exv10w1



 







Exhibit 10.1




CREDIT AGREEMENT




          THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of July 27, 2006, by and
among the lenders identified on the signature pages hereof (such lenders, together with their
respective successors and permitted assigns, are referred to hereinafter each individually as a
“Lender” and collectively as the “Lenders”), WELLS FARGO FOOTHILL, INC., a California
corporation, as the arranger and administrative agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, “Agent”), YOUBET.COM, INC., a Delaware
corporation (“Parent”), and UNITED TOTE COMPANY, a Montana corporation (“United
Tote”, and together with Parent, each individually a “Borrower”, and individually and
collectively, jointly and severally, the “Borrowers”).




          The parties agree as follows:




1. DEFINITIONS AND CONSTRUCTION.




     1.1 Definitions. Capitalized terms used in this Agreement shall have the meanings
specified therefor on Schedule 1.1.



     1.2 Accounting Terms. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. When used herein, the term “financial statements” shall include
the notes and schedules thereto. Whenever the term “Borrowers” or the term “Parent” is used in
respect of a financial covenant or a related definition, it shall be understood to mean Parent and
its Subsidiaries on a consolidated basis, unless the context clearly requires otherwise.



     1.3 Code. Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein; provided,
however, that to the extent that the Code is used to define any term herein and such term
is defined differently in different Articles of the Code, the definition of such term contained in
Article 9 of the Code shall govern.



     1.4 Construction. Unless the context of this Agreement or any other Loan Document
clearly requires otherwise, references to the plural include the singular, references to the
singular include the plural, the terms “includes” and “including” are not limiting, and the term
“or” has, except where otherwise indicated, the inclusive meaning represented by the phrase
“and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be,
as a whole and not to any particular provision of this Agreement or such other Loan Document, as
the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders,
and supplements set forth herein). Any reference herein or in any other Loan Document to the
satisfaction or repayment in full of the Obligations shall mean the repayment in full in cash (or
cash collateralization in accordance with the terms hereof) of all Obligations other than
unasserted contingent indemnification Obligations and other than any Bank Product Obligations that,
at such time, are allowed by the applicable Bank Product Provider to remain outstanding and that
are not required by the provisions of this Agreement to be repaid or cash collateralized. Any
reference herein to any Person shall be construed to include such Person’s successors and assigns.
Any requirement of a writing contained herein or in any other Loan Document shall be satisfied by
the transmission of a Record and any Record so transmitted shall constitute a representation and
warranty as to the accuracy and completeness of the information contained therein.



 









 





     1.5 Schedules and Exhibits. All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by reference.



2. LOAN AND TERMS OF PAYMENT.




     2.1 Revolver Advances.



          (a) Subject to the terms and conditions of this Agreement, and during the term of
this Agreement, each Lender with a Revolver Commitment agrees (severally, not jointly or jointly
and severally) to make advances (“Advances”) to Borrowers in an amount at any one time
outstanding not to exceed such Lender’s Pro Rata Share of an amount equal to the lesser of (i) the
Maximum Revolver Amount less the Letter of Credit Usage less the Bank Product Reserve, and less the
aggregate amount of reserves, if any, established by Agent under Section 2.1(b) at such
time, and (ii) the Loan Limit at such time less the then outstanding principal balance of the Term
Loan at such time less the Revolver Usage at such time.




          (b) Anything to the contrary in this Section 2.1 notwithstanding, Agent
shall have the right to establish reserves against the Maximum Revolver Amount in such amounts, and
with respect to such matters, as Agent in its Permitted Discretion shall deem necessary or
appropriate, including reserves with respect to (i) sums that Borrowers or their Subsidiaries are
required to pay under any Section of this Agreement or any other Loan Document (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable
under such leases) and have failed to pay, and (ii) amounts owing by Borrowers or their
Subsidiaries to any Person to the extent secured by a Lien on, or trust over, any of the Collateral
(other than a Permitted Lien), which Lien or trust, in the Permitted Discretion of Agent likely
would have a priority superior to the Agent’s Liens (such as Liens or trusts in favor of landlords,
warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad
valorem, excise, sales, or other taxes where given priority under applicable law) in and to such
item of the Collateral.




          (c) Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time during the term of
this Agreement. The outstanding principal amount of the Advances, together with interest accrued
thereon, shall be due and payable on the Maturity Date or, if earlier, on the date on which they
are declared due and payable pursuant to the terms of this Agreement.




     2.2 Term Loan. Subject to the terms and conditions of this Agreement, on the Closing
Date each Lender with a Term Loan Commitment agrees (severally, not jointly or jointly and
severally) to make term loans (collectively, the “Term Loan”) to Borrowers in an amount
equal to such Lender’s Pro Rata Share of the Term Loan Amount. The principal of the Term Loan
shall be repaid in sixty (60) equal monthly installments of principal, each in an amount equal to
one-sixtieth (1/60) of the Term Loan Amount, commencing on September 1, 2006 and continuing on the
first day of each month thereafter. The outstanding unpaid principal balance and all accrued and
unpaid interest on the Term Loan shall be due and payable on the earliest of (i) the Maturity Date,
and (ii) the date of the acceleration of the Term Loan in accordance with the terms hereof. All
principal of, interest on, and other amounts payable in respect of the Term Loan shall constitute
Obligations.



     2.3 Borrowing Procedures and Settlements.



          (a) Procedure for Borrowing. Each Borrowing shall be made by an irrevocable
written request by an Authorized Person delivered to Agent. Unless Swing Lender is not obligated
to make a Swing Loan pursuant to Section 2.3(b) below, such notice must be received by
Agent no later than 10:00 a.m. (California time) on the Business Day that is the requested Funding
Date specifying (i) the amount of such Borrowing, and (ii) the requested Funding Date, which shall
be a Business Day; provided, however, that if Swing Lender is not obligated to make
a Swing Loan as to a requested Borrowing, such notice must be received by Agent no later than 10:00
a.m. (California time) on the Business Day prior to the date that is the

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requested Funding Date. At Agent’s election, in lieu of delivering the above-described
written request, any Authorized Person may give Agent telephonic notice of such request by the
required time. In such circumstances, Borrowers agree that any such telephonic notice will be
confirmed in writing within 24 hours of the giving of such telephonic notice, but the failure to
provide such written confirmation shall not affect the validity of the request.




          (b) Making of Swing Loans. In the case of a request for an Advance and so long as
either (i) the aggregate amount of Swing Loans made since the last Settlement Date plus the amount
of the requested Advance does not exceed $1,000,000, or (ii) Swing Lender, in its sole discretion,
shall agree to make a Swing Loan notwithstanding the foregoing limitation, Swing Lender shall make
an Advance in the amount of such Borrowing (any such Advance made solely by Swing Lender pursuant
to this Section 2.3(b) being referred to as a “Swing Loan” and such Advances being
referred to collectively as “Swing Loans”) available to Borrowers on the Funding Date
applicable thereto by transferring immediately available funds to Borrowers’ Designated Account.
Each Swing Loan shall be deemed to be an Advance hereunder and shall be subject to all the terms
and conditions applicable to other Advances, except that all payments on any Swing Loan shall be
payable to Swing Lender solely for its own account. Subject to the provisions of Section
2.3(d)(ii), Swing Lender shall not make and shall not be obligated to make any Swing Loan if
Swing Lender has actual knowledge that (i) one or more of the applicable conditions precedent set
forth in Section 3 will not be satisfied on the requested Funding Date for the applicable
Borrowing, or (ii) the requested Borrowing would exceed the Availability on such Funding Date.
Swing Lender shall not otherwise be required to determine whether the applicable conditions
precedent set forth in Section 3 have been satisfied on the Funding Date applicable thereto
prior to making any Swing Loan. The Swing Loans shall be secured by the Agent’s Liens, constitute
Obligations hereunder, and bear interest at the rate applicable from time to time to Advances that
are Base Rate Loans.




          (c) Making of Loans.




               (i) In the event that Swing Lender is not obligated to make a Swing Loan, then
promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a), Agent shall
notify the Lenders, not later than 1:00 p.m. (California time) on the Business Day immediately
preceding the Funding Date applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of such Lender’s Pro
Rata Share of the requested Borrowing available to Agent in immediately available funds, to Agent’s
Account, not later than 10:00 a.m. (California time) on the Funding Date applicable thereto. After
Agent’s receipt of the proceeds of such Advances, Agent shall make the proceeds thereof available
to Administrative Borrower on the applicable Funding Date by transferring immediately available
funds equal to such proceeds received by Agent to Administrative Borrower’s Designated Account;
provided, however, that, subject to the provisions of Section 2.3(d)(ii),
Agent shall not request any Lender to make, and no Lender shall have the obligation to make, any
Advance if Agent shall have actual knowledge that (1) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the requested Funding Date for
the applicable Borrowing unless such condition has been waived, or (2) the requested Borrowing
would exceed the Availability on such Funding Date.



               (ii) Unless Agent receives notice from a Lender prior to 9:00 a.m. (California
time) on the date of a Borrowing, that such Lender will not make available as and when required
hereunder to Agent for the account of Borrowers the amount of that Lender’s Pro Rata Share of the
Borrowing, Agent may assume that each Lender has made or will make such amount available to Agent
in immediately available funds on the Funding Date and Agent may (but shall not be so required), in
reliance upon such assumption, make available to Borrowers on such date a corresponding amount. If
and to the extent any Lender shall not have made its full amount available to Agent in immediately
available funds and Agent in such circumstances has made available to Borrowers such amount, that
Lender shall on the Business Day following such Funding Date make such amount available to Agent,
together with interest at the Defaulting Lender Rate for each day during such period. A notice
submitted by Agent to any Lender with respect to amounts owing under this subsection shall be
conclusive, absent manifest error. If such amount is so made available, such payment to



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Agent shall constitute such Lender’s Advance on the date of Borrowing for all purposes of this
Agreement. If such amount is not made available to Agent on the Business Day following the Funding
Date, Agent will notify Administrative Borrower of such failure to fund and, upon demand by Agent,
Borrowers shall pay such amount to Agent for Agent’s account, together with interest thereon for
each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances composing such Borrowing. The failure of any Lender to make
any Advance on any Funding Date shall not relieve any other Lender of any obligation hereunder to
make an Advance on such Funding Date, but no Lender shall be responsible for the failure of any
other Lender to make the Advance to be made by such other Lender on any Funding Date.




               (iii) Agent shall not be obligated to transfer to a Defaulting Lender any payments
made by Borrowers to Agent for the Defaulting Lender’s benefit, and, in the absence of such
transfer to the Defaulting Lender, Agent shall transfer any such payments to each other
non-Defaulting Lender member of the Lender Group ratably in accordance with their Commitments (but
only to the extent that such Defaulting Lender’s Advance was funded by the other members of the
Lender Group) or, if so directed by Administrative Borrower and if no Default or Event of Default
had occurred and is continuing (and to the extent such Defaulting Lender’s Advance was not funded
by the Lender Group), retain same to be re-advanced to Borrowers as if such Defaulting Lender had
made Advances to Borrowers. Subject to the foregoing, Agent may hold and, in its Permitted
Discretion, re-lend to Borrowers for the account of such Defaulting Lender the amount of all such
payments received and retained by Agent for the account of such Defaulting Lender. Solely for the
purposes of voting or consenting to matters with respect to the Loan Documents, such Defaulting
Lender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be
zero. This Section shall remain effective with respect to such Lender until (x) the Obligations
under this Agreement shall have been declared or shall have become immediately due and payable, (y)
the non-Defaulting Lenders, Agent, and Administrative Borrower shall have waived such Defaulting
Lender’s default in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance and pays to Agent all amounts owing by Defaulting Lender in respect thereof.
The operation of this Section shall not be construed to increase or otherwise affect the Commitment
of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender
of its duties and obligations hereunder, or to relieve or excuse the performance by Borrowers of
their duties and obligations hereunder to Agent or to the Lenders other than such Defaulting
Lender. Any such failure to fund by any Defaulting Lender shall constitute a material breach by
such Defaulting Lender of this Agreement and shall entitle Administrative Borrower at its option,
upon written notice to Agent, to arrange for a substitute Lender to assume the Commitment of such
Defaulting Lender, such substitute Lender to be reasonably acceptable to Agent. In connection with
the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to
be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and
Acceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executed
and delivered such document if it fails to do so) subject only to being repaid its share of the
outstanding Obligations (other than Bank Product Obligations, but including an assumption of its
Pro Rata Share of the Risk Participation Liability) without any premium or penalty of any kind
whatsoever; provided however, that any such assumption of the Commitment of such Defaulting Lender
shall not be deemed to constitute a waiver of any of the Lender Groups’ or Borrowers’ rights or
remedies against any such Defaulting Lender arising out of or in relation to such failure to fund.



          (d) Protective Advances and Optional Overadvances.




               (i) Agent hereby is authorized by Borrowers and the Lenders, from time to time in
Agent’s sole discretion, (A) after the occurrence and during the continuance of a Default or an
Event of Default, or (B) at any time that any of the other applicable conditions precedent set
forth in Section 3 are not satisfied, to make Advances to Borrowers on behalf of the
Lenders that Agent, in its Permitted Discretion deems necessary or desirable (1) to preserve or
protect the Collateral, or any portion thereof, (2) to enhance the likelihood of repayment of the
Obligations (other than the Bank Product Obligations), or (3) to pay any other amount chargeable to
Borrowers pursuant to the terms of this Agreement, including Lender Group Expenses



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and the costs, fees, and expenses described in Section 9 (any of the Advances
described in this Section 2.3(d)(i) shall be referred to as “Protective Advances”).




               (ii) Any contrary provision of this Agreement notwithstanding, the Lenders hereby
authorize Agent or Swing Lender, as applicable, and either Agent or Swing Lender, as applicable,
may, but is not obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrowers notwithstanding that an Overadvance exists or thereby would be created,
so long as after giving effect to such Advances, the outstanding Revolver Usage (except for and
excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) does
not exceed the Maximum Revolver Amount by more than $4,000,000. In the event Agent obtains actual
knowledge that the Revolver Usage exceeds the amounts permitted by the immediately foregoing
provisions, regardless of the amount of, or reason for, such excess, Agent shall notify the Lenders
as soon as practicable (and prior to making any (or any additional) intentional Overadvances
(except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group
Expenses) unless Agent determines that prior notice would result in imminent harm to the Collateral
or its value), and the Lenders with Revolver Commitments thereupon shall, together with Agent,
jointly determine the terms of arrangements that shall be implemented with Borrowers intended to
reduce, within a reasonable time, the outstanding principal amount of the Advances to Borrowers to
an amount permitted by the preceding paragraph. In such circumstances, if any Lender with a
Revolver Commitment objects to the proposed terms of reduction or repayment of any Overadvance, the
terms of reduction or repayment thereof shall be implemented according to the determination of the
Required Lenders. Each Lender with a Revolver Commitment shall be obligated to settle with Agent
as provided in Section 2.3(e) for the amount of such Lender’s Pro Rata Share of any
unintentional Overadvances by Agent reported to such Lender, any intentional Overadvances made as
permitted under this Section 2.3(d)(ii), and any Overadvances resulting from the charging
to the Loan Account of interest, fees, or Lender Group Expenses.



               (iii) Each Protective Advance and each Overadvance shall be deemed to be an
Advance hereunder, except that no Protective Advance or Overadvance shall be eligible to be a LIBOR
Rate Loan and all payments on the Protective Advances shall be payable to Agent solely for its own
account. The Protective Advances and Overadvances shall be repayable on demand, secured by the
Agent’s Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time
to time to Advances that are Base Rate Loans. The provisions of this Section 2.3(d) are
for the exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended to benefit
any Borrower in any way.



          (e) Settlement. It is agreed that each Lender’s funded portion of the Advances is
intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding
Advances. Such agreement notwithstanding, Agent, Swing Lender, and the other Lenders agree (which
agreement shall not be for the benefit of any Borrower) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among the Lenders as to
the Advances, the Swing Loans, and the Protective Advances shall take place on a periodic basis in
accordance with the following provisions:




               (i) Agent shall request settlement (“Settlement”) with the Lenders on a
weekly basis, or on a more frequent basis if so determined by Agent (1) on behalf of Swing Lender,
with respect to the outstanding Swing Loans, (2) for itself, with respect to the outstanding
Protective Advances, and (3) with respect to Borrowers’ or their Subsidiaries’ Collections
received, as to each by notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00 p.m. (California time) on the
Business Day immediately prior to the date of such requested Settlement (the date of such requested
Settlement being the “Settlement Date”). Such notice of a Settlement Date shall include a
summary statement of the amount of outstanding Advances, Swing Loans, and Protective Advances for
the period since the prior Settlement Date. Subject to the terms and conditions contained herein
(including Section 2.3(c)(iii)): (y) if a Lender’s balance of the Advances (including
Swing Loans and Protective Advances) exceeds such Lender’s Pro Rata Share of the Advances
(including Swing Loans and Protective Advances) as of a Settlement Date, then Agent shall, by no
later than 12:00 p.m. (California time) on the Settlement Date, transfer in immediately available
funds to a Deposit Account of such Lender (as such Lender may designate),



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an amount such that each such Lender shall, upon receipt of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and Protective
Advances), and (z) if a Lender’s balance of the Advances (including Swing Loans and Protective
Advances) is less than such Lender’s Pro Rata Share of the Advances (including Swing Loans and
Protective Advances) as of a Settlement Date, such Lender shall no later than 12:00 p.m.
(California time) on the Settlement Date transfer in immediately available funds to the Agent’s
Account, an amount such that each such Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and Protective
Advances). Such amounts made available to Agent under clause (z) of the immediately preceding
sentence shall be applied against the amounts of the applicable Swing Loans or Protective Advances
and, together with the portion of such Swing Loans or Protective Advances representing Swing
Lender’s Pro Rata Share thereof, shall constitute Advances of such Lenders. If any such amount is
not made available to Agent by any Lender on the Settlement Date applicable thereto to the extent
required by the terms hereof, Agent shall be entitled to recover for its account such amount on
demand from such Lender together with interest thereon at the Defaulting Lender Rate.




               (ii) In determining whether a Lender’s balance of the Advances, Swing Loans, and
Protective Advances is less than, equal to, or greater than such Lender’s Pro Rata Share of the
Advances, Swing Loans, and Protective Advances as of a Settlement Date, Agent shall, as part of the
relevant Settlement, apply to such balance the portion of payments actually received in good funds
by Agent with respect to principal, interest, fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a net amount is owed to any such
Lender after such application, such net amount shall be distributed by Agent to that Lender as part
of such next Settlement.



               (iii) Between Settlement Dates, Agent, to the extent no Protective Advances or
Swing Loans are outstanding, may pay over to Swing Lender any payments received by Agent, that in
accordance with the terms of this Agreement would be applied to the reduction of the Advances, for
application to Swing Lender’s Pro Rata Share of the Advances. If, as of any Settlement Date,
Collections of Borrowers or their Subsidiaries received since the then immediately preceding
Settlement Date have been applied to Swing Lender’s Pro Rata Share of the Advances other than to
Swing Loans, as provided for in the previous sentence, Swing Lender shall pay to Agent for the
accounts of the Lenders, and Agent shall pay to the Lenders, to be applied to the outstanding
Advances of such Lenders, an amount such that each Lender shall, upon receipt of such amount, have,
as of such Settlement Date, its Pro Rata Share of the Advances. During the period between
Settlement Dates, Swing Lender with respect to Swing Loans, Agent with respect to Protective
Advances, and each Lender (subject to the effect of agreements between Agent and individual
Lenders) with respect to the Advances other than Swing Loans and Protective Advances, shall be
entitled to interest at the applicable rate or rates payable under this Agreement on the daily
amount of funds employed by Swing Lender, Agent, or the Lenders, as applicable.



          (f) Notation. Agent shall record on its books the principal amount of the
Advances owing to each Lender, including the Swing Loans owing to Swing Lender, and Protective
Advances owing to Agent, and the interests therein of each Lender, from time to time and such
records shall, absent manifest error, conclusively be presumed to be correct and accurate.




          (g) Lenders’ Failure to Perform. All Advances (other than Swing Loans and
Protective Advances) shall be made by the Lenders contemporaneously and in accordance with their
Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any
other Lender to perform its obligation to make any Advance (or other extension of credit)
hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lender
to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder.




     2.4 Payments.



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          (a) Payments by Borrowers.




               (i) Except as otherwise expressly provided herein, all payments by Borrowers shall
be made to Agent’s Account for the account of the Lender Group and shall be made in immediately
available funds, no later than 11:00 a.m. (California time) on the date specified herein. Any
payment received by Agent later than 11:00 a.m. (California time), shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall continue to accrue
until such following Business Day.



               (ii) Unless Agent receives notice from Administrative Borrower prior to the date
on which any payment is due to the Lenders that Borrowers will not make such payment in full as and
when required, Agent may assume that Borrowers have made (or will make) such payment in full to
Agent on such date in immediately available funds and Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent Borrowers do not make such payment in full to
Agent on the date when due, each Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each
day from the date such amount is distributed to such Lender until the date repaid.



          (b) Apportionment and Application.




               (i) So long as no Event of Default has occurred and is continuing and except as
otherwise provided with respect to Defaulting Lenders, all principal and interest payments shall be
apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations
to which such payments relate held by each Lender) and all payments of fees and expenses (other
than fees or expenses that are for Agent’s separate account) shall be apportioned ratably among the
Lenders having a Pro Rata Share of the type of Commitment or Obligation to which a particular fee
or expense relates. All payments to be made hereunder by Borrowers shall be remitted to Agent and
all (subject to Section 2.4(b)(iv) hereof) such payments, and all proceeds of Collateral received
by Agent, shall be applied, so long as no Event of Default has occurred and is continuing, to
reduce the balance of the Advances outstanding and, thereafter, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto under applicable law.



               (ii) At any time that an Event of Default has occurred and is continuing and
except as otherwise provided with respect to Defaulting Lenders, all payments remitted to Agent and
all proceeds of Collateral received by Agent shall be applied as follows:



                    (A) first, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to Agent under the Loan Documents, until paid in full,



                    (B) second, to pay any fees or premiums then due to Agent under the Loan
Documents until paid in full,



                    (C) third, to pay interest due in respect of all Protective Advances until
paid in full,



                    (D) fourth, to pay the principal of all Protective Advances until paid in
full,



                    (E) fifth, ratably to pay any Lender Group Expenses (including cost or
expense reimbursements) or indemnities then due to any of the Lenders under the Loan Documents,
until paid in full,



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                    (F) sixth, ratably to pay any fees or premiums then due to any of the
Lenders under the Loan Documents until paid in full,



                    (G) seventh, ratably to pay interest due in respect of the Advances (other
than Protective Advances), the Swing Loans, and the Term Loan until paid in full,



                    (H) eighth, ratably (i) to pay the principal of all Swing Loans until paid
in full, (ii) to pay the principal of all Advances until paid in full, (iii) to Agent, to be held
by Agent, for the ratable benefit of Issuing Lender and those Lenders having a Revolver Commitment,
as cash collateral in an amount up to 105% of the Letter of Credit Usage, (iv) to Agent, to be held
by Agent, for the benefit of the Bank Product Providers, as cash collateral in an amount up to the
amount of the Bank Product Reserve established prior to the occurrence of, and not in contemplation
of, the subject Event of Default, and (v) to pay the outstanding principal balance of the Term Loan
(in the inverse order of the maturity of the installments due thereunder) until the Term Loan is
paid in full,



                    (I) ninth, to pay any other Obligations (including the provision of
amounts to Agent, to be held by Agent, for the benefit of the Bank Product Providers, as cash
collateral in an amount up to the amount determined by Agent in its Permitted Discretion as the
amount necessary to secure Borrowers’ and their Subsidiaries’ obligations in respect of Bank
Products), and



                    (J) tenth, to Borrowers (to be wired to the Designated Account) or such
other Person entitled thereto under applicable law.



               (iii) Agent promptly shall distribute to each Lender, pursuant to the applicable
wire instructions received from each Lender in writing, such funds as it may be entitled to
receive, subject to a Settlement delay as provided in Section 2.3(e).



               (iv) In each instance, so long as no Event of Default has occurred and is
continuing, Section 2.4(b)(i) shall not apply to any payment made by Borrowers to Agent and
specified by Borrowers to be for the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.



               (v) For purposes of Section 2.4(b)(ii), “paid in full” means payment of
all amounts owing under the Loan Documents according to the terms thereof, including loan fees,
service fees, professional fees, interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest, interest on interest, and expense
reimbursements, whether or not any of the foregoing would be or is allowed or disallowed in whole
or in part in any Insolvency Proceeding.



               (vi) In the event of a direct conflict between the priority provisions of this
Section 2.4 and any other provision contained in any other Loan Document, it is the
intention of the parties hereto that such provisions be read together and construed, to the fullest
extent possible, to be in concert with each other. In the event of any actual, irreconcilable
conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.4
shall control and govern.



          (c) Mandatory Prepayments.




