AMENDED AND RESTATED LOAN AGREEMENT, dated as of February , 1997,
among ACT III THEATRES, INC., a Delaware corporation having an office at ▇▇▇
▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("Borrower"), the lenders
("Lenders") listed on the signature pages hereof as Lenders and Co-Agents, and
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation having an office at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("GE Capital"), as agent for
the Lenders hereunder (GE Capital, in such capacity, being "Agent").
W I T N E S S E T H
-------------------
WHEREAS, Borrower has entered into an Amended and Restated Loan
Agreement, dated as of September 10, 1996 (the "Original Loan Agreement") with
GE Capital as agent and sole lender, which amended and restated the Loan
Agreement dated as of May 1, 1989 between them; and
WHEREAS, Borrower and GE Capital, as agent and sole lender under the
Original Loan Agreement, desire to amend and restate such Original Loan
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree that the Original Loan
Agreement is hereby amended and restated in its entirety to read as follows:
1. DEFINITIONS
In addition to the defined terms appearing above, capitalized terms
used in this Agreement shall have (unless otherwise provided elsewhere in this
Agreement) the following respective meanings when used herein:
"A 3 Ltd." shall mean A 3 Theatres of San Antonio, Ltd., a Texas
limited partnership and an Affiliate of Borrower.
"Accrued and Unpaid Management Fee" shall have the meaning assigned to
it in Section 7.7(c).
"Act III" shall mean Act III Communications, L.P., a Delaware limited
partnership and an Affiliate of Borrower.
"Adverse Environmental Condition" shall mean any of the matters
referred to in clause (i) or (ii) of the definition of Environmental Claim.
"Affiliate" shall mean with respect to any Person (i) each Person
that, directly or indirectly, owns or Controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 10% or more of the Stock having ordinary
voting power in the election of directors of such Person, (ii) each Person that
Controls, is Controlled by or is under common Control with such Person or any
Affiliate of such Person or (iii) each of such Person's executive officers,
directors, joint venturers and general partners. For the purpose of this
definition GE Capital and its Affiliates shall not be deemed an Affiliate of the
Borrower.
"Agent" shall mean GE Capital, as Agent for Lenders hereunder, and any
successor Agent appointed pursuant to Section 10.6.
"Agreement" shall mean this Loan Agreement, including all amendments,
modifications and supplements hereto and any appendices, exhibits or schedules
to any of the foregoing, and shall refer to this Agreement as the same may be in
effect at the time such reference becomes operative.
"AMC-Austin Leases" shall mean all of the leasehold estates in real
property acquired by Borrower or any of its Subsidiaries in connection with the
Asset Purchase Agreement, dated May 26, 1989, among Borrower, American Multi-
Cinema, Inc. and ▇▇▇▇▇▇▇, Inc.
"Ancillary Agreements" shall mean any supplemental agreement,
undertaking, instrument, document or other writing executed by Parent, Borrower
or by any of Borrower's Subsidiaries or Stockholders as a condition to advances
or funding under this Agreement or otherwise in connection herewith, including,
without limitation, the Loan Documents and all amendments or supplements
thereto.
"Asset Sale" shall mean any sale or other disposition (including by
merger or consolidation) made after the date hereof by Borrower or any of its
Subsidiaries to any Person (other than Borrower or any of its Subsidiaries) of
(i) all or substantially all of the Stock of any of Borrower's Subsidiaries,
(ii) all or substantially all the assets of Borrower or any of its Subsidiaries
or any division of any of them, or (iii) any other asset of Borrower or any of
its Subsidiaries not made in the ordinary course of business (including, without
limitation, a termination or surrender of any lease prior to its stated
expiration date).
"Available Cash" shall mean, with respect to Borrower for any given
Fiscal Year, an amount equal to Borrower's Consolidated Available Cash Flow with
respect to such Fiscal Year, less the amount of such Consolidated Available Cash
Flow required to be utilized to prepay the Loans pursuant to Section 2.4(a)
hereof.
"Borrower" shall mean Act III Theatres, Inc., a Delaware corporation,
having an office at ▇▇▇ ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
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"Business Day" shall mean any day that is not a Saturday, a Sunday or
a day on which banks are required or permitted to be closed in either the state
of California or the state of New York.
"Capital Expenditures" shall mean all payments for any fixed assets or
improvements or for replacements, substitutions or additions thereto, that have
a useful life of more than one year and which are required to be capitalized
under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property, other than the Leases, by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet, other than, in the case of
Borrower or a Subsidiary of Borrower, any such lease under which Borrower or
such Subsidiary is the lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that, in accordance
with GAAP, would appear on a balance sheet of such lessee in respect of such
Capital Lease or otherwise be disclosed in a note to such balance sheet.
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental (including, without limitation, PBGC) taxes
at the time due and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) the Collateral, (ii) Borrower's or any of
its Subsidiaries' employees, payroll, income or gross receipts, (iii) Borrower's
or any of its Subsidiaries' ownership or use of any of its assets, or (iv) any
other aspect of Borrower's or any of the Subsidiaries' business.
"Closing Date" shall mean the date on which the Restated Loan
Agreement becomes effective, as provided in Section 3.1 hereof.
"Code" shall mean the Uniform Commercial Code of the jurisdiction with
respect to which such term is used, as in effect from time to time.
"Collateral" shall mean the Collateral covered by the Security
Agreement and the Trademark Assignment Agreement, the Pledged Collateral covered
by the Pledge Agreement and the properties and interests covered by the
Mortgages and the Leasehold Mortgages.
"Collateral Documents" shall mean the Guaranty, the Security
Agreement, the Pledge Agreement, the Trademark Assignment Agreement, the
Mortgages and the Leasehold Mortgages.
"Commitments" shall mean, the obligation of Lenders to make Revolving
Credit Advances, and the "Commitment" of any Lender shall mean the obligation of
such Lender to
3
make Revolving Credit Advances pursuant to Section 2.1 hereof in the aggregate
principal amount outstanding not to exceed the amount set forth opposite such
Lender's name on the signature pages hereof under the caption "Commitment", as
such amount may be reduced or modified pursuant to this Agreement.
"Commitment Termination Date" shall mean the earliest of (i) February
14, 2002 and (ii) the date of termination of the Commitments pursuant to Section
9.2.
"Common Stock" shall mean the common stock, $.001 par value, of
Parent.
"Compensation" shall mean, with respect to any Person, all payments
and accruals commonly considered to be compensation, including, without
limitation, all wages, salary, deferred payment arrangements, bonus payments and
accruals, profit sharing arrangements, payments in respect of stock option or
phantom stock option or similar arrangements, stock appreciation rights or
similar rights, incentive payments, pension or employment benefit contributions
or similar payments, made to or accrued for the account of such Person or
otherwise for the direct or indirect benefit of such Person; PROVIDED, HOWEVER,
that, Compensation shall not include payments and accruals payable by Borrower
to employees of Borrower pursuant to that certain Compensation Plan as in effect
on the Closing Date or as replaced by that certain Compensation Plan
substantially in the form provided to Agent prior to the Closing Date.
"Compensation Plan" shall mean the Management Incentive Compensation
Plan of Borrower, a copy of which has been delivered to Agent and the Lenders.
"Consolidated Available Cash Flow" shall mean, with respect to any
Person for any period, Consolidated Cash Flow MINUS payments made in respect of
Capital Expenditures permitted hereunder except any such payments made out of
Net Cash Proceeds to the extent permitted by Section 2.4(b), cash interest,
scheduled principal payments on the Notes, principal payments permitted
hereunder on other Indebtedness (other than, with respect to Borrower, the
Revolving Credit Loan to the extent that such payments do not result in a
reduction in availability thereunder), payments made with respect to the
management fee payable to Act III to the extent permitted to be paid by Section
7.7(c) hereof, payment of taxes, amounts used to repurchase Senior Subordinated
Notes to the extent permitted by Section 7.21(a) hereof, and amounts used to
declare and pay cash dividends to the extent permitted by Section 7.15(D)
hereof.
"Consolidated Cash Flow" shall mean, with respect to any Person for
any period, the consolidated operating income (before extraordinary items
(including any Net Cash Proceeds), interest, taxes, depreciation and
amortization) of such Person and its consolidated Subsidiaries determined in
accordance with GAAP and in a manner consistent with the projections referred to
in Section 4.7 hereof.
"Consolidated Cash Flow to Consolidated Fixed Charges Ratio" shall
mean, at any date of calculation thereof, the ratio of (a) Consolidated Cash
Flow of Borrower for the
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immediately preceding four consecutive fiscal quarters to (b) Consolidated Fixed
Charges of Borrower for such period.
