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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
THE INSTANT PUBLISHER INC.
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
45774T 10 5
(CUSIP Number)
PETER CAWDRON
COUTTS & CO AG, NEW YORK BRANCH
65 EAST 55TH STREET NEW YORK, NEW YORK 10022 PHONE: (202) 303-2972
(Name, Address, Telephone Number of Person Authorized to Receive Notices and
Communications)
AUGUST 20, 1996
(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 / /. (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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CUSIP NO. 45774T 10 5 PAGE 2 OF 5 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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NUMBER OF
SHARES 7 SOLE VOTING POWER
BENEFICIALLY 0%
OWNED BY ----------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING 0%
PERSON ----------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER(1)
0
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER(1)
0
------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON(1)
0
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* NO //
- --------------------------------------------------------------------------------
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
17,499,384 shares of the common stock of the
Issuer (as defined below), representing a 37.0%
interest therein.
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ITEM 1. SECURITY AND ISSUER
Common Stock
The Instant Publisher Inc. (the "Issuer")
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 two loans (the "Old Loans") to two 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 2,499,384 Old Pledged Shares,
representing a 5.3% interest in the Issuer, by the Old Debtors to John M.
Wiseman ("Wiseman"), 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 Wiseman.
(a) The 2,499,384 Old Pledged Shares were sold to Wiseman. Following the
transaction, Coutts holds a security interest in 17,499,384 Common Shares
of the Issuer pursuant to a pledge agreement with
Wiseman and a pledge agreement with Jacques Benquesus ("Banks").
(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 17,499,384 Common Shares of the Issuer, representing a 37.0%
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 the Mariner Reserve Fund ("Mariner") which
was secured, inter alia, by shares of the Issuer, pledged by Mariner.
Coutts has made a loan to Wiseman which is secured by Common Shares of the
Issuer, pledged by Wiseman and by Banks.
See Item 3.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Wiseman Master Agreement, dated August 19, 1996
Wiseman Share Purchase Loan Agreement, dated August 20, 1996
Wiseman Pledge Agreement, dated August 20, 1996
Wiseman Share Purchase Agreement, dated August 20, 1996
Wiseman Share Purchase Agreement, dated August 20, 1996
Amended Banks Pledge Agreement, dated August 20, 1996
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 Mariner:
Facility Letter, dated May 22, 1995
Amendment to May 22, 1995 Facility Letter, dated September 26, 1995
Loan and Collateral Agreement, dated January 10, 1995
Note, dated June 27, 1995
Note, dated August 29, 1995
4
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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
5
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EXHIBIT INDEX
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Exhibit
No. Description
- ------- -----------
Ex-99.A Wiseman Master Agreement, dated August 19, 1996
Ex-99.B Wiseman Share Purchase Loan Agreement, dated August 20, 1996
Ex-99.C Wiseman Pledge Agreement, dated August 20, 1996
Ex-99.D Wiseman Share Purchase Agreement, dated August 20, 1996
Ex-99.E Wiseman Share Purchase Agreement, dated August 20, 1996
Ex-99.F Amended Banks Pledge Agreement, dated August 20, 1996.
Ex-99.G 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.H Loan Documents between Coutts and Mariner:
Facility Letter, dated May 22, 1995
Amendment to May 22, 1995 Facility Letter, dated September 26, 1995
Loan and Collateral Agreement, dated January 10, 1995
Note, dated June 27, 1995
Note, dated August 29, 1995
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WISEMAN MASTER AGREEMENT
THIS AGREEMENT made this 19th day of August, 1996
BETWEEN:
COUTTS & CO AG, New York Branch, a Swiss banking institution
("Coutts")
- and -
JOHN M. WISEMAN of the City of Toronto, in the Province of Ontario
("Wiseman")
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. Wiseman has entered into this Agreement and certain other
agreements and arrangements contemplated and provided for by this
Agreement in order to acquire 2,499,384 common shares of TIPI.