               (i) If, as of the last day of any month, the sum of the outstanding principal
balance of the Term Loan on such date plus the Revolver Usage on such date exceeds eighty percent
(80%) of TTM Tote Contract Revenues, as determined by Agent in its Permitted Discretion (the
“Loan Limit” and such excess being referred to as the “Limiter Excess”), then
Borrowers shall prepay the Obligations in accordance with Section 2.4(d)(i) in an aggregate
amount equal to the Limiter Excess, which prepayment shall be due and payable upon the earlier of:
(a) the date Borrowers provide Agent with a calculation of the Limiter Excess in



8









 




accordance with Section 5.2, and (b) the thirtieth day following the end of such
month. For clarification, for purposes of this Section 2.4(c)(i), TTM Tote Contract
Revenues shall be measured as of the last day of each month.




               (ii) Immediately upon the receipt by Borrowers or any of their Subsidiaries of the
proceeds of any voluntary or involuntary sale or disposition by Borrowers or any of their
Subsidiaries of property or assets (including casualty losses or condemnations but excluding sales
or dispositions which qualify as Permitted Dispositions under clauses (a), (b), (c), (d), (e), or
(f) of the definition of Permitted Dispositions, and excluding the sale permitted under Section
6.4(b)), Borrowers shall prepay the outstanding principal amount of the Obligations in
accordance with Section 2.4(d)(ii) in an amount equal to 100% of the Net Cash Proceeds
(including condemnation awards and payments in lieu thereof) received by such Person in connection
with such sales or dispositions; provided that, so long as (A) no Default or Event of
Default shall have occurred and is continuing, (B) Administrative Borrower shall have given Agent
prior written notice of Borrowers’ intention to apply such monies to the costs of replacement of
the properties or assets that are the subject of such sale or disposition or the cost of purchase
or construction of other assets useful in the business of Borrowers or their Subsidiaries, (C) the
monies are held in a cash collateral account in which Agent has a perfected first-priority security
interest, and (D) Borrowers or their Subsidiaries, as applicable, complete such replacement,
purchase, or construction within 180 days after the initial receipt of such monies, Borrowers and
their Subsidiaries shall have the option to apply such monies to the costs of replacement of the
property or assets that are the subject of such sale or disposition or the costs of purchase or
construction of other assets useful in the business of Borrowers and their Subsidiaries unless and
to the extent that such applicable period shall have expired without such replacement, purchase or
construction being made or completed, in which case, any amounts remaining in the cash collateral
account shall be paid to Agent and applied in accordance with Section 2.4(d)(ii). Nothing
contained in this Section 2.4(c)(ii) shall permit Borrowers or any of their Subsidiaries to
sell or otherwise dispose of any property or assets other than in accordance with Section
6.4.



               (iii) Immediately upon the receipt by Borrowers or any of their Subsidiaries of
any Extraordinary Receipts, Borrowers shall prepay the outstanding principal amount of the
Obligations in accordance with Section 2.4(d)(ii) in an amount equal to 100% of such
Extraordinary Receipts, net of any reasonable expenses incurred in collecting such Extraordinary
Receipts (including, without limitation, any out-of-pocket costs and expenses (including attorneys
fees) incurred by Borrowers or any Guarantor in connection with any legal proceedings identified on
Schedule 4.10). Notwithstanding the terms of Section 2.4(d)(ii), Agent, in its
sole and absolute discretion, and with the consent of Administrative Borrower, may apply the
proceeds of any such Extraordinary Receipts to the outstanding principal balance of the Advances
instead of in accordance with Section 2.4(d)(ii).



               (iv) Immediately upon the issuance or incurrence by Borrowers or any of their
Subsidiaries of any Indebtedness (other than Indebtedness permitted under Section 6.1(a),
(b), (c), (d), or (e)) or, upon the occurrence and during the
continuance of an Event of Default only, the issuance by Borrowers or any of their Subsidiaries of
any shares of Borrowers’ Stock or their Subsidiaries’ Stock, Borrowers shall prepay the outstanding
principal amount of the Obligations in accordance with Section 2.4(d)(ii) in an amount
equal to 100% of the Net Cash Proceeds received by such Person in connection with such issuance or
incurrence. The provisions of this Section 2.4(c)(iv) shall not be deemed to be implied
consent to any such issuance or incurrence otherwise prohibited by the terms and conditions of this
Agreement.



          (d) Application of Payments.




               (i) Each prepayment pursuant to Section 2.4(c)(i) shall, (A) so long as no
Event of Default shall have occurred and be continuing, be applied, first, to the outstanding
principal amount of the Advances until paid in full, second, to cash collateralize the Letters of
Credit in an amount equal to 105% of the then extant Letter of Credit Usage, and third, to the
outstanding principal amount of the Term Loan until paid in full, and (B) if an Event of Default
shall have occurred and be continuing, be applied in the manner set



9









 




forth in Section 2.4(b)(ii). Each such prepayment of the Term Loan shall be applied
against the remaining installments of principal of the Term Loan in the inverse order of maturity.




               (ii) Each prepayment pursuant to Section 2.4(c)(ii), 2.4(c)(iii),
or 2.4(c)(iv) above shall (A) so long as no Event of Default shall have occurred and be
continuing, first, to the outstanding principal amount of the Term Loan until paid in full, second,
to the outstanding principal amount of the Advances (with a corresponding permanent reduction in
the Maximum Revolver Amount) until paid in full, and third, to cash collateralize the Letters of
Credit in an amount equal to 105% of the then extant Letter of Credit Usage (with a corresponding
permanent reduction in the Maximum Revolver Amount), and (B) if an Event of Default shall have
occurred and be continuing, be applied in the manner set forth in Section 2.4(b)(ii). Each
such prepayment of the Term Loan shall be applied against the remaining installments of principal
of the Term Loan in the inverse order of maturity.



     2.5 Overadvances. If, at any time or for any reason, the amount of Obligations owed
by Borrowers to the Lender Group pursuant to Section 2.1 or Section 2.12 is greater
than any of the limitations set forth in Section 2.1 or Section 2.12, as applicable
(an “Overadvance”), Borrowers immediately shall pay to Agent, in cash, the amount of such
excess, which amount shall be used by Agent to reduce the Obligations in accordance with the
priorities set forth in Section 2.4(b). Borrowers promise to pay the Obligations
(including principal, interest, fees, costs, and expenses) in Dollars in full on the Maturity Date
or, if earlier, on the date on which the Obligations are declared due and payable pursuant to the
terms of this Agreement.



2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.




          (a) Interest Rates. Except as provided in Section 2.6(c), all Obligations
(except for undrawn Letters of Credit and except for Bank Product Obligations) that have been
charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance
thereof as follows (i) if the relevant Obligation is an Advance or a portion of the Term Loan that
is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and
(ii) otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin.




          (b) Letter of Credit Fee. Borrowers shall pay Agent (for the ratable benefit of
the Lenders with a Revolver Commitment, subject to any agreements between Agent and individual
Lenders), a Letter of Credit fee (in addition to the charges, commissions, fees, and costs set
forth in Section 2.12(e)) which shall accrue at a rate equal to two percent (2.0%) per
annum times the Daily Balance of the undrawn amount of all outstanding Letters of Credit.




          (c) Default Rate. Upon the occurrence and during the continuation of an Event of
Default (and at the election of Agent or the Required Lenders),




               (i) all Obligations (except for undrawn Letters of Credit and except for Bank
Product Obligations) that have been charged to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof at a per annum rate equal to 2 percentage points above
the per annum rate otherwise applicable hereunder, and



               (ii) the Letter of Credit fee provided for in Section 2.6(b) shall be
increased to 2 percentage points above the per annum rate otherwise applicable hereunder.



          (d) Payment. Except as provided to the contrary in Section 2.11 or
Section 2.13(a), interest, Letter of Credit fees, and all other fees payable hereunder
shall be due and payable, in arrears, on the first day of each month at any time that Obligations
or Commitments are outstanding. Borrowers hereby authorize Agent, from time to time, without prior
notice to Borrowers, to charge all interest and fees (when due and payable), all Lender Group
Expenses (as and when incurred), all charges, commissions, fees, and costs provided for in

10









 








Section 2.12(e) (as and when accrued or incurred), all fees and costs
provided for in Section 2.11 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document (including the amounts due and payable with
respect to the Term Loan and including any amounts due and payable to the Bank Product Providers in
respect of Bank Products up to the amount of the Bank Product Reserve) to Borrowers’ Loan Account,
which amounts thereafter shall constitute Advances hereunder and shall accrue interest at the rate
then applicable to Advances that are Base Rate Loans. Any interest not paid when due shall be
compounded by being charged to the Loan Account and shall thereafter constitute Advances hereunder
and shall accrue interest at the rate then applicable to Advances that are Base Rate Loans.




          (e) Computation. All interest and fees chargeable under the Loan Documents shall
be computed on the basis of a 360 day year for the actual number of days elapsed. In the event the
Base Rate is changed from time to time hereafter, the rates of interest hereunder based upon the
Base Rate automatically and immediately shall be increased or decreased by an amount equal to such
change in the Base Rate.




          (f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid in connection
herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction
shall, in a final determination, deem applicable. Borrowers and the Lender Group, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of
payment stated within it; provided, however, that, anything contained herein to the
contrary notwithstanding, if said rate or rates of interest or manner of payment exceeds the
maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement,
Borrowers are and shall be liable only for the payment of such maximum as allowed by law, and
payment received from Borrowers in excess of such legal maximum, whenever received, shall be
applied to reduce the principal balance of the Obligations to the extent of such excess and
thereafter refunded to the Borrowers or to such Persons as a court of competent jurisdiction may
otherwise order.




     2.7 Cash Management.



          (a) Borrowers shall and shall cause each of their Subsidiaries to (i) establish
and maintain cash management services of a type and on terms reasonably satisfactory to Agent at
one or more of the banks set forth on Schedule 2.7(a) (each a “Cash Management
Bank”), and shall request in writing and otherwise take such reasonable steps to ensure that
all of their and their Subsidiaries’ Account Debtors forward payment of the amounts owed by them
directly to such Cash Management Bank, and (ii) deposit or cause to be deposited promptly, and in
any event no later than the first Business Day after the date of receipt thereof, all of their
Collections (including those sent directly by their Account Debtors to Borrowers or their
Subsidiaries) into a bank account in Agent’s name (a “Cash Management Account”) at one of
the Cash Management Banks.




          (b) Each Cash Management Bank shall establish and maintain Cash Management
Agreements with Agent and Borrowers. Each such Cash Management Agreement shall provide, among
other things, that (i) upon notice from Agent (which shall only be given by Agent upon an Event of
Default) the Cash Management Bank will comply with any instructions originated by Agent directing
the disposition of the funds in such Cash Management Account without further consent by Borrowers
or their Subsidiaries, as applicable, (ii) the Cash Management Bank has no rights of setoff or
recoupment or any other claim against the applicable Cash Management Account, other than for
payment of its service fees and other charges directly related to the administration of such Cash
Management Account and for returned checks or other items of payment, and (iii) upon notice from
Agent (which shall only be given by Agent upon an Event of Default), it will forward, by daily
sweep, all amounts in the applicable Cash Management Account to the Agent’s Account.




          (c) So long as no Default or Event of Default has occurred and is continuing,
Administrative Borrower may amend Schedule 2.7(a) to add or replace a Cash Management Bank
or Cash Management Account; provided, however, that (i) such prospective Cash
Management Bank shall be reasonably satisfactory to Agent, and (ii) prior to the time of the
opening of such Cash Management Account, a




11









 







Borrower (or its Subsidiary, as applicable) and such
prospective Cash Management Bank shall have executed and delivered to Agent a Cash Management
Agreement. Borrowers (or their Subsidiaries, as applicable) shall close any of their Cash
Management Accounts (and establish replacement cash management accounts in accordance with the
foregoing sentence) promptly and in any event within 30 days of notice from Agent that the
creditworthiness of any Cash Management Bank is no longer acceptable in Agent’s reasonable
judgment, or as promptly as practicable and in any event within 60 days of notice from Agent that
the operating performance, funds transfer, or availability procedures or performance of the Cash
Management Bank with respect to Cash Management Accounts or Agent’s liability under any Cash
Management Agreement with such Cash Management Bank is no longer acceptable in Agent’s reasonable
judgment.




          (d) Each Cash Management Account shall be a cash collateral account subject to a
Control Agreement.




     2.8 Crediting Payments; Clearance Charge. The receipt of any payment item by Agent
(whether from transfers to Agent by the Cash Management Banks pursuant to the Cash Management
Agreements or otherwise) shall not be considered a payment on account unless such payment item is a
wire transfer of immediately available federal funds made to the Agent’s Account or unless and
until such payment item is honored when presented for payment. Should any payment item not be
honored when presented for payment, then Borrowers shall be deemed not to have made such payment
and interest shall be calculated accordingly. Anything to the contrary contained herein
notwithstanding, any payment item shall be deemed received by Agent only if it is received into the
Agent’s Account on a Business Day on or before 11:00 a.m. (California time). If any payment item
is received into the Agent’s Account on a non-Business Day or after 11:00 a.m. (California time) on
a Business Day, it shall be deemed to have been received by Agent as of the opening of business on
the immediately following Business Day. The parties acknowledge and agree that the economic
benefit of the foregoing provisions of this Section 2.8 shall be for the exclusive benefit
of Agent.



     2.9 Designated Account. Agent is authorized to make the Advances and the Term Loan,
and Issuing Lender is authorized to issue the Letters of Credit, under this Agreement based upon
telephonic or other instructions received from anyone purporting to be an Authorized Person or,
without instructions, if pursuant to Section 2.6(d). Administrative Borrower agrees to
establish and maintain the Designated Account with the Designated Account Bank for the purpose of
receiving the proceeds of the Advances requested by Borrowers and made by Agent or the Lenders
hereunder. Unless otherwise agreed by Agent and Administrative Borrower, any Advance, Protective
Advance, or Swing Loan requested by Borrowers and made by Agent or the Lenders hereunder shall be
made to the Designated Account.



     2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall maintain an
account on its books in the name of Borrowers (the “Loan Account”) on which Borrowers will
be charged with the Term Loan, all Advances (including Protective Advances and Swing Loans) made by
Agent, Swing Lender, or the Lenders to Borrowers or for Borrowers’ account, the Letters of Credit
issued by Issuing Lender for Borrowers’ account, and with all other payment Obligations hereunder
or under the other Loan Documents (except for Bank Product Obligations), including, accrued
interest, fees and expenses, and Lender Group Expenses. In accordance with Section 2.8,
the Loan Account will be credited with all payments received by Agent from Borrowers or for
Borrowers’ account, including all amounts received in the Agent’s Account from any Cash Management
Bank. Agent shall render statements regarding the Loan Account to Administrative Borrower,
including principal, interest, fees, and including an itemization of all charges and expenses
constituting Lender Group Expenses owing, and such statements, absent manifest error, shall be
conclusively presumed to be correct and accurate and constitute an account stated between Borrowers
and the Lender Group unless, within 30 days after receipt thereof by Administrative Borrower,
Administrative Borrower shall deliver to Agent written objection thereto describing the error or
errors contained in any such statements.



     2.11 Fees. Borrowers shall pay to Agent, as and when due and payable under the terms
of the Fee Letter, the fees set forth in the Fee Letter.



12









 





     2.12 Letters of Credit.




          (a) Subject to the terms and conditions of this Agreement, the Issuing Lender
agrees to issue letters of credit for the account of Borrowers (each, an “L/C”) or to
purchase participations or execute indemnities or reimbursement obligations (each such undertaking,
an “L/C Undertaking”) with respect to letters of credit issued by an Underlying Issuer (as
of the Closing Date, the prospective Underlying Issuer is to be Wells Fargo) for the account of
Borrowers. Each request for the issuance of a Letter of Credit or the amendment, renewal, or
extension of any outstanding Letter of Credit, shall be made in writing by an Authorized Person and
delivered to the Issuing Lender and Agent via hand delivery, telefacsimile, or other electronic
method of transmission reasonably in advance of the requested date of issuance, amendment, renewal,
or extension. Each such request shall be in form and substance satisfactory to the Issuing Lender
in its Permitted Discretion and shall specify (i) the amount of such Letter of Credit, (ii) the
date of issuance, amendment, renewal, or extension of such Letter of Credit, (iii) the expiration
date of such Letter of Credit, (iv) the name and address of the beneficiary thereof (or the
beneficiary of the Underlying Letter of Credit, as applicable), and (v) such other information
(including, in the case of an amendment, renewal, or extension, identification of the outstanding
Letter of Credit to be so amended, renewed, or extended) as shall be necessary to prepare, amend,
renew, or extend such Letter of Credit. If requested by the Issuing Lender, Borrowers also shall
be an applicant under the application with respect to any Underlying Letter of Credit that is to be
the subject of an L/C Undertaking. The Issuing Lender shall have no obligation to issue a Letter
of Credit if any of the following would result after giving effect to the issuance of such
requested Letter of Credit:




               (i) the Letter of Credit Usage would exceed the Loan Limit less the outstanding
amount of Advances less the outstanding principal balance of the Term Loan, or



               (ii) the Letter of Credit Usage would exceed $1,500,000, or



               (iii) the Letter of Credit Usage would exceed the Maximum Revolver Amount less the
outstanding amount of Advances less the Bank Product Reserve, and less the aggregate amount of
reserves, if any, established by Agent under Section 2.1(b).



          Borrowers and the Lender Group acknowledge and agree that certain Underlying Letters of Credit
may be issued to support letters of credit that already are outstanding as of the Closing Date.
Each Letter of Credit (and corresponding Underlying Letter of Credit) shall be in form and
substance acceptable to the Issuing Lender (in the exercise of its Permitted Discretion), including
the requirement that the amounts payable thereunder must be payable in Dollars. If Issuing Lender
is obligated to advance funds under a Letter of Credit, Borrowers immediately shall reimburse such
L/C Disbursement to Issuing Lender by paying to Agent an amount equal to such L/C Disbursement not
later than 11:00 a.m., California time, on the date that such L/C Disbursement is made, if
Administrative Borrower shall have received written or telephonic notice of such L/C Disbursement
prior to 10:00 a.m., California time, on such date, or, if such notice has not been received by
Administrative Borrower prior to such time on such date, then not later than 11:00 a.m., California
time, on the Business Day that Administrative Borrower receives such notice, if such notice is
received prior to 10:00 a.m., California time, on the date of receipt, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be deemed to be an Advance
hereunder and, initially, shall bear interest at the rate then applicable to Advances that are Base
Rate Loans. To the extent an L/C Disbursement is deemed to be an Advance hereunder, Borrowers’
obligation to reimburse such L/C Disbursement shall be discharged and replaced by the resulting
Advance. Promptly following receipt by Agent of any payment from Borrowers pursuant to this
paragraph, Agent shall distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to Section 2.12(b) to reimburse the Issuing Lender, then to
such Lenders and the Issuing Lender as their interests may appear.




          (b) Promptly following receipt of a notice of L/C Disbursement pursuant to
Section 2.12(a), each Lender with a Revolver Commitment agrees to fund its Pro Rata Share
of any Advance deemed made pursuant to the foregoing subsection on the same terms and conditions as
if Borrowers had requested


13









 






such Advance and Agent shall promptly pay to Issuing Lender the amounts
so received by it from the Lenders. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action on the part of the
Issuing Lender or the Lenders with Revolver Commitments, the Issuing Lender shall be deemed to have
granted to each Lender with a Revolver Commitment, and each Lender with a Revolver Commitment shall
be deemed to have purchased, a participation in each Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and each such Lender
agrees to pay to Agent, for the account of the Issuing Lender, such Lender’s Pro Rata Share of any
payments made by the Issuing Lender under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender, such Lender’s Pro
Rata Share of each L/C Disbursement made by the Issuing Lender and not reimbursed by Borrowers on
the date due as provided in Section 2.12(a), or of any reimbursement payment required to be
refunded to Borrowers for any reason. Each Lender with a Revolver Commitment acknowledges and
agrees that its obligation to deliver to Agent, for the account of the Issuing Lender, an amount
equal to its respective Pro Rata Share of each L/C Disbursement made by the Issuing Lender pursuant
to this Section 2.12(b) shall be absolute and unconditional and such remittance shall be
made notwithstanding the occurrence or continuation of an Event of Default or Default or the
failure to satisfy any condition set forth in Section 3. If any such Lender fails to make
available to Agent the amount of such Lender’s Pro Rata Share of each L/C Disbursement made by the
Issuing Lender in respect of such Letter of Credit as provided in this Section, such Lender shall
be deemed to be a Defaulting Lender and Agent (for the account of the Issuing Lender) shall be
entitled to recover such amount on demand from such Lender together with interest thereon at the
Defaulting Lender Rate until paid in full.




          (c) Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender
Group harmless from any loss, cost, expense, or liability, and reasonable attorneys fees incurred
by the Lender Group arising out of or in connection with any Letter of Credit; provided,
however, that no Borrower shall be obligated hereunder to indemnify for any loss, cost,
expense, or liability to the extent that it is caused by the gross negligence or willful misconduct
of the Issuing Lender or any other member of the Lender Group. Each Borrower agrees to be bound by
the Underlying Issuer’s regulations and interpretations of any Underlying Letter of Credit or by
Issuing Lender’s interpretations of any L/C issued by Issuing Lender to or for such Borrower’s
account, even though this interpretation may be different from such Borrower’s own, and each
Borrower understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following Borrowers’ instructions or
those contained in the Letter of Credit or any modifications, amendments, or supplements thereto.
Each Borrower understands that the L/C Undertakings may require Issuing Lender to indemnify the
Underlying Issuer for certain costs or liabilities arising out of claims by Borrowers against such
Underlying Issuer. Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender
Group harmless with respect to any loss, cost, expense (including reasonable attorneys fees), or
liability incurred by the Lender Group under any L/C Undertaking as a result of the Lender Group’s
indemnification of any Underlying Issuer; provided, however, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability to the extent that it
is caused by the gross negligence or willful misconduct of the Issuing Lender or any other member
of the Lender Group. Each Borrower hereby acknowledges and agrees that neither the Lender Group
nor the Issuing Lender shall be responsible for delays, errors, or omissions resulting from the
malfunction of equipment in connection with any Letter of Credit.




          (d) Each Borrower hereby authorizes and directs any Underlying Issuer to deliver
to the Issuing Lender all instruments, documents, and other writings and property received by such
Underlying Issuer pursuant to such Underlying Letter of Credit and to accept and rely upon the
Issuing Lender’s instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.




          (e) Any and all issuance charges, commissions, fees, and costs incurred by the
Issuing Lender relating to Underlying Letters of Credit shall be Lender Group Expenses for purposes
of this Agreement and immediately shall be reimbursable by Borrowers to Agent for the account of
the Issuing Lender; it being acknowledged and agreed by each Borrower that, as of the Closing Date,
the issuance charge




14









 







imposed by the prospective Underlying Issuer is .825% per annum times the
undrawn amount of each Underlying Letter of Credit, that such issuance charge may be changed from
time to time, and that the Underlying Issuer also imposes a schedule of charges for amendments,
extensions, drawings, and renewals.




          (f) If by reason of (i) any change after the Closing Date in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application thereof by any
Governmental Authority, or (ii) compliance by the Underlying Issuer or the Lender Group with any
direction, request, or requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the Federal Reserve Board
as from time to time in effect (and any successor thereto):




               (i) any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any Letter of Credit issued hereunder, or



               (ii) there shall be imposed on the Underlying Issuer or the Lender Group any other
condition regarding any Underlying Letter of Credit or any Letter of Credit issued pursuant hereto;


and the result of the foregoing is to increase, directly or indirectly, the cost to the Lender
Group of issuing, making, guaranteeing, or maintaining any Letter of Credit or to reduce the amount
receivable in respect thereof by the Lender Group, then, and in any such case, Agent may, at any
time within a reasonable period after the additional cost is incurred or the amount received is
reduced, notify Administrative Borrower, and Borrowers shall pay on demand such amounts as Agent
may specify to be necessary to compensate the Lender Group for such additional cost or reduced
receipt, together with interest on such amount from the date of such demand until payment in full
thereof at the rate then applicable to Base Rate Loans hereunder. The determination by Agent of
any amount due pursuant to this Section, as set forth in a certificate setting forth the
calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error,
be final and conclusive and binding on all of the parties hereto.




     2.13 LIBOR Option.




          (a) Interest and Interest Payment Dates. In lieu of having interest charged at
the rate based upon the Base Rate, Borrowers shall have the option (the “LIBOR Option”) to
have interest on all or a portion of the Advances or the Term Loan be charged (whether at the time
when made (unless otherwise provided herein), upon conversion from a Base Rate Loan to a LIBOR Rate
Loan, or upon continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of interest based
upon the LIBOR Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last
day of the Interest Period applicable thereto, (ii) the date on which all or any portion of the
Obligations are accelerated pursuant to the terms hereof, or (iii) the date on which this Agreement
is terminated pursuant to the terms hereof. On the last day of each applicable Interest Period,
unless Administrative Borrower properly has exercised the LIBOR Option with respect thereto, the
interest rate applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any time that an Event
of Default has occurred and is continuing, Borrowers no longer shall have the option to request
that Advances or the Term Loan bear interest at a rate based upon the LIBOR Rate, and if Agent has
accelerated the Obligations pursuant to Section 8.1(a), Agent shall have the right to
convert the interest rate on all outstanding LIBOR Rate Loans to the rate then applicable to Base
Rate Loans hereunder.




          (b) LIBOR Election.




