Document:

$345,000,000

                                CREDIT AGREEMENT

                          DATED AS OF SEPTEMBER 6, 2000

                                      AMONG

                              AUTOTOTE CORPORATION,

                                  as Borrower,

                           THE LENDERS LISTED HEREIN,

                                   as Lenders,

                           DLJ CAPITAL FUNDING, INC.,

                              as Syndication Agent,

                          LEHMAN COMMERCIAL PAPER INC.,

                             as Documentation Agent,

                                       and

                           DLJ CAPITAL FUNDING, INC.,

                             as Administrative Agent

                  LEAD ARRANGER and SOLE BOOK RUNNING MANAGER:

                            DLJ CAPITAL FUNDING, INC.

                                  CO-ARRANGER:

                              LEHMAN BROTHERS INC.

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                                  $345,000,000
                              AUTOTOTE CORPORATION
                                CREDIT AGREEMENT

                                TABLE OF CONTENTS

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Section 1. DEFINITIONS.......................................................2

     1.1   Defined Terms.....................................................2

     1.2   Accounting Terms; Utilization of GAAP for Purposes of
           Calculations Under Agreement.....................................34

     1.3   Other Definitional Provisions and Rules of Construction..........34

Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS.......................35

     2.1   Commitments; Making of Loans; Notes..............................35

     2.2   Interest on the Loans............................................44

     2.3   Fees.............................................................48

     2.4   Repayments, Prepayments and Reductions in Loan Commitments;
           General Provisions Regarding Payments............................49

     2.5   Use of Proceeds..................................................59

     2.6   Special Provisions Governing LIBO Rate Loans.....................60

     2.7   Increased Costs; Taxes; Capital Adequacy.........................62

     2.8   Obligation of Lenders and Issuing Lenders to Mitigate;
           Replacement of Lender............................................66

Section 3. LETTERS OF CREDIT................................................67

     3.1   Issuance of Letters of Credit and Lenders' Purchase of
           Participations Therein...........................................67

     3.2   Letter of Credit Fees............................................71

     3.3   Drawings and Reimbursement of Amounts Paid Under Letters of
           Credit ..........................................................71

     3.4   Obligations Absolute.............................................74

     3.5   Indemnification; Nature of Issuing Lenders' Duties...............75

     3.6   Increased Costs and Taxes Relating to Letters of Credit..........76

Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT........................77

     4.1   Conditions to Initial Loans......................................77

     4.2   Conditions to All Loans..........................................88

     4.3   Conditions to Letters of Credit..................................89

Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES.........................89

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     5.1   Organization, Powers, Qualification, Good Standing, Business
           and Subsidiaries.................................................89

     5.2   Authorization of Borrowing, etc..................................90

     5.3   Financial Condition..............................................91

     5.4   No Material Adverse Change; No Restricted Junior Payments........92

     5.5   Title to Properties; Liens; Real Property........................92

     5.6   Litigation; Adverse Facts........................................93

     5.7   Payment of Taxes.................................................93

     5.8   Performance of Agreements; Materially Adverse Agreements.........93

     5.9   Governmental Regulation..........................................94

     5.10  Securities Activities............................................94

     5.11  Employee Benefit Plans...........................................94

     5.12  Certain Fees.....................................................95

     5.13  Environmental Protection.........................................95

     5.14  Employee Matters.................................................96

     5.15  Solvency.........................................................96

     5.16  Matters Relating to Collateral...................................97

     5.17  Related Agreements...............................................97

     5.18  Disclosure.......................................................98

     5.19  Certain Jurisdictions............................................98

Section 6. COMPANY'S AFFIRMATIVE COVENANTS..................................98

     6.1   Financial Statements and Other Reports...........................98

     6.2   Legal Existence, etc............................................104

     6.3   Payment of Taxes and Claims; Tax Consolidation..................104

     6.4   Maintenance of Properties; Insurance; Application of Net
           Insurance/Condemnation Proceeds.................................105

     6.5   Inspection Rights; Lender Meeting...............................107

     6.6   Compliance with Laws, etc.......................................108

     6.7   Environmental Review and Investigation, Disclosure, Etc.;
           Company's Actions Regarding Hazardous Materials Activities,
           Environmental Claims and Violations of Environmental Laws.......108

     6.8   Execution of Subsidiary Guaranty and Personal Property
           Collateral Documents by Certain Subsidiaries and Future
           Subsidiaries; IP Collateral ....................................110

     6.9   Leasehold Properties; Matters Relating to Additional Real
           Property Collateral; Certain Opinions; Removal of Liens ........112

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     6.10  Interest Rate Protection........................................116

     6.11  Fiscal Year.....................................................116

     6.12  Connecticut Lottery Corporation.................................116

     6.13  Delisting.......................................................116

Section 7. COMPANY'S NEGATIVE COVENANTS....................................116

     7.1   Indebtedness....................................................116

     7.2   Liens and Related Matters.......................................118

     7.3   Investments; Joint Ventures.....................................122

     7.4   Contingent Obligations..........................................123

     7.5   Restricted Junior Payments......................................125

     7.6   Financial Covenants.............................................125

     7.7   Restriction on Fundamental Changes; Asset Sales and
           Acquisitions ...................................................128

     7.8   Consolidated Capital Expenditures...............................130

     7.9   Sales and Lease-Backs...........................................131

     7.10  Sale or Discount of Receivables.................................131

     7.11  Transactions with Stockholders and Affiliates...................132

     7.12  Disposal of Subsidiary Equity...................................132

     7.13  Conduct of Business.............................................133

     7.14  Amendments or Waivers of Related Agreements.....................133

     7.15  Fiscal Year.....................................................134

     7.16  Consolidated Capital Software Expenditures......................134

     7.17  Margin Stock....................................................134

Section 8. EVENTS OF DEFAULT...............................................135

     8.1   Failure to Make Payments When Due...............................135

     8.2   Default in Other Agreements.....................................135

     8.3   Breach of Certain Covenants.....................................135

     8.4   Breach of Warranty..............................................135

     8.5   Other Defaults Under Loan Documents.............................135

     8.6   Involuntary Bankruptcy; Appointment of Receiver, etc............136

     8.7   Voluntary Bankruptcy; Appointment of Receiver, etc..............136

     8.8   Judgments and Attachments.......................................136

     8.9   Dissolution.....................................................137

     8.10  Employee Benefit Plans..........................................137

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     8.11  Change in Control...............................................137

     8.12  Invalidity of Guaranties; Failure of Security; Repudiation of
           Obligations ....................................................137

Section 9. THE AGENTS......................................................138

     9.1   Appointment.....................................................138

     9.2   Powers and Duties; General Immunity.............................139

     9.3   Representations and Warranties; No Responsibility For
           Appraisal of Creditworthiness...................................141

     9.4   Right to Indemnity..............................................141

     9.5   Successor Agents and Swing Line Lender..........................142

     9.6   Collateral Documents and Guaranties.............................142

Section 10. MISCELLANEOUS .................................................143

     10.1  Successors and Assigns..........................................143

     10.2  Expenses........................................................145

     10.3  Indemnity.......................................................146

     10.4  Set-Off; Security Interest in Deposit Accounts..................147

     10.5  Ratable Sharing.................................................147

     10.6  Amendments and Waivers..........................................148

     10.7  Independence of Covenants.......................................150

     10.8  Notices.........................................................150

     10.9  Survival of Representations, Warranties and Agreements..........150

     10.10 Failure or Indulgence Not Waiver; Remedies Cumulative...........150

     10.11 Marshalling; Payments Set Aside.................................151

     10.12 Severability....................................................151

     10.13 Obligations Several; Independent Nature of Lenders' Rights......151

     10.14 Headings........................................................151

     10.15 Applicable Law..................................................151

     10.17 Consent to Jurisdiction and Service of Process..................152

     10.18 Waiver of Jury Trial............................................152

     10.19 Confidentiality.................................................153

     10.20 Counterparts; Effectiveness.....................................153

     Signature pages.......................................................S-1

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                                    EXHIBITS

I           FORM OF NOTICE OF BORROWING

II          FORM OF NOTICE OF CONVERSION/CONTINUATION

III         FORM OF REQUEST FOR ISSUANCE OF LETTER OF CREDIT

IV-A        FORM OF TRANCHE A TERM NOTE

IV-B        FORM OF TRANCHE B TERM NOTE

IV-C        FORM OF REVOLVING NOTE

IV-D        FORM OF SWING LINE NOTE

V           FORM OF COMPLIANCE CERTIFICATE

VI          FORM OF FINANCIAL CONDITION CERTIFICATE

VII-A       FORM OF CLOSING DATE OPINION OF KRAMER LEVIN NAFTALIS & FRANKEL
            L.L.P

VII-B       FORM OF CLOSING DATE OPINION OF SMITH, GAMBRELL & RUSSELL, LLP

VII-C       FORM OF CLOSING DATE OPINION OF SILLS, CUMMIS, RADIN, TISCHMAN,
            EPSTEIN & GROSS P.A.

VII-D       FORM OF CLOSING DATE OPINION OF TOBIN, CARBERRY, O'MALLEY, RILEY &
            SELINGER, P.C.

VII-E       FORM OF CLOSING DATE OPINION OF SHRECK MORRIS

VII-F       FORM OF CLOSING DATE OPINION OF MARTIN E. SCHLOSS, ESQ.

VII-G       FORM OF CLOSING DATE OPINION OF C. GRAY BETHEA, ESQ.

VIII        FORM OF OPINION OF O'MELVENY & MYERS LLP

IX          FORM OF ASSIGNMENT AGREEMENT

X           FORM OF CERTIFICATE RE NON-BANK STATUS

XI          INTENTIONALLY OMITTED

XII         FORM OF SECURITY AGREEMENT

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XIII        FORM OF SUBSIDIARY GUARANTY

XIV         FORM OF AGREEMENT OF JOINDER

XV          FORM OF COLLATERAL ACCESS AGREEMENT

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                                    SCHEDULES

2.1         LENDERS' COMMITMENTS AND PRO RATA SHARES

5.1         SUBSIDIARIES OF COMPANY

5.5         REAL PROPERTY

5.6         LITIGATION

5.13        ENVIRONMENTAL MATTERS

7.1         CERTAIN EXISTING INDEBTEDNESS

7.2         CERTAIN EXISTING LIENS

7.2C(a)     CERTAIN EXISTING AGREEMENTS WITH GOVERNMENTAL AUTHORITIES
            PROHIBITING THE ASSUMPTION OR CREATION OF LIENS

7.2C(e)     EXISTING RIGHTS OF FIRST REFUSAL WITH RESPECT TO INTERESTS IN
            CERTAIN SUBSIDIARIES AND JOINT VENTURES

7.2C(g)     CERTAIN AGREEMENTS PROHIBITING THE CREATION OR ASSUMPTION OF ANY
            LIEN ON ASSETS

7.2D(a)     CERTAIN EXISTING AGREEMENTS WITH GOVERNMENTAL AUTHORITIES
            RESTRICTING THE ABILITY TO TRANSFER ASSETS

7.2D(c)     CERTAIN AGREEMENTS RESTRICTING THE PAYMENT OF DIVIDENDS AND THE
            MAKING OF DISTRIBUTIONS ON EQUITY INTERESTS

7.3         CERTAIN EXISTING INVESTMENTS

7.4         CERTAIN EXISTING CONTINGENT OBLIGATIONS

7.11(vi)    TRANSACTIONS WITH AFFILIATES

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<PAGE>

                                  $345,000,000
                              AUTOTOTE CORPORATION
                                CREDIT AGREEMENT

            This CREDIT AGREEMENT is dated as of September 6, 2000, and entered
into by and among AUTOTOTE CORPORATION, a Delaware corporation ("Company"), THE
LENDERS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to
herein as a "Lender" and collectively as "Lenders"), DLJ CAPITAL FUNDING, INC.
("DLJ"), as administrative agent for Lenders (in such capacity, "Administrative
Agent"), DLJ, as syndication agent for Lenders (in such capacity, "Syndication
Agent"), Lead Arranger and Sole Book Running Manager, LEHMAN COMMERCIAL PAPER
INC., ("LCPI"), as documentation agent for Lenders (in such capacity,
"Documentation Agent"), and LEHMAN BROTHERS INC. ("Lehman") as Co-Arranger.
Capitalized terms used herein without definition shall have the meanings set
forth therefor in subsection 1.1 of this Agreement.

                                 R E C I T A L S

            WHEREAS, Company has formed Acquisition Co. for the purpose of
acquiring all the outstanding shares of Scientific Games Common Stock;

            WHEREAS, Lenders have agreed to extend certain credit facilities to
Company to be used for the purposes of providing funds for (i) the Acquisition
Financing Requirements, (ii) working capital and other general purposes of
Company and its Subsidiaries, and (iii) issuing Letters of Credit for the
purposes set forth herein;

            WHEREAS, on the Closing Date, Company will secure all of the
Obligations hereunder and under the other Loan Documents by granting to
Administrative Agent, on behalf of Lenders, a First Priority Lien on
substantially all of its personal, real and mixed property, including a pledge
of all of the capital stock of its existing Domestic Subsidiaries and a pledge
of 65% of the capital stock of its existing direct Foreign Subsidiaries (other
than Inactive Subsidiaries);

            WHEREAS, on the Closing Date, all of Company's existing wholly-owned
Domestic Subsidiaries will guarantee the Obligations hereunder and under the
other Loan Documents and each of such existing wholly-owned Domestic
Subsidiaries will secure its guaranty by granting to Administrative Agent, on
behalf of Lenders, a First Priority Lien on substantially all of its respective
personal, real and mixed property, including a pledge of all of the capital
stock of each of its existing Domestic Subsidiaries and 65% of the capital stock
of each of its existing direct Foreign Subsidiaries (other than Inactive
Subsidiaries);

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            NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and the Agents agree
as follows:

Section 1. DEFINITIONS

 .1 Defined Terms.

      The following terms used in this Agreement shall have the following
meanings:

      "Acquired Business" has the meaning assigned to that term in the
definition of "Permitted Acquisition" in this subsection 1.1.

      "Acquisition Co." means ATX Enterprises, Inc., a Delaware corporation and
wholly-owned Subsidiary of Company.

      "Acquisition Financing Requirements" means the aggregate of all amounts
necessary (i) to finance the purchase price for all of the outstanding shares of
Scientific Games Common Stock (and the retirement of all outstanding stock
options (including related withholding tax with respect to the exercise of such
options)) pursuant to the Merger in an aggregate amount of approximately $307.7
million; (ii) to repay in full the Existing Company Bank Debt in an aggregate
principal amount of approximately $36.0 million; (iii) to repay Existing Company
Senior Notes in an aggregate principal amount of $110 million; (iv) to repay the
Existing Company Convertible Debt in an aggregate principal amount of $35
million; (v) to pay the Tender Premiums in an amount not to exceed $9.5 million;
(vi) to repay in full the Existing Scientific Games Bank Debt in an aggregate
principal amount of approximately $25.0 million; (vii) to pay accrued interest
on existing Indebtedness in the approximate amount of $1.8 million; (viii) to
cash collateralize the Existing Letters of Credit in an aggregate amount not to
exceed $1.4 million; and (ix) to pay Transaction Costs in an amount not to
exceed $30.1 million.

      "Additional Mortgaged Property" has the meaning assigned to that term in
subsection 6.9.

      "Additional Mortgages" has the meaning assigned to that term in subsection
6.9.

      "Adjusted Consolidated Net Income" means, for any period, the net income
(or loss) of Company and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP;
provided that there shall be excluded therefrom (i) the income (or loss) of any
Person (other than a Subsidiary of Company) in which any other Person (other
than Company or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to
Company or any of its Subsidiaries by such Person during such period, (ii)
except as otherwise expressly permitted under this Agreement, the income (or
loss) of any Person accrued prior to the date it becomes a Subsidiary of Company
or is merged into or consolidated with Company or any of its Subsidiaries or
that Person's assets are acquired by Company or any of its Subsidiaries and
(iii) the income of any Subsidiary of Company to the extent that the declaration
or payment of dividends or similar distributions by that Subsidiary of that
income is not at the time permitted by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary; provided that the
foregoing clause (iii) shall

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<PAGE>

not apply with respect to the income of any Foreign Subsidiary of Company to the
extent that the restriction on the declaration or payment of dividends or
similar distributions by that Foreign Subsidiary of that income is permitted by
subsection 7.2C(c) or 7.2D(d).

      "Adjusted LIBO Rate" means, for any Interest Rate Determination Date with
respect to an Interest Period for a LIBO Rate Loan, the rate per annum obtained
by dividing (i) the rate per annum (rounded upward to the nearest 1/16 of one
percent) which appears on the British Bankers Association Telerate page 3750 (or
such other comparable page as may, in the reasonable opinion of the
Administrative Agent with the consent of Company (which consent shall not be
unreasonably withheld or delayed), replace such page for the purpose of
displaying such rate), at which Dollar deposits with a maturity comparable to
such Interest Period as of approximately 11:00 a.m. (London time) on such
Interest Rate Determination Date by (ii) a percentage equal to 100% minus the
stated maximum rate of all reserve requirements (including any marginal,
emergency, supplemental, special or other reserves) applicable on such Interest
Rate Determination Date to any member bank of the Federal Reserve System in
respect of "Eurocurrency liabilities" as defined in Regulation D (or any
successor category of liabilities under Regulation D).

      "Administrative Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 9.5A.

      "Affected Class" has the meaning assigned to that term in subsection 10.6.

      "Affected Lender" has the meaning assigned to that term in subsection
2.6C.

      "Affiliate", as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.

      "Agents" means, collectively, the Syndication Agent, the Documentation
Agent and the Administrative Agent and any Supplemental Collateral Agents (as
defined in subsection 9.1B).

      "Agreement" means this Credit Agreement dated as of September 6, 2000 and
all the exhibits and schedules hereto, as it may be amended, supplemented or
otherwise modified from time to time.

      "Annualized" means (i) with respect to the Fiscal Quarter of Company
ending September 30, 2000, (x) the applicable amount for the period from and
including the Closing Date through and including September 30, 2000 multiplied
by (y) (i) 360 divided by (ii) the number of days from and including the Closing
Date through and including September 30, 2000, (ii) with respect to the Fiscal
Quarter of Company ending December 31, 2000, (x) the applicable amount for the
period from and including the Closing Date through and including December 31,
2000 multiplied by (y) (i) 360 divided by (ii) the number of days from and
including the Closing Date through and including December 31, 2000, and (iii)
with respect to the Fiscal Quarter of Company ending March 31, 2001, (x) the
applicable amount for the period from and including the Closing Date through and

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including March 31, 2001 multiplied by (y) (i) 360 divided by (ii) the number of
days from and including the Closing Date through and including March 31, 2001.

      "Applicable Base Rate Margin" means, as at any date of determination, (i)
with respect to Tranche B Term Loans, 3.00% per annum, and (ii) with respect to
Tranche A Term Loans and Revolving Loans, a percentage per annum as set forth
below opposite the applicable Consolidated Leverage Ratio calculated on a Pro
Forma Basis:

         Consolidated Leverage Ratio         Applicable Base Rate Margin

         ---------------------------------------------------------------
         greater than or equal to 5.00:1.00             2.50%

         less than 5.00:1.00 but greater
         than or equal to 4.50:1.00                     2.25%

         less than 4.50:1.00 but greater
         than or equal to 4.00:1.00                     2.00%

         less than 4.00:1.00 but greater
         than or equal to 3.50:1.00                     1.75%

         less than 3.50:1.00 but greater
         than or equal to 3.00:1.00                     1.50%

         less than 3.00:1.00                            1.25%

; provided that until the delivery of the first Margin Determination Certificate
by Company to Administrative Agent pursuant to subsection 6.1 (xviii) after the
six-month anniversary of the Closing Date, the Applicable Base Rate Margin for
Tranche A Term Loans and Revolving Loans that are Base Rate Loans shall be 2.25%
per annum.

      "Applicable LIBO Rate Margin" means, as at any date of determination, (i)
with respect to Tranche B Term Loans, 4.25% per annum, and (ii) with respect to
Tranche A Term Loans and Revolving Loans, a percentage per annum as set forth
below opposite the applicable Consolidated Leverage Ratio calculated on a Pro
Forma Basis:

         Consolidated Leverage Ratio       Applicable LIBO Rate Margin

         -------------------------------------------------------------
         greater than or equal to 5.00:1.00             3.75%

         less than 5.00:1.00 but greater
         than or equal to 4.50:1.00                     3.50%

         less than 4.50:1.00 but greater
         than or equal to 4.00:1.00                     3.25%

         less than 4.00:1.00 but greater
         than or equal to 3.50:1.00                     3.00%

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         Consolidated Leverage Ratio       Applicable LIBO Rate Margin

         -------------------------------------------------------------
         less than 3.50:1.00 but greater
         than or equal to 3.00:1.00                     2.75%

         less than 3.00:1.00                            2.50%

; provided that until the delivery of the first Margin Determination Certificate
by Company to Administrative Agent pursuant to subsection 6.1 (xviii) after the
six-month anniversary of the Closing Date, the Applicable LIBO Rate Margin for
Tranche A Term Loans and Revolving Loans that are LIBO Rate Loans shall be 3.50%
per annum.

      "Approved Fund" means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.

      "Arranger" means DLJ Capital Funding, Inc. as Lead Arranger and Sole Book
Running Manager.

      "Asset Sale" means the sale, lease, assignment or other transfer (whether
voluntary or involuntary) for value (collectively, a "transfer") by Company or
any of its Subsidiaries to any Person other than Company or any of its
wholly-owned Subsidiaries of (i) any of the equity ownership of any of Company's
Subsidiaries, (ii) substantially all of the assets of any division or line of
business of Company or any of its Subsidiaries, or (iii) any other assets
(whether tangible or intangible) of Company or any of its Subsidiaries (other
than (a) inventory sold in the ordinary course of business, (b) other equipment
transferred for not in excess of $2 million for any single transaction or
related series of transactions and $4 million in the aggregate for each Fiscal
Year, and (c) any such other assets to the extent that (x) the aggregate value
of such assets transferred in any single transaction or related series of
transactions is equal to $2 million or less and (y) the aggregate value of such
assets transferred in any Fiscal Year is equal to $4 million or less).

      "Assignment Agreement" means an Assignment Agreement in substantially the
form of Exhibit IX annexed hereto.

      "Authorized Representative" means any of the President, the Chief
Financial Officer and the Treasurer (or any other senior executive officer
designated in writing by the Company to the Administrative Agent and reasonably
acceptable to the Administrative Agent).

      "Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.

      "Base Rate" means, at any time, the higher of (x) the Prime Rate or (y)
the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.

      "Base Rate Loans" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.

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<PAGE>

      "Business Day" means (i) for all purposes other than as covered by clause
(ii) below, any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of New York or is a day on which banking
institutions located in such state are authorized or required by law or other
governmental action to close, and (ii) with respect to all notices,
determinations, fundings and payments in connection with the Adjusted LIBO Rate
or any LIBO Rate Loans, any day that is a Business Day described in clause (i)
above and that is also a day for trading by and between banks in Dollar deposits
in the London interbank market.

      "Capital Lease", as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.

      "Cash" means money, currency or a credit balance in a demand, time,
savings, passbook or like account with a bank, savings and loan association,
credit union or like organization, other than an account evidenced by a
negotiable certificate of deposit.

      "Cash Equivalents" means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States Government or (b) issued by any agency of the
United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within one year after such date;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after such date
and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100 million; and (v) shares of any money market mutual fund that (a)
invests solely in the types of investments referred to in clauses (i) through
(iv) above or in substantially similar investments and (b) has a rating of no
less than "AAA" from Moody's and an equivalent rating from S&P.

      "Cash Junior Payment" has the meaning assigned to that term in the
definition of "Consolidated Fixed Charges" in this subsection 1.1.

      "Certificate of Designation" means the Certificate of Designations,
Preferences and Relative, Participating, Optional and Other Special Rights of
Preferred Stock and Qualifications, Limitations and Restrictions Thereof of
Series A Convertible Preferred Stock of Autotote Corporation dated as of
September 6, 2000.

      "Certificate re Non-Bank Status" means a certificate substantially in the
form of Exhibit X annexed hereto delivered by a Lender to Administrative Agent
pursuant to subsection 2.7B(iii).

                                       6                               EXECUTION
<PAGE>

      "Change in Control" means:

            (i) a change shall occur in the Board of Directors of Company so
      that a majority of the Board of Directors of Company ceases to consist of
      the individuals who constituted the Board of Directors of Company on the
      Closing Date (or individuals whose election or nomination for election was
      approved by a vote of at least a majority of the directors then in office
      who either were directors on the Closing Date or whose election or
      nomination for election was previously so approved); or

            (ii) any Person or group (within the meaning of Rule 13d-3 of the
      Securities and Exchange Commission) (other than Olivetti or an affiliate
      of Olivetti or a group in which Olivetti or an affiliate of Olivetti is
      the largest beneficial owner of shares of the voting capital stock of
      Company) shall become or be the owner, directly or indirectly,
      beneficially or of record, of shares representing more than 35% of the
      aggregate ordinary voting power represented by the issued and outstanding
      capital stock of Company on a fully diluted basis; or

            (iii) a "Change of Control" occurs as that term is defined in the
      Senior Subordinated Note Indenture or any other indenture or agreement
      pursuant to which Subordinated Indebtedness has been issued.

      "Class" means, as applied to Lenders, each of the following classes of
Lenders: (i) Lenders having Tranche A Term Loan Exposure; (ii) Lenders having
Tranche B Term Loan Exposure; (iii) Lenders having Revolving Loan Exposure; and
(iv) Lenders having exposure in additional commitments made in accordance with
clause (vi) of subsection 10.6.

      "Closing Date" means the date on or before September 30, 2000 on which the
initial Loans are made.

      "Closing Date Mortgaged Property" has the meaning assigned to that term in
subsection 4.1G.

      "Closing Date Mortgages" has the meaning assigned to that term in
subsection 4.1G.

      "Collateral" means, collectively, all of the real, personal and mixed
property (including capital stock) in which Liens are purported to be granted
pursuant to the Collateral Documents as security for the Obligations.

      "Collateral Access Agreement" means any landlord agreement and waiver,
mortgagee agreement and waiver, bailee letter or any similar acknowledgement or
agreement of any landlord or mortgagee in respect of any Real Property Asset
where any Collateral is located or any warehouseman or other bailee in
possession of any Collateral of any Loan Party, substantially in the form of
Exhibit XV annexed hereto with such changes thereto as may be agreed to by
Administrative Agent in the reasonable exercise of its discretion.

      "Collateral Documents" means the Security Agreement or any Mortgage
executed by Company or any of Company's Subsidiaries and granting a Lien on any
real, personal or mixed property of such Person to secure the Obligations and
all other instruments or documents

                                       7                               EXECUTION
<PAGE>

delivered by any Loan Party pursuant to this Agreement or any of the other Loan
Documents in order to grant to Administrative Agent, on behalf of Lenders, a
Lien on any real, personal or mixed property of that Loan Party as security for
the Obligations.

      "Commercial Letter of Credit" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services of Company or
any of its Subsidiaries in the ordinary course of business of Company or such
Subsidiary.

      "Commitment Fee Percentage" means, as at any date of determination, a
percentage per annum as set forth below opposite the applicable Consolidated
Leverage Ratio calculated on a Pro Forma Basis.

         Consolidated Leverage Ratio           Commitment Fee Percentage

         ---------------------------------------------------------------
         greater than or equal to 3.50:1.00v   0.50%

         less than 3.50:1.00                   0.375%

; provided that until the delivery of the first Margin Determination Certificate
by Company to Administrative Agent pursuant to subsection 6.1(xviii) after the
six-month anniversary of the Closing Date, the Commitment Fee Percentage shall
be 0.50% per annum.

      "Commitments" means the commitments of Lenders to make Loans as set forth
in subsection 2.1A.

      "Company" has the meaning assigned to that term in the introduction to
this Agreement.

      "Company Employee Benefit Plan" means any Employee Benefit Plan which is
maintained or contributed to by Company or any of its Subsidiaries.

      "Company Pension Plan" means any Pension Plan which is a Company Employee
Benefit Plan.

      "Compliance Certificate" means a certificate substantially in the form of
Exhibit V annexed hereto delivered to Administrative Agent and Lenders by
Company pursuant to subsection 6.1(iv).

      "Computation Date" has the meaning assigned to that term in subsection
2.1F(i).

      "Conforming Leasehold Interest" means any Recorded Leasehold Interest as
to which the lessor (and all other parties having a consent right) has agreed in
writing for the benefit of Administrative Agent (which writing has been
delivered to Administrative Agent), whether under the terms of the applicable
lease, under the terms of a Landlord Consent and Estoppel, or otherwise, to the
matters described in the definition of "Landlord Consent and Estoppel," which

                                      8                                EXECUTION
<PAGE>

interest, if a subleasehold or sub-subleasehold interest, is not subject to any
contrary restrictions contained in a superior lease or sublease.

      "Consolidated Capital Expenditures" means, for any period, the sum of the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in conformity with
GAAP, are included in "additions to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of Company and its
Subsidiaries; provided that Consolidated Capital Expenditures shall not include
expenditures made in acquisitions constituting Permitted Acquisitions; provided,
further that all calculations of Consolidated Capital Expenditures for any
period that ends prior to the Closing Date or that includes the Closing Date
shall be made on a Pro Forma Basis assuming the Merger was consummated on the
first day of the Fiscal Quarter ending September 30, 2000 and the Merger was a
Permitted Acquisition; provided, still further, that for purposes of calculating
Consolidated Capital Expenditures (on a Pro Forma Basis) for the period ending
(x) December 31, 2000, Consolidated Capital Expenditures for the Fiscal Quarter
deemed to have ended March 31, 2000 shall be deemed to be $21.8 million and
Consolidated Capital Expenditures for the Fiscal Quarter deemed to have ended
June 30, 2000 shall be deemed to be $19.9 million and (y) March 31, 2001,
Consolidated Capital Expenditures for the Fiscal Quarter deemed to have ended
June 30, 2000 shall be deemed to be $19.9 million; provided, still further, that
Consolidated Capital Expenditures shall not include Consolidated Capital
Software Expenditures.

      "Consolidated Capital Software Expenditures" means, for any period, the
sum of the aggregate of all expenditures by Company and its Subsidiaries during
that period to purchase or develop computer software or systems (but only to the
extent such expenditures are capitalized on the consolidated balance sheet of
Company and its Subsidiaries in conformity with GAAP); provided that
Consolidated Capital Software Expenditures shall not include expenditures made
in acquisitions constituting Permitted Acquisitions; provided, further that all
calculations of Consolidated Capital Software Expenditures for any period that
ends prior to the Closing Date or that includes the Closing Date shall be made
on a Pro Forma Basis assuming the Merger was consummated on the first day of the
Fiscal Quarter ending September 30, 2000 and the Merger was a Permitted
Acquisition; provided, still further, that for purposes of calculating
Consolidated Capital Software Expenditures (on a Pro Forma Basis) for the period
ending (x) December 31, 2000, Consolidated Capital Software Expenditures for the
Fiscal Quarter deemed to have ended March 31, 2000 shall be deemed to be $1.2
million and Consolidated Capital Software Expenditures for the Fiscal Quarter
deemed to have ended June 30, 2000 shall be deemed to be $1.5 million and (y)
March 31, 2001, Consolidated Capital Software Expenditures for the Fiscal
Quarter deemed to have ended June 30, 2000 shall be deemed to be $1.5 million.

      "Consolidated Cash Interest Expense" means, for any period, Consolidated
Interest Expense for such period excluding, however, any interest expense not
payable in Cash (including amortization of discount and amortization of debt
issuance costs).

      "Consolidated Cash Taxes" means, for any period, federal, state, local and
foreign income taxes of Company and its Subsidiaries paid in Cash during such
period.

                                       9                               EXECUTION
<PAGE>

      "Consolidated Current Assets" means, as at any date of determination, the
total assets of Company and its Subsidiaries on a consolidated basis which may
properly be classified as current assets in conformity with GAAP, but excluding
Cash and Cash Equivalents.

      "Consolidated Current Liabilities" means, as at any date of determination,
the total liabilities of Company and its Subsidiaries on a consolidated basis
which may properly be classified as current liabilities in conformity with GAAP,
but excluding the Revolving Loans and the current portion of long term
Indebtedness of Company (including the Term Loans).

      "Consolidated EBITDA" means, for any period, the sum of the amounts for
such period of (i) Consolidated Net Income, (ii) Consolidated Interest Expense,
(iii) provisions for taxes based on income, (iv) total depreciation expense, (v)
total amortization expense (including without limitation any amortization of
amounts referred to in subsection 2.3 payable to Arranger, Agents and Lenders on
or before the Closing Date), (vi) other non-cash items reducing Consolidated Net
Income less other non-cash items increasing Consolidated Net Income, and (vii)
in each case, to the extent (x) actually paid in Cash by Company on or before
the Closing Date and (y) resulting in a reduction of Consolidated Net Income for
the Fiscal Quarter ending September 30, 2000, (A) any fees paid by Company in
connection with the placement of the Convertible Preferred Stock and (B) the
Tender Premiums, all of the foregoing as determined on a consolidated basis for
Company and its Subsidiaries in conformity with GAAP; provided that all
calculations of Consolidated EBITDA for any period that ends prior to the
Closing Date or that includes the Closing Date shall be made on a Pro Forma
Basis assuming the Merger was consummated on the first day of the Fiscal Quarter
ending September 30, 2000 and the Merger was a Permitted Acquisition; provided,
further that for purposes of calculating Consolidated EBITDA (on a Pro Forma
Basis) and for purposes of each of the Consolidated Fixed Charge Coverage Ratio,
the Consolidated Leverage Ratio and the Consolidated Interest Coverage Ratio,
for the period ending (x) September 30, 2000, Consolidated EBITDA for the Fiscal
Quarter deemed to have ended December 31, 1999 shall be deemed to be $24.1
million, Consolidated EBITDA for the Fiscal Quarter deemed to have ended March
31, 2000 shall be deemed to be $24.2 million and Consolidated EBITDA for the
Fiscal Quarter deemed to have ended June 30, 2000 shall be deemed to be $24.8
million, (y) December 31, 2000, Consolidated EBITDA for the Fiscal Quarter
deemed to have ended March 31, 2000 shall be deemed to be $24.2 million and
Consolidated EBITDA for the Fiscal Quarter deemed to have ended June 30, 2000
shall be deemed to be $24.8 million, and (z) March 31, 2001, Consolidated EBITDA
for the Fiscal Quarter deemed to have ended June 30, 2000 shall be deemed to be
$24.8 million.

      "Consolidated Excess Cash Flow" means, for any period, an amount (if
positive) equal to (i) the sum, without duplication, of the amounts for such
period of (a) Consolidated EBITDA and (b) the Consolidated Working Capital
Adjustment minus (ii) the sum, without duplication, of the amounts for such
period of (a) voluntary and scheduled repayments of Consolidated Total Debt
(excluding repayments of Revolving Loans except to the extent the Revolving Loan
Commitments are permanently reduced in connection with such repayments), (b)
Consolidated Capital Expenditures (net of any proceeds of any related financings
with respect to such expenditures), (c) Consolidated Capital Software
Expenditures, (d) amounts expended on Permitted Acquisitions, (e) Consolidated
Cash Interest Expense, (f) Consolidated Cash Taxes and (g) dividends paid in
cash.

                                       10                              EXECUTION
<PAGE>

      "Consolidated Fixed Charge Coverage Ratio" means, as of any date of
determination, the ratio computed for the four Fiscal Quarter period most
recently ended on or before such date of determination of (x) Consolidated
EBITDA to (y) Consolidated Fixed Charges.

      "Consolidated Fixed Charges" means, for any period, the sum (without
duplication) of the amounts for such period of (i) Consolidated Cash Interest
Expense, (ii) Consolidated Cash Taxes, (iii) the aggregate amount of scheduled
payments of principal on Indebtedness of Company and its Subsidiaries (including
that portion attributable to Capital Leases in accordance with GAAP) ("Scheduled
Principal Payments") for such period, and (iv) the amount of Restricted Junior
Payments paid in cash during such period permitted under subsection 7.5 ("Cash
Junior Payments"), all of the foregoing as determined on a consolidated basis
for Company and its Subsidiaries in conformity with GAAP; provided that all
calculations of Consolidated Fixed Charges for any period that ends prior to the
Closing Date or that includes the Closing Date shall be made on a Pro Forma
Basis assuming the Merger was consummated on the first day of the Fiscal Quarter
ending September 30, 2000 and the Merger was a Permitted Acquisition; provided,
further, that for purposes of calculating Consolidated Fixed Charges (on a Pro
Forma Basis) for the period ending (x) September 30, 2000, Consolidated Cash
Taxes for the Fiscal Quarter deemed to have ended December 31, 1999 shall be
deemed to be $1.5 million, Consolidated Cash Taxes for the Fiscal Quarter deemed
to have ended March 31, 2000 shall be deemed to be $1.5 million and Consolidated
Cash Taxes for the Fiscal Quarter deemed to have ended June 30, 2000 shall be
deemed to be $1.5 million, and Scheduled Principal Payments for the Fiscal
Quarter deemed to have ended December 31, 1999 shall be deemed to be $0.3
million, Scheduled Principal Payments for the Fiscal Quarter deemed to have
ended March 31, 2000 shall be deemed to be $0.3 million and Scheduled Principal
Payments for the Fiscal Quarter deemed to have ended June 30, 2000 shall be
deemed to be $0.3 million, (y) December 31, 2000 , Consolidated Cash Taxes for
the Fiscal Quarter deemed to have ended March 31, 2000 shall be deemed to be
$1.5 million and Consolidated Cash Taxes for the Fiscal Quarter deemed to have
ended June 30, 2000 shall be deemed to be $1.5 million and Scheduled Principal
Payments for the Fiscal Quarter deemed to have ended March 31, 2000 shall be
deemed to be $0.3 million and Scheduled Principal Payments for the Fiscal
Quarter deemed to have ended June 30, 2000 shall be deemed to be $0.3 million,
and (z) March 31, 2001, Consolidated Cash Taxes for the Fiscal Quarter deemed to
have ended June 30, 2000 shall be deemed to be $1.5 million and Scheduled
Principal Payments for the Fiscal Quarter deemed to have ended June 30, 2000
shall be deemed to be $0.3 million; provided, still further, that
notwithstanding anything to the contrary contained in the first proviso to this
sentence, for purposes of the calculation of Consolidated Fixed Charges for the
period ending on September 30, 2000, December 31, 2000 and March 31, 2001,
Consolidated Cash Interest Expense and Cash Junior Payments for the Fiscal
Quarter ending September 30, 2000, December 31, 2000 and March 31, 2001 shall
not be determined on a Pro Forma Basis but shall be determined on an Annualized
basis.

      "Consolidated Interest Coverage Ratio" means, as of any date of
determination, the ratio computed for the four Fiscal Quarter period most
recently ended on or before such date of determination of Consolidated EBITDA to
Consolidated Cash Interest Expense; provided that Consolidated Cash Interest
Expense for the Fiscal Quarters ending September 30, 2000, December 31, 2000 and
March 31, 2001, shall be determined on an Annualized basis.

                                       11                              EXECUTION
<PAGE>

      "Consolidated Interest Expense" means, for any period, the sum of total
interest expense (including that portion attributable to Capital Leases in
accordance with GAAP and capitalized interest) of Company and its Subsidiaries
on a consolidated basis with respect to all outstanding Indebtedness of Company
and its Subsidiaries, including all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and net costs under Interest Rate Agreements, but excluding, however, the
amortization of any amounts referred to in subsection 2.3 payable to Arranger,
Agents and Lenders on or before the Closing Date.

      "Consolidated Leverage Ratio" means, as at any date of determination, the
ratio of (a) Consolidated Total Debt as of the last day of the Fiscal Quarter
for which such determination is being made to (b) Consolidated EBITDA for the
consecutive four Fiscal Quarters ending on the last day of the Fiscal Quarter
for which such determination is being made.

      "Consolidated Net Income" means, for any period, the net income (or loss)
of Company and its Subsidiaries on a consolidated basis for such period taken as
a single accounting period determined in conformity with GAAP; provided that
there shall be excluded therefrom (i) the income (or loss) of any Person (other
than a Subsidiary of Company) in which any other Person (other than Company or
any of its Subsidiaries) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to Company or any of
its Subsidiaries by such Person during such period, (ii) except as otherwise
expressly permitted under this Agreement, the income (or loss) of any Person
accrued prior to the date it becomes a Subsidiary of Company or is merged into
or consolidated with Company or any of its Subsidiaries or that Person's assets
are acquired by Company or any of its Subsidiaries, (iii) the income of any
Subsidiary of Company to the extent that the declaration or payment of dividends
or similar distributions by that Subsidiary of that income is not at the time
permitted by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Subsidiary; provided that the foregoing clause (iii) shall not apply with
respect to the income of any Foreign Subsidiary of Company to the extent that
the restriction on the declaration or payment of dividends or similar
distributions by that Foreign Subsidiary of that income is permitted by
subsection 7.2C(c) or 7.2D(d), (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains.

      "Consolidated Net Worth" means, as of any date of determination, the sum
of the capital stock (including, without limitation, Convertible Preferred
Stock) and additional paid-in capital plus retained earnings (or minus
accumulated deficits) of Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.

      "Consolidated Total Debt" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.

      "Consolidated Working Capital" means, as at any date of determination, the
excess (or deficit) of Consolidated Current Assets over Consolidated Current
Liabilities.

                                       12                              EXECUTION
<PAGE>

      "Consolidated Working Capital Adjustment" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or is
less than) Consolidated Working Capital as of the end of such period.

      "Consulting Agreement" means that certain Consulting Agreement dated as of
May 18, 2000 by and between Company and William G. Malloy, as such agreement may
be amended from time to time to the extent permitted under subsection 7.14.

      "Contingent Obligation", as applied to any Person, means, without
duplication, any direct or indirect liability, contingent or otherwise, of that
Person (i) with respect to any Indebtedness, lease, dividend or other obligation
of another if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such obligation
of another that such obligation of another will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders of
such obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (iii) under Hedge Agreements. Contingent Obligations shall include
(a) the direct or indirect guaranty, endorsement (otherwise than for collection
or deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation of another, (b)
the obligation to make take-or-pay or similar payments if required regardless of
non-performance by any other party or parties to an agreement, and (c) any
liability of such Person for the obligation of another through any agreement
(contingent or otherwise) (X) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (Y) to maintain the solvency
or any balance sheet item, level of income or financial condition of another if,
in the case of any agreement described under subclauses (X) or (Y) of this
sentence, the primary purpose or intent thereof is as described in the preceding
sentence. The amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported or, if less, the amount
to which such Contingent Obligation is specifically limited.

      "Contractual Obligation", as applied to any Person, means any material
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.

      "Convertible Preferred Stock" means Company's Series A Convertible
Preferred Stock.

      "Convertible Preferred Stock Purchase Agreement" means that certain
Preferred Stock Purchase Agreement dated as of August 31, 2000 by and among
Company, Olivetti and Tote Holdings, L.P., as Purchasers, providing for the
aggregate purchase and sale of shares of Convertible Preferred Stock in an
amount not to exceed $110 million, as such purchase agreement may be amended
from time to time to the extent permitted under subsection 7.14.

                                       13                              EXECUTION
<PAGE>

      "Currency Agreement" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement to which Company or any of its Subsidiaries is a party.

      "DLJ" means DLJ Capital Funding, Inc.

      "Documentation Agent" has the meaning assigned to that term in the
introduction to this Agreement.

      "Dollar Equivalent" means, at any time, (x) as to any amount denominated
in Dollars, the amount thereof at such time, and (y) as to any amount
denominated in a currency other than Dollars, the equivalent amount in Dollars
as determined by Administrative Agent at such time on the basis of the Exchange
Rate for the purchase of Dollars with such currency on the most recent
Computation Date provided for in subsection 2.1F(i) or such other time as may be
reasonably specified by Administrative Agent.

      "Dollars" and the sign "$" mean the lawful money of the United States of
America.

      "Domestic Subsidiary" means a direct or indirect Subsidiary of Company
that is incorporated or organized under the laws of a state of the United States
of America.

      "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c)
an Approved Fund; and (d) any other person (other than a natural Person)
approved by the Administrative Agent, in the case of any assignment of a
Revolving Loan, the Issuing Lender, and, unless (X) such Person is taking
delivery of an assignment in connection with physical settlement of a credit
derivatives transaction or (Y) an Event of Default has occurred and is
continuing, Company (each such approval not to be unreasonably withheld or
delayed). If the consent of Company to an assignment or to an Eligible Assignee
is required hereunder (including a consent to an assignment which does not meet
the minimum assignment thresholds specified in subsection 10.1B(i)), Company
shall be deemed to have given its consent five (5) Business Days after the date
notice thereof has been delivered by the assigning Lender (through the
Administrative Agent) unless such consent is expressly refused by Company prior
to such fifth Business Day.

      "Employee Benefit Plan" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is, or during the last six years was, maintained or
contributed to by Company, any of its Subsidiaries or any of their respective
ERISA Affiliates. Any such plan of a former ERISA Affiliate of Company or any of
its Subsidiaries shall continue to be considered an Employee Benefit Plan within
the meaning of this definition solely with respect to the period during which
such former ERISA Affiliate was an ERISA Affiliate of Company or any of its
Subsidiaries with respect to liabilities for which Company or any of its
Subsidiaries could be liable under the Internal Revenue Code or ERISA.

      "Environmental Claim" means any investigation, written notice, written
notice of violation, claim, action, suit, proceeding, written demand, abatement
order or other order or directive (conditional or otherwise), by any
governmental authority or any other Person, arising (i) pursuant to or in
connection with any actual or alleged violation of any Environmental Law, (ii)
in connection with any Hazardous Materials or any actual or alleged Hazardous
Materials

                                       14                              EXECUTION
<PAGE>

Activity, or (iii) in connection with any actual or alleged damage, injury,
threat or harm to health, safety, natural resources or the environment.

      "Environmental Laws" means any and all federal, state, foreign or local
statutes, ordinances, orders, rules, regulations, judgments, Governmental
Authorizations, binding and enforceable guidance documents, or any other
requirements of governmental authorities now or hereafter in effect relating to
(i) environmental matters, including those relating to any Hazardous Materials
Activity, (ii) the generation, use, storage, transportation or disposal of
Hazardous Materials, or (iii) occupational safety and health, industrial
hygiene, land use or the protection of human, plant or animal health or welfare,
in any manner applicable to Company or any of its Subsidiaries or any Facility,
including the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. ss.9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. ss.1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
ss.6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. ss.1251 et
seq.), the Clean Air Act (42 U.S.C. ss.7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. ss.2601 et seq.), the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. ss.136 et seq.), the Occupational Safety and Health
Act (29 U.S.C. ss.651 et seq.), the Oil Pollution Act (33 U.S.C. ss.2701 et
seq.) and the Emergency Planning and Community Right-to-Know Act (42 U.S.C.
ss.11001 et seq.), each as amended or supplemented, any analogous state or local
statutes or laws, now or hereafter in effect, and any regulations promulgated
pursuant to any of the foregoing.

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.

      "ERISA Affiliate" means, as applied to any Person, (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
any member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of Company or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of Company or
such Subsidiary within the meaning of this definition with respect to the period
such entity was an ERISA Affiliate of Company or such Subsidiary and with
respect to liabilities for which Company or such Subsidiary could be liable
under the Internal Revenue Code or ERISA.

      "ERISA Event" means (i) a "reportable event" within the meaning of Section
4043 of ERISA and the regulations issued thereunder with respect to any Pension
Plan (excluding those for which the provision for 30-day notice to the PBGC has
been waived by regulation); (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect to any Pension
Plan (whether or not waived in accordance with Section 412(d) of the Internal
Revenue Code) or the failure to make by its due date a required installment
under Section 412(m) of the Internal Revenue Code with respect to any Pension
Plan or the failure to make any required contribution to a Multiemployer Plan;
(iii) the provision by the administrator of any Pension Plan pursuant to Section
4041(a)(2) of ERISA of a notice of intent to terminate such

                                       15                              EXECUTION
<PAGE>

plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal, during any year for which it was a "substantial employer" (as
defined in Section 4001(a) of ERISA), by Company, any of its Subsidiaries or any
of their respective ERISA Affiliates from any Pension Plan with two or more
contributing sponsors or the termination of any such Pension Plan resulting in
liability pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the
PBGC of proceedings to terminate any Pension Plan, or the occurrence of any
event or condition which would reasonably be expected to constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on Company, any
of its Subsidiaries or any of their respective ERISA Affiliates pursuant to
Section 4062(e) or 4069 of ERISA or by reason of the application of Section
4212(c) of ERISA; (vii) the withdrawal of Company, any of its Subsidiaries or
any of their respective ERISA Affiliates in a complete or partial withdrawal
(within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer
Plan if there is any potential liability therefor, or the receipt by Company,
any of its Subsidiaries or any of their respective ERISA Affiliates of notice
from any Multiemployer Plan that it is in reorganization or insolvency pursuant
to Section 4241 or 4245 of ERISA, or that it intends to terminate or has
terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act
or omission which would reasonably be expected to give rise to the imposition on
Company or any of its Subsidiaries of material fines, penalties, taxes or
related charges under Chapter 43 of the Internal Revenue Code or under Section
409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any
Employee Benefit Plan; (ix) the occurrence of an act or omission which would
reasonably be expected to give rise to the imposition on Company, any of its
Subsidiaries or any of their respective ERISA Affiliates of material fines,
penalties, taxes or related charges under Section 4071 of ERISA in respect of
any Employee Benefit Plan; (x) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan other than a
Multiemployer Plan or the assets thereof, or against Company, any of its
Subsidiaries or any of their respective ERISA Affiliates in connection with any
Employee Benefit Plan, which could reasonably be expected to result in a
liability to the Company, any of its Subsidiaries or any of their respective
ERISA Affiliates in excess of $500,000; (xi) receipt from the Internal Revenue
Service of notice of the failure of any Pension Plan (or any other Employee
Benefit Plan intended to be qualified under Section 401(a) of the Internal
Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan to qualify for
exemption from taxation under Section 501(a) of the Internal Revenue Code; or
(xii) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.

      "Event of Default" means each of the events set forth in Section 8.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.

      "Exchange Rate" means, on any date when an amount expressed in a currency
other than Dollars is to be determined with respect to any Letter of Credit, the
nominal rate of exchange of the applicable Issuing Lender in the New York
foreign exchange market for the purchase by such Issuing Lender (by cable
transfer) of such currency in exchange for Dollars at 12:00 noon (New York time)
one Business Day prior to such date, expressed as a number of units of such
currency per one Dollar.

                                       16                              EXECUTION
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      "Existing Company Bank Debt" means the Indebtedness under (x) the Credit
Agreement dated as of July 28, 1997 by and among Company, the various financial
institutions named therein, and Heller Financial, Inc., as agent, (y) the Term
Loan Agreement dated as of May 28, 1998 by and among Company, the various
financial institutions named therein, and Heller Financial, Inc., as agent, and
(z) the Term Loan Agreement dated as of June 9, 2000 by and among Company, the
various financial institutions named therein, and DLJ, as agent, each as
amended, supplemented or otherwise modified through the date hereof.

      "Existing Company Convertible Debt" means Company's 5-1/2% Convertible
Subordinated Debentures due 2001 in an aggregate principal amount of $35
million.

      "Existing Company Senior Notes" means Company's 10-7/8% Senior Notes due
2004 in an aggregate principal amount of $110 million.

      "Existing Letters of Credit" means the letters of credit identified as
such in Schedule 7.4 annexed hereto (but not any refinancings, renewals or
extensions thereof).

      "Existing Scientific Games Bank Debt" means the Indebtedness under (i) the
Credit Agreement dated as of November 30, 1999 by and among Scientific Games and
Scientific Games, Inc., a Delaware corporation, as co-borrowers, the lenders
referred to therein and First Union National Bank, as administrative agent
thereunder, and (ii) the 364-Day Credit Agreement dated as of November 30, 1999
by and among Scientific Games and Scientific Games, Inc., as borrowers, and
First Union National Bank, as administrative agent, each as amended,
supplemented or otherwise modified through the date hereof.

      "Facilities" means any and all real property (including all buildings,
fixtures or other improvements located thereon) now, hereafter or heretofore
owned, leased, operated or used by Company, Scientific Games or any of their
respective Subsidiaries or any of their respective predecessors or Affiliates.

      "Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.

      "Financial Condition Certificate" means a Financial Condition Certificate,
substantially in the form of Exhibit VI annexed hereto, dated as of the Closing
Date.

      "Financial Plan" has the meaning assigned to that term in subsection
4.1J(iv).

      "First Priority" means, with respect to any Lien purported to be created
in any Collateral pursuant to any Collateral Document, that (i) such Lien has
priority over any other Lien on such Collateral (other than Permitted
Encumbrances which as a matter of statutory law have priority

                                       17                              EXECUTION
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over any other Lien irrespective of the prior perfection or filing of such other
Lien) and (ii) such Lien is the only Lien (other than Permitted Encumbrances) to
which such Collateral is subject.

      "Fiscal Quarter" means a fiscal quarter of Company or its Subsidiaries
ending on January 31, April 30, July 31 and October 31 of each calendar year;
provided that, until the date on which Company changes its Fiscal Year from a
Fiscal Year ending on October 31 of each calendar year to a Fiscal Year ending
on December 31 of each calendar year pursuant to subsection 6.11, "Fiscal
Quarter" shall be deemed for all purposes hereunder to mean, unless the context
otherwise requires, a fiscal quarter of Company and its Subsidiaries ending on
March 31, June 30, September 30 and December 31 of each calendar year; provided,
further that, from and after the date on which Company changes its fiscal year
from a fiscal year ending on October 31 of each calendar year to a fiscal year
ending on December 31 of each calendar year, "Fiscal Quarter" shall mean a
fiscal quarter of Company and its Subsidiaries ending on March 31, June 30,
September 30 and December 31 of each calendar year.

      "Fiscal Year" means the fiscal year, in the case of Company and its
Subsidiaries (other than Scientific Games and its Subsidiaries), ending on
October 31 of each calendar year, and in the case of Scientific Games and its
Subsidiaries, ending on December 31 of each calendar year; provided that, until
Company changes its fiscal year from a fiscal year ending on October 31 of each
calendar year to a fiscal year ending on December 31 of each calendar year,
"Fiscal Year" of Company and its Subsidiaries shall be deemed for all purposes
hereunder to mean, unless context otherwise requires, a fiscal year of Company
deemed for all purposes hereunder to end on December 31 of each calendar year
provided further that, from and after the date on which Company changes its
fiscal year from a fiscal year ending on October 31 of each calendar year to a
fiscal year ending on December 31 of each calendar year, "Fiscal Year" shall
mean a fiscal year of Company and its Subsidiaries ending on December 31 of each
calendar year; provided, further that, from and after the date on which Company
changes its fiscal year from a fiscal year ending on October 31 of each calendar
year to a fiscal year ending on December 31 of each calendar year, "Fiscal Year"
shall mean a fiscal year of Company and its Subsidiaries ending on December 31
each calendar year.

      "Flood Hazard Property" means a Mortgaged Property located in an area
designated by the Federal Emergency Management Agency as having special flood or
mud slide hazards.

      "Foreign Subsidiary" means a direct or indirect Subsidiary of Company
which is incorporated or organized under the laws of any government or
sovereignty other than any state of the United States of America or the District
of Columbia.

      "Funding and Payment Office" means (i) the office of Administrative Agent
and Swing Line Lender located at 277 Park Avenue, New York, NY 10172 or (ii)
such other office of Administrative Agent and Swing Line Lender as may from time
to time hereafter be designated as such in a written notice delivered by
Administrative Agent and Swing Line Lender to Company and each Lender.

      "Fund" means any Person (other than a natural Person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of business.

                                       18                              EXECUTION
<PAGE>

      "Funding Date" means the date of the funding of a Loan, which date shall
be a Business Day.

      "GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination.

      "Governmental Authorization" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.

      "Hazardous Materials" means (i) any chemical, material or substance at the
applicable time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
waste", "acutely hazardous waste", "radioactive waste", "biohazardous waste",
"pollutant", "toxic pollutant", "contaminant", "restricted hazardous waste",
"infectious waste", "toxic substances", or any other term or expression intended
to define, list or classify substances by reason of properties harmful to
health, safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of
similar import under any applicable Environmental Laws); (ii) any oil,
petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources;
(iv) any flammable substances or explosives; (v) any radioactive materials; (vi)
any asbestos-containing materials; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or dielectric fluid
containing polychlorinated biphenyls; (ix) pesticides; and (x) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority.

      "Hazardous Materials Activity" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, presence, storage, Release, threatened Release,
discharge, placement, generation, transportation, processing, construction,
treatment, abatement, removal, remediation, disposal, disposition or handling of
any Hazardous Materials, and any corrective action or response action with
respect to any of the foregoing.

      "Hedge Agreement" means an Interest Rate Agreement or a Currency Agreement
designed to hedge against fluctuations in interest rates or currency values,
respectively, and not entered into for speculative purposes.

      "Inactive Subsidiary" means any Subsidiary of Company that does not engage
in any business activity, which Subsidiary, together with all other Inactive
Subsidiaries, (a) does not own assets with an aggregate value for all such
Inactive Subsidiaries of greater than $50,000, and (b) does not, together with
all other Inactive Subsidiaries, generate aggregate revenues of greater

                                       19                              EXECUTION
<PAGE>

than $50,000 in any single Fiscal Year; and all Inactive Subsidiaries shall be
designated as such on Schedule 5.1.

      "Indebtedness", as applied to any Person, means, without duplication, (i)
all indebtedness for borrowed money, (ii) that portion of obligations with
respect to Capital Leases that is properly classified as a liability on a
balance sheet in conformity with GAAP, (iii) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for
borrowed money, (iv) any obligation owed for all or any part of the deferred
purchase price of property or services (excluding any such obligations incurred
under ERISA), which purchase price is (a) due more than six months from the date
of incurrence of the obligation in respect thereof or (b) evidenced by a note or
similar written instrument, and (v) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person. Obligations under Interest Rate
Agreements and Currency Agreements constitute (X) in the case of Hedge
Agreements, Contingent Obligations, and (Y) in all other cases, Investments, and
in neither case constitute Indebtedness.

      "Indemnified Liabilities" has the meaning assigned to that term in
subsection 10.3.

      "Indemnitee" has the meaning assigned to that term in subsection 10.3.

      "Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company and its Subsidiaries, taken as a whole.

      "Interest Payment Date" means (i) with respect to any Base Rate Loan, the
last Business Day of each March, June, September and December, of each year,
commencing on the first such date to occur after the Closing Date, and (ii) with
respect to any LIBO Rate Loan, the last Business Day of each Interest Period
applicable to such Loan; provided that in the case of each Interest Period of
longer than three months "Interest Payment Date" shall also include the Business
Day that is three months, or any multiple thereof, after the commencement of
such Interest Period.

      "Interest Period" has the meaning assigned to that term in subsection
2.2B.

      "Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement to which Company or any of its Subsidiaries is a party.

      "Interest Rate Determination Date" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.

      "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute.

      "Investment" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person

                                       20                              EXECUTION
<PAGE>

(including any Subsidiary of Company other than a wholly-owned Domestic
Subsidiary of Company), (ii) any direct or indirect redemption, retirement,
purchase or other acquisition for value, by any Subsidiary of Company from any
Person other than Company or any of its wholly-owned Domestic Subsidiaries, of
any equity Securities of such Subsidiary, (iii) any direct or indirect loan,
advance (other than advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary course of
business) or capital contribution by Company or any of its Subsidiaries to any
other Person (other than a wholly-owned Domestic Subsidiary of Company),
including all indebtedness and accounts receivable from that other Person that
are not current assets or did not arise from sales to that other Person in the
ordinary course of business, or (iv) Interest Rate Agreements or Currency
Agreements not constituting Hedge Agreements. The amount of any Investment shall
be the original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment; provided that the
amount of an Investment shall be reduced by the amount of capital returned on
such Investment (as determined on an after tax basis).

      "IP Collateral" means, collectively, any Collateral under the Security
Agreement consisting of trademarks, servicemarks, tradenames, tradesecrets,
business names, logos, patents, patent applications, licenses, copyrights, any
registration and franchise rights and interests relating thereto, and any other
intellectual property of any type, and all goodwill associated with any of the
foregoing.

      "Issuing Lender" means, with respect to any Letter of Credit, the
Revolving Lender that agrees or is otherwise obligated to issue such Letter of
Credit, determined as provided in subsection 3.1B(ii).

      "Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any Subsidiary of any Person be considered to be a Joint
Venture to which such Person is a party.

      "Landlord Consent and Estoppel" means, with respect to any Leasehold
Property, a letter, certificate or other instrument in writing from the lessor
(and all other parties having a consent right) under the related lease,
satisfactory in form and substance to Administrative Agent, pursuant to which
such lessor (and all other parties having a consent right) agrees, for the
benefit of Administrative Agent, (i) that without any further consent of such
lessor (and all other parties having a consent right) or any further action on
the part of the Loan Party holding such Leasehold Property, such Leasehold
Property may be encumbered pursuant to a Mortgage and may be assigned to the
purchaser at a foreclosure sale or in a transfer in lieu of such a sale (and to
a subsequent third party assignee if any Agent, any Lender, or an Affiliate of
either so acquires such Leasehold Property), (ii) that such lessor shall not
terminate such lease as a result of a default by such Loan Party thereunder
without first giving Administrative Agent notice of such default and at least 15
days in the case of a monetary default and 30 days in the case of a non-monetary
default beyond the cure period afforded to the tenant thereunder to cure such
default, and (iii) that the related lease is in full force and effect, that no
defaults by the lessee exist thereunder, and such other information as is
customarily included in a lessor's estoppel certificate, and (iv) to such other
matters relating to such Leasehold Property as Administrative Agent may
reasonably request.

                                       21                              EXECUTION
<PAGE>

      "Leasehold Property" means any leasehold interest of any Loan Party as
lessee under any lease of real property.

      "Lender" and "Lenders" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall
include Swing Line Lender unless the context otherwise requires.

      "Letter of Credit" or "Letters of Credit" means Commercial Letters of
Credit and Standby Letters of Credit issued or to be issued by Issuing Lenders
for the account of Company pursuant to subsection 3.1.

      "Letter of Credit Usage" means, as at any date of determination, the sum
of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing under all Letters of Credit then outstanding plus
(ii) the aggregate amount of all drawings under Letters of Credit honored by
Issuing Lenders and not theretofore reimbursed by Company. For the purposes of
this definition, any amount described in clause (i) or (ii) of the preceding
sentence which is denominated in a currency other than Dollars shall be valued
based on the applicable Exchange Rate for such currency as of the applicable
date of determination.

      "LIBO Rate Loans" means Loans bearing interest at rates determined by
reference to the Adjusted LIBO Rate as provided in subsection 2.2A.

      "Lien" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.