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:
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"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;
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"MARINER" means Mariner Reserve Fund Inc.;
"MARINER SHARE PURCHASE AGREEMENT" means a Share Purchase Agreement to be
entered into between Mariner and Wiseman to effect the sale of 2,004,384
TIPI Shares by Mariner to Wiseman;
"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);
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"OPERATIVE AGREEMENTS" means this Agreement, the Wiseman Loan Agreement, the
Wiseman Share Purchase Agreements and the Share Pledge and any and all
agreements required to be entered into between Coutts and Wiseman 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 2,499,384 TIPI Shares purchased by Wiseman
pursuant to the Wiseman 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 Wiseman 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;
"SILVA RUN SHARE PURCHASE AGREEMENT" means a Share Purchase Agreement to be
entered into between Silva Run and Wiseman to effect the sale of 495,000
TIPI Shares by Silva Run to Wiseman;
"TIPI SHARES" means common shares of TIPI;
"WARP 10 SHARES" means common shares of Warp 10;
"WELTMAN" means Larry H. Weltman;
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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;
"WELTMAN SHARE PURCHASE AGREEMENT" has the meaning ascribed thereto in the
Weltman Master Agreement;
"WILLSBORO" means Willsboro Universal Corporation; and
"WISEMAN LOAN AGREEMENT" means the loan agreement to be entered into between
Wiseman and Coutts pursuant to which Coutts will advance funds to Wiseman
which Wiseman will use to complete the transactions contemplated in the
Wiseman Share Purchase Agreement and to pay certain expenses incurred by
Wiseman 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;
"WISEMAN SHARE PURCHASE AGREEMENTS" means the Silva Run Share Purchase
Agreement and the Mariner Share Purchase 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
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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:
Schedule Description
Schedule A Client Loan Amounts
Schedule B Share Pledge
Schedule C Share Purchase Agreement
Schedule D Wiseman Loan Agreement
ARTICLE 2
CLOSING
2.1 CLOSING - At the Closing, the parties will take the following actions:
(a) each of Wiseman and Coutts shall enter into, execute and deliver each
of the Wiseman Loan Agreement and the 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
Share
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Purchase Agreement; and
(ii) Mariner to enter into, execute and deliver the Mariner Share
Purchase Agreement;
(c) Wiseman 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 Wiseman
Loan Agreement, Coutts shall advance to Wiseman the amount of $957,269
under the Wiseman Loan Agreement to fund the acquisition by Wiseman of
the Purchased Shares and the payment by Wiseman of certain legal
expenses incurred by Wiseman 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 Wiseman shall direct Coutts to, and Coutts shall, deposit into the
accounts of Silva Run and Mariner the amounts payable to each of them
under the Wiseman Share Purchase Agreements and shall deliver the
Purchased Shares to Coutts to be held by Coutts as security pursuant to
the Share Pledge; and
(e) Coutts shall pay to any Client the amount, if any, of the proceeds from
the sale of the Purchased Shares sold by such Client to Wiseman, which
exceeds the aggregate of all amounts owing to Coutts under such
Client'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
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b) 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.
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) Wiseman 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 Wiseman 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 Wiseman
(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), Wiseman 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
Wiseman, 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
Wiseman unless the amount of the Net Proceeds from such sale is at least equal
to the Minimum Price.
