as more specifically set out in Schedule D;
"CLIENTS" means Bayfront, Compania, Mariner, Panola, Silva Run and
Willsboro;
"CLOSING" means the completion of the actions, exchanges and
transactions contemplated by Article 2, which shall take place at
10:00 a.m. on August 20, 1996 or such other time as the parties may
agree at the offices of Osler, Hoskin & Harcourt in New York City;
"COMPANIA" means Compania Di Investimento Antilliana S.A.;
"COMPANIA GAMING SHARE PURCHASE AGREEMENT" means a Share Purchase
Agreement to be entered into between Compania and Mr. Banks to effect
the sale of 331,138 Gaming Shares by Compania to Mr. Banks;
"EVENT OF DEFAULT" shall have the meaning ascribed to it in each of
the Banks Loan Agreements, the Weltman Loan Agreement and the Wiseman
Loan Agreement;
"GAMING SHARES" means common shares of Gaming;
"GUARANTEE" means the limited guarantee of Mr. Banks in the form
attached hereto as Schedule E;
"MARINER" means Mariner Reserve Fund Inc.;
"MINIMUM PRICE" means:
(a) at all times that less than $30 million of the New Loan Amount has
been
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repaid to Coutts, the Minimum Price shall be equal to 80% of the Open
Market Price of the particular Pledged Shares being sold;
(b) after $30 million or more of the New Loan Amount has been repaid,
the Minimum Price shall be equal to 85% of the Open Market Price of
the particular Pledged Shares being sold; and
(c) in the event that the sale of Pledged Shares is to a Related Party,
the Minimum Price shall be equal to the Open Market Price of the
Pledged Shares being sold less an amount equal to the customary
commission which would have been payable had the sale been undertaken
at arms-length on an exchange or quotation system on which such shares
are traded;
"NET PROCEEDS" means the full amount of the proceeds received or
receivable on a sale of Pledged Shares pursuant to Article 3 after
deducting any discount or commission payable in respect of such sale;
"NEW LOAN AMOUNT" means the aggregate principal amount outstanding
from time to time and owing to Coutts under any and all of the New
Loans;
"NEW LOANS" means the loans made to Mr. Banks by Coutts under the
Banks Loan Agreements, the loan made to Weltman by Coutts under the
Weltman Loan Agreement and the loan made to Wiseman by Coutts under
the Wiseman Loan Agreement;
"OPEN MARKET PRICE" means, in respect of a sale of Pledged Shares, the
highest closing price of the shares of the Company which are the
subject of the sale on any of the NASDAQ Stock Market, Inc., The
Toronto Stock Exchange or The Canadian Dealing Network Inc. (in the
case of The Toronto Stock Exchange or The Canadian Dealing Network
Inc., the closing price shall be determined by taking the actual
closing price, reported in Canadian dollars, and converting such price
to U.S. dollars by reference to the Reuters Canadian dollar/U.S.
dollar exchange rate as reported at 4:00 p.m. (New York time) on the
trading day immediately preceding the date on which such sale is
made);
"OPERATIVE AGREEMENTS" means this Agreement, the Banks Loan
Agreements, the Guarantee, the Banks Share Purchase Agreements, the
Amended Banks Pledge and the Banks Purchased Share Pledge and any and
all agreements required to be entered into between Coutts and Mr.
Banks pursuant to this Agreement and the other Operative Agreements;
"PANOLA" means Panola Worldwide Corporation;
"PANOLA GAMING SHARE PURCHASE AGREEMENT" means a Share Purchase
Agreement to be entered into between Panola and Mr. Banks to effect
the sale
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of 668,465 Gaming Shares to Mr. Banks;
"PANOLA WARP 10 SHARE PURCHASE AGREEMENT" means a Share Purchase
Agreement to be entered into between Panola and Mr. Banks to effect
the sale of 150,000 Warp 10 Shares by Panola to Mr. Banks;
"PLEDGED SHARES" means the Banks Pledged Shares and the Banks
Purchased Pledged Shares;
"RELATED PARTY" means Mr. Banks, Mrs. Banks, Weltman, Wiseman, any
officer, director or employee of any of the Companies, any "associate"
of any of the foregoing, any "insider" of any of the Companies, any
company "controlling", "controlled" by or under common "control" with
any of the foregoing or any "subsidiary" or "affiliate" of any of the
Companies (terms in quotation marks having the meaning ascribed to
them in the Securities Act (Ontario)) and any other party with whom
Mr. Banks does not deal with at arms length for the purposes of the
Income Tax Act (Canada);
"RELEVANT PROVISIONS" has the meaning ascribed thereto in subsection
3.1(i) of this Agreement;
"SECURITY INTEREST" means any mortgage, lien, pledge, charge, security
interest or other encumbrance;
"SHARE PURCHASE AGREEMENT" means the form of share purchase agreement
attached hereto as Schedule F;
"SILVA RUN" means Silva Run Worldwide Limited;
"SILVA RUN GAMING SHARE PURCHASE AGREEMENT" means a Share Purchase
Agreement to be entered into between Silva Run and Mr. Banks to effect
the sale of 3,157,112 Gaming Shares by Silva Run to Mr. Banks;
"TIPI SHARES" means common shares of TIPI;
"UNPLEDGED SHARES" has the meaning ascribed thereto in subsection
3.1(h) of this Agreement;
"WARP 10 SHARES" means common shares of Warp 10;
"WELTMAN" means Larry H. Weltman;
"WELTMAN SHARE PURCHASE AGREEMENT" has the meaning ascribed thereto in
the Weltman Master Agreement;
<PAGE> 7
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"WELTMAN LOAN AGREEMENT" means the loan agreement entered into between
Weltman and Coutts pursuant to the Weltman Master Agreement;
"WELTMAN MASTER AGREEMENT" means the master agreement of even date
herewith between Weltman and Coutts;
"WILLSBORO" means Willsboro Universal Corporation;
"WILLSBORO GAMING SHARE PURCHASE AGREEMENT" means a Share Purchase
Agreement to be entered into between Willsboro and Mr. Banks to
effect the sale of 843,285 Gaming Shares by Willsboro to Mr. Banks;
"WILLSBORO WARP 10 SHARE PURCHASE AGREEMENT" means a Share Purchase
Agreement to be entered into between Willsboro and Mr. Banks to effect
the sale of 140,000 Warp 10 Shares by Willsboro to Mr. Banks;
"WISEMAN" means John M. Wiseman;
"WISEMAN LOAN AGREEMENT" means the loan agreement entered into between
Wiseman and Coutts pursuant to the Wiseman Master Agreement;
"WISEMAN MASTER AGREEMENT" means the master agreement of even date
herewith between Wiseman and Coutts; and
"WISEMAN SHARE PURCHASE AGREEMENTS" has the meaning ascribed thereto
in the Wiseman Master Agreement.
1.2 CERTAIN RULES OF INTERPRETATION - In this Agreement:
(a) time is of the essence in the performance of the parties'
respective obligations;
(b) unless otherwise specified, all references to money amounts
are to United States currency;
(c) the descriptive headings of Articles and Sections are inserted
solely for convenience of reference and are not intended as
complete or accurate descriptions of content;
(d) the use of words in the singular or plural, or with a
particular gender, shall not limit the scope or exclude the
application of any provision of this Agreement to such person
or persons or circumstances as the context otherwise permits;
and
(e) whenever a provision of this Agreement requires an approval or
<PAGE> 8
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consent by a party to this Agreement and notification of such
approval or consent is not delivered within the applicable
time limit, then, unless otherwise specified, the party to
this agreement whose consent or approval is required shall be
conclusively deemed to have withheld its consent or approval.
1.3 ENTIRE AGREEMENT - This Agreement together with the other Operative
Agreements and the other documents to be delivered pursuant to this Agreement
and the other Operative Agreements, constitute the entire agreement between the
parties or any of them pertaining to the subject matter of this Agreement and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements among the parties or any of them in
connection with the subject matter of this Agreement except as specifically set
forth in this Agreement and any document delivered pursuant to this Agreement.
No supplement, modification or waiver or termination of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. No waiver
of any of the provisions of this Agreement shall be deemed to or shall
constitute a waiver of any other provisions (whether or not similar) nor shall
such waiver constitute a continuing waiver unless otherwise expressly provided.
To the extent that the provisions of this Agreement conflict with or operate in
a manner contrary to any term or provision of any of the agreements and
documents delivered pursuant to this Agreement, this Agreement shall govern.
1.4 SCHEDULES - The schedules to this Agreement, as listed below, are an
integral part of this Agreement:
<TABLE>
<CAPTION>
Schedule Description
-------- -----------
<S> <C>
Schedule A Amended Banks Pledge
Schedule B Banks Forbearance Consideration Loan Agreement/Banks Share
Purchase Loan Agreement
Schedule C Banks Purchased Share Pledge
Schedule D Client Loan Amounts
Schedule E Guarantee
Schedule F Share Purchase Agreement
Schedule G Banks Share Acquisition Reports
Schedule H Coutts Share Report
</TABLE>
ARTICLE 2
CLOSING
2.1 CLOSING - At the Closing, the parties will take the following
actions:
<PAGE> 9
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(a) each of Mr. Banks and Coutts shall enter into, execute and
deliver each of the Banks Loan Agreements, the Guarantee, the
Amended Banks Pledge and the Banks Purchased Share Pledge and
the other agreements and documents required to be delivered
thereunder at the Closing;
(b) Coutts shall cause:
(i) Silva Run to enter into, execute and deliver
the Silva Run Gaming Share Purchase
Agreement;
(ii) Compania to enter into, execute and deliver
the Compania Gaming Share Purchase Agreement;
(iii) Willsboro to enter into, execute and deliver
each of the Willsboro Gaming Share Purchase
Agreement and the Willsboro Warp 10 Share
Purchase Agreement;
(iv) Panola to enter into, execute and deliver
each of the Panola Gaming Share Purchase
Agreement and the Panola Warp 10 Share
Purchase Agreement; and
(v) Bayfront to enter into, execute and deliver
the Bayfront Warp 10 Share Purchase
Agreement;
(c) Mr. Banks shall enter into, execute and deliver each of the
share purchase agreements provided for in Subsection 2.1(b)
hereof;
(d) subject to the satisfaction of all applicable conditions in
the Banks Share Purchase Loan Agreement, Coutts shall advance
to Mr. Banks the amount of $21,186,620.10 under the Banks
Share Purchase Loan Agreement to fund the acquisition by Mr.
Banks of the Banks Purchased Shares and the payment by Mr.
Banks of certain legal expenses incurred by Mr. Banks and
Coutts in connection with the preparation of this Agreement
and the other documents contemplated hereby and the
consummation of the transactions provided for herein; and Mr.
Banks shall direct Coutts to, and Coutts shall, deposit into
the accounts of Silva Run, Compania, Willsboro, Panola and
Bayfront the amounts payable to each of them under the Banks
Share Purchase Agreements and shall deliver the Banks
Purchased Shares to Coutts to be held by Coutts as security
pursuant to the Banks Purchased Share Pledge;
(e) Coutts shall pay to any Client the amount, if any, of the
proceeds from the sale of the Banks Purchased Shares sold by
such Client to Mr.
<PAGE> 10
-10-
Banks, which exceeds the aggregate of all amounts owing to
Coutts under such Client's Client Loan;
(f) subject to the satisfaction of all applicable conditions in
the Banks Forbearance Consideration Loan Agreement, Coutts
shall advance to Mr. Banks the amount of $20,016,872.25 under
the Banks Forbearance Consideration Loan Agreement, to fund
the payment by Mr. Banks to Coutts of the consideration for
the forbearance of Coutts in not selling the Banks Pledged
Shares and the repayment, for Mr. Banks' account, of the
Client Loans pursuant to subsection 2.1(i);
(g) Mr. Banks shall deliver to Coutts 1,000,000 Warp 10 Shares and
an additional 2,190,000 Gaming Shares and 2,665,026 TIPI
Shares beneficially owned by him free and clear of any
Security Interest, to be held as additional collateral under
the Amended Banks Pledge;
(h) Coutts shall release and deliver to Mrs. Banks the 2,210,000
Gaming Shares and 9,757,116 TIPI Shares beneficially owned by
Mrs. Banks and currently pledged to and held by Coutts under
the Banks Pledge free and clear of any Security Interest
created by Coutts; and
(i) Mr. Banks shall direct Coutts to, and Coutts shall, use the
funds advanced to Mr. Banks by Coutts under the Banks
Forbearance Consideration Loan Agreement to repay for Mr.
Banks' account the balance due on the Client Loans after the
proceeds payable to the Clients pursuant to the Banks Share
Purchase Agreements, the Weltman Share Purchase Agreement and
the Wiseman Share Purchase Agreements have been applied
against the Client Loans. The parties acknowledge that this
subsection 2.1(i) is intended to create a right of subrogation
in favor of Mr. Banks under applicable law and that Coutts
shall provide Mr. Banks with the assistance referred to in
Section 6.3 hereof; provided, however, that Coutts makes no
representation, warranty or covenant as to the existence of
such a right of subrogation and shall have no responsibility
for the sufficiency of any rights of subrogation arising
hereunder or as a result of the transactions completed
pursuant to this Agreement or the other Operative Agreements
now or at any time in the future.
The forgoing actions and deliveries shall be taken and made in the order set
out above. Each of the documents and deliveries contemplated by this Section
shall be deposited in escrow and shall not become effective or be released
until all the actions required by this Section have been taken and the
conditions set out in Section 2.2 have been fulfilled, in each case to the
satisfaction of each of the parties to this Agreement and their counsel.
<PAGE> 11
-11-
2.2 CONDITIONS - This Agreement and the agreements, actions, exchanges and
deliveries provided for in Section 2.1 shall be of no legal force or effect
unless and until each of the following conditions shall have been fulfilled:
a) Weltman and Coutts shall have taken all of the actions required to be
taken under Section 2.1 of the Weltman Master Agreement and each of
Weltman and Coutts shall have acknowledged the sufficient performance
of the covenants to be performed by the other pursuant to that section
and the satisfaction and fulfilment of each of the conditions set out
in Section 2.2 of the Weltman Master Agreement; and
b) Wiseman and Coutts shall have taken all of the actions required to be
taken under Section 2.1 of the Wiseman Master Agreement and each of
Wiseman and Coutts shall have acknowledged the sufficient performance
of the covenants to be performed by the other pursuant to that section
and the satisfaction and fulfilment of each of the conditions set out
in Section 2.2 of the Wiseman Master Agreement.
2.3 ACKNOWLEDGEMENTS - Each of the parties will acknowledge in writing the
performance of the covenants required to be performed for their benefit on or
before the Closing and the fulfilment of the conditions in Section 2.2
forthwith after such performance and fulfilment has been achieved to the
satisfaction of such party.
ARTICLE 3
RELEASE OF PLEDGED SHARES
3.1 SALE OF SHARES
(a) Mr. Banks shall be permitted, at any time hereafter, to sell any of the
Pledged Shares, and Coutts shall forthwith release and deliver any Pledged
Shares so sold by Mr. Banks free and clear of any Security Interest created by
Coutts upon payment therefor as provided herein and Coutts shall do all things
necessary to ensure that the certificates representing such Pledged Shares are
properly endorsed for transfer in accordance with the directions of Mr. Banks
(provided that such instructions are in accordance with the applicable
provisions of this Agreement and further provided that the full amount of the
Net Proceeds from the sale is applied in repayment of one or more of the New
Loans).
(b) Notwithstanding subsection 3.1(a) Mr. Banks shall be permitted, whenever
the New Loan Amount has been reduced by $40 million, to sell any Banks
Purchased Pledged Shares and Coutts shall forthwith release and deliver any
Banks Purchased
<PAGE> 12
-12-
Pledged Shares so sold by Mr. Banks, free and clear of any Security Interest
created by Coutts upon payment therefor as provided herein, provided that fifty
per cent of the Net Proceeds from the sale is applied in repayment of one or
more of the New Loans.
(c) No sale of Pledged Shares pursuant to this Article 3 may be effected by Mr.
Banks unless the amount of the Net Proceeds from such sale is at least equal to
the Minimum Price.
(d) Mr. Banks shall be permitted to designate the New Loan to which the Net
Proceeds of any sale of Pledged Shares pursuant to this section shall be
applied.
(e) All sales of Pledged Shares by Mr. Banks must be made in compliance with
all applicable laws and regulations.
(f) Notwithstanding any other provision of this Article 3, Coutts shall not be
required to release and deliver any Pledged Shares sold by Mr. Banks unless
and until Coutts is provided with evidence, reasonably satisfactory to Coutts,
that the provisions of this Article 3 to be complied with by Mr. Banks in
connection with such sale have been complied with, provided that upon being so
satisfied, Coutts shall promptly deliver any such Pledged Shares.
(g) In the event that a sale of Pledged Shares is made pursuant to this Article
3 at any time at which the New Loan to which the proceeds of sale are to be
applied is not at that time repayable without penalty, the proceeds of sale
required to be applied as repayment shall be delivered to Coutts and held by
Coutts (in an interest bearing account pledged to Coutts) as security under the
Banks Purchased Share Pledge until such time as the designated New Loan is
repayable without penalty whereupon such proceeds shall be applied by Coutts as
repayment of such New Loan.
(h) Notwithstanding any other provisions of this Agreement or any of the
agreements relating to the transactions contemplated herein, in the event Mr.
Banks at any time sells any Gaming Shares, TIPI Shares or Warp 10 Shares other
than Pledged Shares ("Unpledged Shares"), Coutts shall forthwith release and
deliver to Mr. Banks, that number of Pledged Shares which equals the number of
Unpledged Shares so sold by Mr. Banks, free and clear of any Security Interest
created by Coutts provided that a sale of such Unpledged Shares is completed by
Mr. Banks in all respects in compliance with the provisions of this Article 3
which govern and are applicable to a sale by Mr. Banks of Pledged Shares.
(i) Notwithstanding any other provision of this Agreement or any of the
agreements relating to the transactions contemplated herein, for the purposes
of Section 3.2 of this Agreement, Section 3 of the Guarantee and subsection
10.3(b) of each of the Banks Loan Agreements (the "Relevant Provisions"), and
for no other purposes, 4,400,000 of the Banks Purchased Gaming Shares and all
of the 834,231
<PAGE> 13
-13-
Banks Purchased Warp 10 Shares (collectively, the "Banks Exchanged Purchased
Shares") shall be deemed to be Banks Pledged Shares and not Banks Purchased
Pledged Shares, and all of the Gaming Shares and 834,231 of the Warp 10 Shares
which are Banks Pledged Shares (the "Banks Exchanged Pledged Shares") shall for
the same purposes be deemed to be Banks Purchased Pledged Shares and not Banks
Pledged Shares. For example, as long as Coutts holds any Banks Exchanged
Pledged Shares:
(i) any sale by Mr. Banks, pursuant to subsection 3.1(a) hereof,
of Gaming Shares or Warp 10 Shares which are Banks Pledged
Shares shall for the purposes of the Relevant Provisions only,
be deemed to have been a sale of Banks Exchanged Pledged
Shares, and
(ii) any sale by Coutts, pursuant to either clause (i) of
subsection 10.3(b) of any of the Banks Loan Agreements or
Section 3 of the Guarantee, of Gaming Shares or Warp 10 Shares
which are Banks Pledged Shares shall, for the purposes of the
Relevant Provisions only, be deemed to have been a sale of
Banks Exchanged Pledged Shares;
and, for the purposes of the Relevant Provisions only, any such sale by
Mr.Banks or by Coutts shall have the effect of reducing the number of Banks
Purchased Pledged Shares, but not the number of Banks Pledged Shares, held by
Coutts by the number of Gaming Shares or Warp 10 Shares, as the case may be, so
sold.
3.2 RELEASE ON REPAYMENT - At such time as the New Loan Amount has been
reduced by $30 million, Coutts shall release and deliver to Mr. Banks, Banks
Pledged Shares sufficient to reduce the number of the Banks Pledged Shares held
by Coutts to an amount equal to 25% of the number of the Banks Pledged Shares
pledged to Coutts immediately following the Closing. Thereafter, whenever the
New Loan Amount is reduced by a further amount of $1 million (and the
obligation of Coutts under this Section is not triggered unless and until a
full further $1 million is repaid), Coutts shall release ten percent of the
Banks Pledged Shares which remain subject to the Amended Banks Pledge after the
release of 75% of Banks Pledged Shares originally pledged in accordance with
this section so that at such time as the New Loan Amount has been reduced by
$40 million, all of the Banks Pledged Shares shall have been released by Coutts
and delivered to Mr. Banks. Notwithstanding any other provision of this
Article 3, Mr. Banks shall not be permitted to sell Banks Pledged Shares if,
but only to the extent that, as a result of such sale of Banks Pledged Shares,
less than 25% of the number of shares of each Company held by Coutts under the
Amended Banks Pledge immediately following the Closing would then be held by
Coutts as collateral under the Amended Banks Pledge prior to the time when the
New Loan Amount has been reduced by $30 million, or thereafter, if as a result
of the sale of such Banks Pledged Shares the maximum number of shares of any
Company which could be retained by Coutts as collateral under the Amended
<PAGE> 14
-14-
Banks Pledge under the provisions of this subsection 3.2 would not be so
retained. At such time as the New Loans have been repaid in full, Coutts shall
release and deliver to Mr. Banks any and all Banks Purchased Pledged Shares
free and clear of any Security Interest created by Coutts.
ARTICLE 4
INDEMNIFICATION
4.1 MUTUAL INDEMNIFICATIONS FOR BREACHES OF COVENANTS AND WARRANTY, ETC. -
Coutts covenants and agrees with Mr. Banks, and Mr. Banks covenants
and agrees with Coutts (the party or parties so covenanting and
agreeing to indemnify another party being referred to in this Section
as the "Indemnifying Party" and the party so to be indemnified being
called the "Indemnified Party") to indemnify and save harmless the
Indemnified Party, effective as and from the Closing, from and against
all Claims which may be made or brought against the Indemnified Party
or which it may suffer or incur, directly or indirectly, as a result
of or in connection with any non-fulfilment of any covenant or
agreement on the part of the Indemnifying Party under this Agreement
or any misstatement in or breach of any representation or warranty of
the Indemnifying Party contained in this Agreement or in any
certificate or other document furnished by the Indemnifying Party
pursuant to this Agreement. Notwithstanding any other provision of
this Article 4:
(i) no claim for indemnification may be made by an Indemnified Party
against any Indemnifying Party after the time which is the latest of:
(a) date on which all amounts due under the New Loans
have been repaid; and
(b) four years from the date of this Agreement; and
(ii) the aggregate amount payable by an Indemnifying Party as
indemnification pursuant to this Article 4 shall be limited to $40
million.
4.2 INDEMNIFICATION PROCEDURES FOR THIRD PARTY CLAIMS
(a) In the case of claims or demands made by a third party in
respect of which indemnification is sought by an Indemnified
Party, the Indemnified Party seeking such indemnification
under this Agreement shall give prompt written notice, and in
any event within 20 days, to the Indemnifying Party of any
such claims or demands made upon it, provided that in the
event of a failure to give such
<PAGE> 15
-15-
notice, such failure shall not preclude the party seeking
indemnification to obtain such indemnification but its right
to indemnification may be reduced to the extent that such
delay prejudiced the defense of the claim or demand or
increased the amount of liability or cost of defense.
(b) The Indemnifying Party shall have the right, by notice to the
Indemnified Party given not later than 30 days after receipt
of the notice described in subsection (a) to assume the
control of the defense, compromise or settlement of the claim
or demand, provided that such assumption shall, by its terms,
be without cost to the Indemnified Party and provided the
Indemnifying Party acknowledges in writing its obligation to
indemnify the Indemnified Party in accordance with the terms
contained in this Article 4 in respect of that claim or
demand.
(c) Upon the assumption of control of any claim or demand by the
Indemnifying Party as set out in subsection (b), the
Indemnifying Party shall diligently proceed with the defence,
compromise or settlement of the claim or demand at its sole
expense, including, if necessary, employment of counsel
reasonably satisfactory to the Indemnified Party and, in
connection therewith, the Indemnified Party shall cooperate
fully, but at the expense of the Indemnifying Party, with
respect to any out-of-pocket expenses incurred, to make
available to the Indemnifying Party all pertinent information
(other than privileged information) and witnesses under the
Indemnified Party's control, make such assignments and take
such other steps as in the opinion of counsel for the
Indemnifying Party are reasonably necessary to enable the
Indemnifying Party to conduct such defence. The Indemnified
Party shall also have the right to participate in the
negotiation, settlement or defence of any claim or demand at
its own expense.
(d) The final determination of any claim or demand pursuant to
this Article, including all related costs and expenses, will be
binding and conclusive upon the parties as to the validity or
invalidity, as the case may be, of such claim or demand
against the Indemnifying Party.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 MR. BANKS' REPRESENTATIONS AND WARRANTIES
Mr. Banks hereby represents and warrants to Coutts that:
<PAGE> 16
-16-
(a) in considering the provisions of the Operative Agreements and
in negotiating their terms, Mr. Banks has been advised and
represented by independent counsel;
(b) as of the date hereof, Mr. Banks does not have knowledge of
any undisclosed "material change" or "material fact", as such
terms are defined in the Securities Act (Ontario"), relating
to the affairs of the Companies or the Gaming Shares, TIPI
Shares or Warp 10 Shares;
(c) Mr. Banks has the capacity to enter into each of the Operative
Agreements and to carry out his obligations under each of the
Operative Agreements;
(d) each of the Operative Agreements constitutes a valid and
binding obligation of Mr. Banks enforceable against him in
accordance with its terms;
(e) Mr. Banks is not a party to, bound or affected by or subject
to any indenture, mortgage, lease, agreement, obligation,
instrument, charter or by-law provision, statute, regulation,
order, judgment, decree, licence, permit or law which would be
violated, contravened, breached by, or under which default
would occur or an encumbrance would be created as a result of
the execution and delivery of any of the Operative Agreements
or any other agreement to be entered into under the terms of
any of the Operative Agreements, or the performance by Mr.
Banks of any of his obligations provided for under any of the
Operative Agreements or any other agreement contemplated
herein or therein;
(f) Mr. Banks understands that no federal or state agency has
passed on or made any recommendation or endorsement of the
Banks Purchased Shares;
(g) Mr. Banks acknowledges that, in entering into this Agreement
and the other Operative Agreements, including making the
decision to purchase the Banks Purchased Shares, Mr. Banks has
not relied upon any representation or warranty by Coutts other
than the representations and warranties of Coutts set forth in
Section 5.2 of this Agreement and in the other Operative
Agreements;
(h) Mr. Banks acknowledges and understands that Banks Purchased
Shares have not been registered under the United States
Securities Act of 1933, as amended (the "1933 Act"), or any
other applicable securities law, and accordingly, none of the
Banks Purchased Shares may be offered, sold, transferred,
pledged, hypothecated or otherwise disposed
<PAGE> 17
-17-
of unless registered pursuant to, or in a transaction exempt
from registration under, the 1933 Act and any other applicable
securities law;
(i) Mr. Banks is an "accredited investor" within the meaning of
Rule 501(a) under the 1933 Act (an "Accredited Investor") who
is acquiring the Banks Purchased Shares for his own account.
Mr. Banks has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits
and risks of an investment in the Banks Purchased Shares. Mr.
Banks is aware that he may be required to bear the economic
risk of an investment in the Banks Purchased Shares for an
indefinite period, and he is able to bear such risk for an
indefinite period;
(j) Mr. Banks is acquiring the Banks Purchased Shares for his own
account for investment purposes and not with a view to, or for
offer or sale in connection with, any distribution thereof.
Mr. Banks agrees to offer, sell or otherwise transfer Banks
Purchased Shares only pursuant to registration under the 1933
Act and any other applicable securities law, or an exemption
therefrom;
(k) Mr. Banks acknowledges that Coutts, its employees, officers,
directors and agents and the respective heirs, successors and
assigns of each of the foregoing, will be relying upon the
truth and accuracy of the acknowledgements, representations,
warranties and agreements made by Mr. Banks in the Operative
Agreements; and
(l) Mr. Banks acknowledges that it is the intention of the parties
to this Agreement that the transfer of the Banks Purchased
Shares under the Banks Share Purchase Agreements be made at a
price which is in compliance with clause 93(1)(c) of the
Securities Act (Ontario) and section 183 of the Regulation
made thereunder (and the comparable provisions of the
Securities Act (Alberta)), and Mr. Banks hereby confirms that
he is not aware of any fact, event or occurrence which could
reasonably be expected to give rise to a finding by the
Ontario Securities Commission or the Alberta Securities
Commission that the purchase price for any of the Banks
Purchased Shares under the Banks Share Purchase Agreements
does not so comply.
5.2 COUTTS' REPRESENTATIONS AND WARRANTIES
Coutts hereby represents and warrants to Mr. Banks that:
(a) Coutts is a corporation validly existing and in good standing
under the laws of the jurisdiction of its organization.
Coutts has the full corporate power and authority to execute
and deliver each of the
<PAGE> 18
-18-
Operative Agreements and all other agreements and documents
executed or to be executed by it in connection with each of
the Operative Agreements (including, without limitation, the
Banks Share Purchase Agreements) and to perform all of its
obligations hereunder and thereunder;
(b) Coutts has all necessary authority to transfer, or caused to
be transferred, the Banks Purchased Shares to Mr. Banks
pursuant to and in accordance with the terms of the Banks
Share Purchase Agreements and to complete the transactions
contemplated herein and therein;
(c) each of the Operative Agreements constitutes a valid and
binding obligation of Coutts to Mr. Banks enforceable against
it in accordance with its terms;
(d) Coutts is not a party to, bound or affected by or subject to
any indenture, mortgage, lease, agreement, obligation,
instrument, charter or by-law provision, statute, regulation,
order, judgment, decree, licence, permit or law which would be
violated, contravened, breached by, or under which default
would occur or an encumbrance would be created as a result of
the execution and delivery of any of the Operative Agreements
or any other agreement to be entered into under the terms of
any of the Operative Agreements, or the performance by Coutts
of any of its obligations provided for under any of the
Operative Agreements or any other agreement contemplated
herein or therein;
(e) there has been no act or omission by Coutts which has created
or resulted in the creation of any Security Interest on,
against or with respect to any of the Pledged Shares (except
Security Interests (if any) created as a result of the
consummation of the transactions contemplated by this
Agreement);
(f) to the best of Coutts' information, knowledge and belief, each
of the Clients is incorporated in and a resident of the
jurisdiction which appears below immediately opposite its name
and none of the Clients have been incorporated or organized
for the purposes of causing such corporations not to be in or
resident in Ontario or Alberta for the purposes of completing
the transactions provided for in this Agreement:
<TABLE>
<CAPTION>
CLIENT NAME COUNTRY OF INCORPORATION
----------- ------------------------
<S> <C>
Bayfront Intervest Limited British Virgin Islands
</TABLE>
<PAGE> 19
-19-
<TABLE>
<S> <C>
Compania Di Investimento British Virgin Islands
Antilliana S.A.
Mariner Reserve Fund Inc. Bahamas
Panola Worldwide Corporation British Virgin Islands
Silva Run Worldwide Limited British Virgin Islands
Willsboro Universal Corporation British Virgin Islands;
</TABLE>
(g) to the best of Coutts' information, knowledge and belief, the
transactions contemplated herein will not result in Mr. Banks
having made purchases of shares of any of the Companies from
more than five persons or companies in the aggregate, for the
purposes of clause 93(1)(c) and subsection 93(2) of the
Securities Act (Ontario) (and the comparable provisions of the
Securities Act (Alberta));
(h) Coutts is a banking institution incorporated and organized
under the laws of Switzerland, with a New York Branch, which
does not have an office in the Province of Ontario and, other
than certain activities undertaken by Coutts in connection
with its application to the Ontario Securities Commission for
registration under the Securities Act (Ontario) in the
category of International Dealer, does not carry on business
in the Province of Ontario;
(i) Coutts acknowledges that in entering into this Agreement and
the other Operative Agreements, Coutts has not relied upon any
representation or warranty other than those representations
and warranties set forth in Section 5.1 of this Agreement and
in the other Operative Agreements;
(j) in considering the provisions of the Operative Agreements and
in negotiating their terms, Coutts has been advised and
represented by independent counsel;
(k) Coutts acknowledges that it is the intention of the parties to
this Agreement that the transfer of the Banks Purchased Shares
under the Banks Share Purchase Agreements be made at a price
which is in compliance with clause 93(1)(c) of the Securities
Act (Ontario) and section 183 of the Regulation made
thereunder (and the comparable provisions of the Securities
Act (Alberta)), and Coutts hereby confirms that Coutts is not
aware of any fact, event or occurrence which could reasonably
be expected to give rise to a finding by the Ontario
Securities Commission or the Alberta Securities Commission
that the purchase
<PAGE> 20
-20-
price for any of the Banks Purchased Shares under the Banks
Share Purchase Agreements does not so comply; and
(l) none of Coutts, any affiliate of Coutts, or any person acting
on behalf of Coutts or any such affiliate has engaged, or will
engage, in any general solicitation or any general advertising
with respect to the Banks Purchased Shares.
5.3 COVENANTS OF MR. BANKS
(a) Mr. Banks hereby covenants to Coutts that promptly following the
execution of this Agreement, Mr. Banks shall make and file the press
release and report required by section 101 of the Securities Act
(Ontario) in the forms annexed hereto as Schedule G and, within the
time period required by law, the report required pursuant to section
13(d) of the United States Securities Exchange Act of 1934, as
amended, in a form approved by Coutts, in accordance with the
provisions of such statutes (and the rules and regulations thereunder)
and shall provide Coutts with a copy of such reports.
(b) Mr. Banks hereby covenants to Coutts that all amounts which he
recovers from any of the Clients pursuant to his rights of subrogation
referred to in subsection 2.1(i), after deduction of expenses and fees
incurred by Mr. Banks in asserting and enforcing such rights, shall,
for so long as any amounts remain outstanding on the New Loans, be
paid to Coutts as repayment of the New Loans to the extent of the
outstanding balance thereon.
5.4 COVENANTS OF COUTTS
Coutts hereby covenants to Mr. Banks that promptly following the execution of
this Agreement, Coutts shall make and file the press release and report
required by section 101 of the Securities Act (Ontario) in the form annexed
hereto as Schedule H and, within the time period required by law, the report
required pursuant to section 13(d) of the United States Securities Exchange Act
of 1934, as amended, in a form approved by Mr. Banks, in accordance with the
provisions of such statutes (and the rules and regulations thereunder) and
shall provide Mr. Banks with a copy of all such reports.
<PAGE> 21
-21-
ARTICLE 6
GENERAL
6.1 NOTICES - Any notice or other writing required or permitted to be
given under this Agreement or for the purposes of this Agreement (referred to
in this Section 6.1 as a "notice") to any other party to this Agreement shall
be sufficiently given if delivered personally, or if sent by prepaid registered
mail or if transmitted by fax or other form of recorded communication tested
prior to transmission to such party:
(a) in the case of Coutts a notice at:
Coutts & Co AG, New York Branch
65 East 55th Street
New York, New York 10022
Phone: (212) 303-2971
Attention: Mr. Mario Economou, Vice President
FAX: (212) 303-2929
with copies to:
Mr. Alan M. Christenfeld
Rogers & Wells
200 Park Avenue
New York, New York 10166-0153
FAX: (212) 878-8375
Phone: (212) 878-8000
and
Mr. John W. Stevens
Osler, Hoskin & Harcourt
280 Park Avenue - 30W
New York, New York 10017
FAX: (212) 867-5802
Phone: (212) 867-5800
(b) in the case of Mr. Banks a notice at:
c/o Gaming Lottery Corporation
160 Nashdene Road
Scarborough, Ontario
<PAGE> 22
-22-
M1V 4C4
Attention: Mr. J. Benquesus
FAX: (416) 754-8441
Phone: (416) 292-5963
with copies to:
Mr. Jack Jackson
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, New York 10036
FAX: (212) 969-2900
Phone: (212) 969-3000
and
Mr. Joseph Maierovits
Goldman, Spring, Schwartz & Kichler
Suite 700
40 Sheppard Avenue West
North York, Ontario
M2N 6K9
FAX: (416) 225-4805
Phone: (416) 225-9400
or such other address as the party to whom such writing is to be given shall
have last notified the party giving the same in the manner provided in this
Section. Any notice delivered to the party to whom it is addressed as provided
in this Section shall be deemed to have been given and received on the day it
is so delivered at such address, provided that if such day is not a business
day then the notice shall be deemed to have been given and received on the
business day next following such day. Any notice mailed to the address and in
the manner provided for in this Section shall be deemed to have been given and
received on the fifth business day next following the date of its mailing. Any
notice transmitted by fax or other form of recorded communication shall be
deemed given and received on the first business day after its transmission.
6.2 EXPENSES - Other than the payment by Mr. Banks of Coutts' legal
expenses required by the Banks Share Purchase Loan Agreement, each of the
parties shall pay their respective legal, accounting and other professional
advisory fees, costs and expenses incurred in connection with the transactions
and agreements provided for in this Agreement and the other Operative
Agreements and the preparation,
<PAGE> 23
-23-
execution and delivery of the Operative Agreements and all documents and
instruments executed pursuant to the Operative Agreements and any other costs
and expenses incurred. The parties acknowledge that transactions contemplated
hereby have been negotiated and are to be completed in a manner which will not
give rise to a valid claim for a brokerage fee or commission or other like
payment and no brokerage fee or commission or other like payment has been or
will be made in connection therewith.
6.3 FURTHER ASSURANCES - The Parties shall with reasonable diligence do all
such things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated by this Agreement, and each party
shall provide such further documents or instruments required by any other party
as may be reasonably necessary or desirable to effect the purpose of this
Agreement and carry out its provisions, whether before or after the Closing.
Without limiting the generality of the foregoing, the obligations agreed to by
Coutts for the purposes of this Section 6.3 shall include Coutts' agreement to
provide Mr. Banks with all assistance reasonably requested by Mr. Banks for the
purposes of enabling Mr. Banks to pursue his rights of subrogation, if any,
arising under applicable law to collect from the Clients the amount of the
outstanding balance on the Client Loans which Mr. Banks caused to be repaid
pursuant to Section 2.1(i) hereof unless the assistance requested would result
in a breach of duty owed by Coutts to a Client, would be contrary to applicable
law or would otherwise be reasonably expected to expose Coutts to liability or
require Coutts to incur out of pocket expense (unless Coutts is indemnified
therefor by Mr. Banks).
6.4 GOVERNING LAW AND CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
(b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE,
AND TO THE EXTENT THAT THE PROVISIONS OF THIS SECTION 6.4 ARE
APPLICABLE, MR. BANKS AND COUTTS HEREBY AGREE TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK SITTING IN THE CITY AND
COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED ON VENUE OR
FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED
THEREIN, AND AGREE THAT ANY DISPUTE CONCERNING THE
RELATIONSHIP BETWEEN MR. BANKS AND COUTTS OR THE CONDUCT OF
ANY PARTY HERETO IN CONNECTION WITH THIS AGREEMENT OR
OTHERWISE SHALL
<PAGE> 24
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BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE. NOTWITHSTANDING
THE FOREGOING, COUTTS SHALL HAVE THE RIGHT TO BRING ANY ACTION
OR PROCEEDING AGAINST MR. BANKS OR HIS PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION COUTTS DEEMS NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER
SECURITY FOR THE NEW LOANS.
(c) MR. BANKS HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO HIM AT HIS ADDRESS SET FORTH IN SECTION 6.1 HEREOF
AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5)
DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS OR AT COUTTS' OPTION, BY SERVICE UPON MR. BANKS' NEW
YORK COUNSEL AT ITS NOTICE ADDRESS SET FORTH IN SECTION 6.1
HEREOF, WHICH MR. BANKS HEREBY IRREVOCABLY APPOINTS AS HIS
AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN
THE STATE OF NEW YORK. MR. BANKS HEREBY CONSENTS TO SERVICE
OF PROCESS AS AFORESAID.
(d) NOTHING IN THIS SECTION 6.4 SHALL AFFECT THE RIGHTS OF COUTTS
TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHTS OF COUTTS TO BRING ANY ACTION OR PROCEEDING
AGAINST MR. BANKS OR HIS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
(e) EACH OF MR. BANKS AND COUTTS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED
BY LAW, ANY RIGHT THEY MAY HAVE OR EACH OF THEM MAY HAVE TO
CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO
IN THIS SECTION 6.5 ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
6.5 CONFIDENTIALITY. Each of the parties hereto agrees to keep
confidential the terms of this Agreement and the transactions contemplated
herein, and neither of the parties hereby shall make any public announcement
with the respect to this Agreement or the subject matter hereof without the
prior approval of the other party hereto, except:
(i) as required under this Agreement;
<PAGE> 25
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(ii) for the press release and reports required by Section 5.3 and
Section 5.4 hereof;
(iii) either party may disclose information pertaining to this
Agreement to any person employed or retained by such person;
(iv) such disclosures as may be reasonably required in connection
with the exercise by Coutts of any remedy under the Operative
Agreements or any document related hereto upon the occurrence
of, or during the continuance of, an Event of Default; or
(v) for such disclosures as may be required by applicable law.
6.6 COUNTERPARTS - This Agreement may be executed by the parties hereto in
separate counterparts each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
6.7 FACSIMILE SIGNATURE - This Agreement may be executed by faxed signature
with the same effect as a manually signed original signature.
6.8 ASSIGNMENT - Neither this Agreement nor any benefits or burdens under
this Agreement, the other Operative Agreements or any of the agreements
contemplated herein, shall be assignable by any party hereto without the prior
written consent of each of the other parties hereto. Subject to the foregoing,
this Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective successors, heirs, and permitted assigns.
IN WITNESS WHEREOF the parties have hereunto duly executed this
Agreement.
COUTTS & CO AG, NEW YORK BRANCH
BY: /s/ Peter Cawdron
------------------------------------
Branch Manager
/s/ Jacques Benquesus
------------------------------------
Jacques Benquesus
<PAGE> 1
LOAN AGREEMENT
THIS AGREEMENT made as of the 20th day of August, 1996
B E T W E E N:
MR. JACQUES BENQUESUS, an individual residing in the City
of Jerusalem, Israel
(hereinafter referred to as the "Borrower")
- and -
COUTTS & CO AG, NEW YORK BRANCH, a Swiss bank licensed
to conduct a banking business by the State of New York
(hereinafter referred to as the "Bank")
WITNESSES THAT WHEREAS the Borrower has requested the Facility
(as hereinafter defined) to fund the payment by the Borrower to the Bank of the
consideration for the forbearance of the Bank in not selling the Banks Pledged
Shares (as defined in the Banks Master Agreement) and to repay the balance due
on certain of the Client Loans (as defined in the Banks Master Agreement) and
to pay expenses incurred by him in connection with payment of such
consideration and the repayment of such loans and the Bank has agreed to
provide the Facility to the Borrower on the terms and conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and mutual
agreements and covenants contained in this Agreement and other good and
valuable consideration (the receipt and adequacy of which are hereby mutually
admitted), the Parties hereby agree as follows:
<PAGE> 2
-2-
ARTICLE I.
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS - Whenever used in this Agreement, unless there is
something inconsistent in the subject matter or context the following words and
terms shall have the meaning set out below:
"AGREEMENT" means this agreement, including all schedules and all
instruments supplementing or amending or confirming this Agreement,
"hereof", "hereto" and "hereunder" and similar expressions mean and
refer to this Agreement and not any particular article or section, and
"Article", "Section" and "Subsection" each means and refers to the
specified article, section or subsection in this Agreement;
"ANNIVERSARY DATE" means the annual anniversary of the date of this
Agreement or the next Business Day thereafter if such date is not a
Business Day;
"APPLICABLE LAW" means, with respect to any Person, property,
transaction or event, and whether or not having the force of law, all
applicable laws, statutes, regulations, rules, guidelines, by-laws,
treaties, orders, policies, judgments, decrees and official directives
of governmental bodies or other Persons acting under the authority of
any governmental body;
"BANKS MASTER AGREEMENT" means the master agreement dated August 19,
1996 between the Bank and Mr. Jacques Benquesus;
"BASE RATE" means, at any time, the rate of interest, expressed as an
annual rate, established by the Bank from time to time as the
reference rate of interest it will charge for loans in Dollars;
"BASE RATE LOAN" means the amount of the Loan with respect to which
the Borrower is deemed to have elected to have interest calculated by
reference to the Base Rate or to which, in accordance with the
provisions of this Agreement, the Base Rate is deemed to apply;
"BASE RATE ROLLOVER" means a deemed conversion of the Libor Loan to a
Base Rate Loan pursuant to Section 3.1;
"BORROWER" means Mr. Jacques Benquesus, an individual residing in the
City of Jerusalem, Israel;
"BRANCH" means the branch of the Bank located at 65 East 55th Street,
New York, NY 10022;
<PAGE> 3
-3-
"BUSINESS DAY" means a day on which banks are open for business in New
York, U.S.A.;
"CLOSING DATE" means August 20, 1996 or such other earlier or later
date as may be agreed upon by the Parties;
"COLLATERAL" means the assets, property and undertaking of the
Borrower subject to the Security;
"COMPANY" means any of Gaming Lottery Corporation, The Instant
Publisher Inc. or Warp 10 Technologies Inc.;
"DOLLARS" and the symbol "$" mean the lawful currency of the United
States of America;
"DRAWDOWN" means the borrowing, in Dollars, of funds under the
Facility;
"EVENT OF DEFAULT" means any of the events described in Section 10.1;
"FACILITY" has the meaning ascribed to it in Section 2.1;
"FACILITY CREDIT LIMIT" has the meaning ascribed to it in Section 2.1;
"GUARANTEE" has the meaning ascribed to it in Subsection 7.1(a);
"INTEREST PAYMENT DATE" means
(i) with respect to the Libor Loan, the last day of the
Libor Interest Period applicable thereto and also, if any
Libor Interest Period is longer than 93 days, the last day of
each 90-day period during such Libor Interest Period or, if
any such day is not a Business Day, the Business Day next
following; and
(ii) with respect to the Base Rate Loan, the last day of
each calendar month or, if any such day is not a Business Day,
the Business Day next following;
"LIBOR INTEREST PERIOD" means, for the Libor Loan, subject to
availability of funds to the Bank, the period of 1, 2, 3, 6 or 12
months, as may be selected by the Borrower pursuant to the relevant
Libor Notice, commencing on, in respect of the initial Libor Interest
Period, the Closing Date and, thereafter, the date of the applicable
Libor Rollover, provided that:
<PAGE> 4
-4-
(i) any Libor Interest Period which would otherwise end
on a day which is not a Business Day shall be extended to the
next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Libor Interest
Period shall end on the immediately preceding Business Day;
(ii) any Libor Interest Period which 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 Libor Interest Period) shall end on the last
Business Day of a calendar month;
(iii) the Libor Interest Period shall terminate on such
date as will permit the repayment of the Facility on the date
and in the manner provided for herein;
"LIBOR LOAN" means the amount of the Loan with respect to which
interest under this Agreement is calculated with reference to the
Libor Rate;
"LIBOR NOTICE" means a notice substantially in the form attached
hereto as Schedule B;
"LIBOR RATE" means, for the Libor Interest Period then applicable to
the Libor Loan, the interest rate per annum (expressed on the basis of
a 360-day year) at which Dollar deposits are offered to leading banks
in the London interbank euro-currency offering market in an amount
approximately equal to the principal amount of the Libor Loan and for
a period comparable to such Libor Interest Period at approximately
11:00 a.m. London, England time on the second Business Day preceding
the first day of such Libor Interest Period for delivery on the first
day of such Libor Interest Period;
"LIBOR ROLLOVER" means a rollover of the Libor Loan pursuant to
Section 2.5;
"LIQUIDITY EVENT" means the announcement or occurrence of any
transaction or event initiated, caused or assisted, directly or
indirectly, by Mr. Jacques Benquesus, any Person controlled by Mr.
Jacques Benquesus or any affiliate or associate (as such terms are
defined in the Securities Act (Ontario)) of Mr. Jacques Benquesus or
such Person, or any Person acting jointly or in concert with Mr.
Jacques Benquesus or such Person in connection with such transaction
or event which results, or if consummated would result, in the Public
Float of any Company being less than one half of the Public Float of
such Company on the date hereof;
"LOAN" means, at any time, the total outstanding principal amount of
all Drawdowns, together with any interest capitalized pursuant to
Section 4.5;
<PAGE> 5
-5-
"PARTIES" means the Bank and the Borrower and "PARTY" refers to any
one of them;
"PERSON" means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, governmental authority and a
natural person in his capacity as trustee, executor, administrator or
other legal representative;
"PUBLIC FLOAT" means the percentage of the issued and outstanding
participating voting equity shares of a Company held by persons other
than Mr. Jacques Benquesus, Mrs. Biba Benquesus, Mr. Larry H. Weltman
or Mr. John M. Wiseman and their associates and affiliates (as such
terms are defined in the Securities Act (Ontario));
"RELATED LOAN AGREEMENTS" means the loan agreements dated the date
hereof between the Bank and each of Mr. Jacques Benquesus, Mr. Larry
H. Weltman and Mr. John M. Wiseman;
"ROLLOVER" means, as applicable, either a Base Rate Rollover or a
Libor Rollover.
"SECURITY" means the security described in Article VII;
"TAXES" means all present and future taxes, levies, imposts, stamp
taxes, duties, charges to taxes, fees, deductions, withholdings and
any restrictions or conditions resulting in a charge imposed, levied,
collected, withheld or reserved and all penalties, interest and other
payments on or in respect thereof;
"WELTMAN MASTER AGREEMENT" means the master agreement dated August 19,
1996 between Larry H. Weltman and the Bank; and
"WISEMAN MASTER AGREEMENT" means the master agreement dated August 19,
1996 between John M. Wiseman and the Bank.
1.2 CERTAIN RULES OF INTERPRETATION - In this Agreement:
(a) time is of the essence in the performance of the Parties'
respective obligations;
(b) the descriptive headings of Articles and Sections are inserted
solely for convenience of reference and are not intended as complete
or accurate descriptions of content;
<PAGE> 6
-6-
(c) the use of words in the singular or plural, or with a
particular gender, shall not limit the scope or exclude the
application of any provision of this Agreement to such person or
persons or circumstances except as the context otherwise permits;
(d) whenever a provision of this Agreement requires an approval or
consent by a Party to this Agreement and notification of such approval
or consent is not delivered within the applicable time limited, then,
unless otherwise specified, the Party whose consent or approval is
required shall be conclusively deemed to have withheld its consent or
approval;
(e) unless otherwise specified, time periods within or following
which any payment is to be made or act is to be done shall be
calculated by excluding the day on which the period commences and
including the day which ends the period and by extending the period to
the next Business Day following if the last day of the period is not a
Business Day; and
(f) whenever any payment is to be made or action to be taken under
this Agreement is required to be made or taken on a day other than a
Business Day, such payment shall be made or action taken on the next
Business Day following.
1.3 SCHEDULES - The following are the Schedules to this Agreement and are
incorporated by reference and deemed to be part of this Agreement:
Schedule A - Compliance Certificate
Schedule B - Libor Notice
ARTICLE II.
THE FACILITY
2.1 THE FACILITY - Upon the terms and subject to the conditions herein set
forth, the Bank hereby establishes in favour of the Borrower the following
credit facility (the "Facility") to be available to the Borrower in accordance
with the provisions of this Agreement. The Facility shall consist of a term
credit facility of up to a maximum principal amount, excluding any interest
capitalized pursuant to Section 4.5, of $20,016,872.25 (the "Facility Credit
Limit") which funds shall be advanced or otherwise made available in a single
Drawdown on the Closing Date.
2.2 PURPOSE - The Facility shall be available to the Borrower to fund the
payment by the Borrower to the Bank of the consideration for the forbearance of
the Bank in not selling the Banks Pledged Shares (as defined in the Banks
Master Agreement) and to repay the balance due on certain of the Client Loans
(as defined
<PAGE> 7
-7-
in the Banks Master Agreement) and to pay expenses incurred by him in
connection with the payment of such consideration and the repayment of such
loans.
2.3 AVAILMENT OF FACILITY - Upon the terms and subject to the conditions
herein set forth, the Borrower may effect a single borrowing under the Facility
by way of a Libor Loan with an initial Libor Interest Period of one (1) month.
2.4 EFFECTING THE DRAWDOWN - Borrowing under the Facility shall be
effected by the Bank crediting to the Borrower's Dollar account with the Bank
the full amount of such borrowing for same day value by 2:00 p.m. New York time
on the Closing Date and in immediately available funds.
2.5 ROLLOVERS - The Libor Loan will be deemed to be automatically rolled
over (on the last day of the applicable Libor Interest Period) into a Libor
Loan in a principal amount equal to the amount of the Loan for a Libor Interest
Period equal to the lesser of:
(a) (i) if the Borrower has delivered to the Bank a Libor
Notice in accordance with the terms of this
Agreement, the Libor Interest Period specified in
such Libor Notice or (ii) if the Borrower has not
made such delivery of a Libor Notice, the Libor
Interest Period of such rolled over Libor Loan;
(b) the remaining term of the Loan.
2.6 LIBOR NOTICE - A Libor Notice shall be substantially in the form
attached as Schedule B to this Agreement and shall state the Libor Interest
Period being requested.
Subject to the terms and conditions of this Agreement, the Borrower
shall be entitled to specify the Libor Interest Period to be applicable to the
Libor Loan upon rollover by delivering a Libor Notice to the Bank by 11:00 a.m.
(New York time) no less than two Business Days prior to the last day of the
current Libor Interest Period.
In the event that a Libor Notice is given by telephone, the Borrower
shall provide to the Bank written confirmation of such notice bearing the
Borrower's original signature within two Business Days of giving of such
notice. All notices given by telephone shall be at the risk of the Borrower
and the Bank shall have no liability for relying or acting on such verbal
notice (whether or not subsequently confirmed in writing) or for any failure on
the part of the Bank to carry out the requirements of such notice wholly or in
part, or for any error or omission in fulfilling the requirements of such
notice or the interpretation thereof by the Bank, save and except for any
failure, error or omission arising out of the gross negligence or willful
misconduct of the Bank. Any notice on which the Bank has
<PAGE> 8
-8-
acted, whether made by telephone, fax or otherwise in writing shall be
irrevocable and binding on the Borrower.
2.7 EVIDENCE OF INDEBTEDNESS - The Bank shall open and maintain on its
books at the Branch, accounts in respect of the Facility to evidence the Loan
under the Facility and all other amounts owing by the Borrower to the Bank
hereunder. The Bank shall enter in the foregoing accounts details of all
amounts from time to time owing, paid or repaid by the Borrower hereunder. The
information entered in the foregoing accounts shall constitute prima facie
evidence of the obligations of the Borrower to the Bank hereunder with respect
to the Loan and all other amounts owing by the Borrower to the Bank hereunder.
The Borrower shall, on reasonable notice to the Bank, be entitled to obtain
from the Bank extracts of all entries made in such accounts.
ARTICLE III.
FURTHER PROVISIONS RELATING TO
THE LIBOR LOANS
3.1 CHANGE OF CIRCUMSTANCES - In the event that at any time prior to the
commencement of a Libor Interest Period the Bank makes a determination in good
faith, which shall be final, conclusive and binding upon the Borrower, that:
(a) by reason of changes affecting the London interbank market,
adequate and fair means do not exist for ascertaining the rate of
interest applicable to the Libor Loan during the ensuing Libor
Interest Period;
(b) the continuing of the Libor Loan by the Bank during the
ensuing Libor Interest Period has been made impracticable by the
occurrence of circumstances which materially or adversely affect the
London interbank market;
(c) Dollar deposits are not available to the Bank in the London
interbank market in sufficient amounts in the ordinary course of
business in order for the Bank to fund the Libor Loan during the
ensuing Libor Interest Period; or
(d) the Libor Rate for the immediately following Libor Interest
Period does not accurately reflect the effective cost to the Bank of
funding the Libor Loan for the ensuing Libor Interest Period, or the
costs to the Bank would be increased or the income receivable by the
Bank would be reduced in respect of such Libor Loan,
then the Bank shall give notice thereof to the Borrower, which notice shall set
out in reasonable detail the reasons for such determination. Upon such notice
being
<PAGE> 9
-9-
given, Libor Rollovers shall be suspended until the Borrower is informed
by the Bank that such conditions no longer exist and the outstanding Libor Loan
shall, at the expiration of the Libor Interest Period, be deemed to be
converted into a Base Rate Loan, in an amount equal to the principal amount of
such Libor Loan.
ARTICLE IV.
PAYMENT OF INTEREST AND OTHER FEES
4.1 INTEREST ON THE LIBOR LOAN - The Borrower shall pay interest in
Dollars to the Bank on the amount of the Libor Loan for the Libor Interest
Period applicable thereto at a nominal rate per annum equal to the Libor Rate
applicable to the Libor Loan plus 0.5%, for any period that such Libor Loan is
outstanding. Interest on the Libor Loan shall accrue daily on the amount of
such Libor Loan and shall be calculated and, subject to Sections 4.5 and 4.6,
payable in arrears on each successive Interest Payment Date applicable to the
Libor Loan on the basis of the actual number of days for which the Libor Loan
is outstanding, computed on the basis of a year of 360 days. Interest on the
Libor Loan shall be payable in accordance with the foregoing after as well as
before demand, default, maturity and judgment.
4.2 INTEREST ON BASE RATE LOANS - The Borrower shall pay interest in
Dollars to the Bank on the principal amount of the Base Rate Loan (with
interest on overdue interest at the same rate) at a nominal rate per annum
equal to the Base Rate in effect from time to time plus 0.5%;
Interest on the Base Rate Loan shall accrue daily on the outstanding principal
balance thereof and shall be calculated and, subject to Sections 4.5 and 4.6,
payable in arrears:
(a) on each successive Interest Payment Date, for the period then
ending;
(b) in the case of a prepayment of part or all of the Base Rate
Loan, on the date of such prepayment, with respect to interest accrued
on the amount of principal being prepaid;
(c) in the case of amounts repaid pursuant to Section 5.3, on the
date of such repayment with respect to interest accrued on the amount
of the principal of the Base Rate Loan being repaid; and
(d) on the date that all amounts owing hereunder are repaid in
full, whether on demand, by reason of acceleration or otherwise;
<PAGE> 10
-10-
on the basis of the actual number of days for which a particular principal
amount is outstanding, computed on the basis of a year of 365 days or 366 days
in the case of a leap year. Interest on overdue interest on the Base Rate Loan
shall be payable on demand. Changes in the Base Rate shall cause an immediate
and automatic adjustment of the interest rate applicable to the Base Rate Loan
as and from the effective date of such change without the necessity of any
notice to the Borrower, such notice being hereby expressly waived by the
Borrower. Interest on the Base Rate Loan shall be payable in accordance with
the foregoing after as well as before demand, default, maturity and judgment.
4.3 INCREASED COSTS - If, as a result of any Applicable Law, or of the
interpretation or application thereof by any court or by any governmental or
other authority or entity charged with the administration thereof, whether or
not having the force of law, which:
(a) subjects the Bank to any Taxes or changes the basis of
taxation, or increases any existing Taxes, on payments of principal,
interest or other amounts payable by the Borrower to the Bank under
this Agreement (except for Taxes on the overall net income or capital
of the Bank or gross receipts or franchise taxes imposed by the
jurisdiction in which its principal or lending offices are located);
(b) imposes, modifies or deems applicable any reserve, cash
margin, special deposit or similar requirements against assets held
by, or deposits in or for the account of or loans by or any other
acquisition of funds by the relevant funding office of the Bank;
(c) imposes on the Bank any other adverse condition with respect
to this Agreement; or
(d) imposes on the Bank a requirement to maintain or allocate
capital in relation to the Facility;
and the result of any of the foregoing is, in the reasonable opinion of the
Bank, to increase the cost to the Bank of making the Drawdown or maintaining
the Loan or reduce the income receivable by the Bank in respect of the Loan by
an amount which the Bank deems to be material, then upon the Bank giving
written notice thereof, from time to time, to the Borrower (such notice to set
out in reasonable detail the facts giving rise to and a summary calculation of
such increased cost or reduced income), the Borrower shall forthwith pay to the
Bank, upon receipt of such notice, that amount which shall compensate the Bank
for such additional cost or reduction in income. The Borrower will not be
required to compensate the Bank for any such additional cost or reduction in
income under this Section 4.3 incurred by the Bank more than 3 months prior to
its request to the Borrower for such compensation. Notwithstanding anything
herein to the contrary, to the extent that
<PAGE> 11
-11-
the Bank does not charge all of its customers who are similarly situated to the
Borrower in respect of any additional cost or reduction of income described in
this Section 4.3, the Bank shall not charge the Borrower.
4.4 GROSS-UP - All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such deduction or
withholding is required by any Applicable Law, as modified by the practice or
any relevant governmental revenue authority, then in effect. If the Borrower
is so required to deduct or withhold, then the Borrower will:
(a) promptly notify the Bank of such requirement;
(b) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by the Borrower
to the Bank under this Section 4.4) promptly upon the earlier of
determining that such deduction or withholding is required or
receiving notice that such amount has been assessed against the Bank;
(c) promptly forward to the Bank an official receipt (or a
certified copy), or other documentation reasonably acceptable to the
Bank evidencing such payment to such authorities; and
(d) pay to the Bank, in addition to the payment to which the Bank
is otherwise entitled under this Agreement, such additional amount as
is necessary to ensure that the net amount actually received by the
Bank (free and clear of Taxes, whether assessed against the Borrower
or the Bank) will equal the full amount the Bank would have received
had no such deduction or withholding been required.
