-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Km2Cx5g5GWJgvyBmhGtIZqDVm2eaz24UuZ9z7aGOhWN4Yla7Nbjyc4x1tiM/obaJ X72l9/nCZSz14wjlk5qUxQ== 0000950123-96-004823.txt : 19960903 0000950123-96-004823.hdr.sgml : 19960903 ACCESSION NUMBER: 0000950123-96-004823 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 19960830 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GAMING LOTTERY CORP CENTRAL INDEX KEY: 0000911625 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL PRINTING [2750] IRS NUMBER: 000000000 FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-46795 FILM NUMBER: 96624496 BUSINESS ADDRESS: STREET 1: 160 NASHDENE RD CITY: SCARBOROUGH ONTARIO STATE: A6 FORMER COMPANY: FORMER CONFORMED NAME: LASER FRIENDLY INC DATE OF NAME CHANGE: 19930907 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: COUTTS & CO AG NEW YORK BRANCH CENTRAL INDEX KEY: 0001021811 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 65 E 55TH ST CITY: NEW YORK STATE: NY ZIP: 10022 MAIL ADDRESS: STREET 1: 65 E 55TH ST CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D 1 SCHEDULE 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 GAMING LOTTERY CORPORATION (formerly Laser Friendly, Inc.) - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK - -------------------------------------------------------------------------------- (Title of Class of Securities) 364910 10 9 - -------------------------------------------------------------------------------- (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 [X]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (Rule 13d-7.) NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 2 SCHEDULE 13D CUSIP NO. 364910 10 9 PAGE 2 OF 6 PAGES ------------------------- --- --- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON; S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Coutts & Co AG, New York Branch 521677023 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [ ] (B) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OR ORGANIZATION Incorporated as a banking institution in Switzerland - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0% ----------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES 0% BENEFICIALLY OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER(1) REPORTING 0 PERSON WITH ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER(1) 0 - -------------------------------------------------------------------------------- 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% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* BK - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! (1) However, the reporting person is the pledgee of 9,583,020 shares of the outstanding common stock of the Issuer (as defined below), representing a 37.8% interest therein. 3 ITEM 1. SECURITY AND ISSUER Common Stock Gaming Lottery Corporation (the "Issuer") (formerly Laser Friendly, Inc.) 160 Nashdene Road Scarborough, Ontario Canada M1V 4C4 ITEM 2. IDENTITY AND BACKGROUND (a) Name: Coutts & Co AG, New York Branch ("Coutts") (b) Place of Organization: Coutts is a Swiss bank licensed to conduct a banking business by the State of New York (c) Principal Business: Banking (d) Address of Principal Business: 65 East 55th Street New York, New York 10022 (e) Address of Principal Office: 65 East 55th Street New York, New York 10022 (f) Criminal Convictions: None (g) Civil Proceedings under any Securities Laws: None ITEM 3. SOURCE AND AMOUNT OF FUNDS In 1995, Coutts extended four loans (the "Old Loans") to four parties (the "Old Debtors"), each of which gave Coutts, inter alia, a security interest in shares of common stock ("Common Shares") of the Issuer (the "Old Pledged Shares"). As each of the Old Loans was in default immediately prior to the consummation of this transaction, Coutts caused the sale of the 5,183,020 Old Pledged Shares, representing a 20.4% interest in the Issuer, by the Old Debtors to Jacques Benquesus ("Banks") and Larry H. Weltman ("Weltman") pursuant to the terms of the relevant loan and collateral agreements with the Old Debtors. ITEM 4. PURPOSE OF TRANSACTION The purpose of this transaction is for Coutts to reduce certain financial risks presented by the Old Loans, which were in default immediately prior to the consummation of this transaction. To this end, Coutts caused the sale of the Old Pledged Shares to Banks and Weltman. (a) 5,000,000 of the Old Pledged Shares were sold to Banks and the remaining 183,020 Old Pledged Shares were sold to Weltman. Following the transaction, Coutts holds a security interest in 9,583,020 Common Shares of the Issuer pursuant to pledge agreements with Banks and Weltman. (b) No extraordinary corporation transaction planned. (c) No material asset transfer planned. (d) No change in board of directors or management envisioned. (e) No material change in the present capitalization or dividend policy of the Issuer planned. (f) No material change in Issuer's business or corporate structure anticipated. (g) No change in the Issuer's charter planned. (h) No delisting planned. (i) Not applicable. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) 0 Common Shares, representing, 0% interest in the Issuer. However, Coutts is the pledgee of 9,583,020 Common Shares of the Issuer, representing a 37.8% interest therein. 3 4 ITEM 6. CONTRACTS, ETC., WITH RESPECT TO SECURITIES OF THE ISSUER In 1995, Coutts made a loan to Silva Run Worldwide Limited ("Silva Run") which was secured, inter alia, by shares of the Issuer, pledged by Silva Run. In 1995, Coutts made a loan to Compania Di Investimento Antilliana S.A. ("Compania") which was secured, inter alia, by shares of the Issuer, pledged by Compania. In 1995, Coutts made a loan to Willsboro Universal Corporation ("Willsboro") which was secured, inter alia, by shares of the Issuer, pledged by Willsboro. In 1995, Coutts made a loan to Panola Worldwide Corporation ("Panola") which was secured, inter alia, by shares of the Issuer, pledged by Panola. Coutts has made loans to Banks which are secured by Common Shares of the Issuer, pledged by Banks and by Weltman. Coutts has made a loan to Weltman which is secured by 183,020 Common Shares of the Issuer, pledged by Weltman and by Banks. See Item 3. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Banks Master Agreement, dated August 19, 1996 Banks Loan Agreement, dated August 20, 1996 Banks Share Purchase Loan Agreement, dated August 20, 1996 Banks Pledge Agreement, dated August 20, 1996 Amended Banks Pledge Agreement, dated August 20, 1996 Banks Share Purchase Agreement, dated August 20, 1996 Banks Share Purchase Agreement, dated August 20, 1996 Banks Share Purchase Agreement, dated August 20, 1996 Banks Share Purchase Agreement, dated August 20, 1996 Banks Limited Guarantee, dated August 20, 1996 Weltman Master Agreement, dated August 19, 1996 Weltman Share Purchase Loan Agreement, dated August 20, 1996 Weltman Pledge Agreement, dated August 20, 1996 Weltman Share Purchase Agreement, dated August 20, 1996 4 5 Loan Documents between Coutts and Silva Run: Facility Letter, dated March 16, 1995 Facility Letter, dated June 26, 1995 Loan and Collateral Agreement, dated January 11, 1995 Note, dated June 26, 1995 Loan Documents between Coutts and Compania: Facility Letter, dated March 16, 1995 Facility Letter, dated April 5, 1995 Facility Letter, dated June 29, 1995 Amendment to June 29, 1995 Facility letter, dated February 23, 1996 Loan and Collateral Agreement, dated January 10, 1995 Note, dated June 27, 1995 Loan Documents between Coutts and Willsboro: Facility Letter, dated December 20, 1995 Loan and Collateral Agreement, dated December 14, 1995 Note, dated December 21, 1995 Loan Documents between Coutts and Panola: Facility Letter, dated December 20, 1995 Loan and Collateral Agreement, dated December 14, 1995 Note, dated December 21, 1995 5 6 After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct. Date: August 30, 1996 COUTTS & CO AG, NEW YORK BRANCH By: /s/ Leland D. Montgomery --------------------------- Name: Leland D. Montgomery Title: Vice President and General Counsel 6 7 EXHIBIT INDEX ------------- Exhibit No. Description - ------- ----------- Ex-99.A Banks Master Agreement, dated August 19, 1996 Ex-99.B Banks Loan Agreement, dated August 20, 1996 Ex-99.C Banks Share Purchase Loan Agreement, dated August 20, 1996 Ex-99.D Banks Pledge Agreement, dated August 20, 1996 Ex-99.E Amended Banks Pledge Agreement, dated August 20, 1996 Ex-99.F Banks Share Purchase Agreement, dated August 20, 1996 Ex-99.G Banks Share Purchase Agreement, dated August 20, 1996 Ex-99.H Banks Share Purchase Agreement, dated August 20, 1996 Ex-99.I Banks Share Purchase Agreement, dated August 20, 1996 Ex-99.J Banks Limited Guarantee, dated August 20, 1996 Ex-99.K Weltman Master Agreement, dated August 19, 1996 Ex-99.L Weltman Share Purchase Loan Agreement, dated August 20, 1996 Ex-99.M Weltman Pledge Agreement, dated August 20, 1996 Ex-99.N Weltman Share Purchase Agreement, dated August 20, 1996 Ex-99.O Loan Documents between Coutts and Silva Run: Facility Letter, dated March 16, 1995 Facility Letter, dated June 26, 1995 Loan and Collateral Agreement, dated January 11, 1995 Note, dated June 26, 1995 Ex-99.P Loan Documents between Coutts and Compania: Facility Letter, dated March 16, 1995 Facility Letter, dated April 5, 1995 Facility Letter, dated June 29, 1995 Amendment to June 29, 1995 Facility letter, dated February 23, 1996 Loan and Collateral Agreement, dated January 10, 1995 Note, dated June 27, 1995 Ex-99.Q Loan Documents between Coutts and Willsboro: Facility Letter, dated December 20, 1995 Loan and Collateral Agreement, dated December 14, 1995 Note, dated December 21, 1995 Ex-99.R Loan Documents between Coutts and Panola: Facility Letter, dated December 20, 1995 Loan and Collateral Agreement, dated December 14, 1995 Note, dated December 21, 1995 EX-99.A 2 BANKS MASTER AGREEMENT DATED 8/19/96 1 BANKS MASTER AGREEMENT THIS AGREEMENT made this 19th day of August, 1996 BETWEEN: COUTTS & CO AG, New York Branch, a Swiss banking institution ("Coutts") - and - JACQUES BENQUESUS of the City of Jerusalem, Israel ("Mr. Banks") WHEREAS: A. Coutts has loans (the "Client Loans") outstanding to certain of its clients in the aggregate amount of approximately $42 million, which loans were made for the purposes of financing the acquisition from treasury of common shares of Gaming Lottery Corporation ("Gaming"), The Instant Publisher Inc. ("TIPI") and/or Warp 10 Technologies Inc. ("Warp 10" and collectively with Gaming and TIPI, the "Companies" and each a "Company"); B. Mr. Banks and his wife, Biba Banks ("Mrs. Banks" and, together with Mr. Banks, the "Banks"), have pledged certain securities of Gaming and TIPI beneficially owned by them as security for the repayment of the Client Loans; C. The Client Loans are now, and have been for some time, in default and Coutts is permitted under the terms of the agreements governing the Client Loans and its agreement with the Banks to sell the shares of the Companies which have been pledged to Coutts by the Clients and by the Banks as security for the Client Loans; and D. Mr. Banks has entered into this Agreement and certain other agreements and arrangements contemplated and provided for by this Agreement in order to acquire 5,000,000 common shares of Gaming and 834,231 common shares of Warp 10 and to preclude the immediate sale of the securities of TIPI and Gaming pledged by the Banks as security for the Client Loans. 2 -2- NOW THEREFORE the parties agree as follows; ARTICLE 1 DEFINITIONS AND PRINCIPLES OF INTERPRETATION 1.1 DEFINITIONS - Whenever used in this Agreement, unless there is something inconsistent in the subject matter or context, the following words and terms shall have the meanings set out below: "AGREEMENT" means this agreement, including the schedules, and all instruments supplementing or amending or confirming this Agreement; "hereof", "hereto", and "hereunder" and similar expressions mean and refer to this Agreement and not to any particular article or section; "Article" or "Section" means and refers to the specified article or section of this Agreement; "AMENDED BANKS PLEDGE" means the Banks Pledge, as supplemented and amended in the form attached hereto as Schedule A, which provides for the retention by Coutts of the 1,916,918 Gaming Shares and 12,334,974 TIPI Shares currently pledged by Mr. Banks to, and held by, Coutts as security for the Client Loans, as security for the New Loans and pursuant to which 1,000,000 Warp 10 Shares and an additional 2,483,082 Gaming Shares and 2,665,026 TIPI Shares are to be pledged by Mr. Banks as additional security for the New Loans; "BANKS EXCHANGED PLEDGED SHARES" has the meaning ascribed thereto in subsection 3.1(i) of this Agreement; "BANKS EXCHANGED PURCHASED SHARES" has the meaning ascribed thereto in subsection 3.1(i) of this Agreement; "BANKS FORBEARANCE CONSIDERATION LOAN AGREEMENT" means the loan agreement to be entered into between Mr. Banks and Coutts pursuant to which Coutts will advance funds to Mr. Banks which Mr. Banks will use to fund the payment required by Subsection 2.1(f) of this Agreement, in the form attached hereto as Schedule B; "BANKS GAMING SHARE PURCHASE AGREEMENTS" means the Silva Run Gaming Share Purchase Agreement, the Compania Gaming Share Purchase Agreement, the Willsboro Gaming Share Purchase Agreement and the Panola Gaming Share Purchase Agreement; "BANKS LOAN AGREEMENTS" means the Banks Forbearance Consideration Loan 3 -3- Agreement and the Banks Share Purchase Loan Agreement; "BANKS PLEDGE" means the agreements among Coutts, Mr. Banks and Mrs. Banks pursuant to which the Banks pledged 4,126,918 Gaming Shares and 22,092,090 TIPI Shares to Coutts as collateral for the Client Loans; "BANKS PLEDGED SHARES" means the shares of the Companies held from time to time by Coutts as security for the New Loans under the Amended Banks Pledge; "BANKS PURCHASED PLEDGED SHARES" means the Banks Purchased Shares held from time to time by Coutts as security for the New Loans under the Banks Purchased Share Pledge; "BANKS PURCHASED GAMING SHARES" means the 5,000,000 Gaming Shares purchased by Mr. Banks pursuant to the Banks Gaming Share Purchase Agreements; "BANKS PURCHASED SHARES" means the Banks Purchased Gaming Shares and the Banks Purchased Warp 10 Shares; "BANKS PURCHASED SHARE PLEDGE" means the pledge agreement to be entered into between Coutts and Mr. Banks in the form attached hereto as Schedule C in respect of the pledge of the Banks Purchased Shares; "BANKS PURCHASED WARP 10 SHARES" means the 834,231 Warp 10 Shares purchased by Mr. Banks pursuant to the Banks Warp 10 Share Purchase Agreements; "BANKS SHARE PURCHASE AGREEMENTS" means the Banks Gaming Share Purchase Agreements and the Banks Warp 10 Share Purchase Agreements; "BANKS SHARE PURCHASE LOAN AGREEMENT" means the loan agreement to be entered into between Mr. Banks and Coutts pursuant to which Coutts will advance funds to Mr. Banks which Mr. Banks will use to complete the transactions contemplated in the Banks Share Purchase Agreements and to pay certain expenses incurred by Mr. Banks and Coutts in connection with the preparation of this Agreement and the other documents contemplated hereby and the consummation of the transactions provided for herein, in the form attached hereto as Schedule B; "BANKS WARP 10 SHARE PURCHASE AGREEMENTS" means the Bayfront Warp 10 Share Purchase Agreement, the Willsboro Warp 10 Share Purchase Agreement and the Panola Warp 10 Share Purchase Agreement; 4 -4- "BAYFRONT" means Bayfront Intervest Limited; "BAYFRONT WARP 10 SHARE PURCHASE AGREEMENT" means a Share Purchase Agreement to be entered into between Bayfront and Mr. Banks to effect the sale of 544,231 Warp 10 Shares by Bayfront to Mr. Banks; "CLAIMS" means any claim, demand, action, cause of action, damage, loss, costs, liability or expense, including, without limitation, reasonable legal, accounting and other professional fees, and all costs incurred in investigating or pursuing any of the foregoing or any proceeding relating to any of the foregoing; "CLIENT LOANS" means the loans made by Coutts to each of the Clients and includes all amounts outstanding and payable to Coutts thereunder as at the date of Closing including for principal, interest, fees owing and other charges as more specifically set out in Schedule D; "CLIENTS" means Bayfront, Compania, Mariner, Panola, Silva Run and Willsboro; "CLOSING" means the completion of the actions, exchanges and transactions contemplated by Article 2, which shall take place at 10:00 a.m. on August 20, 1996 or such other time as the parties may agree at the offices of Osler, Hoskin & Harcourt in New York City; "COMPANIA" means Compania Di Investimento Antilliana S.A.; "COMPANIA GAMING SHARE PURCHASE AGREEMENT" means a Share Purchase Agreement to be entered into between Compania and Mr. Banks to effect the sale of 331,138 Gaming Shares by Compania to Mr. Banks; "EVENT OF DEFAULT" shall have the meaning ascribed to it in each of the Banks Loan Agreements, the Weltman Loan Agreement and the Wiseman Loan Agreement; "GAMING SHARES" means common shares of Gaming; "GUARANTEE" means the limited guarantee of Mr. Banks in the form attached hereto as Schedule E; "MARINER" means Mariner Reserve Fund Inc.; "MINIMUM PRICE" means: (a) at all times that less than $30 million of the New Loan Amount has been 5 -5- repaid to Coutts, the Minimum Price shall be equal to 80% of the Open Market Price of the particular Pledged Shares being sold; (b) after $30 million or more of the New Loan Amount has been repaid, the Minimum Price shall be equal to 85% of the Open Market Price of the particular Pledged Shares being sold; and (c) in the event that the sale of Pledged Shares is to a Related Party, the Minimum Price shall be equal to the Open Market Price of the Pledged Shares being sold less an amount equal to the customary commission which would have been payable had the sale been undertaken at arms-length on an exchange or quotation system on which such shares are traded; "NET PROCEEDS" means the full amount of the proceeds received or receivable on a sale of Pledged Shares pursuant to Article 3 after deducting any discount or commission payable in respect of such sale; "NEW LOAN AMOUNT" means the aggregate principal amount outstanding from time to time and owing to Coutts under any and all of the New Loans; "NEW LOANS" means the loans made to Mr. Banks by Coutts under the Banks Loan Agreements, the loan made to Weltman by Coutts under the Weltman Loan Agreement and the loan made to Wiseman by Coutts under the Wiseman Loan Agreement; "OPEN MARKET PRICE" means, in respect of a sale of Pledged Shares, the highest closing price of the shares of the Company which are the subject of the sale on any of the NASDAQ Stock Market, Inc., The Toronto Stock Exchange or The Canadian Dealing Network Inc. (in the case of The Toronto Stock Exchange or The Canadian Dealing Network Inc., the closing price shall be determined by taking the actual closing price, reported in Canadian dollars, and converting such price to U.S. dollars by reference to the Reuters Canadian dollar/U.S. dollar exchange rate as reported at 4:00 p.m. (New York time) on the trading day immediately preceding the date on which such sale is made); "OPERATIVE AGREEMENTS" means this Agreement, the Banks Loan Agreements, the Guarantee, the Banks Share Purchase Agreements, the Amended Banks Pledge and the Banks Purchased Share Pledge and any and all agreements required to be entered into between Coutts and Mr. Banks pursuant to this Agreement and the other Operative Agreements; "PANOLA" means Panola Worldwide Corporation; "PANOLA GAMING SHARE PURCHASE AGREEMENT" means a Share Purchase Agreement to be entered into between Panola and Mr. Banks to effect the sale 6 -6- of 668,465 Gaming Shares to Mr. Banks; "PANOLA WARP 10 SHARE PURCHASE AGREEMENT" means a Share Purchase Agreement to be entered into between Panola and Mr. Banks to effect the sale of 150,000 Warp 10 Shares by Panola to Mr. Banks; "PLEDGED SHARES" means the Banks Pledged Shares and the Banks Purchased Pledged Shares; "RELATED PARTY" means Mr. Banks, Mrs. Banks, Weltman, Wiseman, any officer, director or employee of any of the Companies, any "associate" of any of the foregoing, any "insider" of any of the Companies, any company "controlling", "controlled" by or under common "control" with any of the foregoing or any "subsidiary" or "affiliate" of any of the Companies (terms in quotation marks having the meaning ascribed to them in the Securities Act (Ontario)) and any other party with whom Mr. Banks does not deal with at arms length for the purposes of the Income Tax Act (Canada); "RELEVANT PROVISIONS" has the meaning ascribed thereto in subsection 3.1(i) of this Agreement; "SECURITY INTEREST" means any mortgage, lien, pledge, charge, security interest or other encumbrance; "SHARE PURCHASE AGREEMENT" means the form of share purchase agreement attached hereto as Schedule F; "SILVA RUN" means Silva Run Worldwide Limited; "SILVA RUN GAMING SHARE PURCHASE AGREEMENT" means a Share Purchase Agreement to be entered into between Silva Run and Mr. Banks to effect the sale of 3,157,112 Gaming Shares by Silva Run to Mr. Banks; "TIPI SHARES" means common shares of TIPI; "UNPLEDGED SHARES" has the meaning ascribed thereto in subsection 3.1(h) of this Agreement; "WARP 10 SHARES" means common shares of Warp 10; "WELTMAN" means Larry H. Weltman; "WELTMAN SHARE PURCHASE AGREEMENT" has the meaning ascribed thereto in the Weltman Master Agreement; 7 -7- "WELTMAN LOAN AGREEMENT" means the loan agreement entered into between Weltman and Coutts pursuant to the Weltman Master Agreement; "WELTMAN MASTER AGREEMENT" means the master agreement of even date herewith between Weltman and Coutts; "WILLSBORO" means Willsboro Universal Corporation; "WILLSBORO GAMING SHARE PURCHASE AGREEMENT" means a Share Purchase Agreement to be entered into between Willsboro and Mr. Banks to effect the sale of 843,285 Gaming Shares by Willsboro to Mr. Banks; "WILLSBORO WARP 10 SHARE PURCHASE AGREEMENT" means a Share Purchase Agreement to be entered into between Willsboro and Mr. Banks to effect the sale of 140,000 Warp 10 Shares by Willsboro to Mr. Banks; "WISEMAN" means John M. Wiseman; "WISEMAN LOAN AGREEMENT" means the loan agreement entered into between Wiseman and Coutts pursuant to the Wiseman Master Agreement; "WISEMAN MASTER AGREEMENT" means the master agreement of even date herewith between Wiseman and Coutts; and "WISEMAN SHARE PURCHASE AGREEMENTS" has the meaning ascribed thereto in the Wiseman Master Agreement. 1.2 CERTAIN RULES OF INTERPRETATION - In this Agreement: (a) time is of the essence in the performance of the parties' respective obligations; (b) unless otherwise specified, all references to money amounts are to United States currency; (c) the descriptive headings of Articles and Sections are inserted solely for convenience of reference and are not intended as complete or accurate descriptions of content; (d) the use of words in the singular or plural, or with a particular gender, shall not limit the scope or exclude the application of any provision of this Agreement to such person or persons or circumstances as the context otherwise permits; and (e) whenever a provision of this Agreement requires an approval or 8 -8- consent by a party to this Agreement and notification of such approval or consent is not delivered within the applicable time limit, then, unless otherwise specified, the party to this agreement whose consent or approval is required shall be conclusively deemed to have withheld its consent or approval. 1.3 ENTIRE AGREEMENT - This Agreement together with the other Operative Agreements and the other documents to be delivered pursuant to this Agreement and the other Operative Agreements, constitute the entire agreement between the parties or any of them pertaining to the subject matter of this Agreement and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties, and there are no warranties, representations or other agreements among the parties or any of them in connection with the subject matter of this Agreement except as specifically set forth in this Agreement and any document delivered pursuant to this Agreement. No supplement, modification or waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed to or shall constitute a waiver of any other provisions (whether or not similar) nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. To the extent that the provisions of this Agreement conflict with or operate in a manner contrary to any term or provision of any of the agreements and documents delivered pursuant to this Agreement, this Agreement shall govern. 1.4 SCHEDULES - The schedules to this Agreement, as listed below, are an integral part of this Agreement:
Schedule Description -------- ----------- Schedule A Amended Banks Pledge Schedule B Banks Forbearance Consideration Loan Agreement/Banks Share Purchase Loan Agreement Schedule C Banks Purchased Share Pledge Schedule D Client Loan Amounts Schedule E Guarantee Schedule F Share Purchase Agreement Schedule G Banks Share Acquisition Reports Schedule H Coutts Share Report
ARTICLE 2 CLOSING 2.1 CLOSING - At the Closing, the parties will take the following actions: 9 -9- (a) each of Mr. Banks and Coutts shall enter into, execute and deliver each of the Banks Loan Agreements, the Guarantee, the Amended Banks Pledge and the Banks Purchased Share Pledge and the other agreements and documents required to be delivered thereunder at the Closing; (b) Coutts shall cause: (i) Silva Run to enter into, execute and deliver the Silva Run Gaming Share Purchase Agreement; (ii) Compania to enter into, execute and deliver the Compania Gaming Share Purchase Agreement; (iii) Willsboro to enter into, execute and deliver each of the Willsboro Gaming Share Purchase Agreement and the Willsboro Warp 10 Share Purchase Agreement; (iv) Panola to enter into, execute and deliver each of the Panola Gaming Share Purchase Agreement and the Panola Warp 10 Share Purchase Agreement; and (v) Bayfront to enter into, execute and deliver the Bayfront Warp 10 Share Purchase Agreement; (c) Mr. Banks shall enter into, execute and deliver each of the share purchase agreements provided for in Subsection 2.1(b) hereof; (d) subject to the satisfaction of all applicable conditions in the Banks Share Purchase Loan Agreement, Coutts shall advance to Mr. Banks the amount of $21,186,620.10 under the Banks Share Purchase Loan Agreement to fund the acquisition by Mr. Banks of the Banks Purchased Shares and the payment by Mr. Banks of certain legal expenses incurred by Mr. Banks and Coutts in connection with the preparation of this Agreement and the other documents contemplated hereby and the consummation of the transactions provided for herein; and Mr. Banks shall direct Coutts to, and Coutts shall, deposit into the accounts of Silva Run, Compania, Willsboro, Panola and Bayfront the amounts payable to each of them under the Banks Share Purchase Agreements and shall deliver the Banks Purchased Shares to Coutts to be held by Coutts as security pursuant to the Banks Purchased Share Pledge; (e) Coutts shall pay to any Client the amount, if any, of the proceeds from the sale of the Banks Purchased Shares sold by such Client to Mr. 10 -10- Banks, which exceeds the aggregate of all amounts owing to Coutts under such Client's Client Loan; (f) subject to the satisfaction of all applicable conditions in the Banks Forbearance Consideration Loan Agreement, Coutts shall advance to Mr. Banks the amount of $20,016,872.25 under the Banks Forbearance Consideration Loan Agreement, to fund the payment by Mr. Banks to Coutts of the consideration for the forbearance of Coutts in not selling the Banks Pledged Shares and the repayment, for Mr. Banks' account, of the Client Loans pursuant to subsection 2.1(i); (g) Mr. Banks shall deliver to Coutts 1,000,000 Warp 10 Shares and an additional 2,190,000 Gaming Shares and 2,665,026 TIPI Shares beneficially owned by him free and clear of any Security Interest, to be held as additional collateral under the Amended Banks Pledge; (h) Coutts shall release and deliver to Mrs. Banks the 2,210,000 Gaming Shares and 9,757,116 TIPI Shares beneficially owned by Mrs. Banks and currently pledged to and held by Coutts under the Banks Pledge free and clear of any Security Interest created by Coutts; and (i) Mr. Banks shall direct Coutts to, and Coutts shall, use the funds advanced to Mr. Banks by Coutts under the Banks Forbearance Consideration Loan Agreement to repay for Mr. Banks' account the balance due on the Client Loans after the proceeds payable to the Clients pursuant to the Banks Share Purchase Agreements, the Weltman Share Purchase Agreement and the Wiseman Share Purchase Agreements have been applied against the Client Loans. The parties acknowledge that this subsection 2.1(i) is intended to create a right of subrogation in favor of Mr. Banks under applicable law and that Coutts shall provide Mr. Banks with the assistance referred to in Section 6.3 hereof; provided, however, that Coutts makes no representation, warranty or covenant as to the existence of such a right of subrogation and shall have no responsibility for the sufficiency of any rights of subrogation arising hereunder or as a result of the transactions completed pursuant to this Agreement or the other Operative Agreements now or at any time in the future. The forgoing actions and deliveries shall be taken and made in the order set out above. Each of the documents and deliveries contemplated by this Section shall be deposited in escrow and shall not become effective or be released until all the actions required by this Section have been taken and the conditions set out in Section 2.2 have been fulfilled, in each case to the satisfaction of each of the parties to this Agreement and their counsel. 11 -11- 2.2 CONDITIONS - This Agreement and the agreements, actions, exchanges and deliveries provided for in Section 2.1 shall be of no legal force or effect unless and until each of the following conditions shall have been fulfilled: a) Weltman and Coutts shall have taken all of the actions required to be taken under Section 2.1 of the Weltman Master Agreement and each of Weltman and Coutts shall have acknowledged the sufficient performance of the covenants to be performed by the other pursuant to that section and the satisfaction and fulfilment of each of the conditions set out in Section 2.2 of the Weltman Master Agreement; and b) Wiseman and Coutts shall have taken all of the actions required to be taken under Section 2.1 of the Wiseman Master Agreement and each of Wiseman and Coutts shall have acknowledged the sufficient performance of the covenants to be performed by the other pursuant to that section and the satisfaction and fulfilment of each of the conditions set out in Section 2.2 of the Wiseman Master Agreement. 2.3 ACKNOWLEDGEMENTS - Each of the parties will acknowledge in writing the performance of the covenants required to be performed for their benefit on or before the Closing and the fulfilment of the conditions in Section 2.2 forthwith after such performance and fulfilment has been achieved to the satisfaction of such party. ARTICLE 3 RELEASE OF PLEDGED SHARES 3.1 SALE OF SHARES (a) Mr. Banks shall be permitted, at any time hereafter, to sell any of the Pledged Shares, and Coutts shall forthwith release and deliver any Pledged Shares so sold by Mr. Banks free and clear of any Security Interest created by Coutts upon payment therefor as provided herein and Coutts shall do all things necessary to ensure that the certificates representing such Pledged Shares are properly endorsed for transfer in accordance with the directions of Mr. Banks (provided that such instructions are in accordance with the applicable provisions of this Agreement and further provided that the full amount of the Net Proceeds from the sale is applied in repayment of one or more of the New Loans). (b) Notwithstanding subsection 3.1(a) Mr. Banks shall be permitted, whenever the New Loan Amount has been reduced by $40 million, to sell any Banks Purchased Pledged Shares and Coutts shall forthwith release and deliver any Banks Purchased 12 -12- Pledged Shares so sold by Mr. Banks, free and clear of any Security Interest created by Coutts upon payment therefor as provided herein, provided that fifty per cent of the Net Proceeds from the sale is applied in repayment of one or more of the New Loans. (c) No sale of Pledged Shares pursuant to this Article 3 may be effected by Mr. Banks unless the amount of the Net Proceeds from such sale is at least equal to the Minimum Price. (d) Mr. Banks shall be permitted to designate the New Loan to which the Net Proceeds of any sale of Pledged Shares pursuant to this section shall be applied. (e) All sales of Pledged Shares by Mr. Banks must be made in compliance with all applicable laws and regulations. (f) Notwithstanding any other provision of this Article 3, Coutts shall not be required to release and deliver any Pledged Shares sold by Mr. Banks unless and until Coutts is provided with evidence, reasonably satisfactory to Coutts, that the provisions of this Article 3 to be complied with by Mr. Banks in connection with such sale have been complied with, provided that upon being so satisfied, Coutts shall promptly deliver any such Pledged Shares. (g) In the event that a sale of Pledged Shares is made pursuant to this Article 3 at any time at which the New Loan to which the proceeds of sale are to be applied is not at that time repayable without penalty, the proceeds of sale required to be applied as repayment shall be delivered to Coutts and held by Coutts (in an interest bearing account pledged to Coutts) as security under the Banks Purchased Share Pledge until such time as the designated New Loan is repayable without penalty whereupon such proceeds shall be applied by Coutts as repayment of such New Loan. (h) Notwithstanding any other provisions of this Agreement or any of the agreements relating to the transactions contemplated herein, in the event Mr. Banks at any time sells any Gaming Shares, TIPI Shares or Warp 10 Shares other than Pledged Shares ("Unpledged Shares"), Coutts shall forthwith release and deliver to Mr. Banks, that number of Pledged Shares which equals the number of Unpledged Shares so sold by Mr. Banks, free and clear of any Security Interest created by Coutts provided that a sale of such Unpledged Shares is completed by Mr. Banks in all respects in compliance with the provisions of this Article 3 which govern and are applicable to a sale by Mr. Banks of Pledged Shares. (i) Notwithstanding any other provision of this Agreement or any of the agreements relating to the transactions contemplated herein, for the purposes of Section 3.2 of this Agreement, Section 3 of the Guarantee and subsection 10.3(b) of each of the Banks Loan Agreements (the "Relevant Provisions"), and for no other purposes, 4,400,000 of the Banks Purchased Gaming Shares and all of the 834,231 13 -13- Banks Purchased Warp 10 Shares (collectively, the "Banks Exchanged Purchased Shares") shall be deemed to be Banks Pledged Shares and not Banks Purchased Pledged Shares, and all of the Gaming Shares and 834,231 of the Warp 10 Shares which are Banks Pledged Shares (the "Banks Exchanged Pledged Shares") shall for the same purposes be deemed to be Banks Purchased Pledged Shares and not Banks Pledged Shares. For example, as long as Coutts holds any Banks Exchanged Pledged Shares: (i) any sale by Mr. Banks, pursuant to subsection 3.1(a) hereof, of Gaming Shares or Warp 10 Shares which are Banks Pledged Shares shall for the purposes of the Relevant Provisions only, be deemed to have been a sale of Banks Exchanged Pledged Shares, and (ii) any sale by Coutts, pursuant to either clause (i) of subsection 10.3(b) of any of the Banks Loan Agreements or Section 3 of the Guarantee, of Gaming Shares or Warp 10 Shares which are Banks Pledged Shares shall, for the purposes of the Relevant Provisions only, be deemed to have been a sale of Banks Exchanged Pledged Shares; and, for the purposes of the Relevant Provisions only, any such sale by Mr.Banks or by Coutts shall have the effect of reducing the number of Banks Purchased Pledged Shares, but not the number of Banks Pledged Shares, held by Coutts by the number of Gaming Shares or Warp 10 Shares, as the case may be, so sold. 3.2 RELEASE ON REPAYMENT - At such time as the New Loan Amount has been reduced by $30 million, Coutts shall release and deliver to Mr. Banks, Banks Pledged Shares sufficient to reduce the number of the Banks Pledged Shares held by Coutts to an amount equal to 25% of the number of the Banks Pledged Shares pledged to Coutts immediately following the Closing. Thereafter, whenever the New Loan Amount is reduced by a further amount of $1 million (and the obligation of Coutts under this Section is not triggered unless and until a full further $1 million is repaid), Coutts shall release ten percent of the Banks Pledged Shares which remain subject to the Amended Banks Pledge after the release of 75% of Banks Pledged Shares originally pledged in accordance with this section so that at such time as the New Loan Amount has been reduced by $40 million, all of the Banks Pledged Shares shall have been released by Coutts and delivered to Mr. Banks. Notwithstanding any other provision of this Article 3, Mr. Banks shall not be permitted to sell Banks Pledged Shares if, but only to the extent that, as a result of such sale of Banks Pledged Shares, less than 25% of the number of shares of each Company held by Coutts under the Amended Banks Pledge immediately following the Closing would then be held by Coutts as collateral under the Amended Banks Pledge prior to the time when the New Loan Amount has been reduced by $30 million, or thereafter, if as a result of the sale of such Banks Pledged Shares the maximum number of shares of any Company which could be retained by Coutts as collateral under the Amended 14 -14- Banks Pledge under the provisions of this subsection 3.2 would not be so retained. At such time as the New Loans have been repaid in full, Coutts shall release and deliver to Mr. Banks any and all Banks Purchased Pledged Shares free and clear of any Security Interest created by Coutts. ARTICLE 4 INDEMNIFICATION 4.1 MUTUAL INDEMNIFICATIONS FOR BREACHES OF COVENANTS AND WARRANTY, ETC. - Coutts covenants and agrees with Mr. Banks, and Mr. Banks covenants and agrees with Coutts (the party or parties so covenanting and agreeing to indemnify another party being referred to in this Section as the "Indemnifying Party" and the party so to be indemnified being called the "Indemnified Party") to indemnify and save harmless the Indemnified Party, effective as and from the Closing, from and against all Claims which may be made or brought against the Indemnified Party or which it may suffer or incur, directly or indirectly, as a result of or in connection with any non-fulfilment of any covenant or agreement on the part of the Indemnifying Party under this Agreement or any misstatement in or breach of any representation or warranty of the Indemnifying Party contained in this Agreement or in any certificate or other document furnished by the Indemnifying Party pursuant to this Agreement. Notwithstanding any other provision of this Article 4: (i) no claim for indemnification may be made by an Indemnified Party against any Indemnifying Party after the time which is the latest of: (a) date on which all amounts due under the New Loans have been repaid; and (b) four years from the date of this Agreement; and (ii) the aggregate amount payable by an Indemnifying Party as indemnification pursuant to this Article 4 shall be limited to $40 million. 4.2 INDEMNIFICATION PROCEDURES FOR THIRD PARTY CLAIMS (a) In the case of claims or demands made by a third party in respect of which indemnification is sought by an Indemnified Party, the Indemnified Party seeking such indemnification under this Agreement shall give prompt written notice, and in any event within 20 days, to the Indemnifying Party of any such claims or demands made upon it, provided that in the event of a failure to give such 15 -15- notice, such failure shall not preclude the party seeking indemnification to obtain such indemnification but its right to indemnification may be reduced to the extent that such delay prejudiced the defense of the claim or demand or increased the amount of liability or cost of defense. (b) The Indemnifying Party shall have the right, by notice to the Indemnified Party given not later than 30 days after receipt of the notice described in subsection (a) to assume the control of the defense, compromise or settlement of the claim or demand, provided that such assumption shall, by its terms, be without cost to the Indemnified Party and provided the Indemnifying Party acknowledges in writing its obligation to indemnify the Indemnified Party in accordance with the terms contained in this Article 4 in respect of that claim or demand. (c) Upon the assumption of control of any claim or demand by the Indemnifying Party as set out in subsection (b), the Indemnifying Party shall diligently proceed with the defence, compromise or settlement of the claim or demand at its sole expense, including, if necessary, employment of counsel reasonably satisfactory to the Indemnified Party and, in connection therewith, the Indemnified Party shall cooperate fully, but at the expense of the Indemnifying Party, with respect to any out-of-pocket expenses incurred, to make available to the Indemnifying Party all pertinent information (other than privileged information) and witnesses under the Indemnified Party's control, make such assignments and take such other steps as in the opinion of counsel for the Indemnifying Party are reasonably necessary to enable the Indemnifying Party to conduct such defence. The Indemnified Party shall also have the right to participate in the negotiation, settlement or defence of any claim or demand at its own expense. (d) The final determination of any claim or demand pursuant to this Article, including all related costs and expenses, will be binding and conclusive upon the parties as to the validity or invalidity, as the case may be, of such claim or demand against the Indemnifying Party. ARTICLE 5 REPRESENTATIONS, WARRANTIES AND COVENANTS 5.1 MR. BANKS' REPRESENTATIONS AND WARRANTIES Mr. Banks hereby represents and warrants to Coutts that: 16 -16- (a) in considering the provisions of the Operative Agreements and in negotiating their terms, Mr. Banks has been advised and represented by independent counsel; (b) as of the date hereof, Mr. Banks does not have knowledge of any undisclosed "material change" or "material fact", as such terms are defined in the Securities Act (Ontario"), relating to the affairs of the Companies or the Gaming Shares, TIPI Shares or Warp 10 Shares; (c) Mr. Banks has the capacity to enter into each of the Operative Agreements and to carry out his obligations under each of the Operative Agreements; (d) each of the Operative Agreements constitutes a valid and binding obligation of Mr. Banks enforceable against him in accordance with its terms; (e) Mr. Banks is not a party to, bound or affected by or subject to any indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law provision, statute, regulation, order, judgment, decree, licence, permit or law which would be violated, contravened, breached by, or under which default would occur or an encumbrance would be created as a result of the execution and delivery of any of the Operative Agreements or any other agreement to be entered into under the terms of any of the Operative Agreements, or the performance by Mr. Banks of any of his obligations provided for under any of the Operative Agreements or any other agreement contemplated herein or therein; (f) Mr. Banks understands that no federal or state agency has passed on or made any recommendation or endorsement of the Banks Purchased Shares; (g) Mr. Banks acknowledges that, in entering into this Agreement and the other Operative Agreements, including making the decision to purchase the Banks Purchased Shares, Mr. Banks has not relied upon any representation or warranty by Coutts other than the representations and warranties of Coutts set forth in Section 5.2 of this Agreement and in the other Operative Agreements; (h) Mr. Banks acknowledges and understands that Banks Purchased Shares have not been registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or any other applicable securities law, and accordingly, none of the Banks Purchased Shares may be offered, sold, transferred, pledged, hypothecated or otherwise disposed 17 -17- of unless registered pursuant to, or in a transaction exempt from registration under, the 1933 Act and any other applicable securities law; (i) Mr. Banks is an "accredited investor" within the meaning of Rule 501(a) under the 1933 Act (an "Accredited Investor") who is acquiring the Banks Purchased Shares for his own account. Mr. Banks has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Banks Purchased Shares. Mr. Banks is aware that he may be required to bear the economic risk of an investment in the Banks Purchased Shares for an indefinite period, and he is able to bear such risk for an indefinite period; (j) Mr. Banks is acquiring the Banks Purchased Shares for his own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Mr. Banks agrees to offer, sell or otherwise transfer Banks Purchased Shares only pursuant to registration under the 1933 Act and any other applicable securities law, or an exemption therefrom; (k) Mr. Banks acknowledges that Coutts, its employees, officers, directors and agents and the respective heirs, successors and assigns of each of the foregoing, will be relying upon the truth and accuracy of the acknowledgements, representations, warranties and agreements made by Mr. Banks in the Operative Agreements; and (l) Mr. Banks acknowledges that it is the intention of the parties to this Agreement that the transfer of the Banks Purchased Shares under the Banks Share Purchase Agreements be made at a price which is in compliance with clause 93(1)(c) of the Securities Act (Ontario) and section 183 of the Regulation made thereunder (and the comparable provisions of the Securities Act (Alberta)), and Mr. Banks hereby confirms that he is not aware of any fact, event or occurrence which could reasonably be expected to give rise to a finding by the Ontario Securities Commission or the Alberta Securities Commission that the purchase price for any of the Banks Purchased Shares under the Banks Share Purchase Agreements does not so comply. 5.2 COUTTS' REPRESENTATIONS AND WARRANTIES Coutts hereby represents and warrants to Mr. Banks that: (a) Coutts is a corporation validly existing and in good standing under the laws of the jurisdiction of its organization. Coutts has the full corporate power and authority to execute and deliver each of the 18 -18- Operative Agreements and all other agreements and documents executed or to be executed by it in connection with each of the Operative Agreements (including, without limitation, the Banks Share Purchase Agreements) and to perform all of its obligations hereunder and thereunder; (b) Coutts has all necessary authority to transfer, or caused to be transferred, the Banks Purchased Shares to Mr. Banks pursuant to and in accordance with the terms of the Banks Share Purchase Agreements and to complete the transactions contemplated herein and therein; (c) each of the Operative Agreements constitutes a valid and binding obligation of Coutts to Mr. Banks enforceable against it in accordance with its terms; (d) Coutts is not a party to, bound or affected by or subject to any indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law provision, statute, regulation, order, judgment, decree, licence, permit or law which would be violated, contravened, breached by, or under which default would occur or an encumbrance would be created as a result of the execution and delivery of any of the Operative Agreements or any other agreement to be entered into under the terms of any of the Operative Agreements, or the performance by Coutts of any of its obligations provided for under any of the Operative Agreements or any other agreement contemplated herein or therein; (e) there has been no act or omission by Coutts which has created or resulted in the creation of any Security Interest on, against or with respect to any of the Pledged Shares (except Security Interests (if any) created as a result of the consummation of the transactions contemplated by this Agreement); (f) to the best of Coutts' information, knowledge and belief, each of the Clients is incorporated in and a resident of the jurisdiction which appears below immediately opposite its name and none of the Clients have been incorporated or organized for the purposes of causing such corporations not to be in or resident in Ontario or Alberta for the purposes of completing the transactions provided for in this Agreement:
CLIENT NAME COUNTRY OF INCORPORATION ----------- ------------------------ Bayfront Intervest Limited British Virgin Islands
19 -19- Compania Di Investimento British Virgin Islands Antilliana S.A. Mariner Reserve Fund Inc. Bahamas Panola Worldwide Corporation British Virgin Islands Silva Run Worldwide Limited British Virgin Islands Willsboro Universal Corporation British Virgin Islands;
(g) to the best of Coutts' information, knowledge and belief, the transactions contemplated herein will not result in Mr. Banks having made purchases of shares of any of the Companies from more than five persons or companies in the aggregate, for the purposes of clause 93(1)(c) and subsection 93(2) of the Securities Act (Ontario) (and the comparable provisions of the Securities Act (Alberta)); (h) Coutts is a banking institution incorporated and organized under the laws of Switzerland, with a New York Branch, which does not have an office in the Province of Ontario and, other than certain activities undertaken by Coutts in connection with its application to the Ontario Securities Commission for registration under the Securities Act (Ontario) in the category of International Dealer, does not carry on business in the Province of Ontario; (i) Coutts acknowledges that in entering into this Agreement and the other Operative Agreements, Coutts has not relied upon any representation or warranty other than those representations and warranties set forth in Section 5.1 of this Agreement and in the other Operative Agreements; (j) in considering the provisions of the Operative Agreements and in negotiating their terms, Coutts has been advised and represented by independent counsel; (k) Coutts acknowledges that it is the intention of the parties to this Agreement that the transfer of the Banks Purchased Shares under the Banks Share Purchase Agreements be made at a price which is in compliance with clause 93(1)(c) of the Securities Act (Ontario) and section 183 of the Regulation made thereunder (and the comparable provisions of the Securities Act (Alberta)), and Coutts hereby confirms that Coutts is not aware of any fact, event or occurrence which could reasonably be expected to give rise to a finding by the Ontario Securities Commission or the Alberta Securities Commission that the purchase 20 -20- price for any of the Banks Purchased Shares under the Banks Share Purchase Agreements does not so comply; and (l) none of Coutts, any affiliate of Coutts, or any person acting on behalf of Coutts or any such affiliate has engaged, or will engage, in any general solicitation or any general advertising with respect to the Banks Purchased Shares. 5.3 COVENANTS OF MR. BANKS (a) Mr. Banks hereby covenants to Coutts that promptly following the execution of this Agreement, Mr. Banks shall make and file the press release and report required by section 101 of the Securities Act (Ontario) in the forms annexed hereto as Schedule G and, within the time period required by law, the report required pursuant to section 13(d) of the United States Securities Exchange Act of 1934, as amended, in a form approved by Coutts, in accordance with the provisions of such statutes (and the rules and regulations thereunder) and shall provide Coutts with a copy of such reports. (b) Mr. Banks hereby covenants to Coutts that all amounts which he recovers from any of the Clients pursuant to his rights of subrogation referred to in subsection 2.1(i), after deduction of expenses and fees incurred by Mr. Banks in asserting and enforcing such rights, shall, for so long as any amounts remain outstanding on the New Loans, be paid to Coutts as repayment of the New Loans to the extent of the outstanding balance thereon. 5.4 COVENANTS OF COUTTS Coutts hereby covenants to Mr. Banks that promptly following the execution of this Agreement, Coutts shall make and file the press release and report required by section 101 of the Securities Act (Ontario) in the form annexed hereto as Schedule H and, within the time period required by law, the report required pursuant to section 13(d) of the United States Securities Exchange Act of 1934, as amended, in a form approved by Mr. Banks, in accordance with the provisions of such statutes (and the rules and regulations thereunder) and shall provide Mr. Banks with a copy of all such reports. 21 -21- ARTICLE 6 GENERAL 6.1 NOTICES - Any notice or other writing required or permitted to be given under this Agreement or for the purposes of this Agreement (referred to in this Section 6.1 as a "notice") to any other party to this Agreement shall be sufficiently given if delivered personally, or if sent by prepaid registered mail or if transmitted by fax or other form of recorded communication tested prior to transmission to such party: (a) in the case of Coutts a notice at: Coutts & Co AG, New York Branch 65 East 55th Street New York, New York 10022 Phone: (212) 303-2971 Attention: Mr. Mario Economou, Vice President FAX: (212) 303-2929 with copies to: Mr. Alan M. Christenfeld Rogers & Wells 200 Park Avenue New York, New York 10166-0153 FAX: (212) 878-8375 Phone: (212) 878-8000 and Mr. John W. Stevens Osler, Hoskin & Harcourt 280 Park Avenue - 30W New York, New York 10017 FAX: (212) 867-5802 Phone: (212) 867-5800 (b) in the case of Mr. Banks a notice at: c/o Gaming Lottery Corporation 160 Nashdene Road Scarborough, Ontario 22 -22- M1V 4C4 Attention: Mr. J. Benquesus FAX: (416) 754-8441 Phone: (416) 292-5963 with copies to: Mr. Jack Jackson Proskauer Rose Goetz & Mendelsohn LLP 1585 Broadway New York, New York 10036 FAX: (212) 969-2900 Phone: (212) 969-3000 and Mr. Joseph Maierovits Goldman, Spring, Schwartz & Kichler Suite 700 40 Sheppard Avenue West North York, Ontario M2N 6K9 FAX: (416) 225-4805 Phone: (416) 225-9400 or such other address as the party to whom such writing is to be given shall have last notified the party giving the same in the manner provided in this Section. Any notice delivered to the party to whom it is addressed as provided in this Section shall be deemed to have been given and received on the day it is so delivered at such address, provided that if such day is not a business day then the notice shall be deemed to have been given and received on the business day next following such day. Any notice mailed to the address and in the manner provided for in this Section shall be deemed to have been given and received on the fifth business day next following the date of its mailing. Any notice transmitted by fax or other form of recorded communication shall be deemed given and received on the first business day after its transmission. 6.2 EXPENSES - Other than the payment by Mr. Banks of Coutts' legal expenses required by the Banks Share Purchase Loan Agreement, each of the parties shall pay their respective legal, accounting and other professional advisory fees, costs and expenses incurred in connection with the transactions and agreements provided for in this Agreement and the other Operative Agreements and the preparation, 23 -23- execution and delivery of the Operative Agreements and all documents and instruments executed pursuant to the Operative Agreements and any other costs and expenses incurred. The parties acknowledge that transactions contemplated hereby have been negotiated and are to be completed in a manner which will not give rise to a valid claim for a brokerage fee or commission or other like payment and no brokerage fee or commission or other like payment has been or will be made in connection therewith. 6.3 FURTHER ASSURANCES - The Parties shall with reasonable diligence do all such things and provide all such reasonable assurances as may be required to consummate the transactions contemplated by this Agreement, and each party shall provide such further documents or instruments required by any other party as may be reasonably necessary or desirable to effect the purpose of this Agreement and carry out its provisions, whether before or after the Closing. Without limiting the generality of the foregoing, the obligations agreed to by Coutts for the purposes of this Section 6.3 shall include Coutts' agreement to provide Mr. Banks with all assistance reasonably requested by Mr. Banks for the purposes of enabling Mr. Banks to pursue his rights of subrogation, if any, arising under applicable law to collect from the Clients the amount of the outstanding balance on the Client Loans which Mr. Banks caused to be repaid pursuant to Section 2.1(i) hereof unless the assistance requested would result in a breach of duty owed by Coutts to a Client, would be contrary to applicable law or would otherwise be reasonably expected to expose Coutts to liability or require Coutts to incur out of pocket expense (unless Coutts is indemnified therefor by Mr. Banks). 6.4 GOVERNING LAW AND CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE, AND TO THE EXTENT THAT THE PROVISIONS OF THIS SECTION 6.4 ARE APPLICABLE, MR. BANKS AND COUTTS HEREBY AGREE TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK SITTING IN THE CITY AND COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN, AND AGREE THAT ANY DISPUTE CONCERNING THE RELATIONSHIP BETWEEN MR. BANKS AND COUTTS OR THE CONDUCT OF ANY PARTY HERETO IN CONNECTION WITH THIS AGREEMENT OR OTHERWISE SHALL 24 -24- BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE. NOTWITHSTANDING THE FOREGOING, COUTTS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST MR. BANKS OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION COUTTS DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE NEW LOANS. (c) MR. BANKS HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO HIM AT HIS ADDRESS SET FORTH IN SECTION 6.1 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS OR AT COUTTS' OPTION, BY SERVICE UPON MR. BANKS' NEW YORK COUNSEL AT ITS NOTICE ADDRESS SET FORTH IN SECTION 6.1 HEREOF, WHICH MR. BANKS HEREBY IRREVOCABLY APPOINTS AS HIS AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF NEW YORK. MR. BANKS HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. (d) NOTHING IN THIS SECTION 6.4 SHALL AFFECT THE RIGHTS OF COUTTS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHTS OF COUTTS TO BRING ANY ACTION OR PROCEEDING AGAINST MR. BANKS OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. (e) EACH OF MR. BANKS AND COUTTS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT THEY MAY HAVE OR EACH OF THEM MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION 6.5 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 6.5 CONFIDENTIALITY. Each of the parties hereto agrees to keep confidential the terms of this Agreement and the transactions contemplated herein, and neither of the parties hereby shall make any public announcement with the respect to this Agreement or the subject matter hereof without the prior approval of the other party hereto, except: (i) as required under this Agreement; 25 -25- (ii) for the press release and reports required by Section 5.3 and Section 5.4 hereof; (iii) either party may disclose information pertaining to this Agreement to any person employed or retained by such person; (iv) such disclosures as may be reasonably required in connection with the exercise by Coutts of any remedy under the Operative Agreements or any document related hereto upon the occurrence of, or during the continuance of, an Event of Default; or (v) for such disclosures as may be required by applicable law. 6.6 COUNTERPARTS - This Agreement may be executed by the parties hereto in separate counterparts each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. 