$5,000,000 Term Note between Interlott Technologies, Inc. and Fifth Third Bank (June 1, 2001)

Summary

Interlott Technologies, Inc. has issued a $5,000,000 term note to Fifth Third Bank, agreeing to repay the principal plus 12% annual interest. Interest is paid monthly, and the full amount is due by June 30, 2003. The note allows for prepayment under certain conditions and is governed by the terms of a related credit agreement. If Interlott defaults, a higher interest rate may apply. The agreement is governed by Ohio law and includes a waiver of jury trial rights.

EX-10.5 7 interlott10q_ex10563001.txt INTERLOTT TECHNOLOGIES EX-10.5 TERM NOTE $5,000,000.00 Cincinnati, Ohio June 1, 2001 INTERLOTT TECHNOLOGIES, INC., a Delaware corporation (the "Borrower"), for value received, hereby promises to pay to the order of FIFTH THIRD BANK, an Ohio banking corporation (the "Bank"), at its offices located at 38 Fountain Square Plaza, Cincinnati, Ohio 45263, in lawful money of the United States of America, the principal sum of Five Million Dollars ($5,000,000) together with interest as set forth herein. Interest on the outstanding principal balance of this Note will accrue at a rate per annum equal to 12% per annum. Interest will be calculated on the basis of a year of 360 days and charged for the actual number of days elapsed. Interest will be payable in immediately available funds at the principal office of Bank on the first day of each calendar month commencing July 1, 2001. After maturity, whether by acceleration, or otherwise, this Note will bear interest (computed and adjusted in the same manner, and with the same effect, as interest hereon prior to maturity), payable on demand, at a rate per annum equal to the Default Rate, until paid, and whether before or after the entry of judgment hereon. Accrued and unpaid interest will only be due and payable monthly commencing on the 1st day of July, 2001 and continuing on the 1st day of each month thereafter during the term hereof. The entire principal amount and all accrued and unpaid interest due and of this Note will be due and payable on June 30, 2003. This Note is the Term Note referred to in the Credit Agreement between Borrower and Bank of even date herewith, as it may be amended from time to time (the "Agreement"), and is entitled to the benefits, and is subject to the terms, of the Agreement. Capitalized terms used but not otherwise defined herein will have the meanings attributed thereto in the Agreement. The principal of this Note is pre-payable in the amounts and under the circumstances, and its maturity is subject to acceleration upon the terms, set forth in the Agreement. Except as otherwise expressly provided in the Agreement, if any payment on this Note becomes due and payable on a day other than one on which Bank is open for business (a "Business Day"), the maturity thereof will be extended to the next Business Day, and interest will be payable at the rate specified during the extension period. This Note is subject to all the terms and conditions of a Standby and Subordination Agreement (as defined in the Credit Agreement). After the occurrence and during the continuation of an Event of Default, all amounts of principal outstanding as of the date of the occurrence of such Event of Default will bear interest at the Default Rate, in Bank's sole discretion. This provision does not constitute a waiver of any Events of Default or an agreement by Bank to permit any late payments whatsoever. Prepayment. Borrower may prepay any portion of the Term Loan without premium or penalty but only if: (a) Borrower is in full compliance with the Senior Debt Credit Facility, and (b) all pre-payments are made in increments of $500,000, and (c) all pre-payments are made not earlier than 40 days after the close of each fiscal quarter, and not later than 50 days after the close of each fiscal quarter, commencing on September 30, 2001. In no event will the interest rate on this Note exceed the highest rate permissible under any law which a court of competent jurisdiction will, in a final determination, deem applicable hereto. In the event that a court determines that Bank has received interest and other charges under this Note in excess of the highest permissible rate applicable hereto, such excess will be deemed received on account of, and will automatically be applied to reduce the amounts due to Bank from Borrower under this Note, other than interest in the inverse order of maturity, and the provisions hereof will be deemed amended to provide for the highest permissible rate. If there are no such amounts outstanding, Bank will refund to Borrower such excess. Page 2 All payments received by Bank will be applied first to payment of amounts advanced by Bank on behalf of Borrower, which may be due for insurance, taxes and attorneys' fees or other charges to be paid by Borrower pursuant to the Agreement and the Loan Documents (as defined herein), then to accrued interest due on this Note, then to the principal, which will be repaid in the inverse order of maturity. Borrower and all endorsers, sureties, guarantors and other persons liable on this Note hereby waive presentment for payment, demand, notice of dishonor, protest, notice of protest and all other demands and notices in connection with the delivery, performance and enforcement of this Note, and one or more extensions and renewals of this Note. This Note may not be changed orally, but only by an instrument in writing. This Note is being delivered in, is intended to be performed in, will be construed and enforceable in accordance with, and be governed by the internal laws of, the State of Ohio without regard to principles of conflict of laws. Borrower agrees that the State and federal courts in Hamilton County, Ohio, or any other court in which Bank initiates proceedings, have exclusive jurisdiction over all matters arising out of this Note, and that service of process in any such proceeding will be effective if mailed to Borrower at its address described in the Notices section of the Agreement. BORROWER HEREBY WAIVES THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE. Page 3 WITNESSES: INTERLOTT TECHNOLOGIES, INC. ____________________________ By: ____________________________ ____________________________ Its: ____________________________ Page 4