4.5 CAPITALIZATION OF INTEREST - At the election of the Borrower, unless
there shall have occurred and be continuing any event which constitutes or
would constitute, with the giving of notice, the passing of time, or both, an
Event of Default, any interest accruing and otherwise payable by the Borrower
on the Loan on or before the first Anniversary Date shall be added to the
principal amount of the Loan and the non-payment of such interest when due
shall not be considered an Event of Default.
4.6 DEFERRAL OF INTEREST - At the election of the Borrower, unless there
shall have occurred and be continuing any event which constitutes, or would
constitute, with the giving of notice, the passing of time, or both, an Event
of Default, the Borrower shall be entitled to:
(a) defer the payment of any interest accruing and otherwise
payable by the Borrower on the Loan for the period from and including
the Closing Date to
<PAGE> 12
-12-
and excluding the first Anniversary Date. Any interest deferred
pursuant to this Subsection 4.6(a) shall be paid by the Borrower to
the Bank on or before the first Anniversary Date or capitalized
pursuant to Section 4.5;
(b) defer the payment of any interest accruing and otherwise
payable by the Borrower on the Loan for the period from and including
the first Anniversary Date to and excluding the second Anniversary
Date. Any interest deferred pursuant to this Subsection 4.6(b) shall
be paid by the Borrower to the Bank on or before the second
Anniversary Date;
(c) defer the payment of any interest accruing and otherwise
payable by the Borrower on the Loan for the period from and including
the second Anniversary Date to and excluding the third Anniversary
Date. Any interest deferred pursuant to this Subsection 4.6(c) shall
be paid by the Borrower to the Bank on or before the third Anniversary
Date; and
(d) defer the payment of any interest accruing and otherwise
payable by the Borrower on the Loan for the period from and including
the third Anniversary Date to and excluding the fourth Anniversary
Date. Any interest deferred pursuant to this Subsection 4.6(d) shall
be paid by the Borrower to the Bank on or before the fourth
Anniversary Date.
The non-payment of interest which is deferred pursuant to this Section which
would otherwise be due and payable shall not be considered an Event of Default;
provided that any interest which is deferred is subsequently paid in accordance
with this Section.
4.7 MAXIMUM INTEREST RATE. In no event shall any interest rate exceed the
maximum rate permissible for individual borrowers by Applicable Law (the
"Maximum Rate"). If, in any month, any interest rate, absent such limitation,
would have exceeded the Maximum Rate, then the interest rate for that month
shall be the Maximum Rate, and, if in future months, that interest rate would
otherwise be less than the Maximum Rate, then that interest rate shall remain
at the Maximum Rate until such time as the amount of interest paid hereunder
equals the amount of interest which would have been paid if the same had not
been limited under this section to the Maximum Rate. In the event that, upon
payment in full of the Loan under this Agreement, the total amount of interest
paid or accrued under the terms of this Agreement is less than the total amount
of interest which would have been paid or accrued if the interest rates set
forth in this Agreement had at all times been in effect, then the Borrower
agrees, to the extent permitted by Applicable Law, to pay to the Bank an amount
equal to the difference between (a) the lesser of (i) the amount of interest
which would have been charged if the Maximum Rate had, at all times, been in
effect or (ii) the amount of interest which would have accrued had the interest
rates set forth in this Agreement, at all times, been in effect and (b) the
amount of interest actually paid or accrued under this Agreement. In the
<PAGE> 13
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event that the Bank receives, collects or applies as interest any sum in excess
of the Maximum Rate, such excess amount shall be applied to the reduction of
the principal balance of the Loan, and any funding indemnities in connection
therewith under Section 11.3 hereof, and, if no such principal or such funding
indemnity is then outstanding, such excess or part thereof remaining shall be
paid to the Borrower.
ARTICLE V.
REPAYMENTS AND PREPAYMENTS
5.1 REPAYMENT OF THE LOAN - On or before the fourth Anniversary Date, the
Borrower shall repay the Loan in its entirety, together with all interest
accrued thereon.
5.2 VOLUNTARY PREPAYMENTS OF PRINCIPAL - The Borrower shall have the right
to prepay the Loan without premium or penalty unless otherwise provided herein.
Any voluntary prepayment of the Libor Loan may be made without penalty only if
made at the expiration of the applicable Libor Interest Period, and then only
if at least two Business Days' prior notice is given to the Bank.
5.3 CURRENCY AND TIME OF PAYMENTS - The Borrower shall make each payment
hereunder at the Branch (or such other place in New York, New York as the Bank
may from time to time notify the Borrower, at least five Business Days prior to
any payment date) not later than 10:00 a.m. New York, New York, time on the day
when due (or on the next Business Day thereafter if such day is not a Business
Day) in Dollars.
5.4 APPLICATION OF PAYMENTS AND PREPAYMENTS - Payments and any prepayments
made by the Borrower in respect of the Loan shall be applied as follows: (i)
first, to the payment of any interest deferred pursuant to Section 4.6; (ii)
second, to the repayment of the principal amount of the Loan; (iii) third, to
the payment of any interest capitalized pursuant to Section 4.5; and (iv)
fourth, to the payment of any other amounts payable by the Borrower under this
Agreement.
<PAGE> 14
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ARTICLE VI.
CONDITIONS PRECEDENT TO DRAWDOWN
6.1 CONDITIONS PRECEDENT TO DRAWDOWN - The obligation of the Bank to
permit the Drawdown is subject to the condition precedent that the Bank shall
have received on or before the Closing Date all of the following in form and
substance satisfactory to the Bank and the Bank's counsel:
(a) the Security, duly executed;
(b) evidence of the completion of all recordings, registrations
and filings as may be necessary or desirable to perfect or preserve
the security interests created by the Security;
(c) a promissory note, duly executed;
(d) a certificate of the Borrower stating that, as of such date,
(i) all the representations and warranties made by the Borrower herein
are true and correct and that no event has occurred which constitutes
or would constitute, with the giving of notice, the passing of time,
or both, an Event of Default; and (ii) the Borrower has performed all
covenants under this Agreement to be performed by him; and
(e) the Borrower shall have delivered such other documentation as
the Bank may reasonably request.
6.2 WAIVER - The conditions set forth in Section 6.1 are inserted for the
sole benefit of the Bank and may be waived by the Bank, in whole or in part
(with or without terms or conditions).
ARTICLE VII.
SECURITY
7.1 SECURITY - There shall be delivered to the Bank the following:
(a) a limited guarantee from Mr. Jacques Benquesus in the form
provided for in the Banks Master Agreement (the "Guarantee");
(b) the Amended Banks Pledge (as such term is defined in the Banks
Master Agreement);
<PAGE> 15
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(c) the Banks Purchased Share Pledge (as such term is defined in
the Banks Master Agreement);
(d) the Share Pledge (as such term is defined in the Weltman
Master Agreement); and
(e) the Share Pledge (as such term is defined in the Wiseman
Master Agreement);
as continuing collateral security for the prompt and due repayment of the Loan
and the performance by the Borrower of all of its present and future
obligations to the Bank.
7.2 REGISTRATION - The Security shall, at the Borrower's expense (subject
to the provisions set forth in the first sentence of Section 11.1), be
registered, filed or recorded in all offices where such registration, filing or
recording is necessary or of advantage to the creation, perfection and
preserving of the applicable security interests.
ARTICLE VIII.
BORROWER'S REPRESENTATIONS AND WARRANTIES
To induce the Bank to make available the Facility, the Borrower
represents and warrants to and in favour of the Bank as follows, which
representations and warranties of the Borrower shall survive the execution and
delivery of this Agreement and the making of the Loan, notwithstanding any
investigations or examinations which may be made by the Bank or the Bank's
counsel, and the Bank shall be deemed to have relied on such representations
and warranties in the making of the Loan:
8.1 ENFORCEABILITY - When executed and delivered, this Agreement and the
Security (to the extent that the Borrower is a party thereto) will constitute
valid and legally binding obligations enforceable against the Borrower in
accordance with their respective terms, subject, however, to limitations with
respect to enforcement imposed by law in connection with bankruptcy or similar
proceedings and to the extent that equitable remedies such as specific
performance and injunction are in the discretion of the court from which they
are sought;
8.2 VALIDITY OF AGREEMENT - NO-CONFLICT - The Borrower is not a party to,
bound or affected by or subject to any indenture, mortgage, lease, agreement,
obligation, instrument, statute, regulation, order, judgment, decree, licence,
permit or law which would be violated, contravened, breached by, or under which
default would occur or a lien, claim, restriction or encumbrance would be
created as a result
<PAGE> 16
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of the execution and delivery of this Agreement or the Security or the carrying
out of the Borrower's obligations hereunder or thereunder;
8.3 GOVERNMENT APPROVAL, REGULATION, ETC. - No authorization or approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body or other Person is required for the due execution, delivery
or performance by the Borrower of this Agreement or the Security except for
authorizations, approvals, actions, notices or filings which have been duly
obtained or made and are in full force and effect;
8.4 NO EVENT OF DEFAULT - No Event of Default has occurred and is
continuing and no event has occurred which, with the giving of notice, the
passing of time, or both, would constitute an Event of Default;
8.5 NO ENCUMBRANCES -
(a) The Banks Pledged Shares (as such term is defined in the Banks
Master Agreement) are not subject to any mortgage, lien, pledge,
charge, security interest or other encumbrance other than the
Security; and
(b) There has been no act or omission by the Borrower which has
created or resulted in the creation of any mortgage, lien, pledge,
charge, security interest or other encumbrance on, against or with
respect to any part of the Banks Purchased Pledged Shares (as such
term is defined in the Banks Master Agreement), except the Security;
8.6 MATERIAL OBLIGATIONS - The Borrower is not, in any respect, in default
under any material obligation, direct or indirect, contingent or otherwise, or
under any order, writ, decree or demand of any court or governmental agency or
authority, where any such default would materially adversely affect the
Borrower's ability to perform his obligations under this Agreement or under the
Security;
8.7 COMPLIANCE WITH LAWS - The Borrower is not in violation of any
judgment, decree, order, statute, rule or regulation relating in any way to the
Borrower, or to his property or assets and which would have a material effect
on the condition, financial or otherwise, of the Borrower;
8.8 TAXES - The Borrower has duly and timely filed all tax returns and
reports required by law to have been filed by him, has duly and correctly
reported all income and other amounts required to be reported and has paid all
taxes, penalties, interest, fines and governmental charges in respect thereof,
to the extent that such taxes, penalties, interest, fines and other
governmental charges have been assessed by the relevant taxation authority,
except to the extent that (i) any such tax, penalty, interest, fine or any
other governmental charge is being contested in good faith by appropriate
proceedings or (ii) the failure so to pay or discharge any such tax,
<PAGE> 17
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penalty, interest, fine or any other governmental charge could not reasonably
be expected to materially adversely affect the financial condition or business
of the Borrower. The Borrower has duly and timely paid all instalments of
taxes required to be paid by him except to the extent that (i) any such
instalment of tax is being contested in good faith by appropriate proceedings
or (ii) the failure so to pay or discharge any such instalment of tax could not
reasonably be expected to materially adversely affect the financial condition
or business of the Borrower. There are no actions, suits, proceedings,
investigations, audits or claims now pending or, to the best of the knowledge
of the Borrower (after due inquiry), threatened against the Borrower in respect
of any taxes or any penalties, interest and fines in respect thereof and there
are no matters under discussion with any taxation or other governmental
authority relating to any such matters; and
8.9 ACCURACY OF INFORMATION - All factual information previously or
contemporaneously furnished by or on behalf of the Borrower in writing to the
Bank for purposes of or in connection with this Agreement or any transaction
contemplated hereby including the certificates delivered pursuant to Section
6.1, (true and complete copies of which were furnished to the Bank in
connection with its execution and delivery of this Agreement) is and all other
such factual information pursuant to this Agreement to the Bank will be true
and accurate in every material respect on the date as of which such information
is dated or certified and such information is not, or shall not be, as the case
may be, incomplete by omitting to state any material fact necessary to make
such information not misleading.
ARTICLE IX.
COVENANTS
The Borrower covenants and agrees with the Bank that, unless the Bank
otherwise consents in writing, so long as any amount payable hereunder is
outstanding:
9.1 PUNCTUAL PAYMENT - The Borrower shall duly and punctually pay the
principal amount of the Loan, all interest thereon, all fees and all other
amounts required to be paid by the Borrower hereunder or pursuant to agreements
with the Bank at the times and places and in the manner provided for herein or
therein;
9.2 COMPLIANCE WITH LEGISLATION - The Borrower shall comply with all laws,
rules, regulations and orders, the non- compliance with which could materially
and adversely affect the financial condition of the Borrower or the performance
by the Borrower of his obligations under this Agreement and the Security;
<PAGE> 18
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9.3 NOTICE OF LITIGATION - The Borrower shall give notice to the Bank of
the occurrence of any material litigation, proceeding or dispute affecting the
Borrower initiated after the Closing Date if the result of any of them might
have a material adverse effect on the ability, financial or otherwise, of the
Borrower to perform his obligations under this Agreement and Security, and from
time to time shall provide the Bank with all reasonable non-privileged
information requested by the Bank concerning the status of any such litigation,
proceeding or dispute. Such notice shall be given within fifteen (15) days of
the Borrower becoming aware of such litigation, proceeding or dispute and shall
be in form and detail satisfactory to the Bank;
9.4 NOTICE OF ANY EVENT OF DEFAULT - The Borrower shall forthwith give
notice to the Bank of any fact which, to the best of the Borrower's knowledge,
may be construed as constituting an Event of Default or of any event which, to
the best of the Borrower's knowledge, with the giving of notice, lapse of time
or otherwise may constitute an Event of Default;
9.5 USE OF PROCEEDS - The Borrower shall use the proceeds of the Loan for
the purposes contemplated hereunder;
9.6 TAXES - The Borrower will pay all federal, state and provincial and
other taxes or other assessments or governmental charges or levies imposed upon
him or upon his income or profits or upon property belonging to him prior to
the time when any penalties or interest (except interest during extensions of
time for filing of federal income or other tax returns not in excess of nine
months) accrue with respect thereto, unless, in any such case, the same is
being contested in good faith by appropriate proceedings, except to the extent
that (i) any such tax, penalty, interest, fine or any other governmental charge
is being contested in good faith by appropriate proceedings or (ii) the failure
so to pay or discharge any such tax, penalty, interest, fine or other
governmental charge could not reasonably be expected to materially adversely
affect the financial condition or business of the Borrower;
9.7 PERFORMANCE OF COVENANTS - The Borrower will diligently observe and
perform all his covenants to be observed or performed hereunder and under the
Security;
9.8 DISPOSAL OF COLLATERAL - The Borrower shall not sell, assign,
lease-back or otherwise dispose of any of the Collateral, unless the Net
Proceeds (as such term is defined in the Banks Master Agreement) of the sale,
assignment, or other disposal of the Collateral are applied, in accordance with
the provisions of Article 3 of the Banks Master Agreement, to reduce the
outstanding Loan;
9.9 LIMITATION ON ENCUMBRANCES - The Borrower shall not create, incur,
assume or otherwise become liable upon or suffer to exist any mortgage, charge,
<PAGE> 19
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lien, hypothec, security interest or other encumbrance whatsoever on, against
or with respect to any part of the Collateral except the Security; and
9.10 FURTHER ASSURANCES - The Borrower will, from time to time, do, execute
and deliver or shall cause to be done, executed and delivered all such further
acts, documents or other instruments as may reasonably be requested by the Bank
in order to cure any defects in the execution and delivery of, or to comply
with or accomplish the covenants and agreements contained in this Agreement and
the Security.
ARTICLE X.
EVENTS OF DEFAULT
10.1 EVENTS OF DEFAULT - The occurrence of any one or more of the following
events (each such event being herein referred to as an "Event of Default")
shall constitute a default under this Agreement:
(a) If the Borrower shall fail to pay any principal of, or
interest on, the Loan when the same shall become due and payable
hereunder;
(b) If the Borrower, together with the borrowers under the Related
Loan Agreements, shall fail to repay on or before the third
Anniversary Date at least $30,000,000 of the aggregate principal
amount of the Loan and the loans under the Related Loan Agreements;
for a period of 3 Business Days after notice from the Bank;
(c) If the Borrower shall fail to perform or comply with any term,
condition, covenant or obligation contained in this Agreement or in
the Security (other than those specified in Subsections 10.1(a) or
(b)) and, if capable of remedy, such failure to perform or comply is
not remedied within 30 days of notice from the Bank so to remedy;
(d) If any representation or warranty made by the Borrower in this
Agreement or the Security or in any certificate or other document at
the time delivered hereunder to the Bank shall prove to have been
incorrect in any material respect on and as of the date thereof;
(e) If the Borrower becomes insolvent, makes any assignment in
bankruptcy or makes any other general assignment for the benefit of
creditors, makes any proposal under the Bankruptcy and Insolvency Act
(Canada), the United States Bankruptcy Code, 11 USC Section 101 et
seq. or any comparable law, is adjudged bankrupt, files a petition or
proposal to take advantage of any act of
<PAGE> 20
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insolvency, consents to or acquiesces in the appointment of a trustee,
receiver, receiver and manager, interim receiver, custodian,
sequestrator or other person with similar powers of himself or of all
or any substantial portion of his property or assets, or files a
petition or otherwise commences any proceedings seeking any
arrangement, composition or readjustment under any applicable
bankruptcy, insolvency, moratorium or other similar law affecting
creditors' rights or consents to, or acquiesces in, the filing of such
a petition;
(f) If a trustee, receiver, receiver and manager, interim
receiver, custodian, sequestrator or any other person with similar
powers shall be appointed of the Borrower or of all or any substantial
portion of his property or assets, a judgment or an order is made by a
tribunal of competent jurisdiction restraining his ability to deal
with all or any substantial portion of his property and assets or a
judgment or order is made by a tribunal of competent jurisdiction
approving any arrangement, composition or readjustment under any
applicable bankruptcy, insolvency or moratorium or other similar law
affecting creditors' rights and such appointment, judgment or order is
not vacated, stayed or set aside within 45 days of the date thereof;
(g) If an event of default shall occur under any of the Related
Loan Agreements;
(h) If a Liquidity Event shall occur; or
(i) While the aggregate principal amount repaid (excluding any
repayments rescinded or otherwise required to be returned by the Bank
upon the occurrence of a Recapture Event (as such term is defined in
the Guarantee)) under the Loan and the loans under Related Loan
Agreements is less than $30,000,000:
(i) if a writ of execution, distress, attachment or
similar process is issued or levied against all or a
substantial portion of the property or assets of the Borrower
in connection with any default by him in the payment of any
amount in excess of $2,500,000 or the equivalent amount
thereof in another currency as reasonably determined by the
Bank, unless the writ is withdrawn, released, vacated or
stayed within 30 days, or a judgment or order (other than any
judgment or order issued in connection with the matters
referred to in Schedule 5(c) to the Guarantee) shall be
rendered against the Borrower by a court of competent
jurisdiction with respect to such default and such judgment or
order shall not be satisfied in accordance with its terms and
shall continue unstayed and in effect for 10 days;
<PAGE> 21
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(ii) if a default, under any indenture, agreement or
instrument under which the Borrower has at the date of this
Agreement or shall hereafter have outstanding indebtedness for
borrowed money in excess of $2,500,000 or the equivalent
amount thereof in another currency as reasonably determined by
the Bank, shall occur and be continuing and (A) any such
indebtedness shall have been lawfully accelerated or shall
lawfully be or become due and payable prior to the date on
which the same would otherwise have become due and payable, or
(B) such default is a default in payment of such indebtedness
when due or within the applicable grace period set out in such
indenture, agreement or instrument; or
(iii) if all or a substantial part of the property of the
Borrower shall be expropriated, whether for full or partial
consideration.
10.2 TERMINATION AND ACCELERATION - Upon the occurrence of an Event of
Default and for so long as such Event of Default shall continue, the Bank may,
by one or more notices to the Borrower do any or all of the following:
(a) terminate the obligations of the Bank including without
limitation, the obligation of the Bank to permit the Drawdown, or any
Libor Rollovers, the capitalization of interest or the deferral of
interest hereunder;
(b) declare the entire principal amount of the Loan Amount, all
interest accrued thereon (including any deferred interest) and all
fees and other amounts required to be paid by the Borrower hereunder,
to be immediately due and payable without the necessity of presentment
for payment, protest, notice of non-payment or notice of protest (all
of which are hereby expressly waived); and
(c) proceed to exercise any and all rights hereunder or under the
Security and any other document or instrument executed pursuant to
this Agreement.
The Borrower acknowledges that the exercise by the Bank of any rights under the
Security without having declared an acceleration pursuant to the provisions of
this Section shall not in any way alter, affect or prejudice the right of the
Bank to make a declaration pursuant to the provisions of this Section at any
time and, without limiting the foregoing, shall not be construed or deemed to
constitute a waiver of any rights under this Section.
10.3 REMEDIES CUMULATIVE AND WAIVERS -
(a) For greater certainty, it is expressly understood and agreed
that the respective rights and remedies of the Bank hereunder or under
any other document or instrument executed pursuant to this Agreement,
including the
<PAGE> 22
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Security, are cumulative and are in addition to and not in
substitution for any rights or remedies provided by law or by equity;
and any single or partial exercise by the Bank of any right of remedy
for a default or breach of any term, covenant, condition or agreement
contained in this Agreement or other document or instrument executed
pursuant to this Agreement, including the Security, shall not be
deemed to be a waiver of or to alter, affect or prejudice any other
right or remedy or other rights or remedies to which the Bank may be
lawfully entitled for such default or breach. Any waiver by the Bank
of the strict observance, performance or compliance with any term,
covenant, condition or agreement herein contained or contained in any
of the Security and any indulgence granted either expressly or by
course of conduct, by the Bank shall be effective only in the specific
instance and for the purpose for which it was given and shall be
deemed not to be a waiver of any rights and remedies of the Bank under
this Agreement or under the Security or other document or instrument
executed pursuant to this Agreement as a result of any other default
or breach hereunder or thereunder.
(b) Notwithstanding anything in this Agreement or the Security to
the contrary, if after the occurrence of an Event of Default, the Bank
elects to exercise any of its rights or remedies to seek payment of
the Loan and/or any other obligation of the Borrower hereunder, the
Bank agrees that it shall exercise any such right or remedy in the
following order (i) first, the Bank shall (unless stayed or prevented
from doing so by law or court order) sell the securities held under
the Banks Purchased Share Pledge (as defined in the Banks Master
Agreement); (ii) second, the Bank shall (unless stayed or prevented
from doing so by law or court order) sell the securities held under
the Amended Banks Pledge (as defined in the Banks Master Agreement);
(iii) third, the Bank shall (unless stayed or prevented from doing so
by law or court order) exercise any right of set-off pursuant to
Section 10.4 below and (iv) fourth, but only to the extent of any
remaining deficiency, the Bank shall make a demand for payment
pursuant to the Guarantee.
10.4 SETOFF -
(a) Regardless of the adequacy of any Collateral, any deposits or
other sums credited by or due from the Bank to the Borrower and any
securities or other property of the Borrower in the possession of the
Bank may be applied to or set off against the payment of the
obligations of the Borrower hereunder and under the Security and any
or all other liabilities, direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, of the
Borrower to the Bank at any time after the occurrence and during the
continuance of any Event of Default.
(b) The obligations of the Borrower under this Agreement and under
the Security shall not be subject to any counterclaim, set-off,
deduction or defence
<PAGE> 23
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(other than payment or performance) based upon any claim the Borrower
may have against the Bank or any other Person.
ARTICLE XI.
GENERAL
11.1 COSTS AND EXPENSES - The Borrower shall pay on the Closing Date all
reasonable costs and expenses incurred by the Bank in connection with
preparation, printing, execution and delivery of each of this Agreement, the
Security and the other documents to be delivered hereunder, whether or not the
Drawdown has been made hereunder, including, without limitation, the fees and
out-of-pocket expenses of Bank's counsel with respect thereto and with respect
to advising the Bank as to its rights and responsibilities hereunder and under
the Security and the other documents delivered hereunder; provided, however,
that such costs and expenses shall not exceed the lesser of $52,500 and the
fees and out-of-pocket expenses of the Borrower's counsel; it being understood
and agreed that such amount shall be capitalized and added to the principal
amount of the Loan. The Borrower further agrees to pay all costs and expenses
incurred by the Bank (including fees and expenses of counsel, accountants and
other experts), in connection with any waiver or consent under, or amendment
to, this Agreement or the Security, or the preservation or enforcement of
rights of the Bank under this Agreement, the Security and other documents
delivered hereunder including, without limitation, all reasonable costs and
expenses sustained by the Bank as a result of any failure by the Borrower to
perform or observe his obligations contained in any of such documents.
11.2 ILLEGALITY - If after the date of this Agreement any change occurs in
any Applicable Law, or in the interpretation or application thereof by any
court or by any governmental or other authority or entity charged with the
administration thereof, which makes it unlawful for the Bank to make, fund or
maintain the Facility or to give effect to its obligations in respect of any
Libor Loan thereunder, the Bank may, by written notice thereof to the Borrower
declare its obligations under this Agreement to be terminated. The Borrower
shall prepay to the Bank within the time required by such law (or at the end of
such longer period as the Bank at its discretion has agreed) the principal
amount of the Loan together with accrued interest (including any deferred
interest) and such other amounts which may be payable hereunder as a result of
such prepayment. Any such notice shall be accompanied by a certificate of an
officer of the Bank identifying in reasonable detail the event or condition
which makes it unlawful for the Bank to fund or maintain the Facility or any
Libor Loan thereunder and such certificate shall be final, conclusive and
binding on the Borrower in respect of the matters set out therein. If any such
change shall only affect a portion of the Bank's obligations under this
Agreement which is, in the reasonable opinion of the Bank, severable from the
remainder of this Agreement so that the remainder of this Agreement may be
<PAGE> 24
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continued in full force and effect without otherwise affecting any of the
obligations of the Bank or the Borrower hereunder or under any of the other
documents contemplated hereby, the Bank shall only declare its obligations
under the affected portion so terminated.
11.3 INDEMNIFICATION BY THE BORROWER - In addition to any liability of the
Borrower to the Bank under any other provision of this Agreement, the Borrower
shall indemnify the Bank and hold the Bank harmless against any reasonable loss
(excluding loss of profit) or expense incurred by the Bank as a result of any
failure by the Borrower to fulfil any of its obligations hereunder including,
without limitation, any actual breakage cost or expense incurred by reason of
the liquidation or re-employment in whole or in part of deposits or other funds
required by the Bank to fund the Libor Loans as a result of
(a) the Borrower's failure to effect the Drawdown or to make any
payment, repayment or prepayment on the date required hereunder or
specified by him in any notice given hereunder;
(b) the Borrower's failure to pay any other amount, including
without limitation any interest or fee, due hereunder on its due date;
(c) the Borrower's failure to give any notice required to be given
by him to the Bank hereunder; or
(d) the voluntary prepayment by the Borrower of the Libor Loan or
any portion thereof on any date other than on the last day of the
Libor Interest Period relating thereto.
11.4 FUNDS - Each amount advanced, made available, disbursed or paid
hereunder shall be advanced, made available, disbursed or paid, as the case may
be, in immediately available funds or, after notice from the Bank, in such
other form of funds as may from time to time be customarily used in New York,
United States of America in the settlement of banking transactions similar to
the banking transactions required to give effect to the provisions of this
Agreement on the day such advance, disbursement or payment is to be made.
11.5 NOTICE - Any demand, notice or communication to be made or given
hereunder shall be in writing, except as otherwise expressly permitted or
required under this Agreement, and may be made or given by personal delivery,
by registered mail or by transmittal by telex or facsimile machine addressed to
the respective Parties as follows:
<PAGE> 25
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To the Borrower: Mr. Jacques Benquesus
c/o Gaming Lottery Corporation
160 Nashdene Road
Scarborough, Ontario
M1V 4C4
Telecopier: (416) 754-8441
Telephone: (416) 292-5963
With a copy to the
Borrower's New York
counsel: Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, NY 10036
Attention: Mr. Jack Jackson, Esq.
Telecopier: (212) 969-2900
Telephone: (212) 969-3000
And a copy to the
Borrower's Ontario
counsel: Goldman, Spring, Schwartz & Kichler
Suite 700
40 Sheppard Avenue West
North York, Ontario
M2N 6K9
Attention: Mr. Joseph Maierovits, Esq.
Telecopier: (416) 225-4805
Telephone: (416) 225-9400
To the Bank: Coutts & Co AG, New York Branch
65 East 55th Street
New York, NY 10022
Attention: Mr. Mario Economou, Vice President
Telecopier: (212) 303-2929
Telephone: (212) 303-2971
<PAGE> 26
-26-
With a copy to the
Bank's New York
counsel: Rogers & Wells
200 Park Avenue
New York, New York 10166-0153
Attention: Mr. Alan M. Christenfeld, Esq.
Telecopier: (212) 878-8375
Telephone: (212) 878-8000
And a copy to the
Bank's Ontario
counsel: Osler, Hoskin & Harcourt
280 Park Avenue - 30W
New York, New York 10017
Attention: Mr. John W. Stevens, Esq.
Telecopier: (212) 867-5802
Telephone: (212) 867-5800
or to such other mailing or telex or facsimile machine address as any party may
from time to time notify the others in accordance with this Section. Any
demand, notice or communication made or given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof,
or, if made or given by registered mail, on the fifth Business Day following
deposit thereof in the mail or, if made or given by telex or by facsimile
transmission, on the first Business Day following the transmittal thereof and
receipt of the appropriate answer back. If the party making or giving such
demand, notice or communication knows or ought reasonably to know of
difficulties with the postal system which might affect the delivery of mail,
any such demand, notice or communication shall not be mailed but shall be made
or given by personal delivery or by telex or by facsimile transmission.
11.6 GOVERNING LAW AND CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL:
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
(b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE,
EACH OF THE BORROWER AND THE BANK HEREBY AGREE TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE
<PAGE> 27
-27-
OF NEW YORK SITTING IN THE CITY AND COUNTY OF NEW YORK AND
WAIVE ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS
WITH RESPECT TO ANY ACTION INSTITUTED THEREIN, AND AGREE THAT
ANY DISPUTE CONCERNING THE RELATIONSHIP BETWEEN THE BORROWER
AND THE BANK OR THE CONDUCT OF ANY PARTY HERETO IN CONNECTION
WITH THIS AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE
COURTS DESCRIBED ABOVE. NOTWITHSTANDING THE FOREGOING, THE
BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST THE BORROWER OR HIS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION THE BANK DEEMS NECESSARY OR APPROPRIATE IN
ORDER TO REALIZE ON THE SECURITY.
(c) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO HIM AT HIS ADDRESS SET FORTH IN SECTION 11.5 AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS
AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS
OR, AT THE BANK'S OPTION, BY SERVICE UPON THE BORROWER'S NEW
YORK COUNSEL AT ITS ADDRESS SET FORTH IN SECTION 11.5, WHICH
COUNSEL THE BORROWER HEREBY IRREVOCABLY APPOINTS AS HIS AGENT
FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE
STATE OF NEW YORK. THE BORROWER HEREBY CONSENTS TO SERVICE OF
PROCESS AS AFORESAID.
(d) EACH OF THE BORROWER AND THE BANK HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(I) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH (OTHER THAN THE BANKS MASTER AGREEMENT) OR (II) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO
THIS AGREEMENT, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. THE BORROWER AND THE BANK EACH HEREBY AGREE AND
CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF
THEM MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
AGREEMENT
<PAGE> 28
-28-
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) NOTHING IN THIS SECTION 11.6 SHALL AFFECT THE RIGHTS OF THE
BANK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR AFFECT THE RIGHTS OF THE BANK TO BRING ANY ACTION OR
PROCEEDING AGAINST THE BORROWER OR HIS PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION.
(f) EACH OF THE BORROWER AND THE BANK HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SECTION 11.6 ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
11.7 JUDGMENT CURRENCY - The obligation of the Borrower pursuant to this
Agreement to make payments in a specific currency (the "Contractual Currency")
shall not be discharged or satisfied by any tender or recovery pursuant to any
judgment expressed in or converted into any other currency except to the extent
to which such tender or recovery shall result in the effective receipt by the
Bank of the full amount of the Contractual Currency payable or expressed to be
payable under this Agreement and accordingly the obligation of the Borrower
shall be enforceable as an alternative or additional cause of action for the
purpose of recovery in the other currency of the amount (if any) by which such
effective receipt shall fall short of the full amount of the Contractual
Currency payable or expressed to be payable under this Agreement and shall not
be effected by judgment being obtained for any other sum due under this
Agreement.
11.8 SUCCESSORS AND ASSIGNS - This Agreement shall be binding upon and
shall enure to the benefit of the Bank and the Borrower, and their respective
successors and assigns. The Borrower shall not assign or transfer its rights
and obligations hereunder or any interest herein without the prior written
consent of the Bank.
11.9 ANNUAL RATES OF INTEREST - For the purposes of the Interest Act
(Canada), whenever interest payable pursuant to this Agreement is calculated on
the basis of a period other than a calendar year (the "Interest Period"), each
rate of interest determined pursuant to such calculation expressed as an annual
rate is equivalent to such rate as so determined multiplied by the actual
number of days in the calendar year in which the same is to be ascertained and
divided by the number of days in the Interest Period.
<PAGE> 29
-29-
11.10 SEVERABILITY - Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
of this Agreement and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provisions in
any other jurisdiction.
11.11 WHOLE AGREEMENT - This Agreement, together with the Banks Master
Agreement and all agreements and transactions contemplated herein and therein,
constitute the whole and entire agreement between the Parties relating to the
subject matter of this Agreement, and cancels and supersedes any prior
agreements, undertakings, declarations, commitments and representations,
written or oral, in respect thereof.
11.12 AMENDMENTS AND WAIVERS - Any provision of this Agreement or the
Security may be amended only if the Borrower and the Bank so agree in writing
and, except as otherwise specifically provided herein, may be waived only if
the Bank so agrees in writing.
Any such waiver and any consent by the Bank under any provision of
this Agreement or the Security must be in writing and may be given subject to
any conditions thought fit by the person giving that waiver or consent. Any
waiver or consent shall be effective only in the instance and for the purpose
for which it is given.
11.13 FURTHER ASSURANCES - Each of the Borrower and the Bank shall promptly
cure any default by him or it in the execution and delivery of this Agreement
or of the Security. The Borrower, at his expense, shall promptly execute and
deliver to the Bank, upon request by the Bank, all such other and further
documents, agreements, opinions, certificates and other instruments in
compliance with, or accomplishment of his covenants and agreements hereunder or
under the Security or to more fully state his obligations as set out herein or
in the Security or to make any recording, filing or notice or obtain any
consent, all as may be reasonably necessary or appropriate in connection
therewith.
11.14 COUNTERPARTS - This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
taken together shall be deemed to constitute one and the same instrument, and
it shall not be necessary in making proof of this Agreement to produce or
account for more than one such counterpart.
11.15 FACSIMILE SIGNATURE - This Agreement may be executed by faxed
signature with the same effect as a manually signed original signature.
11.16 CONFIDENTIALITY - This Agreement shall be subject to the provisions of
the Banks Master Agreement regarding confidentiality.
<PAGE> 30
-30-
11.17 LIMITED RECOURSE - Notwithstanding anything contained in (i) this
Agreement, (ii) any agreement, document, instrument or certificate entered into
in connection herewith, other than the Banks Master Agreement, (collectively,
the "Loan Documents") or (iii) otherwise, the Borrower shall only be personally
liable to the extent of the Guarantee Limit (as such term is defined in the
Guarantee) for the repayment of any of the principal of, or interest on, the
Loan and the loans under the Related Loan Agreements, the payment of any fees
or expenses of the Bank hereunder or under any Loan Documents or the
performance of, or failure to perform, any other obligation of the Borrower
under this Agreement or under any other Loan Document or the borrowers under
the Related Loan Agreements, and the sole and exclusive recourse of the Bank
shall be the Security and the Borrower shall have no liability, other than
under the Guarantee, for any deficiency which may exist after foreclosure on
the Security; provided, however, that there shall be no limit to the personal
liability of the Borrower in the case of fraud.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the
date first written above.
/s/ Jacques Benquesus
---------------------------------------
MR. JACQUES BENQUESUS
COUTTS & CO AG, NEW YORK BRANCH
By: /s/ Peter Cawdron
------------------------------------
Name:
Title:
<PAGE> 31
SCHEDULE A
CERTIFICATE OF COMPLIANCE
TO: Coutts & Co AG, New York Branch (the "Bank")
FROM: Mr. Jacques Benquesus (the "Borrower")
RE: Loan Agreement dated August 20, 1996 between the Borrower
and the Bank in connection with the payment of certain
consideration and the repayment of certain loans (the "Loan
Agreement")
- --------------------------------------------------------------------------------
This certificate is given pursuant to the terms of the Loan
Agreement. All defined terms used in this certificate indicated with
initial capitals shall have the same meaning as in the Loan
Agreement.
The Borrower hereby certifies that:
(a) All of the representations and warranties of the Borrower
contained in the Loan Agreement are true and correct on and as of the
Closing Date.
(b) All of the covenants of the Borrower contained in the Loan
Agreement together with all of the conditions precedent to the
Drawdown required to be performed by the Borrower on or prior to the
Closing Date and all other terms and conditions required to be
performed by the Borrower on or prior to the Closing Date contained
in the Loan Agreement have been fully complied with.
(c) No Event of Default has occurred and remains outstanding and
to the best of the knowledge, information and belief of the
undersigned, no event has occurred and remains outstanding which,
with the passing of time or giving of notice, or both, would be an
Event of Default.
DATED the day of August, 1996.
---------------------------------------
Mr. Jacques Benquesus
<PAGE> 32
SCHEDULE B
LIBOR NOTICE
TO: Coutts & Co. AG, New York Branch (the "Bank")
Attention: Mr. Mario Economou, Vice President
FROM: Mr. Jacques Benquesus (the "Borrower")
RE: Loan Agreement dated August 20, 1996 between the Borrower
and the Bank in connection with the payment of certain
consideration and repayment of certain loans (the "Loan
Agreement")
- --------------------------------------------------------------------------------
This Libor Notice is given pursuant to the terms of the Loan agreement. All
defined terms used in this Libor Notice indicated with initial capitals shall
have the same meaning as in the Loan Agreement.
Notice is hereby given pursuant to the provisions of Section 2.5 of the Loan
Agreement that the Borrower requests the rollover of the Libor Loan for a Libor
Interest Period of ___________ month(s).
The undersigned hereby certifies that no Event of Default has occurred and
remains outstanding and to the best of the knowledge, information and belief of
the Borrower (after due enquiry), no event has occurred and remains outstanding
which, with the giving of notice or the passing of time, or both, would be an
Event of Default.
DATED the day of
---------------------------------------
Mr. Jacques Benquesus
<PAGE> 1
LOAN AGREEMENT
THIS AGREEMENT made as of the 20th day of August, 1996
B E T W E E N:
MR. JACQUES BENQUESUS, an individual residing in the City of
Jerusalem, Israel
(hereinafter referred to as the "Borrower")
- and -
COUTTS & CO AG, NEW YORK BRANCH, a Swiss bank licensed to
conduct a banking business by the State of New York
(hereinafter referred to as the "Bank")
WITNESSES THAT WHEREAS the Borrower has requested the Facility
(as hereinafter defined) to acquire certain shares of certain corporations, as
identified in Schedule A hereto (the "Shares"), and to pay expenses incurred by
him in connection with the acquisition of the Shares and the Bank has agreed to
provide the Facility to the Borrower on the terms and conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and mutual
agreements and covenants contained in this Agreement and other good and
valuable consideration (the receipt and adequacy of which are hereby mutually
admitted), the Parties hereby agree as follows:
<PAGE> 2
- 2 -
ARTICLE I.
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS - Whenever used in this Agreement, unless there is
something inconsistent in the subject matter or context the following words and
terms shall have the meaning set out below:
"AGREEMENT" means this agreement, including all schedules and all
instruments supplementing or amending or confirming this Agreement,
"hereof", "hereto" and "hereunder" and similar expressions mean and
refer to this Agreement and not any particular article or section, and
"Article", "Section" and "Subsection" each means and refers to the
specified article, section or subsection in this Agreement;
"ANNIVERSARY DATE" means the annual anniversary of the date of this
Agreement or the next Business Day thereafter if such date is not a
Business Day;
"APPLICABLE LAW" means, with respect to any Person, property,
transaction or event, and whether or not having the force of law, all
applicable laws, statutes, regulations, rules, guidelines, by-laws,
treaties, orders, policies, judgments, decrees and official directives
of governmental bodies or other Persons acting under the authority of
any governmental body;
"BANKS MASTER AGREEMENT" means the master agreement dated August 19,
1996 between the Bank and Mr. Jacques Benquesus;
"BASE RATE" means, at any time, the rate of interest, expressed as an
annual rate, established by the Bank from time to time as the
reference rate of interest it will charge for loans in Dollars;
"BASE RATE LOAN" means the amount of the Loan with respect to which
the Borrower is deemed to have elected to have interest calculated by
reference to the Base Rate or to which, in accordance with the
provisions of this Agreement, the Base Rate is deemed to apply;
"BASE RATE ROLLOVER" means a deemed conversion of the Libor Loan to a
Base Rate Loan pursuant to Section 3.1;
"BORROWER" means Mr. Jacques Benquesus, an individual residing in the
City of Jerusalem, Israel;
"BRANCH" means the branch of the Bank located at 65 East 55th Street,
New York, NY 10022;
<PAGE> 3
- 3 -
"BUSINESS DAY" means a day on which banks are open for business in New
York, U.S.A.;
"CLOSING DATE" means August 20, 1996 or such other earlier or later
date as may be agreed upon by the Parties;
"COLLATERAL" means the assets, property and undertaking of the
Borrower subject to the Security;
"COMPANY" means any of Gaming Lottery Corporation, The Instant
Publisher Inc. or Warp 10 Technologies Inc.;
"DOLLARS" and the symbol "$" mean the lawful currency of the United
States of America;
"DRAWDOWN" means the borrowing, in Dollars, of funds under the
Facility;
"EVENT OF DEFAULT" means any of the events described in Section 10.1;
"FACILITY" has the meaning ascribed to it in Section 2.1;
"FACILITY CREDIT LIMIT" has the meaning ascribed to it in Section 2.1;
"GUARANTEE" has the meaning ascribed to it in Subsection 7.1(a);
"INTEREST PAYMENT DATE" means
(i) with respect to the Libor Loan, the last day of the
Libor Interest Period applicable thereto and also, if any
Libor Interest Period is longer than 93 days, the last day of
each 90-day period during such Libor Interest Period or, if
any such day is not a Business Day, the Business Day next
following; and
(ii) with respect to the Base Rate Loan, the last day of
each calendar month or, if any such day is not a Business Day,
the Business Day next following;
"LIBOR INTEREST PERIOD" means, for the Libor Loan, subject to
availability of funds to the Bank, the period of 1, 2, 3, 6 or 12
months, as may be selected by the Borrower pursuant to the relevant
Libor Notice, commencing on, in respect of the initial Libor Interest
Period, the Closing Date and, thereafter, the date of the applicable
Libor Rollover, provided that:
<PAGE> 4
- 4 -
(i) any Libor Interest Period which would otherwise end
on a day which is not a Business Day shall be extended to the
next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Libor Interest
Period shall end on the immediately preceding Business Day;
(ii) any Libor Interest Period which 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 Libor Interest Period) shall end on the last
Business Day of a calendar month;
(iii) the Libor Interest Period shall terminate on such
date as will permit the repayment of the Facility on the date
and in the manner provided for herein;
"LIBOR LOAN" means the amount of the Loan with respect to which
interest under this Agreement is calculated with reference to the
Libor Rate;
"LIBOR NOTICE" means a notice substantially in the form attached
hereto as Schedule C;
"LIBOR RATE" means, for the Libor Interest Period then applicable to
the Libor Loan, the interest rate per annum (expressed on the basis of
a 360-day year) at which Dollar deposits are offered to leading banks
in the London interbank euro-currency offering market in an amount
approximately equal to the principal amount of the Libor Loan and for
a period comparable to such Libor Interest Period at approximately
11:00 a.m. London, England time on the second Business Day preceding
the first day of such Libor Interest Period for delivery on the first
day of such Libor Interest Period;
"LIBOR ROLLOVER" means a rollover of the Libor Loan pursuant to
Section 2.5;
"LIQUIDITY EVENT" means the announcement or occurrence of any
transaction or event initiated, caused or assisted, directly or
indirectly, by Mr. Jacques Benquesus, any Person controlled by Mr.
Jacques Benquesus or any affiliate or associate (as such terms are
defined in the Securities Act (Ontario)) of Mr. Jacques Benquesus or
such Person, or any Person acting jointly or in concert with Mr.
Jacques Benquesus or such Person in connection with such transaction
or event which results, or if consummated would result, in the Public
Float of any Company being less than one half of the Public Float of
such Company on the date hereof;
"LOAN" means, at any time, the total outstanding principal amount of
all Drawdowns, together with any interest capitalized pursuant to
Section 4.5;
<PAGE> 5
- 5 -
"PARTIES" means the Bank and the Borrower and "PARTY" refers to any
one of them;
"PERSON" means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, governmental authority and a
natural person in his capacity as trustee, executor, administrator or
other legal representative;
"PUBLIC FLOAT" means the percentage of the issued and outstanding
participating voting equity shares of a Company held by persons other
than Mr. Jacques Benquesus, Mrs. Biba Benquesus, Mr. Larry H. Weltman
or Mr. John M. Wiseman and their associates and affiliates (as such
terms are defined in the Securities Act (Ontario));
"RELATED LOAN AGREEMENTS" means the loan agreements dated the date
hereof between the Bank and each of Mr. Jacques Benquesus, Mr. Larry
H. Weltman and Mr. John M. Wiseman;
"ROLLOVER" means, as applicable, either a Base Rate Rollover or a Libor
Rollover.
"SECURITY" means the security described in Article VII;
"SHARES" means those certain shares of certain corporations identified
in Schedule A hereto;
"TAXES" means all present and future taxes, levies, imposts, stamp
taxes, duties, charges to taxes, fees, deductions, withholdings and
any restrictions or conditions resulting in a charge imposed, levied,
collected, withheld or reserved and all penalties, interest and other
payments on or in respect thereof;
"WELTMAN MASTER AGREEMENT" means the master agreement dated August 19,
1996 between Larry H. Weltman and the Bank; and
"WISEMAN MASTER AGREEMENT" means the master agreement dated August 19,
1996 between John M. Wiseman and the Bank.
1.2 CERTAIN RULES OF INTERPRETATION - In this Agreement:
(a) time is of the essence in the performance of the Parties'
respective obligations;
<PAGE> 6
- 6 -
(b) the descriptive headings of Articles and Sections are inserted
solely for convenience of reference and are not intended as complete
or accurate descriptions of content;
(c) the use of words in the singular or plural, or with a
particular gender, shall not limit the scope or exclude the
application of any provision of this Agreement to such person or
persons or circumstances except as the context otherwise permits;
(d) whenever a provision of this Agreement requires an approval or
consent by a Party to this Agreement and notification of such approval
or consent is not delivered within the applicable time limited, then,
unless otherwise specified, the Party whose consent or approval is
required shall be conclusively deemed to have withheld its consent or
approval;
(e) unless otherwise specified, time periods within or following
which any payment is to be made or act is to be done shall be
calculated by excluding the day on which the period commences and
including the day which ends the period and by extending the period to
the next Business Day following if the last day of the period is not a
Business Day; and
(f) whenever any payment is to be made or action to be taken under
this Agreement is required to be made or taken on a day other than a
Business Day, such payment shall be made or action taken on the next
Business Day following.
1.3 SCHEDULES - The following are the Schedules to this Agreement
and are incorporated by reference and deemed to be part of this Agreement:
Schedule A - Shares to be Acquired
Schedule B - Compliance Certificate
Schedule C - Libor Notice
<PAGE> 7
- 7 -
ARTICLE II.
THE FACILITY
2.4 THE FACILITY - Upon the terms and subject to the conditions
herein set forth, the Bank hereby establishes in favour of the Borrower the
following credit facility (the "Facility") to be available to the Borrower in
accordance with the provisions of this Agreement. The Facility shall consist
of a term credit facility of up to a maximum principal amount, excluding any
interest capitalized pursuant to Section 4.5, of $21,818,620.10 (the "Facility
Credit Limit") which funds shall be advanced or otherwise made available in a
single Drawdown on the Closing Date.
2.5 PURPOSE - The Facility shall be available to the Borrower to
acquire the Shares and to pay expenses incurred by him in connection with the
acquisition of the Shares.
2.6 AVAILMENT OF FACILITY - Upon the terms and subject to the
conditions herein set forth, the Borrower may effect a single borrowing under
the Facility by way of a Libor Loan with an initial Libor Interest Period of
one (1) month.
2.7 EFFECTING THE DRAWDOWN - Borrowing under the Facility shall be
effected by the Bank crediting to the Borrower's Dollar account with the Bank
the full amount of such borrowing for same day value by 2:00 p.m. New York time
on the Closing Date and in immediately available funds.
2.8 ROLLOVERS - The Libor Loan will be deemed to be automatically
rolled over (on the last day of the applicable Libor Interest Period) into a
Libor Loan in a principal amount equal to the amount of the Loan for a Libor
Interest Period equal to the lesser of:
(a) (i) if the Borrower has delivered to the Bank a Libor
Notice in accordance with the terms of this
Agreement, the Libor Interest Period specified in
such Libor Notice or (ii) if the Borrower has not
made such delivery of a Libor Notice, the Libor
Interest Period of such rolled over Libor Loan;
(b) the remaining term of the Loan.
2.9 LIBOR NOTICE - A Libor Notice shall be substantially in the
form attached as Schedule C to this Agreement and shall state the Libor
Interest Period being requested.
Subject to the terms and conditions of this Agreement, the
Borrower shall be entitled to specify the Libor Interest Period to be
applicable to the Libor Loan upon rollover by delivering a Libor Notice to the
Bank by 11:00 a.m. (New York
<PAGE> 8
- 8 -
time) no less than two Business Days prior to the last day of the current Libor
Interest Period.
In the event that a Libor Notice is given by telephone, the
Borrower shall provide to the Bank written confirmation of such notice bearing
the Borrower's original signature within two Business Days of giving of such
notice. All notices given by telephone shall be at the risk of the Borrower
and the Bank shall have no liability for relying or acting on such verbal
notice (whether or not subsequently confirmed in writing) or for any failure on
the part of the Bank to carry out the requirements of such notice wholly or in
part, or for any error or omission in fulfilling the requirements of such
notice or the interpretation thereof by the Bank, save and except for any
failure, error or omission arising out of the gross negligence or willful
misconduct of the Bank. Any notice on which the Bank has acted, whether made
by telephone, fax or otherwise in writing shall be irrevocable and binding on
the Borrower.
2.7 EVIDENCE OF INDEBTEDNESS - The Bank shall open and maintain on
its books at the Branch, accounts in respect of the Facility to evidence the
Loan under the Facility and all other amounts owing by the Borrower to the Bank
hereunder. The Bank shall enter in the foregoing accounts details of all
amounts from time to time owing, paid or repaid by the Borrower hereunder. The
information entered in the foregoing accounts shall constitute prima facie
evidence of the obligations of the Borrower to the Bank hereunder with respect
to the Loan and all other amounts owing by the Borrower to the Bank hereunder.
The Borrower shall, on reasonable notice to the Bank, be entitled to obtain
from the Bank extracts of all entries made in such accounts.
ARTICLE III.
FURTHER PROVISIONS RELATING TO
THE LIBOR LOANS
3.1 CHANGE OF CIRCUMSTANCES - In the event that at any time prior
to the commencement of a Libor Interest Period the Bank makes a determination
in good faith, which shall be final, conclusive and binding upon the Borrower,
that:
(a) by reason of changes affecting the London interbank market,
adequate and fair means do not exist for ascertaining the rate of
interest applicable to the Libor Loan during the ensuing Libor
Interest Period;
(b) the continuing of the Libor Loan by the Bank during the
ensuing Libor Interest Period has been made impracticable by the
occurrence of circumstances which materially or adversely affect the
London interbank market;
<PAGE> 9
- 9 -
(c) Dollar deposits are not available to the Bank in the London
interbank market in sufficient amounts in the ordinary course of
business in order for the Bank to fund the Libor Loan during the
ensuing Libor Interest Period; or
(d) the Libor Rate for the immediately following Libor Interest
Period does not accurately reflect the effective cost to the Bank of
funding the Libor Loan for the ensuing Libor Interest Period, or the
costs to the Bank would be increased or the income receivable by the
Bank would be reduced in respect of such Libor Loan,
then the Bank shall give notice thereof to the Borrower, which notice shall set
out in reasonable detail the reasons for such determination. Upon such notice
being given, Libor Rollovers shall be suspended until the Borrower is informed
by the Bank that such conditions no longer exist and the outstanding Libor Loan
shall, at the expiration of the Libor Interest Period, be deemed to be
converted into a Base Rate Loan, in an amount equal to the principal amount of
such Libor Loan.
ARTICLE IV.
PAYMENT OF INTEREST AND OTHER FEES
4.1 INTEREST ON THE LIBOR LOAN - The Borrower shall pay interest
in Dollars to the Bank on the amount of the Libor Loan for the Libor Interest
Period applicable thereto at a nominal rate per annum equal to the Libor Rate
applicable to the Libor Loan plus 0.5%, for any period that such Libor Loan is
outstanding. Interest on the Libor Loan shall accrue daily on the amount of
such Libor Loan and shall be calculated and, subject to Sections 4.5 and 4.6,
payable in arrears on each successive Interest Payment Date applicable to the
Libor Loan on the basis of the actual number of days for which the Libor Loan
is outstanding, computed on the basis of a year of 360 days. Interest on the
Libor Loan shall be payable in accordance with the foregoing after as well as
before demand, default, maturity and judgment.
4.2 INTEREST ON BASE RATE LOANS - The Borrower shall pay interest
in Dollars to the Bank on the principal amount of the Base Rate Loan (with
interest on overdue interest at the same rate) at a nominal rate per annum
equal to the Base Rate in effect from time to time plus 0.5%;
Interest on the Base Rate Loan shall accrue daily on the outstanding principal
balance thereof and shall be calculated and, subject to Sections 4.5 and 4.6,
payable in arrears:
(a) on each successive Interest Payment Date, for the period then
ending;
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(b) in the case of a prepayment of part or all of the Base Rate
Loan, on the date of such prepayment, with respect to interest accrued
on the amount of principal being prepaid;
(c) in the case of amounts repaid pursuant to Section 5.3, on the
date of such repayment with respect to interest accrued on the amount
of the principal of the Base Rate Loan being repaid; and
(d) on the date that all amounts owing hereunder are repaid in
full, whether on demand, by reason of acceleration or otherwise;
on the basis of the actual number of days for which a particular principal
amount is outstanding, computed on the basis of a year of 365 days or 366 days
in the case of a leap year. Interest on overdue interest on the Base Rate Loan
shall be payable on demand. Changes in the Base Rate shall cause an immediate
and automatic adjustment of the interest rate applicable to the Base Rate Loan
as and from the effective date of such change without the necessity of any
notice to the Borrower, such notice being hereby expressly waived by the
Borrower. Interest on the Base Rate Loan shall be payable in accordance with
the foregoing after as well as before demand, default, maturity and judgment.
4.3 INCREASED COSTS - If, as a result of any Applicable Law, or of
the interpretation or application thereof by any court or by any governmental
or other authority or entity charged with the administration thereof, whether
or not having the force of law, which:
(a) subjects the Bank to any Taxes or changes the basis of
taxation, or increases any existing Taxes, on payments of principal,
interest or other amounts payable by the Borrower to the Bank under
this Agreement (except for Taxes on the overall net income or capital
of the Bank or gross receipts or franchise taxes imposed by the
jurisdiction in which its principal or lending offices are located);
(b) imposes, modifies or deems applicable any reserve, cash
margin, special deposit or similar requirements against assets held
by, or deposits in or for the account of or loans by or any other
acquisition of funds by the relevant funding office of the Bank;
(c) imposes on the Bank any other adverse condition with respect
to this Agreement; or
(d) imposes on the Bank a requirement to maintain or allocate
capital in relation to the Facility;
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and the result of any of the foregoing is, in the reasonable opinion of the
Bank, to increase the cost to the Bank of making the Drawdown or maintaining
the Loan or reduce the income receivable by the Bank in respect of the Loan by
an amount which the Bank deems to be material, then upon the Bank giving
written notice thereof, from time to time, to the Borrower (such notice to set
out in reasonable detail the facts giving rise to and a summary calculation of
such increased cost or reduced income), the Borrower shall forthwith pay to the
Bank, upon receipt of such notice, that amount which shall compensate the Bank
for such additional cost or reduction in income. The Borrower will not be
required to compensate the Bank for any such additional cost or reduction in
income under this Section 4.3 incurred by the Bank more than 3 months prior to
its request to the Borrower for such compensation. Notwithstanding anything
herein to the contrary, to the extent that the Bank does not charge all of its
customers who are similarly situated to the Borrower in respect of any
additional cost or reduction of income described in this Section 4.3, the Bank
shall not charge the Borrower.
4.4 GROSS-UP - All payments under this Agreement will be made
without any deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any Applicable Law, as modified by the
practice or any relevant governmental revenue authority, then in effect. If
the Borrower is so required to deduct or withhold, then the Borrower will:
(a) promptly notify the Bank of such requirement;
(b) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by the Borrower
to the Bank under this Section 4.4) promptly upon the earlier of
determining that such deduction or withholding is required or
receiving notice that such amount has been assessed against the Bank;
(c) promptly forward to the Bank an official receipt (or a
certified copy), or other documentation reasonably acceptable to the
Bank evidencing such payment to such authorities; and
(d) pay to the Bank, in addition to the payment to which the Bank
is otherwise entitled under this Agreement, such additional amount as
is necessary to ensure that the net amount actually received by the
Bank (free and clear of Taxes, whether assessed against the Borrower
or the Bank) will equal the full amount the Bank would have received
had no such deduction or withholding been required.
4.5 CAPITALIZATION OF INTEREST - At the election of the Borrower,
unless there shall have occurred and be continuing any event which constitutes
or would constitute, with the giving of notice, the passing of time, or both,
an Event of
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Default, any interest accruing and otherwise payable by the Borrower on the
Loan on or before the first Anniversary Date shall be added to the principal
amount of the Loan and the non-payment of such interest when due shall not be
considered an Event of Default.
4.6 DEFERRAL OF INTEREST - At the election of the Borrower,
unless there shall have occurred and be continuing any event which constitutes,
or would constitute, with the giving of notice, the passing of time, or both,
an Event of Default, the Borrower shall be entitled to:
(a) defer the payment of any interest accruing and otherwise
payable by the Borrower on the Loan for the period from and including
the Closing Date to and excluding the first Anniversary Date. Any
interest deferred pursuant to this Subsection 4.6(a) shall be paid by
the Borrower to the Bank on or before the first Anniversary Date or
capitalized pursuant to Section 4.5;
(b) defer the payment of any interest accruing and otherwise
payable by the Borrower on the Loan for the period from and including
the first Anniversary Date to and excluding the second Anniversary
Date. Any interest deferred pursuant to this Subsection 4.6(b) shall
be paid by the Borrower to the Bank on or before the second
Anniversary Date;
(c) defer the payment of any interest accruing and otherwise
payable by the Borrower on the Loan for the period from and including
the second Anniversary Date to and excluding the third Anniversary
Date. Any interest deferred pursuant to this Subsection 4.6(c) shall
be paid by the Borrower to the Bank on or before the third Anniversary
Date; and
(d) defer the payment of any interest accruing and otherwise
payable by the Borrower on the Loan for the period from and including
the third Anniversary Date to and excluding the fourth Anniversary
Date. Any interest deferred pursuant to this Subsection 4.6(d) shall
be paid by the Borrower to the Bank on or before the fourth
Anniversary Date.
The non-payment of interest which is deferred pursuant to this Section which
would otherwise be due and payable shall not be considered an Event of Default;
provided that any interest which is deferred is subsequently paid in accordance
with this Section.
4.7 MAXIMUM INTEREST RATE. In no event shall any interest rate
exceed the maximum rate permissible for individual borrowers by Applicable Law
(the "Maximum Rate"). If, in any month, any interest rate, absent such
limitation, would have exceeded the Maximum Rate, then the interest rate for
that month shall be the Maximum Rate, and, if in future months, that interest
rate would otherwise be less than the Maximum Rate, then that interest rate
shall remain at the
<PAGE> 13
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Maximum Rate until such time as the amount of interest paid hereunder equals
the amount of interest which would have been paid if the same had not been
limited under this section to the Maximum Rate. In the event that, upon
payment in full of the Loan under this Agreement, the total amount of interest
paid or accrued under the terms of this Agreement is less than the total amount
of interest which would have been paid or accrued if the interest rates set
forth in this Agreement had at all times been in effect, then the Borrower
agrees, to the extent permitted by Applicable Law, to pay to the Bank an amount
equal to the difference between (a) the lesser of (i) the amount of interest
which would have been charged if the Maximum Rate had, at all times, been in
effect or (ii) the amount of interest which would have accrued had the interest
rates set forth in this Agreement, at all times, been in effect and (b) the
amount of interest actually paid or accrued under this Agreement. In the event
that the Bank receives, collects or applies as interest any sum in excess of
the Maximum Rate, such excess amount shall be applied to the reduction of the
principal balance of the Loan, and any funding indemnities in connection
therewith under Section 11.3 hereof, and, if no such principal or such funding
indemnity is then outstanding, such excess or part thereof remaining shall be
paid to the Borrower.
ARTICLE V.