6.7 FACSIMILE SIGNATURE - This Agreement may be executed by faxed signature with the same effect as a manually signed original signature. 6.8 ASSIGNMENT - Neither this Agreement nor any benefits or burdens under this Agreement, the other Operative Agreements or any of the agreements contemplated herein, shall be assignable by any party hereto without the prior written consent of each of the other parties hereto. Subject to the foregoing, this Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors, heirs, and permitted assigns. IN WITNESS WHEREOF the parties have hereunto duly executed this Agreement. COUTTS & CO AG, NEW YORK BRANCH BY: /s/ Peter Cawdron ------------------------------------ Branch Manager /s/ Jacques Benquesus ------------------------------------ Jacques Benquesus EX-99.B 3 BANKS LOAN AGREEMENT DATED 8/20/96 1 LOAN AGREEMENT THIS AGREEMENT made as of the 20th day of August, 1996 B E T W E E N: MR. JACQUES BENQUESUS, an individual residing in the City of Jerusalem, Israel (hereinafter referred to as the "Borrower") - and - COUTTS & CO AG, NEW YORK BRANCH, a Swiss bank licensed to conduct a banking business by the State of New York (hereinafter referred to as the "Bank") WITNESSES THAT WHEREAS the Borrower has requested the Facility (as hereinafter defined) to fund the payment by the Borrower to the Bank of the consideration for the forbearance of the Bank in not selling the Banks Pledged Shares (as defined in the Banks Master Agreement) and to repay the balance due on certain of the Client Loans (as defined in the Banks Master Agreement) and to pay expenses incurred by him in connection with payment of such consideration and the repayment of such loans and the Bank has agreed to provide the Facility to the Borrower on the terms and conditions herein set forth; NOW, THEREFORE, in consideration of the premises and mutual agreements and covenants contained in this Agreement and other good and valuable consideration (the receipt and adequacy of which are hereby mutually admitted), the Parties hereby agree as follows: 2 -2- ARTICLE I. DEFINITIONS AND PRINCIPLES OF INTERPRETATION 1.1 DEFINITIONS - Whenever used in this Agreement, unless there is something inconsistent in the subject matter or context the following words and terms shall have the meaning set out below: "AGREEMENT" means this agreement, including all schedules and all instruments supplementing or amending or confirming this Agreement, "hereof", "hereto" and "hereunder" and similar expressions mean and refer to this Agreement and not any particular article or section, and "Article", "Section" and "Subsection" each means and refers to the specified article, section or subsection in this Agreement; "ANNIVERSARY DATE" means the annual anniversary of the date of this Agreement or the next Business Day thereafter if such date is not a Business Day; "APPLICABLE LAW" means, with respect to any Person, property, transaction or event, and whether or not having the force of law, all applicable laws, statutes, regulations, rules, guidelines, by-laws, treaties, orders, policies, judgments, decrees and official directives of governmental bodies or other Persons acting under the authority of any governmental body; "BANKS MASTER AGREEMENT" means the master agreement dated August 19, 1996 between the Bank and Mr. Jacques Benquesus; "BASE RATE" means, at any time, the rate of interest, expressed as an annual rate, established by the Bank from time to time as the reference rate of interest it will charge for loans in Dollars; "BASE RATE LOAN" means the amount of the Loan with respect to which the Borrower is deemed to have elected to have interest calculated by reference to the Base Rate or to which, in accordance with the provisions of this Agreement, the Base Rate is deemed to apply; "BASE RATE ROLLOVER" means a deemed conversion of the Libor Loan to a Base Rate Loan pursuant to Section 3.1; "BORROWER" means Mr. Jacques Benquesus, an individual residing in the City of Jerusalem, Israel; "BRANCH" means the branch of the Bank located at 65 East 55th Street, New York, NY 10022; 3 -3- "BUSINESS DAY" means a day on which banks are open for business in New York, U.S.A.; "CLOSING DATE" means August 20, 1996 or such other earlier or later date as may be agreed upon by the Parties; "COLLATERAL" means the assets, property and undertaking of the Borrower subject to the Security; "COMPANY" means any of Gaming Lottery Corporation, The Instant Publisher Inc. or Warp 10 Technologies Inc.; "DOLLARS" and the symbol "$" mean the lawful currency of the United States of America; "DRAWDOWN" means the borrowing, in Dollars, of funds under the Facility; "EVENT OF DEFAULT" means any of the events described in Section 10.1; "FACILITY" has the meaning ascribed to it in Section 2.1; "FACILITY CREDIT LIMIT" has the meaning ascribed to it in Section 2.1; "GUARANTEE" has the meaning ascribed to it in Subsection 7.1(a); "INTEREST PAYMENT DATE" means (i) with respect to the Libor Loan, the last day of the Libor Interest Period applicable thereto and also, if any Libor Interest Period is longer than 93 days, the last day of each 90-day period during such Libor Interest Period or, if any such day is not a Business Day, the Business Day next following; and (ii) with respect to the Base Rate Loan, the last day of each calendar month or, if any such day is not a Business Day, the Business Day next following; "LIBOR INTEREST PERIOD" means, for the Libor Loan, subject to availability of funds to the Bank, the period of 1, 2, 3, 6 or 12 months, as may be selected by the Borrower pursuant to the relevant Libor Notice, commencing on, in respect of the initial Libor Interest Period, the Closing Date and, thereafter, the date of the applicable Libor Rollover, provided that: 4 -4- (i) any Libor Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Libor Interest Period shall end on the immediately preceding Business Day; (ii) any Libor Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Libor Interest Period) shall end on the last Business Day of a calendar month; (iii) the Libor Interest Period shall terminate on such date as will permit the repayment of the Facility on the date and in the manner provided for herein; "LIBOR LOAN" means the amount of the Loan with respect to which interest under this Agreement is calculated with reference to the Libor Rate; "LIBOR NOTICE" means a notice substantially in the form attached hereto as Schedule B; "LIBOR RATE" means, for the Libor Interest Period then applicable to the Libor Loan, the interest rate per annum (expressed on the basis of a 360-day year) at which Dollar deposits are offered to leading banks in the London interbank euro-currency offering market in an amount approximately equal to the principal amount of the Libor Loan and for a period comparable to such Libor Interest Period at approximately 11:00 a.m. London, England time on the second Business Day preceding the first day of such Libor Interest Period for delivery on the first day of such Libor Interest Period; "LIBOR ROLLOVER" means a rollover of the Libor Loan pursuant to Section 2.5; "LIQUIDITY EVENT" means the announcement or occurrence of any transaction or event initiated, caused or assisted, directly or indirectly, by Mr. Jacques Benquesus, any Person controlled by Mr. Jacques Benquesus or any affiliate or associate (as such terms are defined in the Securities Act (Ontario)) of Mr. Jacques Benquesus or such Person, or any Person acting jointly or in concert with Mr. Jacques Benquesus or such Person in connection with such transaction or event which results, or if consummated would result, in the Public Float of any Company being less than one half of the Public Float of such Company on the date hereof; "LOAN" means, at any time, the total outstanding principal amount of all Drawdowns, together with any interest capitalized pursuant to Section 4.5; 5 -5- "PARTIES" means the Bank and the Borrower and "PARTY" refers to any one of them; "PERSON" means any individual, sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, governmental authority and a natural person in his capacity as trustee, executor, administrator or other legal representative; "PUBLIC FLOAT" means the percentage of the issued and outstanding participating voting equity shares of a Company held by persons other than Mr. Jacques Benquesus, Mrs. Biba Benquesus, Mr. Larry H. Weltman or Mr. John M. Wiseman and their associates and affiliates (as such terms are defined in the Securities Act (Ontario)); "RELATED LOAN AGREEMENTS" means the loan agreements dated the date hereof between the Bank and each of Mr. Jacques Benquesus, Mr. Larry H. Weltman and Mr. John M. Wiseman; "ROLLOVER" means, as applicable, either a Base Rate Rollover or a Libor Rollover. "SECURITY" means the security described in Article VII; "TAXES" means all present and future taxes, levies, imposts, stamp taxes, duties, charges to taxes, fees, deductions, withholdings and any restrictions or conditions resulting in a charge imposed, levied, collected, withheld or reserved and all penalties, interest and other payments on or in respect thereof; "WELTMAN MASTER AGREEMENT" means the master agreement dated August 19, 1996 between Larry H. Weltman and the Bank; and "WISEMAN MASTER AGREEMENT" means the master agreement dated August 19, 1996 between John M. Wiseman and the Bank. 1.2 CERTAIN RULES OF INTERPRETATION - In this Agreement: (a) time is of the essence in the performance of the Parties' respective obligations; (b) the descriptive headings of Articles and Sections are inserted solely for convenience of reference and are not intended as complete or accurate descriptions of content; 6 -6- (c) the use of words in the singular or plural, or with a particular gender, shall not limit the scope or exclude the application of any provision of this Agreement to such person or persons or circumstances except as the context otherwise permits; (d) whenever a provision of this Agreement requires an approval or consent by a Party to this Agreement and notification of such approval or consent is not delivered within the applicable time limited, then, unless otherwise specified, the Party whose consent or approval is required shall be conclusively deemed to have withheld its consent or approval; (e) unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day which ends the period and by extending the period to the next Business Day following if the last day of the period is not a Business Day; and (f) whenever any payment is to be made or action to be taken under this Agreement is required to be made or taken on a day other than a Business Day, such payment shall be made or action taken on the next Business Day following. 1.3 SCHEDULES - The following are the Schedules to this Agreement and are incorporated by reference and deemed to be part of this Agreement: Schedule A - Compliance Certificate Schedule B - Libor Notice ARTICLE II. THE FACILITY 2.1 THE FACILITY - Upon the terms and subject to the conditions herein set forth, the Bank hereby establishes in favour of the Borrower the following credit facility (the "Facility") to be available to the Borrower in accordance with the provisions of this Agreement. The Facility shall consist of a term credit facility of up to a maximum principal amount, excluding any interest capitalized pursuant to Section 4.5, of $20,016,872.25 (the "Facility Credit Limit") which funds shall be advanced or otherwise made available in a single Drawdown on the Closing Date. 2.2 PURPOSE - The Facility shall be available to the Borrower to fund the payment by the Borrower to the Bank of the consideration for the forbearance of the Bank in not selling the Banks Pledged Shares (as defined in the Banks Master Agreement) and to repay the balance due on certain of the Client Loans (as defined 7 -7- in the Banks Master Agreement) and to pay expenses incurred by him in connection with the payment of such consideration and the repayment of such loans. 2.3 AVAILMENT OF FACILITY - Upon the terms and subject to the conditions herein set forth, the Borrower may effect a single borrowing under the Facility by way of a Libor Loan with an initial Libor Interest Period of one (1) month. 2.4 EFFECTING THE DRAWDOWN - Borrowing under the Facility shall be effected by the Bank crediting to the Borrower's Dollar account with the Bank the full amount of such borrowing for same day value by 2:00 p.m. New York time on the Closing Date and in immediately available funds. 2.5 ROLLOVERS - The Libor Loan will be deemed to be automatically rolled over (on the last day of the applicable Libor Interest Period) into a Libor Loan in a principal amount equal to the amount of the Loan for a Libor Interest Period equal to the lesser of: (a) (i) if the Borrower has delivered to the Bank a Libor Notice in accordance with the terms of this Agreement, the Libor Interest Period specified in such Libor Notice or (ii) if the Borrower has not made such delivery of a Libor Notice, the Libor Interest Period of such rolled over Libor Loan; (b) the remaining term of the Loan. 2.6 LIBOR NOTICE - A Libor Notice shall be substantially in the form attached as Schedule B to this Agreement and shall state the Libor Interest Period being requested. Subject to the terms and conditions of this Agreement, the Borrower shall be entitled to specify the Libor Interest Period to be applicable to the Libor Loan upon rollover by delivering a Libor Notice to the Bank by 11:00 a.m. (New York time) no less than two Business Days prior to the last day of the current Libor Interest Period. In the event that a Libor Notice is given by telephone, the Borrower shall provide to the Bank written confirmation of such notice bearing the Borrower's original signature within two Business Days of giving of such notice. All notices given by telephone shall be at the risk of the Borrower and the Bank shall have no liability for relying or acting on such verbal notice (whether or not subsequently confirmed in writing) or for any failure on the part of the Bank to carry out the requirements of such notice wholly or in part, or for any error or omission in fulfilling the requirements of such notice or the interpretation thereof by the Bank, save and except for any failure, error or omission arising out of the gross negligence or willful misconduct of the Bank. Any notice on which the Bank has 8 -8- acted, whether made by telephone, fax or otherwise in writing shall be irrevocable and binding on the Borrower. 2.7 EVIDENCE OF INDEBTEDNESS - The Bank shall open and maintain on its books at the Branch, accounts in respect of the Facility to evidence the Loan under the Facility and all other amounts owing by the Borrower to the Bank hereunder. The Bank shall enter in the foregoing accounts details of all amounts from time to time owing, paid or repaid by the Borrower hereunder. The information entered in the foregoing accounts shall constitute prima facie evidence of the obligations of the Borrower to the Bank hereunder with respect to the Loan and all other amounts owing by the Borrower to the Bank hereunder. The Borrower shall, on reasonable notice to the Bank, be entitled to obtain from the Bank extracts of all entries made in such accounts. ARTICLE III. FURTHER PROVISIONS RELATING TO THE LIBOR LOANS 3.1 CHANGE OF CIRCUMSTANCES - In the event that at any time prior to the commencement of a Libor Interest Period the Bank makes a determination in good faith, which shall be final, conclusive and binding upon the Borrower, that: (a) by reason of changes affecting the London interbank market, adequate and fair means do not exist for ascertaining the rate of interest applicable to the Libor Loan during the ensuing Libor Interest Period; (b) the continuing of the Libor Loan by the Bank during the ensuing Libor Interest Period has been made impracticable by the occurrence of circumstances which materially or adversely affect the London interbank market; (c) Dollar deposits are not available to the Bank in the London interbank market in sufficient amounts in the ordinary course of business in order for the Bank to fund the Libor Loan during the ensuing Libor Interest Period; or (d) the Libor Rate for the immediately following Libor Interest Period does not accurately reflect the effective cost to the Bank of funding the Libor Loan for the ensuing Libor Interest Period, or the costs to the Bank would be increased or the income receivable by the Bank would be reduced in respect of such Libor Loan, then the Bank shall give notice thereof to the Borrower, which notice shall set out in reasonable detail the reasons for such determination. Upon such notice being 9 -9- given, Libor Rollovers shall be suspended until the Borrower is informed by the Bank that such conditions no longer exist and the outstanding Libor Loan shall, at the expiration of the Libor Interest Period, be deemed to be converted into a Base Rate Loan, in an amount equal to the principal amount of such Libor Loan. ARTICLE IV. PAYMENT OF INTEREST AND OTHER FEES 4.1 INTEREST ON THE LIBOR LOAN - The Borrower shall pay interest in Dollars to the Bank on the amount of the Libor Loan for the Libor Interest Period applicable thereto at a nominal rate per annum equal to the Libor Rate applicable to the Libor Loan plus 0.5%, for any period that such Libor Loan is outstanding. Interest on the Libor Loan shall accrue daily on the amount of such Libor Loan and shall be calculated and, subject to Sections 4.5 and 4.6, payable in arrears on each successive Interest Payment Date applicable to the Libor Loan on the basis of the actual number of days for which the Libor Loan is outstanding, computed on the basis of a year of 360 days. Interest on the Libor Loan shall be payable in accordance with the foregoing after as well as before demand, default, maturity and judgment. 4.2 INTEREST ON BASE RATE LOANS - The Borrower shall pay interest in Dollars to the Bank on the principal amount of the Base Rate Loan (with interest on overdue interest at the same rate) at a nominal rate per annum equal to the Base Rate in effect from time to time plus 0.5%; Interest on the Base Rate Loan shall accrue daily on the outstanding principal balance thereof and shall be calculated and, subject to Sections 4.5 and 4.6, payable in arrears: (a) on each successive Interest Payment Date, for the period then ending; (b) in the case of a prepayment of part or all of the Base Rate Loan, on the date of such prepayment, with respect to interest accrued on the amount of principal being prepaid; (c) in the case of amounts repaid pursuant to Section 5.3, on the date of such repayment with respect to interest accrued on the amount of the principal of the Base Rate Loan being repaid; and (d) on the date that all amounts owing hereunder are repaid in full, whether on demand, by reason of acceleration or otherwise; 10 -10- on the basis of the actual number of days for which a particular principal amount is outstanding, computed on the basis of a year of 365 days or 366 days in the case of a leap year. Interest on overdue interest on the Base Rate Loan shall be payable on demand. Changes in the Base Rate shall cause an immediate and automatic adjustment of the interest rate applicable to the Base Rate Loan as and from the effective date of such change without the necessity of any notice to the Borrower, such notice being hereby expressly waived by the Borrower. Interest on the Base Rate Loan shall be payable in accordance with the foregoing after as well as before demand, default, maturity and judgment. 4.3 INCREASED COSTS - If, as a result of any Applicable Law, or of the interpretation or application thereof by any court or by any governmental or other authority or entity charged with the administration thereof, whether or not having the force of law, which: (a) subjects the Bank to any Taxes or changes the basis of taxation, or increases any existing Taxes, on payments of principal, interest or other amounts payable by the Borrower to the Bank under this Agreement (except for Taxes on the overall net income or capital of the Bank or gross receipts or franchise taxes imposed by the jurisdiction in which its principal or lending offices are located); (b) imposes, modifies or deems applicable any reserve, cash margin, special deposit or similar requirements against assets held by, or deposits in or for the account of or loans by or any other acquisition of funds by the relevant funding office of the Bank; (c) imposes on the Bank any other adverse condition with respect to this Agreement; or (d) imposes on the Bank a requirement to maintain or allocate capital in relation to the Facility; and the result of any of the foregoing is, in the reasonable opinion of the Bank, to increase the cost to the Bank of making the Drawdown or maintaining the Loan or reduce the income receivable by the Bank in respect of the Loan by an amount which the Bank deems to be material, then upon the Bank giving written notice thereof, from time to time, to the Borrower (such notice to set out in reasonable detail the facts giving rise to and a summary calculation of such increased cost or reduced income), the Borrower shall forthwith pay to the Bank, upon receipt of such notice, that amount which shall compensate the Bank for such additional cost or reduction in income. The Borrower will not be required to compensate the Bank for any such additional cost or reduction in income under this Section 4.3 incurred by the Bank more than 3 months prior to its request to the Borrower for such compensation. Notwithstanding anything herein to the contrary, to the extent that 11 -11- the Bank does not charge all of its customers who are similarly situated to the Borrower in respect of any additional cost or reduction of income described in this Section 4.3, the Bank shall not charge the Borrower. 4.4 GROSS-UP - All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any Applicable Law, as modified by the practice or any relevant governmental revenue authority, then in effect. If the Borrower is so required to deduct or withhold, then the Borrower will: (a) promptly notify the Bank of such requirement; (b) pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by the Borrower to the Bank under this Section 4.4) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against the Bank; (c) promptly forward to the Bank an official receipt (or a certified copy), or other documentation reasonably acceptable to the Bank evidencing such payment to such authorities; and (d) pay to the Bank, in addition to the payment to which the Bank is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by the Bank (free and clear of Taxes, whether assessed against the Borrower or the Bank) will equal the full amount the Bank would have received had no such deduction or withholding been required. 4.5 CAPITALIZATION OF INTEREST - At the election of the Borrower, unless there shall have occurred and be continuing any event which constitutes or would constitute, with the giving of notice, the passing of time, or both, an Event of Default, any interest accruing and otherwise payable by the Borrower on the Loan on or before the first Anniversary Date shall be added to the principal amount of the Loan and the non-payment of such interest when due shall not be considered an Event of Default. 4.6 DEFERRAL OF INTEREST - At the election of the Borrower, unless there shall have occurred and be continuing any event which constitutes, or would constitute, with the giving of notice, the passing of time, or both, an Event of Default, the Borrower shall be entitled to: (a) defer the payment of any interest accruing and otherwise payable by the Borrower on the Loan for the period from and including the Closing Date to 12 -12- and excluding the first Anniversary Date. Any interest deferred pursuant to this Subsection 4.6(a) shall be paid by the Borrower to the Bank on or before the first Anniversary Date or capitalized pursuant to Section 4.5; (b) defer the payment of any interest accruing and otherwise payable by the Borrower on the Loan for the period from and including the first Anniversary Date to and excluding the second Anniversary Date. Any interest deferred pursuant to this Subsection 4.6(b) shall be paid by the Borrower to the Bank on or before the second Anniversary Date; (c) defer the payment of any interest accruing and otherwise payable by the Borrower on the Loan for the period from and including the second Anniversary Date to and excluding the third Anniversary Date. Any interest deferred pursuant to this Subsection 4.6(c) shall be paid by the Borrower to the Bank on or before the third Anniversary Date; and (d) defer the payment of any interest accruing and otherwise payable by the Borrower on the Loan for the period from and including the third Anniversary Date to and excluding the fourth Anniversary Date. Any interest deferred pursuant to this Subsection 4.6(d) shall be paid by the Borrower to the Bank on or before the fourth Anniversary Date. The non-payment of interest which is deferred pursuant to this Section which would otherwise be due and payable shall not be considered an Event of Default; provided that any interest which is deferred is subsequently paid in accordance with this Section. 4.7 MAXIMUM INTEREST RATE. In no event shall any interest rate exceed the maximum rate permissible for individual borrowers by Applicable Law (the "Maximum Rate"). If, in any month, any interest rate, absent such limitation, would have exceeded the Maximum Rate, then the interest rate for that month shall be the Maximum Rate, and, if in future months, that interest rate would otherwise be less than the Maximum Rate, then that interest rate shall remain at the Maximum Rate until such time as the amount of interest paid hereunder equals the amount of interest which would have been paid if the same had not been limited under this section to the Maximum Rate. In the event that, upon payment in full of the Loan under this Agreement, the total amount of interest paid or accrued under the terms of this Agreement is less than the total amount of interest which would have been paid or accrued if the interest rates set forth in this Agreement had at all times been in effect, then the Borrower agrees, to the extent permitted by Applicable Law, to pay to the Bank an amount equal to the difference between (a) the lesser of (i) the amount of interest which would have been charged if the Maximum Rate had, at all times, been in effect or (ii) the amount of interest which would have accrued had the interest rates set forth in this Agreement, at all times, been in effect and (b) the amount of interest actually paid or accrued under this Agreement. In the 13 -13- event that the Bank receives, collects or applies as interest any sum in excess of the Maximum Rate, such excess amount shall be applied to the reduction of the principal balance of the Loan, and any funding indemnities in connection therewith under Section 11.3 hereof, and, if no such principal or such funding indemnity is then outstanding, such excess or part thereof remaining shall be paid to the Borrower. ARTICLE V. REPAYMENTS AND PREPAYMENTS 5.1 REPAYMENT OF THE LOAN - On or before the fourth Anniversary Date, the Borrower shall repay the Loan in its entirety, together with all interest accrued thereon. 5.2 VOLUNTARY PREPAYMENTS OF PRINCIPAL - The Borrower shall have the right to prepay the Loan without premium or penalty unless otherwise provided herein. Any voluntary prepayment of the Libor Loan may be made without penalty only if made at the expiration of the applicable Libor Interest Period, and then only if at least two Business Days' prior notice is given to the Bank. 5.3 CURRENCY AND TIME OF PAYMENTS - The Borrower shall make each payment hereunder at the Branch (or such other place in New York, New York as the Bank may from time to time notify the Borrower, at least five Business Days prior to any payment date) not later than 10:00 a.m. New York, New York, time on the day when due (or on the next Business Day thereafter if such day is not a Business Day) in Dollars. 5.4 APPLICATION OF PAYMENTS AND PREPAYMENTS - Payments and any prepayments made by the Borrower in respect of the Loan shall be applied as follows: (i) first, to the payment of any interest deferred pursuant to Section 4.6; (ii) second, to the repayment of the principal amount of the Loan; (iii) third, to the payment of any interest capitalized pursuant to Section 4.5; and (iv) fourth, to the payment of any other amounts payable by the Borrower under this Agreement. 14 -14- ARTICLE VI. CONDITIONS PRECEDENT TO DRAWDOWN 6.1 CONDITIONS PRECEDENT TO DRAWDOWN - The obligation of the Bank to permit the Drawdown is subject to the condition precedent that the Bank shall have received on or before the Closing Date all of the following in form and substance satisfactory to the Bank and the Bank's counsel: (a) the Security, duly executed; (b) evidence of the completion of all recordings, registrations and filings as may be necessary or desirable to perfect or preserve the security interests created by the Security; (c) a promissory note, duly executed; (d) a certificate of the Borrower stating that, as of such date, (i) all the representations and warranties made by the Borrower herein are true and correct and that no event has occurred which constitutes or would constitute, with the giving of notice, the passing of time, or both, an Event of Default; and (ii) the Borrower has performed all covenants under this Agreement to be performed by him; and (e) the Borrower shall have delivered such other documentation as the Bank may reasonably request. 6.2 WAIVER - The conditions set forth in Section 6.1 are inserted for the sole benefit of the Bank and may be waived by the Bank, in whole or in part (with or without terms or conditions). ARTICLE VII. SECURITY 7.1 SECURITY - There shall be delivered to the Bank the following: (a) a limited guarantee from Mr. Jacques Benquesus in the form provided for in the Banks Master Agreement (the "Guarantee"); (b) the Amended Banks Pledge (as such term is defined in the Banks Master Agreement); 15 -15- (c) the Banks Purchased Share Pledge (as such term is defined in the Banks Master Agreement); (d) the Share Pledge (as such term is defined in the Weltman Master Agreement); and (e) the Share Pledge (as such term is defined in the Wiseman Master Agreement); as continuing collateral security for the prompt and due repayment of the Loan and the performance by the Borrower of all of its present and future obligations to the Bank. 7.2 REGISTRATION - The Security shall, at the Borrower's expense (subject to the provisions set forth in the first sentence of Section 11.1), be registered, filed or recorded in all offices where such registration, filing or recording is necessary or of advantage to the creation, perfection and preserving of the applicable security interests. ARTICLE VIII. BORROWER'S REPRESENTATIONS AND WARRANTIES To induce the Bank to make available the Facility, the Borrower represents and warrants to and in favour of the Bank as follows, which representations and warranties of the Borrower shall survive the execution and delivery of this Agreement and the making of the Loan, notwithstanding any investigations or examinations which may be made by the Bank or the Bank's counsel, and the Bank shall be deemed to have relied on such representations and warranties in the making of the Loan: 8.1 ENFORCEABILITY - When executed and delivered, this Agreement and the Security (to the extent that the Borrower is a party thereto) will constitute valid and legally binding obligations enforceable against the Borrower in accordance with their respective terms, subject, however, to limitations with respect to enforcement imposed by law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought; 8.2 VALIDITY OF AGREEMENT - NO-CONFLICT - The Borrower is not a party to, bound or affected by or subject to any indenture, mortgage, lease, agreement, obligation, instrument, statute, regulation, order, judgment, decree, licence, permit or law which would be violated, contravened, breached by, or under which default would occur or a lien, claim, restriction or encumbrance would be created as a result 16 - 16 - of the execution and delivery of this Agreement or the Security or the carrying out of the Borrower's obligations hereunder or thereunder; 8.3 GOVERNMENT APPROVAL, REGULATION, ETC. - No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person is required for the due execution, delivery or performance by the Borrower of this Agreement or the Security except for authorizations, approvals, actions, notices or filings which have been duly obtained or made and are in full force and effect; 8.4 NO EVENT OF DEFAULT - No Event of Default has occurred and is continuing and no event has occurred which, with the giving of notice, the passing of time, or both, would constitute an Event of Default; 8.5 NO ENCUMBRANCES - (a) The Banks Pledged Shares (as such term is defined in the Banks Master Agreement) are not subject to any mortgage, lien, pledge, charge, security interest or other encumbrance other than the Security; and (b) There has been no act or omission by the Borrower which has created or resulted in the creation of any mortgage, lien, pledge, charge, security interest or other encumbrance on, against or with respect to any part of the Banks Purchased Pledged Shares (as such term is defined in the Banks Master Agreement), except the Security; 8.6 MATERIAL OBLIGATIONS - The Borrower is not, in any respect, in default under any material obligation, direct or indirect, contingent or otherwise, or under any order, writ, decree or demand of any court or governmental agency or authority, where any such default would materially adversely affect the Borrower's ability to perform his obligations under this Agreement or under the Security; 8.7 COMPLIANCE WITH LAWS - The Borrower is not in violation of any judgment, decree, order, statute, rule or regulation relating in any way to the Borrower, or to his property or assets and which would have a material effect on the condition, financial or otherwise, of the Borrower; 8.8 TAXES - The Borrower has duly and timely filed all tax returns and reports required by law to have been filed by him, has duly and correctly reported all income and other amounts required to be reported and has paid all taxes, penalties, interest, fines and governmental charges in respect thereof, to the extent that such taxes, penalties, interest, fines and other governmental charges have been assessed by the relevant taxation authority, except to the extent that (i) any such tax, penalty, interest, fine or any other governmental charge is being contested in good faith by appropriate proceedings or (ii) the failure so to pay or discharge any such tax, 17 -17- penalty, interest, fine or any other governmental charge could not reasonably be expected to materially adversely affect the financial condition or business of the Borrower. The Borrower has duly and timely paid all instalments of taxes required to be paid by him except to the extent that (i) any such instalment of tax is being contested in good faith by appropriate proceedings or (ii) the failure so to pay or discharge any such instalment of tax could not reasonably be expected to materially adversely affect the financial condition or business of the Borrower. There are no actions, suits, proceedings, investigations, audits or claims now pending or, to the best of the knowledge of the Borrower (after due inquiry), threatened against the Borrower in respect of any taxes or any penalties, interest and fines in respect thereof and there are no matters under discussion with any taxation or other governmental authority relating to any such matters; and 8.9 ACCURACY OF INFORMATION - All factual information previously or contemporaneously furnished by or on behalf of the Borrower in writing to the Bank for purposes of or in connection with this Agreement or any transaction contemplated hereby including the certificates delivered pursuant to Section 6.1, (true and complete copies of which were furnished to the Bank in connection with its execution and delivery of this Agreement) is and all other such factual information pursuant to this Agreement to the Bank will be true and accurate in every material respect on the date as of which such information is dated or certified and such information is not, or shall not be, as the case may be, incomplete by omitting to state any material fact necessary to make such information not misleading. ARTICLE IX. COVENANTS The Borrower covenants and agrees with the Bank that, unless the Bank otherwise consents in writing, so long as any amount payable hereunder is outstanding: 9.1 PUNCTUAL PAYMENT - The Borrower shall duly and punctually pay the principal amount of the Loan, all interest thereon, all fees and all other amounts required to be paid by the Borrower hereunder or pursuant to agreements with the Bank at the times and places and in the manner provided for herein or therein; 9.2 COMPLIANCE WITH LEGISLATION - The Borrower shall comply with all laws, rules, regulations and orders, the non- compliance with which could materially and adversely affect the financial condition of the Borrower or the performance by the Borrower of his obligations under this Agreement and the Security; 18 -18- 9.3 NOTICE OF LITIGATION - The Borrower shall give notice to the Bank of the occurrence of any material litigation, proceeding or dispute affecting the Borrower initiated after the Closing Date if the result of any of them might have a material adverse effect on the ability, financial or otherwise, of the Borrower to perform his obligations under this Agreement and Security, and from time to time shall provide the Bank with all reasonable non-privileged information requested by the Bank concerning the status of any such litigation, proceeding or dispute. Such notice shall be given within fifteen (15) days of the Borrower becoming aware of such litigation, proceeding or dispute and shall be in form and detail satisfactory to the Bank; 9.4 NOTICE OF ANY EVENT OF DEFAULT - The Borrower shall forthwith give notice to the Bank of any fact which, to the best of the Borrower's knowledge, may be construed as constituting an Event of Default or of any event which, to the best of the Borrower's knowledge, with the giving of notice, lapse of time or otherwise may constitute an Event of Default; 9.5 USE OF PROCEEDS - The Borrower shall use the proceeds of the Loan for the purposes contemplated hereunder; 9.6 TAXES - The Borrower will pay all federal, state and provincial and other taxes or other assessments or governmental charges or levies imposed upon him or upon his income or profits or upon property belonging to him prior to the time when any penalties or interest (except interest during extensions of time for filing of federal income or other tax returns not in excess of nine months) accrue with respect thereto, unless, in any such case, the same is being contested in good faith by appropriate proceedings, except to the extent that (i) any such tax, penalty, interest, fine or any other governmental charge is being contested in good faith by appropriate proceedings or (ii) the failure so to pay or discharge any such tax, penalty, interest, fine or other governmental charge could not reasonably be expected to materially adversely affect the financial condition or business of the Borrower; 9.7 PERFORMANCE OF COVENANTS - The Borrower will diligently observe and perform all his covenants to be observed or performed hereunder and under the Security; 9.8 DISPOSAL OF COLLATERAL - The Borrower shall not sell, assign, lease-back or otherwise dispose of any of the Collateral, unless the Net Proceeds (as such term is defined in the Banks Master Agreement) of the sale, assignment, or other disposal of the Collateral are applied, in accordance with the provisions of Article 3 of the Banks Master Agreement, to reduce the outstanding Loan; 9.9 LIMITATION ON ENCUMBRANCES - The Borrower shall not create, incur, assume or otherwise become liable upon or suffer to exist any mortgage, charge, 19 -19- lien, hypothec, security interest or other encumbrance whatsoever on, against or with respect to any part of the Collateral except the Security; and 9.10 FURTHER ASSURANCES - The Borrower will, from time to time, do, execute and deliver or shall cause to be done, executed and delivered all such further acts, documents or other instruments as may reasonably be requested by the Bank in order to cure any defects in the execution and delivery of, or to comply with or accomplish the covenants and agreements contained in this Agreement and the Security. ARTICLE X. EVENTS OF DEFAULT 10.1 EVENTS OF DEFAULT - The occurrence of any one or more of the following events (each such event being herein referred to as an "Event of Default") shall constitute a default under this Agreement: (a) If the Borrower shall fail to pay any principal of, or interest on, the Loan when the same shall become due and payable hereunder; (b) If the Borrower, together with the borrowers under the Related Loan Agreements, shall fail to repay on or before the third Anniversary Date at least $30,000,000 of the aggregate principal amount of the Loan and the loans under the Related Loan Agreements; for a period of 3 Business Days after notice from the Bank; (c) If the Borrower shall fail to perform or comply with any term, condition, covenant or obligation contained in this Agreement or in the Security (other than those specified in Subsections 10.1(a) or (b)) and, if capable of remedy, such failure to perform or comply is not remedied within 30 days of notice from the Bank so to remedy; (d) If any representation or warranty made by the Borrower in this Agreement or the Security or in any certificate or other document at the time delivered hereunder to the Bank shall prove to have been incorrect in any material respect on and as of the date thereof; (e) If the Borrower becomes insolvent, makes any assignment in bankruptcy or makes any other general assignment for the benefit of creditors, makes any proposal under the Bankruptcy and Insolvency Act (Canada), the United States Bankruptcy Code, 11 USC Section 101 et seq. or any comparable law, is adjudged bankrupt, files a petition or proposal to take advantage of any act of 20 -20- insolvency, consents to or acquiesces in the appointment of a trustee, receiver, receiver and manager, interim receiver, custodian, sequestrator or other person with similar powers of himself or of all or any substantial portion of his property or assets, or files a petition or otherwise commences any proceedings seeking any arrangement, composition or readjustment under any applicable bankruptcy, insolvency, moratorium or other similar law affecting creditors' rights or consents to, or acquiesces in, the filing of such a petition; (f) If a trustee, receiver, receiver and manager, interim receiver, custodian, sequestrator or any other person with similar powers shall be appointed of the Borrower or of all or any substantial portion of his property or assets, a judgment or an order is made by a tribunal of competent jurisdiction restraining his ability to deal with all or any substantial portion of his property and assets or a judgment or order is made by a tribunal of competent jurisdiction approving any arrangement, composition or readjustment under any applicable bankruptcy, insolvency or moratorium or other similar law affecting creditors' rights and such appointment, judgment or order is not vacated, stayed or set aside within 45 days of the date thereof; (g) If an event of default shall occur under any of the Related Loan Agreements; (h) If a Liquidity Event shall occur; or (i) While the aggregate principal amount repaid (excluding any repayments rescinded or otherwise required to be returned by the Bank upon the occurrence of a Recapture Event (as such term is defined in the Guarantee)) under the Loan and the loans under Related Loan Agreements is less than $30,000,000: (i) if a writ of execution, distress, attachment or similar process is issued or levied against all or a substantial portion of the property or assets of the Borrower in connection with any default by him in the payment of any amount in excess of $2,500,000 or the equivalent amount thereof in another currency as reasonably determined by the Bank, unless the writ is withdrawn, released, vacated or stayed within 30 days, or a judgment or order (other than any judgment or order issued in connection with the matters referred to in Schedule 5(c) to the Guarantee) shall be rendered against the Borrower by a court of competent jurisdiction with respect to such default and such judgment or order shall not be satisfied in accordance with its terms and shall continue unstayed and in effect for 10 days; 21 -21- (ii) if a default, under any indenture, agreement or instrument under which the Borrower has at the date of this Agreement or shall hereafter have outstanding indebtedness for borrowed money in excess of $2,500,000 or the equivalent amount thereof in another currency as reasonably determined by the Bank, shall occur and be continuing and (A) any such indebtedness shall have been lawfully accelerated or shall lawfully be or become due and payable prior to the date on which the same would otherwise have become due and payable, or (B) such default is a default in payment of such indebtedness when due or within the applicable grace period set out in such indenture, agreement or instrument; or (iii) if all or a substantial part of the property of the Borrower shall be expropriated, whether for full or partial consideration. 10.2 TERMINATION AND ACCELERATION - Upon the occurrence of an Event of Default and for so long as such Event of Default shall continue, the Bank may, by one or more notices to the Borrower do any or all of the following: (a) terminate the obligations of the Bank including without limitation, the obligation of the Bank to permit the Drawdown, or any Libor Rollovers, the capitalization of interest or the deferral of interest hereunder; (b) declare the entire principal amount of the Loan Amount, all interest accrued thereon (including any deferred interest) and all fees and other amounts required to be paid by the Borrower hereunder, to be immediately due and payable without the necessity of presentment for payment, protest, notice of non-payment or notice of protest (all of which are hereby expressly waived); and (c) proceed to exercise any and all rights hereunder or under the Security and any other document or instrument executed pursuant to this Agreement. The Borrower acknowledges that the exercise by the Bank of any rights under the Security without having declared an acceleration pursuant to the provisions of this Section shall not in any way alter, affect or prejudice the right of the Bank to make a declaration pursuant to the provisions of this Section at any time and, without limiting the foregoing, shall not be construed or deemed to constitute a waiver of any rights under this Section. 10.3 REMEDIES CUMULATIVE AND WAIVERS - (a) For greater certainty, it is expressly understood and agreed that the respective rights and remedies of the Bank hereunder or under any other document or instrument executed pursuant to this Agreement, including the 22 -22- Security, are cumulative and are in addition to and not in substitution for any rights or remedies provided by law or by equity; and any single or partial exercise by the Bank of any right of remedy for a default or breach of any term, covenant, condition or agreement contained in this Agreement or other document or instrument executed pursuant to this Agreement, including the Security, shall not be deemed to be a waiver of or to alter, affect or prejudice any other right or remedy or other rights or remedies to which the Bank may be lawfully entitled for such default or breach. Any waiver by the Bank of the strict observance, performance or compliance with any term, covenant, condition or agreement herein contained or contained in any of the Security and any indulgence granted either expressly or by course of conduct, by the Bank shall be effective only in the specific instance and for the purpose for which it was given and shall be deemed not to be a waiver of any rights and remedies of the Bank under this Agreement or under the Security or other document or instrument executed pursuant to this Agreement as a result of any other default or breach hereunder or thereunder. (b) Notwithstanding anything in this Agreement or the Security to the contrary, if after the occurrence of an Event of Default, the Bank elects to exercise any of its rights or remedies to seek payment of the Loan and/or any other obligation of the Borrower hereunder, the Bank agrees that it shall exercise any such right or remedy in the following order (i) first, the Bank shall (unless stayed or prevented from doing so by law or court order) sell the securities held under the Banks Purchased Share Pledge (as defined in the Banks Master Agreement); (ii) second, the Bank shall (unless stayed or prevented from doing so by law or court order) sell the securities held under the Amended Banks Pledge (as defined in the Banks Master Agreement); (iii) third, the Bank shall (unless stayed or prevented from doing so by law or court order) exercise any right of set-off pursuant to Section 10.4 below and (iv) fourth, but only to the extent of any remaining deficiency, the Bank shall make a demand for payment pursuant to the Guarantee. 10.4 SETOFF - (a) Regardless of the adequacy of any Collateral, any deposits or other sums credited by or due from the Bank to the Borrower and any securities or other property of the Borrower in the possession of the Bank may be applied to or set off against the payment of the obligations of the Borrower hereunder and under the Security and any or all other liabilities, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, of the Borrower to the Bank at any time after the occurrence and during the continuance of any Event of Default. (b) The obligations of the Borrower under this Agreement and under the Security shall not be subject to any counterclaim, set-off, deduction or defence 23 -23- (other than payment or performance) based upon any claim the Borrower may have against the Bank or any other Person. ARTICLE XI. GENERAL 11.1 COSTS AND EXPENSES - The Borrower shall pay on the Closing Date all reasonable costs and expenses incurred by the Bank in connection with preparation, printing, execution and delivery of each of this Agreement, the Security and the other documents to be delivered hereunder, whether or not the Drawdown has been made hereunder, including, without limitation, the fees and out-of-pocket expenses of Bank's counsel with respect thereto and with respect to advising the Bank as to its rights and responsibilities hereunder and under the Security and the other documents delivered hereunder; provided, however, that such costs and expenses shall not exceed the lesser of $52,500 and the fees and out-of-pocket expenses of the Borrower's counsel; it being understood and agreed that such amount shall be capitalized and added to the principal amount of the Loan. The Borrower further agrees to pay all costs and expenses incurred by the Bank (including fees and expenses of counsel, accountants and other experts), in connection with any waiver or consent under, or amendment to, this Agreement or the Security, or the preservation or enforcement of rights of the Bank under this Agreement, the Security and other documents delivered hereunder including, without limitation, all reasonable costs and expenses sustained by the Bank as a result of any failure by the Borrower to perform or observe his obligations contained in any of such documents. 11.2 ILLEGALITY - If after the date of this Agreement any change occurs in any Applicable Law, or in the interpretation or application thereof by any court or by any governmental or other authority or entity charged with the administration thereof, which makes it unlawful for the Bank to make, fund or maintain the Facility or to give effect to its obligations in respect of any Libor Loan thereunder, the Bank may, by written notice thereof to the Borrower declare its obligations under this Agreement to be terminated. The Borrower shall prepay to the Bank within the time required by such law (or at the end of such longer period as the Bank at its discretion has agreed) the principal amount of the Loan together with accrued interest (including any deferred interest) and such other amounts which may be payable hereunder as a result of such prepayment. Any such notice shall be accompanied by a certificate of an officer of the Bank identifying in reasonable detail the event or condition which makes it unlawful for the Bank to fund or maintain the Facility or any Libor Loan thereunder and such certificate shall be final, conclusive and binding on the Borrower in respect of the matters set out therein. If any such change shall only affect a portion of the Bank's obligations under this Agreement which is, in the reasonable opinion of the Bank, severable from the remainder of this Agreement so that the remainder of this Agreement may be 24 -24- continued in full force and effect without otherwise affecting any of the obligations of the Bank or the Borrower hereunder or under any of the other documents contemplated hereby, the Bank shall only declare its obligations under the affected portion so terminated. 11.3 INDEMNIFICATION BY THE BORROWER - In addition to any liability of the Borrower to the Bank under any other provision of this Agreement, the Borrower shall indemnify the Bank and hold the Bank harmless against any reasonable loss (excluding loss of profit) or expense incurred by the Bank as a result of any failure by the Borrower to fulfil any of its obligations hereunder including, without limitation, any actual breakage cost or expense incurred by reason of the liquidation or re-employment in whole or in part of deposits or other funds required by the Bank to fund the Libor Loans as a result of (a) the Borrower's failure to effect the Drawdown or to make any payment, repayment or prepayment on the date required hereunder or specified by him in any notice given hereunder; (b) the Borrower's failure to pay any other amount, including without limitation any interest or fee, due hereunder on its due date; (c) the Borrower's failure to give any notice required to be given by him to the Bank hereunder; or (d) the voluntary prepayment by the Borrower of the Libor Loan or any portion thereof on any date other than on the last day of the Libor Interest Period relating thereto. 11.4 FUNDS - Each amount advanced, made available, disbursed or paid hereunder shall be advanced, made available, disbursed or paid, as the case may be, in immediately available funds or, after notice from the Bank, in such other form of funds as may from time to time be customarily used in New York, United States of America in the settlement of banking transactions similar to the banking transactions required to give effect to the provisions of this Agreement on the day such advance, disbursement or payment is to be made. 11.5 NOTICE - Any demand, notice or communication to be made or given hereunder shall be in writing, except as otherwise expressly permitted or required under this Agreement, and may be made or given by personal delivery, by registered mail or by transmittal by telex or facsimile machine addressed to the respective Parties as follows: 25 -25- To the Borrower: Mr. Jacques Benquesus c/o Gaming Lottery Corporation 160 Nashdene Road Scarborough, Ontario M1V 4C4 Telecopier: (416) 754-8441 Telephone: (416) 292-5963 With a copy to the Borrower's New York counsel: Proskauer Rose Goetz & Mendelsohn LLP 1585 Broadway New York, NY 10036 Attention: Mr. Jack Jackson, Esq. Telecopier: (212) 969-2900 Telephone: (212) 969-3000 And a copy to the Borrower's Ontario counsel: Goldman, Spring, Schwartz & Kichler Suite 700 40 Sheppard Avenue West North York, Ontario M2N 6K9 Attention: Mr. Joseph Maierovits, Esq. Telecopier: (416) 225-4805 Telephone: (416) 225-9400 To the Bank: Coutts & Co AG, New York Branch 65 East 55th Street New York, NY 10022 Attention: Mr. Mario Economou, Vice President Telecopier: (212) 303-2929 Telephone: (212) 303-2971 26 -26- With a copy to the Bank's New York counsel: Rogers & Wells 200 Park Avenue New York, New York 10166-0153 Attention: Mr. Alan M. Christenfeld, Esq. Telecopier: (212) 878-8375 Telephone: (212) 878-8000 And a copy to the Bank's Ontario counsel: Osler, Hoskin & Harcourt 280 Park Avenue - 30W New York, New York 10017 Attention: Mr. John W. Stevens, Esq. Telecopier: (212) 867-5802 Telephone: (212) 867-5800 or to such other mailing or telex or facsimile machine address as any party may from time to time notify the others in accordance with this Section. Any demand, notice or communication made or given by personal delivery shall be conclusively deemed to have been given on the day of actual delivery thereof, or, if made or given by registered mail, on the fifth Business Day following deposit thereof in the mail or, if made or given by telex or by facsimile transmission, on the first Business Day following the transmittal thereof and receipt of the appropriate answer back. If the party making or giving such demand, notice or communication knows or ought reasonably to know of difficulties with the postal system which might affect the delivery of mail, any such demand, notice or communication shall not be mailed but shall be made or given by personal delivery or by telex or by facsimile transmission. 