               (i) Administrative Borrower may, at any time and from time to time, so long as no
Event of Default has occurred and is continuing, elect to exercise the LIBOR Option by notifying
Agent prior to 11:00 a.m. (California time) at least 3 Business Days prior to the commencement of
the proposed Interest Period (the “LIBOR Deadline”). Notice of Administrative Borrower’s
election of the LIBOR Option for a permitted portion of the Advances or the Term Loan and an
Interest Period pursuant to this Section shall



15









 




be made by delivery to Agent of a LIBOR Notice
received by Agent before the LIBOR Deadline, or by telephonic notice received by Agent before the
LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR Notice received by Agent prior to
5:00 p.m. (California time) on the same day). Promptly upon its receipt of each such LIBOR Notice,
Agent shall provide a copy thereof to each of the affected Lenders.




               (ii) Each LIBOR Notice shall be irrevocable and binding on Borrowers. In
connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend, and hold Agent and the
Lenders harmless against any loss, cost, or expense incurred by Agent or any Lender as a result of
(A) the payment of any principal of any LIBOR Rate Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (B) the conversion of any
LIBOR Rate Loan other than on the last day of the Interest Period applicable thereto, or (C) the
failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, or expenses, “Funding Losses”).
Funding Losses shall, with respect to Agent or any Lender, be deemed to equal the amount
determined by Agent or such Lender to be the excess, if any, of (1) the amount of interest that
would have accrued on the principal amount of such LIBOR Rate Loan had such event not occurred, at
the LIBOR Rate that would have been applicable thereto, for the period from the date of such event
to the last day of the then current Interest Period therefor (or, in the case of a failure to
borrow, convert, or continue, for the period that would have been the Interest Period therefor),
minus (2) the amount of interest that would accrue on such principal amount for such period at the
interest rate which Agent or such Lender would be offered were it to be offered, at the
commencement of such period, Dollar deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered to Administrative Borrower setting
forth any amount or amounts that Agent or such Lender is entitled to receive pursuant to this
Section 2.13 shall be conclusive absent manifest error.



               (iii) Borrowers shall have not more than 5 LIBOR Rate Loans in effect at any given
time. Borrowers only may exercise the LIBOR Option for LIBOR Rate Loans of at least $1,000,000 and
integral multiples of $500,000 in excess thereof.



          (c) Conversion. Borrowers may convert LIBOR Rate Loans to Base Rate Loans at any
time; provided, however, that in the event that LIBOR Rate Loans are converted or
prepaid on any date that is not the last day of the Interest Period applicable thereto, including
as a result of any automatic prepayment through the required application by Agent of proceeds of
Borrowers’ and their Subsidiaries’ Collections in accordance with Section 2.4(b) or for any
other reason, including early termination of the term of this Agreement or acceleration of all or
any portion of the Obligations pursuant to the terms hereof, each Borrower shall indemnify, defend,
and hold Agent and the Lenders and their Participants harmless against any and all Funding Losses
in accordance with Section 2.13 (b)(ii) above.




          (d) Special Provisions Applicable to LIBOR Rate.




               (i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a
prospective basis to take into account any additional or increased costs to such Lender of
maintaining or obtaining any eurodollar deposits or increased costs, in each case, due to changes
in applicable law occurring subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in corporate income tax
laws) and changes in the reserve requirements imposed by the Board of Governors of the Federal
Reserve System (or any successor), excluding the Reserve Percentage, which additional or increased
costs would increase the cost of funding or maintaining loans bearing interest at the LIBOR Rate.
In any such event, the affected Lender shall give Administrative Borrower
and Agent notice of such a determination and adjustment and Agent promptly shall transmit the
notice to each other Lender and, upon its receipt of the notice from the affected Lender,
Administrative Borrower may, by notice to such affected Lender (y) require such Lender to furnish
to Administrative Borrower a statement setting forth the basis for adjusting such LIBOR Rate and
the method for determining the amount of such adjustment, or (z) repay the LIBOR Rate Loans with
respect to which such adjustment is made (together with any amounts due under Section
2.13(b)(ii)).



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               (ii) In the event that any change in market conditions or any law, regulation,
treaty, or directive, or any change therein or in the interpretation of application thereof, shall
at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or
impractical for such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or
maintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender shall give
notice of such changed circumstances to Agent and Administrative Borrower and Agent promptly shall
transmit the notice to each other Lender and (y) in the case of any LIBOR Rate Loans of such Lender
that are outstanding, the date specified in such Lender’s notice shall be deemed to be the last day
of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such
Lender thereafter shall accrue interest at the rate then applicable to Base Rate Loans, and (z)
Borrowers shall not be entitled to elect the LIBOR Option until such Lender determines that it
would no longer be unlawful or impractical to do so.



          (e) No Requirement of Matched Funding. Anything to the contrary contained herein
notwithstanding, neither Agent, nor any Lender, nor any of their Participants, is required actually
to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest
accrues at the LIBOR Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at the LIBOR Rate by
acquiring eurodollar deposits for each Interest Period in the amount of the LIBOR Rate Loans.




     2.14 Capital Requirements. If, after the date hereof, any Lender determines that (i)
the adoption of or change in any law, rule, regulation or guideline regarding capital requirements
for banks or bank holding companies, or any change in the interpretation or application thereof by
any Governmental Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or directive of any such
entity regarding capital adequacy (whether or not having the force of law), has the effect of
reducing the return on such Lender’s or such holding company’s capital as a consequence of such
Lender’s Commitments hereunder to a level below that which such Lender or such holding company
could have achieved but for such adoption, change, or compliance (taking into consideration such
Lender’s or such holding company’s then existing policies with respect to capital adequacy and
assuming the full utilization of such entity’s capital) by any amount deemed by such Lender to be
material, then such Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such reduction of return
of capital as and when such reduction is determined, payable within 90 days after presentation by
such Lender of a statement in the amount and setting forth in reasonable detail such Lender’s
calculation thereof and the assumptions upon which such calculation was based (which statement
shall be deemed true and correct absent manifest error). In determining such amount, such Lender
may use any reasonable averaging and attribution methods.



     2.15 Joint and Several Liability of Borrowers.



          (a) Each Borrower is accepting joint and several liability hereunder and under the
other Loan Documents in consideration of the financial accommodations to be provided by the Lender
Group under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and
in consideration of the undertakings of the other Borrowers to accept joint and several liability
for the Obligations.




          (b) Each Borrower, jointly and severally, hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other
Borrowers, with respect to the payment and performance of all of the Obligations (including,
without limitation, any
Obligations arising under this Section 2.15), it being the intention of the parties
hereto that all the Obligations shall be the joint and several obligations of each Borrower without
preferences or distinction among them.




          (c) If and to the extent that any Borrower shall fail to make any payment with
respect to any of the Obligations as and when due or to perform any of the Obligations in
accordance with the terms thereof, then in each such event the other Borrowers will make such
payment with respect to, or perform, such Obligation.




17









 








          (d) The Obligations of each Borrower under the provisions of this Section
2.15 constitute the absolute and unconditional, full recourse Obligations of each Borrower
enforceable against each Borrower to the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Agreement or any other circumstances whatsoever.




          (e) Except as otherwise expressly provided in this Agreement, each Borrower hereby
waives notice of acceptance of its joint and several liability, notice of any Advances or Letters
of Credit issued under or pursuant to this Agreement, notice of the occurrence of any Default,
Event of Default, or of any demand for any payment under this Agreement, notice of any action at
any time taken or omitted by Agent or Lenders under or in respect of any of the Obligations, any
requirement of diligence or to mitigate damages and, generally, to the extent permitted by
applicable law, all demands, notices and other formalities of every kind in connection with this
Agreement (except as otherwise provided in this Agreement). Each Borrower hereby assents to, and
waives notice of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial
payment thereon, any waiver, consent or other action or acquiescence by Agent or Lenders at any
time or times in respect of any default by any Borrower in the performance or satisfaction of any
term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever
by Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of the Obligations or
the addition, substitution or release, in whole or in part, of any Borrower. Without limiting the
generality of the foregoing, each Borrower assents to any other action or delay in acting or
failure to act on the part of any Agent or Lender with respect to the failure by any Borrower to
comply with any of its respective Obligations, including, without limitation, any failure strictly
or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws
or regulations thereunder, which might, but for the provisions of this Section 2.15 afford
grounds for terminating, discharging or relieving any Borrower, in whole or in part, from any of
its Obligations under this Section 2.15, it being the intention of each Borrower that, so
long as any of the Obligations hereunder remain unsatisfied, the Obligations of each Borrower under
this Section 2.15 shall not be discharged except by performance and then only to the extent
of such performance. The Obligations of each Borrower under this Section 2.15 shall not be
diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation,
reconstruction or similar proceeding with respect to any Borrower or any Agent or Lender.




          (f) Each Borrower represents and warrants to Agent and Lenders that such Borrower
is currently informed of the financial condition of Borrowers and of all other circumstances which
a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations.
Each Borrower further represents and warrants to Agent and Lenders that such Borrower has read and
understands the terms and conditions of the Loan Documents. Each Borrower hereby covenants that
such Borrower will continue to keep informed of Borrowers’ financial condition, the financial
condition of other guarantors, if any, and of all other circumstances which bear upon the risk of
nonpayment or nonperformance of the Obligations.




          (g) Each Borrower waives all rights and defenses arising out of an election of
remedies by Agent or any Lender, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed Agent’s or such
Lender’s rights of subrogation and reimbursement against such Borrower by the operation of Section
580(d) of the California Code of Civil Procedure or otherwise:




          (h) Each Borrower waives all rights and defenses that such Borrower may have
because the Obligations are secured by Real Property. This means, among other things:




               (i) Agent and Lenders may collect from such Borrower without first foreclosing on
any Real or Personal Property Collateral pledged by Borrowers.



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               (ii) If Agent or any Lender forecloses on any Real Property Collateral pledged by
Borrowers:



                    (A) The amount of the Obligations may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale
price.



                    (B) Agent
and Lenders may collect from such Borrower even if Agent or Lenders, by
foreclosing on the Real Property Collateral, has destroyed any right such Borrower may have to
collect from the other Borrowers.


This is an unconditional and irrevocable waiver of any rights and defenses such Borrower may have
because the Obligations are secured by Real Property. These rights and defenses include, but are
not limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the California
Code of Civil Procedure.




          (i) The provisions of this Section 2.15 are made for the benefit of Agent,
Lenders and their respective successors and assigns, and may be enforced by it or them from time to
time against any or all Borrowers as often as occasion therefor may arise and without requirement
on the part of Agent, Lender, successor or assign first to marshal any of its or their claims or to
exercise any of its or their rights against any Borrower or to exhaust any remedies available to it
or them against any Borrower or to resort to any other source or means of obtaining payment of any
of the Obligations hereunder or to elect any other remedy. The provisions of this Section
2.15 shall remain in effect until all of the Obligations shall have been paid in full or
otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of
any of the Obligations, is rescinded or must otherwise be restored or returned by Agent or any
Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the
provisions of this Section 2.15 will forthwith be reinstated in effect, as though such
payment had not been made.




          (j) Each Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against any other Borrower with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to Agent or Lenders
with respect to any of the Obligations or any collateral security therefor until such time as all
of the Obligations have been paid in full in cash. Any claim which any Borrower may have against
any other Borrower with respect to any payments to any Agent or Lender hereunder or under any other
Loan Documents are hereby expressly made subordinate and junior in right of payment, without
limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary,
all such Obligations shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any other Borrower
therefor.




          (k) Each Borrower hereby agrees that, after the occurrence and during the
continuance of any Default or Event of Default, the payment of any amounts due with respect to the
indebtedness owing by any Borrower to any other Borrower is hereby subordinated to the prior
payment in full in cash of the Obligations. Each Borrower hereby agrees that after the occurrence
and during the continuance of any Default or Event of Default, such Borrower will not demand, sue
for or otherwise attempt to collect any indebtedness of any other Borrower owing to such Borrower
until the Obligations shall have been paid in full in cash. If, notwithstanding the foregoing
sentence, such Borrower shall collect, enforce or receive any amounts in respect
of such indebtedness, such amounts shall be collected, enforced and received by such Borrower
as trustee for Agent, and such Borrower shall deliver any such amounts to Agent for application to
the Obligations in accordance with Section 2.4(b).




3. CONDITIONS; TERM OF AGREEMENT.





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     3.1 Conditions Precedent to the Initial Extension of Credit. The obligation of each
Lender to make its initial extension of credit provided for hereunder, is subject to the
fulfillment, to the satisfaction of Agent and each Lender of each of the conditions precedent set
forth on Schedule 3.1 (the making of such initial extension of credit by a Lender being
conclusively deemed to be its satisfaction or waiver of the conditions precedent).



     3.2 Conditions Precedent to all Extensions of Credit. The obligation of the Lender
Group (or any member thereof) to make any Advances hereunder (or to extend any other credit
hereunder) at any time shall be subject to the following conditions precedent:



          (a) the representations and warranties contained in this Agreement or in the other
Loan Documents shall be true and correct in all material respects (except that such materiality
qualifier shall not be applicable to any representations and warranties that already are qualified
or modified by materiality in the text thereof) on and as of the date of such extension of credit,
as though made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);




          (b) no Default or Event of Default shall have occurred and be continuing on the
date of such extension of credit, nor shall either result from the making thereof;




          (c) no injunction, writ, restraining order, or other order of any nature
restricting or prohibiting, directly or indirectly, the extending of such credit shall have been
issued and remain in force by any Governmental Authority against any Borrower, Agent, or any
Lender; and




          (d) no Material Adverse Change shall have occurred since March 31, 2006.




     3.3 Conditions Subsequent to the Initial Extensions of Credit. The obligation of each
Lender to continue to make Advances (or otherwise extend credit hereunder) is subject to the
fulfillment, on or before the date applicable thereto, of each of the conditions subsequent set
forth below (the failure by Borrowers to so perform or cause to be performed constituting an Event
of Default):



          (a) Borrowers shall have used best efforts to deliver to Agent, within thirty (30)
days of the Closing Date, Collateral Access Agreements with respect to the locations listed on
Schedule 3.3(a);




          (b) With respect to the real property owned by United Tote in Pennsylvania, within
twenty (20) days of the Closing Date, Agent shall have received, in form and substance satisfactory
to Agent, a mortgage or deed of trust (as applicable) duly executed by United Tote in recordable
form, provided, that, notwithstanding anything to the contrary in this Agreement, no opinions of
counsel, policies of title insurance, environmental reports or other like documentation shall now
or hereafter be required to be delivered in connection with said mortgage or deed of trust;




          (c) Within sixty (60) days of the Closing Date, Agent shall have received
evidence, in form and substance satisfactory to Agent, that all M&T Accounts have been closed;




          (d) Within thirty (30) days of the Closing Date, with respect to each Deposit
Account and Securities Account maintained by any Borrower or any Guarantor (other than (i) any
Player’s Trust Account, (ii) any payroll account, (iii) to the extent Borrowers are in compliance
with Section 3.3(c), any
M&T Accounts, and (iv) any L/C Collateral Account), Agent shall have received either a Control
Agreement covering such Deposit Account or Securities Account, or evidence, in form and substance
satisfactory to Agent, that such Deposit Account or Securities Account has been closed;




          (e) Borrowers shall use best efforts to deliver to Agent, within thirty (30) days
of Borrowers’ receipt of a written request by Agent, a source escrow agreement, in form and
substance




20









 







satisfactory to Agent, duly executed by Borrowers and Borrowers’ outside vendor
responsible for maintaining Borrowers’ electronic records, intellectual property, and other assets;




          (f) Within twelve (12) months of the Closing Date, Borrowers shall have satisfied
the other conditions subsequent set forth on Schedule 3.3(f); and




          (g) Within ten (10) days of the Closing Date, Borrowers shall cause lender’s loss
payee endorsements and additional insured endorsements with respect to Borrowers’ and their
Subsidiaries insurance policies covering the Collateral to be delivered to Agent, which
endorsements shall be in form and substance satisfactory to Lender.




     3.4 Term. This Agreement shall continue in full force and effect for a term ending on
July 27, 2010 (the “Maturity Date”). The foregoing notwithstanding, the Lender Group, upon
the election of the Required Lenders, shall have the right to terminate its Commitments under this
Agreement immediately and without notice upon the occurrence and during the continuation of an
Event of Default.



     3.5 Effect of Termination. On the date of termination of this Agreement, all
Obligations (including contingent reimbursement obligations of Borrowers with respect to
outstanding Letters of Credit and including all Bank Product Obligations) immediately shall become
due and payable without notice or demand (including (a) either (i) providing cash collateral to be
held by Agent for the benefit of those Lenders with a Revolver Commitment in an amount equal to
105% of the Letter of Credit Usage, or (ii) causing the original Letters of Credit to be returned
to the Issuing Lender, and (b) providing cash collateral (in an amount determined by Agent as
sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit
of the Bank Product Providers with respect to the Bank Product Obligations). No termination of
this Agreement, however, shall relieve or discharge Borrowers or their Subsidiaries of their
duties, Obligations, or covenants hereunder or under any other Loan Document and the Agent’s Liens
in the Collateral shall remain in effect until all Obligations have been paid in full and the
Lender Group’s obligations to provide additional credit hereunder have been terminated. When this
Agreement has been terminated and all of the Obligations have been paid in full and the Lender
Group’s obligations to provide additional credit under the Loan Documents have been terminated
irrevocably, Agent will, at Borrowers’ sole expense, execute and deliver any termination
statements, lien releases, mortgage releases, re-assignments of trademarks, discharges of security
interests, and other similar discharge or release documents (and, if applicable, in recordable
form) as are reasonably necessary to release, as of record, the Agent’s Liens and all notices of
security interests and liens previously filed by Agent with respect to the Obligations.



     3.6 Early Termination by Borrowers. Borrowers have the option, at any time upon 10
Business Days prior written notice by Administrative Borrower to Agent, to terminate this Agreement
and terminate the Commitments hereunder by paying to Agent, in cash, the Obligations (including (a)
either (i) providing cash collateral to be held by Agent for the benefit of those Lenders with a
Revolver Commitment in an amount equal to 105% of the Letter of Credit Usage, or (ii) causing the
original Letters of Credit to be returned to the Issuing Lender, and (b) providing cash collateral
(in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit
exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the
Bank Product Obligations), in full. If Administrative Borrower has sent a notice of termination
pursuant to the provisions of this Section, then the Commitments shall terminate on the date set
forth as the date of termination of this Agreement in such notice and Borrowers shall be obligated
to repay the Obligations (including (a) either (i) providing cash collateral to be held by Agent
for the benefit of those Lenders with a Revolver Commitment in an amount equal to 105% of the
Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to the Issuing Lender, and (b) providing
cash collateral (in an amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to
the Bank Product Obligations), in full, on the date set forth as the date of termination of this
Agreement in such notice. Notwithstanding anything contained in this Section 3.6 to the
contrary, so long as no Default or Event of Default exists, Administrative Borrower in any twelve
(12) month period may rescind one (1) such written notice given to Agent by



21









 




Administrative Borrower
pursuant to this Section 3.6 at any time up to twenty-four (24) hours prior to the
termination date set forth in any such notice; provided, however, after any such
rescission, Borrowers may only terminate this Agreement pursuant to this Section 3.6 by
satisfying the terms and conditions set forth in this Section 3.6, including, without
limitation, providing 10 Business Days prior written notice.




4. REPRESENTATIONS AND WARRANTIES.




          In order to induce the Lender Group to enter into this Agreement, each Borrower makes the
following representations and warranties to the Lender Group which shall be true, correct, and
complete, in all material respects, as of the date hereof, and shall be true, correct, and
complete, in all material respects, as of the Closing Date, and at and as of the date of the making
of each Advance (or other extension of credit) made thereafter, as though made on and as of the
date of such Advance (or other extension of credit) (except to the extent that such representations
and warranties relate solely to an earlier date) and such representations and warranties shall
survive the execution and delivery of this Agreement:




     4.1 No Encumbrances. Each Borrower and its Operating Subsidiaries has good and
indefeasible title to, or a valid leasehold interest in, their personal property assets and good
and marketable title to, or a valid leasehold interest in, their Real Property, in each case, free
and clear of Liens except for Permitted Liens.



     4.2 Intentionally Omitted.




     4.3 Intentionally Omitted.




     4.4 Equipment. Each material item of Equipment of Borrowers and their Operating
Subsidiaries is used or held for use in their business and is in good working order, ordinary wear
and tear and damage by casualty excepted.



     4.5 Location of Inventory and Equipment. The Inventory and Equipment (other than
vehicles or Equipment out for repair) of Borrowers and their Operating Subsidiaries are not stored
with a bailee, warehouseman, or similar party and are located only at, or in-transit between, the
locations identified on Schedule 4.5 (as such Schedule may be updated pursuant to
Section 5.9).



     4.6 Inventory Records. Each Borrower keeps correct and accurate records itemizing and
describing the type, quality, and quantity of its and its Operating Subsidiaries’ Inventory and the
book value thereof.



     4.7 Jurisdiction of Organization; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims.



          (a) The name of (within the meaning of Section 9-503 of the Code) and jurisdiction
of organization of each Borrower and each of its Subsidiaries is set forth on Schedule
4.7(a) (as such Schedule may be updated from time to time to reflect changes permitted to be
made under Section 6.5).




          (b) The chief executive office of each Borrower and each of its Subsidiaries is
located at the address indicated on Schedule 4.7(b) (as such Schedule may be updated from
time to time to reflect changes permitted to be made under Section 5.9).




          (c) Each Borrower’s and each of its Subsidiaries’ tax identification numbers and
organizational identification numbers, if any, are identified on Schedule 4.7(c) (as such
Schedule may be updated from time to time to reflect changes permitted to be made under Section
6.5).





22









 








          (d) As of the Closing Date, Borrowers and their Subsidiaries have not filed and
completed service of process in connection with any commercial tort claims, except as set forth on
Schedule 4.7(d).




     4.8 Due Organization and Qualification; Subsidiaries.



          (a) Each Borrower is duly organized and existing and in good standing under the
laws of the jurisdiction of its organization and qualified to do business in any state where the
failure to be so qualified reasonably could be expected to result in a Material Adverse Change.




          (b) Set forth on Schedule 4.8(b) (as such Schedule may be updated from
time to time to reflect changes permitted to be made under Section 5.16), is a complete and
accurate description of the authorized capital Stock of each Borrower, by class, and, as of the
Closing Date, a description of the number of shares of each such class that are issued and
outstanding. Other than as described on Schedule 4.8(b), there are no subscriptions,
options, warrants, or calls relating to any shares of each Borrower’s capital Stock, including any
right of conversion or exchange under any outstanding security or other instrument. No Borrower is
subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire
any shares of its capital Stock or any security convertible into or exchangeable for any of its
capital Stock.




          (c) Set forth on Schedule 4.8(c) (as such Schedule may be updated from
time to time to reflect changes permitted to be made under Section 5.16), is a complete and
accurate list of each Borrower’s direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization, (ii) the number of shares of each class of common and preferred Stock
authorized for each of such Subsidiaries, and (iii) the number and the percentage of the
outstanding shares of each such class owned directly or indirectly by the applicable Borrower. All
of the outstanding capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable.




          (d) Except as set forth on Schedule 4.8(c), there are no subscriptions,
options, warrants, or calls relating to any shares of any Borrower’s Subsidiaries’ capital Stock,
including any right of conversion or exchange under any outstanding security or other instrument.
No Borrower or any of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any Borrower’s Subsidiaries’
capital Stock or any security convertible into or exchangeable for any such capital Stock.




     4.9 Due Authorization; No Conflict.



          (a) As to each Borrower, the execution, delivery, and performance by such Borrower
of this Agreement and the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Borrower.




          (b) As to each Borrower, the execution, delivery, and performance by such Borrower
of this Agreement and the other Loan Documents to which it is a party do not and will not (i)
violate any provision of federal, state, or local law or regulation applicable to any Borrower, the
Governing Documents of any Borrower, or any order, judgment, or decree of any court or other
Governmental Authority binding on any Borrower, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any material contractual
obligation of any Borrower, (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of Borrower, other than Permitted Liens, or
(iv) require any approval of any Borrower’s interestholders or any approval or consent of
any Person under any material contractual obligation of any Borrower, other than consents or
approvals that have been obtained and that are still in force and effect.




23









 








          (c) Other than the filing of financing statements, the recordation of the
Mortgages, and other filings or actions necessary to perfect Liens granted to Agent in the
Collateral, the execution, delivery, and performance by each Borrower of this Agreement and the
other Loan Documents to which such Borrower is a party do not and will not require any registration
with, consent, or approval of, or notice to, or other action with or by, any Governmental
Authority, other than consents or approvals that have been obtained and that are still in force and
effect.




          (d) As to each Borrower, this Agreement and the other Loan Documents to which such
Borrower is a party, and all other documents contemplated hereby and thereby, when executed and
delivered by such Borrower will be the legally valid and binding obligations of such Borrower,
enforceable against such Borrower in accordance with their respective terms, except as enforcement
may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or
similar laws relating to or limiting creditors’ rights generally.




          (e) The Agent’s Liens are validly created, perfected (other than (i) in respect of
motor vehicles and (ii) any Deposit Accounts and Securities Accounts not subject to a Control
Agreement as permitted by Section 6.12, and subject only to the filing of financing
statements and the recordation of the Mortgages), and first priority Liens, subject only to
Permitted Liens.