REPAYMENTS AND PREPAYMENTS
5.1 REPAYMENT OF THE LOAN - On or before the fourth Anniversary
Date, the Borrower shall repay the Loan in its entirety, together with all
interest accrued thereon.
5.2 VOLUNTARY PREPAYMENTS OF PRINCIPAL - The Borrower shall have
the right to prepay the Loan without premium or penalty unless otherwise
provided herein. Any voluntary prepayment of the Libor Loan may be made
without penalty only if made at the expiration of the applicable Libor Interest
Period, and then only if at least two Business Days' prior notice is given to
the Bank.
5.3 CURRENCY AND TIME OF PAYMENTS - The Borrower shall make each
payment hereunder at the Branch (or such other place in New York, New York as
the Bank may from time to time notify the Borrower, at least five Business Days
prior to any payment date) not later than 10:00 a.m. New York, New York, time
on the day when due (or on the next Business Day thereafter if such day is not
a Business Day) in Dollars.
5.4 APPLICATION OF PAYMENTS AND PREPAYMENTS - Payments and any
prepayments made by the Borrower in respect of the Loan shall be applied as
follows: (i) first, to the payment of any interest deferred pursuant to Section
4.6; (ii)
<PAGE> 14
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second, to the repayment of the principal amount of the Loan; (iii) third, to
the payment of any interest capitalized pursuant to Section 4.5; and (iv)
fourth, to the payment of any other amounts payable by the Borrower under this
Agreement.
ARTICLE VI.
CONDITIONS PRECEDENT TO DRAWDOWN
6.1 CONDITIONS PRECEDENT TO DRAWDOWN - The obligation of the Bank
to permit the Drawdown is subject to the condition precedent that the Bank
shall have received on or before the Closing Date all of the following in form
and substance satisfactory to the Bank and the Bank's counsel:
(a) the Security, duly executed;
(b) evidence of the completion of all recordings, registrations
and filings as may be necessary or desirable to perfect or preserve
the security interests created by the Security;
(c) a promissory note, duly executed;
(d) a certificate of the Borrower stating that, as of such date,
(i) all the representations and warranties made by the Borrower herein
are true and correct and that no event has occurred which constitutes
or would constitute, with the giving of notice, the passing of time,
or both, an Event of Default; and (ii) the Borrower has performed all
covenants under this Agreement to be performed by him; and
(e) the Borrower shall have delivered such other documentation as
the Bank may reasonably request.
6.2 WAIVER - The conditions set forth in Section 6.1 are inserted
for the sole benefit of the Bank and may be waived by the Bank, in whole or in
part (with or without terms or conditions).
ARTICLE VII.
SECURITY
7.1 SECURITY - There shall be delivered to the Bank the following:
(a) a limited guarantee from Mr. Jacques Benquesus in the form
provided for in the Banks Master Agreement (the "Guarantee");
<PAGE> 15
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(b) the Amended Banks Pledge (as such term is defined in the Banks
Master Agreement);
(c) the Banks Purchased Share Pledge (as such term is defined in
the Banks Master Agreement);
(d) the Share Pledge (as such term is defined in the Weltman
Master Agreement); and
(e) the Share Pledge (as such term is defined in the Wiseman
Master Agreement);
as continuing collateral security for the prompt and due repayment of the Loan
and the performance by the Borrower of all of its present and future
obligations to the Bank.
7.2 REGISTRATION - The Security shall, at the Borrower's expense
(subject to the provisions set forth in the first sentence of Section 11.1), be
registered, filed or recorded in all offices where such registration, filing or
recording is necessary or of advantage to the creation, perfection and
preserving of the applicable security interests.
ARTICLE VIII.
BORROWER'S REPRESENTATIONS AND WARRANTIES
To induce the Bank to make available the Facility, the
Borrower represents and warrants to and in favour of the Bank as follows, which
representations and warranties of the Borrower shall survive the execution and
delivery of this Agreement and the making of the Loan, notwithstanding any
investigations or examinations which may be made by the Bank or the Bank's
counsel, and the Bank shall be deemed to have relied on such representations
and warranties in the making of the Loan:
8.1 ENFORCEABILITY - When executed and delivered, this Agreement
and the Security (to the extent that the Borrower is a party thereto) will
constitute valid and legally binding obligations enforceable against the
Borrower in accordance with their respective terms, subject, however, to
limitations with respect to enforcement imposed by law in connection with
bankruptcy or similar proceedings and to the extent that equitable remedies
such as specific performance and injunction are in the discretion of the court
from which they are sought;
8.2 VALIDITY OF AGREEMENT - NO-CONFLICT - The Borrower is not a
party to, bound or affected by or subject to any indenture, mortgage, lease,
agreement,
<PAGE> 16
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obligation, instrument, statute, regulation, order, judgment, decree, licence,
permit or law which would be violated, contravened, breached by, or under which
default would occur or a lien, claim, restriction or encumbrance would be
created as a result of the execution and delivery of this Agreement or the
Security or the carrying out of the Borrower's obligations hereunder or
thereunder;
8.3 GOVERNMENT APPROVAL, REGULATION, ETC. - No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance by the Borrower of this Agreement or the Security
except for authorizations, approvals, actions, notices or filings which have
been duly obtained or made and are in full force and effect;
8.4 NO EVENT OF DEFAULT - No Event of Default has occurred and is
continuing and no event has occurred which, with the giving of notice, the
passing of time, or both, would constitute an Event of Default;
8.5 NO ENCUMBRANCES -
(a) The Banks Pledged Shares (as such term is defined in the Banks
Master Agreement) are not subject to any mortgage, lien, pledge,
charge, security interest or other encumbrance other than the
Security; and
(b) There has been no act or omission by the Borrower which has
created or resulted in the creation of any mortgage, lien, pledge,
charge, security interest or other encumbrance on, against or with
respect to any part of the Banks Purchased Pledged Shares (as such
term is defined in the Banks Master Agreement), except the Security;
8.6 MATERIAL OBLIGATIONS - The Borrower is not, in any respect, in
default under any material obligation, direct or indirect, contingent or
otherwise, or under any order, writ, decree or demand of any court or
governmental agency or authority, where any such default would materially
adversely affect the Borrower's ability to perform his obligations under this
Agreement or under the Security;
8.7 COMPLIANCE WITH LAWS - The Borrower is not in violation of any
judgment, decree, order, statute, rule or regulation relating in any way to the
Borrower, or to his property or assets and which would have a material effect
on the condition, financial or otherwise, of the Borrower;
8.8 TAXES - The Borrower has duly and timely filed all tax returns
and reports required by law to have been filed by him, has duly and correctly
reported all income and other amounts required to be reported and has paid all
taxes, penalties, interest, fines and governmental charges in respect thereof,
to the extent that such taxes, penalties, interest, fines and other
governmental charges have been assessed
<PAGE> 17
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by the relevant taxation authority, except to the extent that (i) any such tax,
penalty, interest, fine or any other governmental charge is being contested in
good faith by appropriate proceedings or (ii) the failure so to pay or
discharge any such tax, penalty, interest, fine or any other governmental
charge could not reasonably be expected to materially adversely affect the
financial condition or business of the Borrower. The Borrower has duly and
timely paid all instalments of taxes required to be paid by him except to the
extent that (i) any such instalment of tax is being contested in good faith by
appropriate proceedings or (ii) the failure so to pay or discharge any such
instalment of tax could not reasonably be expected to materially adversely
affect the financial condition or business of the Borrower. There are no
actions, suits, proceedings, investigations, audits or claims now pending or,
to the best of the knowledge of the Borrower (after due inquiry), threatened
against the Borrower in respect of any taxes or any penalties, interest and
fines in respect thereof and there are no matters under discussion with any
taxation or other governmental authority relating to any such matters; and
8.9 ACCURACY OF INFORMATION - All factual information previously
or contemporaneously furnished by or on behalf of the Borrower in writing to
the Bank for purposes of or in connection with this Agreement or any
transaction contemplated hereby including the certificates delivered pursuant
to Section 6.1, (true and complete copies of which were furnished to the Bank
in connection with its execution and delivery of this Agreement) is and all
other such factual information pursuant to this Agreement to the Bank will be
true and accurate in every material respect on the date as of which such
information is dated or certified and such information is not, or shall not be,
as the case may be, incomplete by omitting to state any material fact necessary
to make such information not misleading.
ARTICLE IX.
COVENANTS
The Borrower covenants and agrees with the Bank that, unless
the Bank otherwise consents in writing, so long as any amount payable hereunder
is outstanding:
9.1 PUNCTUAL PAYMENT - The Borrower shall duly and punctually pay
the principal amount of the Loan, all interest thereon, all fees and all other
amounts required to be paid by the Borrower hereunder or pursuant to agreements
with the Bank at the times and places and in the manner provided for herein or
therein;
9.2 COMPLIANCE WITH LEGISLATION - The Borrower shall comply with
all laws, rules, regulations and orders, the non-compliance with which could
materially and adversely affect the financial condition of the Borrower or the
<PAGE> 18
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performance by the Borrower of his obligations under this Agreement and the
Security;
9.3 NOTICE OF LITIGATION - The Borrower shall give notice to the
Bank of the occurrence of any material litigation, proceeding or dispute
affecting the Borrower initiated after the Closing Date if the result of any of
them might have a material adverse effect on the ability, financial or
otherwise, of the Borrower to perform his obligations under this Agreement and
Security, and from time to time shall provide the Bank with all reasonable
non-privileged information requested by the Bank concerning the status of any
such litigation, proceeding or dispute. Such notice shall be given within
fifteen (15) days of the Borrower becoming aware of such litigation, proceeding
or dispute and shall be in form and detail satisfactory to the Bank;
9.4 NOTICE OF ANY EVENT OF DEFAULT - The Borrower shall forthwith
give notice to the Bank of any fact which, to the best of the Borrower's
knowledge, may be construed as constituting an Event of Default or of any event
which, to the best of the Borrower's knowledge, with the giving of notice,
lapse of time or otherwise may constitute an Event of Default;
9.5 USE OF PROCEEDS - The Borrower shall use the proceeds of the
Loan for the purposes contemplated hereunder;
9.6 TAXES - The Borrower will pay all federal, state and
provincial and other taxes or other assessments or governmental charges or
levies imposed upon him or upon his income or profits or upon property
belonging to him prior to the time when any penalties or interest (except
interest during extensions of time for filing of federal income or other tax
returns not in excess of nine months) accrue with respect thereto, unless, in
any such case, the same is being contested in good faith by appropriate
proceedings, except to the extent that (i) any such tax, penalty, interest,
fine or any other governmental charge is being contested in good faith by
appropriate proceedings or (ii) the failure so to pay or discharge any such
tax, penalty, interest, fine or other governmental charge could not reasonably
be expected to materially adversely affect the financial condition or business
of the Borrower;
9.7 PERFORMANCE OF COVENANTS - The Borrower will diligently
observe and perform all his covenants to be observed or performed hereunder and
under the Security;
9.8 DISPOSAL OF COLLATERAL - The Borrower shall not sell, assign,
lease-back or otherwise dispose of any of the Collateral, unless the Net
Proceeds (as such term is defined in the Banks Master Agreement) of the sale,
assignment, or other disposal of the Collateral are applied, in accordance with
the provisions of Article 3 of the Banks Master Agreement, to reduce the
outstanding Loan;
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9.9 LIMITATION ON ENCUMBRANCES - The Borrower shall not create,
incur, assume or otherwise become liable upon or suffer to exist any mortgage,
charge, lien, hypothec, security interest or other encumbrance whatsoever on,
against or with respect to any part of the Collateral except the Security; and
9.10 FURTHER ASSURANCES - The Borrower will, from time to time, do,
execute and deliver or shall cause to be done, executed and delivered all such
further acts, documents or other instruments as may reasonably be requested by
the Bank in order to cure any defects in the execution and delivery of, or to
comply with or accomplish the covenants and agreements contained in this
Agreement and the Security.
ARTICLE X.
EVENTS OF DEFAULT
10.1 EVENTS OF DEFAULT - The occurrence of any one or more of the
following events (each such event being herein referred to as an "Event of
Default") shall constitute a default under this Agreement:
(a) If the Borrower shall fail to pay any principal of, or
interest on, the Loan when the same shall become due and payable
hereunder;
(b) If the Borrower, together with the borrowers under the Related
Loan Agreements, shall fail to repay on or before the third
Anniversary Date at least $30,000,000 of the aggregate principal
amount of the Loan and the loans under the Related Loan Agreements;
for a period of 3 Business Days after notice from the Bank;
(c) If the Borrower shall fail to perform or comply with any term,
condition, covenant or obligation contained in this Agreement or in
the Security (other than those specified in Subsections 10.1(a) or
(b)) and, if capable of remedy, such failure to perform or comply is
not remedied within 30 days of notice from the Bank so to remedy;
(d) If any representation or warranty made by the Borrower in this
Agreement or the Security or in any certificate or other document at
the time delivered hereunder to the Bank shall prove to have been
incorrect in any material respect on and as of the date thereof;
(e) If the Borrower becomes insolvent, makes any assignment in
bankruptcy or makes any other general assignment for the benefit of
creditors, makes any proposal under the Bankruptcy and Insolvency Act
(Canada), the
<PAGE> 20
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United States Bankruptcy Code, 11 USC Section 101 et seq. or any
comparable law, is adjudged bankrupt, files a petition or proposal to
take advantage of any act of insolvency, consents to or acquiesces in
the appointment of a trustee, receiver, receiver and manager, interim
receiver, custodian, sequestrator or other person with similar powers
of himself or of all or any substantial portion of his property or
assets, or files a petition or otherwise commences any proceedings
seeking any arrangement, composition or readjustment under any
applicable bankruptcy, insolvency, moratorium or other similar law
affecting creditors' rights or consents to, or acquiesces in, the
filing of such a petition;
(f) If a trustee, receiver, receiver and manager, interim
receiver, custodian, sequestrator or any other person with similar
powers shall be appointed of the Borrower or of all or any substantial
portion of his property or assets, a judgment or an order is made by a
tribunal of competent jurisdiction restraining his ability to deal
with all or any substantial portion of his property and assets or a
judgment or order is made by a tribunal of competent jurisdiction
approving any arrangement, composition or readjustment under any
applicable bankruptcy, insolvency or moratorium or other similar law
affecting creditors' rights and such appointment, judgment or order is
not vacated, stayed or set aside within 45 days of the date thereof;
(g) If an event of default shall occur under any of the Related
Loan Agreements;
(h) If a Liquidity Event shall occur; or
(i) While the aggregate principal amount repaid (excluding any
repayments rescinded or otherwise required to be returned by the Bank
upon the occurrence of a Recapture Event (as such term is defined in
the Guarantee)) under the Loan and the loans under Related Loan
Agreements is less than $30,000,000:
(i) if a writ of execution, distress, attachment or
similar process is issued or levied against all or a
substantial portion of the property or assets of the Borrower
in connection with any default by him in the payment of any
amount in excess of $2,500,000 or the equivalent amount
thereof in another currency as reasonably determined by the
Bank, unless the writ is withdrawn, released, vacated or
stayed within 30 days, or a judgment or order (other than any
judgment or order issued in connection with the matters
referred to in Schedule 5(c) to the Guarantee) shall be
rendered against the Borrower by a court of competent
jurisdiction with respect to such default and such judgment or
order shall not be satisfied in accordance with its terms and
shall continue unstayed and in effect for 10 days;
<PAGE> 21
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(ii) if a default, under any indenture, agreement or
instrument under which the Borrower has at the date of this
Agreement or shall hereafter have outstanding indebtedness for
borrowed money in excess of $2,500,000 or the equivalent
amount thereof in another currency as reasonably determined by
the Bank, shall occur and be continuing and (A) any such
indebtedness shall have been lawfully accelerated or shall
lawfully be or become due and payable prior to the date on
which the same would otherwise have become due and payable, or
(B) such default is a default in payment of such indebtedness
when due or within the applicable grace period set out in such
indenture, agreement or instrument; or
(iii) if all or a substantial part of the property of the
Borrower shall be expropriated, whether forfull or partial
consideration.
10.2 TERMINATION AND ACCELERATION - Upon the occurrence of an Event
of Default and for so long as such Event of Default shall continue, the Bank
may, by one or more notices to the Borrower do any or all of the following:
(a) terminate the obligations of the Bank including without
limitation, the obligation of the Bank to permit the Drawdown, or any
Libor Rollovers, the capitalization of interest or the deferral of
interest hereunder;
(b) declare the entire principal amount of the Loan Amount, all
interest accrued thereon (including any deferred interest) and all
fees and other amounts required to be paid by the Borrower hereunder,
to be immediately due and payable without the necessity of presentment
for payment, protest, notice of non-payment or notice of protest (all
of which are hereby expressly waived); and
(c) proceed to exercise any and all rights hereunder or under the
Security and any other document or instrument executed pursuant to
this Agreement.
The Borrower acknowledges that the exercise by the Bank of any rights under the
Security without having declared an acceleration pursuant to the provisions of
this Section shall not in any way alter, affect or prejudice the right of the
Bank to make a declaration pursuant to the provisions of this Section at any
time and, without limiting the foregoing, shall not be construed or deemed to
constitute a waiver of any rights under this Section.
<PAGE> 22
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10.3 REMEDIES CUMULATIVE AND WAIVERS -
(a) For greater certainty, it is expressly understood and agreed
that the respective rights and remedies of the Bank hereunder or under
any other document or instrument executed pursuant to this Agreement,
including the Security, are cumulative and are in addition to and not
in substitution for any rights or remedies provided by law or by
equity; and any single or partial exercise by the Bank of any right of
remedy for a default or breach of any term, covenant, condition or
agreement contained in this Agreement or other document or instrument
executed pursuant to this Agreement, including the Security, shall not
be deemed to be a waiver of or to alter, affect or prejudice any other
right or remedy or other rights or remedies to which the Bank may be
lawfully entitled for such default or breach. Any waiver by the Bank
of the strict observance, performance or compliance with any term,
covenant, condition or agreement herein contained or contained in any
of the Security and any indulgence granted either expressly or by
course of conduct, by the Bank shall be effective only in the specific
instance and for the purpose for which it was given and shall be
deemed not to be a waiver of any rights and remedies of the Bank under
this Agreement or under the Security or other document or instrument
executed pursuant to this Agreement as a result of any other default
or breach hereunder or thereunder.
(b) Notwithstanding anything in this Agreement or the Security to
the contrary, if after the occurrence of an Event of Default, the Bank
elects to exercise any of its rights or remedies to seek payment of
the Loan and/or any other obligation of the Borrower hereunder, the
Bank agrees that it shall exercise any such right or remedy in the
following order (i) first, the Bank shall (unless stayed or prevented
from doing so by law or court order) sell the securities held under
the Banks Purchased Share Pledge (as defined in the Banks Master
Agreement); (ii) second, the Bank shall (unless stayed or prevented
from doing so by law or court order) sell the securities held under
the Amended Banks Pledge (as defined in the Banks Master Agreement);
(iii) third, the Bank shall (unless stayed or prevented from doing so
by law or court order) exercise any right of set-off pursuant to
Section 10.4 below and (iv) fourth, but only to the extent of any
remaining deficiency, the Bank shall make a demand for payment
pursuant to the Guarantee.
10.4 SETOFF -
(a) Regardless of the adequacy of any Collateral, any deposits or
other sums credited by or due from the Bank to the Borrower and any
securities or other property of the Borrower in the possession of the
Bank may be applied to or set off against the payment of the
obligations of the Borrower hereunder and under the Security and any
or all other liabilities, direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, of the
<PAGE> 23
- 23 -
Borrower to the Bank at any time after the occurrence and during the
continuance of any Event of Default.
(b) The obligations of the Borrower under this Agreement and under
the Security shall not be subject to any counterclaim, set-off,
deduction or defence (other than payment or performance) based upon
any claim the Borrower may have against the Bank or any other Person.
ARTICLE XI.
GENERAL
11.1 COSTS AND EXPENSES - The Borrower shall pay on the Closing
Date all reasonable costs and expenses incurred by the Bank in connection with
preparation, printing, execution and delivery of each of this Agreement, the
Security and the other documents to be delivered hereunder, whether or not the
Drawdown has been made hereunder, including, without limitation, the fees and
out-of-pocket expenses of Bank's counsel with respect thereto and with respect
to advising the Bank as to its rights and responsibilities hereunder and under
the Security and the other documents delivered hereunder; provided, however,
that such costs and expenses shall not exceed the lesser of $52,500 and the
fees and out-of-pocket expenses of the Borrower's counsel; it being understood
and agreed that such amount shall be capitalized and added to the principal
amount of the Loan. The Borrower further agrees to pay all costs and expenses
incurred by the Bank (including fees and expenses of counsel, accountants and
other experts), in connection with any waiver or consent under, or amendment
to, this Agreement or the Security, or the preservation or enforcement of
rights of the Bank under this Agreement, the Security and other documents
delivered hereunder including, without limitation, all reasonable costs and
expenses sustained by the Bank as a result of any failure by the Borrower to
perform or observe his obligations contained in any of such documents.
11.2 ILLEGALITY - If after the date of this Agreement any change
occurs in any Applicable Law, or in the interpretation or application thereof
by any court or by any governmental or other authority or entity charged with
the administration thereof, which makes it unlawful for the Bank to make, fund
or maintain the Facility or to give effect to its obligations in respect of any
Libor Loan thereunder, the Bank may, by written notice thereof to the Borrower
declare its obligations under this Agreement to be terminated. The Borrower
shall prepay to the Bank within the time required by such law (or at the end of
such longer period as the Bank at its discretion has agreed) the principal
amount of the Loan together with accrued interest (including any deferred
interest) and such other amounts which may be payable hereunder as a result of
such prepayment. Any such notice shall be accompanied by a certificate of an
officer of the Bank identifying in reasonable detail
<PAGE> 24
- 24 -
the event or condition which makes it unlawful for the Bank to fund or maintain
the Facility or any Libor Loan thereunder and such certificate shall be final,
conclusive and binding on the Borrower in respect of the matters set out
therein. If any such change shall only affect a portion of the Bank's
obligations under this Agreement which is, in the reasonable opinion of the
Bank, severable from the remainder of this Agreement so that the remainder of
this Agreement may be continued in full force and effect without otherwise
affecting any of the obligations of the Bank or the Borrower hereunder or under
any of the other documents contemplated hereby, the Bank shall only declare its
obligations under the affected portion so terminated.
11.3 INDEMNIFICATION BY THE BORROWER - In addition to any liability
of the Borrower to the Bank under any other provision of this Agreement, the
Borrower shall indemnify the Bank and hold the Bank harmless against any
reasonable loss (excluding loss of profit) or expense incurred by the Bank as a
result of any failure by the Borrower to fulfil any of its obligations
hereunder including, without limitation, any actual breakage cost or expense
incurred by reason of the liquidation or re-employment in whole or in part of
deposits or other funds required by the Bank to fund the Libor Loans as a
result of
(a) the Borrower's failure to effect the Drawdown or to make any
payment, repayment or prepayment on the date required hereunder or
specified by him in any notice given hereunder;
(b) the Borrower's failure to pay any other amount, including
without limitation any interest or fee, due hereunder on its due date;
(c) the Borrower's failure to give any notice required to be given
by him to the Bank hereunder; or
(d) the voluntary prepayment by the Borrower of the Libor Loan or
any portion thereof on any date other than on the last day of the
Libor Interest Period relating thereto.
11.4 FUNDS - Each amount advanced, made available, disbursed or
paid hereunder shall be advanced, made available, disbursed or paid, as the
case may be, in immediately available funds or, after notice from the Bank, in
such other form of funds as may from time to time be customarily used in New
York, United States of America in the settlement of banking transactions
similar to the banking transactions required to give effect to the provisions
of this Agreement on the day such advance, disbursement or payment is to be
made.
11.5 NOTICE - Any demand, notice or communication to be made or
given hereunder shall be in writing, except as otherwise expressly permitted or
required under this Agreement, and may be made or given by personal delivery,
by registered
<PAGE> 25
- 25 -
mail or by transmittal by telex or facsimile machine addressed to the
respective Parties as follows:
To the Borrower: Mr. Jacques Benquesus
c/o Gaming Lottery Corporation
160 Nashdene Road
Scarborough, Ontario
M1V 4C4
Telecopier: (416) 754-8441
Telephone: (416) 292-5963
With a copy to the
Borrower's New York
counsel: Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, NY 10036
Attention: Mr. Jack Jackson, Esq.
Telecopier: (212) 969-2900
Telephone: (212) 969-3000
And a copy to the
Borrower's Ontario
counsel: Goldman, Spring, Schwartz & Kichler
Suite 700
40 Sheppard Avenue West
North York, Ontario
M2N 6K9
Attention: Mr. Joseph Maierovits, Esq.
Telecopier: (416) 225-4805
Telephone: (416) 225-9400
To the Bank: Coutts & Co AG, New York Branch
65 East 55th Street
New York, NY 10022
Attention: Mr. Mario Economou, Vice President
Telecopier: (212) 303-2929
Telephone: (212) 303-2971
<PAGE> 26
- 26 -
With a copy to the
Bank's New York
counsel: Rogers & Wells
200 Park Avenue
New York, New York 10166-0153
Attention: Mr. Alan M. Christenfeld, Esq.
Telecopier: (212) 878-8375
Telephone: (212) 878-8000
And a copy to the
Bank's Ontario
counsel: Osler, Hoskin & Harcourt
280 Park Avenue - 30W
New York, New York 10017
Attention: Mr. John W. Stevens, Esq.
Telecopier: (212) 867-5802
Telephone: (212) 867-5800
or to such other mailing or telex or facsimile machine address as any party may
from time to time notify the others in accordance with this Section. Any
demand, notice or communication made or given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof,
or, if made or given by registered mail, on the fifth Business Day following
deposit thereof in the mail or, if made or given by telex or by facsimile
transmission, on the first Business Day following the transmittal thereof and
receipt of the appropriate answer back. If the party making or giving such
demand, notice or communication knows or ought reasonably to know of
difficulties with the postal system which might affect the delivery of mail,
any such demand, notice or communication shall not be mailed but shall be made
or given by personal delivery or by telex or by facsimile transmission.
11.6 GOVERNING LAW AND CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL:
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
(b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE,
EACH OF THE BORROWER AND THE BANK HEREBY AGREE TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR
<PAGE> 27
- 27 -
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW
YORK SITTING IN THE CITY AND COUNTY OF NEW YORK AND WAIVE ANY
OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT
TO ANY ACTION INSTITUTED THEREIN, AND AGREE THAT ANY DISPUTE
CONCERNING THE RELATIONSHIP BETWEEN THE BORROWER AND THE BANK
OR THE CONDUCT OF ANY PARTY HERETO IN CONNECTION WITH THIS
AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS
DESCRIBED ABOVE. NOTWITHSTANDING THE FOREGOING, THE BANK SHALL
HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE
BORROWER OR HIS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION THE BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER
TO REALIZE ON THE SECURITY.
(c) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO HIM AT HIS ADDRESS SET FORTH IN SECTION 11.5 AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS
AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS
OR, AT THE BANK'S OPTION, BY SERVICE UPON THE BORROWER'S NEW
YORK COUNSEL AT ITS ADDRESS SET FORTH IN SECTION 11.5, WHICH
COUNSEL THE BORROWER HEREBY IRREVOCABLY APPOINTS AS HIS AGENT
FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE
STATE OF NEW YORK. THE BORROWER HEREBY CONSENTS TO SERVICE OF
PROCESS AS AFORESAID.
(d) EACH OF THE BORROWER AND THE BANK HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(I) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH (OTHER THAN THE BANKS MASTER AGREEMENT) OR (II) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO
THIS AGREEMENT, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. THE BORROWER AND THE BANK EACH HEREBY AGREE AND
CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF
THEM MAY FILE AN
<PAGE> 28
- 28 -
ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) NOTHING IN THIS SECTION 11.6 SHALL AFFECT THE RIGHTS OF THE
BANK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR AFFECT THE RIGHTS OF THE BANK TO BRING ANY ACTION OR
PROCEEDING AGAINST THE BORROWER OR HIS PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION.
(f) EACH OF THE BORROWER AND THE BANK HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SECTION 11.6 ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
11.7 JUDGMENT CURRENCY - The obligation of the Borrower pursuant to
this Agreement to make payments in a specific currency (the "Contractual
Currency") shall not be discharged or satisfied by any tender or recovery
pursuant to any judgment expressed in or converted into any other currency
except to the extent to which such tender or recovery shall result in the
effective receipt by the Bank of the full amount of the Contractual Currency
payable or expressed to be payable under this Agreement and accordingly the
obligation of the Borrower shall be enforceable as an alternative or additional
cause of action for the purpose of recovery in the other currency of the amount
(if any) by which such effective receipt shall fall short of the full amount of
the Contractual Currency payable or expressed to be payable under this
Agreement and shall not be effected by judgment being obtained for any other
sum due under this Agreement.
11.8 SUCCESSORS AND ASSIGNS - This Agreement shall be binding upon
and shall enure to the benefit of the Bank and the Borrower, and their
respective successors and assigns. The Borrower shall not assign or transfer
its rights and obligations hereunder or any interest herein without the prior
written consent of the Bank.
11.9 ANNUAL RATES OF INTEREST - For the purposes of the Interest
Act (Canada), whenever interest payable pursuant to this Agreement is
calculated on the basis of a period other than a calendar year (the "Interest
Period"), each rate of interest determined pursuant to such calculation
expressed as an annual rate is equivalent to such rate as so determined
multiplied by the actual number of days in the calendar year in which the same
is to be ascertained and divided by the number of days in the Interest Period.
<PAGE> 29
- 29 -
11.10 SEVERABILITY - Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions of this Agreement and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction.
11.11 WHOLE AGREEMENT - This Agreement, together with the Banks
Master Agreement and all agreements and transactions contemplated herein and
therein, constitute the whole and entire agreement between the Parties relating
to the subject matter of this Agreement, and cancels and supersedes any prior
agreements, undertakings, declarations, commitments and representations,
written or oral, in respect thereof.
11.12 AMENDMENTS AND WAIVERS - Any provision of this Agreement or
the Security may be amended only if the Borrower and the Bank so agree in
writing and, except as otherwise specifically provided herein, may be waived
only if the Bank so agrees in writing.
Any such waiver and any consent by the Bank under any
provision of this Agreement or the Security must be in writing and may be given
subject to any conditions thought fit by the person giving that waiver or
consent. Any waiver or consent shall be effective only in the instance and for
the purpose for which it is given.
11.13 FURTHER ASSURANCES - Each of the Borrower and the Bank shall
promptly cure any default by him or it in the execution and delivery of this
Agreement or of the Security. The Borrower, at his expense, shall promptly
execute and deliver to the Bank, upon request by the Bank, all such other and
further documents, agreements, opinions, certificates and other instruments in
compliance with, or accomplishment of his covenants and agreements hereunder or
under the Security or to more fully state his obligations as set out herein or
in the Security or to make any recording, filing or notice or obtain any
consent, all as may be reasonably necessary or appropriate in connection
therewith.
11.14 COUNTERPARTS - This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
taken together shall be deemed to constitute one and the same instrument, and
it shall not be necessary in making proof of this Agreement to produce or
account for more than one such counterpart.
11.15 FACSIMILE SIGNATURE - This Agreement may be executed by faxed
signature with the same effect as a manually signed original signature.
<PAGE> 30
- 30 -
11.16 CONFIDENTIALITY - This Agreement shall be subject to the
provisions of the Banks Master Agreement regarding confidentiality.
11.17 LIMITED RECOURSE - Notwithstanding anything contained in (i)
this Agreement, (ii) any agreement, document, instrument or certificate entered
into in connection herewith, other than the Banks Master Agreement,
(collectively, the "Loan Documents") or (iii) otherwise, the Borrower shall
only be personally liable to the extent of the Guarantee Limit (as such term is
defined in the Guarantee) for the repayment of any of the principal of, or
interest on, the Loan and the loans under the Related Loan Agreements, the
payment of any fees or expenses of the Bank hereunder or under any Loan
Documents or the performance of, or failure to perform, any other obligation of
the Borrower under this Agreement or under any other Loan Document or the
borrowers under the Related Loan Agreements, and the sole and exclusive
recourse of the Bank shall be the Security and the Borrower shall have no
liability, other than under the Guarantee, for any deficiency which may exist
after foreclosure on the Security; provided, however, that there shall be no
limit to the personal liability of the Borrower in the case of fraud.
IN WITNESS WHEREOF the Parties have executed this Agreement as
of the date first written above.
l/s
-------------------------------------
MR. JACQUES BENQUESUS
COUTTS & CO AG, NEW YORK BRANCH
By:
-------------------------------------
Name:
Title:
<PAGE> 31
SCHEDULE A
SHARES TO BE ACQUIRED
<TABLE>
<CAPTION>
COMPANY SHARES
------- -------
<S> <C>
Gaming Lottery Corporation 5,000,000 common shares
Warp 10 Technologies Inc. 834,231 common shares
</TABLE>
<PAGE> 32
SCHEDULE B
CERTIFICATE OF COMPLIANCE
TO: Coutts & Co AG, New York Branch (the "Bank")
FROM: Mr. Jacques Benquesus (the "Borrower")
RE: Loan Agreement dated August 20, 1996 between the Borrower
and the Bank in connection with the acquisition of certain
shares of certain corporations by the Borrower (the "Loan
Agreement")
- --------------------------------------------------------------------------------
This certificate is given pursuant to the terms of the Loan
Agreement. All defined terms used in this certificate indicated with
initial capitals shall have the same meaning as in the Loan
Agreement.
The Borrower hereby certifies that:
(a) All of the representations and warranties of the Borrower
contained in the Loan Agreement are true and correct on and as of the
Closing Date.
(b) All of the covenants of the Borrower contained in the Loan
Agreement together with all of the conditions precedent to the
Drawdown required to be performed by the Borrower on or prior to the
Closing Date and all other terms and conditions required to be
performed by the Borrower on or prior to the Closing Date contained
in the Loan Agreement have been fully complied with.
(c) No Event of Default has occurred and remains outstanding and
to the best of the knowledge, information and belief of the
undersigned, no event has occurred and remains outstanding which,
with the passing of time or giving of notice, or both, would be an
Event of Default.
DATED the - day of August, 1996.
----------------------------------------
Mr. Jacques Benquesus
<PAGE> 33
SCHEDULE C
LIBOR NOTICE
TO: Coutts & Co. AG, New York Branch (the "Bank")
Attention: Mr. Mario Economou, Vice President
FROM: Mr. Jacques Benquesus (the "Borrower")
RE: Loan Agreement dated August 20, 1996 between the Borrower
and the Bank in connection with the acquisition of certain
shares of certain corporations by the Borrower (the "Loan
Agreement")
- --------------------------------------------------------------------------------
This Libor Notice is given pursuant to the terms of the Loan agreement. All
defined terms used in this Libor Notice indicated with initial capitals shall
have the same meaning as in the Loan Agreement.
Notice is hereby given pursuant to the provisions of Section 2.5 of the Loan
Agreement that the Borrower requests the rollover of the Libor Loan for a Libor
Interest Period of _____________ month(s).
The undersigned hereby certifies that no Event of Default has occurred and
remains outstanding and to the best of the knowledge, information and belief of
the Borrower (after due enquiry), no event has occurred and remains outstanding
which, with the giving of notice or the passing of time, or both, would be an
Event of Default.
DATED the - day of -, -
----------------------------------------
Mr. Jacques Benquesus
<PAGE> 1
BANKS PURCHASED SHARE PLEDGE
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as
of August 20, 1996, by JACQUES BENQUESUS, an individual resident in the City of
Jerusalem, Israel (the "Pledgor"), in favour of COUTTS & CO AG, NEW YORK
BRANCH, a Swiss bank licensed to conduct a banking business in the State of New
York (the "Pledgee").
Preliminary Statement.
A. Simultaneous with the execution and delivery of this
Agreement, Pledgee is entering into (i) those certain Loan Agreements of even
date herewith with Jacques Benquesus (the "Banks Loan Agreements"), (ii) that
certain Loan Agreement of even date herewith with Larry H. Weltman (the
"Weltman Loan Agreement") and (iii) that certain Loan Agreement of even date
herewith with John M. Wiseman (the "Wiseman Loan Agreement" and together with
the Banks Loan Agreements and the Weltman Loan Agreement, the "Loan
Agreements"), pursuant to which the Pledgee may hereafter advance monies and
make other extensions of credit to each of Jacques Benquesus, Larry H. Weltman
and John M. Wiseman (collectively, the "Borrowers") under the respective Loan
Agreements.
B. Simultaneous with the execution and delivery of this
Agreement, Jacques Benquesus is entering into that certain limited guarantee of
even date herewith with Pledgee (the "Limited Guarantee") whereby Jacques
Benquesus guarantees the obligations of each of the Borrowers under the Loan
Agreements to the extent set forth therein.
C. Pledgor is the owner of certain shares of the issued and
outstanding capital stock of Gaming Lottery Corporation and Warp 10
Technologies Inc. (each a "Company" and collectively, the "Companies"), in the
amounts listed on Schedule 1 hereto (the securities listed on Schedule 1 are
hereinafter referred to as the "Stock").
D. The Pledgee has required as a condition to the Pledgee's
advancement of funds and making of other extensions of credit under the Loan
Agreements that Pledgor execute and deliver to Pledgee this Agreement in order
to secure the due and punctual performance of and compliance by each of the
Borrowers with all obligations, covenants, warranties, undertakings and
conditions
<PAGE> 2
- 2 -
contained in or arising under each of the Loan Agreements including but not
limited to, the full and punctual payment by the Borrowers, when due, whether
at the stated due date, by acceleration or otherwise, of any and all,
obligations, liabilities, indebtedness and other amounts of every kind arising
under the Loan Agreements (whether principal, interest (after as well as before
default), fees, premiums or penalties), all amounts in respect of indemnities
provided for in the Loan Agreements, and all damages (whether provided for in
the Loan Agreements or otherwise permitted by law) in respect of a failure or
refusal by any Borrower to make any such payment howsoever created, arising or
evidenced, voluntary or involuntary, whether direct or indirect, absolute or
contingent, now or hereafter existing or owing to the Pledgee, and Jacques
Benquesus' obligations under the Limited Guarantee (all of the foregoing
obligations and undertakings are collectively referred to herein as the
"Obligations").
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit (including, without
limitation, any loan or advance by renewal, refinancing or extension of the
Loan Agreements or otherwise) heretofore, now or hereafter made to or for the
benefit of the Borrowers by Pledgee, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, the parties hereto agree as follows:
1. Pledge. Pledgor hereby delivers, pledges and grants security
interests to Pledgee in: (a) the Stock accompanied by stock transfer powers of
attorney in respect of all of the Stock ("Powers") duly executed in blank, in
the form attached hereto as Exhibit 1 and made a part hereof; (b) all dividends
and distributions (whether in cash, stock or otherwise) paid or payable on or
in respect of the Stock or any of it, including without limitation (i) all
dividends and other distributions paid or payable in cash in respect of the
Stock or any of it in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus and (ii) cash paid, payable or otherwise distributed in respect
of, or in redemption of, or in exchange for, any Stock; (c) the proceeds of
disposition of any of the foregoing; (d) every balance of every account which
the Pledgor has or shall at any time have with the Pledgee and all moneys,
instruments, chattel paper, documents, accounts, contract rights, goods,
credits, choses in action, claims, demands and without limitation whatsoever,
property of every kind and description including additions, accessions and
substitutions which have been or at any time shall be delivered to or be in
transit to or from the Pledgee or any of its agents or correspondents or other
third party or parties acting on the Pledgee's behalf, by, or for, or for
account of, or subject to the order of, the Pledgor, which has come or shall
come into the possession, custody or control of the Pledgee in any way or for
any purpose whatsoever, whether for safekeeping or otherwise and whether the
Pledgee shall accept them for the purposes for which they are delivered to it
or not; and (e) the property and interests in property described in
<PAGE> 3
- 3 -
Paragraphs 2, 6 and 7 hereof and the proceeds thereof (items (a), (b), (c), (d)
and (e) being hereinafter collectively referred to as the "Collateral"), as
security for the payment and performance of the Obligations. Pledgor hereby
appoints Pledgee as Pledgor's attorney-in-fact to arrange, at Pledgee's option,
for the transfer, of the Collateral to the name of Pledgee or to the name of
Pledgee's nominee and to this end the Pledgor hereby covenants to execute any
further endorsements, transfers, conveyances, powers of attorney or other
documents that the Pledgee may from time to time reasonably request as may be
required to effect transfer of the Collateral or any of it.
2. After-Acquired Collateral. In the event that the Pledgor
receives or becomes entitled to receive, after the date hereof, property and
interests that constitute Collateral, then any such Collateral shall be
received in trust for the benefit of the Pledgee, shall be segregated from
other property of the Pledgor and shall be forthwith delivered over to the
Pledgee as Collateral in the same form as so received by the Pledgor (with any
necessary endorsements or stock powers required to provide for its transfer in
the manner set forth in Paragraph 1 hereof).
3. Voting Rights. During the term of this Agreement, and so long
as there shall not occur or exist an Event of Default under any of the Loan
Agreements and as defined in each of the Loan Agreements (hereinafter an "Event
of Default"), Pledgor shall have the right to vote the Stock on all corporate
questions for all purposes not inconsistent with the terms of this Agreement
and any of the Loan Agreements. Pledgee shall be entitled to exercise all
voting powers pertaining to the Collateral from and after the occurrence of an
Event of Default. Pledgee shall execute and deliver (or cause to be executed
and delivered) to the Pledgor all such proxies and other instruments as the
Pledgor may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and other rights which it is entitled to exercise pursuant
to this Paragraph 3.
4. Representations, Warranties and Covenants. Pledgor warrants
and represents that there has been no act or omission by the Pledgor which has
created or resulted in the creation of any mortgage, lien, pledge, charge,
security interest or other encumbrance on, against or with respect to any part
of the Banks Purchased Pledged Shares (as such term is defined in the Master
Agreement between the Pledgee and the Pledgor, dated August 19, 1996 (the
"Master Agreement")), except the Security (as such term is defined in the Banks
Loan Agreements); (b) that the Pledgor has full power and authority to enter
into this Agreement; and (c) the Powers are duly executed and give Pledgee the
authority such Powers purport to confer.
The Pledgor hereby covenants not to undertake any act or omit to take
any act, which could create or result in, any mortgage, lien, pledge, charge,
security interest or other encumbrance (each a "Charge"), or suffer to exist
any Charge arising
<PAGE> 4
- 4 -
after the date hereof, on, against or with respect to, any part of the
Pledged Shares, except the Security.
5. Subsequent Changes Affecting Collateral. Pledgor represents
to Pledgee that Pledgor has made Pledgor's own arrangements for keeping
informed of changes or potential changes affecting the Collateral (including,
but not limited to, rights to convert, rights to subscribe, payment of
dividends, reorganization or other exchanges, tender offers and voting rights),
and Pledgor agrees that Pledgee shall have no responsibility or liability for
informing Pledgor of any such changes or potential changes or for taking any
action or omitting to take any action with respect thereto. Pledgee may at any
time, transfer or register the Collateral or any part of the Collateral into
Pledgee's or Pledgee's nominee's name with or without any indication that such
Collateral is subject to the security interest under this Agreement and without
notice to the Pledgor, which notice is hereby expressly waived to the fullest
extent permitted by applicable law.
6. Stock Adjustments. In the event that during the term of this
Agreement any stock dividend, reclassification, readjustment or other change is
declared or made in the capital structure of any Company (including, without
limitation, the issuance of additional shares of preferred or common stock of
any such Company of whatever class to the Pledgor in respect of the Collateral
for no further consideration), or any option included within the Stock is
exercised, or both, then all new, substituted and additional shares, or other
securities, issued to the Pledgor by reason of any such change or exercise
shall be delivered to and held by Pledgee under the terms of this Agreement in
the same manner as the Collateral originally pledged under this Agreement.
7. Warrants, Options and Other Rights. In the event that during
the term of this Agreement subscription warrants or any other rights or options
shall be issued in connection with any of the Collateral, then such warrants,
rights and options shall be immediately assigned to Pledgee and all new stock,
bonds or other securities so acquired by Pledgor shall be immediately assigned
to Pledgee to be held under the terms of this Agreement in the same manner as
the Collateral originally pledged hereunder.
8. Registration. If at any time the Pledgee wishes to register
under or otherwise comply in any way with the Securities Act of 1933, as
amended (the "Securities Act") or any similar federal or state law, or if such
registration or compliance is required with respect to the securities included
in any of the Collateral prior to the sale thereof by Pledgee, Pledgor will
cooperate with the Pledgee to cause such registration to be effectively made
(it being understood and agreed that such cooperation shall not require the
Pledgor to execute and/or deliver any registration statement with respect to
the Collateral), at no expense to Pledgor, and to continue such registration
effective for such time as may be necessary in the opinion of
<PAGE> 5
- 5 -
Pledgee. If Pledgee shall at any time determine to transfer or register the
Collateral (or any part thereof) in its name in order to facilitate any
registration under the Securities Act, Pledgor and Pledgee hereby agree that
such action will not require the Pledgee to make any adjustment to Pledgor's
account and no such adjustment shall be made unless and until the Collateral
(or any part thereof) is sold pursuant to such registration statement or
otherwise to any third party. Upon or at any time after the occurrence of an
Event of Default, should Pledgee determine that, prior to any public offering
of any securities contained in any of the Collateral, such securities should be
registered under the Securities Act and/or registered or qualified under any
other federal or state law, and that such registration and/or qualification is
not practical, then Pledgor agrees that it will be commercially reasonable if a
private sale, upon at least 10 days' prior notice to Pledgor, is arranged so as
to avoid a public offering even though the sales price established and/or
obtained may be substantially less than prices which would be quoted for such
security on any market or exchange.
9. Waivers; Subrogation. The Pledgor irrevocably agrees that
it will not bring any claims against the Borrowers to which the Pledgor is or
would at any time be otherwise entitled by virtue of its obligations under this
Agreement, including, without limitation, any right of subrogation (whether
contractual, under Section 509 of the U.S. Bankruptcy Code or otherwise) and
all contractual, statutory or common law rights of reimbursement, contribution,
or indemnity from the Borrowers which may otherwise have arisen in connection
with this Agreement, until such time as all of the Obligations have been
satisfied in full and this Agreement shall have terminated in accordance with
its terms. The Pledgor waives presentment and demand for payment of any of the
Obligations, protest and notice of dishonour or default with respect to any or
all of the Obligations, and all other notices to which Pledgor might otherwise
be entitled, except as otherwise expressly provided in this Agreement or any of
the Loan Agreements.
10. Default. (a) Upon the occurrence or existence of
an Event of Default, Pledgee shall have, in addition to any other rights given
by law or the rights given under this Agreement or the Loan Agreements, all of
the rights and remedies with respect to the Collateral of a secured party under
the Uniform Commercial Code.
(b) In addition, with respect to the Collateral, or any part of
the Collateral, which shall then be in or shall thereafter come into the
possession or custody of Pledgee, Pledgee may sell or cause the same to be sold
at any broker's board or at public or private sale, in one or more sales or
lots, at such price as Pledgee may deem best, and for cash or on credit or for
future delivery, without assumption of any credit risk, and the purchaser of
any or all of the Collateral so sold shall thereafter hold the same absolutely,
free from any claim, encumbrance or right of any kind whatsoever. Unless any
of the Collateral threatens to decline
<PAGE> 6
- 6 -
speedily in value or is or becomes of a type sold on a recognized market,
Pledgee will give Pledgor reasonable notice of the time and place of any public
sale of the Collateral, or of the time after which any private sale or other
intended disposition is to be made. Any sale of any of the Collateral
conducted in conformity with the selling restrictions applicable to the Pledgor
pursuant to Article 3 of the Master Agreement or the reasonable commercial
practices of banks, commercial finance companies, insurance companies or other
financial institutions disposing of property similar to such Collateral, shall
be deemed to be commercially reasonable. Notwithstanding any provision to the
contrary contained in this Agreement, any requirements of reasonable notice
shall be met if such notice is deposited in the United States mail, addressed
to Pledgor as provided in Paragraph 16 hereof, at least 10 days before the time
of the sale or disposition. Any other requirement of notice, demand or
advertisement for sale is, to the extent permitted by law, waived. Pledgee may,
in Pledgee's own name, or in the name of a designee or nominee, buy at any
public sale of any of the Collateral and, if permitted by applicable law, buy
at any private sale of any of the Collateral. Pledgor will pay to Pledgee all
expenses (including court costs and attorney fees and expenses, of, or incident
to, the enforcement of any of the provisions of this Agreement. Since federal
and state securities laws may impose certain restrictions on the method by
which a sale of any or all of the Collateral may be effected after the
occurrence of an Event of Default, Pledgor agrees that upon the occurrence or
existence of an Event of Default, Pledgee may, from time to time, attempt to
sell all or any part of the Collateral by means of a private placement,
restricting the bidder and prospective purchasers to those who will represent
and agree that they are purchasing for investment only and not for
distribution, and Pledgor further agrees that such private sales may be at
prices and on terms less favourable than those which may be available in a
public sale. In so doing, Pledgee may solicit offers to buy the Collateral, or
any part of it, for cash, from a limited number of investors deemed by Pledgee,
in Pledgee's reasonable judgment, to be financially responsible parties who
might be interested in purchasing such Collateral, and if Pledgee solicits such
offers from not less than four such investors, then the acceptance by Pledgee
of the highest offer obtained therefrom shall be deemed to be a commercially
reasonable method of disposition of such Collateral notwithstanding any other
provision of this Subparagraph 10(b).
(c) The Collateral is subject to release to the Pledgor in
accordance with the provisions of Article 3 of the Master Agreement.
(d) Notwithstanding anything in this Agreement to the contrary, if
after the occurrence of an Event of Default, the Pledgee elects to exercise any
of its rights or remedies hereunder, the Pledgee agrees that it shall exercise
any such right or remedy in the following order (i) first, the Pledgee shall
(unless stayed or prevented from doing so by law or court order) sell the
securities held under this Agreement; (ii) second, the Pledgee shall (unless
stayed or prevented from doing so by law or court order) sell the securities
held under the Amended Banks Pledge (as
<PAGE> 7
- 7 -
defined in the Master Agreement); (iii) third, the Pledgee shall (unless stayed
or prevented from doing so by law or court order) exercise any right of set-off
pursuant to Section 10.4 of the Banks Loan Agreements and (iv) fourth, but only
to the extent of any remaining deficiency, the Pledgee shall make a demand for
payment pursuant to the Limited Guarantee.
11. Term. This Agreement shall remain in full force and effect
until all of the Obligations have been fully paid and satisfied, and all of the
Loan Agreements have been terminated. Upon termination of this Agreement as
provided in this Paragraph 11. Pledgee agrees to return any Collateral then in
its possession to Pledgor. Notwithstanding anything in this Agreement to the
contrary, this Agreement will terminate upon the release of all of the
Collateral in accordance with Article 3 of the Master Agreement.
12. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of Pledgor, Pledgee and their respective successors,
heirs and assigns. Pledgor's successors, heirs and assigns shall include,
without limitation, a receiver, trustee or debtor in possession of or for
Pledgor.
13. Governing Law and Consent to Jurisdiction; Waiver of Jury
Trial.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
(b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE,
EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY AGREE TO THE EXCLUSIVE JURISDICTION
OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW
YORK SITTING IN THE CITY AND COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED
ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN,
AND AGREE THAT ANY DISPUTE CONCERNING THE RELATIONSHIP BETWEEN THE PLEDGOR AND
THE PLEDGEE OR THE CONDUCT OF ANY PARTY HERETO IN CONNECTION WITH THIS
AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
NOTWITHSTANDING THE FOREGOING, THE PLEDGEE SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST THE PLEDGOR OR HIS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION THE PLEDGEE DEEMS NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THIS AGREEMENT.
(c) THE PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON HIM AND CONSENTS THAT ALL SUCH
<PAGE> 8
- 8 -
SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO HIM AT HIS ADDRESS SET FORTH IN SECTION 6.1 OF THE MASTER AGREEMENT
AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE
SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS OR, AT THE PLEDGEE'S
OPTION, BY SERVICE UPON THE PLEDGOR'S NEW YORK COUNSEL AT ITS ADDRESS SET FORTH
IN SECTION 6.1 OF THE MASTER AGREEMENT, WHICH COUNSEL THE PLEDGOR HEREBY
IRREVOCABLY APPOINTS AS HIS AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF
PROCESS WITHIN THE STATE OF NEW YORK. THE PLEDGOR HEREBY CONSENTS TO SERVICE
OF PROCESS AS AFORESAID.
(d) EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER
THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR (II) IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT
TO THIS AGREEMENT, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. THE PLEDGOR AND THE PLEDGEE
EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF THEM MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
(e) NOTHING IN THIS PARAGRAPH 13 SHALL AFFECT THE RIGHTS OF THE
PLEDGEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
THE RIGHTS OF THE PLEDGEE TO BRING ANY ACTION OR PROCEEDING AGAINST THE PLEDGOR
OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
(f) EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS
PARAGRAPH 13 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
14. Further Assurances. Pledgor agrees that Pledgor will
cooperate with Pledgee and will execute and deliver, or cause to be executed
and delivered, all such other stock powers, proxies, instruments, documents and
endorsements, and will take all such other action, including, without
limitation, the filing of UCC financing statements, as Pledgee may reasonably
request from time to time in order
<PAGE> 9
- 9 -
to carry out the provisions and purposes of this Agreement. In furtherance,
and not in limitation of the foregoing, Pledgor agrees to take all action
necessary or that Pledgee may reasonably request to maintain the continued
perfection of the security interests granted under this Agreement.
15. Pledgee's Duty of Care. Pledgee shall have no duty with
respect to any Collateral other than as set forth in the Loan Agreements.
Without limiting the generality of the foregoing, Pledgee shall be under no
obligation to take any steps necessary to preserve rights in any of the
Collateral against any other parties but may do so at Pledgee's option, but all
expenses incurred in connection therewith shall be for the sole account of
Pledgor.
16. Notices. Any notice, request or other communication required
or desired to be served, given or delivered under this Agreement shall be in
writing and shall be given in the manner and to the addresses set forth in
section 6.1 of the Master Agreement.
17. Paragraph Headings. The paragraph headings in this Agreement
are for convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions of this Agreement.
18. Counterparts; Facsimile Signature. This Agreement may be
executed by the parties hereto in separate counterparts each of which when so
executed and delivered shall be an original, and all such counterparts shall
together constitute one and the same instrument. Furthermore, this Agreement
may be executed by faxed signature with the same effect as a manually signed
original signature.
19. Confidentiality. This Agreement shall be subject to the
provisions of the Master Agreement regarding confidentiality.
20. Non- Recourse. Notwithstanding anything contained in (i) this
Agreement or the Loan Agreements, (ii) any agreement, document, instrument or
certificate entered into in connection herewith or therewith, other than the
Master Agreement, (collectively, the "Loan Documents") or (iii) otherwise, the
Pledgor shall not be personally liable for the repayment of any of the
principal of, or interest on, the loans under the Loan Agreements, the payment
of any fees or expenses of the Pledgee hereunder or under any Loan Documents or
the performance of, or failure to perform, any other obligation of the Pledgor
under this Agreement or under any other Loan Document, and the sole and
exclusive recourse of the Pledgee shall be to the Security and the Borrower
shall have no liability for any deficiency which may exist after foreclosure on
the Security; provided, however, that there shall be no limit to the personal
liability of the Pledgor in the case of fraud.
<PAGE> 10
- 10 -
IN WITNESS WHEREOF, Pledgor and Pledgee have executed this Agreement
as of the 20th day of August, 1996.
/s/ Jacques Benquesus
-------------------------
JACQUES BENQUESUS
COUTTS & CO AG, NEW YORK
BRANCH
By /s/ Peter Cawdron
-----------------------
Name:
Title:
<PAGE> 11
Schedule 1
to
BANKS PURCHASED SHARE PLEDGE
Stock
<TABLE>
<CAPTION>
Issuer Shares
------ ------
<S> <C>
Gaming Lottery Corporation 5,000,000 common shares
Warp 10 Technologies Inc. 834,231 common shares
</TABLE>
<PAGE> 12
Exhibit 1
to
BANKS PURCHASED SHARE PLEDGE
FORM OF STOCK TRANSFER POWER OF ATTORNEY
FOR VALUE RECEIVED, _________________________ hereby sells, assigns and
transfers unto______________________________________________________________:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
standing in my name on the books of said corporation[s] represented by
certificate[s] ______________________________________________________________
_____________________________________________________________________, and do
hereby irrevocably constitute and appoint____________________________________
attorney to transfer the said stock on the books of said corporation[s] with
full power of substitution in the premises.
DATED this ______ day of __________________, ______.
In the presence of
- ------------------------------------- ---------------------------------
[PLEDGOR]
<PAGE> 1
AMENDED BANKS PLEDGE
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as
of August 20, 1996, by JACQUES BENQUESUS, an individual resident in the City of
Jerusalem, Israel (the "Pledgor"), in favour of COUTTS & CO AG, NEW YORK
BRANCH, a Swiss bank licensed to conduct a banking business in the State of New
York (the "Pledgee").
Preliminary Statement.
A. Simultaneous with the execution and delivery of this
Agreement, Pledgee is entering into (i) those certain Loan Agreements of even
date herewith with Jacques Benquesus (the "Banks Loan Agreements"), (ii) that
certain Loan Agreement of even date herewith with Larry H. Weltman (the
"Weltman Loan Agreement") and (iii) that certain Loan Agreement of even date
herewith with John M. Wiseman (the "Wiseman Loan Agreement" and together with
the Banks Loan Agreements and the Weltman Loan Agreement, the "Loan
Agreements"), pursuant to which the Pledgee may hereafter advance monies and
make other extensions of credit to each of Jacques Benquesus, Larry H. Weltman
and John M. Wiseman (collectively, the "Borrowers") under the respective Loan
Agreements.
B. Simultaneous with the execution and delivery of this
Agreement, Jacques Benquesus is entering into that certain limited guarantee of
even date herewith with Pledgee (the "Limited Guarantee") whereby Jacques
Benquesus guarantees the obligations of each of the Borrowers under the Loan
Agreements to the extent set forth therein.
C. Pledgor is the owner of certain shares of the issued and
outstanding capital stock of Gaming Lottery Corporation ("Gaming"), The Instant
Publisher Inc. ("TIPI"), and Warp 10 Technologies Inc. (each a "Company" and
collectively, the "Companies"), in the amounts listed on Schedule 1 hereto (the
securities listed on Schedule 1 are hereinafter referred to as the "Stock").
D. The Pledgee has required as a condition to the Pledgee's
advancement of funds and making of other extensions of credit under the Loan
Agreements that Pledgor execute and deliver to Pledgee this Agreement in order
to secure the due and punctual performance of and compliance by each of the
Borrowers with all obligations, covenants, warranties, undertakings and
conditions
<PAGE> 2
- 2 -
contained in or arising under each of the Loan Agreements including but not
limited to, the full and punctual payment by the Borrowers, when due, whether
at the stated due date, by acceleration or otherwise, of any and all,
obligations, liabilities, indebtedness and other amounts of every kind arising
under the Loan Agreements (whether principal, interest (after as well as before
default), fees, premiums or penalties), all amounts in respect of indemnities
provided for in the Loan Agreements, and all damages (whether provided for in
the Loan Agreements or otherwise permitted by law) in respect of a failure or
refusal by any Borrower to make any such payment howsoever created, arising or
evidenced, voluntary or involuntary, whether direct or indirect, absolute or
contingent, now or hereafter existing or owing to the Pledgee, and Jacques
Benquesus' obligations under the Limited Guarantee (all of the foregoing
obligations and undertakings are collectively referred to herein as the
"Obligations").
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit (including, without
limitation, any loan or advance by renewal, refinancing or extension of the
Loan Agreements or otherwise) heretofore, now or hereafter made to or for the
benefit of the Borrowers by Pledgee, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, the parties hereto agree as follows:
1. Pledge. Pledgor hereby delivers, other than in respect of
1,916,918 common shares of Gaming and 12,334,974 common shares of TIPI
presently held by the Pledgee as security for the Obligations of the Pledgor,
pledges and grants security interests to Pledgee in: (a) the Stock accompanied
by stock transfer powers of attorney in respect of all of the Stock ("Powers")
duly executed in blank, in the form attached hereto as Exhibit 1 and made a
part hereof; (b) all dividends and distributions (whether in cash, stock or
otherwise) paid or payable on or in respect of the Stock or any of it,
including without limitation (i) all dividends and other distributions paid or
payable in cash in respect of the Stock or any of it in connection with a
partial or total liquidation or dissolution or in connection with a reduction
of capital, capital surplus or paid-in surplus and (ii) cash paid, payable or
otherwise distributed in respect of, or in redemption of, or in exchange for,
any Stock; (c) the proceeds of disposition of any of the foregoing; (d) every
balance of every account which the Pledgor has or shall at any time have with
the Pledgee and all moneys, instruments, chattel paper, documents, accounts,
contract rights, goods, credits, choses in action, claims, demands and without
limitation whatsoever, property of every kind and description including
additions, accessions and substitutions which have been or at any time shall be
delivered to or be in transit to or from the Pledgee or any of its agents or
correspondents or other third party or parties acting on the Pledgee's behalf,
by, or for, or for account of, or subject to the order of, the Pledgor, which
has come or shall come into the possession, custody or control of the Pledgee
in any way or for any purpose whatsoever, whether for
<PAGE> 3
- 3 -
safekeeping or otherwise and whether the Pledgee shall accept them for the
purposes for which they are delivered to it or not; and (e) the property and
interests in property described in Paragraphs 2, 6 and 7 hereof and the
proceeds thereof (items (a), (b), (c), (d) and (e) being hereinafter
collectively referred to as the "Collateral"), as security for the payment and
performance of the Obligations. Pledgor hereby appoints Pledgee as Pledgor's
attorney-in-fact to arrange, at Pledgee's option, for the transfer of the
Collateral to the name of Pledgee or to the name of Pledgee's nominee and to
this end the Pledgor hereby covenants to execute any further endorsements,
transfers, conveyances, powers of attorney or other documents that the Pledgee
may from time to time reasonably request as may be required to effect transfer
of the Collateral or any of it.