      "Loan" or "Loans" means one or more of the Tranche A Term Loans, Tranche B
Term Loans, Revolving Loans or Swing Line Loans or any combination thereof.

      "Loan Documents" means this Agreement, the Notes, the Letters of Credit
(and any applications for, or reimbursement agreements or other documents or
certificates executed by Company in favor of an Issuing Lender relating to, the
Letters of Credit), the Subsidiary Guaranties and the Collateral Documents.

      "Loan Party" means each of Acquisition Co., Company and any of Company's
Subsidiaries from time to time executing a Loan Document, and "Loan Parties"
means all such Persons, collectively.

      "Margin Determination Certificate" means a Margin Determination
Certificate of Company delivered pursuant to 6.1(xviii) setting forth in
reasonable detail the calculation of the Consolidated Leverage Ratio for the
four-Fiscal Quarter period ending as of the last day of the Fiscal Quarter
immediately preceding the Fiscal Quarter in which such certificate is delivered.

      "Margin Stock" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.

                                       22                              EXECUTION
<PAGE>

      "Material Adverse Effect" means (i) any event or change in or effect on
the business of Company and its Subsidiaries, taken as a whole, that is or can
reasonably be expected to be materially adverse to the business, operations,
properties (including intangible properties), condition (financial or
otherwise), assets, liabilities or prospects of Company and its Subsidiaries,
taken as a whole, or (ii) the impairment in any material respect of the ability
of any Loan Party to perform, or of Administrative Agent or Lenders to enforce,
the Obligations.

      "Material Leasehold Property" means a Leasehold Property reasonably
determined by Administrative Agent to be of material value as Collateral or of
material importance to the operations of Company or any of its Subsidiaries.

      "Merger" means the merger of Acquisition Co. with and into Scientific
Games pursuant to the Merger Agreement, with Scientific Games as the surviving
corporation.

      "Merger Agreement" means the Agreement and Plan of Merger dated as of May
18, 2000 by and among Company, Acquisition Co. and Scientific Games, as such
agreement may be amended from time to time to the extent permitted under
subsection 7.14.

      "Merger Date" means the date upon which the Merger is consummated.

      "Mortgage" means (i) a security instrument (whether designated as a deed
of trust or a mortgage or by any similar title) executed and delivered by any
Loan Party, substantially in such form as may be approved by Administrative
Agent in its reasonable discretion, in each case with such changes thereto as
may be recommended by Administrative Agent's local counsel based on local laws
or customary local mortgage or deed of trust practices, or (ii) at the option of
Administrative Agent, in the case of an Additional Mortgaged Property, an
amendment to an existing Mortgage, in form reasonably satisfactory to
Administrative Agent, adding such Additional Mortgaged Property to the Real
Property Assets encumbered by such existing Mortgage, in either case as such
security instrument or amendment may be amended, supplemented or otherwise
modified from time to time.

      "Mortgages" means all such instruments, including the Closing Date
Mortgages, and any Additional Mortgages, collectively.

      "Mortgaged Property" means a Closing Date Mortgaged Property or an
Additional Mortgaged Property.

      "Multiemployer Plan" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.

      "Net Asset Sale Proceeds" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale, net of (a) any amounts properly
reserved on the financial statements of Company and its Subsidiaries in
accordance with GAAP with respect to contingent liabilities directly related to
such Asset Sale (provided that the aggregate amount of such reserved amount
shall not exceed $5 million at any time), and (b) any bona fide direct costs
incurred in connection with such Asset Sale, including (i) income taxes
reasonably estimated to be actually payable within two years of

                                       23                              EXECUTION
<PAGE>

the date of such Asset Sale as a result of any gain recognized in connection
with such Asset Sale and (ii) payment of the outstanding principal amount of,
premium or penalty, if any, and interest on, any Indebtedness (other than the
Loans) that is secured by a Lien on the stock or assets in question and that is
required to be repaid under the terms thereof as a result of such Asset Sale.

      "Net Insurance/Condemnation Proceeds" means any Cash payments or proceeds
received by Company or any of its Subsidiaries (i) under any business
interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Company or any of
its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of any
actual and reasonable documented costs incurred by Company or any of its
Subsidiaries in connection with the adjustment or settlement of any claims of
Company or such Subsidiary in respect thereof.

      "Notes" means one or more of the Tranche A Term Notes, Tranche B Term
Notes, Revolving Notes or Swing Line Notes or any combination thereof.

      "Notice of Borrowing" means a notice substantially in the form of Exhibit
I annexed hereto delivered by Company to Administrative Agent pursuant to
subsection 2.1B with respect to a proposed borrowing.

      "Notice of Conversion/Continuation" means a notice substantially in the
form of Exhibit II annexed hereto delivered by Company to Administrative Agent
pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.

      "Obligations" means all obligations of every nature of each Loan Party
from time to time owed to Agents, Lenders or any of them under the Loan
Documents to which any of the Lenders is a party, whether for principal,
interest, reimbursement of amounts drawn under Letters of Credit, fees,
expenses, indemnification or otherwise.

      "Officer's Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its president, one of its
vice-presidents, its chief financial officer (or if there is no chief financial
officer, its chief accounting officer) or its treasurer; provided that every
Officer's Certificate with respect to the compliance with a condition precedent
to the making of any Loans hereunder shall include (i) a statement that the
officer or officers making or giving such Officer's Certificate has or have read
such condition and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the opinion of the signer
or signers, such signer or signers has or have made or has or have caused to be
made such examination or investigation as is necessary to enable such signer or
signers to express an informed opinion as to whether or not such condition has
been complied with, and (iii) a statement as to whether, in the opinion of the
signer or signers, such condition has been complied with.

      "Olivetti" means Olivetti S.p.A.

                                       24                              EXECUTION
<PAGE>

      "Operating Lease" means, as applied to any Person, any lease (including
leases that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) that is not a Capital Lease in accordance with
GAAP other than any such lease under which that Person is the lessor.

      "PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.

      "Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to Section 412 of the Internal Revenue Code or Section
302 of ERISA.

      "Permitted Acquisition" means any acquisition, whether by purchase,
merger, reorganization or any other method, by Company or any of its
Subsidiaries of (x) another Person which is engaged primarily in the same or a
related line of business as Company and its Subsidiaries or (y) any assets or
other property of another Person relating primarily to the same or a related
line of business as Company and its Subsidiaries (any such Person, assets or
other property being an "Acquired Business"); provided that any such Permitted
Acquisition shall comply with the provisions of subsection 7.7(vii).

      "Permitted Currency" means, Euros, Pounds Sterling, Italian Lire, French
Francs, Belgium Francs, Irish Punts, German Marks, Luxembourg Francs, Dutch
Guilders and Austrian Schillings.

      "Permitted Encumbrances" means the following types of Liens (excluding (x)
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA and (y) any such Lien relating to or imposed in
connection with any Environmental Claim which, solely with respect to Liens
within the ambit of this clause (y), would give rise to a Material Adverse
Effect):

            (i) Liens for taxes, assessments or governmental charges or claims
      the payment of which is not, at the time, required by subsection 6.3 but
      excluding any lien for the reimbursement of charges incurred by any
      governmental authorities in connection with any Hazardous Materials
      Activity;

            (ii) statutory Liens of landlords, statutory Liens of banks and
      rights of set-off, statutory Liens of carriers, warehousemen, mechanics,
      repairmen, workmen and materialmen, and other Liens imposed by law, in
      each case incurred in the ordinary course of business (a) for amounts not
      yet overdue or (b) for amounts that are overdue and that (in the case of
      any such amounts overdue for a period in excess of 15 days) are being
      contested in good faith by appropriate proceedings, so long as (1) such
      reserves or other appropriate provisions, if any, as shall be required by
      GAAP shall have been made for any such contested amounts, and (2) in the
      case of a Lien with respect to any portion of the Collateral, such contest
      proceedings conclusively operate to stay the sale of any portion of the
      Collateral on account of such Lien;

            (iii) Liens incurred or deposits made in the ordinary course of
      business in connection with workers' compensation, unemployment insurance
      and other types of social security, or to secure the performance of
      tenders, statutory obligations, surety and

                                       25                              EXECUTION
<PAGE>

      appeal bonds, bids, leases, government contracts, trade contracts,
      performance and return-of-money bonds and other similar obligations
      (exclusive of obligations for the payment of borrowed money), so long as
      no foreclosure, sale or similar proceedings have been commenced with
      respect to any portion of the Collateral on account thereof;

            (iv) any attachment or judgment Lien not constituting an Event of
      Default under subsection 8.8;

            (v) leases or subleases granted to third parties in accordance with
      any applicable terms of the Collateral Documents and not interfering in
      any material respect with the ordinary conduct of the business of Company
      or any of its Subsidiaries or resulting in a material diminution in the
      value of any Collateral as security for the Obligations;

            (vi) easements, rights-of-way, covenants, conditions, restrictions,
      encroachments, and other defects or irregularities in title, in each case
      which do not and will not interfere in any material respect with the
      ordinary conduct of the business of Company or any of its Subsidiaries or
      result in a material diminution in the value of any Collateral as security
      for the Obligations;

            (vii) any (a) interest or title of a lessor or sublessor under any
      lease permitted under this Agreement, (b) restriction or encumbrance that
      the interest or title of such lessor or sublessor may be subject to, or
      (c) subordination of the interest of the lessee or sublessee under such
      lease to any restriction or encumbrance referred to in the preceding
      clause (b), so long as the holder of such restriction or encumbrance
      agrees to recognize the rights of such lessee or sublessee under such
      lease;

            (viii) Liens arising from filing UCC financing statements relating
      solely to leases not prohibited by this Agreement;

            (ix) Liens in favor of customs and revenue authorities arising as a
      matter of law to secure payment of customs duties in connection with the
      importation of goods;

            (x) any zoning or similar law or right reserved to or vested in any
      governmental office or agency to control or regulate the use of any real
      property;

            (xi) Liens securing obligations (other than obligations representing
      Indebtedness for borrowed money) under operating, reciprocal easement or
      similar agreements entered into in the ordinary course of business of
      Company and its Subsidiaries; and

            (xii) licenses of patents, trademarks and other intellectual
      property rights granted by Company or any of its Subsidiaries in the
      ordinary course of business and not interfering in any material respect
      with the ordinary conduct of the business of Company or such Subsidiary.

      "Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint

                                       26                              EXECUTION
<PAGE>

Ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments (whether federal, state or local, domestic or foreign, and including
political subdivisions thereof) and agencies or other administrative or
regulatory bodies thereof.

      "Potential Event of Default" means a condition or event that, after notice
or lapse of time or both, would constitute an Event of Default.

      "Prime Rate" means the prime lending rate as set forth on the British
Banking Association Telerate page 5 (or such other comparable page as may, in
the opinion of the Administrative Agent, replace such page for the purpose of
displaying such rate), as in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually available. Administrative Agent or any Lender may make commercial loans
or other loans at rates of interest at, above or below the Prime Rate.

      "Pro Forma Basis" means, as of any date of determination, the compliance
of Company with the financial covenants set forth in subsection 7.6A, 7.6B and
7.6C as of the last day of the four Fiscal Quarter period most recently ended
prior to such date of determination for which the relevant financial information
is available (the "Compliance Period"), after giving effect on a pro forma basis
to any Permitted Acquisitions made during such Compliance Period and any
dispositions made during such Compliance Period, other than sales of inventory
in the ordinary course of business and dispositions of obsolete equipment on the
following basis:

            (i) any Indebtedness incurred or assumed by Company or any of its
      Subsidiaries in connection with such Permitted Acquisitions and any
      Indebtedness repaid in connection with such Permitted Acquisitions or
      dispositions shall be deemed to have been incurred or repaid,
      respectively, as of the first day of the Compliance Period;

            (ii) if such Indebtedness incurred or assumed by Company or any of
      its Subsidiaries in connection with such Permitted Acquisitions has a
      floating or formula rate, then the rate of interest for such Indebtedness
      for the applicable period shall be computed as if the rate in effect for
      such Indebtedness on the relevant measurement date had been the applicable
      rate for the entire applicable period;

            (iii) income statement items (whether positive or negative)
      attributable to the property or business acquired or disposed of in such
      Permitted Acquisitions or dispositions shall be included as if such
      acquisitions or dispositions took place on the first day of such
      Compliance Period on a pro forma basis; and

            (iv) any historical extraordinary non-recurring costs or expenses or
      other verifiable costs or expenses that will not continue after the
      acquisition or disposition date may be eliminated and other expenses and
      cost reductions may be reflected on a basis consistent with Regulation S-X
      promulgated by the Securities and Exchange Commission.

            With respect to any such Permitted Acquisitions, such pro forma
      calculations shall be based on the audited or reviewed financial results
      to the extent delivered in compliance with clause (g) of subsection
      7.7(vii). All pro forma adjustments shall be approved by the
      Administrative Agent.

                                       27                              EXECUTION
<PAGE>

      "Pro Rata Share" means (i) with respect to all payments, computations and
other matters relating to the Tranche A Term Loan Commitment or the Tranche A
Term Loan of any Lender, the percentage obtained by dividing (x) the Tranche A
Term Loan Exposure of that Lender by (y) the aggregate Tranche A Term Loan
Exposure of all Lenders, (ii) with respect to all payments, computations and
other matters relating to the Tranche B Term Loan Commitment or the Tranche B
Term Loan of any Lender, the percentage obtained by dividing (x) the Tranche B
Term Loan Exposure of that Lender by (y) the aggregate Tranche B Term Loan
Exposure of all Lenders, (iii) with respect to all payments, computations and
other matters relating to the Revolving Loan Commitment or the Revolving Loans
of any Lender or any Letters of Credit issued or participations therein
purchased by any Lender or any participations in any Swing Line Loans purchased
or deemed purchased by any Revolving Lender, the percentage obtained by dividing
(x) the Revolving Loan Exposure of that Lender by (y) the aggregate Revolving
Loan Exposure of all Lenders, and (iv) for all other purposes with respect to
each Lender, the percentage obtained by dividing (x) the sum of the Tranche A
Term Loan Exposure of that Lender plus the Tranche B Term Loan Exposure of
Lender plus the Revolving Loan Exposure of that Lender by (y) the sum of the
aggregate Tranche A Term Loan Exposure of all Lenders plus the Tranche B Term
Loan Exposure of that Lender plus the aggregate Revolving Loan Exposure of all
Lenders, in any such case as the applicable percentage may be adjusted by
assignments permitted pursuant to subsection 10.1. The initial Pro Rata Share of
each Lender for purposes of each of clauses (i), (ii) and (iii) of the preceding
sentence is set forth opposite the name of that Lender in Schedule 2.1 annexed
hereto.

      "PTO" means the United States Patent and Trademark Office or any successor
or substitute office in which filings are necessary or, in the opinion of
Administrative Agent, desirable in order to create or perfect Liens on any IP
Collateral.

      "Purchase Money Indebtedness" means Indebtedness of Company or any of its
Subsidiaries incurred in connection with the purchase of assets or other
property for the business of Company or any of its Subsidiaries; provided that
the recourse of the lenders with respect to such Indebtedness is limited solely
to the assets or other property so purchased (and the proceeds of such assets or
other property) without further recourse to either Company or any of its
Subsidiaries.

      "Real Property Asset" means, at any time of determination, any interest
then owned by any Loan Party in any real property.

      "Recorded Leasehold Interest" means a Leasehold Property with respect to
which a Record Document (as hereinafter defined) has been recorded in all places
necessary or desirable, in the reasonable judgment of Administrative Agent, to
give constructive notice of such Leasehold Property to third-party purchasers
and encumbrancers of the affected real property. For purposes of this
definition, the term "Record Document" means, with respect to any Leasehold
Property, (a) the lease evidencing such Leasehold Property or a memorandum
thereof, executed and acknowledged by the owner of the affected real property,
as lessor, or (b) if such Leasehold Property was acquired or subleased from the
holder of a Recorded Leasehold Interest, the applicable assignment or sublease
document or a memorandum thereof, executed and acknowledged by such holder, in
each case in form sufficient to give such constructive notice upon recordation
and otherwise in form reasonably satisfactory to Administrative Agent.

                                       28                              EXECUTION
<PAGE>

      "Refunded Swing Line Loans" has the meaning assigned to that term in
subsection 2.1A(iii).

      "Register" has the meaning assigned to that term in subsection 2.1D.

      "Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

      "Reimbursement Date" has the meaning assigned to that term in subsection
3.3B.

      "Related Agreements" means, collectively, the Merger Agreement, the
Convertible Preferred Stock Purchase Agreement, the Stockholders Agreement, the
Certificate of Designations, the Senior Subordinated Note Indenture and the
Senior Subordinated Notes.

      "Release" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the indoor or outdoor environment
(including the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Materials), including the movement
of any Hazardous Materials through the air, soil, surface water or groundwater.

      "Replaced Lender" has the meaning assigned to that term in subsection 2.8.

      "Replacement Lender" has the meaning assigned to that term in subsection
2.8.

      "Request for Issuance of Letter of Credit" means a notice substantially in
the form of Exhibit III annexed hereto delivered by Company to Administrative
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.

      "Requisite Class Lenders" means, at any time of determination, (i) for the
Class of Lenders having Tranche A Term Loan Exposure, Lenders having or holding
more than 50% of the aggregate Tranche A Term Loan Exposure of all Lenders, (ii)
for the Class of Lenders having Tranche B Term Loan Exposure, Lenders having or
holding more than 50% of the aggregate Tranche B Term Loan Exposure of all
Lenders, (iii) for the Class of Lenders having Revolving Loan Exposure, Lenders
having or holding more than 50% of the aggregate Revolving Loan Exposure of all
Lenders and (iv) for any Lenders having exposure in additional commitments or
loans in any additional Class created in accordance with clause (vi) of
subsection 10.6A, Lenders having or holding more than 50% of the aggregate
exposure in commitments or loans of such Class.

      "Requisite Lenders" means Lenders having or holding more than 50% of the
sum of (i) the aggregate Tranche A Term Loan Exposure of all Lenders plus (ii)
the aggregate Tranche B Term Loan Exposure of all Lenders plus (iii) the
aggregate Revolving Loan Exposure of all Lenders.

      "Restricted Junior Payment" means (i) any distribution, direct or
indirect, on account of any class of stock of Company now or hereafter
outstanding, except a distribution payable solely in shares of that class of
stock payable solely to holders of that class, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or

                                       29                              EXECUTION
<PAGE>

indirect, of any class of stock of Company now or hereafter outstanding, (iii)
any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock of
Company now or hereafter outstanding, and (iv) any payment or prepayment of
principal of, premium, if any, or interest on, or redemption, purchase,
retirement, defeasance (including in-substance or legal defeasance), sinking
fund or similar payment with respect to, any Subordinated Indebtedness.

      "Revised Financial Plan" has the meaning assigned to that term in
subsection 6.1(xiii).

      "Revolving Lender" means a Lender having a Revolving Loan Commitment.

      "Revolving Loan Commitment" means the commitment of a Revolving Lender to
make Revolving Loans to Company pursuant to subsection 2.1A(iii), and "Revolving
Loan Commitments" means such commitments of all Revolving Lenders in the
aggregate.

      "Revolving Loan Commitment Termination Date" means September 30, 2006.

      "Revolving Loan Exposure" means, with respect to any Revolving Lender as
of any date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Revolving Lender's Revolving Loan Commitment and (ii) after
the termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Revolving Lender
plus (b) in the event that Revolving Lender is an Issuing Lender, the aggregate
Letter of Credit Usage in respect of all Letters of Credit issued by that
Revolving Lender (in each case net of any participations purchased or deemed
purchased by other Revolving Lenders in such Letters of Credit or any
unreimbursed drawings thereunder) plus (c) the aggregate amount of all
participations purchased or deemed purchased by that Revolving Lender in any
outstanding Letters of Credit or any unreimbursed drawings under any Letters of
Credit plus (d) in the case of Swing Line Lender, the aggregate outstanding
principal amount of all Swing Line Loans (net of any participations therein
purchased or deemed purchased by other Revolving Lenders) plus (e) the aggregate
amount of all participations purchased or deemed purchased by that Revolving
Lender in any outstanding Swing Line Loans.

      "Revolving Loans" means the Loans made by Revolving Lenders to Company
pursuant to subsection 2.1A(iii).

      "Revolving Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(iii) on the Closing Date and (ii) any promissory
notes issued by Company pursuant to subsection 10.1B in connection with
assignments of the Revolving Loan Commitments and Revolving Loans of any
Revolving Lenders, in each case substantially in the form of Exhibit IV-C
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.

      "Scheduled Principal Payments" has the meaning assigned to that term in
the definition of "Consolidated Fixed Charges" in this subsection 1.1.

      "Scientific Games" means Scientific Games Holdings Corp., a Delaware
corporation.

                                       30                              EXECUTION
<PAGE>

      "Scientific Games Common Stock" means prior to the Merger the Common
Stock, $.001 par value, of Scientific Games.

      "Security Agreement" means the Security Agreement executed and delivered
by Company and the wholly-owned Domestic Subsidiaries of Company on the Closing
Date and to be executed and delivered by additional wholly-owned Domestic
Subsidiaries of Company from time to time thereafter in accordance with
subsection 6.8, substantially in the form of Exhibit XII annexed hereto, as such
Security Agreement may thereafter be amended, supplemented or otherwise modified
from time to time and any documents or agreements delivered by Company or any of
its wholly-owned Domestic Subsidiaries with respect to the pledge of capital
stock or other equity interests in Foreign Subsidiaries pursuant to subsection
6.8D.

      "Securities" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.

      "Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor statute.

      "Senior Subordinated Note Indenture" means the Indenture dated as of
August 14, 2000 executed by Company and a trustee named therein pursuant to
which the Senior Subordinated Notes were issued, as amended by the First
Supplemental Indenture dated as of September 6, 2000, and as such indenture may
be further amended from time to time to the extent permitted under subsection
7.14.

      "Senior Subordinated Notes" means the unsecured Senior Subordinated Notes
due 2010, issued by Company pursuant to the Senior Subordinated Note Indenture,
as such Senior Subordinated Notes may be amended from time to time to the extent
permitted under subsection 7.14, all the proceeds of which are to be used
pursuant to subsection 4.1D.

      "SGIL" has the meaning assigned to that term in subsection 7.1(x).

      "Solvent" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time

                                       31                              EXECUTION
<PAGE>

shall be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.

      "Standby Letter of Credit" means any standby letter of credit or similar
instrument issued for the purpose of supporting (i) Indebtedness of Company or
any of its Subsidiaries in respect of industrial revenue or development bonds or
financings, (ii) workers' compensation liabilities of Company or any of its
Subsidiaries, (iii) the obligations of third party insurers of Company or any of
its Subsidiaries, (iv) obligations with respect to Capital Leases or Operating
Leases of Company or any of its Subsidiaries, and (v) performance, payment,
deposit or surety obligations of Company or any of its Subsidiaries, in any case
if required by law or governmental rule or regulation or in accordance with
custom and practice in the industry; provided that Standby Letters of Credit may
not be issued for the purpose of supporting (a) trade payables or (b) any
Indebtedness constituting "antecedent debt" (as that term is used in Section 547
of the Bankruptcy Code).

      "Stockholders' Agreement" means that certain Stockholders' Agreement dated
as of September 6, 2000, by and among Company, Cermatica Gaming, S.A., Olivetti
International, S.A., The Oak Fund, Peconic Fund Ltd. and Ramius Securities, LLC.

      "Subordinated Indebtedness" means the Senior Subordinated Notes, the
Convertible Subordinated Debt and any other Indebtedness of Company subordinated
in right of payment to the Obligations pursuant to documentation containing
maturities, amortization schedules, covenants, defaults, remedies, subordination
provisions and other material terms in form and substance reasonably
satisfactory to Administrative Agent and Requisite Lenders.

      "Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.

      "Subsidiary Guarantor" means (i) any wholly-owned Domestic Subsidiary of
Company with respect to the Subsidiary Guaranty executed and delivered by such
Subsidiaries in favor of Administrative Agent, on behalf of Lenders, on the
Closing Date and to be executed and delivered by any additional wholly-owned
Domestic Subsidiaries of Company from time to time thereafter in accordance with
subsection 6.8, and (ii) any wholly-owned Domestic Subsidiary of Company that
executes and delivers a counterpart of the Subsidiary Guaranty in favor of
Administrative Agent, on behalf of Lenders, from time to time after the Closing
Date in accordance with subsection 6.8.

      "Subsidiary Guaranty" means the Subsidiary Guaranty in favor of
Administrative Agent, on behalf of Lenders, executed and delivered by the
wholly-owned Domestic Subsidiaries of Company (other than any Inactive
Subsidiary) on the Closing Date and to be executed and

                                       32                              EXECUTION
<PAGE>

delivered by additional wholly-owned Domestic Subsidiaries of Company (other
than any Inactive Subsidiary) from time to time thereafter in accordance with
subsection 6.8, substantially in the form of Exhibit XIII annexed hereto, as
such Subsidiary Guaranty may hereafter be amended, supplemented or otherwise
modified from time to time.

      "Supplemental Collateral Agent" has the meaning assigned to that term in
subsection 9.1B.

      "Swing Line Lender" means DLJ, or any Person serving as a successor
Administrative Agent hereunder, in its capacity as Swing Line Lender hereunder.

      "Swing Line Loan Commitment" means the commitment of Swing Line Lender to
make Swing Line Loans to Company pursuant to subsection 2.1A(iv).

      "Swing Line Loans" means the Loans made by Swing Line Lender to Company
pursuant to subsection 2.1A(iv).

      "Swing Line Note" means (i) the promissory note of Company issued pursuant
to subsection 2.1E(iii) on the Closing Date and (ii) any promissory note issued
by Company to any successor Administrative Agent and Swing Line Lender pursuant
to the last sentence of subsection 9.5B, in each case substantially in the form
of Exhibit IV-D annexed hereto, as it may be amended, supplemented or otherwise
modified from time to time.

      "Syndication Agent" has the meaning assigned to that term in the
introduction to this Agreement.

      "Tax" or "Taxes" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "Tax on the overall net income" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in
the case of a Lender, its lending office).

      "Tender Premiums" means the tender premiums and/or redemption payable
under the Existing Company Senior Notes.

      "Term Loans" means the Tranche A Term Loans and the Tranche B Term Loans.

      "Title Company" means one or more title insurance companies reasonably
satisfactory to Administrative Agent.

      "Total Utilization of Revolving Loan Commitments" means, as at any date of
determination, the sum of (i) the aggregate principal amount of all outstanding
Revolving Loans

                                       33                              EXECUTION
<PAGE>

plus (ii) the aggregate principal amount of all outstanding Swing Line Loans
plus (iii) the Letter of Credit Usage.

      "Tranche A Term Loan Commitment" means the commitment of a Lender to make
a Tranche A Term Loan to Company pursuant to subsection 2.1A(i), and "Tranche A
Term Loan Commitments" means such commitments of all Lenders in the aggregate.

      "Tranche A Term Loan Exposure" means, with respect to any Tranche A Term
Loan Lender as of any date of determination (i) prior to the funding of all of
the Tranche A Term Loans, that Lender's original Tranche A Term Loan Commitment
and (ii) after the funding of all of the Tranche A Term Loans, the outstanding
principal amount of the Tranche A Term Loan of that Lender.

      "Tranche A Term Loan Lender" means any Lender who holds a Tranche A Term
Loan Commitment, or who has made a Tranche A Term Loan hereunder and any
assignee of such Lender pursuant to subsection 10.1B.

      "Tranche A Term Loans" means the Tranche A Term Loans made by Tranche A
Term Loan Lenders to Company pursuant to subsection 2.1A(i).

      "Tranche A Term Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(i) on the Closing Date and (ii) any promissory notes
issued by Company pursuant to subsection 10.1B in connection with assignments of
the Tranche A Term Loan Commitments or Tranche A Term Loans of any Tranche A
Term Loan Lenders, in each case substantially in the form of Exhibit IV-A
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.

      "Tranche B Term Loan Commitment" means the commitment of a Lender to make
a Tranche B Term Loan to Company pursuant to subsection 2.1A(ii), and "Tranche B
Term Loan Commitments" means such commitments of all Lenders in the aggregate.

      "Tranche B Term Loan Exposure" means, with respect to any Tranche B Term
Loan Lender as of any date of determination (i) prior to the funding of the
Tranche B Term Loans, that Lender's Tranche B Term Loan Commitment and (ii)
after the funding of the Tranche B Term Loans, the outstanding principal amount
of the Tranche B Term Loan of that Lender.

      "Tranche B Term Loan Lender" means any Lender who holds a Tranche B Term
Loan Commitment or who has made a Tranche B Term Loan hereunder, and any
assignee of such Lender pursuant to subsection 10.1B.

      "Tranche B Term Loans" means the Tranche B Term Loans made by Tranche B
Term Loan Lenders to Company pursuant to subsection 2.1A(ii).

      "Tranche B Term Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(ii) on the Closing Date and (ii) any promissory
notes issued by Company pursuant to subsection 10.1B in connection with
assignments of the Tranche B Term Loan Commitments or Tranche B Term Loans of
any Tranche B Term Loan Lenders, in each case

                                       34                              EXECUTION
<PAGE>

substantially in the form of Exhibit IV-B annexed hereto, as they may be
amended, supplemented or otherwise modified from time to time.

      "Transaction Costs" means the fees, costs and expenses payable by any Loan
Party or by Scientific Games in connection with the Merger, the related
financing and other transactions contemplated by the Loan Documents and the
Related Agreements in an aggregate amount not to exceed $30.1 million; provided
that the foregoing shall not include any related non-cash compensation paid to
any of the Lenders or any Affiliates of any of the Lenders on or before the
Closing Date in connection with any of the financings contemplated by the Loan
Documents.

      "UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.

      "UK Property" shall mean the property located at Quayside, Thwaitgate,
Leeds LS10, England.

 .1 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement.

      Except as otherwise expressly provided in this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
delivered by Company to Lenders pursuant to clauses (i), (ii), and (xiii) of
subsection 6.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 6.1(v)). Calculations in connection with
the definitions, covenants and other provisions of this Agreement shall utilize
accounting principles and policies in conformity with those used to prepare the
financial statements referred to in subsection 5.3.

 .2 Other Definitional Provisions and Rules of Construction.

      A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.

      B. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.

      C. The use in any of the Loan Documents of the word "include" or
"including", when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.

                                       35                              EXECUTION
<PAGE>

Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS

 .1 Commitments; Making of Loans; Notes.

      A. Commitments. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Company herein set forth,
each Tranche A Term Loan Lender hereby severally agrees to make the Tranche A
Term Loans described in subsection 2.1A(i), each Tranche B Term Loan Lender
hereby severally agrees to make the Tranche B Term Loans described in subsection
2.1A(ii), each Revolving Lender hereby severally agrees to make the Revolving
Loans described in subsection 2.1A(iii) and each Swing Line Lender hereby agrees
to make the Swing Line Loans described in subsection 2.1A(iv).

            (i) Tranche A Term Loans. Each Tranche A Term Loan Lender severally
      agrees to lend to Company on the Closing Date an aggregate amount not
      exceeding its Pro Rata Share of the aggregate amount of the Tranche A Term
      Loan Commitments to be used for the purposes identified in subsection
      2.5A. The amount of each Tranche A Term Loan Lender's Tranche A Term Loan
      Commitment is set forth opposite its name on Schedule 2.1 annexed hereto
      and the aggregate amount of the Tranche A Term Loan Commitments is $60
      million; provided that the Tranche A Term Loan Commitments of the Tranche
      A Term Loan Lenders shall be adjusted to give effect to any assignments of
      the Tranche A Term Loan Commitments pursuant to subsection 10.1B. Each
      Tranche A Term Loan Lender's Term Loan Commitment to the extent unused,
      shall expire on the close of business on the Closing Date. Amounts
      borrowed under this subsection 2.1A(i) and subsequently repaid or prepaid
      may not be reborrowed.

            (ii) Tranche B Term Loans. Each Tranche B Term Loan Lender severally
      agrees to lend to Company on the Closing Date an amount not exceeding its
      Pro Rata Share of the aggregate amount of the Tranche B Term Loan
      Commitments to be used for the purposes identified in subsection 2.5A. The
      amount of each Tranche B Term Loan Lender's Tranche B Term Loan Commitment
      is set forth opposite its name on Schedule 2.1 annexed hereto and the
      aggregate amount of the Tranche B Term Loan Commitments is $220 million;
      provided that the Tranche B Term Loan Commitments of Tranche B Term Loan
      Lenders shall be adjusted to give effect to any assignments of the Tranche
      B Term Loan Commitments pursuant to subsection 10.1B. Each Tranche B Term
      Loan Lender's Tranche B Term Loan Commitment to the extent unused, shall
      expire on the close of business on the Closing Date. Amounts borrowed
      under this subsection 2.1A(ii) and subsequently repaid or prepaid may not
      be reborrowed.

            (iii) Revolving Loans. Each Revolving Lender severally agrees,
      subject to the limitations set forth below with respect to the maximum
      amount of Revolving Loans permitted to be outstanding from time to time,
      to lend to Company from time to time during the period from the Closing
      Date to but excluding the Revolving Loan Commitment Termination Date an
      aggregate amount not exceeding its Pro Rata Share of the aggregate amount
      of the Revolving Loan Commitments to be used for the purposes identified
      in subsection 2.5B. The original amount of each Revolving Lender's
      Revolving Loan Commitment is set forth opposite its name on Schedule 2.1
      annexed hereto and the aggregate original amount of the Revolving Loan
      Commitments is $65 million; provided

                                       36                              EXECUTION
<PAGE>

      that the Revolving Loan Commitments of the Revolving Lenders shall be
      adjusted to give effect to any assignments of the Revolving Loan
      Commitments pursuant to subsection 10.1B; and provided further that the
      amount of the Revolving Loan Commitments shall be reduced from time to
      time by the amount of any reductions thereto made pursuant to subsections
      2.4B(ii) and 2.4B(iii). Each Revolving Lender's Revolving Loan Commitment
      shall expire on September 30, 2000 if the Term Loans are not made on or
      before such date or on the Revolving Loan Commitment Termination Date if
      the Term Loans are made and all Revolving Loans and all other amounts owed
      hereunder with respect to the Revolving Loans and the Revolving Loan
      Commitments shall be paid in full no later than the Revolving Loan
      Commitment Termination Date. Amounts borrowed under this subsection
      2.1A(iii) may be repaid and reborrowed to but excluding the Revolving Loan
      Commitment Termination Date.

                  Anything contained in this Agreement to the contrary
      notwithstanding, in no event shall the Total Utilization of Revolving Loan
      Commitments at any time exceed the Revolving Loan Commitments then in
      effect.

            (iv) Swing Line Loans. Swing Line Lender hereby agrees, subject to
      the limitations set forth below with respect to the maximum amount of
      Swing Line Loans permitted to be outstanding from time to time, to make a
      portion of the Revolving Loan Commitments available to Company from time
      to time during the period from the Closing Date to but excluding the
      Revolving Loan Commitment Termination Date by making Swing Line Loans to
      Company in an aggregate amount not exceeding the amount of the Swing Line
      Loan Commitment to be used for the purposes identified in subsection 2.5B,
      notwithstanding the fact that such Swing Line Loans, when aggregated with
      Swing Line Lender's outstanding Revolving Loans and Swing Line Lender's
      Pro Rata Share of the Letter of Credit Usage then in effect, may exceed
      Swing Line Lender's Revolving Loan Commitment. The original amount of the
      Swing Line Loan Commitment is $10 million; provided that any reduction of
      the Revolving Loan Commitments made pursuant to subsection 2.4B(ii) or
      2.4B(iii) which reduces the aggregate Revolving Loan Commitments to an
      amount less than the then current amount of the Swing Line Loan Commitment
      shall result in an automatic corresponding reduction of the Swing Line
      Loan Commitment to the amount of the Revolving Loan Commitments, as so
      reduced, without any further action on the part of Company, Administrative
      Agent or Swing Line Lender. The Swing Line Loan Commitment shall expire on
      September 30, 2000 if the Term Loans are not made on or before such date
      or on the Revolving Loan Commitment Termination Date if the Term Loans are
      made and all Swing Line Loans and all other amounts owed hereunder with
      respect to the Swing Line Loans shall be paid in full no later than the
      Revolving Loan Commitment Termination Date. Amounts borrowed under this
      subsection 2.1A(iv) may be repaid and reborrowed to but excluding the
      Revolving Loan Commitment Termination Date.

                  Anything contained in this Agreement to the contrary
      notwithstanding, the Swing Line Loans and the Swing Line Loan Commitment
      shall be subject to the limitation that in no event shall the Total
      Utilization of Revolving Loan Commitments at any time exceed the Revolving
      Loan Commitments then in effect.

                                       37                              EXECUTION
<PAGE>

                  With respect to any Swing Line Loans which have not been
      voluntarily prepaid by Company pursuant to subsection 2.4B(i), Swing Line
      Lender may, at any time in its sole and absolute discretion, deliver to
      Administrative Agent (with a copy to Company), no later than 1:00 P.M.
      (New York City time) on the first Business Day in advance of the proposed
      Funding Date, a notice (which shall be deemed to be a Notice of Borrowing
      given by Company) requesting Revolving Lenders to make Revolving Loans
      that are Base Rate Loans on such Funding Date in an amount equal to the
      amount of such Swing Line Loans (the "Refunded Swing Line Loans")
      outstanding on the date such notice is given which Swing Line Lender
      requests Revolving Lenders to prepay. Anything contained in this Agreement
      to the contrary notwithstanding, (i) the proceeds of such Revolving Loans
      made by Revolving Lenders other than Swing Line Lender shall be
      immediately delivered by Administrative Agent to Swing Line Lender (and
      not to Company) and applied to repay a corresponding portion of the
      Refunded Swing Line Loans and (ii) on the day such Revolving Loans are
      made, Swing Line Lender's Pro Rata Share of the Refunded Swing Line Loans
      shall be deemed to be paid with the proceeds of a Revolving Loan made by
      Swing Line Lender, and such portion of the Swing Line Loans deemed to be
      so paid shall no longer be outstanding as Swing Line Loans and shall no
      longer be due under the Swing Line Note of Swing Line Lender but shall
      instead constitute part of Swing Line Lender's outstanding Revolving Loans
      and shall be due under the Revolving Note of Swing Line Lender. Company
      hereby authorizes Administrative Agent and Swing Line Lender to charge
      Company's accounts with Administrative Agent and Swing Line Lender (up to
      the amount available in each such account) in order to immediately pay
      Swing Line Lender the amount of the Refunded Swing Line Loans to the
      extent the proceeds of such Revolving Loans made by Revolving Lenders,
      including the Revolving Loan deemed to be made by Swing Line Lender, are
      not sufficient to repay in full the Refunded Swing Line Loans. If any
      portion of any such amount paid (or deemed to be paid) to Swing Line
      Lender should be recovered by or on behalf of Company from Swing Line
      Lender in bankruptcy, by assignment for the benefit of creditors or
      otherwise, the loss of the amount so recovered shall be ratably shared
      among all Revolving Lenders in the manner contemplated by subsection 10.5.

                  Immediately upon funding of the Swing Line Loan, each
      Revolving Lender shall be deemed to, and hereby agrees to, have purchased
      a participation in such outstanding Swing Line Loans in an amount equal to
      its Pro Rata Share of the unpaid amount of such Swing Line Loans together
      with accrued interest thereon. Upon one Business Day's notice from Swing
      Line Lender, each Revolving Lender shall deliver to Swing Line Lender an
      amount equal to its respective participation in same day funds at the
      Funding and Payment Office. In the event any Revolving Lender fails to
      make available to Swing Line Lender the amount of such Revolving Lender's
      participation as provided in this paragraph, Swing Line Lender shall be
      entitled to recover such amount on demand from such Revolving Lender
      together with interest thereon at the Federal Funds Effective Rate for
      three Business Days and thereafter at the Base Rate. In the event Swing
      Line Lender receives a payment of any amount in which other Revolving
      Lenders have purchased participations as provided in this paragraph, Swing
      Line Lender shall promptly distribute to each such other Revolving Lender
      its Pro Rata Share of such payment.

                                       38                              EXECUTION
<PAGE>

                  Anything contained herein to the contrary notwithstanding,
      each Revolving Lender's obligation to make Revolving Loans for the purpose
      of repaying any Refunded Swing Line Loans pursuant to the second preceding
      paragraph and each Revolving Lender's obligation to purchase a
      participation in any unpaid Swing Line Loans pursuant to the immediately
      preceding paragraph shall be absolute and unconditional and shall not be
      affected by any circumstance, including (a) any set-off, counterclaim,
      recoupment, defense or other right which such Revolving Lender may have
      against Swing Line Lender, Company or any other Person for any reason
      whatsoever; (b) the occurrence or continuation of an Event of Default or a
      Potential Event of Default; (c) any adverse change in the business,
      operations, properties, assets, condition (financial or otherwise) or
      prospects of Company or any of its Subsidiaries; (d) any breach of this
      Agreement or any other Loan Document by any party thereto; or (e) any
      other circumstance, happening or event whatsoever, whether or not similar
      to any of the foregoing; provided that such obligations of each Revolving
      Lender are subject to satisfaction of one of the following conditions (X)
      Swing Line Lender believes in good faith that all conditions under Section
      4 to the making of the applicable Refunded Swing Line Loans or unpaid
      Swing Line Loans, as the case may be, were satisfied at the time such
      Refunded Swing Line Loans or unpaid Swing Line Loans were made or (Y) the
      satisfaction of any such condition not satisfied has been waived in
      accordance with subsection 10.6 prior to or at the time such Refunded
      Swing Line Loans or other unpaid Swing Line Loans were made.

            (v) Increases of the Revolving Loan Commitments. With the written
      consent of Administrative Agent, Company may request in writing at any
      time during the period from the Closing Date to and including July 31,
      2005 that the then effective aggregate principal amount of Revolving Loan
      Commitments be increased; provided that (1) the aggregate principal amount
      of the increases in Revolving Loan Commitments pursuant to this subsection
      2.1A(v) shall not exceed $35 million, (2) Company may not make more than
      one request for such increase in Revolving Loan Commitments, (3) no Event
      of Default or Potential Event of Default shall have occurred and be
      continuing or shall occur as a result of such increases in Revolving Loan
      Commitments, and (4) Company shall, and shall cause its Subsidiaries to,
      execute and deliver such documents and instruments and take such other
      actions (including, without limitation, obtaining appropriate endorsements
      to title insurance policies) as may be reasonably requested by
      Administrative Agent in connection with such increases. Any request under
      this subsection 2.1A(v) shall be submitted by Company to Administrative
      Agent (which shall forward copies to Lenders), specify the proposed
      effective date and amount of such increase and be accompanied by an
      Officer's Certificate stating that no Event of Default or Potential Event
      of Default exists or will occur as a result of such increase. Company may
      also specify any fees offered to those Lenders (the "Increasing Lenders")
      which agree to increase the principal amount of their Revolving Loan
      Commitments, which fees may be variable based upon the amount by which any
      such Lender is willing to increase the principal amount of its Revolving
      Loan Commitment. No Lender shall have any obligation, express or implied,
      to offer to increase the aggregate principal amount of its Revolving Loan
      Commitment. Only the consent of each Increasing Lender and Administrative
      Agent shall be required for an increase in the aggregate principal amount
      of Revolving Loan Commitments pursuant to this subsection 2.1A(v). No
      Lender which elects not to increase the principal amount of

                                       39                              EXECUTION
<PAGE>

      its Revolving Loan Commitment may be replaced in respect of its existing
      Revolving Loan Commitment as a result thereof without such Lender's
      consent.

                  Each Increasing Lender shall as soon as practicable specify
      the amount of the proposed increase which it is willing to assume. Company
      may accept some or all of the offered amounts or designate new lenders who
      qualify as Eligible Assignees and which are reasonably acceptable to
      Administrative Agent as additional Lenders hereunder in accordance with
      this subsection 2.1A(v) (each such new lender being a "New Lender"), which
      New Lender may assume all or a portion of the increase in the aggregate
      principal amount of the Revolving Loan Commitments. Company and
      Administrative Agent shall have discretion jointly to adjust the
      allocation of the increased aggregate principal amount of Revolving Loan
      Commitments, among Increasing Lenders and New Lenders.

                  Each New Lender designated by Company and reasonably
      acceptable to Administrative Agent shall become an additional party hereto
      as a New Lender concurrently with the effectiveness of the proposed
      increase in the aggregate principal amount of the Revolving Loan
      Commitments, upon its execution of an Agreement of Joinder in the form of
      Exhibit XIV (and, in each case, otherwise in form and substance reasonably
      satisfactory to Administrative Agent).

                  Subject to the foregoing, any increase requested by Company
      shall be effective as of the date proposed by Company and shall be in the
      principal amount equal to (i) the principal amount which Increasing
      Lenders are willing to assume as increases to the principal amount of
      their Revolving Loan Commitments, plus (ii) the principal amount offered
      by New Lenders with respect to Revolving Loan Commitments, in either case
      as adjusted by Company and Administrative Agent pursuant to this
      subsection 2.1A(v). Upon effectiveness of any such increase, the Pro Rata
      Share of each Lender will be adjusted to give effect to the increase in
      Revolving Loan Commitments, Administrative Agent shall distribute to
      Lenders a revised Schedule 2.1 reflecting the Revolving Loan Commitment
      and Pro Rata Share of each Lender after giving effect to such increase. To
      the extent that the adjustment of Pro Rata Shares results in loss or
      expenses to any Lender as a result of the prepayment of any Adjusted LIBO
      Rate Loan on a date other than the scheduled last day of the applicable
      Interest Period, Company shall be responsible for such loss or expense
      pursuant to subsection 2.6D.

      B. Borrowing Mechanics. Loans made on any Funding Date as Base Rate Loans
(other than Revolving Loans made pursuant to a request by Swing Line Lender
pursuant to subsection 2.1A(iii) for the purpose of repaying any Refunded Swing
Line Loans or Revolving Loans made pursuant to subsection 3.3B for the purpose
of reimbursing any Issuing Lender for the amount of a drawing under a Letter of
Credit issued by it) shall be in an aggregate minimum amount of $1 million and
multiples of $50,000 in excess of that amount; provided that Loans made on any
Funding Date as LIBO Rate Loans with a particular Interest Period shall be in an
aggregate minimum amount of $3 million and multiples of $500,000 in excess of
that amount. Swing Line Loans made on any Funding Date shall be in an aggregate
minimum amount of $200,000 and multiples of $50,000 in excess of that amount.
Whenever Company desires that Lenders make Loans it shall deliver to
Administrative Agent a Notice of Borrowing no later than 12:00 Noon (New York
City time) at least three Business Days in advance of the proposed Funding Date
(in

                                       40                              EXECUTION
<PAGE>

the case of a LIBO Rate Loan) or at least one Business Day in advance of the
proposed Funding Date (in the case of a Base Rate Loan). Whenever Company
desires that Swing Line Lender make a Swing Line Loan, it shall deliver to
Administrative Agent a Notice of Borrowing no later than 1:00 P.M. (New York
City time) on the proposed Funding Date. The Notice of Borrowing shall specify
(i) the proposed Funding Date (which shall be a Business Day), (ii) the amount
and type of Loans requested, (iii) in the case of Swing Line Loans, that such
Loans shall be Base Rate Loans, (iv) whether such Loans shall be Base Rate Loans
or LIBO Rate Loans, and (v) in the case of any Loans requested to be made as
LIBO Rate Loans, the initial Interest Period requested therefor. Term Loans and
Revolving Loans may be continued as or converted into Base Rate Loans and LIBO
Rate Loans in the manner provided in subsection 2.2D. In lieu of delivering the
above-described Notice of Borrowing, Company may give Administrative Agent
telephonic notice by the required time of any proposed borrowing under this
subsection 2.1B; provided that such notice shall be confirmed in writing by
delivery of a Notice of Borrowing to Administrative Agent on the date of such
telephonic notice.

            Neither Administrative Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.

            Company shall notify Administrative Agent prior to the funding of
any Loans in the event that any of the matters to which Company is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the applicable Funding Date, and the acceptance by Company of the proceeds of
any Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.

            Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a LIBO Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination Date,
and Company shall be bound to make a borrowing in accordance therewith.

      C. Disbursement of Funds. All Loans (other than Swing Line Loans) under
this Agreement shall be made by Lenders simultaneously and proportionately to
their respective Pro Rata Shares of the Tranche A Term Loan Commitment, Tranche
B Term Loan Commitment and the Revolving Loan Commitment, as the case may be, it
being understood that no Lender shall be responsible for any default by any
other Lender in that other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender to make the particular type of
Loan requested be increased or decreased as a result of a default by any other
Lender in that other Lender's obligation to make a Loan requested hereunder.
Promptly after receipt by Administrative Agent of a Notice of Borrowing pursuant
to subsection 2.1B (or telephonic notice in lieu thereof), Administrative Agent
shall notify each Lender or Swing Line Lender, as the case may be, of the
proposed borrowing. Each Lender shall make the amount of its Loan available to
Administrative Agent not later than 1:00 P.M. (New York City time) on the
applicable Funding Date, and Swing Line Lender shall make the amount of its
Swing Line Loan available to

                                       41                              EXECUTION
<PAGE>

Administrative Agent not later than 2:00 P.M. (New York City time) on the
applicable Funding Date, in each case in same day funds in Dollars, at the
Funding and Payment Office. Except as provided in subsection 2.1A(iii) or
subsection 3.3B with respect to Revolving Loans used to repay Refunded Swing
Line Loans or to reimburse any Issuing Lender for the amount of a drawing under
a Letter of Credit issued by it, upon satisfaction or waiver of the conditions
precedent specified in subsections 4.1 (in the case of Loans made on the Closing
Date), 4.2 (in the case of Loans made on the Merger Date) and 4.3 (in the case
of all Loans), Administrative Agent shall make the proceeds of such Loans
available to Company on the applicable Funding Date by causing an amount of same
day funds in Dollars equal to the proceeds of all such Loans received by
Administrative Agent from Lenders or Swing Line Lender, as the case may be, to
be credited to the account of Company at the Funding and Payment Office.

      Unless Administrative Agent shall have been notified in writing by any
Lender prior to the Funding Date for any Loans that such Lender does not intend
to make available to Administrative Agent the amount of such Lender's Loan
requested on such Funding Date, Administrative Agent may assume that such Lender
has made such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Company a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the Federal Funds Effective Rate for three Business
Days and thereafter at the Base Rate. If such Lender does not pay such
corresponding amount forthwith upon Administrative Agent's demand therefor,
Administrative Agent shall promptly notify Company and Company shall immediately
pay such corresponding amount to Administrative Agent together with interest
thereon, for each day from such Funding Date until the date such amount is paid
to Administrative Agent, at the rate payable under this Agreement for Base Rate
Loans. Nothing in this subsection 2.1C shall be deemed to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to prejudice any
rights that Company may have against any Lender as a result of any default by
such Lender hereunder.

      D. The Register.

            (i) Administrative Agent shall maintain, at its address referred to
      in subsection 10.8, a register for the recordation of the names and
      addresses of Lenders and the Commitments and Loans of each Lender from
      time to time (the "Register"). The Register shall be available for
      inspection by Company or any Lender at any reasonable time and from time
      to time upon reasonable prior notice. Upon the Company's written request,
      the Administrative Agent shall provide the Company with a copy of the
      Register.

            (ii) Administrative Agent shall record in the Register the Tranche A
      Term Loan Commitment, the Trance B Term Loan Commitment and the Revolving
      Loan Commitment, and the Tranche A Term Loan, the Tranche B Term Loan and
      the Revolving Loans from time to time of each Lender, the Swing Line Loan
      Commitment and the Swing Line Loans from time to time of Swing Line
      Lender, and each repayment or prepayment in respect of the principal
      amount of the Tranche A Term Loan, the Tranche B Term Loan or the
      Revolving Loans of each Lender or the Swing Line Loans of

                                       42                              EXECUTION
<PAGE>

      Swing Line Lender. Any such recordation shall be conclusive and binding on
      Company and each Lender, absent error; provided that failure to make any
      such recordation, or any error in such recordation, shall not affect any
      Lender's Commitments or Company's Obligations in respect of any applicable
      Loans.

            (iii) Each Lender shall record on its internal records (including,
      without limitation, the Notes held by such Lender) the amount of the
      Tranche A Term Loan, the Tranche B Term Loan and each Revolving Loan made
      by it and each payment in respect thereof. Any such recordation shall be
      conclusive and binding on Company, absent error; provided that failure to
      make any such recordation, or any error in such recordation, shall not
      affect any Lender's Commitments or Company's Obligations in respect of any
      applicable Loans; and provided further that in the event of any
      inconsistency between the Register and any Lender's records, the
      recordations in the Register shall govern.

            (iv) Company, Administrative Agent and Lenders shall deem and treat
      the Persons listed as Lenders in the Register as the holders and owners of
      the corresponding Commitments and Loans listed therein for all purposes
      hereof, and no assignment or transfer of any such Commitment or Loan shall
      be effective, in each case unless and until an Assignment Agreement
      effecting the assignment or transfer thereof shall have been accepted by
      Administrative Agent and recorded in the Register as provided in
      subsection 10.1B(ii). Prior to such recordation, all amounts owed with
      respect to the applicable Commitment or Loan shall be owed to the Lender
      listed in the Register as the owner thereof, and any request, authority or
      consent of any Person who, at the time of making such request or giving
      such authority or consent, is listed in the Register as a Lender shall be
      conclusive and binding on any subsequent holder, assignee or transferee of
      the corresponding Commitments or Loans.

            (v) Company hereby designates Administrative Agent to serve as
      Company's agent solely for purposes of maintaining the Register as
      provided in this subsection 2.1D, and Company hereby agrees that, to the
      extent Administrative Agent serves in such capacity, Administrative Agent
      and its officers, directors and employees shall constitute Indemnitees for
      all purposes under subsection 10.3.

      E. Evidence of Debt.

            (i) The Register maintained by the Administrative Agent pursuant to
      Section 2.1D shall include a control account, and a subsidiary account for
      each Lender, in which accounts (taken together) shall be recorded (i) the
      date, amount and tenor, as applicable, of each Loan, the type of Loan and
      the Interest Period applicable thereto, (ii) the terms of each Assignment
      Agreement delivered to and accepted by it, (iii) the amount of any
      principal or interest due and payable or to become due and payable from
      the Company to each Lender hereunder, and (iv) the amount of any sum
      received by the Administrative Agent from the Company hereunder and each
      Lender's share thereof.

            (ii) The entries made in the Register shall be conclusive and
      binding for all purposes, absent manifest error.

                                       43                              EXECUTION
<PAGE>

            (iii) If, in the opinion of any Lender, a promissory note or other
      evidence of debt is required, appropriate or desirable to reflect or
      enforce the indebtedness of the Company resulting from a Tranche A Loan, a
      Tranche B Loan, a Revolving Loan or a Swing Line Loan made, or to be made,
      by such Lender to the Company, then, upon written request of such Lender,
      the Company shall promptly execute and deliver to such Lender a promissory
      note substantially in the form of Exhibit IV-A in the case of Tranche A
      Loans, Exhibit IV-B in the case of Tranche B Loans, Exhibit IV-C in the
      case of Revolving Loans and Exhibit IV-D in the case of Swing Line Loans,
      payable to the order of such Lender in an amount up to the maximum amount
      of Tranche A Loans, Tranche B Loans, Revolving Loans or Swing Line Loans,
      as the case may be, payable or to be payable by Company to such Lender
      from time to time hereunder.

            (iv) Administrative Agent may deem and treat the payee of any Note
      as the owner thereof for all purposes hereof unless and until an
      Assignment Agreement effecting the assignment or transfer thereof shall
      have been accepted by Administrative Agent as provided in subsection
      10.1B(ii). Any request, authority or consent of any person or entity who,
      at the time of making such request or giving such authority or consent, is
      the holder of any Note shall be conclusive and binding on any subsequent
      holder, assignee or transferee of that Note or of any Note or Notes issued
      in exchange therefor.

      F. Special Provisions Governing Foreign Currency Letters of Credit.
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Letters of Credit denominated
in a currency other than Dollars, in each case as to the matters covered:

            (i) Calculation of Dollar Equivalent Amount of Foreign Currency
      Letters of Credit. For purposes of determining (1) whether the Total
      Utilization of Commitments exceeds the Revolving Loan Commitments then in
      effect or (2) the Letter of Credit Usage, Administrative Agent shall
      determine the Dollar Equivalent amounts with respect to any Letters of
      Credit denominated in a currency other than Dollars (a) on the first
      Business Day following each monthly anniversary of the issuance of such
      Letter of Credit, and (b) at such other dates as Administrative Agent may
      reasonably require (each such date under clauses (a) and (b) being a
      "Computation Date"). Administrative Agent shall determine the Dollar
      Equivalent amount for a particular Letter of Credit at the time a Request
      for Issuance of Letter of Credit is given with respect to such Letter of
      Credit.

            (ii) European Monetary Union. The European Monetary Union (the
      "European Monetary Union") anticipates the introduction of a single
      currency and the substitution of such currency for the national currencies
      of the member states participating in the European Monetary Union. On the
      date on which any currency under which a Letter of Credit is issued is
      replaced by such single currency, the conversion of any outstanding
      Letters of Credit denominated in such foreign currency into such single
      currency shall take effect; provided that the original foreign currency
      shall be retained for so long as legally permissible; provided further
      that any such conversion shall be based on the rate of conversion
      officially fixed by the European Monetary Union on the date such single
      currency replaces the applicable foreign currency. Notwithstanding
      anything contained herein to the contrary, none of the introduction of
      such single currency, the rate of

                                       44                              EXECUTION
<PAGE>

      conversion or any economic consequences that arise from any of the
      aforementioned events or otherwise in connection with the European
      Monetary Union shall give rise to any right to terminate prematurely,
      contest, cancel, rescind, modify or renegotiate this Agreement or any of
      its provisions or to raise any other objections and/or exceptions or to
      assert any claim for compensation.

            (iii) Limitation to Permitted Currencies. Letters of Credit issued
      in a currency other than Dollars shall only be issued in a Permitted
      Currency.

 .2 Interest on the Loans.

      A. Rate of Interest. Subject to the provisions of subsections 2.6 and 2.7,
each Loan shall bear interest on the unpaid principal amount thereof from the
date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate or the Adjusted LIBO Rate. Subject to
the provisions of subsection 2.7, each Swing Line Loan shall bear interest on
the unpaid principal amount thereof from the date made through maturity (whether
by acceleration or otherwise) at a rate determined by reference to the Base
Rate. The applicable basis for determining the rate of interest with respect to
any Loan shall be selected by Company initially at the time a Notice of
Borrowing is given with respect to such Loan pursuant to subsection 2.1B, and
the basis for determining the interest rate with respect to any Loan may be
changed from time to time pursuant to subsection 2.2D. If on any day a Loan is
outstanding with respect to which notice has not been delivered to
Administrative Agent in accordance with the terms of this Agreement specifying
the applicable basis for determining the rate of interest, then for that day
that Loan shall bear interest determined by reference to the Base Rate.

            (i) Subject to the provisions of subsections 2.2E and 2.7, the
      Tranche A Term Loans, the Tranche B Term Loans and the Revolving Loans
      shall bear interest through maturity as follows:

                  (1) if a Base Rate Loan, then at the sum of the Base Rate plus
            the Applicable Base Rate Margin or

                  (2) if a LIBO Rate Loan, then at the sum of the Adjusted LIBO
            Rate plus the Applicable LIBO Rate Margin.

            (ii) Subject to the provisions of subsections 2.2E and 2.7, the
      Swing Line Loans shall bear interest through maturity at the sum of the
      Base Rate plus the Applicable Base Rate Margin for Revolving Loans minus
      the Commitment Fee Percentage.

            Upon delivery of a Margin Determination Certificate by Company to
Administrative Agent pursuant to subsection 6.1(xviii), each of the Applicable
Base Rate Margin and the Applicable LIBO Rate Margin shall automatically be
adjusted in accordance with such Margin Determination Certificate, such
adjustment to become effective on the next succeeding Business Day following the
receipt by Administrative Agent of such Margin Determination Certificate;
provided that if at any time a Margin Determination Certificate is not delivered
at the time required pursuant to subsection 6.1(xviii), the highest Applicable
Base Rate Margin or Applicable LIBO Rate Margin, as the case may be, shall be
applicable from such time until delivery of such Margin Determination
Certificate; provided further that if a Margin

                                       45                              EXECUTION
<PAGE>

Determination Certificate erroneously indicates an applicable margin more
favorable to Company than should be afforded by the actual calculation of the
Consolidated Leverage Ratio, Company shall promptly pay additional interest,
letter of credit fees and all other applicable fees or commitment fees, as the
case may be, to correct such error.

      B. Interest Periods. In connection with each LIBO Rate Loan, Company may,
pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"Interest Period") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period; provided
that:

            (i) the initial Interest Period for any LIBO Rate Loan shall
      commence on the Funding Date in respect of such Loan, in the case of a
      Loan initially made as a LIBO Rate Loan, or on the date specified in the
      applicable Notice of Conversion/Continuation, in the case of a Loan
      converted to a LIBO Rate Loan;

            (ii) in the case of immediately successive Interest Periods
      applicable to a LIBO Rate Loan continued as such pursuant to a Notice of
      Conversion/Continuation, each successive Interest Period shall commence
      on the day on which the next preceding Interest Period expires;

            (iii) if an Interest Period would otherwise expire on a day that is
      not a Business Day, such Interest Period shall expire on the next
      succeeding Business Day; provided that, if any Interest Period would
      otherwise expire on a day that is not a Business Day but is a day of the
      month after which no further Business Day occurs in such month, such
      Interest Period shall expire on the next preceding Business Day;

            (iv) any 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) shall, subject to clause (v) of this subsection 2.2B, end on the
      last Business Day of a calendar month;

            (v) no Interest Period with respect to any portion of the Tranche A
      Term Loans shall extend beyond July 31, 2006, no Interest Period with
      respect to any portion of the Tranche B Term Loans shall extend beyond
      July 31, 2007 and no Interest Period with respect to any portion of the
      Revolving Loans shall extend beyond the Revolving Loan Commitment
      Termination Date;

            (vi) no Interest Period with respect to any portion of the Tranche A
      Term Loans shall extend beyond a date on which Company is required to make
      a scheduled payment of principal of the Tranche A Term Loans unless the
      sum of (a) the aggregate principal amount of Tranche A Term Loans that are
      Base Rate Loans plus (b) the aggregate principal amount of Tranche A Term
      Loans that are LIBO Rate Loans with Interest Periods expiring on or before
      such date equals or exceeds the principal amount required to be paid on
      the Tranche A Term Loans on such date;

            (vii) no Interest Period with respect to any portion of the Tranche
      B Term Loans shall extend beyond a date on which Company is required to
      make a scheduled payment of principal of the Tranche B Term Loans unless
      the sum of (a) the aggregate principal

                                       46                              EXECUTION
<PAGE>

      amount of Tranche B Term Loans that are Base Rate Loans plus (b) the
      aggregate principal amount of Tranche B Term Loans that are LIBO Rate
      Loans with Interest Periods expiring on or before such date equals or
      exceeds the principal amount required to be paid on the Tranche B Term
      Loans on such date;

            (viii) there shall be no more than ten Interest Periods outstanding
      at any time; and

            (ix) in the event Company fails to specify an Interest Period for
      any LIBO Rate Loan in the applicable Notice of Borrowing or Notice of
      Conversion/Continuation, Company shall be deemed to have selected an
      Interest Period of one month.