11.6 GOVERNING LAW AND CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL: (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE, EACH OF THE BORROWER AND THE BANK HEREBY AGREE TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE 27 -27- OF NEW YORK SITTING IN THE CITY AND COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN, AND AGREE THAT ANY DISPUTE CONCERNING THE RELATIONSHIP BETWEEN THE BORROWER AND THE BANK OR THE CONDUCT OF ANY PARTY HERETO IN CONNECTION WITH THIS AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE. NOTWITHSTANDING THE FOREGOING, THE BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE SECURITY. (c) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO HIM AT HIS ADDRESS SET FORTH IN SECTION 11.5 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS OR, AT THE BANK'S OPTION, BY SERVICE UPON THE BORROWER'S NEW YORK COUNSEL AT ITS ADDRESS SET FORTH IN SECTION 11.5, WHICH COUNSEL THE BORROWER HEREBY IRREVOCABLY APPOINTS AS HIS AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF NEW YORK. THE BORROWER HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. (d) EACH OF THE BORROWER AND THE BANK HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH (OTHER THAN THE BANKS MASTER AGREEMENT) OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO THIS AGREEMENT, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. THE BORROWER AND THE BANK EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF THEM MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT 28 -28- WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. (e) NOTHING IN THIS SECTION 11.6 SHALL AFFECT THE RIGHTS OF THE BANK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHTS OF THE BANK TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. (f) EACH OF THE BORROWER AND THE BANK HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION 11.6 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 11.7 JUDGMENT CURRENCY - The obligation of the Borrower pursuant to this Agreement to make payments in a specific currency (the "Contractual Currency") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any other currency except to the extent to which such tender or recovery shall result in the effective receipt by the Bank of the full amount of the Contractual Currency payable or expressed to be payable under this Agreement and accordingly the obligation of the Borrower shall be enforceable as an alternative or additional cause of action for the purpose of recovery in the other currency of the amount (if any) by which such effective receipt shall fall short of the full amount of the Contractual Currency payable or expressed to be payable under this Agreement and shall not be effected by judgment being obtained for any other sum due under this Agreement. 11.8 SUCCESSORS AND ASSIGNS - This Agreement shall be binding upon and shall enure to the benefit of the Bank and the Borrower, and their respective successors and assigns. The Borrower shall not assign or transfer its rights and obligations hereunder or any interest herein without the prior written consent of the Bank. 11.9 ANNUAL RATES OF INTEREST - For the purposes of the Interest Act (Canada), whenever interest payable pursuant to this Agreement is calculated on the basis of a period other than a calendar year (the "Interest Period"), each rate of interest determined pursuant to such calculation expressed as an annual rate is equivalent to such rate as so determined multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by the number of days in the Interest Period. 29 -29- 11.10 SEVERABILITY - Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions of this Agreement and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provisions in any other jurisdiction. 11.11 WHOLE AGREEMENT - This Agreement, together with the Banks Master Agreement and all agreements and transactions contemplated herein and therein, constitute the whole and entire agreement between the Parties relating to the subject matter of this Agreement, and cancels and supersedes any prior agreements, undertakings, declarations, commitments and representations, written or oral, in respect thereof. 11.12 AMENDMENTS AND WAIVERS - Any provision of this Agreement or the Security may be amended only if the Borrower and the Bank so agree in writing and, except as otherwise specifically provided herein, may be waived only if the Bank so agrees in writing. Any such waiver and any consent by the Bank under any provision of this Agreement or the Security must be in writing and may be given subject to any conditions thought fit by the person giving that waiver or consent. Any waiver or consent shall be effective only in the instance and for the purpose for which it is given. 11.13 FURTHER ASSURANCES - Each of the Borrower and the Bank shall promptly cure any default by him or it in the execution and delivery of this Agreement or of the Security. The Borrower, at his expense, shall promptly execute and deliver to the Bank, upon request by the Bank, all such other and further documents, agreements, opinions, certificates and other instruments in compliance with, or accomplishment of his covenants and agreements hereunder or under the Security or to more fully state his obligations as set out herein or in the Security or to make any recording, filing or notice or obtain any consent, all as may be reasonably necessary or appropriate in connection therewith. 11.14 COUNTERPARTS - This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. 11.15 FACSIMILE SIGNATURE - This Agreement may be executed by faxed signature with the same effect as a manually signed original signature. 11.16 CONFIDENTIALITY - This Agreement shall be subject to the provisions of the Banks Master Agreement regarding confidentiality. 30 -30- 11.17 LIMITED RECOURSE - Notwithstanding anything contained in (i) this Agreement, (ii) any agreement, document, instrument or certificate entered into in connection herewith, other than the Banks Master Agreement, (collectively, the "Loan Documents") or (iii) otherwise, the Borrower shall only be personally liable to the extent of the Guarantee Limit (as such term is defined in the Guarantee) for the repayment of any of the principal of, or interest on, the Loan and the loans under the Related Loan Agreements, the payment of any fees or expenses of the Bank hereunder or under any Loan Documents or the performance of, or failure to perform, any other obligation of the Borrower under this Agreement or under any other Loan Document or the borrowers under the Related Loan Agreements, and the sole and exclusive recourse of the Bank shall be the Security and the Borrower shall have no liability, other than under the Guarantee, for any deficiency which may exist after foreclosure on the Security; provided, however, that there shall be no limit to the personal liability of the Borrower in the case of fraud. IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above. /s/ Jacques Benquesus --------------------------------------- MR. JACQUES BENQUESUS COUTTS & CO AG, NEW YORK BRANCH By: /s/ Peter Cawdron ------------------------------------ Name: Title: 31 SCHEDULE A CERTIFICATE OF COMPLIANCE TO: Coutts & Co AG, New York Branch (the "Bank") FROM: Mr. Jacques Benquesus (the "Borrower") RE: Loan Agreement dated August 20, 1996 between the Borrower and the Bank in connection with the payment of certain consideration and the repayment of certain loans (the "Loan Agreement") - -------------------------------------------------------------------------------- This certificate is given pursuant to the terms of the Loan Agreement. All defined terms used in this certificate indicated with initial capitals shall have the same meaning as in the Loan Agreement. The Borrower hereby certifies that: (a) All of the representations and warranties of the Borrower contained in the Loan Agreement are true and correct on and as of the Closing Date. (b) All of the covenants of the Borrower contained in the Loan Agreement together with all of the conditions precedent to the Drawdown required to be performed by the Borrower on or prior to the Closing Date and all other terms and conditions required to be performed by the Borrower on or prior to the Closing Date contained in the Loan Agreement have been fully complied with. (c) No Event of Default has occurred and remains outstanding and to the best of the knowledge, information and belief of the undersigned, no event has occurred and remains outstanding which, with the passing of time or giving of notice, or both, would be an Event of Default. DATED the day of August, 1996. --------------------------------------- Mr. Jacques Benquesus 32 SCHEDULE B LIBOR NOTICE TO: Coutts & Co. AG, New York Branch (the "Bank") Attention: Mr. Mario Economou, Vice President FROM: Mr. Jacques Benquesus (the "Borrower") RE: Loan Agreement dated August 20, 1996 between the Borrower and the Bank in connection with the payment of certain consideration and repayment of certain loans (the "Loan Agreement") - -------------------------------------------------------------------------------- This Libor Notice is given pursuant to the terms of the Loan agreement. All defined terms used in this Libor Notice indicated with initial capitals shall have the same meaning as in the Loan Agreement. Notice is hereby given pursuant to the provisions of Section 2.5 of the Loan Agreement that the Borrower requests the rollover of the Libor Loan for a Libor Interest Period of ___________ month(s). The undersigned hereby certifies that no Event of Default has occurred and remains outstanding and to the best of the knowledge, information and belief of the Borrower (after due enquiry), no event has occurred and remains outstanding which, with the giving of notice or the passing of time, or both, would be an Event of Default. DATED the day of --------------------------------------- Mr. Jacques Benquesus EX-99.C 4 BANKS SHARE PURCHASE LOAN AGREEMENT DATED 8/20/96 1 LOAN AGREEMENT THIS AGREEMENT made as of the 20th day of August, 1996 B E T W E E N: MR. JACQUES BENQUESUS, an individual residing in the City of Jerusalem, Israel (hereinafter referred to as the "Borrower") - and - COUTTS & CO AG, NEW YORK BRANCH, a Swiss bank licensed to conduct a banking business by the State of New York (hereinafter referred to as the "Bank") WITNESSES THAT WHEREAS the Borrower has requested the Facility (as hereinafter defined) to acquire certain shares of certain corporations, as identified in Schedule A hereto (the "Shares"), and to pay expenses incurred by him in connection with the acquisition of the Shares and the Bank has agreed to provide the Facility to the Borrower on the terms and conditions herein set forth; NOW, THEREFORE, in consideration of the premises and mutual agreements and covenants contained in this Agreement and other good and valuable consideration (the receipt and adequacy of which are hereby mutually admitted), the Parties hereby agree as follows: 2 - 2 - ARTICLE I. DEFINITIONS AND PRINCIPLES OF INTERPRETATION 1.1 DEFINITIONS - Whenever used in this Agreement, unless there is something inconsistent in the subject matter or context the following words and terms shall have the meaning set out below: "AGREEMENT" means this agreement, including all schedules and all instruments supplementing or amending or confirming this Agreement, "hereof", "hereto" and "hereunder" and similar expressions mean and refer to this Agreement and not any particular article or section, and "Article", "Section" and "Subsection" each means and refers to the specified article, section or subsection in this Agreement; "ANNIVERSARY DATE" means the annual anniversary of the date of this Agreement or the next Business Day thereafter if such date is not a Business Day; "APPLICABLE LAW" means, with respect to any Person, property, transaction or event, and whether or not having the force of law, all applicable laws, statutes, regulations, rules, guidelines, by-laws, treaties, orders, policies, judgments, decrees and official directives of governmental bodies or other Persons acting under the authority of any governmental body; "BANKS MASTER AGREEMENT" means the master agreement dated August 19, 1996 between the Bank and Mr. Jacques Benquesus; "BASE RATE" means, at any time, the rate of interest, expressed as an annual rate, established by the Bank from time to time as the reference rate of interest it will charge for loans in Dollars; "BASE RATE LOAN" means the amount of the Loan with respect to which the Borrower is deemed to have elected to have interest calculated by reference to the Base Rate or to which, in accordance with the provisions of this Agreement, the Base Rate is deemed to apply; "BASE RATE ROLLOVER" means a deemed conversion of the Libor Loan to a Base Rate Loan pursuant to Section 3.1; "BORROWER" means Mr. Jacques Benquesus, an individual residing in the City of Jerusalem, Israel; "BRANCH" means the branch of the Bank located at 65 East 55th Street, New York, NY 10022; 3 - 3 - "BUSINESS DAY" means a day on which banks are open for business in New York, U.S.A.; "CLOSING DATE" means August 20, 1996 or such other earlier or later date as may be agreed upon by the Parties; "COLLATERAL" means the assets, property and undertaking of the Borrower subject to the Security; "COMPANY" means any of Gaming Lottery Corporation, The Instant Publisher Inc. or Warp 10 Technologies Inc.; "DOLLARS" and the symbol "$" mean the lawful currency of the United States of America; "DRAWDOWN" means the borrowing, in Dollars, of funds under the Facility; "EVENT OF DEFAULT" means any of the events described in Section 10.1; "FACILITY" has the meaning ascribed to it in Section 2.1; "FACILITY CREDIT LIMIT" has the meaning ascribed to it in Section 2.1; "GUARANTEE" has the meaning ascribed to it in Subsection 7.1(a); "INTEREST PAYMENT DATE" means (i) with respect to the Libor Loan, the last day of the Libor Interest Period applicable thereto and also, if any Libor Interest Period is longer than 93 days, the last day of each 90-day period during such Libor Interest Period or, if any such day is not a Business Day, the Business Day next following; and (ii) with respect to the Base Rate Loan, the last day of each calendar month or, if any such day is not a Business Day, the Business Day next following; "LIBOR INTEREST PERIOD" means, for the Libor Loan, subject to availability of funds to the Bank, the period of 1, 2, 3, 6 or 12 months, as may be selected by the Borrower pursuant to the relevant Libor Notice, commencing on, in respect of the initial Libor Interest Period, the Closing Date and, thereafter, the date of the applicable Libor Rollover, provided that: 4 - 4 - (i) any Libor Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Libor Interest Period shall end on the immediately preceding Business Day; (ii) any Libor Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Libor Interest Period) shall end on the last Business Day of a calendar month; (iii) the Libor Interest Period shall terminate on such date as will permit the repayment of the Facility on the date and in the manner provided for herein; "LIBOR LOAN" means the amount of the Loan with respect to which interest under this Agreement is calculated with reference to the Libor Rate; "LIBOR NOTICE" means a notice substantially in the form attached hereto as Schedule C; "LIBOR RATE" means, for the Libor Interest Period then applicable to the Libor Loan, the interest rate per annum (expressed on the basis of a 360-day year) at which Dollar deposits are offered to leading banks in the London interbank euro-currency offering market in an amount approximately equal to the principal amount of the Libor Loan and for a period comparable to such Libor Interest Period at approximately 11:00 a.m. London, England time on the second Business Day preceding the first day of such Libor Interest Period for delivery on the first day of such Libor Interest Period; "LIBOR ROLLOVER" means a rollover of the Libor Loan pursuant to Section 2.5; "LIQUIDITY EVENT" means the announcement or occurrence of any transaction or event initiated, caused or assisted, directly or indirectly, by Mr. Jacques Benquesus, any Person controlled by Mr. Jacques Benquesus or any affiliate or associate (as such terms are defined in the Securities Act (Ontario)) of Mr. Jacques Benquesus or such Person, or any Person acting jointly or in concert with Mr. Jacques Benquesus or such Person in connection with such transaction or event which results, or if consummated would result, in the Public Float of any Company being less than one half of the Public Float of such Company on the date hereof; "LOAN" means, at any time, the total outstanding principal amount of all Drawdowns, together with any interest capitalized pursuant to Section 4.5; 5 - 5 - "PARTIES" means the Bank and the Borrower and "PARTY" refers to any one of them; "PERSON" means any individual, sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, governmental authority and a natural person in his capacity as trustee, executor, administrator or other legal representative; "PUBLIC FLOAT" means the percentage of the issued and outstanding participating voting equity shares of a Company held by persons other than Mr. Jacques Benquesus, Mrs. Biba Benquesus, Mr. Larry H. Weltman or Mr. John M. Wiseman and their associates and affiliates (as such terms are defined in the Securities Act (Ontario)); "RELATED LOAN AGREEMENTS" means the loan agreements dated the date hereof between the Bank and each of Mr. Jacques Benquesus, Mr. Larry H. Weltman and Mr. John M. Wiseman; "ROLLOVER" means, as applicable, either a Base Rate Rollover or a Libor Rollover. "SECURITY" means the security described in Article VII; "SHARES" means those certain shares of certain corporations identified in Schedule A hereto; "TAXES" means all present and future taxes, levies, imposts, stamp taxes, duties, charges to taxes, fees, deductions, withholdings and any restrictions or conditions resulting in a charge imposed, levied, collected, withheld or reserved and all penalties, interest and other payments on or in respect thereof; "WELTMAN MASTER AGREEMENT" means the master agreement dated August 19, 1996 between Larry H. Weltman and the Bank; and "WISEMAN MASTER AGREEMENT" means the master agreement dated August 19, 1996 between John M. Wiseman and the Bank. 1.2 CERTAIN RULES OF INTERPRETATION - In this Agreement: (a) time is of the essence in the performance of the Parties' respective obligations; 6 - 6 - (b) the descriptive headings of Articles and Sections are inserted solely for convenience of reference and are not intended as complete or accurate descriptions of content; (c) the use of words in the singular or plural, or with a particular gender, shall not limit the scope or exclude the application of any provision of this Agreement to such person or persons or circumstances except as the context otherwise permits; (d) whenever a provision of this Agreement requires an approval or consent by a Party to this Agreement and notification of such approval or consent is not delivered within the applicable time limited, then, unless otherwise specified, the Party whose consent or approval is required shall be conclusively deemed to have withheld its consent or approval; (e) unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day which ends the period and by extending the period to the next Business Day following if the last day of the period is not a Business Day; and (f) whenever any payment is to be made or action to be taken under this Agreement is required to be made or taken on a day other than a Business Day, such payment shall be made or action taken on the next Business Day following. 1.3 SCHEDULES - The following are the Schedules to this Agreement and are incorporated by reference and deemed to be part of this Agreement: Schedule A - Shares to be Acquired Schedule B - Compliance Certificate Schedule C - Libor Notice 7 - 7 - ARTICLE II. THE FACILITY 2.4 THE FACILITY - Upon the terms and subject to the conditions herein set forth, the Bank hereby establishes in favour of the Borrower the following credit facility (the "Facility") to be available to the Borrower in accordance with the provisions of this Agreement. The Facility shall consist of a term credit facility of up to a maximum principal amount, excluding any interest capitalized pursuant to Section 4.5, of $21,818,620.10 (the "Facility Credit Limit") which funds shall be advanced or otherwise made available in a single Drawdown on the Closing Date. 2.5 PURPOSE - The Facility shall be available to the Borrower to acquire the Shares and to pay expenses incurred by him in connection with the acquisition of the Shares. 2.6 AVAILMENT OF FACILITY - Upon the terms and subject to the conditions herein set forth, the Borrower may effect a single borrowing under the Facility by way of a Libor Loan with an initial Libor Interest Period of one (1) month. 2.7 EFFECTING THE DRAWDOWN - Borrowing under the Facility shall be effected by the Bank crediting to the Borrower's Dollar account with the Bank the full amount of such borrowing for same day value by 2:00 p.m. New York time on the Closing Date and in immediately available funds. 2.8 ROLLOVERS - The Libor Loan will be deemed to be automatically rolled over (on the last day of the applicable Libor Interest Period) into a Libor Loan in a principal amount equal to the amount of the Loan for a Libor Interest Period equal to the lesser of: (a) (i) if the Borrower has delivered to the Bank a Libor Notice in accordance with the terms of this Agreement, the Libor Interest Period specified in such Libor Notice or (ii) if the Borrower has not made such delivery of a Libor Notice, the Libor Interest Period of such rolled over Libor Loan; (b) the remaining term of the Loan. 2.9 LIBOR NOTICE - A Libor Notice shall be substantially in the form attached as Schedule C to this Agreement and shall state the Libor Interest Period being requested. Subject to the terms and conditions of this Agreement, the Borrower shall be entitled to specify the Libor Interest Period to be applicable to the Libor Loan upon rollover by delivering a Libor Notice to the Bank by 11:00 a.m. (New York 8 - 8 - time) no less than two Business Days prior to the last day of the current Libor Interest Period. In the event that a Libor Notice is given by telephone, the Borrower shall provide to the Bank written confirmation of such notice bearing the Borrower's original signature within two Business Days of giving of such notice. All notices given by telephone shall be at the risk of the Borrower and the Bank shall have no liability for relying or acting on such verbal notice (whether or not subsequently confirmed in writing) or for any failure on the part of the Bank to carry out the requirements of such notice wholly or in part, or for any error or omission in fulfilling the requirements of such notice or the interpretation thereof by the Bank, save and except for any failure, error or omission arising out of the gross negligence or willful misconduct of the Bank. Any notice on which the Bank has acted, whether made by telephone, fax or otherwise in writing shall be irrevocable and binding on the Borrower. 2.7 EVIDENCE OF INDEBTEDNESS - The Bank shall open and maintain on its books at the Branch, accounts in respect of the Facility to evidence the Loan under the Facility and all other amounts owing by the Borrower to the Bank hereunder. The Bank shall enter in the foregoing accounts details of all amounts from time to time owing, paid or repaid by the Borrower hereunder. The information entered in the foregoing accounts shall constitute prima facie evidence of the obligations of the Borrower to the Bank hereunder with respect to the Loan and all other amounts owing by the Borrower to the Bank hereunder. The Borrower shall, on reasonable notice to the Bank, be entitled to obtain from the Bank extracts of all entries made in such accounts. ARTICLE III. FURTHER PROVISIONS RELATING TO THE LIBOR LOANS 3.1 CHANGE OF CIRCUMSTANCES - In the event that at any time prior to the commencement of a Libor Interest Period the Bank makes a determination in good faith, which shall be final, conclusive and binding upon the Borrower, that: (a) by reason of changes affecting the London interbank market, adequate and fair means do not exist for ascertaining the rate of interest applicable to the Libor Loan during the ensuing Libor Interest Period; (b) the continuing of the Libor Loan by the Bank during the ensuing Libor Interest Period has been made impracticable by the occurrence of circumstances which materially or adversely affect the London interbank market; 9 - 9 - (c) Dollar deposits are not available to the Bank in the London interbank market in sufficient amounts in the ordinary course of business in order for the Bank to fund the Libor Loan during the ensuing Libor Interest Period; or (d) the Libor Rate for the immediately following Libor Interest Period does not accurately reflect the effective cost to the Bank of funding the Libor Loan for the ensuing Libor Interest Period, or the costs to the Bank would be increased or the income receivable by the Bank would be reduced in respect of such Libor Loan, then the Bank shall give notice thereof to the Borrower, which notice shall set out in reasonable detail the reasons for such determination. Upon such notice being given, Libor Rollovers shall be suspended until the Borrower is informed by the Bank that such conditions no longer exist and the outstanding Libor Loan shall, at the expiration of the Libor Interest Period, be deemed to be converted into a Base Rate Loan, in an amount equal to the principal amount of such Libor Loan. ARTICLE IV. PAYMENT OF INTEREST AND OTHER FEES 4.1 INTEREST ON THE LIBOR LOAN - The Borrower shall pay interest in Dollars to the Bank on the amount of the Libor Loan for the Libor Interest Period applicable thereto at a nominal rate per annum equal to the Libor Rate applicable to the Libor Loan plus 0.5%, for any period that such Libor Loan is outstanding. Interest on the Libor Loan shall accrue daily on the amount of such Libor Loan and shall be calculated and, subject to Sections 4.5 and 4.6, payable in arrears on each successive Interest Payment Date applicable to the Libor Loan on the basis of the actual number of days for which the Libor Loan is outstanding, computed on the basis of a year of 360 days. Interest on the Libor Loan shall be payable in accordance with the foregoing after as well as before demand, default, maturity and judgment. 4.2 INTEREST ON BASE RATE LOANS - The Borrower shall pay interest in Dollars to the Bank on the principal amount of the Base Rate Loan (with interest on overdue interest at the same rate) at a nominal rate per annum equal to the Base Rate in effect from time to time plus 0.5%; Interest on the Base Rate Loan shall accrue daily on the outstanding principal balance thereof and shall be calculated and, subject to Sections 4.5 and 4.6, payable in arrears: (a) on each successive Interest Payment Date, for the period then ending; 10 - 10 - (b) in the case of a prepayment of part or all of the Base Rate Loan, on the date of such prepayment, with respect to interest accrued on the amount of principal being prepaid; (c) in the case of amounts repaid pursuant to Section 5.3, on the date of such repayment with respect to interest accrued on the amount of the principal of the Base Rate Loan being repaid; and (d) on the date that all amounts owing hereunder are repaid in full, whether on demand, by reason of acceleration or otherwise; on the basis of the actual number of days for which a particular principal amount is outstanding, computed on the basis of a year of 365 days or 366 days in the case of a leap year. Interest on overdue interest on the Base Rate Loan shall be payable on demand. Changes in the Base Rate shall cause an immediate and automatic adjustment of the interest rate applicable to the Base Rate Loan as and from the effective date of such change without the necessity of any notice to the Borrower, such notice being hereby expressly waived by the Borrower. Interest on the Base Rate Loan shall be payable in accordance with the foregoing after as well as before demand, default, maturity and judgment. 4.3 INCREASED COSTS - If, as a result of any Applicable Law, or of the interpretation or application thereof by any court or by any governmental or other authority or entity charged with the administration thereof, whether or not having the force of law, which: (a) subjects the Bank to any Taxes or changes the basis of taxation, or increases any existing Taxes, on payments of principal, interest or other amounts payable by the Borrower to the Bank under this Agreement (except for Taxes on the overall net income or capital of the Bank or gross receipts or franchise taxes imposed by the jurisdiction in which its principal or lending offices are located); (b) imposes, modifies or deems applicable any reserve, cash margin, special deposit or similar requirements against assets held by, or deposits in or for the account of or loans by or any other acquisition of funds by the relevant funding office of the Bank; (c) imposes on the Bank any other adverse condition with respect to this Agreement; or (d) imposes on the Bank a requirement to maintain or allocate capital in relation to the Facility; 11 - 11 - and the result of any of the foregoing is, in the reasonable opinion of the Bank, to increase the cost to the Bank of making the Drawdown or maintaining the Loan or reduce the income receivable by the Bank in respect of the Loan by an amount which the Bank deems to be material, then upon the Bank giving written notice thereof, from time to time, to the Borrower (such notice to set out in reasonable detail the facts giving rise to and a summary calculation of such increased cost or reduced income), the Borrower shall forthwith pay to the Bank, upon receipt of such notice, that amount which shall compensate the Bank for such additional cost or reduction in income. The Borrower will not be required to compensate the Bank for any such additional cost or reduction in income under this Section 4.3 incurred by the Bank more than 3 months prior to its request to the Borrower for such compensation. Notwithstanding anything herein to the contrary, to the extent that the Bank does not charge all of its customers who are similarly situated to the Borrower in respect of any additional cost or reduction of income described in this Section 4.3, the Bank shall not charge the Borrower. 4.4 GROSS-UP - All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any Applicable Law, as modified by the practice or any relevant governmental revenue authority, then in effect. If the Borrower is so required to deduct or withhold, then the Borrower will: (a) promptly notify the Bank of such requirement; (b) pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by the Borrower to the Bank under this Section 4.4) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against the Bank; (c) promptly forward to the Bank an official receipt (or a certified copy), or other documentation reasonably acceptable to the Bank evidencing such payment to such authorities; and (d) pay to the Bank, in addition to the payment to which the Bank is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by the Bank (free and clear of Taxes, whether assessed against the Borrower or the Bank) will equal the full amount the Bank would have received had no such deduction or withholding been required. 4.5 CAPITALIZATION OF INTEREST - At the election of the Borrower, unless there shall have occurred and be continuing any event which constitutes or would constitute, with the giving of notice, the passing of time, or both, an Event of 12 - 12 - Default, any interest accruing and otherwise payable by the Borrower on the Loan on or before the first Anniversary Date shall be added to the principal amount of the Loan and the non-payment of such interest when due shall not be considered an Event of Default. 4.6 DEFERRAL OF INTEREST - At the election of the Borrower, unless there shall have occurred and be continuing any event which constitutes, or would constitute, with the giving of notice, the passing of time, or both, an Event of Default, the Borrower shall be entitled to: (a) defer the payment of any interest accruing and otherwise payable by the Borrower on the Loan for the period from and including the Closing Date to and excluding the first Anniversary Date. Any interest deferred pursuant to this Subsection 4.6(a) shall be paid by the Borrower to the Bank on or before the first Anniversary Date or capitalized pursuant to Section 4.5; (b) defer the payment of any interest accruing and otherwise payable by the Borrower on the Loan for the period from and including the first Anniversary Date to and excluding the second Anniversary Date. Any interest deferred pursuant to this Subsection 4.6(b) shall be paid by the Borrower to the Bank on or before the second Anniversary Date; (c) defer the payment of any interest accruing and otherwise payable by the Borrower on the Loan for the period from and including the second Anniversary Date to and excluding the third Anniversary Date. Any interest deferred pursuant to this Subsection 4.6(c) shall be paid by the Borrower to the Bank on or before the third Anniversary Date; and (d) defer the payment of any interest accruing and otherwise payable by the Borrower on the Loan for the period from and including the third Anniversary Date to and excluding the fourth Anniversary Date. Any interest deferred pursuant to this Subsection 4.6(d) shall be paid by the Borrower to the Bank on or before the fourth Anniversary Date. The non-payment of interest which is deferred pursuant to this Section which would otherwise be due and payable shall not be considered an Event of Default; provided that any interest which is deferred is subsequently paid in accordance with this Section. 4.7 MAXIMUM INTEREST RATE. In no event shall any interest rate exceed the maximum rate permissible for individual borrowers by Applicable Law (the "Maximum Rate"). If, in any month, any interest rate, absent such limitation, would have exceeded the Maximum Rate, then the interest rate for that month shall be the Maximum Rate, and, if in future months, that interest rate would otherwise be less than the Maximum Rate, then that interest rate shall remain at the 13 - 13 - Maximum Rate until such time as the amount of interest paid hereunder equals the amount of interest which would have been paid if the same had not been limited under this section to the Maximum Rate. In the event that, upon payment in full of the Loan under this Agreement, the total amount of interest paid or accrued under the terms of this Agreement is less than the total amount of interest which would have been paid or accrued if the interest rates set forth in this Agreement had at all times been in effect, then the Borrower agrees, to the extent permitted by Applicable Law, to pay to the Bank an amount equal to the difference between (a) the lesser of (i) the amount of interest which would have been charged if the Maximum Rate had, at all times, been in effect or (ii) the amount of interest which would have accrued had the interest rates set forth in this Agreement, at all times, been in effect and (b) the amount of interest actually paid or accrued under this Agreement. In the event that the Bank receives, collects or applies as interest any sum in excess of the Maximum Rate, such excess amount shall be applied to the reduction of the principal balance of the Loan, and any funding indemnities in connection therewith under Section 11.3 hereof, and, if no such principal or such funding indemnity is then outstanding, such excess or part thereof remaining shall be paid to the Borrower. ARTICLE V. REPAYMENTS AND PREPAYMENTS 5.1 REPAYMENT OF THE LOAN - On or before the fourth Anniversary Date, the Borrower shall repay the Loan in its entirety, together with all interest accrued thereon. 5.2 VOLUNTARY PREPAYMENTS OF PRINCIPAL - The Borrower shall have the right to prepay the Loan without premium or penalty unless otherwise provided herein. Any voluntary prepayment of the Libor Loan may be made without penalty only if made at the expiration of the applicable Libor Interest Period, and then only if at least two Business Days' prior notice is given to the Bank. 5.3 CURRENCY AND TIME OF PAYMENTS - The Borrower shall make each payment hereunder at the Branch (or such other place in New York, New York as the Bank may from time to time notify the Borrower, at least five Business Days prior to any payment date) not later than 10:00 a.m. New York, New York, time on the day when due (or on the next Business Day thereafter if such day is not a Business Day) in Dollars. 5.4 APPLICATION OF PAYMENTS AND PREPAYMENTS - Payments and any prepayments made by the Borrower in respect of the Loan shall be applied as follows: (i) first, to the payment of any interest deferred pursuant to Section 4.6; (ii) 14 - 14 - second, to the repayment of the principal amount of the Loan; (iii) third, to the payment of any interest capitalized pursuant to Section 4.5; and (iv) fourth, to the payment of any other amounts payable by the Borrower under this Agreement. ARTICLE VI. CONDITIONS PRECEDENT TO DRAWDOWN 6.1 CONDITIONS PRECEDENT TO DRAWDOWN - The obligation of the Bank to permit the Drawdown is subject to the condition precedent that the Bank shall have received on or before the Closing Date all of the following in form and substance satisfactory to the Bank and the Bank's counsel: (a) the Security, duly executed; (b) evidence of the completion of all recordings, registrations and filings as may be necessary or desirable to perfect or preserve the security interests created by the Security; (c) a promissory note, duly executed; (d) a certificate of the Borrower stating that, as of such date, (i) all the representations and warranties made by the Borrower herein are true and correct and that no event has occurred which constitutes or would constitute, with the giving of notice, the passing of time, or both, an Event of Default; and (ii) the Borrower has performed all covenants under this Agreement to be performed by him; and (e) the Borrower shall have delivered such other documentation as the Bank may reasonably request. 6.2 WAIVER - The conditions set forth in Section 6.1 are inserted for the sole benefit of the Bank and may be waived by the Bank, in whole or in part (with or without terms or conditions). ARTICLE VII. SECURITY 7.1 SECURITY - There shall be delivered to the Bank the following: (a) a limited guarantee from Mr. Jacques Benquesus in the form provided for in the Banks Master Agreement (the "Guarantee"); 15 - 15 - (b) the Amended Banks Pledge (as such term is defined in the Banks Master Agreement); (c) the Banks Purchased Share Pledge (as such term is defined in the Banks Master Agreement); (d) the Share Pledge (as such term is defined in the Weltman Master Agreement); and (e) the Share Pledge (as such term is defined in the Wiseman Master Agreement); as continuing collateral security for the prompt and due repayment of the Loan and the performance by the Borrower of all of its present and future obligations to the Bank. 7.2 REGISTRATION - The Security shall, at the Borrower's expense (subject to the provisions set forth in the first sentence of Section 11.1), be registered, filed or recorded in all offices where such registration, filing or recording is necessary or of advantage to the creation, perfection and preserving of the applicable security interests. ARTICLE VIII. BORROWER'S REPRESENTATIONS AND WARRANTIES To induce the Bank to make available the Facility, the Borrower represents and warrants to and in favour of the Bank as follows, which representations and warranties of the Borrower shall survive the execution and delivery of this Agreement and the making of the Loan, notwithstanding any investigations or examinations which may be made by the Bank or the Bank's counsel, and the Bank shall be deemed to have relied on such representations and warranties in the making of the Loan: 8.1 ENFORCEABILITY - When executed and delivered, this Agreement and the Security (to the extent that the Borrower is a party thereto) will constitute valid and legally binding obligations enforceable against the Borrower in accordance with their respective terms, subject, however, to limitations with respect to enforcement imposed by law in connection with bankruptcy or similar proceedings and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought; 8.2 VALIDITY OF AGREEMENT - NO-CONFLICT - The Borrower is not a party to, bound or affected by or subject to any indenture, mortgage, lease, agreement, 16 - 16 - obligation, instrument, statute, regulation, order, judgment, decree, licence, permit or law which would be violated, contravened, breached by, or under which default would occur or a lien, claim, restriction or encumbrance would be created as a result of the execution and delivery of this Agreement or the Security or the carrying out of the Borrower's obligations hereunder or thereunder; 8.3 GOVERNMENT APPROVAL, REGULATION, ETC. - No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person is required for the due execution, delivery or performance by the Borrower of this Agreement or the Security except for authorizations, approvals, actions, notices or filings which have been duly obtained or made and are in full force and effect; 8.4 NO EVENT OF DEFAULT - No Event of Default has occurred and is continuing and no event has occurred which, with the giving of notice, the passing of time, or both, would constitute an Event of Default; 8.5 NO ENCUMBRANCES - (a) The Banks Pledged Shares (as such term is defined in the Banks Master Agreement) are not subject to any mortgage, lien, pledge, charge, security interest or other encumbrance other than the Security; and (b) There has been no act or omission by the Borrower which has created or resulted in the creation of any mortgage, lien, pledge, charge, security interest or other encumbrance on, against or with respect to any part of the Banks Purchased Pledged Shares (as such term is defined in the Banks Master Agreement), except the Security; 8.6 MATERIAL OBLIGATIONS - The Borrower is not, in any respect, in default under any material obligation, direct or indirect, contingent or otherwise, or under any order, writ, decree or demand of any court or governmental agency or authority, where any such default would materially adversely affect the Borrower's ability to perform his obligations under this Agreement or under the Security; 8.7 COMPLIANCE WITH LAWS - The Borrower is not in violation of any judgment, decree, order, statute, rule or regulation relating in any way to the Borrower, or to his property or assets and which would have a material effect on the condition, financial or otherwise, of the Borrower; 8.8 TAXES - The Borrower has duly and timely filed all tax returns and reports required by law to have been filed by him, has duly and correctly reported all income and other amounts required to be reported and has paid all taxes, penalties, interest, fines and governmental charges in respect thereof, to the extent that such taxes, penalties, interest, fines and other governmental charges have been assessed 17 - 17 - by the relevant taxation authority, except to the extent that (i) any such tax, penalty, interest, fine or any other governmental charge is being contested in good faith by appropriate proceedings or (ii) the failure so to pay or discharge any such tax, penalty, interest, fine or any other governmental charge could not reasonably be expected to materially adversely affect the financial condition or business of the Borrower. The Borrower has duly and timely paid all instalments of taxes required to be paid by him except to the extent that (i) any such instalment of tax is being contested in good faith by appropriate proceedings or (ii) the failure so to pay or discharge any such instalment of tax could not reasonably be expected to materially adversely affect the financial condition or business of the Borrower. There are no actions, suits, proceedings, investigations, audits or claims now pending or, to the best of the knowledge of the Borrower (after due inquiry), threatened against the Borrower in respect of any taxes or any penalties, interest and fines in respect thereof and there are no matters under discussion with any taxation or other governmental authority relating to any such matters; and 8.9 ACCURACY OF INFORMATION - All factual information previously or contemporaneously furnished by or on behalf of the Borrower in writing to the Bank for purposes of or in connection with this Agreement or any transaction contemplated hereby including the certificates delivered pursuant to Section 6.1, (true and complete copies of which were furnished to the Bank in connection with its execution and delivery of this Agreement) is and all other such factual information pursuant to this Agreement to the Bank will be true and accurate in every material respect on the date as of which such information is dated or certified and such information is not, or shall not be, as the case may be, incomplete by omitting to state any material fact necessary to make such information not misleading. ARTICLE IX. COVENANTS The Borrower covenants and agrees with the Bank that, unless the Bank otherwise consents in writing, so long as any amount payable hereunder is outstanding: 9.1 PUNCTUAL PAYMENT - The Borrower shall duly and punctually pay the principal amount of the Loan, all interest thereon, all fees and all other amounts required to be paid by the Borrower hereunder or pursuant to agreements with the Bank at the times and places and in the manner provided for herein or therein; 9.2 COMPLIANCE WITH LEGISLATION - The Borrower shall comply with all laws, rules, regulations and orders, the non-compliance with which could materially and adversely affect the financial condition of the Borrower or the 18 - 18 - performance by the Borrower of his obligations under this Agreement and the Security; 9.3 NOTICE OF LITIGATION - The Borrower shall give notice to the Bank of the occurrence of any material litigation, proceeding or dispute affecting the Borrower initiated after the Closing Date if the result of any of them might have a material adverse effect on the ability, financial or otherwise, of the Borrower to perform his obligations under this Agreement and Security, and from time to time shall provide the Bank with all reasonable non-privileged information requested by the Bank concerning the status of any such litigation, proceeding or dispute. Such notice shall be given within fifteen (15) days of the Borrower becoming aware of such litigation, proceeding or dispute and shall be in form and detail satisfactory to the Bank; 9.4 NOTICE OF ANY EVENT OF DEFAULT - The Borrower shall forthwith give notice to the Bank of any fact which, to the best of the Borrower's knowledge, may be construed as constituting an Event of Default or of any event which, to the best of the Borrower's knowledge, with the giving of notice, lapse of time or otherwise may constitute an Event of Default; 9.5 USE OF PROCEEDS - The Borrower shall use the proceeds of the Loan for the purposes contemplated hereunder; 9.6 TAXES - The Borrower will pay all federal, state and provincial and other taxes or other assessments or governmental charges or levies imposed upon him or upon his income or profits or upon property belonging to him prior to the time when any penalties or interest (except interest during extensions of time for filing of federal income or other tax returns not in excess of nine months) accrue with respect thereto, unless, in any such case, the same is being contested in good faith by appropriate proceedings, except to the extent that (i) any such tax, penalty, interest, fine or any other governmental charge is being contested in good faith by appropriate proceedings or (ii) the failure so to pay or discharge any such tax, penalty, interest, fine or other governmental charge could not reasonably be expected to materially adversely affect the financial condition or business of the Borrower; 9.7 PERFORMANCE OF COVENANTS - The Borrower will diligently observe and perform all his covenants to be observed or performed hereunder and under the Security; 9.8 DISPOSAL OF COLLATERAL - The Borrower shall not sell, assign, lease-back or otherwise dispose of any of the Collateral, unless the Net Proceeds (as such term is defined in the Banks Master Agreement) of the sale, assignment, or other disposal of the Collateral are applied, in accordance with the provisions of Article 3 of the Banks Master Agreement, to reduce the outstanding Loan; 19 - 19 - 9.9 LIMITATION ON ENCUMBRANCES - The Borrower shall not create, incur, assume or otherwise become liable upon or suffer to exist any mortgage, charge, lien, hypothec, security interest or other encumbrance whatsoever on, against or with respect to any part of the Collateral except the Security; and 9.10 FURTHER ASSURANCES - The Borrower will, from time to time, do, execute and deliver or shall cause to be done, executed and delivered all such further acts, documents or other instruments as may reasonably be requested by the Bank in order to cure any defects in the execution and delivery of, or to comply with or accomplish the covenants and agreements contained in this Agreement and the Security. ARTICLE X. EVENTS OF DEFAULT 10.1 EVENTS OF DEFAULT - The occurrence of any one or more of the following events (each such event being herein referred to as an "Event of Default") shall constitute a default under this Agreement: (a) If the Borrower shall fail to pay any principal of, or interest on, the Loan when the same shall become due and payable hereunder; (b) If the Borrower, together with the borrowers under the Related Loan Agreements, shall fail to repay on or before the third Anniversary Date at least $30,000,000 of the aggregate principal amount of the Loan and the loans under the Related Loan Agreements; for a period of 3 Business Days after notice from the Bank; (c) If the Borrower shall fail to perform or comply with any term, condition, covenant or obligation contained in this Agreement or in the Security (other than those specified in Subsections 10.1(a) or (b)) and, if capable of remedy, such failure to perform or comply is not remedied within 30 days of notice from the Bank so to remedy; (d) If any representation or warranty made by the Borrower in this Agreement or the Security or in any certificate or other document at the time delivered hereunder to the Bank shall prove to have been incorrect in any material respect on and as of the date thereof; (e) If the Borrower becomes insolvent, makes any assignment in bankruptcy or makes any other general assignment for the benefit of creditors, makes any proposal under the Bankruptcy and Insolvency Act (Canada), the 20 - 20 - United States Bankruptcy Code, 11 USC Section 101 et seq. or any comparable law, is adjudged bankrupt, files a petition or proposal to take advantage of any act of insolvency, consents to or acquiesces in the appointment of a trustee, receiver, receiver and manager, interim receiver, custodian, sequestrator or other person with similar powers of himself or of all or any substantial portion of his property or assets, or files a petition or otherwise commences any proceedings seeking any arrangement, composition or readjustment under any applicable bankruptcy, insolvency, moratorium or other similar law affecting creditors' rights or consents to, or acquiesces in, the filing of such a petition; (f) If a trustee, receiver, receiver and manager, interim receiver, custodian, sequestrator or any other person with similar powers shall be appointed of the Borrower or of all or any substantial portion of his property or assets, a judgment or an order is made by a tribunal of competent jurisdiction restraining his ability to deal with all or any substantial portion of his property and assets or a judgment or order is made by a tribunal of competent jurisdiction approving any arrangement, composition or readjustment under any applicable bankruptcy, insolvency or moratorium or other similar law affecting creditors' rights and such appointment, judgment or order is not vacated, stayed or set aside within 45 days of the date thereof; (g) If an event of default shall occur under any of the Related Loan Agreements; (h) If a Liquidity Event shall occur; or (i) While the aggregate principal amount repaid (excluding any repayments rescinded or otherwise required to be returned by the Bank upon the occurrence of a Recapture Event (as such term is defined in the Guarantee)) under the Loan and the loans under Related Loan Agreements is less than $30,000,000: (i) if a writ of execution, distress, attachment or similar process is issued or levied against all or a substantial portion of the property or assets of the Borrower in connection with any default by him in the payment of any amount in excess of $2,500,000 or the equivalent amount thereof in another currency as reasonably determined by the Bank, unless the writ is withdrawn, released, vacated or stayed within 30 days, or a judgment or order (other than any judgment or order issued in connection with the matters referred to in Schedule 5(c) to the Guarantee) shall be rendered against the Borrower by a court of competent jurisdiction with respect to such default and such judgment or order shall not be satisfied in accordance with its terms and shall continue unstayed and in effect for 10 days; 21 - 21 - (ii) if a default, under any indenture, agreement or instrument under which the Borrower has at the date of this Agreement or shall hereafter have outstanding indebtedness for borrowed money in excess of $2,500,000 or the equivalent amount thereof in another currency as reasonably determined by the Bank, shall occur and be continuing and (A) any such indebtedness shall have been lawfully accelerated or shall lawfully be or become due and payable prior to the date on which the same would otherwise have become due and payable, or (B) such default is a default in payment of such indebtedness when due or within the applicable grace period set out in such indenture, agreement or instrument; or (iii) if all or a substantial part of the property of the Borrower shall be expropriated, whether forfull or partial consideration. 10.2 TERMINATION AND ACCELERATION - Upon the occurrence of an Event of Default and for so long as such Event of Default shall continue, the Bank may, by one or more notices to the Borrower do any or all of the following: (a) terminate the obligations of the Bank including without limitation, the obligation of the Bank to permit the Drawdown, or any Libor Rollovers, the capitalization of interest or the deferral of interest hereunder; (b) declare the entire principal amount of the Loan Amount, all interest accrued thereon (including any deferred interest) and all fees and other amounts required to be paid by the Borrower hereunder, to be immediately due and payable without the necessity of presentment for payment, protest, notice of non-payment or notice of protest (all of which are hereby expressly waived); and (c) proceed to exercise any and all rights hereunder or under the Security and any other document or instrument executed pursuant to this Agreement. The Borrower acknowledges that the exercise by the Bank of any rights under the Security without having declared an acceleration pursuant to the provisions of this Section shall not in any way alter, affect or prejudice the right of the Bank to make a declaration pursuant to the provisions of this Section at any time and, without limiting the foregoing, shall not be construed or deemed to constitute a waiver of any rights under this Section. 22 - 22 - 10.3 REMEDIES CUMULATIVE AND WAIVERS - (a) For greater certainty, it is expressly understood and agreed that the respective rights and remedies of the Bank hereunder or under any other document or instrument executed pursuant to this Agreement, including the Security, are cumulative and are in addition to and not in substitution for any rights or remedies provided by law or by equity; and any single or partial exercise by the Bank of any right of remedy for a default or breach of any term, covenant, condition or agreement contained in this Agreement or other document or instrument executed pursuant to this Agreement, including the Security, shall not be deemed to be a waiver of or to alter, affect or prejudice any other right or remedy or other rights or remedies to which the Bank may be lawfully entitled for such default or breach. Any waiver by the Bank of the strict observance, performance or compliance with any term, covenant, condition or agreement herein contained or contained in any of the Security and any indulgence granted either expressly or by course of conduct, by the Bank shall be effective only in the specific instance and for the purpose for which it was given and shall be deemed not to be a waiver of any rights and remedies of the Bank under this Agreement or under the Security or other document or instrument executed pursuant to this Agreement as a result of any other default or breach hereunder or thereunder. (b) Notwithstanding anything in this Agreement or the Security to the contrary, if after the occurrence of an Event of Default, the Bank elects to exercise any of its rights or remedies to seek payment of the Loan and/or any other obligation of the Borrower hereunder, the Bank agrees that it shall exercise any such right or remedy in the following order (i) first, the Bank shall (unless stayed or prevented from doing so by law or court order) sell the securities held under the Banks Purchased Share Pledge (as defined in the Banks Master Agreement); (ii) second, the Bank shall (unless stayed or prevented from doing so by law or court order) sell the securities held under the Amended Banks Pledge (as defined in the Banks Master Agreement); (iii) third, the Bank shall (unless stayed or prevented from doing so by law or court order) exercise any right of set-off pursuant to Section 10.4 below and (iv) fourth, but only to the extent of any remaining deficiency, the Bank shall make a demand for payment pursuant to the Guarantee. 10.4 SETOFF - (a) Regardless of the adequacy of any Collateral, any deposits or other sums credited by or due from the Bank to the Borrower and any securities or other property of the Borrower in the possession of the Bank may be applied to or set off against the payment of the obligations of the Borrower hereunder and under the Security and any or all other liabilities, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, of the 23 - 23 - Borrower to the Bank at any time after the occurrence and during the continuance of any Event of Default. (b) The obligations of the Borrower under this Agreement and under the Security shall not be subject to any counterclaim, set-off, deduction or defence (other than payment or performance) based upon any claim the Borrower may have against the Bank or any other Person. ARTICLE XI. GENERAL 11.1 COSTS AND EXPENSES - The Borrower shall pay on the Closing Date all reasonable costs and expenses incurred by the Bank in connection with preparation, printing, execution and delivery of each of this Agreement, the Security and the other documents to be delivered hereunder, whether or not the Drawdown has been made hereunder, including, without limitation, the fees and out-of-pocket expenses of Bank's counsel with respect thereto and with respect to advising the Bank as to its rights and responsibilities hereunder and under the Security and the other documents delivered hereunder; provided, however, that such costs and expenses shall not exceed the lesser of $52,500 and the fees and out-of-pocket expenses of the Borrower's counsel; it being understood and agreed that such amount shall be capitalized and added to the principal amount of the Loan. The Borrower further agrees to pay all costs and expenses incurred by the Bank (including fees and expenses of counsel, accountants and other experts), in connection with any waiver or consent under, or amendment to, this Agreement or the Security, or the preservation or enforcement of rights of the Bank under this Agreement, the Security and other documents delivered hereunder including, without limitation, all reasonable costs and expenses sustained by the Bank as a result of any failure by the Borrower to perform or observe his obligations contained in any of such documents. 