2. After-Acquired Collateral. In the event that the Pledgor
receives or becomes entitled to receive, after the date hereof, property and
interests that constitute Collateral, then any such Collateral shall be
received in trust for the benefit of the Pledgee, shall be segregated from
other property of the Pledgor and shall be forthwith delivered over to the
Pledgee as Collateral in the same form as so received by the Pledgor (with any
necessary endorsements or stock powers required to provide for its transfer in
the manner set forth in Paragraph 1 hereof).
3. Voting Rights. During the term of this Agreement, and so long
as there shall not occur or exist an Event of Default under any of the Loan
Agreements and as defined in each of the Loan Agreements (hereinafter an "Event
of Default"), Pledgor shall have the right to vote the Stock on all corporate
questions for all purposes not inconsistent with the terms of this Agreement
and any of the Loan Agreements. Pledgee shall be entitled to exercise all
voting powers pertaining to the Collateral from and after the occurrence of an
Event of Default. Pledgee shall execute and deliver (or cause to be executed
and delivered) to the Pledgor all such proxies and other instruments as the
Pledgor may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and other rights which it is entitled to exercise pursuant
to this Paragraph 3.
4. Representations, Warranties and Covenants. Pledgor warrants
and represents that (a) Pledgor is the beneficial owner of the Banks Pledged
Shares (as such term is defined in the Master Agreement between the Pledgee and
the Pledgor dated August 19, 1996 (the "Master Agreement")); (b) the Banks
Pledged Shares are not subject to any mortgage, lien, pledge, charge, security
interest or other encumbrance other than the Security (as such term is defined
in the Banks Loan Agreements); (c) that Pledgor has full power and authority to
enter into this Agreement; (d) there are no restrictions upon the voting rights
associated with any of the Banks Pledged Shares or upon the transfer of any of
the Banks Pledged Shares other than those which may appear on the face of the
certificates evidencing any of such shares or those which may be imposed by
applicable securities laws; (e) there are no warrants or other rights or
options issued or outstanding in connection with
<PAGE> 4
- 4 -
any of the Banks Pledged Shares; (f) Pledgor has the right to vote, pledge and
grant a security interest in or otherwise transfer the Banks Pledged Shares
free of any liens, claims or encumbrances; and (g) the Powers are duly executed
and give Pledgee the authority such Powers purport to confer.
The Pledgor hereby covenants not to undertake or suffer any act or
omit to take any act, which could create or result in, any mortgage, lien,
pledge, charge, security interest or other encumbrance on, against or with
respect to, any part of the Banks Pledged Shares, except the Security.
5. Subsequent Changes Affecting Collateral. Pledgor represents
to Pledgee that Pledgor has made Pledgor's own arrangements for keeping
informed of changes or potential changes affecting the Collateral (including,
but not limited to, rights to convert, rights to subscribe, payment of
dividends, reorganization or other exchanges, tender offers and voting rights),
and Pledgor agrees that Pledgee shall have no responsibility or liability for
informing Pledgor of any such changes or potential changes or for taking any
action or omitting to take any action with respect thereto. Pledgee may at any
time, transfer or register the Collateral or any part of the Collateral into
Pledgee's or Pledgee's nominee's name with or without any indication that such
Collateral is subject to the security interest under this Agreement and without
notice to the Pledgor, which notice is hereby expressly waived to the fullest
extent permitted by applicable law.
6. Stock Adjustments. In the event that during the term of this
Agreement any stock dividend, reclassification, readjustment or other change is
declared or made in the capital structure of any Company (including, without
limitation, the issuance of additional shares of preferred or common stock of
any such Company of whatever class to the Pledgor in respect of the Collateral
for no further consideration), or any option included within the Stock is
exercised, or both, then all new, substituted and additional shares, or other
securities, issued to the Pledgor by reason of any such change or exercise
shall be delivered to and held by Pledgee under the terms of this Agreement in
the same manner as the Collateral originally pledged under this Agreement.
7. Warrants, Options and Other Rights. In the event that during
the term of this Agreement subscription warrants or any other rights or options
shall be issued in connection with any of the Collateral, then such warrants,
rights and options shall be immediately assigned to Pledgee and all new stock,
bonds or other securities so acquired by Pledgor shall be immediately assigned
to Pledgee to be held under the terms of this Agreement in the same manner as
the Collateral originally pledged hereunder.
8. Registration. If at any time the Pledgee wishes to register
under or otherwise comply in any way with the Securities Act of 1933, as
amended (the
<PAGE> 5
- 5 -
"Securities Act") or any similar federal or state law, or if such registration
or compliance is required with respect to the securities included in any of the
Collateral prior to the sale thereof by Pledgee, Pledgor will cooperate with
the Pledgee to cause such registration to be effectively made (it being
understood and agreed that such cooperation shall not require the Pledgor to
execute and/or deliver any registration statement with respect to the
Collateral), at no expense to Pledgor, and to continue such registration
effective for such time as may be necessary in the opinion of Pledgee. If
Pledgee shall at any time determine to transfer or register the Collateral (or
any part thereof) in its name in order to facilitate any registration under the
Securities Act, Pledgor and Pledgee hereby agree that such action will not
require the Pledgee to make any adjustment to Pledgor's account and no such
adjustment shall be made unless and until the Collateral (or any part thereof)
is sold pursuant to such registration statement or otherwise to any third
party. Upon or at any time after the occurrence of an Event of Default, should
Pledgee determine that, prior to any public offering of any securities
contained in any of the Collateral, such securities should be registered under
the Securities Act and/or registered or qualified under any other federal or
state law, and that such registration and/or qualification is not practical,
then Pledgor agrees that it will be commercially reasonable if a private sale,
upon at least 10 days' prior notice to Pledgor, is arranged so as to avoid a
public offering even though the sales price established and/or obtained may be
substantially less than prices which would be quoted for such security on any
market or exchange.
9. Waivers; Subrogation. The Pledgor irrevocably agrees that
it will not bring any claims against the Borrowers to which the Pledgor is or
would at any time be otherwise entitled by virtue of its obligations under this
Agreement, including, without limitation, any right of subrogation (whether
contractual, under Section 509 of the U.S. Bankruptcy Code or otherwise) and
all contractual, statutory or common law rights of reimbursement, contribution,
or indemnity from the Borrowers which may otherwise have arisen in connection
with this Agreement, until such time as all of the Obligations have been
satisfied in full and this Agreement shall have terminated in accordance with
its terms. The Pledgor waives presentment and demand for payment of any of the
Obligations, protest and notice of dishonour or default with respect to any or
all of the Obligations, and all other notices to which Pledgor might otherwise
be entitled, except as otherwise expressly provided in this Agreement or any of
the Loan Agreements.
10. Default. (a) Upon the occurrence or existence of
an Event of Default, Pledgee shall have, in addition to any other rights given
by law or the rights given under this Agreement or the Loan Agreements, all of
the rights and remedies with respect to the Collateral of a secured party under
the Uniform Commercial Code.
(b) In addition, with respect to the Collateral, or any part of the
<PAGE> 6
- 6 -
Collateral, which shall then be in or shall thereafter come into the possession
or custody of Pledgee, Pledgee may sell or cause the same to be sold at any
broker's board or at public or private sale, in one or more sales or lots, at
such price as Pledgee may deem best, and for cash or on credit or for future
delivery, without assumption of any credit risk, and the purchaser of any or
all of the Collateral so sold shall thereafter hold the same absolutely, free
from any claim, encumbrance or right of any kind whatsoever. Unless any of the
Collateral threatens to decline speedily in value or is or becomes of a type
sold on a recognized market, Pledgee will give Pledgor reasonable notice of the
time and place of any public sale of the Collateral, or of the time after which
any private sale or other intended disposition is to be made. Any sale of any
of the Collateral conducted in conformity with the selling restrictions
applicable to the Pledgor pursuant to Article 3 of the Master Agreement or the
reasonable commercial practices of banks, commercial finance companies,
insurance companies or other financial institutions disposing of property
similar to such Collateral, shall be deemed to be commercially reasonable.
Notwithstanding any provision to the contrary contained in this Agreement, any
requirements of reasonable notice shall be met if such notice is deposited in
the United States mail, addressed to Pledgor as provided in Paragraph 16
hereof, at least 10 days before the time of the sale or disposition. Any other
requirement of notice, demand or advertisement for sale is, to the extent
permitted by law, waived. Pledgee may, in Pledgee's own name, or in the name of
a designee or nominee, buy at any public sale of any of the Collateral and, if
permitted by applicable law, buy at any private sale of any of the Collateral.
Pledgor will pay to Pledgee all expenses (including court costs and attorney
fees and expenses) of, or incident to, the enforcement of any of the provisions
of this Agreement. Since federal and state securities laws may impose certain
restrictions on the method by which a sale of any or all of the Collateral may
be effected after the occurrence of an Event of Default, Pledgor agrees that
upon the occurrence or existence of an Event of Default, Pledgee may, from time
to time, attempt to sell all or any part of the Collateral by means of a
private placement, restricting the bidder and prospective purchasers to those
who will represent and agree that they are purchasing for investment only and
not for distribution, and Pledgor further agrees that such private sales may be
at prices and on terms less favourable than those which may be available in a
public sale. In so doing, Pledgee may solicit offers to buy the Collateral, or
any part of it, for cash, from a limited number of investors deemed by Pledgee,
in Pledgee's reasonable judgment, to be financially responsible parties who
might be interested in purchasing such Collateral, and if Pledgee solicits such
offers from not less than four such investors, then the acceptance by Pledgee
of the highest offer obtained therefrom shall be deemed to be a commercially
reasonable method of disposition of such Collateral notwithstanding any other
provision of this Subparagraph 10(b).
(c) The Collateral is subject to release to the Pledgor in
accordance with the provisions of Article 3 of the Master Agreement.
<PAGE> 7
- 7 -
(d) Notwithstanding anything in this Agreement to the contrary, if
after the occurrence of an Event of Default, the Pledgee elects to exercise any
of its rights or remedies hereunder, the Pledgee agrees that it shall exercise
any such right or remedy in the following order (i) first, the Pledgee shall
(unless stayed or prevented from doing so by law or court order) sell the
securities held under the Banks Purchased Share Pledge (as defined in the
Master Agreement); (ii) second, the Pledgee shall (unless stayed or prevented
from doing so by law or court order) sell the securities held under this
Agreement; (iii) third, the Pledgee shall (unless stayed or prevented from
doing so by law or court order) exercise any right of set-off pursuant to
Section 10.4 of the Banks Loan Agreements and (iv) fourth, but only to the
extent of any remaining deficiency, the Pledgee shall make a demand for payment
pursuant to the Limited Guarantee.
11. Term. This Agreement shall remain in full force and effect
until all of the Obligations have been fully paid and satisfied, and all of the
Loan Agreements have been terminated. Upon termination of this Agreement as
provided in this Paragraph 11, Pledgee agrees to return any Collateral then in
its possession to Pledgor. Notwithstanding anything in this Agreement to the
contrary, this Agreement will terminate upon the release of all of the
Collateral in accordance with Article 3 of the Master Agreement.
12. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of Pledgor, Pledgee and their respective successors,
heirs and assigns. Pledgor's successors, heirs and assigns shall include,
without limitation, a receiver, trustee or debtor in possession of or for
Pledgor.
13. Governing Law and Consent to Jurisdiction; Waiver of Jury
Trial.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
(b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE,
EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY AGREE TO THE EXCLUSIVE JURISDICTION
OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW
YORK SITTING IN THE CITY AND COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED
ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN,
AND AGREE THAT ANY DISPUTE CONCERNING THE RELATIONSHIP BETWEEN THE PLEDGOR AND
THE PLEDGEE OR THE CONDUCT OF ANY PARTY HERETO IN CONNECTION WITH THIS
AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
NOTWITHSTANDING THE FOREGOING, THE PLEDGEE
<PAGE> 8
- 8 -
SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE PLEDGOR OR
HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE PLEDGEE DEEMS
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THIS AGREEMENT.
(c) THE PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO HIM AT HIS ADDRESS SET
FORTH IN SECTION 6.1 OF THE MASTER AGREEMENT AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO
DEPOSITED IN THE U.S. MAILS OR, AT THE PLEDGEE'S OPTION, BY SERVICE UPON THE
PLEDGOR'S NEW YORK COUNSEL AT ITS ADDRESS SET FORTH IN SECTION 6.1 OF THE
MASTER AGREEMENT, WHICH COUNSEL THE PLEDGOR HEREBY IRREVOCABLY APPOINTS AS HIS
AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF NEW
YORK. THE PLEDGOR HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID.
(d) EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER
THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR (II) IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT
TO THIS AGREEMENT, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. THE PLEDGOR AND THE PLEDGEE
EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF THEM MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
(e) NOTHING IN THIS PARAGRAPH 13 SHALL AFFECT THE RIGHTS OF THE
PLEDGEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
THE RIGHTS OF THE PLEDGEE TO BRING ANY ACTION OR PROCEEDING AGAINST THE PLEDGOR
OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
(f) EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS
PARAGRAPH 13
<PAGE> 9
- 9 -
ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
14. Further Assurances. Pledgor agrees that Pledgor will
cooperate with Pledgee and will execute and deliver, or cause to be executed
and delivered, all such other stock powers, proxies, instruments, documents and
endorsements, and will take all such other action, including, without
limitation, the filing of UCC financing statements, as Pledgee may reasonably
request from time to time in order to carry out the provisions and purposes of
this Agreement. In furtherance, and not in limitation of the foregoing,
Pledgor agrees to take all action necessary or that Pledgee may reasonably
request to maintain the continued perfection of the security interests granted
under this Agreement.
15. Pledgee's Duty of Care. Pledgee shall have no duty with
respect to any Collateral other than as set forth in the Loan Agreements.
Without limiting the generality of the foregoing, Pledgee shall be under no
obligation to take any steps necessary to preserve rights in any of the
Collateral against any other parties but may do so at Pledgee's option, but all
expenses incurred in connection therewith shall be for the sole account of
Pledgor.
16. Notices. Any notice, request or other communication required
or desired to be served, given or delivered under this Agreement shall be in
writing and shall be given in the manner and to the addresses set forth in
section 6.1 of the Master Agreement.
17. Paragraph Headings. The paragraph headings in this Agreement
are for convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions of this Agreement.
18. Counterparts; Facsimile Signature. This Agreement may be
executed by the parties hereto in separate counterparts each of which when so
executed and delivered shall be an original, and all such counterparts shall
together constitute one and the same instrument. Furthermore, this Agreement
may be executed by faxed signature with the same effect as a manually signed
original signature.
19. Confidentiality. This Agreement shall be subject to the
provisions of the Master Agreement regarding confidentiality.
20. Limited Recourse. Notwithstanding anything contained in (i)
this Agreement or the Loan Agreements, (ii) any agreement, document, instrument
or certificate entered into in connection herewith or therewith, other than the
Master Agreement, (collectively, the "Loan Documents") or (iii) otherwise, the
Pledgor shall only be personally liable to the extent of the Guarantee Limit
(as such term is defined in the Limited Guarantee) for the repayment of any of
the principal
<PAGE> 10
- 10 -
of, or interest on, the loans under the Loan Agreements, the payment of any
fees or expenses of the Pledgee hereunder or under any Loan Documents or the
performance of, or failure to perform, any other obligation of the Pledgor
under this Agreement or the Borrowers under any other Loan Document, and the
sole and exclusive recourse of the Pledgee shall be the Security and the
Pledgor shall have no liability, other than under the Limited Guarantee, for
any deficiency which may exist after foreclosure on the Security; provided,
however, that there shall be no limit to the personal liability of the Pledgor
in the case of fraud.
<PAGE> 11
- 11 -
IN WITNESS WHEREOF, Pledgor and Pledgee have executed this Agreement
as of the 20th day of August, 1996.
/s/ Jacques Benquesus
----------------------------------
JACQUES BENQUESUS
COUTTS & CO AG, NEW YORK
BRANCH
By /s/ Peter Cawdron
--------------------------------
Name:
Title:
<PAGE> 12
Schedule 1
to
AMENDED BANKS PLEDGE
<TABLE>
<CAPTION>
Issuer Shares
------ ------
<S> <C>
Gaming 4,400,000 common shares
TIPI 15,000,000 common shares
Warp 10 1,000,000 common shares
</TABLE>
<PAGE> 13
Exhibit 1
to
AMENDED BANKS PLEDGE
FORM OF STOCK TRANSFER POWER OF ATTORNEY
FOR VALUE RECEIVED,_________________________________ hereby sells, assigns and
transfers unto________________________________________________________________:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
standing in my name on the books of said corporation[s] represented by
certificate[s] ________________________________________________________________
_______________________________________________________________________, and do
hereby irrevocably constitute and appoint______________________________________
attorney to transfer the said stock on the books of said corporation[s] with
full power of substitution in the premises.
DATED this ______ day of __________________, ______.
In the presence of
- --------------------------------- --------------------------------
[PLEDGOR]
<PAGE> 1
COMP/BANKS/GAMING
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made this 20th day of August, 1996
BETWEEN:
JACQUES BENQUESUS of the City of Jerusalem, Israel
(the "Purchaser")
- and -
COMPANIA DI INVESTIMENTO ANTILLIANA S.A. a corporation governed by the
laws of the British Virgin Islands (the "Owner"), by Coutts & Co AG,
New York Branch, pursuant to the authority granted to it by the Owner
under that certain General Loan and Collateral Agreement executed by
the Owner dated January 10, 1995 (the "Loan Agreement")
WHEREAS, the Owner is the beneficial owner of 331,138 common shares
(the Shares") of Gaming Lottery Corporation (the "Company");
AND WHEREAS, the Owner has pledged the Shares to Coutts, as security
for a loan (the "Loan") made by Coutts to the Owner to finance the acquisition
of the Shares by the Owner pursuant to the Loan Agreement;
AND WHEREAS, the Loan Agreement provides, among other things, that in
the event of a default thereunder, Coutts may sell, or resell in one or more
sales, all or any portion of the property ("Collateral") pledged to it as
security for the obligations of the Owner under the Loan Agreement, at any
broker's board or public or private sale;
AND WHEREAS, the Loan Agreement further provides that Coutts may at
any time, whenever it deems necessary or desirable, in its own name or in the
name of the Owner, endorse, assign, convey and transfer any and all of the
Collateral;
AND WHEREAS, the Shares form part of the Collateral;
AND WHEREAS, the Owner is in default of its obligations under the Loan
Agreement;
<PAGE> 2
- 2 -
AND WHEREAS, the Purchaser and Coutts have entered into the Banks
Master Agreement dated August 19, 1996 (hereinafter the "Master Agreement")
pursuant to which the Purchaser has agreed to enter into this Agreement to
purchase the Shares, Coutts has agreed to loan to the Purchaser the amount to
be paid as the purchase price in respect of the sale of the Shares hereunder
and Coutts agreed to cause the Owner to enter into this Agreement to sell the
Shares.
NOW THEREFORE the parties agree as follows:
1. PURCHASE AND SALE
The Owner hereby sells, assigns and transfers to the Purchaser and the
Purchaser hereby purchases from the Owner as of the date hereof (the
"Effective Date") all the right, title and interest of the Owner in
and to the Shares for an aggregate purchase price equal to
$1,112,623.60 (the "Purchase Price") and on and subject to the terms
and conditions set forth in this Agreement and the Master Agreement.
2. PAYMENT OF PURCHASE PRICE AND DEEMED DELIVERY OF THE SHARES
(a) Payment of Purchase Price
The Purchase Price shall be satisfied by Coutts crediting an
amount equal to the Purchase Price as a repayment on behalf of
the Owner to the balance outstanding under the Loan on the
Effective Date. If the Purchase Price exceeds the balance
outstanding under the Loan, including principal, interest and
all other amounts owing thereunder, the amount of such excess
shall be paid by Coutts to the Owner as soon as the full
amount of the Loan has been repaid and discharged.
(b) Deemed Delivery of Purchased Shares
On payment of the Purchase Price in the manner set forth in
paragraph (a) above, Coutts shall instruct the transfer agent
for the Company to issue certificates representing the Shares
in the name of the Purchaser. The certificates shall be
retained by Coutts and held as security under the Banks
Purchased Share Pledge (as defined in the Master Agreement)
duly endorsed in blank for transfer or with a stock transfer
power of attorney duly executed by the Purchaser.
<PAGE> 3
- 3 -
3. AGREEMENT TO OPERATE AS CONVEYANCE
This Agreement shall operate as an actual conveyance, transfer,
assignment and setting over of all the right, title and interest of
the Owner in and to the Shares as of the date of this Agreement.
4. GENERAL
(a) Time
Time shall be of the essence of this Agreement.
(b) Governing Law; Choice of Forum, Service of Process; Jury
Trial; Waivers
This Agreement shall be subject to the provisions in the
Master Agreement relating to governing law, choice of forum,
service of process, jury trials and waivers.
(c) Successors and Assigns
This Agreement shall enure to the benefit of and be binding
upon the respective parties hereto and their successors and
permitted assigns.
(d) Currency
All references to money amounts are to United States currency.
(e) Confidentiality
This Agreement shall be subject to the provisions contained in
section 6.5 of the Master Agreement relating to
confidentiality.
<PAGE> 4
- 4 -
IN WITNESS WHEREOF, the Owner and the Purchaser have executed this Agreement by
the signatures of their proper officers duly authorized in that behalf.
BY COUTTS & CO AG, NEW YORK BRANCH, IN
THE NAME OF THE OWNER, PURSUANT TO THE
AUTHORITY GRANTED TO IT IN THE LOAN
AGREEMENT
By: /s/ Peter Cawdron
------------------------------------
/s/ Jacques Benquesus
---------------------------------------
Jacques Benquesus
<PAGE> 1
Silva/Banks/Gaming
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made this 20th day of August, 1996
BETWEEN:
JACQUES BENQUESUS of the City of Jerusalem, Israel
(the "Purchaser")
- and -
SILVA RUN WORLDWIDE LIMITED a corporation governed by the laws of the
British Virgin Islands (the "Owner"), by Coutts & Co AG, New York
Branch, pursuant to the authority granted to it by the Owner under
that certain General Loan and Collateral Agreement executed by the
Owner dated January 11, 1995 (the "Loan Agreement")
WHEREAS, the Owner is the beneficial owner of 3,157,112 common shares
(the Shares") of Gaming Lottery Corporation (the "Company");
AND WHEREAS, the Owner has pledged the Shares to Coutts, as security
for a loan (the "Loan") made by Coutts to the Owner to finance the acquisition
of the Shares by the Owner pursuant to the Loan Agreement;
AND WHEREAS, the Loan Agreement provides, among other things, that in
the event of a default thereunder, Coutts may sell, or resell in one or more
sales, all or any portion of the property ("Collateral") pledged to it as
security for the obligations of the Owner under the Loan Agreement, at any
broker's board or public or private sale;
AND WHEREAS, the Loan Agreement further provides that Coutts may at
any time, whenever it deems necessary or desirable, in its own name or in the
name of the Owner, endorse, assign, convey and transfer any and all of the
Collateral;
AND WHEREAS, the Shares form part of the Collateral;
AND WHEREAS, the Owner is in default of its obligations under the Loan
Agreement;
<PAGE> 2
- 2 -
AND WHEREAS, the Purchaser and Coutts have entered into the Banks
Master Agreement dated August 19, 1996 (hereinafter the "Master Agreement")
pursuant to which the Purchaser has agreed to enter into this Agreement to
purchase the Shares, Coutts has agreed to loan to the Purchaser the amount to
be paid as the purchase price in respect of the sale of the Shares hereunder
and Coutts agreed to cause the Owner to enter into this Agreement to sell the
Shares.
NOW THEREFORE the parties agree as follows:
1. PURCHASE AND SALE
The Owner hereby sells, assigns and transfers to the Purchaser and the
Purchaser hereby purchases from the Owner as of the date hereof (the
"Effective Date") all the right, title and interest of the Owner in
and to the Shares for an aggregate purchase price equal to $10,607,896
(the "Purchase Price") and on and subject to the terms and conditions
set forth in this Agreement and the Master Agreement.
2. PAYMENT OF PURCHASE PRICE AND DEEMED DELIVERY OF THE SHARES
(a) Payment of Purchase Price
The Purchase Price shall be satisfied by Coutts crediting an
amount equal to the Purchase Price as a repayment on behalf of
the Owner to the balance outstanding under the Loan on the
Effective Date. If the Purchase Price exceeds the balance
outstanding under the Loan, including principal, interest and
all other amounts owing thereunder, the amount of such excess
shall be paid by Coutts to the Owner as soon as the full
amount of the Loan has been repaid and discharged.
(b) Deemed Delivery of Purchased Shares
On payment of the Purchase Price in the manner set forth in
paragraph (a) above, Coutts shall instruct the transfer agent
for the Company to issue certificates representing the Shares
in the name of the Purchaser. The certificates shall be
retained by Coutts and held as security under the Banks
Purchased Share Pledge (as defined in the Master Agreement)
duly endorsed in blank for transfer or with a stock transfer
power of attorney duly executed by the Purchaser.
<PAGE> 3
- 3 -
3. AGREEMENT TO OPERATE AS CONVEYANCE
This Agreement shall operate as an actual conveyance, transfer,
assignment and setting over of all the right, title and interest of
the Owner in and to the Shares as of the date of this Agreement.
4. GENERAL
(a) Time
Time shall be of the essence of this Agreement.
(b) Governing Law; Choice of Forum, Service of Process; Jury
Trial; Waivers
This Agreement shall be subject to the provisions in the
Master Agreement relating to governing law, choice of forum,
service of process, jury trials and waivers.
(c) Successors and Assigns
This Agreement shall enure to the benefit of and be binding
upon the respective parties hereto and their successors and
permitted assigns.
(d) Currency
All references to money amounts are to United States currency.
(e) Confidentiality
This Agreement shall be subject to the provisions contained in
section 6.5 of the Master Agreement relating to
confidentiality.
<PAGE> 4
- 4 -
IN WITNESS WHEREOF, the Owner and the Purchaser have executed this Agreement by
the signatures of their proper officers duly authorized in that behalf.
BY COUTTS & CO AG, NEW YORK BRANCH, IN
THE NAME OF THE OWNER, PURSUANT TO THE
AUTHORITY GRANTED TO IT IN THE LOAN
AGREEMENT
By: /s/ Peter Cawdron
------------------------------------
/s/ Jacques Benquesus
---------------------------------------
Jacques Benquesus
<PAGE> 1
Wills/Banks/Gaming
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made this 20th day of August, 1996
BETWEEN:
JACQUES BENQUESUS of the City of Jerusalem, Israel
(the "Purchaser")
- and -
WILLSBORO UNIVERSAL CORPORATION a corporation governed by the laws of
the British Virgin Islands (the "Owner"), by Coutts & Co AG, New York
Branch, pursuant to the authority granted to it by the Owner under
that certain General Loan and Collateral Agreement executed by the
Owner (the "Loan Agreement")
WHEREAS, the Owner is the beneficial owner of 843,285 common shares
(the Shares") of Gaming Lottery Corporation (the "Company");
AND WHEREAS, the Owner has pledged the Shares to Coutts, as security
for a loan (the "Loan") made by Coutts to the Owner to finance the acquisition
of the Shares by the Owner pursuant to the Loan Agreement;
AND WHEREAS, the Loan Agreement provides, among other things, that in
the event of a default thereunder, Coutts may sell, or resell in one or more
sales, all or any portion of the property ("Collateral") pledged to it as
security for the obligations of the Owner under the Loan Agreement, at any
broker's board or public or private sale;
AND WHEREAS, the Loan Agreement further provides that Coutts may at
any time, whenever it deems necessary or desirable, in its own name or in the
name of the Owner, endorse, assign, convey and transfer any and all of the
Collateral;
AND WHEREAS, the Shares form part of the Collateral;
AND WHEREAS, the Owner is in default of its obligations under the Loan
Agreement;
<PAGE> 2
- 2 -
AND WHEREAS, the Purchaser and Coutts have entered into the Banks
Master Agreement dated August 19, 1996 (hereinafter the "Master Agreement")
pursuant to which the Purchaser has agreed to enter into this Agreement to
purchase the Shares, Coutts has agreed to loan to the Purchaser the amount to
be paid as the purchase price in respect of the sale of the Shares hereunder
and Coutts agreed to cause the Owner to enter into this Agreement to sell the
Shares.
NOW THEREFORE the parties agree as follows:
1. PURCHASE AND SALE
The Owner hereby sells, assigns and transfers to the Purchaser and the
Purchaser hereby purchases from the Owner as of the date hereof (the
"Effective Date") all the right, title and interest of the Owner in
and to the Shares for an aggregate purchase price equal to
$2,833,437.60 (the "Purchase Price") and on and subject to the terms
and conditions set forth in this Agreement and the Master Agreement.
2. PAYMENT OF PURCHASE PRICE AND DEEMED DELIVERY OF THE SHARES
(a) Payment of Purchase Price
The Purchase Price shall be satisfied by Coutts crediting an
amount equal to the Purchase Price as a repayment on behalf of
the Owner to the balance outstanding under the Loan on the
Effective Date. If the Purchase Price exceeds the balance
outstanding under the Loan, including principal, interest and
all other amounts owing thereunder, the amount of such excess
shall be paid by Coutts to the Owner as soon as the full
amount of the Loan has been repaid and discharged.
(b) Deemed Delivery of Purchased Shares
On payment of the Purchase Price in the manner set forth in
paragraph (a) above, Coutts shall instruct the transfer agent
for the Company to issue certificates representing the Shares
in the name of the Purchaser. The certificates shall be
retained by Coutts and held as security under the Banks
Purchased Share Pledge (as defined in the Master Agreement)
duly endorsed in blank for transfer or with a stock transfer
power of attorney duly executed by the Purchaser.
<PAGE> 3
- 3 -
3. AGREEMENT TO OPERATE AS CONVEYANCE
This Agreement shall operate as an actual conveyance, transfer,
assignment and setting over of all the right, title and interest of
the Owner in and to the Shares as of the date of this Agreement.
4. GENERAL
(a) Time
Time shall be of the essence of this Agreement.
(b) Governing Law; Choice of Forum, Service of Process; Jury
Trial; Waivers
This Agreement shall be subject to the provisions in the
Master Agreement relating to governing law, choice of forum,
service of process, jury trials and waivers.
(c) Successors and Assigns
This Agreement shall enure to the benefit of and be binding
upon the respective parties hereto and their successors and
permitted assigns.
(d) Currency
All references to money amounts are to United States currency.
(e) Confidentiality
This Agreement shall be subject to the provisions contained
in section 6.5 of the Master Agreement relating to
confidentiality.
<PAGE> 4
- 4 -
IN WITNESS WHEREOF, the Owner and the Purchaser have executed this Agreement by
the signatures of their proper officers duly authorized in that behalf.
BY COUTTS & CO AG, NEW YORK BRANCH, IN
THE NAME OF THE OWNER, PURSUANT TO THE
AUTHORITY GRANTED TO IT IN THE LOAN
AGREEMENT
By: /s/ Peter Cawdron
-----------------------------------
/s/ Jacques Benquesus
---------------------------------------
Jacques Benquesus
<PAGE> 1
Pan/Banks/Gaming
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made this 20th day of August, 1996
BETWEEN:
JACQUES BENQUESUS of the City of Jerusalem, Israel
(the "Purchaser")
- and -
PANOLA WORLDWIDE CORPORATION a corporation governed by the laws of the
British Virgin Islands (the "Owner"), by Coutts & Co AG, New York
Branch, pursuant to the authority granted to it by the Owner under
that certain General Loan and Collateral Agreement executed by the
Owner (the "Loan Agreement")
WHEREAS, the Owner is the beneficial owner of 668,465 common shares
(the Shares") of Gaming Lottery Corporation (the "Company");
AND WHEREAS, the Owner has pledged the Shares to Coutts, as security
for a loan (the "Loan") made by Coutts to the Owner to finance the acquisition
of the Shares by the Owner pursuant to the Loan Agreement;
AND WHEREAS, the Loan Agreement provides, among other things, that in
the event of a default thereunder, Coutts may sell, or resell in one or more
sales, all or any portion of the property ("Collateral") pledged to it as
security for the obligations of the Owner under the Loan Agreement, at any
broker's board or public or private sale;
AND WHEREAS, the Loan Agreement further provides that Coutts may at
any time, whenever it deems necessary or desirable, in its own name or in the
name of the Owner, endorse, assign, convey and transfer any and all of the
Collateral;
AND WHEREAS, the Shares form part of the Collateral;
AND WHEREAS, the Owner is in default of its obligations under the Loan
Agreement;
<PAGE> 2
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AND WHEREAS, the Purchaser and Coutts have entered into the Banks
Master Agreement dated August 19, 1996 (hereinafter the "Master Agreement")
pursuant to which the Purchaser has agreed to enter into this Agreement to
purchase the Shares, Coutts has agreed to loan to the Purchaser the amount to
be paid as the purchase price in respect of the sale of the Shares hereunder
and Coutts agreed to cause the Owner to enter into this Agreement to sell the
Shares.
NOW THEREFORE the parties agree as follows:
1. PURCHASE AND SALE
The Owner hereby sells, assigns and transfers to the Purchaser and the
Purchaser hereby purchases from the Owner as of the date hereof (the
"Effective Date") all the right, title and interest of the Owner in
and to the Shares for an aggregate purchase price equal to
$2,246,042.40 (the "Purchase Price") and on and subject to the terms
and conditions set forth in this Agreement and the Master Agreement.
2. PAYMENT OF PURCHASE PRICE AND DEEMED DELIVERY OF THE SHARES
(a) Payment of Purchase Price
The Purchase Price shall be satisfied by Coutts crediting an
amount equal to the Purchase Price as a repayment on behalf of
the Owner to the balance outstanding under the Loan on the
Effective Date. If the Purchase Price exceeds the balance
outstanding under the Loan, including principal, interest and
all other amounts owing thereunder, the amount of such excess
shall be paid by Coutts to the Owner as soon as the full
amount of the Loan has been repaid and discharged.
(b) Deemed Delivery of Purchased Shares
On payment of the Purchase Price in the manner set forth in
paragraph (a) above, Coutts shall instruct the transfer agent
for the Company to issue certificates representing the Shares
in the name of the Purchaser. The certificates shall be
retained by Coutts and held as security under the Banks
Purchased Share Pledge (as defined in the Master Agreement)
duly endorsed in blank for transfer or with a stock transfer
power of attorney duly executed by the Purchaser.
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3. AGREEMENT TO OPERATE AS CONVEYANCE
This Agreement shall operate as an actual conveyance, transfer,
assignment and setting over of all the right, title and interest of
the Owner in and to the Shares as of the date of this Agreement.
4. GENERAL
(a) Time
Time shall be of the essence of this Agreement.
(b) Governing Law; Choice of Forum, Service of Process; Jury
Trial; Waivers
This Agreement shall be subject to the provisions in the
Master Agreement relating to governing law, choice of forum,
service of process, jury trials and waivers.
(c) Successors and Assigns
This Agreement shall enure to the benefit of and be binding
upon the respective parties hereto and their successors and
permitted assigns.
(d) Currency
All references to money amounts are to United States currency.
(e) Confidentiality
This Agreement shall be subject to the provisions
contained in section 6.5 of the Master Agreement
relating to confidentiality.
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IN WITNESS WHEREOF, the Owner and the Purchaser have executed this Agreement by
the signatures of their proper officers duly authorized in that behalf.
BY COUTTS & CO AG, NEW YORK BRANCH, IN
THE NAME OF THE OWNER, PURSUANT TO THE
AUTHORITY GRANTED TO IT IN THE LOAN
AGREEMENT
By: /s/ Peter Cawdron
------------------------------------
/s/ Jacques Benquesus
---------------------------------------
Jacques Benquesus
<PAGE> 1
LIMITED GUARANTEE
LIMITED GUARANTEE, dated as of August 20, 1996 (the
"Guarantee"), from Jacques Benquesus, an individual residing in the City of
Jerusalem, Israel (the "Guarantor"), to Coutts & Co AG, New York Branch, a Swiss
bank licensed to conduct a banking business by the State of New York, its
successors and assigns (the "Bank").
WHEREAS, the Guarantor has agreed pursuant to an agreement
dated August 19, 1996 between the Guarantor and the Bank (the "Master
Agreement"), to enter into this agreement of limited guarantee with the Bank in
order to induce the Bank to enter into certain loan agreements (the "Loan
Agreements") dated as of the date hereof between the Bank and each of Larry H.
Weltman, John M. Wiseman and the Guarantor (each a "Borrower" and, collectively,
the "Borrowers") for the extension of credit provided for therein (each a
"Guaranteed Loan" and collectively the "Guaranteed Loans") and in consideration
of the Bank agreeing not to effect the sale of certain property of the Guarantor
currently held by the Bank as security for certain indebtedness which is
currently in default;
AND WHEREAS, the Bank is unwilling to enter into the Loan
Agreements or forbear from effecting the sale of the Guarantor's property unless
the Guarantor enters into this Guarantee.
NOW, THEREFORE, in order to induce the Bank to enter into the
Loan Agreements and to extend the Guaranteed Loans and to consummate the
transactions contemplated thereby and for other good and valuable consideration,
the receipt and adequacy of which are hereby mutually acknowledged, the
Guarantor hereby agrees as follows:
1. GUARANTEE:
(a) Subject to Section 3 hereof, the Guarantor unconditionally and
irrevocably guarantees to the Bank, the due and punctual performance of
and compliance by each of the Borrowers with all obligations,
covenants, warranties, undertakings and conditions contained in or
arising under the Loan Agreements including but not limited to, the
full and punctual payment by the Borrowers, when due, whether at the
stated due date, by acceleration or otherwise, of any and all,
obligations, liabilities, indebtedness and other amounts of every kind
arising under the Loan Agreements or in respect of the Guaranteed Loans
(whether principal, interest (after as well as before default) fees,
premiums or penalties), all amounts in respect of indemnities provided
for in the Loan Agreements, and all damages (whether provided for in
the Loan Agreements or otherwise permitted by law) in respect of a
failure or refusal by any Borrower to make any such payment,howsoever
created, arising or evidenced, voluntary or involuntary, whether direct
or indirect, absolute or contingent, now or hereafter existing or owing
<PAGE> 2
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to the Bank (all the foregoing obligations and undertakings are
collectively referred to herein as the "Obligations").
(b) Except as otherwise provided in Section 3 hereof, this Guarantee is
an absolute and unconditional guarantee of performance and payment when
due under the Loan Agreements and not of collection of any indebtedness
contained in or arising under the Loan Agreements. This Guarantee is in
no way conditioned upon any attempt to collect from a Borrower or upon
any other event or contingency except as otherwise provided in Section
3 hereof, and shall be binding upon and enforceable against the
Guarantor without regard to the validity or enforceability of the
Obligations, or of any term thereof. If for any reason any Borrower
shall fail or be unable duly and punctually to pay any amount when due
under a Loan Agreement, the Guarantor will forthwith pay the same
immediately upon demand, subject to Section 3 hereof.
(c) If any Obligation, or any part thereof shall be terminated as a
result of the rejection thereof by any trustee, receiver or agent of a
Borrower or any of his property in any bankruptcy, insolvency or
similar proceeding, the Guarantor's obligations hereunder shall
continue to the same extent as if such Obligation had not been so
rejected. The Guarantor agrees that this Guarantee, up to and including
the full amount of the Guarantee Limit (as defined in Section 3), shall
continue to be effective or be reinstated, as the case may be, if at
any time payment to the Bank of the Obligations or any part thereof is
rescinded or must otherwise be returned by the Bank upon the insolvency
or bankruptcy of a Borrower, or otherwise, as though such payment to
the Bank had not been made (hereinafter referred to as a "Recapture
Event").
(d) The Guarantor shall pay all reasonable costs, expenses and damages
incurred (including, without limitation, attorneys' fees and
disbursements) in connection with the enforcement of the obligations of
the Guarantor under this Guarantee and, subject to Section 3 hereof, in
connection with the enforcement of the Obligations only to the extent
that such costs, expenses and damages are not paid by a Borrower
pursuant to the respective documents pursuant to which the Obligations
were created or otherwise.
2. NATURE OF GUARANTEE: Except as otherwise provided in Section 3 hereof, the
obligations of the Guarantor hereunder shall be continuing and unlimited, shall
not be subject to any counterclaim, set-off, deduction or defence (other than
payment or performance) based upon any claim the Guarantor may have against the
Bank or a Borrower or any other corporation, individual, partnership,
association, organization, trust, trustee, executor, administrator or other
legal representative(each a "Person") and shall remain in full force and effect
without regard to, and shall not be released, discharged or in any way affected
by any circumstance or
<PAGE> 3
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condition (whether or not the Guarantor shall have any knowledge or notice
thereof) whatsoever which might constitute a legal or equitable discharge or
defence including, but not limited to, (a) any express or implied amendment or
modification of or supplement to any of the Loan Agreements or any other
agreement referred to in any thereof, or any other instrument applicable to any
Borrower or to the Obligations, or any part thereof, or any assignment or
transfer of any thereof; (b) any failure on the part of any Borrower to perform
or comply with any of the Loan Agreements or in respect of any of the Guaranteed
Loans, or any other agreement as aforesaid; (c) any waiver, consent, change,
extension, indulgence or other action or any action or inaction under any of the
Loan Agreements or in respect of any of the Guaranteed Loans, or any other
agreement as aforesaid, or this Guarantee, whether or not the Bank, any Borrower
or the Guarantor has notice or knowledge of any of the foregoing; (d) any
bankruptcy, insolvency or similar proceeding with respect to the Guarantor or
any Borrower, or the Guarantor's or the Borrowers' respective properties or
their creditors, or any action taken by any trustee or receiver or by any court
in any such proceeding; (e) any furnishing or acceptance of additional security
or any release or non-perfection of any security (and the Guarantor authorizes
the Bank to furnish, accept or release said security); (f) any limitation on the
liability of any Borrower or any obligations of a Borrower under any of the Loan
Agreements (other than any limitation expressly provided for therein or herein)
or any termination, cancellation, frustration, invalidity or unenforceability,
in whole or in part, of any of the Loan Agreements, or any term of any thereof;
(g) any lien, charge or encumbrance on or affecting the Guarantor's or any of
the Borrowers' respective assets and properties; (h) any act, omission or breach
on the part of the Bank under any of the Loan Agreements, or any other agreement
at any time existing between the Bank and any Borrower or any other law,
governmental regulation or other agreement applicable to the Bank or any
Obligation; (i) any claim as a result of any other dealings among the Bank, the
Guarantor or any Borrower or any of them; (j) the assignment of the Guaranteed
Loans by the Bank to any other Person, or the assignment of this Guarantee by
the Bank to any other Person; or (k) any change in the name of the Bank, any
Borrower or any other Person referred to herein.
The obligations of the Guarantor set forth herein constitute
the full recourse obligations of the Guarantor enforceable against him to the
full extent of all of his assets and properties, subject to the limitation that
in no event shall the Guarantor be required to pay pursuant to this Guarantee
any amount, in the aggregate, in excess of the Guarantee Limit (as defined in
Section 3 hereof).
3. GUARANTEE LIMIT: The Guarantee limit (the "Guarantee Limit") shall be
$10,000,000, which Guarantee Limit shall be subject to reduction as provided in
the immediately succeeding sentence; provided, however, that the Guarantee Limit
shall not apply to and shall in no way limit the obligation of the Guarantor to
pay costs, expenses and damages incurred in connection with the enforcement of
the obligations of the Guarantor under this Guarantee as required by Subsection
1(d) hereof. Notwithstanding anything in this Guarantee or the Security (as
defined in
<PAGE> 4
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the Loan Agreements) to the contrary, (x) subject only to the occurrence of a
Recapture Event, the Guarantee Limit shall be reduced by $1,000,000 for every
$3,000,000 in principal repaid under the Guaranteed Loans (and in this respect,
no partial reductions will be made and no $1,000,000 reduction in the Guarantee
Limit will be made until the $3,000,000 in principal giving rise to such
reduction has been repaid in full), and shall terminate and be of no further
force or effect at such time as at least $30,000,000 in principal amount of the
Guaranteed Loans has been repaid and (y) if after the occurrence of an Event of
Default (as defined in the Loan Agreements), the Bank elects to exercise any of
its rights or remedies to seek payment of the Guaranteed Loans and/or any other
Obligation, the Bank agrees that it shall exercise any such right or remedy in
the following order (i) first, the Bank shall (unless stayed or prevented from
doing so by law or court order) sell or otherwise realize upon the securities
held under the Banks Purchased Share Pledge (as such term is defined in the
Master Agreement); (ii) second, the Bank shall (unless stayed or prevented from
doing so by law or court order) sell or otherwise realize upon the securities
held under the Amended Banks Pledge (as such term is defined in the Master
Agreement); (iii) third the Bank shall (unless stayed or prevented from doing so
by law or court order) exercise any right of set-off as provided in Section 10.4
of the Loan Agreements; and (iv) fourth, but only to the extent of any remaining
deficiency, the Bank shall make a demand for payment pursuant to this Guarantee.
Any sales by the Bank of any portion of the Security will be deemed to have been
made in a commercially reasonable manner satisfactory to the Guarantor if such
sales have been effected within the parameters set forth in Article 3 of the
Master Agreement.
4. WAIVER: The Guarantor unconditionally waives: (a) notice of any of the
matters referred to in Section 2 hereof; (b) all notices which may be required
by statute, rule of law or otherwise to preserve any rights against the
Guarantor hereunder, including, without limitation, notice of the acceptance of
this Guarantee, or the creation, renewal, extension, modification or accrual of
the Obligations or notice of any other matters relating thereto, any
presentment, demand, notice of dishonour, protest, nonpayment of any damages or
other amounts payable under any of the Loan Agreements; (c) any requirement for
the enforcement, assertion or exercise of any right, remedy, power or privilege
under any of the Loan Agreements or in respect of any of the Guaranteed Loans,
including without limitation, diligence in collection or protection of or
realization upon the Obligations or any part thereof or any of the Security; (d)
any requirement of diligence; (e) any requirement to mitigate the damages
resulting from a default by a Borrower under any of the Loan Agreements; (f) the
occurrence of every other condition precedent to which the Guarantor or any
Borrower may otherwise be entitled; and (g) except as otherwise provided in
Section 3 hereof, the right to require the Bank to proceed against any Borrower
or any other Person liable on the Obligations, to proceed against or
exhaust any security held from any Borrower or any other Person, or to pursue
any other remedy in the Bank's power whatsoever, and the Guarantor hereby waives
<PAGE> 5
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the right to have the property of any Borrower first applied to the discharge of
the Obligations.
Subject to Section 3 hereof, the Bank may, at its election,
exercise any right or remedy it may have, including, without limitation, the
right to foreclose upon any such security by judicial or nonjudicial sale,
without affecting or impairing in any way the liability of the Guarantor
hereunder, except to the extent the Obligations have been paid, and the
Guarantor waives any defense arising out of the absence, impairment or loss of
any right of reimbursement, contribution or subrogation or any other right or
remedy of the Guarantor against any of the Borrowers or any such security,
whether resulting from such election by the Bank or otherwise. The Guarantor
waives any defense arising by reason of any disability or other defense of each
of the Borrowers or by reason of the cessation from any cause whatsoever of the
liability, either in whole or in part, of any Borrower to the Bank for the
Obligations.
The Guarantor understands that the Bank's exercise of certain
rights and remedies contained in the Loan Agreements may affect or eliminate the
Guarantor's rights of subrogation against the Borrowers and that the Guarantor
may therefore incur partially or totally nonreimbursable liability hereunder;
nevertheless, the Guarantor hereby authorizes and empowers the Bank, its
successors, endorsees and/or assignees, to exercise in its or their sole
discretion, any rights and remedies, or any combination thereof, which may then
be available, it being the purpose and intent of the Guarantor that his
obligations hereunder shall be absolute, independent and unconditional under any
and all circumstances, except as described in Section 3 hereof.
The Guarantor assumes the responsibility for being and keeping
informed of the financial condition of each of the Borrowers and of all other
circumstances bearing upon the risk of nonpayment of the Obligations and agrees
that the Bank shall not have any duty to advise the Guarantor of information
regarding any condition or circumstance or any change in such condition or
circumstances. The Guarantor acknowledges that the Bank has not made any
representation to the Guarantor concerning the financial condition of the
Borrowers.
5. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR: The Guarantor represents and
warrants to the Bank that:
(a) Enforceable Obligations: No consent of any other Person (including,
without limitation, creditors of the Guarantor), and no authorization
of, notice to, or other act by or in respect of the Guarantor by or
with any governmental authority, agency or instrumentality is required
in connection with the execution, delivery, performance, validity or
enforceability of this Guarantee. This Guarantee has been duly executed
and delivered by the
<PAGE> 6
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Guarantor and constitutes a legal, valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its
terms.
(b) No Legal Bar: The execution, delivery and performance by the
Guarantor of this Guarantee will not violate any provision of any
existing law or regulation applicable to the Guarantor or of any award,
order or decree applicable to the Guarantor of any court, arbitrator or
governmental authority, or of any security issued by the Guarantor or
of any mortgage, indenture, lease, contract or other agreement or
undertaking to which the Guarantor is a party or by which the Guarantor
or any of his properties or assets may be bound.
(c) No Material Litigation: There is no action, suit, proceeding or
investigation at law or in equity by or before any court, governmental
body, agency, commission or other tribunal now pending or, to the best
knowledge of the Guarantor, threatened against or affecting the
Guarantor or any of his property or rights which questions the
enforceability of this Guarantee or which, if adversely determined,
would have a material adverse impact on the financial condition or
business of the Guarantor or, which if adversely determined, could
reasonably be expected to materially impair the ability of the
Guarantor to perform his obligations hereunder, except as disclosed in
Schedule 5(c) hereto.
6. PAYMENT: A payment by the Guarantor to the Bank under this Guarantee shall be
made by transferring the amount thereof in immediately available funds without
set-off or counterclaim; provided that, no such payment shall be deemed a waiver
of any rights the Bank may have. If the Guarantor is required by any applicable
law to make a deduction or withholding for or on account of any tax for any
payment to be made to the Bank under this Guarantee, the Guarantor will pay to
the Bank such additional amount so that the amount actually received by the Bank
equals the full amount the Bank would have received had no such deduction or
withholding been required, provided, however, that in no event shall the
Guarantor be liable to make any payment to the Bank in excess of the then
applicable Guarantee Limit as described in Section 3 hereof.
7. PARTIES: This Guarantee shall inure to the benefit of the Bank and its
successors, assigns or transferees, and shall be binding upon the Guarantor and
his successors and assigns. The Guarantor may not delegate any of his duties
under this Guarantee without the prior written consent of the Bank or any Person
to whom the Bank has assigned this Guarantee. Upon notice to the Guarantor, the
Bank and its successors, assigns and transferees may assign its or their rights
and benefits under this Guarantee to any financial institution.
8. NOTICES: All notices, demands and other communications between the Bank and
the Guarantor under this Guarantee shall be in writing and shall be
<PAGE> 7
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delivered or sent to the address or telecopier number shown below, or to such
other address or telecopier number as either of us may by written notice to the
other have designated for such purpose. Any such notice, demand or other
communication shall not be effective until actually received.
If to the Bank: Coutts & Co AG, New York Branch
65 East 55th Street
New York, NY 10022
Attention: Mr. Mario Economou, Vice President
Telecopier: (212) 303-2929
Telephone: (212) 303-2971
With a copy to the
Bank's New York
counsel: Rogers & Wells
200 Park Avenue
New York, New York 10166-0153
Attention: Mr. Alan M. Christenfeld, Esq.
Telecopier: (212) 878-8375
Telephone: (212) 878-8000
And a copy to the
Bank's Ontario
counsel: Osler, Hoskin & Harcourt
280 Park Avenue - 30W
New York, New York 10017
Attention: Mr. John W. Stevens, Esq.
Telecopier: (212) 867-5802
Telephone: (212) 867-5800
If to the Guarantor: Mr. Jacquese Benquesus
c/o Gaming Lottery Corporation
160 Nashdene Road
Scarborough, Ontario
M1V 4C4
Telecopier: (416) 754-8441
Telephone: (416) 292-5963
<PAGE> 8
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With a copy to the
Guarantor's New York
counsel: Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, NY 10036
Attention: Mr. Jack Jackson, Esq.
Telecopier: (212) 969-2900
Telephone: (212) 969-3000
And a copy to the
Guarantor's Ontario
counsel: Goldman, Spring, Schwartz & Kichler
Suite 700
40 Sheppard Avenue West
North York, Ontario
M2N 6K9
Attention: Mr. Joseph Maierovits, Esq.
Telecopier: (416) 225-4805
Telephone: (416) 225-9400
9. REMEDIES: The Guarantor stipulates that the remedies at law in respect of any
default or threatened default by the Guarantor in the performance of or
compliance with any of the terms of this Guarantee are not and will not be
adequate, and that any of such terms may be specifically enforced by a decree
for specific performance or by an injunction against violation of any such terms
or otherwise.
10. RIGHTS TO DEAL WITH THE BORROWERS: At any time and from time to time,
without terminating, affecting or impairing the validity of this Guarantee or
the obligations of the Guarantor hereunder, the Bank may deal with the
Borrowers, or any of them, in the same manner and as fully and as if this
Guarantee did not exist and shall be entitled, among other things, to grant any
Borrower, without notice or demand and without affecting the Guarantor's
liability hereunder, such extension or extensions of time to perform, renew,
compromise, accelerate or otherwise change the time for payment of or otherwise
change the terms of payment or any part thereof contained in or arising under
any of the Loan Agreements, or to waive any obligation of any Borrower to
perform any act or acts as the Bank may deem advisable.
11. SUBROGATION: The Guarantor irrevocably waives any and all rights to which he
may be entitled, by operation of law or otherwise, upon making any
<PAGE> 9
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payment hereunder to be subrogated to the rights of the payee against the
Borrower with respect to such payment or otherwise to be reimbursed, indemnified
or exonerated by the Borrower in respect thereof.
12. GUARANTOR'S COVENANTS: The Guarantor hereby covenants and agrees that until
the Obligations and all obligations of the Guarantor under this Guarantee have
been paid or discharged in full:
(a) Compliance with Law: The Guarantor shall comply in all material
respects with all applicable laws, rules, regulations and orders of any
governmental authority having jurisdiction over his or such Person's
business, as the case may be, except (i) such noncompliance as could
not materially adversely affect the financial condition or business of
the Guarantor and such Persons, taken as a whole, or (ii) such
noncompliance as is being contested in good faith by appropriate
proceedings.
(b) Payment of Taxes: The Guarantor shall pay and discharge all taxes,
assessments and governmental charges or levies imposed upon him or such
Person or upon his or such Person's income or properties, as the case
may be, prior to the date on which penalties attach thereto, except to
the extent that (i) any such tax, assessment, charge or levy is being
contested in good faith by appropriate proceedings and, in the case of
such Person, adequate reserves therefor have been established by such
Person, as the case may be, or (ii) the failure so to pay or discharge
any such tax, assessment, charge or levy could not materially adversely
affect the financial condition or business of the Guarantor.
13. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC.: All representations,
warranties, covenants and agreements made herein and in statements or
certificates delivered under this Guarantee (collectively, the "Operative
Provisions") shall survive any investigation or inspection made by or on behalf
of the Bank and shall continue in full force and effect until all of the
obligations of the Guarantor under this Guarantee shall be fully performed in
accordance with the terms hereof, and until the payment in full of all sums
payable under each of the Loan Agreements. The Operative Provisions shall
terminate and be of no force or effect at such time as at least $30,000,000 of
the principal amount of the Guaranteed Loans has been repaid; provided, however,
that the Operative Provisions shall continue to be effective or be reinstated,
as the case may be, if, at any time, a Recapture Event shall have occurred and,
as a result thereof, the principal amount of the Guaranteed Loans repaid less
any amounts required to be rescinded or returned by the Bank is less than
$30,000,000.
<PAGE> 10
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14. GOVERNING LAW AND CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL:
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
(b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE,
EACH OF THE GUARANTOR AND THE BANK HEREBY AGREE TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK SITTING IN THE
CITY AND COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED ON
VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION
INSTITUTED THEREIN, AND AGREE THAT ANY DISPUTE CONCERNING THE
RELATIONSHIP BETWEEN THE GUARANTOR AND THE BANK OR THE CONDUCT
OF ANY PARTY HERETO IN CONNECTION WITH THIS GUARANTEE OR
OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
NOTWITHSTANDING THE FOREGOING, THE BANK SHALL HAVE THE RIGHT
TO BRING ANY ACTION OR PROCEEDING AGAINST THE GUARANTOR OR HIS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE BANK
DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THIS
GUARANTEE.
(c) THE GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO HIM AT HIS ADDRESS SET FORTH IN SECTION 8 HEREOF
AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5)
DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS OR, AT THE BANK'S OPTION, BY SERVICE UPON THE
GUARANTOR'S NEW YORK COUNSEL AT ITS ADDRESS SET FORTH IN
SECTION 8 HEREOF, WHICH COUNSEL THE GUARANTOR HEREBY
IRREVOCABLY APPOINTS AS HIS AGENT FOR THE PURPOSE OF ACCEPTING
SERVICE OF PROCESS WITHIN THE STATE OF NEW YORK. THE GUARANTOR
HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID.
(d) EACH OF THE GUARANTOR AND THE BANK HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(I) ARISING UNDER THIS GUARANTEE OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH OR (II) IN ANY WAY CONNECTED WITH OR RELATED
<PAGE> 11
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OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF
THEM IN RESPECT TO THIS GUARANTEE, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE. THE GUARANTOR AND THE BANK EACH
HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY AND THAT ANY OF THEM MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS GUARANTEE WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
(e) NOTHING IN THIS SECTION 14 SHALL AFFECT THE RIGHTS OF THE BANK
TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHTS OF THE BANK TO BRING ANY ACTION OR
PROCEEDING AGAINST THE GUARANTOR OR HIS PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION.
(f) EACH OF THE GUARANTOR AND THE BANK HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SECTION 14 ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
15. MISCELLANEOUS: If any term of this Guarantee or any application thereof
shall be invalid or unenforceable, the remainder of this Guarantee and any other
application of such term shall not be affected thereby. Any term of this
Guarantee may be amended, waived, discharged or terminated only by an instrument
in writing signed by the Guarantor and the Bank. The headings in this Guarantee
are for purposes of reference only and shall not limit or define the meaning
hereof. This Guarantee may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument. This Guarantee may be executed by faxed signature with the same
effect as an originally executed copy.
16. CONFIDENTIALITY: This Guarantee shall be subject to the provisions of the
Master Agreement regarding confidentiality.
<PAGE> 12
- 12 -
IN WITNESS WHEREOF, the undersigned have caused this Guarantee
to be executed and delivered as of the day and year first above written.
/s/ Jacques Benquesus
---------------------------
MR. JACQUES BENQUESUS
Acknowledged and Agreed:
COUTTS & CO AG, NEW YORK BRANCH
By: /s/ Peter Cawdron
-------------------------
Name:
Title:
<PAGE> 1
WELTMAN MASTER AGREEMENT
THIS AGREEMENT made this 19th day of August, 1996
BETWEEN:
COUTTS & CO AG, New York Branch, a Swiss banking institution
("Coutts")
- and -
LARRY H. WELTMAN of the City of Toronto, in the Province of Ontario
("Weltman")
WHEREAS:
A. Coutts has loans (the "Client Loans") outstanding to certain
of its clients in the aggregate amount of approximately $42
million, which loans were made for the purposes of financing
the acquisition from treasury of common shares of Gaming
Lottery Corporation ("Gaming"), The Instant Publisher Inc.
("TIPI") and/or Warp 10 Technologies Inc. ("Warp 10" and
collectively with Gaming and TIPI, the "Companies" and each a
"Company");
B. The Client Loans are now, and have been for some time, in
default and Coutts is permitted under the terms of the
agreements governing the Client Loans to sell the shares of
the Companies which have been pledged to Coutts by the Clients
as security for the Client Loans; and
C. Weltman has entered into this Agreement and certain other
agreements and arrangements contemplated and provided for by
this Agreement in order to acquire 183,020 common shares of
Gaming.