      C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Swing Line Loans or any Revolving
Loans that are Base Rate Loans are prepaid pursuant to subsection 2.4B(i),
interest accrued on such Swing Line Loans or Revolving Loans through the date of
such prepayment shall be payable on the next succeeding Interest Payment Date
applicable to Base Rate Loans (or, if earlier, at final maturity).

      D. Conversion or Continuation. Subject to the provisions of subsection
2.6, Company shall have the option to convert at any time all or any part of its
outstanding Loans equal to $3 million and multiples of $500,000 in excess of
that amount from Loans bearing interest at a rate determined by reference to one
basis to Loans bearing interest at a rate determined by reference to an
alternative basis or (ii) upon the expiration of any Interest Period applicable
to a LIBO Rate Loan, to continue all or any portion of such Loan equal to $3
million and multiples of $500,000 in excess of that amount as a LIBO Rate Loan;
provided, however, that (i) a LIBO Rate Loan may only be converted into a Base
Rate Loan on the expiration date of an Interest Period applicable thereto.

            Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 10:00 A.M. (New York City time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a LIBO Rate Loan). A Notice of Conversion/Continuation shall
specify (i) the proposed conversion/continuation date (which shall be a Business
Day), (ii) the amount and type of the Loan to be converted/continued, (iii) the
nature of the proposed conversion/continuation, (iv) in the case of a conversion
to, or a continuation of, a LIBO Rate Loan, the requested Interest Period, and
(v) in the case of a conversion to, or a continuation of, a LIBO Rate Loan, that
no Potential Event of Default or Event of Default has occurred and is
continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/ Continuation to Administrative
Agent on or before the proposed conversion/continuation date. Upon receipt of
written or telephonic notice of any proposed conversion/continuation under this
subsection 2.2D, Administrative Agent shall promptly transmit such notice by
telefacsimile or telephone to each Lender.

                                       47                              EXECUTION
<PAGE>

            Neither Administrative Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.

            Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a LIBO
Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Company shall be bound
to effect a conversion or continuation in accordance therewith.

      E. Default Rate. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2.00% per annum in excess of the interest rate
otherwise payable under this Agreement with respect to the applicable Loans (or,
in the case of any such fees and other amounts, at a rate which is 2.00% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans); provided that, in the case of LIBO Rate Loans, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such LIBO Rate Loans shall thereupon become Base Rate
Loans and shall thereafter bear interest payable upon demand at a rate which is
2.00% per annum in excess of the interest rate otherwise payable under this
Agreement for Base Rate Loans. Payment or acceptance of the increased rates of
interest provided for in this subsection 2.2E is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of any Agent or any Lender.

      F. Computation of Interest. Interest on the Loans shall be computed on the
basis of a 360-day year, in each case for the actual number of days elapsed in
the period during which it accrues. In computing interest on any Loan, the date
of the making of such Loan or the first day of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted from a LIBO Rate
Loan, the date of conversion of such LIBO Rate Loan to such Base Rate Loan, as
the case may be, shall be included, and the date of payment of such Loan or the
expiration date of an Interest Period applicable to such Loan or, with respect
to a Base Rate Loan being converted to a LIBO Rate Loan, the date of conversion
of such Base Rate Loan to such LIBO Rate Loan, as the case may be, shall be
excluded; provided that if a Loan is repaid on the same day on which it is made,
one day's interest shall be paid on that Loan.

 .3 Fees.

      A. Commitment Fees. Company agrees to pay to Administrative Agent, for
distribution to each Revolving Lender in proportion to that Lender's Pro Rata
Share of the Revolving Loan Commitments, commitment fees for the period from and
including the Closing Date to and excluding the Revolving Loan Commitment
Termination Date equal to (x) the average of the daily

                                       48                              EXECUTION
<PAGE>

excess of the Revolving Loan Commitments over the Total Utilization of Revolving
Loan Commitments (but not including any outstanding Swing Line Loans) multiplied
by (y) the applicable Commitment Fee Percentage, such commitment fees to be
calculated on the basis of a 360-day year and the actual number of days elapsed
and to be payable quarterly in arrears on the last Business Day of each March,
June, September and December of each year, commencing on the first such date to
occur after the Closing Date, and on the Revolving Loan Commitment Termination
Date.

      B. Other Fees. Company agrees to pay to Arranger and Administrative Agent
such other fees in the amounts and at the times separately agreed upon between
Company, Arranger and Administrative Agent (including that certain letter
agreement dated May 18, 2000 relating to fees for the Commitments and Loans made
hereunder).

      C. Tranche B Term Loan Prepayment Fees. Voluntary payments or prepayments
of Tranche B Term Loans made on or before the second anniversary of the Closing
Date shall be accompanied by payment of a prepayment fee as follows:

            (i) if such voluntary payment or prepayment is made on or before the
      first anniversary of the Closing Date, a fee equal to 2% of the amount of
      such voluntary payment or prepayment; and

            (ii) if such voluntary payment or prepayment is made after the first
      anniversary of the Closing Date but on or before the second anniversary of
      the Closing Date, a fee equal to 1% of the amount of such voluntary
      payment or prepayment.

 .4 Repayments, Prepayments and Reductions in Loan Commitments; General
Provisions Regarding Payments.

A. Scheduled Payments of Term Loans.

            (i) Company shall make principal payments on the Tranche A Term
      Loans on each of the following dates in the aggregate amount set forth
      opposite such date in the table set forth below:

               ------------------------------------------------------
               Scheduled Repayment Date         Scheduled Repayment
                                              of Tranche A Term Loans
               ------------------------------------------------------

                   December 31, 2000                  $750,000.00
                   March 31, 2001                     $750,000.00
                   June 30, 2001                      $750,000.00
                   September 30, 2001                 $750,000.00

                   December 31, 2001                $1,500,000.00
                   March 31, 2002                   $1,500,000.00
                   June 30, 2002                    $1,500,000.00
                   September 30, 2002               $1,500,000.00

                   December 31, 2002                $2,250,000.00
                   March 31, 2003                   $2,250,000.00
                   June 30, 2003                    $2,250,000.00

                                       49                              EXECUTION
<PAGE>

               ------------------------------------------------------
               Scheduled Repayment Date         Scheduled Repayment
                                              of Tranche A Term Loans
               ------------------------------------------------------
                   September 30, 2003               $2,250,000.00

                   December 31, 2003                $3,000,000.00
                   March 31, 2004                   $3,000,000.00
                   June 30, 2004                    $3,000,000.00
                   September 30, 2004               $3,000,000.00

                   December 31, 2004                $3,750,000.00
                   March 31, 2005                   $3,750,000.00
                   June 30, 2005                    $3,750,000.00
                   September 30, 2005               $3,750,000.00

                   December 31, 2005                $3,750,000.00
                   March 31, 2006                   $3,750,000.00
                   June 30, 2006                    $3,750,000.00
                   September 30, 2006               $3,750,000.00
                                              -----------------------
                        Total                $      60,000,000.00

      ; provided that the scheduled installments of principal of the Tranche A
      Term Loans set forth above shall be reduced in connection with any
      voluntary or mandatory prepayments of the Tranche A Term Loans in
      accordance with subsection 2.4B(iv); and provided further that the Tranche
      A Term Loans and all other amounts owed hereunder with respect to the
      Tranche A Term Loans shall be paid in full no later than September 30,
      2006, and the final installment payable by Company in respect of the
      Tranche A Term Loans on such date shall be in an amount, if such amount is
      different from that specified above, sufficient to repay all amounts owing
      by Company under this Agreement with respect to the Tranche A Term Loans.

            (i) Company shall make principal payments on the Tranche B Term
      Loans on each of the following dates in the aggregate amount set forth
      opposite such date in the table set forth below:

               ------------------------------------------------------
               Scheduled Repayment Date       Scheduled  Repayment of
                                              Tranche B Term Loans
               ------------------------------------------------------
                   December 31, 2000             $550,000.00
                   March 31, 2001                $550,000.00
                   June 30, 2001                 $550,000.00
                   September 30, 2001            $550,000.00

                                       50                              EXECUTION
<PAGE>

               ------------------------------------------------------
               Scheduled Repayment Date       Scheduled  Repayment of
                                              Tranche B Term Loans
               ------------------------------------------------------
                   December 31, 2001             $550,000.00
                   March 31, 2002                $550,000.00
                   June 30, 2002                 $550,000.00
                   September 30, 2002            $550,000.00

                   December 31, 2002             $550,000.00
                   March 31, 2003                $550,000.00
                   June 30, 2003                 $550,000.00
                   September 30, 2003            $550,000.00

                   December 31, 2003             $550,000.00
                   March 31, 2004                $550,000.00
                   June 30, 2004                 $550,000.00
                   September 30, 2004            $550,000.00

                   December 31, 2004             $550,000.00
                   March 31, 2005                $550,000.00
                   June 30, 2005                 $550,000.00
                   September 30, 2005            $550,000.00

                   December 31, 2005             $550,000.00
                   March 31, 2006                $550,000.00
                   June 30, 2006                 $550,000.00
                   September 30, 2006            $550,000.00

                   December 31, 2006          $51,700,000.00
                   March 31, 2007             $51,700,000.00
                   June 30, 2007              $51,700,000.00
                   September 30, 2007         $51,700,000.00
                                            -------------------------
                        Total                $220,000,000.00

      ; provided that the scheduled installments of principal of the Tranche B
      Term Loans set forth above shall be reduced in connection with any
      voluntary or mandatory prepayments of the Tranche B Term Loans in
      accordance with subsection 2.4B(iv); and provided further that the Tranche
      B Term Loans and all other amounts owed hereunder with respect to the
      Tranche B Term Loans shall be paid in full no later September 30, 2007,
      and the final installment payable by Company in respect of the Tranche B
      Term Loans on such date shall be in an amount, if such amount is different
      from that specified above, sufficient to repay all amounts owing by
      Company under this Agreement with respect to the Tranche B Term Loans.

                                       51                              EXECUTION
<PAGE>

A. Prepayments of Loans and Unscheduled Reductions in Revolving Loan
Commitments.

            (i) Voluntary Prepayments.

                  (a) Company may, upon written or telephonic notice to
            Administrative Agent on or prior to 12:00 Noon (New York City time)
            on the date of prepayment, which notice, if telephonic, shall be
            promptly confirmed in writing, at any time and from time to time
            prepay, without premium or penalty, any Swing Line Loan on any
            Business Day in whole or in part in an aggregate minimum amount of
            $100,000 and multiples of $50,000 in excess of that amount. Subject
            to subsection 2.3C, Company may, upon not less than one Business
            Day's prior written or telephonic notice, in the case of Base Rate
            Loans, and three Business Days' prior written or telephonic notice,
            in the case of LIBO Rate Loans, in each case given to Administrative
            Agent by 12:00 Noon (New York City time) on the date required and,
            if given by telephone, promptly confirmed in writing to
            Administrative Agent (which original written or telephonic notice
            Administrative Agent will promptly transmit by telefacsimile or
            telephone to each Lender), at any time and from time to time prepay,
            without premium or penalty, any Loans on any Business Day in whole
            or in part in an aggregate minimum amount of $500,000 and multiples
            of $50,000 in excess of that amount; provided, however, that a LIBO
            Rate Loan may only be prepaid on the expiration of the Interest
            Period applicable thereto unless Company complies with subsection
            2.6D with respect to any breakage costs resulting from such
            prepayment being made on a date prior to the expiration of the
            applicable Interest Period. Notice of prepayment having been given
            as aforesaid, the principal amount of the Loans specified in such
            notice shall become due and payable on the prepayment date specified
            therein. Any such voluntary prepayment shall be applied as specified
            in subsection 2.4B(iv).

                  (b) In the event Company is entitled to replace a
            non-consenting Lender pursuant to subsection 10.6B, Company shall
            have the right, upon five Business Days' written notice to
            Administrative Agent (which notice Administrative Agent shall
            promptly transmit to each of the Lenders), to prepay all Loans,
            together with accrued and unpaid interest, fees and other amounts
            owing to such Lender (including without limitation amounts owing to
            such Lender pursuant to subsection 2.6D and subsection 2.3C) in
            accordance with subsection 10.6B so long as (1) in the case of the
            prepayment of the Revolving Loans of any Lender pursuant to this
            subsection 2.4B(i)(b), the Revolving Loan Commitment of such Lender
            is terminated concurrently with such prepayment pursuant to
            subsection 2.4B(ii)(b) (at which time Schedule 2.1 shall be deemed
            modified to reflect the changed Revolving Loan Commitments), and (2)
            in the case of the prepayment of the Loans of any Lender, the
            consents required by subsection 10.6B in connection with the
            prepayment pursuant to this subsection 2.4B(i)(b) shall have been
            obtained, and at such time, such Lender shall no longer constitute a
            "Lender" for purposes of this Agreement, except with respect to
            indemnifications under this Agreement (including, without
            limitation, subsections 2.6D, 2.7, 3.6, 10.2 and 10.3), which shall
            survive as to such Lender.

                                       52                              EXECUTION
<PAGE>

            (ii) Voluntary Reductions of Loan Commitments.

                  (a) Company may, upon not less than three Business Days' prior
            written or telephonic notice confirmed in writing to Administrative
            Agent (which original written or telephonic notice Administrative
            Agent will promptly transmit by telefacsimile or telephone to each
            Revolving Lender), at any time and from time to time terminate in
            whole or permanently reduce in part, without premium or penalty, the
            Revolving Loan Commitments in an amount up to the amount by which
            the Revolving Loan Commitments exceed the Total Utilization of
            Revolving Loan Commitments at the time of such proposed termination
            or reduction; provided that any such partial reduction shall be in
            an aggregate minimum amount of $500,000 and multiples of $100,000 in
            excess of that amount. Company's notice to Administrative Agent
            shall designate the date (which shall be a Business Day) of such
            termination or reduction and the amount of any partial reduction,
            and such termination or reduction of the Revolving Loan Commitments
            shall be effective on the date specified in Company's notice and
            shall reduce the Revolving Loan Commitment of each Revolving Lender
            proportionately to its Pro Rata Share.

                  (b) In the event Company is entitled to replace a
            non-consenting Lender pursuant to subsection 10.6B, Company shall
            have the right, upon five Business Days' written notice to
            Administrative Agent (which notice Administrative Agent shall
            promptly transmit to each of the Lenders), to terminate the entire
            Revolving Loan Commitment of such Lender so long as (1) all Loans,
            together with accrued and unpaid interest, fees and other amounts
            owing to such Lender are repaid, including without limitation
            amounts owing to such Lender pursuant to subsection 2.6D, pursuant
            to subsection 2.4B(i)(b) concurrently with the effectiveness of such
            termination (at which time Schedule 2.1 shall be deemed modified to
            reflect such changed amounts), and (2) the consents required by
            subsection 10.6B in connection with the prepayment pursuant to
            subsection 2.4B(i)(b) shall have been obtained, and at such time,
            such Lender shall no longer constitute a "Lender" for purposes of
            this Agreement, except with respect to indemnifications under this
            Agreement (including, without limitation, subsections 2.6D, 2.7,
            3.6, 10.2 and 10.3), which shall survive as to such Lender.

            (iii) Mandatory Prepayments and Mandatory Reductions of Loan
      Commitments. The Loans shall be prepaid and/or the Revolving Loan
      Commitments shall be permanently reduced in the amounts and under the
      circumstances set forth below, all such prepayments and/or reductions to
      be applied as set forth below or as more specifically provided in
      subsection 2.4B(iv):

                  (a) Prepayments and Reductions From Net Asset Sale Proceeds.
            No later than the first Business Day following the date of receipt
            by Company or any of its Subsidiaries of any Net Asset Sale Proceeds
            in respect of any Asset Sale, Company shall prepay the Loans and/or
            the Revolving Loan Commitments shall be permanently reduced in an
            aggregate amount equal to 100% of such Net Asset Sale Proceeds minus
            any such Net Asset Sale Proceeds (the "Proposed Asset Sale

                                       53                              EXECUTION
<PAGE>

            Reinvestment Proceeds") that Company or any Subsidiary intends to
            use within 360 days of such date of receipt to acquire any asset
            used or useful to the Company or such Subsidiary in conducting its
            business; provided that Company shall have delivered to
            Administrative Agent, on or before such first Business Day, an
            Officer's Certificate setting forth the proposed use of the Proposed
            Asset Sale Reinvestment Proceeds and such other information with
            respect to such proposed use as Administrative Agent may reasonably
            request. In addition, no later than 360 days after receipt of any
            Net Asset Sale Proceeds, Company shall prepay the Loans and/or the
            Revolving Loan Commitments shall be permanently reduced in an amount
            equal to the amount of any related Proposed Asset Sale Reinvestment
            Proceeds that have not been applied to the purchase of an asset by
            Company or such Subsidiary as provided above; provided further that
            the aggregate amount of any such Proposed Asset Sale Reinvestment
            Proceeds so reinvested in the business of Company or any Subsidiary
            shall not exceed $20 million for any Fiscal Year.

                  If, following the receipt by Company or any of its
            Subsidiaries of any Net Asset Sale Proceeds, Company is required to
            apply or cause to be applied any portion of such Net Asset Sale
            Proceeds to prepay any Indebtedness evidenced by any of the Related
            Agreements pursuant to the applicable Related Agreement, then,
            notwithstanding anything contained in this subsection 2.4B(iii)(a),
            Company shall prepay the Loans and/or reduce the Revolving Loan
            Commitments as set forth in this subsection 2.4B(iii)(a) so as to
            eliminate any obligation to prepay such Indebtedness.

                  (b) Prepayments and Reductions from Net Insurance/Condemnation
            Proceeds. No later than the fifth Business Day following the date of
            receipt by Administrative Agent or by Company or any of its
            Subsidiaries of any Net Insurance/Condemnation Proceeds, Company
            shall, or shall instruct the Administrative Agent to, prepay the
            Loans and/or the Revolving Loan Commitments shall be permanently
            reduced in an aggregate amount equal to 100% of the amount of such
            Net Insurance/Condemnation Proceeds minus any such Net
            Insurance/Condemnation Proceeds (the "Proposed Reinvestment
            Proceeds") that Company or such Subsidiary intends to use within 360
            days of such date of receipt to pay or reimburse the costs of
            repairing, restoring or replacing the assets in respect of which
            such Net Insurance/Condemnation Proceeds were received; provided
            that Company shall have delivered to Administrative Agent, on or
            before such first Business Day, an Officer's Certificate setting
            forth the proposed use of the Proposed Reinvestment Proceeds and
            such other information with respect to such proposed use as
            Administrative Agent may reasonably request. In addition, no later
            than 360 days after receipt of any Net Insurance/Condemnation
            Proceeds, Company shall prepay the Loans and/or the Revolving Loan
            Commitments shall be permanently reduced in an amount equal to the
            amount of any related Proposed Reinvestment Proceeds that have not
            been applied to the costs of repairing, restoring or replacing the
            applicable assets of Company or such Subsidiary as provided above;
            provided further that the aggregate amount of any such Proposed
            Reinvestment Proceeds so applied to such repair, restoration or
            replacement shall not exceed $35 million for any Fiscal Year.

                                       54                              EXECUTION
<PAGE>

                  (c) Prepayments and Reductions Due to Issuance of Equity
            Securities. No later than the first Business Day following receipt
            by Company or any of its Subsidiaries of the Cash proceeds (any such
            Cash proceeds, net of underwriting discounts and commissions and
            other reasonable costs and expenses associated therewith, including
            reasonable legal fees and expenses, being "Net Equity Securities
            Proceeds"), from the issuance of equity Securities of Company (other
            than Net Equity Proceeds from the Convertible Preferred Stock and
            proceeds from common equity Securities (including options, warrants
            or other convertible equity securities) of Company issued to
            officers, employees, directors, consultants and certain other
            qualified persons of Company and its Subsidiaries pursuant to option
            plans or other similar plans or agreements adopted by Company's
            Board of Directors), Company shall prepay the Loans and/or the
            Revolving Loan Commitments shall be permanently reduced in an
            aggregate amount equal to 50% of such Net Equity Securities
            Proceeds.

                  (d) Prepayments and Reductions Due to Issuance of Debt
            Securities. No later than the first Business Day following receipt
            by Company or any of its Subsidiaries of the Cash proceeds (any such
            Cash proceeds, net of underwriting discounts and commissions and
            other reasonable costs and expenses associated therewith, including
            reasonable legal fees and expenses, being "Net Debt Securities
            Proceeds"), from the issuance of debt Securities of Company or any
            of its Subsidiaries after the Closing Date (including the Net Debt
            Securities Proceeds of Indebtedness permitted under subsection
            7.1(x) but excluding the Net Debt Securities Proceeds of
            Indebtedness permitted under subsection 7.1 as in effect on the
            Closing Date (other than subsection 7.1(x)), Company shall prepay
            the Loans and/or the Revolving Loan Commitments shall be permanently
            reduced in an aggregate amount equal to 100% of such Net Debt
            Securities Proceeds.

                  (e) Prepayments and Reductions from Consolidated Excess Cash
            Flow. In the event that there shall be Consolidated Excess Cash Flow
            for any Fiscal Year (commencing with the Fiscal Year ending on or
            about December 31, 2001), Company shall, no later than ninety (90)
            days after the end of such Fiscal Year, prepay the Loans and/or the
            Revolving Loan Commitments shall be permanently reduced in an
            aggregate amount equal to 50% of such Consolidated Excess Cash Flow;
            provided that such percentage shall be reduced to 25% if the
            Consolidated Leverage Ratio as at the last day of such Fiscal Year
            is less than 3.00:1.00.

                  (f) Prepayments Due to Restrictions on Revolving Loans
            Commitments or Currency Fluctuations. Company shall from time to
            time prepay first the Swing Line Loans and second the Revolving
            Loans to the extent necessary so that the Total Utilization of
            Revolving Loan Commitments shall not exceed the Revolving Loan
            Commitments then in effect. If on any Computation Date
            Administrative Agent shall have determined that the Total
            Utilization of Revolving Loan Commitments exceeds the Revolving Loan
            Commitments because of a change in applicable rates of exchange
            between Dollars and any other currency under which a Letter of
            Credit has been issued, then Administrative Agent shall give notice
            to the Company that a prepayment is required under this subsection
            2.4B(iii)(f) and

                                       55                              EXECUTION
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            Company shall promptly (x) prepay first its Swing Line Loans and
            second its Revolving Loans and/or (y) cash collateralize its
            outstanding Letters of Credit by depositing Dollars into the
            Collateral Account established under the Security Agreement, in each
            case to the extent necessary so that the Total Utilization of
            Revolving Loan Commitments shall not exceed the Revolving Loan
            Commitments.

                  (g) Calculations of Net Proceeds Amounts; Additional
            Prepayments and Reductions Based on Subsequent Calculations.
            Concurrently with any prepayment of the Loans and/or reduction of
            the Revolving Loan Commitments pursuant to subsections
            2.4B(iii)(a)-(e), Company shall deliver to Administrative Agent an
            Officer's Certificate demonstrating the calculation of the amount
            (the "Net Proceeds Amount") of the applicable Net Asset Sale
            Proceeds or Net Insurance/Condemnation Proceeds, or Net Equity
            Securities Proceeds (as such term is defined in subsection
            2.4B(iii)(c)) or Net Debt Securities Proceeds (as such term is
            defined in subsection 2.4B(iii)(d)) or the applicable Consolidated
            Excess Cash Flow, as the case may be, that gave rise to such
            prepayment and/or reduction. In the event that Company shall
            subsequently determine that the actual Net Proceeds Amount exceeded
            the amount set forth in such Officer's Certificate by $100,000 or
            more, Company shall promptly make an additional prepayment of the
            Loans (and/or, if applicable, the Revolving Loan Commitments shall
            be permanently reduced) in an amount equal to the amount of such
            excess, and Company shall concurrently therewith deliver to
            Administrative Agent an Officer's Certificate demonstrating the
            derivation of the additional Net Proceeds Amount resulting in such
            excess.

            (iv) Application of Prepayments.

                  (a) Application of Voluntary Prepayments by Type of Loans and
            Order of Maturity. Any voluntary prepayments pursuant to subsection
            2.4B(i) shall be applied to the Loans as specified by Company in the
            applicable notice of prepayment; provided that in the event Company
            fails to specify the Loans to which any such prepayment shall be
            applied, such prepayment shall be applied first to repay outstanding
            Swing Line Loans to the full extent thereof, second to repay
            outstanding Revolving Loans to the full extent thereof and third to
            repay outstanding Term Loans to the full extent thereof. Any
            voluntary prepayments of the Term Loans pursuant to subsection
            2.4B(i) (whether the application thereof is specified by Company or
            not) shall be applied to prepay the Tranche A Term Loans and the
            Tranche B Term Loans on a pro rata basis (in accordance with the
            respective outstanding principal amounts thereof) and shall be
            applied on a pro rata basis (in accordance with the respective
            outstanding principal amounts thereof) to each scheduled installment
            of principal of the Tranche A Term Loans or the Tranche B Term
            Loans, as the case may be, set forth in subsection 2.4A(i) or
            2.4A(ii), respectively, that is unpaid at the time of such
            prepayment; provided that, notwithstanding anything to the contrary
            contained in the sentence immediately preceding this proviso, up to
            the first $25 million of any voluntary prepayment of the Term Loans
            shall be applied to prepay the Tranche A Term Loans or Tranche B
            Term Loans, or both, as the case may be, as specified by the Company
            and shall

                                       56                              EXECUTION
<PAGE>

            be applied on a pro rata basis (in accordance with the respective
            outstanding principal thereof) to each scheduled installment of
            principal of the Tranche A Term Loans or the Tranche B Term Loans,
            as the case may be, set forth in subsection 2.4A(i) or 2.4A(ii),
            respectively, that is unpaid at the time of such prepayment.

                  (b) Application of Mandatory Prepayments by Type of Loans. Any
            amount (the "Applied Amount") required to be applied as a mandatory
            prepayment of the Loans and/or a reduction of the Revolving Loan
            Commitments pursuant to subsections 2.4B(iii)(a)-(e) shall be
            applied first to prepay the Term Loans to the full extent thereof as
            provided in subsection 2.4B(iv)(c), second, to the extent of any
            remaining portion of the Applied Amount, to prepay the Swing Line
            Loans to the full extent thereof and to permanently reduce the
            Revolving Loan Commitments by the amount of such prepayment, third,
            to the extent of any remaining portion of the Applied Amount, to
            prepay the Revolving Loans to the full extent thereof and to further
            permanently reduce the Revolving Loan Commitments by the amount of
            such prepayments, and fourth, to the extent of any remaining portion
            of the Applied Amount, to further permanently reduce the Revolving
            Loan Commitments to the full extent thereof; provided, however that
            the Revolving Loan Commitments shall not be reduced pursuant to this
            subsection 2.4B(iv)(b) to an amount less than $35 million.

                  (c) Application of Mandatory Prepayments to Term Loans and the
            Scheduled Installments of Principal Thereof. Any mandatory
            prepayments of the Term Loans pursuant to subsection 2.4B(iii) shall
            be applied to prepay the Tranche A Term Loans and the Tranche B Term
            Loans on a pro rata basis (in accordance with the respective
            outstanding principal amounts thereof) and shall be applied on a pro
            rata basis (in accordance with the respective outstanding principal
            amounts thereof) to each scheduled installment of principal of the
            Tranche A Term Loans or the Tranche B Term Loans, as the case may
            be, set forth in subsection 2.4A(i) or 2.4A(ii), respectively, that
            is unpaid at the time of such prepayment; provided, however, that
            Tranche B Term Lenders shall have the option to waive their rights
            to receive any such prepayment (a "Waivable Mandatory Prepayment").
            In the event any such Tranche B Term Lender desires to waive such
            Lender's right to receive such Waivable Mandatory Prepayment, (1)
            such Tranche B Term Lender shall so advise Administrative Agent in
            writing no later than the close of business on the Business Day
            following the date it receives notice of the prepayment from
            Administrative Agent and (2) upon receipt of such written advice
            from such Tranche B Term Lender, Administrative Agent shall apply
            the amount so waived by such Tranche B Term Lender to prepay the
            Tranche A Term Loans and to reduce the unpaid scheduled installments
            of principal on the Tranche A Term Loans set forth in subsection
            2.4A(i) on a pro rata basis and apply the remainder of the amount so
            waived by such Lender to prepay the Revolving Loans. Company shall
            use its best efforts to notify Administrative Agent (which shall
            promptly notify the Tranche B Term Lenders) of any Waivable
            Mandatory Prepayment at least three Business Days prior to the
            payment to Administrative Agent of such Waivable Mandatory
            Prepayment.

                                       57                              EXECUTION
<PAGE>

                  (d) Application of Prepayments to Base Rate Loans and LIBO
            Rate Loans. Considering Tranche A Term Loans, Tranche B Term Loans
            and Revolving Loans being prepaid separately, any prepayment thereof
            shall be applied first to Base Rate Loans to the full extent thereof
            before application to LIBO Rate Loans, in each case in a manner
            which minimizes the amount of any payments required to be made by
            Company pursuant to subsection 2.6D.

      B. General Provisions Regarding Payments.

            (i) Manner and Time of Payment. All payments by Company of
      principal, interest, fees and other Obligations hereunder and under the
      Notes shall be made in Dollars in same day funds, without defense, setoff
      or counterclaim, free of any restriction or condition, and delivered to
      Administrative Agent not later than 2:00 P.M. (New York City time) on the
      date due at the Funding and Payment Office for the account of Lenders;
      funds received by Administrative Agent after that time on such due date
      shall be deemed to have been paid by Company on the next succeeding
      Business Day. Company hereby authorizes Administrative Agent to charge its
      accounts with Administrative Agent in order to cause timely payment to be
      made to Administrative Agent of all principal, interest, fees and expenses
      due hereunder (subject to sufficient funds being available in its accounts
      for that purpose).

            (ii) Application of Payments to Principal and Interest. Except as
      provided in subsection 2.2C, all payments in respect of the principal
      amount of any Loan shall include payment of accrued interest on the
      principal amount being repaid or prepaid, and all such payments (and, in
      any event, any payments in respect of any Loan on a date when interest is
      due and payable with respect to such Loan) shall be applied to the payment
      of interest before application to principal.

            (iii) Apportionment of Payments. Aggregate principal and interest
      payments in respect of Loans shall be apportioned among all outstanding
      Loans to which such payments relate, in each case proportionately to
      Lenders' respective Pro Rata Shares. Administrative Agent shall promptly
      distribute to each Lender, at its primary address set forth below its name
      on the appropriate signature page hereof or at such other address as such
      Lender may request, its Pro Rata Share of all such payments received by
      Administrative Agent and the commitment fees of such Lender when received
      by Administrative Agent pursuant to subsection 2.3. Notwithstanding the
      foregoing provisions of this subsection 2.4C(iii), if, pursuant to the
      provisions of subsection 2.6C, any Notice of Conversion/Continuation is
      withdrawn as to any Affected Lender or if any Affected Lender makes Base
      Rate Loans in lieu of its Pro Rata Share of any LIBO Rate Loans,
      Administrative Agent shall give effect thereto in apportioning payments
      received thereafter.

            (iv) Payments on Business Days. Whenever any payment to be made
      hereunder shall be stated to be due on a day that is not a Business Day,
      such payment shall be made on the next succeeding Business Day and such
      extension of time shall be included in the computation of the payment of
      interest hereunder or of the commitment fees hereunder, as the case may
      be.

                                       58                              EXECUTION
<PAGE>

            (v) Notation of Payment. Each Lender agrees that before disposing of
      any Note held by it, or any part thereof (other than by granting
      participations therein), that Lender will make a notation thereon of all
      Loans evidenced by that Note and all principal payments previously made
      thereon and of the date to which interest thereon has been paid; provided
      that the failure to make (or any error in the making of) a notation of any
      Loan made under such Note shall not limit or otherwise affect the
      obligations of Company hereunder or under such Note with respect to any
      Loan or any payments of principal or interest on such Note.

      C. Application of Proceeds of Collateral and Payments Under Guaranties

            (i) Application of Proceeds of Collateral. Except as provided in
      subsection 2.4B(iii)(a) with respect to prepayments from Net Asset Sale
      Proceeds, all proceeds received by Administrative Agent in respect of any
      sale of, collection from, or other realization upon all or any part of the
      Collateral under any Collateral Document may, in the discretion of
      Administrative Agent, be held by Administrative Agent as Collateral for,
      and/or (then or at any time thereafter) applied in full or in part by
      Administrative Agent against, the applicable Secured Obligations (as
      defined in such Collateral Document) in the following order of priority:

                  (a) To the payment of all costs and expenses of such sale,
            collection or other realization, including reasonable compensation
            to Administrative Agent and its agents and counsel, and all other
            expenses, liabilities and advances made or incurred by
            Administrative Agent in connection therewith, and all amounts for
            which Administrative Agent is entitled to indemnification under such
            Collateral Document and all advances made by Administrative Agent
            thereunder for the account of the applicable Loan Party, and to the
            payment of all costs and expenses paid or incurred by Administrative
            Agent in connection with the exercise of any right or remedy under
            such Collateral Document, all in accordance with the terms of this
            Agreement and such Collateral Document;

                  (b) thereafter, to the extent of any excess such proceeds, to
            the payment of all other such Secured Obligations for the ratable
            benefit of the holders thereof;

                  (c) thereafter, to the extent of any excess such proceeds, to
            the payment of cash collateral for Letters of Credit for the ratable
            benefit of the Issuing Lenders thereof and holders of participations
            therein; and

                  (d) thereafter, to the extent of any excess such proceeds, to
            the payment to or upon the order of such Loan Party or to whosoever
            may be lawfully entitled to receive the same or as a court of
            competent jurisdiction may direct.

            (ii) Application of Payments Under Subsidiary Guaranty. All payments
      received by Administrative Agent under the Subsidiary Guaranty shall be
      applied promptly from time to time by Administrative Agent in the
      following order of priority:

                  (a) to the payment of the costs and expenses of any collection
            or other realization under the Subsidiary Guaranty, including
            reasonable compensation to

                                       59                              EXECUTION
<PAGE>

            Administrative Agent and its agents and counsel, and all expenses,
            liabilities and advances made or incurred by Administrative Agent in
            connection therewith, all in accordance with the terms of this
            Agreement and the Subsidiary Guaranty;

                  (b) thereafter, to the extent of any excess such payments, to
            the payment of all other Guarantied Obligations (as defined in the
            Subsidiary Guaranty) for the ratable benefit of the holders thereof;

                  (c) thereafter, to the extent of any excess such payments, to
            the payment of cash collateral for Letters of Credit for the ratable
            benefit of the Issuing Lenders thereof and holders of participations
            therein; and

                  (d) thereafter, to the extent of any excess such payments, to
            the payment to the applicable Subsidiary Guarantor or to whosoever
            may be lawfully entitled to receive the same or as a court of
            competent jurisdiction may direct.

 .2 Use of Proceeds.

      A. Term Loans. On the Closing Date, after application of approximately
$3.9 million in cash on hand, the cash proceeds, if any, of $150 million of the
Senior Subordinated Notes and $110 million of the Convertible Preferred Stock,
both as described in subsection 4.1D, then the proceeds of the Term Loans shall
be applied by Company to pay any remaining Acquisition Financing Requirements on
the Closing Date.

      B. Revolving Loans; Swing Line Loans. On the Closing Date, after the
application of the proceeds of the Term Loans, then approximately $3.0 million
of the proceeds of the Revolving Loans and any Swing Line Loans may be applied
to pay any remaining Acquisition Financing Requirements to be paid on the
Closing Date and the remaining proceeds of the Revolving Loans shall be applied
by Company for working capital and general corporate purposes, which may include
the making of interest payments on the Loans, Permitted Acquisitions, the
payment of any remaining Acquisition Financing Requirements to be paid after the
Closing Date and the making of intercompany loans to any of Company's
Subsidiaries in accordance with subsection 7.1(iv) for their own working capital
purposes, and Letters of Credit may be issued for the purposes set forth in the
definition of such term.

      C. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.

 .3 Special Provisions Governing LIBO Rate Loans.

            Notwithstanding any other provision of this Agreement to the
contrary, the following provisions shall govern with respect to LIBO Rate Loans
as to the matters covered:

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      A. Determination of Applicable Interest Rate. As soon as practicable after
10:00 A.M. (New York City time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the LIBO Rate Loans for which an interest rate is then being
determined for the applicable Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to Company and each
Lender.

      B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any LIBO Rate Loans, that by reason of
circumstances affecting the London interbank market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted LIBO Rate, Administrative Agent
shall on such date give notice (by telefacsimile or by telephone confirmed in
writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, LIBO Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice
of Conversion/Continuation given by Company with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by Company.

      C. Illegality or Impracticability of LIBO Rate Loans. In the event that on
any date any Lender shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto but shall be made only after
consultation with Company and Administrative Agent) that the making, maintaining
or continuation of its LIBO Rate Loans (i) has become unlawful as a result of
compliance by such Lender in good faith with any law, treaty, governmental rule,
regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Lender material hardship, as a result
of contingencies occurring after the date of this Agreement which materially and
adversely affect the London interbank market or the position of such Lender in
that market, then, and in any such event, such Lender shall be an "Affected
Lender" and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Administrative Agent of such determination
(which notice Administrative Agent shall promptly transmit to each other
Lender). Thereafter (a) the obligation of the Affected Lender to make Loans as,
or to convert Loans to, LIBO Rate Loans shall be suspended until such notice
shall be withdrawn by the Affected Lender, (b) to the extent such determination
by the Affected Lender relates to a LIBO Rate Loan then being requested by
Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender's
obligation to maintain its outstanding LIBO Rate Loans (the "Affected Loans")
shall be terminated at the earlier to occur of the expiration of the Interest
Period then in effect with respect to the Affected Loans or when required by
law, and (d) the Affected Loans shall automatically convert into Base Rate Loans
on the date of such termination. Notwithstanding the foregoing, to the extent a
determination by an Affected Lender as described above relates to a LIBO Rate
Loan then being requested by Company pursuant to a Notice of Borrowing or a
Notice of Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to

                                       61                              EXECUTION
<PAGE>

all Lenders by giving notice (by telefacsimile or by telephone confirmed in
writing) to Administrative Agent of such rescission on the date on which the
Affected Lender gives notice of its determination as described above (which
notice of rescission Administrative Agent shall promptly transmit to each other
Lender). Except as provided in the immediately preceding sentence, nothing in
this subsection 2.6C shall affect the obligation of any Lender other than an
Affected Lender to make or maintain Loans as, or to convert Loans to, LIBO Rate
Loans in accordance with the terms of this Agreement.

      D. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth in reasonable detail the basis for requesting such
amounts), for all reasonable losses, expenses and liabilities (including any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its LIBO Rate Loans and any loss, expense or liability sustained by that Lender
in connection with the liquidation or re-employment of such funds) which that
Lender may sustain: (i) if for any reason (other than a default by that Lender)
a borrowing of any LIBO Rate Loan does not occur on a date specified therefor in
a Notice of Borrowing or a telephonic request for borrowing, or a conversion to
or continuation of any LIBO Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment (including any prepayment
pursuant to subsection 2.4B(i)) or other principal payment or any conversion of
any of its LIBO Rate Loans occurs on a date prior to the last day of an Interest
Period applicable to that Loan, (iii) if any prepayment of any of its LIBO Rate
Loans is not made on any date specified in a notice of prepayment given by
Company, or (iv) as a consequence of any other default by Company in the
repayment of its LIBO Rate Loans when required by the terms of this Agreement.

      E. Booking of LIBO Rate Loans. Any Lender may make, carry or transfer LIBO
Rate Loans at, to, or for the account of any of its branch offices or the office
of an Affiliate of that Lender.

      F. Assumptions Concerning Funding of LIBO Rate Loans. Calculation of all
amounts payable to a Lender under this subsection 2.6 and under subsection 2.7A
shall be made as though that Lender had actually funded each of its relevant
LIBO Rate Loans through the purchase of a LIBO deposit bearing interest at the
rate obtained pursuant to clause (i) of the definition of Adjusted LIBO Rate in
an amount equal to the amount of such LIBO Rate Loan and having a maturity
comparable to the relevant Interest Period and through the transfer of such LIBO
deposit from an offshore office of that Lender to a domestic office of that
Lender in the United States of America; provided, however, that each Lender may
fund each of its LIBO Rate Loans in any manner it sees fit and the foregoing
assumptions shall be utilized only for the purposes of calculating amounts
payable under this subsection 2.6 and under subsection 2.7A.

      G. LIBO Rate Loans After Default. After the occurrence of and during the
continuation of a Potential Event of Default or an Event of Default, (i) Company
may not elect to have a Loan be made or maintained as, or converted to, a LIBO
Rate Loan after the expiration of any Interest Period then in effect for that
Loan and (ii) subject to the provisions of subsection 2.6D, any Notice of
Borrowing or Notice of Conversion/Continuation given by Company with respect to
a requested borrowing or conversion/continuation that has not yet occurred shall
be deemed to be rescinded by Company.

                                       62                              EXECUTION
<PAGE>

 .4 Increased Costs; Taxes; Capital Adequacy.

      A. Compensation for Increased Costs and Taxes. Subject to the provisions
of subsection 2.7B (which shall be controlling with respect to the matters
covered thereby), in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that the adoption, effectiveness, phase-in or
applicability after the date hereof of any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof, or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):

            (i) subjects such Lender (or its applicable lending office) to any
      additional Tax (other than any Tax on the overall net income of such
      Lender) with respect to this Agreement or any of its obligations hereunder
      or any payments to such Lender (or its applicable lending office) of
      principal, interest, fees or any other amount payable hereunder;

            (ii) imposes, modifies or holds applicable any reserve (including
      any marginal, emergency, supplemental, special or other reserve), special
      deposit, compulsory loan, FDIC insurance or similar requirement against
      assets held by, or deposits or other liabilities in or for the account of,
      or advances or loans by, or other credit extended by, or any other
      acquisition of funds by, any office of such Lender (other than any such
      reserve or other requirements with respect to LIBO Rate Loans that are
      reflected in the definition of Adjusted LIBO Rate); or

            (iii) imposes any other condition (other than with respect to a Tax
      matter) on or affecting such Lender (or its applicable lending office) or
      its obligations hereunder or the London interbank market;

and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto in an amount deemed by such Lender (in its sole discretion) to
be material; then, in any such case, Company shall promptly pay to such Lender,
upon receipt of the statement referred to in the next sentence, such additional
amount or amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole discretion shall
determine) as may be necessary to compensate such Lender for any such increased
cost or reduction in amounts received or receivable hereunder. Such Lender shall
deliver to Company (with a copy to Administrative Agent) a written statement,
setting forth in reasonable detail the basis for calculating the additional
amounts owed to such Lender under this subsection 2.7A, which statement shall be
conclusive and binding upon all parties hereto absent manifest error.

                                       63                              EXECUTION
<PAGE>

      B. Withholding of Taxes.

            (i) Payments to Be Free and Clear. All sums payable by Company under
      this Agreement and the other Loan Documents shall (except to the extent
      required by law) be paid free and clear of, and without any deduction or
      withholding on account of, any Tax (other than a Tax on the overall net
      income of any Lender) imposed, levied, collected, withheld or assessed by
      or within the United States of America or any political subdivision in or
      of the United States of America or any other jurisdiction from which a
      payment is made by or on behalf of Company or by any federation or
      organization of which the United States of America or any such
      jurisdiction is a member at the time of payment.

            (ii) Grossing-up of Payments. If Company or any other Person is
      required by law to make any deduction or withholding on account of any
      such Tax from any sum paid or payable by Company to Administrative Agent
      or any Lender under any of the Loan Documents:

                  (a) Company shall notify Administrative Agent of any such
            requirement or any change in any such requirement as soon as Company
            becomes aware of it;

                  (b) Company shall pay any such Tax before the date on which
            penalties attach thereto, such payment to be made (if the liability
            to pay is imposed on Company) for its own account or (if that
            liability is imposed on Administrative Agent or such Lender, as the
            case may be) on behalf of and in the name of Administrative Agent or
            such Lender;

                  (c) the sum payable by Company in respect of which the
            relevant deduction, withholding or payment is required shall be
            increased to the extent necessary to ensure that, after the making
            of that deduction, withholding or payment, Administrative Agent or
            such Lender, as the case may be, receives on the due date a net sum
            equal to what it would have received had no such deduction,
            withholding or payment been required or made; and

                  (d) within 30 days after paying any sum from which it is
            required by law to make any deduction or withholding, and within 30
            days after the due date of payment of any Tax which it is required
            by clause (b) above to pay, Company shall deliver to Administrative
            Agent evidence satisfactory to the other affected parties of such
            deduction, withholding or payment and of the remittance thereof to
            the relevant taxing or other authority;

      provided that no such additional amount shall be required to be paid to
      any Lender under clause (c) above except to the extent that any change
      after the date hereof (in the case of each Lender listed on the signature
      pages hereof) or after the date of the Assignment Agreement pursuant to
      which such Lender became a Lender (in the case of each other Lender)
      affecting any such requirement for a deduction, withholding or payment as
      is mentioned therein shall result in an increase in the rate of such
      deduction, withholding or payment from that in effect at the date of this
      Agreement or at the date of such Assignment Agreement, as the case may be,
      in respect of payments to such Lender.

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            (iii) Evidence of Exemption from U.S. Withholding Tax.

                  (a) Each Lender that is organized under the laws of any
            jurisdiction other than the United States or any state or other
            political subdivision thereof (for purposes of this subsection
            2.7B(iii), a "Non-US Lender") shall deliver to Administrative Agent
            for transmission to Company, on or prior to the Closing Date (in the
            case of each Lender listed on the signature pages hereof) or on or
            prior to the date of the Assignment Agreement pursuant to which it
            becomes a Lender (in the case of each other Lender), and at such
            other times as may be necessary in the determination of Company or
            Administrative Agent (each in the reasonable exercise of its
            discretion), (1) two original copies of Internal Revenue Service
            Form 1001 or 4224 (or any successor forms), properly completed and
            duly executed by such Lender, together with any other certificate or
            statement of exemption required under the Internal Revenue Code or
            the regulations issued thereunder to establish that such Lender is
            not subject to deduction or withholding of United States federal
            income tax with respect to any payments to such Lender of principal,
            interest, fees or other amounts payable under any of the Loan
            Documents or (2) if such Lender is not a "bank" or other Person
            described in Section 881(c)(3) of the Internal Revenue Code and
            cannot deliver either Internal Revenue Service Form 1001 or 4224
            pursuant to clause (1) above, a Certificate re Non-Bank Status
            together with two original copies of Internal Revenue Service Form
            W-8 (or any successor form), properly completed and duly executed by
            such Lender, together with any other certificate or statement of
            exemption required under the Internal Revenue Code or the
            regulations issued thereunder to establish that such Lender is not
            subject to deduction or withholding of United States federal income
            tax with respect to any payments to such Lender of interest payable
            under any of the Loan Documents.

                  (b) Each Lender required to deliver any forms, certificates or
            other evidence with respect to United States federal income tax
            withholding matters pursuant to subsection 2.7B(iii)(a) hereby
            agrees, from time to time after the initial delivery by such Lender
            of such forms, certificates or other evidence, whenever a lapse in
            time or change in circumstances renders such forms, certificates or
            other evidence obsolete or inaccurate in any material respect, that
            such Lender shall promptly (1) deliver to Administrative Agent for
            transmission to Company two new original copies of Internal Revenue
            Service Form 1001 or 4224, or a Certificate re Non-Bank Status and
            two original copies of Internal Revenue Service Form W-8, as the
            case may be, properly completed and duly executed by such Lender,
            together with any other certificate or statement of exemption
            required in order to confirm or establish that such Lender is not
            subject to deduction or withholding of United States federal income
            tax with respect to payments to such Lender under the Loan Documents
            or (2) notify Administrative Agent and Company of its inability to
            deliver any such forms, certificates or other evidence.

                  (c) Company shall not be required to pay any additional amount
            to any Non-US Lender under clause (c) of subsection 2.7B(ii) if such
            Lender shall have

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            failed to satisfy the requirements of clause (a) or (b)(1) of this
            subsection 2.7B(iii); provided that if such Lender shall have
            satisfied the requirements of subsection 2.7B(iii)(a) on the Closing
            Date (in the case of each Lender listed on the signature pages
            hereof) or on the date of the Assignment Agreement pursuant to which
            it became a Lender (in the case of each other Lender), nothing in
            this subsection 2.7B(iii)(c) shall relieve Company of its obligation
            to pay any additional amounts pursuant to clause (c) of subsection
            2.7B(ii) in the event that, as a result of any change in any
            applicable law, treaty or governmental rule, regulation or order, or
            any change in the interpretation, administration or application
            thereof, such Lender is no longer properly entitled to deliver
            forms, certificates or other evidence at a subsequent date
            establishing the fact that such Lender is not subject to withholding
            as described in subsection 2.7B(iii)(a).

      C. Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loans or Commitments or Letters of Credit or participations
therein or other obligations hereunder with respect to the Loans or the Letters
of Credit to a level below that which such Lender or such controlling
corporation could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
such Lender or such controlling corporation with regard to capital adequacy),
then from time to time, within five Business Days after receipt by Company from
such Lender of the statement referred to in the next sentence, Company shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such controlling corporation on an after-tax basis for such reduction. Such
Lender shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error.

 .5 Obligation of Lenders and Issuing Lenders to Mitigate; Replacement of Lender.

      A. Mitigation. Each Lender and Issuing Lender agrees that, as promptly as
practicable after the officer of such Lender or Issuing Lender responsible for
administering the Loans or Letters of Credit of such Lender or Issuing Lender,
as the case may be, becomes aware of the occurrence of an event or the existence
of a condition that would cause such Lender to become an Affected Lender or that
would entitle such Lender or Issuing Lender to receive payments under subsection
2.7 or subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending or letter of credit office of
such Lender or Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the circumstances
which would cause

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such Lender to be an Affected Lender would cease to exist or the additional
amounts which would otherwise be required to be paid to such Lender or Issuing
Lender pursuant to subsection 2.7 or subsection 3.6 would be materially reduced
and if, as determined by such Lender or Issuing Lender in its sole discretion,
the making, issuing, funding or maintaining of such Commitments or Loans or
Letters of Credit through such other lending or letter of credit office or in
accordance with such other measures, as the case may be, would not otherwise
materially adversely affect such Commitments or Loans or Letters of Credit or
the interests of such Lender or Issuing Lender; provided that such Lender or
Issuing Lender will not be obligated to utilize such other lending or letter of
credit office pursuant to this subsection 2.8 unless Company agrees to pay all
incremental expenses incurred by such Lender or Issuing Lender as a result of
utilizing such other lending or letter of credit office as described in clause
(i) above. A certificate as to the amount of any such expenses payable by
Company pursuant to this subsection 2.8 (setting forth in reasonable detail the
basis for requesting such amount) submitted by such Lender or Issuing Lender to
Company (with a copy to Administrative Agent) shall be conclusive absent
manifest error.

      B. Replacement of Lender. If Company receives a notice pursuant to
subsection 2.7A, 2.7B, 2.7C or 3.6, a Lender defaults in its obligations
hereunder or in the event a Lender has not consented to a proposed change,
waiver, discharge or termination with respect to this Agreement which requires
the consent of all Lenders and which has been approved by Requisite Lenders, as
provided in subsection 10.6B, Company shall have the right, if no Potential
Event of Default or Event of Default then exists, to replace such Lender (a
"Replaced Lender") with one or more Eligible Assignees (collectively, the
"Replacement Lender") acceptable to Administrative Agent; provided that (i) at
the time of any replacement pursuant to this subsection 2.8, the Replacement
Lender shall enter into one or more Assignment Agreements pursuant to subsection
10.1B (and with all fees payable pursuant to subsection 10.1B to be paid by the
Replacement Lender) pursuant to which the Replacement Lender shall acquire all
of the outstanding Loans and Commitments of, and in each case participations in
Letters of Credit and Swing Line Loans by, the Replaced Lender and, in
connection therewith, shall pay to (x) the Replaced Lender in respect thereof an
amount equal to the sum of (A) an amount equal to the principal of, and all
accrued interest on, all outstanding Loans of the Replaced Lender, (B) an amount
equal to all unpaid drawings with respect to Letters of Credit that have been
funded by (and not reimbursed to) such Replaced Lender, together with all then
unpaid interest with respect thereto at such time and (C) an amount equal to all
accrued, but theretofore unpaid, fees owing to the Replaced Lender with respect
thereto, (y) the appropriate Issuing Lender an amount equal to such Replaced
Lender's Pro Rata Share of any unpaid drawings with respect to Letters of Credit
(which at such time remains an unpaid drawing) issued by it to the extent such
amount was not theretofore funded by such Replaced Lender, and (z) Swing Line
Lender an amount equal to such Replaced Lender's Pro Rata Share of any Refunded
Swing Line Loans to the extent such amount was not theretofore funded by such
Replaced Lender, and (ii) all obligations (including without limitation all such
amounts, if any, owing under subsection 2.6D and, except in the case in which
Company is replacing such Replaced Lender because such Replaced Lender has
defaulted in its obligations hereunder, all fees which become payable as a
result of such replacement under subsection 2.3C (it being acknowledged and
agreed that such replacement shall be deemed to be a voluntary prepayment of the
Loans of the Replaced Lender for purposes of subsection 2.3C)) of Company owing
to the Replaced Lender (other than those specifically described in clause (i)
above in respect of which the assignment purchase price has been, or is
concurrently being, paid), shall be

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paid in full to such Replaced Lender concurrently with such replacement. Upon
the execution of the respective Assignment Agreements, recordation of such
assignment in the Register by Administrative Agent pursuant to subsection 2.1D,
the payment of amounts referred to in clauses (i) and (ii) above and delivery to
the Replacement Lender of the appropriate Note or Notes executed by Company, the
Replacement Lender shall become a Lender hereunder and the Replaced Lender shall
cease to constitute a Lender hereunder except with respect to indemnification
provisions under this Agreement which by the terms of this Agreement survive the
termination of this Agreement, which indemnification provisions shall survive as
to such Replaced Lender. Notwithstanding anything to the contrary contained
above, no Issuing Lender may be replaced hereunder at any time while it has
Letters of Credit outstanding hereunder unless arrangements satisfactory to such
Issuing Lender (including the furnishing of a Standby Letter of Credit in form
and substance, and issued by an issuer, satisfactory to such Issuing Lender or
the furnishing of cash collateral in amounts and pursuant to arrangements
satisfactory to such Issuing Lender) have been made with respect to such
outstanding Letters of Credit.

Section 2. LETTERS OF CREDIT

 .1 Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein.

      A. Letters of Credit. In addition to Company requesting that Revolving
Lenders make Revolving Loans pursuant to subsection 2.1A(iii) and that Swing
Line Lender make Swing Line Loans pursuant to subsection 2.1A(iv), Company may
request, in accordance with the provisions of this subsection 3.1, from time to
time during the period from the Closing Date to but excluding the date which is
thirty (30) days prior to the Revolving Loan Commitment Termination Date, that
one or more Revolving Lenders issue Letters of Credit negotiated on a sight
basis for the account of Company for the purposes specified in the definitions
of Commercial Letters of Credit and Standby Letters of Credit. Subject to the
terms and conditions of this Agreement and in reliance upon the representations
and warranties of Company herein set forth, any one or more Revolving Lenders
may, but (except as provided in subsection 3.1B(ii)) shall not be obligated to,
issue such Letters of Credit in accordance with the provisions of this
subsection 3.1; provided that Company shall not request that any Revolving
Lender issue (and no Revolving Lender shall issue):

            (i) any Letter of Credit if, after giving effect to such issuance,
      the Total Utilization of Revolving Loan Commitments would exceed the
      Revolving Loan Commitments then in effect;

            (ii) any Letter of Credit if, after giving effect to such issuance,
      the Letter of Credit Usage would exceed $25 million;

            (iii) any Standby Letter of Credit having an expiration date later
      than the earlier of (a) the date which is ten (10) Business Days prior to
      the Revolving Loan Commitment Termination Date and (b) the date that is
      one year from the date of issuance of such Standby Letter of Credit;
      provided that the immediately preceding clause (b) shall not prevent any
      Issuing Lender from agreeing that a Standby Letter of Credit will
      automatically be extended for one or more successive periods not to exceed
      one year each unless such Issuing Lender elects not to extend for any such
      additional period; and

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<PAGE>

      provided further that such Issuing Lender shall elect not to extend such
      Standby Letter of Credit if it has knowledge that an Event of Default has
      occurred and is continuing (and has not been waived in accordance with
      subsection 10.6) at the time such Issuing Lender must elect whether or not
      to allow such extension;

            (iv) any Commercial Letter of Credit having an expiration date (a)
      later than the earlier of (X) the date which is thirty (30) days prior to
      the Revolving Loan Commitment Termination Date and (Y) the date which is
      180 days from the date of issuance of such Commercial Letter of Credit or
      (b) that is otherwise unacceptable to the applicable Issuing Lender in its
      reasonable discretion;

            (v) any Letter of Credit at a tenor other than at sight; or

            (vi) any Letter of Credit denominated in a currency other than
      Dollars if, after giving effect to such issuance, the Dollar Equivalent of
      the Letter of Credit Usage for all Letters of Credit denominated in a
      currency other than Dollars would exceed $25 million.

      B. Mechanics of Issuance.

            (i) Request for Issuance. Whenever Company desires the issuance of a
      Letter of Credit, it shall deliver to the proposed Issuing Lender (with,
      simultaneously, a copy to Administrative Agent if Administrative Agent is
      not the proposed Issuing Lender) a Request for Issuance of Letter of
      Credit in the form of Exhibit III annexed hereto no later than 12:00 Noon
      (New York City time) at least five Business Days, or such shorter period
      as may be agreed to by the Issuing Lender in any particular instance, in
      advance of the proposed date of issuance. The Issuing Lender, in its
      reasonable discretion, may require changes in the text of the proposed
      Letter of Credit or any documents described in or attached to the Request
      for Issuance of Letter of Credit. No Letter of Credit shall require
      payment against a conforming demand for payment to be made thereunder on
      the same business day (under the laws of the jurisdiction in which the
      office of the Issuing Lender to which such demand for payment is required
      to be presented is located) that such demand for payment is presented if
      such presentation is made after 10:00 A.M. (in the time zone of such
      office of the Issuing Lender) on such business day. The Request for
      Issuance of Letter of Credit shall specify (a) the proposed date of
      issuance (which shall be a Business Day), (b) whether the Letter of Credit
      is to be a Standby Letter of Credit or a Commercial Letter of Credit, (c)
      the face amount of the Letter of Credit, (d) in the case of a Letter of
      Credit which Company requests to be denominated in a currency other than
      Dollars, the currency in which Company requests such Letter of Credit to
      be issued, (e) the expiration date of the Letter of Credit, (f) the name
      and address of the beneficiary, (g) the name of the Revolving Lender which
      has agreed to be the Issuing Lender and (h) either the verbatim text of
      the proposed Letter of Credit or the proposed terms and conditions
      thereof, including a precise description of any documents to be presented
      by the beneficiary which, if presented by the beneficiary prior to the
      expiration date of the Letter of Credit, would require the Issuing Lender
      to make payment under the Letter of Credit; provided that the Issuing
      Lender, in its reasonable discretion, may require changes in the text of
      the proposed Letter of Credit or any such documents.

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                  Company shall notify the applicable Issuing Lender (and
      Administrative Agent, if Administrative Agent is not such Issuing Lender)
      prior to the issuance of any Letter of Credit in the event that any of the
      matters to which Company is required to certify in the applicable Request
      for Issuance of Letter of Credit is no longer true and correct as of the
      proposed date of issuance of such Letter of Credit, and upon the issuance
      of any Letter of Credit Company shall be deemed to have re-certified, as
      of the date of such issuance, as to the matters to which Company is
      required to certify in the applicable Request for Issuance of Letter of
      Credit.

            (ii) Determination of Issuing Lender. Upon receipt by a proposed
      Issuing Lender of a Request for Issuance of Letter of Credit pursuant to
      subsection 3.1B(i) requesting the issuance of a Letter of Credit, (a) in
      the event Administrative Agent is the proposed Issuing Lender,
      Administrative Agent shall be the Issuing Lender with respect to such
      Letter of Credit, notwithstanding the fact that the Letter of Credit Usage
      with respect to such Letter of Credit and with respect to all other
      Letters of Credit issued by Administrative Agent, when aggregated with
      Administrative Agent's outstanding Revolving Loans and Swing Line Loans,
      may exceed Administrative Agent's Revolving Loan Commitment then in
      effect; provided that Administrative Agent shall not be obligated to issue
      any Letter of Credit denominated in a foreign currency which in the
      judgment of Administrative Agent is not readily and freely available; and
      (b) in the event any other Revolving Lender is the proposed Issuing
      Lender, such Revolving Lender shall promptly notify Company and
      Administrative Agent whether or not, in its sole discretion, it has
      elected to issue such Letter of Credit, and (1) if such Revolving Lender
      so elects to issue such Letter of Credit it shall be the Issuing Lender
      with respect thereto and (2) if such Revolving Lender fails to so promptly
      notify Company and Administrative Agent or declines to issue such Letter
      of Credit, Company may request Administrative Agent or another Revolving
      Lender to be the Issuing Lender with respect to such Letter of Credit in
      accordance with the provisions of this subsection 3.1B.

            (iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
      accordance with subsection 10.6) of the conditions set forth in subsection
      4.3, the Issuing Lender shall issue the requested Letter of Credit in
      accordance with the Issuing Lender's standard operating procedures.

            (iv) Notification to Revolving Lenders. Upon the issuance of or
      amendment to any Letter of Credit the applicable Issuing Lender shall
      promptly notify Administrative Agent and each other Revolving Lender of
      such issuance or amendment. The notice to Administrative Agent shall be
      accompanied by a copy of such Letter of Credit or amendment and in the
      event a Revolving Lender requests a copy of such issuance or amendment,
      such copies will be provided by Administrative Agent. Promptly after
      receipt of such notice (or, if Administrative Agent is the Issuing Lender,
      together with such notice), Administrative Agent shall notify each
      Revolving Lender of the amount of such Lender's respective participation
      in such Letter of Credit, determined in accordance with subsection 3.1C.

            (v) Reports to Revolving Lenders. In the event that the Issuing
      Lender is other than Administrative Agent, such Issuing Lender will send
      by facsimile transmission to

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      Administrative Agent, promptly on the first Business Day of each month,
      the daily maximum amount available to be drawn for the Letters of Credit
      for the previous month. Administrative Agent shall deliver to each
      Revolving Lender, upon each Letter of Credit fee payment, a report setting
      forth for such period the daily maximum amount available to be drawn under
      the Letters of Credit issued by all Issuing Lenders during such period.