          (f) The execution, delivery, and performance by each Guarantor of the Loan
Documents to which it is a party have been duly authorized by all necessary action on the part of
such Guarantor.




          (g) The execution, delivery, and performance by each Guarantor of the Loan
Documents to which it is a party do not and will not (i) violate any provision of federal, state,
or local law or regulation applicable to such Guarantor, the Governing Documents of such Guarantor,
or any order, judgment, or decree of any court or other Governmental Authority binding on such
Guarantor, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of
time or both) a default under any material contractual obligation of such Guarantor, (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of such Guarantor, other than Permitted Liens, or (iv) require any approval of such
Guarantor’s interestholders or any approval or consent of any Person under any material contractual
obligation of such Guarantor, other than consents or approvals that have been obtained and that are
still in force and effect.




          (h) Other than the filing of financing statements and the recordation of the
Mortgages, and other filings or actions necessary to perfect Liens granted to Agent in the
Collateral, the execution, delivery, and performance by each Guarantor of the Loan Documents to
which such Guarantor is a party do not and will not require any registration with, consent, or
approval of, or notice to, or other action with or by, any Governmental Authority, other than
consents or approvals that have been obtained and that are still in force and effect.




          (i) The Loan Documents to which each Guarantor is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Guarantor will be the legally
valid and binding obligations of such Guarantor, enforceable against such Guarantor in accordance
with their respective terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors’ rights generally.




     4.10 Litigation. Other than those matters disclosed on Schedule 4.10 and
other than matters arising after the Closing Date that reasonably could not be expected to result
in a Material Adverse Change,
there are no actions, suits, or proceedings pending or, to the best knowledge of each
Borrower, threatened against any Borrower or any of its Subsidiaries.



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     4.11 No Material Adverse Change. All financial statements relating to Borrowers and
their Subsidiaries that have been delivered by Borrowers to the Lender Group have been prepared in
accordance with GAAP (except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and present fairly in all material
respects, Borrowers’ and their Subsidiaries’ financial condition as of the date thereof and results
of operations for the period then ended; provided, however, that this Section 4.11 shall only apply
with respect to (i) United Tote, (ii) IRG Services, Inc., (iii) International Racing Group N.V.,
and (iv) United Tote Canada, Inc. from and after the date of their respective acquisitions by
Parent. There has not been a Material Adverse Change with respect to Borrowers and their
Subsidiaries since March 31, 2006.



     4.12 Fraudulent Transfer.




          (a) Each Borrower and each Operating Subsidiary of a Borrower is Solvent.




          (b) No transfer of property is being made by any Borrower or any Subsidiary of a
Borrower and no obligation is being incurred by any Borrower or any Subsidiary of a Borrower in
connection with the transactions contemplated by this Agreement or the other Loan Documents with
the intent to hinder, delay, or defraud either present or future creditors of Borrowers or their
Subsidiaries.




     4.13 Employee Benefits. None of Borrowers, any of their Subsidiaries, or any of their
ERISA Affiliates maintains or contributes to any Benefit Plan.



     4.14 Environmental Condition. Except as set forth on Schedule 4.14, (a) to
Borrowers’ knowledge, none of Borrowers’ or their Operating Subsidiaries’ properties or assets has
ever been used by Borrowers, their Operating Subsidiaries, or by previous owners or operators in
the disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous
Materials, where such use, production, storage, handling, treatment, release or transport was in
violation, in any material respect, of any applicable Environmental Law, (b) to Borrowers’
knowledge, none of Borrowers’ nor their Operating Subsidiaries’ properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection statute as a
Hazardous Materials disposal site, (c) none of Borrowers nor any of their Operating Subsidiaries
have received notice that a Lien arising under any Environmental Law has attached to any revenues
or to any Real Property owned or operated by Borrowers or their Operating Subsidiaries, and (d)
none of Borrowers nor any of their Operating Subsidiaries have received a summons, citation,
notice, or directive from the United States Environmental Protection Agency or any other federal or
state governmental agency concerning any action or omission by any Borrower or any Operating
Subsidiary of a Borrower resulting in the releasing or disposing of Hazardous Materials into the
environment.



     4.15 Intellectual Property. Each Borrower and each Operating Subsidiary of a Borrower
owns, or holds licenses in, all trademarks, trade names, copyrights, patents, patent rights, and
licenses that are necessary to the conduct of its business as currently conducted, and attached
hereto as Schedule 4.15 (as updated from time to time) is a true, correct, and complete
listing of all material patents, patent applications, trademarks, trademark applications,
copyrights, and copyright registrations as to which each Borrower or one of its Operating
Subsidiaries is the owner or is an exclusive licensee; provided, however, that
Borrowers may amend Schedule 4.15 to add additional property so long as such amendment
occurs by written notice to Agent: (a) not more than 5 days after the date on which a Borrower or
any Subsidiary of a Borrower acquires any such property (other than with respect to registered
copyrights) after the Closing Date; and (b) not less than 10 days before the date on which a
Borrower or any Subsidiary of a Borrower acquires any registered copyrights or takes steps to
register any of their pre-existing copyrights after the Closing Date.



     4.16 Leases. Borrowers and their Operating Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which they are parties or
under which they are operating and all of such material leases are valid and subsisting and no
material default by Borrowers or their Operating Subsidiaries exists under any of them.



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     4.17 Deposit Accounts and Securities Accounts. Set forth on Schedule 4.17 is
a listing of all of Borrowers’ and their Operating Subsidiaries’ Deposit Accounts and Securities
Accounts, including, with respect to each bank or securities intermediary (a) the name and address
of such Person, and (b) the account numbers of the Deposit Accounts or Securities Accounts
maintained with such Person.



     4.18 Complete Disclosure. All factual information (taken as a whole) furnished by or
on behalf of Borrowers or their Subsidiaries in writing to Agent or any Lender (including all
information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in
connection with this Agreement, the other Loan Documents, or any transaction contemplated herein or
therein is, and all other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrowers or their Subsidiaries in writing to Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such information (taken as a
whole) not misleading in any material respect at such time in light of the circumstances under
which such information was provided. On the Closing Date, the Closing Date Projections represent,
and as of the date on which any other Projections are delivered to Agent, such additional
Projections represent Borrowers’ good faith estimate of their and their Subsidiaries’ future
performance for the periods covered thereby based upon assumptions believed by Borrowers to be
reasonable at the time of the delivery thereof to Agent (it being understood that such projections
and forecasts are subject to uncertainties and contingencies, many of which are beyond the control
of Borrowers and their Subsidiaries and no assurances can be given that such projections or
forecasts will be realized).



     4.19 Indebtedness. Set forth on Schedule 4.19 and Schedule 6.1, along
with the Indebtedness evidenced by the Seller Notes, is a true and complete list of all
Indebtedness of each Borrower and each Operating Subsidiary of a Borrower outstanding immediately
prior to the Closing Date that is to remain outstanding after the Closing Date and such Schedule
accurately sets forth the aggregate principal amount of such Indebtedness and the principal terms
thereof.



5. AFFIRMATIVE COVENANTS.




          Each Borrower covenants and agrees that, until termination of all of the Commitments and
payment in full of the Obligations, Borrowers shall and shall cause each of their respective
Operating Subsidiaries to do all of the following:




     5.1 Accounting System. Maintain a system of accounting that enables Borrowers to
produce financial statements in accordance with GAAP and maintain records pertaining to the
Collateral that contain information as from time to time reasonably may be requested by Agent.
Borrowers also shall keep a reporting system that shows all additions, sales, claims, returns, and
allowances with respect to their and their Subsidiaries’ sales.



     5.2 Collateral Reporting. Provide Agent (and if so requested by Agent, with copies
for each Lender) with each of the reports set forth on Schedule 5.2 at the times specified
therein.



     5.3 Financial Statements, Reports, Certificates. Deliver to Agent, with copies to
each Lender, each of the financial statements, reports, or other items set forth on Schedule
5.3 at the times specified therein. In addition, Parent agrees that no Subsidiary of Parent
will have a fiscal year different from that of Parent.



     5.4 Guarantor Reports. Cause each Guarantor to deliver its annual financial
statements at the time when Parent provides its audited financial statements to Agent, but only to
the extent such Guarantor’s financial statements are not consolidated with Parent’s financial
statements.



     5.5 Inspection. Permit Agent, each Lender, and each of their duly authorized
representatives or agents to visit any of its properties and inspect any of its assets or books and
records, to examine and make copies of its books and records, and to discuss its affairs, finances,
and accounts with, and to be advised as to



26









 




the same by, its officers and employees at such
reasonable times and intervals as Agent or any such Lender may designate and, so long as no Default
or Event of Default exists, with reasonable prior notice to Administrative Borrower.




     5.6 Maintenance of Properties. Maintain and preserve all of their properties which
are necessary or useful in the proper conduct of their business in good working order and
condition, ordinary wear, tear, and casualty excepted (and except where the failure to do so could
not be expected to result in a Material Adverse Change), and comply at all times with the
provisions of all material leases to which it is a party as lessee, so as to prevent any loss or
forfeiture thereof or thereunder.



     5.7 Taxes. Cause all assessments and taxes, whether real, personal, or otherwise, due
or payable by, or imposed, levied, or assessed against Borrowers, their Subsidiaries, or any of
their respective assets to be paid in full, before delinquency or before the expiration of any
extension period, except to the extent that the validity of such assessment or tax shall be the
subject of a Permitted Protest. Borrowers will and will cause their Subsidiaries to make timely
payment or deposit of all tax payments and withholding taxes required of them by applicable laws,
including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof satisfactory to Agent indicating
that the applicable Borrower or Subsidiary of a Borrower has made such payments or deposits.



     5.8 Insurance.



          (a) At Borrowers’ expense, maintain insurance respecting their and their
Subsidiaries’ assets wherever located, covering loss or damage by fire, theft, explosion, and all
other hazards and risks as ordinarily are insured against by other Persons engaged in the same or
similar businesses. Borrowers also shall maintain business interruption, public liability, and
product liability insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation. All such policies of insurance shall be in such amounts and with such insurance
companies as are reasonably satisfactory to Agent. Borrowers shall deliver copies of all such
policies to Agent with an endorsement naming Agent as the sole loss payee (under a satisfactory
lender’s loss payable endorsement) or additional insured, as appropriate. Each policy of insurance
or endorsement shall contain a clause requiring the insurer to give not less than 30 days prior
written notice to Agent in the event of cancellation of the policy for any reason whatsoever.




          (b) Administrative Borrower shall give Agent prompt notice of any loss exceeding
$250,000 covered by such insurance. So long as no Event of Default has occurred and is continuing,
Borrowers shall have the exclusive right to adjust any losses payable under any such insurance
policies which are less than $250,000. Following the occurrence and during the continuation of an
Event of Default, or in the case of any losses payable under such insurance exceeding $250,000,
Agent shall have the exclusive right to adjust any losses payable under any such insurance
policies, without any liability to Borrowers whatsoever in respect of such adjustments.




     5.9 Location of Inventory and Equipment. Keep Borrowers’ and their Subsidiaries’
Inventory and Equipment (other than vehicles and Equipment out for repair) only at the locations
identified on Schedule 4.5 and their chief executive offices only at the locations
identified on Schedule 4.7(b); provided, however, that Administrative
Borrower may amend Schedule 4.5 or Schedule 4.7 so long as such amendment occurs by
written notice to Agent: (a) not less than 30 days prior to the date such chief executive office is
relocated; and (b) not more than 3 days after the date on which such Inventory or Equipment is
moved to such
new location; so long as, in each case, such new location is within the continental United
States, and so long as, at the time of such written notification, the applicable Borrower provides
Agent a Collateral Access Agreement with respect thereto.



     5.10 Compliance with Laws. Comply with the requirements of all applicable laws,
rules, regulations, and orders of any Governmental Authority, other than laws, rules, regulations,
and orders the non-



27









 




compliance with which, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Change.




     5.11 Leases. Pay when due all rents and other amounts payable under any material
leases to which any Borrower or any Subsidiary of a Borrower is a party or by which any Borrower’s
or any of its Subsidiaries’ properties and assets are bound, unless such payments are the subject
of a Permitted Protest.



     5.12 Existence. At all times preserve and keep in full force and effect each
Borrower’s and each of its Subsidiaries’, valid existence and good standing and, except as could
not reasonably be expected to result in a Material Adverse Change, any rights, franchises, permits,
licenses, accreditations, authorizations, or other approvals material to their businesses.



     5.13 Environmental.



          (a) Keep any property either owned or operated by any Borrower or any Subsidiary
of a Borrower free of any Environmental Liens or post bonds or other financial assurances
sufficient to satisfy the obligations or liability evidenced by such Environmental Liens, (b)
comply, in all material respects, with Environmental Laws and provide to Agent documentation of
such compliance which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity from or onto property owned or operated by any
Borrower or any Subsidiary of a Borrower and take any Remedial Actions required to abate said
release or otherwise to come into compliance with applicable Environmental Law, and (d) promptly,
but in any event within 5 days of its receipt thereof, provide Agent with written notice of any of
the following: (i) notice that an Environmental Lien has been filed against any of the real or
personal property of any Borrower or any Subsidiary of a Borrower, (ii) commencement of any
Environmental Action or notice that an Environmental Action will be filed against any Borrower or
any Subsidiary of a Borrower, and (iii) notice of a violation, citation, or other administrative
order which reasonably could be expected to result in a Material Adverse Change.




     5.14 Disclosure Updates. Promptly and in no event later than 5 Business Days after
obtaining knowledge thereof, notify Agent if any written information, exhibit, or report furnished
to the Lender Group contained, at the time it was furnished, any untrue statement of a material
fact or omitted to state any material fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not cure or remedy the
effect of the prior untrue statement of a material fact or omission of any material fact nor shall
any such notification have the effect of amending or modifying this Agreement or any of the
Schedules hereto.



     5.15 Control Agreements. Take all reasonable steps in order for Agent to obtain
control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the Code with respect
to (subject to the proviso contained in Section 6.12) all of its Securities Accounts and
Deposit Accounts (other than (a) any Player’s Trust Account, (b) any payroll account, (c) to the
extent Borrowers are in compliance with Section 3.3(c), any M&T Accounts, and (d) any L/C
Collateral Account), electronic chattel paper, investment property, and letter-of-credit rights.



     5.16 Formation of Subsidiaries. At the time that any Borrower or any Guarantor forms
any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Closing
Date, such Borrower or such Guarantor shall (a) with respect to any new Domestic Subsidiaries,
cause such new Domestic
Subsidiary to provide to Agent a joinder to the Guaranty and the Security Agreement, together
with such other security documents (including Mortgages with respect to any Real Property of such
new Domestic Subsidiary), as well as appropriate financing statements (and with respect to all
property subject to a Mortgage, fixture filings), all in form and substance satisfactory to Agent
(including being sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in
and to the assets of such newly formed or acquired Domestic Subsidiary), (b) provide to Agent a
pledge agreement and appropriate certificates and powers or financing



28









 




statements, hypothecating (i)
in the case of a Domestic Subsidiary, all of the direct or beneficial ownership interest in such
new Domestic Subsidiary, or (ii) in the case of any Subsidiary that is not a Domestic Subsidiary,
sixty-five percent (65%) of the direct or beneficial ownership in such new Subsidiary, in either
case, in form and substance satisfactory to Agent, and (c) provide to Agent all other
documentation, including one or more opinions of counsel satisfactory to Agent, which in its
opinion is appropriate with respect to the execution and delivery of the applicable documentation
referred to above (including policies of title insurance or other documentation with respect to all
property subject to a Mortgage); provided, however, that this Section 5.16 shall
not apply with respect to any Subsidiary formed by any Borrower or Guarantor after the Closing Date
to the extent such Subsidiary does not hold material assets or generate material revenue, as
determined by Agent in its absolute and sole discretion. Any document, agreement, or instrument
executed or issued pursuant to this Section 5.16 shall be a Loan Document. The provisions
of this Section 5.16 shall not be deemed to be implied consent to any action otherwise
prohibited by the terms and conditions of this Agreement.




     5.17 Further Assurances. At any time upon the request of Agent, Borrowers shall
execute or deliver to Agent, and shall cause their Subsidiaries to execute or deliver to Agent, any
and all financing statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, mortgages, deeds of trust, opinions of counsel, and all
other documents (collectively, the “Additional Documents”) that Agent may request in form
and substance reasonably satisfactory to Agent, to create, perfect, and continue perfected or to
better perfect the Agent’s Liens in all of the properties and assets of Borrowers and their
Subsidiaries (whether now owned or hereafter arising or acquired, tangible or intangible, real or
personal), to create and perfect Liens in favor of Agent in any Real Property acquired by Borrowers
or their Subsidiaries after the Closing Date, and in order to fully consummate all of the
transactions contemplated hereby and under the other Loan Documents. To the maximum extent
permitted by applicable law, Borrowers authorize Agent to execute any such Additional Documents in
Borrowers’ or their Subsidiaries’ names, as applicable, and authorizes Agent to file such executed
Additional Documents in any appropriate filing office.



6. NEGATIVE COVENANTS.




          Each Borrower covenants and agrees that, until termination of all of the Commitments and
payment in full of the Obligations, Borrowers will not and will not permit any of their respective
Subsidiaries to do any of the following:




     6.1 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any Indebtedness, except:



          (a) Indebtedness evidenced by this Agreement and the other Loan Documents,
together with Indebtedness owed to Underlying Issuers with respect to Underlying Letters of Credit,




          (b) Indebtedness set forth on Schedule 4.19 and any Refinancing
Indebtedness in respect of such Indebtedness,




          (c) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in
respect of such Indebtedness,




          (d) endorsement of instruments or other payment items for deposit,




          (e) Indebtedness comprising Permitted Investments,




          (f) Indebtedness arising under the Seller Notes; provided,
however, Parent and its Subsidiaries may not make any payments on account of such
Indebtedness unless such payment is permitted under the terms of the Subordination Agreement, and




29









 








          (g) Indebtedness set forth on Schedule 6.1.




     6.2 Liens. Create, incur, assume, or suffer to exist, directly or indirectly, any
Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired,
or any income or profits therefrom, except for Permitted Liens.



     6.3 Restrictions on Fundamental Changes.



          (a) Enter into any merger, consolidation, reorganization, or recapitalization, or
reclassify its Stock; provided, however, upon prior written notice to Agent:




               (i) a Subsidiary of any Borrower may merge into or with or consolidate with a
Borrower so long as (A) such Borrower is the surviving entity with respect thereto and continues to
be an organization of the type, domiciled in the state and bearing the same corporate name as
existed prior to such merger or consolidation, (B) no Default or Event of Default then exists or
would occur as a result of such merger or consolidation, (C) no liens, other than those permitted
under the terms of this Agreement with regard to a Borrower, on the assets of such Subsidiary then
exist, and (D) such Borrower would not, as a result of such transaction, be liable for any
Indebtedness or other obligations of such Subsidiary, other than Indebtedness or other obligations
which are permitted under the terms of this Agreement with regard to a Borrower;



               (ii) a Guarantor may merge into or with or consolidate with another Guarantor so
long as no Default or Event of Default then exists or would occur as a result of such merger or
consolidation; and



               (iii) a Subsidiary of any Borrower which is not a Guarantor or a Borrower may
merge into or with or consolidate with another Subsidiary of any Borrower which is not a Guarantor
or a Borrower so long as no Default or Event of Default then exists or would occur as a result of
such merger or consolidation,



          (b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution),




          (c) Suspend or go out of a substantial portion of its or their business.




     6.4 Disposal of Assets. Convey, sell, lease, license, assign, transfer, or otherwise
dispose of (or enter into an agreement to convey, sell, lease, license, assign, transfer, or
otherwise dispose of) any of the assets of any Borrowers or any Subsidiary of a Borrower, except
for (a) Permitted Dispositions, and (b) the sale by United Tote of the real property it owns in
Glen Rock, Pennsylvania (commonly known as 11505 Susquehanna Trail) so long as: (i) such sale is
consummated in a good faith, arm’s length transaction with a non-Affiliate of any Borrower or any
Guarantor; (ii) at the time of such sale, no Event of Default exists and is continuing or would
result therefrom; and (iii) the Net Cash Proceeds of such sale are remitted to Agent for
application to the outstanding principal balance of the Advances.



     6.5 Change Name. Change any Borrower’s or any of its Subsidiaries’ name,
organizational identification number, state of organization or organizational identity;
provided, however, that a Borrower or a Subsidiary of a Borrower may change its
name upon at least 30 days prior written notice by
Administrative Borrower to Agent of such change and so long as, at the time of such written
notification, such Borrower or such Subsidiary provides any financing statements necessary to
perfect and continue perfected the Agent’s Liens.



30









 





     6.6 Nature of Business. Make any change in the nature of their business as described
in Schedule 6.6 or acquire any properties or assets that are not reasonably related to the
conduct of such business activities.



     6.7 Prepayments and Amendments. Except in connection with Refinancing Indebtedness
permitted by Section 6.1,



          (a) optionally prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of any Borrower or any Subsidiary of a Borrower, other than the Obligations in
accordance with this Agreement,




          (b) make any payment on account of Indebtedness that has been contractually
subordinated in right of payment if such payment is not permitted at such time under the
subordination terms and conditions, or




          (c) directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any agreement, instrument, document, indenture, or other writing evidencing
or concerning Indebtedness permitted under Section 6.1(b), (c), (f), or
(g).




     6.8 Change of Control. Cause, permit, or suffer, directly or indirectly, any Change
of Control.



     6.9 Consignments. Consign any of their Inventory or sell any of their Inventory on
bill and hold, sale or return, sale on approval, or other conditional terms of sale.



     6.10 Distributions. Subject to Schedule 6.1 and Schedule 6.10, make any
distribution or declare or pay any dividends (in cash or other property, other than common Stock)
on, or purchase, acquire, redeem, or retire any of any Borrower’s Stock, of any class, whether now
or hereafter outstanding, except as required or permitted by Section 4 and Section 5 of the UT
Stockholders Agreement.



     6.11 Accounting Methods. Modify or change their fiscal year or their method of
accounting (other than as may be required to conform to GAAP) or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter entered into with any third party
accounting firm or service bureau for the preparation or storage of Borrowers’ or their
Subsidiaries’ accounting records without said accounting firm or service bureau agreeing to provide
Agent information regarding Borrowers’ and their Subsidiaries’ financial condition.



     6.12 Investments. Except for Permitted Investments, directly or indirectly, make or
acquire any Investment or incur any liabilities (including contingent obligations) for or in
connection with any Investment; provided, however, that (a) Administrative Borrower
and its Subsidiaries shall not have Permitted Investments in Deposit Accounts or Securities
Accounts (other than in (i) any Cash Management Account, (ii) any Player’s Trust Account, (iii) any
payroll account, (iv) to the extent Borrowers are in compliance with Section 3.3(c), any
M&T Account, and (v) any L/C Collateral Account) in an aggregate amount in excess of $10,000 at any
one time unless Administrative Borrower or its Subsidiary, as applicable, and the applicable
securities intermediary or bank have entered into Control Agreements governing such Permitted
Investments in order to perfect (and further establish) the Agent’s Liens in such Permitted
Investments, and (b) without limiting Borrowers’ obligations under Section 3.3(c), Administrative
Borrower and its Subsidiaries shall not have Permitted Investments in the M&T Accounts in an
aggregate amount in excess of $311,000 at any one time. Subject to the foregoing proviso,
Borrowers shall not and shall not permit their Subsidiaries to establish
or maintain any Deposit Account or Securities Account (other than (i) any Player’s Trust
Account, (ii) any payroll account, (iii) to the extent Borrowers are in compliance with Section
3.3(c), any M&T Account, or (iv) any L/C Collateral Account) unless Agent shall have received a
Control Agreement in respect of such Deposit Account or Securities Account.



31









 





     6.13 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any transaction with any Affiliate of any Borrower or any Subsidiary of a Borrower except
for:



          (a) transactions (other than the payment of management, consulting, monitoring, or
advisory fees) between Borrowers or their Subsidiaries, on the one hand, and any Affiliate of
Borrowers or their Subsidiaries, on the other hand, so long as such transactions (i) are upon fair
and reasonable terms, (ii) are fully disclosed to Agent if they involve one or more payments by any
Borrower or any of Subsidiary of a Borrower in excess of $150,000 for any single transaction or
series of transactions, and (iii) are no less favorable to Borrowers or their Subsidiaries, as
applicable, than would be obtained in an arm’s length transaction with a non-Affiliate;




          (b) the payment of reasonable fees, salary, consulting fees or other compensation,
or employee benefit arrangements to, and any indemnity provided for the benefit of, directors of
Parent in the ordinary course of business and consistent with industry practice; and




          (c) any such transactions with Affiliates that constitute Indebtedness permitted
under Section 6.1 or Investments permitted under Section 6.12.




     6.14 Use of Proceeds. Use the proceeds of the Advances and the Term Loan for any
purpose other than (a) on the Closing Date, (i) to repay, in full, the outstanding principal,
accrued interest, and accrued fees and expenses owing to Existing Lender, and (ii) to pay
transactional fees, costs, and expenses incurred in connection with this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and (b) thereafter, and subject to
the terms of this Agreement, for working capital purposes, to pay for capital improvements, and for
other lawful general corporate purposes permitted hereunder.