NOW THEREFORE the parties agree as follows;
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS - Whenever used in this Agreement, unless there is
something inconsistent in the subject matter or context, the following words
and terms shall
<PAGE> 2
- 2 -
have the meanings set out below:
"AGREEMENT" means this agreement, including the schedules, and all
instruments supplementing or amending or confirming this Agreement;
"hereof", "hereto", and "hereunder" and similar expressions mean and
refer to this Agreement and not to any particular article or section;
"Article" or "Section" means and refers to the specified article or
section of this Agreement;
"BANKS" means Jacques Benquesus;
"BANKS LOAN AGREEMENTS" has the meaning ascribed thereto in the Banks
Master Agreement;
"BANKS MASTER AGREEMENT" means the master agreement of even date
herewith between Banks and Coutts;
"BAYFRONT" means Bayfront Intervest Limited;
"CLAIMS" means any claim, demand, action, cause of action, damage,
loss, costs, liability or expense, including, without limitation,
reasonable legal, accounting and other professional fees, and all
costs incurred in investigating or pursuing any of the foregoing or
any proceeding relating to any of the foregoing;
"CLIENT LOANS" means the loans made by Coutts to each of the Clients
and includes all amounts outstanding and payable to Coutts thereunder
as at the date of Closing including for principal, interest, fees
owing and other charges as more specifically set out in Schedule A;
"CLIENTS" means Bayfront, Compania, Mariner, Panola, Silva Run and
Willsboro;
"CLOSING" means the completion of the actions, exchanges and
transactions contemplated by Article 2, which shall take place at
10:00 a.m. on August 20, 1996 or such other time as the parties may
agree at the offices of Osler, Hoskin & Harcourt in New York City;
"COMPANIA" means Compania Di Investimento Antilliana S.A.;
"EVENT OF DEFAULT" shall have the meaning ascribed to it in each of
the Banks Loan Agreements, the Weltman Loan Agreement and the Wiseman
Loan Agreement;
"GAMING SHARES" means common shares of Gaming;
<PAGE> 3
- 3 -
"MARINER" means Mariner Reserve Fund Inc.;
"MINIMUM PRICE" means:
(a) at all times that less than $30 million of the New Loan Amount has
been repaid to Coutts, the Minimum Price shall be equal to 80% of the
Open Market Price of the particular Pledged Shares being sold;
(b) after $30 million or more of the New Loan Amount has been repaid,
the Minimum Price shall be equal to 85% of the Open Market Price of
the particular Pledged Shares being sold; and
(c) in the event that the sale of Pledged Shares is to a Related
Party, the Minimum Price shall be equal to the Open Market Price of
the Pledged Shares being sold less an amount equal to the customary
commission which would have been payable had the sale been undertaken
at arms-length on an exchange or quotation system on which such shares
are traded;
"MRS. BANKS" means Biba Benquesus, the wife of Banks;
"NET PROCEEDS" means the full amount of the proceeds received or
receivable on a sale of Pledged Shares pursuant to Article 3 after
deducting any discount or commission payable in respect of such sale;
"NEW LOAN AMOUNT" means the aggregate principal amount outstanding
from time to time and owing to Coutts under any and all of the New
Loans;
"NEW LOANS" means the loans made to Banks by Coutts under the Banks
Loan Agreements, the loan made to Weltman by Coutts under the Weltman
Loan Agreement and the loan made to Wiseman by Coutts under the
Wiseman Loan Agreement;
"OPEN MARKET PRICE" means, in respect of a sale of Pledged Shares, the
highest closing price of the shares of the Company which are the
subject of the sale on any of the NASDAQ Stock Market, Inc., The
Toronto Stock Exchange or The Canadian Dealing Network Inc. (in the
case of The Toronto Stock Exchange or The Canadian Dealing Network
Inc., the closing price shall be determined by taking the actual
closing price, reported in Canadian dollars, and converting such price
to U.S. dollars by reference to the Reuters Canadian dollar/U.S.
dollar exchange rate as reported at 4:00 p.m. (New York time) on the
trading day immediately preceding the date on which such sale is
made);
"OPERATIVE AGREEMENTS" means this Agreement, the Weltman Loan
Agreement, the Weltman Share Purchase Agreement and the Share Pledge
<PAGE> 4
- 4 -
and any and all agreements required to be entered into between Coutts
and Weltman pursuant to this Agreement and the other Operative
Agreements;
"PANOLA" means Panola Worldwide Corporation;
"PLEDGED SHARES" means the Purchased Shares held from time to time by
Coutts as security for the New Loans under the Share Pledge;
"PURCHASED SHARES" means the 183,020 Gaming Shares purchased by
Weltman pursuant to the Weltman Share Purchase Agreement;
"RELATED PARTY" means Mr. Banks, Mrs. Banks, Weltman, Wiseman, any
officer, director or employee of any of the Companies, any "associate"
of any of the foregoing, any "insider" of any of the Companies, any
company "controlling", "controlled" by or under common "control" with
any of the foregoing or any "subsidiary" or "affiliate" of any of the
Companies (terms in quotation marks having the meaning ascribed to
them in the Securities Act (Ontario)) and any other party with whom
Mr. Banks does not deal with at arms length for the purposes of the
Income Tax Act (Canada);
"SECURITY INTEREST" means any mortgage, lien, pledge, charge, security
interest or other encumbrance;
"SHARE PLEDGE" means the pledge agreement to be entered into between
Coutts and Weltman in the form attached hereto as Schedule B in
respect of the pledge of the Purchased Shares;
"SHARE PURCHASE AGREEMENT" means the form of share purchase agreement
attached hereto as Schedule C;
"SILVA RUN" means Silva Run Worldwide Limited;
"TIPI SHARES" means common shares of TIPI;
"WARP 10 SHARES" means common shares of Warp 10;
"WELTMAN LOAN AGREEMENT" means the loan agreement to be entered into
between Weltman and Coutts pursuant to which Coutts will advance funds
to Weltman which Weltman will use to complete the transactions
contemplated in the Weltman Share Purchase Agreement and to pay
certain expenses incurred by Weltman and Coutts in connection with the
preparation of this Agreement and the other documents contemplated
hereby and the consummation of the transactions provided for herein,
in the form attached hereto as Schedule D;
<PAGE> 5
- 5 -
"WELTMAN SHARE PURCHASE AGREEMENT" means a Share Purchase Agreement
to be entered into between Panola and Weltman to effect the sale of
183,020 Gaming Shares to Weltman;
"WILLSBORO" means Willsboro Universal Corporation;
"WISEMAN" means John M. Wiseman;
"WISEMAN LOAN AGREEMENT" means the loan agreement entered into between
Wiseman and Coutts pursuant to the Wiseman Master Agreement;
"WISEMAN MASTER AGREEMENT" means the master agreement of even date
herewith between Wiseman and Coutts; and
"WISEMAN SHARE PURCHASE AGREEMENTS" has the meaning ascribed thereto
in the Wiseman Master Agreement.
1.2 CERTAIN RULES OF INTERPRETATION - In this Agreement:
(a) time is of the essence in the performance of the parties'
respective obligations;
(b) unless otherwise specified, all references to money amounts
are to United States currency;
(c) the descriptive headings of Articles and Sections are inserted
solely for convenience of reference and are not intended as
complete or accurate descriptions of content;
(d) the use of words in the singular or plural, or with a
particular gender, shall not limit the scope or exclude the
application of any provision of this Agreement to such person
or persons or circumstances as the context otherwise permits;
and
(e) whenever a provision of this Agreement requires an approval or
consent by a party to this Agreement and notification of such
approval or consent is not delivered within the applicable
time limit, then, unless otherwise specified, the party to
this agreement whose consent or approval is required shall be
conclusively deemed to have withheld its consent or approval.
1.3 ENTIRE AGREEMENT - This Agreement together with the other Operative
Agreements and the other documents to be delivered pursuant to this Agreement
and the other Operative Agreements, constitute the entire agreement between the
parties or any of them pertaining to the subject matter of this Agreement and
<PAGE> 6
- 6 -
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements among the parties or any of them in
connection with the subject matter of this Agreement except as specifically set
forth in this Agreement and any document delivered pursuant to this Agreement.
No supplement, modification or waiver or termination of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. No waiver
of any of the provisions of this Agreement shall be deemed to or shall
constitute a waiver of any other provisions (whether or not similar) nor shall
such waiver constitute a continuing waiver unless otherwise expressly provided.
To the extent that the provisions of this Agreement conflict with or operate in
a manner contrary to any term or provision of any of the agreements and
documents delivered pursuant to this Agreement, this Agreement shall govern.
1.4 SCHEDULES - The schedules to this Agreement, as listed below, are an
integral part of this Agreement:
<TABLE>
<CAPTION>
Schedule Description
-------- -----------
<S> <C>
Schedule A Client Loan Amounts
Schedule B Share Pledge
Schedule C Share Purchase Agreement
Schedule D Weltman Loan Agreement
</TABLE>
ARTICLE 2
CLOSING
2.1 CLOSING - At the Closing, the parties will take the following actions:
(a) each of Weltman and Coutts shall enter into, execute and
deliver each of the Weltman Loan Agreement and the Share
Pledge and the other agreements and documents required to be
delivered thereunder at the Closing;
(b) Coutts shall cause Panola to enter into, execute and deliver
the Weltman Share Purchase Agreement; and Weltman shall enter
into, execute and deliver the Weltman Share Purchase
Agreement;
(c) subject to the satisfaction of all applicable conditions in
the Weltman Loan Agreement, Coutts shall advance to Weltman
the amount of $634,947.20 under the Weltman Loan Agreement to
fund the acquisition by Weltman of the Purchased Shares and
the payment by Weltman of certain legal expenses incurred by
Weltman and Coutts in
<PAGE> 7
- 7 -
connection with the preparation of this Agreement and the
other documents contemplated hereby and the consummation of
the transactions provided for herein; and Weltman shall direct
Coutts to, and Coutts shall, deposit into the accounts of
Panola the amounts payable to Panola under the Weltman Share
Purchase Agreement and shall deliver the Purchased Shares to
Coutts to be held by Coutts as security pursuant to the Share
Pledge; and
(d) Coutts shall pay to Panola the amount, if any, of the proceeds
from the sale of the Purchased Shares sold by Panola to
Weltman, which exceeds the aggregate of all amounts owing to
Coutts under Panola's Client Loan.
The forgoing actions and deliveries shall be taken and made in the order set
out above. Each of the documents and deliveries contemplated by this Section
shall be deposited in escrow and shall not become effective or be released
until all the actions required by this Section have been taken and the
conditions set out in Section 2.2 have been fulfilled, in each case to the
satisfaction of each of the parties to this Agreement and their counsel.
2.2 CONDITIONS - This Agreement and the agreements, actions, exchanges and
deliveries provided for in Section 2.1 shall be of no legal force or effect
unless and until each of the following conditions shall have been fulfilled:
a) Banks and Coutts shall have taken all of the actions required to be
taken under Section 2.1 of the Banks Master Agreement and each of
Banks and Coutts shall have acknowledged the sufficient performance of
the covenants to be performed by the other pursuant to that section
and the satisfaction and fulfilment of each of the conditions set out
in Section 2.2 of the Banks Master Agreement; and
b) Wiseman and Coutts shall have taken all of the actions required to be
taken under Section 2.1 of the Wiseman Master Agreement and each of
Wiseman and Coutts shall have acknowledged the sufficient performance
of the covenants to be performed by the other pursuant to that section
and the satisfaction and fulfilment of each of the conditions set out
in Section 2.2 of the Wiseman Master Agreement.
2.3 ACKNOWLEDGEMENTS - Each of the parties will acknowledge in writing the
performance of the covenants required to be performed for their benefit on or
before the Closing and the fulfilment of the conditions in Section 2.2
forthwith after such performance and fulfilment has been achieved to the
satisfaction of such party.
<PAGE> 8
- 8 -
ARTICLE 3
RELEASE OF PLEDGED SHARES
3.1 SALE OF SHARES
(a) Weltman shall be permitted, at any time hereafter, to sell any of the
Pledged Shares, and Coutts shall forthwith release and deliver any Pledged
Shares so sold by Weltman free and clear of any Security Interest created by
Coutts upon payment therefor as provided herein and Coutts shall do all things
necessary to ensure that the certificates representing such Pledged Shares are
properly endorsed for transfer in accordance with the directions of Weltman
(provided that such instructions are in accordance with the applicable
provisions of this Agreement and further provided that the full amount of the
Net Proceeds from the sale is applied in repayment of one or more of the New
Loans).
(b) Notwithstanding subsection 3.1(a) Weltman shall be permitted, whenever the
New Loan Amount has been reduced by $40 million, to sell any Pledged Shares and
Coutts shall forthwith release and deliver any Pledged Shares so sold by
Weltman, free and clear of any Security Interest created by Coutts upon payment
therefor as provided herein, provided that fifty per cent of the Net Proceeds
from the sale is applied in repayment of one or more of the New Loans.
(c) No sale of Pledged Shares pursuant to this Article 3 may be effected by
Weltman unless the amount of the Net Proceeds from such sale is at least equal
to the Minimum Price.
(d) Weltman shall be permitted to designate the New Loan to which the Net
Proceeds of any sale of Pledged Shares pursuant to this section shall be
applied.
(e) All sales of Pledged Shares by Weltman must be made in compliance with all
applicable laws and regulations.
(f) Notwithstanding any other provision of this Article 3, Coutts shall not be
required to release and deliver any Pledged Shares sold by Weltman unless and
until Coutts is provided with evidence, reasonably satisfactory to Coutts, that
the provisions of this Article 3 to be complied with by Weltman in connection
with such sale have been complied with, provided that upon being so satisfied,
Coutts shall promptly deliver any such Pledged Shares.
(g) In the event that a sale of Pledged Shares is made pursuant to this Article
3 at any time at which the New Loan to which the proceeds of sale are to be
applied is not at that time repayable without penalty, the proceeds of sale
required to be applied as
<PAGE> 9
- 9 -
repayment shall be delivered to Coutts and held by Coutts (in an interest
bearing account pledged to Coutts) as security under the Share Pledge until
such time as the designated New Loan is repayable without penalty whereupon
such proceeds shall be applied by Coutts as repayment of such New Loan.
(h) Notwithstanding any other provisions of this Agreement or any of the
agreements relating to the transactions contemplated herein, in the event
Weltman at any time sells any Gaming Shares other than Pledged Shares
("Unpledged Shares"), Coutts shall forthwith release and deliver to Weltman,
that number of Pledged Shares which equals the number of Unpledged Shares so
sold by Weltman , free and clear of any Security Interest created by Coutts
provided that a sale of such Unpledged Shares is completed by Weltman in all
respects in compliance with the provisions of this Article 3 which govern and
are applicable to a sale by Weltman's of Pledged Shares.
3.2 RELEASE ON REPAYMENT - At such time as the New Loans have been repaid
in full, Coutts shall release and deliver to Weltman any and all Pledged Shares
free and clear of any Security Interest created by Coutts.
ARTICLE 4
INDEMNIFICATION
4.1 MUTUAL INDEMNIFICATIONS FOR BREACHES OF COVENANTS AND WARRANTY, ETC. -
Coutts covenants and agrees with Weltman, and Weltman covenants and
agrees with Coutts (the party or parties so covenanting and agreeing
to indemnify another party being referred to in this Section as the
"Indemnifying Party" and the party so to be indemnified being called
the "Indemnified Party") to indemnify and save harmless the
Indemnified Party, effective as and from the Closing, from and against
all Claims which may be made or brought against the Indemnified Party
or which it may suffer or incur, directly or indirectly, as a result
of or in connection with any non-fulfilment of any covenant or
agreement on the part of the Indemnifying Party under this Agreement
or any misstatement in or breach of any representation or warranty of
the Indemnifying Party contained in this Agreement or in any
certificate or other document furnished by the Indemnifying Party
pursuant to this Agreement. Notwithstanding any other provision of
this Article 4:
(i) no claim for indemnification may be made by an Indemnified Party
against any Indemnifying Party after the time which is the latest of:
(a) date on which all amounts due under the New Loans
have been repaid; and
<PAGE> 10
- 10 -
(b) four years from the date of this Agreement; and
(ii) the aggregate amount payable by an Indemnifying Party as
indemnification pursuant to this Article 4 shall be limited to $40
million.
4.2 INDEMNIFICATION PROCEDURES FOR THIRD PARTY CLAIMS
(a) In the case of claims or demands made by a third party in
respect of which indemnification is sought by an Indemnified
Party, the Indemnified Party seeking such indemnification
under this Agreement shall give prompt written notice, and in
any event within 20 days, to the Indemnifying Party of any
such claims or demands made upon it, provided that in the
event of a failure to give such notice, such failure shall not
preclude the party seeking indemnification to obtain such
indemnification but its right to indemnification may be
reduced to the extent that such delay prejudiced the defense
of the claim or demand or increased the amount of liability or
cost of defense.
(b) The Indemnifying Party shall have the right, by notice to the
Indemnified Party given not later than 30 days after receipt
of the notice described in subsection (a) to assume the
control of the defense, compromise or settlement of the claim
or demand, provided that such assumption shall, by its terms,
be without cost to the Indemnified Party and provided the
Indemnifying Party acknowledges in writing its obligation to
indemnify the Indemnified Party in accordance with the terms
contained in this Article 4 in respect of that claim or
demand.
(c) Upon the assumption of control of any claim or demand by the
Indemnifying Party as set out in subsection (b), the
Indemnifying Party shall diligently proceed with the defence,
compromise or settlement of the claim or demand at its sole
expense, including, if necessary, employment of counsel
reasonably satisfactory to the Indemnified Party and, in
connection therewith, the Indemnified Party shall cooperate
fully, but at the expense of the Indemnifying Party, with
respect to any out-of-pocket expenses incurred, to make
available to the Indemnifying Party all pertinent information
(other than privileged information) and witnesses under the
Indemnified Party's control, make such assignments and take
such other steps as in the opinion of counsel for the
Indemnifying Party are reasonably necessary to enable the
Indemnifying Party to conduct such defence. The Indemnified
Party shall also have the right to participate in the
negotiation, settlement or defence of any claim or demand at
its own expense.
<PAGE> 11
- 11 -
(d) The final determination of any claim or demand pursuant to
this Article, including all related costs and expenses, will
be binding and conclusive upon the parties as to the validity
or invalidity, as the case may be, of such claim or demand
against the Indemnifying Party.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 REPRESENTATIONS AND WARRANTIES
Weltman hereby represents and warrants to Coutts that:
(a) in considering the provisions of the Operative Agreements and
in negotiating their terms, Weltman has been advised and
represented by independent counsel;
(b) as of the date hereof, Weltman does not have knowledge of any
undisclosed "material change" or "material fact", as such
terms are defined in the Securities Act (Ontario"), relating
to the affairs of the Companies or the Gaming Shares, TIPI
Shares or Warp 10 Shares;
(c) Weltman has the capacity to enter into each of the Operative
Agreements and to carry out his obligations under each of the
Operative Agreements;
(d) each of the Operative Agreements constitutes a valid and
binding obligation of Weltman enforceable against him in
accordance with its terms;
(e) Weltman is not a party to, bound or affected by or subject to
any indenture, mortgage, lease, agreement, obligation,
instrument, charter or by-law provision, statute, regulation,
order, judgment, decree, licence, permit or law which would be
violated, contravened, breached by, or under which default
would occur or an encumbrance would be created as a result of
the execution and delivery of any of the Operative Agreements
or any other agreement to be entered into under the terms of
any of the Operative Agreements, or the performance by Weltman
of any of his obligations provided for under any of the
Operative Agreements or any other agreement contemplated
herein or therein;
(f) Weltman understands that no federal or state agency has passed
on or
<PAGE> 12
- 12 -
made any recommendation or endorsement of the Purchased Shares;
(g) Weltman acknowledges that, in entering into this Agreement and
the other Operative Agreements, including making the decision
to purchase the Purchased Shares, Weltman has not relied upon
any representation or warranty by Coutts other than the
representations and warranties of Coutts set forth in Section
5.2 of this Agreement and in the other Operative Agreements;
(h) Weltman acknowledges and understands that Purchased Shares
have not been registered under the United States Securities
Act of 1933, as amended (the "1933 Act"), or any other
applicable securities law, and accordingly, none of the
Purchased Shares may be offered, sold, transferred, pledged,
hypothecated or otherwise disposed of unless registered
pursuant to, or in a transaction exempt from registration
under, the 1933 Act and any other applicable securities law;
(i) Weltman is an "accredited investor" within the meaning of Rule
501(a) under the 1933 Act (an "Accredited Investor") who is
acquiring the Purchased Shares for his own account. Weltman
has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks
of an investment in the Purchased Shares. Weltman is aware
that he may be required to bear the economic risk of an
investment in the Purchased Shares for an indefinite period,
and he is able to bear such risk for an indefinite period;
(j) Weltman is acquiring the Purchased Shares for his own account
for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution thereof. Weltman
agrees to offer, sell or otherwise transfer Purchased Shares
only pursuant to registration under the 1933 Act and any other
applicable securities law, or an exemption therefrom;
(k) Weltman acknowledges that Coutts, its employees, officers,
directors and agents and the respective heirs, successors and
assigns of each of the foregoing, will be relying upon the
truth and accuracy of the acknowledgements, representations,
warranties and agreements made by Weltman in the Operative
Agreements;
(l) Weltman acknowledges that it is the intention of the parties
to this Agreement that the transfer of the Purchased Shares
under the Weltman Share Purchase Agreement be made at a price
which is in compliance with clause 93(1)(c) of the Securities
Act (Ontario) and
<PAGE> 13
- 13 -
section 183 of the Regulation made thereunder (and the
comparable provisions of the Securities Act (Alberta) and
Weltman hereby confirms that he is not aware of any fact,
event or occurrence which could reasonably be expected to give
rise to a finding by the Ontario Securities Commission or the
Alberta Securities Commission that the purchase price for any
of the Purchased Shares under the Weltman Share Purchase
Agreement does not so comply; and
(m) following the acquisition of the Purchased Shares, Weltman
will not beneficially own or exercise control or direction
over more than 20% of the outstanding voting securities of
Gaming and Weltman has not entered into, and will not enter
into for so long as any Pledged Shares are held by Coutts as
security under the Share Pledge, any arrangement, agreement or
understanding regarding the voting of the Purchased Shares
(other than the Share Pledge) with any person or company that
beneficially owns or exercises control or direction over
outstanding voting securities of Gaming that when aggregated
with the Purchased Shares would represent more than 20% of the
outstanding voting securities of Gaming.
5.2 COUTTS' REPRESENTATIONS AND WARRANTIES
Coutts hereby represents and warrants to Weltman that:
(a) Coutts is a corporation validly existing and in good standing
under the laws of the jurisdiction of its organization.
Coutts has the full corporate power and authority to execute
and deliver each of the Operative Agreements and all other
agreements and documents executed or to be executed by it in
connection with each of the Operative Agreements (including,
without limitation, the Weltman Share Purchase Agreement) and
to perform all of its obligations hereunder and thereunder;
(b) Coutts has all necessary authority to transfer, or caused to
be transferred, the Purchased Shares to Weltman pursuant to
and in accordance with the terms of the Weltman Share Purchase
Agreement and to complete the transactions contemplated herein
and therein;
(c) each of the Operative Agreements constitutes a valid and
binding obligation of Coutts to Weltman enforceable against it
in accordance with its terms;
(d) Coutts is not a party to, bound or affected by or subject to
any indenture, mortgage, lease, agreement, obligation,
instrument, charter or by-law provision, statute, regulation,
order, judgment, decree,
<PAGE> 14
- 14 -
licence, permit or law which would be violated, contravened,
breached by, or under which default would occur or an
encumbrance would be created as a result of the execution and
delivery of any of the Operative Agreements or any other
agreement to be entered into under the terms of any of the
Operative Agreements, or the performance by Coutts of any of
its obligations provided for under any of the Operative
Agreements or any other agreement contemplated herein or
therein;
(e) there has been no act or omission by Coutts which has created
or resulted in the creation of any Security Interest on,
against or with respect to any of the Pledged Shares (except
Security Interests (if any) created as a result of the
consummation of the transactions contemplated by this
Agreement);
(f) to the best of Coutts' information, knowledge and belief, each
of the Clients is incorporated in and a resident of the
jurisdiction which appears below immediately opposite its name
and none of the Clients have been incorporated or organized
for the purposes of causing such corporations not to be in or
resident in Ontario or Alberta for the purposes of completing
the transactions provided for in this Agreement:
<TABLE>
<CAPTION>
CLIENT NAME COUNTRY OF INCORPORATION
----------- ------------------------
<S> <C>
Bayfront Intervest Limited British Virgin Islands
Compania Di Investimento British Virgin Islands
Antilliana S.A.
Mariner Reserve Fund Inc. Bahamas
Panola Worldwide Corporation British Virgin Islands
Silva Run Worldwide Limited British Virgin Islands
Willsboro Universal Corporation British Virgin Islands;
</TABLE>
(g) to the best of Coutts' information, knowledge and belief, the
transactions contemplated herein will not result in Weltman
having made purchases of shares of any of the Companies from
more than five persons or companies in the aggregate, for the
purposes of clause 93(1)(c) and subsection 93(2) of the
Securities Act (Ontario) (and the comparable provisions of the
Securities Act (Alberta));
<PAGE> 15
- 15 -
(h) Coutts is a banking institution incorporated and organized
under the laws of Switzerland, with a New York Branch, which
does not have an office in the Province of Ontario and, other
than certain activities undertaken by Coutts in connection
with its application to the Ontario Securities Commission for
registration under the Securities Act (Ontario) in the
category of International Dealer, does not carry on business
in the Province of Ontario;
(i) Coutts acknowledges that in entering into this Agreement and
the other Operative Agreements, Coutts has not relied upon any
representation or warranty other than those representations
and warranties set forth in Section 5.1 of this Agreement and
in the other Operative Agreements;
(j) in considering the provisions of the Operative Agreements and
in negotiating their terms, Coutts has been advised and
represented by independent counsel;
(k) Coutts acknowledges that it is the intention of the parties to
this Agreement that the transfer of the Purchased Shares under
the Weltman Share Purchase Agreement be made at a price which
is in compliance with clause 93(1)(c) of the Securities Act
(Ontario) and section 183 of the Regulation made thereunder
(and the comparable provisions of the Securities Act
(Alberta)) and Coutts hereby confirms that Coutts is not aware
of any fact, event or occurrence which could reasonably be
expected to give rise to a finding by the Ontario Securities
Commission or the Alberta Securities Commission that the
purchase price for any of the Purchased Shares under the
Weltman Share Purchase Agreement does not so comply; and
(l) none of Coutts, any affiliate of Coutts, or any person acting
on behalf of Coutts or any such affiliate has engaged, or will
engage, in any general solicitation or any general advertising
with respect to the Purchased Shares.
ARTICLE 6
GENERAL
6.1 NOTICES - Any notice or other writing required or permitted to be
given under this Agreement or for the purposes of this Agreement (referred to
in this Section 6.1 as a "notice") to any other party to this Agreement shall
be sufficiently given if delivered personally, or if sent by prepaid registered
mail or if transmitted by fax or
<PAGE> 16
- 16 -
other form of recorded communication tested prior to transmission to such
party:
(a) in the case of Coutts a notice at:
Coutts & Co AG, New York Branch
65 East 55th Street
New York, New York 10022
Phone: (212) 303-2971
Attention: Mr. Mario Economou, Vice President
FAX: (212) 303-2929
with copies to:
Mr. Alan M. Christenfeld
Rogers & Wells
200 Park Avenue
New York, New York 10166-0153
FAX: (212) 878-8375
Phone: (212) 878-8000
and
Mr. John W. Stevens
Osler, Hoskin & Harcourt
280 Park Avenue - 30W
New York, New York 10017
FAX: (212) 867-5802
Phone: (212) 867-5800
(b) in the case of Weltman a notice at:
c/o Gaming Lottery Corporation
160 Nashdene Road
Scarborough, Ontario
M1V 4C4
Attention: Larry H. Weltman
FAX: (416) 754-8441
Phone: (416) 292-5963
with copies to:
Mr. Jack Jackson
Proskauer Rose Goetz & Mendelsohn LLP
<PAGE> 17
- 17 -
1585 Broadway
New York, New York 10036
FAX: (212) 969-2900
Phone: (212) 969-3000
and
Mr. Joseph Maierovits
Goldman, Spring, Schwartz & Kichler
Suite 700
40 Sheppard Avenue West
North York, Ontario
M2N 6K9
FAX: (416) 225-4805
Phone: (416) 225-9400
or such other address as the party to whom such writing is to be given shall
have last notified the party giving the same in the manner provided in this
Section. Any notice delivered to the party to whom it is addressed as provided
in this Section shall be deemed to have been given and received on the day it
is so delivered at such address, provided that if such day is not a business
day then the notice shall be deemed to have been given and received on the
business day next following such day. Any notice mailed to the address and in
the manner provided for in this Section shall be deemed to have been given and
received on the fifth business day next following the date of its mailing. Any
notice transmitted by fax or other form of recorded communication shall be
deemed given and received on the first business day after its transmission.
6.2 EXPENSES - Other than the payment by Weltman of Coutts legal expenses
required by the Weltman Loan Agreement, each of the parties shall pay their
respective legal, accounting and other professional advisory fees, costs and
expenses incurred in connection with the transactions and agreements provided
for in this Agreement and the other Operative Agreements and the preparation,
execution and delivery of the Operative Agreements and all documents and
instruments executed pursuant to the Operative Agreements and any other costs
and expenses incurred. The parties acknowledge that transactions contemplated
hereby have been negotiated and are to be completed in a manner which will not
give rise to a valid claim for a brokerage fee or commission or other like
payment and no brokerage fee or commission or other like payment has been or
will be made in connection therewith.
6.3 FURTHER ASSURANCES - The Parties shall with reasonable diligence do all
such
<PAGE> 18
- 18 -
things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated by this Agreement, and each party
shall provide such further documents or instruments required by any other party
as maybe reasonably necessary or desirable to effect the purpose of this
Agreement and carry out its provisions, whether before or after the Closing.
6.4 GOVERNING LAW AND CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
(b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE,
AND TO THE EXTENT THAT THE PROVISIONS OF THE SECTION 6.4 ARE
APPLICABLE, WELTMAN AND COUTTS HEREBY AGREE TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK SITTING IN THE CITY AND
COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED ON VENUE OR
FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED
THEREIN, AND AGREE THAT ANY DISPUTE CONCERNING THE
RELATIONSHIP BETWEEN WELTMAN AND COUTTS OR THE CONDUCT OF ANY
PARTY HERETO IN CONNECTION WITH THIS AGREEMENT OR OTHERWISE
SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
NOTWITHSTANDING THE FOREGOING, COUTTS SHALL HAVE THE RIGHT TO
BRING ANY ACTION OR PROCEEDING AGAINST WELTMAN OR HIS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION COUTTS DEEMS
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL
OR OTHER SECURITY FOR THE NEW LOANS.
(c) WELTMAN HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE
MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO
HIM AT HIS ADDRESS SET FORTH IN SECTION 6.1 HEREOF AND SERVICE
SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER
THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS OR AT
COUTTS' OPTION, BY SERVICE UPON WELTMAN 'S NEW YORK COUNSEL AT
ITS NOTICE ADDRESS SET FORTH IN SECTION 6.1 HEREOF, WHICH
WELTMAN HEREBY IRREVOCABLY APPOINTS AS HIS AGENT FOR THE
PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF
NEW YORK.
<PAGE> 19
- 19 -
WELTMAN HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID.
(d) NOTHING IN THIS SECTION 6.4 SHALL AFFECT THE RIGHTS OF COUTTS
TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHTS OF COUTTS TO BRING ANY ACTION OR PROCEEDING
AGAINST WELTMAN OR HIS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
(e) EACH OF WELTMAN AND COUTTS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED
BY LAW, ANY RIGHT THEY MAY HAVE OR EACH OF THEM MAY HAVE TO
CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO
IN THIS SECTION 6.5 ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
6.5 CONFIDENTIALITY. Each of the parties hereto agrees to keep
confidential the terms of this Agreement and the transactions contemplated
herein, and neither of the parties hereby shall make any public announcement
with the respect to this Agreement or the subject matter hereof without the
prior approval of the other party hereto, except:
(i) as required under this Agreement;
(ii) for the press release and reports required by Section 5.3 and
Section 5.4 of the Banks Master Agreement;
(iii) either party may disclose information pertaining to this
Agreement to any person employed or retained by such person;
(iv) such disclosures as may be reasonably required in connection
with the exercise by Coutts of any remedy under the Operative
Agreements or any document related hereto upon the occurrence
of, or during the continuance of, an Event of Default; or
(v) for such disclosures as may be required by applicable law.
6.6 COUNTERPARTS - This Agreement may be executed by the parties hereto in
separate counterparts each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
6.7 FACSIMILE SIGNATURE - This Agreement may be executed by faxed signature
<PAGE> 20
- 20 -
with the same effect as a manually signed original signature.
6.8 ASSIGNMENT - Neither this Agreement nor any benefits or burdens under
this Agreement, the other Operative Agreements or any of the agreements
contemplated herein, shall be assignable by any party hereto without the prior
written consent of each of the other parties hereto. Subject to the foregoing,
this Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective successors, heirs, and permitted assigns.
<PAGE> 21
- 21 -
IN WITNESS WHEREOF the parties have hereunto duly executed this Agreement.
COUTTS & CO AG, NEW YORK BRANCH
BY: /s/ Peter Cawdron
-----------------------
/s/ Larry H. Weltman
---------------------------
Larry H. Weltman
<PAGE> 1
LOAN AGREEMENT
THIS AGREEMENT made as of the 20th day of August, 1996
B E T W E E N:
MR. LARRY H. WELTMAN, an individual residing in the City of Toronto,
Ontario, Canada
(hereinafter referred to as the "Borrower")
- and -
COUTTS & CO AG, NEW YORK BRANCH, a Swiss bank licensed to conduct a
banking business by the State of New York
(hereinafter referred to as the "Bank")
WITNESSES THAT WHEREAS the Borrower has requested the Facility (as
hereinafter defined) to acquire certain shares of certain corporations, as
identified in Schedule A hereto (the "Shares"), and to pay expenses incurred by
him in connection with the acquisition of the Shares and the Bank has agreed to
provide the Facility to the Borrower on the terms and conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and mutual agreements
and covenants contained in this Agreement and other good and valuable
consideration (the receipt and adequacy of which are hereby mutually admitted),
the Parties hereby agree as follows:
ARTICLE I.
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS - Whenever used in this Agreement, unless there is
something inconsistent in the subject matter or context the following words and
terms shall have the meaning set out below:
<PAGE> 2
- 2 -
"AGREEMENT" means this agreement, including all schedules and all
instruments supplementing or amending or confirming this Agreement,
"hereof", "hereto" and "hereunder" and similar expressions mean and
refer to this Agreement and not any particular article or section, and
"Article", "Section" and "Subsection" each means and refers to the
specified article, section or subsection in this Agreement;
"ANNIVERSARY DATE" means the annual anniversary of the date of this
Agreement or the next Business Day thereafter if such date is not a
Business Day;
"APPLICABLE LAW" means, with respect to any Person, property,
transaction or event, and whether or not having the force of law, all
applicable laws, statutes, regulations, rules, guidelines, by-laws,
treaties, orders, policies, judgments, decrees and official directives
of governmental bodies or other Persons acting under the authority of
any governmental body;
"BANKS MASTER AGREEMENT" means the master agreement dated August 19,
1996 between the Bank and Mr. Jacques Benquesus;
"BASE RATE" means, at any time, the rate of interest, expressed as an
annual rate, established by the Bank from time to time as the
reference rate of interest it will charge for loans in Dollars;
"BASE RATE LOAN" means the amount of the Loan with respect to which
the Borrower is deemed to have elected to have interest calculated by
reference to the Base Rate or to which, in accordance with the
provisions of this Agreement, the Base Rate is deemed to apply;
"BASE RATE ROLLOVER" means a deemed conversion of the Libor Loan to a
Base Rate Loan pursuant to Section 3.1;
"BORROWER" means Mr. Larry H. Weltman, an individual residing in the
City of Toronto, Ontario, Canada;
"BRANCH" means the branch of the Bank located at 65 East 55th Street,
New York, NY 10022;
"BUSINESS DAY" means a day on which banks are open for business in New
York, U.S.A.;
"CLOSING DATE" means August 20, 1996 or such other earlier or later
date as may be agreed upon by the Parties;
<PAGE> 3
- 3 -
"COLLATERAL" means the assets, property and undertaking of the
Borrower subject to the Security;
"COMPANY" means any of Gaming Lottery Corporation, The Instant
Publisher Inc. or Warp 10 Technologies Inc.;
"DOLLARS" and the symbol "$" mean the lawful currency of the United
States of America;
"DRAWDOWN" means the borrowing, in Dollars, of funds under the
Facility;
"EVENT OF DEFAULT" means any of the events described in Section 10.1;
"FACILITY" has the meaning ascribed to it in Section 2.1;
"FACILITY CREDIT LIMIT" has the meaning ascribed to it in Section 2.1;
"GUARANTEE" has the meaning ascribed to it in Subsection 7.1(a);
"INTEREST PAYMENT DATE" means
(i) with respect to the Libor Loan, the last day of the
Libor Interest Period applicable thereto and also, if any
Libor Interest Period is longer than 93 days, the last day of
each 90-day period during such Libor Interest Period or, if
any such day is not a Business Day, the Business Day next
following; and
(ii) with respect to the Base Rate Loan, the last day of
each calendar month or, if any such day is not a Business Day,
the Business Day next following;
"LIBOR INTEREST PERIOD" means, for the Libor Loan, subject to
availability of funds to the Bank, the period of 1, 2, 3, 6 or 12
months, as may be selected by the Borrower pursuant to the relevant
Libor Notice, commencing on, in respect of the initial Libor Interest
Period, the Closing Date and, thereafter, the date of the applicable
Libor Rollover, provided that:
(i) any Libor Interest Period which would otherwise end
on a day which is not a Business Day shall be extended to the
next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Libor Interest
Period shall end on the immediately preceding Business Day;
(ii) any Libor Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically
<PAGE> 4
- 4 -
corresponding day in the calendar month at the end of such
Libor Interest Period) shall end on the last Business Day of a
calendar month;
(iii) the Libor Interest Period shall terminate on such
date as will permit the repayment of the Facility on the date
and in the manner provided for herein;
"LIBOR LOAN" means the amount of the Loan with respect to which
interest under this Agreement is calculated with reference to the
Libor Rate;
"LIBOR NOTICE" means a notice substantially in the form attached
hereto as Schedule C;
"LIBOR RATE" means, for the Libor Interest Period then applicable to
the Libor Loan, the interest rate per annum (expressed on the basis of
a 360-day year) at which Dollar deposits are offered to leading banks
in the London interbank euro-currency offering market in an amount
approximately equal to the principal amount of the Libor Loan and for
a period comparable to such Libor Interest Period at approximately
11:00 a.m. London, England time on the second Business Day preceding
the first day of such Libor Interest Period for delivery on the first
day of such Libor Interest Period;
"LIBOR ROLLOVER" means a rollover of the Libor Loan pursuant to
Section 2.5;
"LIQUIDITY EVENT" means the announcement or occurrence of any
transaction or event initiated, caused or assisted, directly or
indirectly, by Mr. Jacques Benquesus, any Person controlled by Mr.
Jacques Benquesus or any affiliate or associate (as such terms are
defined in the Securities Act (Ontario)) of Mr. Jacques Benquesus or
such Person, or any Person acting jointly or in concert with Mr.
Jacques Benquesus or such Person in connection with such transaction
or event which results, or if consummated would result, in the Public
Float of any Company being less than one half of the Public Float of
such Company on the date hereof;
"LOAN" means, at any time, the total outstanding principal amount of
all Drawdowns, together with any interest capitalized pursuant to
Section 4.5;
"PARTIES" means the Bank and the Borrower and "PARTY" refers to any
one of them;
"PERSON" means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, governmental authority and a
natural person in his capacity as trustee, executor, administrator or
other legal representative;
<PAGE> 5
- 5 -
"PUBLIC FLOAT" means the percentage of the issued and outstanding
participating voting equity shares of a Company held by persons other
than Mr. Jacques Benquesus, Mrs. Biba Benquesus, Mr. Larry H. Weltman
or Mr. John M. Wiseman and their associates and affiliates (as such
terms are defined in the Securities Act (Ontario));
"RELATED LOAN AGREEMENTS" means the loan agreement dated the date
hereof between the Bank and Mr. John M. Wiseman and the loan
agreements dated the date hereof between the Bank and Mr. Jacques
Benquesus;
"ROLLOVER" means, as applicable, either a Base Rate Rollover or a
Libor Rollover.
"SECURITY" means the security described in Article VII;
"SHARES" means those certain shares of certain corporations identified
in Schedule A hereto;
"TAXES" means all present and future taxes, levies, imposts, stamp
taxes, duties, charges to taxes, fees, deductions, withholdings and
any restrictions or conditions resulting in a charge imposed, levied,
collected, withheld or reserved and all penalties, interest and other
payments on or in respect thereof;
"WELTMAN MASTER AGREEMENT" means the master agreement dated August 19,
1996 between Larry H. Weltman and the Bank; and
"WISEMAN MASTER AGREEMENT" means the master agreement dated August 19,
1996 between John M. Wiseman and the Bank.
1.2 CERTAIN RULES OF INTERPRETATION - In this Agreement:
(a) time is of the essence in the performance of the Parties'
respective obligations;
(b) the descriptive headings of Articles and Sections are inserted
solely for convenience of reference and are not intended as complete
or accurate descriptions of content;
(c) the use of words in the singular or plural, or with a
particular gender, shall not limit the scope or exclude the
application of any provision of this Agreement to such person or
persons or circumstances except as the context otherwise permits;
<PAGE> 6
- 6 -
(d) whenever a provision of this Agreement requires an approval or
consent by a Party to this Agreement and notification of such approval
or consent is not delivered within the applicable time limited, then,
unless otherwise specified, the Party whose consent or approval is
required shall be conclusively deemed to have withheld its consent or
approval;
(e) unless otherwise specified, time periods within or following
which any payment is to be made or act is to be done shall be
calculated by excluding the day on which the period commences and
including the day which ends the period and by extending the period to
the next Business Day following if the last day of the period is not a
Business Day; and
(f) whenever any payment is to be made or action to be taken under
this Agreement is required to be made or taken on a day other than a
Business Day, such payment shall be made or action taken on the next
Business Day following.
1.3 SCHEDULES - The following are the Schedules to this Agreement and are
incorporated by reference and deemed to be part of this Agreement:
Schedule A - Shares to be Acquired
Schedule B - Compliance Certificate
Schedule C - Libor Notice
ARTICLE II.
THE FACILITY
2.1 THE FACILITY - Upon the terms and subject to the conditions herein set
forth, the Bank hereby establishes in favour of the Borrower the following
credit facility (the "Facility") to be available to the Borrower in accordance
with the provisions of this Agreement. The Facility shall consist of a term
credit facility of up to a maximum principal amount, excluding any interest
capitalized pursuant to Section 4.5, of $634,947.20 (the "Facility Credit
Limit") which funds shall be advanced or otherwise made available in a single
Drawdown on the Closing Date.
2.2 PURPOSE - The Facility shall be available to the Borrower to acquire
the Shares and to pay expenses incurred by him in connection with the
acquisition of the Shares.
2.3 AVAILMENT OF FACILITY - Upon the terms and subject to the conditions
herein set forth, the Borrower may effect a single borrowing under the Facility
by way of a Libor Loan with an initial Libor Interest Period of one (1) month.
<PAGE> 7
- 7 -
2.4 EFFECTING THE DRAWDOWN - Borrowing under the Facility shall be
effected by the Bank crediting to the Borrower's Dollar account with the Bank
the full amount of such borrowing for same day value by 2:00 p.m. New York time
on the Closing Date and in immediately available funds.
2.5 ROLLOVERS - The Libor Loan will be deemed to be automatically rolled
over (on the last day of the applicable Libor Interest Period) into a Libor
Loan in a principal amount equal to the amount of the Loan for a Libor Interest
Period equal to the lesser of:
(a) (i) if the Borrower has delivered to the Bank a Libor Notice
in accordance with the terms of this Agreement, the Libor
Interest Period specified in such Libor Notice or (ii) if the
Borrower has not made such delivery of a Libor Notice, the
Libor Interest Period of such rolled over Libor Loan;
(b) the remaining term of the Loan.
2.6 LIBOR NOTICE - A Libor Notice shall be substantially in the form
attached as Schedule C to this Agreement and shall state the Libor Interest
Period being requested.
Subject to the terms and conditions of this Agreement, the Borrower
shall be entitled to specify the Libor Interest Period to be applicable to the
Libor Loan upon rollover by delivering a Libor Notice to the Bank by 11:00 a.m.
(New York time) no less than two Business Days prior to the last day of the
current Libor Interest Period.
In the event that a Libor Notice is given by telephone, the Borrower
shall provide to the Bank written confirmation of such notice bearing the
Borrower's original signature within two Business Days of giving of such
notice. All notices given by telephone shall be at the risk of the Borrower
and the Bank shall have no liability for relying or acting on such verbal
notice (whether or not subsequently confirmed in writing) or for any failure on
the part of the Bank to carry out the requirements of such notice wholly or in
part, or for any error or omission in fulfilling the requirements of such
notice or the interpretation thereof by the Bank, save and except for any
failure, error or omission arising out of the gross negligence or willful
misconduct of the Bank. Any notice on which the Bank has acted, whether made
by telephone, fax or otherwise in writing shall be irrevocable and binding on
the Borrower.
2.7 EVIDENCE OF INDEBTEDNESS - The Bank shall open and maintain on its
books at the Branch, accounts in respect of the Facility to evidence the Loan
under the Facility and all other amounts owing by the Borrower to the Bank
hereunder.
<PAGE> 8
- 8 -
The Bank shall enter in the foregoing accounts details of all amounts from time
to time owing, paid or repaid by the Borrower hereunder. The information
entered in the foregoing accounts shall constitute prima facie evidence of the
obligations of the Borrower to the Bank hereunder with respect to the Loan and
all other amounts owing by the Borrower to the Bank hereunder. The Borrower
shall, on reasonable notice to the Bank, be entitled to obtain from the Bank
extracts of all entries made in such accounts.
ARTICLE III.
FURTHER PROVISIONS RELATING TO
THE LIBOR LOANS
3.1 CHANGE OF CIRCUMSTANCES - In the event that at any time prior to the
commencement of a Libor Interest Period the Bank makes a determination in good
faith, which shall be final, conclusive and binding upon the Borrower, that:
(a) by reason of changes affecting the London interbank market,
adequate and fair means do not exist for ascertaining the rate of
interest applicable to the Libor Loan during the ensuing Libor
Interest Period;
(b) the continuing of the Libor Loan by the Bank during the
ensuing Libor Interest Period has been made impracticable by the
occurrence of circumstances which materially or adversely affect the
London interbank market;
(c) Dollar deposits are not available to the Bank in the London
interbank market in sufficient amounts in the ordinary course of
business in order for the Bank to fund the Libor Loan during the
ensuing Libor Interest Period; or
(d) the Libor Rate for the immediately following Libor Interest
Period does not accurately reflect the effective cost to the Bank of
funding the Libor Loan for the ensuing Libor Interest Period, or the
costs to the Bank would be increased or the income receivable by the
Bank would be reduced in respect of such Libor Loan,
then the Bank shall give notice thereof to the Borrower, which notice shall set
out in reasonable detail the reasons for such determination. Upon such notice
being given, Libor Rollovers shall be suspended until the Borrower is informed
by the Bank that such conditions no longer exist and the outstanding Libor Loan
shall, at the expiration of the Libor Interest Period, be deemed to be
converted into a Base Rate Loan, in an amount equal to the principal amount of
such Libor Loan.
<PAGE> 9
- 9 -
ARTICLE IV.
PAYMENT OF INTEREST AND OTHER FEES
4.1 INTEREST ON THE LIBOR LOAN - The Borrower shall pay interest in
Dollars to the Bank on the amount of the Libor Loan for the Libor Interest
Period applicable thereto at a nominal rate per annum equal to the Libor Rate
applicable to the Libor Loan plus 0.5%, for any period that such Libor Loan is
outstanding. Interest on the Libor Loan shall accrue daily on the amount of
such Libor Loan and shall be calculated and, subject to Sections 4.5 and 4.6,
payable in arrears on each successive Interest Payment Date applicable to the
Libor Loan on the basis of the actual number of days for which the Libor Loan
is outstanding, computed on the basis of a year of 360 days. Interest on the
Libor Loan shall be payable in accordance with the foregoing after as well as
before demand, default, maturity and judgment.
4.2 INTEREST ON BASE RATE LOANS - The Borrower shall pay interest in
Dollars to the Bank on the principal amount of the Base Rate Loan (with
interest on overdue interest at the same rate) at a nominal rate per annum
equal to the Base Rate in effect from time to time plus 0.5%;
Interest on the Base Rate Loan shall accrue daily on the outstanding principal
balance thereof and shall be calculated and, subject to Sections 4.5 and 4.6,
payable in arrears:
(a) on each successive Interest Payment Date, for the period then
ending;
(b) in the case of a prepayment of part or all of the Base Rate
Loan, on the date of such prepayment, with respect to interest accrued
on the amount of principal being prepaid;
(c) in the case of amounts repaid pursuant to Section 5.3, on the
date of such repayment with respect to interest accrued on the amount
of the principal of the Base Rate Loan being repaid; and
(d) on the date that all amounts owing hereunder are repaid in
full, whether on demand, by reason of acceleration or otherwise;
on the basis of the actual number of days for which a particular principal
amount is outstanding, computed on the basis of a year of 365 days or 366 days
in the case of a leap year. Interest on overdue interest on the Base Rate Loan
shall be payable on demand. Changes in the Base Rate shall cause an immediate
and automatic adjustment of the interest rate applicable to the Base Rate Loan
as and from the effective date of such change without the necessity of any
notice to the Borrower, such notice being hereby expressly waived by the
Borrower. Interest on the Base
<PAGE> 10
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Rate Loan shall be payable in accordance with the foregoing after as well as
before demand, default, maturity and judgment.
4.3 INCREASED COSTS - If, as a result of any Applicable Law, or of the
interpretation or application thereof by any court or by any governmental or
other authority or entity charged with the administration thereof, whether or
not having the force of law, which:
(a) subjects the Bank to any Taxes or changes the basis of
taxation, or increases any existing Taxes, on payments of principal,
interest or other amounts payable by the Borrower to the Bank under
this Agreement (except for Taxes on the overall net income or capital
of the Bank or gross receipts or franchise taxes imposed by the
jurisdiction in which its principal or lending offices are located);
(b) imposes, modifies or deems applicable any reserve, cash
margin, special deposit or similar requirements against assets held
by, or deposits in or for the account of or loans by or any other
acquisition of funds by the relevant funding office of the Bank;
(c) imposes on the Bank any other adverse condition with respect
to this Agreement; or
(d) imposes on the Bank a requirement to maintain or allocate
capital in relation to the Facility;
and the result of any of the foregoing is, in the reasonable opinion of the
Bank, to increase the cost to the Bank of making the Drawdown or maintaining
the Loan or reduce the income receivable by the Bank in respect of the Loan by
an amount which the Bank deems to be material, then upon the Bank giving
written notice thereof, from time to time, to the Borrower (such notice to set
out in reasonable detail the facts giving rise to and a summary calculation of
such increased cost or reduced income), the Borrower shall forthwith pay to the
Bank, upon receipt of such notice, that amount which shall compensate the Bank
for such additional cost or reduction in income. The Borrower will not be
required to compensate the Bank for any such additional cost or reduction in
income under this Section 4.3 incurred by the Bank more than 3 months prior to
its request to the Borrower for such compensation. Notwithstanding anything
herein to the contrary, to the extent that the Bank does not charge all of its
customers who are similarly situated to the Borrower in respect of any
additional cost or reduction of income described in this Section 4.3, the Bank
shall not charge the Borrower.
4.4 GROSS-UP - All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such deduction or
withholding is required by any Applicable Law, as modified by the practice or
any
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relevant governmental revenue authority, then in effect. If the Borrower is so
required to deduct or withhold, then the Borrower will:
(a) promptly notify the Bank of such requirement;
(b) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by the Borrower
to the Bank under this Section 4.4) promptly upon the earlier of
determining that such deduction or withholding is required or
receiving notice that such amount has been assessed against the Bank;
(c) promptly forward to the Bank an official receipt (or a
certified copy), or other documentation reasonably acceptable to the
Bank evidencing such payment to such authorities; and
(d) pay to the Bank, in addition to the payment to which the Bank
is otherwise entitled under this Agreement, such additional amount as
is necessary to ensure that the net amount actually received by the
Bank (free and clear of Taxes, whether assessed against the Borrower
or the Bank) will equal the full amount the Bank would have received
had no such deduction or withholding been required.
4.5 CAPITALIZATION OF INTEREST - At the election of the Borrower, unless
there shall have occurred and be continuing any event which constitutes or
would constitute, with the giving of notice, the passing of time, or both, an
Event of Default, any interest accruing and otherwise payable by the Borrower
on the Loan on or before the first Anniversary Date shall be added to the
principal amount of the Loan and the non-payment of such interest when due
shall not be considered an Event of Default.
4.6 DEFERRAL OF INTEREST - At the election of the Borrower, unless there
shall have occurred and be continuing any event which constitutes, or would
constitute, with the giving of notice, the passing of time, or both, an Event
of Default, the Borrower shall be entitled to:
(a) defer the payment of any interest accruing and otherwise
payable by the Borrower on the Loan for the period from and including
the Closing Date to and excluding the first Anniversary Date. Any
interest deferred pursuant to this Subsection 4.6(a) shall be paid by
the Borrower to the Bank on or before the first Anniversary Date or
capitalized pursuant to Section 4.5;
(b) defer the payment of any interest accruing and otherwise
payable by the Borrower on the Loan for the period from and including
the first Anniversary Date to and excluding the second Anniversary
Date. Any
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interest deferred pursuant to this Subsection 4.6(b) shall
be paid by the Borrower to the Bank on or before the second
Anniversary Date;
(c) defer the payment of any interest accruing and otherwise
payable by the Borrower on the Loan for the period from and including
the second Anniversary Date to and excluding the third Anniversary
Date. Any interest deferred pursuant to this Subsection 4.6(c) shall
be paid by the Borrower to the Bank on or before the third Anniversary
Date; and
(d) defer the payment of any interest accruing and otherwise
payable by the Borrower on the Loan for the period from and including
the third Anniversary Date to and excluding the fourth Anniversary
Date. Any interest deferred pursuant to this Subsection 4.6(d) shall
be paid by the Borrower to the Bank on or before the fourth
Anniversary Date.
The non-payment of interest which is deferred pursuant to this Section which
would otherwise be due and payable shall not be considered an Event of Default;
provided that any interest which is deferred is subsequently paid in accordance
with this Section.
4.7 MAXIMUM INTEREST RATE. In no event shall any interest rate exceed the
maximum rate permissible for individual borrowers by Applicable Law (the
"Maximum Rate"). If, in any month, any interest rate, absent such limitation,
would have exceeded the Maximum Rate, then the interest rate for that month
shall be the Maximum Rate, and, if in future months, that interest rate would
otherwise be less than the Maximum Rate, then that interest rate shall remain
at the Maximum Rate until such time as the amount of interest paid hereunder
equals the amount of interest which would have been paid if the same had not
been limited under this section to the Maximum Rate. In the event that, upon
payment in full of the Loan under this Agreement, the total amount of interest
paid or accrued under the terms of this Agreement is less than the total amount
of interest which would have been paid or accrued if the interest rates set
forth in this Agreement had at all times been in effect, then the Borrower
agrees, to the extent permitted by Applicable Law, to pay to the Bank an amount
equal to the difference between (a) the lesser of (i) the amount of interest
which would have been charged if the Maximum Rate had, at all times, been in
effect or (ii) the amount of interest which would have accrued had the interest
rates set forth in this Agreement, at all times, been in effect and (b) the
amount of interest actually paid or accrued under this Agreement. In the event
that the Bank receives, collects or applies as interest any sum in excess of
the Maximum Rate, such excess amount shall be applied to the reduction of the
principal balance of the Loan, and any funding indemnities in connection
therewith under Section 11.3 hereof, and, if no such principal or such funding
indemnity is then outstanding, such excess or part thereof remaining shall be
paid to the Borrower.
<PAGE> 13
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ARTICLE V.
REPAYMENTS AND PREPAYMENTS
5.1 REPAYMENT OF THE LOAN - On or before the fourth Anniversary Date, the
Borrower shall repay the Loan in its entirety, together with all interest
accrued thereon.
5.2 VOLUNTARY PREPAYMENTS OF PRINCIPAL - The Borrower shall have the right
to prepay the Loan without premium or penalty unless otherwise provided herein.
Any voluntary prepayment of the Libor Loan may be made without penalty only if
made at the expiration of the applicable Libor Interest Period, and then only
if at least two Business Days' prior notice is given to the Bank.
5.3 CURRENCY AND TIME OF PAYMENTS - The Borrower shall make each payment
hereunder at the Branch (or such other place in New York, New York as the Bank
may from time to time notify the Borrower, at least five Business Days prior to
any payment date) not later than 10:00 a.m. New York, New York, time on the day
when due (or on the next Business Day thereafter if such day is not a Business
Day) in Dollars.
5.4 APPLICATION OF PAYMENTS AND PREPAYMENTS - Payments and any prepayments
made by the Borrower in respect of the Loan shall be applied as follows: (i)
first, to the payment of any interest deferred pursuant to Section 4.6; (ii)
second, to the repayment of the principal amount of the Loan; (iii) third, to
the payment of any interest capitalized pursuant to Section 4.5; and (iv)
fourth, to the payment of any other amounts payable by the Borrower under this
Agreement.
ARTICLE VI.
CONDITIONS PRECEDENT TO DRAWDOWN
6.1 CONDITIONS PRECEDENT TO DRAWDOWN - The obligation of the Bank to
permit the Drawdown is subject to the condition precedent that the Bank shall
have received on or before the Closing Date all of the following in form and
substance satisfactory to the Bank and the Bank's counsel:
(a) the Security, duly executed;
(b) evidence of the completion of all recordings, registrations
and filings as may be necessary or desirable to perfect or preserve
the security interests created by the Security;
<PAGE> 14
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(c) a promissory note, duly executed;
(d) a certificate of the Borrower stating that, as of such date,
(i) all the representations and warranties made by the Borrower herein
are true and correct and that no event has occurred which constitutes
or would constitute, with the giving of notice, the passing of time,
or both, an Event of Default; and (ii) the Borrower has performed all
covenants under this Agreement to be performed by him; and
(e) the Borrower shall have delivered such other documentation as
the Bank may reasonably request.
6.2 WAIVER - The conditions set forth in Section 6.1 are inserted for the
sole benefit of the Bank and may be waived by the Bank, in whole or in part
(with or without terms or conditions).
ARTICLE VII.
SECURITY
7.1 SECURITY - There shall be delivered to the Bank the following:
(a) a limited guarantee from Mr. Jacques Benquesus in the form
provided for in the Banks Master Agreement (the "Guarantee");
(b) the Amended Banks Pledge (as such term is defined in the Banks
Master Agreement);
(c) the Banks Purchased Share Pledge (as such term is defined in
the Banks Master Agreement);
(d) the Share Pledge (as such term is defined in the Weltman
Master Agreement); and
(e) the Share Pledge (as such term is defined in the Wiseman
Master Agreement);
as continuing collateral security for the prompt and due repayment of the Loan
and the performance by the Borrower of all of its present and future
obligations to the Bank.
7.2 REGISTRATION - The Security shall, at the Borrower's expense (subject
to the provisions set forth in the first sentence of Section 11.1), be
registered, filed or
<PAGE> 15
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recorded in all offices where such registration, filing or recording is
necessary or of advantage to the creation, perfection and preserving of the
applicable security interests.
ARTICLE VIII.
BORROWER'S REPRESENTATIONS AND WARRANTIES
To induce the Bank to make available the Facility, the Borrower
represents and warrants to and in favour of the Bank as follows, which
representations and warranties of the Borrower shall survive the execution and
delivery of this Agreement and the making of the Loan, notwithstanding any
investigations or examinations which may be made by the Bank or the Bank's
counsel, and the Bank shall be deemed to have relied on such representations
and warranties in the making of the Loan:
8.1 ENFORCEABILITY - When executed and delivered, this Agreement and the
Security (to the extent that the Borrower is a party thereto) will constitute
valid and legally binding obligations enforceable against the Borrower in
accordance with their respective terms, subject, however, to limitations with
respect to enforcement imposed by law in connection with bankruptcy or similar
proceedings and to the extent that equitable remedies such as specific
performance and injunction are in the discretion of the court from which they
are sought;
8.2 VALIDITY OF AGREEMENT - NO-CONFLICT - The Borrower is not a party to,
bound or affected by or subject to any indenture, mortgage, lease, agreement,
obligation, instrument, statute, regulation, order, judgment, decree, licence,
permit or law which would be violated, contravened, breached by, or under which
default would occur or a lien, claim, restriction or encumbrance would be
created as a result of the execution and delivery of this Agreement or the
Security or the carrying out of the Borrower's obligations hereunder or
thereunder;
8.3 GOVERNMENT APPROVAL, REGULATION, ETC. - No authorization or approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body or other Person is required for the due execution, delivery
or performance by the Borrower of this Agreement or the Security except for
authorizations, approvals, actions, notices or filings which have been duly
obtained or made and are in full force and effect;
8.4 NO EVENT OF DEFAULT - No Event of Default has occurred and is
continuing and no event has occurred which, with the giving of notice, the
passing of time, or both, would constitute an Event of Default;
8.5 NO ENCUMBRANCES - There has been no act or omission by the Borrower
which has created or resulted in the creation of any mortgage, lien, pledge,
charge,
<PAGE> 16
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security interest or other encumbrance on, against or with respect to any part
of the Pledged Shares (as such term is defined in the Weltman Master
Agreement), except the Security;
8.6 MATERIAL OBLIGATIONS - The Borrower is not, in any respect, in default
under any material obligation, direct or indirect, contingent or otherwise, or
under any order, writ, decree or demand of any court or governmental agency or
authority, where any such default would materially adversely affect the
Borrower's ability to perform his obligations under this Agreement or under the
Security;
8.7 COMPLIANCE WITH LAWS - The Borrower is not in violation of any
judgment, decree, order, statute, rule or regulation relating in any way to the
Borrower, or to his property or assets and which would have a material effect
on the condition, financial or otherwise, of the Borrower;
8.8 TAXES - The Borrower has duly and timely filed all tax returns and
reports required by law to have been filed by him, has duly and correctly
reported all income and other amounts required to be reported and has paid all
taxes, penalties, interest, fines and governmental charges in respect thereof,
to the extent that such taxes, penalties, interest, fines and other
governmental charges have been assessed by the relevant taxation authority,
except to the extent that (i) any such tax, penalty, interest, fine or any
other governmental charge is being contested in good faith by appropriate
proceedings or (ii) the failure so to pay or discharge any such tax, penalty,
interest, fine or any other governmental charge could not reasonably be
expected to materially adversely affect the financial condition or business of
the Borrower. The Borrower has duly and timely paid all instalments of taxes
required to be paid by him except to the extent that (i) any such instalment of
tax is being contested in good faith by appropriate proceedings or (ii) the
failure so to pay or discharge any such instalment of tax could not reasonably
be expected to materially adversely affect the financial condition or business
of the Borrower. There are no actions, suits, proceedings, investigations,
audits or claims now pending or, to the best of the knowledge of the Borrower
(after due inquiry), threatened against the Borrower in respect of any taxes or
any penalties, interest and fines in respect thereof and there are no matters
under discussion with any taxation or other governmental authority relating to
any such matters; and
8.9 ACCURACY OF INFORMATION - All factual information previously or
contemporaneously furnished by or on behalf of the Borrower in writing to the
Bank for purposes of or in connection with this Agreement or any transaction
contemplated hereby including the certificates delivered pursuant to Section
6.1, (true and complete copies of which were furnished to the Bank in
connection with its execution and delivery of this Agreement) is and all other
such factual information pursuant to this Agreement to the Bank will be true
and accurate in every material respect on the date as of which such information
is dated or certified and such information is not, or shall not be, as the case
may be, incomplete by
<PAGE> 17
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omitting to state any material fact necessary to make such information not
misleading.