            (vi) Collateralization of Letters of Credit Due to Currency
      Fluctuation. If on any Computation Date Administrative Agent shall have
      determined that the Letter of Credit Usage exceeds the amount permitted
      under subsection 3.1A(ii) by an amount greater than $50,000 because of a
      change in applicable rates of exchange between Dollars and any foreign
      currency, then Administrative Agent shall give notice to the Company that
      cash collateralization of the Letter of Credit Usage exceeding the amount
      permitted under subsection 3.1A(ii) is required and Company shall cash
      collateralize its outstanding Letters of Credit by depositing Dollars into
      the Collateral Account established under the Security Agreement in an
      amount equal to the extent that the Letter of Credit Usage exceeds the
      amount permitted under subsection 3.1A(ii).

      C. Revolving Lenders' Purchase of Participations in Letters of Credit.
Immediately upon the issuance of each Letter of Credit, each Revolving Lender
shall be deemed to, and hereby agrees to, have irrevocably purchased from the
Issuing Lender a participation in such Letter of Credit and any drawings honored
thereunder in an amount equal to such Revolving Lender's Pro Rata Share of the
maximum amount which is or at any time may become available to be drawn
thereunder.

 .2 Letter of Credit Fees.

            Company agrees to pay the following amounts with respect to Letters
of Credit issued hereunder:

            (i) with respect to each Letter of Credit, (a) a fronting fee,
      payable directly to the applicable Issuing Lender for its own account,
      equal to the greater of (x) $500 and (y) 0.25% per annum the Dollar
      Equivalent of the daily amount available to be drawn under such Letter of
      Credit and (b) a letter of credit fee, payable to Administrative Agent for
      the account of Revolving Lenders (based upon their respective Pro Rata
      Shares), equal to (x) the Applicable LIBO Rate Margin multiplied by (y)
      the Dollar Equivalent of the daily maximum amount available from time to
      time to be drawn under such Letter of Credit, each such fronting fee or
      letter of credit fee to be payable in arrears on and to (but excluding)
      the last Business Day of each March, June, September and December of each
      year and computed on the basis of a 360-day year for the actual number of
      days elapsed; and

            (ii) with respect to the issuance, amendment or transfer of each
      Letter of Credit and each payment of a drawing made thereunder (without
      duplication of the fees payable under clause (i) above), documentary and
      processing charges payable directly to the applicable Issuing Lender for
      its own account in accordance with such Issuing Lender's standard schedule
      for such charges in effect at the time of such issuance, amendment,
      transfer or payment, as the case may be.

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For purposes of calculating any fees payable under clause (i) of this subsection
3.2, (1) the Dollar Equivalent of the daily amount available to be drawn under
any Letter of Credit shall be determined as of the close of business on any date
of determination and (2) the Dollar Equivalent of any amount described in such
clause which is denominated in a currency other than Dollars shall be determined
by the applicable Exchange Rate for such currency as of the immediately
preceding monthly anniversary of the date of issuance of such Letter of Credit.
Promptly upon receipt by Administrative Agent of any amount described in clause
(i)(b) of this subsection 3.2, Administrative Agent shall distribute to each
Revolving Lender its Pro Rata Share of such amount.

 .3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit.

      A. Responsibility of Issuing Lender With Respect to Drawings. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in substantial accordance with
the terms and conditions of such Letter of Credit.

      B. Reimbursement by Company of Amounts Paid Under Letters of Credit. In
the event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately notify Company and
Administrative Agent, and Company shall reimburse such Issuing Lender on or
before the Business Day immediately following the date on which such drawing is
honored (the "Reimbursement Date") in an amount in Dollars (which amount, in the
case of a drawing under a Letter of Credit which is denominated in a currency
other than Dollars, shall be calculated by reference to the applicable Exchange
Rate) and in same day funds equal to the amount of such drawing; provided that,
anything contained in this Agreement to the contrary notwithstanding, (i) unless
Company shall have notified Administrative Agent and such Issuing Lender prior
to 10:00 A.M. (New York City time) on the date such drawing is honored that
Company intends to reimburse such Issuing Lender for the amount of such drawing
with funds other than the proceeds of Revolving Loans, Company shall be deemed
to have given a timely Notice of Borrowing to Administrative Agent requesting
Lenders to make Revolving Loans that are Base Rate Loans on the Reimbursement
Date in an amount in Dollars (which amount, in the case of a drawing under a
Letter of Credit which is denominated in a currency other than Dollars, shall be
calculated by reference to the applicable Exchange Rate) equal to the amount of
such drawing and (ii) subject to satisfaction or waiver of the conditions
specified in subsection 4.3B, Revolving Lenders shall, on the Reimbursement
Date, make Revolving Loans that are Base Rate Loans in the amount of such
drawing, the proceeds of which shall be applied directly by Administrative Agent
to reimburse such Issuing Lender for the amount of such drawing; and provided
further that if for any reason proceeds of Revolving Loans are not received by
such Issuing Lender on the Reimbursement Date in an amount equal to the amount
of such drawing, Company shall reimburse such Issuing Lender, on demand, in an
amount in same day funds equal to the excess of the amount of such drawing over
the aggregate amount of such Revolving Loans, if any, which are so received.
Nothing in this subsection 3.3B shall be deemed to relieve any Revolving Lender
from its obligation to make Revolving Loans on the terms and conditions set
forth in this Agreement, and Company shall retain any and all rights it may have
against any Revolving Lender resulting from the failure of such Lender to make
such Revolving Loans under this subsection 3.3B.

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      C. Payment by Revolving Lenders of Unreimbursed Amounts Paid Under Letters
of Credit.

            (i) Payment by Revolving Lenders. In the event that Company shall
      fail for any reason to reimburse any Issuing Lender as provided in
      subsection 3.3B in an amount (calculated, in the case of a drawing under a
      Letter of Credit denominated in a currency other than Dollars, by
      reference to the applicable Exchange Rate) equal to the amount of any
      drawing honored by such Issuing Lender under a Letter of Credit issued by
      it, such Issuing Lender shall promptly notify each other Revolving Lender
      of the unreimbursed amount of such drawing and of such other Revolving
      Lender's respective participation therein based on such Revolving Lender's
      Pro Rata Share. Each Revolving Lender shall make available to such Issuing
      Lender an amount equal to its respective participation, in Dollars and in
      same day funds, at the office of such Issuing Lender specified in such
      notice, not later than 12:00 Noon (New York City time) on the first
      business day (under the laws of the jurisdiction in which such office of
      such Issuing Lender is located) after the date notified by such Issuing
      Lender. In the event that any Revolving Lender fails to make available to
      such Issuing Lender on such business day the amount of such Revolving
      Lender's participation in such Letter of Credit as provided in this
      subsection 3.3C, such Issuing Lender shall be entitled to recover such
      amount on demand from such Revolving Lender together with interest thereon
      at the Federal Funds Effective Rate for three Business Days and thereafter
      at the Base Rate. Nothing in this subsection 3.3C shall be deemed to
      prejudice the right of any Revolving Lender to recover from any Issuing
      Lender any amounts made available by such Revolving Lender to such Issuing
      Lender pursuant to this subsection 3.3C in the event that it is determined
      by the final judgment of a court of competent jurisdiction that the
      payment with respect to a Letter of Credit by such Issuing Lender in
      respect of which payment was made by such Revolving Lender constituted
      gross negligence or willful misconduct on the part of such Issuing Lender.

            (ii) Distribution to Revolving Lenders of Reimbursements Received
      From Company. In the event any Issuing Lender shall have been reimbursed
      by other Revolving Lenders pursuant to subsection 3.3C(i) for all or any
      portion of any drawing honored by such Issuing Lender under a Letter of
      Credit issued by it, such Issuing Lender shall distribute to each other
      Revolving Lender which has paid all amounts payable by it under subsection
      3.3C(i) with respect to such honored drawing such other Revolving Lender's
      Pro Rata Share of all payments subsequently received by such Issuing
      Lender from Company in reimbursement of such honored drawing when such
      payments are received. Any such distribution shall be made to a Revolving
      Lender at its primary address set forth below its name on the appropriate
      signature page hereof or at such other address as such Revolving Lender
      may request.

      D. Interest on Amounts Paid Under Letters of Credit.

            (i) Payment of Interest by Company. Company agrees to pay to each
      Issuing Lender, with respect to drawings honored under any Letters of
      Credit issued by it, interest on the amount paid by such Issuing Lender in
      respect of each such drawing from the date such drawing is honored to but
      excluding the date such amount is reimbursed by Company (including any
      such reimbursement out of the proceeds of Revolving Loans pursuant to

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      subsection 3.3B) at a rate equal to (a) for the period from the date of
      such drawing to but excluding the Reimbursement Date, the rate then in
      effect under this Agreement with respect to Revolving Loans that are Base
      Rate Loans and (b) thereafter, a rate which is 2.00% per annum in excess
      of the rate of interest otherwise payable under this Agreement with
      respect to Revolving Loans that are Base Rate Loans. Interest payable
      pursuant to this subsection 3.3D(i) shall be computed on the basis of a
      360-day year for the actual number of days elapsed in the period during
      which it accrues and shall be payable on demand or, if no demand is made,
      on the date on which the related drawing under a Letter of Credit is
      reimbursed in full.

            (ii) Distribution of Interest Payments by Issuing Lender. Promptly
      upon receipt by any Issuing Lender of any payment of interest pursuant to
      subsection 3.3D(i) with respect to a drawing under a Letter of Credit
      issued by it, (a) such Issuing Lender shall distribute to each other
      Revolving Lender, out of the interest received by such Issuing Lender in
      respect of the period from the date of such drawing to but excluding the
      date on which such Issuing Lender is reimbursed for the amount of such
      drawing (including any such reimbursement out of the proceeds of Revolving
      Loans pursuant to subsection 3.3B), the amount that such other Revolving
      Lender would have been entitled to receive in respect of the letter of
      credit fee that would have been payable in respect of such Letter of
      Credit for such period pursuant to subsection 3.2 if no drawing had been
      honored under such Letter of Credit, and (b) in the event such Issuing
      Lender shall have been reimbursed by other Revolving Lenders pursuant to
      subsection 3.3C(i) for all or any portion of such drawing, such Issuing
      Lender shall distribute to each other Revolving Lender which has paid all
      amounts payable by it under subsection 3.3C(i) with respect to such
      drawing such other Revolving Lender's Pro Rata Share of any interest
      received by such Issuing Lender in respect of that portion of such drawing
      so reimbursed by other Revolving Lenders for the period from the date on
      which such Issuing Lender was so reimbursed by other Revolving Lenders to
      but excluding the date on which such portion of such drawing is reimbursed
      by Company. Any such distribution shall be made to a Revolving Lender at
      its primary address set forth below its name on the appropriate signature
      page hereof or at such other address as such Revolving Lender may request.

 .4 Obligations Absolute.

            The obligation of Company to reimburse each Issuing Lender for
drawings made under the Letters of Credit issued by it and to repay any
Revolving Loans made by Revolving Lenders pursuant to subsection 3.3B and the
obligations of Revolving Lenders under subsection 3.3C(i) shall be unconditional
and irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including any of the following circumstances:

                  (i) any lack of validity or enforceability of any Letter of
            Credit;

                  (ii) the existence of any claim, set-off, defense or other
            right which Company or any Revolving Lender may have at any time
            against a beneficiary or any transferee of any Letter of Credit (or
            any Persons for whom any such transferee may be acting), any Issuing
            Lender or other Lender or any other Person or, in the case of a
            Lender, against Company,

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      whether in connection with this Agreement, the transactions contemplated
      herein or any unrelated transaction (including any underlying transaction
      between Company or one of its Subsidiaries and the beneficiary for which
      any Letter of Credit was procured);

            (iii) any draft or other document presented under any Letter of
      Credit proving to be forged, fraudulent, invalid or insufficient in any
      respect or any statement therein being untrue or inaccurate in any
      respect;

            (iv) payment by the applicable Issuing Lender under any Letter of
      Credit against presentation of a draft or other document which does not
      substantially comply with the terms of such Letter of Credit;

            (v) any adverse change in the business, operations, properties,
      assets, condition (financial or otherwise) or prospects of Company or any
      of its Subsidiaries;

            (vi) any breach of this Agreement or any other Loan Document by any
      party thereto;

            (vii) any other circumstance or happening whatsoever, whether or not
      similar to any of the foregoing; or

            (viii) the fact that an Event of Default or a Potential Event of
      Default shall have occurred and be continuing;

provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).

 .5 Indemnification; Nature of Issuing Lenders' Duties.

      A. Indemnification. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the gross negligence or willful misconduct
of such Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor
by such Issuing Lender of a proper demand for payment made under any Letter of
Credit issued by it or (ii) the failure of such Issuing Lender to honor a
drawing under any such Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions herein called
"Governmental Acts").

      B. Nature of Issuing Lenders' Duties. As between Company and any Issuing
Lender, Company assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by such Issuing Lender by, the respective beneficiaries
of such Letters of Credit. In furtherance

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and not in limitation of the foregoing, such Issuing Lender shall not be
responsible (absent a determination of a court of competent jurisdiction of
gross negligence or willful misconduct by such Issuing Lender) for: (i) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender, including any Governmental Acts, and none of the
above shall affect or impair, or prevent the vesting of, any of such Issuing
Lender's rights or powers hereunder.

            In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to Company.

            Notwithstanding anything to the contrary contained in this
subsection 3.5, Company shall retain any and all rights it may have against any
Issuing Lender for any liability arising solely out of the gross negligence or
willful misconduct of such Issuing Lender, as determined by a final judgment of
a court of competent jurisdiction.

 .6 Increased Costs and Taxes Relating to Letters of Credit.

            Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby), in the event that any
Issuing Lender or Revolving Lender shall determine (which determination shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto) that any law, treaty or governmental rule, regulation or order, or any
change therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by any
Issuing Lender or Revolving Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):

            (i) subjects such Issuing Lender or Revolving Lender (or its
      applicable lending or letter of credit office) to any additional Tax
      (other than any Tax on the overall net income of such Issuing Lender or
      Revolving Lender) with respect to the issuing or maintaining of any
      Letters of Credit or the purchasing or maintaining of any participations
      therein or any

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      other obligations under this Section 3, whether directly or by such being
      imposed on or suffered by any particular Issuing Lender;

            (ii) imposes, modifies or holds applicable any reserve (including
      any marginal, emergency, supplemental, special or other reserve), special
      deposit, compulsory loan, FDIC insurance or similar requirement in respect
      of any Letters of Credit issued by any Issuing Lender or participations
      therein purchased by any Revolving Lender; or

            (iii) imposes any other condition (other than with respect to a Tax
      matter) on or affecting such Issuing Lender or Revolving Lender (or its
      applicable lending or letter of credit office) regarding this Section 3 or
      any Letter of Credit or any participation therein;

and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Revolving Lender of agreeing to issue, issuing or maintaining any
Letter of Credit or agreeing to purchase, purchasing or maintaining any
participation therein or to reduce any amount received or receivable by such
Issuing Lender or Revolving Lender (or its applicable lending or letter of
credit office) with respect thereto (in any amount deemed by such Issuing Lender
(in its sole discretion) to be material); then, in any case, Company shall
promptly pay to such Issuing Lender or Revolving Lender, upon receipt of the
statement referred to in the next sentence, such additional amount or amounts as
may be necessary to compensate such Issuing Lender or Revolving Lender for any
such increased cost or reduction in amounts received or receivable hereunder.
Such Issuing Lender or Revolving Lender shall deliver to Company a written
statement, setting forth in reasonable detail the basis for calculating the
additional amounts owed to such Issuing Lender or Revolving Lender under this
subsection 3.6, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.

Section 3. CONDITIONS TO LOANS AND LETTERS OF CREDIT

            The obligations of Lenders to make Loans and the issuance of Letters
of Credit hereunder are subject to the satisfaction of the following conditions:

 .1 Conditions to Initial Loans.

            The obligations of Lenders to make the initial Loans to be made on
the Closing Date are, in addition to the conditions precedent specified in
subsection 4.2, subject to prior or concurrent satisfaction of the following
conditions:

      A. Loan Party Documents. On or before the Closing Date, Company shall, and
shall cause each other Loan Party to, deliver to Administrative Agent for
Lenders (with sufficient originally executed copies, where appropriate, for each
Lender and its counsel) the following with respect to Company or such Loan
Party, as the case may be, each, unless otherwise noted, dated the Closing Date:

            (i) Certified copies of the Certificate or Articles of Incorporation
      of such Person, together with a good standing certificate from the
      Secretary of State of its jurisdiction of incorporation and each other
      state in which such Person is qualified as a foreign corporation to do
      business and, to the extent generally available, a certificate or other
      evidence of good standing as to payment of any applicable franchise or
      similar taxes from

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      the appropriate taxing authority of each of such jurisdictions, each dated
      a recent date prior to the Closing Date;

            (ii) Copies of the Bylaws of such Person, certified as of the
      Closing Date by such Person's corporate secretary or an assistant
      secretary;

            (iii) Resolutions of the Board of Directors of such Person approving
      and authorizing the execution, delivery and performance of the Loan
      Documents and the Related Agreements to which it is a party, and the
      consummation of the transactions contemplated by the foregoing, certified
      as of the Closing Date by the corporate secretary or an assistant
      secretary of such Person as being in full force and effect without
      modification or amendment;

            (iv) Signature and incumbency certificates of the officers of such
      Person executing the Loan Documents to which it is a party;

            (v) Executed originals of the Loan Documents, in each case to which
      such Person is a party; and

            (vi) Such other documents as Administrative Agent may reasonably
      request in writing.

      B. Scientific Games Documents. On or before the Closing Date, Company
shall, or shall cause Scientific Games and its Domestic Subsidiaries to, as the
case may be, deliver to Administrative Agent for Lenders (with sufficient
originally executed copies, where appropriate, for each Lender and its counsel)
the following, each, unless otherwise noted, dated the Closing Date:

            (i) Certified copies of the Certificate or Articles of Incorporation
      of each of Scientific Games and its Domestic Subsidiaries, together with,
      where applicable, a good standing certificate from the Secretary of State
      of its jurisdiction of incorporation and each other state in which
      Scientific Games or any of its Domestic Subsidiaries is qualified as a
      foreign corporation to do business and, to the extent generally available,
      a certificate or other evidence of good standing as to payment of any
      applicable franchise or similar taxes from the appropriate taxing
      authority of each of such jurisdictions, each dated a recent date prior to
      the Closing Date;

            (ii) Copies of the Bylaws of each of Scientific Games and its
      Domestic Subsidiaries, certified as of the Closing Date by such Person's
      corporate secretary or an assistant secretary;

            (iii) Resolutions of the Board of Directors of Scientific Games and
      its Domestic Subsidiaries approving and authorizing the execution,
      delivery and performance of the Loan Documents and the Related Agreements
      to which it is a party and the consummation of the transactions
      contemplated by the foregoing, each certified as of the Closing Date by
      the corporate secretary or an assistant secretary of such Person as being
      in full force and effect without modification or amendment;

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            (iv) Signature and incumbency certificates of the officers of
      Scientific Games and its Subsidiaries executing the Loan Documents to
      which it is a party;

            (v) Originals of the Loan Documents, in each case executed by
      Scientific Games and each of its Domestic Subsidiaries that is a party
      thereto, as the case may be; and

            (vi) Such other documents as Administrative Agent may reasonably
      request in writing;

      C. No Material Adverse Change. Since October 31, 1999, Company and each of
its Subsidiaries and, since December 31, 1999, Scientific Games and each of its
Subsidiaries, shall have conducted its business in the ordinary course of
business and consistent with past practice and there shall not have been any
Material Adverse Effect.

      D. Senior Subordinated Notes and Convertible Preferred Stock; Use of
Proceeds.

            (i) Senior Subordinated Notes. On or before the Closing Date the
      Senior Subordinated Notes shall have been sold for gross proceeds of not
      less than $150 million and the Senior Subordinated Note Indenture as
      amended by the First Supplemental Indenture dated as of September 6, 2000
      (the "First Supplemental") shall be in full force and effect and shall not
      have been amended, supplemented, waived or otherwise modified without the
      consent of Administrative Agent, and executed or conformed copies thereof
      (including all exhibits and schedules thereto) and any amendments thereto
      and all material documents executed in connection therewith shall have
      been delivered to Administrative Agent.

            (ii) Convertible Preferred Stock. On or before the Closing Date, (1)
      Company shall have executed and delivered the Convertible Preferred Stock
      Purchase Agreement and such agreement shall be in full force and effect
      and shall not have been amended, supplemented, waived or otherwise
      modified without the consent of Administrative Agent, and executed or
      conformed copies thereof (including all exhibits and schedules thereto)
      and any amendment thereto and all documents executed in connection
      therewith shall have been delivered to Administrative Agent and (2)
      Company shall have received the net cash proceeds from the issuance of
      $110 million of Convertible Preferred Stock.

            (iii) Use of Proceeds. On or before the Closing Date, (1) Company
      shall have contributed the net cash proceeds from the Senior Subordinated
      Notes issuance to Acquisition Co., and Company and Acquisition Co. shall
      have applied such proceeds to the Acquisition Financing Requirements; (2)
      Company shall have applied the net cash proceeds from the Convertible
      Preferred Stock issuance to the Acquisition Financing Requirements; and
      (3) Company shall have applied approximately $3.9 million in cash on hand
      to the Acquisition Financing Requirements.

      E. Necessary Governmental Authorizations and Consents; Expiration of
Waiting Periods, Etc. Company, Acquisition Co. and Scientific Games shall have
obtained all Governmental Authorizations and all consents of other Persons, in
each case that are necessary or advisable in connection with the Merger, the
related financings and the other transactions contemplated by the Loan Documents
and the Related Agreements and the continued operation of the business

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conducted by Company and its Subsidiaries and Scientific Games and its
Subsidiaries in substantially the same manner as conducted prior to the
consummation of the Merger, the related financings and the other transactions
contemplated by the Loan Documents and the Related Agreements, and each of the
foregoing shall be in full force and effect, in each case other than those the
failure to obtain or maintain which, either individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. All
applicable waiting periods relating to competition or antitrust laws and
regulations shall have expired without any action being taken or threatened by
any competent authority which would restrain, prevent or otherwise impose
adverse conditions on the Merger, the related financings and the transactions
contemplated by the Loan Documents and the Related Agreements. No action,
request for stay, petition for review or rehearing, reconsideration, or appeal
with respect to any of the foregoing shall be pending, and the time for any
applicable agency to take action to set aside its consent on its own motion
shall have expired.

      F. Merger Matters.

            (i) Merger Agreement and certain other Related Agreements.
      Administrative Agent shall have received fully executed or conformed
      copies of the Merger Agreement and any documents executed in connection
      therewith, and the Merger Agreement shall be in full force and effect and
      no provision thereof shall have been amended, supplemented, waived or
      otherwise modified in any respect determined by Administrative Agent to be
      material (including, without limitation, any increase in the price to be
      paid for the Scientific Games Common Stock to an amount in excess of
      $26.00 per share), in each case without the consent of Administrative
      Agent;

            (ii) Merger Conditions. All conditions to the Merger set forth in
      the Merger Agreement shall have been satisfied or the fulfillment of any
      such conditions shall have been waived with the consent of Administrative
      Agent and Requisite Lenders;

            (iii) Merger Effective. The Merger shall have become effective in
      accordance with the terms of the Merger Agreement and the Delaware General
      Corporation Law;

            (iv) Merger Documents. Administrative Agent shall have received
      satisfactory evidence of the filing of the documents with the Secretary of
      State of the State of Delaware effecting the Merger on the Merger Date;

            (v) Aggregate Cash Consideration. The aggregate cash consideration
      for the shares of Scientific Games Common Stock to be acquired in any
      manner whatsoever in connection with the Merger shall not exceed
      approximately $307.7 million in the aggregate;

            (vi) Transaction Costs. Transaction Costs incurred as of the Closing
      Date shall not exceed $30.1 million and Administrative Agent shall have
      received evidence to its satisfaction to such effect;

            (vii) Use of Proceeds. Company shall have provided evidence
      satisfactory to Administrative Agent that the proceeds of the Senior
      Subordinated Notes, Convertible Preferred Stock and the Company's cash on
      hand described in subsection 4.1D have been

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      irrevocably committed, prior to the application of the proceeds of the
      Term Loans and the Revolving Loans made on the Closing Date, to the
      payment of a portion of the Acquisition Financing Requirements;

            (viii) Merger Officer's Certificate. Administrative Agent shall have
      received an Officer's Certificate of Company to the effect set forth in
      clauses (i)-(vii) above;

            (ix) Officer's Certificates. Administrative Agent shall have an
      Officer's Certificate from Company to the effect that the representations
      and warranties of each of Acquisition Co. and Scientific Games in the
      Merger Agreement are true, correct and complete in all material respects
      on and as of the Closing Date to the same extent as though made on and as
      of that date. Administrative Agent shall have received Officer's
      Certificates from Company to the effect that (a) the Merger Agreement is
      in full force and effect and no provision thereof has been amended,
      supplemented, waived or otherwise modified in any material respect without
      the consent of Administrative Agent and (b) each of the parties to the
      Merger Agreement has complied with all agreements, terms and conditions
      contained in the Merger Agreement and any agreements or documents referred
      to therein required to be performed or complied with by each of them on or
      before the Closing Date, except where such failure to comply or perform
      could not reasonably be expected to have a Material Adverse Effect, and
      none of such Persons is in default in their performance or compliance with
      any of the terms or provisions thereof, except where such default could
      not reasonably be expected to have a Material Adverse Effect;

            (x) Existing Company Indebtedness; Release of Liens.
      Contemporaneously with the application of the proceeds of the initial
      Loans to be made on the Closing Date:

                  (a) Company shall have paid the Prepayment Premiums and shall
            have repaid in full the Existing Company Bank Debt, the Existing
            Company Senior Notes and the Existing Company Convertible Debt, and
            shall have terminated any commitments to lend or make other
            extensions of credit under the agreements relating to the Existing
            Company Bank Debt and no other Indebtedness of Company and its
            Subsidiaries shall remain outstanding other than the Indebtedness
            permitted under subsection 7.1;

                  (b) Company shall have delivered to Administrative Agent all
            documents and instruments and taken all other actions, in each case
            necessary to release all Liens securing the Existing Company Bank
            Debt in connection therewith;

                  (c) Company shall have made arrangements satisfactory to
            Administrative Agent with respect to the cancellation of any letters
            of credit outstanding under the agreements relating to the Existing
            Company Bank Debt or the issuance of Letters of Credit to support
            the obligations of Company and its Subsidiaries with respect
            thereto;

                  (d) Administrative Agent shall have received an Officer's
            Certificate of Company stating that, after giving effect to the
            transactions described in this subsection 4.1F, there shall be no
            existing Indebtedness of Company or its

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            Subsidiaries outstanding after consummation of the Closing Date
            transactions other than the Indebtedness permitted under subsection
            7.1, such Indebtedness to be in form and substance satisfactory to
            Administrative Agent;

            (xi) Existing Scientific Games Indebtedness. Contemporaneously with
      the application of the proceeds of the initial Loans to be made on the
      Closing Date:

                  (a) Scientific Games and its Subsidiaries shall have repaid in
            full the Existing Scientific Games Bank Debt and shall have
            terminated any commitments to lend or make other extensions of
            credit thereunder;

                  (b) Scientific Games shall have delivered to Administrative
            Agent all documents and instruments and taken all other actions, in
            each case necessary to release all Liens securing the Existing
            Scientific Games Bank Debt in connection therewith; and

                  (c) Scientific Games shall have made arrangements satisfactory
            to Administrative Agent with respect to the cancellation of any
            letters of credit (other than the Existing Letters of Credit)
            outstanding under the agreements relating to the Existing Scientific
            Games Bank Debt or the issuance of Letters of Credit to support the
            obligations of Scientific Games and its Subsidiaries with respect
            thereto; and

            (xii) Existing Letters of Credit. Company shall have furnished to
      Administrative Agent copies of all Existing Letters of Credit and all
      amendments thereto. Company shall have (x) cash collateralized the
      Existing Letters of Credit on or before the Closing Date and (y) paid to
      the issuing lenders with respect to such Existing Letters of Credit all
      fees and other amounts owing with respect thereto through and including
      the Closing Date.

      G. Mortgages; Mortgage Policies; Etc. Administrative Agent shall have
received from Company and each applicable Subsidiary of Company:

            (i) Mortgages. Fully executed and notarized Mortgages and any
      assignments thereof in favor of Administrative Agent, on behalf of Lenders
      (each a "Closing Date Mortgage" and, collectively, the "Closing Date
      Mortgages"), in proper form for recording in all appropriate places in all
      applicable jurisdictions, encumbering each Real Property Asset listed in
      Schedule 5.5 annexed hereto and identified as a Closing Date mortgaged
      property (each a "Closing Date Mortgaged Property" and, collectively, the
      "Closing Date Mortgaged Properties");

            (ii) Matters Relating to Flood Hazard Properties. (a) Evidence,
      which may be in the form of a letter from an insurance broker or a
      municipal engineer, as to whether (1) any Closing Date Mortgaged Property
      is a Flood Hazard Property and (2) the community in which any such Flood
      Hazard Property is located is participating in the National Flood
      Insurance Program, (b) if there are any such Flood Hazard Properties, such
      Person's written acknowledgement of receipt of written notification from

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      Administrative Agent (1) as to the existence of each such Flood Hazard
      Property and (2) as to whether the community in which each such Flood
      Hazard Property is located is participating in the National Flood
      Insurance Program, and (c) in the event any such Flood Hazard Property is
      located in a community that participates in the National Flood Insurance
      Program, evidence that Company or the applicable Subsidiary of Company has
      obtained flood insurance in respect of such Flood Hazard Property to the
      extent required under the applicable regulations of the Board of Governors
      of the Federal Reserve System;

            (iii) Opinions of Local Counsel. If reasonably required by
      Administrative Agent, an opinion of counsel (which counsel shall be
      reasonably satisfactory to Administrative Agent) in each state in which a
      Closing Date Mortgaged Property is located with respect to the
      enforceability of the form(s) of Closing Date Mortgages to be recorded in
      such state and such other matters as Administrative Agent may reasonably
      request, in each case in form and substance reasonably satisfactory to
      Administrative Agent;

            (iv) Landlord Consents and Estoppels; Recorded Leasehold Interests.
      In the case of each Closing Date Mortgaged Property consisting of a
      Leasehold Property, (a) a Landlord Consent and Estoppel with respect
      thereto and (b) evidence that such Leasehold Property is a Recorded
      Leasehold Interest;

            (v) Title Insurance. (a) ALTA mortgagee title insurance policies or
      unconditional commitments therefor (the "Closing Date Mortgage Policies")
      issued by the Title Company with respect to the Closing Date Mortgaged
      Properties listed on Schedule 5.5 annexed hereto, in amounts not less than
      the respective amounts designated therein with respect to any particular
      Closing Date Mortgaged Properties, insuring fee simple title to, or a
      valid leasehold interest in, each such Closing Date Mortgaged Property
      vested in such Loan Party and assuring Administrative Agent that the
      applicable Closing Date Mortgages create valid and enforceable First
      Priority mortgage Liens on the respective Closing Date Mortgaged
      Properties encumbered thereby (provided that Company may cause to be
      delivered to Administrative Agent on the Closing Date a Closing Date
      Mortgage Policy listing as an exception any of the items set forth on
      Schedule 5.5 annexed hereto so long as such exception is removed by
      endorsement within 15 days of the Closing Date), which Closing Date
      Mortgage Policies (1) shall include an endorsement for mechanics' liens,
      for future advances under this Agreement and for any other matters
      reasonably requested by Administrative Agent and (2) shall provide for
      affirmative insurance and such reinsurance as Administrative Agent may
      reasonably request, all of the foregoing in form and substance reasonably
      satisfactory to Administrative Agent; and (b) evidence satisfactory to
      Administrative Agent that such Loan Party has (i) delivered to the Title
      Company all certificates and affidavits required by the Title Company in
      connection with the issuance of the Closing Date Mortgage Policies and
      (ii) paid to the Title Company or to the appropriate governmental
      authorities all expenses and premiums of the Title Company in connection
      with the issuance of the Closing Date Mortgage Policies and all recording
      and stamp taxes (including mortgage recording and intangible taxes)
      payable in connection with recording the Closing Date Mortgages in the
      appropriate real estate records;

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            (vi) Surveys. Unless otherwise approved by Administrative Agent for
      delivery pursuant to subsection 6.9D, ALTA Surveys of each Closing Date
      Mortgaged Property satisfactory in form and substance to the
      Administrative Agent and the Title Company reasonably current and
      certified to Administrative Agent and Title Company by a licensed
      surveyor. Notwithstanding anything to the contrary herein, if
      Administrative Agent, in its sole discretion, determines not to record a
      Mortgage against one or more Mortgaged Properties on the Closing Date,
      because the survey for such Mortgaged Property has not been delivered to
      Administrative Agent, Company shall not be in default hereunder for
      failure to satisfy the requirements of this subsection with respect to
      such Mortgaged Property; provided, however, that Company or the applicable
      Subsidiary Guarantor shall satisfy such requirements no later than
      forty-five (45) days after the Closing Date;

            (vii) Copies of Documents Relating to Title Exceptions. Copies of
      all recorded documents listed as exceptions to title or otherwise referred
      to in the Closing Date Mortgage Policies; and

            (viii) Environmental Indemnity. If requested by Administrative
      Agent, or if required by any Supplemental Collateral Agent, an
      environmental indemnity agreement, reasonably satisfactory in form and
      substance to Administrative Agent and its counsel, to such Supplemental
      Collateral Agent and its counsel and to Company and its counsel and
      Borrower and its counsel, with respect to the indemnification of Agents
      and Lenders for any liabilities that may be imposed on or incurred by any
      of them as a result of any Hazardous Materials Activity.

      H. Security Interests in Personal and Mixed Property. To the extent not
otherwise satisfied pursuant to subsection 4.1G, Administrative Agent shall have
received evidence satisfactory to it that Company and Subsidiary Guarantors
shall have taken or caused to be taken all such actions, executed and delivered
or caused to be executed and delivered all such agreements, documents and
instruments, and made or caused to be made all such filings and recordings
(other than the filing or recording of items described in clauses (iii) and (iv)
below) that may be necessary or, in the reasonable opinion of Administrative
Agent, desirable in order to create in favor of Administrative Agent, for the
benefit of Lenders, a valid and (upon such filing and recording) perfected First
Priority security interest in the entire personal and mixed property Collateral
(including Collateral property fixtures). Such actions shall include the
following:

            (i) Schedules to Collateral Documents. Delivery to Administrative
      Agent of accurate and complete schedules to all of the applicable
      Collateral Documents;

            (ii) Stock Certificates and Instruments. Delivery to Administrative
      Agent of (a) certificates (which certificates shall be accompanied by
      irrevocable undated stock powers, duly endorsed in blank and otherwise
      satisfactory in form and substance to Administrative Agent) representing
      all capital stock pledged pursuant to the Security Agreement executed by
      Company and the Subsidiary Guarantors and (b) all promissory notes or
      other instruments (duly endorsed, where appropriate, in a manner
      satisfactory to Administrative Agent) evidencing any Collateral;

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            (iii) Lien Searches and UCC Termination Statements. Delivery to
      Administrative Agent of (a) the results of a recent search, by a Person
      satisfactory to Administrative Agent, of all effective UCC financing
      statements and fixture filings which may have been made with respect to
      any personal or mixed property of any Loan Party, together with copies of
      all such filings disclosed by such search, and (b) UCC termination
      statements duly executed by all applicable Persons for filing in all
      applicable jurisdictions as may be necessary to terminate any effective
      UCC financing statements or fixture filings disclosed in such search
      (other than any such financing statements or fixture filings in respect of
      Liens permitted to remain outstanding pursuant to the terms of this
      Agreement);

            (iv) UCC Financing Statements and Fixture Filings. Delivery to
      Administrative Agent of UCC financing statements and, where appropriate,
      fixture filings, duly executed by each applicable Loan Party with respect
      to all personal and mixed property Collateral of such Loan Party, for
      filing in all jurisdictions as may be necessary or, in the reasonable
      opinion of Administrative Agent, desirable to perfect the security
      interests created in such Collateral pursuant to the Collateral Documents;

            (v) PTO Cover Sheets, Etc. Delivery to Administrative Agent of all
      cover sheets or other documents or instruments required to be filed with
      the PTO in order to create or perfect Liens in respect of any IP
      Collateral; and

            (vi) Opinions of Local Counsel. To the extent reasonably required by
      Administrative Agent, delivery to Administrative Agent of an opinion of
      counsel (which counsel shall be reasonably satisfactory to Administrative
      Agent) under the laws of each jurisdiction in which any Loan Party or any
      personal or mixed property Collateral is located with respect to the
      creation and perfection of the security interests in favor of
      Administrative Agent in such Collateral and such other matters governed by
      the laws of such jurisdiction regarding such security interests as
      Administrative Agent may reasonably request, in each case in form and
      substance reasonably satisfactory to Administrative Agent.

      I. Environmental Reports. Administrative Agent shall have received all
reports in possession or control of Company and related letters from the
respective authors of such reports authorizing Lenders to rely on such to the
same extent as though they were addressed to Lenders and other information in
possession or control of Company, in form, scope and substance satisfactory to
Administrative Agent, regarding environmental matters relating to Company, its
Subsidiaries, Scientific Games and its Subsidiaries and the Facilities, which
reports shall include a Phase I environmental site assessment of the Facility
owned by Scientific Games, Inc. and located in Alpharetta, Georgia, and updates
of the existing Phase I environmental site assessments of the Facilities owned
by Autotote Enterprises, Inc. and located in New Haven, Connecticut and in
Windsor Locks, Connecticut, and, as to the Facility located in New Haven,
Connecticut, an estimate of the reasonable cost of investigating and remediating
any Hazardous Materials Activity thereon (to the extent any such reliance
letter, Phase I, update or estimate has not been received by Administrative
Agent on the Closing Date, Company shall provide oral reports of the
environmental consultants' findings and conclusions as work on such reports
proceeds, and Company shall deliver to Administrative Agent no later than 30
days after the Closing Date such completed reliance letter, Phase I, updates and
estimate) (collectively, the "Phase I and II

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Reports"). Such Phase I environmental site assessments and updates shall conform
to the ASTM Standard Practice for Environmental Site Assessments: Phase I
Environmental Site Assessment Process, E 1527.

      J. Financial Statements; Pro Forma Balance Sheet. Lenders shall have
received (i) audited financial statements of Company and its Subsidiaries for
the Fiscal Years ended October 31, 1999, 1998 and 1997, and of Scientific Games
and its Subsidiaries for the Fiscal Years ended December 31, 1999, 1998 and
1997, consisting of balance sheets and the related consolidated statements of
income, stockholders' equity and cash flows for such Fiscal Years, (ii)
unaudited financial statements of Company and its Subsidiaries, for the Fiscal
Quarters ended January 31, 2000 and April 30, 2000, and unaudited financial
statements of Scientific Games and its Subsidiaries as of March 31, 2000 and
June 30, 2000, consisting of a balance sheet and the related consolidated
statements of income and cash flows for the three- and six-month periods ending
on such dates, all in reasonable detail and certified by the chief financial
officer of Company and Scientific Games, as the case may be, that they fairly
present the financial condition of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated, subject to changes from audit and normal year-end
adjustments, (iii) unaudited pro forma consolidated balance sheets of Company
and its Subsidiaries and of Scientific Games and its Subsidiaries as at July 31,
2000, prepared in accordance with GAAP and reflecting the estimated effects of
the consummation of the Merger, the related financings and the other
transactions contemplated by the Loan Documents and the Related Agreements,
which pro forma financial statements shall be in form and substance satisfactory
to Agents and Lenders, and (iv) projected financial statements (including
balance sheets and related statements of operations and cash flows) of Company
and its Subsidiaries through and including the last day of Company's Fiscal Year
ended on or about December 31, 2008, which projected financial statements shall
be in form and substance satisfactory to Agents and Lenders (the "Financial
Plan").

      K. Solvency Assurances. On the Closing Date, Administrative Agent and
Lenders shall have received a Financial Condition Certificate from the chief
financial officer of Company, with appropriate attachments, in each case
demonstrating that, after giving effect to the Merger, the related financings
and the other transactions contemplated by the Loan Documents and the Related
Agreements, Company and its Subsidiaries will be Solvent.

      L. Evidence of Insurance. Administrative Agent shall have received a
certificate from Company's insurance broker or other evidence satisfactory to it
that all insurance required to be maintained pursuant to subsection 6.4 is in
full force and effect and that Administrative Agent on behalf of Lenders has
been named as additional insured and/or loss payee thereunder to the extent
required under subsection 6.4.

      M. Opinions of Counsel to Loan Parties; Reliance Letters. Lenders and
their respective counsel shall have received originally executed copies of one
or more favorable written opinions of Kramer Levin Naftalis & Frankel LLP,
counsel for Company, dated as of the Closing Date, together with opinions from
each of Martin E. Schloss, Esq., General Counsel of Company, C. Gray Bethea,
Esq., General Counsel of Scientific Games, Smith, Gambrell & Russell, LLP,
special Georgia counsel for Company, Sills, Cummis, Radin, Tischman, Epstein &
Gross P.A., special New Jersey counsel for Company, Tobin, Carberry, O'Malley,
Riley & Selinger, P.C., special

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Connecticut counsel for Company, and Schreck Morris, special Nevada counsel for
Company, and substantially in the form of Exhibit VII-A, Exhibit VII-B, Exhibit
VII-C, Exhibit VII-D, Exhibit VII-E, Exhibit VII-F and Exhibit VII-G, as the
case may be, annexed hereto and as to such other matters as Administrative Agent
acting on behalf of Lenders may reasonably request. Administrative Agent and its
counsel shall have received copies of each of the opinions of counsel delivered
to the parties under the Related Agreements on or prior to the Closing Date,
together with a letter from each such counsel authorizing Lenders to rely upon
such opinion to the same extent as though it were addressed to Lenders.

      N. Opinions of Administrative Agent's Counsel. Lenders shall have received
originally executed copies of one or more favorable written opinions of
O'Melveny & Myers LLP, counsel to Administrative Agent, dated as of the Closing
Date, substantially in the form of Exhibit VIII annexed hereto and as to such
other matters as Administrative Agent acting on behalf of Lenders may reasonably
request.

      O. Fees. Company shall have paid to Arranger, Agents and Lenders the fees
payable on the Closing Date.

      P. Representations and Warranties; Performance of Agreements. Company
shall have delivered to Administrative Agent an Officer's Certificate, in form
and substance satisfactory to Administrative Agent, to the effect that the
representations and warranties in Section 5 hereof are true, correct and
complete in all material respects on and as of the Closing Date to the same
extent as though made on and as of that date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material
respects on and as of such earlier date) and that Company shall have performed
in all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by
Administrative Agent and Requisite Lenders.

      Q. Additional Information. There shall have been no information relating
to conditions or events not previously disclosed to Administrative Agent or
relating to new information or additional developments concerning conditions of
events previously disclosed to Administrative Agent which may have a Material
Adverse Effect on the business, operations, properties, assets, liabilities,
condition (financial or otherwise) or prospects of Company, Scientific Games and
their respective Subsidiaries. The results of Administrative Agent's legal, tax,
regulatory and environmental investigations with respect to Scientific Games and
its Subsidiaries, the Merger, the related financings and the other transactions
contemplated by the Loan Documents and the Related Agreements shall be
reasonably satisfactory in all material respects to Administrative Agent.

      R. Completion of Proceedings. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent, acting on behalf of Lenders, and its counsel shall be satisfactory in
form and substance to Administrative Agent and such counsel, and Administrative
Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents as Administrative Agent may reasonably
request in writing.

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            Each Lender hereby agrees that by its execution and delivery of its
signature page hereto and by the funding of its Loans to be made on the Closing
Date, such Lender approves of and consents to each of the matters set forth in
this subsection 4.1 which must be approved by, or satisfactory to, Requisite
Lenders; provided that, in the case of any agreement or document which must be
approved by, or which must be satisfactory to, Requisite Lenders, a copy of such
agreement or document shall have been delivered to such Lender on or prior to
the Closing Date by Administrative Agent.

 .2 Conditions to All Loans.

            The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:

      A. Administrative Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an originally executed Notice
of Borrowing, in each case signed by an Authorized Representative.

      B. As of that Funding Date:

            (i) The representations and warranties contained herein and in the
      other Loan Documents shall be true, correct and complete in all material
      respects on and as of that Funding Date to the same extent as though made
      on and as of that date, except to the extent such representations and
      warranties specifically relate to an earlier date, in which case such
      representations and warranties shall have been true, correct and complete
      in all material respects on and as of such earlier date;

            (ii) No event shall have occurred and be continuing or would result
      from the consummation of the borrowing contemplated by such Notice of
      Borrowing that would constitute an Event of Default or a Potential Event
      of Default;

            (iii) Each Loan Party shall have performed in all material respects
      all agreements and satisfied all conditions which this Agreement provides
      shall be performed or satisfied by it on or before that Funding Date;

            (iv) No order, judgment or decree of any court, arbitrator or
      governmental authority shall purport to enjoin or restrain any Lender from
      making the Loans to be made by it on that Funding Date;

            (v) The making of the Loans requested on such Funding Date shall not
      violate any law including Regulation T, Regulation U or Regulation X of
      the Board of Governors of the Federal Reserve System; and

            (vi) There shall not be pending or, to the knowledge of Company,
      threatened, any action, suit, proceeding, governmental investigation or
      arbitration against or affecting Company or any of its Subsidiaries or any
      property of Company or any of its Subsidiaries that has not been disclosed
      by Company in writing pursuant to subsection 5.6 or 6.1(ix) prior to the
      making of the last preceding Loans (or, in the case of the initial Loans,
      prior to the execution of this Agreement), and there shall have occurred
      no development not so

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      disclosed in any such action, suit, proceeding, governmental investigation
      or arbitration so disclosed, that, in either event, in the opinion of
      Administrative Agent or of Requisite Lenders, would be expected to have a
      Material Adverse Effect; and no injunction or other restraining order
      shall have been issued and no hearing to cause an injunction or other
      restraining order to be issued shall be pending or noticed with respect to
      any action, suit or proceeding seeking to enjoin or otherwise prevent the
      consummation of, or to recover any damages or obtain relief as a result
      of, the transactions contemplated by this Agreement or the making of the
      Loans hereunder.

 .3 Conditions to Letters of Credit.

            The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:

      A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.

      B. On or before the date of issuance of such Letter of Credit,
Administrative Agent and Issuing Lender shall have received, in accordance with
the provisions of subsection 3.1B(i), an originally executed Request for
Issuance of Letter of Credit, in each case signed by an Authorized
Representative, together with all other information specified in subsection
3.1B(i) and such other documents or information as the applicable Issuing Lender
may reasonably require in connection with the issuance of such Letter of Credit.

      C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.

Section 4. COMPANY'S REPRESENTATIONS AND WARRANTIES

            In order to induce Lenders and the Agents to enter into this
Agreement and to make the Loans, to induce Issuing Lenders to issue Letters of
Credit and to induce other Lenders to purchase participations therein, Company
represents and warrants to each Lender and the Agents, on the date of this
Agreement, on each Funding Date and on the date of issuance of each Letter of
Credit, that the following statements are true, correct and complete:

 .1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.

      A. Organization and Powers. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization as specified in Schedule 5.1
annexed hereto. Each Loan Party has all requisite corporate power and authority
to own and operate its properties, to carry on its business as now conducted and
as proposed to be conducted, to enter into the Loan Documents and the Related
Agreements to which it is a party and to carry out the transactions contemplated
thereby.

      B. Qualification and Good Standing. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry

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out its business and operations, except in jurisdictions, individually or in the
aggregate for all such jurisdictions, where the failure to be so qualified or in
good standing has not had and will not have a Material Adverse Effect.

      C. Conduct of Business. Company and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.13.

      D. Subsidiaries. All of the Subsidiaries of Company, including any
Inactive Subsidiaries, are identified in Schedule 5.1 annexed hereto, as said
Schedule 5.1 may be supplemented from time to time pursuant to the provisions of
subsection 6.1(xvi). The capital stock of each of the Subsidiaries of Company
identified in Schedule 5.1 is duly authorized, validly issued, fully paid and
nonassessable and none of such capital stock (other than the Scientific Games
Common Stock) constitutes Margin Stock. Each of the Subsidiaries of Company
identified in Schedule 5.1 is a corporation, limited liability company or such
other entity duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation or organization set forth
therein, has all requisite corporation or limited liability company, as the case
may be, power and authority to own and operate its properties and to carry on
its business as now conducted and as proposed to be conducted, and is qualified
to do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, in each
case except where failure to be so qualified or in good standing or a lack of
such corporation or limited liability company, as the case may be, power and
authority, individually or in the aggregate, has not had and will not have a
Material Adverse Effect. Schedule 5.1 correctly sets forth the ownership
interest of Company and each of its Subsidiaries in each of the Subsidiaries of
Company identified therein.

 .2 Authorization of Borrowing, etc.

      A. Authorization of Borrowing. The execution, delivery and performance of
the Loan Documents and the Related Agreements have been duly authorized by all
necessary actions on the part of each Loan Party that is a party thereto.

      B. No Conflict. The execution, delivery and performance by Loan Parties of
the Loan Documents and the Related Agreements and the consummation of the
transactions contemplated by the Loan Documents and the Related Agreements do
not and will not (i) violate any provision of any law or any governmental rule
or regulation applicable to Company or any of its Subsidiaries, the Certificate
or the Articles of Incorporation or Bylaws of Company or any of Company's
Subsidiaries or any order, judgment or decree of any court or other agency of
government binding on Company or any of Company's Subsidiaries, (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any Contractual Obligation of Company or any of its
Subsidiaries, except for such breaches, conflicts and defaults which could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Company or any of Company's
Subsidiaries (other than any Liens created under any of the Loan Documents in
favor of Administrative Agent on behalf of Lenders), or (iv) require any
approval of or consent of any Person under any Contractual Obligation of Company
or any of Company's Subsidiaries, except for such approvals or consents which
will be obtained on or before the Closing Date and disclosed in writing to
Lenders or which the failure to

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obtain could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

      C. Governmental Consents. The execution, delivery and performance by Loan
Parties of the Loan Documents and the Related Agreements and the consummation of
the transactions contemplated by the Loan Documents and the Related Agreements
do not and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body, except for filings required in
connection with the perfection of security interests granted pursuant to the
Loan Documents, and such other registrations, consents, approvals, notices or
other actions which have been or will be made, obtained, given or taken on or
before the Closing Date or which the failure to obtain or take could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

      D. Binding Obligation. Each of the Loan Documents and the Related
Agreements has been duly executed and delivered by each Loan Party that is a
party thereto and is the legally valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability.

      E. Valid Issuance of Equity Securities. The capital stock of Acquisition
Co. to be sold on or before the Closing Date, when issued and delivered, will be
duly and validly issued, fully paid and nonassessable. No stockholder of
Acquisition Co. has or will have any preemptive rights to subscribe for any
additional equity Securities of Acquisition Co. The issuance of sale of such
common equity Securities of Acquisition Co., upon such issuance and sale, will
either (a) have been registered or qualified under applicable federal and state
securities laws or (b) be exempt therefrom.

      F. Senior Subordinated Notes. Company has the corporate power and
authority to issue the Senior Subordinated Notes. The Senior Subordinated Notes
are the legally valid and binding obligations of Company, enforceable against
Company in accordance with their terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability. The subordination provisions of the Senior Subordinated Notes
are enforceable against the holders thereof in accordance with their terms and
the Loans, Letters of Credit and all other monetary Obligations hereunder are
within the definitions of "Senior Indebtedness" and "Designated Senior
Indebtedness" included in such provisions. The issuance and sale by Company of
Senior Subordinated Notes were either (a) registered or qualified under
applicable federal and state securities laws or (b) are exempt therefrom.

      G. Valid Issuance of Convertible Preferred Stock. The Convertible
Preferred Stock, when issued and delivered, will be duly and validly issued,
fully paid and nonassessable. The Convertible Preferred Stock is either (a)
registered or qualified under applicable federal and state securities law or (b)
is exempt therefrom.

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 .3 Financial Condition.

            Company has heretofore delivered to Lenders, at Lenders' request,
the following financial statements and information: (i) the audited consolidated
balance sheets of Company and its Subsidiaries as at October 31, 1999, 1998 and
1997 and the audited consolidated balance sheets of Scientific Games and its
Subsidiaries as at December 31, 1999, 1998 and 1997, and the related
consolidated statements of income, stockholders' equity and cash flows of
Company, Scientific Games and their respective Subsidiaries for the Fiscal Years
then ended and (ii) the unaudited consolidated balance sheet of Company and its
Subsidiaries for the Fiscal Quarters ending on or about January 31, 2000 and
April 30, 2000 and of Scientific Games and its Subsidiaries as of March 31, 2000
and June 30, 2000, and the related unaudited consolidated statements of income
and cash flows of Company, Scientific Games and their respective Subsidiaries
for the three months then ended. All such statements were prepared in conformity
with GAAP and fairly present, in all material respects, the financial position
(on a consolidated basis) of the entities described in such financial statements
as at the respective dates thereof and the results of operations and cash flows
(on a consolidated basis) of the entities described therein for each of the
periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.
Company does not (and will not following the funding of the initial Loans) have
any Contingent Obligation, contingent liability or liability for taxes,
long-term lease or unusual forward or long-term commitment that is not required
to be reflected in the foregoing financial statements or the notes thereto and
which in any such case is material in relation to the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Company
or any of its Subsidiaries, taken as a whole.

 .4 No Material Adverse Change; No Restricted Junior Payments.

            Since October 31, 1999, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect, and neither Company nor any of its Subsidiaries has directly or
indirectly declared, ordered, paid or made, or set apart any sum or property
for, any Restricted Junior Payment or agreed to do so except as permitted under
subsection 7.5.

 .5 Title to Properties; Liens; Real Property.

      A. Title to Properties; Liens. Company and its Subsidiaries have (i) good,
sufficient and legal title to (in the case of fee interests in real property),
(ii) valid leasehold interests in (in the case of leasehold interests in real or
personal property), or (iii) good title to (in the case of all other personal
property), all of their respective properties and assets reflected in the
financial statements referred to in subsection 5.3 or in the most recent
financial statements delivered pursuant to subsection 6.1, in each case except
for assets disposed of since the date of such financial statements in the
ordinary course of business or as otherwise permitted under subsection 7.7.
Except as permitted by this Agreement, all such properties and assets are free
and clear of Liens. With respect to those Liens set forth on Schedule 5.5
annexed hereto, the debts secured thereby have been paid in full and are no
longer outstanding.

      B. Real Property. As of the Closing Date, Schedule 5.5 annexed hereto
contains a true, accurate and complete list of (i) all real property owned by
Company or any Subsidiary and (ii) all

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material leases, subleases or assignments of leases (together with all
amendments, modifications, supplements, renewals or extensions of any thereof)
affecting each Real Property Asset of any Loan Party, regardless of whether such
Loan Party is the landlord or tenant (whether directly or as an assignee or
successor in interest) under such lease, sublease or assignment. Except as
specified in Schedule 5.5 annexed hereto, each agreement listed in clause (ii)
of the immediately preceding sentence is in full force and effect and Company
and each Loan Party do not have knowledge of any default that has occurred and
is continuing thereunder, and each such agreement constitutes the legally valid
and binding obligation of each applicable Loan Party, enforceable against such
Loan Party in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles.

 .6 Litigation; Adverse Facts.

      A. Except as set forth in Schedule 5.6 annexed hereto, there are no
actions, suits, proceedings, arbitrations or governmental investigations
(whether or not purportedly on behalf of Company or any of its Subsidiaries) at
law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign (including any Environmental Claims) that are pending or, to
the knowledge of Company, threatened against or affecting Company or any of its
Subsidiaries or any property of Company or any of its Subsidiaries and that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect or could reasonably be expected to prevent or unduly
delay the Merger. Neither Company nor any of its Subsidiaries (i) is in
violation of any applicable laws (including Environmental Laws) that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, or (ii) is subject to or in default with respect to any
final judgments, writs, injunctions, decrees, rules or regulations of any court
or any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.

 .7 Payment of Taxes.

            Except to the extent permitted by subsection 6.3, all tax returns
and reports of Company and its Subsidiaries required to be filed by any of them
have been timely filed, and all material taxes shown on such tax returns to be
due and payable and all assessments, fees and other governmental charges upon
Company and its Subsidiaries and upon their respective properties, assets,
income, businesses and franchises which are due and payable have been paid when
due and payable other than those being contested in good faith. Company knows of
no proposed tax assessment against Company or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect and which is not
being actively contested by Company or such Subsidiary in good faith and by
appropriate proceedings; provided that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.

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 .8 Performance of Agreements; Materially Adverse Agreements.

      A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

      B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.

 .9 Governmental Regulation.

            Neither Company nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.

 .10 Securities Activities.

      A. Neither Company nor any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.

      B. Not more than 25% of the value of the assets (either of Company only or
of Company and its Subsidiaries on a consolidated basis) that are subject to the
restrictions on Liens or dispositions contained in subsection 7.2 or 7.7 or
subject to any restriction contained in any agreement or instrument, between
Company and any Lender or any Affiliate of any Lender, relating to Indebtedness
and within the scope of subsection 8.2, will be Margin Stock.

 .11 Employee Benefit Plans.

      A. Company and each of its Subsidiaries are in material compliance with
all applicable provisions and requirements of ERISA and the regulations and
published interpretations thereunder with respect to each Company Employee
Benefit Plan, and have performed all their obligations under each Company
Employee Benefit Plan, except where a failure to comply or perform could not
reasonably be expected to have a Material Adverse Effect. Each Company Employee
Benefit Plan which is intended to qualify under Section 401(a) of the Internal
Revenue Code is so qualified.

      B. No ERISA Event has occurred or is reasonably expected to occur that
could reasonably be expected to have a Material Adverse Effect.

      C. Except to the extent required under Section 4980B of the Internal
Revenue Code or other applicable law or individual contract, no Company Employee
Benefit Plan provides health

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or welfare benefits (through the purchase of insurance or otherwise) for any
retired or former employee of Company, any of its Subsidiaries or any of their
respective ERISA Affiliates.

      D. As of the most recent valuation date for any Pension Plan, and
excluding for purposes of such computation all Pension Plans with respect to
which assets exceed benefit liabilities (as defined in Section 4001(a)(16) of
ERISA), the sum of:

            (i) the unfunded benefit liabilities (as defined in Section
      4001(a)(18) of ERISA) individually or in the aggregate for all Company
      Pension Plans; and

            (ii) the liability that Company or its Subsidiaries could reasonably
      be expected to incur as the result of such unfunded benefit liabilities,
      individually or in the aggregate, for all Pension Plans other than Company
      Pension Plans (assuming amortization of such unfunded benefit liabilities
      over ten years);

does not exceed $5 million.

      E. As of the most recent valuation date for which an actuarial report has
been received and based on information available pursuant to Section 4221(e) of
ERISA, the sum of:

            (i) the potential liability of Company and its Subsidiaries for a
      complete withdrawal from all Multiemployer Plans (within the meaning of
      Section 4203 of ERISA) to which Company or any of its Subsidiaries
      contribute; and

            (ii) the liability of Company or its Subsidiaries could be
      reasonably be expected to incur as a result of the complete withdrawal
      from all Multiemployer Plans to which neither Company nor any of its
      Subsidiaries contribute, after considering the financial condition of all
      of the ERISA Affiliates most closely related to the contributing
      employer(s);

does not exceed $5 million.

 .12 Certain Fees.

            Other than as disclosed in the Merger Agreement, no broker's or
finder's fee or commission will be payable with respect to this Agreement or any
of the transactions contemplated hereby, and Company hereby indemnifies Lenders
against, and agrees that it will hold Lenders harmless from, any claim, demand
or liability for any such broker's or finder's fees alleged to have been
incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability.

 .13 Environmental Protection.

            Except as set forth in Schedule 5.13 annexed hereto:

            (i) To the knowledge of the Company and its Subsidiaries, neither
      Company nor any of its Subsidiaries nor any of their respective Facilities
      or operations are subject to any outstanding written order, consent decree
      or settlement agreement with any Person

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      relating to (a) any Environmental Law, (b) any Environmental Claim, or (c)
      any Hazardous Materials Activity, except where such an order, consent,
      decree or settlement agreement, individually or in the aggregate, would
      not be reasonably expected to have a Material Adverse Effect;

            (ii) neither Company nor any of its Subsidiaries has received any
      letter or request for information under Section 104 of the Comprehensive
      Environmental Response, Compensation, and Liability Act (42 U.S.C. ss.
      9604) or any comparable state law, except where such a letter or request,
      individually or in the aggregate, would not reasonably be expected to have
      a Material Adverse Effect;

            (iii) To the knowledge of the Company and its Subsidiaries, there
      are and have been no conditions, occurrences, or Hazardous Materials
      Activities which could reasonably be expected to form the basis of an
      Environmental Claim against Company or any of its Subsidiaries, except
      where such a condition, occurrence or Hazardous Materials Activity,
      individually or in the aggregate, would not reasonably be expected to have
      a Material Adverse Effect;

            (iv) neither Company nor any of its Subsidiaries nor, to Company's
      knowledge, any predecessor of Company or any of its Subsidiaries has filed
      any notice under any Environmental Law indicating past or present
      treatment of Hazardous Materials at any Facility, and none of Company's or
      any of its Subsidiaries' operations involves the generation,
      transportation, treatment, storage or disposal of hazardous waste, as
      defined under 40 C.F.R. Parts 260-270 or any state equivalent, except
      where such treatment or generation, transportation, storage or disposal,
      individually or in the aggregate, would not reasonably be expected to have
      a Material Adverse Effect; and

            (v) To the knowledge of the Company and its Subsidiaries, compliance
      with all current or reasonably foreseeable future requirements pursuant to
      or under Environmental Laws will not, individually or in the aggregate,
      give rise to a Material Adverse Effect.

            To the knowledge of the Company and its Subsidiaries,
notwithstanding anything in this subsection 5.13 to the contrary, no event or
condition has occurred or is occurring with respect to Company or any of its
Subsidiaries relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity, including any matter disclosed
on Schedule 5.13 annexed hereto, which individually or in the aggregate, has had
or would reasonably be expected to have a Material Adverse Effect.

 .14 Employee Matters.

            There is no strike or work stoppage in existence or, to the best
knowledge of the Company, threatened involving Company or any of its
Subsidiaries that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

 .15 Solvency.

            Each Loan Party is and, upon the incurrence of any Obligations by
such Loan Party on any date on which this representation is made, will be,
Solvent.

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 .16 Matters Relating to Collateral.