(d) Wiseman 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 Wiseman must be made in compliance with
all
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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 Wiseman unless and
until Coutts is provided with evidence, reasonably satisfactory to Coutts, that
the provisions of this Article 3 to be complied with by Wiseman 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
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
Wiseman at any time sells any TIPI Shares other than Pledged Shares ("Unpledged
Shares"), Coutts shall forthwith release and deliver to Wiseman, that number of
Pledged Shares which equals the number of Unpledged Shares so sold by Wiseman,
free and clear of any Security Interest created by Coutts provided that a sale
of such Unpledged Shares is completed by Wiseman in all respects in compliance
with the provisions of this Article 3 which govern and are applicable to a sale
by Wiseman 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 Wiseman 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 Wiseman, and Wiseman 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-
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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 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,
<PAGE> 11
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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 REPRESENTATIONS AND WARRANTIES
Wiseman hereby represents and warrants to Coutts that:
(a) in considering the provisions of the Operative Agreements and in
negotiating their terms, Wiseman has been advised and represented by
independent counsel;
(b) as of the date hereof, Wiseman 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) Wiseman 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 Wiseman enforceable against him in accordance with its
terms;
(e) Wiseman is not a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, obligation, instrument,
charter
<PAGE> 12
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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
Wiseman of any of his obligations provided for under any of the
Operative Agreements or any other agreement contemplated herein or
therein;
(f) Wiseman understands that no federal or state agency has passed on or
made any recommendation or endorsement of the Purchased Shares;
(g) Wiseman acknowledges that, in entering into this Agreement and the
other Operative Agreements, including making the decision to purchase
the Purchased Shares, Wiseman 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) Wiseman 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) Wiseman 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. Wiseman 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. Wiseman 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) Wiseman 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. Wiseman 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;
<PAGE> 13
-13-
(k) Wiseman 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
Wiseman in the Operative Agreements;
(l) Wiseman acknowledges that it is the intention of the parties to this
Agreement that the transfer of the Purchased Shares under the Wiseman
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 Wiseman 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 Wiseman Share Purchase Agreement does
not so comply; and
(m) following the acquisition of the Purchased Shares, Wiseman will not
beneficially own or exercise control or direction over more than 20% of
the outstanding voting securities of TIPI and Wiseman 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 TIPI that when aggregated with the Purchased
Shares would represent more than 20% of the outstanding voting
securities of TIPI.
5.2 COUTTS' REPRESENTATIONS AND WARRANTIES
Coutts hereby represents and warrants to Wiseman 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 Wiseman 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 Purchased Shares to Wiseman pursuant to and in
<PAGE> 14
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accordance with the terms of the 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 Wiseman 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:
CLIENT NAME COUNTRY OF INCORPORATION
----------- ------------------------
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
<PAGE> 15
-15-
Willsboro Universal Corporation British Virgin Islands;
(g) to the best of Coutts' information, knowledge and belief, the
transactions contemplated herein will not result in Wiseman 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
Agreements that the transfer of the Purchased Shares under the Wiseman
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 Commission that the purchase price for any of the
Purchased Shares under the Wiseman 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
Purchased Shares.
<PAGE> 16
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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 Wiseman a notice at:
c/o Gaming Lottery Corporation
160 Nashdene Road
Scarborough, Ontario
M1V 4C4
<PAGE> 17
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Attention: John M. Wiseman
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 Wiseman of Coutts expenses required by
the Wiseman 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 ofthe Operative Agreements and all documents and instruments executed
pursuant to
<PAGE> 18
-18-
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.
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, WISEMAN 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 WISEMAN 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 WISEMAN 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) WISEMAN 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
<PAGE> 19
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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 WISEMAN'S NEW YORK COUNSEL AT ITS NOTICE ADDRESS SET
FORTH IN SECTION 6.1 HEREOF WHICH WISEMAN HEREBY IRREVOCABLY
APPOINTS AS HIS AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF
PROCESS WITHIN THE STATE OF NEW YORK. WISEMAN 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 WISEMAN OR HIS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
(e) EACH OF WISEMAN 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.
<PAGE> 20
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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/ John M. Wiseman
------------------------------------
John M. Wiseman
<PAGE> 1
LOAN AGREEMENT
THIS AGREEMENT made as of the 20th day of August, 1996
B E T W E E N:
MR. JOHN M. WISEMAN, 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
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"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. John M. Wiseman, 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
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"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
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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
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"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. Larry H. Weltman 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 $957,269 (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
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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.