ARTICLE IX.
COVENANTS
The Borrower covenants and agrees with the Bank that, unless the Bank
otherwise consents in writing, so long as any amount payable hereunder is
outstanding:
9.1 PUNCTUAL PAYMENT - The Borrower shall duly and punctually pay the
principal amount of the Loan, all interest thereon, all fees and all other
amounts required to be paid by the Borrower hereunder or pursuant to agreements
with the Bank at the times and places and in the manner provided for herein or
therein;
9.2 COMPLIANCE WITH LEGISLATION - The Borrower shall comply with all laws,
rules, regulations and orders, the non- compliance with which could materially
and adversely affect the financial condition of the Borrower or the performance
by the Borrower of his obligations under this Agreement and the Security;
9.3 NOTICE OF LITIGATION - The Borrower shall give notice to the Bank of
the occurrence of any material litigation, proceeding or dispute affecting the
Borrower initiated after the Closing Date if the result of any of them might
have a material adverse effect on the ability, financial or otherwise, of the
Borrower to perform his obligations under this Agreement and Security, and from
time to time shall provide the Bank with all reasonable non-privileged
information requested by the Bank concerning the status of any such litigation,
proceeding or dispute. Such notice shall be given within fifteen (15) days of
the Borrower becoming aware of such litigation, proceeding or dispute and shall
be in form and detail satisfactory to the Bank;
9.4 NOTICE OF ANY EVENT OF DEFAULT - The Borrower shall forthwith give
notice to the Bank of any fact which, to the best of the Borrower's knowledge,
may be construed as constituting an Event of Default or of any event which, to
the best of the Borrower's knowledge, with the giving of notice, lapse of time
or otherwise may constitute an Event of Default;
9.5 USE OF PROCEEDS - The Borrower shall use the proceeds of the Loan for
the purposes contemplated hereunder;
9.6 TAXES - The Borrower will pay all federal, state and provincial and
other taxes or other assessments or governmental charges or levies imposed upon
him or upon his income or profits or upon property belonging to him prior to
the
<PAGE> 18
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time when any penalties or interest (except interest during extensions of time
for filing of federal income or other tax returns not in excess of nine months)
accrue with respect thereto, unless, in any such case, the same is being
contested in good faith by appropriate proceedings, except to the extent that
(i) any such tax, penalty, interest, fine or any other governmental charge is
being contested in good faith by appropriate proceedings or (ii) the failure so
to pay or discharge any such tax, penalty, interest, fine or other governmental
charge could not reasonably be expected to materially adversely affect the
financial condition or business of the Borrower;
9.7 PERFORMANCE OF COVENANTS - The Borrower will diligently observe and
perform all his covenants to be observed or performed hereunder and under the
Security;
9.8 DISPOSAL OF COLLATERAL - The Borrower shall not sell, assign,
lease-back or otherwise dispose of any of the Collateral, unless the Net
Proceeds (as such term is defined in the Weltman Master Agreement) of the sale,
assignment, or other disposal of the Collateral are applied, in accordance with
the provisions of Article 3 of the Weltman Master Agreement, to reduce the
outstanding Loan;
9.9 LIMITATION ON ENCUMBRANCES - The Borrower shall not create, incur,
assume or otherwise become liable upon or suffer to exist any mortgage, charge,
lien, hypothec, security interest or other encumbrance whatsoever on, against
or with respect to any part of the Collateral except the Security; and
9.10 FURTHER ASSURANCES - The Borrower will, from time to time, do, execute
and deliver or shall cause to be done, executed and delivered all such further
acts, documents or other instruments as may reasonably be requested by the Bank
in order to cure any defects in the execution and delivery of, or to comply
with or accomplish the covenants and agreements contained in this Agreement and
the Security.
ARTICLE X.
EVENTS OF DEFAULT
10.1 EVENTS OF DEFAULT - The occurrence of any one or more of the following
events (each such event being herein referred to as an "Event of Default")
shall constitute a default under this Agreement:
(a) If the Borrower shall fail to pay any principal of, or
interest on, the Loan when the same shall become due and payable
hereunder;
<PAGE> 19
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(b) If the Borrower, together with the borrowers under the Related
Loan Agreements, shall fail to repay on or before the third
Anniversary Date at least $30,000,000 of the aggregate principal
amount of the Loan and the loans under the Related Loan Agreements;
for a period of 3 Business Days after notice from the Bank;
(c) If the Borrower shall fail to perform or comply with any term,
condition, covenant or obligation contained in this Agreement or in
the Security (other than those specified in Subsections 10.1(a) or
(b)) and, if capable of remedy, such failure to perform or comply is
not remedied within 30 days of notice from the Bank so to remedy;
(d) If any representation or warranty made by the Borrower in this
Agreement or the Security or in any certificate or other document at
the time delivered hereunder to the Bank shall prove to have been
incorrect in any material respect on and as of the date thereof;
(e) If the Borrower becomes insolvent, makes any assignment in
bankruptcy or makes any other general assignment for the benefit of
creditors, makes any proposal under the Bankruptcy and Insolvency Act
(Canada), the United States Bankruptcy Code, 11 USC Section 101 et
seq. or any comparable law, is adjudged bankrupt, files a petition or
proposal to take advantage of any act of insolvency, consents to or
acquiesces in the appointment of a trustee, receiver, receiver and
manager, interim receiver, custodian, sequestrator or other person
with similar powers of himself or of all or any substantial portion of
his property or assets, or files a petition or otherwise commences any
proceedings seeking any arrangement, composition or readjustment under
any applicable bankruptcy, insolvency, moratorium or other similar law
affecting creditors' rights or consents to, or acquiesces in, the
filing of such a petition;
(f) If a trustee, receiver, receiver and manager, interim
receiver, custodian, sequestrator or any other person with similar
powers shall be appointed of the Borrower or of all or any substantial
portion of his property or assets, a judgment or an order is made by a
tribunal of competent jurisdiction restraining his ability to deal
with all or any substantial portion of his property and assets or a
judgment or order is made by a tribunal of competent jurisdiction
approving any arrangement, composition or readjustment under any
applicable bankruptcy, insolvency or moratorium or other similar law
affecting creditors' rights and such appointment, judgment or order is
not vacated, stayed or set aside within 45 days of the date thereof;
(g) If an event of default shall occur under any of the Related
Loan Agreements; or
<PAGE> 20
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(h) If a Liquidity Event shall occur.
10.2 TERMINATION AND ACCELERATION - Upon the occurrence of an Event of
Default and for so long as such Event of Default shall continue, the Bank may,
by one or more notices to the Borrower do any or all of the following:
(a) terminate the obligations of the Bank including without
limitation, the obligation of the Bank to permit the Drawdown, or any
Libor Rollovers, the capitalization of interest or the deferral of
interest hereunder;
(b) declare the entire principal amount of the Loan Amount, all
interest accrued thereon (including any deferred interest) and all
fees and other amounts required to be paid by the Borrower hereunder,
to be immediately due and payable without the necessity of presentment
for payment, protest, notice of non-payment or notice of protest (all
of which are hereby expressly waived); and
(c) proceed to exercise any and all rights hereunder or under the
Security and any other document or instrument executed pursuant to
this Agreement.
The Borrower acknowledges that the exercise by the Bank of any rights under the
Security without having declared an acceleration pursuant to the provisions of
this Section shall not in any way alter, affect or prejudice the right of the
Bank to make a declaration pursuant to the provisions of this Section at any
time and, without limiting the foregoing, shall not be construed or deemed to
constitute a waiver of any rights under this Section.
10.3 REMEDIES CUMULATIVE AND WAIVERS -
(a) For greater certainty, it is expressly understood and agreed
that the respective rights and remedies of the Bank hereunder or under
any other document or instrument executed pursuant to this Agreement,
including the Security, are cumulative and are in addition to and not
in substitution for any rights or remedies provided by law or by
equity; and any single or partial exercise by the Bank of any right of
remedy for a default or breach of any term, covenant, condition or
agreement contained in this Agreement or other document or instrument
executed pursuant to this Agreement, including the Security, shall not
be deemed to be a waiver of or to alter, affect or prejudice any other
right or remedy or other rights or remedies to which the Bank may be
lawfully entitled for such default or breach. Any waiver by the Bank
of the strict observance, performance or compliance with any term,
covenant, condition or agreement herein contained or contained in any
of the Security and any indulgence granted either expressly or by
course of conduct, by the Bank shall be effective only in the specific
instance and for the purpose for
<PAGE> 21
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which it was given and shall be deemed not to be a waiver of any
rights and remedies of the Bank under this Agreement or under the
Security or other document or instrument executed pursuant to this
Agreement as a result of any other default or breach hereunder or
thereunder.
(b) Notwithstanding anything in this Agreement or the Security to
the contrary, if after the occurrence of an Event of Default, the Bank
elects to exercise any of its rights or remedies to seek payment of
the Loan and/or any other obligation of the Borrower hereunder, the
Bank agrees that it shall exercise any such right or remedy in the
following order (i) first, the Bank shall (unless stayed or prevented
from doing so by law or court order) sell the securities held under
the Share Pledge (as defined in the Weltman Master Agreement); (ii)
second, the Bank shall (unless stayed or prevented from doing so by
law or court order) exercise any right of set-off pursuant to Section
10.4 below and (iii) third, but only to the extent of any remaining
deficiency, the Bank shall make a demand for payment pursuant to the
Guarantee.
10.4 SETOFF -
(a) Regardless of the adequacy of any Collateral, any deposits or
other sums credited by or due from the Bank to the Borrower and any
securities or other property of the Borrower in the possession of the
Bank may be applied to or set off against the payment of the
obligations of the Borrower hereunder and under the Security and any
or all other liabilities, direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, of the
Borrower to the Bank at any time after the occurrence and during the
continuance of any Event of Default.
(b) The obligations of the Borrower under this Agreement and under
the Security shall not be subject to any counterclaim, set-off,
deduction or defence (other than payment or performance) based upon
any claim the Borrower may have against the Bank or any other Person.
ARTICLE XI.
GENERAL
11.1 COSTS AND EXPENSES - The Borrower shall pay on the Closing Date all
reasonable costs and expenses incurred by the Bank in connection with
preparation, printing, execution and delivery of each of this Agreement, the
Security and the other documents to be delivered hereunder, whether or not the
Drawdown has been made hereunder, including, without limitation, the fees and
out-of-pocket expenses of Bank's counsel with respect thereto and with respect
to advising the Bank as to its rights and responsibilities hereunder and under
the Security and the
<PAGE> 22
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other documents delivered hereunder; provided, however, that such costs and
expenses shall not exceed the lesser of $10,000 and the fees and out-of-pocket
expenses of Borrower's counsel; it being understood and agreed that such amount
shall be capitalized and added to the principal amount of the Loan. The
Borrower further agrees to pay all costs and expenses incurred by the Bank
(including fees and expenses of counsel, accountants and other experts), in
connection with any waiver or consent under, or amendment to, this Agreement or
the Security, or the preservation or enforcement of rights of the Bank under
this Agreement, the Security and other documents delivered hereunder including,
without limitation, all reasonable costs and expenses sustained by the Bank as
a result of any failure by the Borrower to perform or observe his obligations
contained in any of such documents.
11.2 ILLEGALITY - If after the date of this Agreement any change occurs in
any Applicable Law, or in the interpretation or application thereof by any
court or by any governmental or other authority or entity charged with the
administration thereof, which makes it unlawful for the Bank to make, fund or
maintain the Facility or to give effect to its obligations in respect of any
Libor Loan thereunder, the Bank may, by written notice thereof to the Borrower
declare its obligations under this Agreement to be terminated. The Borrower
shall prepay to the Bank within the time required by such law (or at the end of
such longer period as the Bank at its discretion has agreed) the principal
amount of the Loan together with accrued interest (including any deferred
interest) and such other amounts which may be payable hereunder as a result of
such prepayment. Any such notice shall be accompanied by a certificate of an
officer of the Bank identifying in reasonable detail the event or condition
which makes it unlawful for the Bank to fund or maintain the Facility or any
Libor Loan thereunder and such certificate shall be final, conclusive and
binding on the Borrower in respect of the matters set out therein. If any such
change shall only affect a portion of the Bank's obligations under this
Agreement which is, in the reasonable opinion of the Bank, severable from the
remainder of this Agreement so that the remainder of this Agreement may be
continued in full force and effect without otherwise affecting any of the
obligations of the Bank or the Borrower hereunder or under any of the other
documents contemplated hereby, the Bank shall only declare its obligations
under the affected portion so terminated.
11.3 INDEMNIFICATION BY THE BORROWER - In addition to any liability of the
Borrower to the Bank under any other provision of this Agreement, the Borrower
shall indemnify the Bank and hold the Bank harmless against any reasonable loss
(excluding loss of profit) or expense incurred by the Bank as a result of any
failure by the Borrower to fulfil any of its obligations hereunder including,
without limitation, any actual breakage cost or expense incurred by reason of
the liquidation or re-employment in whole or in part of deposits or other funds
required by the Bank to fund the Libor Loans as a result of
<PAGE> 23
- 23 -
(a) the Borrower's failure to effect the Drawdown or to make any
payment, repayment or prepayment on the date required hereunder or
specified by him in any notice given hereunder;
(b) the Borrower's failure to pay any other amount, including
without limitation any interest or fee, due hereunder on its due date;
(c) the Borrower's failure to give any notice required to be given
by him to the Bank hereunder; or
(d) the voluntary prepayment by the Borrower of the Libor Loan or
any portion thereof on any date other than on the last day of the
Libor Interest Period relating thereto.
11.4 FUNDS - Each amount advanced, made available, disbursed or paid
hereunder shall be advanced, made available, disbursed or paid, as the case may
be, in immediately available funds or, after notice from the Bank, in such
other form of funds as may from time to time be customarily used in New York,
United States of America in the settlement of banking transactions similar to
the banking transactions required to give effect to the provisions of this
Agreement on the day such advance, disbursement or payment is to be made.
11.5 NOTICE - Any demand, notice or communication to be made or given
hereunder shall be in writing, except as otherwise expressly permitted or
required under this Agreement, and may be made or given by personal delivery,
by registered mail or by transmittal by telex or facsimile machine addressed to
the respective Parties as follows:
To the Borrower: Mr. Larry H. Weltman
c/o Gaming Lottery Corporation
160 Nashdene Road
Scarborough, Ontario
M1V 4C4
Telecopier: (416) 754-8441
Telephone: (416) 292-5963
With a copy to the
Borrower's counsel: Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, NY 10036
Attention: Mr. Jack Jackson, Esq.
Telecopier: (212) 969-2900
Telephone: (212) 969-3000
<PAGE> 24
- 24 -
And a copy to the
Borrower's Ontario
counsel: Goldman, Spring, Schwartz & Kichler
Suite 700
40 Sheppard Avenue West
North York, Ontario
M2N 6K9
Attention: Mr. Joseph Maierovits, Esq.
Telecopier: (416) 225-4805
Telephone: (416) 225-9400
To the Bank: Coutts & Co AG, New York Branch
65 East 55th Street
New York, NY 10022
Attention: Mr. Mario Economou, Vice President
Telecopier: (212) 303-2929
Telephone: (212) 303-2971
With a copy to the
Bank's New York
counsel: Rogers & Wells
200 Park Avenue
New York, New York 10166-0153
Attention: Mr. Alan M. Christenfeld, Esq.
Telecopier: (212) 878-8375
Telephone: (212) 878-8000
And a copy to the
Bank's Ontario
counsel: Osler, Hoskin & Harcourt
280 Park Avenue - 30W
New York, New York 10017
Attention: Mr. John W. Stevens, Esq.
Telecopier: (212) 867-5802
Telephone: (212) 867-5800
or to such other mailing or telex or facsimile machine address as any party may
from time to time notify the others in accordance with this Section. Any
demand,
<PAGE> 25
- 25 -
notice or communication made or given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof,
or, if made or given by registered mail, on the fifth Business Day following
deposit thereof in the mail or, if made or given by telex or by facsimile
transmission, on the first Business Day following the transmittal thereof and
receipt of the appropriate answer back. If the party making or giving such
demand, notice or communication knows or ought reasonably to know of
difficulties with the postal system which might affect the delivery of mail,
any such demand, notice or communication shall not be mailed but shall be made
or given by personal delivery or by telex or by facsimile transmission.
11.6 GOVERNING LAW AND CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL:
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
(b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE,
EACH OF THE BORROWER AND THE BANK HEREBY AGREE TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK SITTING IN THE
CITY AND COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED ON
VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION
INSTITUTED THEREIN, AND AGREE THAT ANY DISPUTE CONCERNING THE
RELATIONSHIP BETWEEN THE BORROWER AND THE BANK OR THE CONDUCT
OF ANY PARTY HERETO IN CONNECTION WITH THIS AGREEMENT OR
OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
NOTWITHSTANDING THE FOREGOING, THE BANK SHALL HAVE THE RIGHT
TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR HIS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE BANK
DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE
SECURITY.
(c) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO HIM AT HIS ADDRESS SET FORTH IN SECTION 11.5 AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS
AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS
OR, AT THE BANK'S OPTION, BY SERVICE UPON THE BORROWER'S NEW
YORK COUNSEL AT ITS ADDRESS SET FORTH IN SECTION 11.5, WHICH
COUNSEL THE BORROWER HEREBY IRREVOCABLY APPOINTS AS HIS AGENT
FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE
STATE OF NEW YORK. THE
<PAGE> 26
- 26 -
BORROWER HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID.
(d) EACH OF THE BORROWER AND THE BANK HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(I) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH (OTHER THAN THE WELTMAN MASTER AGREEMENT) OR (II) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO
THIS AGREEMENT, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. THE BORROWER AND THE BANK EACH HEREBY AGREE AND
CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF
THEM MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
(e) NOTHING IN THIS SECTION 11.6 SHALL AFFECT THE RIGHTS OF THE
BANK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR AFFECT THE RIGHTS OF THE BANK TO BRING ANY ACTION OR
PROCEEDING AGAINST THE BORROWER OR HIS PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION.
(f) EACH OF THE BORROWER AND THE BANK HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SECTION 11.6 ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
11.7 JUDGMENT CURRENCY - The obligation of the Borrower pursuant to this
Agreement to make payments in a specific currency (the "Contractual Currency")
shall not be discharged or satisfied by any tender or recovery pursuant to any
judgment expressed in or converted into any other currency except to the extent
to which such tender or recovery shall result in the effective receipt by the
Bank of the full amount of the Contractual Currency payable or expressed to be
payable under this Agreement and accordingly the obligation of the Borrower
shall be enforceable as an alternative or additional cause of action for the
purpose of recovery in the other currency of the amount (if any) by which such
effective receipt shall fall short of the full amount of the Contractual
Currency payable or expressed to be payable
<PAGE> 27
- 27 -
under this Agreement and shall not be effected by judgment being obtained for
any other sum due under this Agreement.
11.8 SUCCESSORS AND ASSIGNS - This Agreement shall be binding upon and
shall enure to the benefit of the Bank and the Borrower, and their respective
successors and assigns. The Borrower shall not assign or transfer its rights
and obligations hereunder or any interest herein without the prior written
consent of the Bank.
11.9 ANNUAL RATES OF INTEREST - For the purposes of the Interest Act
(Canada), whenever interest payable pursuant to this Agreement is calculated on
the basis of a period other than a calendar year (the "Interest Period"), each
rate of interest determined pursuant to such calculation expressed as an annual
rate is equivalent to such rate as so determined multiplied by the actual
number of days in the calendar year in which the same is to be ascertained and
divided by the number of days in the Interest Period.
11.10 SEVERABILITY - Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
of this Agreement and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provisions in
any other jurisdiction.
11.11 WHOLE AGREEMENT - This Agreement, together with the Weltman Master
Agreement and all agreements and transactions contemplated herein and therein,
constitute the whole and entire agreement between the Parties relating to the
subject matter of this Agreement, and cancels and supersedes any prior
agreements, undertakings, declarations, commitments and representations,
written or oral, in respect thereof.
11.12 AMENDMENTS AND WAIVERS - Any provision of this Agreement or the
Security may be amended only if the Borrower and the Bank so agree in writing
and, except as otherwise specifically provided herein, may be waived only if
the Bank so agrees in writing.
Any such waiver and any consent by the Bank under any provision of
this Agreement or the Security must be in writing and may be given subject to
any conditions thought fit by the person giving that waiver or consent. Any
waiver or consent shall be effective only in the instance and for the purpose
for which it is given.
11.13 FURTHER ASSURANCES - Each of the Borrower and the Bank shall promptly
cure any default by him or it in the execution and delivery of this Agreement
or of the Security. The Borrower, at his expense, shall promptly execute and
deliver to the Bank, upon request by the Bank, all such other and further
documents, agreements, opinions, certificates and other instruments in
compliance with, or accomplishment of his covenants and agreements hereunder or
under the
<PAGE> 28
- 28 -
Security or to more fully state his obligations as set out herein or in the
Security or to make any recording, filing or notice or obtain any consent, all
as may be reasonably necessary or appropriate in connection therewith.
11.14 COUNTERPARTS - This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
taken together shall be deemed to constitute one and the same instrument, and
it shall not be necessary in making proof of this Agreement to produce or
account for more than one such counterpart.
11.15 FACSIMILE SIGNATURE - This Agreement may be executed by faxed
signature with the same effect as a manually signed original signature.
11.16 CONFIDENTIALITY - This Agreement shall be subject to the provisions of
the Weltman Master Agreement regarding confidentiality.
11.17 NON-RECOURSE - Notwithstanding anything contained in (i) this
Agreement, (ii) any agreement, document, instrument or certificate entered into
in connection herewith, other than the Weltman Master Agreement, (collectively,
the "Loan Documents") or (iii) otherwise, the Borrower shall not be personally
liable for the repayment of any of the principal of, or interest on, the Loan,
the payment of any fees or expenses of the Bank hereunder or under any Loan
Documents or the performance of, or failure to perform, any other obligation of
the Borrower under this Agreement or under any other Loan Document, and the
sole and exclusive recourse of the Bank shall be to the Security and the
Borrower shall have no liability for any deficiency which may exist after
foreclosure on the Security; provided, however, that there shall be no limit to
the personal liability of the Borrower in the case of fraud.
<PAGE> 29
IN WITNESS WHEREOF the Parties have executed this Agreement as of the
date first written above.
/s/ Larry H. Weltman
---------------------------------------
MR. LARRY H. WELTMAN
COUTTS & CO AG, NEW YORK BRANCH
By: /s/ Peter Cawdron
------------------------------------
Name:
Title:
<PAGE> 30
SCHEDULE A
SHARES TO BE ACQUIRED
<TABLE>
<CAPTION>
COMPANY SHARES
------- ------
<S> <C>
Gaming Lottery Corporation 183,020 common shares
</TABLE>
<PAGE> 31
SCHEDULE B
CERTIFICATE OF COMPLIANCE
TO: Coutts & Co AG, New York Branch (the "Bank")
FROM: Mr. Larry H. Weltman (the "Borrower")
RE: Loan Agreement dated August 20, 1996 between the Borrower and the
Bank (the "Loan Agreement")
- --------------------------------------------------------------------------------
This certificate is given pursuant to the terms of the Loan
Agreement. All defined terms used in this certificate indicated with
initial capitals shall have the same meaning as in the Loan
Agreement.
The Borrower hereby certifies that:
A. All of the representations and warranties of the Borrower
contained in the Loan Agreement are true and correct on and as of the
Closing Date.
B. All of the covenants of the Borrower contained in the Loan
Agreement together with all of the conditions precedent to the
Drawdown required to be performed by the Borrower on or prior to the
Closing Date and all other terms and conditions required to be
performed by the Borrower on or prior to the Closing Date contained
in the Loan Agreement have been fully complied with.
C. No Event of Default has occurred and remains outstanding and
to the best of the knowledge, information and belief of the
undersigned, no event has occurred and remains outstanding which,
with the passing of time or giving of notice, or both, would be an
Event of Default.
DATED the day of August, 1996.
--------------------------------------
Mr. Larry H. Weltman
<PAGE> 32
SCHEDULE C
LIBOR NOTICE
TO: Coutts & Co. AG, New York Branch (the "Bank")
Attention: Mr. Mario Economou, Vice President
FROM: Mr. Larry H. Weltman (the "Borrower")
RE: Loan Agreement dated August 20, 1996 between the Borrower
and the Bank (the "Loan Agreement")
- --------------------------------------------------------------------------------
This Libor Notice is given pursuant to the terms of the Loan agreement. All
defined terms used in this Libor Notice indicated with initial capitals shall
have the same meaning as in the Loan Agreement.
Notice is hereby given pursuant to the provisions of Section 2.5 of the Loan
Agreement that the Borrower requests the rollover of the Libor Loan for a Libor
Interest Period of ________________ month(s).
The undersigned hereby certifies that no Event of Default has occurred and
remains outstanding and to the best of the knowledge, information and belief of
the Borrower (after due enquiry), no event has occurred and remains outstanding
which, with the giving of notice or the passing of time, or both, would be an
Event of Default.
DATED the day of ,
--------------------------------------
Mr. Larry H. Weltman
<PAGE> 1
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as
of August 20, 1996, by LARRY H. WELTMAN, an individual resident in the City of
Toronto, Ontario (the "Pledgor"), in favour of COUTTS & CO AG, NEW YORK BRANCH,
a Swiss bank licensed to conduct a banking business in the State of New York
(the "Pledgee").
Preliminary Statement.
A. Simultaneous with the execution and delivery of this
Agreement, Pledgee is entering into (i) those certain Loan Agreements of even
date herewith with Jacques Benquesus (the "Banks Loan Agreements"), (ii) that
certain Loan Agreement of even date herewith with Larry H. Weltman (the
"Weltman Loan Agreement") and (iii) that certain Loan Agreement of even date
herewith with John M. Wiseman (the "Wiseman Loan Agreement" and together with
the Banks Loan Agreements and the Weltman Loan Agreement, the "Loan
Agreements"), pursuant to which the Pledgee may hereafter advance monies and
make other extensions of credit to each of Jacques Benquesus, Larry H. Weltman
and John M. Wiseman (collectively, the "Borrowers") under the respective Loan
Agreements.
B. Simultaneous with the execution and delivery of this
Agreement, Jacques Benquesus is entering into that certain limited guarantee of
even date herewith with Pledgee (the "Limited Guarantee") whereby Jacques
Benquesus guarantees the obligations of each of the Borrowers under the Loan
Agreements to the extent set forth therein.
C. Pledgor is the owner of certain shares of the issued and
outstanding capital stock of Gaming Lottery Corporation (the "Company") in the
amounts listed on Schedule 1 hereto (the securities listed on Schedule 1 are
hereinafter referred to as the "Stock").
D. The Pledgee has required as a condition to the Pledgee's
advancement of funds and making of other extensions of credit under the Loan
Agreements that Pledgor execute and deliver to Pledgee this Agreement in order
to secure the due and punctual performance of and compliance by each of the
Borrowers with all obligations, covenants, warranties, undertakings and
conditions contained in or arising under each of the Loan Agreements including
but not
<PAGE> 2
- 2 -
limited to, the full and punctual payment by the Borrowers, when due, whether
at the stated due date, by acceleration or otherwise, of any and all,
obligations, liabilities, indebtedness and other amounts of every kind arising
under the Loan Agreements (whether principal, interest (after as well as before
default), fees, premiums or penalties), all amounts in respect of indemnities
provided for in the Loan Agreements, and all damages (whether provided for in
the Loan Agreements or otherwise permitted by law) in respect of a failure or
refusal by any Borrower to make any such payment howsoever created, arising or
evidenced, voluntary or involuntary, whether direct or indirect, absolute or
contingent, now or hereafter existing or owing to the Pledgee, and Jacques
Benquesus' obligations under the Limited Guarantee (all of the foregoing
obligations and undertakings are collectively referred to herein as the
"Obligations").
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit (including, without
limitation, any loan or advance by renewal, refinancing or extension of the
Loan Agreements or otherwise) heretofore, now or hereafter made to or for the
benefit of the Borrowers by Pledgee, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, the parties hereto agree as follows:
1. Pledge. Pledgor hereby delivers, pledges and grants security
interests to Pledgee in: (a) the Stock accompanied by stock transfer powers of
attorney in respect of all of the Stock ("Powers") duly executed in blank, in
the form attached hereto as Exhibit 1 and made a part hereof; (b) all dividends
and distributions (whether in cash, stock or otherwise) paid or payable on or
in respect of the Stock or any of it, including without limitation (i) all
dividends and other distributions paid or payable in cash in respect of the
Stock or any of it in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus and (ii) cash paid, payable or otherwise distributed in respect
of, or in redemption of, or in exchange for, any Stock; (c) the proceeds of
disposition of any of the foregoing; (d) every balance of every account which
the Pledgor has or shall at any time have with the Pledgee and all moneys,
instruments, chattel paper, documents, accounts, contract rights, goods,
credits, choses in action, claims, demands and without limitation whatsoever,
property of every kind and description including additions, accessions and
substitutions which have been or at any time shall be delivered to or be in
transit to or from the Pledgee or any of its agents or correspondents or other
third party or parties acting on the Pledgee's behalf, by, or for, or for
account of, or subject to the order of, the Pledgor, which has come or shall
come into the possession, custody or control of the Pledgee in any way or for
any purpose whatsoever, whether for safekeeping or otherwise and whether the
Pledgee shall accept them for the purposes for which they are delivered to it
or not; and (e) the property and interests in property described in Paragraphs
2, 6 and 7 hereof and the proceeds thereof (items (a), (b), (c), (d) and (e)
<PAGE> 3
- 3 -
being hereinafter collectively referred to as the "Collateral"), as security
for the payment and performance of the Obligations. Pledgor hereby appoints
Pledgee as Pledgor's attorney-in-fact to arrange, at Pledgee's option, for the
transfer of the Collateral to the name of Pledgee or to the name of Pledgee's
nominee and to this end the Pledgor hereby covenants to execute any further
endorsements, transfers, conveyances, powers of attorney or other documents
that the Pledgee may from time to time reasonably request as may be required to
effect transfer of the Collateral or any of it.
2. After-Acquired Collateral. In the event that the Pledgor
receives or becomes entitled to receive, after the date hereof, property and
interests that constitute Collateral, then any such Collateral shall be
received in trust for the benefit of the Pledgee, shall be segregated from
other property of the Pledgor and shall be forthwith delivered over to the
Pledgee as Collateral in the same form as so received by the Pledgor (with any
necessary endorsements or stock powers required to provide for its transfer in
the manner set forth in Paragraph 1 hereof).
3. Voting Rights. During the term of this Agreement, and so long
as there shall not occur or exist an Event of Default under any of the Loan
Agreements and as defined in each of the Loan Agreements (hereinafter an "Event
of Default"), Pledgor shall have the right to vote the Stock on all corporate
questions for all purposes not inconsistent with the terms of this Agreement
and any of the Loan Agreements. Pledgee shall be entitled to exercise all
voting powers pertaining to the Collateral from and after the occurrence of an
Event of Default. Pledgee shall execute and deliver (or cause to be executed
and delivered) to the Pledgor all such proxies and other instruments as the
Pledgor may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and other rights which it is entitled to exercise pursuant
to this Paragraph 3.
4. Representations, Warranties and Covenants. Pledgor warrants
and represents that (a) there has been no act or omission by the Pledgor which
has created or resulted in the creation of any mortgage, lien, pledge, charge,
security interest or other encumbrance on, against or with respect to any part
of the Pledged Shares (as such term is defined in the Master Agreement between
the Pledgee and the Pledgor, dated August 19, 1996 (the "Master Agreement")),
except the Security (as such term is defined in the Weltman Loan Agreement);
(b) the Pledgor has full power and authority to enter into this Agreement; and
(c) the Powers are duly executed and give Pledgee the authority such Powers
purport to confer.
The Pledgor hereby covenants not to undertake any act or omit to take
any act, which could create or result in, any mortgage, lien, pledge, charge,
security interest or other encumbrance (each a "Charge"), or suffer to exist
any Charge arising after the date hereof, on, against or with respect to, any
part of the Pledged Shares, except the Security.
<PAGE> 4
- 4 -
5. Subsequent Changes Affecting Collateral. Pledgor represents
to Pledgee that Pledgor has made Pledgor's own arrangements for keeping
informed of changes or potential changes affecting the Collateral (including,
but not limited to, rights to convert, rights to subscribe, payment of
dividends, reorganization or other exchanges, tender offers and voting rights),
and Pledgor agrees that Pledgee shall have no responsibility or liability for
informing Pledgor of any such changes or potential changes or for taking any
action or omitting to take any action with respect thereto. Pledgee may at any
time, transfer or register the Collateral or any part of the Collateral into
Pledgee's or Pledgee's nominee's name with or without any indication that such
Collateral is subject to the security interest under this Agreement and without
notice to the Pledgor, which notice is hereby expressly waived to the fullest
extent permitted by applicable law.
6. Stock Adjustments. In the event that during the term of this
Agreement any stock dividend, reclassification, readjustment or other change is
declared or made in the capital structure of the Company (including, without
limitation, the issuance of additional shares of preferred or common stock of
the Company of whatever class to the Pledgor in respect of the Collateral for
no further consideration), or any option included within the Stock is
exercised, or both, then all new, substituted and additional shares, or other
securities, issued to the Pledgor by reason of any such change or exercise
shall be delivered to and held by Pledgee under the terms of this Agreement in
the same manner as the Collateral originally pledged under this Agreement.
7. Warrants, Options and Other Rights. In the event that during
the term of this Agreement subscription warrants or any other rights or options
shall be issued in connection with any of the Collateral, then such warrants,
rights and options shall be immediately assigned to Pledgee and all new stock,
bonds or other securities so acquired by Pledgor shall be immediately assigned
to Pledgee to be held under the terms of this Agreement in the same manner as
the Collateral originally pledged hereunder.
8. Registration. If at any time the Pledgee wishes to register
under or otherwise comply in any way with the Securities Act of 1933, as
amended (the "Securities Act") or any similar federal or state law, or if such
registration or compliance is required with respect to the securities included
in any of the Collateral prior to the sale thereof by Pledgee, Pledgor will
cooperate with the Pledgee to cause such registration to be effectively made
(it being understood and agreed that such cooperation shall not require the
Pledgor to execute and/or deliver any registration statement with respect to
the Collateral), at no expense to Pledgor, and to continue such registration
effective for such time as may be necessary in the opinion of Pledgee. If
Pledgee shall at any time determine to transfer or register the Collateral (or
any part thereof) in its name in order to facilitate any registration under the
<PAGE> 5
- 5 -
Securities Act, Pledgor and Pledgee hereby agree that such action will not
require the Pledgee to make any adjustment to Pledgor's account and no such
adjustment shall be made unless and until the Collateral (or any part thereof)
is sold pursuant to such registration statement or otherwise to any third
party. Upon or at any time after the occurrence of an Event of Default, should
Pledgee determine that, prior to any public offering of any securities
contained in any of the Collateral, such securities should be registered under
the Securities Act and/or registered or qualified under any other federal or
state law, and that such registration and/or qualification is not practical,
then Pledgor agrees that it will be commercially reasonable if a private sale,
upon at least 10 days' prior notice to Pledgor, is arranged so as to avoid a
public offering even though the sales price established and/or obtained may be
substantially less than prices which would be quoted for such security on any
market or exchange.
9. Waivers; Subrogation. The Pledgor irrevocably agrees that
it will not bring any claims against the Borrowers to which the Pledgor is or
would at any time be otherwise entitled by virtue of its obligations under this
Agreement, including, without limitation, any right of subrogation (whether
contractual, under Section 509 of the U.S. Bankruptcy Code or otherwise) and
all contractual, statutory or common law rights of reimbursement, contribution,
or indemnity from the Borrowers which may otherwise have arisen in connection
with this Agreement, until such time as all of the Obligations have been
satisfied in full and this Agreement shall have terminated in accordance with
its terms. The Pledgor waives presentment and demand for payment of any of the
Obligations, protest and notice of dishonour or default with respect to any or
all of the Obligations, and all other notices to which Pledgor might otherwise
be entitled, except as otherwise expressly provided in this Agreement or any of
the Loan Agreements.
10. Default. (a) Upon the occurrence or existence of
an Event of Default, Pledgee shall have, in addition to any other rights given
by law or the rights given under this Agreement or the Loan Agreements, all of
the rights and remedies with respect to the Collateral of a secured party under
the Uniform Commercial Code.
(b) In addition, with respect to the Collateral, or any part of
the Collateral, which shall then be in or shall thereafter come into the
possession or custody of Pledgee, Pledgee may sell or cause the same to be sold
at any broker's board or at public or private sale, in one or more sales or
lots, at such price as Pledgee may deem best, and for cash or on credit or for
future delivery, without assumption of any credit risk, and the purchaser of
any or all of the Collateral so sold shall thereafter hold the same absolutely,
free from any claim, encumbrance or right of any kind whatsoever. Unless any
of the Collateral threatens to decline speedily in value or is or becomes of a
type sold on a recognized market, Pledgee will give Pledgor reasonable notice
of the time and place of any public sale of the
<PAGE> 6
- 6 -
Collateral, or of the time after which any private sale or other intended
disposition is to be made. Any sale of any of the Collateral conducted in
conformity with the selling restrictions applicable to the Pledgor pursuant to
Article 3 of the Master Agreement or the reasonable commercial practices of
banks, commercial finance Company, insurance Company or other financial
institutions disposing of property similar to such Collateral, shall be deemed
to be commercially reasonable. Notwithstanding any provision to the contrary
contained in this Agreement, any requirements of reasonable notice shall be met
if such notice is deposited in the United States mail, addressed to Pledgor as
provided in Paragraph 16 hereof, at least 10 days before the time of the sale
or disposition. Any other requirement of notice, demand or advertisement for
sale is, to the extent permitted by law, waived. Pledgee may, in Pledgee's own
name, or in the name of a designee or nominee, buy at any public sale of any of
the Collateral and, if permitted by applicable law, buy at any private sale of
any of the Collateral. Pledgor will pay to Pledgee all expenses (including
court costs and attorney fees and expenses) of, or incident to, the enforcement
of any of the provisions of this Agreement. Since federal and state securities
laws may impose certain restrictions on the method by which a sale of any or
all of the Collateral may be effected after the occurrence of an Event of
Default, Pledgor agrees that upon the occurrence or existence of an Event of
Default, Pledgee may, from time to time, attempt to sell all or any part of the
Collateral by means of a private placement, restricting the bidder and
prospective purchasers to those who will represent and agree that they are
purchasing for investment only and not for distribution, and Pledgor further
agrees that such private sales may be at prices and on terms less favourable
than those which may be available in a public sale. In so doing, Pledgee may
solicit offers to buy the Collateral, or any part of it, for cash, from a
limited number of investors deemed by Pledgee, in Pledgee's reasonable
judgment, to be financially responsible parties who might be interested in
purchasing such Collateral, and if Pledgee solicits such offers from not less
than four such investors, then the acceptance by Pledgee of the highest offer
obtained therefrom shall be deemed to be a commercially reasonable method of
disposition of such Collateral notwithstanding any other provision of this
Subparagraph 10(b).
(c) The Collateral is subject to release to the Pledgor in
accordance with the provisions of Article 3 of the Master Agreement.
11. Term. This Agreement shall remain in full force and effect
until all of the Obligations have been fully paid and satisfied, and all of the
Loan Agreements have been terminated. Upon termination of this Agreement as
provided in this Paragraph 11. Pledgee agrees to return any Collateral then in
its possession to Pledgor. Notwithstanding anything in this Agreement to the
contrary, this Agreement will terminate upon the release of all of the
Collateral in accordance with Article 3 of the Master Agreement.
<PAGE> 7
- 7 -
12. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of Pledgor, Pledgee and their respective successors,
heirs and assigns. Pledgor's successors, heirs and assigns shall include,
without limitation, a receiver, trustee or debtor in possession of or for
Pledgor.
13. Governing Law and Consent to Jurisdiction; Waiver of Jury
Trial.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
(b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE,
EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY AGREE TO THE EXCLUSIVE JURISDICTION
OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW
YORK SITTING IN THE CITY AND COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED
ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN,
AND AGREE THAT ANY DISPUTE CONCERNING THE RELATIONSHIP BETWEEN THE PLEDGOR AND
THE PLEDGEE OR THE CONDUCT OF ANY PARTY HERETO IN CONNECTION WITH THIS
AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
NOTWITHSTANDING THE FOREGOING, THE PLEDGEE SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST THE PLEDGOR OR HIS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION THE PLEDGEE DEEMS NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THIS AGREEMENT.
(c) THE PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO HIM AT HIS ADDRESS SET
FORTH IN SECTION 6.1 OF THE MASTER AGREEMENT AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO
DEPOSITED IN THE U.S. MAILS OR, AT THE PLEDGEE'S OPTION, BY SERVICE UPON THE
PLEDGOR'S NEW YORK COUNSEL AT ITS ADDRESS SET FORTH IN SECTION 6.1 OF THE
MASTER AGREEMENT, WHICH COUNSEL THE PLEDGOR HEREBY IRREVOCABLY APPOINTS AS HIS
AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF NEW
YORK. THE PLEDGOR HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID.
(d) EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER
THIS AGREEMENT OR ANY
<PAGE> 8
- 8 -
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO THIS AGREEMENT, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE. THE PLEDGOR AND THE PLEDGEE EACH HEREBY AGREE
AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF THEM MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
(e) NOTHING IN THIS PARAGRAPH 13 SHALL AFFECT THE RIGHTS OF THE
PLEDGEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
THE RIGHTS OF THE PLEDGEE TO BRING ANY ACTION OR PROCEEDING AGAINST THE PLEDGOR
OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
(f) EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS
PARAGRAPH 13 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
14. Further Assurances. Pledgor agrees that Pledgor will
cooperate with Pledgee and will execute and deliver, or cause to be executed
and delivered, all such other stock powers, proxies, instruments, documents and
endorsements, and will take all such other action, including, without
limitation, the filing of UCC financing statements, as Pledgee may reasonably
request from time to time in order to carry out the provisions and purposes of
this Agreement. In furtherance, and not in limitation of the foregoing,
Pledgor agrees to take all action necessary or that Pledgee may reasonably
request to maintain the continued perfection of the security interests granted
under this Agreement.
15. Pledgee's Duty of Care. Pledgee shall have no duty with
respect to any Collateral other than as set forth in the Loan Agreements.
Without limiting the generality of the foregoing, Pledgee shall be under no
obligation to take any steps necessary to preserve rights in any of the
Collateral against any other parties but may do so at Pledgee's option, but all
expenses incurred in connection therewith shall be for the sole account of
Pledgor.
16. Notices. Any notice, request or other communication required
or desired to be served, given or delivered under this Agreement shall be in
writing
<PAGE> 9
- 9 -
and shall be given in the manner and to the addresses set forth in section 6.1
of the Master Agreement.
17. Paragraph Headings. The paragraph headings in this Agreement
are for convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions of this Agreement.
18. Counterparts; Facsimile Signature. This Agreement may be
executed by the parties hereto in separate counterparts each of which when so
executed and delivered shall be an original, and all such counterparts shall
together constitute one and the same instrument. Furthermore, this Agreement
may be executed by faxed signature with the same effect as a manually signed
original signature.
19. Confidentiality. This Agreement shall be subject to the
provisions of the Master Agreement regarding confidentiality.
20. Non- Recourse. Notwithstanding anything contained in (i) this
Agreement or the Loan Agreements, (ii) any agreement, document, instrument or
certificate entered into in connection herewith or therewith, other than the
Master Agreement, (collectively, the "Loan Documents") or (iii) otherwise, the
Pledgor shall not be personally liable for the repayment of any of the
principal of, or interest on, the loans under the Loan Agreements, the payment
of any fees or expenses of the Pledgee hereunder or under any Loan Documents or
the performance of, or failure to perform, any other obligation of the Pledgor
under this Agreement or under any other Loan Document, and the sole and
exclusive recourse of the Pledgee shall be to the Security and the Borrower
shall have no liability for any deficiency which may exist after foreclosure on
the Security; provided, however, that there shall be no limit to the personal
liability of the Pledgor in the case of fraud.
<PAGE> 10
- 10 -
IN WITNESS WHEREOF, Pledgor and Pledgee have executed this Agreement
as of the 20th day of August, 1996.
/s/ Larry H. Weltman
-------------------------------------
Mr. Larry H. Weltman
COUTTS & CO AG, NEW YORK BRANCH
By /s/ Peter Cawdron
----------------------------------
Name: Mr. Peter Cawdron
Title: Bank Manager
<PAGE> 11
Schedule 1
to
Pledge Agreement
Stock Certificates
<TABLE>
<CAPTION>
Issuer Shares
------ ------
<S> <C>
Gaming Lottery Corporation 183,020 common shares
</TABLE>
<PAGE> 12
Exhibit 1
to
PLEDGE AGREEMENT
FORM OF STOCK TRANSFER POWER OF ATTORNEY
FOR VALUE RECEIVED, ________________________________ hereby sells, assigns and
transfers unto___________________________________:
___________________________________________________
___________________________________________________
___________________________________________________
___________________________________________________
standing in my name on the books of said corporation[s] represented by
certificate[s] ____________________________________________________________
______________________________________________________________________, and do
hereby irrevocably constitute and appoint_____________________________________
attorney to transfer the said stock on the books of said corporation[s] with
full power of substitution in the premises.
DATED this ______ Day of __________________, ______.
In the presence of
- -------------------------- --------------------------
[PLEDGOR]
<PAGE> 1
Pan/Welt/Gaming
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made this 20th day of August, 1996
BETWEEN:
LARRY H. WELTMAN of the City of Toronto, in the Province of Ontario
(the "Purchaser")
- and -
PANOLA WORLDWIDE CORPORATION a corporation governed by the laws of the
British Virgin Islands (the "Owner"), by Coutts & Co AG, New York
Branch, pursuant to the authority granted to it by the Owner under
that certain General Loan and Collateral Agreement executed by the
Owner (the "Loan Agreement")
WHEREAS, the Owner is the beneficial owner of 183,020 common shares
(the Shares") of Gaming Lottery Corporation (the "Company");
AND WHEREAS, the Owner has pledged the Shares to Coutts, as security
for a loan (the "Loan") made by Coutts to the Owner to finance the acquisition
of the Shares by the Owner pursuant to the Loan Agreement;
AND WHEREAS, the Loan Agreement provides, among other things, that in
the event of a default thereunder, Coutts may sell, or resell in one or more
sales, all or any portion of the property ("Collateral") pledged to it as
security for the obligations of the Owner under the Loan Agreement, at any
broker's board or public or private sale;
AND WHEREAS, the Loan Agreement further provides that Coutts may at
any time, whenever it deems necessary or desirable, in its own name or in the
name of the Owner, endorse, assign, convey and transfer any and all of the
Collateral;
AND WHEREAS, the Shares form part of the Collateral;
AND WHEREAS, the Owner is in default of its obligations under the Loan
Agreement;
<PAGE> 2
- 2 -
AND WHEREAS, the Purchaser and Coutts have entered into the Weltman
Master Agreement dated August 19, 1996 (hereinafter the "Master Agreement")
pursuant to which the Purchaser has agreed to enter into this Agreement to
purchase the Shares, Coutts has agreed to loan to the Purchaser the amount to
be paid as the purchase price in respect of the sale of the Shares hereunder
and Coutts agreed to cause the Owner to enter into this Agreement to sell the
Shares.
NOW THEREFORE the parties agree as follows:
1. PURCHASE AND SALE
The Owner hereby sells, assigns and transfers to the Purchaser and the
Purchaser hereby purchases from the Owner as of the date hereof (the
"Effective Date") all the right, title and interest of the Owner in
and to the Shares for an aggregate purchase price equal to $614,947.20
(the "Purchase Price") and on and subject to the terms and conditions
set forth in this Agreement and the Master Agreement.
2. PAYMENT OF PURCHASE PRICE AND DEEMED DELIVERY OF THE SHARES
(a) Payment of Purchase Price
The Purchase Price shall be satisfied by Coutts crediting an
amount equal to the Purchase Price as a repayment on behalf of
the Owner to the balance outstanding under the Loan on the
Effective Date. If the Purchase Price exceeds the balance
outstanding under the Loan, including principal, interest and
all other amounts owing thereunder, the amount of such excess
shall be paid by Coutts to the Owner as soon as the full
amount of the Loan has been repaid and discharged.
(b) Deemed Delivery of Purchased Shares
On payment of the Purchase Price in the manner set forth in
paragraph (a) above, Coutts shall instruct the transfer agent
for the Company to issue certificates representing the Shares
in the name of the Purchaser. The certificates shall be
retained by Coutts and held as security under the Share Pledge
(as defined in the Master Agreement) duly endorsed in blank
for transfer or with a stock transfer power of attorney duly
executed by the Purchaser.
<PAGE> 3
- 3 -
3. AGREEMENT TO OPERATE AS CONVEYANCE
This Agreement shall operate as an actual conveyance, transfer,
assignment and setting over of all the right, title and interest of
the Owner in and to the Shares as of the date of this Agreement.
4. GENERAL
(a) Time
Time shall be of the essence of this Agreement.
(b) Governing Law; Choice of Forum, Service of Process; Jury
Trial; Waivers
This Agreement shall be subject to the provisions in the
Master Agreement relating to governing law, choice of forum,
service of process, jury trials and waivers.
(c) Successors and Assigns
This Agreement shall enure to the benefit of and be binding
upon the respective parties hereto and their successors and
permitted assigns.
(d) Currency
All references to money amounts are to United States currency.
(e) Confidentiality
This Agreement shall be subject to the provisions contained in
section 6.5 of the Master Agreement relating to
confidentiality.
<PAGE> 4
- 4 -
IN WITNESS WHEREOF, the Owner and the Purchaser have executed this Agreement by
the signatures of their proper officers duly authorized in that behalf.
BY COUTTS & CO AG, NEW YORK BRANCH,
IN THE NAME OF THE OWNER, PURSUANT TO
THE AUTHORITY GRANTED TO IT IN THE LOAN
AGREEMENT
By: /s/ Peter Cawdron
------------------------------------
Peter Cawdron
/s/ Larry H. Weltman
---------------------------------------
Larry H. Weltman
<PAGE> 1
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as
of August 20, 1996, by LARRY H. WELTMAN, an individual resident in the City of
Toronto, Ontario (the "Pledgor"), in favour of COUTTS & CO AG, NEW YORK BRANCH,
a Swiss bank licensed to conduct a banking business in the State of New York
(the "Pledgee").
Preliminary Statement.
A. Simultaneous with the execution and delivery of this
Agreement, Pledgee is entering into (i) those certain Loan Agreements of even
date herewith with Jacques Benquesus (the "Banks Loan Agreements"), (ii) that
certain Loan Agreement of even date herewith with Larry H. Weltman (the
"Weltman Loan Agreement") and (iii) that certain Loan Agreement of even date
herewith with John M. Wiseman (the "Wiseman Loan Agreement" and together with
the Banks Loan Agreements and the Weltman Loan Agreement, the "Loan
Agreements"), pursuant to which the Pledgee may hereafter advance monies and
make other extensions of credit to each of Jacques Benquesus, Larry H. Weltman
and John M. Wiseman (collectively, the "Borrowers") under the respective Loan
Agreements.
B. Simultaneous with the execution and delivery of this
Agreement, Jacques Benquesus is entering into that certain limited guarantee of
even date herewith with Pledgee (the "Limited Guarantee") whereby Jacques
Benquesus guarantees the obligations of each of the Borrowers under the Loan
Agreements to the extent set forth therein.
C. Pledgor is the owner of certain shares of the issued and
outstanding capital stock of Gaming Lottery Corporation (the "Company") in the
amounts listed on Schedule 1 hereto (the securities listed on Schedule 1 are
hereinafter referred to as the "Stock").
D. The Pledgee has required as a condition to the Pledgee's
advancement of funds and making of other extensions of credit under the Loan
Agreements that Pledgor execute and deliver to Pledgee this Agreement in order
to secure the due and punctual performance of and compliance by each of the
Borrowers with all obligations, covenants, warranties, undertakings and
conditions contained in or arising under each of the Loan Agreements including
but not
<PAGE> 2
- 2 -
limited to, the full and punctual payment by the Borrowers, when due, whether
at the stated due date, by acceleration or otherwise, of any and all,
obligations, liabilities, indebtedness and other amounts of every kind arising
under the Loan Agreements (whether principal, interest (after as well as before
default), fees, premiums or penalties), all amounts in respect of indemnities
provided for in the Loan Agreements, and all damages (whether provided for in
the Loan Agreements or otherwise permitted by law) in respect of a failure or
refusal by any Borrower to make any such payment howsoever created, arising or
evidenced, voluntary or involuntary, whether direct or indirect, absolute or
contingent, now or hereafter existing or owing to the Pledgee, and Jacques
Benquesus' obligations under the Limited Guarantee (all of the foregoing
obligations and undertakings are collectively referred to herein as the
"Obligations").
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit (including, without
limitation, any loan or advance by renewal, refinancing or extension of the
Loan Agreements or otherwise) heretofore, now or hereafter made to or for the
benefit of the Borrowers by Pledgee, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, the parties hereto agree as follows:
1. Pledge. Pledgor hereby delivers, pledges and grants security
interests to Pledgee in: (a) the Stock accompanied by stock transfer powers of
attorney in respect of all of the Stock ("Powers") duly executed in blank, in
the form attached hereto as Exhibit 1 and made a part hereof; (b) all dividends
and distributions (whether in cash, stock or otherwise) paid or payable on or
in respect of the Stock or any of it, including without limitation (i) all
dividends and other distributions paid or payable in cash in respect of the
Stock or any of it in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus and (ii) cash paid, payable or otherwise distributed in respect
of, or in redemption of, or in exchange for, any Stock; (c) the proceeds of
disposition of any of the foregoing; (d) every balance of every account which
the Pledgor has or shall at any time have with the Pledgee and all moneys,
instruments, chattel paper, documents, accounts, contract rights, goods,
credits, choses in action, claims, demands and without limitation whatsoever,
property of every kind and description including additions, accessions and
substitutions which have been or at any time shall be delivered to or be in
transit to or from the Pledgee or any of its agents or correspondents or other
third party or parties acting on the Pledgee's behalf, by, or for, or for
account of, or subject to the order of, the Pledgor, which has come or shall
come into the possession, custody or control of the Pledgee in any way or for
any purpose whatsoever, whether for safekeeping or otherwise and whether the
Pledgee shall accept them for the purposes for which they are delivered to it
or not; and (e) the property and interests in property described in Paragraphs
2, 6 and 7 hereof and the proceeds thereof (items (a), (b), (c), (d) and (e)
<PAGE> 3
- 3 -
being hereinafter collectively referred to as the "Collateral"), as security
for the payment and performance of the Obligations. Pledgor hereby appoints
Pledgee as Pledgor's attorney-in-fact to arrange, at Pledgee's option, for the
transfer of the Collateral to the name of Pledgee or to the name of Pledgee's
nominee and to this end the Pledgor hereby covenants to execute any further
endorsements, transfers, conveyances, powers of attorney or other documents
that the Pledgee may from time to time reasonably request as may be required to
effect transfer of the Collateral or any of it.
2. After-Acquired Collateral. In the event that the Pledgor
receives or becomes entitled to receive, after the date hereof, property and
interests that constitute Collateral, then any such Collateral shall be
received in trust for the benefit of the Pledgee, shall be segregated from
other property of the Pledgor and shall be forthwith delivered over to the
Pledgee as Collateral in the same form as so received by the Pledgor (with any
necessary endorsements or stock powers required to provide for its transfer in
the manner set forth in Paragraph 1 hereof).
3. Voting Rights. During the term of this Agreement, and so long
as there shall not occur or exist an Event of Default under any of the Loan
Agreements and as defined in each of the Loan Agreements (hereinafter an "Event
of Default"), Pledgor shall have the right to vote the Stock on all corporate
questions for all purposes not inconsistent with the terms of this Agreement
and any of the Loan Agreements. Pledgee shall be entitled to exercise all
voting powers pertaining to the Collateral from and after the occurrence of an
Event of Default. Pledgee shall execute and deliver (or cause to be executed
and delivered) to the Pledgor all such proxies and other instruments as the
Pledgor may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and other rights which it is entitled to exercise pursuant
to this Paragraph 3.
4. Representations, Warranties and Covenants. Pledgor warrants
and represents that (a) there has been no act or omission by the Pledgor which
has created or resulted in the creation of any mortgage, lien, pledge, charge,
security interest or other encumbrance on, against or with respect to any part
of the Pledged Shares (as such term is defined in the Master Agreement between
the Pledgee and the Pledgor, dated August 19, 1996 (the "Master Agreement")),
except the Security (as such term is defined in the Weltman Loan Agreement);
(b) the Pledgor has full power and authority to enter into this Agreement; and
(c) the Powers are duly executed and give Pledgee the authority such Powers
purport to confer.
The Pledgor hereby covenants not to undertake any act or omit to take
any act, which could create or result in, any mortgage, lien, pledge, charge,
security interest or other encumbrance (each a "Charge"), or suffer to exist
any Charge arising after the date hereof, on, against or with respect to, any
part of the Pledged Shares, except the Security.
<PAGE> 4
- 4 -
5. Subsequent Changes Affecting Collateral. Pledgor represents
to Pledgee that Pledgor has made Pledgor's own arrangements for keeping
informed of changes or potential changes affecting the Collateral (including,
but not limited to, rights to convert, rights to subscribe, payment of
dividends, reorganization or other exchanges, tender offers and voting rights),
and Pledgor agrees that Pledgee shall have no responsibility or liability for
informing Pledgor of any such changes or potential changes or for taking any
action or omitting to take any action with respect thereto. Pledgee may at any
time, transfer or register the Collateral or any part of the Collateral into
Pledgee's or Pledgee's nominee's name with or without any indication that such
Collateral is subject to the security interest under this Agreement and without
notice to the Pledgor, which notice is hereby expressly waived to the fullest
extent permitted by applicable law.
6. Stock Adjustments. In the event that during the term of this
Agreement any stock dividend, reclassification, readjustment or other change is
declared or made in the capital structure of the Company (including, without
limitation, the issuance of additional shares of preferred or common stock of
the Company of whatever class to the Pledgor in respect of the Collateral for
no further consideration), or any option included within the Stock is
exercised, or both, then all new, substituted and additional shares, or other
securities, issued to the Pledgor by reason of any such change or exercise
shall be delivered to and held by Pledgee under the terms of this Agreement in
the same manner as the Collateral originally pledged under this Agreement.
7. Warrants, Options and Other Rights. In the event that during
the term of this Agreement subscription warrants or any other rights or options
shall be issued in connection with any of the Collateral, then such warrants,
rights and options shall be immediately assigned to Pledgee and all new stock,
bonds or other securities so acquired by Pledgor shall be immediately assigned
to Pledgee to be held under the terms of this Agreement in the same manner as
the Collateral originally pledged hereunder.
8. Registration. If at any time the Pledgee wishes to register
under or otherwise comply in any way with the Securities Act of 1933, as
amended (the "Securities Act") or any similar federal or state law, or if such
registration or compliance is required with respect to the securities included
in any of the Collateral prior to the sale thereof by Pledgee, Pledgor will
cooperate with the Pledgee to cause such registration to be effectively made
(it being understood and agreed that such cooperation shall not require the
Pledgor to execute and/or deliver any registration statement with respect to
the Collateral), at no expense to Pledgor, and to continue such registration
effective for such time as may be necessary in the opinion of Pledgee. If
Pledgee shall at any time determine to transfer or register the Collateral (or
any part thereof) in its name in order to facilitate any registration under the
<PAGE> 5
- 5 -
Securities Act, Pledgor and Pledgee hereby agree that such action will not
require the Pledgee to make any adjustment to Pledgor's account and no such
adjustment shall be made unless and until the Collateral (or any part thereof)
is sold pursuant to such registration statement or otherwise to any third
party. Upon or at any time after the occurrence of an Event of Default, should
Pledgee determine that, prior to any public offering of any securities
contained in any of the Collateral, such securities should be registered under
the Securities Act and/or registered or qualified under any other federal or
state law, and that such registration and/or qualification is not practical,
then Pledgor agrees that it will be commercially reasonable if a private sale,
upon at least 10 days' prior notice to Pledgor, is arranged so as to avoid a
public offering even though the sales price established and/or obtained may be
substantially less than prices which would be quoted for such security on any
market or exchange.