      A. Creation, Perfection and Priority of Liens. Subject to the filing of
UCC financing statements and the taking of possession by the Administrative
Agent of all stock certificates and instruments, if any, constituting
Collateral, the execution and delivery of the Collateral Documents by Loan
Parties, together with actions taken pursuant to subsections 4.1G, 4.1H, 6.8 and
6.9 are effective, or in the case of subsections 6.8 and 6.9, will be effective
at the time of the acquisition of such Subsidiaries, to create in favor of
Administrative Agent for the benefit of Lenders, as security for the respective
Secured Obligations (as defined in the applicable Collateral Document in respect
of any Collateral), a valid and perfected First Priority Lien on all of the
Collateral.

      B. Governmental Authorizations. No authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for either (i) the pledge or grant by any Loan Party of the
Liens purported to be created in favor of Administrative Agent pursuant to any
of the Collateral Documents or (ii) the exercise by Administrative Agent of any
rights or remedies in respect of any Collateral (whether specifically granted or
created pursuant to any of the Collateral Documents or created or provided for
by applicable law), except for filings or recordings contemplated by subsection
5.16A and except as may be required, in connection with the disposition of any
Pledged Collateral (as defined in the Security Agreement), by laws generally
affecting the offering and sale of securities.

      C. Absence of Third-Party Filings. Except such as may have been filed (x)
in favor of Administrative Agent, (y) with respect to Permitted Encumbrances,
and (z) as to which executed UCC termination statements have been delivered to
the Administrative Agent for filing (i) no effective UCC financing statement,
fixture filing or other instrument similar in effect covering all or any part of
the Collateral is on file in any filing or recording office and (ii) no
effective filing covering all or any part of the IP Collateral is on file in the
PTO.

      D. Margin Regulations. The pledge of the Pledged Collateral (as defined in
the Security Agreement) pursuant to the Collateral Documents does not violate
Regulation U or X of the Board of Governors of the Federal Reserve System.

      E. Information Regarding Collateral. All written information supplied to
Agents by or on behalf of any Loan Party with respect to any of the Collateral
(in each case taken as a whole with respect to any particular Collateral) is
accurate and complete in all material respects.

 .17 Related Agreements.

      A. Delivery of Related Agreements. Company has delivered to Lenders
complete and correct copies of each Related Agreement and of all exhibits and
schedules thereto.

      B. Warranties. Subject to the qualifications set forth therein, each of
the representations and warranties given by Company, Acquisition Co. and
Scientific Games in the Merger Agreement is true and correct in all material
respects as of the date hereof (or as of any earlier date to which such
representation and warranty specifically relates) and will be true and correct
in all material respects as of the Closing Date (or such earlier date as the
case may be).

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      C. Survival. Notwithstanding anything in the Merger Agreement to the
contrary, the representations and warranties of Company set forth in subsection
5.17B shall, solely for purposes of this Agreement, survive the Closing Date for
the benefit of Lenders.

 .18 Disclosure.

            No representation or warranty of any Loan Party contained in any
Loan Document or Related Agreement or in any other document, certificate or
written statement furnished to Lenders by or on behalf of Company or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to Company, in the case of any document not furnished by
it) necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by Company to be
reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There are no facts known (or which should upon the
reasonable exercise of diligence be known) to Company (other than matters of a
general economic nature) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to Lenders for use in connection with the transactions contemplated
hereby.

 .19 Certain Jurisdictions.

            Company and its Subsidiaries do not have any assets located in any
of (i) Trinidad and Tobago, St. Maarten, Barbados, Bermuda, Jamaica, Guyana,
Dutch West Indies, St. Kitts West, Aruba or Virgin Islands and (ii) Panama and
Mexico, except, in respect of each such jurisdiction, assets of Company and its
Subsidiaries located in such jurisdiction with an aggregate market value of not
more than (i) $10,000 and (ii) $300,000, respectively.

Section 5. COMPANY'S AFFIRMATIVE COVENANTS

            Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 6.

 .1 Financial Statements and Other Reports.

            Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP. Company will deliver to Agents and Lenders:

            (i) Monthly Financials: as soon as available and in any event within
      30 days after the end of each calendar month (or, in the case of the
      calendar month of October, 2000,

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      the last calendar month of each Fiscal Quarter and the last calendar month
      of each Fiscal Year, as soon as available and in any event within 45 days
      after the end of such calendar month) the consolidated and consolidating
      balance sheets of Company and its Subsidiaries as at the end of such
      calendar month and the related consolidated and consolidating statements
      of income and cash flows of Company and its Subsidiaries for such calendar
      month, all in reasonable detail and certified by the chief financial
      officer of Company that they fairly present, in all material respects, the
      financial condition of Company and its Subsidiaries as at the dates
      indicated and the results of their operations and their cash flows for the
      periods indicated, subject to changes resulting from audit and normal
      year-end adjustments;

            (ii) Quarterly Financials: as soon as available and in any event
      within 45 days after the end of each of the first three Fiscal Quarters,
      (a) the consolidated and consolidating balance sheets of Company and its
      Subsidiaries as at the end of such Fiscal Quarter and the related
      consolidated and consolidating statements of income and cash flows of
      Company and its Subsidiaries for such Fiscal Quarter and for the period
      from the beginning of the then current Fiscal Year to the end of such
      Fiscal Quarter, setting forth in each case in comparative form the
      corresponding figures for the corresponding periods of the previous Fiscal
      Year and the corresponding figures from the Financial Plan or Revised
      Financial Plan, as the case may be, for the current Fiscal Year, all in
      reasonable detail and certified by the chief financial officer of Company
      that they fairly present, in all material respects, the financial
      condition of Company and its Subsidiaries as at the dates indicated and
      the results of their operations and their cash flows for the periods
      indicated, subject to changes resulting from audit and normal year-end
      adjustments; provided that with respect to the Fiscal Quarters ending
      September 30, 2000, December 31, 2000, March 31, 2001 and June 30, 2001,
      Company shall not be required to set forth in comparative form the
      corresponding figures for the corresponding periods of the previous Fiscal
      Year; provided further that, with respect to the Fiscal Quarters ending
      September 30, 2000, December 31, 2000 and March 31, 2001, Company shall
      not be required to deliver the consolidated and consolidating balance
      sheets of Company and its Subsidiaries and the related consolidated and
      consolidating statements of income and cash flows of Company and its
      Subsidiaries for the period from the beginning of the then current Fiscal
      Year to the end of such Fiscal Quarter; provided still further, that is
      hereby acknowledged and agreed that any such financial statements
      delivered hereunder for any period that ends prior to the Closing Date or
      includes the Closing Date shall be prepared on a Pro Forma Basis as if the
      Merger had been consummated on the first day of the Fiscal Quarter ending
      on September 30, 2000 and the Merger was a Permitted Acquisition of
      Company and its Subsidiaries and (b) a narrative report describing the
      operations of Company and its Subsidiaries in the form prepared for
      presentation to senior management for such Fiscal Quarter and for the
      period from the beginning of the then current Fiscal Year to the end of
      such Fiscal Quarter (it being understood and agreed that the "Management
      Discussion and Analysis" contained in the Company's quarterly report on
      Form 10-Q filed with the Securities and Exchange Commission for such
      period shall be deemed to comply with the foregoing requirement);

            (iii) Year-End Financials: as soon as available and in any event
      within 90 days after the end of each Fiscal Year, (a) the consolidated and
      consolidating balance sheets of Company and its Subsidiaries as at the end
      of such Fiscal Year and the related

                                       99                              EXECUTION
<PAGE>

      consolidated and consolidating statements of income, stockholders' equity
      and cash flows of Company and its Subsidiaries for such Fiscal Year,
      setting forth in each case in comparative form the corresponding figures
      for the previous Fiscal Year and the corresponding figures from the
      Revised Financial Plan or Financial Plan, as the case may be, for the
      Fiscal Year covered by such financial statements, all in reasonable detail
      and certified by the chief financial officer, chief accounting officer or
      controller of Company that they fairly present, in all material respects,
      the financial condition of Company and its Subsidiaries as at the dates
      indicated and the results of their operations and their cash flows for the
      periods indicated; provided that, with respect to the Fiscal Year ending
      December 31, 2000, Company shall not be required to set forth in
      comparative form the corresponding figures for the previous Fiscal Year,
      (b) a narrative report describing the operations of Company and its
      Subsidiaries in the form prepared for presentation to senior management
      for such Fiscal Year (it being understood and agreed that the "Management
      Discussion and Analysis" contained in the Company's annual report on Form
      10-K or such similar report filed with the Securities and Exchange
      Commission shall be deemed to comply with the foregoing requirement), and
      (c) in the case of such consolidated financial statements, a report
      thereon of KPMG Peat Marwick or other independent certified public
      accountants of recognized national standing selected by Company and
      reasonably satisfactory to Administrative Agent, which report shall be
      unqualified, shall express no doubts about the ability of Company and its
      Subsidiaries to continue as a going concern, and shall state that such
      consolidated financial statements fairly present, in all material
      respects, the consolidated financial position of Company and its
      Subsidiaries as at the dates indicated and the results of their operations
      and their cash flows for the periods indicated in conformity with GAAP
      applied on a basis consistent with prior years (except as otherwise
      disclosed in such financial statements) and that the examination by such
      accountants in connection with such consolidated financial statements has
      been made in accordance with generally accepted auditing standards;

            (iv) Officer's and Compliance Certificates: together with each
      delivery of financial statements pursuant to subdivisions (ii) and (iii)
      above, (a) an Officer's Certificate (provided that such Officer's
      Certificate shall be executed on behalf of Company by its president or one
      of its vice-presidents and by its chief financial officer (or if there is
      no chief financial officer its chief accounting officer) or its treasurer)
      of Company stating that the signers have reviewed the terms of this
      Agreement and the other Loan Documents and have made, or caused to be made
      under their supervision, a review in reasonable detail of the material
      transactions and condition of Company and its Subsidiaries during the
      accounting period covered by such financial statements and that such
      review has not disclosed the existence during or at the end of such
      accounting period, and that the signers do not have knowledge of the
      existence as at the date of such Officer's Certificate, of any condition
      or event that constitutes an Event of Default or Potential Event of
      Default, or, if any such condition or event existed or exists, specifying
      the nature and period of existence thereof and what action Company has
      taken, is taking and proposes to take with respect thereto and (b) a
      Compliance Certificate demonstrating in reasonable detail compliance
      during and at the end of the applicable accounting periods with the
      restrictions contained in Section 7, in each case to the extent compliance
      with such restrictions is required to be tested at the end of the
      applicable accounting period;

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            (v) Reconciliation Statements: if, as a result of the Company's
      adoption of any change in accounting principles, from those used in the
      preparation of the audited financial statements referred to in subsection
      5.3, the consolidated financial statements of Company and its Subsidiaries
      delivered pursuant to subdivisions (i), (ii), (iii) or (xiii) of this
      subsection 6.1 will differ in any material respect from the consolidated
      financial statements that would have been delivered pursuant to such
      subdivisions had no such change in accounting principles been made, then
      (a) together with the first delivery of financial statements pursuant to
      subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1 following
      such change, consolidated financial statements of Company and its
      Subsidiaries for (x) the current Fiscal Year to the effective date of such
      change and (y) the full Fiscal Year immediately preceding the Fiscal Year
      in which such change is made, in each case prepared on a pro forma basis
      as if such change had been in effect during such periods, and (b) together
      with each delivery of financial statements pursuant to subdivision (i),
      (ii), (iii) or (xiii) of this subsection 6.1 following such change, a
      written statement of the chief accounting officer or chief financial
      officer of Company setting forth the differences (including without
      limitation any differences that would affect any calculations relating to
      the financial covenants set forth in subsection 7.6) which would have
      resulted if such financial statements had been prepared without giving
      effect to such change;

            (vi) Accountants' Certification: together with each delivery of
      consolidated financial statements of Company and its Subsidiaries pursuant
      to subdivision (iii) above, a written statement by the independent
      certified public accountants giving the report thereon (a) stating that
      their audit examination has included a review of the terms of Section 7 as
      they relate to accounting matters, (b) stating whether, in connection with
      their audit examination, any condition or event that constitutes an Event
      of Default or Potential Event of Default has come to their attention and,
      if such a condition or event has come to their attention, specifying the
      nature and period of existence thereof; provided that such accountants
      shall not be liable by reason of any failure to obtain knowledge of any
      such Event of Default or Potential Event of Default that would not be
      disclosed in the course of their audit examination, and (c) stating that
      based on their audit examination nothing has come to their attention that
      causes them to believe either or both that the information contained in
      the certificates delivered therewith pursuant to subdivision (iv) above is
      not correct or that the matters set forth in the Compliance Certificates
      delivered therewith pursuant to clause (c) of subdivision (iv) above for
      the applicable Fiscal Year are not stated in accordance with the terms of
      this Agreement;

            (vii) Accountants' Reports: promptly upon receipt thereof (unless
      restricted by applicable professional standards), copies of all
      "Management Letters" submitted to Company by independent certified public
      accountants in connection with each annual, interim or special audit of
      the financial statements of Company and its Subsidiaries made by such
      accountants, including any comment letter submitted by such accountants to
      management in connection with their annual audit;

            (viii) SEC Filings and Press Releases: promptly upon their becoming
      available, copies of (a) all financial statements, reports, notices and
      proxy statements sent or made available generally by Company to its
      security holders or by any Subsidiary of Company to its security holders
      other than Company or another Subsidiary of Company, (b) all regular

                                       101                             EXECUTION
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      and periodic financial reports and all registration statements (other than
      on Form S-8 or a similar form) and prospectuses, if any, filed by Company
      or any of its Subsidiaries with any securities exchange or with the
      Securities and Exchange Commission and (c) all press releases made by
      Company or any of its Subsidiaries to the public concerning material
      developments in the business of Company or any of its Subsidiaries;

            (ix) Events of Default, etc.: promptly upon any officer of Company
      obtaining knowledge (a) of any condition or event that constitutes an
      Event of Default or Potential Event of Default, or becoming aware that any
      Lender has given any notice (other than to Administrative Agent) or taken
      any other action with respect to a claimed Event of Default or Potential
      Event of Default, (b) that any Person has given any notice to Company or
      any of its Subsidiaries or taken any other action with respect to a
      claimed default or event or condition of the type referred to in
      subsection 8.2, (c) of any condition or event that would be required to be
      disclosed in a current report filed by Company with the Securities and
      Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in
      effect on the date hereof) whether or not Company is required to file such
      reports under the Exchange Act, or (d) of the occurrence of any event or
      change that has caused or evidences, either in any case or in the
      aggregate, a Material Adverse Effect, an Officer's Certificate specifying
      the nature and period of existence of such condition, event or change, or
      specifying the notice given or action taken by any such Person and the
      nature of such claimed Event of Default, Potential Event of Default,
      default, event or condition, and what action Company has taken, is taking
      and proposes to take with respect thereto;

            (x) Litigation or Other Proceedings: (a) promptly upon any officer
      of Company obtaining knowledge of (X) the institution of, or non-frivolous
      threat of, any action, suit, proceeding (whether administrative, judicial
      or otherwise), governmental investigation or arbitration against or
      affecting Company or any of its Subsidiaries or any property of Company or
      any of its Subsidiaries (collectively, "Proceedings") not previously
      disclosed in writing by Company to Lenders or (Y) any material development
      in any Proceeding that, in any case set forth in clause (x) or (y):

                  (1) if adversely determined, could reasonably be expected to
            have a Material Adverse Effect; or

                  (2) seeks to enjoin or otherwise prevent the consummation of,
            or to recover any damages or obtain relief as a result of, the
            transactions contemplated hereby;

      written notice thereof together with such other information as may be
      reasonably available to Company to enable Lenders and their respective
      counsel to evaluate such matters; and (b) within twenty days after the end
      of each Fiscal Quarter, a schedule of all Proceedings involving an alleged
      liability of, or claims against or affecting, Company or any of its
      Subsidiaries equal to or greater than $500,000, and promptly after request
      by Administrative Agent such other information as may be reasonably
      requested by Administrative Agent to enable Administrative Agent and its
      respective counsel to evaluate any of such Proceedings;

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            (xi) ERISA Events: reasonably promptly upon Company becoming aware
      of the occurrence of or forthcoming occurrence of any ERISA Event, which
      would reasonably be expected to result in a liability to the Company, any
      of its Subsidiaries or any of their respective ERISA Affiliates in excess
      of $500,000, a written notice specifying the nature thereof, what action
      Company, any of its Subsidiaries or any of their respective ERISA
      Affiliates has taken, is taking or proposes to take with respect thereto
      and, when known, any action taken or threatened by the Internal Revenue
      Service, the Department of Labor or the PBGC with respect thereto;

            (xii) ERISA Notices: with reasonable promptness, copies of (a) all
      notices received by Company, any of its Subsidiaries or (if obtained by
      Company) any of their respective ERISA Affiliates from a Multiemployer
      Plan sponsor concerning an ERISA Event; and (b) copies of such other
      documents or governmental reports or filings relating to any Employee
      Benefit Plan as Administrative Agent shall reasonably request;

            (xiii) Financial Plans: as soon as practicable and in any event no
      later than fifteen (15) days subsequent to the beginning of the Fiscal
      Year ending on or about December 31, 2001 and each subsequent Fiscal Year,
      a revised consolidated and consolidating plan and financial forecast for
      such Fiscal Year and the next four succeeding Fiscal Years (the "Revised
      Financial Plan" for such Fiscal Years, it being acknowledged and agreed
      that each succeeding Revised Financial Plan shall replace the immediately
      preceding Financial Plan or Revised Financial Plan, as the case may be
      (other than with respect to any representations, warranties,
      certifications or other statements previously made as of the date thereof
      with respect to such preceding Financial Plan or Revised Financial Plan,
      as the case may be)), including (a) a forecast consolidated and
      consolidating balance sheet and forecast consolidated and consolidating
      statements of income and cash flows of Company and its Subsidiaries for
      each such Fiscal Year and an explanation of the assumptions on which such
      forecasts are based, (b) forecast consolidated and consolidating balance
      sheet and forecast consolidated and consolidating statements of income and
      cash flows of Company and its Subsidiaries for each quarter of the first
      such Fiscal Year, together with pro forma financial covenant calculations
      for such Fiscal Year determined in a manner consistent with financial
      covenant calculations shown in a Compliance Certificate and (c) such other
      information and projections as Administrative Agent or any Lender may
      reasonably request in writing;

            (xiv) Insurance: as soon as practicable and in any event by the last
      day of each Fiscal Year, a report in form and substance satisfactory to
      Administrative Agent outlining all material insurance coverage maintained
      as of the date of such report by Company and its Subsidiaries and all
      material insurance coverage planned to be maintained by Company and its
      Subsidiaries in the immediately succeeding Fiscal Year;

            (xv) Board of Directors: with reasonable promptness, written notice
      of any change in the Board of Directors of Company;

            (xvi) New Subsidiaries: promptly upon any Person becoming a
      Subsidiary of Company, a written notice setting forth with respect to such
      Person (a) the date on which such Person became a Subsidiary of Company
      and (b) all of the data required to be set

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      forth in Schedule 5.1 annexed hereto with respect to all Subsidiaries of
      Company (it being understood that such written notice shall be deemed to
      supplement Schedule 5.1 annexed hereto for all purposes of this
      Agreement);

            (xvii) UCC Search Report: As promptly as practicable after the date
      of delivery to Administrative Agent of any UCC financing statement
      executed by any Loan Party pursuant to subsection 4.1H, 4.2F or 6.8A,
      copies of completed UCC searches evidencing the proper filing, recording
      and indexing of all such UCC financing statements and listing all other
      effective financing statements that name such Loan Party as debtor,
      together with copies of all such other financing statements not previously
      delivered to Administrative Agent by or on behalf of Company or such Loan
      Party;

            (xviii) Margin Determination Certificate: together with each
      delivery of financial statements pursuant to subdivisions (ii) and (iii)
      above, a Margin Determination Certificate demonstrating in reasonable
      detail the calculation of the Consolidated Leverage Ratio for the four
      consecutive Fiscal Quarters ending on the last day of the accounting
      period covered by such financial statements; and

            (xix) Other Information: with reasonable promptness, such other
      information and data with respect to Company or any of its Subsidiaries as
      from time to time may be reasonably requested in writing by Administrative
      Agent or any Lender.

 .2 Legal Existence, etc.

            Except as permitted under subsection 7.7, Company will, and will
cause each of its Subsidiaries to, at all times preserve and keep in full force
and effect its legal existence and all rights and franchises material to its
business; provided, however, that neither Company nor any of its Subsidiaries
shall be required to preserve any such right or franchise if the Board of
Directors of Company or such Subsidiary shall determine that the preservation
thereof is no longer desirable in the conduct of the business of Company or such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to Company, such Subsidiary or Lenders.

 .3 Payment of Taxes and Claims; Tax Consolidation.

      A. Company will, and will cause each of its Subsidiaries to, pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a material Lien upon any of its
properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided that no such charge or claim need be
paid if it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, so long as (1) such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor and (2) in the case of a charge or claim which has
or may become a Lien against any of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral to
satisfy such charge or claim.

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      B. Company will not, nor will it permit any of its Subsidiaries to, file
or consent to the filing of any consolidated income tax return with any Person
(other than Company or any of its Subsidiaries).

 .4 Maintenance of Properties; Insurance; Application of Net
Insurance/Condemnation Proceeds.

      A. Maintenance of Properties. Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of Company and its Subsidiaries (including all
Intellectual Property) and from time to time will make or cause to be made all
repairs, renewals and replacements thereof which the Company deems appropriate.

      B. Insurance. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for
corporations similarly situated in the industry. Without limiting the generality
of the foregoing, Company will maintain or cause to be maintained (i) flood
insurance with respect to each Flood Hazard Property that is located in a
community that participates in the National Flood Insurance Program, in each
case in compliance with any applicable regulations of the Board of Governors of
the Federal Reserve System, and (ii) replacement value casualty insurance on the
Collateral under such policies of insurance, with such insurance companies, in
such amounts, with such deductibles, and covering such risks as are at all times
satisfactory to Administrative Agent in its commercially reasonable judgment.
Each such policy of insurance shall (a) name Administrative Agent for the
benefit of Lenders as an additional insured thereunder as its interests may
appear and (b) in the case of each business interruption and casualty insurance
policy, contain a loss payable clause or endorsement, satisfactory in form and
substance to Administrative Agent, that names Administrative Agent for the
benefit of Lenders as the loss payee thereunder for any covered loss in excess
of $2 million and provides for at least (x) in the case of any such policies
with respect to Scientific Games and its Subsidiaries, 30 days and (y) in the
case of any such policies with respect to Company and its Subsidiaries (other
than Scientific Games and its Subsidiaries) 10 days, prior written notice to
Administrative Agent of any modification or cancellation of such policy. Company
will use its commercially reasonable efforts to cause its insurers to change the
provisions of its existing insurance policies to provide for at least 30 days
prior written notice to Administrative Agent of any modification or cancellation
of such policy in connection with the October 31, 2000 renewal of Company's and
its Subsidiaries' insurance policies.

      C. Application of Net Insurance/Condemnation Proceeds.

            (i) Business Interruption Insurance. Upon receipt by Company or any
      of its Subsidiaries of any business interruption insurance proceeds
      constituting Net Insurance/Condemnation Proceeds, (a) so long as no Event
      of Default or Potential Event

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<PAGE>

      of Default shall have occurred and be continuing, Company or such
      Subsidiary may retain and apply such Net Insurance/Condemnation Proceeds
      for working capital purposes, and (b) if an Event of Default or Potential
      Event of Default shall have occurred and be continuing, Company shall
      apply an amount equal to such Net Insurance/Condemnation Proceeds to
      prepay the Loans (and/or the Revolving Loan Commitments shall be reduced)
      as provided in subsection 2.4B(iii)(b);

            (ii) Casualty Insurance/Condemnation Proceeds. Upon receipt by
      Company or any of its Subsidiaries of any Net Insurance/Condemnation
      Proceeds other than from business interruption insurance, (a) so long as
      no Event of Default or Potential Event of Default shall have occurred and
      be continuing, Company shall, or shall cause one or more of its
      Subsidiaries to, promptly and diligently apply such Net
      Insurance/Condemnation Proceeds to pay or reimburse the costs of
      repairing, restoring or replacing the assets in respect of which such Net
      Insurance/Condemnation Proceeds were received or, to the extent not so
      applied, to prepay the Loans (and/or the Revolving Loan Commitments shall
      be reduced) as provided in subsection 2.4B(iii)(b) (it being acknowledged
      and agreed that, in the event that the Company fully repairs, restores or
      replaces, as the case may be, the assets in respect of which such Net
      Insurance/Condemnation Proceeds were received for less than the amount of
      such Net Insurance/Condemnation Proceeds, Company may retain such excess
      Net Insurance/Condemnation Proceeds; provided that the amount of such
      excess Net Insurance/Condemnation Proceeds retained by Company shall not
      exceed $10 million in any Fiscal Year) and (b) if an Event of Default or
      Potential Event of Default shall have occurred and be continuing, Company
      shall apply an amount equal to such Net Insurance/Condemnation Proceeds to
      prepay the Loans (and/or the Revolving Loan Commitments shall be reduced)
      as provided in subsection 2.4B(iii)(b); provided that the aggregate amount
      applied by Company to pay or reimburse the costs of repairing, restoring
      or replacing such assets pursuant to the foregoing clause (a) shall not
      exceed $25 million for any Fiscal Year.

            (iii) Net Insurance/Condemnation Proceeds Received by Administrative
      Agent. Upon receipt by Administrative Agent of any Net
      Insurance/Condemnation Proceeds as loss payee, if and to the extent
      Company would have been required to apply such Net Insurance/Condemnation
      Proceeds (if it had received them directly) to prepay the Loans and/or
      reduce the Revolving Loan Commitments, Administrative Agent shall, and
      Company hereby authorizes Administrative Agent to, apply such Net
      Insurance/Condemnation Proceeds to prepay the Loans (and/or the Revolving
      Loan Commitments shall be reduced) as provided in subsection 2.4B(iii)(b),
      and (b) to the extent the foregoing clause (a) does not apply and (1) the
      aggregate amount of such Net Insurance/Condemnation Proceeds received (and
      reasonably expected to be received) by Administrative Agent in respect of
      any covered loss does not exceed $20 million, Administrative Agent shall
      deliver such Net Insurance/Condemnation Proceeds to Company, and Company
      shall, or shall cause one or more of its Subsidiaries to, promptly apply
      such Net Insurance/Condemnation Proceeds to the costs of repairing,
      restoring, or replacing the assets in respect of which such Net
      Insurance/Condemnation Proceeds were received, and (2) if the aggregate
      amount of Net Insurance/Condemnation Proceeds received (and reasonably
      expected to be received) by Administrative Agent in respect of any covered
      loss exceeds $20 million, Administrative Agent shall hold such Net

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      Insurance/Condemnation Proceeds in the Collateral Account established
      under the Security Agreement and, so long as Company or any of its
      Subsidiaries proceeds diligently to repair, restore or replace the assets
      of Company or such Subsidiary in respect of which such Net
      Insurance/Condemnation Proceeds were received, Administrative Agent shall
      from time to time disburse to Company or such Subsidiary from the
      Collateral Account established under the Security Agreement, to the extent
      of any such Net Insurance/Condemnation Proceeds remaining therein in
      respect of the applicable covered loss, amounts necessary to pay the cost
      of such repair, restoration or replacement after the receipt by
      Administrative Agent of invoices or other documentation relating to the
      amount of costs so incurred and the work performed (including, if required
      by Administrative Agent, lien releases and architects' certificates);
      provided, however that if at any time Administrative Agent reasonably
      determines after discussion with Company (A) that Company or such
      Subsidiary is not proceeding diligently with such repair, restoration or
      replacement or (B) that such repair, restoration or replacement cannot be
      completed with the Net Insurance/Condemnation Proceeds then held by
      Administrative Agent for such purpose, together with funds otherwise
      available to Company for such purpose, or that such repair, restoration or
      replacement cannot be completed within 360 days after the receipt by
      Administrative Agent of such Net Insurance/Condemnation Proceeds,
      Administrative Agent shall, and Company hereby authorizes Administrative
      Agent, one Business Day following Administrative Agent's sending of
      written notice to Company, to apply such Net Insurance/ Condemnation
      Proceeds to prepay the Loans (and/or the Revolving Loan Commitments shall
      be reduced) as provided in subsection 2.4B(iii)(b); provided that
      Administrative Agent's failure to provide such written notice will not
      affect the right of Administrative Agent to apply such Net
      Insurance/Condemnation Proceeds to prepay the Loans (and to reduce the
      Revolving Loan Commitments) pursuant to this subsection,.

 .5 Inspection Rights; Lender Meeting.

      A. Inspection Rights. Company shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by
Administrative Agent or any Lender to visit and inspect any of the properties of
Company or of any of its Subsidiaries, to inspect, copy and take extracts from
its and their financial and accounting records, and to discuss its and their
affairs, finances and accounts with its and their officers and independent
public accountants (provided that Company may, if it so chooses, be present at
or participate in any such discussion), all upon reasonable notice and at such
reasonable times during normal business hours and as often as may reasonably be
requested.

      B. Lender Meeting. Company will, upon at least thirty (30) days prior
written notice from Administrative Agent or Requisite Lenders, participate in a
meeting of Administrative Agent and Lenders once during each Fiscal Year to be
held at Company's corporate offices (or at such other location as may be agreed
to by Company and Administrative Agent) at such time as may be agreed to by
Company and Administrative Agent.

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 .6 Compliance with Laws, etc.

            Company shall comply, and shall cause each of its Subsidiaries and
all other Persons on or occupying any Facilities to comply, with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority (including all Environmental Laws), noncompliance with
which could reasonably be expected to cause, individually or in the aggregate, a
Material Adverse Effect.

 .7 Environmental Review and Investigation, Disclosure, Etc.; Company's Actions
Regarding Hazardous Materials Activities, Environmental Claims and Violations of
Environmental Laws.

      A. Environmental Review and Investigation. Company agrees that
Administrative Agent may, from time to time and in its reasonable discretion, at
Company's expense, (i) retain an independent professional consultant to review
any environmental audits, investigations, analyses and reports relating to
Hazardous Materials prepared by or for Company and (ii) upon receipt of
information that there may exist at any Facility an environmental matter which,
individually or in the aggregate, would reasonably be expected to result in a
Material Adverse Effect or there may exist at any Facility any Environmental
Claims which, individually or in the aggregate, would reasonably be expected to
result in a Material Adverse Effect, or upon the occurrence of any Event of
Default, conduct its own investigation of any Facility; provided that, in the
case of any Facility no longer owned, leased, operated or used by Company or any
of its Subsidiaries, Company shall only be obligated to use its reasonable good
faith efforts to obtain permission for Administrative Agent's professional
consultant to conduct an investigation of such Facility. For purposes of
conducting such a review and/or investigation, Company hereby grants to
Administrative Agent and its respective agents, employees, consultants and
contractors the right to enter into or onto any Facilities currently owned,
leased, operated or used by Company or any of its Subsidiaries and to perform
such tests on such property (including taking samples of soil, groundwater and
suspected asbestos-containing materials) as are reasonably necessary in
connection therewith. Any such investigation of any Facility shall be conducted,
unless otherwise agreed to by Company and Administrative Agent, during normal
business hours and, to the extent reasonably practicable, shall be conducted so
as not to interfere with the ongoing operations at such Facility or to cause any
damage or loss to any property at such Facility. So long as no Event of Default
or Potential Event of Default has occurred and is continuing, Administrative
Agent shall provide reasonable notice to Company prior to the inspection of any
Facility. Company and Administrative Agent hereby acknowledge and agree that any
report of any investigation conducted at the request of Administrative Agent
pursuant to this subsection 6.7A will be obtained and shall be used by
Administrative Agent and Lenders for the purposes of Lenders' internal credit
decisions, to monitor and police the Loans and to protect Lenders' security
interests, if any, created by the Loan Documents. Administrative Agent agrees to
deliver a copy of any such report to Company with the understanding that Company
acknowledges and agrees that (x) it will indemnify and hold harmless
Administrative Agent and each Lender from any costs, losses or liabilities
relating to Company's use of or reliance on such report, (y) none of the
Administrative Agent or any Lender makes any representation or warranty with
respect to such report, and (z) by delivering such report to Company, none of
the Administrative Agent or any Lender is requiring or recommending the
implementation of any suggestions or recommendations contained in such report.

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      B. Environmental Disclosure. Company will deliver to Administrative Agent
and Lenders:

            (i) Environmental Audits and Reports. As soon as practicable
      following receipt thereof, copies of material environmental audits,
      investigations, analyses and reports of any kind or character, whether
      prepared by personnel of Company or any of its Subsidiaries or by
      independent consultants, governmental authorities or any other Persons,
      with respect to significant environmental matters at any Facility which,
      individually or in the aggregate, would reasonably be expected to result
      in a Material Adverse Effect or with respect to any Environmental Claims
      which, individually or in the aggregate, would reasonably be expected to
      result in a Material Adverse Effect;

            (ii) Notice of Certain Releases, Remedial Actions, Etc. Promptly
      upon the occurrence thereof, written notice describing in reasonable
      detail (a) any Release required to be reported to any federal, state or
      local governmental or regulatory agency under any applicable Environmental
      Laws, (b) any remedial action taken by Company or any other Person of
      which Company has knowledge in response to (1) any Hazardous Materials
      Activities the existence of which has a reasonable possibility of
      resulting in one or more Environmental Claims having, individually or in
      the aggregate, a Material Adverse Effect, or (2) any Environmental Claims
      that, individually or in the aggregate, have a reasonable possibility of
      resulting in a Material Adverse Effect, and (c) Company's discovery of any
      occurrence or condition on any real property adjoining any Facility that
      could cause such Facility or any part thereof to be subject to any
      material restrictions on the ownership, occupancy, transferability or use
      thereof under any Environmental Laws.

            (iii) Written Communications Regarding Environmental Claims,
      Releases, Etc. As soon as practicable following the sending or receipt
      thereof by Company or any of its Subsidiaries, a copy of any and all
      written communications with respect to (a) any Environmental Claims that,
      individually or in the aggregate, have a reasonable possibility of giving
      rise to a Material Adverse Effect, (b) any Release required to be reported
      to any federal, state or local governmental or regulatory agency, and (c)
      any request for information from any governmental agency that suggests
      such agency is investigating whether Company or any of its Subsidiaries
      may be potentially responsible for any Environmental Claim.

            (iv) Notice of Certain Proposed Actions Having Environmental Impact.
      Prompt written notice describing in reasonable detail (a) any proposed
      acquisition of stock, assets, or property by Company or any of its
      Subsidiaries that could reasonably be expected to (1) expose Company or
      any of its Subsidiaries to, or result in, Environmental Claims that would
      reasonably be expected to have, individually or in the aggregate, a
      Material Adverse Effect or (2) affect the ability of Company or any of its
      Subsidiaries to maintain in full force and effect all material
      Governmental Authorizations required under any Environmental Laws for
      their respective operations and (b) any proposed action to be taken by
      Company or any of its Subsidiaries to commence manufacturing or other
      industrial operations or to modify current operations in a manner that
      could reasonably be expected to subject Company or any of its Subsidiaries
      to any additional obligations or

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      requirements under any Environmental Laws that would reasonably be
      expected to have, individually or in the aggregate, a Material Adverse
      Effect.

            (v) Other Information. With reasonable promptness, such other
      documents and information as from time to time may be reasonably requested
      by Administrative Agent in relation to any matters disclosed pursuant to
      this subsection 6.7.

      C. Company's Actions Regarding Hazardous Materials Activities,
Environmental Claims and Violations of Environmental Laws.

            (i) Remedial Actions Relating to Hazardous Materials Activities.
      Company shall promptly undertake, and shall cause each of its Subsidiaries
      promptly to undertake, any and all investigations, studies, sampling,
      testing, abatement, cleanup, removal, remediation or other response
      actions necessary to remove, remediate, clean up or abate any Hazardous
      Materials Activity on, under or about any Facility that is required by any
      Governmental Authority or that is in violation of any Environmental Laws
      or that presents a material risk of giving rise to an Environmental Claim
      that would reasonably be expected to have, individually or in the
      aggregate, a Material Adverse Effect. In the event Company or any of its
      Subsidiaries undertakes any such action with respect to any Hazardous
      Materials, Company or such Subsidiary shall conduct and complete such
      action in compliance with all applicable Environmental Laws and in
      accordance with the policies, orders and directives of all federal, state
      and local governmental authorities except when, and only to the extent
      that, Company's or such Subsidiary's liability with respect to such
      Hazardous Materials Activity is being contested in good faith by Company
      or such Subsidiary.

            (ii) Actions with Respect to Environmental Claims and Violations of
      Environmental Laws. Company shall promptly take, and shall cause each of
      its Subsidiaries promptly to take, any and all actions necessary to (a)
      cure any violation of applicable Environmental Laws by Company or its
      Subsidiaries that would reasonably be expected to have, individually or in
      the aggregate, a Material Adverse Effect and (b) make an appropriate
      response to any Environmental Claim against Company or any of its
      Subsidiaries and discharge any obligations it may have to any Person
      thereunder where failure to do so would reasonably be expected to have,
      individually or in the aggregate, a Material Adverse Effect.

 .8 Execution of Subsidiary Guaranty and Personal Property Collateral Documents
by Certain Subsidiaries and Future Subsidiaries; IP Collateral.

      A. Execution of Subsidiary Guaranty and Personal Property Collateral
Documents. In the event that any Person (other than an Inactive Subsidiary)
becomes a wholly-owned Domestic Subsidiary of Company or any Subsidiary
Guarantor after the Closing Date, Company will promptly notify Administrative
Agent of that fact and (i) Company or such Subsidiary Guarantor shall execute
and deliver to Administrative Agent a Pledge Amendment (as defined in the
Security Agreement) to the Security Agreement pledging all of the stock of such
wholly-owned Domestic Subsidiary owned by Company or such Subsidiary Guarantor
and (ii) cause such wholly-owned Domestic Subsidiary to execute and deliver to
Administrative Agent a counterpart of the

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Subsidiary Guaranty and, as applicable, a Pledge Amendment and Additional
Mortgages (as defined in subsection 6.9) and to take all such further actions
and execute all such further documents and instruments (including actions,
documents and instruments comparable to those described in subsection 4.1H) as
may be necessary or, in the reasonable opinion of Administrative Agent,
desirable to create in favor of Administrative Agent, for the benefit of
Lenders, a valid and perfected First Priority Lien on all of the personal and
mixed property assets of such wholly-owned Domestic Subsidiary described in the
applicable forms of Collateral Documents.

      B. Execution of Future Foreign Subsidiary Guaranty and Collateral
Documents. In the event that any Person (other than an Inactive Subsidiary)
becomes a direct Foreign Subsidiary of Company or any Subsidiary Guarantor after
the Closing Date, Company will promptly notify Administrative Agent of that fact
and Company or such Subsidiary Guarantor will execute a Pledge Amendment (as
defined in the Security Agreement) to the Security Agreement pledging not less
than 65% (66% in the case of any Foreign Subsidiary organized under the laws of
France or any political subdivision thereof) of the stock of such Foreign
Subsidiary. In the event that U.S. tax laws and/or any other applicable laws in
foreign jurisdictions, as the case may be, are amended to permit a Foreign
Subsidiary to guarantee the Loans without the incurrence of an investment in
U.S. property or other deemed dividends for U.S. tax purposes or without
otherwise resulting in U.S. taxable income or without otherwise violating any
other applicable laws in foreign jurisdictions, Company will promptly notify
Administrative Agent of that fact and Company or such Subsidiary Guarantor will
execute Pledge Amendments to the Security Agreement pledging not less than 100%
of the stock of its wholly-owned Foreign Subsidiaries (other than Inactive
Subsidiaries) and Company will cause its Foreign Subsidiaries (other than
Inactive Subsidiaries) to execute and deliver to Administrative Agent a
counterpart of the Subsidiary Guaranty and the Security Agreement and Additional
Mortgages, as applicable, and to take all such further action and execute all
such further documents and instruments as may be reasonably required to grant
and perfect in favor of Administrative Agent, for the benefit of Lenders, a
First Priority security interest in all of the personal and mixed property
assets of such Subsidiary described in the applicable Collateral Documents.

      C. Subsidiary Charter Documents, Legal Opinions, Etc. Company shall
deliver to Administrative Agent, together with such Loan Documents, (i)
certified copies of such Subsidiary's Certificate or Articles of Incorporation,
together with a good standing certificate from the Secretary of State of the
jurisdiction of its incorporation and each other state in which such Person is
qualified as a foreign corporation to do business and, to the extent generally
available, a certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority of
each of such jurisdictions, each to be dated a recent date prior to their
delivery to Administrative Agent, (ii) a copy of such Subsidiary's Bylaws
certified by its secretary or an assistant secretary as of a recent date prior
to their delivery to Administrative Agent, (iii) a certificate executed by the
secretary or an assistant secretary of such Subsidiary as to (a) the fact that
the attached resolutions of the Board of Directors of such Subsidiary approving
and authorizing the execution, delivery and performance of such Loan Documents
are in full force and effect and have not been modified or amended and (b) the
incumbency and signatures of the officers of such Subsidiary executing such Loan
Documents, and (iv) if required by the Administrative Agent, a favorable opinion
of counsel to such Subsidiary, in form and substance satisfactory to
Administrative Agent and its counsel, as to (a) the due organization and good
standing of such Subsidiary, (b) the due authorization,

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execution and delivery by such Subsidiary of such Loan Documents, (c) the
enforceability of such Loan Documents against such Subsidiary, (d) such other
matters (including matters relating to the creation and perfection of Liens in
any Collateral pursuant to such Loan Documents) as Administrative Agent may
reasonably request, all of the foregoing to be satisfactory in form and
substance to Administrative Agent and its counsel.

      D. Pledge of Foreign Subsidiary Stock. To the extent not otherwise
satisfied on the Closing Date with respect to Company's Foreign Subsidiaries, no
later than 120 days after the Closing Date, Company shall, and shall cause each
of its Subsidiary Guarantors owning direct Foreign Subsidiaries to, deliver to
Administrative Agent such Pledge Amendments or other similar documents executed
with respect to the capital stock of each such Foreign Subsidiary (other than
Inactive Subsidiaries) and to deliver such stock certificates or such other
related documents or instruments as shall grant to Administrative Agent a
perfected First Priority Lien on such capital stock, all in form and substance
reasonably satisfactory to Administrative Agent.

 .9 Leasehold Properties; Matters Relating to Additional Real Property
Collateral; Certain Opinions; Removal of Liens.

      A. Leasehold Properties.

      To the extent not otherwise satisfied on the Closing Date with respect to
Company and its Subsidiaries, each of Company and each applicable Subsidiary
Guarantor shall use its reasonable good faith best efforts (without requiring
Company or such Subsidiary Guarantor to relinquish any material rights or incur
any material obligations or to expend more than a nominal amount of money as
well as reasonable attorneys' fees incurred by (x) the landlord under the
applicable lease, (y) Administrative Agent and (z) Company or such Subsidiary
Guarantor) to:

            (i) Landlord Consents and Estoppels; Recorded Leasehold Interests.
      Deliver to Administrative Agent no later than 45 days after the Closing
      Date, in the case of each Material Leasehold Property of Company or its
      Subsidiary Guarantors existing as of the Closing Date, (a) a Landlord
      Consent and Estoppel with respect thereto and (b) evidence that such
      Material Leasehold Property is a Recorded Leasehold Interest;

            (ii) Collateral Access Agreements. Deliver to Administrative Agent
      no later than 45 days after the Closing Date, in the case of each
      Leasehold Property of Company or its Subsidiary Guarantors existing as of
      the Closing Date designated by Administrative Agent, a Collateral Access
      Agreement with respect thereto and in the event that any landlord party to
      a Collateral Access Agreement requests an estoppel certificate regarding
      such Leasehold Property, Company or the applicable Subsidiary Guarantor
      will include a description of such Collateral Access Agreement in such
      estoppel certificate; and

            (iii) Conforming Leasehold Interests. If Company or any of its
      Subsidiary Guarantors acquires any Material Leasehold Property after the
      Closing Date, Company shall, or shall cause such Subsidiary to, use its
      reasonable good faith best efforts (without requiring Company or such
      Subsidiary to relinquish any material rights or incur any material
      obligations or to expend more than a nominal amount of money as well as
      reasonable attorneys' fees incurred by (x) the landlord under the
      applicable lease, (y)

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      Administrative Agent and (z) Company or such Subsidiary) to cause such
      Material Leasehold Property to be a Conforming Leasehold Interest.

      B. Additional Mortgages, Etc. From and after the Closing Date, in the
event that (i) Company or any Subsidiary Guarantor acquires any fee interest in
real property having a fair market value in excess of $1 million or any Material
Leasehold Property or (ii) at the time any Person becomes a Subsidiary
Guarantor, such Person owns or holds any fee interest in real property or any
Material Leasehold Property, in either case excluding any such Real Property
Asset the encumbrancing of which requires the consent of any applicable lessor
or (in the case of clause (ii) above) then-existing senior lienholder, where
Company and its Subsidiaries are unable to obtain such lessor's or senior
lienholder's consent or (iii) Company or any Subsidiary Guarantor acquires a
leasehold interest in the property presently occupied by Company or any
Subsidiary and located at 100 Bellevue Road, Newark, Delaware (any such
non-excluded Real Property Asset described in the foregoing clause (i) or (ii)
or (iii) being an "Additional Mortgaged Property"), Company or such Subsidiary
Guarantor shall deliver to Administrative Agent, as soon as practicable after
such Person acquires such Additional Mortgaged Property or becomes a Subsidiary
Guarantor, as the case may be, the following:

            (i) Additional Mortgage. A fully executed and notarized Mortgage (an
      "Additional Mortgage"), duly recorded in all appropriate places in all
      applicable jurisdictions, encumbering the interest of such Loan Party in
      such Additional Mortgaged Property;

            (ii) Opinions of Counsel. If reasonably required by Administrative
      Agent, (a) a favorable opinion of counsel to such Loan Party, in form and
      substance satisfactory to Administrative Agent and its counsel, as to the
      due authorization, execution and delivery by such Loan Party of such
      Additional Mortgage and such other matters as Administrative Agent may
      reasonably request, and (b) an opinion of counsel (which counsel shall be
      reasonably satisfactory to Administrative Agent) in the state in which
      such Additional Mortgaged Property is located with respect to the
      enforceability of the form of Additional Mortgage recorded in such state
      and such other matters (including any matters governed by the laws of such
      state regarding personal property security interests in respect of any
      Collateral) as Administrative Agent may reasonably request, in each case
      in form and substance reasonably satisfactory to Administrative Agent;

            (iii) Landlord Consent and Estoppel; Recorded Leasehold Interest. In
      the case of an Additional Mortgaged Property consisting of a Material
      Leasehold Property, after using reasonable good faith best efforts
      (without requiring Company or such Subsidiary Guarantor to relinquish any
      material rights or incur any material obligations or to expend more than a
      nominal amount of money as well as reasonable attorneys' fees incurred by
      (i) the landlord under the applicable lease, (ii) Administrative Agent and
      (iii) Company or such Subsidiary Guarantor) to obtain the following: (a) a
      Landlord Consent and Estoppel, unless Company or such Subsidiary Guarantor
      is unable to obtain the Landlord Consent and Estoppel and (b) evidence
      that such Material Leasehold Property is a Recorded Leasehold Interest,
      and in the case of the property located at 100 Bellevue Road, Newark,
      Delaware, (c) a Landlord Consent and Estoppel and (d) evidence that such
      Material Leasehold Property is a Recorded Leasehold Interest;

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            (iv) Title Insurance. (a) If required by Administrative Agent, an
      ALTA mortgagee title insurance policy or an unconditional commitment
      therefor (an "Additional Mortgage Policy") issued by the Title Company
      with respect to such Additional Mortgaged Property, in an amount
      reasonably satisfactory to Administrative Agent, insuring fee simple title
      to, or a valid leasehold interest in, such Additional Mortgaged Property
      vested in such Loan Party and assuring Administrative Agent that such
      Additional Mortgage creates a valid and enforceable First Priority
      mortgage Lien on such Additional Mortgaged Property, which Additional
      Mortgage Policy (1) shall include, if available in the state in which such
      Mortgaged Property is located, a lender's aggregation endorsement, an
      endorsement for future advances under this Agreement and for any other
      matters reasonably requested by Administrative Agent and (2) shall provide
      for affirmative insurance and such reinsurance as Administrative Agent may
      reasonably request, all of the foregoing in form and substance reasonably
      satisfactory to Administrative Agent; and (b) evidence reasonably
      satisfactory to Administrative Agent that such Loan Party has (i)
      delivered to the Title Company all certificates and affidavits required by
      the Title Company in connection with the issuance of the Additional
      Mortgage Policy and (ii) paid to the Title Company or to the appropriate
      governmental authorities all expenses and premiums of the Title Company in
      connection with the issuance of the Additional Mortgage Policy and all
      recording and stamp taxes (including mortgage recording and intangible
      taxes) payable in connection with recording the Additional Mortgage in the
      appropriate real estate records;

            (v) Title Report. If no Additional Mortgage Policy is required with
      respect to such Additional Mortgaged Property, a title report issued by
      the Title Company with respect thereto, dated not more than 30 days prior
      to the date such Additional Mortgage is to be recorded and reasonably
      satisfactory in form and substance to Administrative Agent;

            (vi) Copies of Documents Relating to Title Exceptions. Copies of all
      recorded documents listed as exceptions to title or otherwise referred to
      in the Additional Mortgage Policy or title report delivered pursuant to
      clause (iv) or (v) above;

            (vii) Matters Relating to Flood Hazard Properties. (a) Evidence,
      which may be in the form of a letter from an insurance broker or a
      municipal engineer, as to (1) whether such Additional Mortgaged Property
      is a Flood Hazard Property and (2) if so, whether the community in which
      such Flood Hazard Property is located is participating in the National
      Flood Insurance Program, (b) if such Additional Mortgaged Property is a
      Flood Hazard Property, such Loan Party's written acknowledgement of
      receipt of written notification from Administrative Agent (1) that such
      Additional Mortgaged Property is a Flood Hazard Property and (2) as to
      whether the community in which such Flood Hazard Property is located is
      participating in the National Flood Insurance Program, and (c) in the
      event such Additional Mortgaged Property is a Flood Hazard Property that
      is located in a community that participates in the National Flood
      Insurance Program, evidence that Company has obtained flood insurance in
      respect of such Flood Hazard Property to the extent required under the
      applicable regulations of the Board of Governors of the Federal Reserve
      System; and

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            (viii) Surveys. ALTA Surveys of each Additional Mortgaged Property
      satisfactory in form and substance to the Administrative Agent and the
      Title Company reasonably current and certified to Administrative Agent and
      Title Company by a licensed Surveyor.

            (ix) Environmental Audit. If required by Administrative Agent,
      reports and other information, in form, scope and substance satisfactory
      to Administrative Agent and prepared by environmental consultants
      satisfactory to Administrative Agent, concerning any environmental hazards
      or liabilities to which Company or any of its Subsidiaries may be subject
      with respect to such Additional Mortgaged Property.

      C. Real Estate Appraisals. Company shall, and shall cause each of its
Subsidiary Guarantors to, permit an independent real estate appraiser
satisfactory to Administrative Agent, upon reasonable notice, to visit and
inspect any Additional Mortgaged Property for the purpose of preparing an
appraisal of such Additional Mortgaged Property satisfying the requirements of
any applicable laws and regulations (in each case to the extent required under
such laws and regulations as determined by Administrative Agent in its
discretion). Any such inspection of any Additional Mortgaged Property shall be
conducted, unless otherwise agreed to by Company and Administrative Agent,
during normal business hours and, to the extent reasonably practicable, shall be
conducted so as not to interfere with the ongoing business operations at such
Additional Mortgaged Property.

      D. Surveys. To the extent not otherwise satisfied on the Closing Date with
respect to Company and its Subsidiaries, Company and each Subsidiary Guarantor,
as applicable, shall (a) no later than forty-five (45) days after the Closing
Date, deliver or cause to be delivered to Administrative Agent a survey for each
of the Mortgaged Properties, in the form more specifically described in
subsection 4.1G(vi), (b) no later than fifteen (15) days after the delivery of
such surveys to Administrative Agent, cause the Title Company to issue
endorsements removing the standard survey exception (the "Survey Endorsements")
from the appropriate Closing Date Mortgage Policies, (c) pay to the Title
Company all costs associated with the issuance of such Survey Endorsements and
(d) in the event Administrative Agent determined not to record a Mortgage
against one or more Mortgaged Properties on the Closing Date, because the survey
for such Mortgaged Property was not available, Company shall deliver such
Mortgage no later than forty-five (45) days after the Closing Date.

      E. Removal of Liens. With respect to those Liens set forth on Schedule 5.5
annexed hereto, Company shall cause such Liens to be released of record within
15 days of the Closing Date for Closing Date Mortgaged Properties (as such term
is defined in subsection 4.1G); provided that Company may satisfy such
requirement by causing Title Company to issue an endorsement to the Closing Date
Mortgage Policy (as such term is defined in subsection 4.1G) removing the Liens
set forth on Schedule 5.5 as an exception to such Title Policies within the
periods set forth herein for removal of such Liens.

      F. Additional Collateral Access Agreements. From and after the Closing
Date, in the event that Company or any Subsidiary Guarantor acquires a Leasehold
Property in which Collateral is located, Company shall inform Administrative
Agent and, upon Administrative

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Agent's request, shall use its commercially reasonable efforts to promptly
deliver to Administrative Agent a Collateral Access Agreement for such Leasehold
Property.

 .10 Interest Rate Protection.

            Within 120 days after the Closing Date, Company shall obtain and
shall thereafter maintain in effect for a period of not less than two years
after the Merger Date one or more Interest Rate Agreements with respect to the
Term Loans, in an aggregate notional principal amount of not less than 50% of
the Term Loans outstanding on the Closing Date, each such Interest Agreement to
be in form and substance reasonably satisfactory to Administrative Agent.

 .11 Fiscal Year .

      On or before December 31, 2000, Company shall change its Fiscal Year-end
from October 31 of each calendar year to December 31 of each calendar year.

 .12 Connecticut Lottery Corporation.

      Company hereby agrees to use its commercially reasonable efforts to
procure within 60 days an agreement by and among Company, the Connecticut
Lottery Corporation ("CLC") and Administrative Agent substantially similar to
that certain Agreement dated as of May 22, 1998 by and among CLC, Company,
Autotote Lottery Corporation and Heller Financial Inc. and otherwise reasonably
satisfactory in form and substance to Administrative Agent.

 .13 Delisting.

      On or before the second Business Day following the Closing Date, Company
shall cause appropriate documents to delist the Scientific Games Common Stock to
be filed with the New York Stock Exchange and the SEC.

Section 6. COMPANY'S NEGATIVE COVENANTS

            Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 7.

 .1 Indebtedness.

            Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:

            (i) Company may become and remain liable with respect to the
      Obligations;

            (ii) Company and its Subsidiaries may become and remain liable with
      respect to Contingent Obligations permitted by subsection 7.4 and, upon
      any obligations actually

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<PAGE>

      arising pursuant thereto, the Indebtedness corresponding to the Contingent
      Obligations so extinguished;

            (iii) Company and its Subsidiaries may become and remain liable with
      respect to (x) Purchase Money Indebtedness and (y) Indebtedness in respect
      of Capital Leases entered into after the Closing Date and incurred for the
      purpose of financing all or any part of the purchase price or cost of
      construction or improvement of property, plant or equipment used in the
      business of the Company or its Subsidiaries; provided that the aggregate
      amount of such Purchase Money Indebtedness and Indebtedness incurred in
      respect of such Capital Leases, in each case incurred for the purpose of
      financing all or any part of the purchase price or cost of construction or
      improvement of property, plant or equipment used in the business of the
      Company or its Subsidiaries, does not exceed $20 million at any time
      outstanding;

            (iv) Company may become and remain liable with respect to
      Indebtedness to any of its Subsidiary Guarantors and any of its Foreign
      Subsidiaries, and any Subsidiary Guarantor of Company may become and
      remain liable with respect to Indebtedness to Company or any other
      Subsidiary Guarantor or any Foreign Subsidiary of Company and any Foreign
      Subsidiary of Company may become and remain liable with respect to
      Indebtedness (A) to Company or any Subsidiary Guarantor to the extent that
      such Indebtedness is a permitted Investment by Company or such Subsidiary
      Guarantor under subsection 7.3(viii) or subsection 7.3(v) and (B) to any
      other Foreign Subsidiary of Company to the extent that such Indebtedness
      is a permitted Investment by such Foreign Subsidiary under subsection
      7.3(viii); provided that (a) all such intercompany Indebtedness shall be
      evidenced by promissory notes; (b) all such intercompany Indebtedness owed
      by Company to any of its Subsidiaries shall be subordinated in right of
      payment to the payment in full of the Obligations pursuant to the terms of
      the applicable promissory notes or an intercompany subordination
      agreement, and (c) any payment by any Subsidiary of Company under any
      guaranty of the Obligations shall result in a pro tanto reduction of the
      amount of any intercompany Indebtedness owed by such Subsidiary to Company
      or to any of its Subsidiaries for whose benefit such payment is made;

            (v) Company and its Subsidiaries, as applicable, may remain liable
      with respect to Indebtedness and Indebtedness in respect of Capital
      Leases, in each case, existing as of the Closing Date and described in
      Schedule 7.1 annexed hereto; provided that the aggregate amount of such
      Indebtedness does not exceed $2.5 million at any time outstanding;

            (vi) Company may become and remain liable with respect to
      Indebtedness evidenced by the Senior Subordinated Notes in an aggregate
      principal amount which does not exceed $150 million on the Closing Date;

            (vii) Intentionally Omitted

            (viii) Intentionally Omitted

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<PAGE>

            (ix) Company and its Domestic Subsidiaries may become and remain
      liable with respect to other Indebtedness, and Contingent Obligations
      permitted under subsection 7.4(x), in an aggregate amount not to exceed
      $20 million at any time outstanding;

            (x) Scientific Games International Limited ("SGIL") may become and
      remain liable with respect to Indebtedness in respect of mortgage
      financing of the land and improvements comprising the UK Property and any
      equipment located at the UK Property, including costs, fees and expenses
      related to such mortgage financing; provided that the aggregate amount of
      such Indebtedness shall not exceed $20 million at any time outstanding;
      provided, further that (x) the recourse of the lenders with respect to
      such Indebtedness is limited solely to the land and improvements
      comprising the U.K. Property and any equipment located at the UK Property
      without further recourse to any of Company or any of its Subsidiaries
      (including SGIL) or any other asset of any of Company or any of its
      Subsidiaries (including SGIL), and (y) Company shall make prepayments
      pursuant to subsection 2.4B(iii)(d) in an amount equal to the Net Debt
      Securities Proceeds received by Company and its Subsidiaries in connection
      with the incurrence of such Indebtedness, which shall be applied to prepay
      the Loans as provided in subsection 2.4B(iii)(d);

            (xi) Company's Foreign Subsidiaries may become and remain liable
      with respect to other Indebtedness, and Contingent Obligations permitted
      under subsection 7.4(xi), in an aggregate amount not to exceed $10 million
      at any time outstanding; provided that any such Indebtedness is
      non-recourse to Company and its Domestic Subsidiaries; and

            (xii) Company and its Subsidiaries, as applicable, may become and
      remain liable with respect to Indebtedness which refinances the
      Indebtedness described in clause (v) of this subsection 7.1; provided that
      (x) such refinancing Indebtedness shall be incurred by Company or the
      applicable Subsidiary, as the case may be, that incurred the Indebtedness
      described in clause (v) of this subsection 7.1 that is being refinanced,
      (y) the maturity date of such refinancing Indebtedness shall be later than
      the maturity date of the Indebtedness described in clause (v) of this
      subsection 7.1 that is being refinanced and (z) the aggregate principal
      amount of such refinancing Indebtedness shall be less than the lesser of
      (1) the sum of the aggregate principal amount of Indebtedness being
      refinanced as of the date of such refinancing plus all related costs, fees
      and expenses related to the refinancing and (2) the aggregate principal
      amount of such Indebtedness as of the Closing Date.

 .2 Liens and Related Matters.

      A. Prohibition on Liens. Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:

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            (i) Permitted Encumbrances;

            (ii) Liens granted pursuant to the Collateral Documents;

            (iii) Liens described in Schedule 7.2 annexed hereto;

            (iv) Liens securing Indebtedness permitted under subsection 7.1(iii)
      with respect to the property or assets (and the proceeds thereof) financed
      by such Indebtedness;

            (v) Liens securing Indebtedness incurred by a Foreign Subsidiary
      under (X) subsection 7.1(xi) and encumbering only the assets of such
      Foreign Subsidiary and (Y) subsection 7.1(x) and encumbering only the UK
      Property and any equipment located at the UK Property;

            (vi) Liens securing Indebtedness permitted by subsection 7.1(ix) in
      an aggregate amount not to exceed $10 million at any time outstanding; and

            (vii) Liens securing Indebtedness permitted by subsection 7.1(xii),
      solely to the extent such Liens replace Liens set forth in Schedule 7.2
      annexed hereto with respect to the Indebtedness permitted by subsection
      7.1(v) that is being refinanced by the Indebtedness permitted by
      subsection 7.1(xii).

      B. Equitable Lien in Favor of Lenders. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A; and provided further that Company shall under no circumstances
be required to make or cause to be made effective provision whereby the
Obligations will be secured, directly or indirectly, by Margin Stock.