11.2 ILLEGALITY - If after the date of this Agreement any change occurs in any Applicable Law, or in the interpretation or application thereof by any court or by any governmental or other authority or entity charged with the administration thereof, which makes it unlawful for the Bank to make, fund or maintain the Facility or to give effect to its obligations in respect of any Libor Loan thereunder, the Bank may, by written notice thereof to the Borrower declare its obligations under this Agreement to be terminated. The Borrower shall prepay to the Bank within the time required by such law (or at the end of such longer period as the Bank at its discretion has agreed) the principal amount of the Loan together with accrued interest (including any deferred interest) and such other amounts which may be payable hereunder as a result of such prepayment. Any such notice shall be accompanied by a certificate of an officer of the Bank identifying in reasonable detail 24 - 24 - the event or condition which makes it unlawful for the Bank to fund or maintain the Facility or any Libor Loan thereunder and such certificate shall be final, conclusive and binding on the Borrower in respect of the matters set out therein. If any such change shall only affect a portion of the Bank's obligations under this Agreement which is, in the reasonable opinion of the Bank, severable from the remainder of this Agreement so that the remainder of this Agreement may be continued in full force and effect without otherwise affecting any of the obligations of the Bank or the Borrower hereunder or under any of the other documents contemplated hereby, the Bank shall only declare its obligations under the affected portion so terminated. 11.3 INDEMNIFICATION BY THE BORROWER - In addition to any liability of the Borrower to the Bank under any other provision of this Agreement, the Borrower shall indemnify the Bank and hold the Bank harmless against any reasonable loss (excluding loss of profit) or expense incurred by the Bank as a result of any failure by the Borrower to fulfil any of its obligations hereunder including, without limitation, any actual breakage cost or expense incurred by reason of the liquidation or re-employment in whole or in part of deposits or other funds required by the Bank to fund the Libor Loans as a result of (a) the Borrower's failure to effect the Drawdown or to make any payment, repayment or prepayment on the date required hereunder or specified by him in any notice given hereunder; (b) the Borrower's failure to pay any other amount, including without limitation any interest or fee, due hereunder on its due date; (c) the Borrower's failure to give any notice required to be given by him to the Bank hereunder; or (d) the voluntary prepayment by the Borrower of the Libor Loan or any portion thereof on any date other than on the last day of the Libor Interest Period relating thereto. 11.4 FUNDS - Each amount advanced, made available, disbursed or paid hereunder shall be advanced, made available, disbursed or paid, as the case may be, in immediately available funds or, after notice from the Bank, in such other form of funds as may from time to time be customarily used in New York, United States of America in the settlement of banking transactions similar to the banking transactions required to give effect to the provisions of this Agreement on the day such advance, disbursement or payment is to be made. 11.5 NOTICE - Any demand, notice or communication to be made or given hereunder shall be in writing, except as otherwise expressly permitted or required under this Agreement, and may be made or given by personal delivery, by registered 25 - 25 - mail or by transmittal by telex or facsimile machine addressed to the respective Parties as follows: To the Borrower: Mr. Jacques Benquesus c/o Gaming Lottery Corporation 160 Nashdene Road Scarborough, Ontario M1V 4C4 Telecopier: (416) 754-8441 Telephone: (416) 292-5963 With a copy to the Borrower's New York counsel: Proskauer Rose Goetz & Mendelsohn LLP 1585 Broadway New York, NY 10036 Attention: Mr. Jack Jackson, Esq. Telecopier: (212) 969-2900 Telephone: (212) 969-3000 And a copy to the Borrower's Ontario counsel: Goldman, Spring, Schwartz & Kichler Suite 700 40 Sheppard Avenue West North York, Ontario M2N 6K9 Attention: Mr. Joseph Maierovits, Esq. Telecopier: (416) 225-4805 Telephone: (416) 225-9400 To the Bank: Coutts & Co AG, New York Branch 65 East 55th Street New York, NY 10022 Attention: Mr. Mario Economou, Vice President Telecopier: (212) 303-2929 Telephone: (212) 303-2971 26 - 26 - With a copy to the Bank's New York counsel: Rogers & Wells 200 Park Avenue New York, New York 10166-0153 Attention: Mr. Alan M. Christenfeld, Esq. Telecopier: (212) 878-8375 Telephone: (212) 878-8000 And a copy to the Bank's Ontario counsel: Osler, Hoskin & Harcourt 280 Park Avenue - 30W New York, New York 10017 Attention: Mr. John W. Stevens, Esq. Telecopier: (212) 867-5802 Telephone: (212) 867-5800 or to such other mailing or telex or facsimile machine address as any party may from time to time notify the others in accordance with this Section. Any demand, notice or communication made or given by personal delivery shall be conclusively deemed to have been given on the day of actual delivery thereof, or, if made or given by registered mail, on the fifth Business Day following deposit thereof in the mail or, if made or given by telex or by facsimile transmission, on the first Business Day following the transmittal thereof and receipt of the appropriate answer back. If the party making or giving such demand, notice or communication knows or ought reasonably to know of difficulties with the postal system which might affect the delivery of mail, any such demand, notice or communication shall not be mailed but shall be made or given by personal delivery or by telex or by facsimile transmission. 11.6 GOVERNING LAW AND CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL: (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE, EACH OF THE BORROWER AND THE BANK HEREBY AGREE TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR 27 - 27 - FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK SITTING IN THE CITY AND COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN, AND AGREE THAT ANY DISPUTE CONCERNING THE RELATIONSHIP BETWEEN THE BORROWER AND THE BANK OR THE CONDUCT OF ANY PARTY HERETO IN CONNECTION WITH THIS AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE. NOTWITHSTANDING THE FOREGOING, THE BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE SECURITY. (c) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO HIM AT HIS ADDRESS SET FORTH IN SECTION 11.5 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS OR, AT THE BANK'S OPTION, BY SERVICE UPON THE BORROWER'S NEW YORK COUNSEL AT ITS ADDRESS SET FORTH IN SECTION 11.5, WHICH COUNSEL THE BORROWER HEREBY IRREVOCABLY APPOINTS AS HIS AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF NEW YORK. THE BORROWER HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. (d) EACH OF THE BORROWER AND THE BANK HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH (OTHER THAN THE BANKS MASTER AGREEMENT) OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO THIS AGREEMENT, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. THE BORROWER AND THE BANK EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF THEM MAY FILE AN 28 - 28 - ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. (e) NOTHING IN THIS SECTION 11.6 SHALL AFFECT THE RIGHTS OF THE BANK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHTS OF THE BANK TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. (f) EACH OF THE BORROWER AND THE BANK HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION 11.6 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 11.7 JUDGMENT CURRENCY - The obligation of the Borrower pursuant to this Agreement to make payments in a specific currency (the "Contractual Currency") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any other currency except to the extent to which such tender or recovery shall result in the effective receipt by the Bank of the full amount of the Contractual Currency payable or expressed to be payable under this Agreement and accordingly the obligation of the Borrower shall be enforceable as an alternative or additional cause of action for the purpose of recovery in the other currency of the amount (if any) by which such effective receipt shall fall short of the full amount of the Contractual Currency payable or expressed to be payable under this Agreement and shall not be effected by judgment being obtained for any other sum due under this Agreement. 11.8 SUCCESSORS AND ASSIGNS - This Agreement shall be binding upon and shall enure to the benefit of the Bank and the Borrower, and their respective successors and assigns. The Borrower shall not assign or transfer its rights and obligations hereunder or any interest herein without the prior written consent of the Bank. 11.9 ANNUAL RATES OF INTEREST - For the purposes of the Interest Act (Canada), whenever interest payable pursuant to this Agreement is calculated on the basis of a period other than a calendar year (the "Interest Period"), each rate of interest determined pursuant to such calculation expressed as an annual rate is equivalent to such rate as so determined multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by the number of days in the Interest Period. 29 - 29 - 11.10 SEVERABILITY - Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions of this Agreement and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provisions in any other jurisdiction. 11.11 WHOLE AGREEMENT - This Agreement, together with the Banks Master Agreement and all agreements and transactions contemplated herein and therein, constitute the whole and entire agreement between the Parties relating to the subject matter of this Agreement, and cancels and supersedes any prior agreements, undertakings, declarations, commitments and representations, written or oral, in respect thereof. 11.12 AMENDMENTS AND WAIVERS - Any provision of this Agreement or the Security may be amended only if the Borrower and the Bank so agree in writing and, except as otherwise specifically provided herein, may be waived only if the Bank so agrees in writing. Any such waiver and any consent by the Bank under any provision of this Agreement or the Security must be in writing and may be given subject to any conditions thought fit by the person giving that waiver or consent. Any waiver or consent shall be effective only in the instance and for the purpose for which it is given. 11.13 FURTHER ASSURANCES - Each of the Borrower and the Bank shall promptly cure any default by him or it in the execution and delivery of this Agreement or of the Security. The Borrower, at his expense, shall promptly execute and deliver to the Bank, upon request by the Bank, all such other and further documents, agreements, opinions, certificates and other instruments in compliance with, or accomplishment of his covenants and agreements hereunder or under the Security or to more fully state his obligations as set out herein or in the Security or to make any recording, filing or notice or obtain any consent, all as may be reasonably necessary or appropriate in connection therewith. 11.14 COUNTERPARTS - This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. 11.15 FACSIMILE SIGNATURE - This Agreement may be executed by faxed signature with the same effect as a manually signed original signature. 30 - 30 - 11.16 CONFIDENTIALITY - This Agreement shall be subject to the provisions of the Banks Master Agreement regarding confidentiality. 11.17 LIMITED RECOURSE - Notwithstanding anything contained in (i) this Agreement, (ii) any agreement, document, instrument or certificate entered into in connection herewith, other than the Banks Master Agreement, (collectively, the "Loan Documents") or (iii) otherwise, the Borrower shall only be personally liable to the extent of the Guarantee Limit (as such term is defined in the Guarantee) for the repayment of any of the principal of, or interest on, the Loan and the loans under the Related Loan Agreements, the payment of any fees or expenses of the Bank hereunder or under any Loan Documents or the performance of, or failure to perform, any other obligation of the Borrower under this Agreement or under any other Loan Document or the borrowers under the Related Loan Agreements, and the sole and exclusive recourse of the Bank shall be the Security and the Borrower shall have no liability, other than under the Guarantee, for any deficiency which may exist after foreclosure on the Security; provided, however, that there shall be no limit to the personal liability of the Borrower in the case of fraud. IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above. l/s ------------------------------------- MR. JACQUES BENQUESUS COUTTS & CO AG, NEW YORK BRANCH By: ------------------------------------- Name: Title: 31 SCHEDULE A SHARES TO BE ACQUIRED
COMPANY SHARES ------- ------- Gaming Lottery Corporation 5,000,000 common shares Warp 10 Technologies Inc. 834,231 common shares
32 SCHEDULE B CERTIFICATE OF COMPLIANCE TO: Coutts & Co AG, New York Branch (the "Bank") FROM: Mr. Jacques Benquesus (the "Borrower") RE: Loan Agreement dated August 20, 1996 between the Borrower and the Bank in connection with the acquisition of certain shares of certain corporations by the Borrower (the "Loan Agreement") - -------------------------------------------------------------------------------- This certificate is given pursuant to the terms of the Loan Agreement. All defined terms used in this certificate indicated with initial capitals shall have the same meaning as in the Loan Agreement. The Borrower hereby certifies that: (a) All of the representations and warranties of the Borrower contained in the Loan Agreement are true and correct on and as of the Closing Date. (b) All of the covenants of the Borrower contained in the Loan Agreement together with all of the conditions precedent to the Drawdown required to be performed by the Borrower on or prior to the Closing Date and all other terms and conditions required to be performed by the Borrower on or prior to the Closing Date contained in the Loan Agreement have been fully complied with. (c) No Event of Default has occurred and remains outstanding and to the best of the knowledge, information and belief of the undersigned, no event has occurred and remains outstanding which, with the passing of time or giving of notice, or both, would be an Event of Default. DATED the - day of August, 1996. ---------------------------------------- Mr. Jacques Benquesus 33 SCHEDULE C LIBOR NOTICE TO: Coutts & Co. AG, New York Branch (the "Bank") Attention: Mr. Mario Economou, Vice President FROM: Mr. Jacques Benquesus (the "Borrower") RE: Loan Agreement dated August 20, 1996 between the Borrower and the Bank in connection with the acquisition of certain shares of certain corporations by the Borrower (the "Loan Agreement") - -------------------------------------------------------------------------------- This Libor Notice is given pursuant to the terms of the Loan agreement. All defined terms used in this Libor Notice indicated with initial capitals shall have the same meaning as in the Loan Agreement. Notice is hereby given pursuant to the provisions of Section 2.5 of the Loan Agreement that the Borrower requests the rollover of the Libor Loan for a Libor Interest Period of _____________ month(s). The undersigned hereby certifies that no Event of Default has occurred and remains outstanding and to the best of the knowledge, information and belief of the Borrower (after due enquiry), no event has occurred and remains outstanding which, with the giving of notice or the passing of time, or both, would be an Event of Default. DATED the - day of -, - ---------------------------------------- Mr. Jacques Benquesus EX-99.D 5 BANKS PLEDGE AGREEMENT DATED 8/20/96 1 BANKS PURCHASED SHARE PLEDGE THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as of August 20, 1996, by JACQUES BENQUESUS, an individual resident in the City of Jerusalem, Israel (the "Pledgor"), in favour of COUTTS & CO AG, NEW YORK BRANCH, a Swiss bank licensed to conduct a banking business in the State of New York (the "Pledgee"). Preliminary Statement. A. Simultaneous with the execution and delivery of this Agreement, Pledgee is entering into (i) those certain Loan Agreements of even date herewith with Jacques Benquesus (the "Banks Loan Agreements"), (ii) that certain Loan Agreement of even date herewith with Larry H. Weltman (the "Weltman Loan Agreement") and (iii) that certain Loan Agreement of even date herewith with John M. Wiseman (the "Wiseman Loan Agreement" and together with the Banks Loan Agreements and the Weltman Loan Agreement, the "Loan Agreements"), pursuant to which the Pledgee may hereafter advance monies and make other extensions of credit to each of Jacques Benquesus, Larry H. Weltman and John M. Wiseman (collectively, the "Borrowers") under the respective Loan Agreements. B. Simultaneous with the execution and delivery of this Agreement, Jacques Benquesus is entering into that certain limited guarantee of even date herewith with Pledgee (the "Limited Guarantee") whereby Jacques Benquesus guarantees the obligations of each of the Borrowers under the Loan Agreements to the extent set forth therein. C. Pledgor is the owner of certain shares of the issued and outstanding capital stock of Gaming Lottery Corporation and Warp 10 Technologies Inc. (each a "Company" and collectively, the "Companies"), in the amounts listed on Schedule 1 hereto (the securities listed on Schedule 1 are hereinafter referred to as the "Stock"). D. The Pledgee has required as a condition to the Pledgee's advancement of funds and making of other extensions of credit under the Loan Agreements that Pledgor execute and deliver to Pledgee this Agreement in order to secure the due and punctual performance of and compliance by each of the Borrowers with all obligations, covenants, warranties, undertakings and conditions 2 - 2 - contained in or arising under each of the Loan Agreements including but not limited to, the full and punctual payment by the Borrowers, when due, whether at the stated due date, by acceleration or otherwise, of any and all, obligations, liabilities, indebtedness and other amounts of every kind arising under the Loan Agreements (whether principal, interest (after as well as before default), fees, premiums or penalties), all amounts in respect of indemnities provided for in the Loan Agreements, and all damages (whether provided for in the Loan Agreements or otherwise permitted by law) in respect of a failure or refusal by any Borrower to make any such payment howsoever created, arising or evidenced, voluntary or involuntary, whether direct or indirect, absolute or contingent, now or hereafter existing or owing to the Pledgee, and Jacques Benquesus' obligations under the Limited Guarantee (all of the foregoing obligations and undertakings are collectively referred to herein as the "Obligations"). NOW, THEREFORE, for and in consideration of the foregoing and of any financial accommodations or extensions of credit (including, without limitation, any loan or advance by renewal, refinancing or extension of the Loan Agreements or otherwise) heretofore, now or hereafter made to or for the benefit of the Borrowers by Pledgee, and for other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereto agree as follows: 1. Pledge. Pledgor hereby delivers, pledges and grants security interests to Pledgee in: (a) the Stock accompanied by stock transfer powers of attorney in respect of all of the Stock ("Powers") duly executed in blank, in the form attached hereto as Exhibit 1 and made a part hereof; (b) all dividends and distributions (whether in cash, stock or otherwise) paid or payable on or in respect of the Stock or any of it, including without limitation (i) all dividends and other distributions paid or payable in cash in respect of the Stock or any of it in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in surplus and (ii) cash paid, payable or otherwise distributed in respect of, or in redemption of, or in exchange for, any Stock; (c) the proceeds of disposition of any of the foregoing; (d) every balance of every account which the Pledgor has or shall at any time have with the Pledgee and all moneys, instruments, chattel paper, documents, accounts, contract rights, goods, credits, choses in action, claims, demands and without limitation whatsoever, property of every kind and description including additions, accessions and substitutions which have been or at any time shall be delivered to or be in transit to or from the Pledgee or any of its agents or correspondents or other third party or parties acting on the Pledgee's behalf, by, or for, or for account of, or subject to the order of, the Pledgor, which has come or shall come into the possession, custody or control of the Pledgee in any way or for any purpose whatsoever, whether for safekeeping or otherwise and whether the Pledgee shall accept them for the purposes for which they are delivered to it or not; and (e) the property and interests in property described in 3 - 3 - Paragraphs 2, 6 and 7 hereof and the proceeds thereof (items (a), (b), (c), (d) and (e) being hereinafter collectively referred to as the "Collateral"), as security for the payment and performance of the Obligations. Pledgor hereby appoints Pledgee as Pledgor's attorney-in-fact to arrange, at Pledgee's option, for the transfer, of the Collateral to the name of Pledgee or to the name of Pledgee's nominee and to this end the Pledgor hereby covenants to execute any further endorsements, transfers, conveyances, powers of attorney or other documents that the Pledgee may from time to time reasonably request as may be required to effect transfer of the Collateral or any of it. 2. After-Acquired Collateral. In the event that the Pledgor receives or becomes entitled to receive, after the date hereof, property and interests that constitute Collateral, then any such Collateral shall be received in trust for the benefit of the Pledgee, shall be segregated from other property of the Pledgor and shall be forthwith delivered over to the Pledgee as Collateral in the same form as so received by the Pledgor (with any necessary endorsements or stock powers required to provide for its transfer in the manner set forth in Paragraph 1 hereof). 3. Voting Rights. During the term of this Agreement, and so long as there shall not occur or exist an Event of Default under any of the Loan Agreements and as defined in each of the Loan Agreements (hereinafter an "Event of Default"), Pledgor shall have the right to vote the Stock on all corporate questions for all purposes not inconsistent with the terms of this Agreement and any of the Loan Agreements. Pledgee shall be entitled to exercise all voting powers pertaining to the Collateral from and after the occurrence of an Event of Default. Pledgee shall execute and deliver (or cause to be executed and delivered) to the Pledgor all such proxies and other instruments as the Pledgor may reasonably request for the purpose of enabling the Pledgor to exercise the voting and other rights which it is entitled to exercise pursuant to this Paragraph 3. 4. Representations, Warranties and Covenants. Pledgor warrants and represents that there has been no act or omission by the Pledgor which has created or resulted in the creation of any mortgage, lien, pledge, charge, security interest or other encumbrance on, against or with respect to any part of the Banks Purchased Pledged Shares (as such term is defined in the Master Agreement between the Pledgee and the Pledgor, dated August 19, 1996 (the "Master Agreement")), except the Security (as such term is defined in the Banks Loan Agreements); (b) that the Pledgor has full power and authority to enter into this Agreement; and (c) the Powers are duly executed and give Pledgee the authority such Powers purport to confer. The Pledgor hereby covenants not to undertake any act or omit to take any act, which could create or result in, any mortgage, lien, pledge, charge, security interest or other encumbrance (each a "Charge"), or suffer to exist any Charge arising 4 - 4 - after the date hereof, on, against or with respect to, any part of the Pledged Shares, except the Security. 5. Subsequent Changes Affecting Collateral. Pledgor represents to Pledgee that Pledgor has made Pledgor's own arrangements for keeping informed of changes or potential changes affecting the Collateral (including, but not limited to, rights to convert, rights to subscribe, payment of dividends, reorganization or other exchanges, tender offers and voting rights), and Pledgor agrees that Pledgee shall have no responsibility or liability for informing Pledgor of any such changes or potential changes or for taking any action or omitting to take any action with respect thereto. Pledgee may at any time, transfer or register the Collateral or any part of the Collateral into Pledgee's or Pledgee's nominee's name with or without any indication that such Collateral is subject to the security interest under this Agreement and without notice to the Pledgor, which notice is hereby expressly waived to the fullest extent permitted by applicable law. 6. Stock Adjustments. In the event that during the term of this Agreement any stock dividend, reclassification, readjustment or other change is declared or made in the capital structure of any Company (including, without limitation, the issuance of additional shares of preferred or common stock of any such Company of whatever class to the Pledgor in respect of the Collateral for no further consideration), or any option included within the Stock is exercised, or both, then all new, substituted and additional shares, or other securities, issued to the Pledgor by reason of any such change or exercise shall be delivered to and held by Pledgee under the terms of this Agreement in the same manner as the Collateral originally pledged under this Agreement. 7. Warrants, Options and Other Rights. In the event that during the term of this Agreement subscription warrants or any other rights or options shall be issued in connection with any of the Collateral, then such warrants, rights and options shall be immediately assigned to Pledgee and all new stock, bonds or other securities so acquired by Pledgor shall be immediately assigned to Pledgee to be held under the terms of this Agreement in the same manner as the Collateral originally pledged hereunder. 8. Registration. If at any time the Pledgee wishes to register under or otherwise comply in any way with the Securities Act of 1933, as amended (the "Securities Act") or any similar federal or state law, or if such registration or compliance is required with respect to the securities included in any of the Collateral prior to the sale thereof by Pledgee, Pledgor will cooperate with the Pledgee to cause such registration to be effectively made (it being understood and agreed that such cooperation shall not require the Pledgor to execute and/or deliver any registration statement with respect to the Collateral), at no expense to Pledgor, and to continue such registration effective for such time as may be necessary in the opinion of 5 - 5 - Pledgee. If Pledgee shall at any time determine to transfer or register the Collateral (or any part thereof) in its name in order to facilitate any registration under the Securities Act, Pledgor and Pledgee hereby agree that such action will not require the Pledgee to make any adjustment to Pledgor's account and no such adjustment shall be made unless and until the Collateral (or any part thereof) is sold pursuant to such registration statement or otherwise to any third party. Upon or at any time after the occurrence of an Event of Default, should Pledgee determine that, prior to any public offering of any securities contained in any of the Collateral, such securities should be registered under the Securities Act and/or registered or qualified under any other federal or state law, and that such registration and/or qualification is not practical, then Pledgor agrees that it will be commercially reasonable if a private sale, upon at least 10 days' prior notice to Pledgor, is arranged so as to avoid a public offering even though the sales price established and/or obtained may be substantially less than prices which would be quoted for such security on any market or exchange. 9. Waivers; Subrogation. The Pledgor irrevocably agrees that it will not bring any claims against the Borrowers to which the Pledgor is or would at any time be otherwise entitled by virtue of its obligations under this Agreement, including, without limitation, any right of subrogation (whether contractual, under Section 509 of the U.S. Bankruptcy Code or otherwise) and all contractual, statutory or common law rights of reimbursement, contribution, or indemnity from the Borrowers which may otherwise have arisen in connection with this Agreement, until such time as all of the Obligations have been satisfied in full and this Agreement shall have terminated in accordance with its terms. The Pledgor waives presentment and demand for payment of any of the Obligations, protest and notice of dishonour or default with respect to any or all of the Obligations, and all other notices to which Pledgor might otherwise be entitled, except as otherwise expressly provided in this Agreement or any of the Loan Agreements. 10. Default. (a) Upon the occurrence or existence of an Event of Default, Pledgee shall have, in addition to any other rights given by law or the rights given under this Agreement or the Loan Agreements, all of the rights and remedies with respect to the Collateral of a secured party under the Uniform Commercial Code. (b) In addition, with respect to the Collateral, or any part of the Collateral, which shall then be in or shall thereafter come into the possession or custody of Pledgee, Pledgee may sell or cause the same to be sold at any broker's board or at public or private sale, in one or more sales or lots, at such price as Pledgee may deem best, and for cash or on credit or for future delivery, without assumption of any credit risk, and the purchaser of any or all of the Collateral so sold shall thereafter hold the same absolutely, free from any claim, encumbrance or right of any kind whatsoever. Unless any of the Collateral threatens to decline 6 - 6 - speedily in value or is or becomes of a type sold on a recognized market, Pledgee will give Pledgor reasonable notice of the time and place of any public sale of the Collateral, or of the time after which any private sale or other intended disposition is to be made. Any sale of any of the Collateral conducted in conformity with the selling restrictions applicable to the Pledgor pursuant to Article 3 of the Master Agreement or the reasonable commercial practices of banks, commercial finance companies, insurance companies or other financial institutions disposing of property similar to such Collateral, shall be deemed to be commercially reasonable. Notwithstanding any provision to the contrary contained in this Agreement, any requirements of reasonable notice shall be met if such notice is deposited in the United States mail, addressed to Pledgor as provided in Paragraph 16 hereof, at least 10 days before the time of the sale or disposition. Any other requirement of notice, demand or advertisement for sale is, to the extent permitted by law, waived. Pledgee may, in Pledgee's own name, or in the name of a designee or nominee, buy at any public sale of any of the Collateral and, if permitted by applicable law, buy at any private sale of any of the Collateral. Pledgor will pay to Pledgee all expenses (including court costs and attorney fees and expenses, of, or incident to, the enforcement of any of the provisions of this Agreement. Since federal and state securities laws may impose certain restrictions on the method by which a sale of any or all of the Collateral may be effected after the occurrence of an Event of Default, Pledgor agrees that upon the occurrence or existence of an Event of Default, Pledgee may, from time to time, attempt to sell all or any part of the Collateral by means of a private placement, restricting the bidder and prospective purchasers to those who will represent and agree that they are purchasing for investment only and not for distribution, and Pledgor further agrees that such private sales may be at prices and on terms less favourable than those which may be available in a public sale. In so doing, Pledgee may solicit offers to buy the Collateral, or any part of it, for cash, from a limited number of investors deemed by Pledgee, in Pledgee's reasonable judgment, to be financially responsible parties who might be interested in purchasing such Collateral, and if Pledgee solicits such offers from not less than four such investors, then the acceptance by Pledgee of the highest offer obtained therefrom shall be deemed to be a commercially reasonable method of disposition of such Collateral notwithstanding any other provision of this Subparagraph 10(b). (c) The Collateral is subject to release to the Pledgor in accordance with the provisions of Article 3 of the Master Agreement. (d) Notwithstanding anything in this Agreement to the contrary, if after the occurrence of an Event of Default, the Pledgee elects to exercise any of its rights or remedies hereunder, the Pledgee agrees that it shall exercise any such right or remedy in the following order (i) first, the Pledgee shall (unless stayed or prevented from doing so by law or court order) sell the securities held under this Agreement; (ii) second, the Pledgee shall (unless stayed or prevented from doing so by law or court order) sell the securities held under the Amended Banks Pledge (as 7 - 7 - defined in the Master Agreement); (iii) third, the Pledgee shall (unless stayed or prevented from doing so by law or court order) exercise any right of set-off pursuant to Section 10.4 of the Banks Loan Agreements and (iv) fourth, but only to the extent of any remaining deficiency, the Pledgee shall make a demand for payment pursuant to the Limited Guarantee. 11. Term. This Agreement shall remain in full force and effect until all of the Obligations have been fully paid and satisfied, and all of the Loan Agreements have been terminated. Upon termination of this Agreement as provided in this Paragraph 11. Pledgee agrees to return any Collateral then in its possession to Pledgor. Notwithstanding anything in this Agreement to the contrary, this Agreement will terminate upon the release of all of the Collateral in accordance with Article 3 of the Master Agreement. 12. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of Pledgor, Pledgee and their respective successors, heirs and assigns. Pledgor's successors, heirs and assigns shall include, without limitation, a receiver, trustee or debtor in possession of or for Pledgor. 13. Governing Law and Consent to Jurisdiction; Waiver of Jury Trial. (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE, EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY AGREE TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK SITTING IN THE CITY AND COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN, AND AGREE THAT ANY DISPUTE CONCERNING THE RELATIONSHIP BETWEEN THE PLEDGOR AND THE PLEDGEE OR THE CONDUCT OF ANY PARTY HERETO IN CONNECTION WITH THIS AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE. NOTWITHSTANDING THE FOREGOING, THE PLEDGEE SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE PLEDGOR OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE PLEDGEE DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THIS AGREEMENT. (c) THE PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON HIM AND CONSENTS THAT ALL SUCH 8 - 8 - SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO HIM AT HIS ADDRESS SET FORTH IN SECTION 6.1 OF THE MASTER AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS OR, AT THE PLEDGEE'S OPTION, BY SERVICE UPON THE PLEDGOR'S NEW YORK COUNSEL AT ITS ADDRESS SET FORTH IN SECTION 6.1 OF THE MASTER AGREEMENT, WHICH COUNSEL THE PLEDGOR HEREBY IRREVOCABLY APPOINTS AS HIS AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF NEW YORK. THE PLEDGOR HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. (d) EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO THIS AGREEMENT, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. THE PLEDGOR AND THE PLEDGEE EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF THEM MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. (e) NOTHING IN THIS PARAGRAPH 13 SHALL AFFECT THE RIGHTS OF THE PLEDGEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHTS OF THE PLEDGEE TO BRING ANY ACTION OR PROCEEDING AGAINST THE PLEDGOR OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. (f) EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS PARAGRAPH 13 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 14. Further Assurances. Pledgor agrees that Pledgor will cooperate with Pledgee and will execute and deliver, or cause to be executed and delivered, all such other stock powers, proxies, instruments, documents and endorsements, and will take all such other action, including, without limitation, the filing of UCC financing statements, as Pledgee may reasonably request from time to time in order 9 - 9 - to carry out the provisions and purposes of this Agreement. In furtherance, and not in limitation of the foregoing, Pledgor agrees to take all action necessary or that Pledgee may reasonably request to maintain the continued perfection of the security interests granted under this Agreement. 15. Pledgee's Duty of Care. Pledgee shall have no duty with respect to any Collateral other than as set forth in the Loan Agreements. Without limiting the generality of the foregoing, Pledgee shall be under no obligation to take any steps necessary to preserve rights in any of the Collateral against any other parties but may do so at Pledgee's option, but all expenses incurred in connection therewith shall be for the sole account of Pledgor. 16. Notices. Any notice, request or other communication required or desired to be served, given or delivered under this Agreement shall be in writing and shall be given in the manner and to the addresses set forth in section 6.1 of the Master Agreement. 17. Paragraph Headings. The paragraph headings in this Agreement are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions of this Agreement. 18. Counterparts; Facsimile Signature. This Agreement may be executed by the parties hereto in separate counterparts each of which when so executed and delivered shall be an original, and all such counterparts shall together constitute one and the same instrument. Furthermore, this Agreement may be executed by faxed signature with the same effect as a manually signed original signature. 19. Confidentiality. This Agreement shall be subject to the provisions of the Master Agreement regarding confidentiality. 20. Non- Recourse. Notwithstanding anything contained in (i) this Agreement or the Loan Agreements, (ii) any agreement, document, instrument or certificate entered into in connection herewith or therewith, other than the Master Agreement, (collectively, the "Loan Documents") or (iii) otherwise, the Pledgor shall not be personally liable for the repayment of any of the principal of, or interest on, the loans under the Loan Agreements, the payment of any fees or expenses of the Pledgee hereunder or under any Loan Documents or the performance of, or failure to perform, any other obligation of the Pledgor under this Agreement or under any other Loan Document, and the sole and exclusive recourse of the Pledgee shall be to the Security and the Borrower shall have no liability for any deficiency which may exist after foreclosure on the Security; provided, however, that there shall be no limit to the personal liability of the Pledgor in the case of fraud. 10 - 10 - IN WITNESS WHEREOF, Pledgor and Pledgee have executed this Agreement as of the 20th day of August, 1996. /s/ Jacques Benquesus ------------------------- JACQUES BENQUESUS COUTTS & CO AG, NEW YORK BRANCH By /s/ Peter Cawdron ----------------------- Name: Title: 11 Schedule 1 to BANKS PURCHASED SHARE PLEDGE Stock
Issuer Shares ------ ------ Gaming Lottery Corporation 5,000,000 common shares Warp 10 Technologies Inc. 834,231 common shares
12 Exhibit 1 to BANKS PURCHASED SHARE PLEDGE FORM OF STOCK TRANSFER POWER OF ATTORNEY FOR VALUE RECEIVED, _________________________ hereby sells, assigns and transfers unto______________________________________________________________: ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ standing in my name on the books of said corporation[s] represented by certificate[s] ______________________________________________________________ _____________________________________________________________________, and do hereby irrevocably constitute and appoint____________________________________ attorney to transfer the said stock on the books of said corporation[s] with full power of substitution in the premises. DATED this ______ day of __________________, ______. In the presence of - ------------------------------------- --------------------------------- [PLEDGOR] EX-99.E 6 AMENDED BANKS PLEDGE AGREEMENT DATED 8/20/96 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 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 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 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 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 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. 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 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 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 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. 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: 12 Schedule 1 to AMENDED BANKS PLEDGE
Issuer Shares ------ ------ Gaming 4,400,000 common shares TIPI 15,000,000 common shares Warp 10 1,000,000 common shares
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] EX-99.F 7 BANKS SHARE PURCHASE AGREEMENT DATED 8/20/96 1 COMP/BANKS/GAMING SHARE PURCHASE AGREEMENT THIS AGREEMENT is made this 20th day of August, 1996 BETWEEN: JACQUES BENQUESUS of the City of Jerusalem, Israel (the "Purchaser") - and - COMPANIA DI INVESTIMENTO ANTILLIANA S.A. a corporation governed by the laws of the British Virgin Islands (the "Owner"), by Coutts & Co AG, New York Branch, pursuant to the authority granted to it by the Owner under that certain General Loan and Collateral Agreement executed by the Owner dated January 10, 1995 (the "Loan Agreement") WHEREAS, the Owner is the beneficial owner of 331,138 common shares (the Shares") of Gaming Lottery Corporation (the "Company"); AND WHEREAS, the Owner has pledged the Shares to Coutts, as security for a loan (the "Loan") made by Coutts to the Owner to finance the acquisition of the Shares by the Owner pursuant to the Loan Agreement; AND WHEREAS, the Loan Agreement provides, among other things, that in the event of a default thereunder, Coutts may sell, or resell in one or more sales, all or any portion of the property ("Collateral") pledged to it as security for the obligations of the Owner under the Loan Agreement, at any broker's board or public or private sale; AND WHEREAS, the Loan Agreement further provides that Coutts may at any time, whenever it deems necessary or desirable, in its own name or in the name of the Owner, endorse, assign, convey and transfer any and all of the Collateral; AND WHEREAS, the Shares form part of the Collateral; AND WHEREAS, the Owner is in default of its obligations under the Loan Agreement; 2 - 2 - AND WHEREAS, the Purchaser and Coutts have entered into the Banks Master Agreement dated August 19, 1996 (hereinafter the "Master Agreement") pursuant to which the Purchaser has agreed to enter into this Agreement to purchase the Shares, Coutts has agreed to loan to the Purchaser the amount to be paid as the purchase price in respect of the sale of the Shares hereunder and Coutts agreed to cause the Owner to enter into this Agreement to sell the Shares. NOW THEREFORE the parties agree as follows: 1. PURCHASE AND SALE The Owner hereby sells, assigns and transfers to the Purchaser and the Purchaser hereby purchases from the Owner as of the date hereof (the "Effective Date") all the right, title and interest of the Owner in and to the Shares for an aggregate purchase price equal to $1,112,623.60 (the "Purchase Price") and on and subject to the terms and conditions set forth in this Agreement and the Master Agreement. 2. PAYMENT OF PURCHASE PRICE AND DEEMED DELIVERY OF THE SHARES (a) Payment of Purchase Price The Purchase Price shall be satisfied by Coutts crediting an amount equal to the Purchase Price as a repayment on behalf of the Owner to the balance outstanding under the Loan on the Effective Date. If the Purchase Price exceeds the balance outstanding under the Loan, including principal, interest and all other amounts owing thereunder, the amount of such excess shall be paid by Coutts to the Owner as soon as the full amount of the Loan has been repaid and discharged. (b) Deemed Delivery of Purchased Shares On payment of the Purchase Price in the manner set forth in paragraph (a) above, Coutts shall instruct the transfer agent for the Company to issue certificates representing the Shares in the name of the Purchaser. The certificates shall be retained by Coutts and held as security under the Banks Purchased Share Pledge (as defined in the Master Agreement) duly endorsed in blank for transfer or with a stock transfer power of attorney duly executed by the Purchaser. 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. 4 - 4 - IN WITNESS WHEREOF, the Owner and the Purchaser have executed this Agreement by the signatures of their proper officers duly authorized in that behalf. BY COUTTS & CO AG, NEW YORK BRANCH, IN THE NAME OF THE OWNER, PURSUANT TO THE AUTHORITY GRANTED TO IT IN THE LOAN AGREEMENT By: /s/ Peter Cawdron ------------------------------------ /s/ Jacques Benquesus --------------------------------------- Jacques Benquesus EX-99.G 8 BANKS SHARE PURCHASE AGREEMENT DATED 8/20/96 1 Silva/Banks/Gaming SHARE PURCHASE AGREEMENT THIS AGREEMENT is made this 20th day of August, 1996 BETWEEN: JACQUES BENQUESUS of the City of Jerusalem, Israel (the "Purchaser") - and - SILVA RUN WORLDWIDE LIMITED a corporation governed by the laws of the British Virgin Islands (the "Owner"), by Coutts & Co AG, New York Branch, pursuant to the authority granted to it by the Owner under that certain General Loan and Collateral Agreement executed by the Owner dated January 11, 1995 (the "Loan Agreement") WHEREAS, the Owner is the beneficial owner of 3,157,112 common shares (the Shares") of Gaming Lottery Corporation (the "Company"); AND WHEREAS, the Owner has pledged the Shares to Coutts, as security for a loan (the "Loan") made by Coutts to the Owner to finance the acquisition of the Shares by the Owner pursuant to the Loan Agreement; AND WHEREAS, the Loan Agreement provides, among other things, that in the event of a default thereunder, Coutts may sell, or resell in one or more sales, all or any portion of the property ("Collateral") pledged to it as security for the obligations of the Owner under the Loan Agreement, at any broker's board or public or private sale; AND WHEREAS, the Loan Agreement further provides that Coutts may at any time, whenever it deems necessary or desirable, in its own name or in the name of the Owner, endorse, assign, convey and transfer any and all of the Collateral; AND WHEREAS, the Shares form part of the Collateral; AND WHEREAS, the Owner is in default of its obligations under the Loan Agreement; 2 - 2 - AND WHEREAS, the Purchaser and Coutts have entered into the Banks Master Agreement dated August 19, 1996 (hereinafter the "Master Agreement") pursuant to which the Purchaser has agreed to enter into this Agreement to purchase the Shares, Coutts has agreed to loan to the Purchaser the amount to be paid as the purchase price in respect of the sale of the Shares hereunder and Coutts agreed to cause the Owner to enter into this Agreement to sell the Shares. NOW THEREFORE the parties agree as follows: 1. PURCHASE AND SALE The Owner hereby sells, assigns and transfers to the Purchaser and the Purchaser hereby purchases from the Owner as of the date hereof (the "Effective Date") all the right, title and interest of the Owner in and to the Shares for an aggregate purchase price equal to $10,607,896 (the "Purchase Price") and on and subject to the terms and conditions set forth in this Agreement and the Master Agreement. 2. PAYMENT OF PURCHASE PRICE AND DEEMED DELIVERY OF THE SHARES (a) Payment of Purchase Price The Purchase Price shall be satisfied by Coutts crediting an amount equal to the Purchase Price as a repayment on behalf of the Owner to the balance outstanding under the Loan on the Effective Date. If the Purchase Price exceeds the balance outstanding under the Loan, including principal, interest and all other amounts owing thereunder, the amount of such excess shall be paid by Coutts to the Owner as soon as the full amount of the Loan has been repaid and discharged. (b) Deemed Delivery of Purchased Shares On payment of the Purchase Price in the manner set forth in paragraph (a) above, Coutts shall instruct the transfer agent for the Company to issue certificates representing the Shares in the name of the Purchaser. The certificates shall be retained by Coutts and held as security under the Banks Purchased Share Pledge (as defined in the Master Agreement) duly endorsed in blank for transfer or with a stock transfer power of attorney duly executed by the Purchaser. 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. 4 - 4 - IN WITNESS WHEREOF, the Owner and the Purchaser have executed this Agreement by the signatures of their proper officers duly authorized in that behalf. BY COUTTS & CO AG, NEW YORK BRANCH, IN THE NAME OF THE OWNER, PURSUANT TO THE AUTHORITY GRANTED TO IT IN THE LOAN AGREEMENT By: /s/ Peter Cawdron ------------------------------------ /s/ Jacques Benquesus --------------------------------------- Jacques Benquesus EX-99.H 9 BANKS SHARE PURCHASE AGREEMENT DATED 8/20/96 1 Wills/Banks/Gaming SHARE PURCHASE AGREEMENT THIS AGREEMENT is made this 20th day of August, 1996 BETWEEN: JACQUES BENQUESUS of the City of Jerusalem, Israel (the "Purchaser") - and - WILLSBORO UNIVERSAL CORPORATION a corporation governed by the laws of the British Virgin Islands (the "Owner"), by Coutts & Co AG, New York Branch, pursuant to the authority granted to it by the Owner under that certain General Loan and Collateral Agreement executed by the Owner (the "Loan Agreement") WHEREAS, the Owner is the beneficial owner of 843,285 common shares (the Shares") of Gaming Lottery Corporation (the "Company"); AND WHEREAS, the Owner has pledged the Shares to Coutts, as security for a loan (the "Loan") made by Coutts to the Owner to finance the acquisition of the Shares by the Owner pursuant to the Loan Agreement; AND WHEREAS, the Loan Agreement provides, among other things, that in the event of a default thereunder, Coutts may sell, or resell in one or more sales, all or any portion of the property ("Collateral") pledged to it as security for the obligations of the Owner under the Loan Agreement, at any broker's board or public or private sale; AND WHEREAS, the Loan Agreement further provides that Coutts may at any time, whenever it deems necessary or desirable, in its own name or in the name of the Owner, endorse, assign, convey and transfer any and all of the Collateral; AND WHEREAS, the Shares form part of the Collateral; AND WHEREAS, the Owner is in default of its obligations under the Loan Agreement; 2 - 2 - AND WHEREAS, the Purchaser and Coutts have entered into the Banks Master Agreement dated August 19, 1996 (hereinafter the "Master Agreement") pursuant to which the Purchaser has agreed to enter into this Agreement to purchase the Shares, Coutts has agreed to loan to the Purchaser the amount to be paid as the purchase price in respect of the sale of the Shares hereunder and Coutts agreed to cause the Owner to enter into this Agreement to sell the Shares. NOW THEREFORE the parties agree as follows: 1. PURCHASE AND SALE The Owner hereby sells, assigns and transfers to the Purchaser and the Purchaser hereby purchases from the Owner as of the date hereof (the "Effective Date") all the right, title and interest of the Owner in and to the Shares for an aggregate purchase price equal to $2,833,437.60 (the "Purchase Price") and on and subject to the terms and conditions set forth in this Agreement and the Master Agreement. 2. PAYMENT OF PURCHASE PRICE AND DEEMED DELIVERY OF THE SHARES (a) Payment of Purchase Price The Purchase Price shall be satisfied by Coutts crediting an amount equal to the Purchase Price as a repayment on behalf of the Owner to the balance outstanding under the Loan on the Effective Date. If the Purchase Price exceeds the balance outstanding under the Loan, including principal, interest and all other amounts owing thereunder, the amount of such excess shall be paid by Coutts to the Owner as soon as the full amount of the Loan has been repaid and discharged. (b) Deemed Delivery of Purchased Shares On payment of the Purchase Price in the manner set forth in paragraph (a) above, Coutts shall instruct the transfer agent for the Company to issue certificates representing the Shares in the name of the Purchaser. The certificates shall be retained by Coutts and held as security under the Banks Purchased Share Pledge (as defined in the Master Agreement) duly endorsed in blank for transfer or with a stock transfer power of attorney duly executed by the Purchaser. 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. 4 - 4 - IN WITNESS WHEREOF, the Owner and the Purchaser have executed this Agreement by the signatures of their proper officers duly authorized in that behalf. BY COUTTS & CO AG, NEW YORK BRANCH, IN THE NAME OF THE OWNER, PURSUANT TO THE AUTHORITY GRANTED TO IT IN THE LOAN AGREEMENT By: /s/ Peter Cawdron ----------------------------------- /s/ Jacques Benquesus --------------------------------------- Jacques Benquesus EX-99.I 10 BANKS SHARE PURCHASE AGREEMENT DATED 8/20/96 1 Pan/Banks/Gaming SHARE PURCHASE AGREEMENT THIS AGREEMENT is made this 20th day of August, 1996 BETWEEN: JACQUES BENQUESUS of the City of Jerusalem, Israel (the "Purchaser") - and - PANOLA WORLDWIDE CORPORATION a corporation governed by the laws of the British Virgin Islands (the "Owner"), by Coutts & Co AG, New York Branch, pursuant to the authority granted to it by the Owner under that certain General Loan and Collateral Agreement executed by the Owner (the "Loan Agreement") WHEREAS, the Owner is the beneficial owner of 668,465 common shares (the Shares") of Gaming Lottery Corporation (the "Company"); AND WHEREAS, the Owner has pledged the Shares to Coutts, as security for a loan (the "Loan") made by Coutts to the Owner to finance the acquisition of the Shares by the Owner pursuant to the Loan Agreement; AND WHEREAS, the Loan Agreement provides, among other things, that in the event of a default thereunder, Coutts may sell, or resell in one or more sales, all or any portion of the property ("Collateral") pledged to it as security for the obligations of the Owner under the Loan Agreement, at any broker's board or public or private sale; AND WHEREAS, the Loan Agreement further provides that Coutts may at any time, whenever it deems necessary or desirable, in its own name or in the name of the Owner, endorse, assign, convey and transfer any and all of the Collateral; AND WHEREAS, the Shares form part of the Collateral; AND WHEREAS, the Owner is in default of its obligations under the Loan Agreement; 2 - 2 - AND WHEREAS, the Purchaser and Coutts have entered into the Banks Master Agreement dated August 19, 1996 (hereinafter the "Master Agreement") pursuant to which the Purchaser has agreed to enter into this Agreement to purchase the Shares, Coutts has agreed to loan to the Purchaser the amount to be paid as the purchase price in respect of the sale of the Shares hereunder and Coutts agreed to cause the Owner to enter into this Agreement to sell the Shares. NOW THEREFORE the parties agree as follows: 1. PURCHASE AND SALE The Owner hereby sells, assigns and transfers to the Purchaser and the Purchaser hereby purchases from the Owner as of the date hereof (the "Effective Date") all the right, title and interest of the Owner in and to the Shares for an aggregate purchase price equal to $2,246,042.40 (the "Purchase Price") and on and subject to the terms and conditions set forth in this Agreement and the Master Agreement. 2. PAYMENT OF PURCHASE PRICE AND DEEMED DELIVERY OF THE SHARES (a) Payment of Purchase Price The Purchase Price shall be satisfied by Coutts crediting an amount equal to the Purchase Price as a repayment on behalf of the Owner to the balance outstanding under the Loan on the Effective Date. If the Purchase Price exceeds the balance outstanding under the Loan, including principal, interest and all other amounts owing thereunder, the amount of such excess shall be paid by Coutts to the Owner as soon as the full amount of the Loan has been repaid and discharged. (b) Deemed Delivery of Purchased Shares On payment of the Purchase Price in the manner set forth in paragraph (a) above, Coutts shall instruct the transfer agent for the Company to issue certificates representing the Shares in the name of the Purchaser. The certificates shall be retained by Coutts and held as security under the Banks Purchased Share Pledge (as defined in the Master Agreement) duly endorsed in blank for transfer or with a stock transfer power of attorney duly executed by the Purchaser. 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. 