"Consolidated Fixed Charges" shall mean, with respect to any Person
for any period, the sum of (i) Consolidated Interest Charges of such Person and
its consolidated Subsidiaries during such period plus (ii) principal amounts of
all Indebtedness (including Capital Lease Obligations) of such Person and its
consolidated Subsidiaries payable during such period resulting from borrowings
or the granting of credit (other than normal trade credit) plus (iii) the amount
of any reduction of the Revolving Credit Loans during such period as provided in
Section 2.1(c).
"Consolidated Interest Charges" shall mean, with respect to any Person
for any period, the amount which, in conformity with GAAP, would be set forth
opposite the caption "interest expense" (or any like caption) on a consolidated
income statement of such Person and all other Persons with which such Person's
financial statements are to be consolidated in accordance with GAAP for the
relevant period ended on such date (including interest payable with respect to
any Capitalized Lease Obligation).
"Consolidated Interest Coverage Ratio" shall mean, at any date of
calculation thereof, the ratio of (a) Consolidated Cash Flow of Borrower for the
immediately preceding four consecutive fiscal quarters to (b) Consolidated
Interest Charges of Borrower for such period.
"Consolidated Senior Debt" shall mean Consolidated Total Funded Debt
other than the Senior Subordinated Notes.
"Consolidated Senior Debt to Consolidated Cash Flow Ratio" shall mean,
at any date of calculation thereof, the ratio of (a) Consolidated Senior Debt of
Borrower to (b) Consolidated Cash Flow of Borrower for the immediately preceding
four consecutive fiscal quarters.
"Consolidated Theatre Cash Flow" shall mean, with respect to Borrower
and its consolidated Subsidiaries for any period, the sum of Consolidated Cash
Flow of Borrower and its consolidated Subsidiaries for such period plus
Corporate Overhead of Borrower and its consolidated Subsidiaries for such
period.
"Consolidated Total Funded Debt" shall mean, with respect to any
Person at any date of determination, the total of all Funded Debt (including
Capital Lease Obligations) of such Person and its consolidated Subsidiaries
outstanding on such date determined in accordance with GAAP, after eliminating
all intercompany transactions.
"Consolidated Total Funded Debt to Consolidated Cash Flow Ratio" shall
mean, at any date of calculation thereof, the ratio of (a) Consolidated Total
Funded Debt of Borrower to (b) Consolidated Cash Flow of Borrower for the
immediately preceding four consecutive fiscal
5
quarters; PROVIDED, HOWEVER, that solely for the purposes of this calculation,
in the event that Borrower acquires any Theatre, Consolidated Cash Flow of
Borrower shall include the operating income (before extraordinary items,
interest, taxes, depreciation and amortization) of such acquired Theatre for the
immediately preceding four consecutive fiscal quarters.
"Contaminant" shall mean those substances which are regulated by or
form the basis of liability under any Environmental Laws including, without
limitation, asbestos, polychlorinated biphenyls ("PCBs"), and radioactive
substances, or any other material or substance which constitutes a health,
safety or environmental hazard to any person or property.
"Continuing Directors" shall mean any member of the Board of Directors
of Borrower who (i) is a member of that Board of Directors on the date hereof or
(ii) was nominated for election or elected to the Board of Directors with the
affirmative vote of a majority of the Continuing Directors who were members of
the Board at the time of such nomination or election.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise and "Controlled by" shall have the concomitant meaning; PROVIDED,
HOWEVER, that a Person shall not be deemed to lack or to have failed to maintain
Control of another Person by reason of the existence of rights of approval or
veto rights held by any third party, including, without limitation, any
stockholder, director, partner, lender or landlord.
"Corporate Overhead" shall mean, for any period, all customary and
routine overhead costs, expenses and liabilities of Borrower or any of its
Subsidiaries, including, without limitation, all accounting and legal fees,
telephone expenses, rent or other office overhead payable by Borrower or such
Subsidiary, and all Compensation payable by Borrower or such Subsidiary, to the
employees, officers or directors of Borrower or such Subsidiary, all of which
are incurred in connection with the conduct of the business of Borrower or such
Subsidiary; PROVIDED, HOWEVER, that Corporate Overhead shall not include any of
the foregoing costs, expenses or liabilities incurred by Borrower or any of its
Subsidiaries in connection with the day to day operations of any Theatre or
management fees paid by Borrower pursuant to Section 7.7(c).
"Debt" shall mean all principal of and premium, if any, and interest
on, and all other amounts of any nature whatsoever owing in respect of the
Revolving Credit Loan hereunder.
"Default" shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Derivative Ownership Interest" shall mean an ownership interest held
either directly or indirectly and determined by reference to the diluted
percentage interest that is derived through intermediate Persons. For instance,
an 80% interest in a Person that, in turn, owns 80%
6
of an underlying entity, would be computed as a 64% Derivative Ownership
Interest in the underlying entity.
"Disclosure Documents" means, collectively, the Registration Statement
on Form S-1 filed by Borrower with the Securities and Exchange Commission, as
amended from time to time through the date hereof, including, without
limitation, the Prospectus dated January 26, 1993 constituting a part thereof.
"DOL" shall mean the United States Department of Labor.
"Eastgate" shall mean Eastgate Theatre, Inc., an Oregon corporation.
"Environmental Claim" shall mean any accusation, allegation, notice of
violation, claim, demand, abatement or other order or direction (conditional or
otherwise) by any governmental authority or any Person for personal injury
(including sickness, disease or death), tangible or intangible property damage,
damage to the environment, nuisance, pollution, contamination or other adverse
effects on the environment, or for fines, penalties, interest, costs and
expenses, or restrictions, resulting from or based upon (i) the existence, or
the continuation of the existence, of a Release (including, without limitation,
sudden or non-sudden, accidental or non-accidental Releases), of, or exposure
to, any Contaminant in, into or onto the environment (including, without
limitation, the air, ground, water or any surface) at, in, by, from, or related
to the Facilities, (ii) the transportation, storage, treatment or disposal of
Contaminants in connection with the operation of the Facilities or any other
tangible assets of the Borrower or any of its subsidiaries, or (iii) the
violation, or alleged violation, of any statutes, ordinances, orders, rules,
regulations, permits or licenses of or from any governmental authority, agency
or court relating to environmental matters connected with the Facilities.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 ET SEQ.),
the Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C.
Section 5101 ET SEQ.), the Federal Water Pollution Control Act
(33 U.S.C.Section 1251 ET SEQ.), the Resource Conservation and Recovery Act
(42 U.S.C. Section 6901 ET SEQ.), the Clean Air Act (42 U.S.C. Section 7401
ET SEQ.), the Toxic Substances Control Act, as amended (15 U.S.C.
Section 2601 ET SEQ.), the Federal Insecticide, Fungicide and Rodenticide Act
(7 U.S.C. Section 136 ET SEQ.), and the Occupational Safety and Health Act
(29 U.S.C. Section 651 ET SEQ.), as these laws have been amended or
supplemented and any analogous state or local statutes and the regulations
promulgated pursuant thereto.
"ERISA" shall mean the Employee Retirement Income security Act of
1974, as amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to Borrower or any of its
subsidiaries, all trades or businesses (whether or not incorporated) which are
under common control with
7
Borrower or any of its Subsidiaries and which, together with Borrower or any of
its Subsidiaries, are treated as a single employer under Section 414(b), (c),
(m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to Borrower, any of its
Subsidiaries or any ERISA Affiliate, (a) a Reportable Event (other than a
Reportable Event not subject to the provision for 30-day notice to the PBGC
under regulations issued under Section 4043 of ERISA), (b) the withdrawal of
Borrower, any of its Subsidiaries or any ERISA Affiliate from a Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or
the treatment of a Plan amendment as a termination under Section 4041(c) of
ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC under
Section 4042 of ERISA, (e) the failure to make required contributions which
would result in the imposition of a lien under Section 412 of the IRC or Section
302 of ERISA, or (f) any other event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan or to cause the
imposition of any liability under Title IV of ERISA.
"Eurodollar Business Day" shall mean a Business Day on which banks in
the City of London are required or permitted to be open for interbank or foreign
exchange transactions.
"Event of Default" shall have the meaning assigned to it in Section
9.1 hereof.
"Exhibition Contract" shall mean any contract or other agreement,
whether or not written, with a motion picture distributor for the exhibition of
a motion picture.
"Facilities" shall mean any and all real property owned or leased or
used by Borrower or any of its Subsidiaries.
"Federal Funds Rate" shall mean, for any day, a floating rate equal to
the weighted average of the rates on overnight federal funds transactions among
members of the Federal Reserve System, as determined by Agent.
"Federal Reserve Board" shall have the meaning assigned to it in
Section 4.13 hereof.
"Fiscal Year" shall mean the calendar year. Subsequent changes of the
fiscal year of Borrower shall not change the term "Fiscal Year," unless the
Required Lenders shall consent in writing to such changes.