      C. No Further Negative Pledges. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an Asset Sale or held in respect of
Capital Leases permitted pursuant to subsection 7.1(iii), neither Company nor
any of its Subsidiaries shall enter into any agreement (other than (x) the
Senior Subordinated Note Indenture and (y) an agreement prohibiting only the
creation of Liens securing Subordinated Indebtedness) prohibiting the creation
or assumption of any Lien upon any of its properties or assets, whether now
owned or hereafter acquired; provided that the foregoing shall not preclude
Company and its Subsidiaries from entering into:

            (a) agreements with governmental authorities prohibiting the
creation or assumption of any Lien on assets located in the jurisdiction of any
such governmental authority and utilized pursuant to the applicable agreement,
(i) to the extent existing on the Closing Date, as set forth in Schedule 7.2C(a)
and (ii) to the extent such agreements are entered into after the Closing Date,
at the time any such agreement is entered into, the aggregate value of such
assets subject to such prohibitions, together with the aggregate value of any
such assets subject to the

                                       119                             EXECUTION
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encumbrances and restrictions permitted by subsection 7.2D(a)(ii), in each case
as set forth on the most recent consolidated balance sheet of Company and its
Subsidiaries in accordance with GAAP, shall not exceed 5% of the aggregate value
of all assets set forth on the most recent consolidated balance sheet of Company
and its Subsidiaries in accordance with GAAP;

            (b) (A) agreements containing customary provisions restricting (1)
the subletting or assignment of any lease or (2) the transfer of copyrighted or
patented materials, (B) agreements containing provisions that restrict the
assignment of such agreements or rights thereunder; provided that payments
received or to be received pursuant to such agreements shall be subject to the
Liens securing the Obligations or (C) customary provisions contained in the
terms of any shares, interests, participations or other equivalents of corporate
stock of any Subsidiary of Company that is a corporation or any partnership,
limited liability company or other equity interests of any Subsidiary of Company
that is not a corporation (hereinafter "Equity Interests") restricting the
payment of dividends and the making of distributions on Equity Interests, in
each case described in this clause (C) solely to the extent set forth in
Schedule 7.2D(c);

            (c) agreements or instruments governing Indebtedness permitted by
subsection 7.1(xi) prohibiting the creation or assumption of any Lien on assets
or properties of the Foreign Subsidiary incurring such Indebtedness; provided
that the projected Consolidated EBITDA attributable to the Foreign Subsidiary
incurring such Indebtedness and any of its Subsidiaries in any Fiscal Year (as
set forth in the Financial Plan or Revised Financial Plan, as the case may be,
for such Fiscal Year) shall not exceed 5% of the aggregate projected
Consolidated EBITDA of Company and its Subsidiaries in such Fiscal Year (as set
forth in the Financial Plan or Revised Financial Plan, as the case may be, for
such Fiscal Year); provided further that, in the event that the Foreign
Subsidiary incurring such Indebtedness was not included in the Financial Plan or
Revised Financial Plan, as the case may be, for such Fiscal Year because such
Foreign Subsidiary was not a Subsidiary of Company at the time such Financial
Plan or Revised Financial Plan, as the case may be, was prepared, for purposes
of the preceding proviso the projected Consolidated EBITDA attributable to such
Foreign Subsidiary and its Subsidiaries for such Fiscal Year shall be deemed to
be the projected Consolidated EBITDA of such Foreign Subsidiary and its
Subsidiaries for the twelve months immediately succeeding the incurrence of such
Indebtedness as detailed in an Officer's Certificate in form and substance
reasonably acceptable to Administrative Agent delivered to Administrative Agent
prior to the incurrence of such Indebtedness;

            (d) restrictions on the transfer of assets subject to any Lien
permitted under Subsection 7.2 to the extent imposed by the agreements creating
such Liens;

            (e) agreements containing customary rights of first refusal with
respect to Company's and its Subsidiaries' interests in their respective non
wholly-owned Subsidiaries and Joint Ventures; provided that any such agreements
existing on the Closing Date are set forth in Schedule 7.2C(e);

            (f) applicable law to the extent restricting the transfer of assets;
and

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            (g) agreements (other than agreements referred to in clause (a)
above) prohibiting the creation or assumption of any Lien on assets utilized
pursuant to such agreement solely to the extent set forth in Schedule 7.2C(g).

      D. No Restrictions on Subsidiary Distributions to Company or Other
Subsidiaries. Except as provided herein, Company will not, and will not permit
any of its Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by Company or any
other Subsidiary of Company (other than any such restrictions imposed by
applicable law), (ii) repay or prepay any Indebtedness owed by such Subsidiary
to Company or any other Subsidiary of Company (other than any such restrictions
imposed by applicable foreign law with respect to the repayment or prepayment of
Indebtedness owed to or by a Foreign Subsidiary), (iii) make loans or advances
to Company or any other Subsidiary of Company, or (iv) transfer any of its
property or assets to Company or any other Subsidiary of Company, except for
such consensual encumbrances or restrictions to the extent arising pursuant to:

            (a) agreements with governmental authorities containing a consensual
encumbrance or restriction on the ability of any Subsidiary to transfer any of
its assets located in the jurisdiction of any such governmental authority and
utilized pursuant to the applicable agreement to Company or any other Subsidiary
of Company (i) to the extent existing on the Closing Date, as set forth on
Schedule 7.2D(a) and (ii) to the extent such agreements are entered into after
the Closing Date, at the time any such agreement is entered into, the aggregate
value of such assets subject to such encumbrances or restrictions, together with
the aggregate value of any such assets subject to the prohibitions permitted by
subsection 7.2C(a)(ii), in each case as set forth on the most recent
consolidated balance sheet of Company and its Subsidiaries in accordance with
GAAP, shall not exceed 5% of the aggregate value of all assets set forth on the
most recent consolidated balance sheet of Company and its Subsidiaries in
accordance with GAAP;

            (b) the Senior Subordinated Notes, the Senior Subordinated Note
Indenture or any guarantee thereof;

            (c) (A) solely with respect to clause (iv) above, agreements
containing customary provisions restricting (1) the subletting or assignment of
any lease or (2) the transfer of copyrighted or patented materials, (B) solely
with respect to clause (iv) above, provisions in agreements that restrict the
assignment of such agreements or rights thereunder; provided that payments
received or to be received pursuant to such agreements shall be subject to the
Liens securing the Obligations or (C) solely with respect to clause (i) above,
customary provisions contained in the terms of any Equity Interests restricting
the payment of dividends and the making of distributions on Equity Interests, in
each case solely to the extent set forth in Schedule 7.2D(c);

            (d) any agreement or instrument governing Indebtedness permitted by
subsection 7.1(xi) containing any consensual encumbrance or restriction on the
ability of the Foreign Subsidiary incurring such Indebtedness to (i) pay
dividends or make any other distributions on any of such Foreign Subsidiary's
capital stock or (ii) transfer any of its property or assets to Company or any
other Subsidiary of Company; provided that the projected Consolidated EBITDA

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attributable to the Foreign Subsidiary incurring such Indebtedness and any of
its Subsidiaries in any Fiscal Year (as set forth in the Financial Plan or
Revised Financial Plan, as the case may be, for such Fiscal Year) shall not
exceed 5% of the aggregate projected Consolidated EBITDA of Company and its
Subsidiaries in such Fiscal Year (as set forth in the Financial Plan or Revised
Financial Plan, as the case may be, for such Fiscal Year); provided further
that, in the event that the Foreign Subsidiary incurring such Indebtedness was
not included in the Financial Plan or Revised Financial Plan, as the case may
be, for such Fiscal Year because such Foreign Subsidiary was not a Subsidiary of
Company at the time such Financial Plan or Revised Financial Plan, as the case
may be, was prepared, for purposes of the preceding proviso the projected
Consolidated EBITDA attributable to such Foreign Subsidiary and its Subsidiaries
for such Fiscal Year shall be deemed to be the projected Consolidated EBITDA of
such Foreign Subsidiary and its Subsidiaries for the twelve months immediately
succeeding the incurrence of such Indebtedness as detailed in an Officer's
Certificate in form and substance reasonably acceptable to Administrative Agent
delivered to Administrative Agent prior to the incurrence of such Indebtedness;

            (e) solely with respect to clause (iv) above, restrictions on the
transfer of assets subject to any Liens permitted under subsection 7.2 to the
extent imposed by the agreements creating such Liens;

            (f) solely with respect to clause (iv) above, restrictions imposed
by any executed agreement with respect to an Asset Sale not in violation of this
Agreement with respect to the transfer of the assets to be sold in such Asset
Sale; and

            (g) customary rights of first refusal with respect to Company's and
its Subsidiaries' interests in their respective non-wholly owned Subsidiaries
and Joint Ventures; provided that any such agreements existing on the Closing
Date are set forth in Schedule 7.2C(e).

 .3 Investments; Joint Ventures.

            Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:

            (i) Company and its Subsidiaries may make and own Investments in
      Cash Equivalents;

            (ii) Company and its Subsidiaries may continue to own the
      Investments owned by them as of the Closing Date in any Subsidiaries of
      Company;

            (iii) Company and its wholly-owned Subsidiary Guarantors may make
      Investments in any of Company's wholly-owned Subsidiary Guarantors and
      Subsidiaries of Company may make Investments in Company;

            (iv) Company and its Subsidiaries may make (x) Consolidated Capital
      Expenditures permitted by subsection 7.8 and (y) Consolidated Capital
      Software Expenditures permitted by subsection 7.16;

            (v) Company and its Subsidiaries may continue to own the Investments
      owned by them as of the Closing Date and described in Schedule 7.3 annexed
      hereto;

                                       122                             EXECUTION
<PAGE>

            (vi) Company and its Subsidiaries may make and own Investments in
      Permitted Acquisitions permitted under subsection 7.7(vii);

            (vii) Company and its Subsidiaries may hold non-cash consideration
      consisting of promissory notes received in connection with Asset Sales
      permitted under subsection 7.7(viii) so long as the aggregate principal
      amount of all such promissory notes does not exceed $15 million at any
      time outstanding (determined without regard to any write-downs or
      write-offs thereof);

            (viii) Company and its Subsidiaries may make and own Investments in
      Foreign Subsidiaries in an aggregate amount not to exceed $15 million at
      any time outstanding; provided that in the event that any of Company or
      any of its Subsidiaries has an Investment in a Foreign Subsidiary that is
      solely a holding company with no material assets, liabilities or
      operations ("Foreign Holdco") other than an equity Investment in another
      Foreign Subsidiary that is a direct subsidiary of Foreign Holdco,
      Company's or such Subsidiary's equity Investment in Foreign Holdco will
      not be counted for purposes of the $15 million amount permitted by this
      subsection 7.3(viii) to the extent such equity Investment in Foreign
      Holdco is equal to or less than the equity Investment of Foreign Holdco in
      such other Foreign Subsidiary;

            (ix) Company and its Subsidiaries may make and own Investments in
      Joint Ventures and non-wholly owned Subsidiaries in an aggregate amount
      not to exceed $15 million at any time outstanding;

            (x) Company and its Subsidiaries may make and own other Investments
      in an aggregate amount not to exceed $5 million at any time outstanding;
      and

            (xi) So long as no Event of Default or Potential Event of Default
      has occurred and is continuing, Company may make Investments as required
      to be made by the Company pursuant to and in accordance with the terms of
      the Consulting Agreement.

 .4 Contingent Obligations.

            Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:

            (i) Subsidiaries of Company may become and remain liable with
      respect to Contingent Obligations in respect of the Subsidiary Guaranty;

            (ii) Company may become and remain liable with respect to Contingent
      Obligations in respect of (x) Letters of Credit and (y) surety bonds
      incurred in the ordinary course of business;

            (iii) Company and its Subsidiaries may become and remain liable with
      respect to Contingent Obligations under (x) Interest Rate Agreements with
      Lenders with respect to Indebtedness in an aggregate notional principal
      amount not to exceed at any time the aggregate amount of the Commitments
      and (y) Currency Agreements with Lenders entered into in the ordinary
      course of business for hedging purposes only;

                                       123                             EXECUTION
<PAGE>

            (iv) Company and its Subsidiaries may become and remain liable with
      respect to Contingent Obligations in respect of customary indemnification
      and purchase price adjustment obligations incurred in connection with
      Asset Sales or other sales of assets;

            (v) Company and its Subsidiaries may become and remain liable with
      respect to Contingent Obligations in respect of the performance by the
      Subsidiaries of Company of obligations (other than obligations for the
      payment of money) of such Subsidiaries incurred in the ordinary course of
      business;

            (vi) Company and its Subsidiaries may become and remain liable with
      respect to Contingent Obligations in respect of any Indebtedness of
      Company or any of its wholly-owned Domestic Subsidiaries permitted by
      subsection 7.1 (other than subsection 7.1(vi));

            (vii) Company and its Subsidiaries, as applicable, may remain liable
      with respect to Contingent Obligations described in Schedule 7.4 annexed
      hereto;

            (viii) Company and its Subsidiaries may become and remain liable
      with respect to Contingent Obligations in connection with Operating
      Leases;

            (ix) Subsidiary Guarantors may become and remain liable with respect
      to Contingent Obligations arising under subordinated guaranties of the
      Senior Subordinated Notes as set forth in and to the extent required under
      the Senior Subordinated Note Indenture as in effect on the Closing Date;

            (x) Company and its Domestic Subsidiaries may become and remain
      liable with respect to other Contingent Obligations; provided that the
      maximum aggregate liability, contingent or otherwise, of Company and its
      Domestic Subsidiaries in respect of all such Contingent Obligations,
      together with the aggregate principal amount of all Indebtedness permitted
      under subsection 7.1(ix), shall at no time exceed $20 million;

            (xi) Company's Foreign Subsidiaries may become and remain liable
      with respect to other Contingent Obligations; provided that the Contingent
      Obligations are non-recourse to Company and its Domestic Subsidiaries and
      the maximum aggregate liability, contingent or otherwise, of Company's
      Foreign Subsidiaries in respect of all such Contingent Obligations,
      together with the aggregate principal amount of all Indebtedness permitted
      under subsection 7.1(xi), shall at no time exceed $10 million;

            (xii) Company and its Subsidiaries may become and remain liable with
      respect to Contingent Obligations in respect of the contingent deferred
      purchase price of any Permitted Acquisitions in an aggregate amount not to
      exceed $5 million at any time outstanding; and

            (xiii) Company and its Subsidiaries may become and remain liable
      with respect to Contingent Obligations in respect of any Indebtedness of
      SGIL permitted under subsection 7.1(x).

                                       124                             EXECUTION
<PAGE>

 .5 Restricted Junior Payments.

            Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment, except:

            (i) Company may make Restricted Junior Payments consisting of
      payment-in-kind dividends paid on the Convertible Preferred Stock;

            (ii) Company shall not, and shall not permit any of its Subsidiaries
      to, directly or indirectly, declare, order, pay, make or set apart any sum
      for payment on the Senior Subordinated Notes; provided that Company may
      make payments of regularly scheduled interest in respect of the Senior
      Subordinated Notes in accordance with the terms of and to the extent
      required by, and subject to the subordination provisions contained in, the
      Senior Subordinated Note Indenture;

            (iii) Company may repurchase (x) shares of its common stock and/or
      warrants, rights or options to purchase such common stock to the extent
      such repurchase is deemed to occur upon the exercise of stock options to
      acquire common stock or similar arrangements to acquire common stock;
      provided that such repurchased common stock and/or warrants, rights or
      options to acquire shares of such common stock represent a portion of the
      exercise price thereof; provided further that no cash is expended (or
      obligation to expend cash is incurred) by Company or any of its
      Subsidiaries pursuant to this clause (iii)(x) and (y) shares of its common
      stock and/or warrants, rights or options to purchase such common stock
      held by directors, executive officers, members of management or employees
      of Company or any of its Subsidiaries upon the death, disability,
      retirement or termination of employment of such directors, executive
      officers, members of management or employees, so long as (1) no Default or
      Event of Default then exists or would result therefrom and (2) the
      aggregate amount of cash expended by Company pursuant to this clause (iii)
      (y) does not exceed $2 million in any Fiscal Year of Company; and

            (iv) Company may make withholding tax payments on behalf of the
      holders of the Convertible Preferred Stock solely to the extent required
      in connection with the payment by Company of payment-in-kind dividends on
      the Convertible Preferred Stock; provided that the aggregate amount of
      such withholding tax payments made by Company in any Fiscal Year shall not
      exceed $1 million; provided, further, that the aggregate amount of such
      withholding tax payments made by Company shall not exceed $5 million for
      the period from the Closing Date through and including December 31, 2005;
      provided, further, still, that prior to Company making any such
      withholding tax payments in any Fiscal Year, the holders of the
      Convertible Preferred Stock shall have previously made, or transferred to
      Company adequate funds so that Company may make on behalf of the holders
      of the Convertible Preferred Stock, withholding tax payments in an amount
      equal to 10% of the fair market value of such payment-in-kind dividends.

                                       125                             EXECUTION
<PAGE>

 .6 Financial Covenants

      A. Minimum Fixed Charge Coverage Ratio. Company shall not permit the
Consolidated Fixed Charge Coverage Ratio, calculated on a Pro Forma Basis, for
any four-Fiscal Quarter period ending during any of the periods set forth below
to be less than the correlative ratio indicated:

<TABLE>
<CAPTION>
                                                           Minimum  Fixed Charge
                   Period                                  Coverage Ratio
     ---------------------------------------               ---------------------
     <S>                                                         <C>
     Closing Date through September 30, 2000                     1.35:1.00

     October 1, 2000 through June 30, 2002                       1.40:1.00

     July 1, 2002 and thereafter                                 1.45:1.00
</TABLE>

      A. Maximum Consolidated Leverage Ratio. Company shall not permit the
Consolidated Leverage Ratio, calculated on a Pro Forma Basis, for any
four-Fiscal Quarter period ending during any of the periods set forth below to
exceed the correlative ratio indicated:

<TABLE>
<CAPTION>
                                                           Maximum Consolidated
                     Period                                   Leverage Ratio
     -----------------------------------------             ---------------------
     <S>                                                         <C>
     Closing Date through December 31, 2000                      5.25:1.00

     January 1, 2001 through March 31, 2001                      5.00:1.00

     April 1, 2001 through June 30, 2001                         4.75:1.00

     July 1, 2001 through September 30, 2001                     4.50:1.00

     October 1, 2001 through December 31, 2001                   4.35:1.00

     January 1, 2002 through March 31, 2002                      4.15:1.00

     April 1, 2002 through June 30, 2002                         4.10:1.00

     July 1, 2002 through September 30, 2002                     3.95:1.00

     October 1, 2002 through December 31, 2002                   3.80:1.00

     January 1, 2003 through March 31, 2003                      3.65:1.00

     April 1, 2003 through June 30, 2003                         3.55:1.00

     July 1, 2003 through September 30, 2003                     3.40:1.00

     October 1, 2003 through December 31, 2003                   3.30:1.00

     January 1, 2004 through March 31, 2004                      3.25:1.00

     April 1, 2004 through June 30, 2004                         3.15:1.00

     July 1, 2004 through September 30, 2004                     3.05:1.00

     October 1, 2004 through December 31, 2004                   2.95:1.00
</TABLE>

                                       126                             EXECUTION
<PAGE>

<TABLE>
     <S>                                                         <C>
     January 1, 2005 through March 31, 2005                      2.85:1.00

     April 1, 2005 through June 30, 2005                         2.75:1.00

     July 1, 2005 through September 30, 2005                     2.70:1.00

     October 1, 2005  through  December  31, 2005                2.60:1.00

     January 1, 2006 through March 31, 2006                      2.50:1.00

     April 1, 2006 through June 30, 2006                         2.45:1.00

     July 1, 2006 through September 30, 2006                     2.35:1.00

     October 1, 2006  through  December  31, 2006                2.25:1.00

     January 1, 2007 and thereafter                              2.00:1.00
</TABLE>

      A. Minimum Interest Coverage Ratio. Company shall not permit the
Consolidated Interest Coverage Ratio, calculated on a Pro Forma Basis, during
any of the periods set forth below to be less than the correlative ratio
indicated:

<TABLE>
<CAPTION>
                                                             Minimum Interest
                     Period                                   Coverage Ratio
     -----------------------------------------             ---------------------
     <S>                                                         <C>
     Closing Date through December 31, 2000                      1.70:1.00

     January 1, 2001 through March 31, 2001                      1.75:1.00

     April 1, 2001 through June 30, 2001                         1.85:1.00

     July 1, 2001 through September  30, 2001                    1.90:1.00

     October 1, 2001 through December 31, 2001                   1.95:1.00

     January 1, 2002 through March 31, 2002                      2.05:1.00

     April 1, 2002 through June 30, 2002                         2.10:1.00

     July 1, 2002 through September  30, 2002                    2.20:1.00

     October 1, 2002 through December 31, 2002                   2.25:1.00

     January 1, 2003 through March 31, 2003                      2.35:1.00

     April 1, 2003 through June 30, 2003                         2.45:1.00

     July 1, 2003 through September  30, 2003                    2.50:1.00

     October 1, 2003 through December 31, 2003                   2.60:1.00

     January 1, 2004 through March 31, 2004                      2.65:1.00

     April 1, 2004 through June 30, 2004                         2.75:1.00

     July 1, 2004 through September  30, 2004                    2.80:1.00

     October 1, 2004 through December 31, 2004                   2.90:1.00
</TABLE>

                                       127                             EXECUTION
<PAGE>

<TABLE>
     <S>                                                         <C>
     January 1, 2005 through March 31, 2005                      2.95:1.00

     April 1, 2005 through June 30, 2005                         3.05:1.00

     July 1, 2005 through September  30, 2005                    3.15:1.00

     October 1, 2005 through December 31, 2005                   3.25:1.00

     January 1, 2006 through March 31, 2006                      3.35:1.00

     April 1, 2006 through June 30, 2006                         3.45:1:00

     July 1, 2006 and thereafter                                 3.50:1.00
</TABLE>

      A. Minimum Consolidated Net Worth. Company shall not permit Consolidated
Net Worth at any time to be less than the sum of (i) $38.7 million ("Base
Amount") plus (ii) (a) the sum of Adjusted Consolidated Net Income for each
Fiscal Quarter ending after the Closing Date and ending on or before such date
of determination in which Adjusted Consolidated Net Income was positive
multiplied by (b) 75%; provided that for purposes of calculating Adjusted
Consolidated Net Income for the Fiscal Quarter ending on September 30, 2000,
such Fiscal Quarter shall be deemed to commence on the first day after the
Closing Date and end on September 30, 2000; provided further, that the Base
Amount shall be increased to reflect 75% of any increase in the Consolidated Net
Worth of Company and its Subsidiaries as a result of any Merger-related
accounting adjustments made on or after the Closing Date.

 .2 Restriction on Fundamental Changes; Asset Sales and Acquisitions.

            Company shall not, and shall not permit any of Company's
Subsidiaries to, alter the corporate, capital or legal structure of Company or
any of Company's Subsidiaries, or enter into any transaction of merger or
consolidation, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or
sublessor), transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person or any division or line of
business of any Person, except:

            (i) any Domestic Subsidiary of Company may be merged with or into
      Company or any wholly-owned Subsidiary Guarantor, or be liquidated, wound
      up or dissolved, or all or any part of its business, property or assets
      may be conveyed, sold, leased, transferred or otherwise disposed of, in
      one transaction or a series of transactions, to Company or any
      wholly-owned Subsidiary Guarantor; provided that, in the case of such a
      merger, Company or such wholly-owned Subsidiary Guarantor shall be the
      continuing or surviving corporation;

            (ii) Company and its Subsidiaries may make (x) Consolidated Capital
      Expenditures permitted under subsection 7.8 and (y) Consolidated Capital
      Software Expenditures permitted under subsection 7.16;

                                       128                             EXECUTION
<PAGE>

            (iii) Company and its Subsidiaries may dispose of obsolete, worn out
      or surplus property in the ordinary course of business;

            (iv) Company and its Subsidiaries may sell or otherwise dispose of
      assets in transactions that do not constitute Asset Sales; provided that
      the consideration received for such assets shall be in an amount at least
      equal to the fair market value thereof;

            (v) Acquisition Co. and Scientific Games may consummate the Merger;

            (vi) Company or any of its Subsidiaries may convey, sell, transfer
      or otherwise dispose for Cash of any Margin Stock, whether now owned or
      hereafter acquired; provided that such disposition is for fair value and
      the proceeds are held in Cash or Cash Equivalents;

            (vii) Company and its Subsidiaries may consummate Permitted
      Acquisitions; provided that each of the following conditions is satisfied:

                  (a) the Acquired Business is engaged in a line of business
            that Company and its Subsidiaries are permitted to engage in under
            subsection 7.13A;

                  (b) the Acquired Business becomes a wholly-owned Subsidiary
            Guarantor of Company or is acquired by a wholly-owned Subsidiary
            Guarantor of Company in such Permitted Acquisition;

                  (c) the aggregate amount of Cash consideration paid by Company
            and its Subsidiaries (x) for any Permitted Acquisition or series of
            related Permitted Acquisitions made after the Closing Date shall not
            exceed $20 million and (y) for all Permitted Acquisitions made after
            the Closing Date shall not exceed $60 million;

                  (d) the excess of the Revolving Loan Commitments over the
            Total Utilization of Revolving Loan Commitments immediately after
            giving effect to such Permitted Acquisition will be not less than
            $15 million;

                  (e) concurrently with the consummation of such Permitted
            Acquisition, Company shall, and shall cause its Subsidiaries to,
            comply with the requirements of subsections 6.8 and 6.9 with respect
            to such Permitted Acquisition;

                  (f) Company shall deliver to Administrative Agent an Officer's
            Certificate (1) certifying that no Potential Event of Default or
            Event of Default shall then exist or shall occur as a result of such
            Permitted Acquisition and (2) demonstrating that after giving effect
            to such Permitted Acquisition and to all Indebtedness to be incurred
            or assumed or repaid in connection with or as consideration for such
            Permitted Acquisition, Company will be in compliance with the
            financial covenants set forth in subsection 7.6, calculated on a Pro
            Forma Basis, as of the last day of the four Fiscal Quarter period
            most recently ended prior to the date of the proposed Permitted
            Acquisition for which the relevant financial information is
            available;

                                       129                             EXECUTION
<PAGE>

                  (g) prior to the consummation of any Permitted Acquisition
            having a purchase price in excess of $10 million, Company shall
            deliver to Administrative Agent a copy, prepared in conformity with
            GAAP (subject to year-end adjustments and the absence of footnotes),
            of (i) financial statements of the Person or business so acquired
            for the immediately preceding four consecutive Fiscal Quarter period
            corresponding to the calculation period for the financial covenants
            in the immediately preceding clause and (ii) to the extent available
            from the applicable seller of the Acquired Business or the Acquired
            Business, audited or reviewed financial statements of the Person or
            business so acquired for the fiscal year ended within such period of
            such Person;

                  (h) prior to the consummation of any Permitted Acquisition
            having a purchase price in excess of $15 million, Company shall
            deliver to Administrative Agent revised financial projections (in a
            form substantially consistent with previously provided projections)
            for Company, on a Pro Forma Basis, for such proposed Permitted
            Acquisition for the succeeding four Fiscal Quarters;

                  (i) the aggregate purchase price of all Permitted Acquisitions
            that result in a new Foreign Subsidiary of Company or result in the
            Acquired Business being owned by a Foreign Subsidiary of Company
            shall not exceed $10 million; and

                  (viii) Company and its Subsidiaries may make Asset Sales of
            assets having a fair market value of not in excess of $20 million in
            any Fiscal Year or of $60 million in the aggregate for all such
            Asset Sales during the term of this Agreement; provided that in each
            case (x) the consideration received for such assets shall be in an
            amount at least equal to the fair market value thereof; (y) 80% of
            the consideration received therefor shall be Cash; and (z) the
            proceeds of any such Asset Sale are applied as required by
            subsection 2.4B(iii)(a).

 .3 Consolidated Capital Expenditures.

            Company shall not, and shall not permit its Subsidiaries to, make or
incur Consolidated Capital Expenditures, in any Fiscal Year indicated below, in
an aggregate amount in excess of the corresponding amount (the "Maximum
Consolidated Capital Expenditures Amount") set forth below opposite such Fiscal
Year; provided that the Maximum Consolidated Capital Expenditures Amount for any
Fiscal Year shall be increased by an amount equal to the excess, if any, of the
Maximum Consolidated Capital Expenditures Amount for the previous Fiscal Year
only (prior to any adjustment in accordance with this proviso) over the actual
amount of Consolidated Capital Expenditures for such previous Fiscal Year;
provided, further that in no event shall the amount of such increase exceed 50%
of the Maximum Consolidated Capital Expenditures Amount for such previous Fiscal
Year (prior to any adjustment in accordance with this proviso):

                                       130                             EXECUTION
<PAGE>

<TABLE>
<CAPTION>
                    Fiscal Year                   Maximum Consolidated Capital
                                                          Expenditures
          ----------------------------------------------------------------------
                 <S>                                     <C>
                 Fiscal Year 2000                        $80.0 million

                 Fiscal Year 2001                        $45.0 million

                 Fiscal Year 2002                        $35.0 million

                 Fiscal Year 2003                        $28.0 million

                 Fiscal Year 2004                        $28.0 million

                 Fiscal Year 2005                        $25.0 million

                 Fiscal Year 2006                        $25.0 million

                 Fiscal Year 2007                        $18.75 million
</TABLE>

 .1 Sales and Lease-Backs.

            Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by Company or any of its Subsidiaries
to any Person (other than Company or any of its Subsidiaries) in connection with
such lease; provided that Company and its Subsidiaries may become and remain
liable as lessee, guarantor or other surety with respect to any such lease to
the extent that (i) such lease, if a Capital Lease, is permitted pursuant to
subsection 7.1(iii), (ii) the consideration received is at least equal to the
fair market value of the property sold as determined in good faith by Company's
Board of Directors; provided prior consent of the Board of Directors was
obtained if such fair market value was determined to be in excess of $1 million
and (iii) the Net Asset Sale Proceeds derived from the sale/leaseback of such
sold properties or assets owned by the Company or its Subsidiaries shall be
applied to prepay Loans and/or reduce commitments pursuant to subsection
2.4B(iii)(a) without regard to any reinvestment of such Net Asset Sale Proceeds
otherwise permitted under such subsection.

 .2 Sale or Discount of Receivables.

            Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable;
provided that Company may discount accounts receivable arising under letters of
credit with respect to deferred customer financing in the ordinary course of

                                       131                             EXECUTION
<PAGE>

business so long as the aggregate amount of such discount does not exceed $2
million in any Fiscal Year.

 .3 Transactions with Stockholders and Affiliates.

            Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 5% or more of any class of equity Securities of
Company or with any Affiliate of Company or of any such holder, on terms that
are less favorable to Company or that Subsidiary, as the case may be, than those
that might be obtained at the time from Persons who are not such a holder or
Affiliate; provided that the foregoing restriction shall not apply to (i) any
transaction between Company and any of its wholly-owned Subsidiaries or between
any of its wholly-owned Subsidiaries, (ii) reasonable and customary fees paid to
members of the Boards of Directors of Company and its Subsidiaries, (iii)
reasonable fees and compensation paid to, and indemnity provided on behalf of,
officers, directors, employees or consultants of Company or any Subsidiary as
determined in good faith by Company's Board of Directors or its senior
management, (iv) Investments and Restricted Junior Payments permitted hereunder,
(v) transactions between the Company and any of its Subsidiaries or between
Subsidiaries, in each case, so long as no portion of the minority interest in
such Subsidiary is owned by an Affiliate of Company (other than a wholly-owned
Subsidiary or directors or officers of such Subsidiary that hold capital stock
of such Subsidiary to the extent that local law requires a resident of such
jurisdiction to own capital stock of such Subsidiary); provided such
transactions are not otherwise prohibited hereunder and the Board of Directors
of (x) Company, in the case of a transaction between Company and any of its
non-wholly owned Subsidiaries, or (y) the applicable wholly-owned Subsidiary in
the case of a transaction between a non-wholly owned Subsidiary and such
wholly-owned Subsidiary, in each case shall determine in good faith that such
transaction is fair to Company or such wholly-owned Subsidiary, as the case may
be, or (vi) any agreement as in effect as of the Closing Date (as amended by any
amendment thereto or any transaction contemplated thereby, in each case solely
to the extent such agreement and such transactions are set forth in Schedule
7.11(vi); provided that (a) any such amended agreement thereto is not more
disadvantageous to Company or any Subsidiary, as applicable, in any material
respect than such original agreement and (b) such amendment is not materially
adverse to Lenders.

 .4 Disposal of Subsidiary Equity.

            Except pursuant to the Collateral Documents and except for any sale
of 100% of the capital stock or other equity Securities of any its Subsidiaries
in compliance with the provisions of subsection 7.7(i) or 7.7(viii), Company
shall not:

            (i) directly or indirectly sell, assign, pledge or otherwise
      encumber or dispose of any shares of capital stock or other equity
      Securities of any of its Subsidiaries, except to qualify directors if
      required by applicable law; or

            (ii) permit any of its Subsidiaries directly or indirectly to sell,
      assign, pledge or otherwise encumber or dispose of any shares of capital
      stock or other equity Securities of

                                       132                             EXECUTION
<PAGE>

      any of its Subsidiaries (including such Subsidiary), except to Company, a
      Domestic Subsidiary of Company, or to qualify directors if required by
      applicable law.

 .5 Conduct of Business.

      A. From and after the Closing Date, Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by Company and its Subsidiaries on the Closing Date and
similar or related businesses and (ii) such other lines of business as may be
consented to by Requisite Lenders.

      B. Company will not permit Acquisition Co. to engage in any activities
other than those that are necessary or advisable to effect the Merger, and to
effect the transaction contemplated by this Agreement.

 .6 Amendments or Waivers of Related Agreements.

      A. None of Company or any of its Subsidiaries will agree to any material
amendment to, or waive any of its material rights under, any Related Agreement
or the Consulting Agreement, as the case may be, or terminate or agree to
terminate any Related Agreement or the Consulting Agreement, as the case may be,
without in each case obtaining the prior written consent of Requisite Lenders to
such amendment, waiver or termination, other than any amendment, waiver or
termination of any Related Agreement or the Consulting Agreement, as the case
may be, which is neither material nor adverse to Lenders.

      B. Company shall not, and shall not permit any of its Subsidiaries to,
amend or otherwise change the terms of any Subordinated Indebtedness, or make
any payment consistent with an amendment thereof or change thereto, if the
effect of such amendment or change is to increase the interest rate on such
Subordinated Indebtedness, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate any such event of default or increase any grace period related
thereto), change the redemption, prepayment or defeasance provisions thereof,
change the subordination provisions thereof (or of any guaranty thereof), or
change any collateral therefor (other than to release such collateral), or if
the effect of such amendment or change, together with all other amendments or
changes made, is to increase materially the obligations of the obligor
thereunder or to confer any additional rights on the holders of such
Subordinated Indebtedness (or a trustee or other representative on their behalf)
which would be adverse to Company or Lenders.

      C. Company shall not, and shall not permit any of its Subsidiaries to,
designate any Indebtedness as "Designated Senior Debt" (as defined in the Senior
Subordinated Note Indenture) for purposes of the Senior Subordinated Note
Indenture without the prior written consent of Requisite Lenders.

      D. Company shall not make any payment on the Convertible Preferred Stock
in cash which could be made by the issuance of additional shares of Convertible
Preferred Stock.

                                       133                             EXECUTION
<PAGE>

 .7 Fiscal Year.

            Other than in compliance with subsection 6.11, Company shall not
change its Fiscal Year-end from October 31 of each calendar year, and, once such
change has been effected in compliance with subsection 6.11, Company shall not
change its Fiscal Year-end from December 31 of each calendar year.

 .8 Consolidated Capital Software Expenditures.

            Company shall not, and shall not permit its Subsidiaries to, make or
incur Consolidated Capital Software Expenditures, in any Fiscal Year indicated
below, in an aggregate amount in excess of the corresponding amount (the
"Maximum Consolidated Capital Software Expenditures Amount") set forth below
opposite such Fiscal Year; provided that the Maximum Consolidated Capital
Software Expenditures Amount for any Fiscal Year shall be increased by an amount
equal to the excess, if any, of the Maximum Consolidated Capital Software
Expenditures Amount for the previous Fiscal Year only (prior to any adjustment
in accordance with this proviso) over the actual amount of Consolidated Capital
Software Expenditures for such previous Fiscal Year; provided, further that in
no event shall the amount of such increase exceed 50% of the Maximum
Consolidated Capital Software Expenditures Amount for such previous Fiscal Year
(prior to any adjustment in accordance with this proviso):

<TABLE>
<CAPTION>
                    Fiscal Year                 Maximum Consolidated Capital
                                                    Software Expenditures
             -----------------------------------------------------------------
                 <S>                                      <C>
                 Fiscal Year 2000                         $6.0 million

                 Fiscal Year 2001                         $5.0 million

                 Fiscal Year 2002                         $4.5 million

                 Fiscal Year 2003                         $4.0 million

                 Fiscal Year 2004                         $4.0 million

                 Fiscal Year 2005                         $4.0 million

                 Fiscal Year 2006                         $4.0 million

                 Fiscal Year 2007                         $3.0 million
</TABLE>

 .1 Margin Stock.

      Notwithstanding anything to the contrary contained herein, Company and its
Subsidiaries shall not own Margin Stock with an aggregate value in excess of
$5,000,000.

                                       134                             EXECUTION
<PAGE>

Section 2. EVENTS OF DEFAULT

            If any of the following conditions or events ("Events of Default")
shall occur:

 .1 Failure to Make Payments When Due.

            Failure by Company to pay any installment of principal of any Loan
when due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by Company to pay when
due any amount payable to an Issuing Lender in reimbursement of any drawing
under a Letter of Credit; or failure by Company to pay any interest on any Loan
or any fee or any other amount due under this Agreement within five days after
the date due; or

 .2 Default in Other Agreements.

            (i) Failure of Company or any of its Subsidiaries to pay when due
any principal of or interest on or any other amount payable in respect of one or
more items of Indebtedness (other than Indebtedness referred to in subsection
8.1) or Contingent Obligations in an aggregate principal amount of $5 million or
more beyond the end of any grace period provided therefor; or (ii) breach or
default by Company or any of its Subsidiaries with respect to any other material
term of (a) one or more items of Indebtedness or Contingent Obligations in the
aggregate principal amount referred to in clause (i) above or (b) any loan
agreement, mortgage, indenture or other agreement relating to such item(s) of
Indebtedness or Contingent Obligation(s), if the effect of such breach or
default is to cause, or to permit the holder or holders of that Indebtedness or
Contingent Obligation(s) (or a trustee on behalf of such holder or holders) to
cause, that Indebtedness or Contingent Obligation(s) to become or be declared
due and payable prior to its stated maturity or the stated maturity of any
underlying obligation, as the case may be (upon the giving or receiving of
notice, lapse of time, both, or otherwise); or

 .3 Breach of Certain Covenants.

            Failure of Company to perform or comply with any term or condition
contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or

 .4 Breach of Warranty.

            Any representation, warranty, certification or other statement made
by Company or any of its Subsidiaries in any Loan Document or in any statement
or certificate at any time given by Company or any of its Subsidiaries in
writing pursuant hereto or thereto or in connection herewith or therewith shall
be false in any material respect on the date as of which made; or

 .5 Other Defaults Under Loan Documents.

            Any Loan Party shall default in the performance of or compliance
with any term contained in this Agreement or any of the other Loan Documents,
other than any such term referred to in any other subsection of this Section 8,
and such default shall not have been remedied or waived within thirty (30) days
after the earlier of (i) an officer of Company or such

                                       135                             EXECUTION
<PAGE>

Loan Party becoming aware of such default or (ii) receipt by Company and such
Loan Party of notice from Administrative Agent or any Lender of such default; or

 .6 Involuntary Bankruptcy; Appointment of Receiver, etc.

            A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Company or any of its Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Company or any of its Subsidiaries under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Company or any of its Subsidiaries, or
over all or a substantial part of its property, shall have been entered; or
there shall have occurred the involuntary appointment of an interim receiver,
trustee or other custodian of Company or any of its Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Company or any of its Subsidiaries, and any such event described in
this clause (ii) shall continue for 60 days unless dismissed, bonded or
discharged; or

 .7 Voluntary Bankruptcy; Appointment of Receiver, etc.

            (i) Company or any of its Subsidiaries shall have an order for
relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or Company or any of its Subsidiaries shall
make any assignment for the benefit of creditors; or (ii) Company or any of its
Subsidiaries shall be unable, or shall fail generally, or shall admit in writing
its inability, to pay its debts as such debts become due; or the Board of
Directors of Company or any of its Subsidiaries (or any committee thereof) shall
adopt any resolution or otherwise authorize any action to approve any of the
actions referred to in clause (i) above or this clause (ii); or

 .8 Judgments and Attachments.

            Any money judgment, writ or warrant of attachment or similar process
involving either in any individual case or in the aggregate at any time an
amount in excess of $5 million (in either case not adequately covered by
insurance as to which a solvent and unaffiliated insurance company has
acknowledged coverage) shall be entered or filed against Company or any of its
Subsidiaries or any of their respective assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of 60 days (or in any event later
than five days prior to the date of any proposed sale thereunder); or

                                       136                             EXECUTION
<PAGE>

 .9 Dissolution.

            Any order, judgment or decree shall be entered against Company or
any of its Subsidiaries decreeing the dissolution or split up of Company or that
Subsidiary and such order shall remain undischarged or unstayed for a period in
excess of 30 days; or

 .10 Employee Benefit Plans.

            There shall occur one or more ERISA Events which individually or in
the aggregate results in, or, excluding any event described in clause (x) of the
definition of ERISA Event, would reasonably be expected to result in, liability
to Company, any of its Subsidiaries or any of their respective ERISA Affiliates
in excess of $5 million during the term of this Agreement; or there shall exist
an amount of unfunded benefit liability calculated in accordance with the
provisions of subsection 5.11D which exceeds $5 million; or

 .11 Change in Control.

            Any Change in Control shall occur; or

 .12 Invalidity of Guaranties; Failure of Security; Repudiation of Obligations.

            At any time after the execution and delivery thereof, (i) any
Subsidiary Guaranty for any reason, other than the satisfaction in full of all
Obligations, shall cease to be in full force and effect (other than in
accordance with its terms) or shall be declared to be null and void, (ii) any
Collateral Document shall cease to be in full force and effect (other than by
reason of a release of Collateral thereunder in accordance with the terms hereof
or thereof, the satisfaction in full of the Obligations or any other termination
of such Collateral Document in accordance with the terms hereof or thereof) or
shall be declared null and void, or Administrative Agent shall not have or shall
cease to have a valid and perfected First Priority Lien in any Collateral
purported to be covered thereby, in each case for any reason other than the
failure of any Agent or any Lender to take any action within its control, or
(iii) any Loan Party shall contest the validity or enforceability of any Loan
Document in writing or deny in writing that it has any further liability,
including with respect to future advances by Lenders, under any Loan Document to
which it is a party;

THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Company, and the obligation of each Lender to make any Loan, the
obligation of Administrative Agent to issue any Letter of Credit and the right
of any Lender to issue any Letter of Credit hereunder shall thereupon terminate,
and (ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request, or may, with the
written consent, of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) through (c)

                                       137                             EXECUTION
<PAGE>

above to be, and the same shall forthwith become, immediately due and payable,
and the obligation of each Lender to make any Loan, the obligation of
Administrative Agent to issue any Letter of Credit and the right of any Lender
to issue any Letter of Credit hereunder shall thereupon terminate; provided that
the foregoing shall not affect in any way the obligations of Revolving Lenders
under subsection 3.3C(i) or the obligations of Revolving Lenders to purchase
participations in any unpaid Swing Line Loans as provided in subsection
2.1A(iv).

            Any amounts described in clause (b) above, when received by
Administrative Agent, shall be held by Administrative Agent in the Collateral
Account established pursuant to the Security Agreement and shall be applied as
provided therein.

            Notwithstanding anything contained in the second preceding
paragraph, if at any time within 60 days after an acceleration of the Loans
pursuant to clause (ii) of such paragraph Company shall pay all arrears of
interest and all payments on account of principal which shall have become due
otherwise than as a result of such acceleration (with interest on principal and,
to the extent permitted by law, on overdue interest, at the rates specified in
this Agreement) and all Events of Default and Potential Events of Default (other
than non-payment of the principal of and accrued interest on the Loans, in each
case which is due and payable solely by virtue of acceleration) shall be
remedied or waived pursuant to subsection 10.6, then Requisite Lenders, by
written notice to Company, may at their option rescind and annul such
acceleration and its consequences; but such action shall not affect any
subsequent Event of Default or Potential Event of Default or impair any right
consequent thereon. The provisions of this paragraph are intended merely to bind
Lenders to a decision which may be made at the election of Requisite Lenders and
are not intended, directly or indirectly, to benefit Company, and such
provisions shall not at any time be construed so as to grant Company the right
to require Lenders to rescind or annul any acceleration hereunder or to preclude
Administrative Agent or Lenders from exercising any of the rights or remedies
available to them under any of the Loan Documents, even if the conditions set
forth in this paragraph are met.

Section 3. THE AGENTS

 .1 Appointment.

      A. Appointment of Agents. DLJ is hereby appointed Administrative Agent and
Syndication Agent hereunder and under the other Loan Documents and each Lender
hereby authorizes Administrative Agent and Syndication Agent to act as its agent
in accordance with the terms of this Agreement and the other Loan Documents.
LCPI is hereby appointed Documentation Agent. Each of Administrative Agent and
Syndication Agent agrees to act upon the express conditions contained in this
Agreement and the other Loan Documents, as applicable. The Documentation Agent
shall have no duties or responsibilities under this Agreement and the other Loan
Documents. The provisions of this Section 9 are solely for the benefit of each
of Agents and Lenders and Company shall have no rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties under this Agreement, each of Administrative Agent and Syndication Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for Company or any of its Subsidiaries.

                                       138                             EXECUTION
<PAGE>

      B. Appointment of Supplemental Collateral Agents. It is the purpose of
this Agreement and the other Loan Documents that there shall be no violation of
any law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as agent or trustee in such
jurisdiction. It is recognized that in case of litigation under this Agreement
or any of the other Loan Documents, and in particular in case of the enforcement
of any of the Loan Documents, or in case Administrative Agent deems that by
reason of any present or future law of any jurisdiction it may not exercise any
of the rights, powers or remedies granted herein or in any of the other Loan
Documents or take any other action which may be desirable or necessary in
connection therewith, it may be necessary that Administrative Agent appoint an
additional individual or institution as a separate trustee, co-trustee,
collateral agent or collateral co-agent (any such additional individual or
institution being referred to herein individually as a "Supplemental Collateral
Agent" and collectively as "Supplemental Collateral Agents").

            In the event that Administrative Agent appoints a Supplemental
Collateral Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other Loan Documents to be exercised by or vested in or conveyed to
Administrative Agent with respect to such Collateral shall be exercisable by and
vest in such Supplemental Collateral Agent to the extent, and only to the
extent, necessary to enable such Supplemental Collateral Agent to exercise such
rights, powers and privileges with respect to such Collateral and to perform
such duties with respect to such Collateral, and every covenant and obligation
contained in the Loan Documents and necessary to the exercise or performance
thereof by such Supplemental Collateral Agent shall run to and be enforceable by
either Administrative Agent or such Supplemental Collateral Agent, and (ii) the
provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to
Administrative Agent shall inure to the benefit of such Supplemental Collateral
Agent and all references therein to Administrative Agent shall be deemed to be
references to Administrative Agent and/or such Supplemental Collateral Agent, as
the context may require.

            Should any instrument in writing from Company or any other Loan
Party be required by any Supplemental Collateral Agent so appointed by
Administrative Agent for more fully and certainly vesting in and confirming to
him or it such rights, powers, privileges and duties, Company shall, or shall
cause such Loan Party to, execute, acknowledge and deliver any and all such
instruments promptly upon request by Administrative Agent. In case any
Supplemental Collateral Agent, or a successor thereto, shall die, become
incapable of acting, resign or be removed, all the rights, powers, privileges
and duties of such Supplemental Collateral Agent, to the extent permitted by
law, shall vest in and be exercised by Administrative Agent until the
appointment of a new Supplemental Collateral Agent.

 .2 Powers and Duties; General Immunity.

      A. Powers; Duties Specified. Each Lender irrevocably authorizes each Agent
to take such action on such Lender's behalf and to exercise such powers, rights
and remedies hereunder and under the other Loan Documents as are specifically
delegated or granted to such Agent by the terms hereof and thereof, together
with such powers, rights and remedies as are reasonably incidental thereto. Each
Agent shall have only those duties and responsibilities that are expressly
specified in this Agreement and the other Loan Documents. Each Agent may
exercise such powers, rights and remedies and perform such duties by or through
its agents or employees. No

                                       139                             EXECUTION
<PAGE>

Agent shall have, by reason of this Agreement or any of the other Loan
Documents, a fiduciary relationship in respect of any Lender; and nothing in
this Agreement or any of the other Loan Documents, expressed or implied, is
intended to or shall be so construed as to impose upon any Agent any obligations
in respect of this Agreement or any of the other Loan Documents except as
expressly set forth herein or therein. Notwithstanding anything herein to the
contrary, Agent shall not be responsible for notifying any Federal banking
authority of its activities hereunder (including pursuant to the Bank Service
Company Act (12 U.S.C. 1867)).

      B. No Responsibility for Certain Matters. No Agent shall be responsible to
any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by such Agent to Lenders or by or on behalf of
Company to such Agent or any Lender in connection with the Loan Documents and
the transactions contemplated thereby or for the financial condition or business
affairs of Company or any other Person liable for the payment of any
Obligations, nor shall such Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or as to the existence
or possible existence of any Event of Default or Potential Event of Default.
Anything contained in this Agreement to the contrary notwithstanding,
Administrative Agent shall not have any liability arising from confirmations of
the amount of outstanding Loans or the Letter of Credit Usage or the component
amounts thereof.

      C. Exculpatory Provisions. None of the Agents nor any of their respective
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by any such Agent under or in connection with any of the
Loan Documents except to the extent caused by such Agent's gross negligence or
willful misconduct. Each Agent shall be entitled to refrain from any act or the
taking of any action (including the failure to take an action) in connection
with this Agreement or any of the other Loan Documents or from the exercise of
any power, discretion or authority vested in it hereunder or thereunder unless
and until such Agent shall have received instructions in respect thereof from
Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6) and, upon receipt of such instructions from
Requisite Lenders (or such other Lenders, as the case may be), such Agent shall
be entitled to act or (where so instructed) refrain from acting, or to exercise
such power, discretion or authority, in accordance with such instructions.
Without prejudice to the generality of the foregoing, (i) each Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for Company and its Subsidiaries), accountants,
experts and other professional advisors selected by it; and (ii) no Lender shall
have any right of action whatsoever against any Agent as a result of such Agent
acting or (where so instructed) refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of Requisite
Lenders (or such other Lenders as may be required to give such instructions
under subsection 10.6).

                                       140                             EXECUTION
<PAGE>

      D. Agents Entitled to Act as Lender. The agency hereby created shall in no
way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans and the Letters of Credit, each
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not performing the duties and functions
delegated to it hereunder, and the term "Lender" or "Lenders" or any similar
term shall, unless the context clearly otherwise indicates, include such Agent
in its individual capacity. Any Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with Company or any of its Affiliates as if
it were not performing the duties specified herein, and may accept fees and
other consideration from Company for services in connection with this Agreement
and otherwise without having to account for the same to Lenders.

 .3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness.

            Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. No Agent
shall have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders
or to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter, and no Agent shall have any responsibility with
respect to the accuracy of or the completeness of any information provided to
Lenders.

 .4 Right to Indemnity.

            Each Lender, in proportion to its Pro Rata Share, severally agrees
to indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against such
Agent in exercising its powers, rights and remedies or performing its duties
hereunder or under the other Loan Documents or otherwise in its capacity as
Administrative Agent or Syndication Agent, as the case may be, in any way
relating to or arising out of this Agreement or the other Loan Documents;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from any Agent's gross negligence or willful
misconduct. If any indemnity furnished to any Agent for any purpose shall, in
the opinion of such Agent, be insufficient or become impaired, such Agent may
call for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished.

 .5 Successor Agents and Swing Line Lender.

      A. Successor Agents. Each Agent may resign at any time by giving 30 days'
prior written notice thereof to the other Agents, Lenders and Company, and any
Agent may be removed at any

                                       141                             EXECUTION
<PAGE>

time with or without cause by an instrument or concurrent instruments in writing
delivered to Company and the Agents and signed by Requisite Lenders. Upon any
notice of resignation or removal of Administrative Agent, Requisite Lenders
shall have the right, upon five Business Days' notice to Company, to appoint a
successor Administrative Agent. If for any reason Requisite Lenders cannot agree
on a successor Administrative Agent, the resigning Administrative Agent shall
have the right to designate a successor Administrative Agent, after consulting
with Company. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, that successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Administrative Agent, and the
retiring or removed Administrative Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Administrative
Agent's resignation or removal hereunder as Administrative Agent, the provisions
of this Section 9 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement.

      B. Successor Swing Line Lender. Any resignation or removal of
Administrative Agent pursuant to subsection 9.5A shall also constitute the
resignation or removal of DLJ or its successor as Swing Line Lender, and any
successor Administrative Agent appointed pursuant to subsection 9.5A shall, upon
its acceptance of such appointment, become the successor Swing Line Lender for
all purposes hereunder. In such event (i) Company shall prepay any outstanding
Swing Line Loans made by the retiring or removed Administrative Agent in its
capacity as Swing Line Lender, (ii) upon such prepayment, the retiring or
removed Administrative Agent and Swing Line Lender shall surrender the Swing
Line Note held by it to Company for cancellation, and (iii) Company shall issue
a new Swing Line Note to the successor Administrative Agent and Swing Line
Lender substantially in the form of Exhibit IV-D annexed hereto, in the
principal amount of the Swing Line Loan Commitment then in effect and with other
appropriate insertions.

 .6 Collateral Documents and Guaranties.

      A. Each Lender hereby further authorizes Administrative Agent, on behalf
of and for the benefit of Lenders, to enter into each Collateral Document as
secured party and to be the agent for and representative of Lenders under each
Subsidiary Guaranty, and each Lender agrees to be bound by the terms of each
Collateral Document and Subsidiary Guaranty; provided that Administrative Agent
shall not (i) enter into or consent to any material amendment, modification,
termination or waiver of any provision contained in any Collateral Document or
Subsidiary Guaranty or (ii) release any Collateral (except as otherwise
expressly permitted or required pursuant to the terms of this Agreement or the
applicable Collateral Document), in each case without the prior consent of
Requisite Lenders (or, if required pursuant to subsection 10.6, all Lenders);
provided further, however, that, without further written consent or
authorization from Lenders, Administrative Agent may execute any documents or
instruments necessary to (a) release any Lien encumbering any item of Collateral
that is the subject of a sale or other disposition of assets permitted by this
Agreement or to which Requisite Lenders have otherwise consented or (b) release
any Subsidiary Guarantor from the Subsidiary Guaranty if all of the equity
Securities of such Subsidiary Guarantor are sold to any Person (other than an
Affiliate of Company) pursuant to a sale or other disposition permitted
hereunder or to which Requisite Lenders have otherwise consented. Anything
contained in any of the Loan Documents to the contrary notwithstanding, Company,
each Agent and each Lender hereby agree that (X) no

                                       142                             EXECUTION
<PAGE>

Lender shall have any right individually to realize upon any of the Collateral
under any Collateral Document or to enforce any Subsidiary Guaranty, it being
understood and agreed that all rights and remedies under the Collateral
Documents and the Subsidiary Guaranties may be exercised solely by
Administrative Agent for the benefit of Lenders in accordance with the terms
thereof, and (Y) in the event of a foreclosure by Administrative Agent on any of
the Collateral pursuant to a public or private sale, any Agent or any Lender may
be the purchaser of any or all of such Collateral at any such sale and
Administrative Agent, as agent for and representative of Lenders (but not any
Lender or Lenders in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing) shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Obligations as a credit on account of the purchase price for
any collateral payable by Administrative Agent at such sale.

      B. Each Lender hereby authorizes Administrative Agent to execute any and
all powers of attorney or other instruments on behalf of such Lender necessary
to affect the pledge of any Subsidiary's shares of capital stock under the laws
of a jurisdiction outside of the United States of America.

Section 4. MISCELLANEOUS

 .1 Successors and Assigns.

      A. The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that Company may not assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by Company without such consent
shall be null and void). Nothing in this Agreement, expressed or implied, shall
be construed to confer upon any Person (other than the parties hereto and their
respective successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Affiliates of each of the Administrative Agent and the
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

      B. Any Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided that
(i) except in the case of an assignment of the entire remaining amount of the
assigning Lender's Commitment and the Loans at the time owing to it or in the
case of an assignment to a Lender or an Affiliate of a Lender or an Approved
Fund with respect to a Lender, the aggregate amount of the Revolving Loan
Commitments (which for this purpose includes Loans outstanding thereunder) or
principal outstanding balance of the Term Loan of the assigning Lender subject
to each such assignment (determined as of the date the Assignment Agreement with
respect to such assignment is delivered to Administrative Agent) shall not be
less than $5 million, in the case of any assignment of a Revolving Loan, or $1
million, in the case of any assignment of a Term Loan, unless each of the
Administrative Agent and, so long as no Event of Default has occurred and is
continuing, Company otherwise consent (each such consent not to be unreasonably
withheld or delayed), (ii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement with respect to the Loan or the Commitment
assigned, except that this

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<PAGE>

clause (ii) shall not prohibit any Lender from assigning all or a portion of its
rights and obligations among separate Commitments or Loans on a non-pro rata
basis, and (iii) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment Agreement, together with a processing and
recordation fee of $1500, and the Eligible Assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an administrative
questionnaire. Subject to acceptance and recording thereof by Administrative
Agent in the Register, from and after the effective date specified in each
Assignment Agreement, the Eligible Assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment Agreement, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment Agreement, be released from its obligations under this Agreement
(and, in the case of an Assignment Agreement covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of
subsections 2.6, 2.7, 3.6, 10.2 and 10.3. Any assignment or transfer by a Lender
of rights or obligations under this Agreement that does not comply with this
subsection 10.1B shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
subsection 10.1C.

      C. Any Lender may, without the consent of, or notice to, Company or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and/or obligations
under this Agreement (including all or a portion of its Commitment and/or the
Loans owing to it); provided that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) Company, the Administrative Agent and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant agree to any amendment, modification or waiver
described in clauses (a), (b), (c), (d) or (e) of subsection 10.6A that affects
such Participant. Subject to subsection 10.1D, Company agrees that each
Participant shall be entitled to the benefits of subsections 3.6, 2.6D and 2.7
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection 10.1B. To the extent permitted by law, each
Participant also shall be entitled to the benefits of subsection 10.4 as though
it were a Lender, provided such Participant agrees to be subject to subsection
10.5 as though it were a Lender.

      D. A Participant shall not be entitled to receive any greater payment
under subsection 2.7 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with Company's prior
written consent. A Participant that would be a foreign Lender if it were a
Lender shall not be entitled to the benefits of subsection 2.7 unless Company is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of Company, to comply with Section 2.7B(iii)(a) as
though it were a Lender.

                                       144                             EXECUTION
<PAGE>

      E. Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

      F. Information. Each Lender may furnish any information concerning any
Loan Party in the possession of that Lender from time to time to assignees and
participants (including prospective assignees and participants), subject to
subsection 10.19.

      G. Representations of Lenders. Each Lender listed on the signature pages
hereof hereby represents and warrants (i) that it is an Eligible Assignee or,
upon the approval of Administrative Agent and such other Persons, if any,
required under the definition of Eligible Assignee, will be an Eligible
Assignee; (ii) that it has experience and expertise in the making of loans such
as the Loans; and (iii) that it will make its Loans for its own account in the
ordinary course of its business and without a view to distribution of such Loans
within the meaning of the Securities Act or the Exchange Act or other federal
securities laws (it being understood that, subject to the provisions of this
subsection 10.1, the disposition of such Loans or any interests therein shall at
all times remain within its exclusive control). Each Lender that becomes a party
hereto pursuant to an Assignment Agreement will be deemed to agree that the
representations and warranties of such Lender contained in Section 2(c) of such
Assignment Agreement are incorporated herein by this reference.

 .2 Expenses.

            Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual out of pocket and
reasonable costs and expenses of preparation of the Loan Documents and any
consents, amendments, waivers or other modifications thereto; (ii) all the costs
of furnishing all opinions by counsel for Company (including any opinions
requested by Administrative Agent or Lenders as to any legal matters arising
hereunder) and of Company's performance of and compliance with all agreements
and conditions on its part to be performed or complied with under this Agreement
and the other Loan Documents including with respect to confirming compliance
with environmental, insurance and solvency requirements; (iii) the reasonable
fees, expenses and disbursements of counsel to Arranger and Administrative Agent
in connection with the negotiation, preparation, execution and administration of
the Loan Documents and any consents, amendments, waivers or other modifications
thereto and any other documents or matters requested by Company; (iv) all the
actual costs and reasonable expenses of creating and perfecting Liens in favor
of Administrative Agent on behalf of Lenders pursuant to any Collateral
Document, including filing and recording fees, expenses and taxes, stamp or
documentary taxes, search fees, title insurance premiums, and reasonable fees,
expenses and disbursements of counsel to Administrative Agent and of counsel
providing any opinions that Administrative Agent or Requisite Lenders may
request in respect of the Collateral Documents or the Liens created pursuant
thereto; (v) all the actual out of pocket costs and reasonable expenses
(including the reasonable fees, expenses and disbursements of any auditors,
accountants or appraisers and any environmental or other consultants, advisors
and agents employed or retained by Administrative Agent or their respective
counsel) of obtaining and reviewing any appraisals, environmental audits or
reports and any audits or reports provided for

                                       145                             EXECUTION
<PAGE>

under subsection 4.1I, 6.9B or 6.9C; (vi) the custody or preservation of any of
the Collateral; (vii) all other actual and reasonable costs and expenses
incurred by Arranger or Administrative Agent in connection with the syndication
of the Commitments and the negotiation, preparation and execution of the Loan
Documents and any consents, amendments, waivers or other modifications thereto
and the transactions contemplated thereby; and (viii) after the occurrence and
during the continuation of an Event of Default, all costs and expenses,
including reasonable attorneys' fees and costs of settlement, incurred by
Administrative Agent and Lenders in enforcing any Obligations of or in
collecting any payments due from any Loan Party hereunder or under the other
Loan Documents by reason of such Event of Default (including in connection with
the sale of, collection from, or other realization upon any of the Collateral or
the enforcement of the Subsidiary Guaranties or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or pursuant to any insolvency or
bankruptcy proceedings).

 .3 Indemnity.

            In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless Arranger, Agents and Lenders, and the officers,
directors, trustees, employees, agents and affiliates of Arranger, Agents and
Lenders (collectively called the "Indemnitees"), from and against any and all
Indemnified Liabilities (as hereinafter defined); provided that Company shall
not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise solely
from the gross negligence or willful misconduct of that Indemnitee as determined
by a final judgment of a court of competent jurisdiction.

            As used herein, "Indemnified Liabilities" means, collectively, any
and all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including without limitation the costs of any investigation,
study, sampling, testing, abatement, cleanup, removal, remediation or other
response action necessary to remove, remediate, clean up or abate any Hazardous
Materials Activity not caused solely by the gross negligence or willful
misconduct of Administrative Agent or the Lenders), expenses and disbursements
of any kind or nature whatsoever (including the reasonable fees and
disbursements of counsel for Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened by any Person,
whether or not any such Indemnitee shall be designated as a party or a potential
party thereto, and any fees or expenses incurred by Indemnitees in enforcing
this indemnity), whether direct, indirect or consequential and whether based on
any federal, state or foreign laws, statutes, rules or regulations (including
securities and commercial laws, statutes, rules or regulations and Environmental
Laws), on common law or equitable cause or on contract or otherwise, that may be
imposed on, incurred by, or asserted against any such Indemnitee, in any manner
relating to or arising out of (i) this Agreement or the other Loan Documents or
the transactions contemplated hereby or thereby (including Lenders' agreement to
make the Loans hereunder or the use or intended use of the proceeds thereof or
the issuance of Letters of Credit hereunder or the use or intended use of any
thereof), or any enforcement of any of the Loan Documents (including any sale
of, collection from, or other realization upon any of the Collateral or the
enforcement of the Subsidiary Guaranties), (ii) the statements contained in the
commitment letter delivered by any

                                       146                             EXECUTION
<PAGE>

Lender to Company with respect thereto, or (iii) any Environmental Claim or any
Hazardous Materials Activity relating to or arising from, directly or
indirectly, any past or present activity, operation, land ownership, or practice
of Company or any of its Subsidiaries.