4 - 4 - IN WITNESS WHEREOF, the Owner and the Purchaser have executed this Agreement by the signatures of their proper officers duly authorized in that behalf. BY COUTTS & CO AG, NEW YORK BRANCH, IN THE NAME OF THE OWNER, PURSUANT TO THE AUTHORITY GRANTED TO IT IN THE LOAN AGREEMENT By: /s/ Peter Cawdron ------------------------------------ /s/ Jacques Benquesus --------------------------------------- Jacques Benquesus EX-99.J 11 BANKS LIMITED GUARANTEE DATED 8/20/96 1 LIMITED GUARANTEE LIMITED GUARANTEE, dated as of August 20, 1996 (the "Guarantee"), from Jacques Benquesus, an individual residing in the City of Jerusalem, Israel (the "Guarantor"), to Coutts & Co AG, New York Branch, a Swiss bank licensed to conduct a banking business by the State of New York, its successors and assigns (the "Bank"). WHEREAS, the Guarantor has agreed pursuant to an agreement dated August 19, 1996 between the Guarantor and the Bank (the "Master Agreement"), to enter into this agreement of limited guarantee with the Bank in order to induce the Bank to enter into certain loan agreements (the "Loan Agreements") dated as of the date hereof between the Bank and each of Larry H. Weltman, John M. Wiseman and the Guarantor (each a "Borrower" and, collectively, the "Borrowers") for the extension of credit provided for therein (each a "Guaranteed Loan" and collectively the "Guaranteed Loans") and in consideration of the Bank agreeing not to effect the sale of certain property of the Guarantor currently held by the Bank as security for certain indebtedness which is currently in default; AND WHEREAS, the Bank is unwilling to enter into the Loan Agreements or forbear from effecting the sale of the Guarantor's property unless the Guarantor enters into this Guarantee. NOW, THEREFORE, in order to induce the Bank to enter into the Loan Agreements and to extend the Guaranteed Loans and to consummate the transactions contemplated thereby and for other good and valuable consideration, the receipt and adequacy of which are hereby mutually acknowledged, the Guarantor hereby agrees as follows: 1. GUARANTEE: (a) Subject to Section 3 hereof, the Guarantor unconditionally and irrevocably guarantees to the Bank, the due and punctual performance of and compliance by each of the Borrowers with all obligations, covenants, warranties, undertakings and conditions contained in or arising under the Loan Agreements including but not limited to, the full and punctual payment by the Borrowers, when due, whether at the stated due date, by acceleration or otherwise, of any and all, obligations, liabilities, indebtedness and other amounts of every kind arising under the Loan Agreements or in respect of the Guaranteed Loans (whether principal, interest (after as well as before default) fees, premiums or penalties), all amounts in respect of indemnities provided for in the Loan Agreements, and all damages (whether provided for in the Loan Agreements or otherwise permitted by law) in respect of a failure or refusal by any Borrower to make any such payment,howsoever created, arising or evidenced, voluntary or involuntary, whether direct or indirect, absolute or contingent, now or hereafter existing or owing 2 - 2 - to the Bank (all the foregoing obligations and undertakings are collectively referred to herein as the "Obligations"). (b) Except as otherwise provided in Section 3 hereof, this Guarantee is an absolute and unconditional guarantee of performance and payment when due under the Loan Agreements and not of collection of any indebtedness contained in or arising under the Loan Agreements. This Guarantee is in no way conditioned upon any attempt to collect from a Borrower or upon any other event or contingency except as otherwise provided in Section 3 hereof, and shall be binding upon and enforceable against the Guarantor without regard to the validity or enforceability of the Obligations, or of any term thereof. If for any reason any Borrower shall fail or be unable duly and punctually to pay any amount when due under a Loan Agreement, the Guarantor will forthwith pay the same immediately upon demand, subject to Section 3 hereof. (c) If any Obligation, or any part thereof shall be terminated as a result of the rejection thereof by any trustee, receiver or agent of a Borrower or any of his property in any bankruptcy, insolvency or similar proceeding, the Guarantor's obligations hereunder shall continue to the same extent as if such Obligation had not been so rejected. The Guarantor agrees that this Guarantee, up to and including the full amount of the Guarantee Limit (as defined in Section 3), shall continue to be effective or be reinstated, as the case may be, if at any time payment to the Bank of the Obligations or any part thereof is rescinded or must otherwise be returned by the Bank upon the insolvency or bankruptcy of a Borrower, or otherwise, as though such payment to the Bank had not been made (hereinafter referred to as a "Recapture Event"). (d) The Guarantor shall pay all reasonable costs, expenses and damages incurred (including, without limitation, attorneys' fees and disbursements) in connection with the enforcement of the obligations of the Guarantor under this Guarantee and, subject to Section 3 hereof, in connection with the enforcement of the Obligations only to the extent that such costs, expenses and damages are not paid by a Borrower pursuant to the respective documents pursuant to which the Obligations were created or otherwise. 2. NATURE OF GUARANTEE: Except as otherwise provided in Section 3 hereof, the obligations of the Guarantor hereunder shall be continuing and unlimited, shall not be subject to any counterclaim, set-off, deduction or defence (other than payment or performance) based upon any claim the Guarantor may have against the Bank or a Borrower or any other corporation, individual, partnership, association, organization, trust, trustee, executor, administrator or other legal representative(each a "Person") and shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by any circumstance or 3 - 3 - condition (whether or not the Guarantor shall have any knowledge or notice thereof) whatsoever which might constitute a legal or equitable discharge or defence including, but not limited to, (a) any express or implied amendment or modification of or supplement to any of the Loan Agreements or any other agreement referred to in any thereof, or any other instrument applicable to any Borrower or to the Obligations, or any part thereof, or any assignment or transfer of any thereof; (b) any failure on the part of any Borrower to perform or comply with any of the Loan Agreements or in respect of any of the Guaranteed Loans, or any other agreement as aforesaid; (c) any waiver, consent, change, extension, indulgence or other action or any action or inaction under any of the Loan Agreements or in respect of any of the Guaranteed Loans, or any other agreement as aforesaid, or this Guarantee, whether or not the Bank, any Borrower or the Guarantor has notice or knowledge of any of the foregoing; (d) any bankruptcy, insolvency or similar proceeding with respect to the Guarantor or any Borrower, or the Guarantor's or the Borrowers' respective properties or their creditors, or any action taken by any trustee or receiver or by any court in any such proceeding; (e) any furnishing or acceptance of additional security or any release or non-perfection of any security (and the Guarantor authorizes the Bank to furnish, accept or release said security); (f) any limitation on the liability of any Borrower or any obligations of a Borrower under any of the Loan Agreements (other than any limitation expressly provided for therein or herein) or any termination, cancellation, frustration, invalidity or unenforceability, in whole or in part, of any of the Loan Agreements, or any term of any thereof; (g) any lien, charge or encumbrance on or affecting the Guarantor's or any of the Borrowers' respective assets and properties; (h) any act, omission or breach on the part of the Bank under any of the Loan Agreements, or any other agreement at any time existing between the Bank and any Borrower or any other law, governmental regulation or other agreement applicable to the Bank or any Obligation; (i) any claim as a result of any other dealings among the Bank, the Guarantor or any Borrower or any of them; (j) the assignment of the Guaranteed Loans by the Bank to any other Person, or the assignment of this Guarantee by the Bank to any other Person; or (k) any change in the name of the Bank, any Borrower or any other Person referred to herein. The obligations of the Guarantor set forth herein constitute the full recourse obligations of the Guarantor enforceable against him to the full extent of all of his assets and properties, subject to the limitation that in no event shall the Guarantor be required to pay pursuant to this Guarantee any amount, in the aggregate, in excess of the Guarantee Limit (as defined in Section 3 hereof). 3. GUARANTEE LIMIT: The Guarantee limit (the "Guarantee Limit") shall be $10,000,000, which Guarantee Limit shall be subject to reduction as provided in the immediately succeeding sentence; provided, however, that the Guarantee Limit shall not apply to and shall in no way limit the obligation of the Guarantor to pay costs, expenses and damages incurred in connection with the enforcement of the obligations of the Guarantor under this Guarantee as required by Subsection 1(d) hereof. Notwithstanding anything in this Guarantee or the Security (as defined in 4 - 4 - the Loan Agreements) to the contrary, (x) subject only to the occurrence of a Recapture Event, the Guarantee Limit shall be reduced by $1,000,000 for every $3,000,000 in principal repaid under the Guaranteed Loans (and in this respect, no partial reductions will be made and no $1,000,000 reduction in the Guarantee Limit will be made until the $3,000,000 in principal giving rise to such reduction has been repaid in full), and shall terminate and be of no further force or effect at such time as at least $30,000,000 in principal amount of the Guaranteed Loans has been repaid and (y) if after the occurrence of an Event of Default (as defined in the Loan Agreements), the Bank elects to exercise any of its rights or remedies to seek payment of the Guaranteed Loans and/or any other Obligation, the Bank agrees that it shall exercise any such right or remedy in the following order (i) first, the Bank shall (unless stayed or prevented from doing so by law or court order) sell or otherwise realize upon the securities held under the Banks Purchased Share Pledge (as such term is defined in the Master Agreement); (ii) second, the Bank shall (unless stayed or prevented from doing so by law or court order) sell or otherwise realize upon the securities held under the Amended Banks Pledge (as such term is defined in the Master Agreement); (iii) third the Bank shall (unless stayed or prevented from doing so by law or court order) exercise any right of set-off as provided in Section 10.4 of the Loan Agreements; and (iv) fourth, but only to the extent of any remaining deficiency, the Bank shall make a demand for payment pursuant to this Guarantee. Any sales by the Bank of any portion of the Security will be deemed to have been made in a commercially reasonable manner satisfactory to the Guarantor if such sales have been effected within the parameters set forth in Article 3 of the Master Agreement. 4. WAIVER: The Guarantor unconditionally waives: (a) notice of any of the matters referred to in Section 2 hereof; (b) all notices which may be required by statute, rule of law or otherwise to preserve any rights against the Guarantor hereunder, including, without limitation, notice of the acceptance of this Guarantee, or the creation, renewal, extension, modification or accrual of the Obligations or notice of any other matters relating thereto, any presentment, demand, notice of dishonour, protest, nonpayment of any damages or other amounts payable under any of the Loan Agreements; (c) any requirement for the enforcement, assertion or exercise of any right, remedy, power or privilege under any of the Loan Agreements or in respect of any of the Guaranteed Loans, including without limitation, diligence in collection or protection of or realization upon the Obligations or any part thereof or any of the Security; (d) any requirement of diligence; (e) any requirement to mitigate the damages resulting from a default by a Borrower under any of the Loan Agreements; (f) the occurrence of every other condition precedent to which the Guarantor or any Borrower may otherwise be entitled; and (g) except as otherwise provided in Section 3 hereof, the right to require the Bank to proceed against any Borrower or any other Person liable on the Obligations, to proceed against or exhaust any security held from any Borrower or any other Person, or to pursue any other remedy in the Bank's power whatsoever, and the Guarantor hereby waives 5 - 5 - the right to have the property of any Borrower first applied to the discharge of the Obligations. Subject to Section 3 hereof, the Bank may, at its election, exercise any right or remedy it may have, including, without limitation, the right to foreclose upon any such security by judicial or nonjudicial sale, without affecting or impairing in any way the liability of the Guarantor hereunder, except to the extent the Obligations have been paid, and the Guarantor waives any defense arising out of the absence, impairment or loss of any right of reimbursement, contribution or subrogation or any other right or remedy of the Guarantor against any of the Borrowers or any such security, whether resulting from such election by the Bank or otherwise. The Guarantor waives any defense arising by reason of any disability or other defense of each of the Borrowers or by reason of the cessation from any cause whatsoever of the liability, either in whole or in part, of any Borrower to the Bank for the Obligations. The Guarantor understands that the Bank's exercise of certain rights and remedies contained in the Loan Agreements may affect or eliminate the Guarantor's rights of subrogation against the Borrowers and that the Guarantor may therefore incur partially or totally nonreimbursable liability hereunder; nevertheless, the Guarantor hereby authorizes and empowers the Bank, its successors, endorsees and/or assignees, to exercise in its or their sole discretion, any rights and remedies, or any combination thereof, which may then be available, it being the purpose and intent of the Guarantor that his obligations hereunder shall be absolute, independent and unconditional under any and all circumstances, except as described in Section 3 hereof. The Guarantor assumes the responsibility for being and keeping informed of the financial condition of each of the Borrowers and of all other circumstances bearing upon the risk of nonpayment of the Obligations and agrees that the Bank shall not have any duty to advise the Guarantor of information regarding any condition or circumstance or any change in such condition or circumstances. The Guarantor acknowledges that the Bank has not made any representation to the Guarantor concerning the financial condition of the Borrowers. 5. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR: The Guarantor represents and warrants to the Bank that: (a) Enforceable Obligations: No consent of any other Person (including, without limitation, creditors of the Guarantor), and no authorization of, notice to, or other act by or in respect of the Guarantor by or with any governmental authority, agency or instrumentality is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee. This Guarantee has been duly executed and delivered by the 6 - 6 - Guarantor and constitutes a legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms. (b) No Legal Bar: The execution, delivery and performance by the Guarantor of this Guarantee will not violate any provision of any existing law or regulation applicable to the Guarantor or of any award, order or decree applicable to the Guarantor of any court, arbitrator or governmental authority, or of any security issued by the Guarantor or of any mortgage, indenture, lease, contract or other agreement or undertaking to which the Guarantor is a party or by which the Guarantor or any of his properties or assets may be bound. (c) No Material Litigation: There is no action, suit, proceeding or investigation at law or in equity by or before any court, governmental body, agency, commission or other tribunal now pending or, to the best knowledge of the Guarantor, threatened against or affecting the Guarantor or any of his property or rights which questions the enforceability of this Guarantee or which, if adversely determined, would have a material adverse impact on the financial condition or business of the Guarantor or, which if adversely determined, could reasonably be expected to materially impair the ability of the Guarantor to perform his obligations hereunder, except as disclosed in Schedule 5(c) hereto. 6. PAYMENT: A payment by the Guarantor to the Bank under this Guarantee shall be made by transferring the amount thereof in immediately available funds without set-off or counterclaim; provided that, no such payment shall be deemed a waiver of any rights the Bank may have. If the Guarantor is required by any applicable law to make a deduction or withholding for or on account of any tax for any payment to be made to the Bank under this Guarantee, the Guarantor will pay to the Bank such additional amount so that the amount actually received by the Bank equals the full amount the Bank would have received had no such deduction or withholding been required, provided, however, that in no event shall the Guarantor be liable to make any payment to the Bank in excess of the then applicable Guarantee Limit as described in Section 3 hereof. 7. PARTIES: This Guarantee shall inure to the benefit of the Bank and its successors, assigns or transferees, and shall be binding upon the Guarantor and his successors and assigns. The Guarantor may not delegate any of his duties under this Guarantee without the prior written consent of the Bank or any Person to whom the Bank has assigned this Guarantee. Upon notice to the Guarantor, the Bank and its successors, assigns and transferees may assign its or their rights and benefits under this Guarantee to any financial institution. 8. NOTICES: All notices, demands and other communications between the Bank and the Guarantor under this Guarantee shall be in writing and shall be 7 - 7 - delivered or sent to the address or telecopier number shown below, or to such other address or telecopier number as either of us may by written notice to the other have designated for such purpose. Any such notice, demand or other communication shall not be effective until actually received. If to the Bank: Coutts & Co AG, New York Branch 65 East 55th Street New York, NY 10022 Attention: Mr. Mario Economou, Vice President Telecopier: (212) 303-2929 Telephone: (212) 303-2971 With a copy to the Bank's New York counsel: Rogers & Wells 200 Park Avenue New York, New York 10166-0153 Attention: Mr. Alan M. Christenfeld, Esq. Telecopier: (212) 878-8375 Telephone: (212) 878-8000 And a copy to the Bank's Ontario counsel: Osler, Hoskin & Harcourt 280 Park Avenue - 30W New York, New York 10017 Attention: Mr. John W. Stevens, Esq. Telecopier: (212) 867-5802 Telephone: (212) 867-5800 If to the Guarantor: Mr. Jacquese Benquesus c/o Gaming Lottery Corporation 160 Nashdene Road Scarborough, Ontario M1V 4C4 Telecopier: (416) 754-8441 Telephone: (416) 292-5963 8 - 8 - With a copy to the Guarantor's New York counsel: Proskauer Rose Goetz & Mendelsohn LLP 1585 Broadway New York, NY 10036 Attention: Mr. Jack Jackson, Esq. Telecopier: (212) 969-2900 Telephone: (212) 969-3000 And a copy to the Guarantor's Ontario counsel: Goldman, Spring, Schwartz & Kichler Suite 700 40 Sheppard Avenue West North York, Ontario M2N 6K9 Attention: Mr. Joseph Maierovits, Esq. Telecopier: (416) 225-4805 Telephone: (416) 225-9400 9. REMEDIES: The Guarantor stipulates that the remedies at law in respect of any default or threatened default by the Guarantor in the performance of or compliance with any of the terms of this Guarantee are not and will not be adequate, and that any of such terms may be specifically enforced by a decree for specific performance or by an injunction against violation of any such terms or otherwise. 10. RIGHTS TO DEAL WITH THE BORROWERS: At any time and from time to time, without terminating, affecting or impairing the validity of this Guarantee or the obligations of the Guarantor hereunder, the Bank may deal with the Borrowers, or any of them, in the same manner and as fully and as if this Guarantee did not exist and shall be entitled, among other things, to grant any Borrower, without notice or demand and without affecting the Guarantor's liability hereunder, such extension or extensions of time to perform, renew, compromise, accelerate or otherwise change the time for payment of or otherwise change the terms of payment or any part thereof contained in or arising under any of the Loan Agreements, or to waive any obligation of any Borrower to perform any act or acts as the Bank may deem advisable. 11. SUBROGATION: The Guarantor irrevocably waives any and all rights to which he may be entitled, by operation of law or otherwise, upon making any 9 - 9 - payment hereunder to be subrogated to the rights of the payee against the Borrower with respect to such payment or otherwise to be reimbursed, indemnified or exonerated by the Borrower in respect thereof. 12. GUARANTOR'S COVENANTS: The Guarantor hereby covenants and agrees that until the Obligations and all obligations of the Guarantor under this Guarantee have been paid or discharged in full: (a) Compliance with Law: The Guarantor shall comply in all material respects with all applicable laws, rules, regulations and orders of any governmental authority having jurisdiction over his or such Person's business, as the case may be, except (i) such noncompliance as could not materially adversely affect the financial condition or business of the Guarantor and such Persons, taken as a whole, or (ii) such noncompliance as is being contested in good faith by appropriate proceedings. (b) Payment of Taxes: The Guarantor shall pay and discharge all taxes, assessments and governmental charges or levies imposed upon him or such Person or upon his or such Person's income or properties, as the case may be, prior to the date on which penalties attach thereto, except to the extent that (i) any such tax, assessment, charge or levy is being contested in good faith by appropriate proceedings and, in the case of such Person, adequate reserves therefor have been established by such Person, as the case may be, or (ii) the failure so to pay or discharge any such tax, assessment, charge or levy could not materially adversely affect the financial condition or business of the Guarantor. 13. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC.: All representations, warranties, covenants and agreements made herein and in statements or certificates delivered under this Guarantee (collectively, the "Operative Provisions") shall survive any investigation or inspection made by or on behalf of the Bank and shall continue in full force and effect until all of the obligations of the Guarantor under this Guarantee shall be fully performed in accordance with the terms hereof, and until the payment in full of all sums payable under each of the Loan Agreements. The Operative Provisions shall terminate and be of no force or effect at such time as at least $30,000,000 of the principal amount of the Guaranteed Loans has been repaid; provided, however, that the Operative Provisions shall continue to be effective or be reinstated, as the case may be, if, at any time, a Recapture Event shall have occurred and, as a result thereof, the principal amount of the Guaranteed Loans repaid less any amounts required to be rescinded or returned by the Bank is less than $30,000,000. 10 - 10 - 14. GOVERNING LAW AND CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL: (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE, EACH OF THE GUARANTOR AND THE BANK HEREBY AGREE TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK SITTING IN THE CITY AND COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN, AND AGREE THAT ANY DISPUTE CONCERNING THE RELATIONSHIP BETWEEN THE GUARANTOR AND THE BANK OR THE CONDUCT OF ANY PARTY HERETO IN CONNECTION WITH THIS GUARANTEE OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE. NOTWITHSTANDING THE FOREGOING, THE BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE GUARANTOR OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THIS GUARANTEE. (c) THE GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO HIM AT HIS ADDRESS SET FORTH IN SECTION 8 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS OR, AT THE BANK'S OPTION, BY SERVICE UPON THE GUARANTOR'S NEW YORK COUNSEL AT ITS ADDRESS SET FORTH IN SECTION 8 HEREOF, WHICH COUNSEL THE GUARANTOR HEREBY IRREVOCABLY APPOINTS AS HIS AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF NEW YORK. THE GUARANTOR HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. (d) EACH OF THE GUARANTOR AND THE BANK HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS GUARANTEE OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR (II) IN ANY WAY CONNECTED WITH OR RELATED 11 - 11 - OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO THIS GUARANTEE, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. THE GUARANTOR AND THE BANK EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF THEM MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS GUARANTEE WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. (e) NOTHING IN THIS SECTION 14 SHALL AFFECT THE RIGHTS OF THE BANK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHTS OF THE BANK TO BRING ANY ACTION OR PROCEEDING AGAINST THE GUARANTOR OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. (f) EACH OF THE GUARANTOR AND THE BANK HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION 14 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 15. MISCELLANEOUS: If any term of this Guarantee or any application thereof shall be invalid or unenforceable, the remainder of this Guarantee and any other application of such term shall not be affected thereby. Any term of this Guarantee may be amended, waived, discharged or terminated only by an instrument in writing signed by the Guarantor and the Bank. The headings in this Guarantee are for purposes of reference only and shall not limit or define the meaning hereof. This Guarantee may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. This Guarantee may be executed by faxed signature with the same effect as an originally executed copy. 16. CONFIDENTIALITY: This Guarantee shall be subject to the provisions of the Master Agreement regarding confidentiality. 12 - 12 - IN WITNESS WHEREOF, the undersigned have caused this Guarantee to be executed and delivered as of the day and year first above written. /s/ Jacques Benquesus --------------------------- MR. JACQUES BENQUESUS Acknowledged and Agreed: COUTTS & CO AG, NEW YORK BRANCH By: /s/ Peter Cawdron ------------------------- Name: Title: EX-99.K 12 WELTMAN MASTER AGREEMENT DATED 8/19/96 1 WELTMAN MASTER AGREEMENT THIS AGREEMENT made this 19th day of August, 1996 BETWEEN: COUTTS & CO AG, New York Branch, a Swiss banking institution ("Coutts") - and - LARRY H. WELTMAN of the City of Toronto, in the Province of Ontario ("Weltman") WHEREAS: A. Coutts has loans (the "Client Loans") outstanding to certain of its clients in the aggregate amount of approximately $42 million, which loans were made for the purposes of financing the acquisition from treasury of common shares of Gaming Lottery Corporation ("Gaming"), The Instant Publisher Inc. ("TIPI") and/or Warp 10 Technologies Inc. ("Warp 10" and collectively with Gaming and TIPI, the "Companies" and each a "Company"); B. The Client Loans are now, and have been for some time, in default and Coutts is permitted under the terms of the agreements governing the Client Loans to sell the shares of the Companies which have been pledged to Coutts by the Clients as security for the Client Loans; and C. Weltman has entered into this Agreement and certain other agreements and arrangements contemplated and provided for by this Agreement in order to acquire 183,020 common shares of Gaming. NOW THEREFORE the parties agree as follows; ARTICLE 1 DEFINITIONS AND PRINCIPLES OF INTERPRETATION 1.1 DEFINITIONS - Whenever used in this Agreement, unless there is something inconsistent in the subject matter or context, the following words and terms shall 2 - 2 - have the meanings set out below: "AGREEMENT" means this agreement, including the schedules, and all instruments supplementing or amending or confirming this Agreement; "hereof", "hereto", and "hereunder" and similar expressions mean and refer to this Agreement and not to any particular article or section; "Article" or "Section" means and refers to the specified article or section of this Agreement; "BANKS" means Jacques Benquesus; "BANKS LOAN AGREEMENTS" has the meaning ascribed thereto in the Banks Master Agreement; "BANKS MASTER AGREEMENT" means the master agreement of even date herewith between Banks and Coutts; "BAYFRONT" means Bayfront Intervest Limited; "CLAIMS" means any claim, demand, action, cause of action, damage, loss, costs, liability or expense, including, without limitation, reasonable legal, accounting and other professional fees, and all costs incurred in investigating or pursuing any of the foregoing or any proceeding relating to any of the foregoing; "CLIENT LOANS" means the loans made by Coutts to each of the Clients and includes all amounts outstanding and payable to Coutts thereunder as at the date of Closing including for principal, interest, fees owing and other charges as more specifically set out in Schedule A; "CLIENTS" means Bayfront, Compania, Mariner, Panola, Silva Run and Willsboro; "CLOSING" means the completion of the actions, exchanges and transactions contemplated by Article 2, which shall take place at 10:00 a.m. on August 20, 1996 or such other time as the parties may agree at the offices of Osler, Hoskin & Harcourt in New York City; "COMPANIA" means Compania Di Investimento Antilliana S.A.; "EVENT OF DEFAULT" shall have the meaning ascribed to it in each of the Banks Loan Agreements, the Weltman Loan Agreement and the Wiseman Loan Agreement; "GAMING SHARES" means common shares of Gaming; 3 - 3 - "MARINER" means Mariner Reserve Fund Inc.; "MINIMUM PRICE" means: (a) at all times that less than $30 million of the New Loan Amount has been repaid to Coutts, the Minimum Price shall be equal to 80% of the Open Market Price of the particular Pledged Shares being sold; (b) after $30 million or more of the New Loan Amount has been repaid, the Minimum Price shall be equal to 85% of the Open Market Price of the particular Pledged Shares being sold; and (c) in the event that the sale of Pledged Shares is to a Related Party, the Minimum Price shall be equal to the Open Market Price of the Pledged Shares being sold less an amount equal to the customary commission which would have been payable had the sale been undertaken at arms-length on an exchange or quotation system on which such shares are traded; "MRS. BANKS" means Biba Benquesus, the wife of Banks; "NET PROCEEDS" means the full amount of the proceeds received or receivable on a sale of Pledged Shares pursuant to Article 3 after deducting any discount or commission payable in respect of such sale; "NEW LOAN AMOUNT" means the aggregate principal amount outstanding from time to time and owing to Coutts under any and all of the New Loans; "NEW LOANS" means the loans made to Banks by Coutts under the Banks Loan Agreements, the loan made to Weltman by Coutts under the Weltman Loan Agreement and the loan made to Wiseman by Coutts under the Wiseman Loan Agreement; "OPEN MARKET PRICE" means, in respect of a sale of Pledged Shares, the highest closing price of the shares of the Company which are the subject of the sale on any of the NASDAQ Stock Market, Inc., The Toronto Stock Exchange or The Canadian Dealing Network Inc. (in the case of The Toronto Stock Exchange or The Canadian Dealing Network Inc., the closing price shall be determined by taking the actual closing price, reported in Canadian dollars, and converting such price to U.S. dollars by reference to the Reuters Canadian dollar/U.S. dollar exchange rate as reported at 4:00 p.m. (New York time) on the trading day immediately preceding the date on which such sale is made); "OPERATIVE AGREEMENTS" means this Agreement, the Weltman Loan Agreement, the Weltman Share Purchase Agreement and the Share Pledge 4 - 4 - and any and all agreements required to be entered into between Coutts and Weltman pursuant to this Agreement and the other Operative Agreements; "PANOLA" means Panola Worldwide Corporation; "PLEDGED SHARES" means the Purchased Shares held from time to time by Coutts as security for the New Loans under the Share Pledge; "PURCHASED SHARES" means the 183,020 Gaming Shares purchased by Weltman pursuant to the Weltman Share Purchase Agreement; "RELATED PARTY" means Mr. Banks, Mrs. Banks, Weltman, Wiseman, any officer, director or employee of any of the Companies, any "associate" of any of the foregoing, any "insider" of any of the Companies, any company "controlling", "controlled" by or under common "control" with any of the foregoing or any "subsidiary" or "affiliate" of any of the Companies (terms in quotation marks having the meaning ascribed to them in the Securities Act (Ontario)) and any other party with whom Mr. Banks does not deal with at arms length for the purposes of the Income Tax Act (Canada); "SECURITY INTEREST" means any mortgage, lien, pledge, charge, security interest or other encumbrance; "SHARE PLEDGE" means the pledge agreement to be entered into between Coutts and Weltman in the form attached hereto as Schedule B in respect of the pledge of the Purchased Shares; "SHARE PURCHASE AGREEMENT" means the form of share purchase agreement attached hereto as Schedule C; "SILVA RUN" means Silva Run Worldwide Limited; "TIPI SHARES" means common shares of TIPI; "WARP 10 SHARES" means common shares of Warp 10; "WELTMAN LOAN AGREEMENT" means the loan agreement to be entered into between Weltman and Coutts pursuant to which Coutts will advance funds to Weltman which Weltman will use to complete the transactions contemplated in the Weltman Share Purchase Agreement and to pay certain expenses incurred by Weltman and Coutts in connection with the preparation of this Agreement and the other documents contemplated hereby and the consummation of the transactions provided for herein, in the form attached hereto as Schedule D; 5 - 5 - "WELTMAN SHARE PURCHASE AGREEMENT" means a Share Purchase Agreement to be entered into between Panola and Weltman to effect the sale of 183,020 Gaming Shares to Weltman; "WILLSBORO" means Willsboro Universal Corporation; "WISEMAN" means John M. Wiseman; "WISEMAN LOAN AGREEMENT" means the loan agreement entered into between Wiseman and Coutts pursuant to the Wiseman Master Agreement; "WISEMAN MASTER AGREEMENT" means the master agreement of even date herewith between Wiseman and Coutts; and "WISEMAN SHARE PURCHASE AGREEMENTS" has the meaning ascribed thereto in the Wiseman Master Agreement. 1.2 CERTAIN RULES OF INTERPRETATION - In this Agreement: (a) time is of the essence in the performance of the parties' respective obligations; (b) unless otherwise specified, all references to money amounts are to United States currency; (c) the descriptive headings of Articles and Sections are inserted solely for convenience of reference and are not intended as complete or accurate descriptions of content; (d) the use of words in the singular or plural, or with a particular gender, shall not limit the scope or exclude the application of any provision of this Agreement to such person or persons or circumstances as the context otherwise permits; and (e) whenever a provision of this Agreement requires an approval or consent by a party to this Agreement and notification of such approval or consent is not delivered within the applicable time limit, then, unless otherwise specified, the party to this agreement whose consent or approval is required shall be conclusively deemed to have withheld its consent or approval. 1.3 ENTIRE AGREEMENT - This Agreement together with the other Operative Agreements and the other documents to be delivered pursuant to this Agreement and the other Operative Agreements, constitute the entire agreement between the parties or any of them pertaining to the subject matter of this Agreement and 6 - 6 - supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties, and there are no warranties, representations or other agreements among the parties or any of them in connection with the subject matter of this Agreement except as specifically set forth in this Agreement and any document delivered pursuant to this Agreement. No supplement, modification or waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed to or shall constitute a waiver of any other provisions (whether or not similar) nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. To the extent that the provisions of this Agreement conflict with or operate in a manner contrary to any term or provision of any of the agreements and documents delivered pursuant to this Agreement, this Agreement shall govern. 1.4 SCHEDULES - The schedules to this Agreement, as listed below, are an integral part of this Agreement:
Schedule Description -------- ----------- Schedule A Client Loan Amounts Schedule B Share Pledge Schedule C Share Purchase Agreement Schedule D Weltman Loan Agreement
ARTICLE 2 CLOSING 2.1 CLOSING - At the Closing, the parties will take the following actions: (a) each of Weltman and Coutts shall enter into, execute and deliver each of the Weltman Loan Agreement and the Share Pledge and the other agreements and documents required to be delivered thereunder at the Closing; (b) Coutts shall cause Panola to enter into, execute and deliver the Weltman Share Purchase Agreement; and Weltman shall enter into, execute and deliver the Weltman Share Purchase Agreement; (c) subject to the satisfaction of all applicable conditions in the Weltman Loan Agreement, Coutts shall advance to Weltman the amount of $634,947.20 under the Weltman Loan Agreement to fund the acquisition by Weltman of the Purchased Shares and the payment by Weltman of certain legal expenses incurred by Weltman and Coutts in 7 - 7 - connection with the preparation of this Agreement and the other documents contemplated hereby and the consummation of the transactions provided for herein; and Weltman shall direct Coutts to, and Coutts shall, deposit into the accounts of Panola the amounts payable to Panola under the Weltman Share Purchase Agreement and shall deliver the Purchased Shares to Coutts to be held by Coutts as security pursuant to the Share Pledge; and (d) Coutts shall pay to Panola the amount, if any, of the proceeds from the sale of the Purchased Shares sold by Panola to Weltman, which exceeds the aggregate of all amounts owing to Coutts under Panola's Client Loan. The forgoing actions and deliveries shall be taken and made in the order set out above. Each of the documents and deliveries contemplated by this Section shall be deposited in escrow and shall not become effective or be released until all the actions required by this Section have been taken and the conditions set out in Section 2.2 have been fulfilled, in each case to the satisfaction of each of the parties to this Agreement and their counsel. 2.2 CONDITIONS - This Agreement and the agreements, actions, exchanges and deliveries provided for in Section 2.1 shall be of no legal force or effect unless and until each of the following conditions shall have been fulfilled: a) Banks and Coutts shall have taken all of the actions required to be taken under Section 2.1 of the Banks Master Agreement and each of Banks and Coutts shall have acknowledged the sufficient performance of the covenants to be performed by the other pursuant to that section and the satisfaction and fulfilment of each of the conditions set out in Section 2.2 of the Banks Master Agreement; and b) Wiseman and Coutts shall have taken all of the actions required to be taken under Section 2.1 of the Wiseman Master Agreement and each of Wiseman and Coutts shall have acknowledged the sufficient performance of the covenants to be performed by the other pursuant to that section and the satisfaction and fulfilment of each of the conditions set out in Section 2.2 of the Wiseman Master Agreement. 2.3 ACKNOWLEDGEMENTS - Each of the parties will acknowledge in writing the performance of the covenants required to be performed for their benefit on or before the Closing and the fulfilment of the conditions in Section 2.2 forthwith after such performance and fulfilment has been achieved to the satisfaction of such party. 8 - 8 - ARTICLE 3 RELEASE OF PLEDGED SHARES 3.1 SALE OF SHARES (a) Weltman shall be permitted, at any time hereafter, to sell any of the Pledged Shares, and Coutts shall forthwith release and deliver any Pledged Shares so sold by Weltman free and clear of any Security Interest created by Coutts upon payment therefor as provided herein and Coutts shall do all things necessary to ensure that the certificates representing such Pledged Shares are properly endorsed for transfer in accordance with the directions of Weltman (provided that such instructions are in accordance with the applicable provisions of this Agreement and further provided that the full amount of the Net Proceeds from the sale is applied in repayment of one or more of the New Loans). (b) Notwithstanding subsection 3.1(a) Weltman shall be permitted, whenever the New Loan Amount has been reduced by $40 million, to sell any Pledged Shares and Coutts shall forthwith release and deliver any Pledged Shares so sold by Weltman, free and clear of any Security Interest created by Coutts upon payment therefor as provided herein, provided that fifty per cent of the Net Proceeds from the sale is applied in repayment of one or more of the New Loans. (c) No sale of Pledged Shares pursuant to this Article 3 may be effected by Weltman unless the amount of the Net Proceeds from such sale is at least equal to the Minimum Price. (d) Weltman shall be permitted to designate the New Loan to which the Net Proceeds of any sale of Pledged Shares pursuant to this section shall be applied. (e) All sales of Pledged Shares by Weltman must be made in compliance with all applicable laws and regulations. (f) Notwithstanding any other provision of this Article 3, Coutts shall not be required to release and deliver any Pledged Shares sold by Weltman unless and until Coutts is provided with evidence, reasonably satisfactory to Coutts, that the provisions of this Article 3 to be complied with by Weltman in connection with such sale have been complied with, provided that upon being so satisfied, Coutts shall promptly deliver any such Pledged Shares. (g) In the event that a sale of Pledged Shares is made pursuant to this Article 3 at any time at which the New Loan to which the proceeds of sale are to be applied is not at that time repayable without penalty, the proceeds of sale required to be applied as 9 - 9 - repayment shall be delivered to Coutts and held by Coutts (in an interest bearing account pledged to Coutts) as security under the Share Pledge until such time as the designated New Loan is repayable without penalty whereupon such proceeds shall be applied by Coutts as repayment of such New Loan. (h) Notwithstanding any other provisions of this Agreement or any of the agreements relating to the transactions contemplated herein, in the event Weltman at any time sells any Gaming Shares other than Pledged Shares ("Unpledged Shares"), Coutts shall forthwith release and deliver to Weltman, that number of Pledged Shares which equals the number of Unpledged Shares so sold by Weltman , free and clear of any Security Interest created by Coutts provided that a sale of such Unpledged Shares is completed by Weltman in all respects in compliance with the provisions of this Article 3 which govern and are applicable to a sale by Weltman's of Pledged Shares. 3.2 RELEASE ON REPAYMENT - At such time as the New Loans have been repaid in full, Coutts shall release and deliver to Weltman any and all Pledged Shares free and clear of any Security Interest created by Coutts. ARTICLE 4 INDEMNIFICATION 4.1 MUTUAL INDEMNIFICATIONS FOR BREACHES OF COVENANTS AND WARRANTY, ETC. - Coutts covenants and agrees with Weltman, and Weltman covenants and agrees with Coutts (the party or parties so covenanting and agreeing to indemnify another party being referred to in this Section as the "Indemnifying Party" and the party so to be indemnified being called the "Indemnified Party") to indemnify and save harmless the Indemnified Party, effective as and from the Closing, from and against all Claims which may be made or brought against the Indemnified Party or which it may suffer or incur, directly or indirectly, as a result of or in connection with any non-fulfilment of any covenant or agreement on the part of the Indemnifying Party under this Agreement or any misstatement in or breach of any representation or warranty of the Indemnifying Party contained in this Agreement or in any certificate or other document furnished by the Indemnifying Party pursuant to this Agreement. Notwithstanding any other provision of this Article 4: (i) no claim for indemnification may be made by an Indemnified Party against any Indemnifying Party after the time which is the latest of: (a) date on which all amounts due under the New Loans have been repaid; and 10 - 10 - (b) four years from the date of this Agreement; and (ii) the aggregate amount payable by an Indemnifying Party as indemnification pursuant to this Article 4 shall be limited to $40 million. 4.2 INDEMNIFICATION PROCEDURES FOR THIRD PARTY CLAIMS (a) In the case of claims or demands made by a third party in respect of which indemnification is sought by an Indemnified Party, the Indemnified Party seeking such indemnification under this Agreement shall give prompt written notice, and in any event within 20 days, to the Indemnifying Party of any such claims or demands made upon it, provided that in the event of a failure to give such notice, such failure shall not preclude the party seeking indemnification to obtain such indemnification but its right to indemnification may be reduced to the extent that such delay prejudiced the defense of the claim or demand or increased the amount of liability or cost of defense. (b) The Indemnifying Party shall have the right, by notice to the Indemnified Party given not later than 30 days after receipt of the notice described in subsection (a) to assume the control of the defense, compromise or settlement of the claim or demand, provided that such assumption shall, by its terms, be without cost to the Indemnified Party and provided the Indemnifying Party acknowledges in writing its obligation to indemnify the Indemnified Party in accordance with the terms contained in this Article 4 in respect of that claim or demand. (c) Upon the assumption of control of any claim or demand by the Indemnifying Party as set out in subsection (b), the Indemnifying Party shall diligently proceed with the defence, compromise or settlement of the claim or demand at its sole expense, including, if necessary, employment of counsel reasonably satisfactory to the Indemnified Party and, in connection therewith, the Indemnified Party shall cooperate fully, but at the expense of the Indemnifying Party, with respect to any out-of-pocket expenses incurred, to make available to the Indemnifying Party all pertinent information (other than privileged information) and witnesses under the Indemnified Party's control, make such assignments and take such other steps as in the opinion of counsel for the Indemnifying Party are reasonably necessary to enable the Indemnifying Party to conduct such defence. The Indemnified Party shall also have the right to participate in the negotiation, settlement or defence of any claim or demand at its own expense. 11 - 11 - (d) The final determination of any claim or demand pursuant to this Article, including all related costs and expenses, will be binding and conclusive upon the parties as to the validity or invalidity, as the case may be, of such claim or demand against the Indemnifying Party. ARTICLE 5 REPRESENTATIONS, WARRANTIES AND COVENANTS 5.1 REPRESENTATIONS AND WARRANTIES Weltman hereby represents and warrants to Coutts that: (a) in considering the provisions of the Operative Agreements and in negotiating their terms, Weltman has been advised and represented by independent counsel; (b) as of the date hereof, Weltman does not have knowledge of any undisclosed "material change" or "material fact", as such terms are defined in the Securities Act (Ontario"), relating to the affairs of the Companies or the Gaming Shares, TIPI Shares or Warp 10 Shares; (c) Weltman has the capacity to enter into each of the Operative Agreements and to carry out his obligations under each of the Operative Agreements; (d) each of the Operative Agreements constitutes a valid and binding obligation of Weltman enforceable against him in accordance with its terms; (e) Weltman is not a party to, bound or affected by or subject to any indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law provision, statute, regulation, order, judgment, decree, licence, permit or law which would be violated, contravened, breached by, or under which default would occur or an encumbrance would be created as a result of the execution and delivery of any of the Operative Agreements or any other agreement to be entered into under the terms of any of the Operative Agreements, or the performance by Weltman of any of his obligations provided for under any of the Operative Agreements or any other agreement contemplated herein or therein; (f) Weltman understands that no federal or state agency has passed on or 12 - 12 - made any recommendation or endorsement of the Purchased Shares; (g) Weltman acknowledges that, in entering into this Agreement and the other Operative Agreements, including making the decision to purchase the Purchased Shares, Weltman has not relied upon any representation or warranty by Coutts other than the representations and warranties of Coutts set forth in Section 5.2 of this Agreement and in the other Operative Agreements; (h) Weltman acknowledges and understands that Purchased Shares have not been registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or any other applicable securities law, and accordingly, none of the Purchased Shares may be offered, sold, transferred, pledged, hypothecated or otherwise disposed of unless registered pursuant to, or in a transaction exempt from registration under, the 1933 Act and any other applicable securities law; (i) Weltman is an "accredited investor" within the meaning of Rule 501(a) under the 1933 Act (an "Accredited Investor") who is acquiring the Purchased Shares for his own account. Weltman has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Purchased Shares. Weltman is aware that he may be required to bear the economic risk of an investment in the Purchased Shares for an indefinite period, and he is able to bear such risk for an indefinite period; (j) Weltman is acquiring the Purchased Shares for his own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Weltman agrees to offer, sell or otherwise transfer Purchased Shares only pursuant to registration under the 1933 Act and any other applicable securities law, or an exemption therefrom; (k) Weltman acknowledges that Coutts, its employees, officers, directors and agents and the respective heirs, successors and assigns of each of the foregoing, will be relying upon the truth and accuracy of the acknowledgements, representations, warranties and agreements made by Weltman in the Operative Agreements; (l) Weltman acknowledges that it is the intention of the parties to this Agreement that the transfer of the Purchased Shares under the Weltman Share Purchase Agreement be made at a price which is in compliance with clause 93(1)(c) of the Securities Act (Ontario) and 13 - 13 - section 183 of the Regulation made thereunder (and the comparable provisions of the Securities Act (Alberta) and Weltman hereby confirms that he is not aware of any fact, event or occurrence which could reasonably be expected to give rise to a finding by the Ontario Securities Commission or the Alberta Securities Commission that the purchase price for any of the Purchased Shares under the Weltman Share Purchase Agreement does not so comply; and (m) following the acquisition of the Purchased Shares, Weltman will not beneficially own or exercise control or direction over more than 20% of the outstanding voting securities of Gaming and Weltman has not entered into, and will not enter into for so long as any Pledged Shares are held by Coutts as security under the Share Pledge, any arrangement, agreement or understanding regarding the voting of the Purchased Shares (other than the Share Pledge) with any person or company that beneficially owns or exercises control or direction over outstanding voting securities of Gaming that when aggregated with the Purchased Shares would represent more than 20% of the outstanding voting securities of Gaming. 5.2 COUTTS' REPRESENTATIONS AND WARRANTIES Coutts hereby represents and warrants to Weltman that: (a) Coutts is a corporation validly existing and in good standing under the laws of the jurisdiction of its organization. Coutts has the full corporate power and authority to execute and deliver each of the Operative Agreements and all other agreements and documents executed or to be executed by it in connection with each of the Operative Agreements (including, without limitation, the Weltman Share Purchase Agreement) and to perform all of its obligations hereunder and thereunder; (b) Coutts has all necessary authority to transfer, or caused to be transferred, the Purchased Shares to Weltman pursuant to and in accordance with the terms of the Weltman Share Purchase Agreement and to complete the transactions contemplated herein and therein; (c) each of the Operative Agreements constitutes a valid and binding obligation of Coutts to Weltman enforceable against it in accordance with its terms; (d) Coutts is not a party to, bound or affected by or subject to any indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law provision, statute, regulation, order, judgment, decree, 14 - 14 - licence, permit or law which would be violated, contravened, breached by, or under which default would occur or an encumbrance would be created as a result of the execution and delivery of any of the Operative Agreements or any other agreement to be entered into under the terms of any of the Operative Agreements, or the performance by Coutts of any of its obligations provided for under any of the Operative Agreements or any other agreement contemplated herein or therein; (e) there has been no act or omission by Coutts which has created or resulted in the creation of any Security Interest on, against or with respect to any of the Pledged Shares (except Security Interests (if any) created as a result of the consummation of the transactions contemplated by this Agreement); (f) to the best of Coutts' information, knowledge and belief, each of the Clients is incorporated in and a resident of the jurisdiction which appears below immediately opposite its name and none of the Clients have been incorporated or organized for the purposes of causing such corporations not to be in or resident in Ontario or Alberta for the purposes of completing the transactions provided for in this Agreement:
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 Willsboro Universal Corporation British Virgin Islands;