"Funded Debt" shall mean, with respect to any Person, all Indebtedness
of such Person which by the terms of the agreement governing or instrument
evidencing such Indebtedness matures more than one year from, or is directly or
indirectly renewable or extendible at the option of the debtor under a revolving
credit or similar agreement obligating the lender or lenders to extend credit
over a period of more than one year from, the date of creation thereof,
including
8
current maturities of long-term debt, revolving credit, and short-term debt
extendible beyond one year at the option of the debtor and, in respect of
Borrower, including the Revolving Credit Loan.
"Funding Arrangements" shall have the meaning assigned to it in
Section 2.15(b) hereof.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"GE Capital" shall mean General Electric Capital Corporation, a New
York corporation, having an office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation
of such Person guaranteeing any indebtedness, lease, dividend, or other
obligation ("primary obligations") of any other Person (the "primary obligor")
in any manner including, without limitation, any obligation or arrangement of
such Person (a) to purchase or repurchase any such primary obligation, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
condition of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof.
"Guarantor" shall mean Parent and each Subsidiary of Borrower, each of
which is executing and delivering to Agent the Guaranty.
"Guaranty" shall mean the Guaranty made in favor of Agent, as agent
for itself and the other Lenders, by each Guarantor, dated as of May 1, 1989,
including all amendments, modifications and supplements thereto, and shall refer
to the Guaranty as the same may be in effect at the time such reference becomes
operative.
"Improvements" shall have the meaning assigned to such term in Section
4.8(d) hereof.
"Indebtedness" of any Person shall mean (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (including, without limitation, reimbursement and all other obligations
with respect to surety bonds, letters of credit and bankers' acceptances,
whether or not matured, but not including obligations to trade creditors
incurred in the ordinary course of business), (ii) all obligations evidenced by
notes, bonds, debentures or similar instruments, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default
9
are limited to repossession or sale of such property), (iv) all Guaranteed
Indebtedness, (v) all Indebtedness referred to in clause (i), (ii), (iii) or
(iv) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in
property (including, without limitation, accounts and contracts rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, (vi) the Obligations, and (vii) all liabilities
under Title IV of ERISA.
"Indenture" means the Indenture, dated as of February 2, 1993, between
Borrower and The First National Bank of Boston, as Trustee, pursuant to which
the Senior Subordinated Notes are to be issued, as the same may be hereafter
amended, supplemented or modified from time to time to the extent permitted by
the Loan Agreement.
"Index Rate" shall mean, for any day, a floating rate equal to the
higher of (i) the highest prime or base rate of interest publicly announced on
any given Business Day by any of Citibank, N.A., ▇▇▇▇▇▇ Guaranty Trust Company
of New York and The Chase Manhattan Bank (whether or not such rate is actually
charged by any such bank) and (ii) the Federal Funds Rate plus fifty (50) basis
points per annum. Each change in any interest rate provided for in the
Agreement based upon the Index Rate shall take effect at the time of such change
in the Index Rate.
"Index Rate Loan" shall mean any Loan that bears interest at the Index
Rate.
"Interest Payment Date" shall have the meaning assigned to such term
in Section 2.8(a) hereof.
"Interest Rate Contracts" means interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance, and other agreements or arrangements designed to provide protection
against fluctuations in interest rates.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"IRS" shall mean the Internal Revenue Service.
"▇▇▇▇" shall mean ▇▇▇▇▇▇ ▇▇▇▇.
"Leases" shall mean all of those leases of real property now owned or
hereafter acquired by Borrower or any Subsidiary of Borrower, as lessee.
"Leasehold Mortgage" shall mean the leasehold mortgages, leasehold
deeds of trust or other similar leasehold security agreements substantially in
the form of Exhibit C, made or to be made by Borrower and each of its
Subsidiaries having an interest in the Lease to be encumbered, in favor of Agent
to secure the Obligations creating a lien on the Leases particularly
10
designated on Schedule 4.8(b) or for which Leasehold Mortgages are required in
accordance with the terms of this Agreement, as the same may be amended,
modified or supplemented, from time to time.
"Lender" shall mean each Lender, including GE Capital, listed on the
signature pages hereof and any future holder of all or any portion of the Notes.
"LIBOR Lending Office" shall mean, with respect to any Lender, the
office of such Lender specified as its "LIBOR Lending Office" opposite its name
on Schedule 1.1 hereto (or, if no such office is specified, its domestic lending
office) or such other office of such Lender as such Lender may from time to time
specify to Borrower and Agent.
"LIBOR Period" shall mean, with respect to any LIBOR Rate Loan, each
period commencing on the last day of the next preceding LIBOR Period applicable
to such LIBOR Rate Loan and ending 30 days thereafter, as selected by Borrower's
irrevocable notice to Agent as set forth in Section 2.8(e) hereof; PROVIDED that
the foregoing provision relating to LIBOR Periods is subject to the following:
(1) if any LIBOR Period pertaining to a LIBOR Rate Loan would
otherwise end on a day that is not a Eurodollar Business Day, such LIBOR
Period shall be extended to the next succeeding Eurodollar Business Day
unless the result of such extension would be to carry such LIBOR Period
into another calendar month in which event such LIBOR Period shall end on
the immediately preceding Eurodollar Business Day;
(2) any LIBOR Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date;
(3) any LIBOR Period pertaining to a LIBOR Rate Loan that begins on
the last Eurodollar Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such LIBOR Period) shall end on the last Eurodollar Business Day of a
calendar month;
(4) Borrower shall select LIBOR Periods so as not to require a
payment or prepayment of any LIBOR Rate Loan during a LIBOR Period for such
Loan; and
(5) Borrower shall select LIBOR Periods so that there shall be no
more than three tranches in existence at any one time and each tranche
shall be in an amount of at least $5,000,000.
"LIBOR Rate" shall mean for any LIBOR Period the average of the four
rates, reported from time to time by Telerate News Service page 3750 or such
other page as may replace page 3750 on that service or such other service or
services as may be designated by the British Bankers' Association for the
purpose of displaying such rate (or such other number of
11
rates as such service may from time to time report), at which foreign branches
of major United States banks offer United States dollar deposits to other banks
for such LIBOR Period at approximately 9:00 a.m., New York City time, on the
second full Eurodollar Business Day next preceding such LIBOR Period. If such
interest rates shall cease to be available from Telerate News Service, the LIBOR
Rate shall be determined from such financial reporting service or other
information as shall be mutually acceptable to Agent and Borrower.
"LIBOR Rate Loan" shall mean any loan that bears interest at the LIBOR
Rate.
"Lien" shall mean any mortgage or deed of trust (including any
Mortgage and Leasehold Mortgage), pledge, hypothecation, assignment, deposit
arrangement, lien, Charge, claim, security interest, easement or encumbrance, or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any lease or title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the Code or comparable
law of any jurisdiction).
"Loans" shall mean the Revolving Credit Loan.
"Loan Documents" shall mean this Agreement, the Notes, the Collateral
Documents and all other agreements, instruments, documents and certificates,
including, without limitation, pledges, powers of attorney, consents,
assignments, contracts, notices, whether now or hereafter executed by or on
behalf of Borrower or any other Loan Party, or any employee of Borrower or any
other Loan Party, and delivered to Agent or any Lender, in connection with this
Agreement or the transactions contemplated hereby.
"Loan Party" shall mean Parent, Borrower and each Subsidiary of
Borrower.
"Market Segment" shall mean the geographic regions in which the
Borrower and/or its Subsidiaries own, lease or operate Theatres broken down as
follows: (i) Alaska, (ii) Austin, Texas, (iii) San Antonio, Texas, (iv)
Washington and Idaho, (v) Oregon and (vi) Nevada and Missouri.
"Material Adverse Effect" shall mean a material adverse effect on (i)
the business, assets, operations, financial or other condition of Parent,
Borrower and its Subsidiaries, taken as a whole, (ii) the Parent's, Borrower's
and its Subsidiaries' collective ability to pay the Obligations in accordance
with the terms thereof, (iii) the Collateral, determined by reference to Parent,
Borrower and its Subsidiaries, taken as a whole or (iv) Lenders' Liens on the
Collateral or the priority thereof, determined by reference to Parent, Borrower
and its Subsidiaries, taken as a whole.
"Maximum Lawful Rate" shall have the meaning assigned to it in Section
2.8(d) hereof.
12
"Maximum Revolving Credit Loan" shall mean, at any particular time, an
amount equal to $250,000,000, as such amount may be limited or reduced from time
to time pursuant to Sections 2.1(c), 2.1(d), 2.1(e) and 2.4 hereof.