            To the extent that the undertakings to defend, indemnify, pay and
hold harmless set forth in this subsection 10.3 may be unenforceable in whole or
in part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.

 .4 Set-Off; Security Interest in Deposit Accounts.

            In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence and
during the continuation of any Event of Default each Lender is hereby authorized
by Company at any time or from time to time, without notice to Company or to any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time held or
owing by that Lender to or for the credit or the account of Company against and
on account of the obligations and liabilities of Company to that Lender under
this Agreement, the Letters of Credit and participations therein and the other
Loan Documents, including all claims of any nature or description arising out of
or connected with this Agreement, the Letters of Credit and participations
therein or any other Loan Document, irrespective of whether or not (i) that
Lender shall have made any demand hereunder or (ii) the principal of or the
interest on the Loans or any amounts in respect of the Letters of Credit or any
other amounts due hereunder shall have become due and payable pursuant to
Section 8 and although said obligations and liabilities, or any of them, may be
contingent or unmatured. Company hereby further grants to each Agent and each
Lender a security interest in all deposits and accounts maintained with such
Agent or such Lender as security for the Obligations.

 .5 Ratable Sharing.

            Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Loans made
and applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the "Aggregate
Amounts Due" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it shall
be deemed to have purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of

                                       147                             EXECUTION
<PAGE>

such payment) in the Aggregate Amounts Due to the other Lenders so that all such
recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion
to the Aggregate Amounts Due to them; provided that if all or part of such
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of Company or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. Company expressly consents to the
foregoing arrangement and agrees that any holder of a participation so purchased
may exercise any and all rights of banker's lien, set-off or counterclaim with
respect to any and all monies owing by Company to that holder with respect
thereto as fully as if that holder were owed the amount of the participation
held by that holder.

 .6 Amendments and Waivers.

      A. No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, and no consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any amendment, modification, termination,
waiver or consent which:

                  (a) extends the final scheduled maturity of any Loan or Note,
            or extends the stated maturity of any Letter of Credit beyond the
            Revolving Loan Commitment Termination Date, or reduces the rate or
            extends the time of payment of interest or fees thereon (except in
            connection with a waiver of applicability of any post-default
            increase in interest rates), or reduces the principal amount thereof
            (except to the extent repaid in cash), or increases the amount or
            extends the expiration date of any Lender's Commitments; or

                  (b) releases all or substantially all of (x) the Collateral
            (except as expressly provided in the Loan Documents) under all the
            Collateral Documents (it being understood that an increase in the
            amount of Indebtedness of the Company secured ratably by the
            Collateral shall not be deemed a release of Collateral), or (y) the
            Subsidiary Guarantors (except as expressly provided in the Loan
            Documents) from their obligations under the Subsidiary Guaranty; or

                  (c) amends, modifies or waives any provision of this
            subsection 10.6; or

                  (d) reduces the percentage specified in the definition
            "Requisite Lenders" or "Requisite Class Lenders" (it being
            understood that, with the consent of Requisite Lenders, additional
            extensions of credit pursuant to this Agreement may be included in
            the determination of Requisite Lenders on substantially the same
            basis as the extensions of Term Loans and Revolving Loan Commitments
            are included on the Closing Date); or

                  (e) consents to the assignment or transfer by Company of any
            of its rights and obligations under this Agreement or any other Loan
            Document;

shall be effective only if evidenced in a writing signed by or on behalf of all
Lenders (with Obligations being directly affected in the case of clause (a)
above).

                                       148                             EXECUTION
<PAGE>

            In addition, (i) no amendment, modification, termination or waiver
of any provision of any Note held by a Lender or which increases the Commitments
of any Lender over the amount thereof then in effect shall be effective without
the written concurrence of such Lender, (ii) no amendment, modification,
termination or waiver of any provision of subsection 2.1A(iv) or any other
provision of this Agreement relating to the Swing Line Lender shall be effective
without the written concurrence of Swing Line Lender, (iii) no amendment,
modification, termination or waiver of any provision of Section 9 or of any
other provision of this Agreement which, by its terms, expressly requires the
approval or concurrence of Administrative Agent shall be effective without the
written concurrence of Administrative Agent, (iv) no amendment, modification,
termination or waiver of any provision of subsection 2.3C or subsection 2.4 that
has the effect of changing any voluntary or mandatory prepayments or Commitment
reductions or voluntary prepayment fees applicable to any Class (the "Affected
Class") in a manner that disproportionately disadvantages such Class relative to
the other Classes shall be effective without the written concurrence of
Requisite Class Lenders of the Affected Class (it being understood and agreed
that any amendment, modification, termination or waiver of any such provision
that only postpones or reduces voluntary or mandatory prepayment or Commitment
reduction upon those set forth in subsection 2.4 with respect to one Class but
not the other Classes shall be deemed to disproportionately disadvantage one
Class but not to disproportionately disadvantage such other Classes for purposes
of this clause (iv), and it being further understood that any amendment covered
by clause (v) or clause (vi) shall be deemed not to disproportionately
disadvantage any Class), (v) any increase in the Tranche A Term Loan
Commitments, Tranche B Term Loan Commitments or the Revolving Loan Commitments
(and any appropriate conforming and supplemental modifications to this
Agreement) shall require only the approval of Requisite Lenders and each Lender
increasing its Tranche A Term Loan Commitments, Tranche B Term Loan Commitments
or the Revolving Loan Commitments, as the case may be (provided that increases
pursuant to subsection 2.1A(v) do not require the consent of Requisite Lenders),
and (vi) the creation of an additional Class of commitments and loans made
thereunder (and any appropriate conforming and supplemental modifications to
this Agreement) shall require only the approval of Requisite Lenders and each
Lender providing a commitment under such additional Class.

      B. If, in connection with any proposed amendment, modification,
termination or waiver of any of the provisions of this Agreement or the Notes
which requires the consent of all Lenders, the consent of Requisite Lenders is
obtained but the consent of one or more of such other Lenders whose consent is
required is not obtained, then Company shall have the right, so long as all
non-consenting Lenders whose individual consent is required are treated as
described in either clause (i) or (ii) below, to either (i) replace each such
non-consenting Lender or Lenders with one or more Replacement Lenders pursuant
to subsection 2.8 so long as at the time of such replacement, each such
Replacement Lender consents to the proposed amendment, modification, termination
or waiver, or (ii) terminate such non-consenting Lender's Commitments and repay
in full its outstanding Loans in accordance with subsections 2.4B(i)(b) and
2.4B(ii)(b); provided that unless the Commitments that are terminated and the
Loans that are repaid pursuant to the preceding clause (ii) are immediately
replaced in full at such time through the addition of new Lenders or the
increase of the Commitments and/or outstanding Loans of existing Lenders (who in
each case must specifically consent thereto), then in the case of any action
pursuant to the preceding clause (ii), the Requisite Lenders (determined before
giving effect to the proposed action) shall specifically consent thereto;
provided further that Company shall not have the right to terminate

                                       149                             EXECUTION
<PAGE>

such non-consenting Lender's Commitment and repay in full its outstanding Loans
pursuant to clause (ii) of this subsection 10.6B if, immediately after the
termination of such Lender's Revolving Loan Commitment in accordance with
subsection 2.4B(ii)(b), the Revolving Loan Exposure of all Lenders would exceed
the Revolving Loan Commitments of all Lenders; provided still further that
Company shall not have the right to replace a Lender solely as a result of the
exercise of such Lender's rights (and the withholding of any required consent by
such Lender) pursuant to the second paragraph of subsection 10.6A.

      C. Administrative Agent may, but shall have no obligation to, with the
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No
notice to or demand on Company in any case shall entitle Company to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
subsection 10.6 shall be binding upon each Lender at the time outstanding, each
future Lender and, if signed by Company, on Company.

 .7 Independence of Covenants.

            All covenants hereunder shall be given independent effect so that if
a particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.

 .8 Notices.

            Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Administrative Agent shall not
be effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or (i) as to Company and Administrative Agent, such other address as
shall be designated by such Person in a written notice delivered to the other
parties hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Administrative Agent.

 .9 Survival of Representations, Warranties and Agreements.

      A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.

      B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 3.5A,
3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections
9.2C, 9.4 and 10.5 shall survive the payment of the

                                       150                             EXECUTION
<PAGE>

Loans, the cancellation or expiration of the Letters of Credit and the
reimbursement of any amounts drawn thereunder, the foreclosure (including by the
exercise of power of sale) of any Mortgage or any deed given in lieu of
foreclosure, and the termination of this Agreement.

 .10 Failure or Indulgence Not Waiver; Remedies Cumulative.

            No failure or delay on the part of any Agent or any Lender in the
exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude any other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.

 .11 Marshalling; Payments Set Aside.

            None of Agents or Lenders shall be under any obligation to marshal
any assets in favor of Company or any other party or against or in payment of
any or all of the Obligations. To the extent that Company makes a payment or
payments to Administrative Agent or Lenders (or to Administrative Agent for the
benefit of Lenders), or any of Agents or Lenders enforce any security interests
or exercise their rights of setoff, and such payment or payments or the proceeds
of such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, any
other state or federal law, common law or any equitable cause, then, to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor or related thereto,
shall be revived and continued in full force and effect as if such payment or
payments had not been made or such enforcement or setoff had not occurred.

 .12 Severability.

            In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

 .13 Obligations Several; Independent Nature of Lenders' Rights.

            The obligations of Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.

                                       151                             EXECUTION
<PAGE>

 .14 Headings.

            Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.

 .15 Applicable Law.

            THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.

 .16 [Intentionally omitted.]

 .17 Consent to Jurisdiction and Service of Process.

            ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY

            (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
      JURISDICTION AND VENUE OF SUCH COURTS;

            (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;

            (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
      ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
      REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
      SUBSECTION 10.8;

            (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
      SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
      PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
      BINDING SERVICE IN EVERY RESPECT;

            (V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
      OTHER MANNER PERMITTED BY LAW OR TO BRING

                                       152                             EXECUTION
<PAGE>

      PROCEEDINGS AGAINST COMPANY IN THE COURTS OF ANY OTHER JURISDICTION; AND

            (VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
      JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
      EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402
      OR OTHERWISE.

 .18 Waiver of Jury Trial.

            EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party hereto acknowledges that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on this waiver in entering into this Agreement, and that each will continue to
rely on this waiver in their related future dealings. Each party hereto further
warrants and represents that it has reviewed this waiver with its legal counsel
and that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.

 .19 Confidentiality.

            Each Lender shall hold all non-public information obtained pursuant
to the requirements of this Agreement which has been identified as confidential
by Company in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, it being understood and agreed by Company that in any event a
Lender may make disclosures to Affiliates and professional advisors of such
Lender or disclosures reasonably required by (a) any bona fide assignee,
transferee or participant in connection with the contemplated assignment or
transfer by such Lender of any Loans or any participations therein or (b) by any
direct or indirect contractual counterparties in swap agreements or such
contractual counterparties' professional advisors provided that such contractual
counterparty or professional advisor to such contractual counterparty agrees to
keep such information confidential to the same extent required of the

                                       153                             EXECUTION
<PAGE>

Lenders hereunder, or disclosures required or requested by any governmental
agency or representative thereof or pursuant to legal process; provided that,
unless specifically prohibited by applicable law or court order, each Lender
shall notify Company of any request by any governmental agency or representative
thereof (other than any such request in connection with any examination of the
financial condition of such Lender by such governmental agency) for disclosure
of any such non-public information prior to disclosure of such information; and
provided further that in no event shall Administrative Agent or any Lender be
obligated or required to return any materials furnished by Company or any of its
Subsidiaries.

 .20 Counterparts; Effectiveness.

            This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.

                  [Remainder of page intentionally left blank]

                                      154                              EXECUTION
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

            COMPANY:

                                    AUTOTOTE CORPORATION

                                    By: /s/ Martin E. Schloss
                                        ----------------------------------------
                                        Name:  Martin E. Schloss
                                        Title: Vice President

                                    Notice Address:

                                    220 Continental Drive, Suite 407
                                    Newark, DE 19713
                                    Attention: Bob Becker
                                    Phone: (302) 737-4300
                                    Fax: (302) 737-8424

                                       S-1                             EXECUTION
<PAGE>

            LENDERS:

                                    DLJ CAPITAL FUNDING, INC., individually and
                                    as Administrative Agent and Syndication
                                    Agent

                                    By: /s/ Joseph Adipietro
                                       -----------------------------------------
                                    Name:  Joseph Adipietro
                                    Title: Vice President

                                    Notice Address:

                                    277 Park Avenue
                                    New York, NY 10172
                                    Attention: Dana Klein
                                    Tel.: 212-892-2903
                                    Fax: 212-892-6031

                                    LEHMAN COMMERCIAL PAPER INC., individually
                                    and as Documentation Agent

                                    By: /s/ Andrew Keith
                                       -----------------------------------------
                                    Name:  Andrew Keith
                                    Title: Authorized Signatory

                                    Notice Address:

                                    3 World Financial Center
                                    New York, NY 10285
                                    Attention: Andrew Keith
                                    Tel.: (212) 526-4059
                                    Fax: (212) 526-0242

                                       S-2                             EXECUTION
<PAGE>

                                    LEHMAN BROTHERS INC., as Co-Arranger

                                    By: /s/ Andrew Keith
                                       -----------------------------------------
                                    Name:  Andrew Keith
                                    Title: Senior Vice President

                                    Notice Address:

                                    3 World Financial Center
                                    New York, NY 10285
                                    Attention: Andrew Keith
                                    Tel.: (212) 526-4059
                                    Fax: (212) 526-0242

                                       S-3                             EXECUTION[FORM OF SECURITY AGREEMENT]

                               SECURITY AGREEMENT

            This SECURITY AGREEMENT (this "Agreement") is dated as of September
6, 2000 and entered into by and among Autotote Corporation, a Delaware
corporation ("Company"), each of THE UNDERSIGNED SUBSIDIARIES of Company (each
of such undersigned Subsidiaries being a "Subsidiary Grantor" and collectively
"Subsidiary Grantors") and each ADDITIONAL GRANTOR that may become a party
hereto after the date hereof in accordance with Section 22 hereof (each of the
Company, each Subsidiary Grantor, and each Additional Grantor being a "Grantor"
and collectively the "Grantors") and DLJ CAPITAL FUNDING, INC., as
Administrative Agent for and representative of (in such capacity herein called
"Secured Party") the financial institutions ("Lenders") party to the Credit
Agreement referred to below and any Interest Rate Exchangers (as hereinafter
defined).

                             PRELIMINARY STATEMENTS

            A. Pursuant to the Credit Agreement dated as of September 6, 2000
(said Credit Agreement, as it may hereafter be amended, restated, supplemented
or otherwise modified from time to time, being the "Credit Agreement"; the terms
defined therein and not otherwise defined herein being used herein as therein
defined), by and among Company, the financial institutions listed therein as
Lenders, DLJ Capital Funding, Inc., as Administrative Agent, Syndication Agent,
Lead Arranger and Sole Book Running Manager, Lehman Commercial Paper Inc., as
Documentation Agent, and Lehman Brothers Inc., as Co-Arranger, Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company.

            B. Company and the Subsidiary Guarantors, as the case may be, may
from time to time enter, or may from time to time have entered, into one or more
Hedge Agreements (collectively, the "Lender Hedge Agreements") with one or more
Persons that are Lenders or Affiliates of Lenders at the time such Hedge
Agreements are entered into (in such capacity, collectively, "Hedge Exchangers")
in accordance with the terms of the Credit Agreement, and it is desired that the
obligations of Company and the Subsidiary Guarantors, under the Lender Hedge
Agreements, including without limitation the obligation of Company and the
Subsidiary Guarantors, as the case may be, to make payments thereunder in the
event of early termination thereof or other termination payments, together with
all obligations of Company under the Credit Agreement and the other Loan
Documents, be secured hereunder.

            C. Subsidiary Grantors have executed and delivered that certain
Subsidiary Guaranty dated the date hereof (said Subsidiary Guaranty, as it may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, being the "Subsidiary Guaranty") in favor of Secured Party for the benefit
of Lenders and any Hedge Exchangers, pursuant to which each Subsidiary Grantor
has guarantied the prompt payment and performance when due of all obligations of
Company under the Credit Agreement and all

<PAGE>

obligations of Company under the Lender Hedge Agreements, including without
limitation the obligation of Company to make payments thereunder in the event of
early termination thereof or other termination payments.

            D. It is a condition precedent to the initial extensions of credit
by Lenders under the Credit Agreement that Grantors listed on the signature
pages hereof shall have granted the security interests and undertaken the
obligations contemplated by this Agreement.

            NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and to induce Hedge Exchangers to enter into the Lender Hedge
Agreements, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each Grantor hereby agrees with
Secured Party as follows:

section 1. Grant of Security.

            Each Grantor hereby assigns to Secured Party, and hereby grants to
Secured Party a security interest in, all of such Grantor's right, title and
interest in and to the following, in each case whether now or hereafter
existing, whether tangible or intangible, or in which such Grantor now has or
hereafter acquires an interest and wherever the same may be located (the
"Collateral"):

            (a) all equipment in all of its forms, all parts thereof and all
accessions thereto (any and all such equipment, parts and accessions being the
"Equipment");

            (b) all inventory in all of its forms, including but not limited to
(i) all goods held by such Grantor for sale or lease or to be furnished under
contracts of service or so leased or furnished, (ii) all raw materials, work in
process, finished goods, and materials used or consumed in the manufacture,
packing, shipping, advertising, selling, leasing, furnishing or production of
such inventory or otherwise used or consumed in such Grantor's business, (iii)
all goods in which such Grantor has an interest in mass or a joint or other
interest or right of any kind, and (iv) all goods which are returned to or
repossessed by such Grantor and all accessions thereto and products thereof
(collectively the "Inventory") and all negotiable and non-negotiable documents
of title (including without limitation warehouse receipts, dock receipts and
bills of lading) issued by any Person covering any Inventory (any such
negotiable document of title being a "Negotiable Document of Title");

            (c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other rights and obligations of any kind
owned by or owing to such Grantor and all rights in, to and under all security
agreements, leases and other contracts securing or otherwise relating to any
such accounts, contract rights, chattel paper, documents, instruments, general
intangibles or other obligations (any and all such accounts, contract rights,
chattel paper, documents, instruments, general intangibles and other obligations
being the "Accounts", and any and all such security agreements, leases and other
contracts being the "Related Contracts");

                                       2
<PAGE>

            (d) all deposit accounts ("Deposit Accounts") including the
restricted deposit account established and maintained by Secured Party pursuant
to Section 12 (the "Collateral Account"), together with (i) all amounts on
deposit from time to time in such deposit accounts and (ii) all interest, cash,
instruments, securities and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the foregoing;

            (e) the "Securities Collateral", which term means:

                  (i) the shares of stock, partnership interests, interests in
      joint ventures, limited liability company interests and all other equity
      interests in a Person that is, or becomes, a direct Subsidiary or direct
      Joint Venture, as the case may be, of such Grantor, including all
      securities convertible into, and rights, warrants, options and other
      rights to purchase or otherwise acquire, any of the foregoing now or
      hereafter owned by such Grantor, including those owned on the date hereof
      and described on Schedule 1(e)(i), and the certificates or other
      instruments representing any of the foregoing and any interest of such
      Grantor in the entries on the books of any securities intermediary
      pertaining thereto (the "Pledged Shares"), and all dividends,
      distributions, returns of capital, cash, warrants, options, rights,
      instruments, rights to vote or manage the business of such Person pursuant
      to organizational documents governing the rights and obligations of the
      stockholders, partners, members or other owners thereof and other property
      or proceeds from time to time received, receivable or otherwise
      distributed in respect of or in exchange for any or all of such Pledged
      Shares; provided, that if the issuer of any of such Pledged Shares is a
      controlled foreign corporation (used hereinafter as such term is defined
      in Section 975(a) or a successor provision of the Internal Revenue Code),
      the Pledged Shares shall not include any shares of stock of such issuer in
      excess of the number of shares of such issuer possessing up to but not
      exceeding 65% (66% in the case of any issuer organized under the laws of
      France or any political subdivision thereof) of the voting power of all
      classes of capital stock entitled to vote of such issuer, and all
      dividends, cash, warrants, rights, instruments and other property or
      proceeds from time to time received, receivable or otherwise distributed
      in respect of or in exchange for any or all of such Pledged Shares;

                  (ii) the indebtedness from time to time owed to such Grantor
      by any obligor that is, or becomes, a direct or indirect Subsidiary or a
      direct or indirect Joint Venture, as the case may be, of such Grantor,
      including the indebtedness described on Schedule 1(e)(ii) and issued by
      the obligors named therein, and the instruments evidencing such
      indebtedness (the "Pledged Debt"), and all interest, cash, instruments and
      other property or proceeds from time to time received, receivable or
      otherwise distributed in respect of or in exchange for any or all of the
      Pledged Debt; and

                  (iii) all other investment property as that term is defined in
      Article 9 of the Uniform Commercial Code as in effect in the State of New
      York (the "UCC"), of such Grantor;

            (f) the "Intellectual Property Collateral", which term means:

                                       3
<PAGE>

                  (i) all rights, title and interest (including rights acquired
      pursuant to a license or otherwise) in and to all trademarks, service
      marks, designs, logos, indicia, tradenames, trade dress, corporate names,
      company names, business names, fictitious business names, trade styles,
      domain names and/or other source and/or business identifiers and
      applications pertaining thereto, owned by such Grantor, or hereafter
      adopted and used, in its business (including, without limitation, the
      trademarks specifically identified in Schedule 1(f)(i), as the same may be
      amended pursuant hereto from time to time) (collectively, the
      "Trademarks"), all registrations that have been or may hereafter be issued
      or applied for thereon in the United States and any state thereof and in
      foreign countries (including, without limitation, the registrations and
      applications specifically identified in Schedule 1(f)(i), but excluding
      all applications which are filed based on an intent to use, until such
      time as use is established and the appropriate affidavit filed, as the
      same may be amended pursuant hereto from time to time) (the "Trademark
      Registrations"), all common law and other rights in and to the Trademarks
      in the United States and any state thereof and in foreign countries (the
      "Trademark Rights"), and all goodwill of such Grantor's business
      symbolized by the Trademarks and associated therewith (the "Associated
      Goodwill"):

                  (ii) all rights, title and interest (including rights acquired
      pursuant to a license or otherwise) in and to all patents and patent
      applications and rights and interests in patents and patent applications
      under any domestic or foreign law that are presently, or in the future may
      be, owned or held by such Grantor and all patents and patent applications
      and rights, title and interests in patents and patent applications under
      any domestic or foreign law that are presently, or in the future may be,
      owned by such Grantor in whole or in part (including, without limitation,
      the patents and patent applications listed in Schedule 1(f)(ii), as the
      same may be amended pursuant hereto from time to time), all rights
      corresponding thereto (including, without limitation, the right,
      exercisable only upon the occurrence and during the continuation of an
      Event of Default, to sue for past, present and future infringements in the
      name of such Grantor or in the name of Secured Party or Lenders), and all
      re-issues, divisions, continuations, renewals, extensions and
      continuations-in-part thereof (all of the foregoing being collectively
      referred to as the "Patents"); it being understood that the rights and
      interests included in the Intellectual Property Collateral hereby shall
      include, without limitation, all rights and interests pursuant to
      licensing or other contracts in favor of such Grantor pertaining to patent
      applications and patents presently or in the future owned or used by third
      parties but, in the case of third parties which are not Affiliates of such
      Grantor, only to the extent permitted by such licensing or other contracts
      and, if not so permitted, only with the consent of such third parties; and

                  (iii) all rights, title and interest (including rights
      acquired pursuant to a license or otherwise) under copyright in various
      published and unpublished works of authorship including, without
      limitation, computer programs, computer data bases, other computer
      software, layouts, trade dress, drawings, designs, writings, and formulas
      owned by such Grantor (including, without limitation, the works listed on
      Schedule 1(f)(iii), as the same may be amended pursuant hereto from time
      to time) (collectively, the

                                       4
<PAGE>

      "Copyrights"), all copyright registrations issued to such Grantor and
      applications for copyright registration that have been or may hereafter be
      issued or applied for thereon by such Grantor in the United States and any
      state thereof and in foreign countries (including, without limitation, the
      registrations listed on Schedule 1(f)(iii), as the same may be amended
      pursuant hereto from time to time) (collectively, the "Copyright
      Registrations"), all common law and other rights in and to the Copyrights
      in the United States and any state thereof and in foreign countries
      including all copyright licenses (but with respect to such copyright
      licenses, only to the extent permitted by such licensing arrangements)
      (the "Copyright Rights"), including, without limitation, each of the
      Copyrights, rights, titles and interests in and to the Copyrights, all
      derivative works and other works protectable by copyright, which are
      presently, or in the future may be, owned, created (as a work for hire for
      the benefit of such Grantor), authored (as a work for hire for the benefit
      of such Grantor), or acquired by such Grantor, in whole or in part, and
      all Copyright Rights with respect thereto and all Copyright Registrations
      therefor, heretofore or hereafter granted or applied for, and all renewals
      and extensions thereof, throughout the world, including all proceeds
      thereof (such as, by way of example and not by limitation, license
      royalties and proceeds of infringement suits), the right to renew and
      extend such Copyright Registrations and Copyright Rights and to register
      works protectable by copyright and the right to sue for past, present and
      future infringements of the Copyrights and Copyright Rights;

            (g) all information used or useful or arising from the business
including all goodwill, trade secrets, trade secret rights, know-how, customer
lists, processes of production, ideas, confidential business information,
techniques, processes, formulas, and all other proprietary information;

            (h) the agreements listed in Schedule 1(h), as each such agreement
may be amended, restated, supplemented or otherwise modified from time to time
(said agreements, as so amended, restated, supplemented or otherwise modified,
being referred to herein individually as an "Assigned Agreement" and
collectively as the "Assigned Agreements"), including, without limitation, (i)
all rights of such Grantor to receive moneys due or to become due under or
pursuant to the Assigned Agreements, (ii) all rights of such Grantor to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect to the
Assigned Agreements, (iii) all claims of such Grantor for damages arising out of
any breach of or default under the Assigned Agreements, and (iv) all rights of
such Grantor to terminate, amend, supplement, modify or exercise rights or
options under the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;

            (i) to the extent not included in any other paragraph of this
Section 1, all other general intangibles (including without limitation tax
refunds, rights to payment or performance, choses in action and judgments taken
on any rights or claims included in the Collateral);

            (j) all plant fixtures, business fixtures and other fixtures and
storage and office facilities, and all accessions thereto and products thereof;

                                       5
<PAGE>

            (k) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and

            (l) all proceeds, products, rents and profits of or from any and all
of the foregoing Collateral and, to the extent not otherwise included, all
payments under insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "proceeds" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.

            Notwithstanding anything to the contrary contained herein, the
Collateral shall not include any Margin Stock for so long as it constitutes
Margin Stock.

            Notwithstanding anything herein to the contrary, in no event shall
the Collateral include, and no Grantor shall be deemed to have granted a
security interest in (i) any of such Grantor's rights or interests in any
Governmental Authorization, license, contract or agreement to which such Grantor
is a party or any of its rights or interests thereunder to the extent, but only
to the extent, that such a grant would, under the terms of such Governmental
Authorization, license, contract or agreement or otherwise, result in a breach
of the terms of, or constitute a default under any Governmental Authorization,
license, contract or agreement to which such Grantor is a party (other than to
the extent that any such term would be rendered ineffective pursuant to Section
9-318(4) of the UCC or any other applicable law (including the Bankruptcy Code)
or principles of equity); provided, that immediately upon the ineffectiveness,
lapse or termination of any such provision, the Collateral shall include, and
such Grantor shall be deemed to have granted a security interest in, all such
rights and interests as if such provision had never been in effect, or (ii) any
real property leasehold, unless a Grantor has executed a leasehold mortgage or
leasehold deed of trust covering such real property leasehold or (iii) such
Grantor's rights or interest in any agreements with governmental authorities
prohibiting the creation or assumption of any Lien on assets located in the
jurisdiction of any such governmental authority and utilized pursuant to the
applicable agreement, (x) to the extent existing on the date hereof, as set
forth in Schedule 7.2C(a) of the Credit Agreement and (y) to the extent such
agreements are entered into after the date hereof, at the time any such
agreement is entered into, the aggregate value of such assets subject to such
prohibitions, together with the aggregate value of any such assets subject to
the encumbrances and restrictions permitted by subsection 7.2D(a)(ii) of the
Credit Agreement, in each case as set forth on the most recent consolidated
balance sheet of Grantor and its Subsidiaries in accordance with GAAP, shall not
exceed 5% of the aggregate value of all assets set forth on the most recent
consolidated balance sheet of Grantor and its Subsidiaries in accordance with
GAAP.

            In the event that any asset of Grantor is excluded from the
Collateral by virtue of the foregoing paragraph, such Grantor agrees to use all
reasonable efforts to obtain all requisite consents to enable such Grantor to
provide a security interest in such asset pursuant hereto as promptly as
practicable.

                                       6
<PAGE>

section 2. Security for Obligations.

            This Agreement secures, and the Collateral assigned by each Grantor
is collateral security for, the prompt payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including without limitation the payment of amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code), of all Secured Obligations of such Grantor.
"Secured Obligations" means:

            (a) with respect to Company, all obligations and liabilities of
every nature of Company now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents and any Lender
Hedge Agreement, and

            (b) with respect to each Subsidiary Grantor and Additional Grantor,
all obligations and liabilities of every nature of such Grantor now or hereafter
existing under or arising out of or in connection with the Subsidiary Guaranty
and any Lender Hedge Agreement;

in each case together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company or any other Grantor,
would accrue on such obligations, whether or not a claim is allowed against
Company or such Grantor for such interest in the related bankruptcy proceeding),
reimbursement of amounts drawn under Letters of Credit, payments for early
termination of or other termination payments with respect to Lender Hedge
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender or Hedge Exchanger as a preference,
fraudulent transfer or otherwise, and all obligations of every nature of
Grantors now or hereafter existing under this Agreement.

section 3. Grantors Remain Liable.

            Anything contained herein to the contrary notwithstanding, (a) each
Grantor shall remain liable under any contracts and agreements included in the
Collateral, to the extent set forth therein, to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Secured Party of any of its rights hereunder shall
not release any Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral, and (c) Secured Party shall
not have any obligation or liability under any contracts, licenses, and
agreements included in the Collateral by reason of this Agreement, nor shall
Secured Party be obligated to perform any of the obligations or duties of any
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.

                                       7
<PAGE>

section 4. Representations and Warranties.

      Each Grantor represents and warrants as follows:

            (a) Ownership of Collateral. Except as expressly permitted by the
Credit Agreement and for the security interest created by this Agreement, such
Grantor owns the Collateral owned by such Grantor free and clear of any Lien.
Except as expressly permitted by the Credit Agreement (including any financing
statements with respect to which Grantors have delivered UCC termination
statements on the date of this Agreement) and such as may have been filed in
favor of Secured Party relating to this Agreement, no effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any filing or recording office.

            (b) Locations of Equipment and Inventory. All of the Equipment and
Inventory is, as of the date hereof, or in the case of an Additional Grantor,
the date of the applicable counterpart entered into pursuant to Section 22
(each, a "Counterpart") located at the places specified in Schedule 4(b), except
for Inventory which, in the ordinary course of business, is in transit either
(i) from a supplier to a Grantor, (ii) between the locations specified in
Schedule 4(b), or (iii) to customers of a Grantor.

            (c) Negotiable Documents of Title. No Negotiable Documents of Title
are outstanding with respect to any of the Inventory.

            (d) Office Locations. The chief place of business, the chief
executive office and the office where such Grantor keeps its records regarding
the Accounts and all originals of all chattel paper that evidence Accounts are,
as of the date hereof, and have been for the four month period preceding the
date hereof, or, in the case of an Additional Grantor, the date of the
applicable Counterpart, located at the locations set forth on Schedule 4(d);

            (e) Names. No Grantor (or predecessor by merger or otherwise of such
Grantor) has, within the four month period preceding the date hereof, or, in the
case of an Additional Grantor, the date of the applicable Counterpart, had a
different name from the name of such Grantor listed or the signature pages
hereof, except the names listed in Schedule 4(e) annexed hereto.

            (f) Delivery of Certain Collateral. All certificates or instruments
(excluding checks or other instruments of payment for an aggregate amount of
less than $5,000 at any time) evidencing, comprising or representing the
Collateral (including, without limitation, the Securities Collateral) have been
delivered to Secured Party duly endorsed or accompanied by duly executed
instruments of transfer or assignment in blank.

            (g) Securities Collateral. (i) All of the Pledged Shares described
on Schedule 1(e)(i) have been duly authorized and validly issued and are fully
paid and non-assessable; (ii) all of the Pledged Debt described on Schedule
1(e)(ii) has been duly authorized, authenticated or issued, and delivered and is
the legal, valid and binding obligation of the issuers thereof and is not in
default; (iii) except as set forth on Schedule 1(e)(i), the Pledged Shares
constitute all of the

                                       8
<PAGE>

issued and outstanding shares of stock or other equity interests of each issuer
thereof (subject to the proviso to Section 1(e)(i) with respect to shares of a
foreign controlled corporation), and there are no outstanding warrants, options
or other rights to purchase, or other agreements outstanding with respect to, or
property that is now or hereafter convertible into, or that requires the
issuance or sale of, any Pledged Shares; (iv) the Pledged Debt constitutes all
of the issued and outstanding intercompany indebtedness evidenced by a
promissory note of the respective issuers thereof owing to such Grantor; (v)
Schedule 1(e)(i) sets forth all of the Pledged Shares owned by each Grantor on
the date hereof; and (vi) Schedule 1(e)(ii) sets forth all of the Pledged Debt
in existence on the date hereof.

            (h) Intellectual Property Collateral.

                  (i) a true and complete list of all Trademark Registrations
      and Trademark applications owned, held (whether pursuant to a license or
      otherwise) or used by such Grantor, in whole or in part, is set forth in
      Schedule 1(f)(i);

                  (ii) a true and complete list of all Patents owned, held
      (whether pursuant to a license or otherwise) or used by such Grantor, in
      whole or in part, is set forth in Schedule 1(f)(ii);

                  (iii) a true and complete list of all Copyright Registrations
      and applications for Copyright Registrations held (whether pursuant to a
      license or otherwise) by such Grantor, in whole or in part, is set forth
      in Schedule 1(f)(iii);

                  (iv) after reasonable inquiry, such Grantor is not aware of
      any pending or threatened claim by any third party that any of the
      Intellectual Property Collateral owned, held or used by such Grantor is
      invalid or unenforceable; and

                  (v) no effective security interest or other Lien covering all
      or any part of the Intellectual Property Collateral is on file in the
      United States Patent and Trademark Office or the United States Copyright
      Office, other than the Liens with respect to Intellectual Property
      Collateral with respect to which Grantors have delivered releases on the
      date of this Agreement.

            (i) Perfection. The security interests in the Collateral granted to
Secured Party for the ratable benefit of the Lenders and Hedge Exchangers
hereunder constitute valid security interests in the Collateral, securing the
payment of the Secured Obligations. Upon (i) the filing of UCC financing
statements naming each Grantor as "debtor", naming Secured Party as "secured
party" and describing the Collateral in the filing offices with respect to such
Grantor set forth on Schedule 4(i), (ii) in the case of the Securities
Collateral consisting of certificated securities or evidenced by instruments,
delivery of the certificates representing such certificated securities and
delivery of such instruments to Secured Party, in each case duly endorsed or
accompanied by duly executed instruments of assignment or transfer in blank,
(iii) in the case of the Intellectual Property Collateral, in addition to the
filing of such UCC financing statements, the filing of a Grant of Trademark
Security Interest, substantially in the form of Exhibit I, and a Grant of Patent
Security Interest, substantially in the form of Exhibit II, with the United
States Patent and

                                       9
<PAGE>

Trademark Office and the filing of a Grant of Copyright Security Interest,
substantially in the form of Exhibit III, with the United States Copyright
Office (each such Grant of Trademark Security Interest, Grant of Patent Security
Interest and Grant of Copyright Security Interest being referred to herein as a
"Grant"), and (iv) in the case of Equipment that is covered by a certificate of
title, the filing with the registrar of motor vehicles or other appropriate
authority in the applicable jurisdiction of an application requesting the
notation of the security interest created hereunder on such certificate of
title, the security interests in the Collateral granted to Secured Party for the
ratable benefit of the Lenders and Hedge Exchangers will constitute perfected
security interests therein prior to all other Liens (except for Permitted
Encumbrances), and all filings and other actions necessary or desirable to
perfect and protect such security interest will have been duly made or taken.

section 5. Further Assurances.

            (a) Generally. Each Grantor agrees that from time to time, at the
expense of Grantors, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action that may be necessary or
desirable, or that Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the generality of the
foregoing, each Grantor will: (i) at the request of Secured Party, mark
conspicuously each item of chattel paper included in the Accounts, each Related
Contract and, at the request of Secured Party, each of its records pertaining to
the Collateral, with a legend, in form and substance reasonably satisfactory to
Secured Party, indicating that such Collateral is subject to the security
interest granted hereby, (ii) at the reasonable request of Secured Party,
deliver and pledge to Secured Party hereunder all promissory notes and other
instruments (and, upon an Event of Default, including checks) and all original
counterparts of chattel paper constituting Collateral, duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to Secured Party, (iii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as Secured Party
may reasonably request, in order to perfect and preserve the security interests
granted or purported to be granted hereby, (iv) furnish to Secured Party from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as Secured
Party may reasonably request, all in reasonable detail, (v) promptly after the
acquisition by such Grantor of any item of Equipment that is covered by a
certificate of title under a statute of any jurisdiction under the law of which
indication of a security interest on such certificate is required as a condition
of perfection thereof, execute and file with the registrar of motor vehicles or
other appropriate authority in such jurisdiction an application or other
document requesting the notation or other indication of the security interest
created hereunder on such certificate of title, (vi) within 30 days after the
end of each calendar quarter, deliver to Secured Party copies of all such
applications or other documents filed during such calendar quarter and copies of
all such certificates of title issued during such calendar quarter indicating
the security interest created hereunder in the items of Equipment covered
thereby, (vii) at any reasonable time, upon request by Secured Party, exhibit
the Collateral to and allow inspection of the Collateral by Secured Party, or
persons designated by Secured Party,

                                       10
<PAGE>

(viii) at Secured Party's request, appear in and defend any action or proceeding
that may affect such Grantor's title to or Secured Party's security interest in
all or any part of the Collateral, and (ix) upon any Event of Default, use
commercially reasonable efforts to obtain any necessary consents of third
parties to the assignment and perfection of a security interest to Secured Party
with respect to any Collateral. Each Grantor hereby authorizes Secured Party to
file one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of any
Grantor. Each Grantor agrees that a carbon, photographic or other reproduction
of this Agreement or of a financing statement signed by such Grantor shall be
sufficient as a financing statement and may be filed as a financing statement in
any and all jurisdictions.

            (b) Securities Collateral. Without limiting the generality of the
foregoing Section 5(a), each Grantor agrees that it will, upon obtaining any
additional shares of stock or other securities required to be pledged hereunder,
promptly (and in any event within five Business Days for the pledge of all
shares of stock or other securities of any domestic Person, and as soon as
possible, but in any event within twenty (20) Business Days for the pledge of
all shares of stock or other securities of any foreign controlled corporation)
deliver to Secured Party a Pledge Supplement, duly executed by such Grantor, in
substantially the form of Exhibit IV (a "Pledge Supplement"), in respect of the
additional Pledged Shares or Pledged Debt to be pledged pursuant to this
Agreement. Upon each delivery of a Pledge Supplement to Secured Party, the
representations and warranties contained in clauses (i)-(iv) of Section 4(g)
hereof shall be deemed to have been made by such Grantor as to the Securities
Collateral described in such Pledge Supplement as of the date thereof. Each
Grantor hereby authorizes Secured Party to attach each Pledge Supplement to this
Agreement and agrees that all Pledged Shares or Pledged Debt of such Grantor
listed on any Pledge Supplement shall for all purposes hereunder be considered
Collateral of such Grantor; provided, the failure of any Grantor to execute a
Pledge Supplement with respect to any additional Pledged Shares or Pledged Debt
pledged pursuant to this Agreement shall not impair the security interest of
Secured Party therein or otherwise adversely affect the rights and remedies of
Secured Party hereunder with respect thereto.

            (c) Intellectual Property Collateral. Without limiting the
generality of the foregoing Section 5(a), if any Grantor shall hereafter obtain
rights to any new Intellectual Property Collateral or become entitled to the
benefit of (i) any patent application or patent or any reissue, division,
continuation, renewal, extension or continuation-in-part of any Patent or any
improvement of any Patent or (ii) any Copyright Registration, application for
Copyright Registration or renewals or extension of any Copyright, then in any
such case, the provisions of this Agreement shall automatically apply thereto.
Each Grantor shall promptly notify Secured Party in writing of any of the
foregoing rights acquired by such Grantor after the date hereof and of (i) any
Trademark Registrations issued or application for a Trademark Registration or
application for a Patent made, and (ii) any Copyright Registrations issued or
applications for Copyright Registration made, in any such case, after the date
hereof. Promptly after the filing of an application for any (1) Trademark
Registration; (2) Patent; and (3) Copyright Registration, each Grantor shall
execute and deliver to Secured Party and record in all places where a Grant is
recorded an IP Supplement, substantially in the form of Exhibit V (an "IP
Supplement"), pursuant to which such Grantor shall grant to Secured Party a
security interest to the extent of its

                                       11
<PAGE>

interest in such Intellectual Property Collateral; provided, if, in the
reasonable judgment of such Grantor, after due inquiry, granting such interest
would result in the grant of a Trademark Registration or Copyright Registration
in the name of Secured Party, such Grantor shall give written notice to Secured
Party as soon as reasonably practicable and the filing shall instead be
undertaken as soon as practicable but in no case later than immediately
following the grant of the applicable Trademark Registration or Copyright
Registration, as the case may be. Upon delivery to Secured Party of an IP
Supplement, Schedules 1(f)(i), 1(f)(ii), and 1(f)(iii) hereto and Schedule A to
each Grant, as applicable, shall be deemed modified to include reference to any
right, title or interest in any existing Intellectual Property Collateral or any
Intellectual Property Collateral included on Schedule A to such IP Supplement.
Each Grantor hereby authorizes Secured Party to modify this Agreement without
the signature or consent of any Grantor by attaching Schedules 1(f)(i),
1(f)(ii), and 1(f)(iii), as applicable, that have been modified to include such
Intellectual Property Collateral or to delete any reference to any right, title
or interest in any Intellectual Property Collateral in which any Grantor no
longer has or claims any right, title or interest; provided, the failure of any
Grantor to execute an IP Supplement with respect to any additional Intellectual
Property Collateral pledged pursuant to this Agreement shall not impair the
security interest of Secured Party therein or otherwise adversely affect the
rights and remedies of Secured Party hereunder with respect thereto.

section 6. Certain Covenants of Grantors.

      Each Grantor shall:

            (a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or material ordinance or any policy of insurance covering the
Collateral;

            (b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 15 days of such change;

            (c) give Secured Party 30 days' prior written notice of any change
in such Grantor's chief place of business, chief executive office or residence
or the office where such Grantor keeps its records regarding the Accounts and
all originals of all chattel paper that evidence Accounts;

            (d) if Secured Party gives value to enable such Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes; and

            (e) except as expressly permitted by the Credit Agreement, pay
promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
services, materials and supplies) against, the Collateral, except to the extent
the validity thereof is being contested in good faith; provided that such
Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment entered or filed against such Grantor or
any of the Collateral as a result of the failure to make such payment.

                                       12
<PAGE>

section 7. Special Covenants With Respect to Equipment and Inventory.

      Each Grantor shall:

            (a) keep the Equipment and Inventory owned by such Grantor at the
places therefor specified on Schedule 4(b) or, upon 30 days' prior written
notice to Secured Party, at such other places in jurisdictions where all action
that may be necessary or desirable, or that Secured Party may request, in order
to perfect and protect any security interest granted or purported to be granted
hereby, or to enable Secured Party to exercise and enforce its rights and
remedies hereunder, with respect to such Equipment and Inventory shall have been
taken;

            (b) cause the Equipment owned by such Grantor to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and in accordance with such Grantor's past practices,
and shall forthwith make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable to such
end. Each Grantor shall promptly furnish to Secured Party a statement respecting
any material loss or damage to any of the Equipment owned by such Grantor;

            (c) keep correct and accurate records of Inventory owned by such
Grantor, itemizing and describing the kind, type and quantity of such Inventory,
such Grantor's cost therefor and (where applicable) the current list prices for
such Inventory;

            (d) if any Inventory is in possession or control of any of such
Grantor's agents or processors, if the aggregate book value of all such
Inventory exceeds $100,000, and in any event, if so requested by the Secured
Party by written notice given upon or after the occurrence of an Event of
Default (as defined in Section 16(a)), instruct such agent or processor to hold
all such Inventory for the account of Secured Party and subject to the
instructions of Secured Party;

            (e) promptly upon the issuance and delivery to such Grantor of any
Negotiable Document of Title, deliver such Negotiable Document of Title to
Secured Party;

            (f) Each Grantor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory in accordance with the terms of the
Credit Agreement; and

section 8. Special Covenants with respect to Accounts and Related Contracts.

            (a) Each Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper that
evidence Accounts, at the locations therefor set forth on Schedule 4(d), upon 30
days' prior written notice to Secured Party, at such other location in a
jurisdiction where all action that may be necessary or desirable, or that
Secured Party may request, in order to perfect and protect any security interest
granted or purported to be granted hereby, or to enable Secured Party to
exercise and enforce its rights and remedies hereunder, with respect to such
Accounts and Related Contracts shall have been taken. Each Grantor will hold and
preserve such records and chattel paper and will permit representatives of
Secured Party at any time during normal business hours to inspect and make
abstracts from such records and

                                       13
<PAGE>

chattel paper, and each Grantor agrees to render to Secured Party, at Grantor's
cost and expense, such clerical and other assistance as may be reasonably
requested with regard thereto. Promptly upon the request of Secured Party, each
Grantor shall deliver to Secured Party complete and correct copies of each
Related Contract.

            (b) Each Grantor shall, for not less than three (3) years from the
date on which each Account of such Grantor arose, maintain (i) records complete
in all material respects of such Account, including records of all payments
received, credits granted and merchandise returned, and (ii) all material
documentation relating thereto.

            (c) Except as otherwise provided in this subsection (c), each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to such Grantor under the Accounts and Related Contracts. In
connection with such collections, each Grantor may take (and, upon the
occurrence and during the continuance of an Event of Default at Secured Party's
direction, shall take) such action as such Grantor or Secured Party may deem
necessary or advisable to enforce collection of amounts due or to become due
under the Accounts; provided, however, that Secured Party shall have the right
at any time, upon the occurrence and during the continuation of an Event of
Default and upon written notice to such Grantor of its intention to do so, to
notify the account debtors or obligors under any Accounts of the assignment of
such Accounts to Secured Party and to direct such account debtors or obligors to
make payment of all amounts due or to become due to such Grantor thereunder
directly to Secured Party, to notify each Person maintaining a lockbox or
similar arrangement to which account debtors or obligors under any Accounts have
been directed to make payment to remit all amounts representing collections on
checks and other payment items from time to time sent to or deposited in such
lockbox or other arrangement directly to Secured Party and, upon such
notification and at the expense of Grantors, to enforce collection of any such
Accounts and to adjust, settle or compromise the amount or payment thereof, in
the same manner and to the same extent as such Grantor might have done. After
receipt by such Grantor of the notice from Secured Party referred to in the
proviso to the preceding sentence, (i) all amounts and proceeds (including
checks and other instruments) received by such Grantor in respect of the
Accounts and the Related Contracts shall be received in trust for the benefit of
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to Secured Party in the same form
as so received (with any necessary endorsement) to be held as cash Collateral
and applied as provided by Section 18, and (ii) such Grantor shall not adjust,
settle or compromise the amount or payment of any Account, or release wholly or
partly any account debtor or obligor thereof, or allow any credit or discount
thereon.

section 9. Special Covenants With Respect to the Securities Collateral.

            (a) Delivery. Each Grantor agrees that all certificates or
instruments representing or evidencing the Securities Collateral shall be
delivered to and held by or on behalf of Secured Party pursuant hereto and shall
be in suitable form for transfer by delivery or, as applicable, shall be
accompanied by such Grantor's endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Secured Party. Secured Party shall have the right at any time to
exchange certificates or instruments representing

                                       14
<PAGE>

or evidencing Securities Collateral for certificates or instruments of smaller
or larger denominations.

            (b) Covenants. Each Grantor shall (i) not, except as expressly
permitted by the Credit Agreement, permit any issuer of Pledged Shares to merge
or consolidate unless all the outstanding capital stock or other equity
interests of the surviving or resulting Person is, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other constituent
corporation; provided, if the surviving or resulting Person upon any such merger
or consolidation involving an issuer of Pledged Shares which is a controlled
foreign corporation is a controlled foreign corporation, then such Grantor shall
only be required to pledge outstanding capital stock of such surviving or
resulting Person possessing up to but not exceeding 66% (66% in the case of any
issuer organized under the laws of France or any political subdivision thereof)
of the voting power of all classes of capital stock of such issuer entitled to
vote; (ii) cause each issuer of Pledged Shares not to issue any stock, other
equity interests or other securities in addition to or in substitution for the
Pledged Shares issued by such issuer, except to such Grantor; (iii) pledge
hereunder, promptly upon its acquisition (directly or indirectly) thereof (and
in any event within five Business Days for the pledge of all shares of stock,
other equity interests or other securities of any domestic issuer, and as soon
as possible, but in any event within twenty (20) Business Days for the pledge of
all shares of stock, other equity interests or other securities of any foreign
controlled corporation) any and all additional shares of stock, other equity
interests or other securities of each issuer of Pledged Shares; (iv) pledge
hereunder, promptly upon its acquisition (directly or indirectly) thereof (and
in any event within five Business Days for the pledge of all shares of stock,
other equity interests or other securities of any domestic Person, and as soon
as possible, but in any event within twenty (20) Business Days for the pledge of
all shares of stock, other equity interests or other securities of any foreign
controlled corporation), any and all shares of stock or other equity interests
of any Person that, after the date of this Agreement, becomes, as a result of
any occurrence, a direct Subsidiary of such Grantor; provided, notwithstanding
anything contained in this clause (iv) to the contrary, such Grantor shall only
be required to pledge the outstanding capital stock of a controlled foreign
corporation possessing up to but not exceeding 65% of the voting power of all
classes of capital stock of such controlled foreign corporation entitled to
vote; (v) pledge hereunder, immediately upon their issuance, any and all
instruments or other evidences of additional indebtedness from time to time owed
to such Grantor by any obligor on the Pledged Debt; (vi) pledge hereunder,
immediately upon their issuance, any and all instruments or other evidences of
indebtedness from time to time owed to such Grantor by any Person that after the
date of this Agreement becomes, as a result of any occurrence, a direct or
indirect Subsidiary or Joint Venture, as the case may be, of such Grantor; (vii)
upon an Event of Default, promptly notify Secured Party of any event of which
such Grantor becomes aware causing loss or depreciation in the value of the
Securities Collateral; (viii) upon an Event of Default, promptly deliver to
Secured Party all written notices received by it with respect to the Securities
Collateral; and (ix), at the request of Secured Party, promptly execute and
deliver to Secured Party an agreement providing for the control, as that term is
defined in the UCC, by Secured Party of all securities entitlements and
securities accounts of such Grantor.

                                       15
<PAGE>

            (c) Voting and Distributions. So long as no Event of Default shall
have occurred and be continuing, (i) each Grantor shall be entitled to exercise
any and all voting and other consensual rights pertaining to the Securities
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the Credit Agreement; provided, no Grantor shall exercise
or refrain from exercising any such right if Secured Party shall have notified
such Grantor in writing that, in Secured Party's judgment, such action would
have a material adverse effect on the value of the Securities Collateral or any
part thereof; and provided further, such Grantor shall give Secured Party at
least five Business Days' prior written notice of the manner in which it intends
to exercise, or the reasons for refraining from exercising, any such right (it
being understood, however, that neither (A) the voting by such Grantor of any
Pledged Shares for or such Grantor's consent to the election of directors or
other members of a governing body of an issuer of Pledged Shares at a regularly
scheduled annual or other meeting of stockholders or holders of equity interests
or with respect to incidental matters at any such meeting, nor (B) Grantor's
consent to or approval of any action otherwise permitted under this Agreement
and the Credit Agreement shall be deemed inconsistent with the terms of this
Agreement or the Credit Agreement within the meaning of this Section, and no
notice of any such voting or consent need be given to Secured Party); (ii) each
Grantor shall be entitled to receive and retain, and to utilize free and clear
of the lien of this Agreement, any and all dividends, other distributions and
interest paid in respect of the Securities Collateral; provided, any and all (A)
dividends, distributions and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Securities Collateral, (B)
during the continuance of an Event of Default, dividends and other distributions
paid or payable in cash in respect of any Securities Collateral in connection
with a partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in-surplus, and (C) during the
continuance of an Event of Default, cash paid, payable or otherwise distributed
in respect of principal or in redemption of or in exchange for any Securities
Collateral, shall be, and shall forthwith be delivered to Secured Party to hold
as, Securities Collateral and shall, if received by such Grantor, be received in
trust for the benefit of Secured Party, be segregated from the other property or
funds of such Grantor and be forthwith delivered to Secured Party as Securities
Collateral in the same form as so received (with all necessary endorsements);
provided that, if no Event of Default shall have occurred, to the extent any of
the property described in the foregoing clause (B) or (C) shall constitute Net
Asset Sale Proceeds or Net Insurance/Condemnation Proceeds (or proceeds
thereof), it shall be applied as required by the Credit Agreement; and (iii)
Secured Party shall promptly execute and deliver (or cause to be executed and
delivered) to such Grantor all such proxies, dividend payment orders and other
instruments as Grantor may from time to time reasonably request for the purpose
of enabling Grantor to exercise the voting and other consensual rights which it
is entitled to exercise pursuant to clause (i) above and to receive the
dividends, distributions, principal or interest payments which it is authorized
to receive and retain pursuant to clause (ii) above.

            Upon the occurrence and during the continuation of an Event of
Default, (x) upon written notice from Secured Party to any Grantor, all rights
of such Grantor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant hereto shall cease, and all
such rights shall thereupon become vested in Secured Party who shall thereupon
have the sole right to exercise such voting and other consensual rights; (y) all
rights of such

                                       16
<PAGE>

Grantor to receive the dividends, other distributions and interest payments
which it would otherwise be authorized to receive and retain pursuant hereto
shall cease, and all such rights shall thereupon become vested in Secured Party
who shall thereupon have the sole right to receive and hold as Securities
Collateral such dividends, other distributions and interest payments; and (z)
all dividends, principal, interest payments and other distributions which are
received by Grantor contrary to the provisions of clause (ii) of the immediately
preceding paragraph or clause (y) above shall be received in trust for the
benefit of Secured Party, shall be segregated from other funds of Grantor and
shall forthwith be paid over to Secured Party as Securities Collateral in the
same form as so received (with any necessary endorsements).

            In order to permit Secured Party to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant hereto and to
receive all dividends and other distributions which it may be entitled to
receive hereunder, (I) each Grantor shall promptly execute and deliver (or cause
to be executed and delivered) to Secured Party all such proxies, dividend
payment orders and other instruments as Secured Party may from time to time
reasonably request, and (II) without limiting the effect of clause (I) above,
each Grantor hereby grants to Secured Party an irrevocable proxy to vote the
Pledged Shares and to exercise all other rights, powers, privileges and remedies
to which a holder of the Pledged Shares would be entitled (including giving or
withholding written consents of shareholders or other holders of equity
interests, calling special meetings of shareholders or other holders of equity
interests and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Shares on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Shares or any officer or agent
thereof), upon the occurrence of an Event of Default and which proxy shall only
terminate upon the payment in full of the Secured Obligations.

section 10. Special Covenants With Respect to the Intellectual Property
Collateral.

            (a) Each Grantor shall:

                  (i) diligently keep reasonable records respecting the
      Intellectual Property Collateral and at all times keep at least one
      complete set of its records concerning such Collateral at its chief
      executive office or principal place of business;

                  (ii) use commercially reasonable efforts so as not to permit
      the inclusion in any contract to which it hereafter becomes a party of any
      provision that could or might in any way impair or prevent the creation of
      a security interest in, or the assignment of, such Grantor's rights and
      interests in any property included within the definitions of any
      Intellectual Property Collateral acquired under such contracts;

                  (iii) take any and all reasonable steps to protect the secrecy
      of all trade secrets relating to the products and services sold or
      delivered under or in connection with the Intellectual Property
      Collateral, including, without limitation, where appropriate entering into
      confidentiality agreements with employees and labeling and restricting
      access to secret information and documents;

                                       17
<PAGE>

                  (iv) use proper statutory notice in connection with its use of
      any of the Intellectual Property Collateral;

                  (v) use a commercially appropriate standard of quality
      (consistent with such Grantor's past practices) in the manufacture, sale
      and delivery of products and services sold or delivered under or in
      connection with the Trademarks; and

                  (vi) furnish to Secured Party from time to time at Secured
      Party's reasonable written request statements and schedules further
      identifying and describing any Intellectual Property Collateral and such
      other reports in connection with such Collateral, all in reasonable
      detail.

            (b) Except as otherwise provided in this Section 10, each Grantor
shall continue to collect, at its own expense, all amounts due or to become due
to such Grantor in respect of the Intellectual Property Collateral or any
portion thereof. In connection with such collections, each Grantor may take
(and, after the occurrence and during the continuance of any Event of Default,
at Secured Party's reasonable direction, shall take) such action as such Grantor
or Secured Party may deem reasonably necessary or advisable to enforce
collection of such amounts; provided, Secured Party shall have the right at any
time, upon the occurrence and during the continuation of an Event of Default and
upon written notice to such Grantor of its intention to do so, to notify the
obligors with respect to any such amounts of the existence of the security
interest created hereby and to direct such obligors to make payment of all such
amounts directly to Secured Party, and, upon such notification and at the
expense of such Grantor, to enforce collection of any such amounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as such Grantor might have done. After receipt by any
Grantor of the notice from Secured Party referred to in the proviso to the
preceding sentence and during the continuation of any Event of Default, (i) all
amounts and proceeds (including checks and other instruments) received by each
Grantor in respect of amounts due to such Grantor in respect of the Intellectual
Property Collateral or any portion thereof shall be received in trust for the
benefit of Secured Party hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over or delivered to Secured Party in the
same form as so received (with any necessary endorsement) to be held as cash
Collateral and applied as provided by Section 18, and (ii) such Grantor shall
not adjust, settle or compromise the amount or payment of any such amount or
release wholly or partly any obligor with respect thereto or allow any credit or
discount thereon.

            (c) Each Grantor shall have the duty diligently, through appropriate
counsel, to prosecute, file and/or make, unless and until such Grantor, in its
commercially reasonable judgment, decides otherwise, (i) any application
relating to any of the Intellectual Property Collateral owned, held or used by
such Grantor and identified on Schedules 1(f)(i), 1(f)(ii) or 1(f)(iii), as
applicable, that is pending as of the date of this Agreement, (ii) any Copyright
Registration on any existing or future unregistered but copyrightable works
(except for works of nominal commercial value or with respect to which such
Grantor has determined in the exercise of its commercially reasonable judgment
that it shall not seek registration), (iii) any application on any future
patentable but unpatented innovation or invention comprising Intellectual
Property Collateral (except where, in its commercially reasonable judgment, such
Grantor decides to

                                       18
<PAGE>

attempt to maintain the information as know-how or a trade secret), and (iv) any
Trademark opposition and cancellation proceedings, renew Trademark Registrations
and Copyright Registrations and do any and all acts which are necessary or
desirable to preserve and maintain all rights in all Intellectual Property
Collateral. Any expenses incurred in connection therewith shall be borne solely
by Grantors. Subject to the foregoing, each Grantor shall give Secured Party
prior written notice of any abandonment of any Intellectual Property Collateral
or any pending patent application or any Patent.

            (d) Except as provided herein, each Grantor shall have the right to
commence and prosecute in its own name, as real party in interest, for its own
benefit and at its own expense, such suits, proceedings or other actions for
infringement, unfair competition, dilution, misappropriation or other damage, or
reexamination or reissue proceedings as are necessary to protect the
Intellectual Property Collateral. Secured Party shall provide, at such Grantor's
expense, all reasonable and necessary cooperation in connection with any such
suit, proceeding or action including, without limitation, joining as a necessary
party. Each Grantor shall promptly, following its becoming aware thereof, notify
Secured Party of the institution of, or of any adverse determination in, any
proceeding (whether in the United States Patent and Trademark Office, the United
States Copyright Office or any federal, state, local or foreign court) or
regarding such Grantor's ownership, right to use, or interest in any
Intellectual Property Collateral. Each Grantor shall provide to Secured Party
any information with respect thereto reasonably requested by Secured Party.

            (e) In addition to, and not by way of limitation of, the granting of
a security interest in the Collateral pursuant hereto, each Grantor, effective
upon the occurrence and during the continuation of an Event of Default, hereby
assigns, transfers and conveys to Secured Party the nonexclusive right and
license to use all trademarks, tradenames, copyrights, patents or technical
processes (including, without limitation, the Intellectual Property Collateral)
owned or used by such Grantor that relate to the Collateral and any other
collateral granted by such Grantor as security for the Secured Obligations,
together with any goodwill associated therewith, all to the extent necessary to
enable Secured Party to realize on the Collateral in accordance with this
Agreement and to enable any transferee or assignee of the Collateral to enjoy
the benefits of the Collateral. This right shall inure to the benefit of Secured
Party and its successors, assigns and transferees, whether by voluntary
conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of
foreclosure or otherwise. Such right and license shall be granted free of
charge, without requirement that any monetary payment whatsoever be made to such
Grantor. In addition, each Grantor hereby grants to Secured Party and its
employees, representatives and agents the right to visit such Grantor's and any
of its Affiliate's or subcontractor's plants, facilities and other places of
business that are utilized in connection with the manufacture, production,
inspection, storage or sale of products and services sold or delivered under any
of the Intellectual Property Collateral (or which were so utilized during the
prior six month period), and to inspect the quality control and all other
records relating thereto upon reasonable advance written notice to such Grantor
and at reasonable dates and times and as often as may be reasonably requested.
If and to the extent that any Grantor is permitted to license the Intellectual
Property Collateral, Secured Party shall promptly enter into a non-disturbance
agreement or other similar arrangement, at such Grantor's request and expense,
with such Grantor and any licensee

                                       19
<PAGE>

of any Intellectual Property Collateral permitted hereunder in form and
substance reasonably satisfactory to Secured Party pursuant to which (i) Secured
Party shall agree not to disturb or interfere with such licensee's rights under
its license agreement with such Grantor so long as such licensee is not in
default thereunder, and (ii) such licensee shall acknowledge and agree that the
Intellectual Property Collateral licensed to it is subject to the security
interest created in favor of Secured Party and the other terms of this
Agreement.

section 11. Special Provisions With Respect to the Assigned Agreements.