     6.15 Inventory and Equipment with Bailees. Store the Inventory or Equipment of
Borrowers or their Subsidiaries at any time now or hereafter with a bailee, warehouseman, or
similar party other than in the ordinary course of business consistent with past practices.



     6.16 Financial Covenants.



          (a) Minimum EBITDA. Fail to achieve EBITDA, measured on a fiscal quarter-end
basis, of at least the required amount set forth in the following table for the applicable period
set forth opposite thereto:




	 	 	 	 
	 

	 	 	 
	Applicable Amount

	 	Applicable Period	 
	$2,000,000

	 	For the 3 month period

ending September 30, 2006	 
	 
	 	 	 
	$4,000,000

	 	For the 6 month period

ending December 31, 2006	 
	 
	 	 	 
	$6,000,000

	 	For the 9 month period

ending March 31, 2007	 
	 
	 	 	 
	$11,000,000

	 	For the 12 month period

ending June 30, 2007	 
	 
	 	 	 
	$11,000,000

	 	For the 12 month period

ending September 30, 2007	 






32









 






	 	 	 	 
	Applicable Amount

	 	Applicable Period	 
	$11,000,000

	 	For the 12 month period

ending December 31, 2007	 
	 
	 	 	 
	$11,000,000

	 	For the 12 month period

ending March 31, 2008	 
	 
	 	 	 
	$11,000,000

	 	For the 12 month period

ending each fiscal quarter-end thereafter	 






          (b) Free Cash Flow. Fail to achieve Free Cash Flow, measured at the end of each fiscal year
of Parent for the one-year period then ended, of at least $1,000,000.




          (c) Leverage Ratio. Have a Leverage Ratio, measured on a fiscal quarter-end basis, of more
than the applicable ratio set forth in the following table for the applicable date set forth
opposite thereto:




	 	 	 	 
	 

	 	 	 
	Applicable Ratio

	 	Applicable Date	 
	2.5:1.0

	 	September 30, 2006	 
	 
	 	 	 
	2.0:1.0

	 	December 31, 2006	 
	 
	 	 	 
	2.0:1.0

	 	March 31, 2007	 
	 
	 	 	 
	1.75:1.0

	 	June 30, 2007	 
	 
	 	 	 
	1.25:1.0

	 	September 30, 2007	 
	 
	 	 	 
	1.0:1.0

	 	December 31, 2007, and each fiscal quarter-end
thereafter	 






          (d) Capital Expenditures. Make Capital Expenditures in any fiscal year in excess of the
amount set forth in the following table for the applicable period:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Fiscal Year 2009	 
	 	 	 	 	 	 	 	 	 	 	and each Fiscal	 
	Fiscal Year 2006	 	Fiscal Year 2007	 	 	Fiscal Year 2008	 	 	Year thereafter	 
	$4,250,000
	 	$3,000,000	 	 	$3,000,000	 	 	 	3,600,000	 






7. EVENTS OF DEFAULT.




          Any one or more of the following events shall constitute an event of default (each, an
“Event of Default”) under this Agreement:




     7.1 If Borrowers fail to pay when due and payable, or when declared due and payable, (a) all
or any portion of the Obligations consisting of interest, fees, or charges due the Lender Group,
reimbursement of Lender Group Expenses, or other amounts (other than any portion thereof
constituting principal) constituting Obligations (including any portion thereof that accrues after
the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole
or in part as a claim in any such Insolvency Proceeding),



33









 




and such failure continues for a period
of 3 Business Days, or (b) all or any portion of the principal of the Obligations;




     7.2 If Borrowers or any Subsidiary of any Borrower



          (a) fails to perform or observe any covenant or other agreement contained in any
of Sections 2.7, 5.2, 5.3, 5.4, 5.5, 5.8,
5.12, 5.14, 5.16, 5.17 and 6.1 through 6.16 of this
Agreement or Section 6 of the Security Agreement;




          (b) fails to perform or observe any covenant or other agreement contained in any of
Sections 5.6, 5.7, 5.9, 5.10, 5.11 and 5.15 of this
Agreement and such failure continues for a period of 10 Business Days after the earlier of (i) the
date on which such failure shall first become known to any Responsible Officer of any Borrower or
(ii) written notice thereof is given to Administrative Borrower by Agent; or




          (c) fails to perform or observe any covenant or other agreement contained in this
Agreement, or in any of the other Loan Documents, in each case, other than any such covenant or
agreement that is the subject of another provision of this Section 7 (in which event such
other provision of this Section 7 shall govern), and such failure continues for a period of
20 days after the earlier of (i) the date on which such failure shall first become known to any
Responsible Officer of any Borrower or (ii) written notice thereof is given to Administrative
Borrower by Agent;




          Agent, in its sole and absolute discretion, may provide Borrowers with extensions for any of
the above time frames and the failure to comply with the above time frames shall not constitute an
Event of Default to the extent Borrowers comply with the deadlines established by any such
extension given by Agent in writing.




     7.3 If any material portion of any Borrower’s or any of its Operating Subsidiaries’ assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the
possession of any third Person and the same is not discharged before the earlier of 30 days after
the date it first arises or 5 days prior to the date on which such property or asset is subject to
forfeiture by such Borrower or the applicable Operating Subsidiary;



     7.4 If an Insolvency Proceeding is commenced by any Borrower or any Subsidiary of a Borrower;




     7.5 If an Insolvency Proceeding is commenced against any Borrower or any Subsidiary of a
Borrower, and any of the following events occur: (a) the applicable Borrower or Subsidiary
consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing
the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency
Proceeding is not dismissed within 60 calendar days of the date of the filing thereof, (d) an
interim trustee is appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of, any Borrower or any
Subsidiary of a Borrower, or (e) an order for relief shall have been issued or entered therein;



     7.6 If any Borrower or any Operating Subsidiary of a Borrower is enjoined, restrained, or in
any way prevented by court order from continuing to conduct all or any material part of its
business affairs;



     7.7 If one or more judgments, orders, or awards involving an aggregate amount of $150,000, or
more (except to the extent fully covered by insurance pursuant to which the insurer has accepted
liability therefor in writing) shall be entered or filed against any Borrower or any Subsidiary of
any Borrower or with respect to any of their respective assets, and the same is not satisfied,
released, discharged, bonded against, or stayed pending appeal before the earlier of 30 days after
the date it first arises or 5 days prior to the date on which such asset is subject to being
forfeited by the applicable Borrower or the applicable Subsidiary;



34









 





     7.8 If there is a default in one or more agreements to which any Borrower or any Subsidiary of
a Borrower is a party with one or more third Persons relative to Indebtedness of any Borrower or
any Subsidiary of any Borrower involving an aggregate amount of $300,000 or more, and such default
(i) occurs at the final maturity of the obligations thereunder, or (ii) results in a right by such
third Person(s), irrespective of whether exercised, to accelerate the maturity of the applicable
Borrower’s or Subsidiary’s obligations thereunder;



     7.9 If any warranty, representation, statement, or Record made herein or in any other Loan
Document or delivered to Agent or any Lender in connection with this Agreement or any other Loan
Document proves to be untrue in any material respect (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are qualified or modified by
materiality in the text thereof) as of the date of issuance or making or deemed making thereof;



     7.10 If the obligation of any Guarantor under the Guaranty is limited or terminated by
operation of law or by such Guarantor, or any such Guarantor becomes the subject of an Insolvency
Proceeding;



     7.11 If the Security Agreement or any other Loan Document that purports to create a Lien,
shall, for any reason, fail or cease to create a valid and perfected and, except to the extent
permitted by the terms hereof or thereof, first priority Lien on or security interest in the
Collateral covered hereby or thereby, except as a result of a disposition of the applicable
Collateral in a transaction permitted under this Agreement; or



     7.12 Any provision of any Loan Document shall at any time for any reason be declared to be
null and void, or the validity or enforceability thereof shall be contested by any Borrower or any
Subsidiary of a Borrower, or a proceeding shall be commenced by any Borrower or any Subsidiary of a
Borrower, or by any Governmental Authority having jurisdiction over any Borrower or any Subsidiary
of a Borrower, seeking to establish the invalidity or unenforceability thereof, or any Borrower or
any Subsidiary of a Borrower shall deny that it has any liability or obligation purported to be
created under any Loan Document.



8. THE LENDER GROUP’S RIGHTS AND REMEDIES.




     8.1 Rights and Remedies. Upon the occurrence, and during the continuation, of an
Event of Default, the Required Lenders (at their election but without notice of their election and
without demand) may authorize and instruct Agent to do any one or more of the following on behalf
of the Lender Group (and Agent, acting upon the instructions of the Required Lenders, shall do the
same on behalf of the Lender Group), all of which are authorized by Borrowers:



          (a) Declare all or any portion of the Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable;




          (b) Cease advancing money or extending credit to or for the benefit of Borrowers
under this Agreement, under any of the Loan Documents, or under any other agreement between
Borrowers and the Lender Group;




          (c) Terminate this Agreement and any of the other Loan Documents as to any future
liability or obligation of the Lender Group, but without affecting any of the Agent’s Liens in the
Collateral and without affecting the Obligations; and




          (d) The Lender Group shall have all other rights and remedies available at law or
in equity or pursuant to any other Loan Document.



The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default
described in Section 7.4 or Section 7.5, in addition to the remedies set forth
above, without any notice to Borrowers or any other Person or any act by the Lender Group, the
Commitments shall automatically terminate and the Obligations then outstanding, together with all
accrued and unpaid interest thereon and all fees and all other

35









 








amounts due under this Agreement and
the other Loan Documents, shall automatically and immediately become due and payable, without
presentment, demand, protest, or notice of any kind, all of which are expressly waived by
Borrowers.




     8.2 Remedies Cumulative. The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender
Group shall have all other rights and remedies not inconsistent herewith as provided under the
Code, by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemed
an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing
waiver. No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it.



9. TAXES AND EXPENSES.




          If any Borrower fails to pay any monies (whether taxes, assessments, insurance premiums, or,
in the case of leased properties or assets, rents or other amounts payable under such leases) due
to third Persons, or fails to make any deposits or furnish any required proof of payment or
deposit, all as required under the terms of this Agreement, then, Agent, in its sole discretion and
without prior notice to any Borrower, may do any or all of the following: (a) make payment of the
same or any part thereof, (b) set up such reserves against the Maximum Revolver Amount as Agent
deems necessary to protect the Lender Group from the exposure created by such failure, or (c) in
the case of the failure to comply with Section 5.8 hereof, obtain and maintain insurance
policies of the type described in Section 5.8 and take any action with respect to such
policies as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender Group
Expenses and any such payments shall not constitute an agreement by the Lender Group to make
similar payments in the future or a waiver by the Lender Group of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such expense, tax, or
Lien and the receipt of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.




10. WAIVERS; INDEMNIFICATION.




     10.1 Demand; Protest; etc. Except as expressly provided herein, each Borrower waives
demand, protest, notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of
documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which
any such Borrower may in any way be liable.



     10.2 The Lender Group’s Liability for Collateral. Each Borrower hereby agrees that:
(a) so long as Agent complies with its obligations, if any, under the Code, the Lender Group shall
not in any way or manner be liable or responsible for: (i) the safekeeping of the Collateral, (ii)
any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the
Collateral shall be borne by Borrowers.



     10.3 Indemnification. Each Borrower shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons, and each Participant (each, an “Indemnified
Person”) harmless (to the fullest extent permitted by law) from and against any and all claims,
demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and
damages, and all reasonable fees and disbursements of attorneys, experts, or consultants and all
other costs and expenses actually incurred in connection therewith or in connection with the
enforcement of this indemnification (as and when they are incurred and irrespective of whether suit
is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in
connection with or as a result of or related to the execution, delivery, enforcement, performance,
or administration (including any restructuring or workout with respect hereto) of this Agreement,
any of the other Loan Documents, or the transactions contemplated hereby or thereby or the
monitoring of Borrowers’ and their Subsidiaries’ compliance with the terms of the Loan Documents,
(b) with respect to any investigation, litigation, or proceeding related to this Agreement, any
other Loan Document, or the use of the proceeds of the



36









 




credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in
any manner related thereto, and (c) in connection with or arising out of any presence or release of
Hazardous Materials at, on, under, to or from any assets or properties owned, leased or operated by
Parent or any of its Subsidiaries or any Environmental Actions, Environmental Liabilities and Costs
or Remedial Actions related in any way to any such assets or properties of Parent or any of its
Subsidiaries (each and all of the foregoing, the “Indemnified Liabilities”). The foregoing
to the contrary notwithstanding, Borrowers shall have no obligation to any Indemnified Person under
this Section 10.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of
such Indemnified Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations. If any Indemnified Person makes any payment to any other Indemnified
Person with respect to an Indemnified Liability as to which Borrowers were required to indemnify
the Indemnified Person receiving such payment, the Indemnified Person making such payment is
entitled to be indemnified and reimbursed by Borrowers with respect thereto. WITHOUT LIMITATION,
THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED
LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION
OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.




11. NOTICES.




          Unless otherwise provided in this Agreement, all notices or demands by Borrowers or Agent to
the other relating to this Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by first-class mail,
postage prepaid) shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as
Administrative Borrower or Agent, as applicable, may designate to each other in accordance
herewith), or telefacsimile to Borrowers in care of Administrative Borrower or to Agent, as the
case may be, at its address set forth below:




	 	 	 	 	 
	 

	 	If to Administrative Borrower:
	 	YOUBET.COM, INC.
	 

	 	 	 	5901 De Soto Avenue
	 

	 	 	 	Woodland Hills, California 91367
	 

	 	 	 	Attn: Gary Sproule, CFO; and Scott Solomon,
General Counsel
	 

	 	 	 	Fax No.: (818) 668-2101
	 
	 	 	 	 
	 

	 	with copies to:
	 	SIDLEY AUSTIN LLP
	 

	 	 	 	555 West Fifth Street, 40th Floor
	 

	 	 	 	Los Angeles, California 90013
	 

	 	 	 	Attn: Jennifer C. Hagle, Esq.
	 

	 	 	 	Fax No.: (213) 896-6600
	 
	 	 	 	 
	 

	 	If to Agent:
	 	WELLS FARGO FOOTHILL, INC.
	 

	 	 	 	2450 Colorado Avenue
	 

	 	 	 	Suite 3000 West
	 

	 	 	 	Santa Monica, California 90404
	 

	 	 	 	Attn: Business Finance Division Manager
	 

	 	 	 	Fax No. (310) 453-7413
	 
	 	 	 	 
	 

	 	with copies to:
	 	MAYER, BROWN, ROWE & MAW LLP
	 

	 	 	 	350 South Grand Avenue, 25th Floor
	 

	 	 	 	Los Angeles, California 90071
	 

	 	 	 	Attn: Marshall C. Stoddard, Jr., Esq.
	 

	 	 	 	Fax No. (213) 625-0248






37









 






          Agent and Borrowers may change the address at which they are to receive notices hereunder, by
notice in writing in the foregoing manner given to the other party. All notices or demands sent in
accordance with this Section 11, other than notices by Agent in connection with enforcement
rights against the Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail.
Each Borrower acknowledges and agrees that notices sent by the Lender Group in connection with the
exercise of enforcement rights against Collateral under the provisions of the Code shall be deemed
sent when deposited in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.




12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; CALIFORNIA JUDICIAL REFERENCE .




          (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY
PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES
HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA.




          (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND TO
THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE
OF CALIFORNIA; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
BORROWERS AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW,
ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR
TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
12(b).




          (c) IF ANY ACTION OR PROCEEDING IS FILED IN A COURT OF THE STATE OF CALIFORNIA BY
OR AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO AND EACH PARTY HERETO OR THERETO DOES NOT SUBSEQUENTLY
WAIVE IN AN EFFECTIVE MANNER UNDER CALIFORNIA LAW ITS RIGHT TO A TRIAL BY JURY, (a) THE COURT
SHALL, AND IS HEREBY DIRECTED TO, MAKE A GENERAL
REFERENCE PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638 TO A REFEREE OR REFEREES
TO HEAR AND DETERMINE ALL OF THE ISSUES IN SUCH ACTION OR PROCEEDING (WHETHER OF FACT OR OF LAW)
AND TO REPORT A STATEMENT OF DECISION, PROVIDED THAT ANY SUCH ISSUES PERTAINING TO A “PROVISIONAL
REMEDY” AS DEFINED IN CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1281.8 SHALL BE HEARD AND
DETERMINED BY THE COURT, AND (b) BORROWERS SHALL BE SOLELY RESPONSIBLE TO PAY ALL FEES AND EXPENSES
OF ANY REFEREE APPOINTED IN SUCH ACTION OR PROCEEDING.




          (d) BORROWERS AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT

38









 








CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWERS AND EACH MEMBER OF
THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.




13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.




     13.1 Assignments and Participations.



          (a) Any Lender may assign and delegate to one or more assignees (each an
“Assignee”) that are Eligible Transferees all or any portion, of the Obligations, the
Commitments and the other rights and obligations of such Lender hereunder and under the other Loan
Documents, in a minimum amount (unless waived by the Agent) of $5,000,000 (except such minimum
amount shall not apply to (x) an assignment or delegation by any Lender to any other Lender or an
Affiliate of any Lender or (y) a group of new Lenders, each of whom is an Affiliate of each other
or a fund or account managed by any such new Lender or an Affiliate of such new Lender to the
extent that the aggregate amount to be assigned to all such new Lenders is at least $5,000,000);
provided, however, that Borrowers and Agent may continue to deal solely and
directly with such Lender in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Administrative Borrower and Agent by
such Lender and the Assignee, (ii) such Lender and its Assignee have delivered to Administrative
Borrower and Agent an Assignment and Acceptance and Agent has notified the assigning Lender of its
receipt thereof in accordance with Section 13.1(b), and (iii) unless waived by the Agent,
the assigning Lender or Assignee has paid to Agent for Agent’s separate account a processing fee in
the amount of $3,500. Anything contained herein to the contrary notwithstanding, the payment of
any fees shall not be required and the Assignee need not be an Eligible Transferee if such
assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of
all or any substantial portion of the business or loan portfolio of the assigning Lender.




          (b) From and after the date that Agent notifies the assigning Lender (with a copy
to Administrative Borrower) that it has received an executed Assignment and Acceptance and, if
applicable, payment of the required processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder
and under the other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except with respect to Section 10.3 hereof) and be
released from any future obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations
under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto
and thereto), and such assignment shall effect a novation among Borrowers, the assigning
Lender, and the Assignee; provided, however, that nothing contained herein shall
release any assigning Lender from obligations that survive the termination of this Agreement,
including such assigning Lender’s obligations under Section 15 and Section 16.7(a)
of this Agreement.




          (c) By executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the Assignee thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning
Lender makes no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement
or any other Loan Document furnished pursuant hereto, (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of




39









 







their obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (iii) such Assignee confirms that
it has received a copy of this Agreement, together with such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter into such Assignment
and Acceptance, (iv) such Assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or not taking action
under this Agreement, (v) such Assignee appoints and authorizes Agent to take such actions and to
exercise such powers under this Agreement as are delegated to Agent, by the terms hereof, together
with such powers as are reasonably incidental thereto, and (vi) such Assignee agrees that it will
perform all of the obligations which by the terms of this Agreement are required to be performed by
it as a Lender.




          (d) Immediately upon Agent’s receipt of the required processing fee, if
applicable, and delivery of notice to the assigning Lender pursuant to Section 13.1(b),
this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to
reflect the addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Lender pro tanto.




          (e) Any Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons (a “Participant”) participating interests in all or any
portion of its Obligations, its Commitment, and the other rights and interests of that Lender (the
“Originating Lender”) hereunder and under the other Loan Documents; provided,
however, that (i) the Originating Lender shall remain a “Lender” for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the participating interest in
the Obligations, the Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and the
Originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the Originating
Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers,
Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender’s rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating interest under which the
Participant has the right to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would (A) extend the final
maturity date of the Obligations hereunder in which such Participant is participating, (B) reduce
the interest rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or guaranties (except to the
extent expressly provided herein or in any of the Loan Documents) supporting the Obligations
hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the
amount of, the interest or fees payable to such Participant through such Lender, or (E) change the
amount or due dates of scheduled principal repayments or prepayments or premiums, and (v) all
amounts payable by Borrowers hereunder shall be determined as if such Lender had not sold such
participation, except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the occurrence of an Event of
Default, each
Participant shall be deemed to have the right of set off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this Agreement. The rights of
any Participant only shall be derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrowers, the Collections of
Borrowers or their Subsidiaries, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of decisions by the Lenders
among themselves.




          (f) In connection with any such assignment or participation or proposed assignment
or participation, a Lender may, subject to the provisions of Section 16.7, disclose all
documents and information which it now or hereafter may have relating to Borrowers and their
Subsidiaries and their respective businesses.




40









 








          (g) Any other provision in this Agreement notwithstanding, any Lender may at any
time create a security interest in, or pledge, all or any portion of its rights under and interest
in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the
Federal Reserve Bank or U.S. Treasury Regulation 31 CFR § 203.24, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under applicable law.




          (h) Notwithstanding anything in this Agreement to the contrary, and so long as no
Event of Default exists and is continuing, no Lender may assign, delegate, or sell participation
interests in, any of the Obligations to any Ineligible Lending Institution without the prior
written consent of Administrative Borrower




     13.2 Successors. This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties; provided, however, that Borrowers
may not assign this Agreement or any rights or duties hereunder without the Lenders’ prior written
consent and any prohibited assignment shall be absolutely void ab initio. No consent to assignment
by the Lenders shall release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to
Section 13.1 hereof and, except as expressly required pursuant to Section 13.1
hereof, no consent or approval by any Borrower is required in connection with any such assignment.



14. AMENDMENTS; WAIVERS.




     14.1 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document (other than Bank Product Agreements or the Fee Letter), and no
consent with respect to any departure by Borrowers therefrom, shall be effective unless the same
shall be in writing and signed by the Required Lenders (or by Agent at the written request of the
Required Lenders) and Administrative Borrower (on behalf of all Borrowers) and then any such waiver
or consent shall be effective, but only in the specific instance and for the specific purpose for
which given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all of the Lenders directly affected thereby and Administrative
Borrower (on behalf of all Borrowers), do any of the following:



          (a) increase or extend any Commitment of any Lender,




          (b) postpone or delay any date fixed by this Agreement or any other Loan Document
for any payment of principal, interest, fees, or other amounts due hereunder or under any other
Loan Document,




          (c) reduce the principal of, or the rate of interest on, any loan or other
extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any
other Loan Document,




          (d) change the Pro Rata Share that is required to take any action hereunder,




          (e) amend or modify this Section or any provision of this Agreement providing for
consent or other action by all Lenders,




          (f) other than as permitted by Section 15.12, release Agent’s Lien in and
to any of the Collateral,




          (g) change the definition of “Required Lenders” or “Pro Rata Share”,




          (h) contractually subordinate any of the Agent’s Liens,




41









 








          (i) other than in connection with a merger, liquidation, dissolution or sale of
such Person expressly permitted by the terms hereof or the other Loan Documents, release any
Borrower or any Guarantor from any obligation for the payment of money,




          (j) amend any of the provisions of Section 2.4(b)(i) or (ii),




          (k) change the definitions of Loan Limit, Maximum Revolver Amount, Term Loan
Amount, or change Section 2.1(b), or




          (l) amend any of the provisions of Section 15.



and, provided further, however, that no amendment, waiver or consent shall, unless
in writing and signed by Agent, Issuing Lender, or Swing Lender, as applicable, affect the rights
or duties of Agent, Issuing Lender, or Swing Lender, as applicable, under this Agreement or any
other Loan Document. The foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement or any other Loan
Document that relates only to the relationship of the Lender Group among themselves, and that does
not affect the rights or obligations of Borrowers, shall not require consent by or the agreement of
Borrowers.




     14.2 Replacement of Holdout Lender.


         (a) If any action to be taken by the Lender Group or Agent hereunder requires the
unanimous consent, authorization, or agreement of all Lenders, and a Lender (“Holdout
Lender”) fails to give its consent, authorization, or agreement, then Agent, upon at least 5
Business Days prior irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a “Replacement Lender”), and the Holdout
Lender shall have no right to refuse to be replaced hereunder. Such notice to replace the Holdout
Lender shall specify an effective date for such replacement, which date shall not be later than 15
Business Days after the date such notice is given.



         (b) Prior to the effective date of such replacement, the Holdout Lender and each
Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the
Holdout Lender being repaid its share of the outstanding Obligations (including an assumption of
its Pro Rata Share of the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver any such Assignment
and Acceptance prior to the effective date of such replacement, the Holdout Lender shall be deemed
to have executed and delivered such Assignment and Acceptance. The replacement of any Holdout
Lender shall be made in accordance with the terms of Section 13.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other
rights and obligations of the Holdout Lender hereunder and under the other Loan Documents, the
Holdout Lender shall remain obligated to make the Holdout Lender’s Pro Rata Share of
Advances and to purchase a participation in each Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit.




     14.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to exercise
any right, remedy, or option under this Agreement or any other Loan Document, or delay by Agent or
any Lender in exercising the same, will operate as a waiver thereof. No waiver by Agent or any
Lender will be effective unless it is in writing, and then only to the extent specifically stated.
No waiver by Agent or any Lender on any occasion shall affect or diminish Agent’s and each Lender’s
rights thereafter to require strict performance by Borrowers of any provision of this Agreement.
Agent’s and each Lender’s rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Agent or any Lender may have.