"Mortgage" shall mean each mortgage, deed of trust or similar security
agreement made or to be made by Borrower and each of its subsidiaries having an
interest in the Real Estate to be encumbered in favor of Lender, creating a lien
against any portion of the real estate described in Schedule 4.8(a) hereto to
secure the payment of the Obligations, substantially in the form of Exhibit D,
as the same may be amended, modified or supplemented from time to time.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA and to which Borrower, any of its subsidiaries or
any ERISA Affiliate is making, or is obligated to make, contributions or has
made, or been obligated to make, contributions.
"Net Cash Proceeds" shall mean cash payments received by Borrower or
any of its Subsidiaries (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received) from any Asset Sale made after the Closing Date,
in each case net of the amount of (i) brokers' fees, legal fees, accountants'
fees and related expenses payable in connection with such Asset Sale and (ii)
federal, state and local taxes payable as a consequence of such Asset Sale.
"Note Documents" means the Indenture, the Senior Subordinated Notes,
each agreement entered into and certificate or other document executed with
respect to the Indenture or the Senior Subordinated Notes, including, without
limitation, the Disclosure Documents.
"Notes" shall mean the Revolving Credit Notes.
"Notice of Revolving Credit Advance" shall have the meaning assigned
to it in Section 2.1(a) hereof.
"Number" shall mean, in respect of shares of Common Stock, the number
thereof, and in respect of the shares of Senior Subordinated Convertible
Preferred Stock, the number of shares of Common Stock issuable upon the exercise
or conversion thereof.
"Obligations" shall mean all loans, advances, debts, liabilities, and
obligations, for monetary amounts (whether or not such amounts are liquidated or
determinable) owing by Borrower or any or all of its subsidiaries or all of them
to Agent or Lenders or, if pursuant to interest rate hedging contracts, to any
Lender or any Affiliate of a Lender, and all covenants and duties of Borrower or
any of its Subsidiaries regarding such amounts, of any kind or nature, present
or future, whether or not evidenced by any note, agreement or other instrument,
arising under any of the Loan Documents, or pursuant to any interest rate
hedging contracts entered into
13
by any Lender or any Affiliate of a Lender. This term includes, without
limitation, all interest, charges, expenses, reasonable attorneys' fees and any
other sum chargeable to Borrower or any or all of its Subsidiaries under any of
the Loan Documents.
"Parent" shall mean Act III Cinemas, Inc., a Delaware corporation and
the owner of all of the issued and outstanding capital stock of Borrower.
"Partnership Agreement" shall mean that certain Second Amended and
Restated Agreement of Limited Partnership of A 3 Ltd., dated as of October 29,
1987, as amended, and the Certificate of Limited Partnership of A 3 Ltd., as
amended.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions.
"Permit" shall mean any permit, certificate, registration, approval,
authorization, license, variance, or permission required from a governmental
authority under any applicable Environmental Laws.
"Permitted Encumbrances" shall mean the following encumbrances: (i)
Liens for taxes or assessments or other governmental charges or levies, either
not yet due and payable or to the extent that nonpayment thereof is permitted by
the terms of this Agreement; (ii) pledges or deposits securing obligations under
workmen's compensation, unemployment insurance, social security or public
liability laws or similar legislation; (iii) pledges or deposits securing bids,
tenders, contracts (other than contracts for the payment of money) or leases to
which Borrower or any of its subsidiaries is a party as lessee made in the
ordinary course of business; (iv) deposits securing public or statutory
obligations of Borrower or any of its subsidiaries; (v) workers', mechanics',
suppliers', carriers', warehousemen's or other similar liens arising in the
ordinary course of business not yet due and payable; (vi) non-consensual
statutory, contractual (provided that such contractual liens are subordinate to
the Lien in favor of the Agent, on behalf of the Lenders) or common law
landlords' liens under any Lease hereafter executed by Borrower or any of its
Subsidiaries and any statutory, contractual or common law landlord's lien under
the Leases set forth on Schedule 4.8(b) (other than those which have been
subordinated to the Lien in favor of the Agent, on behalf of the Lenders); (vii)
Liens under concession or license agreements arising in the ordinary course of
business not yet due and payable; (viii) deposits securing or in lieu of surety,
appeal or customs bonds in proceedings to which Borrower or any of its
Subsidiaries is a party; (ix) any attachment or judgment Lien, unless the
judgment it secures shall not, within 60 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not have been
discharged within 60 days after the expiration of any such stay; (x) easements,
licenses, or other restrictions on the use of real property or other minor
irregularities in title (including leasehold title) thereto so long as the same
do not materially impair the use, value, or marketability of such real property,
leases or leasehold estates; (xi) Liens existing as of the Closing Date securing
Indebtedness listed on Schedule 4.26 hereto; (xii) purchase money liens or
purchase money security interests upon or in any property (other than any real
property) acquired
14
or held by Borrower or any of its Subsidiaries in the ordinary course of its
business to secure the purchase price of such property or to secure the
indebtedness incurred solely for the purpose of financing the acquisition of
such property, or Liens existing on such property at the time of its acquisition
(provided that such existing Liens would otherwise constitute a Permitted
Encumbrance); PROVIDED, HOWEVER, that the aggregate principal amount of
Indebtedness secured by such Liens shall not in the aggregate exceed the amount
of Indebtedness of Borrower and its Subsidiaries permitted to be incurred in
connection therewith under Section 7.3(a)(i) hereof; (xiii) presently existing
Liens listed on Schedule 1.2 hereto, other than the general survey exception,
(xiv) any defect in title disclosed by surveys, other than a defect in title
that has a Material Adverse Effect; PROVIDED, HOWEVER, that with respect to a
defect in title disclosed by any such survey that does not have a Material
Adverse Effect, Borrower promptly shall take and diligently pursue such actions
as shall be reasonably required by Agent to remove such defects; (xv) such
landlord's consents, nondisturbance agreements and such other agreements as may
be required by Agent to be recorded in connection with the transactions
contemplated by this Agreement; and (xvi) the leases in which Borrower or any of
its Subsidiaries is a lessor described in Part Two of Schedule 4.8(b) hereto.
"Permitted Transferee" shall mean, with respect to a Person, (a) the
spouse or child of such Person, (b) such Person's heirs, executors or legal
representatives, (c) trustees of an inter vivos trust or testamentary trust for
the benefit of such Person or Persons identified in subparagraph (a) of this
definition, or (d) another Person Controlled by such Person or by any Person
identified in clauses (a) through (c) of this definition.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean, with respect to Borrower, any of its Subsidiaries
or any ERISA Affiliate, at any time, an employee pension benefit plan as defined
in Section 3(2) of ERISA (including a Multiemployer Plan) that is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the IRC and is maintained for the employees of Borrower, any of its
Subsidiaries or any ERISA Affiliate.
"Pledge Agreement" shall mean the Pledge Agreement entered into
between Agent, as agent for itself and the other Lenders, and each of Parent,
Borrower and those Subsidiaries owning Stock of other Subsidiaries of Borrower,
dated as of May 1, 1989, including all amendments, modifications and supplements
thereto, and shall refer to the Pledge Agreement as the same may be in effect at
the time such reference becomes operative.
"Qualified Issuer" means any money center or first tier regional
commercial bank (i) which has capital and surplus in excess of $200,000,000, and
(ii) the outstanding long term debt securities of which are rated at least A by
Standard & Poor's Corporation or at least A-1 by
15
▇▇▇▇▇'▇ Investors Service, Inc., or carry an equivalent rating by a nationally
recognized rating agency if both of the two named rating agencies cease
publishing ratings of investments or any other bank or first tier investment
bank reasonably acceptable to Agent.
"Ratable Portion" or ratably shall mean, with respect to any Lender,
the quotient obtained by dividing the Commitment of such Lender by the
Commitments of all Lenders.
"Real Estate" shall mean all of those plots, pieces or parcels of land
now owned or hereafter acquired by Borrower or any Subsidiary (the "Land"),
including, without limitation, those listed on Schedule 4.8(a) hereto and more
particularly described in the Mortgages, together with the right, title and
interest of Borrower or any Subsidiary, if any, in and to the streets, the land
lying in the bed of any streets, roads or avenues, opened or proposed, in front
of, adjoining, or abutting the Land to the center line thereof, the air space
and development rights pertaining to the Land and right to use such air space
and development rights, all rights of way, privileges, liberties, tenements,
hereditaments, and appurtenances belonging or in any way appertaining thereto,
all fixtures, all easements now or hereafter benefiting the Land and all
royalties and rights appertaining to the use and enjoyment of the Land,
including, without limitation, all alley, vault, drainage, mineral, water, oil,
and gas rights, together with all of the buildings and other improvements now or
hereafter erected on the Land, and all fixtures and articles of personal
property appertaining thereto and all additions thereto and substitution and
replacement thereof.
"Real Estate Permits" shall have the meaning assigned to it in Section
4.8(e) hereof.
"Release" shall mean any release, threatened release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching,
or migration into the indoor or outdoor environment, or into or out of any
property owned or leased by the Borrower or any of its Subsidiaries, including
the movement of any Contaminant through or in the air, soil, surface water,
groundwater, or property.