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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.
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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
<PAGE> 11
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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
<PAGE> 12
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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 Wiseman 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 Wiseman Master Agreement) of the sale, assignment, or
other disposal of the Collateral are applied, in accordance with the provisions
of Article 3 of the Wiseman 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 Wiseman 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 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 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. John M. Wiseman
c/o Gaming Lottery Corporation
160 Nashdene Road
Scarborough, Ontario
M1V 4C4
Telecopier: (416) 754-8441
Telephone: (416) 292-5963
<PAGE> 24
-24-
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
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
<PAGE> 25
-25-
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 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
<PAGE> 26
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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 WISEMAN 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.
<PAGE> 27
-27-
(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.
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 Wiseman 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
<PAGE> 28
-28-
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
Wiseman 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 Wiseman 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
<PAGE> 29
-29-
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/ John M. Wiseman
-------------------------------------
MR. JOHN M. WISEMAN
COUTTS & CO AG, NEW YORK BRANCH
By: /s/ Peter Cawdron
---------------------------------
Name:
Title:
<PAGE> 30
SCHEDULE A
SHARES TO BE ACQUIRED
COMPANY SHARES
The Instant Publisher Inc. 2,499,384 common shares
<PAGE> 31
SCHEDULE B
CERTIFICATE OF COMPLIANCE
TO: Coutts & Co AG, New York Branch (the "Bank")
FROM: Mr. John M. Wiseman (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. John M. Wiseman
<PAGE> 32
SCHEDULE C
LIBOR NOTICE
TO: Coutts & Co. AG, New York Branch (the "Bank")
Attention: Mr. Mario Economou, Vice President
FROM: Mr. John M. Wiseman (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. John M. Wiseman
<PAGE> 1
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered
into as of August 20, 1996, by JOHN M. WISEMAN, 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 The Instant Publisher Inc. (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 Wiseman 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 Pledgor 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/ John M. Wiseman
------------------------
JOHN M. WISEMAN
COUTTS & CO AG, NEW YORK
BRANCH
By /s/ Peter Cawdron
----------------------
Name:
Title:
<PAGE> 11
Schedule 1
to
PLEDGE AGREEMENT
Stock
<TABLE>
<CAPTION>
Issuer Shares
- ------ ------
<S> <C>
The Instant Publisher Inc. 2,499,384 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
JM Wiseman/Mariner/TIPI
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made this 20th day of August, 1996
BETWEEN:
JOHN M. WISEMAN of the City of Toronto, in the Province of
Ontario
(the "Purchaser")
- and -
MARINER RESERVE FUND INC. a corporation governed by the laws
of the Bahamas (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 2,004,384 common
shares (the Shares") of The Instant Publisher Inc. (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
Wiseman 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 $751,644 (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
----------------------------------
/s/ John M. Wiseman
----------------------------------
John M. Wiseman
<PAGE> 1
Wiseman/Silva Run/TIPI
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made this 20th day of August, 1996
BETWEEN:
JOHN M. WISEMAN of the City of Toronto, in the Province of
Ontario
(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 495,000 common
shares (the Shares") of The Instant Publisher Inc. (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
Wiseman 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 $185,625 (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
------------------------------------
/s/ John M. Wiseman
------------------------------------
John M. Wiseman
<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
[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 purpose of this loan is 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> 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 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> 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
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> 4
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> 5
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> 6
Maximum Lending Ratios
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 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%
***************
<PAGE> 7
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, or 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> 8
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.
New York, New York
1-11-1995
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.
/s/ A H Salazar Diaz
________________________________________
Account Signature
________________________________________
Address
________________________________________
Account Signature
________________________________________
Address
________________________________________
Account Signature
________________________________________
Address
________________________________________
Account Signature
________________________________________
Address
<PAGE> 9
Coutts & Co
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
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
<PAGE> 10
each of them consents to any and all delays, extensions of time, renewals,
releases of any Obligor 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 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
________________________________________
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.