(g) to the best of Coutts' information, knowledge and belief, the transactions contemplated herein will not result in Weltman having made purchases of shares of any of the Companies from more than five persons or companies in the aggregate, for the purposes of clause 93(1)(c) and subsection 93(2) of the Securities Act (Ontario) (and the comparable provisions of the Securities Act (Alberta)); 15 - 15 - (h) Coutts is a banking institution incorporated and organized under the laws of Switzerland, with a New York Branch, which does not have an office in the Province of Ontario and, other than certain activities undertaken by Coutts in connection with its application to the Ontario Securities Commission for registration under the Securities Act (Ontario) in the category of International Dealer, does not carry on business in the Province of Ontario; (i) Coutts acknowledges that in entering into this Agreement and the other Operative Agreements, Coutts has not relied upon any representation or warranty other than those representations and warranties set forth in Section 5.1 of this Agreement and in the other Operative Agreements; (j) in considering the provisions of the Operative Agreements and in negotiating their terms, Coutts has been advised and represented by independent counsel; (k) Coutts acknowledges that it is the intention of the parties to this Agreement that the transfer of the Purchased Shares under the Weltman Share Purchase Agreement be made at a price which is in compliance with clause 93(1)(c) of the Securities Act (Ontario) and section 183 of the Regulation made thereunder (and the comparable provisions of the Securities Act (Alberta)) and Coutts hereby confirms that Coutts is not aware of any fact, event or occurrence which could reasonably be expected to give rise to a finding by the Ontario Securities Commission or the Alberta Securities Commission that the purchase price for any of the Purchased Shares under the Weltman Share Purchase Agreement does not so comply; and (l) none of Coutts, any affiliate of Coutts, or any person acting on behalf of Coutts or any such affiliate has engaged, or will engage, in any general solicitation or any general advertising with respect to the Purchased Shares. ARTICLE 6 GENERAL 6.1 NOTICES - Any notice or other writing required or permitted to be given under this Agreement or for the purposes of this Agreement (referred to in this Section 6.1 as a "notice") to any other party to this Agreement shall be sufficiently given if delivered personally, or if sent by prepaid registered mail or if transmitted by fax or 16 - 16 - other form of recorded communication tested prior to transmission to such party: (a) in the case of Coutts a notice at: Coutts & Co AG, New York Branch 65 East 55th Street New York, New York 10022 Phone: (212) 303-2971 Attention: Mr. Mario Economou, Vice President FAX: (212) 303-2929 with copies to: Mr. Alan M. Christenfeld Rogers & Wells 200 Park Avenue New York, New York 10166-0153 FAX: (212) 878-8375 Phone: (212) 878-8000 and Mr. John W. Stevens Osler, Hoskin & Harcourt 280 Park Avenue - 30W New York, New York 10017 FAX: (212) 867-5802 Phone: (212) 867-5800 (b) in the case of Weltman a notice at: c/o Gaming Lottery Corporation 160 Nashdene Road Scarborough, Ontario M1V 4C4 Attention: Larry H. Weltman FAX: (416) 754-8441 Phone: (416) 292-5963 with copies to: Mr. Jack Jackson Proskauer Rose Goetz & Mendelsohn LLP 17 - 17 - 1585 Broadway New York, New York 10036 FAX: (212) 969-2900 Phone: (212) 969-3000 and Mr. Joseph Maierovits Goldman, Spring, Schwartz & Kichler Suite 700 40 Sheppard Avenue West North York, Ontario M2N 6K9 FAX: (416) 225-4805 Phone: (416) 225-9400 or such other address as the party to whom such writing is to be given shall have last notified the party giving the same in the manner provided in this Section. Any notice delivered to the party to whom it is addressed as provided in this Section shall be deemed to have been given and received on the day it is so delivered at such address, provided that if such day is not a business day then the notice shall be deemed to have been given and received on the business day next following such day. Any notice mailed to the address and in the manner provided for in this Section shall be deemed to have been given and received on the fifth business day next following the date of its mailing. Any notice transmitted by fax or other form of recorded communication shall be deemed given and received on the first business day after its transmission. 6.2 EXPENSES - Other than the payment by Weltman of Coutts legal expenses required by the Weltman Loan Agreement, each of the parties shall pay their respective legal, accounting and other professional advisory fees, costs and expenses incurred in connection with the transactions and agreements provided for in this Agreement and the other Operative Agreements and the preparation, execution and delivery of the Operative Agreements and all documents and instruments executed pursuant to the Operative Agreements and any other costs and expenses incurred. The parties acknowledge that transactions contemplated hereby have been negotiated and are to be completed in a manner which will not give rise to a valid claim for a brokerage fee or commission or other like payment and no brokerage fee or commission or other like payment has been or will be made in connection therewith. 6.3 FURTHER ASSURANCES - The Parties shall with reasonable diligence do all such 18 - 18 - things and provide all such reasonable assurances as may be required to consummate the transactions contemplated by this Agreement, and each party shall provide such further documents or instruments required by any other party as maybe reasonably necessary or desirable to effect the purpose of this Agreement and carry out its provisions, whether before or after the Closing. 6.4 GOVERNING LAW AND CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE, AND TO THE EXTENT THAT THE PROVISIONS OF THE SECTION 6.4 ARE APPLICABLE, WELTMAN AND COUTTS HEREBY AGREE TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK SITTING IN THE CITY AND COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN, AND AGREE THAT ANY DISPUTE CONCERNING THE RELATIONSHIP BETWEEN WELTMAN AND COUTTS OR THE CONDUCT OF ANY PARTY HERETO IN CONNECTION WITH THIS AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE. NOTWITHSTANDING THE FOREGOING, COUTTS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST WELTMAN OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION COUTTS DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE NEW LOANS. (c) WELTMAN HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO HIM AT HIS ADDRESS SET FORTH IN SECTION 6.1 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS OR AT COUTTS' OPTION, BY SERVICE UPON WELTMAN 'S NEW YORK COUNSEL AT ITS NOTICE ADDRESS SET FORTH IN SECTION 6.1 HEREOF, WHICH WELTMAN HEREBY IRREVOCABLY APPOINTS AS HIS AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF NEW YORK. 19 - 19 - WELTMAN HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. (d) NOTHING IN THIS SECTION 6.4 SHALL AFFECT THE RIGHTS OF COUTTS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHTS OF COUTTS TO BRING ANY ACTION OR PROCEEDING AGAINST WELTMAN OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. (e) EACH OF WELTMAN AND COUTTS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT THEY MAY HAVE OR EACH OF THEM MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION 6.5 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 6.5 CONFIDENTIALITY. Each of the parties hereto agrees to keep confidential the terms of this Agreement and the transactions contemplated herein, and neither of the parties hereby shall make any public announcement with the respect to this Agreement or the subject matter hereof without the prior approval of the other party hereto, except: (i) as required under this Agreement; (ii) for the press release and reports required by Section 5.3 and Section 5.4 of the Banks Master Agreement; (iii) either party may disclose information pertaining to this Agreement to any person employed or retained by such person; (iv) such disclosures as may be reasonably required in connection with the exercise by Coutts of any remedy under the Operative Agreements or any document related hereto upon the occurrence of, or during the continuance of, an Event of Default; or (v) for such disclosures as may be required by applicable law. 6.6 COUNTERPARTS - This Agreement may be executed by the parties hereto in separate counterparts each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. 6.7 FACSIMILE SIGNATURE - This Agreement may be executed by faxed signature 20 - 20 - with the same effect as a manually signed original signature. 6.8 ASSIGNMENT - Neither this Agreement nor any benefits or burdens under this Agreement, the other Operative Agreements or any of the agreements contemplated herein, shall be assignable by any party hereto without the prior written consent of each of the other parties hereto. Subject to the foregoing, this Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors, heirs, and permitted assigns. 21 - 21 - IN WITNESS WHEREOF the parties have hereunto duly executed this Agreement. COUTTS & CO AG, NEW YORK BRANCH BY: /s/ Peter Cawdron ----------------------- /s/ Larry H. Weltman --------------------------- Larry H. Weltman EX-99.L 13 WELTMAN SHARE PURCHASE LOAN AGREEMENT OF 8/20/96 1 LOAN AGREEMENT THIS AGREEMENT made as of the 20th day of August, 1996 B E T W E E N: MR. LARRY H. WELTMAN, an individual residing in the City of Toronto, Ontario, Canada (hereinafter referred to as the "Borrower") - and - COUTTS & CO AG, NEW YORK BRANCH, a Swiss bank licensed to conduct a banking business by the State of New York (hereinafter referred to as the "Bank") WITNESSES THAT WHEREAS the Borrower has requested the Facility (as hereinafter defined) to acquire certain shares of certain corporations, as identified in Schedule A hereto (the "Shares"), and to pay expenses incurred by him in connection with the acquisition of the Shares and the Bank has agreed to provide the Facility to the Borrower on the terms and conditions herein set forth; NOW, THEREFORE, in consideration of the premises and mutual agreements and covenants contained in this Agreement and other good and valuable consideration (the receipt and adequacy of which are hereby mutually admitted), the Parties hereby agree as follows: ARTICLE I. DEFINITIONS AND PRINCIPLES OF INTERPRETATION 1.1 DEFINITIONS - Whenever used in this Agreement, unless there is something inconsistent in the subject matter or context the following words and terms shall have the meaning set out below: 2 - 2 - "AGREEMENT" means this agreement, including all schedules and all instruments supplementing or amending or confirming this Agreement, "hereof", "hereto" and "hereunder" and similar expressions mean and refer to this Agreement and not any particular article or section, and "Article", "Section" and "Subsection" each means and refers to the specified article, section or subsection in this Agreement; "ANNIVERSARY DATE" means the annual anniversary of the date of this Agreement or the next Business Day thereafter if such date is not a Business Day; "APPLICABLE LAW" means, with respect to any Person, property, transaction or event, and whether or not having the force of law, all applicable laws, statutes, regulations, rules, guidelines, by-laws, treaties, orders, policies, judgments, decrees and official directives of governmental bodies or other Persons acting under the authority of any governmental body; "BANKS MASTER AGREEMENT" means the master agreement dated August 19, 1996 between the Bank and Mr. Jacques Benquesus; "BASE RATE" means, at any time, the rate of interest, expressed as an annual rate, established by the Bank from time to time as the reference rate of interest it will charge for loans in Dollars; "BASE RATE LOAN" means the amount of the Loan with respect to which the Borrower is deemed to have elected to have interest calculated by reference to the Base Rate or to which, in accordance with the provisions of this Agreement, the Base Rate is deemed to apply; "BASE RATE ROLLOVER" means a deemed conversion of the Libor Loan to a Base Rate Loan pursuant to Section 3.1; "BORROWER" means Mr. Larry H. Weltman, an individual residing in the City of Toronto, Ontario, Canada; "BRANCH" means the branch of the Bank located at 65 East 55th Street, New York, NY 10022; "BUSINESS DAY" means a day on which banks are open for business in New York, U.S.A.; "CLOSING DATE" means August 20, 1996 or such other earlier or later date as may be agreed upon by the Parties; 3 - 3 - "COLLATERAL" means the assets, property and undertaking of the Borrower subject to the Security; "COMPANY" means any of Gaming Lottery Corporation, The Instant Publisher Inc. or Warp 10 Technologies Inc.; "DOLLARS" and the symbol "$" mean the lawful currency of the United States of America; "DRAWDOWN" means the borrowing, in Dollars, of funds under the Facility; "EVENT OF DEFAULT" means any of the events described in Section 10.1; "FACILITY" has the meaning ascribed to it in Section 2.1; "FACILITY CREDIT LIMIT" has the meaning ascribed to it in Section 2.1; "GUARANTEE" has the meaning ascribed to it in Subsection 7.1(a); "INTEREST PAYMENT DATE" means (i) with respect to the Libor Loan, the last day of the Libor Interest Period applicable thereto and also, if any Libor Interest Period is longer than 93 days, the last day of each 90-day period during such Libor Interest Period or, if any such day is not a Business Day, the Business Day next following; and (ii) with respect to the Base Rate Loan, the last day of each calendar month or, if any such day is not a Business Day, the Business Day next following; "LIBOR INTEREST PERIOD" means, for the Libor Loan, subject to availability of funds to the Bank, the period of 1, 2, 3, 6 or 12 months, as may be selected by the Borrower pursuant to the relevant Libor Notice, commencing on, in respect of the initial Libor Interest Period, the Closing Date and, thereafter, the date of the applicable Libor Rollover, provided that: (i) any Libor Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Libor Interest Period shall end on the immediately preceding Business Day; (ii) any Libor Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically 4 - 4 - corresponding day in the calendar month at the end of such Libor Interest Period) shall end on the last Business Day of a calendar month; (iii) the Libor Interest Period shall terminate on such date as will permit the repayment of the Facility on the date and in the manner provided for herein; "LIBOR LOAN" means the amount of the Loan with respect to which interest under this Agreement is calculated with reference to the Libor Rate; "LIBOR NOTICE" means a notice substantially in the form attached hereto as Schedule C; "LIBOR RATE" means, for the Libor Interest Period then applicable to the Libor Loan, the interest rate per annum (expressed on the basis of a 360-day year) at which Dollar deposits are offered to leading banks in the London interbank euro-currency offering market in an amount approximately equal to the principal amount of the Libor Loan and for a period comparable to such Libor Interest Period at approximately 11:00 a.m. London, England time on the second Business Day preceding the first day of such Libor Interest Period for delivery on the first day of such Libor Interest Period; "LIBOR ROLLOVER" means a rollover of the Libor Loan pursuant to Section 2.5; "LIQUIDITY EVENT" means the announcement or occurrence of any transaction or event initiated, caused or assisted, directly or indirectly, by Mr. Jacques Benquesus, any Person controlled by Mr. Jacques Benquesus or any affiliate or associate (as such terms are defined in the Securities Act (Ontario)) of Mr. Jacques Benquesus or such Person, or any Person acting jointly or in concert with Mr. Jacques Benquesus or such Person in connection with such transaction or event which results, or if consummated would result, in the Public Float of any Company being less than one half of the Public Float of such Company on the date hereof; "LOAN" means, at any time, the total outstanding principal amount of all Drawdowns, together with any interest capitalized pursuant to Section 4.5; "PARTIES" means the Bank and the Borrower and "PARTY" refers to any one of them; "PERSON" means any individual, sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, governmental authority and a natural person in his capacity as trustee, executor, administrator or other legal representative; 5 - 5 - "PUBLIC FLOAT" means the percentage of the issued and outstanding participating voting equity shares of a Company held by persons other than Mr. Jacques Benquesus, Mrs. Biba Benquesus, Mr. Larry H. Weltman or Mr. John M. Wiseman and their associates and affiliates (as such terms are defined in the Securities Act (Ontario)); "RELATED LOAN AGREEMENTS" means the loan agreement dated the date hereof between the Bank and Mr. John M. Wiseman and the loan agreements dated the date hereof between the Bank and Mr. Jacques Benquesus; "ROLLOVER" means, as applicable, either a Base Rate Rollover or a Libor Rollover. "SECURITY" means the security described in Article VII; "SHARES" means those certain shares of certain corporations identified in Schedule A hereto; "TAXES" means all present and future taxes, levies, imposts, stamp taxes, duties, charges to taxes, fees, deductions, withholdings and any restrictions or conditions resulting in a charge imposed, levied, collected, withheld or reserved and all penalties, interest and other payments on or in respect thereof; "WELTMAN MASTER AGREEMENT" means the master agreement dated August 19, 1996 between Larry H. Weltman and the Bank; and "WISEMAN MASTER AGREEMENT" means the master agreement dated August 19, 1996 between John M. Wiseman and the Bank. 1.2 CERTAIN RULES OF INTERPRETATION - In this Agreement: (a) time is of the essence in the performance of the Parties' respective obligations; (b) the descriptive headings of Articles and Sections are inserted solely for convenience of reference and are not intended as complete or accurate descriptions of content; (c) the use of words in the singular or plural, or with a particular gender, shall not limit the scope or exclude the application of any provision of this Agreement to such person or persons or circumstances except as the context otherwise permits; 6 - 6 - (d) whenever a provision of this Agreement requires an approval or consent by a Party to this Agreement and notification of such approval or consent is not delivered within the applicable time limited, then, unless otherwise specified, the Party whose consent or approval is required shall be conclusively deemed to have withheld its consent or approval; (e) unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day which ends the period and by extending the period to the next Business Day following if the last day of the period is not a Business Day; and (f) whenever any payment is to be made or action to be taken under this Agreement is required to be made or taken on a day other than a Business Day, such payment shall be made or action taken on the next Business Day following. 1.3 SCHEDULES - The following are the Schedules to this Agreement and are incorporated by reference and deemed to be part of this Agreement: Schedule A - Shares to be Acquired Schedule B - Compliance Certificate Schedule C - Libor Notice ARTICLE II. THE FACILITY 2.1 THE FACILITY - Upon the terms and subject to the conditions herein set forth, the Bank hereby establishes in favour of the Borrower the following credit facility (the "Facility") to be available to the Borrower in accordance with the provisions of this Agreement. The Facility shall consist of a term credit facility of up to a maximum principal amount, excluding any interest capitalized pursuant to Section 4.5, of $634,947.20 (the "Facility Credit Limit") which funds shall be advanced or otherwise made available in a single Drawdown on the Closing Date. 2.2 PURPOSE - The Facility shall be available to the Borrower to acquire the Shares and to pay expenses incurred by him in connection with the acquisition of the Shares. 2.3 AVAILMENT OF FACILITY - Upon the terms and subject to the conditions herein set forth, the Borrower may effect a single borrowing under the Facility by way of a Libor Loan with an initial Libor Interest Period of one (1) month. 7 - 7 - 2.4 EFFECTING THE DRAWDOWN - Borrowing under the Facility shall be effected by the Bank crediting to the Borrower's Dollar account with the Bank the full amount of such borrowing for same day value by 2:00 p.m. New York time on the Closing Date and in immediately available funds. 2.5 ROLLOVERS - The Libor Loan will be deemed to be automatically rolled over (on the last day of the applicable Libor Interest Period) into a Libor Loan in a principal amount equal to the amount of the Loan for a Libor Interest Period equal to the lesser of: (a) (i) if the Borrower has delivered to the Bank a Libor Notice in accordance with the terms of this Agreement, the Libor Interest Period specified in such Libor Notice or (ii) if the Borrower has not made such delivery of a Libor Notice, the Libor Interest Period of such rolled over Libor Loan; (b) the remaining term of the Loan. 2.6 LIBOR NOTICE - A Libor Notice shall be substantially in the form attached as Schedule C to this Agreement and shall state the Libor Interest Period being requested. Subject to the terms and conditions of this Agreement, the Borrower shall be entitled to specify the Libor Interest Period to be applicable to the Libor Loan upon rollover by delivering a Libor Notice to the Bank by 11:00 a.m. (New York time) no less than two Business Days prior to the last day of the current Libor Interest Period. In the event that a Libor Notice is given by telephone, the Borrower shall provide to the Bank written confirmation of such notice bearing the Borrower's original signature within two Business Days of giving of such notice. All notices given by telephone shall be at the risk of the Borrower and the Bank shall have no liability for relying or acting on such verbal notice (whether or not subsequently confirmed in writing) or for any failure on the part of the Bank to carry out the requirements of such notice wholly or in part, or for any error or omission in fulfilling the requirements of such notice or the interpretation thereof by the Bank, save and except for any failure, error or omission arising out of the gross negligence or willful misconduct of the Bank. Any notice on which the Bank has acted, whether made by telephone, fax or otherwise in writing shall be irrevocable and binding on the Borrower. 2.7 EVIDENCE OF INDEBTEDNESS - The Bank shall open and maintain on its books at the Branch, accounts in respect of the Facility to evidence the Loan under the Facility and all other amounts owing by the Borrower to the Bank hereunder. 8 - 8 - The Bank shall enter in the foregoing accounts details of all amounts from time to time owing, paid or repaid by the Borrower hereunder. The information entered in the foregoing accounts shall constitute prima facie evidence of the obligations of the Borrower to the Bank hereunder with respect to the Loan and all other amounts owing by the Borrower to the Bank hereunder. The Borrower shall, on reasonable notice to the Bank, be entitled to obtain from the Bank extracts of all entries made in such accounts. ARTICLE III. FURTHER PROVISIONS RELATING TO THE LIBOR LOANS 3.1 CHANGE OF CIRCUMSTANCES - In the event that at any time prior to the commencement of a Libor Interest Period the Bank makes a determination in good faith, which shall be final, conclusive and binding upon the Borrower, that: (a) by reason of changes affecting the London interbank market, adequate and fair means do not exist for ascertaining the rate of interest applicable to the Libor Loan during the ensuing Libor Interest Period; (b) the continuing of the Libor Loan by the Bank during the ensuing Libor Interest Period has been made impracticable by the occurrence of circumstances which materially or adversely affect the London interbank market; (c) Dollar deposits are not available to the Bank in the London interbank market in sufficient amounts in the ordinary course of business in order for the Bank to fund the Libor Loan during the ensuing Libor Interest Period; or (d) the Libor Rate for the immediately following Libor Interest Period does not accurately reflect the effective cost to the Bank of funding the Libor Loan for the ensuing Libor Interest Period, or the costs to the Bank would be increased or the income receivable by the Bank would be reduced in respect of such Libor Loan, then the Bank shall give notice thereof to the Borrower, which notice shall set out in reasonable detail the reasons for such determination. Upon such notice being given, Libor Rollovers shall be suspended until the Borrower is informed by the Bank that such conditions no longer exist and the outstanding Libor Loan shall, at the expiration of the Libor Interest Period, be deemed to be converted into a Base Rate Loan, in an amount equal to the principal amount of such Libor Loan. 9 - 9 - ARTICLE IV. PAYMENT OF INTEREST AND OTHER FEES 4.1 INTEREST ON THE LIBOR LOAN - The Borrower shall pay interest in Dollars to the Bank on the amount of the Libor Loan for the Libor Interest Period applicable thereto at a nominal rate per annum equal to the Libor Rate applicable to the Libor Loan plus 0.5%, for any period that such Libor Loan is outstanding. Interest on the Libor Loan shall accrue daily on the amount of such Libor Loan and shall be calculated and, subject to Sections 4.5 and 4.6, payable in arrears on each successive Interest Payment Date applicable to the Libor Loan on the basis of the actual number of days for which the Libor Loan is outstanding, computed on the basis of a year of 360 days. Interest on the Libor Loan shall be payable in accordance with the foregoing after as well as before demand, default, maturity and judgment. 4.2 INTEREST ON BASE RATE LOANS - The Borrower shall pay interest in Dollars to the Bank on the principal amount of the Base Rate Loan (with interest on overdue interest at the same rate) at a nominal rate per annum equal to the Base Rate in effect from time to time plus 0.5%; Interest on the Base Rate Loan shall accrue daily on the outstanding principal balance thereof and shall be calculated and, subject to Sections 4.5 and 4.6, payable in arrears: (a) on each successive Interest Payment Date, for the period then ending; (b) in the case of a prepayment of part or all of the Base Rate Loan, on the date of such prepayment, with respect to interest accrued on the amount of principal being prepaid; (c) in the case of amounts repaid pursuant to Section 5.3, on the date of such repayment with respect to interest accrued on the amount of the principal of the Base Rate Loan being repaid; and (d) on the date that all amounts owing hereunder are repaid in full, whether on demand, by reason of acceleration or otherwise; on the basis of the actual number of days for which a particular principal amount is outstanding, computed on the basis of a year of 365 days or 366 days in the case of a leap year. Interest on overdue interest on the Base Rate Loan shall be payable on demand. Changes in the Base Rate shall cause an immediate and automatic adjustment of the interest rate applicable to the Base Rate Loan as and from the effective date of such change without the necessity of any notice to the Borrower, such notice being hereby expressly waived by the Borrower. Interest on the Base 10 - 10 - 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 11 - 11 - 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 12 - 12 - 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. 13 - 13 - 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; 14 - 14 - (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 15 - 15 - 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, 16 - 16 - security interest or other encumbrance on, against or with respect to any part of the Pledged Shares (as such term is defined in the Weltman Master Agreement), except the Security; 8.6 MATERIAL OBLIGATIONS - The Borrower is not, in any respect, in default under any material obligation, direct or indirect, contingent or otherwise, or under any order, writ, decree or demand of any court or governmental agency or authority, where any such default would materially adversely affect the Borrower's ability to perform his obligations under this Agreement or under the Security; 8.7 COMPLIANCE WITH LAWS - The Borrower is not in violation of any judgment, decree, order, statute, rule or regulation relating in any way to the Borrower, or to his property or assets and which would have a material effect on the condition, financial or otherwise, of the Borrower; 8.8 TAXES - The Borrower has duly and timely filed all tax returns and reports required by law to have been filed by him, has duly and correctly reported all income and other amounts required to be reported and has paid all taxes, penalties, interest, fines and governmental charges in respect thereof, to the extent that such taxes, penalties, interest, fines and other governmental charges have been assessed by the relevant taxation authority, except to the extent that (i) any such tax, penalty, interest, fine or any other governmental charge is being contested in good faith by appropriate proceedings or (ii) the failure so to pay or discharge any such tax, penalty, interest, fine or any other governmental charge could not reasonably be expected to materially adversely affect the financial condition or business of the Borrower. The Borrower has duly and timely paid all instalments of taxes required to be paid by him except to the extent that (i) any such instalment of tax is being contested in good faith by appropriate proceedings or (ii) the failure so to pay or discharge any such instalment of tax could not reasonably be expected to materially adversely affect the financial condition or business of the Borrower. There are no actions, suits, proceedings, investigations, audits or claims now pending or, to the best of the knowledge of the Borrower (after due inquiry), threatened against the Borrower in respect of any taxes or any penalties, interest and fines in respect thereof and there are no matters under discussion with any taxation or other governmental authority relating to any such matters; and 8.9 ACCURACY OF INFORMATION - All factual information previously or contemporaneously furnished by or on behalf of the Borrower in writing to the Bank for purposes of or in connection with this Agreement or any transaction contemplated hereby including the certificates delivered pursuant to Section 6.1, (true and complete copies of which were furnished to the Bank in connection with its execution and delivery of this Agreement) is and all other such factual information pursuant to this Agreement to the Bank will be true and accurate in every material respect on the date as of which such information is dated or certified and such information is not, or shall not be, as the case may be, incomplete by 17 - 17 - 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 18 - 18 - time when any penalties or interest (except interest during extensions of time for filing of federal income or other tax returns not in excess of nine months) accrue with respect thereto, unless, in any such case, the same is being contested in good faith by appropriate proceedings, except to the extent that (i) any such tax, penalty, interest, fine or any other governmental charge is being contested in good faith by appropriate proceedings or (ii) the failure so to pay or discharge any such tax, penalty, interest, fine or other governmental charge could not reasonably be expected to materially adversely affect the financial condition or business of the Borrower; 9.7 PERFORMANCE OF COVENANTS - The Borrower will diligently observe and perform all his covenants to be observed or performed hereunder and under the Security; 9.8 DISPOSAL OF COLLATERAL - The Borrower shall not sell, assign, lease-back or otherwise dispose of any of the Collateral, unless the Net Proceeds (as such term is defined in the Weltman Master Agreement) of the sale, assignment, or other disposal of the Collateral are applied, in accordance with the provisions of Article 3 of the Weltman Master Agreement, to reduce the outstanding Loan; 9.9 LIMITATION ON ENCUMBRANCES - The Borrower shall not create, incur, assume or otherwise become liable upon or suffer to exist any mortgage, charge, lien, hypothec, security interest or other encumbrance whatsoever on, against or with respect to any part of the Collateral except the Security; and 9.10 FURTHER ASSURANCES - The Borrower will, from time to time, do, execute and deliver or shall cause to be done, executed and delivered all such further acts, documents or other instruments as may reasonably be requested by the Bank in order to cure any defects in the execution and delivery of, or to comply with or accomplish the covenants and agreements contained in this Agreement and the Security. ARTICLE X. EVENTS OF DEFAULT 10.1 EVENTS OF DEFAULT - The occurrence of any one or more of the following events (each such event being herein referred to as an "Event of Default") shall constitute a default under this Agreement: (a) If the Borrower shall fail to pay any principal of, or interest on, the Loan when the same shall become due and payable hereunder; 19 - 19 - (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 20 - 20 - (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 21 - 21 - which it was given and shall be deemed not to be a waiver of any rights and remedies of the Bank under this Agreement or under the Security or other document or instrument executed pursuant to this Agreement as a result of any other default or breach hereunder or thereunder. (b) Notwithstanding anything in this Agreement or the Security to the contrary, if after the occurrence of an Event of Default, the Bank elects to exercise any of its rights or remedies to seek payment of the Loan and/or any other obligation of the Borrower hereunder, the Bank agrees that it shall exercise any such right or remedy in the following order (i) first, the Bank shall (unless stayed or prevented from doing so by law or court order) sell the securities held under the Share Pledge (as defined in the Weltman Master Agreement); (ii) second, the Bank shall (unless stayed or prevented from doing so by law or court order) exercise any right of set-off pursuant to Section 10.4 below and (iii) third, but only to the extent of any remaining deficiency, the Bank shall make a demand for payment pursuant to the Guarantee. 10.4 SETOFF - (a) Regardless of the adequacy of any Collateral, any deposits or other sums credited by or due from the Bank to the Borrower and any securities or other property of the Borrower in the possession of the Bank may be applied to or set off against the payment of the obligations of the Borrower hereunder and under the Security and any or all other liabilities, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, of the Borrower to the Bank at any time after the occurrence and during the continuance of any Event of Default. (b) The obligations of the Borrower under this Agreement and under the Security shall not be subject to any counterclaim, set-off, deduction or defence (other than payment or performance) based upon any claim the Borrower may have against the Bank or any other Person. ARTICLE XI. GENERAL 11.1 COSTS AND EXPENSES - The Borrower shall pay on the Closing Date all reasonable costs and expenses incurred by the Bank in connection with preparation, printing, execution and delivery of each of this Agreement, the Security and the other documents to be delivered hereunder, whether or not the Drawdown has been made hereunder, including, without limitation, the fees and out-of-pocket expenses of Bank's counsel with respect thereto and with respect to advising the Bank as to its rights and responsibilities hereunder and under the Security and the 22 - 22 - other documents delivered hereunder; provided, however, that such costs and expenses shall not exceed the lesser of $10,000 and the fees and out-of-pocket expenses of Borrower's counsel; it being understood and agreed that such amount shall be capitalized and added to the principal amount of the Loan. The Borrower further agrees to pay all costs and expenses incurred by the Bank (including fees and expenses of counsel, accountants and other experts), in connection with any waiver or consent under, or amendment to, this Agreement or the Security, or the preservation or enforcement of rights of the Bank under this Agreement, the Security and other documents delivered hereunder including, without limitation, all reasonable costs and expenses sustained by the Bank as a result of any failure by the Borrower to perform or observe his obligations contained in any of such documents. 11.2 ILLEGALITY - If after the date of this Agreement any change occurs in any Applicable Law, or in the interpretation or application thereof by any court or by any governmental or other authority or entity charged with the administration thereof, which makes it unlawful for the Bank to make, fund or maintain the Facility or to give effect to its obligations in respect of any Libor Loan thereunder, the Bank may, by written notice thereof to the Borrower declare its obligations under this Agreement to be terminated. The Borrower shall prepay to the Bank within the time required by such law (or at the end of such longer period as the Bank at its discretion has agreed) the principal amount of the Loan together with accrued interest (including any deferred interest) and such other amounts which may be payable hereunder as a result of such prepayment. Any such notice shall be accompanied by a certificate of an officer of the Bank identifying in reasonable detail the event or condition which makes it unlawful for the Bank to fund or maintain the Facility or any Libor Loan thereunder and such certificate shall be final, conclusive and binding on the Borrower in respect of the matters set out therein. If any such change shall only affect a portion of the Bank's obligations under this Agreement which is, in the reasonable opinion of the Bank, severable from the remainder of this Agreement so that the remainder of this Agreement may be continued in full force and effect without otherwise affecting any of the obligations of the Bank or the Borrower hereunder or under any of the other documents contemplated hereby, the Bank shall only declare its obligations under the affected portion so terminated. 11.3 INDEMNIFICATION BY THE BORROWER - In addition to any liability of the Borrower to the Bank under any other provision of this Agreement, the Borrower shall indemnify the Bank and hold the Bank harmless against any reasonable loss (excluding loss of profit) or expense incurred by the Bank as a result of any failure by the Borrower to fulfil any of its obligations hereunder including, without limitation, any actual breakage cost or expense incurred by reason of the liquidation or re-employment in whole or in part of deposits or other funds required by the Bank to fund the Libor Loans as a result of 23 - 23 - (a) the Borrower's failure to effect the Drawdown or to make any payment, repayment or prepayment on the date required hereunder or specified by him in any notice given hereunder; (b) the Borrower's failure to pay any other amount, including without limitation any interest or fee, due hereunder on its due date; (c) the Borrower's failure to give any notice required to be given by him to the Bank hereunder; or (d) the voluntary prepayment by the Borrower of the Libor Loan or any portion thereof on any date other than on the last day of the Libor Interest Period relating thereto. 11.4 FUNDS - Each amount advanced, made available, disbursed or paid hereunder shall be advanced, made available, disbursed or paid, as the case may be, in immediately available funds or, after notice from the Bank, in such other form of funds as may from time to time be customarily used in New York, United States of America in the settlement of banking transactions similar to the banking transactions required to give effect to the provisions of this Agreement on the day such advance, disbursement or payment is to be made. 11.5 NOTICE - Any demand, notice or communication to be made or given hereunder shall be in writing, except as otherwise expressly permitted or required under this Agreement, and may be made or given by personal delivery, by registered mail or by transmittal by telex or facsimile machine addressed to the respective Parties as follows: To the Borrower: Mr. Larry H. Weltman c/o Gaming Lottery Corporation 160 Nashdene Road Scarborough, Ontario M1V 4C4 Telecopier: (416) 754-8441 Telephone: (416) 292-5963 With a copy to the Borrower's counsel: Proskauer Rose Goetz & Mendelsohn LLP 1585 Broadway New York, NY 10036 Attention: Mr. Jack Jackson, Esq. Telecopier: (212) 969-2900 Telephone: (212) 969-3000 24 - 24 - And a copy to the Borrower's Ontario counsel: Goldman, Spring, Schwartz & Kichler Suite 700 40 Sheppard Avenue West North York, Ontario M2N 6K9 Attention: Mr. Joseph Maierovits, Esq. Telecopier: (416) 225-4805 Telephone: (416) 225-9400 To the Bank: Coutts & Co AG, New York Branch 65 East 55th Street New York, NY 10022 Attention: Mr. Mario Economou, Vice President Telecopier: (212) 303-2929 Telephone: (212) 303-2971 With a copy to the Bank's New York counsel: Rogers & Wells 200 Park Avenue New York, New York 10166-0153 Attention: Mr. Alan M. Christenfeld, Esq. Telecopier: (212) 878-8375 Telephone: (212) 878-8000 And a copy to the Bank's Ontario counsel: Osler, Hoskin & Harcourt 280 Park Avenue - 30W New York, New York 10017 Attention: Mr. John W. Stevens, Esq. Telecopier: (212) 867-5802 Telephone: (212) 867-5800 or to such other mailing or telex or facsimile machine address as any party may from time to time notify the others in accordance with this Section. Any demand, 25 - 25 - notice or communication made or given by personal delivery shall be conclusively deemed to have been given on the day of actual delivery thereof, or, if made or given by registered mail, on the fifth Business Day following deposit thereof in the mail or, if made or given by telex or by facsimile transmission, on the first Business Day following the transmittal thereof and receipt of the appropriate answer back. If the party making or giving such demand, notice or communication knows or ought reasonably to know of difficulties with the postal system which might affect the delivery of mail, any such demand, notice or communication shall not be mailed but shall be made or given by personal delivery or by telex or by facsimile transmission. 11.6 GOVERNING LAW AND CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL: (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (b) SUBJECT ONLY TO THE EXCEPTION SET FORTH IN THE NEXT SENTENCE, EACH OF THE BORROWER AND THE BANK HEREBY AGREE TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK SITTING IN THE CITY AND COUNTY OF NEW YORK AND WAIVE ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN, AND AGREE THAT ANY DISPUTE CONCERNING THE RELATIONSHIP BETWEEN THE BORROWER AND THE BANK OR THE CONDUCT OF ANY PARTY HERETO IN CONNECTION WITH THIS AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE. NOTWITHSTANDING THE FOREGOING, THE BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE SECURITY. (c) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON HIM AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO HIM AT HIS ADDRESS SET FORTH IN SECTION 11.5 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS OR, AT THE BANK'S OPTION, BY SERVICE UPON THE BORROWER'S NEW YORK COUNSEL AT ITS ADDRESS SET FORTH IN SECTION 11.5, WHICH COUNSEL THE BORROWER HEREBY IRREVOCABLY APPOINTS AS HIS AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF NEW YORK. THE 26 - 26 - BORROWER HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. (d) EACH OF THE BORROWER AND THE BANK HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH (OTHER THAN THE WELTMAN MASTER AGREEMENT) OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO THIS AGREEMENT, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. THE BORROWER AND THE BANK EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF THEM MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. (e) NOTHING IN THIS SECTION 11.6 SHALL AFFECT THE RIGHTS OF THE BANK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHTS OF THE BANK TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR HIS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. (f) EACH OF THE BORROWER AND THE BANK HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION 11.6 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 11.7 JUDGMENT CURRENCY - The obligation of the Borrower pursuant to this Agreement to make payments in a specific currency (the "Contractual Currency") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any other currency except to the extent to which such tender or recovery shall result in the effective receipt by the Bank of the full amount of the Contractual Currency payable or expressed to be payable under this Agreement and accordingly the obligation of the Borrower shall be enforceable as an alternative or additional cause of action for the purpose of recovery in the other currency of the amount (if any) by which such effective receipt shall fall short of the full amount of the Contractual Currency payable or expressed to be payable 27 - 27 - under this Agreement and shall not be effected by judgment being obtained for any other sum due under this Agreement. 11.8 SUCCESSORS AND ASSIGNS - This Agreement shall be binding upon and shall enure to the benefit of the Bank and the Borrower, and their respective successors and assigns. The Borrower shall not assign or transfer its rights and obligations hereunder or any interest herein without the prior written consent of the Bank. 11.9 ANNUAL RATES OF INTEREST - For the purposes of the Interest Act (Canada), whenever interest payable pursuant to this Agreement is calculated on the basis of a period other than a calendar year (the "Interest Period"), each rate of interest determined pursuant to such calculation expressed as an annual rate is equivalent to such rate as so determined multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by the number of days in the Interest Period. 11.10 SEVERABILITY - Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions of this Agreement and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provisions in any other jurisdiction. 11.11 WHOLE AGREEMENT - This Agreement, together with the Weltman Master Agreement and all agreements and transactions contemplated herein and therein, constitute the whole and entire agreement between the Parties relating to the subject matter of this Agreement, and cancels and supersedes any prior agreements, undertakings, declarations, commitments and representations, written or oral, in respect thereof. 11.12 AMENDMENTS AND WAIVERS - Any provision of this Agreement or the Security may be amended only if the Borrower and the Bank so agree in writing and, except as otherwise specifically provided herein, may be waived only if the Bank so agrees in writing. Any such waiver and any consent by the Bank under any provision of this Agreement or the Security must be in writing and may be given subject to any conditions thought fit by the person giving that waiver or consent. Any waiver or consent shall be effective only in the instance and for the purpose for which it is given. 11.13 FURTHER ASSURANCES - Each of the Borrower and the Bank shall promptly cure any default by him or it in the execution and delivery of this Agreement or of the Security. The Borrower, at his expense, shall promptly execute and deliver to the Bank, upon request by the Bank, all such other and further documents, agreements, opinions, certificates and other instruments in compliance with, or accomplishment of his covenants and agreements hereunder or under the 28 - 28 - Security or to more fully state his obligations as set out herein or in the Security or to make any recording, filing or notice or obtain any consent, all as may be reasonably necessary or appropriate in connection therewith. 11.14 COUNTERPARTS - This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. 11.15 FACSIMILE SIGNATURE - This Agreement may be executed by faxed signature with the same effect as a manually signed original signature. 11.16 CONFIDENTIALITY - This Agreement shall be subject to the provisions of the Weltman Master Agreement regarding confidentiality. 11.17 NON-RECOURSE - Notwithstanding anything contained in (i) this Agreement, (ii) any agreement, document, instrument or certificate entered into in connection herewith, other than the Weltman Master Agreement, (collectively, the "Loan Documents") or (iii) otherwise, the Borrower shall not be personally liable for the repayment of any of the principal of, or interest on, the Loan, the payment of any fees or expenses of the Bank hereunder or under any Loan Documents or the performance of, or failure to perform, any other obligation of the Borrower under this Agreement or under any other Loan Document, and the sole and exclusive recourse of the Bank shall be to the Security and the Borrower shall have no liability for any deficiency which may exist after foreclosure on the Security; provided, however, that there shall be no limit to the personal liability of the Borrower in the case of fraud. 29 IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above. /s/ Larry H. Weltman --------------------------------------- MR. LARRY H. WELTMAN COUTTS & CO AG, NEW YORK BRANCH By: /s/ Peter Cawdron ------------------------------------ Name: Title: 30 SCHEDULE A SHARES TO BE ACQUIRED
COMPANY SHARES ------- ------ Gaming Lottery Corporation 183,020 common shares
31 SCHEDULE B CERTIFICATE OF COMPLIANCE TO: Coutts & Co AG, New York Branch (the "Bank") FROM: Mr. Larry H. Weltman (the "Borrower") RE: Loan Agreement dated August 20, 1996 between the Borrower and the Bank (the "Loan Agreement") - -------------------------------------------------------------------------------- This certificate is given pursuant to the terms of the Loan Agreement. All defined terms used in this certificate indicated with initial capitals shall have the same meaning as in the Loan Agreement. The Borrower hereby certifies that: A. All of the representations and warranties of the Borrower contained in the Loan Agreement are true and correct on and as of the Closing Date. B. All of the covenants of the Borrower contained in the Loan Agreement together with all of the conditions precedent to the Drawdown required to be performed by the Borrower on or prior to the Closing Date and all other terms and conditions required to be performed by the Borrower on or prior to the Closing Date contained in the Loan Agreement have been fully complied with. C. No Event of Default has occurred and remains outstanding and to the best of the knowledge, information and belief of the undersigned, no event has occurred and remains outstanding which, with the passing of time or giving of notice, or both, would be an Event of Default. DATED the day of August, 1996. -------------------------------------- Mr. Larry H. Weltman 32 SCHEDULE C LIBOR NOTICE TO: Coutts & Co. AG, New York Branch (the "Bank") Attention: Mr. Mario Economou, Vice President FROM: Mr. Larry H. Weltman (the "Borrower") RE: Loan Agreement dated August 20, 1996 between the Borrower and the Bank (the "Loan Agreement") - -------------------------------------------------------------------------------- This Libor Notice is given pursuant to the terms of the Loan agreement. All defined terms used in this Libor Notice indicated with initial capitals shall have the same meaning as in the Loan Agreement. Notice is hereby given pursuant to the provisions of Section 2.5 of the Loan Agreement that the Borrower requests the rollover of the Libor Loan for a Libor Interest Period of ________________ month(s). The undersigned hereby certifies that no Event of Default has occurred and remains outstanding and to the best of the knowledge, information and belief of the Borrower (after due enquiry), no event has occurred and remains outstanding which, with the giving of notice or the passing of time, or both, would be an Event of Default. DATED the day of , -------------------------------------- Mr. Larry H. Weltman EX-99.M 14 WELTMAN PLEDGE AGREEMENT DATED 8/20/96 1 PLEDGE AGREEMENT THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as of August 20, 1996, by LARRY H. WELTMAN, an individual resident in the City of Toronto, Ontario (the "Pledgor"), in favour of COUTTS & CO AG, NEW YORK BRANCH, a Swiss bank licensed to conduct a banking business in the State of New York (the "Pledgee"). Preliminary Statement. A. Simultaneous with the execution and delivery of this Agreement, Pledgee is entering into (i) those certain Loan Agreements of even date herewith with Jacques Benquesus (the "Banks Loan Agreements"), (ii) that certain Loan Agreement of even date herewith with Larry H. Weltman (the "Weltman Loan Agreement") and (iii) that certain Loan Agreement of even date herewith with John M. Wiseman (the "Wiseman Loan Agreement" and together with the Banks Loan Agreements and the Weltman Loan Agreement, the "Loan Agreements"), pursuant to which the Pledgee may hereafter advance monies and make other extensions of credit to each of Jacques Benquesus, Larry H. Weltman and John M. Wiseman (collectively, the "Borrowers") under the respective Loan Agreements. B. Simultaneous with the execution and delivery of this Agreement, Jacques Benquesus is entering into that certain limited guarantee of even date herewith with Pledgee (the "Limited Guarantee") whereby Jacques Benquesus guarantees the obligations of each of the Borrowers under the Loan Agreements to the extent set forth therein. C. Pledgor is the owner of certain shares of the issued and outstanding capital stock of Gaming Lottery Corporation (the "Company") in the amounts listed on Schedule 1 hereto (the securities listed on Schedule 1 are hereinafter referred to as the "Stock"). D. The Pledgee has required as a condition to the Pledgee's advancement of funds and making of other extensions of credit under the Loan Agreements that Pledgor execute and deliver to Pledgee this Agreement in order to secure the due and punctual performance of and compliance by each of the Borrowers with all obligations, covenants, warranties, undertakings and conditions contained in or arising under each of the Loan Agreements including but not 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) 3 - 3 - being hereinafter collectively referred to as the "Collateral"), as security for the payment and performance of the Obligations. Pledgor hereby appoints Pledgee as Pledgor's attorney-in-fact to arrange, at Pledgee's option, for the transfer of the Collateral to the name of Pledgee or to the name of Pledgee's nominee and to this end the Pledgor hereby covenants to execute any further endorsements, transfers, conveyances, powers of attorney or other documents that the Pledgee may from time to time reasonably request as may be required to effect transfer of the Collateral or any of it. 2. After-Acquired Collateral. In the event that the Pledgor receives or becomes entitled to receive, after the date hereof, property and interests that constitute Collateral, then any such Collateral shall be received in trust for the benefit of the Pledgee, shall be segregated from other property of the Pledgor and shall be forthwith delivered over to the Pledgee as Collateral in the same form as so received by the Pledgor (with any necessary endorsements or stock powers required to provide for its transfer in the manner set forth in Paragraph 1 hereof). 3. Voting Rights. During the term of this Agreement, and so long as there shall not occur or exist an Event of Default under any of the Loan Agreements and as defined in each of the Loan Agreements (hereinafter an "Event of Default"), Pledgor shall have the right to vote the Stock on all corporate questions for all purposes not inconsistent with the terms of this Agreement and any of the Loan Agreements. Pledgee shall be entitled to exercise all voting powers pertaining to the Collateral from and after the occurrence of an Event of Default. Pledgee shall execute and deliver (or cause to be executed and delivered) to the Pledgor all such proxies and other instruments as the Pledgor may reasonably request for the purpose of enabling the Pledgor to exercise the voting and other rights which it is entitled to exercise pursuant to this Paragraph 3. 4. Representations, Warranties and Covenants. Pledgor warrants and represents that (a) there has been no act or omission by the Pledgor which has created or resulted in the creation of any mortgage, lien, pledge, charge, security interest or other encumbrance on, against or with respect to any part of the Pledged Shares (as such term is defined in the Master Agreement between the Pledgee and the Pledgor, dated August 19, 1996 (the "Master Agreement")), except the Security (as such term is defined in the Weltman Loan Agreement); (b) the Pledgor has full power and authority to enter into this Agreement; and (c) the Powers are duly executed and give Pledgee the authority such Powers purport to confer. The Pledgor hereby covenants not to undertake any act or omit to take any act, which could create or result in, any mortgage, lien, pledge, charge, security interest or other encumbrance (each a "Charge"), or suffer to exist any Charge arising after the date hereof, on, against or with respect to, any part of the Pledged Shares, except the Security. 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 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 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. 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 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 9 - 9 - and shall be given in the manner and to the addresses set forth in section 6.1 of the Master Agreement. 17. Paragraph Headings. The paragraph headings in this Agreement are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions of this Agreement. 18. Counterparts; Facsimile Signature. This Agreement may be executed by the parties hereto in separate counterparts each of which when so executed and delivered shall be an original, and all such counterparts shall together constitute one and the same instrument. Furthermore, this Agreement may be executed by faxed signature with the same effect as a manually signed original signature. 19. Confidentiality. This Agreement shall be subject to the provisions of the Master Agreement regarding confidentiality. 20. Non- Recourse. Notwithstanding anything contained in (i) this Agreement or the Loan Agreements, (ii) any agreement, document, instrument or certificate entered into in connection herewith or therewith, other than the Master Agreement, (collectively, the "Loan Documents") or (iii) otherwise, the Pledgor shall not be personally liable for the repayment of any of the principal of, or interest on, the loans under the Loan Agreements, the payment of any fees or expenses of the Pledgee hereunder or under any Loan Documents or the performance of, or failure to perform, any other obligation of the Pledgor under this Agreement or under any other Loan Document, and the sole and exclusive recourse of the Pledgee shall be to the Security and the Borrower shall have no liability for any deficiency which may exist after foreclosure on the Security; provided, however, that there shall be no limit to the personal liability of the Pledgor in the case of fraud. 10 - 10 - IN WITNESS WHEREOF, Pledgor and Pledgee have executed this Agreement as of the 20th day of August, 1996. /s/ Larry H. Weltman ------------------------------------- Mr. Larry H. Weltman COUTTS & CO AG, NEW YORK BRANCH By /s/ Peter Cawdron ---------------------------------- Name: Mr. Peter Cawdron Title: Bank Manager 11 Schedule 1 to Pledge Agreement Stock Certificates
Issuer Shares ------ ------ Gaming Lottery Corporation 183,020 common shares