"Remedial Action" shall mean all actions required under any
Environmental Law to (1) clean up, remove, treat, or in any other way address
any Contaminant in the indoor or outdoor environment; (2) prevent the Release or
threat of Release, or minimize the further Release of any Contaminant so it does
not migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; or (3) perform pre-remedial studies and
investigations and post-remedial monitoring and care.
"Reportable Event" shall have the meaning assigned to it in Section
4043 of ERISA.
"Required Lenders" shall mean, as of any date and so long as any Debt
is outstanding, the holders of Notes evidencing at least 60% of the aggregate
unpaid principal amount of the Revolving Credit Loan or, in the event that at
such date there is no Revolving
16
Credit Loan then outstanding, then the holders of Notes evidencing at least 60%
of the unused portion of the Maximum Revolving Credit Loan, and in each case, at
least two Lenders, so long as there are two or more Lenders; PROVIDED, HOWEVER,
that such references to 60% shall be changed to a majority at such times as GE
Capital holds a Commitment of less than $75,000,000.
"Reserves" shall mean such reserves for doubtful accounts, returns,
allowances and the like as may be established by Borrower or any Subsidiary or
as may otherwise be required in accordance with GAAP.
"Restated Loan Agreement" shall mean the Amended and Restated Loan
Agreement dated February 14, 1997 among Borrower, the Lenders party thereto and
GE Capital as Agent for the Lenders.
"Restricted Lease" shall mean any lease of any property, but excluding
the Leases, by Borrower or such subsidiary as lessee, other than any such lease
under which Borrower or such Subsidiary is the lessor.
"Restricted Payment" shall mean (i) the declaration of any dividends
or the incurrence of any liability to make any other payment or distribution of
cash or other property or assets in respect of Borrower's Stock or (ii) any
payment on account of the purchase, redemption or other retirement of Borrower's
Stock or any other payment or distribution made in respect thereof, either
directly or indirectly.
"Revolving Credit Advance" shall have the meaning assigned to it in
Section 2.1(a) hereof.
"Revolving Credit Loan" shall mean the aggregate amount of Revolving
Credit Advances outstanding at any time.
"Revolving Credit Note" shall have the meaning assigned to it in
Section 2.1(b) hereof.
"Security Agreement" shall mean the Security Agreement entered into
between Agent, as agent for itself and the other Lenders, and Borrower and its
Subsidiaries, dated as of May 1, 1989, including all amendments, modifications
and supplements thereto, and shall refer to the Security Agreement as the same
may be in effect at the time such reference becomes operative.
"Senior Management" shall mean ▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
"Senior Subordinated Convertible Preferred Stock" shall mean the 200
shares of Senior Subordinated Convertible Preferred Stock, Series A, originally
issued to Electra
17
Investment Trust P.L.C. pursuant to the Electra/▇▇▇▇▇ Purchase Agreement, dated
February 8, 1990, and the Stockholders Agreement.
"Senior Subordinated Notes" means the 11-7/8% Senior Subordinated
Notes due 2003, issued in an aggregate principal amount of $85,000,000 and any
refinancings thereof which comply with the provisions of Section 7.21(b);
PROVIDED, HOWEVER, that the terms and conditions of any such refinancings shall
be no more onerous to Borrower than existing terms in all material respects as
reasonably determined by Agent; and PROVIDED, FURTHER, HOWEVER, that the total
principal amount of Senior Subordinated Notes outstanding at any one time shall
not exceed $100,000,000.
"Solvent" shall mean, when used with respect to any Person, that:
(a) the present fair salable value of such Person's assets is in
excess of the total amount of such Person' s liabilities;
(b) such Person is able to pay its debts as they become due; and
(c) such Person does not have unreasonably small capital to carry on
such Person's business as theretofore operated and all businesses in which
such Person is about to engage.
"Stated Rate" shall mean, so long as no Event of Default has occurred
and is continuing, a floating rate, which shall be determined as of the second
Business Day following, but shall be effective as of the date of, Agent's
receipt of the quarterly financial statements referred to in Section 5.1(b)
hereof (the "Quarterly Financial Statements") equal to the Index Rate or LIBOR
Rate, as the case may be, plus the applicable margin set forth below for the
Borrower's Consolidated Total Funded Debt to Consolidated Cash Flow Ratio, as
set forth on the most recent Quarterly Financial Statements received by Agent:
Applicable Applicable
Margin for Margin for
Index Rate LIBOR Rate
Ratio Loans Loans
----- ----- -----
Greater than 5.0 to 1.0 .75 2.25%
Equal to or greater than
4.5 to 1.0 but not greater .25% 1.75%
than 5.0 to 1.0
Equal to or greater than 0% 1.50%
4.0 to 1.0 but less than
4.5 to 1.0
Equal to or greater than 0% 1.25%
18
3.5 to 1.0 but less than
4.0 to 1.0
Less than 3.5 to 1.0 0% 1.00%
; PROVIDED, HOWEVER, that in the event Agent shall receive any Quarterly
Financial Statements after the applicable time period set forth in Section
5.1(b), then the Stated Rate as previously determined shall remain in effect
until such time as such Quarterly Financial Statements are delivered, and when
so delivered, the Stated Rate determined as set forth above shall be effective,
retroactively, on and as of the last day on which such Quarterly Financial
Statements could have been timely delivered pursuant to Section 5.1(b), except
that in no event shall any Lender be required to refund any interest payment
already received by such Lender; and PROVIDED, FURTHER, HOWEVER, that solely for
purposes of this calculation, in the event that Borrower shall construct any
motion picture theatre and related assets, there shall be deducted from
Consolidated Total Funded Debt the Capital Expenditures (up to an aggregate
amount of $30,000,000) incurred by Borrower in connection therewith for the
first twelve months following the date of such commencement of construction.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests (regardless of how designated) of or in a corporation,
partnership or equivalent entity whether voting or nonvoting, including, without
limitation, common stock, preferred stock, or any other "equity security" (as
such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended).
"Stockholders" shall mean, with respect to any Loan Party, all of the
holders of stock of such Loan Party immediately following the Closing Date.
"Stockholders Agreement" shall mean the Stockholders Agreement, dated
as of February 8, 1990, among Parent, Act III Theatres, L.P., Electra Investment
Trust P.L.C., ▇▇▇▇▇ Gamma Limited and certain holders from time to time of
capital stock.
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, and (b) any partnership in which such Person and/or one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than 50% and
which such Person or one or more Subsidiaries of such Person shall Control.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income
19
of Agent or a Lender by the jurisdictions under the laws of which Agent and
Lenders are organized or any political subdivision thereof.
"Termination Date" shall mean the date on which all Debt and any other
Obligations hereunder have been completely discharged and Borrower shall have no
further right to borrow any monies hereunder.
"Theatres" shall mean each of the motion picture theatres and related
assets owned or leased and operated by Borrower or any of its Subsidiaries.
"Trademark Assignment Agreement" shall mean the Grant of Security
Interest (Trademarks, Trademark Applications and Trademark Licenses) made in
favor of Agent, on behalf of the Lenders, by Borrower and its Subsidiaries,
dated as of May 1, 1989.
"Voting Stock" shall mean outstanding shares of stock having voting
power for the election of directors, whether at all times or only so long as no
senior class of stock has such voting power because of default in dividends or
some other default.
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly
modified by the phrase "in accordance with GAAP" shall in no way be construed to
limit the foregoing.
All other undefined terms contained in this Agreement shall, unless
the context indicates otherwise, have the meanings provided for by the Code as
in effect in the State of New York to the extent the same are used or defined
therein.
The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole, including the Exhibits and
schedules hereto, as the same may from time to time be amended, modified or
supplemented and not to any particular section, subsection or clause contained
in this Agreement.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter.