9. Waivers; Subrogation. The Pledgor irrevocably agrees that
it will not bring any claims against the Borrowers to which the Pledgor is or
would at any time be otherwise entitled by virtue of its obligations under this
Agreement, including, without limitation, any right of subrogation (whether
contractual, under Section 509 of the U.S. Bankruptcy Code or otherwise) and
all contractual, statutory or common law rights of reimbursement, contribution,
or indemnity from the Borrowers which may otherwise have arisen in connection
with this Agreement, until such time as all of the Obligations have been
satisfied in full and this Agreement shall have terminated in accordance with
its terms. The Pledgor waives presentment and demand for payment of any of the
Obligations, protest and notice of dishonour or default with respect to any or
all of the Obligations, and all other notices to which Pledgor might otherwise
be entitled, except as otherwise expressly provided in this Agreement or any of
the Loan Agreements.
10. Default. (a) Upon the occurrence or existence of
an Event of Default, Pledgee shall have, in addition to any other rights given
by law or the rights given under this Agreement or the Loan Agreements, all of
the rights and remedies with respect to the Collateral of a secured party under
the Uniform Commercial Code.
(b) In addition, with respect to the Collateral, or any part of
the Collateral, which shall then be in or shall thereafter come into the
possession or custody of Pledgee, Pledgee may sell or cause the same to be sold
at any broker's board or at public or private sale, in one or more sales or
lots, at such price as Pledgee may deem best, and for cash or on credit or for
future delivery, without assumption of any credit risk, and the purchaser of
any or all of the Collateral so sold shall thereafter hold the same absolutely,
free from any claim, encumbrance or right of any kind whatsoever. Unless any
of the Collateral threatens to decline speedily in value or is or becomes of a
type sold on a recognized market, Pledgee will give Pledgor reasonable notice
of the time and place of any public sale of the
<PAGE> 6
- 6 -
Collateral, or of the time after which any private sale or other intended
disposition is to be made. Any sale of any of the Collateral conducted in
conformity with the selling restrictions applicable to the Pledgor pursuant to
Article 3 of the Master Agreement or the reasonable commercial practices of
banks, commercial finance Company, insurance Company or other financial
institutions disposing of property similar to such Collateral, shall be deemed
to be commercially reasonable. Notwithstanding any provision to the contrary
contained in this Agreement, any requirements of reasonable notice shall be met
if such notice is deposited in the United States mail, addressed to Pledgor as
provided in Paragraph 16 hereof, at least 10 days before the time of the sale
or disposition. Any other requirement of notice, demand or advertisement for
sale is, to the extent permitted by law, waived. Pledgee may, in Pledgee's own
name, or in the name of a designee or nominee, buy at any public sale of any of
the Collateral and, if permitted by applicable law, buy at any private sale of
any of the Collateral. Pledgor will pay to Pledgee all expenses (including
court costs and attorney fees and expenses) of, or incident to, the enforcement
of any of the provisions of this Agreement. Since federal and state securities
laws may impose certain restrictions on the method by which a sale of any or
all of the Collateral may be effected after the occurrence of an Event of
Default, Pledgor agrees that upon the occurrence or existence of an Event of
Default, Pledgee may, from time to time, attempt to sell all or any part of the
Collateral by means of a private placement, restricting the bidder and
prospective purchasers to those who will represent and agree that they are
purchasing for investment only and not for distribution, and Pledgor further
agrees that such private sales may be at prices and on terms less favourable
than those which may be available in a public sale. In so doing, Pledgee may
solicit offers to buy the Collateral, or any part of it, for cash, from a
limited number of investors deemed by Pledgee, in Pledgee's reasonable
judgment, to be financially responsible parties who might be interested in
purchasing such Collateral, and if Pledgee solicits such offers from not less
than four such investors, then the acceptance by Pledgee of the highest offer
obtained therefrom shall be deemed to be a commercially reasonable method of
disposition of such Collateral notwithstanding any other provision of this
Subparagraph 10(b).
(c) The Collateral is subject to release to the Pledgor in
accordance with the provisions of Article 3 of the Master Agreement.
11. Term. This Agreement shall remain in full force and effect
until all of the Obligations have been fully paid and satisfied, and all of the
Loan Agreements have been terminated. Upon termination of this Agreement as
provided in this Paragraph 11. Pledgee agrees to return any Collateral then in
its possession to Pledgor. Notwithstanding anything in this Agreement to the
contrary, this Agreement will terminate upon the release of all of the
Collateral in accordance with Article 3 of the Master Agreement.
<PAGE> 7
- 7 -
12. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of Pledgor, Pledgee and their respective successors,
heirs and assigns. Pledgor's successors, heirs and assigns shall include,
without limitation, a receiver, trustee or debtor in possession of or for
Pledgor.
13. Governing Law and Consent to Jurisdiction; Waiver of Jury
Trial.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
(b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE,
EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY AGREE TO THE EXCLUSIVE JURISDICTION
OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW
YORK SITTING IN THE CITY AND COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED
ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN,
AND AGREE THAT ANY DISPUTE CONCERNING THE RELATIONSHIP BETWEEN THE PLEDGOR AND
THE PLEDGEE OR THE CONDUCT OF ANY PARTY HERETO IN CONNECTION WITH THIS
AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
NOTWITHSTANDING THE FOREGOING, THE PLEDGEE SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST THE PLEDGOR OR HIS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION THE PLEDGEE DEEMS NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THIS AGREEMENT.
(c) THE PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO HIM AT HIS ADDRESS SET
FORTH IN SECTION 6.1 OF THE MASTER AGREEMENT AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO
DEPOSITED IN THE U.S. MAILS OR, AT THE PLEDGEE'S OPTION, BY SERVICE UPON THE
PLEDGOR'S NEW YORK COUNSEL AT ITS ADDRESS SET FORTH IN SECTION 6.1 OF THE
MASTER AGREEMENT, WHICH COUNSEL THE PLEDGOR HEREBY IRREVOCABLY APPOINTS AS HIS
AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF NEW
YORK. THE PLEDGOR HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID.
(d) EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER
THIS AGREEMENT OR ANY
<PAGE> 8
- 8 -
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO THIS AGREEMENT, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE. THE PLEDGOR AND THE PLEDGEE EACH HEREBY AGREE
AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF THEM MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
(e) NOTHING IN THIS PARAGRAPH 13 SHALL AFFECT THE RIGHTS OF THE
PLEDGEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
THE RIGHTS OF THE PLEDGEE TO BRING ANY ACTION OR PROCEEDING AGAINST THE PLEDGOR
OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
(f) EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS
PARAGRAPH 13 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
14. Further Assurances. Pledgor agrees that Pledgor will
cooperate with Pledgee and will execute and deliver, or cause to be executed
and delivered, all such other stock powers, proxies, instruments, documents and
endorsements, and will take all such other action, including, without
limitation, the filing of UCC financing statements, as Pledgee may reasonably
request from time to time in order to carry out the provisions and purposes of
this Agreement. In furtherance, and not in limitation of the foregoing,
Pledgor agrees to take all action necessary or that Pledgee may reasonably
request to maintain the continued perfection of the security interests granted
under this Agreement.
15. Pledgee's Duty of Care. Pledgee shall have no duty with
respect to any Collateral other than as set forth in the Loan Agreements.
Without limiting the generality of the foregoing, Pledgee shall be under no
obligation to take any steps necessary to preserve rights in any of the
Collateral against any other parties but may do so at Pledgee's option, but all
expenses incurred in connection therewith shall be for the sole account of
Pledgor.
16. Notices. Any notice, request or other communication required
or desired to be served, given or delivered under this Agreement shall be in
writing
<PAGE> 9
- 9 -
and shall be given in the manner and to the addresses set forth in section 6.1
of the Master Agreement.
17. Paragraph Headings. The paragraph headings in this Agreement
are for convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions of this Agreement.
18. Counterparts; Facsimile Signature. This Agreement may be
executed by the parties hereto in separate counterparts each of which when so
executed and delivered shall be an original, and all such counterparts shall
together constitute one and the same instrument. Furthermore, this Agreement
may be executed by faxed signature with the same effect as a manually signed
original signature.
19. Confidentiality. This Agreement shall be subject to the
provisions of the Master Agreement regarding confidentiality.
20. Non- Recourse. Notwithstanding anything contained in (i) this
Agreement or the Loan Agreements, (ii) any agreement, document, instrument or
certificate entered into in connection herewith or therewith, other than the
Master Agreement, (collectively, the "Loan Documents") or (iii) otherwise, the
Pledgor shall not be personally liable for the repayment of any of the
principal of, or interest on, the loans under the Loan Agreements, the payment
of any fees or expenses of the Pledgee hereunder or under any Loan Documents or
the performance of, or failure to perform, any other obligation of the Pledgor
under this Agreement or under any other Loan Document, and the sole and
exclusive recourse of the Pledgee shall be to the Security and the Borrower
shall have no liability for any deficiency which may exist after foreclosure on
the Security; provided, however, that there shall be no limit to the personal
liability of the Pledgor in the case of fraud.
<PAGE> 10
- 10 -
IN WITNESS WHEREOF, Pledgor and Pledgee have executed this Agreement
as of the 20th day of August, 1996.
/s/ Larry H. Weltman
-------------------------------------
Mr. Larry H. Weltman
COUTTS & CO AG, NEW YORK BRANCH
By /s/ Peter Cawdron
----------------------------------
Name: Mr. Peter Cawdron
Title: Bank Manager
<PAGE> 11
Schedule 1
to
Pledge Agreement
Stock Certificates
<TABLE>
<CAPTION>
Issuer Shares
------ ------
<S> <C>
Gaming Lottery Corporation 183,020 common shares
</TABLE>
<PAGE> 12
Exhibit 1
to
PLEDGE AGREEMENT
FORM OF STOCK TRANSFER POWER OF ATTORNEY
FOR VALUE RECEIVED, ________________________________ hereby sells, assigns and
transfers unto___________________________________:
___________________________________________________
___________________________________________________
___________________________________________________
___________________________________________________
standing in my name on the books of said corporation[s] represented by
certificate[s] ____________________________________________________________
______________________________________________________________________, and do
hereby irrevocably constitute and appoint_____________________________________
attorney to transfer the said stock on the books of said corporation[s] with
full power of substitution in the premises.
DATED this ______ Day of __________________, ______.
In the presence of
- -------------------------- --------------------------
[PLEDGOR]
<PAGE> 13
Pan/Welt/Gaming
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made this 20th day of August, 1996
BETWEEN:
LARRY H. WELTMAN of the City of Toronto, in the Province of Ontario
(the "Purchaser")
- and -
PANOLA WORLDWIDE CORPORATION a corporation governed by the laws of the
British Virgin Islands (the "Owner"), by Coutts & Co AG, New York
Branch, pursuant to the authority granted to it by the Owner under
that certain General Loan and Collateral Agreement executed by the
Owner (the "Loan Agreement")
WHEREAS, the Owner is the beneficial owner of 183,020 common shares
(the Shares") of Gaming Lottery Corporation (the "Company");
AND WHEREAS, the Owner has pledged the Shares to Coutts, as security
for a loan (the "Loan") made by Coutts to the Owner to finance the acquisition
of the Shares by the Owner pursuant to the Loan Agreement;
AND WHEREAS, the Loan Agreement provides, among other things, that in
the event of a default thereunder, Coutts may sell, or resell in one or more
sales, all or any portion of the property ("Collateral") pledged to it as
security for the obligations of the Owner under the Loan Agreement, at any
broker's board or public or private sale;
AND WHEREAS, the Loan Agreement further provides that Coutts may at
any time, whenever it deems necessary or desirable, in its own name or in the
name of the Owner, endorse, assign, convey and transfer any and all of the
Collateral;
AND WHEREAS, the Shares form part of the Collateral;
AND WHEREAS, the Owner is in default of its obligations under the Loan
Agreement;
<PAGE> 14
- 2 -
AND WHEREAS, the Purchaser and Coutts have entered into the Weltman
Master Agreement dated August 19, 1996 (hereinafter the "Master Agreement")
pursuant to which the Purchaser has agreed to enter into this Agreement to
purchase the Shares, Coutts has agreed to loan to the Purchaser the amount to
be paid as the purchase price in respect of the sale of the Shares hereunder
and Coutts agreed to cause the Owner to enter into this Agreement to sell the
Shares.
NOW THEREFORE the parties agree as follows:
1. PURCHASE AND SALE
The Owner hereby sells, assigns and transfers to the Purchaser and the
Purchaser hereby purchases from the Owner as of the date hereof (the
"Effective Date") all the right, title and interest of the Owner in
and to the Shares for an aggregate purchase price equal to $614,947.20
(the "Purchase Price") and on and subject to the terms and conditions
set forth in this Agreement and the Master Agreement.
2. PAYMENT OF PURCHASE PRICE AND DEEMED DELIVERY OF THE SHARES
(a) Payment of Purchase Price
The Purchase Price shall be satisfied by Coutts crediting an
amount equal to the Purchase Price as a repayment on behalf of
the Owner to the balance outstanding under the Loan on the
Effective Date. If the Purchase Price exceeds the balance
outstanding under the Loan, including principal, interest and
all other amounts owing thereunder, the amount of such excess
shall be paid by Coutts to the Owner as soon as the full
amount of the Loan has been repaid and discharged.
(b) Deemed Delivery of Purchased Shares
On payment of the Purchase Price in the manner set forth in
paragraph (a) above, Coutts shall instruct the transfer agent
for the Company to issue certificates representing the Shares
in the name of the Purchaser. The certificates shall be
retained by Coutts and held as security under the Share Pledge
(as defined in the Master Agreement) duly endorsed in blank
for transfer or with a stock transfer power of attorney duly
executed by the Purchaser.
<PAGE> 15
- 3 -
3. AGREEMENT TO OPERATE AS CONVEYANCE
This Agreement shall operate as an actual conveyance, transfer,
assignment and setting over of all the right, title and interest of
the Owner in and to the Shares as of the date of this Agreement.
4. GENERAL
(a) Time
Time shall be of the essence of this Agreement.
(b) Governing Law; Choice of Forum, Service of Process; Jury
Trial; Waivers
This Agreement shall be subject to the provisions in the
Master Agreement relating to governing law, choice of forum,
service of process, jury trials and waivers.
(c) Successors and Assigns
This Agreement shall enure to the benefit of and be binding
upon the respective parties hereto and their successors and
permitted assigns.
(d) Currency
All references to money amounts are to United States currency.
(e) Confidentiality
This Agreement shall be subject to the provisions contained in
section 6.5 of the Master Agreement relating to
confidentiality.
<PAGE> 16
- 4 -
IN WITNESS WHEREOF, the Owner and the Purchaser have executed this Agreement by
the signatures of their proper officers duly authorized in that behalf.
BY COUTTS & CO AG, NEW YORK BRANCH,
IN THE NAME OF THE OWNER, PURSUANT TO
THE AUTHORITY GRANTED TO IT IN THE LOAN
AGREEMENT
By: /s/ Peter Cawdron
------------------------------------
Peter Cawdron
/s/ Larry H. Weltman
---------------------------------------
Larry H. Weltman
<PAGE> 17
[COUTTS & CO LOGO]
COUTTS & CO AG
PARK AVENUE TOWER
65 East 55th Street
New York, NY 10022
Telephone (212) 303 2939 TELEFAX (212) 303 2929
March 16, 1995
Mr. A H Salazar Diaz
Silva Run Worldwide Ltd.
Tortola, British Virgin Islands
Dear Mr. Salazar:
We are pleased to confirm that we are prepared to make available a line of
credit on the following terms and conditions:
1) Amount
Up to US$6,000,000 (six million U.S. Dollars), provided the collateral
requirements set out below are satisfied.
2) Availability
Loan US$6,000,000
You may borrow up to a maximum amount set out above and, after full or
partial repayment, reborrow on this line of credit until its term has
expired, provided that all the terms and conditions hereof are
satisfied.
3) Purpose and Repayment
The loan will be used for investment purchases of stock and bonds.
Repayment of this loan will be from the liquidation of collateral.
4) Collateral
Any utilisation hereunder shall be secured by the pledge of all assets
held by you with this Bank (the "Assets"), pursuant to the General
Loan and Collateral Agreement signed by you on 1/11/95.
Some or all of the Assets have a loanable value up to a percentage
ratio of their market value from time to time which varies with the
nature and quality of each asset (certain Assets may not have a
loanable value, although these Assets will secure the line of credit).
A summary of current maximum lending ratios is provided as an appendix
to this letter. We reserve the right to vary these ratios at our
discretion, and to refuse to extend a lending ratio against assets
which we do not consider to be acceptable or which would exceed the
limits we regard as prudent for lending against a specific Asset, and
to terminate our lending ratios against Assets.
None of the Assets may be removed by you from the Bank without our
prior written consent.
<PAGE> 18
5) Collateral Margin Requirements
You will ensure at all times that the loanable value of the assets
pledged to us as collateral exceeds the amount outstanding hereunder.
Should the loanable value of pledged assets fall to 5% below the
amount outstanding (inclusive of interest and costs), you will provide
us with additional collateral to cover the shortfall upon our first
demand. Should you fail to provide the additional collateral within 5
business days or should the loanable value of the pledged assets fall
to 10% or more below the amount outstanding (whichever occurs first),
we reserve the right without further formality or notice and at our
discretion to sell sufficient Assets (including both Assets with, and
Assets without, a loanable value) to reduce the amount outstanding
under the line of credit to the loanable value of the remaining Assets
which are pledged to us. These provisions will take effect regardless
of the value of any Assets which do not have loanable value and may
take effect because we decrease or terminate our lending ratio for
some or all of the Assets securing the line of credit.
6) Pricing
You agree to pay an interest rate of LIBOR + 1% (one percent) on any
advances.
7) Term
This line of credit is provided on the basis that it may be withdrawn
without notice and any amounts outstanding are repayable on first
demand. It is made available to you on an uncommitted basis and we
reserve the right to liquidate collateral to repay any amounts
outstanding at our discretion and without further formality.
In any event, this line of credit shall become due for review on
February 22, 1996, and we shall be pleased to discuss future
arrangements shortly before this date.
8) Applicable Law
This Agreement is subject to the laws of the State of New York.
Please sign and return the attached copy of this letter as
confirmation of your acceptance of those terms and conditions.
Yours sincerely,
/s/ P Embiricos /s/ D Simmons
P Embiricos D Simmons
Coutts & Co AG Coutts & Co AG
/s/ A H Salazar Diaz
<PAGE> 19
[COUTTS & CO LOGO]
COUTTS & CO AG
PARK AVENUE TOWER
65 East 55th Street
New York, NY 10022
Telephone (212) 303 2939 TELEFAX (212) 303 2929
Mr. A H Salazar Diaz
Silva Run Worldwide Limited
Tortola
British Virgin Islands
June 26, 1995
Dear Mr. Salazar:
Silva Run Worldwide Limited
We are pleased to confirm that we are prepared to make available a line of
credit on the following terms and conditions:
1) Amount
Up to US$25,000,000 (twenty five million dollars), provided the
collateral requirements set out below are satisfied.
2) Availability
Loan US$22,000,000
Foreign Exchange Trading US$3,000,000 (covering open
foreign exchange contracts with a face value of $30,000,000)
You may borrow up to a maximum amount set out above and, after full or
partial repayment, reborrow on this line of credit until its term has
expired, provided that all the terms and conditions hereof are
satisfied.
We are prepared to enter into open forward foreign exchange contracts
with you, up to 12 months duration in major currencies. We will apply
a notional value of 10% of the face value of each contract as
utilization hereunder.
3) Purpose and Repayment
The loan will be used for investment purposes including trading on
margin. Repayment of the loan will be from the sale of the
investments from time to time, and/or from other resources of the
corporation.
<PAGE> 20
4) Collateral
Any utilisation hereunder shall be secured by the pledge of all assets
held by you with this Bank (the "Assets"), pursuant to the General
Loan and Collateral Agreement signed by you on January 11, 1995.
Some or all of the Assets have a loanable value up to a percentage
ratio of their market value from time to time which varies with the
nature and quality of each asset (certain Assets may not have a
loanable value, although these Assets will secure the line of credit).
A summary of current maximum lending ratios is provided as an appendix
to this letter. We reserve the right to vary these ratios at our
discretion, and to refuse to extend a lending ratio against assets
which we do not consider to be acceptable or which would exceed the
limits we regard as prudent for lending against a specific Asset, and
to terminate our lending ratios against Assets.
None of the Assets may be removed by you from the Bank without our
prior written consent.
5) Collateral Margin Requirements
You will ensure at all times that the loanable value of the assets
pledged to us as collateral exceeds the amount outstanding hereunder.
Should the loanable value of pledged assets fall to 5% below the
amount outstanding (inclusive of interest and costs), you will provide
us with additional collateral to cover the shortfall upon our first
demand. Should you fail to provide the additional collateral within 5
business days or should the loanable value of the pledged assets fall
to 10% or more below the amount outstanding (whichever occurs first),
we reserve the right without further formality or notice and at our
discretion to sell sufficient Assets (including both Assets with, and
Assets without, a loanable value) to reduce the amount outstanding
under the line of credit to the loanable value of the remaining Assets
which are pledged to us. These provisions will take effect regardless
of the value of any Assets which do not have loanable value and may
take effect because we decrease or terminate our lending ratio for
some or all of the Assets securing the line of credit.
6) Pricing
Loans will bear interest at a rate to be mutually agreed at the time
of each borrowing. Indicative pricing is:
Loan: 1.0% over Libor
All interest is to be paid as it falls due.
<PAGE> 21
7) Term
This line of credit is provided on the basis that it may be withdrawn
without notice and any amounts outstanding are repayable on first
demand. It is made available to you on an uncommitted basis and we
reserve the right to liquidate collateral to repay any amounts
outstanding at our discretion and without further formality.
In any event, this line of credit shall become due for review on
February 24, 1996, and we shall be pleased to discuss future
arrangements shortly before this date.
8) Required Documentation
Promissory Note in respect of loan drawings (attached).
Form U1 (attached).
9) Applicable Law
This Agreement is subject to the laws of the State of New York.
Please advise if you require any further explanation of these terms and
conditions.
Yours faithfully,
/s/ Peter Embiricos /s/ Derek Simmons
Peter Embiricos Derek Simmons
Coutts & Co Coutts & Co
Terms accepted,
/s/ A.H. Salazar Diaz
--------------------------------------------
For and on behalf of Silva Run Worldwide Ltd
Date: 06/26/95
<PAGE> 22
Maximum Lending Ratios
<TABLE>
<S> <C> <C>
1. Coutts & Co own bonds and medium term cash bonds 90%
2. US, major European and Japanese government or government
agency bonds and notes 90%
3. Corporate bonds or notes rated AA or better 80%
4. Corporate bonds or notes rated A or BBB 70%
5. Selected equities quoted on US, major European or
Japanese stock exchanges 50%
6. Funds:
(a) Coutts & Co money market funds, same currency 95%
Coutts & Co money market funds, another currency 85%
Coutts & Co global fixed income 85%
Coutts & Co global equities 70%
(b) Other unleveraged global fixed income 75%
Other unleveraged global equities 60%
Other unleveraged emerging market 50%
7. Precious Metals 50%
8. Time Deposits and bank certificates of deposit:
Coutts & Co, same currency 95%
Coutts & Co, another currency 85%
</TABLE>
***************
<PAGE> 23
GENERAL LOAN
AND COLLATERAL AGREEMENT [COUTTS & CO LOGO]
In order to induce Coutts & Co AG (herein together with its successors, assigns
and endorsees is called "the Bank") from time to time in its discretion to
grant, extend or continue credit or other financial accommodations to the
undersigned, or any of them, or to others on the guaranty, endorsement or other
assurance of the undersigned, or any of them, it is hereby agreed and provided
by the undersigned that the Bank shall have the following rights in addition to
all other rights the Bank may have under the Uniform Commercial Code of New
York or otherwise, to wit:
1. All loans, advances, or credits heretofore or hereafter obtained from the
Bank by the undersigned, or any of them, as well as all present and future
indebtedness of any of the undersigned to the Bank, shall, unless otherwise
agreed in writing, be repayable by the undersigned at the Bank at its office at
65 East 55th Street, New York, NY 10022, upon demand, in immediately available
funds.
2. As security for any and all loans, advances, credits, indebtedness,
obligations and liabilities of any kind, of the undersigned or any of them to
the Bank, now or hereafter existing, whether absolute or contingent, due or to
become due, direct or indirect, liquidated or unliquidated, and however
acquired, incurred, or arising (all of which are hereinafter referred to as the
"obligations"), the undersigned and each of them grants a present security
interest in every balance of every account which the undersigned or any of them
has or shall at any time have with the Bank and all moneys, instruments,
chattel paper, documents, accounts, contract rights, goods, credits, choses in
action, claims, demands, and without any limitation whatsoever, property of
every kind and description including additions, accessions and substitutions
(all of which are hereinafter collectively referred to as the "collateral")
which have been or at any time shall be delivered to or be in transit to or
from the Bank or any of its agents or correspondents or other third party or
parties acting in its behalf, by, or for, or for account of, or subject to the
order of, the undersigned or any of them and in all right, title and interest
of the undersigned or any of them in and to any collateral which has come or
shall come into the possession, custody or control of the Bank in any way or
for any purpose whatsoever, whether for safekeeping or otherwise and whether
the Bank shall accept them for the purposes for which it is delivered to it or
not. The undersigned further authorizes the Bank to execute and file one or
more financing statements covering the collateral security or any part thereof
and the undersigned agrees to bear the cost of such filing(s).
3. The Bank at its discretion may, without notice, transfer any of the
collateral into its own name or that of its nominee and may, at its discretion,
in its or its nominee's name or in the name of the undersigned or any of them,
demand, sue for, collect and receive any money or property at any time due,
payable or receivable on account of or in exchange for, or make any compromise
or settlement it deems desirable with reference to, any of the collateral and
endorse, assign, convey and transfer any and all of the collateral. The Bank
may discharge all liens, taxes and security interests relating to the
collateral at the undersigned's expense. The Bank may, upon any default
hereunder or under any of the obligations, grant options or sell and resell in
one or more sales, all or any of the collateral at any broker's board or public
or private sale, for cash, upon credit or for future delivery, free from all
liability or claim for inadequacy of price, with or without demand of
performance or advertisement. Unless the collateral is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, the Bank will give the undersigned at least five days prior written
notice of the time and place of any public sale thereof or of the time after
which any private sale or any other intended disposition thereof is to be made.
The Bank or its agent may bid and/or purchase at any public sale and, if the
collateral is of the type customarily sold in a recognized market or the type
which is the subject of widely distributed price standards, at any private sale
made under this agreement, the Bank may hold the same thereafter in its own
right, absolutely free from any claim of the undersigned, who and each of whom
hereby waives and releases all rights of redemption to the extent such waiver
is lawful. The undersigned will bear and pay all necessary and incidental
costs and expenses and reasonable attorney's fees that the Bank may incur in
the enforcement hereof or of any of the obligations or of any of the collateral
or of any actual or attempted sale, exchange, enforcement, collection,
compromise or settlement of any of the collateral and of receipt of proceeds
thereof, and will repay to the Bank any such expense incurred by it together
with interest as hereinabove provided for.
The pledge and lien hereby given shall cover all proceeds of the
collateral at any time in the possession or control of the Bank. The Bank may
at any time, at its option, apply all or any of the net cash receipts or net
balance of or from any of the collateral to the payment in whole or in part of
any of the obligations or any such expense, applying or distributing the same
as it shall elect, whether the item or items on which such payment is made be
due or not, notwithstanding the holding by the Bank of the collateral. The
Bank shall not assume nor shall it be deemed to have assumed any duties,
liabilities or obligations in any way relating to or arising out of any of the
collateral. Notwithstanding the holding by the Bank of the collateral or any
sale, exchange, transfer, enforcement, collection, compromise or settlement,
actual or attempted, of any of the collateral the undersigned and each of them
shall be and remain liable for the payment in full of principal and interest of
all of the obligations and any expense as aforesaid, except only to the extent
that the same or any part thereof shall be reduced by payment or actual
application thereon by the Bank of the collateral or proceeds thereof. All
remittances and property shall be deemed in the possession and custody of the
Bank when actually in possession or custody of, or in transit to it or any
agent, bailee or correspondent or other third party acting on its behalf.
4. If at any time the collateral for any of the obligations shall be
unsatisfactory to the Bank or any of its officers, and the undersigned or any
of them shall not on demand furnish such further collateral or make such
payment on account as shall be satisfactory to the Bank, or if any sum payable
upon any of the obligations be not paid when due, or in the event of any other
default in, or under, any of the obligations, or default in the payment at
maturity of liabilities of the undersigned to others, or upon failure of the
undersigned to insure in favor of and to the satisfaction of the Bank any of
the collateral or if the undersigned or any of them, or in the case of a
partnership, any partner thereof, or any guarantor of any of the obligations or
any maker, endorser, or guarantor of any of the collateral shall die, or become
insolvent, or suspend business or make an assignment for the benefit of
creditors, or if a petition in bankruptcy shall be filed against, or a
voluntary petition in bankruptcy shall be filed by or if a judgment be entered
against, or if a receiver shall be appointed or any attachment or levy filed
against the property or assets, or any thereof, of, or upon any proceeding
being commenced under any bankruptcy reorganization, arrangement of debt,
insolvency, liquidation or dissolution law or statute by or against the
undersigned or any of them, or any such maker, endorser, or guarantor, of if
the Bank shall in good faith deem itself insecure, thereupon any or all of the
obligations, although not payable on demand, shall, at the option of the Bank,
forthwith become and be due and payable without notice, presentation or demand
of payment all of which are hereby expressly waived.
5. The Bank may assign or transfer all or any part of the obligations and may
transfer as security therefor all or any part of the collateral, and shall be
thereafter duly discharged from all liability and responsibility with respect
to the collateral so transferred, and the transferee shall thereafter be vested
with all powers and rights of the Bank hereunder with respect to such
collateral but with respect to any security not so transferred the Bank shall
retain all rights and powers hereby or otherwise given. The undersigned will
assert no claims or defense he may have against the Bank against the
transferee.
6. No delay on the part of the Bank or any of such assignee or transferee in
exercising any power or right hereunder shall operate as a waiver of any power
or right nor shall any single or partial exercise of any power or right
hereunder preclude other or further exercise thereof or the exercise of any
other power or right. The rights and remedies herein expressly specified are
irrevocable, cumulative and not exclusive of any other rights or remedies which
the Bank or its assigns may otherwise have. Any notice to or demand on the
undersigned elected to be given or made by the Bank shall be deemed effective,
if not first otherwise made or given, when forwarded by mail, telegraph, or
telephoned to the last address of the undersigned appearing on the Bank's
books. No notice to or demand on the undersigned shall be deemed to be a
waiver of any obligation of the undersigned or of the right of the Bank to take
further action without notice or demand as provided herein. In no event shall
any waiver by the Bank or any right be effective unless in writing and then the
same shall be applicable only in the specific instance for which given.
<PAGE> 24
7. This agreement shall cover all future as well as all existing transactions
and shall remain effective irrespective of any interruptions in the business
relations of the undersigned with the Bank. It shall bind all administrators,
executors, heirs, partners, successors and assigns of the undersigned and each
of them. The term "undersigned" as used herein shall, if this instrument is
signed by more than one party, mean the "undersigned and each of them" and each
undertaking herein contained shall be their joint and several undertaking.
8. This agreement and the rights and obligations of the Bank and of the
undersigned hereunder shall be governed and construed in accordance with the
laws of the State of New York. The undersigned consent to the jurisdiction of
the courts of New York in any action brought to enforce any of the rights
granted to the Bank hereunder.
9. The undersigned hereby waive(s) trial by jury in any litigation in any
court with respect to, in connection with, or arising out of this Agreement or
any other agreement, instrument or document delivered in connection herewith or
any transaction contemplated hereby.
New York, New York
January 11, 1995
/s/ A. H. Salazar Diaz
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Account Signature
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Address
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Account Signature
- ---------------------------------------
Address
- ---------------------------------------
Account Signature
- ---------------------------------------
Address
- ---------------------------------------
Account Signature
- ---------------------------------------
Address
<PAGE> 25
[COUTTS & CO. LOGO]
Demand Interest Bearing Note
$22,000,000 Office Address: 65 East 55th Street, N.Y., June 26, 1995
ON DEMAND The undersigned, for value received, jointly and severally promise(s)
to pay to the order of Coutts & Co AG (hereinafter called the Bank) at its
office in the place first above stated, or if no place is stated, at 65 East
55th Street, 22nd Fl., New York, NY 10022, in funds current at the New York
Clearing House, the sum of twenty two million dollars.
($22,000,000) Dollars. The undersigned also promises to pay interest at said
offices at the rate per annum indicated below:
[ ] The Bank's Prime Rate (the rate of interest established from time to
time by the Bank as its "prime rate") plus ____________ %, which
interest rate shall change when and as the Prime Rate changes;
[ ] ____________ %; (or)
[x] calculated as provided on the reverse side hereof.
If all or a portion of the principal or interest of the Liabilities (as
hereinafter defined), or any fee or other amount due in connection therewith,
shall not be paid when due (whether after stated maturity, acceleration or
otherwise), such amount, to the extent permitted by applicable law, shall bear
interest at the rate of 2% per annum in excess of the rate hereinbefore
provided, but in no event in excess of the maximum rate of interest permitted
under applicable law. Interest shall be payable on the first day of each month
commencing the first such day to occur after the date hereof and on the
maturity hereof.
The undersigned grants the Bank a security interest in and pledge(s) with the
Bank, as collateral security for payment of this note and of all Liabilities
(as hereinafter defined) of the Obligors (as hereinafter defined), or any one
or more of them, now or hereafter owned or held by the Bank, the following
property:
All assets held by Coutts & Co AG
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together with any additions and accessions thereto and substitutions therefor
and the products and proceeds thereof and all moneys and/or other property now
or hereafter held by the Bank on deposit, in safekeeping, or otherwise, for the
account of or to the credit of or belonging to any Obligor (which term as used
herein shall be deemed to include each and all of the undersigned and each and
every endorser or guarantor hereof) or in which any Obligor shall have any
interest, all or which is hereinafter termed the collateral security. The Bank
at any time, before or after default, may, but shall not be obligated to,
transfer into or out of its own name or that of its nominee all or any of the
collateral security, including stocks, bonds, and other securities, and the
Bank or its nominee may demand, sue for, collect, receive and hold as like
collateral security any or all interest, dividends and income thereon and if
any securities are held in the name of the Bank or its nominee, the Bank may,
after default exercise all voting and other rights pertaining thereto as if the
Bank were the absolute owner thereof; but the Bank shall not be obligated to
demand payment of, protest, or take any steps necessary to preserve any rights
in the collateral against prior parties, or to take any action whatsoever in
regard to the collateral security or any part thereof, all of which the Obligor
assumes and agrees to do. Without limiting the generality of the foregoing,
the Bank shall not be obligated to take any action in connection with any
conversion, call, redemption, retirement or any other event relating to any of
the collateral security, unless the Obligor gives written notice to the Bank
that such action shall be taken not more than thirty (30) days prior to the
time such action may first be taken and not less than ten (10) days prior to
the expiration of the time during which such action may be taken. The term
"Liabilities" shall include this note and all other indebtedness and
obligations and liabilities of any kind of any Obligor to the Bank, now or
hereafter existing, arising directly between any Obligor and the Bank or
acquired by assignment, conditionally or as collateral security by the Bank,
absolute or contingent, joint and/or several, secured or unsecured, due or not
due, contractual or tortious, liquidated or unliquidated, arising by operation
of law or otherwise, direct or indirect, including, but without limiting the
generality of the foregoing, indebtedness, obligations or liabilities to the
Bank of any Obligor as a member of any partnership, syndicate, association or
other group, and whether incurred by any Obligor as principal, surety,
endorser, guarantor, accommodation party or otherwise.
Upon default in the due payment of principal or interest, the Bank may, but
shall not be required to exercise any right or remedy hereby granted or allowed
to it by law including but not limited to the rights and remedies of a Secured
Party under the Uniform Commercial Code of New York and each and every right
and remedy granted to the Bank or allowed to it by law shall be cumulative and
not exclusive the one of the other, and may be exercised by the Bank from time
to time and as often as may be necessary. The Bank shall have at any time in
its discretion the right to enforce collection and payment or liquidation of
any of the collateral security by appropriate action or proceedings, and the
net amounts received therefrom, after deducting all costs and expenses incurred
in connection therewith, shall be applied on account of this note and any other
Liabilities all without notice to any Obligor. Any demand or notice, if made
or given, shall be sufficiently made upon or given to any Obligor if left at or
mailed to the last address of such Obligor known to the Bank or if made or
given in any other manner reasonably calculated to come to the attention of
such Obligor or the personal representatives, successors, or assigns of such
Obligor, whether or not in fact received by them respectively. Unless the
collateral is perishable or threatens to decline speedily in value or is a type
customarily sold on a recognized market, the Bank will give the undersigned
reasonable notice of the time and place of any public sale thereof or of the
time after which any private sale or other intended disposition is to be made.
Five (5) days prior notice shall be deemed reasonable notice. The Bank may
repledge all or any of the collateral security for any sum not in excess of the
amount due hereunder at the date of such repledge with any person, firm or
corporation for any purpose whatsoever, and may assign and transfer this note
to any other person, firm or corporation and may deliver and repledge the
collateral, security or any part thereof to the assignee or transferee of this
note, who shall thereupon become vested with all the powers and rights above
given to the Bank in respect thereof, and the Bank shall thereafter be forever
released and discharged of and from all responsibility or liability to the
Obligors for or on account of the collateral security so delivered. In the
event that this note is placed in the hands of an attorney for collection by
reason of any default hereunder, the Obligor agree(s) to pay attorney's fees in
the amount of 20% of the unpaid principal balance hereof which the Obligor
agree(s) to be reasonable. The Obligors jointly and severally promise to pay
all expenses of any nature as soon as incurred whether in or out of court and
whether incurred before or after this note shall become due at its maturity
date or otherwise and costs which the Bank may deem necessary or proper in
connection with the satisfaction of the indebtedness or the administration,
supervision, preservation, protection (including but not limited to maintenance
or adequate insurance) or of the realization upon the collateral. The Obligor
and the Bank in any litigation (whether or not arising out of or relating to
this note) in which any of them shall be adverse parties waive the right of
trial by jury and the Obligor waives the right to interpose any set-off or
counterclaim of any kind or description in any such litigation. This note and
any other agreements, documents and instruments executed and delivered pursuant
to or in connection with the Liabilities contain the entire agreement between
the parties relating to the subject matter hereof and thereof. The undersigned
expressly acknowledges that the Bank has not made and the undersigned is not
relying on any oral representations, agreements or commitments of the Bank or
any officer, employee, agent or representative thereof. No change,
modification, termination, waiver, or discharge, in whole or in part of this
instrument shall be effective unless in writing and signed by the party against
whom such change, modification, termination, waiver or discharge is sought to
be enforced. The Obligors, and each of them, hereby waive presentment, demand
for payment, protest, notice of protest, notice of dishonor, and any or all
other notices or demands in connection with the delivery, acceptance,
performance, default, or enforcement of this note, and each of them consents to
any and all delays, extensions of time, renewals, releases of any Obligor and
of any available security, waivers or
<PAGE> 26
modifications that may be granted or consented to by the Bank with regard to
the time of payment or with respect to any other provisions of this note and
agrees that no such action or failure to act o the part of the Bank shall in
any way affect or impair the obligations of any Obligor or be construed as a
waiver by the Bank of, or otherwise affect, its right to avail itself of any
remedy hereunder with the same force and effect as if each Obligor had
expressly consented to such action or inaction upon the part of the Bank.
The note shall be deemed to have been made and delivered in the State of York;
the Obligors consent to the jurisdiction of the courts of New York in any
action brought to enforce any of the rights of the Bank under this note and the
rights and liabilities of the Bank and the Obligors shall be determined in
accordance with the laws of the State of New York. Interest shall be
calculated on the basis of a 360-day year and actual days elapsed.
The obligors hereby authorize the Bank to date this note as of the day when the
loan evidenced hereby is made and to complete and fill in any blank spaces in
this note in order to conform to the terms upon which this loan granted. The
Obligor further authorizes the Bank to execute and file one or more financing
statements covering the collateral security or any part thereof and the Obligor
agrees to bear the cost of such filing(s). The term "Bank" as used herein
shall be deemed to include the Bank and its successors, endorsers and assigns.
Special provisions Interest will be calculated at 1% over Libor, with the
rate to be mutually agreed at the time of each borrowing fixture.
For and on behalf of Silva Run Worldwide Ltd
/s/ A. H. Salazar Diaz
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Signature
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Address
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Signature
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Address
GUARANTEE
In consideration of the making of the loan evidenced by the within note, hereby
requested by the undersigned, the undersigned hereby jointly and severally
guarantee(s) to Coutts & Co AG, its successors, endorsers or assigns,
irrespective of the genuineness, validity or enforceability hereof, the
payment, when due, including all interest payable hereon and the payment of all
legal expenses incurred by the holder hereof to enforce the same or to enforce
this guarantee, and hereby consent(s) to and agree(s) to be bound by the terms
and conditions hereof and agree(s) that the collateral may be exchanged or
surrendered in whole or in part from time to time and that the time of payment
hereof may be extended, or the rate of interest altered, or the full amount of
any part hereof may be renewed one or more times without notice to the
undersigned and that this guarantee shall apply to such extension or
extensions, renewal or renewals. The Bank has no duty to any Guarantor to
protect, secure or insure any security interest or lien and the obligations of
each Guarantor hereunder are valid, binding and enforceable, notwithstanding
any defect the Bank causes, permits or suffers to exist in any security
interest or lien. The undersigned waive(s) presentment, demand, protect,
notice of protest and notice of dishonor and each of them consents to any and
all delays, extensions of time, renewals, release of any part hereof and of any
available security, waivers or modifications that may be granted or consented
to by the Bank with regard to the time of payment or with respect to any other
provisions hereof and agrees that no such action or failure to act on the part
of the Bank shall in any way affect or impair the obligations of the
undersigned or be construed as a waiver by the Bank of, or otherwise affect,
its right to avail itself of any remedy hereunder with the same force and
effect as if the undersigned had expressly consented to such action upon the
part of the Bank.
As security for the performance of any and all of the obligations of the
undersigned, the undersigned does hereby give the Bank a continuing lien,
security interest and/or a right of set-off in respect to any and all property,
interest or estate and moneys of the undersigned now or at any time hereafter
held by, or in possession of, or under control of, or on deposit with, the Bank
The undersigned waive(s) presentment, demand, protest, notice of protest.
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Signature
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Address
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Signature
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Address
LOAN NO.
------------------------
<PAGE> 1
[COUTTS & CO LOGO]
COUTTS & CO AG
PARK AVENUE TOWER
65 East 55th Street
New York, NY 10022
Telephone (212) 303 2939 TELEFAX (212) 303 2929
March 16, 1995
Ronald F. Seale
Director
Compania di Investimento Antilliana SA
High Street
St. John's, Antigua
Dear Mr. Seale:
We are pleased to confirm that we are prepared to make available a line of
credit on the following terms and conditions:
1) AMOUNT
Up to US$2,000,000 (two million U.S. Dollars), provided the collateral
requirements set out below are satisfied.
2) AVAILABILITY
Loan US$2,000,000
You may borrow up to the maximum amount set out above and, after full
or partial repayment, reborrow on this line of credit until its term
has expired, provided that all the terms and conditions hereof are
satisfied.
3) PURPOSE AND REPAYMENT
The purpose of this loan is for investment purchases of stocks and
bonds. Repayment of this loan will be from the liquidation of
collateral.
4) COLLATERAL
Any utilization hereunder shall be secured by the pledge of all assets
held by you with this Bank (the "Assets"), pursuant to the General
Loan and Collateral Agreement signed by you on 1/10/95.
Some or all of the Assets have a loanable value up to a percentage
ratio of their market value from time to time which varies with the
nature and quality of each asset (certain Assets may not have a
loanable value, although these Assets will secure the line of credit).
A summary of current maximum lending ratios is provided as an appendix
to this letter. We reserve the right to vary these ratios at our
discretion, and to refuse to extend a lending ratio against assets
which we do not consider to be acceptable or which would exceed the
limits we regard as prudent for lending against a specific Asset, and
to terminate our lending ratios against Assets.
None of the Assets may be removed by you from the Bank without our
prior written consent.
<PAGE> 2
5) COLLATERAL MARGIN REQUIREMENTS
You will ensure at all times that the loanable value of the assets
pledged to us as collateral exceeds the amount outstanding hereunder.
Should the loanable value of pledged assets fall to 5% below the
amount outstanding (inclusive of interest and costs), you will provide
us with additional collateral to cover the shortfall upon our first
demand. Should you fail to provide the additional collateral within 5
business days or should the loanable value of the pledged assets fall
to 10% or more below the amount outstanding (whichever occurs first),
we reserve the right without further formality or notice and at our
discretion to sell sufficient Assets (including both Assets with, and
Assets without, a loanable value) to reduce the amount outstanding
under the line of credit to the loanable value of the remaining Assets
which are pledged to us. These provisions will take effect regardless
of the value of any Assets which do not have loanable value and may
take effect because we decrease or terminate our lending ratio for
some or all of the Assets securing the line of credit.
6) PRICING
You agree to pay an interest rate of LIBOR + 1% (one percent) on any
advances.
7) TERM
This line of credit is provided on the basis that it may be withdrawn
without notice and any amounts outstanding are repayable on first
demand. We reserve the right to liquidate collateral to repay any
amounts outstanding at our discretion and without further formality.
In any event, this line of credit shall become due for review on
February 24, 1996 and we shall be pleased to discuss future
arrangements shortly before this date.
8) APPLICABLE LAW
This Agreement is subject to the laws of the State of New York.
Please sign and return the attached copy of this letter as
confirmation of your acceptance of these terms and conditions.
Yours sincerely,
/s/ P Embiricos /s/ D Simmons
P Embiricos D Simmons
Coutts & Co AG Coutts & Co AG
<PAGE> 3
[COUTTS & CO LOGO]
COUTTS & CO AG
PARK AVENUE TOWER
65 East 55th Street
New York, NY 10022
Telephone (212) 303 2939 TELEFAX (212) 303 2929
April 5, 1995
Ronald F. Seale
Director
Compania di Investimento Antilliana SA
High Street
St. John's, Antigua
Dear Mr. Seale:
We are pleased to confirm that we are prepared to make available a line of
credit on the following terms and conditions:
1) AMOUNT
Up to US$2,500,000 (two million five hundred thousand U.S. Dollars),
provided the collateral requirements set out below are satisfied.
2) AVAILABILITY
Loan US$2,000,000
FX Margin Trading Facility US$500,000
Loan- You may borrow up to the maximum amount set out above and, after
full or partial repayment, reborrow on this line of credit until its
term has expired, provided that all the terms and conditions hereof
are satisfied.
FX Margin Trading Facility- We are prepared to enter into open forward
foreign exchange transactions with you, up to 12 months duration in
major currencies. We will apply a notional value of 10% of the face
value of each contract as utilization hereunder.
3) PURPOSE AND REPAYMENT
The purpose of the loan is for investment purchases of stocks and
bonds. Repayment of this loan will be from the liquidation of
collateral.
The purpose of the FX Margin Trading Facility is to enable the
corporation to enter into forward foreign exchange contracts.
4) COLLATERAL
Any utilization hereunder shall be secured by the pledge of all assets
held by you with this Bank (the "Assets"), pursuant to the General
Loan and Collateral Agreement signed by you on 1/10/95.
<PAGE> 4
Some or all of the Assets have a loanable value up to a percentage
ratio of their market value from time to time which varies with the
nature and quality of each asset (certain Assets may not have a
loanable value, although these Assets will secure the line of credit).
A summary of current maximum lending ratios is provided as an appendix
to this letter. We reserve the right to vary these ratios at our
discretion, and to refuse to extend a lending ratio against assets
which we, do not consider to be acceptable or which would exceed the
limits we regard as prudent for lending against a specific Asset, and
to terminate our lending ratios against Assets.
None of the Assets may be removed by you from the Bank without our
prior written consent.
5) COLLATERAL MARGIN REQUIREMENTS
You will ensure at all times that the loanable value of the assets
pledged to us as collateral exceeds the amount outstanding hereunder.
Should the loanable value of pledged assets fall to 5% below the
amount outstanding (inclusive of interest and costs), you will provide
us with additional collateral to cover the shortfall upon our first
demand. Should you fail to provide the additional collateral within 5
business days or should the loanable value of the pledged assets fall
to 10% or more below the amount outstanding (whichever occurs first),
we reserve the right without further formality or notice and at our
discretion to sell sufficient Assets (including both Assets with, and
Assets without, a loanable value) to reduce the amount outstanding
under the line of credit to the loanable value of the remaining Assets
which are pledged to us. These provisions will take effect regardless
of the value of any Assets which do not have loanable value and may
take effect because we decrease or terminate our lending ratio for
some or all of the Assets securing the line of credit.
6) PRICING
Loan- You agree to pay an interest rate of LIBOR + 1% (one percent)
on any loan advances. FX Margin Trading Facility-You agree to pay 10
PIPs on trades up to $500,000 and 5 PIPs on trades above $500,000.
7) TERM
This line of credit is provided on the basis that it may be withdrawn
without notice and any amounts outstanding are repayable on first
demand. We reserve the right to liquidate collateral to repay any
amounts outstanding at our discretion and without further formality.
In any event, this line of credit shall become due for review on
February 24, 1996 and we shall be pleased to discuss future
arrangements shortly before this date.
8) APPLICABLE LAW
This Agreement is subject to the laws of the State of New York.
Please sign and return the attached copy of this letter as
confirmation of your acceptance of these terms and conditions.
Yours sincerely,
/s/ P Embiricos /s/ D Simmons
P Embiricos D Simmons
Coutts & Co AG Coutts & Co AG
<PAGE> 5
[COUTTS & CO LOGO]
COUTTS & CO AG
PARK AVENUE TOWER
65 East 55th Street
New York, NY 10022
Telephone (212) 303 2939 TELEFAX (212) 303 2929
The Directors
Compania di Investimento Antilliana SA
St. John's
Antigua
June 29, 1995
Dear Sirs:
Compania Di Investimento Antilliana SA
We are pleased to confirm that we are prepared to make available to the
corporation a line of credit on the following terms and conditions:
1) AMOUNT
Up to US$6,000,000 (six million dollars), provided the
collateral requirements set out below are satisfied.
2) AVAILABILITY
The line of credit is available as follows:
<TABLE>
<S> <C>
Loan $5,500,000
Foreign Exchange Margin Trading $ 500,000 (notional limit, covering
open contracts with a face
value of $5,000,000)
</TABLE>
Loan: you may borrow up to the maximum amount set out above
and, after full or partial repayment, reborrow on this line of
credit, provided that all the terms and conditions hereof are
satisfied.
Foreign Exchange Margin Trading: we are prepared to enter
onto open foreign exchange contracts with you, up to 12 months
duration in major currencies. We will apply a notional value
of 10% to the face value of each contract as utilization
hereunder.
<PAGE> 6
3) PURPOSE AND REPAYMENT
The purpose of the loan is to assist the corporation in
connection with its investment activities. Repayment is to
flow from the corporation's investment income and from sales
of assets from time to time as necessary.
Please note also the bank's rights to withdraw the line of
credit and demand repayment shown in Section 7 of this letter.
4) COLLATERAL
Any utilization hereunder shall be secured by the pledge of
all assets held by you with this Bank (the "Assets"), pursuant
to the General Loan and Collateral Agreement signed by you on
January 10, 1995.
Some or all of the Assets have a loanable value up to a
percentage ratio of their market value from time to time which
varies with the nature and quality of each asset (certain
Assets may not have a loanable value, although these Assets
will secure the line of credit). A summary of current maximum
lending ratios is provided as an appendix to this letter. We
reserve the right to vary these ratios at our discretion, and
to refuse to extend a lending ratio against assets which we,
do not consider to be acceptable or which would exceed the
limits we regard as prudent for lending against a specific
Asset, and to terminate our lending ratios against Assets.
None of the Assets may be removed by you from the Bank without
our prior written consent.
The following is additionally required:
o A first legal mortgage over the freehold interest in
the property located at 12803 Waterford Pointe,
Windermere, Florida 34786 (described herein as
Waterford Pointe).
Please see also Section 8 below.
5) COLLATERAL MARGIN REQUIREMENTS
You will ensure at all times that the loanable value of the
assets pledged to us as collateral exceeds the amount
outstanding hereunder. Should the loanable value of pledged
assets fall to 5% below the amount outstanding (inclusive of
interest and costs), you will provide us with additional
collateral to cover the shortfall upon our first demand.
Should you fail to provide the additional collateral within 5
business days or should the loanable value of the pledged
assets fall to 10% or more below the amount outstanding
(whichever occurs first), we reserve the right without further
formality or notice and at our discretion to sell sufficient
Assets (including both Assets with, and Assets without, a
loanable value) to reduce the amount outstanding under the
line of credit to the loanable value of the remaining Assets
which are pledged to us. These provisions will take effect
regardless of the value of any Assets which do not have
loanable value and may take effect because we
<PAGE> 7
decrease or terminate our lending ratio for some or all of the
Assets securing the line of credit.
6) PRICING
Loans will bear interest at a rate to be mutually agreed at
the time of each borrowing. Indicative pricing is:
Interest Rate: 1.0% over Libor, with fixture
periods of up to one year. Any loan
drawing the purpose of which is to
enable the corporation to acquire
real estate investments will attract
an additional interest margin of
0.75%.
Arrangement Fee: $2,500, payable upon first drawdown
of the line of credit.
Other Fees: for the account of the corporation
as they arise (including appraisal
cost, attorney's fees, title
insurance and premiums, etc.).
7) TERM
This line of credit is provided on the basis that it may be
withdrawn without notice and any amounts outstanding are
repayable on first demand. It is made available to you on an
uncommitted basis and we reserve the right to liquidate
collateral to repay any amounts outstanding at our discretion
and without further formality.
In any event, this line of credit shall become due for review
on February 24, 1996.
8) REQUIRED DOCUMENTATION AND CONDITIONS PRECEDENT
o In relation to Waterford Pointe
o The bank requires a valuation report at
regular intervals to disclose no material
deterioration in condition or value.
o Mortgagee's Title Insurance in the amount of
the mortgage insuring the bank's mortgage as
a first mortgage on Waterford Pointe.
o Acceptable insurance cover to be lodged with
the bank.
o Loan documentation, including first mortgage,
prepared by our Florida Counsel.
o Completed Form U1.
9) APPLICABLE LAW
This line of credit is subject to the laws of the State of
New York.
<PAGE> 8
Please sign and return the attached copy of this letter as confirmation of your
acceptance of these terms and conditions.
Yours faithfully,
/s/ P Embiricos /s/ DG Simmons
P Embiricos DG Simmons
Coutts & Co Coutts & Co
Terms Accepted:
/s/ Ronald F. Seale 6/30/95
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For and on behalf of Compania di Investimento Antilliana SA Date
<PAGE> 9
MAXIMUM LENDING RATIOS
<TABLE>
<S> <C> <C>
1. Coutts & Co own bonds and medium term cash bonds 90%
2. US, major European and Japanese government or government agencies bonds and
notes 90%
3. Corporate bonds or notes rate AA or better 80%
4. Corporate bonds or notes rate A or BBB 70%
5. Selected equities quoted on US, major European or Japanese stock
exchanges*** 50%
6. Funds:
(a) Coutts & Co money market funds, same currency 95%
Coutts & Co money market funds, another currency 85%
Coutts & Co global fixed income 85%
Coutts & Co global equities 70%
(b) Other unleveraged global fixed income 75%
Other unleveraged global equities 60%
Other unleveraged emerging market 50%
8 Precious Metals 50%
9. Time deposits and bank certificates of deposit:
Coutts & Co, same currency 95%
Coutts & Co, another currency 85%
</TABLE>
*** lower lending ratios will apply to stocks offering limited
liquidity, no lending ratio is ascribed to restricted stocks.
*****************
<PAGE> 10
[COUTTS & CO LOGO]
COUTTS & CO AG
PARK AVENUE TOWER
65 East 55th Street
New York, NY 10022
Telephone (212) 303 2939 TELEFAX (212) 303 2929
The Directors
Compania di Investimento Antilliana SA
St. John's
Antigua
February 23, 1996
Dear Sirs:
We are pleased to confirm that we are prepared to extend your existing
$6,000,000 facility for an additional 30 days to March 29, 1996. This facility
will continue to be subject to the existing terms and conditions of our
facility letter to you dated June 29, 1995.
Yours sincerely,
/s/ E Badillo /s/ S Nichols
E Badillo S Nichols
Coutts & Co Coutts & Co
<PAGE> 11
GENERAL LOAN [COUTTS & CO LOGO]
AND COLLATERAL AGREEMENT
In order to induce Coutts & Co AG (herein together with its successors, assigns
and endorsees is called "the Bank") from time to time in its discretion to
grant, extend or continue credit or other financial accommodations to the
undersigned, or any of them, or to others on the guaranty, endorsement or other
assurance of the undersigned, or any of them, it is hereby agreed and provided
by the undersigned that the Bank shall have the following rights in addition to
all other rights the Bank may have under the Uniform Commercial Code of New
York or otherwise, to wit:
1. All loans, advances, or credits heretofore or hereafter obtained from the
Bank by the undersigned, or any of them, as well as all present and future
indebtedness of any of the undersigned to the Bank, shall, unless otherwise
agreed in writing, be repayable by the undersigned at the Bank at its office at
65 East 55th Street, New York, NY 10022, upon demand, in immediately available
funds.
2. As security for any and all loans, advances, credits, indebtedness,
obligations and liabilities of any kind, of the undersigned or any of them to
the Bank, now or hereafter existing, whether absolute or contingent, due or to
become due, direct or indirect, liquidated or unliquidated, and however
acquired, incurred, or arising (all of which are hereinafter referred to as the
"obligations"), the undersigned and each of them grants a present security
interest in every balance of every account which the undersigned or any of them
has or shall at any time have with the Bank and all moneys, instruments,
chattel paper, documents, accounts, contract rights, goods, credits, choses in
action, claims, demands, and without any limitation whatsoever, property of
every kind and description including additions, accessions and substitutions
(all of which are hereinafter collectively referred to as the "collateral")
which have been or at any time shall be delivered to or be in transit to or
from the Bank or any of its agents or correspondents or other third party or
parties acting in its behalf, by, or for, or for account of, or subject to the
order of, the undersigned or any of them and in all right, title and interest
of the undersigned or any of them in and to any collateral which has come or
shall come into the possession, custody or control of the Bank in any way or
for any purpose whatsoever, whether for safekeeping or otherwise and whether
the Bank shall accept them for the purposes for which it is delivered to it or
not. The undersigned further authorizes the Bank to execute and file one or
more financing statements covering the collateral security or any part thereof
and the undersigned agrees to bear the cost of such filing(s).
3. The Bank at its discretion may, without notice, transfer any of the
collateral into its own name or that of its nominee and may, at its discretion,
in its or its nominee's name or in the name of the undersigned or any of them,
demand, sue for, collect and receive any money or property at any time due,
payable or receivable on account of or in exchange for, or make any compromise
or settlement it deems desirable with reference to, any of the collateral and
endorse, assign, convey and transfer any and all of the collateral. The Bank
may discharge all liens, taxes and security interests relating to the
collateral at the undersigned's expense. The Bank may, upon any default
hereunder or under any of the obligations, grant options or sell and resell in
one or more sales, all or any of the collateral at any broker's board or public
or private sale, for cash, upon credit or for future delivery, free from all
liability or claim for inadequacy of price, with or without demand of
performance or advertisement. Unless the collateral is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, the Bank will give the undersigned at least five days prior written
notice of the time and place of any public sale thereof or of the time after
which any private sale or any other intended disposition thereof is to be made.
The Bank or its agent may bid and/or purchase at any public sale and, if the
collateral is of the type customarily sold in a recognized market or the type
which is the subject of widely distributed price standards, at any private sale
made under this agreement, the Bank may hold the same thereafter in its own
right, absolutely free from any claim of the undersigned, who and each of whom
hereby waives and releases all rights of redemption to the extent such waiver
is lawful. The undersigned will bear and pay all necessary and incidental
costs and expenses and reasonable attorney's fees that the Bank may incur in
the enforcement hereof or of any of the obligations or of any of the collateral
or of any actual or attempted sale, exchange, enforcement, collection,
compromise or settlement of any of the collateral and of receipt of proceeds
thereof, and will repay to the Bank any such expense incurred by it together
with interest as hereinabove provided for.
The pledge and lien hereby given shall cover all proceeds of the collateral
at any time in the possession or control of the Bank. The Bank may at any
time, at its option, apply all or any of the net cash receipts or net balance
of or from any of the collateral to the payment in whole or in part of any of
the obligations or any such expense, applying or distributing the same as it
shall elect, whether the item or items on which such payment is made be due or
not, notwithstanding the holding by the Bank of the collateral. The Bank shall
not assume nor shall it be deemed to have assumed any duties, liabilities or
obligations in any way relating to or arising out of any of the collateral.