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] EX-99.N 15 WELTMAN SHARE PURCHASE AGREEMENT DATED 8/20/96 1 Pan/Welt/Gaming SHARE PURCHASE AGREEMENT THIS AGREEMENT is made this 20th day of August, 1996 BETWEEN: LARRY H. WELTMAN of the City of Toronto, in the Province of Ontario (the "Purchaser") - and - PANOLA WORLDWIDE CORPORATION a corporation governed by the laws of the British Virgin Islands (the "Owner"), by Coutts & Co AG, New York Branch, pursuant to the authority granted to it by the Owner under that certain General Loan and Collateral Agreement executed by the Owner (the "Loan Agreement") WHEREAS, the Owner is the beneficial owner of 183,020 common shares (the Shares") of Gaming Lottery Corporation (the "Company"); AND WHEREAS, the Owner has pledged the Shares to Coutts, as security for a loan (the "Loan") made by Coutts to the Owner to finance the acquisition of the Shares by the Owner pursuant to the Loan Agreement; AND WHEREAS, the Loan Agreement provides, among other things, that in the event of a default thereunder, Coutts may sell, or resell in one or more sales, all or any portion of the property ("Collateral") pledged to it as security for the obligations of the Owner under the Loan Agreement, at any broker's board or public or private sale; AND WHEREAS, the Loan Agreement further provides that Coutts may at any time, whenever it deems necessary or desirable, in its own name or in the name of the Owner, endorse, assign, convey and transfer any and all of the Collateral; AND WHEREAS, the Shares form part of the Collateral; AND WHEREAS, the Owner is in default of its obligations under the Loan Agreement; 2 - 2 - AND WHEREAS, the Purchaser and Coutts have entered into the Weltman Master Agreement dated August 19, 1996 (hereinafter the "Master Agreement") pursuant to which the Purchaser has agreed to enter into this Agreement to purchase the Shares, Coutts has agreed to loan to the Purchaser the amount to be paid as the purchase price in respect of the sale of the Shares hereunder and Coutts agreed to cause the Owner to enter into this Agreement to sell the Shares. NOW THEREFORE the parties agree as follows: 1. PURCHASE AND SALE The Owner hereby sells, assigns and transfers to the Purchaser and the Purchaser hereby purchases from the Owner as of the date hereof (the "Effective Date") all the right, title and interest of the Owner in and to the Shares for an aggregate purchase price equal to $614,947.20 (the "Purchase Price") and on and subject to the terms and conditions set forth in this Agreement and the Master Agreement. 2. PAYMENT OF PURCHASE PRICE AND DEEMED DELIVERY OF THE SHARES (a) Payment of Purchase Price The Purchase Price shall be satisfied by Coutts crediting an amount equal to the Purchase Price as a repayment on behalf of the Owner to the balance outstanding under the Loan on the Effective Date. If the Purchase Price exceeds the balance outstanding under the Loan, including principal, interest and all other amounts owing thereunder, the amount of such excess shall be paid by Coutts to the Owner as soon as the full amount of the Loan has been repaid and discharged. (b) Deemed Delivery of Purchased Shares On payment of the Purchase Price in the manner set forth in paragraph (a) above, Coutts shall instruct the transfer agent for the Company to issue certificates representing the Shares in the name of the Purchaser. The certificates shall be retained by Coutts and held as security under the Share Pledge (as defined in the Master Agreement) duly endorsed in blank for transfer or with a stock transfer power of attorney duly executed by the Purchaser. 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. 4 - 4 - IN WITNESS WHEREOF, the Owner and the Purchaser have executed this Agreement by the signatures of their proper officers duly authorized in that behalf. BY COUTTS & CO AG, NEW YORK BRANCH, IN THE NAME OF THE OWNER, PURSUANT TO THE AUTHORITY GRANTED TO IT IN THE LOAN AGREEMENT By: /s/ Peter Cawdron ------------------------------------ Peter Cawdron /s/ Larry H. Weltman --------------------------------------- Larry H. Weltman EX-99.O 16 LOAN DOCUMENTS BETWEEN COUTTS AND SILVA RUN 1 PLEDGE AGREEMENT THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as of August 20, 1996, by LARRY H. WELTMAN, an individual resident in the City of Toronto, Ontario (the "Pledgor"), in favour of COUTTS & CO AG, NEW YORK BRANCH, a Swiss bank licensed to conduct a banking business in the State of New York (the "Pledgee"). Preliminary Statement. A. Simultaneous with the execution and delivery of this Agreement, Pledgee is entering into (i) those certain Loan Agreements of even date herewith with Jacques Benquesus (the "Banks Loan Agreements"), (ii) that certain Loan Agreement of even date herewith with Larry H. Weltman (the "Weltman Loan Agreement") and (iii) that certain Loan Agreement of even date herewith with John M. Wiseman (the "Wiseman Loan Agreement" and together with the Banks Loan Agreements and the Weltman Loan Agreement, the "Loan Agreements"), pursuant to which the Pledgee may hereafter advance monies and make other extensions of credit to each of Jacques Benquesus, Larry H. Weltman and John M. Wiseman (collectively, the "Borrowers") under the respective Loan Agreements. B. Simultaneous with the execution and delivery of this Agreement, Jacques Benquesus is entering into that certain limited guarantee of even date herewith with Pledgee (the "Limited Guarantee") whereby Jacques Benquesus guarantees the obligations of each of the Borrowers under the Loan Agreements to the extent set forth therein. C. Pledgor is the owner of certain shares of the issued and outstanding capital stock of Gaming Lottery Corporation (the "Company") in the amounts listed on Schedule 1 hereto (the securities listed on Schedule 1 are hereinafter referred to as the "Stock"). D. The Pledgee has required as a condition to the Pledgee's advancement of funds and making of other extensions of credit under the Loan Agreements that Pledgor execute and deliver to Pledgee this Agreement in order to secure the due and punctual performance of and compliance by each of the Borrowers with all obligations, covenants, warranties, undertakings and conditions contained in or arising under each of the Loan Agreements including but not 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) 3 - 3 - being hereinafter collectively referred to as the "Collateral"), as security for the payment and performance of the Obligations. Pledgor hereby appoints Pledgee as Pledgor's attorney-in-fact to arrange, at Pledgee's option, for the transfer of the Collateral to the name of Pledgee or to the name of Pledgee's nominee and to this end the Pledgor hereby covenants to execute any further endorsements, transfers, conveyances, powers of attorney or other documents that the Pledgee may from time to time reasonably request as may be required to effect transfer of the Collateral or any of it. 2. After-Acquired Collateral. In the event that the Pledgor receives or becomes entitled to receive, after the date hereof, property and interests that constitute Collateral, then any such Collateral shall be received in trust for the benefit of the Pledgee, shall be segregated from other property of the Pledgor and shall be forthwith delivered over to the Pledgee as Collateral in the same form as so received by the Pledgor (with any necessary endorsements or stock powers required to provide for its transfer in the manner set forth in Paragraph 1 hereof). 3. Voting Rights. During the term of this Agreement, and so long as there shall not occur or exist an Event of Default under any of the Loan Agreements and as defined in each of the Loan Agreements (hereinafter an "Event of Default"), Pledgor shall have the right to vote the Stock on all corporate questions for all purposes not inconsistent with the terms of this Agreement and any of the Loan Agreements. Pledgee shall be entitled to exercise all voting powers pertaining to the Collateral from and after the occurrence of an Event of Default. Pledgee shall execute and deliver (or cause to be executed and delivered) to the Pledgor all such proxies and other instruments as the Pledgor may reasonably request for the purpose of enabling the Pledgor to exercise the voting and other rights which it is entitled to exercise pursuant to this Paragraph 3. 4. Representations, Warranties and Covenants. Pledgor warrants and represents that (a) there has been no act or omission by the Pledgor which has created or resulted in the creation of any mortgage, lien, pledge, charge, security interest or other encumbrance on, against or with respect to any part of the Pledged Shares (as such term is defined in the Master Agreement between the Pledgee and the Pledgor, dated August 19, 1996 (the "Master Agreement")), except the Security (as such term is defined in the Weltman Loan Agreement); (b) the Pledgor has full power and authority to enter into this Agreement; and (c) the Powers are duly executed and give Pledgee the authority such Powers purport to confer. The Pledgor hereby covenants not to undertake any act or omit to take any act, which could create or result in, any mortgage, lien, pledge, charge, security interest or other encumbrance (each a "Charge"), or suffer to exist any Charge arising after the date hereof, on, against or with respect to, any part of the Pledged Shares, except the Security. 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 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 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. 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 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 9 - 9 - and shall be given in the manner and to the addresses set forth in section 6.1 of the Master Agreement. 17. Paragraph Headings. The paragraph headings in this Agreement are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions of this Agreement. 18. Counterparts; Facsimile Signature. This Agreement may be executed by the parties hereto in separate counterparts each of which when so executed and delivered shall be an original, and all such counterparts shall together constitute one and the same instrument. Furthermore, this Agreement may be executed by faxed signature with the same effect as a manually signed original signature. 19. Confidentiality. This Agreement shall be subject to the provisions of the Master Agreement regarding confidentiality. 20. Non- Recourse. Notwithstanding anything contained in (i) this Agreement or the Loan Agreements, (ii) any agreement, document, instrument or certificate entered into in connection herewith or therewith, other than the Master Agreement, (collectively, the "Loan Documents") or (iii) otherwise, the Pledgor shall not be personally liable for the repayment of any of the principal of, or interest on, the loans under the Loan Agreements, the payment of any fees or expenses of the Pledgee hereunder or under any Loan Documents or the performance of, or failure to perform, any other obligation of the Pledgor under this Agreement or under any other Loan Document, and the sole and exclusive recourse of the Pledgee shall be to the Security and the Borrower shall have no liability for any deficiency which may exist after foreclosure on the Security; provided, however, that there shall be no limit to the personal liability of the Pledgor in the case of fraud. 10 - 10 - IN WITNESS WHEREOF, Pledgor and Pledgee have executed this Agreement as of the 20th day of August, 1996. /s/ Larry H. Weltman ------------------------------------- Mr. Larry H. Weltman COUTTS & CO AG, NEW YORK BRANCH By /s/ Peter Cawdron ---------------------------------- Name: Mr. Peter Cawdron Title: Bank Manager 11 Schedule 1 to Pledge Agreement Stock Certificates
Issuer Shares ------ ------ Gaming Lottery Corporation 183,020 common shares
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] 13 Pan/Welt/Gaming SHARE PURCHASE AGREEMENT THIS AGREEMENT is made this 20th day of August, 1996 BETWEEN: LARRY H. WELTMAN of the City of Toronto, in the Province of Ontario (the "Purchaser") - and - PANOLA WORLDWIDE CORPORATION a corporation governed by the laws of the British Virgin Islands (the "Owner"), by Coutts & Co AG, New York Branch, pursuant to the authority granted to it by the Owner under that certain General Loan and Collateral Agreement executed by the Owner (the "Loan Agreement") WHEREAS, the Owner is the beneficial owner of 183,020 common shares (the Shares") of Gaming Lottery Corporation (the "Company"); AND WHEREAS, the Owner has pledged the Shares to Coutts, as security for a loan (the "Loan") made by Coutts to the Owner to finance the acquisition of the Shares by the Owner pursuant to the Loan Agreement; AND WHEREAS, the Loan Agreement provides, among other things, that in the event of a default thereunder, Coutts may sell, or resell in one or more sales, all or any portion of the property ("Collateral") pledged to it as security for the obligations of the Owner under the Loan Agreement, at any broker's board or public or private sale; AND WHEREAS, the Loan Agreement further provides that Coutts may at any time, whenever it deems necessary or desirable, in its own name or in the name of the Owner, endorse, assign, convey and transfer any and all of the Collateral; AND WHEREAS, the Shares form part of the Collateral; AND WHEREAS, the Owner is in default of its obligations under the Loan Agreement; 14 - 2 - AND WHEREAS, the Purchaser and Coutts have entered into the Weltman Master Agreement dated August 19, 1996 (hereinafter the "Master Agreement") pursuant to which the Purchaser has agreed to enter into this Agreement to purchase the Shares, Coutts has agreed to loan to the Purchaser the amount to be paid as the purchase price in respect of the sale of the Shares hereunder and Coutts agreed to cause the Owner to enter into this Agreement to sell the Shares. NOW THEREFORE the parties agree as follows: 1. PURCHASE AND SALE The Owner hereby sells, assigns and transfers to the Purchaser and the Purchaser hereby purchases from the Owner as of the date hereof (the "Effective Date") all the right, title and interest of the Owner in and to the Shares for an aggregate purchase price equal to $614,947.20 (the "Purchase Price") and on and subject to the terms and conditions set forth in this Agreement and the Master Agreement. 2. PAYMENT OF PURCHASE PRICE AND DEEMED DELIVERY OF THE SHARES (a) Payment of Purchase Price The Purchase Price shall be satisfied by Coutts crediting an amount equal to the Purchase Price as a repayment on behalf of the Owner to the balance outstanding under the Loan on the Effective Date. If the Purchase Price exceeds the balance outstanding under the Loan, including principal, interest and all other amounts owing thereunder, the amount of such excess shall be paid by Coutts to the Owner as soon as the full amount of the Loan has been repaid and discharged. (b) Deemed Delivery of Purchased Shares On payment of the Purchase Price in the manner set forth in paragraph (a) above, Coutts shall instruct the transfer agent for the Company to issue certificates representing the Shares in the name of the Purchaser. The certificates shall be retained by Coutts and held as security under the Share Pledge (as defined in the Master Agreement) duly endorsed in blank for transfer or with a stock transfer power of attorney duly executed by the Purchaser. 15 - 3 - 3. AGREEMENT TO OPERATE AS CONVEYANCE This Agreement shall operate as an actual conveyance, transfer, assignment and setting over of all the right, title and interest of the Owner in and to the Shares as of the date of this Agreement. 4. GENERAL (a) Time Time shall be of the essence of this Agreement. (b) Governing Law; Choice of Forum, Service of Process; Jury Trial; Waivers This Agreement shall be subject to the provisions in the Master Agreement relating to governing law, choice of forum, service of process, jury trials and waivers. (c) Successors and Assigns This Agreement shall enure to the benefit of and be binding upon the respective parties hereto and their successors and permitted assigns. (d) Currency All references to money amounts are to United States currency. (e) Confidentiality This Agreement shall be subject to the provisions contained in section 6.5 of the Master Agreement relating to confidentiality. 16 - 4 - IN WITNESS WHEREOF, the Owner and the Purchaser have executed this Agreement by the signatures of their proper officers duly authorized in that behalf. BY COUTTS & CO AG, NEW YORK BRANCH, IN THE NAME OF THE OWNER, PURSUANT TO THE AUTHORITY GRANTED TO IT IN THE LOAN AGREEMENT By: /s/ Peter Cawdron ------------------------------------ Peter Cawdron /s/ Larry H. Weltman --------------------------------------- Larry H. Weltman 17 [COUTTS & CO LOGO] COUTTS & CO AG PARK AVENUE TOWER 65 East 55th Street New York, NY 10022 Telephone (212) 303 2939 TELEFAX (212) 303 2929 March 16, 1995 Mr. A H Salazar Diaz Silva Run Worldwide Ltd. Tortola, British Virgin Islands Dear Mr. Salazar: We are pleased to confirm that we are prepared to make available a line of credit on the following terms and conditions: 1) Amount Up to US$6,000,000 (six million U.S. Dollars), provided the collateral requirements set out below are satisfied. 2) Availability Loan US$6,000,000 You may borrow up to a maximum amount set out above and, after full or partial repayment, reborrow on this line of credit until its term has expired, provided that all the terms and conditions hereof are satisfied. 3) Purpose and Repayment The loan will be used for investment purchases of stock and bonds. Repayment of this loan will be from the liquidation of collateral. 4) Collateral Any utilisation hereunder shall be secured by the pledge of all assets held by you with this Bank (the "Assets"), pursuant to the General Loan and Collateral Agreement signed by you on 1/11/95. Some or all of the Assets have a loanable value up to a percentage ratio of their market value from time to time which varies with the nature and quality of each asset (certain Assets may not have a loanable value, although these Assets will secure the line of credit). A summary of current maximum lending ratios is provided as an appendix to this letter. We reserve the right to vary these ratios at our discretion, and to refuse to extend a lending ratio against assets which we do not consider to be acceptable or which would exceed the limits we regard as prudent for lending against a specific Asset, and to terminate our lending ratios against Assets. None of the Assets may be removed by you from the Bank without our prior written consent. 18 5) Collateral Margin Requirements You will ensure at all times that the loanable value of the assets pledged to us as collateral exceeds the amount outstanding hereunder. Should the loanable value of pledged assets fall to 5% below the amount outstanding (inclusive of interest and costs), you will provide us with additional collateral to cover the shortfall upon our first demand. Should you fail to provide the additional collateral within 5 business days or should the loanable value of the pledged assets fall to 10% or more below the amount outstanding (whichever occurs first), we reserve the right without further formality or notice and at our discretion to sell sufficient Assets (including both Assets with, and Assets without, a loanable value) to reduce the amount outstanding under the line of credit to the loanable value of the remaining Assets which are pledged to us. These provisions will take effect regardless of the value of any Assets which do not have loanable value and may take effect because we decrease or terminate our lending ratio for some or all of the Assets securing the line of credit. 6) Pricing You agree to pay an interest rate of LIBOR + 1% (one percent) on any advances. 7) Term This line of credit is provided on the basis that it may be withdrawn without notice and any amounts outstanding are repayable on first demand. It is made available to you on an uncommitted basis and we reserve the right to liquidate collateral to repay any amounts outstanding at our discretion and without further formality. In any event, this line of credit shall become due for review on February 22, 1996, and we shall be pleased to discuss future arrangements shortly before this date. 8) Applicable Law This Agreement is subject to the laws of the State of New York. Please sign and return the attached copy of this letter as confirmation of your acceptance of those terms and conditions. Yours sincerely, /s/ P Embiricos /s/ D Simmons P Embiricos D Simmons Coutts & Co AG Coutts & Co AG /s/ A H Salazar Diaz 19 [COUTTS & CO LOGO] COUTTS & CO AG PARK AVENUE TOWER 65 East 55th Street New York, NY 10022 Telephone (212) 303 2939 TELEFAX (212) 303 2929 Mr. A H Salazar Diaz Silva Run Worldwide Limited Tortola British Virgin Islands June 26, 1995 Dear Mr. Salazar: Silva Run Worldwide Limited We are pleased to confirm that we are prepared to make available a line of credit on the following terms and conditions: 1) Amount Up to US$25,000,000 (twenty five million dollars), provided the collateral requirements set out below are satisfied. 2) Availability Loan US$22,000,000 Foreign Exchange Trading US$3,000,000 (covering open foreign exchange contracts with a face value of $30,000,000) You may borrow up to a maximum amount set out above and, after full or partial repayment, reborrow on this line of credit until its term has expired, provided that all the terms and conditions hereof are satisfied. We are prepared to enter into open forward foreign exchange contracts with you, up to 12 months duration in major currencies. We will apply a notional value of 10% of the face value of each contract as utilization hereunder. 3) Purpose and Repayment The loan will be used for investment purposes including trading on margin. Repayment of the loan will be from the sale of the investments from time to time, and/or from other resources of the corporation. 20 4) Collateral Any utilisation hereunder shall be secured by the pledge of all assets held by you with this Bank (the "Assets"), pursuant to the General Loan and Collateral Agreement signed by you on January 11, 1995. Some or all of the Assets have a loanable value up to a percentage ratio of their market value from time to time which varies with the nature and quality of each asset (certain Assets may not have a loanable value, although these Assets will secure the line of credit). A summary of current maximum lending ratios is provided as an appendix to this letter. We reserve the right to vary these ratios at our discretion, and to refuse to extend a lending ratio against assets which we do not consider to be acceptable or which would exceed the limits we regard as prudent for lending against a specific Asset, and to terminate our lending ratios against Assets. None of the Assets may be removed by you from the Bank without our prior written consent. 5) Collateral Margin Requirements You will ensure at all times that the loanable value of the assets pledged to us as collateral exceeds the amount outstanding hereunder. Should the loanable value of pledged assets fall to 5% below the amount outstanding (inclusive of interest and costs), you will provide us with additional collateral to cover the shortfall upon our first demand. Should you fail to provide the additional collateral within 5 business days or should the loanable value of the pledged assets fall to 10% or more below the amount outstanding (whichever occurs first), we reserve the right without further formality or notice and at our discretion to sell sufficient Assets (including both Assets with, and Assets without, a loanable value) to reduce the amount outstanding under the line of credit to the loanable value of the remaining Assets which are pledged to us. These provisions will take effect regardless of the value of any Assets which do not have loanable value and may take effect because we decrease or terminate our lending ratio for some or all of the Assets securing the line of credit. 6) Pricing Loans will bear interest at a rate to be mutually agreed at the time of each borrowing. Indicative pricing is: Loan: 1.0% over Libor All interest is to be paid as it falls due. 21 7) Term This line of credit is provided on the basis that it may be withdrawn without notice and any amounts outstanding are repayable on first demand. It is made available to you on an uncommitted basis and we reserve the right to liquidate collateral to repay any amounts outstanding at our discretion and without further formality. In any event, this line of credit shall become due for review on February 24, 1996, and we shall be pleased to discuss future arrangements shortly before this date. 8) Required Documentation Promissory Note in respect of loan drawings (attached). Form U1 (attached). 9) Applicable Law This Agreement is subject to the laws of the State of New York. Please advise if you require any further explanation of these terms and conditions. Yours faithfully, /s/ Peter Embiricos /s/ Derek Simmons Peter Embiricos Derek Simmons Coutts & Co Coutts & Co Terms accepted, /s/ A.H. Salazar Diaz -------------------------------------------- For and on behalf of Silva Run Worldwide Ltd Date: 06/26/95 22 Maximum Lending Ratios 1. Coutts & Co own bonds and medium term cash bonds 90% 2. US, major European and Japanese government or government agency bonds and notes 90% 3. Corporate bonds or notes rated AA or better 80% 4. Corporate bonds or notes rated A or BBB 70% 5. Selected equities quoted on US, major European or Japanese stock exchanges 50% 6. Funds: (a) Coutts & Co money market funds, same currency 95% Coutts & Co money market funds, another currency 85% Coutts & Co global fixed income 85% Coutts & Co global equities 70% (b) Other unleveraged global fixed income 75% Other unleveraged global equities 60% Other unleveraged emerging market 50% 7. Precious Metals 50% 8. Time Deposits and bank certificates of deposit: Coutts & Co, same currency 95% Coutts & Co, another currency 85%
*************** 23 GENERAL LOAN AND COLLATERAL AGREEMENT [COUTTS & CO LOGO] In order to induce Coutts & Co AG (herein together with its successors, assigns and endorsees is called "the Bank") from time to time in its discretion to grant, extend or continue credit or other financial accommodations to the undersigned, or any of them, or to others on the guaranty, endorsement or other assurance of the undersigned, or any of them, it is hereby agreed and provided by the undersigned that the Bank shall have the following rights in addition to all other rights the Bank may have under the Uniform Commercial Code of New York or otherwise, to wit: 1. All loans, advances, or credits heretofore or hereafter obtained from the Bank by the undersigned, or any of them, as well as all present and future indebtedness of any of the undersigned to the Bank, shall, unless otherwise agreed in writing, be repayable by the undersigned at the Bank at its office at 65 East 55th Street, New York, NY 10022, upon demand, in immediately available funds. 2. As security for any and all loans, advances, credits, indebtedness, obligations and liabilities of any kind, of the undersigned or any of them to the Bank, now or hereafter existing, whether absolute or contingent, due or to become due, direct or indirect, liquidated or unliquidated, and however acquired, incurred, or arising (all of which are hereinafter referred to as the "obligations"), the undersigned and each of them grants a present security interest in every balance of every account which the undersigned or any of them has or shall at any time have with the Bank and all moneys, instruments, chattel paper, documents, accounts, contract rights, goods, credits, choses in action, claims, demands, and without any limitation whatsoever, property of every kind and description including additions, accessions and substitutions (all of which are hereinafter collectively referred to as the "collateral") which have been or at any time shall be delivered to or be in transit to or from the Bank or any of its agents or correspondents or other third party or parties acting in its behalf, by, or for, or for account of, or subject to the order of, the undersigned or any of them and in all right, title and interest of the undersigned or any of them in and to any collateral which has come or shall come into the possession, custody or control of the Bank in any way or for any purpose whatsoever, whether for safekeeping or otherwise and whether the Bank shall accept them for the purposes for which it is delivered to it or not. The undersigned further authorizes the Bank to execute and file one or more financing statements covering the collateral security or any part thereof and the undersigned agrees to bear the cost of such filing(s). 3. The Bank at its discretion may, without notice, transfer any of the collateral into its own name or that of its nominee and may, at its discretion, in its or its nominee's name or in the name of the undersigned or any of them, demand, sue for, collect and receive any money or property at any time due, payable or receivable on account of or in exchange for, or make any compromise or settlement it deems desirable with reference to, any of the collateral and endorse, assign, convey and transfer any and all of the collateral. The Bank may discharge all liens, taxes and security interests relating to the collateral at the undersigned's expense. The Bank may, upon any default hereunder or under any of the obligations, grant options or sell and resell in one or more sales, all or any of the collateral at any broker's board or public or private sale, for cash, upon credit or for future delivery, free from all liability or claim for inadequacy of price, with or without demand of performance or advertisement. Unless the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Bank will give the undersigned at least five days prior written notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made. The Bank or its agent may bid and/or purchase at any public sale and, if the collateral is of the type customarily sold in a recognized market or the type which is the subject of widely distributed price standards, at any private sale made under this agreement, the Bank may hold the same thereafter in its own right, absolutely free from any claim of the undersigned, who and each of whom hereby waives and releases all rights of redemption to the extent such waiver is lawful. The undersigned will bear and pay all necessary and incidental costs and expenses and reasonable attorney's fees that the Bank may incur in the enforcement hereof or of any of the obligations or of any of the collateral or of any actual or attempted sale, exchange, enforcement, collection, compromise or settlement of any of the collateral and of receipt of proceeds thereof, and will repay to the Bank any such expense incurred by it together with interest as hereinabove provided for. The pledge and lien hereby given shall cover all proceeds of the collateral at any time in the possession or control of the Bank. The Bank may at any time, at its option, apply all or any of the net cash receipts or net balance of or from any of the collateral to the payment in whole or in part of any of the obligations or any such expense, applying or distributing the same as it shall elect, whether the item or items on which such payment is made be due or not, notwithstanding the holding by the Bank of the collateral. The Bank shall not assume nor shall it be deemed to have assumed any duties, liabilities or obligations in any way relating to or arising out of any of the collateral. Notwithstanding the holding by the Bank of the collateral or any sale, exchange, transfer, enforcement, collection, compromise or settlement, actual or attempted, of any of the collateral the undersigned and each of them shall be and remain liable for the payment in full of principal and interest of all of the obligations and any expense as aforesaid, except only to the extent that the same or any part thereof shall be reduced by payment or actual application thereon by the Bank of the collateral or proceeds thereof. All remittances and property shall be deemed in the possession and custody of the Bank when actually in possession or custody of, or in transit to it or any agent, bailee or correspondent or other third party acting on its behalf. 4. If at any time the collateral for any of the obligations shall be unsatisfactory to the Bank or any of its officers, and the undersigned or any of them shall not on demand furnish such further collateral or make such payment on account as shall be satisfactory to the Bank, or if any sum payable upon any of the obligations be not paid when due, or in the event of any other default in, or under, any of the obligations, or default in the payment at maturity of liabilities of the undersigned to others, or upon failure of the undersigned to insure in favor of and to the satisfaction of the Bank any of the collateral or if the undersigned or any of them, or in the case of a partnership, any partner thereof, or any guarantor of any of the obligations or any maker, endorser, or guarantor of any of the collateral shall die, or become insolvent, or suspend business or make an assignment for the benefit of creditors, or if a petition in bankruptcy shall be filed against, or a voluntary petition in bankruptcy shall be filed by or if a judgment be entered against, or if a receiver shall be appointed or any attachment or levy filed against the property or assets, or any thereof, of, or upon any proceeding being commenced under any bankruptcy reorganization, arrangement of debt, insolvency, liquidation or dissolution law or statute by or against the undersigned or any of them, or any such maker, endorser, or guarantor, of if the Bank shall in good faith deem itself insecure, thereupon any or all of the obligations, although not payable on demand, shall, at the option of the Bank, forthwith become and be due and payable without notice, presentation or demand of payment all of which are hereby expressly waived. 5. The Bank may assign or transfer all or any part of the obligations and may transfer as security therefor all or any part of the collateral, and shall be thereafter duly discharged from all liability and responsibility with respect to the collateral so transferred, and the transferee shall thereafter be vested with all powers and rights of the Bank hereunder with respect to such collateral but with respect to any security not so transferred the Bank shall retain all rights and powers hereby or otherwise given. The undersigned will assert no claims or defense he may have against the Bank against the transferee. 6. No delay on the part of the Bank or any of such assignee or transferee in exercising any power or right hereunder shall operate as a waiver of any power or right nor shall any single or partial exercise of any power or right hereunder preclude other or further exercise thereof or the exercise of any other power or right. The rights and remedies herein expressly specified are irrevocable, cumulative and not exclusive of any other rights or remedies which the Bank or its assigns may otherwise have. Any notice to or demand on the undersigned elected to be given or made by the Bank shall be deemed effective, if not first otherwise made or given, when forwarded by mail, telegraph, or telephoned to the last address of the undersigned appearing on the Bank's books. No notice to or demand on the undersigned shall be deemed to be a waiver of any obligation of the undersigned or of the right of the Bank to take further action without notice or demand as provided herein. In no event shall any waiver by the Bank or any right be effective unless in writing and then the same shall be applicable only in the specific instance for which given. 24 7. This agreement shall cover all future as well as all existing transactions and shall remain effective irrespective of any interruptions in the business relations of the undersigned with the Bank. It shall bind all administrators, executors, heirs, partners, successors and assigns of the undersigned and each of them. The term "undersigned" as used herein shall, if this instrument is signed by more than one party, mean the "undersigned and each of them" and each undertaking herein contained shall be their joint and several undertaking. 8. This agreement and the rights and obligations of the Bank and of the undersigned hereunder shall be governed and construed in accordance with the laws of the State of New York. The undersigned consent to the jurisdiction of the courts of New York in any action brought to enforce any of the rights granted to the Bank hereunder. 9. The undersigned hereby waive(s) trial by jury in any litigation in any court with respect to, in connection with, or arising out of this Agreement or any other agreement, instrument or document delivered in connection herewith or any transaction contemplated hereby. New York, New York January 11, 1995 /s/ A. H. Salazar Diaz - --------------------------------------- Account Signature - --------------------------------------- Address - --------------------------------------- Account Signature - --------------------------------------- Address - --------------------------------------- Account Signature - --------------------------------------- Address - --------------------------------------- Account Signature - --------------------------------------- Address 25 [COUTTS & CO. LOGO] Demand Interest Bearing Note $22,000,000 Office Address: 65 East 55th Street, N.Y., June 26, 1995 ON DEMAND The undersigned, for value received, jointly and severally promise(s) to pay to the order of Coutts & Co AG (hereinafter called the Bank) at its office in the place first above stated, or if no place is stated, at 65 East 55th Street, 22nd Fl., New York, NY 10022, in funds current at the New York Clearing House, the sum of twenty two million dollars. ($22,000,000) Dollars. The undersigned also promises to pay interest at said offices at the rate per annum indicated below: [ ] The Bank's Prime Rate (the rate of interest established from time to time by the Bank as its "prime rate") plus ____________ %, which interest rate shall change when and as the Prime Rate changes; [ ] ____________ %; (or) [x] calculated as provided on the reverse side hereof. If all or a portion of the principal or interest of the Liabilities (as hereinafter defined), or any fee or other amount due in connection therewith, shall not be paid when due (whether after stated maturity, acceleration or otherwise), such amount, to the extent permitted by applicable law, shall bear interest at the rate of 2% per annum in excess of the rate hereinbefore provided, but in no event in excess of the maximum rate of interest permitted under applicable law. Interest shall be payable on the first day of each month commencing the first such day to occur after the date hereof and on the maturity hereof. The undersigned grants the Bank a security interest in and pledge(s) with the Bank, as collateral security for payment of this note and of all Liabilities (as hereinafter defined) of the Obligors (as hereinafter defined), or any one or more of them, now or hereafter owned or held by the Bank, the following property: All assets held by Coutts & Co AG - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 26 modifications that may be granted or consented to by the Bank with regard to the time of payment or with respect to any other provisions of this note and agrees that no such action or failure to act o the part of the Bank shall in any way affect or impair the obligations of any Obligor or be construed as a waiver by the Bank of, or otherwise affect, its right to avail itself of any remedy hereunder with the same force and effect as if each Obligor had expressly consented to such action or inaction upon the part of the Bank. The note shall be deemed to have been made and delivered in the State of York; the Obligors consent to the jurisdiction of the courts of New York in any action brought to enforce any of the rights of the Bank under this note and the rights and liabilities of the Bank and the Obligors shall be determined in accordance with the laws of the State of New York. Interest shall be calculated on the basis of a 360-day year and actual days elapsed. The obligors hereby authorize the Bank to date this note as of the day when the loan evidenced hereby is made and to complete and fill in any blank spaces in this note in order to conform to the terms upon which this loan granted. The Obligor further authorizes the Bank to execute and file one or more financing statements covering the collateral security or any part thereof and the Obligor agrees to bear the cost of such filing(s). The term "Bank" as used herein shall be deemed to include the Bank and its successors, endorsers and assigns. Special provisions Interest will be calculated at 1% over Libor, with the rate to be mutually agreed at the time of each borrowing fixture. For and on behalf of Silva Run Worldwide Ltd /s/ A. H. Salazar Diaz - -------------------------------------------------------------------------------- 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. ------------------------ EX-99.P 17 LOAN DOCUMENTS BETWEEN COUTTS AND COMPANIA 1 [COUTTS & CO LOGO] COUTTS & CO AG PARK AVENUE TOWER 65 East 55th Street New York, NY 10022 Telephone (212) 303 2939 TELEFAX (212) 303 2929 March 16, 1995 Ronald F. Seale Director Compania di Investimento Antilliana SA High Street St. John's, Antigua Dear Mr. Seale: We are pleased to confirm that we are prepared to make available a line of credit on the following terms and conditions: 1) AMOUNT Up to US$2,000,000 (two million U.S. Dollars), provided the collateral requirements set out below are satisfied. 2) AVAILABILITY Loan US$2,000,000 You may borrow up to the maximum amount set out above and, after full or partial repayment, reborrow on this line of credit until its term has expired, provided that all the terms and conditions hereof are satisfied. 3) PURPOSE AND REPAYMENT The purpose of this loan is for investment purchases of stocks and bonds. Repayment of this loan will be from the liquidation of collateral. 4) COLLATERAL Any utilization hereunder shall be secured by the pledge of all assets held by you with this Bank (the "Assets"), pursuant to the General Loan and Collateral Agreement signed by you on 1/10/95. Some or all of the Assets have a loanable value up to a percentage ratio of their market value from time to time which varies with the nature and quality of each asset (certain Assets may not have a loanable value, although these Assets will secure the line of credit). A summary of current maximum lending ratios is provided as an appendix to this letter. We reserve the right to vary these ratios at our discretion, and to refuse to extend a lending ratio against assets which we do not consider to be acceptable or which would exceed the limits we regard as prudent for lending against a specific Asset, and to terminate our lending ratios against Assets. None of the Assets may be removed by you from the Bank without our prior written consent. 2 5) COLLATERAL MARGIN REQUIREMENTS You will ensure at all times that the loanable value of the assets pledged to us as collateral exceeds the amount outstanding hereunder. Should the loanable value of pledged assets fall to 5% below the amount outstanding (inclusive of interest and costs), you will provide us with additional collateral to cover the shortfall upon our first demand. Should you fail to provide the additional collateral within 5 business days or should the loanable value of the pledged assets fall to 10% or more below the amount outstanding (whichever occurs first), we reserve the right without further formality or notice and at our discretion to sell sufficient Assets (including both Assets with, and Assets without, a loanable value) to reduce the amount outstanding under the line of credit to the loanable value of the remaining Assets which are pledged to us. These provisions will take effect regardless of the value of any Assets which do not have loanable value and may take effect because we decrease or terminate our lending ratio for some or all of the Assets securing the line of credit. 6) PRICING You agree to pay an interest rate of LIBOR + 1% (one percent) on any advances. 7) TERM This line of credit is provided on the basis that it may be withdrawn without notice and any amounts outstanding are repayable on first demand. We reserve the right to liquidate collateral to repay any amounts outstanding at our discretion and without further formality. In any event, this line of credit shall become due for review on February 24, 1996 and we shall be pleased to discuss future arrangements shortly before this date. 8) APPLICABLE LAW This Agreement is subject to the laws of the State of New York. Please sign and return the attached copy of this letter as confirmation of your acceptance of these terms and conditions. Yours sincerely, /s/ P Embiricos /s/ D Simmons P Embiricos D Simmons Coutts & Co AG Coutts & Co AG 3 [COUTTS & CO LOGO] COUTTS & CO AG PARK AVENUE TOWER 65 East 55th Street New York, NY 10022 Telephone (212) 303 2939 TELEFAX (212) 303 2929 April 5, 1995 Ronald F. Seale Director Compania di Investimento Antilliana SA High Street St. John's, Antigua Dear Mr. Seale: We are pleased to confirm that we are prepared to make available a line of credit on the following terms and conditions: 1) AMOUNT Up to US$2,500,000 (two million five hundred thousand U.S. Dollars), provided the collateral requirements set out below are satisfied. 2) AVAILABILITY Loan US$2,000,000 FX Margin Trading Facility US$500,000 Loan- You may borrow up to the maximum amount set out above and, after full or partial repayment, reborrow on this line of credit until its term has expired, provided that all the terms and conditions hereof are satisfied. FX Margin Trading Facility- We are prepared to enter into open forward foreign exchange transactions with you, up to 12 months duration in major currencies. We will apply a notional value of 10% of the face value of each contract as utilization hereunder. 3) PURPOSE AND REPAYMENT The purpose of the loan is for investment purchases of stocks and bonds. Repayment of this loan will be from the liquidation of collateral. The purpose of the FX Margin Trading Facility is to enable the corporation to enter into forward foreign exchange contracts. 4) COLLATERAL Any utilization hereunder shall be secured by the pledge of all assets held by you with this Bank (the "Assets"), pursuant to the General Loan and Collateral Agreement signed by you on 1/10/95. 4 Some or all of the Assets have a loanable value up to a percentage ratio of their market value from time to time which varies with the nature and quality of each asset (certain Assets may not have a loanable value, although these Assets will secure the line of credit). A summary of current maximum lending ratios is provided as an appendix to this letter. We reserve the right to vary these ratios at our discretion, and to refuse to extend a lending ratio against assets which we, do not consider to be acceptable or which would exceed the limits we regard as prudent for lending against a specific Asset, and to terminate our lending ratios against Assets. None of the Assets may be removed by you from the Bank without our prior written consent. 5) COLLATERAL MARGIN REQUIREMENTS You will ensure at all times that the loanable value of the assets pledged to us as collateral exceeds the amount outstanding hereunder. Should the loanable value of pledged assets fall to 5% below the amount outstanding (inclusive of interest and costs), you will provide us with additional collateral to cover the shortfall upon our first demand. Should you fail to provide the additional collateral within 5 business days or should the loanable value of the pledged assets fall to 10% or more below the amount outstanding (whichever occurs first), we reserve the right without further formality or notice and at our discretion to sell sufficient Assets (including both Assets with, and Assets without, a loanable value) to reduce the amount outstanding under the line of credit to the loanable value of the remaining Assets which are pledged to us. These provisions will take effect regardless of the value of any Assets which do not have loanable value and may take effect because we decrease or terminate our lending ratio for some or all of the Assets securing the line of credit. 6) PRICING Loan- You agree to pay an interest rate of LIBOR + 1% (one percent) on any loan advances. FX Margin Trading Facility-You agree to pay 10 PIPs on trades up to $500,000 and 5 PIPs on trades above $500,000. 7) TERM This line of credit is provided on the basis that it may be withdrawn without notice and any amounts outstanding are repayable on first demand. We reserve the right to liquidate collateral to repay any amounts outstanding at our discretion and without further formality. In any event, this line of credit shall become due for review on February 24, 1996 and we shall be pleased to discuss future arrangements shortly before this date. 8) APPLICABLE LAW This Agreement is subject to the laws of the State of New York. Please sign and return the attached copy of this letter as confirmation of your acceptance of these terms and conditions. Yours sincerely, /s/ P Embiricos /s/ D Simmons P Embiricos D Simmons Coutts & Co AG Coutts & Co AG 5 [COUTTS & CO LOGO] COUTTS & CO AG PARK AVENUE TOWER 65 East 55th Street New York, NY 10022 Telephone (212) 303 2939 TELEFAX (212) 303 2929 The Directors Compania di Investimento Antilliana SA St. John's Antigua June 29, 1995 Dear Sirs: Compania Di Investimento Antilliana SA We are pleased to confirm that we are prepared to make available to the corporation a line of credit on the following terms and conditions: 1) AMOUNT Up to US$6,000,000 (six million dollars), provided the collateral requirements set out below are satisfied. 2) AVAILABILITY The line of credit is available as follows: Loan $5,500,000 Foreign Exchange Margin Trading $ 500,000 (notional limit, covering open contracts with a face value of $5,000,000)
Loan: you may borrow up to the maximum amount set out above and, after full or partial repayment, reborrow on this line of credit, provided that all the terms and conditions hereof are satisfied. Foreign Exchange Margin Trading: we are prepared to enter onto open foreign exchange contracts with you, up to 12 months duration in major currencies. We will apply a notional value of 10% to the face value of each contract as utilization hereunder. 6 3) PURPOSE AND REPAYMENT The purpose of the loan is to assist the corporation in connection with its investment activities. Repayment is to flow from the corporation's investment income and from sales of assets from time to time as necessary. Please note also the bank's rights to withdraw the line of credit and demand repayment shown in Section 7 of this letter. 4) COLLATERAL Any utilization hereunder shall be secured by the pledge of all assets held by you with this Bank (the "Assets"), pursuant to the General Loan and Collateral Agreement signed by you on January 10, 1995. Some or all of the Assets have a loanable value up to a percentage ratio of their market value from time to time which varies with the nature and quality of each asset (certain Assets may not have a loanable value, although these Assets will secure the line of credit). A summary of current maximum lending ratios is provided as an appendix to this letter. We reserve the right to vary these ratios at our discretion, and to refuse to extend a lending ratio against assets which we, do not consider to be acceptable or which would exceed the limits we regard as prudent for lending against a specific Asset, and to terminate our lending ratios against Assets. None of the Assets may be removed by you from the Bank without our prior written consent. The following is additionally required: o A first legal mortgage over the freehold interest in the property located at 12803 Waterford Pointe, Windermere, Florida 34786 (described herein as Waterford Pointe). Please see also Section 8 below. 5) COLLATERAL MARGIN REQUIREMENTS You will ensure at all times that the loanable value of the assets pledged to us as collateral exceeds the amount outstanding hereunder. Should the loanable value of pledged assets fall to 5% below the amount outstanding (inclusive of interest and costs), you will provide us with additional collateral to cover the shortfall upon our first demand. Should you fail to provide the additional collateral within 5 business days or should the loanable value of the pledged assets fall to 10% or more below the amount outstanding (whichever occurs first), we reserve the right without further formality or notice and at our discretion to sell sufficient Assets (including both Assets with, and Assets without, a loanable value) to reduce the amount outstanding under the line of credit to the loanable value of the remaining Assets which are pledged to us. These provisions will take effect regardless of the value of any Assets which do not have loanable value and may take effect because we 7 decrease or terminate our lending ratio for some or all of the Assets securing the line of credit. 6) PRICING Loans will bear interest at a rate to be mutually agreed at the time of each borrowing. Indicative pricing is: Interest Rate: 1.0% over Libor, with fixture periods of up to one year. Any loan drawing the purpose of which is to enable the corporation to acquire real estate investments will attract an additional interest margin of 0.75%. Arrangement Fee: $2,500, payable upon first drawdown of the line of credit. Other Fees: for the account of the corporation as they arise (including appraisal cost, attorney's fees, title insurance and premiums, etc.). 7) TERM This line of credit is provided on the basis that it may be withdrawn without notice and any amounts outstanding are repayable on first demand. It is made available to you on an uncommitted basis and we reserve the right to liquidate collateral to repay any amounts outstanding at our discretion and without further formality. In any event, this line of credit shall become due for review on February 24, 1996. 8) REQUIRED DOCUMENTATION AND CONDITIONS PRECEDENT o In relation to Waterford Pointe o The bank requires a valuation report at regular intervals to disclose no material deterioration in condition or value. o Mortgagee's Title Insurance in the amount of the mortgage insuring the bank's mortgage as a first mortgage on Waterford Pointe. o Acceptable insurance cover to be lodged with the bank. o Loan documentation, including first mortgage, prepared by our Florida Counsel. o Completed Form U1. 9) APPLICABLE LAW This line of credit is subject to the laws of the State of New York. 8 Please sign and return the attached copy of this letter as confirmation of your acceptance of these terms and conditions. Yours faithfully, /s/ P Embiricos /s/ DG Simmons P Embiricos DG Simmons Coutts & Co Coutts & Co Terms Accepted: /s/ Ronald F. Seale 6/30/95 - ----------------------------------------------------------- ------- For and on behalf of Compania di Investimento Antilliana SA Date 9 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 rate AA or better 80% 4. Corporate bonds or notes rate A or BBB 70% 5. Selected equities quoted on US, major European or Japanese stock exchanges*** 50% 6. Funds: (a) Coutts & Co money market funds, same currency 95% Coutts & Co money market funds, another currency 85% Coutts & Co global fixed income 85% Coutts & Co global equities 70% (b) Other unleveraged global fixed income 75% Other unleveraged global equities 60% Other unleveraged emerging market 50% 8 Precious Metals 50% 9. Time deposits and bank certificates of deposit: Coutts & Co, same currency 95% Coutts & Co, another currency 85%