2. AMOUNT AND TERMS OF CREDIT
1. REVOLVING CREDIT ADVANCES. (a) Upon and subject to the terms and
conditions hereof, each Lender agrees to make available, from time to time,
until the Commitment Termination Date, for Borrower's use and upon the request
of Borrower therefor, advances(each,
20
a "Revolving Credit Advance") in an aggregate amount outstanding which shall not
at any given time exceed such Lender's Ratable Portion of the Maximum Revolving
Credit Loan. Subject to the provisions of Section 2.4 and 2.6 hereof and until
all amounts outstanding in respect of the Revolving Credit Loan shall become due
and payable on the Commitment Termination Date, Borrower may from time to time
borrow, repay and reborrow under this Section 2.1(a) within the limits of each
Lender's Commitment; PROVIDED, HOWEVER, that all repayments of any LIBOR Rate
Loans shall be made on, and only on, the last day of the LIBOR Period for such
Loan. Each Revolving Credit Advance shall be made on notice,(i) in the case of
LIBOR Rate Loans, given no later than 12:00 P.M. (New York City time) three
Business Days prior to the Business Day of the proposed Revolving Credit
Advance, by Borrower to Agent, and (ii) in the case of Index Rate Loans, given
no later than 12:00 P.M. (New York City time) on the Business Day of the
proposed Revolving Credit Advance, by Borrower to Agent. Each such notice (a
"Notice of Revolving Credit Advance") shall be in writing or by telephone to
account executive (▇▇▇) ▇▇▇-▇▇▇▇, telecopy, telex or cable, confirmed
immediately in writing, in substantially the form of Exhibit B hereto,
specifying therein (i) the requested date of such Revolving Credit Advance, (ii)
the amount of such Revolving Credit Advance, including, the amount, if any,
requested to be LIBOR Rate Loans, (iii) for which purpose under Section 2.6
hereof such Advance is being requested and (iv) the bank to which the proceeds
of such proposed Advance should be wired, and certifying therein that after
giving effect to such borrowing, (x) the aggregate amount of all Revolving
Credit Advances outstanding with respect to such purpose will not exceed the
maximum amount permitted to be borrowed for such purpose and (y) the aggregate
amount of all Revolving Credit Advances outstanding will not exceed the Maximum
Revolving Credit Loan. Agent shall give to each Lender prompt notice of Agent's
receipt of a Notice of Revolving Credit Advance. Each Lender shall, before 2:00
P.M. (New York City time) on the date of the proposed Revolving Credit Advance
make available for the account of its applicable lending office to Agent at such
account as Agent may specify, in immediately available funds, such Lender's
Ratable Portion of the proposed aggregate amount of such Revolving Credit
Advance. After Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Section 3, Agent will make such funds
available to Borrower by wire transfer to any bank listed on Schedule 2.1, or
any other bank reasonably acceptable to Agent and designated by Borrower in the
Notice of Revolving Credit Advance.
(a) The Revolving Credit Loan made by each Lender shall be evidenced
by a promissory note to be executed and delivered by Borrower to each Lender on
the Closing Date, the form of which is attached hereto and made a part hereof as
Exhibit A (such note, as the same may be amended, extended or renewed from time
to time being the "Revolving Credit Note"). The Revolving Credit Note shall be
payable to the order of each Lender and shall represent the obligation of
Borrower to pay the amount of such Lender's Ratable Portion of the Maximum
Revolving Credit Loan or, if less, the aggregate unpaid principal amount of all
Revolving Credit Advances made by each Lender to Borrower with interest thereon
as prescribed in Section 2.8(a). The date and amount of each Revolving Credit
Advance and each payment of principal with respect thereto shall be recorded on
the books and records of each Lender, which books and records shall constitute
PRIMA FACIE evidence of the accuracy of the information therein recorded.
21
The entire unpaid balance of the Revolving Credit Loan shall be due and payable
on the Commitment Termination Date.
(b) Unless theretofore reduced pursuant to subsection (e) below, the
Maximum Revolving Credit Loan shall automatically be reduced on each date set
forth below (a "Commitment Reduction Date") to the amount set forth below
opposite such Commitment Reduction Date (or such lesser amount required by
Section 2.1(e) below):
Commitment
Reduction Reduced
DATE AMOUNT
---- ------
December 31, 1998 $245,000,000
March 31, 1999 240,000,000
June 30, 1999 235,000,000
September 30, 1999 230,000,000
December 31, 1999 222,500,000
March 31, 2000 215,000,000
June 30, 2000 207,500,000
September 30, 2000 200,000,000
December 31, 2000 190,000,000
March 31, 2001 180,000,000
June 30, 2001 170,000,000
September 30, 2001 160,000,000
The Maximum Revolving Credit Loan shall be reduced to zero on the Commitment
Termination Date.
(c) Borrower shall have the right to reduce to zero the Maximum
Revolving Credit Loan from time to time upon not less than 60 days prior notice
to Agent of such reduction, which notice shall specify the effective date
thereof and shall be irrevocable and effective only upon receipt by Agent;
PROVIDED, HOWEVER, that any such reduction of any Index Rate Loan shall be made
on, and only on, an Interest Payment Date, and any such reduction of any LIBOR
Rate Loan shall be made on and only on, the last day of the LIBOR Period for
such Loan.
(d) Each reduction of the Maximum Revolving Credit Loan pursuant to
Section 2.4 during any period from and including a Reduction Date set forth in
subsection (c) above to but excluding the next Reduction Date (the "Commitment
Period") shall result in an automatic and simultaneous reduction of the Maximum
Revolving Credit Loan in a pro rata amount as to each Lender for each subsequent
Commitment Period. The Maximum Revolving Credit Loan once reduced may not be
reinstated.
2. Intentionally Omitted.
22
3. Intentionally Omitted.
4. MANDATORY PREPAYMENT. (a) On or before 120 days after the end
of each Fiscal Year, commencing with the Fiscal Year ending December 31, 1997
Borrower shall prepay the Loans in an amount equal to 50% of Borrower's
Consolidated Available Cash Flow for such Fiscal Year.
(a) Borrower shall prepay the Loans upon receipt by Borrower or any
of its Subsidiaries of Net Cash Proceeds in excess of $1,000,000 during any
Fiscal Year in an amount equal to such Net Cash Proceeds (it being understood
that no Asset Sales yielding Net Cash Proceeds in excess of $15,000,000
individually or in the aggregate during any Fiscal Year may be made unless any
such Asset Sale is consented to in writing by the Required Lenders).
(b) All prepayments pursuant to clause (a) or (b) above shall be, so
long as interest is charged on the Revolving Credit Loan based on the LIBOR
Rate, made only on the last day of the LIBOR Period for such Loan, and shall be
applied to repay the Revolving Credit Loan, in which event the Maximum Revolving
Credit Loan will be permanently reduced (i) in the case of prepayments pursuant
to clause (a) above, by the amount of each such repayment and (ii) in the case
of prepayments pursuant to clause (b) above, by the amount of such repayments
above $15,000,000 in any one Fiscal Year.
(c) If, at any time, the aggregate principal amount of Revolving
Credit Loans outstanding exceeds the Maximum Revolving Credit Loan, then
Borrower shall immediately repay the Revolving Credit Loans by the amount of
such excess.
(d) No prepayment premium shall be payable in respect of any
mandatory prepayment under this Section 2.4.
Intentionally Omitted.
6. USE OF PROCEEDS. The proceeds of the Revolving Credit Advances
outstanding at any time shall be used by Borrower only as follows: (i) for
working capital needs of Borrower and/or its Subsidiaries; (ii) up to the
maximum amounts set forth in Section 7.10 may be used by Borrower during any
Fiscal Year commencing prior to the Commitment Termination Date to make Capital
Expenditures without the necessity of obtaining the prior consent of any Lender;
(iii) to repurchase Senior Subordinated Notes to the extent permitted by Section
7.21(a); and (iv) to pay cash dividends to Parent to the extent permitted by
Section 7.15.
7. SINGLE LOAN. The Debt and all of the other Obligations of
Borrower arising under this Agreement and the other Loan Documents shall
constitute one general obligation of Borrower secured, until the Termination
Date, by all of the Collateral.
23
8. INTEREST ON REVOLVING CREDIT LOAN. (a) Borrower shall pay
interest to Agent on the unpaid principal amount of each Revolving Credit
Advance from the date of such Revolving Credit Advance until the unpaid
principal amount thereof shall be paid in full, at a rate based on either the
Index Rate or LIBOR Rate as follows: (i) with respect to each Revolving Credit
Advance which bears interest at a rate based upon the Index Rate, at a rate per
annum equal to the Index Rate plus the applicable margin for Index Rate Loans
set forth in the definition of Stated Rate, monthly in arrears on the last day
of each calendar month, commencing on the first such date after the Closing Date
(each, an "Interest Payment Date") and on the date such Revolving Credit Loan is
paid in full, and (ii) with respect to each Revolving Credit Advance which bears
interest at a rate based upon the LIBOR Rate, at a rate per annum equal at all
times during the LIBOR Period therefor at the LIBOR Rate for such LIBOR Period
plus the applicable margin for LIBOR Rate Loans set forth in the definition of
Stated Rate, payable in arrears on the last day of such LIBOR Period and on the
date such Revolving Credit Loan is paid in full.
(a) All computations of interest shall be made by the Agent and on a
basis of a three hundred and sixty (360) day year, in each case for the actual
number of days occurring in the period for which such interest is payable. The
Index Rate shall be determined by the Agent on each Business Day, and any change
in the interest rate on the Notes resulting from a change in the Index Rate
shall become effective as of the opening of business on the day on which such
change in the Index Rate occurs. The LIBOR Rate shall be determined by the
Agent on the second full Eurodollar Business Day prior to the first day of the
applicable LIBOR Period. If any payment on the Revolving Credit Loan becomes
due and payable on a day other than a Business Day, or a Eurodollar Business Day
in the event that the Revolving Credit Loan shall bear interest based upon the
LIBOR Rate, the maturity thereof shall be extended to the next succeeding
Business Day or Eurodollar Business Day, as the case may be (except as provided
in clause (1) of the definition of LIBOR Period), and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension.