Notwithstanding the holding by the Bank of the collateral or any sale,
exchange, transfer, enforcement, collection, compromise or settlement, actual
or attempted, of any of the collateral the undersigned and each of them shall
be and remain liable for the payment in full of principal and interest of all
of the obligations and any expense as aforesaid, except only to the extent that
the same or any part thereof shall be reduced by payment or actual application
thereon by the Bank of the collateral or proceeds thereof. All remittances and
property shall be deemed in the possession and custody of the Bank when
actually in possession or custody of, or in transit to it or any agent, bailee
or correspondent or other third party acting on its behalf.
4. If at any time the collateral for any of the obligations shall be
unsatisfactory to the Bank or any of its officers, and the undersigned or any
of them shall not on demand furnish such further collateral or make such
payment on account as shall be satisfactory to the Bank, or if any sum payable
upon any of the obligations be not paid when due, or in the event of any other
default in, or under, any of the obligations, or default in the payment at
maturity of liabilities of the undersigned to others, or upon failure of the
undersigned to insure in favor of and to the satisfaction of the Bank any of
the collateral or if the undersigned or any of them, or in the case of a
partnership, any partner thereof, or any guarantor of any of the obligations or
any maker, endorser, or guarantor of any of the collateral shall die, or become
insolvent, or suspend business or make an assignment for the benefit of
creditors, or if a petition in bankruptcy shall be filed against, or a
voluntary petition in bankruptcy shall be filed by or if a judgment be entered
against, or if a receiver shall be appointed or any attachment or levy filed
against the property or assets, or any thereof, of, or upon any proceeding
being commenced under any bankruptcy reorganization, arrangement of debt,
insolvency, liquidation or dissolution law or statute by or against the
undersigned or any of them, or any such maker, endorser, or guarantor, of if
the Bank shall in good faith deem itself insecure, thereupon any or all of the
obligations, although not payable on demand, shall, at the option of the Bank,
forthwith become and be due and payable without notice, presentation or demand
of payment all of which are hereby expressly waived.
5. The Bank may assign or transfer all or any part of the obligations and may
transfer as security therefor all or any part of the collateral, and shall be
thereafter duly discharged from all liability and responsibility with respect
to the collateral so transferred, and the transferee shall thereafter be vested
with all powers and rights of the Bank hereunder with respect to such
collateral but with respect to any security not so transferred the Bank shall
retain all rights and powers hereby or otherwise given. The undersigned will
assert no claims or defense he may have against the Bank against the
transferee.
6. No delay on the part of the Bank or any of such assignee or transferee in
exercising any power or right hereunder shall operate as a waiver of any power
or right nor shall any single or partial exercise of any power or right
hereunder preclude other or further exercise thereof or the exercise of any
other power or right. The rights and remedies herein expressly specified are
irrevocable, cumulative and not exclusive of any other rights or remedies which
the Bank or its assigns may otherwise have. Any notice to or demand on the
undersigned elected to be given or made by the Bank shall be deemed effective,
if not first otherwise made or given, when forwarded by mail, telegraph, or
telephoned to the last address of the undersigned appearing on the Bank's
books. No notice to or demand on the undersigned shall be deemed to be a
waiver of any obligation of the undersigned or of the right of the Bank to take
further action without notice or demand as provided herein. In no event shall
any waiver by the Bank or any right be effective unless in writing and then the
same shall be applicable only in the specific instance for which given.
<PAGE> 12
7. This agreement shall cover all future as well as all existing transactions
and shall remain effective irrespective of any interruptions in the business
relations of the undersigned with the Bank. It shall bind all administrators,
executors, heirs, partners, successors and assigns of the undersigned and each
of them. The term "undersigned" as used herein shall, if this instrument is
signed by more than one party, mean the "undersigned and each of them" and each
undertaking herein contained shall be their joint and several undertaking.
8. This agreement and the rights and obligations of the Bank and of the
undersigned hereunder shall be governed and construed in accordance with the
laws of the State of New York. The undersigned consent to the jurisdiction of
the courts of New York in any action brought to enforce any of the rights
granted to the Bank hereunder.
9. The undersigned hereby waive(s) trial by jury in any litigation in any
court with respect to, in connection with, or arising out of this Agreement or
any other agreement, instrument or document delivered in connection herewith or
any transaction contemplated hereby.
New York, New York
/s/ Ronald F. Seale 1/10/95
- --------------------------------------------------------------------------------
/s/ Ronald F. Seale
- --------------------------------------------------------------------------------
Account Signature
- --------------------------------------------------------------------------------
Address
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Account Signature
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
Account Signature
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
Account Signature
- --------------------------------------------------------------------------------
Address
<PAGE> 13
Coutts & Co
- --------------------------------------------------------------------------------
Demand Interest Bearing Note
$6,000,000 Office Address: 65 East 55th Street, N.Y., June 27, 1995
ON DEMAND The undersigned, for value received, jointly and severally promise(s)
to pay to the order of Coutts & Co AG (hereinafter called the Bank) at its
office in the place first above stated, or if no place is stated, at 65 East
55th Street, 22nd Fl., New York, NY 10022, in funds current at the New York
Clearing House, the sum of six million dollars ($6,000,000 ) Dollars. The
undersigned also promises to pay interest at said offices at the rate per annum
indicated below:
[ ] The Bank's Prime Rate (the rate of interest established from time to
time by the Bank as its "prime rate") plus ___________%, which
interest rate shall change when and as the Prime Rate changes;
[ ] ____________ %; (or)
[x] calculated as provided on the reverse side hereof.
If all or a portion of the principal or interest of the Liabilities (as
hereinafter defined), or any fee or other amount due in connection therewith,
shall not be paid when due (whether after stated maturity, acceleration or
otherwise), such amount, to the extent permitted by applicable law, shall bear
interest at the rate of 2% per annum in excess of the rate hereinbefore
provided, but in no event in excess of the maximum rate of interest permitted
under applicable law. Interest shall be payable on the first day of each month
commencing the first such day to occur after the date hereof and on the
maturity hereof.
The undersigned grants the Bank a security interest in and pledge(s) with the
Bank, as collateral security for payment of this note and of all Liabilities
(as hereinafter defined) of the Obligors (as hereinafter defined), or any one
or more of them, now or hereafter owned or held by the Bank, the following
property:
All assets held with Coutts & Co AG
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
together with any additions and accessions thereto and substitutions therefor
and the products and proceeds thereof and all moneys and/or other property now
or hereafter held by the Bank on deposit, in safekeeping, or otherwise, for the
account of or to the credit of or belonging to any Obligor (which term as used
herein shall be deemed to include each and all of the undersigned and each and
every endorser or guarantor hereof) or in which any Obligor shall have any
interest, all or which is hereinafter termed the collateral security. The Bank
at any time, before or after default, may, but shall not be obligated to,
transfer into or out of its own name or that of its nominee all or any of the
collateral security, including stocks, bonds, and other securities, and the Bank
or its nominee may demand, sue for, collect, receive and hold as like collateral
security any or all interest, dividends and income thereon and if any securities
are held in the name of the Bank or its nominee, the Bank may, after default
exercise all voting and other rights pertaining thereto as if the Bank were the
absolute owner thereof; but the Bank shall not be obligated to
demand payment of, protest, or take any steps necessary to preserve any rights
in the collateral against prior parties, or to take any action whatsoever in
regard to the collateral security or any part thereof, all of which the Obligor
assumes and agrees to do. Without limiting the generality of the foregoing,
the Bank shall not be obligated to take any action in connection with any
conversion, call, redemption, retirement or any other event relating to any of
the collateral security, unless the Obligor gives written notice to the Bank
that such action shall be taken not more than thirty (30) days prior to the
time such action may first be taken and not less than ten (10) days prior to
the expiration of the time during which such action may be taken. The term
"Liabilities" shall include this note and all other indebtedness and
obligations and liabilities of any kind of any Obligor to the Bank, now or
hereafter existing, arising directly between any Obligor and the Bank or
acquired by assignment, conditionally or as collateral security by the Bank,
absolute or contingent, joint and/or several, secured or unsecured, due or not
due, contractual or tortious, liquidated or unliquidated, arising by operation
of law or otherwise, direct or indirect, including, but without limiting the
generality of the foregoing, indebtedness, obligations or liabilities to the
Bank of any Obligor as a member of any partnership, syndicate, association or
other group, and whether incurred by any Obligor as principal, surety,
endorser, guarantor, accommodation party or otherwise.
Upon default in the due payment of principal or interest, the Bank may, but
shall not be required to exercise any right or remedy hereby granted or allowed
to it by law including but not limited to the rights and remedies of a Secured
Party under the Uniform Commercial Code of New York and each and every right
and remedy granted to the Bank or allowed to it by law shall be cumulative and
not exclusive the one of the other, and may be exercised by the Bank from time
to time and as often as may be necessary. The Bank shall have at any time in
its discretion the right to enforce collection and payment or liquidation of
any of the collateral security by appropriate action or proceedings, and the
net amounts received therefrom, after deducting all costs and expenses incurred
in connection therewith, shall be applied on account of this note and any other
Liabilities all without notice to any Obligor. Any demand or notice, if made
or given, shall be sufficiently made upon or given to any Obligor if left at or
mailed to the last address of such Obligor known to the Bank or if made or
given in any other manner reasonably calculated to come to the attention of
such Obligor or the personal representatives, successors, or assigns of such
Obligor, whether or not in fact received by them respectively. Unless the
collateral is perishable or threatens to decline speedily in value or is a type
customarily sold on a recognized market, the Bank will give the undersigned
reasonable notice of the time and place of any public sale thereof or of the
time after which any private sale or other intended disposition is to be made.
Five (5) days prior notice shall be deemed reasonable notice. The Bank may
repledge all or any of the collateral security for any sum not in excess of the
amount due hereunder at the date of such repledge with any person, firm or
corporation for any purpose whatsoever, and may assign and transfer this note
to any other person, firm or corporation and may deliver and repledge the
collateral, security or any part thereof to the assignee or transferee of this
note, who shall thereupon become vested with all the powers and rights above
given to the Bank in respect thereof, and the Bank shall thereafter be forever
released and discharged of and from all responsibility or liability to the
Obligors for or on account of the collateral security so delivered. In the
event that this note is placed in the hands of an attorney for collection by
reason of any default hereunder, the Obligor agree(s) to pay attorney's fees in
the amount of 20% of the unpaid principal balance hereof which the Obligor
agree(s) to be reasonable. The Obligors jointly and severally promise to pay
all expenses of any nature as soon as incurred whether in or out of court and
whether incurred before or after this note shall become due at its maturity
date or otherwise and costs which the Bank may deem necessary or proper in
connection with the satisfaction of the indebtedness or the administration,
supervision, preservation, protection (including but not limited to maintenance
or adequate insurance) or of the realization upon the collateral. The Obligor
and the Bank in any litigation (whether or not arising out of or relating to
this note) in which any of them shall be adverse parties waive the right of
trial by jury and the Obligor waives the right to interpose any set-off or
counterclaim of any kind or description in any such litigation. This note and
any other agreements, documents and instruments executed and delivered pursuant
to or in connection with the Liabilities contain the entire agreement between
the parties relating to the subject matter hereof and thereof. The undersigned
expressly acknowledges that the Bank has not made and the undersigned is not
relying on any oral representations, agreements or commitments of the Bank or
any officer, employee, agent or representative thereof. No change,
modification, termination, waiver, or discharge, in whole or in part of this
instrument shall be effective unless in writing and signed by the party against
whom such change, modification, termination, waiver or discharge is sought to
be enforced. The Obligors, and each of them, hereby waive presentment, demand
for payment, protest, notice of protest, notice of dishonor, and any or all
other notices or demands in connection with the delivery, acceptance,
performance, default, or enforcement of this note, and each of them consents to
any and all delays, extensions of time, renewals, releases of any Obligor and
of any available security, waivers or
<PAGE> 14
modifications that may be granted or consented to by the Bank with regard to
the time of payment or with respect to any other provisions of this note and
agrees that no such action or failure to act o the part of the Bank shall in
any way affect or impair the obligations of any Obligor or be construed as a
waiver by the Bank of, or otherwise affect, its right to avail itself of any
remedy hereunder with the same force and effect as if each Obligor had
expressly consented to such action or inaction upon the part of the Bank.
The note shall be deemed to have been made and delivered in the State of York;
the Obligors consent to the jurisdiction of the courts of New York in any
action brought to enforce any of the rights of the Bank under this note and the
rights and liabilities of the Bank and the Obligors shall be determined in
accordance with the laws of the State of New York. Interest shall be
calculated on the basis of a 360-day year and actual days elapsed.
The obligors hereby authorize the Bank to date this note as of the day when the
loan evidenced hereby is made and to complete and fill in any blank spaces in
this note in order to conform to the terms upon which this loan granted. The
Obligor further authorizes the Bank to execute and file one or more financing
statements covering the collateral security or any part thereof and the Obligor
agrees to bear the cost of such filing(s). The term "Bank" as used herein
shall be deemed to include the Bank and its successors, endorsers and assigns.
Special provisions Interest to be calculated at a rate of 1% over Libor.
-------------------------------------------------------------
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- --------------------------------------------------------------------------------
For Compania Di Investimentos Antilliana
/s/ Ronald F. Seale
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
Address
GUARANTEE
In consideration of the making of the loan evidenced by the within note, hereby
requested by the undersigned, the undersigned hereby jointly and severally
guarantee(s) to Coutts & Co AG, its successors, endorsers or assigns,
irrespective of the genuineness, validity or enforceability hereof, the
payment, when due, including all interest payable hereon and the payment of all
legal expenses incurred by the holder hereof to enforce the same or to enforce
this guarantee, and hereby consent(s) to and agree(s) to be bound by the terms
and conditions hereof and agree(s) that the collateral may be exchanged or
surrendered in whole or in part from time to time and that the time of payment
hereof may be extended, or the rate of interest altered, or the full amount of
any part hereof may be renewed one or more times without notice to the
undersigned and that this guarantee shall apply to such extension or
extensions, renewal or renewals. The Bank has no duty to any Guarantor to
protect, secure or insure any security interest or lien and the obligations of
each Guarantor hereunder are valid, binding and enforceable, notwithstanding
any defect the Bank causes, permits or suffers to exist in any security
interest or lien. The undersigned waive(s) presentment, demand, protect,
notice of protest and notice of dishonor and each of them consents to any and
all delays, extensions of time, renewals, release of any part hereof and of any
available security, waivers or modifications that may be granted or consented
to by the Bank with regard to the time of payment or with respect to any other
provisions hereof and agrees that no such action or failure to act on the part
of the Bank shall in any way affect or impair the obligations of the
undersigned or be construed as a waiver by the Bank of, or otherwise affect,
its right to avail itself of any remedy hereunder with the same force and
effect as if the undersigned had expressly consented to such action upon the
part of the Bank.
As security for the performance of any and all of the obligations of the
undersigned, the undersigned does hereby give the Bank a continuing lien,
security interest and/or a right of set-off in respect to any and all property,
interest or estate and moneys of the undersigned now or at any time hereafter
held by, or in possession of, or under control of, or on deposit with, the Bank
The undersigned waive(s) presentment, demand, protest, notice of protest.
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Signature
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Address
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Signature
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Address
LOAN NO.
----------------------------
<PAGE> 1
[COUTTS & CO LOGO]
COUTTS & CO AG
PARK AVENUE TOWER
65 East 55th Street
New York, NY 10022
Telephone (212) 303 2939 TELEFAX (212) 303 2929
The Directors
Willsboro Universal Corporation
Tortola
British Virgin Islands
December 20, 1995
Dear Sirs
WILLSBORO UNIVERSAL CORPORATION
We are pleased to confirm that we are prepared to make available a line of
credit on the following terms and conditions:
1) AMOUNT
Up to US$6,000,000 (six million dollars), provided the collateral
requirements set out below are satisfied.
2) AVAILABILITY
The line of credit is available as follows:
Loan $6,000,000
You may borrow up to the maximum amount set out above and, after full
or partial repayment, reborrow on this line of credit until its term
has expired, provided that all the terms and conditions hereof are
satisfied.
3) PURPOSE AND REPAYMENT
The line of credit is available to assist you in making further
investments in stocks and bonds. Repayment will stem from the sale of
investments from time to time, from other sources of income and from
the sale of other assets held by you as required. All interest will
be paid as it falls due.
<PAGE> 2
4) COLLATERAL
Any utilisation hereunder shall be secured by the pledge of all assets
held by you with this Bank (the "Assets"), pursuant to the General
Loan and Collateral Agreement signed by you.
Some or all of the Assets have a loanable value up to a percentage
ratio of their market value from time to time which varies with the
nature and quality of each asset (certain Assets may not have a
loanable value, although these Assets will secure the line of credit).
A summary of current maximum lending ratios is provided as an appendix
to this letter. We reserve the right to vary these ratios at our
discretion, and to refuse to extend a lending ratio against assets
which we do not consider to be acceptable or which would exceed the
limits we regard as prudent for lending against a specific Asset, and
to terminate our lending ratios against Assets.
None of the Assets may be removed by you from the Bank without our
prior written consent.
5) COLLATERAL MARGIN REQUIREMENTS
You will ensure at all times that the loanable value of the assets
pledged to us as collateral exceeds the amount outstanding hereunder.
Should the loanable value of pledged assets fall to 5% below the
amount outstanding (inclusive of interest and costs), you will provide
us with additional collateral to cover the shortfall upon our first
demand. Should you fail to provide the additional collateral within 5
business days or should the loanable value of the pledged assets fall
to 10% or more below the amount outstanding (whichever occurs first),
we reserve the right without further formality or notice and at our
discretion to sell sufficient Assets (including both Assets with, and
Assets without, a loanable value) to reduce the amount outstanding
under the line of credit to the loanable value of the remaining Assets
which are pledged to us. These provisions will take effect regardless
of the value of any Assets which do not have loanable value and may
take effect because we decrease or terminate our lending ratio for
some or all of the Assets securing the line of credit.
6) PRICING
Loans will bear interest at a rate to be mutually agreed at the time
of each borrowing. Indicative pricing is:
Loan: 1.0% over Libor
Loan Fee: $1,000
<PAGE> 3
7) TERM
This line of credit is provided on the basis that it may be withdrawn
without notice and any amounts outstanding are repayable on first
demand. It is made available to you on an uncommitted basis and we
reserve the right to liquidate collateral to repay any amounts
outstanding at our discretion and without further formality.
In any event, this line of credit shall become due for review on
December 20, 1996, and we shall be pleased to discuss future
arrangements shortly before this date.
8) REQUIRED DOCUMENTATION
The following documentation/formalities are required before the line
is available for use:
- completed Promissory Note in respect of loan drawings
- completed From U1
A copy of the financial statements of the corporation are required as
soon as they become available.
9) APPLICABLE LAW
This Agreement is subject to the laws of the State of New York.
Please contact this office if you require any further explanation of these
terms and conditions.
Yours sincerely,
/s/ M Economou /s/ D G Simmons
M Economou D G Simmons
Coutts & Co Coutts & Co
<PAGE> 4
GENERAL LOAN [COUTTS & CO LOGO]
AND COLLATERAL AGREEMENT
In order to induce Coutts & Co AG (herein together with its successors, assigns
and endorsees is called "the Bank") from time to time in its discretion to
grant, extend or continue credit or other financial accommodations to the
undersigned, or any of them, or to others on the guaranty, endorsement or other
assurance of the undersigned, or any of them, it is hereby agreed and provided
by the undersigned that the Bank shall have the following rights in addition to
all other rights the Bank may have under the Uniform Commercial Code of New
York or otherwise, to wit:
1. All loans, advances, or credits heretofore or hereafter obtained from the
Bank by the undersigned, or any of them, as well as all present and future
indebtedness of any of the undersigned to the Bank, shall, unless otherwise
agreed in writing, be repayable by the undersigned at the Bank at its office at
65 East 55th Street, New York, NY 10022, upon demand, in immediately available
funds.
2. As security for any and all loans, advances, credits, indebtedness,
obligations and liabilities of any kind, of the undersigned or any of them to
the Bank, now or hereafter existing, whether absolute or contingent, due or to
become due, direct or indirect, liquidated or unliquidated, and however
acquired, incurred, or arising (all of which are hereinafter referred to as the
"obligations"), the undersigned and each of them grants a present security
interest in every balance of every account which the undersigned or any of them
has or shall at any time have with the Bank and all moneys, instruments,
chattel paper, documents, accounts, contract rights, goods, credits, choses in
action, claims, demands, and without any limitation whatsoever, property of
every kind and description including additions, accessions and substitutions
(all of which are hereinafter collectively referred to as the "collateral")
which have been or at any time shall be delivered to or be in transit to or
from the Bank or any of its agents or correspondents or other third party or
parties acting in its behalf, by, or for, or for account of, or subject to the
order of, the undersigned or any of them and in all right, title and interest
of the undersigned or any of them in and to any collateral which has come or
shall come into the possession, custody or control of the Bank in any way or
for any purpose whatsoever, whether for safekeeping or otherwise and whether
the Bank shall accept them for the purposes for which it is delivered to it or
not. The undersigned further authorizes the Bank to execute and file one or
more financing statements covering the collateral security or any part thereof
and the undersigned agrees to bear the cost of such filing(s).
3. The Bank at its discretion may, without notice, transfer any of the
collateral into its own name or that of its nominee and may, at its discretion,
in its or its nominee's name or in the name of the undersigned or any of them,
demand, sue for, collect and receive any money or property at any time due,
payable or receivable on account of or in exchange for, or make any compromise
or settlement it deems desirable with reference to, any of the collateral and
endorse, assign, convey and transfer any and all of the collateral. The Bank
may discharge all liens, taxes and security interests relating to the
collateral at the undersigned's expense. The Bank may, upon any default
hereunder or under any of the obligations, grant options or sell and resell in
one or more sales, all or any of the collateral at any broker's board or public
or private sale, for cash, upon credit or for future delivery, free from all
liability or claim for inadequacy of price, with or without demand of
performance or advertisement. Unless the collateral is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, the Bank will give the undersigned at least five days prior written
notice of the time and place of any public sale thereof or of the time after
which any private sale or any other intended disposition thereof is to be made.
The Bank or its agent may bid and/or purchase at any public sale and, if the
collateral is of the type customarily sold in a recognized market or the type
which is the subject of widely distributed price standards, at any private sale
made under this agreement, the Bank may hold the same thereafter in its own
right, absolutely free from any claim of the undersigned, who and each of whom
hereby waives and releases all rights of redemption to the extent such waiver
is lawful. The undersigned will bear and pay all necessary and incidental
costs and expenses and reasonable attorney's fees that the Bank may incur in
the enforcement hereof or of any of the obligations or of any of the collateral
or of any actual or attempted sale, exchange, enforcement, collection,
compromise or settlement of any of the collateral and of receipt of proceeds
thereof, and will repay to the Bank any such expense incurred by it together
with interest as hereinabove provided for.
The pledge and lien hereby given shall cover all proceeds of the
collateral at any time in the possession or control of the Bank. The Bank may
at any time, at its option, apply all or any of the net cash receipts or net
balance of or from any of the collateral to the payment in whole or in part of
any of the obligations or any such expense, applying or distributing the same
as it shall elect, whether the item or items on which such payment is made be
due or not, notwithstanding the holding by the Bank of the collateral. The
Bank shall not assume nor shall it be deemed to have assumed any duties,
liabilities or obligations in any way relating to or arising out of any of the
collateral. Notwithstanding the holding by the Bank of the collateral or any
sale, exchange, transfer, enforcement, collection, compromise or settlement,
actual or attempted, of any of the collateral the undersigned and each of them
shall be and remain liable for the payment in full of principal and interest of
all of the obligations and any expense as aforesaid, except only to the extent
that the same or any part thereof shall be reduced by payment or actual
application thereon by the Bank of the collateral or proceeds thereof. All
remittances and property shall be deemed in the possession and custody of the
Bank when actually in possession or custody of, or in transit to it or any
agent, bailee or correspondent or other third party acting on its behalf.
4. If at any time the collateral for any of the obligations shall be
unsatisfactory to the Bank or any of its officers, and the undersigned or any
of them shall not on demand furnish such further collateral or make such
payment on account as shall be satisfactory to the Bank, or if any sum payable
upon any of the obligations be not paid when due, or in the event of any other
default in, or under, any of the obligations, or default in the payment at
maturity of liabilities of the undersigned to others, or upon failure of the
undersigned to insure in favor of and to the satisfaction of the Bank any of
the collateral or if the undersigned or any of them, or in the case of a
partnership, any partner thereof, or any guarantor of any of the obligations or
any maker, endorser, or guarantor of any of the collateral shall die, or become
insolvent, or suspend business or make an assignment for the benefit of
creditors, or if a petition in bankruptcy shall be filed against, or a
voluntary petition in bankruptcy shall be filed by or if a judgment be entered
against, or if a receiver shall be appointed or any attachment or levy filed
against the property or assets, or any thereof, of, or upon any proceeding
being commenced under any bankruptcy reorganization, arrangement of debt,
insolvency, liquidation or dissolution law or statute by or against the
undersigned or any of them, or any such maker, endorser, or guarantor, of if
the Bank shall in good faith deem itself insecure, thereupon any or all of the
obligations, although not payable on demand, shall, at the option of the Bank,
forthwith become and be due and payable without notice, presentation or demand
of payment all of which are hereby expressly waived.
5. The Bank may assign or transfer all or any part of the obligations and may
transfer as security therefor all or any part of the collateral, and shall be
thereafter duly discharged from all liability and responsibility with respect
to the collateral so transferred, and the transferee shall thereafter be vested
with all powers and rights of the Bank hereunder with respect to such
collateral but with respect to any security not so transferred the Bank shall
retain all rights and powers hereby or otherwise given. The undersigned will
assert no claims or defense he may have against the Bank against the
transferee.
6. No delay on the part of the Bank or any of such assignee or transferee in
exercising any power or right hereunder shall operate as a waiver of any power
or right nor shall any single or partial exercise of any power or right
hereunder preclude other or further exercise thereof or the exercise of any
other power or right. The rights and remedies herein expressly specified are
irrevocable, cumulative and not exclusive of any other rights or remedies which
the Bank or its assigns may otherwise have. Any notice to or demand on the
undersigned elected to be given or made by the Bank shall be deemed effective,
if not first otherwise made or given, when forwarded by mail, telegraph, or
telephoned to the last address of the undersigned appearing on the Bank's
books. No notice to or demand on the undersigned shall be deemed to be a
waiver of any obligation of the undersigned or of the right of the Bank to take
further action without notice or demand as provided herein. In no event shall
any waiver by the Bank or any right be effective unless in writing and then the
same shall be applicable only in the specific instance for which given.
<PAGE> 5
7. This agreement shall cover all future as well as all existing transactions
and shall remain effective irrespective of any interruptions in the business
relations of the undersigned with the Bank. It shall bind all administrators,
executors, heirs, partners, successors and assigns of the undersigned and each
of them. The term "undersigned" as used herein shall, if this instrument is
signed by more than one party, mean the "undersigned and each of them" and each
undertaking herein contained shall be their joint and several undertaking.
8. This agreement and the rights and obligations of the Bank and of the
undersigned hereunder shall be governed and construed in accordance with the
laws of the State of New York. The undersigned consent to the jurisdiction of
the courts of New York in any action brought to enforce any of the rights
granted to the Bank hereunder.
9. The undersigned hereby waive(s) trial by jury in any litigation in any
court with respect to, in connection with, or arising out of this Agreement or
any other agreement, instrument or document delivered in connection herewith or
any transaction contemplated hereby.
New York, New York
/s/ [ILLEGIBLE] 14 December 1995
- -------------------------------------
FOR WILLSBORO UNIVERSAL CORP.
Account Signature
--------------------------------
Address
--------------------------------
Account Signature
--------------------------------
Address
--------------------------------
Account Signature
--------------------------------
Address
--------------------------------
Account Signature
--------------------------------
Address
--------------------------------
<PAGE> 6
Coutts & Co
- --------------------------------------------------------------------------------
Demand Interest Bearing Note
$ 6,000,000 Office Address: 65 East 55th Street, N.Y., N.Y. December 21, 1995
ON DEMAND The undersigned, for value received, jointly and severally promise(s)
to pay to the order of Coutts & Co AG (hereinafter called the Bank) at its
office in the place first above stated, or if no place is stated, at 65 East
55th Street, 22nd Fl., New York, NY 10022, in funds current at the New York
Clearing House, the sum of SIX MILLION DOLLARS. ($6,000,000 ) Dollars. The
undersigned also promises to pay interest at said offices at the rate per annum
indicated below:
[ ] The Bank's Prime Rate (the rate of interest established from time to
time by the Bank as its "prime rate") plus ___________%, which
interest rate shall change when and as the Prime Rate changes;
[ ] ____________ %; (or)
[x] calculated as provided on the reverse side hereof.
If all or a portion of the principal or interest of the Liabilities (as
hereinafter defined), or any fee or other amount due in connection therewith,
shall not be paid when due (whether after stated maturity, acceleration or
otherwise), such amount, to the extent permitted by applicable law, shall bear
interest at the rate of 2% per annum in excess of the rate hereinbefore
provided, but in no event in excess of the maximum rate of interest permitted
under applicable law. Interest shall be payable on the first day of each month
commencing the first such day to occur after the date hereof and on the
maturity hereof.
The undersigned grants the Bank a security interest in and pledge(s) with the
Bank, as collateral security for payment of this note and of all Liabilities
(as hereinafter defined) of the Obligors (as hereinafter defined), or any one
or more of them, now or hereafter owned or held by the Bank, the following
property:
ALL ASSETS HELD WITH COUTTS & CO AG
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together with any additions and accessions thereto and substitutions therefor
and the products and proceeds thereof and all moneys and/or other property now
or hereafter held by the Bank on deposit, in safekeeping, or otherwise, for the
account of or to the credit of or belonging to any Obligor (which term as used
herein shall be deemed to include each and all of the undersigned and each and
every endorser or guarantor hereof) or in which any Obligor shall have any
interest, all or which is hereinafter termed the collateral security. The Bank
at any time, before or after default, may, but shall not be obligated to,
transfer into or out of its own name or that of its nominee all or any of the
collateral security, including stocks, bonds, and other securities, and the
Bank or its nominee may demand, sue for, collect, receive and hold as like
collateral security any or all interest, dividends and income thereon and if
any securities are held in the name of the Bank or its nominee, the Bank may,
after default exercise all voting and other rights pertaining thereto as if the
Bank were the absolute owner thereof; but the Bank shall not be obligated to
demand payment of, protest, or take any steps necessary to preserve any rights
in the collateral against prior parties, or to take any action whatsoever in
regard to the collateral security or any part thereof, all of which the Obligor
assumes and agrees to do. Without limiting the generality of the foregoing, the
Bank shall not be obligated to take any action in connection with any
conversion, call, redemption, retirement or any other event relating to any of
the collateral security, unless the Obligor gives written notice to the Bank
that such action shall be taken not more than thirty (30) days prior to the
time such action may first be taken and not less than ten (10) days prior to
the expiration of the time during which such action may be taken. The term
"Liabilities" shall include this note and all other indebtedness and
obligations and liabilities of any kind of any Obligor to the Bank, now or
hereafter existing, arising directly between any Obligor and the Bank or
acquired by assignment, conditionally or as collateral security by the Bank,
absolute or contingent, joint and/or several, secured or unsecured, due or not
due, contractual or tortious, liquidated or unliquidated, arising by operation
of law or otherwise, direct or indirect, including, but without limiting the
generality of the foregoing, indebtedness, obligations or liabilities to the
Bank of any Obligor as a member of any partnership, syndicate, association or
other group, and whether incurred by any Obligor as principal, surety,
endorser, guarantor, accommodation party or otherwise.
Upon default in the due payment of principal or interest, the Bank may, but
shall not be required to exercise any right or remedy hereby granted or allowed
to it by law including but not limited to the rights and remedies of a Secured
Party under the Uniform Commercial Code of New York and each and every right
and remedy granted to the Bank or allowed to it by law shall be cumulative and
not exclusive the one of the other, and may be exercised by the Bank from time
to time and as often as may be necessary. The Bank shall have at any time in
its discretion the right to enforce collection and payment or liquidation of
any of the collateral security by appropriate action or proceedings, and the
net amounts received therefrom, after deducting all costs and expenses incurred
in connection therewith, shall be applied on account of this note and any other
Liabilities all without notice to any Obligor. Any demand or notice, if made
or given, shall be sufficiently made upon or given to any Obligor if left at or
mailed to the last address of such Obligor known to the Bank or if made or
given in any other manner reasonably calculated to come to the attention of
such Obligor or the personal representatives, successors, or assigns of such
Obligor, whether or not in fact received by them respectively. Unless the
collateral is perishable or threatens to decline speedily in value or is a type
customarily sold on a recognized market, the Bank will give the undersigned
reasonable notice of the time and place of any public sale thereof or of the
time after which any private sale or other intended disposition is to be made.
Five (5) days prior notice shall be deemed reasonable notice. The Bank may
repledge all or any of the collateral security for any sum not in excess of the
amount due hereunder at the date of such repledge with any person, firm or
corporation for any purpose whatsoever, and may assign and transfer this note
to any other person, firm or corporation and may deliver and repledge the
collateral, security or any part thereof to the assignee or transferee of this
note, who shall thereupon become vested with all the powers and rights above
given to the Bank in respect thereof, and the Bank shall thereafter be forever
released and discharged of and from all responsibility or liability to the
Obligors for or on account of the collateral security so delivered. In the
event that this note is placed in the hands of an attorney for collection by
reason of any default hereunder, the Obligor agree(s) to pay attorney's fees in
the amount of 20% of the unpaid principal balance hereof which the Obligor
agree(s) to be reasonable. The Obligors jointly and severally promise to pay
all expenses of any nature as soon as incurred whether in or out of court and
whether incurred before or after this note shall become due at its maturity
date or otherwise and costs which the Bank may deem necessary or proper in
connection with the satisfaction of the indebtedness or the administration,
supervision, preservation, protection (including but not limited to maintenance
or adequate insurance) or of the realization upon the collateral. The Obligor
and the Bank in any litigation (whether or not arising out of or relating to
this note) in which any of them shall be adverse parties waive the right of
trial by jury and the Obligor waives the right to interpose any set-off or
counterclaim of any kind or description in any such litigation. This note and
any other agreements, documents and instruments executed and delivered pursuant
to or in connection with the Liabilities contain the entire agreement between
the parties relating to the subject matter hereof and thereof. The undersigned
expressly acknowledges that the Bank has not made and the undersigned is not
relying on any oral representations, agreements or commitments of the Bank or
any officer, employee, agent or representative thereof. No change,
modification, termination, waiver, or discharge, in whole or in part of this
instrument shall be effective unless in writing and signed by the party against
whom such change, modification, termination, waiver or discharge is sought to
be enforced. The Obligors, and each of them, hereby waive presentment, demand
for payment, protest, notice of protest, notice of dishonor, and any or all
other notices or demands in connection with the delivery, acceptance,
performance, default, or enforcement of this note, and each of them consents to
any and all delays, extensions of time, renewals, releases of any Obligor and
of any available security, waivers or
<PAGE> 7
modifications that may be granted or consented to by the Bank with regard to
the time of payment or with respect to any other provisions of this note and
agrees that no such action or failure to act o the part of the Bank shall in
any way affect or impair the obligations of any Obligor or be construed as a
waiver by the Bank of, or otherwise affect, its right to avail itself of any
remedy hereunder with the same force and effect as if each Obligor had
expressly consented to such action or inaction upon the part of the Bank.
The note shall be deemed to have been made and delivered in the State of York;
the Obligors consent to the jurisdiction of the courts of New York in any
action brought to enforce any of the rights of the Bank under this note and the
rights and liabilities of the Bank and the Obligors shall be determined in
accordance with the laws of the State of New York. Interest shall be
calculated on the basis of a 360-day year and actual days elapsed.
The obligors hereby authorize the Bank to date this note as of the day when the
loan evidenced hereby is made and to complete and fill in any blank spaces in
this note in order to conform to the terms upon which this loan granted. The
Obligor further authorizes the Bank to execute and file one or more financing
statements covering the collateral security or any part thereof and the Obligor
agrees to bear the cost of such filing(s). The term "Bank" as used herein
shall be deemed to include the Bank and its successors, endorsers and assigns.
Special provisions Interest to be charged at LIBOR + 1%
-----------------------------------------------------------
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For and on behalf of Willsboro Universal Corp.
/s/ [ILLEGIBLE]
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Signature
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Address
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Signature
- --------------------------------------------------------------------------------
Address
GUARANTEE
In consideration of the making of the loan evidenced by the within note, hereby
requested by the undersigned, the undersigned hereby jointly and severally
guarantee(s) to Coutts & Co AG, its successors, endorsers or assigns,
irrespective of the genuineness, validity or enforceability hereof, the
payment, when due, including all interest payable hereon and the payment of all
legal expenses incurred by the holder hereof to enforce the same or to enforce
this guarantee, and hereby consent(s) to and agree(s) to be bound by the terms
and conditions hereof and agree(s) that the collateral may be exchanged or
surrendered in whole or in part from time to time and that the time of payment
hereof may be extended, or the rate of interest altered, or the full amount of
any part hereof may be renewed one or more times without notice to the
undersigned and that this guarantee shall apply to such extension or
extensions, renewal or renewals. The Bank has no duty to any Guarantor to
protect, secure or insure any security interest or lien and the obligations of
each Guarantor hereunder are valid, binding and enforceable, notwithstanding
any defect the Bank causes, permits or suffers to exist in any security
interest or lien. The undersigned waive(s) presentment, demand, protect,
notice of protest and notice of dishonor and each of them consents to any and
all delays, extensions of time, renewals, release of any part hereof and of any
available security, waivers or modifications that may be granted or consented
to by the Bank with regard to the time of payment or with respect to any other
provisions hereof and agrees that no such action or failure to act on the part
of the Bank shall in any way affect or impair the obligations of the
undersigned or be construed as a waiver by the Bank of, or otherwise affect,
its right to avail itself of any remedy hereunder with the same force and
effect as if the undersigned had expressly consented to such action upon the
part of the Bank.
As security for the performance of any and all of the obligations of the
undersigned, the undersigned does hereby give the Bank a continuing lien,
security interest and/or a right of set-off in respect to any and all property,
interest or estate and moneys of the undersigned now or at any time hereafter
held by, or in possession of, or under control of, or on deposit with, the Bank
The undersigned waive(s) presentment, demand, protest, notice of protest.
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Signature
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Address
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Signature
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Address
LOAN NO.
----------------------------
<PAGE> 1
[COUTTS & CO. LOGO]
COUTTS & CO AG
PARK AVENUE TOWER
65 EAST 55TH STREET
NEW YORK, NY 10022
TELEPHONE (212) 303-2939 TELEFAX (212) 303-2929
The Directors
Panola Worldwide Corporation
Tortola
British Virgin Islands
December 20, 1995
Dear Sirs:
PANOLA WORLDWIDE CORPORATION
We are pleased to confirm that we are prepared to make available a line of
credit on the following terms and conditions:
1) AMOUNT
Up to US$6,000,000 (six million dollars), provided the collateral
requirements set out below are satisfied.
2) AVAILABILITY
The line of credit is available as follows:
Loan $6,000,000
You may borrow up to the amount set out above and, after full or
partial repayment, reborrow on this line of credit until its term has
expired, provided that all the terms and conditions hereof are
satisfied.
3) PURPOSE AND REPAYMENT
The line of credit is available to assist you in making further
investments in stocks and bonds. Repayment will stem from the sale of
investments from time to time, from other sources of income and from
the sale of other assets held by you as required. All interest will
be paid as it falls due.
<PAGE> 2
4) COLLATERAL
Any utilization hereunder shall be secured by the pledge of all assets
held by you with this Bank (the "Assets"), pursuant to the General
Loan and Collateral Agreement signed by you.
Some or all of the Assets have a loanable value up to @t percentage
ratio of their market value from time to time which varies with the
nature and quality of each asset (certain Assets may not have a
loanable value, although these Assets will secure the line of credit).
A summary of current maximum lending ratios is provided as an appendix
to this letter. We reserve the right to vary these ratios at our
discretion, and to refuse to extend a lending ratio against assets
which we do not consider to be acceptable or which would exceed the
limits we regard as prudent for lending against a specific Asset, and
to terminate our lending ratios against Assets.
None of the Assets may be removed by you from the Bank without our
prior written consent.
5) COLLATERAL MARGIN REQUIREMENTS
You will ensure at all times that the loanable value of the assets
pledged to us as collateral exceeds the amount outstanding hereunder.
Should the loanable value of pledged assets fall to 5% below the
amount outstanding (inclusive of interest and costs), you will provide
us with additional collateral to cover the shortfall upon our first
demand. Should you fail to provide the additional collateral within 5
business days or should the loanable value of the pledged assets fall
to 10% or more below the amount outstanding (whichever occurs first),
we reserve the right without further formality or notice and at our
discretion to sell sufficient Assets (including both Assets with, and
Assets without, a loanable value) to reduce the amount outstanding
under the line of credit to the loanable value of the remaining Assets
which are pledged to us. These provisions will take effect regardless
of the value of any Assets which do not have loanable value and may
take effect because we decrease or terminate our lending ratio for
some or all of the Assets securing the line of credit.
6) PRICING
Loans will bear interest at a rate to be mutually agreed at the time
of each borrowing. Indicative pricing is:
Loan: 1.0% over Libor
Loan Fee: $1000
<PAGE> 3
7) TERM
This line of credit is provided on the basis that it may be withdrawn
without notice and any amounts outstanding are repayable on first
demand. It is made available to you on an uncommitted basis and we
reserve the right to liquidate collateral to repay any amounts
outstanding at our discretion and without further formality.
In any event, this line of credit shall become due for review on
December 20, 1996, and we shall be pleased to discuss future
arrangements shortly before this date.
8) REQUIRED DOCUMENTATION
The following documentation/formalities are required before the line
is available for use:
- completed Promissory Note in respect of loan drawings
- completed From U1
A copy of the financial statements of the corporation are required as
soon as they become available.
9) APPLICABLE LAW
This Agreement is subject to the laws of the State of New York.
Please contact this office if you require any further explanation of these
terms and conditions.
Yours sincerely,
/s/ M Economou /s/ D G Simmons
M Economou D G Simmons
Coutts & Co Coutts & Co
<PAGE> 4
GENERAL LOAN [COUTTS & CO LOGO]
AND COLLATERAL AGREEMENT
In order to induce Coutts & Co AG (herein together with its successors, assigns
and endorsees is called "the Bank") from time to time in its discretion to
grant, extend or continue credit or other financial accommodations to the
undersigned, or any of them, or to others on the guaranty, endorsement or other
assurance of the undersigned, or any of them, it is hereby agreed and provided
by the undersigned that the Bank shall have the following rights in addition to
all other rights the Bank may have under the Uniform Commercial Code of New
York or otherwise, to wit:
1. All loans, advances, or credits heretofore or hereafter obtained from the
Bank by the undersigned, or any of them, as well as all present and future
indebtedness of any of the undersigned to the Bank, shall, unless otherwise
agreed in writing, be repayable by the undersigned at the Bank at its office at
65 East 55th Street, New York, NY 10022, upon demand, in immediately available
funds.
2. As security for any and all loans, advances, credits, indebtedness,
obligations and liabilities of any kind, of the undersigned or any of them to
the Bank, now or hereafter existing, whether absolute or contingent, due or to
become due, direct or indirect, liquidated or unliquidated, and however
acquired, incurred, or arising (all of which are hereinafter referred to as the
"obligations"), the undersigned and each of them grants a present security
interest in every balance of every account which the undersigned or any of them
has or shall at any time have with the Bank and all moneys, instruments,
chattel paper, documents, accounts, contract rights, goods, credits, choses in
action, claims, demands, and without any limitation whatsoever, property of
every kind and description including additions, accessions and substitutions
(all of which are hereinafter collectively referred to as the "collateral")
which have been or at any time shall be delivered to or be in transit to or
from the Bank or any of its agents or correspondents or other third party or
parties acting in its behalf, by, or for, or for account of, or subject to the
order of, the undersigned or any of them and in all right, title and interest
of the undersigned or any of them in and to any collateral which has come or
shall come into the possession, custody or control of the Bank in any way or
for any purpose whatsoever, whether for safekeeping or otherwise and whether
the Bank shall accept them for the purposes for which it is delivered to it or
not. The undersigned further authorizes the Bank to execute and file one or
more financing statements covering the collateral security or any part thereof
and the undersigned agrees to bear the cost of such filing(s).
3. The Bank at its discretion may, without notice, transfer any of the
collateral into its own name or that of its nominee and may, at its discretion,
in its or its nominee's name or in the name of the undersigned or any of them,
demand, sue for, collect and receive any money or property at any time due,
payable or receivable on account of or in exchange for, or make any compromise
or settlement it deems desirable with reference to, any of the collateral and
endorse, assign, convey and transfer any and all of the collateral. The Bank
may discharge all liens, taxes and security interests relating to the
collateral at the undersigned's expense. The Bank may, upon any default
hereunder or under any of the obligations, grant options or sell and resell in
one or more sales, all or any of the collateral at any broker's board or public
or private sale, for cash, upon credit or for future delivery, free from all
liability or claim for inadequacy of price, with or without demand of
performance or advertisement. Unless the collateral is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, the Bank will give the undersigned at least five days prior written
notice of the time and place of any public sale thereof or of the time after
which any private sale or any other intended disposition thereof is to be made.
The Bank or its agent may bid and/or purchase at any public sale and, if the
collateral is of the type customarily sold in a recognized market or the type
which is the subject of widely distributed price standards, at any private sale
made under this agreement, the Bank may hold the same thereafter in its own
right, absolutely free from any claim of the undersigned, who and each of whom
hereby waives and releases all rights of redemption to the extent such waiver
is lawful. The undersigned will bear and pay all necessary and incidental
costs and expenses and reasonable attorney's fees that the Bank may incur in
the enforcement hereof or of any of the obligations or of any of the collateral
or of any actual or attempted sale, exchange, enforcement, collection,
compromise or settlement of any of the collateral and of receipt of proceeds
thereof, and will repay to the Bank any such expense incurred by it together
with interest as hereinabove provided for.
The pledge and lien hereby given shall cover all proceeds of the
collateral at any time in the possession or control of the Bank. The Bank may
at any time, at its option, apply all or any of the net cash receipts or net
balance of or from any of the collateral to the payment in whole or in part of
any of the obligations or any such expense, applying or distributing the same
as it shall elect, whether the item or items on which such payment is made be
due or not, notwithstanding the holding by the Bank of the collateral. The
Bank shall not assume nor shall it be deemed to have assumed any duties,
liabilities or obligations in any way relating to or arising out of any of the
collateral. Notwithstanding the holding by the Bank of the collateral or any
sale, exchange, transfer, enforcement, collection, compromise or settlement,
actual or attempted, of any of the collateral the undersigned and each of them
shall be and remain liable for the payment in full of principal and interest of
all of the obligations and any expense as aforesaid, except only to the extent
that the same or any part thereof shall be reduced by payment or actual
application thereon by the Bank of the collateral or proceeds thereof. All
remittances and property shall be deemed in the possession and custody of the
Bank when actually in possession or custody of, or in transit to it or any
agent, bailee or correspondent or other third party acting on its behalf.
4. If at any time the collateral for any of the obligations shall be
unsatisfactory to the Bank or any of its officers, and the undersigned or any
of them shall not on demand furnish such further collateral or make such
payment on account as shall be satisfactory to the Bank, or if any sum payable
upon any of the obligations be not paid when due, or in the event of any other
default in, or under, any of the obligations, or default in the payment at
maturity of liabilities of the undersigned to others, or upon failure of the
undersigned to insure in favor of and to the satisfaction of the Bank any of
the collateral or if the undersigned or any of them, or in the case of a
partnership, any partner thereof, or any guarantor of any of the obligations or
any maker, endorser, or guarantor of any of the collateral shall die, or become
insolvent, or suspend business or make an assignment for the benefit of
creditors, or if a petition in bankruptcy shall be filed against, or a
voluntary petition in bankruptcy shall be filed by or if a judgment be entered
against, or if a receiver shall be appointed or any attachment or levy filed
against the property or assets, or any thereof, of, or upon any proceeding
being commenced under any bankruptcy reorganization, arrangement of debt,
insolvency, liquidation or dissolution law or statute by or against the
undersigned or any of them, or any such maker, endorser, or guarantor, of if
the Bank shall in good faith deem itself insecure, thereupon any or all of the
obligations, although not payable on demand, shall, at the option of the Bank,
forthwith become and be due and payable without notice, presentation or demand
of payment all of which are hereby expressly waived.
5. The Bank may assign or transfer all or any part of the obligations and may
transfer as security therefor all or any part of the collateral, and shall be
thereafter duly discharged from all liability and responsibility with respect
to the collateral so transferred, and the transferee shall thereafter be vested
with all powers and rights of the Bank hereunder with respect to such
collateral but with respect to any security not so transferred the Bank shall
retain all rights and powers hereby or otherwise given. The undersigned will
assert no claims or defense he may have against the Bank against the
transferee.
6. No delay on the part of the Bank or any of such assignee or transferee in
exercising any power or right hereunder shall operate as a waiver of any power
or right nor shall any single or partial exercise of any power or right
hereunder preclude other or further exercise thereof or the exercise of any
other power or right. The rights and remedies herein expressly specified are
irrevocable, cumulative and not exclusive of any other rights or remedies which
the Bank or its assigns may otherwise have. Any notice to or demand on the
undersigned elected to be given or made by the Bank shall be deemed effective,
if not first otherwise made or given, when forwarded by mail, telegraph, or
telephoned to the last address of the undersigned appearing on the Bank's
books. No notice to or demand on the undersigned shall be deemed to be a
waiver of any obligation of the undersigned or of the right of the Bank to take
further action without notice or demand as provided herein. In no event shall
any waiver by the Bank or any right be effective unless in writing and then the
same shall be applicable only in the specific instance for which given.
<PAGE> 5
7. This agreement shall cover all future as well as all existing transactions
and shall remain effective irrespective of any interruptions in the business
relations of the undersigned with the Bank. It shall bind all administrators,
executors, heirs, partners, successors and assigns of the undersigned and each
of them. The term "undersigned" as used herein shall, if this instrument is
signed by more than one party, mean the "undersigned and each of them" and each
undertaking herein contained shall be their joint and several undertaking.
8. This agreement and the rights and obligations of the Bank and of the
undersigned hereunder shall be governed and construed in accordance with the
laws of the State of New York. The undersigned consent to the jurisdiction of
the courts of New York in any action brought to enforce any of the rights
granted to the Bank hereunder.
9. The undersigned hereby waive(s) trial by jury in any litigation in any
court with respect to, in connection with, or arising out of this Agreement or
any other agreement, instrument or document delivered in connection herewith or
any transaction contemplated hereby.
New York, New York
/s/ [ILLEGIBLE] 14 December 1995
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FOR PANOLA WORLDWIDE CORP.
Account Signature
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Address
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Account Signature
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Address
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Account Signature
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Address
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Account Signature
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Address
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<PAGE> 6
Coutts & Co
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Demand Interest Bearing Note
$6,000,000 Office Address: 65 East 55th St., N.Y., N.Y. December 21, 1995
ON DEMAND The undersigned, for value received, jointly and severally promise(s)
to pay to the order of Coutts & Co AG (hereinafter called the Bank) at its
office in the place first above stated, or if no place is stated, at 65 East
55th Street, 22nd Fl., New York, NY 10022, in funds current at the New York
Clearing House, the sum of SIX MILLION DOLLARS ($6,000,000) Dollars. The
undersigned also promises to pay interest at said offices at the rate per annum
indicated below:
[ ] The Bank's Prime Rate (the rate of interest established from time to
time by the Bank as its "prime rate") plus ___________%, which
interest rate shall change when and as the Prime Rate changes;
[ ] ____________ %; (or)
[x] calculated as provided on the reverse side hereof.
If all or a portion of the principal or interest of the Liabilities (as
hereinafter defined), or any fee or other amount due in connection therewith,
shall not be paid when due (whether after stated maturity, acceleration or
otherwise), such amount, to the extent permitted by applicable law, shall bear
interest at the rate of 2% per annum in excess of the rate hereinbefore
provided, but in no event in excess of the maximum rate of interest permitted
under applicable law. Interest shall be payable on the first day of each month
commencing the first such day to occur after the date hereof and on the
maturity hereof.
The undersigned grants the Bank a security interest in and pledge(s) with the
Bank, as collateral security for payment of this note and of all Liabilities
(as hereinafter defined) of the Obligors (as hereinafter defined), or any one
or more of them, now or hereafter owned or held by the Bank, the following
property:
ALL ASSETS HELD WITH COUTTS & CO AG
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together with any additions and accessions thereto and substitutions therefor
and the products and proceeds thereof and all moneys and/or other property now
or hereafter held by the Bank on deposit, in safekeeping, or otherwise, for the
account of or to the credit of or belonging to any Obligor (which term as used
herein shall be deemed to include each and all of the undersigned and each and
every endorser or guarantor hereof) or in which any Obligor shall have any
interest, all or which is hereinafter termed the collateral security. The Bank
at any time, before or after default, may, but shall not be obligated to,
transfer into or out of its own name or that of its nominee all or any of the
collateral security, including stocks, bonds, and other securities, and the
Bank or its nominee may demand, sue for, collect, receive and hold as like
collateral security any or all interest, dividends and income thereon and if
any securities are held in the name of the Bank or its nominee, the Bank may,
after default exercise all voting and other rights pertaining thereto as if the
Bank were the absolute owner thereof; but the Bank shall not be obligated to
demand payment of, protest, or take any steps necessary to preserve any rights
in the collateral against prior parties, or to take any action whatsoever in
regard to the collateral security or any part thereof, all of which the Obligor
assumes and agrees to do. Without limiting the generality of the foregoing,
the Bank shall not be obligated to take any action in connection with any
conversion, call, redemption, retirement or any other event relating to any of
the collateral security, unless the Obligor gives written notice to the Bank
that such action shall be taken not more than thirty (30) days prior to the
time such action may first be taken and not less than ten (10) days prior to
the expiration of the time during which such action may be taken. The term
"Liabilities" shall include this note and all other indebtedness and
obligations and liabilities of any kind of any Obligor to the Bank, now or
hereafter existing, arising directly between any Obligor and the Bank or
acquired by assignment, conditionally or as collateral security by the Bank,
absolute or contingent, joint and/or several, secured or unsecured, due or not
due, contractual or tortious, liquidated or unliquidated, arising by operation
of law or otherwise, direct or indirect, including, but without limiting the
generality of the foregoing, indebtedness, obligations or liabilities to the
Bank of any Obligor as a member of any partnership, syndicate, association or
other group, and whether incurred by any Obligor as principal, surety,
endorser, guarantor, accommodation party or otherwise.
Upon default in the due payment of principal or interest, the Bank may, but
shall not be required to exercise any right or remedy hereby granted or allowed
to it by law including but not limited to the rights and remedies of a Secured
Party under the Uniform Commercial Code of New York and each and every right
and remedy granted to the Bank or allowed to it by law shall be cumulative and
not exclusive the one of the other, and may be exercised by the Bank from time
to time and as often as may be necessary. The Bank shall have at any time in
its discretion the right to enforce collection and payment or liquidation of
any of the collateral security by appropriate action or proceedings, and the
net amounts received therefrom, after deducting all costs and expenses incurred
in connection therewith, shall be applied on account of this note and any other
Liabilities all without notice to any Obligor. Any demand or notice, if made
or given, shall be sufficiently made upon or given to any Obligor if left at or
mailed to the last address of such Obligor known to the Bank or if made or
given in any other manner reasonably calculated to come to the attention of
such Obligor or the personal representatives, successors, or assigns of such
Obligor, whether or not in fact received by them respectively. Unless the
collateral is perishable or threatens to decline speedily in value or is a type
customarily sold on a recognized market, the Bank will give the undersigned
reasonable notice of the time and place of any public sale thereof or of the
time after which any private sale or other intended disposition is to be made.
Five (5) days prior notice shall be deemed reasonable notice. The Bank may
repledge all or any of the collateral security for any sum not in excess of the
amount due hereunder at the date of such repledge with any person, firm or
corporation for any purpose whatsoever, and may assign and transfer this note
to any other person, firm or corporation and may deliver and repledge the
collateral, security or any part thereof to the assignee or transferee of this
note, who shall thereupon become vested with all the powers and rights above
given to the Bank in respect thereof, and the Bank shall thereafter be forever
released and discharged of and from all responsibility or liability to the
Obligors for or on account of the collateral security so delivered. In the
event that this note is placed in the hands of an attorney for collection by
reason of any default hereunder, the Obligor agree(s) to pay attorney's fees in
the amount of 20% of the unpaid principal balance hereof which the Obligor
agree(s) to be reasonable. The Obligors jointly and severally promise to pay
all expenses of any nature as soon as incurred whether in or out of court and
whether incurred before or after this note shall become due at its maturity
date or otherwise and costs which the Bank may deem necessary or proper in
connection with the satisfaction of the indebtedness or the administration,
supervision, preservation, protection (including but not limited to maintenance
or adequate insurance) or of the realization upon the collateral. The Obligor
and the Bank in any litigation (whether or not arising out of or relating to
this note) in which any of them shall be adverse parties waive the right of
trial by jury and the Obligor waives the right to interpose any set-off or
counterclaim of any kind or description in any such litigation. This note and
any other agreements, documents and instruments executed and delivered pursuant
to or in connection with the Liabilities contain the entire agreement between
the parties relating to the subject matter hereof and thereof. The undersigned
expressly acknowledges that the Bank has not made and the undersigned is not
relying on any oral representations, agreements or commitments of the Bank or
any officer, employee, agent or representative thereof. No change,
modification, termination, waiver, or discharge, in whole or in part of this
instrument shall be effective unless in writing and signed by the party against
whom such change, modification, termination, waiver or discharge is sought to
be enforced. The Obligors, and each of them, hereby waive presentment, demand
for payment, protest, notice of protest, notice of dishonor, and any or all
other notices or demands in connection with the delivery, acceptance,
performance, default, or enforcement of this note, and each of them consents to
any and all delays, extensions of time, renewals, releases of any Obligor and
of any available security, waivers or
<PAGE> 7
modifications that may be granted or consented to by the Bank with regard to
the time of payment or with respect to any other provisions of this note and
agrees that no such action or failure to act o the part of the Bank shall in
any way affect or impair the obligations of any Obligor or be construed as a
waiver by the Bank of, or otherwise affect, its right to avail itself of any
remedy hereunder with the same force and effect as if each Obligor had
expressly consented to such action or inaction upon the part of the Bank.
The note shall be deemed to have been made and delivered in the State of York;
the Obligors consent to the jurisdiction of the courts of New York in any
action brought to enforce any of the rights of the Bank under this note and the
rights and liabilities of the Bank and the Obligors shall be determined in
accordance with the laws of the State of New York. Interest shall be
calculated on the basis of a 360-day year and actual days elapsed.
The obligors hereby authorize the Bank to date this note as of the day when the
loan evidenced hereby is made and to complete and fill in any blank spaces in
this note in order to conform to the terms upon which this loan granted. The
Obligor further authorizes the Bank to execute and file one or more financing
statements covering the collateral security or any part thereof and the Obligor
agrees to bear the cost of such filing(s). The term "Bank" as used herein
shall be deemed to include the Bank and its successors, endorsers and assigns.
Special provisions INTEREST TO BE CHARGED AT LIBOR + 1%
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/s/ [ILLEGIBLE]
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Signature
FOR AND ON BEHALF OF PANOLA WORLDWIDE CORP.
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Address
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Signature
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Address
GUARANTEE
In consideration of the making of the loan evidenced by the within note, hereby
requested by the undersigned, the undersigned hereby jointly and severally
guarantee(s) to Coutts & Co AG, its successors, endorsers or assigns,
irrespective of the genuineness, validity or enforceability hereof, the
payment, when due, including all interest payable hereon and the payment of all
legal expenses incurred by the holder hereof to enforce the same or to enforce
this guarantee, and hereby consent(s) to and agree(s) to be bound by the terms
and conditions hereof and agree(s) that the collateral may be exchanged or
surrendered in whole or in part from time to time and that the time of payment
hereof may be extended, or the rate of interest altered, or the full amount of
any part hereof may be renewed one or more times without notice to the
undersigned and that this guarantee shall apply to such extension or
extensions, renewal or renewals. The Bank has no duty to any Guarantor to
protect, secure or insure any security interest or lien and the obligations of
each Guarantor hereunder are valid, binding and enforceable, notwithstanding
any defect the Bank causes, permits or suffers to exist in any security
interest or lien. The undersigned waive(s) presentment, demand, protect,
notice of protest and notice of dishonor and each of them consents to any and
all delays, extensions of time, renewals, release of any part hereof and of any
available security, waivers or modifications that may be granted or consented
to by the Bank with regard to the time of payment or with respect to any other
provisions hereof and agrees that no such action or failure to act on the part
of the Bank shall in any way affect or impair the obligations of the
undersigned or be construed as a waiver by the Bank of, or otherwise affect,
its right to avail itself of any remedy hereunder with the same force and
effect as if the undersigned had expressly consented to such action upon the
part of the Bank.
As security for the performance of any and all of the obligations of the
undersigned, the undersigned does hereby give the Bank a continuing lien,
security interest and/or a right of set-off in respect to any and all property,
interest or estate and moneys of the undersigned now or at any time hereafter
held by, or in possession of, or under control of, or on deposit with, the Bank
The undersigned waive(s) presentment, demand, protest, notice of protest.
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Signature
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Address
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Signature
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Address
LOAN NO.
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