________________________________________
Signature
________________________________________
Address
________________________________________
Signature
________________________________________
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
Mariner Reserve Fund
Nassau
Bahamas
May 22, 1995
Dear Sirs:
Mariner Reserve Fund
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
Loan US $5,000,000
Foreign Exchange Trading US $1,000,000 (covering open foreign
exchange contracts with a face value of $10,000,000)
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.
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 Fund.
<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 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.
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
Interest will be applied to loan drawings at:
Loan: Libor plus 1%
All interest is to be paid as it falls due.
<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. 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 May
22, 1996 and we shall be pleased to discuss future arrangements shortly
before this date.
8. Required Documentation
Promissory Note in respect of loan drawings
Form U1
Certification of Beneficial Ownership, to be updated on a monthly
basis. Financial Statements for the Fund, as soon as they are
available.
9. Applicable Law
This Agreement is subject to the laws of the State of New York
Please be advised 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.
/s/ Ronald F. Seale
<PAGE> 4
Maximum Lending Ratios
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 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%
9. Time deposits and bank certificates of deposit, in major currencies:
Coutts & Co, same currency 95%
Other Bank, same currency 90%
Coutts & Co, another currency 85%
Other Bank, another currency 80%
Coutts & Co will, at its discretion, consider extending a loanable
value of up to 60% to time deposits and bank certificates of deposit
denominated in non-major currencies.
<PAGE> 5
[COUTTS & CO. LOGO]
COUTTS & CO AG
Park Avenue Tower
65 East 55th Street
New York, NY 10022
Telephone:(212) 303-2900
Telefax: (212) 303-2929
September 26, 1995
The Directors
Mariner Reserve Fund
Nassau, Bahamas
Dear Sirs:
Mariner Reserve Fund
We are pleased to confirm that we are prepared to make the following amendments
to your line of credit on the following terms and conditions:
1) Amount
Up to US$15,000,000 (fifteen million U.S. Dollars), provided the
collateral requirements set out below are satisfied.
2) Availability
Loan US$15,000,000
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) 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 addition, this facility is being made available to you on an
uncommitted basis and may be cancelled by us at any time.
In any event, this line of credit shall become due for review on May
22, 1996 and we shall be pleased to discuss future arrangements shortly
before this date.
<PAGE> 6
All other terms and conditions remain the same as those outlined in our letter
to you of May 22, 1995.
Should you have any questions with reference to the above, please do not
hesitate to contact us.
Yours sincerely,
/s/ P Embiricos /s/ DG Simmons
P Embiricos DG Simmons
Coutts & Co. Coutts & Co
Accepted:
/s/ Ronald F Seale
<PAGE> 7
MARINER RESERVE FUND
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> 8
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 ________________________________________
Account Signature
________________________________________
Address
________________________________________
Account Signature
________________________________________
Address
________________________________________
Account Signature
________________________________________
Address
________________________________________
Account Signature
________________________________________
Address
<PAGE> 9
Coutts & Co
- ------------------------------------------------------------------------------
Demand Interest Bearing Note
$ 15,000,000 Office Address: 65 East 55th Street, N.Y., N.Y. August 29, 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 FIFTEEN MILLION US DOLLARS. ($15,000,000) 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
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
<PAGE> 10
each of them consents to any and all delays, extensions of time, renewals,
releases of any Obligor 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 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% (one percent)
FOR AND BEHALF OF MARINER RESERVE FUND,
/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.
________________________________________
Signature
________________________________________
Address
________________________________________
Signature
________________________________________
Address
LOAN NO.______________________
<PAGE> 11
Coutts & Co
Demand Interest Bearing Note
$ 6,000,000.00 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 by 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> 12
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.
For And On Behalf Of Mariner Reserve Fund
/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.
________________________________________
Signature
________________________________________
Address
________________________________________
Signature
________________________________________
Address
LOAN NO.___________________