15. AGENT; THE LENDER GROUP.





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     15.1 Appointment and Authorization of Agent. Each Lender hereby designates and
appoints WFF as its representative under this Agreement and the other Loan Documents and each
Lender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documents
on its behalf and to take such other action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Agent agrees to act as such on the express conditions
contained in this Section 15. The provisions of this Section 15 (other than the
proviso to Section 15.11(a)) are solely for the benefit of Agent, and the Lenders, and
Borrowers and their Subsidiaries shall have no rights as a third party beneficiary of any of the
provisions contained herein. Any provision to the contrary contained elsewhere in this Agreement
or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Agent; it being expressly understood and agreed that the use of the word
“Agent” is for convenience only, that WFF is merely the representative of the Lenders, and only has
the contractual duties set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or refraining from
exercising any discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan
Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan
Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to
exercise the following powers as long as this Agreement remains in effect: (a) maintain, in
accordance with its customary business practices, ledgers and records reflecting the status of the
Obligations, the Collateral, the Collections of Borrowers and their Subsidiaries, and related
matters, (b) execute or file any and all financing or similar statements or notices, amendments,
renewals, supplements, documents, instruments, proofs of claim, notices and other written
agreements with respect to the Loan Documents, (c) make Advances, for itself or on behalf of
Lenders as provided in the Loan Documents, (d) exclusively receive, apply, and distribute the
Collections of Borrowers and their Subsidiaries as provided in the Loan Documents, (e) open and
maintain such bank accounts and cash management arrangements as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the
Collateral and the Collections of Borrowers and their Subsidiaries, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect to Borrowers, the
Obligations, the Collateral, the Collections of Borrowers and their Subsidiaries, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to the Loan Documents.



     15.2 Delegation of Duties. Agent may execute any of its duties under this Agreement
or any other Loan Document by or through agents, employees or attorneys in fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall not be
responsible for the negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.



     15.3 Liability of Agent. None of the Agent Related Persons shall (a) be liable for
any action taken or omitted to be taken by any of them under or in connection with this Agreement
or any other Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders for
any recital, statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this Agreement or in
any other Loan Document, or in any certificate, report, statement or other document referred to or
provided for in, or received by Agent under or in connection with, this Agreement or any other Loan
Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be
under any obligation to any Lender to ascertain or to inquire as to the observance or performance
of any of the



43









 




agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the books and records or properties of Borrowers or the books or records or
properties of any of Borrowers’ Subsidiaries or Affiliates.




     15.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter,
telegram, telefacsimile or other electronic method of transmission, telex or telephone message,
statement or other document or conversation believed by it to be genuine and correct and to have
been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel to Borrowers or counsel to any Lender), independent accountants and
other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless Agent shall first receive such advice
or concurrence of the Lenders as it deems appropriate and until such instructions are received,
Agent shall act, or refrain from acting, as it deems advisable. If Agent so requests, it shall
first be indemnified to its reasonable satisfaction by the Lenders against any and all liability
and expense that may be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of the requisite
Lenders and such request and any action taken or failure to act pursuant thereto shall be binding
upon all of the Lenders.



     15.5 Notice of Default or Event of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except with respect to
defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for
the account of the Lenders and, except with respect to Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or Administrative Borrower
referring to this Agreement, describing such Default or Event of Default, and stating that such
notice is a “notice of default.” Agent promptly will notify the Lenders of its receipt of any such
notice or of any Event of Default of which Agent has actual knowledge. If any Lender obtains
actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and
Agent of such Event of Default. Each Lender shall be solely responsible for giving any notices to
its Participants, if any. Subject to Section 15.4, Agent shall take such action with
respect to such Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 8; provided, however, that unless and until Agent
has received any such request, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of Default as it shall deem
advisable.



     15.6 Credit Decision. Each Lender acknowledges that none of the Agent Related Persons
has made any representation or warranty to it, and that no act by Agent hereinafter taken,
including any review of the affairs of Borrowers and their Subsidiaries or Affiliates, shall be
deemed to constitute any representation or warranty by any Agent-Related Person to any Lender.
Each Lender represents to Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects, operations, property,
financial and other condition and creditworthiness of Borrowers and any other Person party to a
Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend credit to Borrowers.
Each Lender also represents that it will, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of Borrowers and any other Person party to a Loan Document. Except
for notices, reports, and other documents expressly herein required to be furnished to the Lenders
by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrowers and any other Person party to a Loan Document that may
come into the possession of any of the Agent Related Persons.



44









 





     15.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group
Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and
fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including
court costs, attorneys fees and expenses, fees and expenses of financial accountants, advisors,
consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral,
whether or not Borrowers are obligated to reimburse Agent or Lenders for such expenses pursuant to
this Agreement or otherwise. Agent is authorized and directed to deduct and retain sufficient
amounts from the Collections of Borrowers and their Subsidiaries received by Agent to reimburse
Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to
Lenders. In the event Agent is not reimbursed for such costs and expenses by Borrowers or their
Subsidiaries, each Lender hereby agrees that it is and shall be obligated to pay to Agent such
Lender’s Pro Rata Share thereof. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of Borrowers and without limiting the obligation of Borrowers to do so),
according to their Pro Rata Shares, from and against any and all Indemnified Liabilities;
provided, however, that no Lender shall be liable for the payment to any
Agent-Related Person of any portion of such Indemnified Liabilities resulting solely from such
Person’s gross negligence or willful misconduct nor shall any Lender be liable for the obligations
of any Defaulting Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such
Lender’s Pro Rata Share of any costs or out of pocket expenses (including attorneys, accountants,
advisors, and consultants fees and expenses) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all Obligations hereunder
and the resignation or replacement of Agent.



     15.8 Agent in Individual Capacity. WFF and its Affiliates may make loans to, issue
letters of credit for the account of, accept deposits from, acquire equity interests in, and
generally engage in any kind of banking, trust, financial advisory, underwriting, or other business
with Borrowers and their Subsidiaries and Affiliates and any other Person party to any Loan
Documents as though WFF were not Agent hereunder, and, in each case, without notice to or consent
of the other members of the Lender Group. The other members of the Lender Group acknowledge that,
pursuant to such activities, WFF or its Affiliates may receive information regarding Borrowers or
their Affiliates and any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver
Agent will use its reasonable best efforts to obtain), Agent shall not be under any obligation to
provide such information to them. The terms “Lender” and “Lenders” include WFF in its individual
capacity.



     15.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the Lenders
(unless such notice is waived by the Required Lenders). If Agent resigns under this Agreement, the
Required Lenders shall appoint a successor Agent for the Lenders. If no successor Agent is
appointed prior to the effective date of the resignation of Agent, Agent may appoint, after
consulting with the Lenders, a successor Agent. If Agent has materially breached or failed to
perform any material provision of this Agreement or of applicable law, the Required Lenders may
agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In any
such event, upon the acceptance of its appointment as successor Agent hereunder, such successor
Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term
“Agent” shall mean such successor Agent and the retiring Agent’s appointment, powers, and duties as
Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Section 15 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent’s notice of
resignation, the retiring Agent’s resignation shall nevertheless thereupon
become



45









 




effective and the Lenders shall perform all of the duties of Agent hereunder until such
time, if any, as the Lenders appoint a successor Agent as provided for above.




     15.10 Lender in Individual Capacity. Any Lender and its respective Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial advisory, underwriting,
or other business with Borrowers and their Subsidiaries and Affiliates and any other Person party
to any Loan Documents as though such Lender were not a Lender hereunder without notice to or
consent of the other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, such Lender and its respective Affiliates may
receive information regarding Borrowers or their Affiliates and any other Person party to any Loan
Documents that is subject to confidentiality obligations in favor of Borrowers or such other Person
and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge
that, in such circumstances (and in the absence of a waiver of such confidentiality obligations,
which waiver such Lender will use its reasonable best efforts to obtain), such Lender shall not be
under any obligation to provide such information to them. With respect to the Swing Loans and
Protective Advances, Swing Lender shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though it were not the sub-agent of Agent.



     15.11 Withholding Taxes.



          (a) All payments made by any Borrower hereunder or under any note or other Loan
Document will be made without setoff, counterclaim, or other defense. In addition, all such
payments will be made free and clear of, and without deduction or withholding for, any present or
future Taxes, and in the event any deduction or withholding of Taxes is required, each Borrower
shall comply with the penultimate sentence of this Section 15.11(a). “Taxes” shall mean,
any taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof
or therein with respect to such payments (but excluding any tax imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein measured by or based on the net
income or net profits of any Lender) and all interest, penalties or similar liabilities with
respect thereto. If any Taxes are so levied or imposed, each Borrower agrees to pay the full
amount of such Taxes and such additional amounts as may be necessary so that every payment of all
amounts due under this Agreement, any note, or Loan Document, including any amount paid pursuant to
this Section 15.11(a) after withholding or deduction for or on account of any Taxes, will
not be less than the amount provided for herein; provided, however, that Borrowers shall not be
required to increase any such amounts if the increase in such amount payable results from Agent’s
or such Lender’s own willful misconduct or gross negligence (as finally determined by a court of
competent jurisdiction). Each Borrower will furnish to Agent as promptly as possible after the
date the payment of any Tax is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by any Borrower.




          (b) If a Lender claims an exemption from United States withholding tax, Lender
agrees with and in favor of Agent and any Borrower, to deliver to Agent:




               (i) if such Lender claims an exemption from United States withholding tax pursuant
to its portfolio interest exception, (A) a statement of the Lender, signed under penalty of
perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a 10%
shareholder of any Borrower (within the meaning of Section 871(h)(3)(B) of the IRC), or (III) a
controlled foreign corporation related to any Borrower within the meaning of Section 864(d)(4) of
the IRC, and (B) a properly completed and executed IRS Form W-8BEN, before receiving its first
payment under this Agreement and at any other time reasonably requested by Agent or any Borrower;



               (ii) if such Lender claims an exemption from, or a reduction of, withholding tax
under a United States tax treaty, properly completed and executed IRS Form W-8BEN before receiving
its first payment under this Agreement and at any other time reasonably requested by Agent or any
Borrower;



46









 





               (iii) if such Lender claims that interest paid under this Agreement is exempt from
United States withholding tax because it is effectively connected with a United States trade or
business of such Lender, two properly completed and executed copies of IRS Form W-8ECI before
receiving its first payment under this Agreement and at any other time reasonably requested by
Agent or any Borrower; or



               (iv) such other form or forms, including IRS Form W-9, as may be required under
the IRC or other laws of the United States as a condition to exemption from, or reduction of,
United States withholding or backup withholding tax before receiving its first payment under this
Agreement and at any other time reasonably requested by Agent or any Borrower.


Lender agrees promptly to notify Agent and Administrative Borrower of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.




          (c) If a Lender claims an exemption from withholding tax in a jurisdiction other
than the United States, Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent
any such form or forms, as may be required under the laws of such jurisdiction as a condition to
exemption from, or reduction of, foreign withholding or backup withholding tax before receiving its
first payment under this Agreement and at any other time reasonably requested by Agent or
Administrative Borrower.



Lender agrees promptly to notify Agent and Administrative Borrower of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.




          (d) If any Lender claims exemption from, or reduction of, withholding tax and such
Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of Borrowers to such Lender, such Lender agrees to notify Agent and Administrative
Borrower of the percentage amount in which it is no longer the beneficial owner of Obligations of
Borrowers to such Lender. To the extent of such percentage amount, Agent and Borrowers will treat
such Lender’s documentation provided pursuant to Sections 15.11(b) or 15.11(c) as
no longer valid. With respect to such percentage amount, Lender may provide new documentation,
pursuant to Sections 15.11(b) or 15.11(c), if applicable.




          (e) If any Lender is entitled to a reduction in the applicable withholding tax,
Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or other documentation
required by subsection (b) or (c) of this Section 15.11 are not delivered to Agent, then
Agent may withhold from any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.




          (f) If the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that Agent did not properly withhold tax from amounts paid to or for
the account of any Lender due to a failure on the part of the Lender (because the appropriate form
was not delivered, was not properly executed, or because such Lender failed to notify Agent of a
change in circumstances which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Lender shall indemnify and hold Agent harmless for all
amounts paid, directly or indirectly, by Agent, as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent under
this Section 15.11, together with all costs and expenses (including attorneys fees and
expenses). The obligation of the Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of Agent.




     15.12 Collateral Matters.



          (a) The Lenders hereby irrevocably authorize Agent, at its option and in its sole
discretion, to release any Lien on any Collateral (i) upon the termination of the Commitments and
payment and

47









 








satisfaction in full by Borrowers of all Obligations, (ii) constituting property being sold or
disposed of if a release is required or desirable in connection therewith and if Administrative
Borrower certifies to Agent that the sale or disposition is permitted under Section 6.4 of
this Agreement or the other Loan Documents (and Agent may rely conclusively on any such
certificate, without further inquiry), (iii) constituting property in which no Borrower or its
Subsidiaries owned any interest at the time the Agent’s Lien was granted nor at any time
thereafter, or (iv) constituting property leased to a Borrower or its Subsidiaries under a lease
that has expired or is terminated in a transaction permitted under this Agreement. Except as
provided above, Agent will not execute and deliver a release of any Lien on any Collateral without
the prior written authorization of (y) if the release is of all or substantially all of the
Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or
Administrative Borrower at any time, the Lenders will confirm in writing Agent’s authority to
release any such Liens on particular types or items of Collateral pursuant to this Section
15.12; provided, however, that (1) Agent shall not be required to execute any
document necessary to evidence such release on terms that, in Agent’s opinion, would expose Agent
to liability or create any obligation or entail any consequence other than the release of such Lien
without recourse, representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those expressly being
released) upon (or obligations of Borrowers in respect of) all interests retained by Borrowers,
including, the proceeds of any sale, all of which shall continue to constitute part of the
Collateral.




          (b) Agent shall have no obligation whatsoever to any of the Lenders to assure that
the Collateral exists or is owned by Borrowers or is cared for, protected, or insured or has been
encumbered, or that the Agent’s Liens have been properly or sufficiently or lawfully created,
perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all
or in any particular manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any
of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any
act, omission, or event related thereto, subject to the terms and conditions contained herein,
Agent may act in any manner it may deem appropriate, in its sole discretion given Agent’s own
interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other
duty or liability whatsoever to any Lender as to any of the foregoing, except as otherwise provided
herein.




     15.13 Restrictions on Actions by Lenders; Sharing of Payments.



          (a) Each of the Lenders agrees that it shall not, without the express written
consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the
written request of Agent, set off against the Obligations, any amounts owing by such Lender to
Borrowers or any deposit accounts of Borrowers now or hereafter maintained with such Lender. Each
of the Lenders further agrees that it shall not, unless specifically requested to do so in writing
by Agent, take or cause to be taken any action, including, the commencement of any legal or
equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any
of the Collateral.




          (b) If, at any time or times any Lender shall receive (i) by payment, foreclosure,
setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations,
except for any such proceeds or payments received by such Lender from Agent pursuant to the terms
of this Agreement, or (ii) payments from Agent in excess of such Lender’s Pro Rata Share of all
such distributions by Agent, such Lender promptly shall (A) turn the same over to Agent, in kind,
and with such endorsements as may be required to negotiate the same to Agent, or in immediately
available funds, as applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or (B) purchase,
without recourse or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably as among the
Lenders in accordance with their Pro Rata Shares; provided, however, that to the extent that such
excess payment received by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid

48









 








therefor shall be returned to such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in connection with the recovery of the
excess payment.




     15.14 Agency for Perfection. Agent hereby appoints each other Lender as its agent
(and each Lender hereby accepts such appointment) for the purpose of perfecting the Agent’s Liens
in assets which, in accordance with Article 8 or Article 9, as applicable, of the Code can be
perfected only by possession or control. Should any Lender obtain possession or control of any
such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request
therefor shall deliver possession or control of such Collateral to Agent or in accordance with
Agent’s instructions.



     15.15 Payments by Agent to the Lenders. All payments to be made by Agent to the
Lenders shall be made by bank wire transfer of immediately available funds pursuant to such wire
transfer instructions as each party may designate for itself by written notice to Agent.
Concurrently with each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, fees, or interest of the Obligations.



     15.16 Concerning the Collateral and Related Loan Documents. Each member of the Lender
Group authorizes and directs Agent to enter into this Agreement and the other Loan Documents. Each
member of the Lender Group agrees that any action taken by Agent in accordance with the terms of
this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of
its powers set forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.



     15.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information. By becoming a party to this Agreement, each Lender:



          (a) is deemed to have requested that Agent furnish such Lender, promptly after it
becomes available, a copy of each field audit or examination report (each a “Report” and
collectively, “Reports”) prepared by or at the request of Agent, and Agent shall so furnish
each Lender with such Reports,




          (b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any
information contained in any Report,




          (c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or other party performing any audit or examination will inspect
only specific information regarding Borrowers and will rely significantly upon Borrowers’ and their
Subsidiaries’ books and records, as well as on representations of Borrowers’ personnel,




          (d) agrees to keep all Reports and other material, non-public information
regarding Borrowers and their Subsidiaries and their operations, assets, and existing and
contemplated business plans in a confidential manner in accordance with Section 16.7, and




          (e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any such other Lender preparing a
Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion
the indemnifying Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to Borrowers, or the
indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans
of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other
Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including, attorneys fees and costs) incurred by Agent and any
such other Lender preparing a Report as the direct or indirect result of any third parties who
might obtain all or part of any Report through the indemnifying Lender.




49









 







In addition to the foregoing: (x) any Lender may from time to time request of Agent in writing
that Agent provide to such Lender a copy of any report or document provided by Borrowers to Agent
that has not been contemporaneously provided by Borrowers to such Lender, and, upon receipt of such
request, Agent promptly shall provide a copy of same to such Lender, (y) to the extent that Agent
is entitled, under any provision of the Loan Documents, to request additional reports or
information from Borrowers, any Lender may, from time to time, reasonably request Agent to exercise
such right as specified in such Lender’s notice to Agent, whereupon Agent promptly shall request of
Administrative Borrower the additional reports or information reasonably specified by such Lender,
and, upon receipt thereof from Administrative Borrower, Agent promptly shall provide a copy of same
to such Lender, and (z) any time that Agent renders to Administrative Borrower a statement
regarding the Loan Account, Agent shall send a copy of such statement to each Lender.




     15.18 Several Obligations; No Liability. Notwithstanding that certain of the Loan
Documents now or hereafter may have been or will be executed only by or in favor of Agent in its
capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of
Agent (if any) to make any credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time
outstanding, the amount of their respective Commitments. Nothing contained herein shall confer
upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the
business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan Documents to the
extent any such notice may be required, and no Lender shall have any obligation, duty, or liability
to any Participant of any other Lender. Except as provided in Section 15.7, no member of
the Lender Group shall have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to any Borrower or any other Person for any failure by any other Lender
to fulfill its obligations to make credit available hereunder, nor to advance for it or on its
behalf in connection with its Commitment, nor to take any other action on its behalf hereunder or
in connection with the financing contemplated herein.



     15.19 Bank Product Providers. Each Bank Product Provider shall be deemed a party
hereto for purposes of any reference in a Loan Document to the parties for whom Agent is acting; it
being understood and agreed that the rights and benefits of such Bank Product Provider under the
Loan Documents consist exclusively of such Bank Product Provider’s right to share in payments and
collections out of the Collateral as more fully set forth herein. In connection with any such
distribution of payments and collections, Agent shall be entitled to assume no amounts are due to
any Bank Product Provider unless such Bank Product Provider has notified Agent in writing of the
amount of any such liability owed to it prior to such distribution.



16. GENERAL PROVISIONS.




     16.1 Effectiveness. This Agreement shall be binding and deemed effective when
executed by Borrowers, Agent, and each Lender whose signature is provided for on the signature
pages hereof.



     16.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything contained in each
Section applies equally to this entire Agreement.



     16.3 Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed against the Lender Group or Borrowers, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed
and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the
purposes and intentions of all parties hereto.



     16.4 Severability of Provisions. Each provision of this Agreement shall be severable
from every other provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.



50









 





     16.5 Counterparts; Electronic Execution. This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement
by telefacsimile or other electronic method of transmission shall be equally as effective as
delivery of an original executed counterpart of this Agreement. Any party delivering an executed
counterpart of this Agreement by telefacsimile or other electronic method of transmission also
shall deliver an original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis.



     16.6 Revival and Reinstatement of Obligations. If the incurrence or payment of the
Obligations by any Borrower or Guarantor or the transfer to the Lender Group of any property should
for any reason subsequently be declared to be void or voidable under any state or federal law
relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or transfers of
property (each, a “Voidable Transfer”), and if the Lender Group is required to repay or
restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable
advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that the
Lender Group is required or elects to repay or restore, and as to all reasonable costs, expenses,
and attorneys fees of the Lender Group related thereto, the liability of Borrowers or Guarantor
automatically shall be revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.



     16.7 Confidentiality.



          (a) Agent and Lenders each individually (and not jointly or jointly and severally) agree that
material, non-public information regarding Borrowers and their Subsidiaries, their operations,
assets, and existing and contemplated business plans shall be treated by Agent and the Lenders in a
confidential manner, and shall not be disclosed by Agent and the Lenders to Persons who are not
parties to this Agreement, except: (i) to attorneys for and other advisors, accountants, auditors,
and consultants to any member of the Lender Group, (ii) to Subsidiaries and Affiliates of any
member of the Lender Group (including the Bank Product Providers), provided that any such
Subsidiary or Affiliate shall have a legitimate business need to know such information in
connection with the transactions contemplated by this Agreement and shall have agreed to receive
such information hereunder subject to the terms of this Section 16.7, (iii) as may be
required by statute, decision, or judicial or administrative order, rule, or regulation, (iv) as
may be agreed to in advance by Administrative Borrower or its Subsidiaries or as requested or
required by any Governmental Authority pursuant to any subpoena or other legal process, (v) as to
any such information that is or becomes generally available to the public (other than as a result
of prohibited disclosure by Agent or the Lenders), (vi) in connection with any assignment,
participation or pledge of any Lender’s interest under this Agreement, provided that any such
assignee, participant, or pledgee shall have agreed in writing to receive such information
hereunder subject to the terms of this Section, and (vii) in connection with any litigation or
other adversary proceeding involving parties hereto which such litigation or adversary proceeding
involves claims related to the rights or duties of such parties under this Agreement or the other
Loan Documents. The provisions of this Section 16.7(a) shall survive for 2 years after the
payment in full of the Obligations.




          (b) Anything in this Agreement to the contrary notwithstanding, Agent may provide information
concerning the terms and conditions of this Agreement and the other Loan Documents to loan
syndication and pricing reporting services.




     16.8 Lender Group Expenses. Borrowers agree to pay any and all Lender Group Expenses
promptly after demand therefor by Agent and agrees that their obligations contained in this
Section 16.8 shall survive payment or satisfaction in full of all other Obligations.



     16.9 USA PATRIOT Act. Each Lender that is subject to the requirements of the USA
Patriot Act (Title 111 of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”)
hereby notifies Borrowers that



51









 




pursuant to the requirements of the Act, it is required to obtain, verify and record
information that identifies Borrowers, which information includes the name and address of Borrowers
and other information that will allow such Lender to identify Borrowers in accordance with the Act.




     16.10 Integration. This Agreement, together with the other Loan Documents, reflects
the entire understanding of the parties with respect to the transactions contemplated hereby and
shall not be contradicted or qualified by any other agreement, oral or written, before the date
hereof.



     16.11 Parent as Agent for Borrowers. Each Borrower hereby irrevocably appoints Parent
as the borrowing agent and attorney-in-fact for all Borrowers (the “Administrative
Borrower”) which appointment shall remain in full force and effect unless and until Agent shall
have received prior written notice signed by each Borrower that such appointment has been revoked
and that another Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (i) to provide Agent with all
notices with respect to Advances and Letters of Credit obtained for the benefit of any Borrower and
all other notices and instructions under this Agreement and (ii) to take such action as the
Administrative Borrower deems appropriate on its behalf to obtain Advances and Letters of Credit
and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of
this Agreement. It is understood that the handling of the Loan Account and Collateral of Borrowers
in a combined fashion, as more fully set forth herein, is done solely as an accommodation to
Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient
and economical manner and at their request, and that Lender Group shall not incur liability to any
Borrower as a result hereof. Each Borrower expects to derive benefit, directly or indirectly, from
the handling of the Loan Account and the Collateral in a combined fashion since the successful
operation of each Borrower is dependent on the continued successful performance of the integrated
group. To induce the Lender Group to do so, and in consideration thereof, each Borrower hereby
jointly and severally agrees to indemnify each member of the Lender Group and hold each member of
the Lender Group harmless against any and all liability, expense, loss or claim of damage or
injury, made against the Lender Group by any Borrower or by any third party whosoever, arising from
or incurred by reason of (a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group’s relying on any instructions of the Administrative Borrower, or (c)
any other action taken by the Lender Group hereunder or under the other Loan Documents, except that
Borrowers will have no liability to the relevant Agent-Related Person or Lender-Related Person
under this Section 16.10 with respect to any liability that has been finally determined by
a court of competent jurisdiction to have resulted solely from the gross negligence or willful
misconduct of such Agent-Related Person or Lender-Related Person, as the case may be.