(b) So long as any Event of Default shall be continuing, the
interest rate applicable to the Revolving Credit Loan shall be increased by 2%
per annum above the rate otherwise applicable.
(c) Notwithstanding anything to the contrary set forth in this
Section 2.8, if at any time until payment in full of all of the Obligations, the
Stated Rate exceeds the highest rate of interest permissible under any law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto (the "Maximum Lawful Rate"), then in such event and so long as
the Maximum Lawful Rate would be so exceeded, the rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate; PROVIDED, HOWEVER, that if
at any time thereafter the Stated Rate is less than the Maximum Lawful Rate,
Borrower shall continue to pay interest hereunder at the Maximum Lawful Rate
until such time as the total interest received by Lenders from the making of
advances hereunder is equal to the total interest which Lenders would have
received had the Stated Rate been (but for the operation of this paragraph) the
interest rate payable since the Closing Date. Thereafter, the interest rate
payable hereunder shall be the Stated
24
Rate unless and until the Stated Rate again exceeds the Maximum Lawful Rate, in
which event this paragraph shall again apply. In no event shall the total
interest received by any Lenders pursuant to the terms hereof exceed the amount
which such Lenders could lawfully have received had the interest due hereunder
been calculated for the full term hereof at the Maximum Lawful Rate. In the
event the Maximum Lawful Rate is calculated pursuant to this paragraph, such
interest shall be calculated at a daily rate equal to the Maximum Lawful Rate
divided by the number of days in the year in which such calculation is made. In
the event that a court of competent jurisdiction, notwithstanding the provisions
of this Section 2.8(d), shall make a final determination that any Lender has
received interest hereunder or under any of the Loan Documents in excess of the
Maximum Lawful Rate, such Lender shall, to the extent permitted by applicable
law, promptly apply such excess first to any interest due and not yet paid under
its Note, then to the principal amount of its Note (without premium or penalty),
then to other unpaid Obligations and thereafter shall refund any excess to
Borrower or as a court of competent jurisdiction may otherwise order.
(d) So long as no Event of Default has occurred and is continuing
(i) Borrower may elect on at least three Eurodollar Business Days' prior notice
to convert Index Rate Loans to LIBOR Rate Loans and (ii) Borrower may elect on
or before the third Eurodollar Business Day prior to the end of each LIBOR
Period with respect to any LIBOR Rate Loan to have such LIBOR Rate Loan bear
interest based upon the LIBOR Rate for the next succeeding LIBOR Period. In
each of clauses (i) and (ii), Borrower shall make such election by notice to
Agent in writing, by telecopy, telex or cable. If no such notice is received
with respect to a LIBOR Rate Loan on the third Eurodollar Business Day prior to
the end of the LIBOR Period with respect to such LIBOR Rate Loan, such LIBOR
Rate Loan shall be converted to an Index Rate Loan at the end of the LIBOR
Period.
9. Intentionally Omitted.
10. FEES. (a) Borrower shall pay (i) to GE Capital the fees
specified in that certain fee letter dated the date hereof between Borrower and
GE Capital, at the times specified for payment therein and (ii) to Lenders the
fees as previously agreed to by Borrower and Lenders.
(a) Borrower shall pay to each Lender an unused line fee on the
average daily unused portion of such Lender's Commitment to make a Revolving
Credit Loan from the date hereof until the Commitment Termination Date payable
monthly in arrears on each Interest Payment Date, at the rate of .375% per annum
when Borrower's Consolidated Total Funded Debt to Consolidated Cash Flow Ratio
is greater than 4.0 to 1.0 and at the rate of .250% per annum when such Ratio is
less than or equal to 4.0 to 1.0. Such Ratios shall be determined as provided
in the definition of Stated Rate (without regard to the second proviso thereof).
11. RECEIPT OF PAYMENTS. Borrower shall make each payment under this
Agreement not later than 2:00 P.M. (New York City time) on the day when due in
lawful money of the United States of America in immediately available funds to
Agent's depository bank in the
25
state of New York as designated by Agent from time to time for deposit in
Agent's depositary account or, if Agent so notifies Borrower at least one
Business Day prior to the date on which such payment is due, directly to each
Lender, ratably based on the respective principal amounts of the Notes held by
each Lender that relate to the Loan in respect of which such payment is made or
applied. Agent will, upon any such deposit to its depositary account, promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest (other than interest or principal payments on the
Revolving Credit Loan) ratably to Lenders as provided above, and like funds
relating to the payment of any amount payable to any Lender to such Lender, in
each case to be applied in accordance with the terms of this Agreement. For
purposes only of computing interest hereunder, all payments shall be applied by
Agent to the Revolving Credit Loan on the day payment has been credited by
Agent's depository bank to Agent's account in immediately available funds or, if
Agent has notified Borrower to make any such payments directly to Lenders, such
payments shall be applied by each Lender to its Revolving Credit Loan on the day
payment has been received by such Lender in immediately available funds. For
purposes of determining the amount of funds available for borrowing by Borrower
pursuant to Section 2.1(a) hereof, such payments shall be applied by Agent
against the outstanding amount of the Revolving Credit Loan at the time they are
credited to its account.
12. APPLICATION OF PAYMENTS. Subject to the provisions of 2.4(c),
Borrower irrevocably waives the right to direct the application of any and all
payments at any time or times hereafter received by Agent or any Lender from or
on behalf of Borrower pursuant to the terms of this Agreement, and Borrower
irrevocably agrees that Agent and Lenders shall have the continuing exclusive
right to apply any and all such payments against the then due and payable
Obligations of Borrower and in repayment of the Revolving Credit Loan as they
each may deem advisable. In the absence of a specific determination by Agent
and Lenders with respect thereto, the same shall be applied in the following
order: (i) then due and payable fees and expenses; (ii) then due and payable
interest payments on the Debt; and (iii) then due and payable principal payments
on the Debt. Agent is authorized to, and at its option may, make advances on
behalf of Borrower for payment of all fees, expenses, charges, costs, principal
and interest incurred by Borrower hereunder. Such advances shall be made when
and as Borrower falls to promptly pay such fees, expenses, charges, costs,
principal and interest and, at Agent's option and to the extent permitted by
law, shall be deemed Revolving Credit Advances constituting part of the
Revolving Credit Loan hereunder.
13. SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of any Loan made by it in excess of its ratable share
of payments on account on the Loan obtained by all Lenders, such Lender shall
forthwith purchase from each other Lender such participations in the Loan made
by it as shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each other Lender; PROVIDED, HOWEVER, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each Lender shall be rescinded and such Lender shall
repay to the purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such Lender's ratable share
26
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.13 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such participation.
14. ACCOUNTING. Agent will provide a monthly written accounting of
transactions under the Revolving Credit Loan to Borrower. Each and every such
accounting shall (absent manifest error) be deemed final, binding and conclusive
upon Borrower in all respects as to all matters reflected therein, unless
Borrower, within 45 days after the date any such accounting is rendered, shall
notify Agent in writing of any objection which Borrower may have to any such
accounting, describing the basis for such objection with specificity. In that
event, only those items expressly objected to in such notice shall be deemed to
be disputed by Borrower. Agent's determination, based upon the facts available,
of any item objected to by Borrower in such notice shall (absent manifest error)
be final, binding and conclusive on Borrower, unless Borrower shall commence a
judicial proceeding to resolve such objection within 45 days following Agent's
notifying Borrower of such determination.
15. INDEMNITY. (a) Borrower shall indemnify and hold Agent and each
Lender harmless, whether or not the transactions contemplated hereby have been
consummated, from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including, without limitation,
reasonable attorneys' fees and disbursements, including those incurred upon any
appeal) which may be instituted or asserted against or incurred by Agent or any
Lender as the result of its having entered into any of the Loan Documents or
Ancillary Agreements or extended credit hereunder; PROVIDED, HOWEVER, that
Borrower shall not be liable for such indemnification to such indemnified Person
to the extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results from such indemnified Person's gross negligence or
willful misconduct or any breach by Agent or any Lender of any of its
obligations under the Loan Documents.