            (a) Each Grantor shall at its expense:

                  (i) if consistent with sound business practices, perform and
      observe all material terms and provisions of the Assigned Agreements to be
      performed or observed by it, maintain the Assigned Agreements in full
      force and effect, enforce the Assigned Agreements in accordance with their
      terms, and take all such action to such end as may be from time to time
      reasonably requested by Secured Party; and

                  (ii) upon the reasonable request of Secured Party, furnish to
      Secured Party, promptly upon receipt thereof, copies of all notices,
      requests and other documents received by such Grantor under or pursuant to
      the Assigned Agreements, and from time to time (A) furnish to Secured
      Party such information and reports regarding the Assigned Agreements as
      Secured Party may reasonably request and (B) upon request of Secured Party
      make to the parties to such Assigned Agreements such demands and requests
      for information and reports or for action as such Grantor is entitled to
      make under the Assigned Agreements.

            (b) Upon the occurrence and during the continuance of an Event of
Default, no Grantor shall:

                  (i) cancel or terminate any of the Assigned Agreements or
      consent to or accept any cancellation or termination thereof;

                  (ii) amend or otherwise modify the Assigned Agreements or give
      any consent, waiver or approval thereunder that would, in any case, be
      material or adverse to Lenders;

                  (iii) waive any default under or breach of the Assigned
      Agreements;

                  (iv) consent to or permit or accept any prepayment of amounts
      to become due under or in connection with the Assigned Agreements, except
      as expressly provided therein; or

                  (v) take any other action in connection with the Assigned
      Agreements that could reasonably be expected to materially impair the
      value of the interest or rights of such Grantor thereunder or that could
      reasonably be expected to materially impair the interest or rights of
      Secured Party.

                                       20
<PAGE>

section 12. Collateral Account.

            Secured Party is hereby authorized to establish and maintain at or
at the direction of Secured Party as a blocked account in the name of Company
and under the sole dominion and control of Secured Party, a restricted deposit
account designated as "Autotote Corporation Collateral Account". All amounts at
any time held in the Collateral Account shall be beneficially owned by Grantors
but shall be held in the name of Secured Party hereunder, for the benefit of
Lenders, as collateral security for the Secured Obligations upon the terms and
conditions set forth herein. Grantors shall have no right to withdraw, transfer
or, except as expressly set forth herein, otherwise receive any funds deposited
into the Collateral Account. Anything contained herein to the contrary
notwithstanding, the Collateral Account shall be subject to such applicable
laws, and such applicable regulations of the Board of Governors of the Federal
Reserve System and of any other appropriate banking or governmental authority,
as may now or hereafter be in effect. All deposits of funds in the Collateral
Account shall be made by wire transfer (or, if applicable, by intra-bank
transfer from another account of a Grantor) of immediately available funds, in
each case addressed in accordance with instructions of Secured Party. Each
Grantor shall, promptly after initiating a transfer of funds to the Collateral
Account, give notice to Secured Party by telefacsimile of the date, amount and
method of delivery of such deposit. Cash held by Secured Party in the Collateral
Account shall not be invested by Secured Party but instead shall be maintained
as a cash deposit in the Collateral Account pending application thereof as
elsewhere provided in this Agreement. To the extent permitted under Regulation Q
of the Board of Governors of the Federal Reserve System, any cash held in the
Collateral Account shall bear interest at the standard rate paid by Secured
Party to its customers for deposits of like amounts and terms. Subject to
Secured Party's rights hereunder, any interest earned on deposits of cash in the
Collateral Account shall be deposited directly in, and held in the Collateral
Account.

section 13. Secured Party Appointed Attorney-in-Fact.

            Each Grantor hereby irrevocably appoints Secured Party as such
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor, Secured Party or otherwise, from time
to time in Secured Party's discretion to take any action and to execute any
instrument that Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including without limitation:

            (a) upon the occurrence and during the continuance of an Event of
Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to Secured Party pursuant to Section 7;

            (b) upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;

            (c) upon the occurrence and during the continuance of an Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;

                                       21
<PAGE>

            (d) upon the occurrence and during the continuance of an Event of
Default, to file any claims or take any action or institute any proceedings that
Secured Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Secured Party with respect to
any of the Collateral;

            (e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in its
sole discretion, any such payments made by Secured Party to become obligations
of such Grantor to Secured Party, due and payable immediately without demand;

            (f) upon the occurrence and during the continuance of an Event of
Default, to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and

            (g) upon the occurrence and during the continuance of an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
Secured Party were the absolute owner thereof for all purposes, and to do, at
Secured Party's option and Grantors' expense, at any time or from time to time,
all acts and things that Secured Party deems necessary to protect, preserve or
realize upon the Collateral and Secured Party's security interest therein in
order to effect the intent of this Agreement, all as fully and effectively as
such Grantor might do.

section 14. Secured Party May Perform.

            If any Grantor fails to perform any agreement contained herein,
Secured Party, upon notice to Grantor, may itself perform, or cause performance
of, such agreement, and the expenses of Secured Party incurred in connection
therewith shall be payable by Grantors under Section 19(b).

section 15. Standard of Care.

            The powers conferred on Secured Party hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Secured Party shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Secured Party accords its own
property.

section 16. Remedies.

            (a) Generally. If any Event of Default (as defined in the Credit
Agreement), or the occurrence of an Early Termination Date (as defined in a
Master Agreement in the form prepared by the International Swap and Derivatives
Association, Inc. or a similar event under any

                                       22
<PAGE>

similar swap agreement or Currency Agreement) under any Lender Hedge Agreement
which is not immediately paid, (either such occurrence being an "Event of
Default" for purposes of this Agreement) shall have occurred and be continuing,
Secured Party may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the UCC (whether or
not the UCC applies to the affected Collateral), and also may (i) require each
Grantor to, and each Grantor hereby agrees that it will at its expense and upon
request of Secured Party forthwith, assemble all or part of the Collateral as
directed by Secured Party and make it available to Secured Party at a place to
be designated by Secured Party that is reasonably convenient to both parties,
(ii) enter onto the property where any Collateral is located and take possession
thereof with or without judicial process, (iii) prior to the disposition of the
Collateral, store, process, repair or recondition the Collateral or otherwise
prepare the Collateral for disposition in any manner to the extent Secured Party
deems appropriate, (iv) take possession of any Grantor's premises or place
custodians in exclusive control thereof, remain on such premises and use the
same and any of such Grantor's equipment for the purpose of completing any work
in process, taking any actions described in the preceding clause (iii) and
collecting any Secured Obligation, (v) without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any of Secured Party's offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at such price or prices
and upon such other terms as Secured Party may deem commercially reasonable,
(vi) exercise dominion and control over and refuse to permit further withdrawals
from any Deposit Account maintained with Secured Party or any Lender
constituting a part of the Collateral and (vii) without notice to any Grantor,
transfer to or register in the name of Secured Party or any of its nominees any
or all of the Securities Collateral. Secured Party or any Lender or Hedge
Exchanger may be the purchaser of any or all of the Collateral at any such sale
and Secured Party, as agent for and representative of Lenders and Hedge
Exchangers (but not any Lender or Hedge Exchanger in its individual capacity
unless Requisite Obligees (as defined in Section 21(a)) shall otherwise agree in
writing), shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Collateral sold at
any such public sale, to use and apply any of the Secured Obligations as a
credit on account of the purchase price for any Collateral payable by Secured
Party at such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of any Grantor, and each
Grantor hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Each Grantor agrees that, to the extent notice of sale shall be required by law,
at least ten days' notice to such Grantor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Each Grantor hereby waives any
claims against Secured Party arising by reason of the fact that the price at
which any Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if Secured Party
accepts the first offer received and does not offer such Collateral to more than
one offeree. If the proceeds of any sale or other disposition of the

                                       23
<PAGE>

Collateral are insufficient to pay all the Secured Obligations, Grantors shall
be jointly and severally liable for the deficiency and the fees of any attorneys
employed by Secured Party to collect such deficiency. Each Grantor further
agrees that a breach of any of the covenants contained in this Section will
cause irreparable injury to Secured Party, that Secured Party has no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section shall be specifically enforceable
against such Grantor, and each Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that no default has occurred giving rise to the Secured
Obligations becoming due and payable prior to their stated maturities.

            (b) Securities Collateral.

                  (i) Each Grantor recognizes that, by reason of certain
      prohibitions contained in the Securities Act and applicable state
      securities laws, Secured Party may be compelled, with respect to any sale
      of all or any part of the Securities Collateral conducted without prior
      registration or qualification of such Securities Collateral under the
      Securities Act and/or such state securities laws, to limit purchasers to
      those who will agree, among other things, to acquire the Securities
      Collateral for their own account, for investment and not with a view to
      the distribution or resale thereof. Each Grantor acknowledges that any
      such private sales may be at prices and on terms less favorable than those
      obtainable through a public sale without such restrictions (including a
      public offering made pursuant to a registration statement under the
      Securities Act) and, notwithstanding such circumstances and the
      registration rights granted to Secured Party by such Grantor pursuant
      hereto, each Grantor agrees that any such private sale shall be deemed to
      have been made in a commercially reasonable manner and that Secured Party
      shall have no obligation to engage in public sales and no obligation to
      delay the sale of any Securities Collateral for the period of time
      necessary to permit the issuer thereof to register it for a form of public
      sale requiring registration under the Securities Act or under applicable
      state securities laws, even if such issuer would, or should, agree to so
      register it. If Secured Party determines to exercise its right to sell any
      or all of the Securities Collateral, upon written request, each Grantor
      shall and shall cause each issuer of any Pledged Shares to be sold
      hereunder from time to time to furnish to Secured Party all such
      information as Secured Party may request in order to determine the number
      of shares and other instruments included in the Securities Collateral
      which may be sold by Secured Party in exempt transactions under the
      Securities Act and the rules and regulations of the Securities and
      Exchange Commission thereunder, as the same are from time to time in
      effect.

                  (ii) If Secured Party shall determine to exercise its right to
      sell all or any of the Securities Collateral pursuant to this Section,
      each Grantor agrees that, upon request of Secured Party (which request may
      be made by Secured Party in its sole discretion), Grantor will, at its own
      expense (A) execute and deliver, and cause each issuer of the Securities
      Collateral contemplated to be sold and the directors and officers thereof
      to execute and deliver, all such instruments and documents, and do or
      cause to be done all such other acts and things, as may be necessary or,
      in the opinion of Secured Party, advisable to register such Securities
      Collateral under the provisions of the

                                       24
<PAGE>

      Securities Act and to cause the registration statement relating thereto to
      become effective and to remain effective for such period as prospectuses
      are required by law to be furnished, and to make all amendments and
      supplements thereto and to the related prospectus which, in the opinion of
      Secured Party, are necessary or advisable, all in conformity with the
      requirements of the Securities Act and the rules and regulations of the
      Securities and Exchange Commission applicable thereto; (B) use its best
      efforts to qualify the Securities Collateral under all applicable state
      securities or "Blue Sky" laws and to obtain all necessary governmental
      approvals for the sale of the Securities Collateral, as requested by
      Secured Party; (C) cause each such issuer to make available to its
      security holders, as soon as practicable, an earnings statement which will
      satisfy the provisions of Section 11(a) of the Securities Act; (D) do or
      cause to be done all such other acts and things as may be necessary to
      make such sale of the Securities Collateral or any part thereof valid and
      binding and in compliance with applicable law; and (E) bear all costs and
      expenses, including reasonable attorneys' fees, of carrying out its
      obligations under this Section.

                  (iii) Without limiting the generality of subsections 10.2 and
      10.3 of the Credit Agreement, in the event of any public sale described
      herein, each Grantor agrees to indemnify and hold harmless Secured Party,
      and each Lender and each Hedge Exchanger and each of their respective
      directors, officers, employees and agents from and against any loss, fee,
      cost, expense, damage, liability or claim, joint or several, to which any
      such Persons may become subject or for which any of them may be liable,
      under the Securities Act or otherwise, insofar as such losses, fees,
      costs, expenses, damages, liabilities or claims (or any litigation
      commenced or threatened in respect thereof) arise out of or are based upon
      an untrue statement or alleged untrue statement of a material fact
      contained in any preliminary prospectus, registration statement,
      prospectus or other such document published or filed in connection with
      such public sale, or any amendment or supplement thereto, or arise out of
      or are based upon the omission or alleged omission to state therein a
      material fact required to be stated therein or necessary to make the
      statements therein not misleading, and will reimburse Secured Party and
      such other Persons for any legal or other expenses reasonably incurred by
      Secured Party and such other Persons in connection with any litigation, of
      any nature whatsoever, commenced or threatened in respect thereof
      (including any and all fees, costs and expenses whatsoever reasonably
      incurred by Secured Party and such other Persons and counsel for Secured
      Party and such other Persons in investigating, preparing for, defending
      against or providing evidence, producing documents or taking any other
      action in respect of, any such commenced or threatened litigation or any
      claims asserted). This indemnity shall be in addition to any liability
      which any Grantor may otherwise have and shall extend upon the same terms
      and conditions to each Person, if any, that controls Secured Party or such
      Persons within the meaning of the Securities Act.

            (c) Collateral Account. If an Event of Default has occurred and is
continuing and, in accordance with Section 8 of the Credit Agreement, Company is
required to pay to Secured Party an amount (the "Aggregate Available Amount")
equal to the maximum amount that may at any time be drawn under all Letters of
Credit then outstanding under the Credit

                                       25
<PAGE>

Agreement, Company shall deliver funds in such an amount for deposit in the
Collateral Account. If for any reason the aggregate amount delivered by Company
for deposit in the Collateral Account as aforesaid is less than the Aggregate
Available Amount, the aggregate amount so delivered by Company shall be
apportioned among all outstanding Letters of Credit for purposes of this Section
in accordance with the ratio of the maximum amount available for drawing under
each such Letter of Credit (as to such Letter of Credit, the "Maximum Available
Amount") to the Aggregate Available Amount. Upon any drawing under any
outstanding Letter of Credit in respect of which Company has deposited in the
Collateral Account any amounts described above, Secured Party shall apply such
amounts to reimburse the Issuing Lender for the amount of such drawing. In the
event of cancellation or expiration of any Letter of Credit in respect of which
Company has deposited in the Collateral Account any amounts described above, or
in the event of any reduction in the Maximum Available Amount under such Letter
of Credit, Secured Party shall apply the amount then on deposit in the
Collateral Account in respect of such Letter of Credit (less, in the case of
such a reduction, the Maximum Available Amount under such Letter of Credit
immediately after such reduction) first, to the payment of any amounts payable
to Secured Party pursuant to Section 18 hereof, second, to the extent of any
excess, to the cash collateralization pursuant to the terms of this Agreement of
any outstanding Letters of Credit in respect of which Company has failed to pay
all or a portion of the amounts described above (such cash collateralization to
be apportioned among all such Letters of Credit in the manner described above),
third, to the extent of any further excess, to the payment of any other
outstanding Secured Obligations in such order as Secured Party shall elect, and
fourth, to the extent of any further excess, to the payment to whomsoever shall
be lawfully entitled to receive such funds.

section 17. Additional Remedies for Intellectual Property Collateral.

            (a) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, (i) Secured
Party shall have the right (but not the obligation) to bring suit, in the name
of any Grantor, Secured Party or otherwise, to enforce any Intellectual Property
Collateral, in which event each Grantor shall, at the request of Secured Party,
do any and all lawful acts and execute any and all documents required by Secured
Party in aid of such enforcement and each Grantor shall promptly, upon demand,
reimburse and indemnify Secured Party as provided in Sections 10.2 and 10.3 of
the Credit Agreement and Section 19 hereof, as applicable, in connection with
the exercise of its rights under this Section, and, to the extent that Secured
Party shall elect not to bring suit to enforce any Intellectual Property
Collateral as provided in this Section, each Grantor agrees to use all
reasonable measures, whether by action, suit, proceeding or otherwise, to
prevent the infringement of any of the Intellectual Property Collateral by
others and for that purpose agrees to use its commercially reasonable judgement
in maintaining any action, suit or proceeding against any Person so infringing
reasonably necessary to prevent such infringement; (ii) upon written demand from
Secured Party, each Grantor shall execute and deliver to Secured Party an
assignment or assignments of the Intellectual Property Collateral and such other
documents as are necessary or appropriate to carry out the intent and purposes
of this Agreement; (iii) each Grantor agrees that such an assignment and/or
recording shall be applied to reduce the Secured Obligations outstanding only to
the extent that Secured Party (or any Lender) receives cash

                                       26
<PAGE>

proceeds in respect of the sale of, or other realization upon, the Intellectual
Property Collateral; and (iv) within five Business Days after written notice
from Secured Party, each Grantor shall make available to Secured Party, to the
extent within such Grantor's power and authority, such personnel in such
Grantor's employ on the date of such Event of Default as Secured Party may
reasonably designate, by name, title or job responsibility, to permit such
Grantor to continue, directly or indirectly, to produce, advertise and sell the
products and services sold or delivered by such Grantor under or in connection
with the Trademarks, Trademark Registrations and Trademark Rights, such persons
to be available to perform their prior functions on Secured Party's behalf and
to be compensated by Secured Party at such Grantor's expense on a per diem,
pro-rata basis consistent with the salary and benefit structure applicable to
each as of the date of such Event of Default.

            (b) If (i) an Event of Default shall have occurred and, by reason of
cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment to Secured Party of any rights, title and interests in and to the
Intellectual Property Collateral shall have been previously made, and (iv) the
Secured Obligations shall not have become immediately due and payable, upon the
written request of any Grantor, Secured Party shall promptly execute and deliver
to such Grantor such assignments as may be necessary or desirable to reassign to
such Grantor any such rights, title and interests as may have been assigned to
Secured Party as aforesaid, subject to any disposition thereof that may have
been made by Secured Party; provided, after giving effect to such reassignment,
Secured Party's security interest granted pursuant hereto, as well as all other
rights and remedies of Secured Party granted hereunder, shall continue to be in
full force and effect; and provided further, the rights, title and interests so
reassigned shall be free and clear of all Liens other than Liens (if any)
encumbering such rights, title and interest at the time of their assignment to
Secured Party and Permitted Encumbrances.

section 18. Application of Proceeds.

            Except as expressly provided elsewhere in this Agreement, all
      proceeds received by Secured Party in respect of any sale of, collection
      from, or other realization upon all or any part of the Collateral shall be
      applied as provided in the Credit Agreement.

section 19. Indemnity and Expenses.

            (a) Grantors jointly and severally agree to indemnify Secured Party,
each Lender and each Hedge Exchanger from and against any and all claims, losses
and liabilities in any way relating to, growing out of or resulting from this
Agreement and the transactions contemplated hereby (including without limitation
enforcement of this Agreement), except to the extent such claims, losses or
liabilities result solely from Secured Party's or such Lender's or Hedge
Exchanger's gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction.

            (b) Grantors jointly and severally agree to pay to Secured Party
upon demand the amount of any and all costs and expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
Secured Party may incur in connection with (i) the

                                       27
<PAGE>

administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any of
the Collateral, (iii) the exercise or enforcement of any of the rights of
Secured Party hereunder, or (iv) the failure by any Grantor to perform or
observe any of the provisions hereof.

            (c) The obligations of Grantors in this Section 19 shall survive the
termination of this Agreement and the discharge of Grantors' other obligations
under this Agreement, the Lender Hedge Agreements, the Credit Agreement and the
other Loan Documents.

section 20. Continuing Security Interest; Transfer of Loans.

            This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Grantors and their respective successors and
assigns, and (c) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), (i) but
subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lenders herein or otherwise and (ii) any Hedge Exchanger may
assign or otherwise transfer any Lender Hedge Agreement to which it is a party
to any other Person in accordance with the terms of such Lender Hedge Agreement,
and such other Person shall thereupon become vested with all the benefits in
respect thereof granted to Hedge Exchangers herein or otherwise. Upon the
payment in full of all Secured Obligations, the cancellation or termination of
the Commitments and the cancellation or expiration of all outstanding Letters of
Credit, the security interest granted hereby shall terminate and all rights to
the Collateral shall revert to the applicable Grantors. Upon any such
termination Secured Party will, at Grantors' expense, execute and deliver to
Grantors such documents as Grantors shall reasonably request to evidence such
termination. In addition, upon the proposed sale, transfer or other disposition
of any Collateral by a Grantor in accordance with the Credit Agreement for which
such Grantor desires to obtain a security interest release from Secured Party,
such Grantor shall deliver an Officer's Certificate (x) stating that the
Collateral subject to such disposition is being sold, transferred or otherwise
disposed of in compliance with the terms of the Credit Agreement and (y)
specifying the Collateral being sold, transferred or otherwise disposed of in
the proposed transaction. Upon the receipt of such Officer's Certificate,
Secured Party shall, at Grantor's expense, so long as Secured Party has no
reason to believe that the Officer's Certificate delivered by such Grantor with
respect to such sale is not true and correct, execute and deliver such releases
of its security interest in such Collateral which is to be so sold, transferred
or disposed of, as may be reasonably requested by such Grantor.

section 21. Secured Party as Agent.

            (a) Secured Party has been appointed to act as Secured Party
hereunder by Lenders and, by their acceptance of the benefits hereof, Hedge
Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or

                                       28
<PAGE>

refrain from exercising any rights, and to take or refrain from taking any
action (including without limitation the release or substitution of Collateral),
solely in accordance with this Agreement and the Credit Agreement; provided that
Secured Party shall exercise, or refrain from exercising, any remedies provided
for in Section 16 in accordance with the instructions of (i) Requisite Lenders
or (ii) after payment in full of all Obligations under the Credit Agreement and
the other Loan Documents, the cancellation or expiration of all Letters of
Credit and the termination of the Commitments, (A) the holders of a majority of
the aggregate notional amount under all Lender Hedge Agreements (including
Lender Hedge Agreements that have been terminated) or (B) if all Lender Hedge
Agreements have been terminated in accordance with their terms, the aggregate
amount then due and payable (exclusive of expenses and similar payments but
including any early termination payments then due) under such Lender Hedge
Agreements (Requisite Lenders or, if applicable, such holders being referred to
herein as "Requisite Obligees"). In furtherance of the foregoing provisions of
this Section 21(a), each Hedge Exchanger, by its acceptance of the benefits
hereof, agrees that it shall have no right individually to realize upon any of
the Collateral hereunder, it being understood and agreed by such Hedge Exchanger
that all rights and remedies hereunder may be exercised solely by Secured Party
for the benefit of Lenders and Hedge Exchangers in accordance with the terms of
this Section 21(a).

            (b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Secured Party under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Secured Party under this Agreement;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor Secured
Party under this Agreement. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly (i) transfer to
such successor Secured Party all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Administrative Agent's resignation or removal hereunder as Secured
Party, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
Secured Party hereunder.

            (c) Secured Party shall not be deemed to have any duty whatsoever
with respect to any Hedge Exchanger until it shall have received written notice
in form and substance satisfactory to Secured Party from a Grantor or the Hedge
Exchanger as to the existence and terms of the applicable Lender Hedge
Agreement.

                                       29
<PAGE>

section 22. Additional Grantors.

            The initial Subsidiary Grantors hereunder shall be such of the
wholly-owned Domestic Subsidiaries of Company as are signatories hereto on the
date hereof. From time to time subsequent to the date hereof, additional
wholly-owned Domestic Subsidiaries of Company may become parties hereto as
additional Grantors (each an "Additional Grantor"), by executing a Counterpart
substantially in the form of Exhibit VI annexed hereto. Upon delivery of any
such Counterpart to Secured Party, notice of which is hereby waived by Grantors,
each such Additional Grantor shall be a Grantor and shall be as fully a party
hereto as if such Additional Grantor were an original signatory hereto. Each
Grantor expressly agrees that its obligations arising hereunder shall not be
affected or diminished by the addition or release of any other Grantor
hereunder, nor by any election of Administrative Agent not to cause any
wholly-owned Domestic Subsidiary of Company to become an Additional Grantor
hereunder. This Agreement shall be fully effective as to any Grantor that is or
becomes a party hereto regardless of whether any other Person becomes or fails
to become or ceases to be a Grantor hereunder.

section 23. Amendments; Etc.

            No amendment, modification, termination or waiver of any provision
of this Agreement, and no consent to any departure by any Grantor therefrom,
shall in any event be effective unless the same shall be in writing and signed
by Secured Party and, in the case of any such amendment or modification, by
Grantors; provided this Agreement may be modified by the execution of a
Counterpart by an Additional Grantor in accordance with Section 22 and Grantors
hereby waive any requirement of notice of or consent to any such amendment. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.

section 24. Notices.

            Any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile, or three Business Days after depositing it in the United States
mail with postage prepaid and properly addressed; provided that notices to
Secured Party shall not be effective until received. For the purposes hereof,
the address of each party hereto shall be as provided in subsection 10.8 of the
Credit Agreement or as set forth under such party's name on the signature pages
hereof or such other address as shall be designated by such party in a written
notice delivered to the other parties hereto.

section 25. Failure or Indulgence Not Waiver; Remedies Cumulative.

            No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or

                                       30
<PAGE>

privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.

section 26. Severability.

            In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

section 27. Headings.

            Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.

section 28. Governing Law; Terms; Rules of Construction.

            THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT
THE UCC PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein or in the Credit Agreement, terms used in Articles 8 and 9 of the
Uniform Commercial Code in the State of New York are used herein as therein
defined. The rules of construction set forth in subsection 1.3 of the Credit
Agreement shall be applicable to this Agreement mutatis mutandis.

section 29. Consent to Jurisdiction and Service of Process.

ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR RELATING
TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE , COUNTY AND CITY OF NEW
YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 24; (IV) AGREES THAT SERVICE AS

                                       31
<PAGE>

PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION
OVER SUCH GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT
SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER
JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 29 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT
PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.

section 30. Waiver of Jury Trial.

            GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing
of any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. Each Grantor and Secured Party acknowledge that this waiver is
a material inducement for Grantors and Secured Party to enter into a business
relationship, that Grantors and Secured Party have already relied on this waiver
in entering into this Agreement and that each will continue to rely on this
waiver in their related future dealings. Each Grantor and Secured Party further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 30 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.

section 31. Counterparts.

            This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.

section 32. Suretyship Waivers by Grantors, etc.

            (a) Each Grantor agrees that its obligations hereunder are
irrevocable, absolute, independent and unconditional and shall not be affected
by any circumstance which constitutes a legal or equitable discharge of a
guarantor or surety other than payment in full of the Secured Obligations. In
furtherance of the foregoing and without limiting the generality thereof, each

                                       32
<PAGE>

Grantor agrees as follows: (i) Secured Party or any Lender or any Hedge
Exchanger may from time to time, without notice or demand and without affecting
the validity or enforceability of this Agreement or giving rise to any
limitation, impairment or discharge of such Grantor's liability hereunder, (A)
renew, extend, accelerate or otherwise change the time, place, manner or terms
of payment of the Secured Obligations, (B) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Secured Obligations or any agreement relating thereto
and/or subordinate the payment of the same to the payment of any other
obligations, (C) request and accept guaranties of the Secured Obligations and
take and hold other security for the payment of the Secured Obligations, (D)
release, exchange, compromise, subordinate or modify, with or without
consideration, any other security for payment of the Secured Obligations, any
guaranties of the Secured Obligations, or any other obligation of any Person
with respect to the Secured Obligations, (E) enforce and apply any other
security now or hereafter held by or for the benefit of Secured Party, any
Lender or any Hedge Exchanger in respect of the Secured Obligations and direct
the order or manner of sale thereof, or exercise any other right or remedy that
Secured Party, Lenders or Hedge Exchangers, or any of them, may have against any
such security, as Secured Party in its discretion may determine consistent with
the Credit Agreement and any applicable security agreement, including
foreclosure on any such security pursuant to one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable,
and (F) exercise any other rights available to Secured Party, Lenders or Hedge
Exchangers, or any of them, under the Loan Documents and the Lender Hedge
Agreements, at law or in equity; and (ii) this Agreement and the obligations of
each Grantor hereunder shall be valid and enforceable and shall not be subject
to any limitation, impairment or discharge for any reason (other than payment in
full of the Secured Obligations), including without limitation the occurrence of
any of the following, whether or not such Grantor shall have had notice or
knowledge of any of them: (A) any failure to assert or enforce or agreement not
to assert or enforce, or the stay or enjoining, by order of court, by operation
of law or otherwise, of the exercise or enforcement of, any claim or demand or
any right, power or remedy with respect to the Secured Obligations or any
agreement relating thereto, or with respect to any guaranty of or other security
for the payment of the Secured Obligations, (B) any waiver, amendment or
modification of, or any consent to departure from, any of the terms or
provisions (including without limitation provisions relating to events of
default) of the Credit Agreement, any of the other Loan Documents, any of the
Lender Hedge Agreements or any agreement or instrument executed pursuant
thereto, or of any guaranty or other security for the Secured Obligations, (C)
the Secured Obligations, or any agreement relating thereto, at any time being
found to be illegal, invalid or unenforceable in any respect, (D) the
application of payments received from any source to the payment of indebtedness
other than the Secured Obligations, even though Secured Party, Lenders or Hedge
Exchangers or any of them, might have elected to apply such payment to any part
or all of the Secured Obligations, (E) any failure to perfect or continue
perfection of a security interest in any other collateral which secures any of
the Secured Obligations, (F) any defenses, set-offs or counterclaims which
Company may allege or assert against Secured Party, any Lender or any Hedge
Exchanger in respect of the Secured Obligations, including but not limited to
failure of consideration, breach of warranty, payment, statute of frauds,
statute of limitations, accord and satisfaction and usury, and (G) any other act
or thing or omission, or delay to do any other act or thing, which may or might
in any manner or to any extent vary the risk of any Grantor as an obligor in
respect of the Secured Obligations.

                                       33
<PAGE>

            (b) Each Grantor hereby waives, for the benefit of Lenders, Hedge
Exchangers and Secured Party: (i) any right to require Secured Party, Lenders or
Hedge Exchangers, as a condition of payment or performance by such Grantor, to
(A) proceed against Company, any guarantor of the Secured Obligations or any
other Person, (B) proceed against or exhaust any other security held from
Company, any guarantor of the Secured Obligations or any other Person, (C)
proceed against or have resort to any balance of any deposit account or credit
on the books of Secured Party, any Lender or any Hedge Exchanger in favor of
Company or any other Person, or (D) pursue any other remedy in the power of
Secured Party or any Lender or any Hedge Exchanger whatsoever; (ii) any defense
arising by reason of the incapacity, lack of authority or any disability or
other defense of Company including, without limitation, any defense based on or
arising out of the lack of validity or the unenforceability of the Secured
Obligations or any agreement or instrument relating thereto or by reason of the
cessation of the liability of Company from any cause other than payment in full
of the Secured Obligations; (iii) any defense based upon any statute or rule of
law which provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the principal; (iv)
any defense based upon Secured Party's, any Lender's or any Hedge Exchanger's
errors or omissions in the administration of the Secured Obligations, except
behavior which amounts to bad faith; (v) (A) any principles or provisions of
law, statutory or otherwise, which are or might be in conflict with the terms of
this Agreement and any legal or equitable discharge of such Grantor's
obligations hereunder, (B) the benefit of any statute of limitations affecting
such Grantor's liability hereunder or the enforcement hereof, (C) any rights to
set-offs, recoupments and counterclaims, and (D) promptness, diligence and any
requirement that Secured Party, any Lender or any Hedge Exchanger protect,
secure, perfect or insure any other security interest or lien or any property
subject thereto; (vi) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction, notices of
default under the Credit Agreement or any agreement or instrument related
thereto, notices of any renewal, extension or modification of the Secured
Obligations or any agreement related thereto, notices of any extension of credit
to Company and notices of any of the matters referred to in the preceding
paragraph and any right to consent to any thereof; and (vii) to the fullest
extent permitted by law, any defenses or benefits that may be derived from or
afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of this Agreement.

            (c) As used in this Section 32(c), any reference to "the principal"
includes Company, and any reference to "the creditor" includes Secured Party,
each Lender and each Hedge Exchanger. In accordance with Section 2856 of the
California Civil Code (a) each Grantor waives any and all rights and defenses
available to Grantor by reason of Sections 2787 to 2855, inclusive, 2899 and
3433 of the California Civil Code, including without limitation any and all
rights or defenses such Grantor may have by reason of protection afforded to the
principal with respect to any of the Secured Obligations, or to any guarantor of
any of the Secured Obligations with respect to any of such guarantor's
obligations under its guaranty, in either case pursuant to the antideficiency or
other laws of the State of California limiting or discharging the principal's
indebtedness or such guarantor's obligations, including without limitation
Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure; and
(b) each Grantor waives all rights and defenses arising out of an election of
remedies by the creditor, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for any of the

                                       34
<PAGE>

Secured Obligations, has destroyed such Grantor's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the Code
of Civil Procedure or otherwise; and even though that election of remedies by
the creditor, such as nonjudicial foreclosure with respect to security for an
obligation of any guarantor of any of the Secured Obligations, has destroyed
such Grantor's rights of contribution against such guarantor. No other provision
of this Agreement shall be construed as limiting the generality of any of the
covenants and waivers set forth in this Section 32(c). As provided in Section
28, this Agreement shall be governed by, and shall be construed and enforced in
accordance with, the internal laws of the State of New York, without regard to
conflicts of laws principles. This Section 32(c) is included solely out of an
abundance of caution, and shall not be construed to mean that any of the
above-referenced provisions of California law are in any way applicable to this
Agreement or to any of the Secured Obligations.

            (d) Until the Secured Obligations shall have been paid in full and
the Commitments shall have terminated and all Letters of Credit shall have
expired or been cancelled, each Grantor shall withhold exercise of (i) any
claim, right or remedy, direct or indirect, that such Grantor now has or may
hereafter have against Company or any of its assets in connection with this
Agreement or the performance by such Grantor of its obligations hereunder, in
each case whether such claim, right or remedy arises in equity, under contract,
by statute (including without limitation under California Civil Code Section
2847, 2848 or 2849), under common law or otherwise and including without
limitation (A) any right of subrogation, reimbursement or indemnification that
Grantor now has or may hereafter have against Company, (B) any right to enforce,
or to participate in, any claim, right or remedy that Secured Party, any Lender
or any Hedge Exchanger now has or may hereafter have against Company, and (C)
any benefit of, and any right to participate in, any other collateral or
security now or hereafter held by Secured Party, any Lender or any Hedge
Exchanger, and (ii) any right of contribution such Grantor may have against any
guarantor of the Secured Obligations. Each Grantor further agrees that, to the
extent the waiver of its rights of subrogation, reimbursement, indemnification
and contribution as set forth herein is found by a court of competent
jurisdiction to be void or voidable for any reason, any rights of subrogation,
reimbursement or indemnification such Grantor may have against Company or
against any other collateral or security, and any rights of contribution such
Grantor may have against any such guarantor, shall be junior and subordinate to
any rights Secured Party, Lenders or Hedge Exchangers may have against Company,
to all right, title and interest Secured Party, Lenders or Hedge Exchangers may
have in any such other collateral or security, and to any right Secured Party,
Lenders or Hedge Exchangers may have against any such guarantor.

            (e) Lenders, Hedge Exchangers and Secured Party shall have no
obligation to disclose or discuss with any Grantor their assessment, or such
Grantor's assessment, of the financial condition of Company. Each Grantor has
adequate means to obtain information from Company on a continuing basis
concerning the financial condition of Company and its ability to perform its
obligations under the Loan Documents and Lender Hedge Agreements, and such
Grantor assumes the responsibility for being and keeping informed of the
financial condition of Company and of all circumstances bearing upon the risk of
nonpayment of the Secured Obligations. Each Grantor hereby waives and
relinquishes any duty on the part of Secured Party,

                                       35
<PAGE>

any Lender or any Hedge Exchanger to disclose any matter, fact or thing relating
to the business, operations or condition of Company now known or hereafter known
by Secured Party, any Lender or any Hedge Exchanger.

                  [Remainder of page intentionally left blank]

                                       36
<PAGE>

      IN WITNESS WHEREOF, Grantors and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

COMPANY:                            AUTOTOTE CORPORATION

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

SUBSIDIARY GRANTORS:

                                    AUTOTOTE MANAGEMENT CORPORATION

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    100 Bellevue Road
                                    Newark , DE 19714

                                    AUTOTOTE SYSTEMS, INC.

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    100 Bellevue Road
                                    Newark , DE 19714

                                      A-1
<PAGE>

                                    AUTOTOTE INTERNATIONAL, INC.

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    100 Bellevue Road
                                    Newark , DE 19714

                                    AUTOTOTE ENTERPRISES, INC.

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    600 Long Wharf Drive
                                    New Haven, CT 06511

                                    AUTOTOTE KENO CORPORATION

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    100 Bellevue Road
                                    Newark , DE 19714

                                      A-2
<PAGE>

                                    AUTOTOTE LOTTERY CORPORATION

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    1500 Bluegrass Lakes Parkway
                                    Alpharetta, GA 30004

                                    ACRA ACQUISITION CORP.

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    100 Bellevue Road
                                    Newark , DE 19714

                                    MARVIN H. SUGARMAN PRODUCTIONS, INC.

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    750 Lexington Avenue
                                    New York, NY 10022

                                      A-3
<PAGE>

                                    AUTOTOTE GAMING, INC.

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    100 Bellevue Road
                                    Newark , DE 19714

                                    AUTOTOTE DOMINICANA, INC.

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    100 Bellevue Road
                                    Newark , DE 19714

                                    SCIENTIFIC GAMES HOLDING CORP.

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    1500 Bluegrass Lakes Parkway
                                    Alpharetta, GA 30004

                                      A-4
<PAGE>

                                    SCIENTIFIC GAMES INC.

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    1500 Bluegrass Lakes Parkway
                                    Alpharetta, GA 30004

                                    SCIENTIFIC GAMES (GREECE), INC.

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    1500 Bluegrass Lakes Parkway
                                    Alpharetta, GA 30004

                                    SCIENTIFIC ACQUISITION INC.

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    1500 Bluegrass Lakes Parkway
                                    Alpharetta, GA 30004

                                      A-5
<PAGE>

                                    SCIENTIFIC GAMES FINANCE CORPORATION

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    900 Market Street, Suite 200
                                    Wilmington, DE 19801

                                    SCIENTIFIC GAMES ROYALTY CORPORATION

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    900 Market Street, Suite 200
                                    Wilmington, DE 19801

                                    SCIGAMES FRANCE INC.

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    Address:

                                    1500 Bluegrass Lakes Parkway
                                    Alpharetta, GA 30004

                                      A-6
<PAGE>

                                    DLJ CAPITAL FUNDING, INC.,
                                    as Secured Party

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:
<PAGE>

                               SCHEDULE 1(e)(i) TO
                               SECURITY AGREEMENT

--------------------------------------------------------------------------------
                  Class                                            Percentage
                    of          Stock         Par     Number of        of
 Stock Issuer     Stock   Certificate Nos.   Value      Shares     Outstanding
                                                                  Shares Pledged
================================================================================

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                                   1(e)(i)-1
<PAGE>

                              SCHEDULE 1(e)(ii) TO
                               SECURITY AGREEMENT

--------------------------------------------------------------------------------
                                                               Amount of
                     Debt Issuer                             Indebtedness
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

================================================================================

                                  1(e)(ii)-1
<PAGE>

                               SCHEDULE 1(f)(i) TO
                               SECURITY AGREEMENT

U.S. Trademarks:

                           Trademark           Registration         Registration
  Registered Owner        Description             Number                Date
  ----------------        -----------             ------                ----

Foreign Trademarks:

                           Trademark           Registration         Registration
  Registered Owner        Description             Number                Date
  ----------------        -----------             ------                ----

                                   1(f)(i)-1
<PAGE>

                              SCHEDULE 1(f)(ii) TO
                               SECURITY AGREEMENT

U.S. Patents Issued:

     Patent No.          Issue Date           Invention           Inventor
     ----------          ----------           ---------           --------

U.S. Patents Pending:

  Applicant's         Date         Application
      Name            Filed          Number         Invention       Inventor
      ----            -----          ------         ---------       --------

Foreign Patents Issued:

     Patent No.          Issue Date           Invention           Inventor
     ----------          ----------           ---------           --------

                                  1(f)(ii)-1
<PAGE>

Foreign Patents Pending:

  Applicant's         Date         Application
      Name            Filed          Number         Invention       Inventor
      ----            -----          ------         ---------       --------

                                  1(f)(ii)-2
<PAGE>

                              SCHEDULE 1(f)(iii) TO
                               SECURITY AGREEMENT

U.S. Copyrights:

Title       Registration No.   Date of Issue     Registered Owner
-----       ----------------   -------------     ----------------

Foreign Copyright Registrations:

Country     Title   Registration No.   Date of Issue
-------     -----   ----------------   -------------

Pending U.S. Copyright Registrations & Applications:

Title   Reference No.     Date of Application     Copyright Claimant
-----   -------------     -------------------     ------------------

Pending Foreign Copyright Registrations & Applications:

Country     Title   Registration No.   Date of Issue
-------     -----   ----------------   -------------

                                  1(f)(iii)-1
<PAGE>

                                SCHEDULE 1(h) TO
                               SECURITY AGREEMENT

                               Assigned Agreements

                                     1(h)-1
<PAGE>

                                SCHEDULE 1(m) TO
                               SECURITY AGREEMENT

                                     1(m)-1
<PAGE>

                                  SCHEDULE 4(b)
                                       TO
                               SECURITY AGREEMENT

                      Locations of Equipment and Inventory

Name of Grantor                      Locations of Equipment and Inventory
---------------                      ------------------------------------

                                     4(b)-1
<PAGE>

                                  SCHEDULE 4(d)
                                       TO
                               SECURITY AGREEMENT

                                Office Locations

Name of Grantor                           Office Locations
---------------                           ----------------

                                     4(d)-1
<PAGE>

                                  SCHEDULE 4(e)
                                       TO
                               SECURITY AGREEMENT

                                   Other Names

Name of Grantor                         Other Names
---------------                         -----------

                                     4(e)-1
<PAGE>

                                  SCHEDULE 4(i)
                                       TO
                               SECURITY AGREEMENT

                                 Filing Offices

      Grantor                                         Filing Offices
      -------                                         --------------

                                     4(i)-1
<PAGE>

                                                                    EXHIBIT I TO
                                                              SECURITY AGREEMENT

                 [FORM OF GRANT OF TRADEMARK SECURITY INTEREST]

                      GRANT OF TRADEMARK SECURITY INTEREST

            WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"),
owns and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Trademark Collateral (as defined below); and

            WHEREAS, Autotote Corporation, a Delaware corporation ("Company"),
has entered into a Credit Agreement dated as of September 6, 2000 (said Credit
Agreement, as it may heretofore have been and as it may hereafter be amended,
supplemented, restated or otherwise modified from time to time, being the
"Credit Agreement") with the financial institutions named therein (collectively,
together with their respective successors and assigns party to the Credit
Agreement from time to time, the "Lenders"), DLJ Capital Funding, Inc., as
Administrative Agent, Syndication Agent, Lead Arranger and Sole Book Running
Manager ("Secured Party"), Lehman Commercial Paper Inc., as Documentation Agent
and Lehman Brothers Inc., as Co-Arranger, pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company; and

            WHEREAS, Company [and its Subsidiary Guarantors, as the case may
be,] may from time to time enter, or may from time to time have entered, into
one or more Hedge Agreements (collectively, the "Lender Hedge Agreements") with
one or more Persons that are Lenders or Affiliates of Lenders at the time such
Lender Hedge Agreements are entered into (in such capacity, collectively, "Hedge
Exchangers"); and

            [Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed
and delivered that certain Subsidiary Guaranty dated as of September 6, 2000
(said Subsidiary Guaranty, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Guaranty") in favor of Secured
Party for the benefit of Lenders and any Hedge Exchangers, pursuant to which
Grantor has guarantied the prompt payment and performance when due of all
obligations of Company under the Credit Agreement and the other Loan Documents
and all obligations of Company under the Lender Hedge Agreements, including
without limitation the obligation of Company to make payments thereunder in the
event of early termination thereof; and]

            WHEREAS, pursuant to the terms of a Security Agreement dated as of
September 6, 2000 (as amended, supplemented or otherwise modified from time to
time, the "Security Agreement"), among Grantor, Secured Party and the other
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and Secured Party has agreed to become a
secured creditor with respect to, the Trademark Collateral;

                                      I-1
<PAGE>

            NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party a security
interest in all of Grantor's right, title and interest in and to the following,
in each case whether now or hereafter existing or in which Grantor now has or
hereafter acquires an interest and wherever the same may be located (the
"Trademark Collateral"):

                  (i) all rights, title and interest (including rights acquired
      pursuant to a license or otherwise but only to the extent permitted by
      agreements governing such license or other use) in and to all trademarks,
      service marks, designs, logos, indicia, tradenames, trade dress, corporate
      names, company names, business names, fictitious business names, trade
      styles and/or other source and/or business identifiers and applications
      pertaining thereto, owned by such Grantor, or hereafter adopted and used,
      in its business (including, without limitation, the trademarks
      specifically identified in Schedule A) (collectively, the "Trademarks"),
      all registrations that have been or may hereafter be issued or applied for
      thereon in the United States and any state thereof and in foreign
      countries (including, without limitation, the registrations and
      applications specifically identified in Schedule A) (the "Trademark
      Registrations"), all common law and other rights (but in no event any of
      the obligations) in and to the Trademarks in the United States and any
      state thereof and in foreign countries (the "Trademark Rights"), and all
      goodwill of such Grantor's business symbolized by the Trademarks and
      associated therewith (the "Associated Goodwill"); and

                  (ii) all proceeds, products, rents and profits of or from any
      and all of the foregoing Trademark Collateral and, to the extent not
      otherwise included, all payments under insurance (whether or not Secured
      Party is the loss payee thereof), or any indemnity, warranty or guaranty,
      payable by reason of loss or damage to or otherwise with respect to any of
      the foregoing Trademark Collateral. For purposes of this Grant of
      Trademark Security Interest, the term "proceeds" includes whatever is
      receivable or received when Trademark Collateral or proceeds are sold,
      exchanged, collected or otherwise disposed of, whether such disposition is
      voluntary or involuntary.

            Notwithstanding anything herein to the contrary, in no event shall
the Trademark Collateral include, and Grantor shall be not deemed to have
granted a security interest in, any of Grantor's rights or interests in any
license, contract or agreement to which Grantor is a party or any of its rights
or interests thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement or otherwise,
result in a breach of the terms of, or constitute a default under any license,
contract or agreement to which Grantor is a party; provided, that immediately
upon the ineffectiveness, lapse or termination of any such provision, the
Trademark Collateral shall include, and Grantor shall be deemed to have granted
a security interest in, all such rights and interests as if such provision had
never been in effect.

            Grantor does hereby further acknowledge and affirm that the rights
and remedies of Secured Party with respect to the security interest in the
Trademark Collateral granted hereby

                                      I-2
<PAGE>

are more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.

            [The remainder of this page is intentionally left blank.]

                                      I-3
<PAGE>

      IN WITNESS WHEREOF, Grantor has caused this Grant of Trademark Security
Interest to be duly executed and delivered by its officer thereunto duly
authorized as of the __ day of _______, _____.

                                    [NAME OF GRANTOR]

                                    By:
                                        ----------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                      I-4
<PAGE>

                                   SCHEDULE A
                                       TO
                      GRANT OF TRADEMARK SECURITY INTEREST

                         United States
                           Trademark           Registration         Registration
Registered Owner          Description             Number                Date
----------------          -----------             ------                ----

                                     I-A-1
<PAGE>

                                                                   EXHIBIT II TO
                                                              SECURITY AGREEMENT

                   [FORM OF GRANT OF PATENT SECURITY INTEREST]

                        GRANT OF PATENT SECURITY INTEREST

            WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"),
owns and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Patent Collateral (as defined below); and

            WHEREAS, Autotote Corporation, a Delaware corporation ("Company"),
has entered into a Credit Agreement dated as of September 6, 2000 (said Credit
Agreement, as it may heretofore have been and as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "Credit
Agreement") with the financial institutions named therein (collectively,
together with their respective successors and assigns party to the Credit
Agreement from time to time, the "Lenders"), DLJ Capital Funding, Inc., as
Administrative Agent, Syndication Agent, Lead Arranger and Sole Book Running
Manager ("Secured Party"), Lehman Commercial Paper Inc., as Documentation Agent
and Lehman Brothers Inc., as Co-Arranger, pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company; and

            WHEREAS, Company [and its Subsidiary Guarantors, as the case may
be,] may from time to time enter, or may from time to time have entered, into
one or more Hedge Agreements (collectively, the "Lender Hedge Agreements") with
one or more Persons that are Lenders or Affiliates of Lenders at the time such
Lender Hedge Agreements are entered into (in such capacity, collectively, "Hedge
Exchangers"); and

            [Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed
and delivered that certain Subsidiary Guaranty dated as of September 6, 2000
(said Subsidiary Guaranty, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Guaranty") in favor of Secured
Party for the benefit of Lenders and any Hedge Exchangers, pursuant to which
Grantor has guarantied the prompt payment and performance when due of all
obligations of Company under the Credit Agreement and the other Loan Documents
and all obligations of Company under the Lender Hedge Agreements, including
without limitation the obligation of Company to make payments thereunder in the
event of early termination thereof; and]

            WHEREAS, pursuant to the terms of a Security Agreement dated as of
September 6, 2000 (as amended, supplemented or otherwise modified from time to
time, the "Security Agreement"), among Grantor, Secured Party and the other
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and Secured Party has agreed to become a
secured creditor with respect to, the Patent Collateral;

                                      II-1
<PAGE>

            NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party a security
interest in all of Grantor's right, title and interest in and to the following,
in each case whether now or hereafter existing or in which Grantor now has or
hereafter acquires an interest and wherever the same may be located (the "Patent
Collateral"):

      (i) all rights, title and interest (including rights acquired pursuant to
      a license or otherwise but only to the extent permitted by agreements
      governing such license or other use) in and to all patents and patent
      applications and rights and interests in patents and patent applications
      under any domestic or foreign law that are presently, or in the future may
      be, owned or held by such Grantor and all patents and patent applications
      and rights, title and interests in patents and patent applications under
      any domestic or foreign law that are presently, or in the future may be,
      owned by such Grantor in whole or in part (including, without limitation,
      the patents and patent applications listed in Schedule A), all rights (but
      not obligations) corresponding thereto to sue for past, present and future
      infringements and all re-issues, divisions, continuations, renewals,
      extensions and continuations-in-part thereof (all of the foregoing being
      collectively referred to as the "Patents"); and

      (ii) all proceeds, products, rents and profits of or from any and all of
      the foregoing Patent Collateral and, to the extent not otherwise included,
      all payments under insurance (whether or not Secured Party is the loss
      payee thereof), or any indemnity, warranty or guaranty, payable by reason
      of loss or damage to or otherwise with respect to any of the foregoing
      Patent Collateral. For purposes of this Grant of Patent Security Interest,
      the term "proceeds" includes whatever is receivable or received when
      Patent Collateral or proceeds are sold, exchanged, collected or otherwise
      disposed of, whether such disposition is voluntary or involuntary.

            Notwithstanding anything herein to the contrary, in no event shall
the Patent Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which Grantor is a party or any of its rights or
interests thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement or otherwise,
result in a breach of the terms of, or constitute a default under any license,
contract or agreement to which Grantor is a party; provided, that immediately
upon the ineffectiveness, lapse or termination of any such provision, the Patent
Collateral shall include, and Grantor shall be deemed to have granted a security
interest in, all such rights and interests as if such provision had never been
in effect.

            Grantor does hereby further acknowledge and affirm that the rights
and remedies of Secured Party with respect to the security interest in the
Patent Collateral granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.

             [The remainder of this page intentionally left blank.]

                                      II-2
<PAGE>

      IN WITNESS WHEREOF, Grantor has caused this Grant of Patent Security
Interest to be duly executed and delivered by its officer thereunto duly
authorized as of the ___ day of ____________, _____.

                                    [NAME OF GRANTOR]

                                    By:
                                        ----------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                      II-3
<PAGE>

                                   SCHEDULE A
                                       TO
                        GRANT OF PATENT SECURITY INTEREST

Patents Issued:

     Patent No.          Issue Date           Invention           Inventor
     ----------          ----------           ---------           --------

Patents Pending:

  Applicant's         Date         Application
      Name            Filed          Number         Invention       Inventor
      ----            -----          ------         ---------       --------

                                     II-A-1
<PAGE>

                                                                  EXHIBIT III TO
                                                              SECURITY AGREEMENT

                 [FORM OF GRANT OF COPYRIGHT SECURITY INTEREST]

                      GRANT OF COPYRIGHT SECURITY INTEREST

            WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"),
owns and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Copyright Collateral (as defined below); and

            WHEREAS, Autotote Corporation, a Delaware corporation ("Company"),
has entered into a Credit Agreement dated as of September 6, 2000 (said Credit
Agreement, as it may heretofore have been and as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "Credit
Agreement") with the financial institutions named therein (collectively,
together with their respective successors and assigns party to the Credit
Agreement from time to time, the "Lenders"), DLJ Capital Funding, Inc., as
Administrative Agent, Syndication Agent, Lead Arranger and Sole Book Running
Manager ("Secured Party"), Lehman Commercial Paper Inc., as Documentation Agent
and Lehman Brothers Inc., as Co-Arranger, pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company; and

            WHEREAS, Company [and its Subsidiary Guarantors, as the case may
be,] may from time to time enter, or may from time to time have entered, into
one or more Hedge Agreements (collectively, the "Lender Hedge Agreements") with
one or more Persons that are Lenders or Affiliates of Lenders at the time such
Lender Hedge Agreements are entered into (in such capacity, collectively, "Hedge
Exchangers"); and

            [Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed
and delivered that certain [Subsidiary] Guaranty dated as of September 6, 2000
(said Subsidiary Guaranty, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Guaranty") in favor of Secured
Party for the benefit of Lenders and any Hedge Exchangers, pursuant to which
Grantor has guarantied the prompt payment and performance when due of all
obligations of Company under the Credit Agreement and the other Loan Documents
and all obligations of Company under the Lender Hedge Agreements, including
without limitation the obligation of Company to make payments thereunder in the
event of early termination thereof; and]

            WHEREAS, pursuant to the terms of a Security Agreement dated as of
September 6, 2000 (as amended, supplemented or otherwise modified from time to
time, the "Security Agreement"), among Grantor, Secured Party and the other
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and Secured Party has agreed to become a
secured creditor with respect to, the Copyright Collateral;

                                     III-1
<PAGE>

            NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party a security
interest in all of Grantor's right, title and interest in and to the following,
in each case whether now or hereafter existing or in which Grantor now has or
hereafter acquires an interest and wherever the same may be located (the
"Copyright Collateral"):

      (i) all rights, title and interest (including rights acquired pursuant to
      a license or otherwise but only to the extent permitted by agreements
      governing such license or other use) under copyright in various published
      and unpublished works of authorship including, without limitation,
      computer programs, computer data bases, other computer software layouts,
      trade dress, drawings, designs, writings, and formulas (including, without
      limitation, the works listed on Schedule A, as the same may be amended
      pursuant hereto from time to time) (collectively, the "Copyrights"), all
      copyright registrations issued to Grantor and applications for copyright
      registration that have been or may hereafter be issued or applied for
      thereon in the United States and any state thereof and in foreign
      countries (including, without limitation, the registrations listed on
      Schedule A, as the same may be amended pursuant hereto from time to time)
      (collectively, the "Copyright Registrations"), all common law and other
      rights in and to the Copyrights in the United States and any state thereof
      and in foreign countries including all copyright licenses (but with
      respect to such copyright licenses, only to the extent permitted by such
      licensing arrangements) (the "Copyright Rights"), including, without
      limitation, each of the Copyrights, rights, titles and interests in and to
      the Copyrights, all derivative works and other works protectable by
      copyright, which are presently, or in the future may be, owned, created
      (as a work for hire for the benefit of Grantor), authored (as a work for
      hire for the benefit of Grantor), or acquired by Grantor, in whole or in
      part, and all Copyright Rights with respect thereto and all Copyright
      Registrations therefor, heretofore or hereafter granted or applied for,
      and all renewals and extensions thereof, throughout the world, including
      all proceeds thereof (such as, by way of example and not by limitation,
      license royalties and proceeds of infringement suits), the right (but not
      the obligation) to renew and extend such Copyright Registrations and
      Copyright Rights and to register works protectable by copyright and the
      right (but not the obligation) to sue in the name of such Grantor or in
      the name of Secured Party or Lenders for past, present and future
      infringements of the Copyrights and Copyright Rights; and

      (ii) all proceeds, products, rents and profits of or from any and all of
      the foregoing Copyright Collateral and, to the extent not otherwise
      included, all payments under insurance (whether or not Secured Party is
      the loss payee thereof), or any indemnity, warranty or guaranty, payable
      by reason of loss or damage to or otherwise with respect to any of the
      foregoing Copyright Collateral. For purposes of this Grant of Copyright
      Security Interest, the term "proceeds" includes whatever is receivable or
      received when Copyright Collateral or proceeds are sold, exchanged,
      collected or otherwise disposed of, whether such disposition is voluntary
      or involuntary.

                                     III-2
<PAGE>

            Notwithstanding anything herein to the contrary, in no event shall
the Copyright Collateral include, and Grantor shall be not deemed to have
granted a security interest in, any of Grantor's rights or interests in any
license, contract or agreement to which Grantor is a party or any of its rights
or interests thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement or otherwise,
result in a breach of the terms of, or constitute a default under any license,
contract or agreement to which Grantor is a party; provided, that immediately
upon the ineffectiveness, lapse or termination of any such provision, the
Copyright Collateral shall include, and Grantor shall be deemed to have granted
a security interest in, all such rights and interests as if such provision had
never been in effect.

            Grantor does hereby further acknowledge and affirm that the rights
and remedies of Secured Party with respect to the security interest in the
Copyright Collateral granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.

             [The remainder of this page intentionally left blank.]

                                     III-3
<PAGE>

      IN WITNESS WHEREOF, Grantor has caused this Grant of Copyright Security
Interest to be duly executed and delivered by its officer thereunto duly
authorized as of the ___ day of ___________, _____.

                                    [NAME OF GRANTOR]

                                    By:
                                        ----------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                     III-4
<PAGE>

                                   SCHEDULE A
                                       TO
                      GRANT OF COPYRIGHT SECURITY INTEREST

U.S. Copyrights:

Title       Registration No.   Date of Issue     Registered Owner
-----       ----------------   -------------     ----------------

Pending U.S. Copyright Registrations & Applications:

Title   Reference No.     Date of Application     Copyright   Claimant
-----   -------------     -------------------     ---------   --------

                                    III-A-1
<PAGE>

                                                                   EXHIBIT IV TO
                                                              SECURITY AGREEMENT

                                PLEDGE SUPPLEMENT

            This Pledge Supplement, dated __________________, is delivered
pursuant to the Security Agreement, dated September 6, 2000, between
____________________, a _______________ ("Grantor"), the other Grantors named
therein, and __________________ (as it may be from time to time amended,
modified or supplemented, the "Security Agreement"). Capitalized terms used
herein not otherwise defined herein shall have the meanings ascribed thereto in
the Security Agreement.

            Grantor hereby agrees that the [Pledged Shares] [Pledged Debt]
listed on the schedule attached hereto shall be deemed to be part of the
[Pledged Shares] [Pledged Debt] and shall become part of the Securities
Collateral and shall secure all Secured Obligations.

            IN WITNESS WHEREOF, Grantor has caused this Amendment to be duly
executed and delivered by its duly authorized officer as of _______________.

                                    [GRANTOR]

                                    By:
                                        ----------------------------------------
                                    Title:

                                      IV-1
<PAGE>

                                                                    EXHIBIT V TO
                                                              SECURITY AGREEMENT

                                  IP SUPPLEMENT

            This IP SUPPLEMENT, dated _______, is delivered pursuant to and
supplements (i) the Security Agreement, dated as of September 6, 2000 (as it may
be from time to time amended, modified or supplemented, the "Security
Agreement"), among Autotote Corporation, [Insert Name of Grantor], the other
Grantors named therein, and DLJ Capital Funding, Inc., as Secured Party, and
(ii) the [Grant of Trademark Security Interest] [Grant of Patent Security
Interest] [Grant of Copyright Security Interest] dated as of ___________, _____
(the "Grant") executed by Grantor. Capitalized terms used herein not otherwise
defined herein shall have the meanings ascribed thereto in the Grant.

            ["Grantor"] grants to Secured Party a security interest in all of
Grantor's right, title and interest in and to the [Trademark Collateral] [Patent
Collateral] [Copyright Collateral] listed on Schedule A attached hereto. All
such [Trademark Collateral] [Patent Collateral] [Copyright Collateral] shall be
deemed to be part of the [Trademark Collateral] [Patent Collateral] [Copyright
Collateral] and shall be hereafter subject to each of the terms and conditions
of the Security Agreement and the Grant.

            IN WITNESS WHEREOF, Grantor has caused this Supplement to be duly
executed and delivered by its duly authorized officer as of ______________.

                                    [GRANTOR]

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                      V-1
<PAGE>

                                                                   EXHIBIT VI TO
                                                              SECURITY AGREEMENT

                              [FORM OF COUNTERPART]

            COUNTERPART (this "Counterpart"), dated _______, is delivered
pursuant to Section 22 of the Security Agreement referred to below. The
undersigned hereby agrees that this Counterpart may be attached to the Security
Agreement, dated as of September 6, 2000 (as it may be from time to time
amended, modified or supplemented, the "Security Agreement"; capitalized terms
used herein not otherwise defined herein shall have the meanings ascribed
therein), among Autotote Corporation, the other Grantors named therein, and DLJ
Capital Funding, Inc., as Secured Party. The undersigned by executing and
delivering this Counterpart hereby becomes a Grantor under the Security
Agreement in accordance with Section 22 thereof and agrees to be bound by all of
the terms thereof. [Without limiting the generality of the foregoing, the
undersigned hereby:

            (i) authorizes the Secured Party to add the information set forth on
      the Schedules to this Agreement to the correlative Schedules attached to
      the Security Agreement(1);

            (ii) agrees that all Collateral of the undersigned, including the
      items of property described on the Schedules hereto, shall become part of
      the Collateral and shall secure all Secured Obligations; and

            (iii) makes the representations and warranties set forth in the
      Security Agreement, as amended hereby, to the extent relating to the
      undersigned.]

                                    [NAME OF ADDITIONAL GRANTOR]

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

----------------

                                      VI-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}]]