[Signature pages to follow.]




52









 








     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered
as of the date first above written.



	 	 	 	 	 	 	 
	 	 	YOUBET.COM, INC.,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	  /s/ Gary Sproule	 	 
	 

	 	Name:
	 	 

  Gary Sproule
	 	 
	 

	 	Title:
	 	  Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	UNITED TOTE COMPANY,

a Montana corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	  /s/ Gary Sproule	 	 
	 

	 	Name:
	 	 

  Gary Sproule
	 	 
	 

	 	Title:
	 	  Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent and as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	  /s/ Carey Do	 	 
	 

	 	Name:
	 	 

  Carey Do
	 	 
	 

	 	Title:
	 	  Vice President	 	 






53









 





The exhibits and schedules listed below (other than Schedule 1.1) have been omitted. A copy
of the omitted schedules will be furnished to the Securities and Exchange Commission upon its
request.




EXHIBITS AND SCHEDULES




	 	 	 
	Exhibit A-1

	 	Form of Assignment and Acceptance
	Exhibit C-1

	 	Form of Compliance Certificate
	Exhibit L-1

	 	Form of LIBOR Notice
	Exhibit S-1

	 	Form of Subordination Agreement
	 
	 	 
	Schedule A-1

	 	Agent’s Account
	Schedule C-1

	 	Commitments
	Schedule D-1

	 	Designated Account
	Schedule I-1

	 	Ineligible Lending Institutions
	Schedule P-1

	 	Permitted Dispositions
	Schedule P-2

	 	Permitted Liens
	Schedule P-3

	 	Permitted Investments
	Schedule R-1

	 	Real Property Collateral
	Schedule T-1

	 	Third-Party L/Cs
	Schedule 1.1

	 	Definitions
	Schedule 2.7(a)

	 	Cash Management Banks
	Schedule 3.1

	 	Conditions Precedent
	Schedule 3.3(a)

	 	Collateral Access Agreements
	Schedule 3.3(f)

	 	Other Conditions Subsequent
	Schedule 4.5

	 	Locations of Inventory and Equipment
	Schedule 4.7(a)

	 	States of Organization
	Schedule 4.7(b)

	 	Chief Executive Offices
	Schedule 4.7(c)

	 	Organizational Identification Numbers
	Schedule 4.7(d)

	 	Commercial Tort Claims
	Schedule 4.8(b)

	 	Capitalization of Borrowers
	Schedule 4.8(c)

	 	Capitalization of Borrowers’ Subsidiaries
	Schedule 4.10

	 	Litigation
	Schedule 4.14

	 	Environmental Matters
	Schedule 4.15

	 	Intellectual Property
	Schedule 4.17

	 	Deposit Accounts and Securities Accounts
	Schedule 4.19

	 	Permitted Indebtedness
	Schedule 5.2

	 	Collateral Reporting
	Schedule 5.3

	 	Financial Statements, Reports, Certificates
	Schedule 6.1

	 	Other Indebtedness
	Schedule 6.6

	 	Nature of Business
	Schedule 6.10

	 	Distributions






 









 






Schedule 1.1




     As used in the Agreement, the following terms shall have the following definitions:



          “Account” means an account (as that term is defined in the Code).




          “Account Debtor” means any Person who is obligated on an Account, chattel paper, or a
general intangible.




          “ACH Transactions” means any cash management or related services (including the
Automated Clearing House processing of electronic fund transfers through the direct Federal Reserve
Fedline system) provided by a Bank Product Provider for the account of Administrative Borrower or
its Subsidiaries.




          “Additional Documents” has the meaning specified therefor in Section 5.17.




          “Administrative Borrower” has the meaning specified therefor in Section 16.11.




          “Advances” has the meaning specified therefor in Section 2.1(a).




          “Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of this definition,
“control” means the possession, directly or indirectly through one or more intermediaries, of the
power to direct the management and policies of a Person, whether through the ownership of Stock, by
contract, or otherwise; provided, however, that, for purposes of Section 6.13 of the
Agreement: (a) any Person which owns directly or indirectly 10% or more of the Stock having
ordinary voting power for the election of directors or other members of the governing body of a
Person or 10% or more of the partnership or other ownership interests of a Person (other than as a
limited partner of such Person) shall be deemed an Affiliate of such Person, (b) each director (or
comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and (c) each
partnership in which a Person is a general partner shall be deemed an Affiliate of such Person.




          “Agent” has the meaning specified therefor in the preamble to the Agreement.




          “Agent-Related Persons” means Agent, together with its Affiliates, officers,
directors, employees, attorneys, and agents.




          “Agent’s Account” means the Deposit Account of Agent identified on Schedule A-1.




          “Agent’s Liens” means the Liens granted by Borrowers or their Subsidiaries to Agent
under the Loan Documents.




          “Agreement” means the Credit Agreement to which this Schedule 1.1 is attached.




          “Assignee” has the meaning specified therefor in Section 13.1(a).




          “Assignment and Acceptance” means an Assignment and Acceptance Agreement substantially
in the form of Exhibit A-1.




          “Authorized Person” means any officer or employee of Administrative Borrower.




          “Availability” means, as of any date of determination, the amount that Borrowers are
entitled to borrow as Advances under Section 2.1 of the Agreement (after giving effect to
all then outstanding Obligations (other than Bank Product Obligations) and all sublimits and
reserves then applicable hereunder).




1









 








          “Bank Product” means any financial accommodation extended to Administrative Borrower
or its Subsidiaries by a Bank Product Provider (other than pursuant to the Agreement) including:
(a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH
Transactions, (f) cash management, including controlled disbursement, accounts or services, or (g)
transactions under Hedge Agreements.




          “Bank Product Agreements” means those agreements entered into from time to time by
Administrative Borrower or its Subsidiaries with a Bank Product Provider in connection with the
obtaining of any of the Bank Products.




          “Bank Product Obligations” means all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by Administrative Borrower or its Subsidiaries
to any Bank Product Provider pursuant to or evidenced by the Bank Product Agreements and
irrespective of whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and including all such amounts
that Administrative Borrower or its Subsidiaries are obligated to reimburse to Agent or any member
of the Lender Group as a result of Agent or such member of the Lender Group purchasing
participations from, or executing indemnities or reimbursement obligations to, a Bank Product
Provider with respect to the Bank Products provided by such Bank Product Provider to Administrative
Borrower or its Subsidiaries.




          “Bank Product Provider” means Wells Fargo or any of its Affiliates.




          “Bank Product Reserve” means, as of any date of determination, the amount of reserves
that Agent has established (based upon the Bank Product Providers’ reasonable determination of the
credit exposure of Administrative Borrower and its Subsidiaries in respect of Bank Products) in
respect of Bank Products then provided or outstanding.




          “Bankruptcy Code” means title 11 of the United States Code, as in effect from time to
time.




          “Base LIBOR Rate” means the rate per annum, determined by Agent in accordance with its
customary procedures, and utilizing such electronic or other quotation sources as it considers
appropriate, to be the rate at which Dollar deposits (for delivery on the first day of the
requested Interest Period) are offered to major banks in the London interbank market 2 Business
Days prior to the commencement of the requested Interest Period, for a term and in an amount
comparable to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate
Loan to a LIBOR Rate Loan) by Administrative Borrower in accordance with the Agreement, which
determination shall be conclusive in the absence of manifest error.




          “Base Rate” means, the rate of interest announced, from time to time, within Wells
Fargo at its principal office in San Francisco as its “prime rate”, with the understanding that the
“prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and
serves as the basis upon which effective rates of interest are calculated for those loans making
reference thereto and is evidenced by the recording thereof after its announcement in such internal
publications as Wells Fargo may designate.




          “Base Rate Loan” means the portion of the Advances or the Term Loan that bears
interest at a rate determined by reference to the Base Rate.




          “Base Rate Margin” means, as of any date of determination, the percentage points set
forth below based upon the Leverage Ratio for the 12-month period ending on the last day of the
immediately preceding fiscal month, as determined by Agent in its Permitted Discretion:




2









 








	 	 	 	 	 	 	 
	Pricing Level	 	Leverage Ratio	 	Base Rate Margin
	I

	 	Greater than or equal to 1.5:1.0
	 	 	1.50	%
	 
	 	 	 	 	 	 
	II

	 	Less than 1.5:1.0 but greater than or
equal to 1.0:1.0
	 	 	1.25	%
	 
	 	 	 	 	 	 
	III

	 	Less than 1.0:1.0
	 	 	1.00	%






          ; provided, however, that for the period commencing on the Closing Date through October 1,
2006, the Base Rate Margin shall be the percentage points specified for Pricing Level I as set
forth in this definition; provided, further, however, that after the occurrence and during the
continuance of an Event of Default, the Base Rate Margin shall be the percentage points specified
for Pricing Level I as set forth in this definition.




          “Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of ERISA)
for which any Borrower or any Subsidiary or ERISA Affiliate of any Borrower has been an “employer”
(as defined in Section 3(5) of ERISA) within the past six years.




          “Board of Directors” means the board of directors (or comparable managers) of Parent
or any committee thereof duly authorized to act on behalf of the board of directors (or comparable
managers).




          “Borrower” and “Borrowers” have the respective meanings specified therefor in
the preamble to the Agreement.




          “Borrowing” means a borrowing hereunder consisting of Advances made on the same day by
the Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or by
Agent in the case of a Protective Advance, in each case, to Administrative Borrower.




          “Business Day” means any day that is not a Saturday, Sunday, or other day on which
banks are authorized or required to close in the state of California, except that, if a
determination of a Business Day shall relate to a LIBOR Rate Loan, the term “Business Day” also
shall exclude any day on which banks are closed for dealings in Dollar deposits in the London
interbank market.




          “Capital Expenditures” means, with respect to any Person for any period, the aggregate
of all expenditures by such Person and its Subsidiaries during such period that are capital
expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or
financed.




          “Capitalized Lease Obligation” means that portion of the obligations under a Capital
Lease that is required to be capitalized in accordance with GAAP.




          “Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.




3









 








          “Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof and backed by the
full faith and credit of the United States, in each case maturing within 1 year from the date of
acquisition thereof, (b) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality thereof maturing within 1
year from the date of acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors
Service, Inc. (“Moody’s”), (c) commercial paper maturing no more than 270 days from the date of
creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at
least P-1 from Moody’s, (d) certificates of deposit or bankers’ acceptances maturing within 1 year
from the date of acquisition thereof issued by any bank organized under the laws of the United
States or any state thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies the
criteria described in clause (d) above, or (ii) any other bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any such other bank is less than or equal to $100,000 and is insured
by the Federal Deposit Insurance Corporation, and (f) Investments in money market funds
substantially all of whose assets are invested in the types of assets described in clauses (a)
through (e) above.




          “Cash Management Account” has the meaning specified therefor in Section
2.7(a).




          “Cash Management Agreements” means those certain cash management agreements, in form
and substance satisfactory to Agent, each of which is among Administrative Borrower or one of its
Subsidiaries, Agent, and one of the Cash Management Banks.




          “Cash Management Bank” has the meaning specified therefor in Section 2.7(a).




          “Change of Control” means that (a) any “person” or “group” (within the meaning of
Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of 50%, or more, of the Stock of Parent
having the right to vote for the election of members of the Board of Directors, (b) Parent or one
of its wholly owned Subsidiaries fails to own, either directly or indirectly, 100% of United Tote,
or (c) a change in the composition of the Board of Directors over a period of twelve (12)
consecutive months or less such that a majority of the members of the Board of Directors cease, by
reason of one or more contested elections of Board of Director membership, to be comprised of
individuals who have been nominated for election as members of the Board of Directors by a majority
of the members of the Board of Directors immediately preceding such election.




          “Closing Date” means the date of the making of the initial Advance (or other extension
of credit) hereunder or the date on which Agent sends Administrative Borrower a written notice that
each of the conditions precedent set forth on Schedule 3.1 either have been satisfied or have been
waived.




          “Code” means the California Uniform Commercial Code, as in effect from time to time.




          “Collateral” means all assets and interests in assets and proceeds thereof now owned
or hereafter acquired by Administrative Borrower or its Subsidiaries in or upon which a Lien is
granted under any of the Loan Documents.




          “Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or other Person in
possession of, having a Lien upon, or having rights or interests in Administrative Borrower’s or
its Subsidiaries’ books and records, Equipment, or Inventory, in each case, in form and substance
reasonably satisfactory to Agent.




          “Collections” means all cash, checks, notes, instruments, and other items of payment
(including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds).




4









 








          “Commitment” means, with respect to each Lender, its Revolver Commitment, its Term
Loan Commitment, or its Total Commitment, as the context requires, and, with respect to all
Lenders, their Revolver Commitments, their Term Loan Commitments, or their Total Commitments, as
the context requires, in each case as such Dollar amounts are set forth beside such Lender’s name
under the applicable heading on Schedule C-1 or in the Assignment and Acceptance pursuant to which
such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to
time pursuant to assignments made in accordance with the provisions of Section 13.1.




          “Compliance Certificate” means a certificate substantially in the form of Exhibit C-1
delivered by the chief financial officer of Parent to Agent.




          “Continuing Director” means (a) any member of the Board of Directors who was a
director (or comparable manager) of Parent on the Closing Date, and (b) any individual who becomes
a member of the Board of Directors after the Closing Date if such individual was appointed or
nominated for election to the Board of Directors by a majority of the Continuing Directors, but
excluding any such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or comparable managers)
of Parent and whose initial assumption of office resulted from such contest or the settlement
thereof.




          “Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by the Administrative Borrower or one of its
Subsidiaries, Agent, and the applicable securities intermediary (with respect to a Securities
Account) or bank (with respect to a Deposit Account).




          “Copyright Security Agreement” has the meaning specified therefor in the Security
Agreement.




          “Daily Balance” means, as of any date of determination and with respect to any
Obligation, the amount of such Obligation owed at the end of such day.




          “Default” means an event, condition, or default that, with the giving of notice, the
passage of time, or both, would be an Event of Default.




          “Defaulting Lender” means any Lender that fails to make any Advance (or other
extension of credit) that it is required to make hereunder on the date that it is required to do so
hereunder.




          “Defaulting Lender Rate” means (a) for the first 3 days from and after the date the
relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to
Advances that are Base Rate Loans (inclusive of the Base Rate Margin applicable thereto).




          “Deposit Account” means any deposit account (as that term is defined in the Code).




          “Designated Account” means the Deposit Account of Administrative Borrower identified
on Schedule D-1.




          “Designated Account Bank” has the meaning specified therefor in Schedule D-1.




          “Dollars” or “$” means United States dollars.




          “Domestic Subsidiary” means a Subsidiary that is organized or incorporated under the
laws of the United States of America, any state of the United States of America, or the District
of Columbia.




5









 








          “EBITDA” means, with respect to any fiscal period, Parent’s and its Subsidiaries’
consolidated net earnings (or loss), minus extraordinary gains and interest income, plus interest
expense, income taxes, and depreciation and amortization for such period (as adjusted for non-cash
stock option expenses), in each case, determined on a consolidated basis in accordance with GAAP.




          “Eligible Transferee” means (a) a commercial bank organized under the laws of the
United States, or any state thereof, and having total assets in excess of $250,000,000, (b) a
commercial bank organized under the laws of any other country which is a member of the Organization
for Economic Cooperation and Development or a political subdivision of any such country and which
has total assets in excess of $250,000,000, provided that such bank is acting through a branch or
agency located in the United States, (c) a finance company, insurance company, financial
institution, or fund that is engaged in making, purchasing, or otherwise investing in commercial
loans in the ordinary course of its business and having (together with its Affiliates) total assets
in excess of $250,000,000, (d) any Affiliate (other than individuals) of a Lender, (e) so long as
no Event of Default has occurred and is continuing, any other Person approved by Agent and
Administrative Borrower (which approval of Administrative Borrower shall not be unreasonably
withheld, delayed, or conditioned), and (f) during the continuation of an Event of Default, any
other Person approved by Agent.




          “Environmental Actions” means any complaint, summons, citation, notice, directive,
order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter,
or other communication from any Governmental Authority, or any third party involving violations of
Environmental Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower, any Subsidiary of a Borrower, or any of their predecessors in interest,
(b) from adjoining properties or businesses, or (c) from or
onto any facilities which received Hazardous Materials generated by any Borrower, any
Subsidiary of a Borrower, or any of their predecessors in interest.




          “Environmental Law” means any applicable federal, state, provincial, foreign or local
statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and
enforceable written policy, or rule of common law now or hereafter in effect and in each case as
amended, or any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, in each case, to the extent binding on any
Borrower or any Subsidiary of a Borrower, relating to the environment, the effect of the
environment on employee health, or Hazardous Materials, in each case as amended from time to time.




          “Environmental Liabilities” means all liabilities, monetary obligations, losses,
damages, punitive damages, consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental Authority or any
third party, and which relate to any Environmental Action.




          “Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities.




          “Equipment” means equipment (as that term is defined in the Code).




          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute thereto.




          “ERISA Affiliate” means (a) any Person subject to ERISA whose employees are treated as
employed by the same employer as the employees of a Borrower or a Subsidiary of a Borrower under
IRC Section 414(b), (b) any trade or business subject to ERISA whose employees are treated as
employed by the same employer as the employees of a Borrower or a Subsidiary of a Borrower under
IRC Section 414(c), (c)




6









 







solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of which a Borrower
or a Subsidiary of a Borrower is a member under IRC Section 414(m), or (d) solely for purposes of
Section 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA that is a party to an
arrangement with a Borrower or a Subsidiary of a Borrower and whose employees are aggregated with
the employees of a Borrower or a Subsidiary of a Borrower under IRC Section 414(o).




          “Event of Default” has the meaning specified therefor in Section 7.




          “Excess Availability” means, as of any date of determination, the amount equal to
Availability minus the aggregate amount, if any, of all trade payables of Borrowers and their
Subsidiaries aged in excess of their historical levels with respect thereto and all book overdrafts
of Borrowers and their Subsidiaries in excess of their historical practices with respect thereto,
in each case as determined by Agent in its Permitted Discretion.




          “Exchange Act” means the Securities Exchange Act of 1934, as in effect from time to
time.




          “Existing Lender” means Manufacturers and Traders Trust Company.




          “Extraordinary Receipts” means any cash received by Parent or any of its Subsidiaries
not in the ordinary course of business, including (a) foreign, United States, state or local tax
refunds, (b) pension plan reversions, (c) proceeds of insurance (including key man life insurance
and business interruption insurance, but excluding any casualty insurance), (d) judgments, proceeds
of settlements or other consideration of any kind in connection with any cause of action, (e)
indemnity payments, and (f) any purchase price adjustment received in connection with any purchase
agreement.




          “Fee Letter” means that certain fee letter between Borrowers and Agent, in form and
substance satisfactory to Agent.




          “Free Cash Flow” means, with respect to any fiscal period, EBITDA, minus (a) net cash
interest expense and interest income of Parent and its Subsidiaries, (b) all payments made by
Parent or any of its Subsidiaries on account of any Indebtedness, (c) cash taxes paid by Parent or
any of its Subsidiaries, (d) actual cash payments for Capital Expenditures made by Parent or any of
its Subsidiaries, and (e) any payments made by Parent or any of its Subsidiaries on account of the
UT Stockholders Agreement or the IRG Purchase Agreement.




          “Funding Date” means the date on which a Borrowing occurs.




          “Funding Losses” has the meaning specified therefor in Section 2.13(b)(ii).




          “GAAP” means generally accepted accounting principles as in effect from time to time
in the United States, consistently applied.




          “Governing Documents” means, with respect to any Person, the certificate or articles
of incorporation, by-laws, or other organizational documents of such Person.




          “Governmental Authority” means any federal, state, local, or other governmental or
administrative body, instrumentality, board, department, or agency or any court, tribunal,
administrative hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body.




          “Guarantors” means each Domestic Subsidiary of each Borrower (other than any such
Subsidiary that is not an Operating Subsidiary), and “Guarantor” means any one of them.




7









 








          “Guaranty” means that certain general continuing guaranty executed and delivered by
each Guarantor in favor of Agent, for the benefit of the Lender Group and the Bank Product
Providers, in form and substance satisfactory to Agent.




          “Hazardous Materials” means (a) substances that are defined or listed in, or otherwise
classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous
materials,” “hazardous wastes,” “toxic substances,” or any other formulation intended to define,
list, or classify substances by reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or
petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids,
produced waters, and other wastes associated with the exploration, development, or production of
crude oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any
radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil
or dielectric fluid containing levels of polychlorinated biphenyls in excess of 50 parts per
million.




          “Hedge Agreement” means any and all agreements, or documents now existing or hereafter
entered into by Administrative Borrower or any of its Subsidiaries that provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction,
currency swap, cross currency rate swap, currency option, or any combination of, or option with
respect to, these or similar transactions, for the purpose of hedging Administrative Borrower’s or
any of its Subsidiaries’ exposure to fluctuations in interest or exchange rates, loan, credit
exchange, security, or currency valuations or commodity prices.




          “Holdout Lender” has the meaning specified therefor in Section 14.2(a).




          “Indebtedness” means (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations as a lessee under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of a Person or its Subsidiaries, irrespective
of whether such obligation or liability is assumed, (e) all obligations to pay the deferred
purchase price of assets (other than trade payables incurred in the ordinary course of business and
repayable in accordance with customary trade practices), (f) all obligations owing under Hedge
Agreements, and (g) any obligation guaranteeing or intended to guarantee (whether directly or
indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any
other Person that constitutes Indebtedness under any of clauses (a) through (f) above.




          “Indemnified Liabilities” has the meaning specified therefor in Section 10.3.




          “Indemnified Person” has the meaning specified therefor in Section 10.3.




          “Ineligible Lending Institutions” has the meaning specified therefor on Schedule I-1.




          “Insolvency Proceeding” means any proceeding commenced by or against any Person under
any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency
law, assignments for the benefit of creditors, formal or informal moratoria, compositions,
extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other
similar relief.




          “Interest Period” means, with respect to each LIBOR Rate Loan, a period commencing on
the date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the
conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, or 3 months thereafter;
provided, however, that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the next succeeding
Business Day, (b) interest shall accrue at the applicable rate based upon the LIBOR Rate from and
including the first day of each Interest Period to, but excluding, the day on which any Interest
Period expires, (c) any Interest Period that would end on a day that is




8









 







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 Interest Period shall end on the next preceding Business Day, (d) with
respect to an Interest Period that 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
Interest Period), the Interest Period shall end on the last Business Day of the calendar month that
is 1, 2, or 3 months after the date on which the Interest Period began, as applicable, and (e)
Borrowers (or Administrative Borrower on behalf thereof) may not elect an Interest Period which
will end after the Maturity Date.




          “Inventory” means inventory (as that term is defined in the Code).




          “Investment” means, with respect to any Person, any investment by such Person in any
other Person (including Affiliates) in the form of loans, guarantees, advances, or capital
contributions (excluding (a) commission, travel, and similar advances to officers and employees of
such Person made in the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other acquisitions of
Indebtedness, Stock, or all or substantially all of the assets of such other Person (or of any
division or business line of such other Person), and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.




          “IRC” means the Internal Revenue Code of 1986, as in effect from time to time.




          “IRG Purchase Agreement” means that certain Stock Purchase Agreement, dated as of June
1, 2005, by and among IRG Holdings Curacao, N.V., IRG US Holdings Corp., International Racing
Group, N.V., IRG Services, Inc. (formerly known as It’s All Good Buddy, Inc.), Louis J. Tavano,
James Scott and Richard M. Tavano.




          “Issuing Lender” means WFF or any other Lender that, at the request of Administrative
Borrower and with the consent of Agent, agrees, in such Lender’s sole discretion, to become an
Issuing Lender for the purpose of issuing L/Cs or L/C Undertakings pursuant to Section
2.12.




          “L/C” has the meaning specified therefor in Section 2.12(a).




          “L/C Collateral Account” means any Deposit Account or Security Account collateralizing
any Third-Party L/Cs.




          “L/C Disbursement” means a payment made by the Issuing Lender pursuant to a Letter of
Credit.




          “L/C Undertaking” has the meaning specified therefor in Section 2.12(a).




          “Lender” and “Lenders” have the respective meanings set forth in the preamble
to the Agreement, and shall include any other Person made a party to the Agreement in accordance
with the provisions of Section 13.1.




          “Lender Group” means, individually and collectively, each of the Lenders (including
the Issuing Lender) and Agent.