*** lower lending ratios will apply to stocks offering limited liquidity, no lending ratio is ascribed to restricted stocks. ***************** 10 [COUTTS & CO LOGO] COUTTS & CO AG PARK AVENUE TOWER 65 East 55th Street New York, NY 10022 Telephone (212) 303 2939 TELEFAX (212) 303 2929 The Directors Compania di Investimento Antilliana SA St. John's Antigua February 23, 1996 Dear Sirs: We are pleased to confirm that we are prepared to extend your existing $6,000,000 facility for an additional 30 days to March 29, 1996. This facility will continue to be subject to the existing terms and conditions of our facility letter to you dated June 29, 1995. Yours sincerely, /s/ E Badillo /s/ S Nichols E Badillo S Nichols Coutts & Co Coutts & Co 11 GENERAL LOAN [COUTTS & CO LOGO] AND COLLATERAL AGREEMENT In order to induce Coutts & Co AG (herein together with its successors, assigns and endorsees is called "the Bank") from time to time in its discretion to grant, extend or continue credit or other financial accommodations to the undersigned, or any of them, or to others on the guaranty, endorsement or other assurance of the undersigned, or any of them, it is hereby agreed and provided by the undersigned that the Bank shall have the following rights in addition to all other rights the Bank may have under the Uniform Commercial Code of New York or otherwise, to wit: 1. All loans, advances, or credits heretofore or hereafter obtained from the Bank by the undersigned, or any of them, as well as all present and future indebtedness of any of the undersigned to the Bank, shall, unless otherwise agreed in writing, be repayable by the undersigned at the Bank at its office at 65 East 55th Street, New York, NY 10022, upon demand, in immediately available funds. 2. As security for any and all loans, advances, credits, indebtedness, obligations and liabilities of any kind, of the undersigned or any of them to the Bank, now or hereafter existing, whether absolute or contingent, due or to become due, direct or indirect, liquidated or unliquidated, and however acquired, incurred, or arising (all of which are hereinafter referred to as the "obligations"), the undersigned and each of them grants a present security interest in every balance of every account which the undersigned or any of them has or shall at any time have with the Bank and all moneys, instruments, chattel paper, documents, accounts, contract rights, goods, credits, choses in action, claims, demands, and without any limitation whatsoever, property of every kind and description including additions, accessions and substitutions (all of which are hereinafter collectively referred to as the "collateral") which have been or at any time shall be delivered to or be in transit to or from the Bank or any of its agents or correspondents or other third party or parties acting in its behalf, by, or for, or for account of, or subject to the order of, the undersigned or any of them and in all right, title and interest of the undersigned or any of them in and to any collateral which has come or shall come into the possession, custody or control of the Bank in any way or for any purpose whatsoever, whether for safekeeping or otherwise and whether the Bank shall accept them for the purposes for which it is delivered to it or not. The undersigned further authorizes the Bank to execute and file one or more financing statements covering the collateral security or any part thereof and the undersigned agrees to bear the cost of such filing(s). 3. The Bank at its discretion may, without notice, transfer any of the collateral into its own name or that of its nominee and may, at its discretion, in its or its nominee's name or in the name of the undersigned or any of them, demand, sue for, collect and receive any money or property at any time due, payable or receivable on account of or in exchange for, or make any compromise or settlement it deems desirable with reference to, any of the collateral and endorse, assign, convey and transfer any and all of the collateral. The Bank may discharge all liens, taxes and security interests relating to the collateral at the undersigned's expense. The Bank may, upon any default hereunder or under any of the obligations, grant options or sell and resell in one or more sales, all or any of the collateral at any broker's board or public or private sale, for cash, upon credit or for future delivery, free from all liability or claim for inadequacy of price, with or without demand of performance or advertisement. Unless the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Bank will give the undersigned at least five days prior written notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made. The Bank or its agent may bid and/or purchase at any public sale and, if the collateral is of the type customarily sold in a recognized market or the type which is the subject of widely distributed price standards, at any private sale made under this agreement, the Bank may hold the same thereafter in its own right, absolutely free from any claim of the undersigned, who and each of whom hereby waives and releases all rights of redemption to the extent such waiver is lawful. The undersigned will bear and pay all necessary and incidental costs and expenses and reasonable attorney's fees that the Bank may incur in the enforcement hereof or of any of the obligations or of any of the collateral or of any actual or attempted sale, exchange, enforcement, collection, compromise or settlement of any of the collateral and of receipt of proceeds thereof, and will repay to the Bank any such expense incurred by it together with interest as hereinabove provided for. The pledge and lien hereby given shall cover all proceeds of the collateral at any time in the possession or control of the Bank. The Bank may at any time, at its option, apply all or any of the net cash receipts or net balance of or from any of the collateral to the payment in whole or in part of any of the obligations or any such expense, applying or distributing the same as it shall elect, whether the item or items on which such payment is made be due or not, notwithstanding the holding by the Bank of the collateral. The Bank shall not assume nor shall it be deemed to have assumed any duties, liabilities or obligations in any way relating to or arising out of any of the collateral. Notwithstanding the holding by the Bank of the collateral or any sale, exchange, transfer, enforcement, collection, compromise or settlement, actual or attempted, of any of the collateral the undersigned and each of them shall be and remain liable for the payment in full of principal and interest of all of the obligations and any expense as aforesaid, except only to the extent that the same or any part thereof shall be reduced by payment or actual application thereon by the Bank of the collateral or proceeds thereof. All remittances and property shall be deemed in the possession and custody of the Bank when actually in possession or custody of, or in transit to it or any agent, bailee or correspondent or other third party acting on its behalf. 4. If at any time the collateral for any of the obligations shall be unsatisfactory to the Bank or any of its officers, and the undersigned or any of them shall not on demand furnish such further collateral or make such payment on account as shall be satisfactory to the Bank, or if any sum payable upon any of the obligations be not paid when due, or in the event of any other default in, or under, any of the obligations, or default in the payment at maturity of liabilities of the undersigned to others, or upon failure of the undersigned to insure in favor of and to the satisfaction of the Bank any of the collateral or if the undersigned or any of them, or in the case of a partnership, any partner thereof, or any guarantor of any of the obligations or any maker, endorser, or guarantor of any of the collateral shall die, or become insolvent, or suspend business or make an assignment for the benefit of creditors, or if a petition in bankruptcy shall be filed against, or a voluntary petition in bankruptcy shall be filed by or if a judgment be entered against, or if a receiver shall be appointed or any attachment or levy filed against the property or assets, or any thereof, of, or upon any proceeding being commenced under any bankruptcy reorganization, arrangement of debt, insolvency, liquidation or dissolution law or statute by or against the undersigned or any of them, or any such maker, endorser, or guarantor, of if the Bank shall in good faith deem itself insecure, thereupon any or all of the obligations, although not payable on demand, shall, at the option of the Bank, forthwith become and be due and payable without notice, presentation or demand of payment all of which are hereby expressly waived. 5. The Bank may assign or transfer all or any part of the obligations and may transfer as security therefor all or any part of the collateral, and shall be thereafter duly discharged from all liability and responsibility with respect to the collateral so transferred, and the transferee shall thereafter be vested with all powers and rights of the Bank hereunder with respect to such collateral but with respect to any security not so transferred the Bank shall retain all rights and powers hereby or otherwise given. The undersigned will assert no claims or defense he may have against the Bank against the transferee. 6. No delay on the part of the Bank or any of such assignee or transferee in exercising any power or right hereunder shall operate as a waiver of any power or right nor shall any single or partial exercise of any power or right hereunder preclude other or further exercise thereof or the exercise of any other power or right. The rights and remedies herein expressly specified are irrevocable, cumulative and not exclusive of any other rights or remedies which the Bank or its assigns may otherwise have. Any notice to or demand on the undersigned elected to be given or made by the Bank shall be deemed effective, if not first otherwise made or given, when forwarded by mail, telegraph, or telephoned to the last address of the undersigned appearing on the Bank's books. No notice to or demand on the undersigned shall be deemed to be a waiver of any obligation of the undersigned or of the right of the Bank to take further action without notice or demand as provided herein. In no event shall any waiver by the Bank or any right be effective unless in writing and then the same shall be applicable only in the specific instance for which given. 12 7. This agreement shall cover all future as well as all existing transactions and shall remain effective irrespective of any interruptions in the business relations of the undersigned with the Bank. It shall bind all administrators, executors, heirs, partners, successors and assigns of the undersigned and each of them. The term "undersigned" as used herein shall, if this instrument is signed by more than one party, mean the "undersigned and each of them" and each undertaking herein contained shall be their joint and several undertaking. 8. This agreement and the rights and obligations of the Bank and of the undersigned hereunder shall be governed and construed in accordance with the laws of the State of New York. The undersigned consent to the jurisdiction of the courts of New York in any action brought to enforce any of the rights granted to the Bank hereunder. 9. The undersigned hereby waive(s) trial by jury in any litigation in any court with respect to, in connection with, or arising out of this Agreement or any other agreement, instrument or document delivered in connection herewith or any transaction contemplated hereby. New York, New York /s/ Ronald F. Seale 1/10/95 - -------------------------------------------------------------------------------- /s/ Ronald F. Seale - -------------------------------------------------------------------------------- Account Signature - -------------------------------------------------------------------------------- Address - -------------------------------------------------------------------------------- Account Signature - -------------------------------------------------------------------------------- Address - -------------------------------------------------------------------------------- Account Signature - -------------------------------------------------------------------------------- Address - -------------------------------------------------------------------------------- Account Signature - -------------------------------------------------------------------------------- Address 13 Coutts & Co - -------------------------------------------------------------------------------- Demand Interest Bearing Note $6,000,000 Office Address: 65 East 55th Street, N.Y., June 27, 1995 ON DEMAND The undersigned, for value received, jointly and severally promise(s) to pay to the order of Coutts & Co AG (hereinafter called the Bank) at its office in the place first above stated, or if no place is stated, at 65 East 55th Street, 22nd Fl., New York, NY 10022, in funds current at the New York Clearing House, the sum of six million dollars ($6,000,000 ) Dollars. The undersigned also promises to pay interest at said offices at the rate per annum indicated below: [ ] The Bank's Prime Rate (the rate of interest established from time to time by the Bank as its "prime rate") plus ___________%, which interest rate shall change when and as the Prime Rate changes; [ ] ____________ %; (or) [x] calculated as provided on the reverse side hereof. If all or a portion of the principal or interest of the Liabilities (as hereinafter defined), or any fee or other amount due in connection therewith, shall not be paid when due (whether after stated maturity, acceleration or otherwise), such amount, to the extent permitted by applicable law, shall bear interest at the rate of 2% per annum in excess of the rate hereinbefore provided, but in no event in excess of the maximum rate of interest permitted under applicable law. Interest shall be payable on the first day of each month commencing the first such day to occur after the date hereof and on the maturity hereof. The undersigned grants the Bank a security interest in and pledge(s) with the Bank, as collateral security for payment of this note and of all Liabilities (as hereinafter defined) of the Obligors (as hereinafter defined), or any one or more of them, now or hereafter owned or held by the Bank, the following property: All assets held with Coutts & Co AG - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- together with any additions and accessions thereto and substitutions therefor and the products and proceeds thereof and all moneys and/or other property now or hereafter held by the Bank on deposit, in safekeeping, or otherwise, for the account of or to the credit of or belonging to any Obligor (which term as used herein shall be deemed to include each and all of the undersigned and each and every endorser or guarantor hereof) or in which any Obligor shall have any interest, all or which is hereinafter termed the collateral security. The Bank at any time, before or after default, may, but shall not be obligated to, transfer into or out of its own name or that of its nominee all or any of the collateral security, including stocks, bonds, and other securities, and the Bank or its nominee may demand, sue for, collect, receive and hold as like collateral security any or all interest, dividends and income thereon and if any securities are held in the name of the Bank or its nominee, the Bank may, after default exercise all voting and other rights pertaining thereto as if the Bank were the absolute owner thereof; but the Bank shall not be obligated to demand payment of, protest, or take any steps necessary to preserve any rights in the collateral against prior parties, or to take any action whatsoever in regard to the collateral security or any part thereof, all of which the Obligor assumes and agrees to do. Without limiting the generality of the foregoing, the Bank shall not be obligated to take any action in connection with any conversion, call, redemption, retirement or any other event relating to any of the collateral security, unless the Obligor gives written notice to the Bank that such action shall be taken not more than thirty (30) days prior to the time such action may first be taken and not less than ten (10) days prior to the expiration of the time during which such action may be taken. The term "Liabilities" shall include this note and all other indebtedness and obligations and liabilities of any kind of any Obligor to the Bank, now or hereafter existing, arising directly between any Obligor and the Bank or acquired by assignment, conditionally or as collateral security by the Bank, absolute or contingent, joint and/or several, secured or unsecured, due or not due, contractual or tortious, liquidated or unliquidated, arising by operation of law or otherwise, direct or indirect, including, but without limiting the generality of the foregoing, indebtedness, obligations or liabilities to the Bank of any Obligor as a member of any partnership, syndicate, association or other group, and whether incurred by any Obligor as principal, surety, endorser, guarantor, accommodation party or otherwise. Upon default in the due payment of principal or interest, the Bank may, but shall not be required to exercise any right or remedy hereby granted or allowed to it by law including but not limited to the rights and remedies of a Secured Party under the Uniform Commercial Code of New York and each and every right and remedy granted to the Bank or allowed to it by law shall be cumulative and not exclusive the one of the other, and may be exercised by the Bank from time to time and as often as may be necessary. The Bank shall have at any time in its discretion the right to enforce collection and payment or liquidation of any of the collateral security by appropriate action or proceedings, and the net amounts received therefrom, after deducting all costs and expenses incurred in connection therewith, shall be applied on account of this note and any other Liabilities all without notice to any Obligor. Any demand or notice, if made or given, shall be sufficiently made upon or given to any Obligor if left at or mailed to the last address of such Obligor known to the Bank or if made or given in any other manner reasonably calculated to come to the attention of such Obligor or the personal representatives, successors, or assigns of such Obligor, whether or not in fact received by them respectively. Unless the collateral is perishable or threatens to decline speedily in value or is a type customarily sold on a recognized market, the Bank will give the undersigned reasonable notice of the time and place of any public sale thereof or of the time after which any private sale or other intended disposition is to be made. Five (5) days prior notice shall be deemed reasonable notice. The Bank may repledge all or any of the collateral security for any sum not in excess of the amount due hereunder at the date of such repledge with any person, firm or corporation for any purpose whatsoever, and may assign and transfer this note to any other person, firm or corporation and may deliver and repledge the collateral, security or any part thereof to the assignee or transferee of this note, who shall thereupon become vested with all the powers and rights above given to the Bank in respect thereof, and the Bank shall thereafter be forever released and discharged of and from all responsibility or liability to the Obligors for or on account of the collateral security so delivered. In the event that this note is placed in the hands of an attorney for collection by reason of any default hereunder, the Obligor agree(s) to pay attorney's fees in the amount of 20% of the unpaid principal balance hereof which the Obligor agree(s) to be reasonable. The Obligors jointly and severally promise to pay all expenses of any nature as soon as incurred whether in or out of court and whether incurred before or after this note shall become due at its maturity date or otherwise and costs which the Bank may deem necessary or proper in connection with the satisfaction of the indebtedness or the administration, supervision, preservation, protection (including but not limited to maintenance or adequate insurance) or of the realization upon the collateral. The Obligor and the Bank in any litigation (whether or not arising out of or relating to this note) in which any of them shall be adverse parties waive the right of trial by jury and the Obligor waives the right to interpose any set-off or counterclaim of any kind or description in any such litigation. This note and any other agreements, documents and instruments executed and delivered pursuant to or in connection with the Liabilities contain the entire agreement between the parties relating to the subject matter hereof and thereof. The undersigned expressly acknowledges that the Bank has not made and the undersigned is not relying on any oral representations, agreements or commitments of the Bank or any officer, employee, agent or representative thereof. No change, modification, termination, waiver, or discharge, in whole or in part of this instrument shall be effective unless in writing and signed by the party against whom such change, modification, termination, waiver or discharge is sought to be enforced. The Obligors, and each of them, hereby waive presentment, demand for payment, protest, notice of protest, notice of dishonor, and any or all other notices or demands in connection with the delivery, acceptance, performance, default, or enforcement of this note, and each of them consents to any and all delays, extensions of time, renewals, releases of any Obligor and of any available security, waivers or 14 modifications that may be granted or consented to by the Bank with regard to the time of payment or with respect to any other provisions of this note and agrees that no such action or failure to act o the part of the Bank shall in any way affect or impair the obligations of any Obligor or be construed as a waiver by the Bank of, or otherwise affect, its right to avail itself of any remedy hereunder with the same force and effect as if each Obligor had expressly consented to such action or inaction upon the part of the Bank. The note shall be deemed to have been made and delivered in the State of York; the Obligors consent to the jurisdiction of the courts of New York in any action brought to enforce any of the rights of the Bank under this note and the rights and liabilities of the Bank and the Obligors shall be determined in accordance with the laws of the State of New York. Interest shall be calculated on the basis of a 360-day year and actual days elapsed. The obligors hereby authorize the Bank to date this note as of the day when the loan evidenced hereby is made and to complete and fill in any blank spaces in this note in order to conform to the terms upon which this loan granted. The Obligor further authorizes the Bank to execute and file one or more financing statements covering the collateral security or any part thereof and the Obligor agrees to bear the cost of such filing(s). The term "Bank" as used herein shall be deemed to include the Bank and its successors, endorsers and assigns. Special provisions Interest to be calculated at a rate of 1% over Libor. ------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- For Compania Di Investimentos Antilliana /s/ Ronald F. Seale - -------------------------------------------------------------------------------- Signature - -------------------------------------------------------------------------------- Address - -------------------------------------------------------------------------------- Signature - -------------------------------------------------------------------------------- Address GUARANTEE In consideration of the making of the loan evidenced by the within note, hereby requested by the undersigned, the undersigned hereby jointly and severally guarantee(s) to Coutts & Co AG, its successors, endorsers or assigns, irrespective of the genuineness, validity or enforceability hereof, the payment, when due, including all interest payable hereon and the payment of all legal expenses incurred by the holder hereof to enforce the same or to enforce this guarantee, and hereby consent(s) to and agree(s) to be bound by the terms and conditions hereof and agree(s) that the collateral may be exchanged or surrendered in whole or in part from time to time and that the time of payment hereof may be extended, or the rate of interest altered, or the full amount of any part hereof may be renewed one or more times without notice to the undersigned and that this guarantee shall apply to such extension or extensions, renewal or renewals. The Bank has no duty to any Guarantor to protect, secure or insure any security interest or lien and the obligations of each Guarantor hereunder are valid, binding and enforceable, notwithstanding any defect the Bank causes, permits or suffers to exist in any security interest or lien. The undersigned waive(s) presentment, demand, protect, notice of protest and notice of dishonor and each of them consents to any and all delays, extensions of time, renewals, release of any part hereof and of any available security, waivers or modifications that may be granted or consented to by the Bank with regard to the time of payment or with respect to any other provisions hereof and agrees that no such action or failure to act on the part of the Bank shall in any way affect or impair the obligations of the undersigned or be construed as a waiver by the Bank of, or otherwise affect, its right to avail itself of any remedy hereunder with the same force and effect as if the undersigned had expressly consented to such action upon the part of the Bank. As security for the performance of any and all of the obligations of the undersigned, the undersigned does hereby give the Bank a continuing lien, security interest and/or a right of set-off in respect to any and all property, interest or estate and moneys of the undersigned now or at any time hereafter held by, or in possession of, or under control of, or on deposit with, the Bank The undersigned waive(s) presentment, demand, protest, notice of protest. - -------------------------------------------------------------------------------- Signature - -------------------------------------------------------------------------------- Address - -------------------------------------------------------------------------------- Signature - -------------------------------------------------------------------------------- Address LOAN NO. ---------------------------- EX-99.Q 18 LOAN DOCUMENTS BETWEEN COUTTS AND WILLSBORO 1 [COUTTS & CO LOGO] COUTTS & CO AG PARK AVENUE TOWER 65 East 55th Street New York, NY 10022 Telephone (212) 303 2939 TELEFAX (212) 303 2929 The Directors Willsboro Universal Corporation Tortola British Virgin Islands December 20, 1995 Dear Sirs WILLSBORO UNIVERSAL CORPORATION We are pleased to confirm that we are prepared to make available a line of credit on the following terms and conditions: 1) AMOUNT Up to US$6,000,000 (six million dollars), provided the collateral requirements set out below are satisfied. 2) AVAILABILITY The line of credit is available as follows: Loan $6,000,000 You may borrow up to the maximum amount set out above and, after full or partial repayment, reborrow on this line of credit until its term has expired, provided that all the terms and conditions hereof are satisfied. 3) PURPOSE AND REPAYMENT The line of credit is available to assist you in making further investments in stocks and bonds. Repayment will stem from the sale of investments from time to time, from other sources of income and from the sale of other assets held by you as required. All interest will be paid as it falls due. 2 4) COLLATERAL Any utilisation hereunder shall be secured by the pledge of all assets held by you with this Bank (the "Assets"), pursuant to the General Loan and Collateral Agreement signed by you. Some or all of the Assets have a loanable value up to a percentage ratio of their market value from time to time which varies with the nature and quality of each asset (certain Assets may not have a loanable value, although these Assets will secure the line of credit). A summary of current maximum lending ratios is provided as an appendix to this letter. We reserve the right to vary these ratios at our discretion, and to refuse to extend a lending ratio against assets which we do not consider to be acceptable or which would exceed the limits we regard as prudent for lending against a specific Asset, and to terminate our lending ratios against Assets. None of the Assets may be removed by you from the Bank without our prior written consent. 5) COLLATERAL MARGIN REQUIREMENTS You will ensure at all times that the loanable value of the assets pledged to us as collateral exceeds the amount outstanding hereunder. Should the loanable value of pledged assets fall to 5% below the amount outstanding (inclusive of interest and costs), you will provide us with additional collateral to cover the shortfall upon our first demand. Should you fail to provide the additional collateral within 5 business days or should the loanable value of the pledged assets fall to 10% or more below the amount outstanding (whichever occurs first), we reserve the right without further formality or notice and at our discretion to sell sufficient Assets (including both Assets with, and Assets without, a loanable value) to reduce the amount outstanding under the line of credit to the loanable value of the remaining Assets which are pledged to us. These provisions will take effect regardless of the value of any Assets which do not have loanable value and may take effect because we decrease or terminate our lending ratio for some or all of the Assets securing the line of credit. 6) PRICING Loans will bear interest at a rate to be mutually agreed at the time of each borrowing. Indicative pricing is: Loan: 1.0% over Libor Loan Fee: $1,000 3 7) TERM This line of credit is provided on the basis that it may be withdrawn without notice and any amounts outstanding are repayable on first demand. It is made available to you on an uncommitted basis and we reserve the right to liquidate collateral to repay any amounts outstanding at our discretion and without further formality. In any event, this line of credit shall become due for review on December 20, 1996, and we shall be pleased to discuss future arrangements shortly before this date. 8) REQUIRED DOCUMENTATION The following documentation/formalities are required before the line is available for use: - completed Promissory Note in respect of loan drawings - completed From U1 A copy of the financial statements of the corporation are required as soon as they become available. 9) APPLICABLE LAW This Agreement is subject to the laws of the State of New York. Please contact this office if you require any further explanation of these terms and conditions. Yours sincerely, /s/ M Economou /s/ D G Simmons M Economou D G Simmons Coutts & Co Coutts & Co 4 GENERAL LOAN [COUTTS & CO LOGO] AND COLLATERAL AGREEMENT In order to induce Coutts & Co AG (herein together with its successors, assigns and endorsees is called "the Bank") from time to time in its discretion to grant, extend or continue credit or other financial accommodations to the undersigned, or any of them, or to others on the guaranty, endorsement or other assurance of the undersigned, or any of them, it is hereby agreed and provided by the undersigned that the Bank shall have the following rights in addition to all other rights the Bank may have under the Uniform Commercial Code of New York or otherwise, to wit: 1. All loans, advances, or credits heretofore or hereafter obtained from the Bank by the undersigned, or any of them, as well as all present and future indebtedness of any of the undersigned to the Bank, shall, unless otherwise agreed in writing, be repayable by the undersigned at the Bank at its office at 65 East 55th Street, New York, NY 10022, upon demand, in immediately available funds. 2. As security for any and all loans, advances, credits, indebtedness, obligations and liabilities of any kind, of the undersigned or any of them to the Bank, now or hereafter existing, whether absolute or contingent, due or to become due, direct or indirect, liquidated or unliquidated, and however acquired, incurred, or arising (all of which are hereinafter referred to as the "obligations"), the undersigned and each of them grants a present security interest in every balance of every account which the undersigned or any of them has or shall at any time have with the Bank and all moneys, instruments, chattel paper, documents, accounts, contract rights, goods, credits, choses in action, claims, demands, and without any limitation whatsoever, property of every kind and description including additions, accessions and substitutions (all of which are hereinafter collectively referred to as the "collateral") which have been or at any time shall be delivered to or be in transit to or from the Bank or any of its agents or correspondents or other third party or parties acting in its behalf, by, or for, or for account of, or subject to the order of, the undersigned or any of them and in all right, title and interest of the undersigned or any of them in and to any collateral which has come or shall come into the possession, custody or control of the Bank in any way or for any purpose whatsoever, whether for safekeeping or otherwise and whether the Bank shall accept them for the purposes for which it is delivered to it or not. The undersigned further authorizes the Bank to execute and file one or more financing statements covering the collateral security or any part thereof and the undersigned agrees to bear the cost of such filing(s). 3. The Bank at its discretion may, without notice, transfer any of the collateral into its own name or that of its nominee and may, at its discretion, in its or its nominee's name or in the name of the undersigned or any of them, demand, sue for, collect and receive any money or property at any time due, payable or receivable on account of or in exchange for, or make any compromise or settlement it deems desirable with reference to, any of the collateral and endorse, assign, convey and transfer any and all of the collateral. The Bank may discharge all liens, taxes and security interests relating to the collateral at the undersigned's expense. The Bank may, upon any default hereunder or under any of the obligations, grant options or sell and resell in one or more sales, all or any of the collateral at any broker's board or public or private sale, for cash, upon credit or for future delivery, free from all liability or claim for inadequacy of price, with or without demand of performance or advertisement. Unless the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Bank will give the undersigned at least five days prior written notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made. The Bank or its agent may bid and/or purchase at any public sale and, if the collateral is of the type customarily sold in a recognized market or the type which is the subject of widely distributed price standards, at any private sale made under this agreement, the Bank may hold the same thereafter in its own right, absolutely free from any claim of the undersigned, who and each of whom hereby waives and releases all rights of redemption to the extent such waiver is lawful. The undersigned will bear and pay all necessary and incidental costs and expenses and reasonable attorney's fees that the Bank may incur in the enforcement hereof or of any of the obligations or of any of the collateral or of any actual or attempted sale, exchange, enforcement, collection, compromise or settlement of any of the collateral and of receipt of proceeds thereof, and will repay to the Bank any such expense incurred by it together with interest as hereinabove provided for. The pledge and lien hereby given shall cover all proceeds of the collateral at any time in the possession or control of the Bank. The Bank may at any time, at its option, apply all or any of the net cash receipts or net balance of or from any of the collateral to the payment in whole or in part of any of the obligations or any such expense, applying or distributing the same as it shall elect, whether the item or items on which such payment is made be due or not, notwithstanding the holding by the Bank of the collateral. The Bank shall not assume nor shall it be deemed to have assumed any duties, liabilities or obligations in any way relating to or arising out of any of the collateral. Notwithstanding the holding by the Bank of the collateral or any sale, exchange, transfer, enforcement, collection, compromise or settlement, actual or attempted, of any of the collateral the undersigned and each of them shall be and remain liable for the payment in full of principal and interest of all of the obligations and any expense as aforesaid, except only to the extent that the same or any part thereof shall be reduced by payment or actual application thereon by the Bank of the collateral or proceeds thereof. All remittances and property shall be deemed in the possession and custody of the Bank when actually in possession or custody of, or in transit to it or any agent, bailee or correspondent or other third party acting on its behalf. 4. If at any time the collateral for any of the obligations shall be unsatisfactory to the Bank or any of its officers, and the undersigned or any of them shall not on demand furnish such further collateral or make such payment on account as shall be satisfactory to the Bank, or if any sum payable upon any of the obligations be not paid when due, or in the event of any other default in, or under, any of the obligations, or default in the payment at maturity of liabilities of the undersigned to others, or upon failure of the undersigned to insure in favor of and to the satisfaction of the Bank any of the collateral or if the undersigned or any of them, or in the case of a partnership, any partner thereof, or any guarantor of any of the obligations or any maker, endorser, or guarantor of any of the collateral shall die, or become insolvent, or suspend business or make an assignment for the benefit of creditors, or if a petition in bankruptcy shall be filed against, or a voluntary petition in bankruptcy shall be filed by or if a judgment be entered against, or if a receiver shall be appointed or any attachment or levy filed against the property or assets, or any thereof, of, or upon any proceeding being commenced under any bankruptcy reorganization, arrangement of debt, insolvency, liquidation or dissolution law or statute by or against the undersigned or any of them, or any such maker, endorser, or guarantor, of if the Bank shall in good faith deem itself insecure, thereupon any or all of the obligations, although not payable on demand, shall, at the option of the Bank, forthwith become and be due and payable without notice, presentation or demand of payment all of which are hereby expressly waived. 5. The Bank may assign or transfer all or any part of the obligations and may transfer as security therefor all or any part of the collateral, and shall be thereafter duly discharged from all liability and responsibility with respect to the collateral so transferred, and the transferee shall thereafter be vested with all powers and rights of the Bank hereunder with respect to such collateral but with respect to any security not so transferred the Bank shall retain all rights and powers hereby or otherwise given. The undersigned will assert no claims or defense he may have against the Bank against the transferee. 6. No delay on the part of the Bank or any of such assignee or transferee in exercising any power or right hereunder shall operate as a waiver of any power or right nor shall any single or partial exercise of any power or right hereunder preclude other or further exercise thereof or the exercise of any other power or right. The rights and remedies herein expressly specified are irrevocable, cumulative and not exclusive of any other rights or remedies which the Bank or its assigns may otherwise have. Any notice to or demand on the undersigned elected to be given or made by the Bank shall be deemed effective, if not first otherwise made or given, when forwarded by mail, telegraph, or telephoned to the last address of the undersigned appearing on the Bank's books. No notice to or demand on the undersigned shall be deemed to be a waiver of any obligation of the undersigned or of the right of the Bank to take further action without notice or demand as provided herein. In no event shall any waiver by the Bank or any right be effective unless in writing and then the same shall be applicable only in the specific instance for which given. 5 7. This agreement shall cover all future as well as all existing transactions and shall remain effective irrespective of any interruptions in the business relations of the undersigned with the Bank. It shall bind all administrators, executors, heirs, partners, successors and assigns of the undersigned and each of them. The term "undersigned" as used herein shall, if this instrument is signed by more than one party, mean the "undersigned and each of them" and each undertaking herein contained shall be their joint and several undertaking. 8. This agreement and the rights and obligations of the Bank and of the undersigned hereunder shall be governed and construed in accordance with the laws of the State of New York. The undersigned consent to the jurisdiction of the courts of New York in any action brought to enforce any of the rights granted to the Bank hereunder. 9. The undersigned hereby waive(s) trial by jury in any litigation in any court with respect to, in connection with, or arising out of this Agreement or any other agreement, instrument or document delivered in connection herewith or any transaction contemplated hereby. New York, New York /s/ [ILLEGIBLE] 14 December 1995 - ------------------------------------- FOR WILLSBORO UNIVERSAL CORP. Account Signature -------------------------------- Address -------------------------------- Account Signature -------------------------------- Address -------------------------------- Account Signature -------------------------------- Address -------------------------------- Account Signature -------------------------------- Address -------------------------------- 6 Coutts & Co - -------------------------------------------------------------------------------- Demand Interest Bearing Note $ 6,000,000 Office Address: 65 East 55th Street, N.Y., N.Y. December 21, 1995 ON DEMAND The undersigned, for value received, jointly and severally promise(s) to pay to the order of Coutts & Co AG (hereinafter called the Bank) at its office in the place first above stated, or if no place is stated, at 65 East 55th Street, 22nd Fl., New York, NY 10022, in funds current at the New York Clearing House, the sum of SIX MILLION DOLLARS. ($6,000,000 ) Dollars. The undersigned also promises to pay interest at said offices at the rate per annum indicated below: [ ] The Bank's Prime Rate (the rate of interest established from time to time by the Bank as its "prime rate") plus ___________%, which interest rate shall change when and as the Prime Rate changes; [ ] ____________ %; (or) [x] calculated as provided on the reverse side hereof. If all or a portion of the principal or interest of the Liabilities (as hereinafter defined), or any fee or other amount due in connection therewith, shall not be paid when due (whether after stated maturity, acceleration or otherwise), such amount, to the extent permitted by applicable law, shall bear interest at the rate of 2% per annum in excess of the rate hereinbefore provided, but in no event in excess of the maximum rate of interest permitted under applicable law. Interest shall be payable on the first day of each month commencing the first such day to occur after the date hereof and on the maturity hereof. The undersigned grants the Bank a security interest in and pledge(s) with the Bank, as collateral security for payment of this note and of all Liabilities (as hereinafter defined) of the Obligors (as hereinafter defined), or any one or more of them, now or hereafter owned or held by the Bank, the following property: ALL ASSETS HELD WITH COUTTS & CO AG - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 7 modifications that may be granted or consented to by the Bank with regard to the time of payment or with respect to any other provisions of this note and agrees that no such action or failure to act o the part of the Bank shall in any way affect or impair the obligations of any Obligor or be construed as a waiver by the Bank of, or otherwise affect, its right to avail itself of any remedy hereunder with the same force and effect as if each Obligor had expressly consented to such action or inaction upon the part of the Bank. The note shall be deemed to have been made and delivered in the State of York; the Obligors consent to the jurisdiction of the courts of New York in any action brought to enforce any of the rights of the Bank under this note and the rights and liabilities of the Bank and the Obligors shall be determined in accordance with the laws of the State of New York. Interest shall be calculated on the basis of a 360-day year and actual days elapsed. The obligors hereby authorize the Bank to date this note as of the day when the loan evidenced hereby is made and to complete and fill in any blank spaces in this note in order to conform to the terms upon which this loan granted. The Obligor further authorizes the Bank to execute and file one or more financing statements covering the collateral security or any part thereof and the Obligor agrees to bear the cost of such filing(s). The term "Bank" as used herein shall be deemed to include the Bank and its successors, endorsers and assigns. Special provisions Interest to be charged at LIBOR + 1% ----------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- For and on behalf of Willsboro Universal Corp. /s/ [ILLEGIBLE] - -------------------------------------------------------------------------------- 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. ---------------------------- EX-99.R 19 LOAN DOCUMENTS BETWEEN COUTTS AND PANOLA 1 [COUTTS & CO. LOGO] COUTTS & CO AG PARK AVENUE TOWER 65 EAST 55TH STREET NEW YORK, NY 10022 TELEPHONE (212) 303-2939 TELEFAX (212) 303-2929 The Directors Panola Worldwide Corporation Tortola British Virgin Islands December 20, 1995 Dear Sirs: PANOLA WORLDWIDE CORPORATION We are pleased to confirm that we are prepared to make available a line of credit on the following terms and conditions: 1) AMOUNT Up to US$6,000,000 (six million dollars), provided the collateral requirements set out below are satisfied. 2) AVAILABILITY The line of credit is available as follows: Loan $6,000,000 You may borrow up to the amount set out above and, after full or partial repayment, reborrow on this line of credit until its term has expired, provided that all the terms and conditions hereof are satisfied. 3) PURPOSE AND REPAYMENT The line of credit is available to assist you in making further investments in stocks and bonds. Repayment will stem from the sale of investments from time to time, from other sources of income and from the sale of other assets held by you as required. All interest will be paid as it falls due. 2 4) COLLATERAL Any utilization hereunder shall be secured by the pledge of all assets held by you with this Bank (the "Assets"), pursuant to the General Loan and Collateral Agreement signed by you. Some or all of the Assets have a loanable value up to @t percentage ratio of their market value from time to time which varies with the nature and quality of each asset (certain Assets may not have a loanable value, although these Assets will secure the line of credit). A summary of current maximum lending ratios is provided as an appendix to this letter. We reserve the right to vary these ratios at our discretion, and to refuse to extend a lending ratio against assets which we do not consider to be acceptable or which would exceed the limits we regard as prudent for lending against a specific Asset, and to terminate our lending ratios against Assets. None of the Assets may be removed by you from the Bank without our prior written consent. 5) COLLATERAL MARGIN REQUIREMENTS You will ensure at all times that the loanable value of the assets pledged to us as collateral exceeds the amount outstanding hereunder. Should the loanable value of pledged assets fall to 5% below the amount outstanding (inclusive of interest and costs), you will provide us with additional collateral to cover the shortfall upon our first demand. Should you fail to provide the additional collateral within 5 business days or should the loanable value of the pledged assets fall to 10% or more below the amount outstanding (whichever occurs first), we reserve the right without further formality or notice and at our discretion to sell sufficient Assets (including both Assets with, and Assets without, a loanable value) to reduce the amount outstanding under the line of credit to the loanable value of the remaining Assets which are pledged to us. These provisions will take effect regardless of the value of any Assets which do not have loanable value and may take effect because we decrease or terminate our lending ratio for some or all of the Assets securing the line of credit. 6) PRICING Loans will bear interest at a rate to be mutually agreed at the time of each borrowing. Indicative pricing is: Loan: 1.0% over Libor Loan Fee: $1000 3 7) TERM This line of credit is provided on the basis that it may be withdrawn without notice and any amounts outstanding are repayable on first demand. It is made available to you on an uncommitted basis and we reserve the right to liquidate collateral to repay any amounts outstanding at our discretion and without further formality. In any event, this line of credit shall become due for review on December 20, 1996, and we shall be pleased to discuss future arrangements shortly before this date. 8) REQUIRED DOCUMENTATION The following documentation/formalities are required before the line is available for use: - completed Promissory Note in respect of loan drawings - completed From U1 A copy of the financial statements of the corporation are required as soon as they become available. 9) APPLICABLE LAW This Agreement is subject to the laws of the State of New York. Please contact this office if you require any further explanation of these terms and conditions. Yours sincerely, /s/ M Economou /s/ D G Simmons M Economou D G Simmons Coutts & Co Coutts & Co 4 GENERAL LOAN [COUTTS & CO LOGO] AND COLLATERAL AGREEMENT In order to induce Coutts & Co AG (herein together with its successors, assigns and endorsees is called "the Bank") from time to time in its discretion to grant, extend or continue credit or other financial accommodations to the undersigned, or any of them, or to others on the guaranty, endorsement or other assurance of the undersigned, or any of them, it is hereby agreed and provided by the undersigned that the Bank shall have the following rights in addition to all other rights the Bank may have under the Uniform Commercial Code of New York or otherwise, to wit: 1. All loans, advances, or credits heretofore or hereafter obtained from the Bank by the undersigned, or any of them, as well as all present and future indebtedness of any of the undersigned to the Bank, shall, unless otherwise agreed in writing, be repayable by the undersigned at the Bank at its office at 65 East 55th Street, New York, NY 10022, upon demand, in immediately available funds. 2. As security for any and all loans, advances, credits, indebtedness, obligations and liabilities of any kind, of the undersigned or any of them to the Bank, now or hereafter existing, whether absolute or contingent, due or to become due, direct or indirect, liquidated or unliquidated, and however acquired, incurred, or arising (all of which are hereinafter referred to as the "obligations"), the undersigned and each of them grants a present security interest in every balance of every account which the undersigned or any of them has or shall at any time have with the Bank and all moneys, instruments, chattel paper, documents, accounts, contract rights, goods, credits, choses in action, claims, demands, and without any limitation whatsoever, property of every kind and description including additions, accessions and substitutions (all of which are hereinafter collectively referred to as the "collateral") which have been or at any time shall be delivered to or be in transit to or from the Bank or any of its agents or correspondents or other third party or parties acting in its behalf, by, or for, or for account of, or subject to the order of, the undersigned or any of them and in all right, title and interest of the undersigned or any of them in and to any collateral which has come or shall come into the possession, custody or control of the Bank in any way or for any purpose whatsoever, whether for safekeeping or otherwise and whether the Bank shall accept them for the purposes for which it is delivered to it or not. The undersigned further authorizes the Bank to execute and file one or more financing statements covering the collateral security or any part thereof and the undersigned agrees to bear the cost of such filing(s). 3. The Bank at its discretion may, without notice, transfer any of the collateral into its own name or that of its nominee and may, at its discretion, in its or its nominee's name or in the name of the undersigned or any of them, demand, sue for, collect and receive any money or property at any time due, payable or receivable on account of or in exchange for, or make any compromise or settlement it deems desirable with reference to, any of the collateral and endorse, assign, convey and transfer any and all of the collateral. The Bank may discharge all liens, taxes and security interests relating to the collateral at the undersigned's expense. The Bank may, upon any default hereunder or under any of the obligations, grant options or sell and resell in one or more sales, all or any of the collateral at any broker's board or public or private sale, for cash, upon credit or for future delivery, free from all liability or claim for inadequacy of price, with or without demand of performance or advertisement. Unless the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Bank will give the undersigned at least five days prior written notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made. The Bank or its agent may bid and/or purchase at any public sale and, if the collateral is of the type customarily sold in a recognized market or the type which is the subject of widely distributed price standards, at any private sale made under this agreement, the Bank may hold the same thereafter in its own right, absolutely free from any claim of the undersigned, who and each of whom hereby waives and releases all rights of redemption to the extent such waiver is lawful. The undersigned will bear and pay all necessary and incidental costs and expenses and reasonable attorney's fees that the Bank may incur in the enforcement hereof or of any of the obligations or of any of the collateral or of any actual or attempted sale, exchange, enforcement, collection, compromise or settlement of any of the collateral and of receipt of proceeds thereof, and will repay to the Bank any such expense incurred by it together with interest as hereinabove provided for. The pledge and lien hereby given shall cover all proceeds of the collateral at any time in the possession or control of the Bank. The Bank may at any time, at its option, apply all or any of the net cash receipts or net balance of or from any of the collateral to the payment in whole or in part of any of the obligations or any such expense, applying or distributing the same as it shall elect, whether the item or items on which such payment is made be due or not, notwithstanding the holding by the Bank of the collateral. The Bank shall not assume nor shall it be deemed to have assumed any duties, liabilities or obligations in any way relating to or arising out of any of the collateral. Notwithstanding the holding by the Bank of the collateral or any sale, exchange, transfer, enforcement, collection, compromise or settlement, actual or attempted, of any of the collateral the undersigned and each of them shall be and remain liable for the payment in full of principal and interest of all of the obligations and any expense as aforesaid, except only to the extent that the same or any part thereof shall be reduced by payment or actual application thereon by the Bank of the collateral or proceeds thereof. All remittances and property shall be deemed in the possession and custody of the Bank when actually in possession or custody of, or in transit to it or any agent, bailee or correspondent or other third party acting on its behalf. 4. If at any time the collateral for any of the obligations shall be unsatisfactory to the Bank or any of its officers, and the undersigned or any of them shall not on demand furnish such further collateral or make such payment on account as shall be satisfactory to the Bank, or if any sum payable upon any of the obligations be not paid when due, or in the event of any other default in, or under, any of the obligations, or default in the payment at maturity of liabilities of the undersigned to others, or upon failure of the undersigned to insure in favor of and to the satisfaction of the Bank any of the collateral or if the undersigned or any of them, or in the case of a partnership, any partner thereof, or any guarantor of any of the obligations or any maker, endorser, or guarantor of any of the collateral shall die, or become insolvent, or suspend business or make an assignment for the benefit of creditors, or if a petition in bankruptcy shall be filed against, or a voluntary petition in bankruptcy shall be filed by or if a judgment be entered against, or if a receiver shall be appointed or any attachment or levy filed against the property or assets, or any thereof, of, or upon any proceeding being commenced under any bankruptcy reorganization, arrangement of debt, insolvency, liquidation or dissolution law or statute by or against the undersigned or any of them, or any such maker, endorser, or guarantor, of if the Bank shall in good faith deem itself insecure, thereupon any or all of the obligations, although not payable on demand, shall, at the option of the Bank, forthwith become and be due and payable without notice, presentation or demand of payment all of which are hereby expressly waived. 5. The Bank may assign or transfer all or any part of the obligations and may transfer as security therefor all or any part of the collateral, and shall be thereafter duly discharged from all liability and responsibility with respect to the collateral so transferred, and the transferee shall thereafter be vested with all powers and rights of the Bank hereunder with respect to such collateral but with respect to any security not so transferred the Bank shall retain all rights and powers hereby or otherwise given. The undersigned will assert no claims or defense he may have against the Bank against the transferee. 6. No delay on the part of the Bank or any of such assignee or transferee in exercising any power or right hereunder shall operate as a waiver of any power or right nor shall any single or partial exercise of any power or right hereunder preclude other or further exercise thereof or the exercise of any other power or right. The rights and remedies herein expressly specified are irrevocable, cumulative and not exclusive of any other rights or remedies which the Bank or its assigns may otherwise have. Any notice to or demand on the undersigned elected to be given or made by the Bank shall be deemed effective, if not first otherwise made or given, when forwarded by mail, telegraph, or telephoned to the last address of the undersigned appearing on the Bank's books. No notice to or demand on the undersigned shall be deemed to be a waiver of any obligation of the undersigned or of the right of the Bank to take further action without notice or demand as provided herein. In no event shall any waiver by the Bank or any right be effective unless in writing and then the same shall be applicable only in the specific instance for which given. 5 7. This agreement shall cover all future as well as all existing transactions and shall remain effective irrespective of any interruptions in the business relations of the undersigned with the Bank. It shall bind all administrators, executors, heirs, partners, successors and assigns of the undersigned and each of them. The term "undersigned" as used herein shall, if this instrument is signed by more than one party, mean the "undersigned and each of them" and each undertaking herein contained shall be their joint and several undertaking. 8. This agreement and the rights and obligations of the Bank and of the undersigned hereunder shall be governed and construed in accordance with the laws of the State of New York. The undersigned consent to the jurisdiction of the courts of New York in any action brought to enforce any of the rights granted to the Bank hereunder. 9. The undersigned hereby waive(s) trial by jury in any litigation in any court with respect to, in connection with, or arising out of this Agreement or any other agreement, instrument or document delivered in connection herewith or any transaction contemplated hereby. New York, New York /s/ [ILLEGIBLE] 14 December 1995 - --------------------------------------------- FOR PANOLA WORLDWIDE CORP. Account Signature ---------------------------------- Address ---------------------------------- Account Signature ---------------------------------- Address ---------------------------------- Account Signature ---------------------------------- Address ---------------------------------- Account Signature ---------------------------------- Address ---------------------------------- 6 Coutts & Co - -------------------------------------------------------------------------------- Demand Interest Bearing Note $6,000,000 Office Address: 65 East 55th St., N.Y., N.Y. December 21, 1995 ON DEMAND The undersigned, for value received, jointly and severally promise(s) to pay to the order of Coutts & Co AG (hereinafter called the Bank) at its office in the place first above stated, or if no place is stated, at 65 East 55th Street, 22nd Fl., New York, NY 10022, in funds current at the New York Clearing House, the sum of SIX MILLION DOLLARS ($6,000,000) Dollars. The undersigned also promises to pay interest at said offices at the rate per annum indicated below: [ ] The Bank's Prime Rate (the rate of interest established from time to time by the Bank as its "prime rate") plus ___________%, which interest rate shall change when and as the Prime Rate changes; [ ] ____________ %; (or) [x] calculated as provided on the reverse side hereof. If all or a portion of the principal or interest of the Liabilities (as hereinafter defined), or any fee or other amount due in connection therewith, shall not be paid when due (whether after stated maturity, acceleration or otherwise), such amount, to the extent permitted by applicable law, shall bear interest at the rate of 2% per annum in excess of the rate hereinbefore provided, but in no event in excess of the maximum rate of interest permitted under applicable law. Interest shall be payable on the first day of each month commencing the first such day to occur after the date hereof and on the maturity hereof. The undersigned grants the Bank a security interest in and pledge(s) with the Bank, as collateral security for payment of this note and of all Liabilities (as hereinafter defined) of the Obligors (as hereinafter defined), or any one or more of them, now or hereafter owned or held by the Bank, the following property: ALL ASSETS HELD WITH COUTTS & CO AG - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 7 modifications that may be granted or consented to by the Bank with regard to the time of payment or with respect to any other provisions of this note and agrees that no such action or failure to act o the part of the Bank shall in any way affect or impair the obligations of any Obligor or be construed as a waiver by the Bank of, or otherwise affect, its right to avail itself of any remedy hereunder with the same force and effect as if each Obligor had expressly consented to such action or inaction upon the part of the Bank. The note shall be deemed to have been made and delivered in the State of York; the Obligors consent to the jurisdiction of the courts of New York in any action brought to enforce any of the rights of the Bank under this note and the rights and liabilities of the Bank and the Obligors shall be determined in accordance with the laws of the State of New York. Interest shall be calculated on the basis of a 360-day year and actual days elapsed. The obligors hereby authorize the Bank to date this note as of the day when the loan evidenced hereby is made and to complete and fill in any blank spaces in this note in order to conform to the terms upon which this loan granted. The Obligor further authorizes the Bank to execute and file one or more financing statements covering the collateral security or any part thereof and the Obligor agrees to bear the cost of such filing(s). The term "Bank" as used herein shall be deemed to include the Bank and its successors, endorsers and assigns. Special provisions INTEREST TO BE CHARGED AT LIBOR + 1% ----------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- /s/ [ILLEGIBLE] - -------------------------------------------------------------------------------- Signature FOR AND ON BEHALF OF PANOLA WORLDWIDE CORP. - -------------------------------------------------------------------------------- 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. ---------------------------- -----END PRIVACY-ENHANCED MESSAGE-----