          “Lender Group Expenses” means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by a Borrower or its Subsidiaries under any of the Loan
Documents that are paid, advanced, or incurred by the Lender Group, (b) fees or charges paid or
incurred by Agent in connection with the Lender Group’s transactions with Borrowers or their
Subsidiaries, including, fees or charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, litigation, and UCC searches and
including searches with the patent and trademark office, the copyright office, or the department of
motor vehicles), filing, recording, publication, appraisal (including periodic





9









 







collateral appraisals or business valuations to the extent of the fees and charges (and up to the amount of
any limitation) contained in the Agreement or the Fee Letter), real estate surveys, real estate
title policies and endorsements, and environmental audits, (c) costs and expenses incurred by Agent
in the disbursement of funds to Borrowers or other members of the Lender Group (by wire transfer or
otherwise), (d) charges paid or incurred by Agent resulting from the dishonor of checks, (e)
reasonable costs and expenses paid or incurred by the Lender Group to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral,
or any portion thereof, irrespective of whether a sale is consummated, (f) audit fees and expenses
of Agent related to any inspections or audits to the extent of the fees and charges (and up to the
amount of any limitation) contained in the Agreement or the Fee Letter, (g) reasonable costs and
expenses of third party claims or any other suit paid or incurred by the Lender Group in enforcing
or defending the Loan Documents or in connection with the transactions contemplated by the Loan
Documents or the Lender Group’s relationship with any Borrower or any Subsidiary of a Borrower, (h)
Agent’s and each Lender’s reasonable costs and expenses (including attorneys fees) incurred in
advising, structuring, drafting, reviewing, administering, syndicating (including rating the Term
Loan), or amending the Loan Documents, and (i) Agent’s and each Lender’s reasonable costs and
expenses (including attorneys, accountants, consultants, and other advisors fees and expenses)
incurred in terminating, enforcing (including attorneys, accountants, consultants, and other
advisors fees and expenses incurred in connection with a “workout,” a “restructuring,” or an
Insolvency Proceeding concerning any Borrower or any Subsidiary of a Borrower or in exercising
rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of
whether suit is brought, or in taking any Remedial Action concerning the Collateral.




          “Lender-Related Person” means, with respect to any Lender, such Lender, together with
such Lender’s Affiliates, officers, directors, employees, attorneys, and agents.




          “Letter of Credit” means an L/C or an L/C Undertaking, as the context requires.




          “Letter of Credit Usage” means, as of any date of determination, the aggregate undrawn
amount of all outstanding Letters of Credit.




          “Leverage Ratio” means, as of any date of determination (a) the Obligations
outstanding as of such date, divided by (b) EBITDA for the 12 month period ended as of such date.




          “LIBOR Deadline” has the meaning specified therefor in Section 2.13(b)(i).




          “LIBOR Notice” means a written notice in the form of Exhibit L-1.




          “LIBOR Option” has the meaning specified therefor in Section 2.13(a).




          “LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan, the rate per
annum determined by Agent by dividing (a) the Base LIBOR Rate for such Interest Period, by (b) 100%
minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the effective day of any
change in the Reserve Percentage.




          “LIBOR Rate Loan” means each portion of an Advance or the Term Loan that bears
interest at a rate determined by reference to the LIBOR Rate.




          “LIBOR Rate Margin” means, as of any date of determination, the percentage points set
forth below based upon the Leverage Ratio for the 12-month period ending on the last day of the
immediately preceding fiscal month, as determined by Agent in its Permitted Discretion:




10









 








	 	 	 	 	 	 	 
	Pricing Level	 	Leverage Ratio	 	Base Rate Margin
	I

	 	Greater than or equal to 1.5:1.0
	 	 	3.25	%
	 
	 	 	 	 	 	 
	II

	 	Less than 1.5:1.0 but greater than or
equal to 1.0:1.0
	 	 	3.00	%
	 
	 	 	 	 	 	 
	III

	 	Less than 1.0:1.0
	 	 	2.75	%






          ; provided, however, that for the period commencing on the Closing Date through October 1,
2006, the Base Rate Margin shall be the percentage points specified for Pricing Level I as set
forth in this definition; provided, further, however, that after the occurrence and during the
continuance of an Event of Default, the Base Rate Margin shall be the percentage points specified
for Pricing Level I as set forth in this definition.




          “Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge,
deposit arrangement, encumbrance, easement, lien (statutory or other), security interest, or other
security arrangement and any other preference, priority, or preferential arrangement of any kind or
nature whatsoever, including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing lease having
substantially the same economic effect as any of the foregoing.




          “Loan Account” has the meaning specified therefor in Section 2.10.




          “Loan Documents” means the Agreement, the Bank Product Agreements, the Cash Management
Agreements, the Control Agreements, the Copyright Security Agreement, the Fee Letter, the Guaranty,
the Intercompany Subordination Agreement, the Subordination Agreement, the Letters of Credit, the
Mortgages, the Patent Security Agreement, the Security Agreement, the Trademark Security Agreement,
any note or notes executed by a Borrower in connection with the Agreement and payable to a member
of the Lender Group, and any other agreement entered into, now or in the future, by any Borrower,
any of their Subsidiaries, and the Lender Group in connection with the Agreement.




          “Loan Limit” has the meaning specified therefor in Section 2.4(c)(i).




          “Limiter Excess” has the meaning specified therefor in Section 2.4(c)(i).




          “M&T Accounts” means the Deposit Accounts and Securities Accounts maintained with
Existing Lender which are set forth on Schedule 4.17.




          “Material Adverse Change” means (a) a material adverse change in the business,
operations, results of operations, assets, liabilities or condition (financial or otherwise) of
Borrowers and their Subsidiaries, taken as a whole, (b) a material impairment of a Borrower’s or
any of its Subsidiaries’ ability to perform its obligations under the Loan Documents to which it is
a party or of the Lender Group’s ability to enforce the Obligations or realize upon the Collateral,
or (c) a material impairment of the enforceability or priority of the Agent’s Liens with respect to
the Collateral as a result of an action or failure to act on the part of a Borrower or a Subsidiary
of a Borrower.




11









 








          “Maturity Date” has the meaning specified therefor in Section 3.4.




          “Maximum Revolver Amount” means Four Million Dollars ($4,000,000).




          “Moody’s” has the meaning specified therefor in the definition of Cash Equivalents.




          “Mortgages” means, individually and collectively, one or more mortgages, deeds of
trust, or deeds to secure debt, executed and delivered by a Borrower or a Subsidiary of a Borrower
in favor of Agent, in form and substance satisfactory to Agent, that encumber the Real Property
Collateral.




          “Net Cash Proceeds” means:




          (a) with respect to any sale or disposition by a Borrower or a Subsidiary of a Borrower of
property or assets, the amount of cash proceeds received (directly or indirectly) from time to time
(whether as initial consideration or through the payment of deferred consideration) by or on behalf
of a Borrower or a Subsidiary of a Borrower, in connection therewith after deducting therefrom only
(i) the amount of any Indebtedness secured by any Permitted Lien on any asset (other than (A)
Indebtedness owing to Agent or any Lender under the Agreement or the other Loan Documents and (B)
Indebtedness assumed by the purchaser of such asset) which is required to be, and is, repaid in
connection with such sale or disposition, (ii) costs of any environmental remediation performed
with respect to any such property, (iii) reasonable fees, commissions, and expenses related thereto
and required to be paid by a Borrower or such Subsidiary of a Borrower in connection with such sale
or disposition and (iv) taxes paid or payable to any taxing authorities by a Borrower or such
Subsidiary of a Borrower in connection with such sale or disposition, in each case to the extent,
but only to the extent, that the amounts so deducted are, at the time of receipt of such cash,
actually paid or payable to a Person that is not an Affiliate of a Borrower or a Subsidiary of a
Borrower, and are properly attributable to such transaction; and




          (b) with respect to the issuance or incurrence of any Indebtedness by a Borrower or a
Subsidiary of a Borrower, or the issuance by a Borrower or a Subsidiary of a Borrower of any shares
of its Stock, the aggregate amount of cash received (directly or indirectly) from time to time
(whether as initial consideration or through the payment or disposition of deferred consideration)
by or on behalf of a Borrower or such Subsidiary in connection with such issuance or incurrence,
after deducting therefrom only (i) reasonable fees, commissions, and expenses related thereto and
required to be paid by a Borrower or such Subsidiary in connection with such issuance or
incurrence, (ii) taxes paid or payable to any taxing authorities by a Borrower or such Subsidiary
in connection with such issuance or incurrence, in each case to the extent, but only to the extent,
that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to
a Person that is not an Affiliate of a Borrower or Subsidiary of a Borrower, and are properly
attributable to such transaction.




          “Obligations” means (a) all loans (including the Term Loan), Advances, debts,
principal, interest (including any interest that accrues after the commencement of an Insolvency
Proceeding regardless of whether allowed or allowable in whole or in part as a claim in any such
Insolvency Proceeding), contingent reimbursement obligations with respect to outstanding Letters of
Credit, premiums, liabilities (including all amounts charged to Borrowers’ Loan Account pursuant to
the Agreement), obligations (including indemnification obligations), fees (including the fees
provided for in the Fee Letter), charges, costs, Lender Group Expenses (including any fees or
expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any such Insolvency
Proceeding), lease payments, guaranties, covenants, and duties of any kind and description
owing by Borrowers to the Lender Group pursuant to or evidenced by the Loan Documents and
irrespective of whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and including all interest not
paid when due and all other expenses or other amounts that Borrowers are required to pay or
reimburse by the Loan Documents or by law or otherwise in connection with the Loan Documents, and
(b) all Bank Product Obligations. Any reference in the Agreement





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or in the Loan Documents to the
Obligations shall include all or any portion thereof and any extensions, modifications, renewals,
or alterations thereof, both prior and subsequent to any Insolvency Proceeding.




          “Operating Subsidiary” means any Subsidiary of any Borrower or any Guarantor that
either (a) owns any material assets other than the equity of its direct Subsidiary, or (b)
contributes any material revenues or losses to such Borrower of such Guarantor, on a consolidated
basis, in all cases, as determined by Agent in its reasonable discretion.




          “Originating Lender” has the meaning specified therefor in Section
13.1(e).




          “Overadvance” has the meaning specified therefor in Section 2.5.




          “Parent” has the meaning specified therefor in the preamble to the Agreement.




          “Participant” has the meaning specified therefor in Section 13.1(e).




          “Patent Security Agreement” has the meaning specified therefor in the Security
Agreement.




          “Permitted Discretion” means a determination made in the exercise of reasonable (from
the perspective of a secured asset-based lender) business judgment.




          “Permitted Dispositions” means (a) sales or other dispositions of Equipment that is
substantially worn, damaged, or obsolete in the ordinary course of business, (b) sales of Inventory
to buyers in the ordinary course of business, (c) the use or transfer of money or Cash Equivalents
in a manner that is not prohibited by the terms of the Agreement or the other Loan Documents, (d)
the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual
property rights in the ordinary course of business, (e) sales or other dispositions of assets
resulting in Net Cash Proceeds not to exceed $100,000 in the aggregate for all Borrowers and
Guarantors during any fiscal year, and (f) sales and dispositions set forth on Schedule P-1.




          “Permitted Investments” means (a) Investments in cash and Cash Equivalents, (b)
Investments in negotiable instruments for collection, (c) advances made in connection with
purchases of goods or services in the ordinary course of business, (d) Investments received in
settlement of amounts due to a Borrower or any Subsidiary of a Borrower effected in the ordinary
course of business or owing to a Borrower or any Subsidiary of a Borrower as a result of Insolvency
Proceedings involving an Account Debtor or upon the foreclosure or enforcement of any Lien in favor
of a Borrower or any Subsidiary of a Borrower, and (e) Investments set forth on Schedule P-3.




          “Permitted L/C Collateral” means any L/C Collateral Account, and any cash and
securities held therein, provided that, if and to the extent that the aggregate dollar value of
cash and securities deposited in all such L/C Collateral Accounts exceeds 110% of the face amount
of all Third-Party L/Cs then issued and outstanding that are secured by such L/C Collateral
Accounts (and the cash and securities held therein), a portion of such cash and securities in the
amount of such excess shall not constitute Permitted L/C Collateral for all purposes hereunder.




          “Permitted Liens” means (a) Liens held by Agent to secure the Obligations, (b) Liens
for unpaid taxes, assessments, or other governmental charges or levies that either (i) are not yet
delinquent, or (ii) do not have priority over the Agent’s Liens and the underlying taxes,
assessments, or charges or levies are the subject of Permitted Protests, (c) judgment Liens that do
not constitute an Event of Default under Section 7.7 of the Agreement, (d) Liens set forth
on Schedule P-2, provided that any such Lien only secures the Indebtedness that it secures on the
Closing Date and any Refinancing Indebtedness in respect thereof, (e) the interests of lessors
under operating leases, (f) purchase money Liens or the interests of lessors under Capital Leases
to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long as





13









 







(i) such Lien attaches only to the asset purchased or acquired and the proceeds thereof, and (ii) such
Lien only secures the Indebtedness that was incurred to acquire the asset purchased or acquired or
any Refinancing Indebtedness in respect thereof, (g) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of business and not in connection with the borrowing of money, and which Liens
either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests, (h)
Liens on amounts deposited in connection with obtaining worker’s compensation or other unemployment
insurance, (i) Liens on amounts deposited in connection with the making or entering into of bids,
tenders, or leases in the ordinary course of business and not in connection with the borrowing of
money, (j) Liens on amounts deposited as security for surety or appeal bonds in connection with
obtaining such bonds in the ordinary course of business, and (k) with respect to any Real Property,
easements, rights of way, and zoning restrictions that do not materially interfere with or impair
the use or operation thereof.




          “Permitted Protest” means the right of Administrative Borrower or any of its
Subsidiaries to protest any Lien (other than any Lien that secures the Obligations), taxes (other
than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental
payment, provided that (a) a reserve with respect to such obligation is established on a Borrower’s
or any of its Subsidiaries’ books and records in such amount as is required under GAAP, (b) any
such protest is instituted promptly and prosecuted diligently by Administrative Borrower or any of
its Subsidiaries, as applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity, or priority of any
of the Agent’s Liens.




          “Permitted Purchase Money Indebtedness” means, as of any date of determination,
Purchase Money Indebtedness incurred after the Closing Date in an aggregate principal amount
outstanding at any one time not in excess of $5,000,000.




          “Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts,
land trusts, business trusts, or other organizations, irrespective of whether they are legal
entities, and governments and agencies and political subdivisions thereof.




          “Player’s Trust Account” means any “player’s trust” or similar deposit account
maintained by any Borrower or Guarantor that is utilized exclusively for deposits paid by
customers.




          “Projections” means Parent’s forecasted (a) balance sheets, (b) profit and loss
statements, and (c) cash flow statements, all prepared on a basis consistent with Parent’s
historical financial statements, together with appropriate supporting details and a statement of
underlying assumptions.




          “Pro Rata Share” means, as of any date of determination:




          (a) with respect to a Lender’s obligation to make Advances and right to receive payments of
principal, interest, fees, costs, and expenses with respect thereto, (i) prior to the Revolver
Commitments being terminated or reduced to zero, the percentage obtained by dividing (y) such
Lender’s Revolver Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and (ii)
from and after the time that the Revolver Commitments have been terminated or reduced to zero, the
percentage obtained by dividing (y) the aggregate outstanding principal amount of such Lender’s
Advances by (z) the aggregate outstanding principal amount of all Advances,




          (b) with respect to a Lender’s obligation to participate in Letters of Credit, to reimburse
the Issuing Lender, and right to receive payments of fees with respect thereto, (i) prior to the
Revolver Commitments being terminated or reduced to zero, the percentage obtained by dividing (y)
such Lender’s Revolver Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and
(ii) from and after the time that the Revolver Commitments have been terminated or reduced to zero,
the percentage obtained by





14









 







dividing (y) the aggregate outstanding principal amount of such Lender’s
Advances by (z) the aggregate outstanding principal amount of all Advances,




          (c) with respect to a Lender’s obligation to make the Term Loan and right to receive payments
of interest, fees, and principal with respect thereto, (i) prior to the making of the Term Loan,
the percentage obtained by dividing (y) such Lender’s Term Loan Commitment, by (z) the aggregate
amount of all Lenders’ Term Loan Commitments, and (ii) from and after the making of the Term Loan,
the percentage obtained by dividing (y) the principal amount of such Lender’s portion of the Term
Loan by (z) the principal amount of the Term Loan, and




          (d) with respect to all other matters as to a particular Lender (including the indemnification
obligations arising under Section 15.7), the percentage obtained by dividing (i) such
Lender’s Revolver Commitment plus the outstanding principal amount of such Lender’s portion of the
Term Loan, by (ii) the aggregate amount of Revolver Commitments of all Lenders plus the outstanding
principal amount of the Term Loan; provided, however, that in the event the Revolver Commitments
have been terminated or reduced to zero, Pro Rata Share under this clause shall be the percentage
obtained by dividing (A) the outstanding principal amount of such Lender’s Advances plus such
Lender’s ratable portion of the Risk Participation Liability with respect to outstanding Letters of
Credit plus the outstanding principal amount of such Lender’s portion of the Term Loan, by (B) the
outstanding principal amount of all Advances plus the aggregate amount of the Risk Participation
Liability with respect to outstanding Letters of Credit plus the outstanding principal amount of
the Term Loan.




          “Protective Advances” has the meaning specified therefor in Section 2.3(d)(i).




          “Purchase Money Indebtedness” means Indebtedness (other than the Obligations, but
including Capitalized Lease Obligations), incurred at the time of, or within 20 days after, the
acquisition of any fixed assets for the purpose of financing all or any part of the acquisition
cost thereof.




          “Qualified Cash” means, as of any date of determination, the amount of unrestricted
cash and Cash Equivalents of Borrowers and their Subsidiaries that is in Deposit Accounts or in
Securities Accounts, or any combination thereof, and which such Deposit Account or Securities
Account is the subject of a Control Agreement and is maintained by a branch office of the bank or
securities intermediary located within the United States.




          “Real Property” means any estates or interests in real property now owned or hereafter
acquired by any Borrower or a Subsidiary of any Borrower and the improvements thereto.




          “Real Property Collateral” means the Real Property identified on Schedule R-1 and any
Real Property hereafter acquired by a Borrower or any Subsidiary of a Borrower.




          “Record” means information that is inscribed on a tangible medium or that is stored in
an electronic or other medium and is retrievable in perceivable form.




          “Refinancing Indebtedness” means refinancings, renewals, or extensions of Indebtedness
so long as: (a) the terms and conditions of such refinancings, renewals, or extensions do not, in
Agent’s reasonable judgment, materially impair the prospects of repayment of the Obligations by
Borrowers or materially impair Borrowers’ creditworthiness, (b) such refinancings, renewals, or
extensions do not result in an increase in the principal amount of the Indebtedness so refinanced,
renewed, or extended, (c) such refinancings, renewals, or extensions do not result in an increase
in the interest rate with respect to the Indebtedness so refinanced, renewed, or extended, (d) such
refinancings, renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions that, taken as a whole, are materially more burdensome or restrictive to Borrowers, (e)
if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of





15









 







payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension must
include subordination terms and conditions that are at least as favorable to the Lender Group as
those that were applicable to the refinanced, renewed, or extended Indebtedness, and (f) the
Indebtedness that is refinanced, renewed, or extended is not recourse to any Person that is liable
on account of the Obligations other than those Persons which were obligated with respect to the
Indebtedness that was refinanced, renewed, or extended.




          “Remedial Action” means all actions taken to (a) clean up, remove, remediate, contain,
treat, monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor or
outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials
so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor
or outdoor environment, (c) restore or reclaim natural resources or the environment, (d) perform
any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or
(e) conduct any other actions with respect to Hazardous Materials authorized by Environmental Laws.




          “Replacement Lender” has the meaning specified therefor in Section 14.2(a).




          “Report” has the meaning specified therefor in Section 15.17.




          “Required Availability” means that the sum of (a) Excess Availability, plus (b)
Qualified Cash exceeds Seven Million Five Hundred Thousand Dollars ($7,500,000).




          “Required Lenders” means, at any time, Lenders whose aggregate Pro Rata Shares
(calculated under clause (d) of the definition of Pro Rata Shares) exceed 50%.




          “Reserve Percentage” means, on any day, for any Lender, the maximum percentage
prescribed by the Board of Governors of the Federal Reserve System (or any successor Governmental
Authority) for determining the reserve requirements (including any basic, supplemental, marginal,
or emergency reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as “eurocurrency liabilities”) of that Lender, but so long as such Lender is
not required or directed under applicable regulations to maintain such reserves, the Reserve
Percentage shall be zero.




          “Responsible Officer” means, the chief executive officer, president, chief financial
officer, treasurer, or any equivalent senior officer of any Borrower having the duties of any such
officer.




          “Revolver Commitment” means, with respect to each Lender, its Revolver Commitment,
and, with respect to all Lenders, their Revolver Commitments, in each case as such Dollar amounts
are set forth beside such Lender’s name under the applicable heading on Schedule C-1 or in the
Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts
may be reduced or increased from time to time pursuant to assignments made in accordance with the
provisions of Section 13.1.




          “Revolver Usage” means, as of any date of determination, the sum of (a) the amount of
outstanding Advances, plus (b) the amount of the Letter of Credit Usage.




          “Risk Participation Liability” means, as to each Letter of Credit, all reimbursement
obligations of Borrowers to the Issuing Lender with respect to an L/C Undertaking, consisting of
(a) the amount available to be drawn or which may become available to be drawn, (b) all amounts
that have been paid by the Issuing Lender to the Underlying Issuer to the extent not reimbursed by
Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued and unpaid
interest, fees, and expenses payable with respect thereto.




          “SEC” means the United States Securities and Exchange Commission and any successor
thereto.




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          “Securities Account” means a securities account (as that term is defined in the Code).




          “Security Agreement” means a security agreement, in form and substance satisfactory
to Agent, executed and delivered by Borrowers and Guarantors to Agent.




          “Seller” means UT Group, LLC, a Delaware limited liability company.




          “Seller Notes” means those certain three Promissory Notes made by Parent to Seller
dated as of February 10, 2006, in the aggregate original principal amount of Ten Million Two
Hundred Thousand Dollars ($10,200,000).




          “Settlement” has the meaning specified therefor in Section 2.3(e)(i).




          “Settlement Date” has the meaning specified therefor in Section 2.3(e)(i).




          “Solvent” means, with respect to any Person on a particular date, that, at fair
valuations, the sum of such Person’s assets is greater than all of such Person’s debts.




          “S&P” has the meaning specified therefor in the definition of Cash Equivalents.




          “Stock” means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting,
including common stock, preferred stock, or any other “equity security” (as such term is defined in
Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).




          “Subordination Agreement” means that certain subordination agreement between Seller
and Agent, and acknowledged by Borrowers and Guarantors, substantially in the form of Exhibit S-1.




          “Subsidiary” of a Person means a corporation, partnership, limited liability company,
or other entity in which that Person directly or indirectly owns or controls the shares of Stock
having ordinary voting power to elect a majority of the board of directors (or appoint other
comparable managers) of such corporation, partnership, limited liability company, or other entity.




          “Swing Lender” means WFF or any other Lender that, at the request of Administrative
Borrower and with the consent of Agent agrees, in such Lender’s sole discretion, to become the
Swing Lender under Section 2.3(b).




          “Swing Loan” has the meaning specified therefor in Section 2.3(b).




          “Taxes” has the meaning specified therefor in Section 15.11(a).




          “Term Loan” has the meaning specified therefor in Section 2.2.




          “Term Loan Amount” means Fifteen Million Dollars ($15,000,000).




          “Term Loan Commitment” means, with respect to each Lender, its Term Loan Commitment,
and, with respect to all Lenders, their Term Loan Commitments, in each case as such Dollar amounts
are set forth beside such Lender’s name under the applicable heading on Schedule C-1 or in the
Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts
may be reduced or increased from time to time pursuant to assignments made in accordance with the
provisions of Section 13.1.




17









 








          “Third-Party L/C” means any letter(s) of credit issued by a third-party commercial
bank that are issued as security for any leases of real property in which a Borrower is a tenant or
lessee, in an aggregate face amount not to exceed the dollar amount set forth in Schedule T-1 at
any one time outstanding.




          “Total Commitment” means, with respect to each Lender, its Total Commitment, and, with
respect to all Lenders, their Total Commitments, in each case as such Dollar amounts are set forth
beside such Lender’s name under the applicable heading on Schedule C-1 attached hereto or on the
signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 13.1.




          “Tote Contract Revenues” means revenues derived from contracts which include the
installation and operation of pari-mutuel wagering networks to the extent such revenues have been
reported to Agent consistent with past practices. For clarification, Tote Contract Revenues shall
not include any revenue derived from the sale of any Equipment.




          “Trademark Security Agreement” has the meaning specified therefor in the Security
Agreement.




          “Triggering Event” means either (a) the occurrence of an Event of Default; or (b) the
occurrence of any event or events or the existence of any circumstance or circumstances that cause
the sum of Excess Availability plus Qualified Cash to be less than $3,000,000.




          “TTM Tote Contract Revenues” means, as of any date of determination, the Tote Contract
Revenues of Parent determined on a consolidated basis in accordance with GAAP, for the 12 month
period most recently ended.




          “Underlying Issuer” means a third Person which is the beneficiary of an L/C
Undertaking and which has issued a letter of credit at the request of the Issuing Lender for the
benefit of Borrowers.




          “Underlying Letter of Credit” means a letter of credit that has been issued by an
Underlying Issuer.




          “United States” means the United States of America.




          “United Tote” means United Tote Company, a Montana corporation.




          “UT Stockholders Agreement” means that certain Stockholders Rights Agreement dated
February 10, 2006, by and between Parent and Seller.




          “Voidable Transfer” has the meaning specified therefor in Section 16.6.




          “Wells Fargo” means Wells Fargo Bank, National Association, a national banking
association.




          “WFF” means Wells Fargo Foothill, Inc., a California corporation.





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