(a) Borrower understands that in connection with Lenders' arranging
to provide the LIBOR Rate interest option with respect to the Revolving Credit
Loan from time to time at the option of the Borrower on the terms provided
herein, Lenders may enter into funding arrangements with third parties ("Funding
Arrangements") on terms and conditions which could result in substantial losses
to such Lenders if such LIBOR Rate funds do not remain outstanding at the
interest rates provided herein for the entire monthly interest period with
respect to which the LIBOR Rate has been fixed. Consequently, in order to
induce Lenders to provide such LIBOR Rate option on the terms provided herein
and in consideration for the entering into by Lenders of Funding Arrangements
from time to time in contemplation thereof, if any LIBOR Rate funds are repaid
in whole or in part prior to the last day of such monthly interest period
therefor (whether such repayment is made pursuant to any provision of this
Agreement or any other Loan
27
Document or is the result of acceleration, by operation of law or otherwise),
Borrower shall indemnify and hold harmless each Lender from and against and in
respect of any and all losses, costs and expenses resulting from, or arising out
of or imposed upon or incurred by such Lender by reason of the liquidation or
reemployment of funds acquired or committed to be acquired by such Lender to
fund such LIBOR Rate Option pursuant to the Funding Arrangements. The amount of
any losses, costs or expenses resulting in an obligation of Borrower to make a
payment pursuant to the foregoing sentence shall not include any losses
attributable to lost profit to Lenders but shall represent the excess, if any,
of (A) such Lender's cost of borrowing the LIBOR Rate funds pursuant to the
Funding Arrangements over (B) the return to such Lender on its reinvestment of
such funds; PROVIDED, HOWEVER, that if any Lender terminates any Funding
Arrangements in respect of the LIBOR Rate funds as a result of any repayment of
LIBOR Rate Loans by Borrower prior to the end of any monthly interest period,
the amount of such losses, costs and expenses shall include the cost to such
Lender of such termination. In reinvesting any funds borrowed by any Lender
pursuant to the Funding Arrangements, such Lender shall take into consideration
the remaining maturity of such borrowings. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written calculation
of all amounts payable pursuant to the next preceding sentence, and such
calculation shall be binding on the parties hereto unless Borrower shall object
thereto in writing within ten Business Days of receipt thereof.
16. ACCESS. Agent and each Lender and any of their officers,
employees and/or agents, at the expense of Agent or such Lender, as the case may
be (unless there shall exist an Event of Default, in which event all costs and
expenses shall be borne by Borrower), shall have the right, exercisable as
frequently as Agent or any Lender reasonably determines to be appropriate,
during normal business hours (or at such other times as may reasonably be
requested by Agent or any Lender) to inspect the properties and facilities of
Borrower and its Subsidiaries and to inspect, audit and make extracts from all
of Borrower's and its Subsidiaries' records, files and books of account.
Borrower shall deliver any document or instrument reasonably necessary for Agent
or any Lender, as any of them may request, to obtain records from any service
bureau maintaining records for Borrower or its Subsidiaries, including, without
limitation, computer tapes and discs owned by Borrower and its Subsidiaries.
Borrower shall instruct its and its Subsidiaries' banking and other financial
institutions to make available to Agent and each Lender such information and
records as Agent and each Lender may reasonably request. In connection with
such investigations, Agent and each Lender may interview Borrower's and its
Subsidiaries' employees, during normal business hours and as Agent or any Lender
may reasonably request, and Borrower and its Subsidiaries agree to make their
employees available for such interviews and shall instruct such employees to
cooperate with Agent or such Lender for purposes of such investigation. With
respect to all of the foregoing, Agent and each Lender shall maintain the
confidentiality of any information received and the contents of all records
reviewed by it and shall not disclose any such information or the contents of
any such records to any Person other than (i) to Agent's or such Lender's
accountants or attorneys, in which event such accountants or attorneys shall
similarly agree not to disclose such information or the contents of such
records, (ii) to a potential purchaser of a Note or participant in the Loans, in
which event such potential
28
purchaser or participant shall similarly agree not to disclose such
information or the contents of such records, (iii) except as provided in
subparagraph (iv) below, upon the occurrence and continuance of an Event of
Default, in which event the recipient thereof shall similarly agree not to
disclose such information or the contents of such records, (iv) in connection
with the exercise of any remedies of Agent or any Lender, as the case may be,
under any Collateral Document and (v) to the extent any such disclosure is
required by applicable law.
17. CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY. (a) If any Lender
shall determine that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change 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 such Lender (or its lending office) with any 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 such Lender's capital as a
consequence of its obligations hereunder or credit extended by it hereunder to a
level below that which such Lender could have achieved but for such adoption,
change or compliance by an amount deemed by such Lender to be material, then
from time to time as specified by such Lender, Borrower shall pay such
additional amount or amounts as will compensate such Lender for such reduction
upon written notice to Borrower specifying such amounts and the calculation
thereof.
(a) If, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to any Lender of agreeing to make or making, funding or maintaining of any
Loan or portion thereof bearing interest based on the LIBOR Rate, then Borrower
shall from time to time, upon demand by such Lender (with a copy of such demand
to Agent), pay to Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A certificate as
to the amount of such increased cost, submitted to Borrower and Agent by such
Lender, shall be conclusive and binding on Borrower for all purposes, absent
manifest error. Each Lender agrees that, as promptly as practicable after it
becomes aware of any circumstances referred to in clause (i) or (ii) above which
would result in any such increased cost to such Lender, such Lender shall, to
the extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrower pursuant to this Section 2.17(b).
(b) Notwithstanding anything to the contrary contained herein, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender to agree to make or
to make or to continue to fund or maintain such Loan bearing interest based on
the LIBOR Rate, then, unless such Lender is able to agree to make or to continue
to fund or to maintain such Loans which bear interest based on the LIBOR Rate at
another branch or office of such Lender without, in such Lender's opinion,
adversely affecting it or its Loans or the income
29
obtained therefrom, on notice thereof and demand therefor by such Lender to
Borrower through Agent, (i) the obligation of such Lender to agree to make or to
make or to continue to fund or maintain Loans or any portions thereof bearing
interest based on the LIBOR Rate shall terminate and (ii) Borrower shall
forthwith prepay in full all outstanding Loans or any portions thereof then
bearing interest based on the LIBOR Rate, together with interest accrued
thereon, of such Lender unless Borrower, within five Business Days, after the
delivery of such notice and demand, converts all such Loans into a Loan bearing
interest based on the Index Rate.
(c) Upon the occurrence of any of the events set forth in this
Section 2.17, Agent shall promptly notify Borrower in writing of the occurrence
of such event. Borrower shall have the right within 5 days of receipt of such
notice to convert any outstanding LIBOR Rate Loans to an Index Rate Loan.
(d) Within fifteen (15) days after receipt by Borrower of written
notice and demand from any Lender (an "AFFECTED LENDER") for payment of
additional amounts or increased costs as provided in Section 2.17(a) or (b)
above, Borrower may, at its option, notify Agent and such Affected Lender of its
intention to replace the Affected Lender. So long as no Default or Event of
Default shall have occurred and be continuing, Borrower, with the consent of
Agent, may obtain, at Borrower's expense, a replacement Lender ("REPLACEMENT
LENDER") for the Affected Lender, which Replacement Lender must be acceptable to
Agent. If Borrower obtains a Replacement Lender within ninety (90) days
following notice of its intention to do so, the Affected Lender must sell and
assign its Note and Commitments to such Replacement Lender for an amount equal
to the principal balance of the Note held by the Affected Lender and all accrued
interest and fees with respect thereto through the date of such sale, PROVIDED
that Borrower shall have reimbursed such Affected Lender for the additional
amounts or increased costs that it is entitled to receive under this Agreement
through the date of such sale and assignment.
Notwithstanding the foregoing, Borrower shall not have the right to obtain a
Replacement Lender if the Affected Lender rescinds its demand for increased
costs or additional amounts within fifteen (15) days following its receipt of
Borrower's notice of intention to replace such Affected Lender. Furthermore, if
Borrower gives a notice of intention to replace and does not so replace such
Affected Lender within ninety (90) days thereafter, Borrower's rights under this
Section 2.17(e) shall terminate and Borrower shall promptly pay all increased
costs or additional amounts demanded by such Affected Lender pursuant to
Sections 2.17(a) and (b).
18. TAXES. (a) Any and all payments by Borrower hereunder or under
the Notes shall be made, in accordance with this Section 2.18, free and clear of
and without deduction for any and all present or future Taxes. If Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under the Notes, (i) the sum payable shall be increased as
much as shall be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.18) Agent or Lenders, as applicable, receive an amount equal to the sum they
would have received had no such deductions been made, (ii) Borrower shall make
such deductions, and (iii) Borrower shall pay the full amount
30
deducted to the relevant taxing or other authority in accordance with applicable
law. Within thirty (30) days after the date of any payment of Taxes, Borrower
shall furnish to Agent the original or a certified copy of a receipt evidencing
payment thereof.
(a) Borrower shall indemnify and, within ten (10) days of demand
therefor, pay Agent and each Lender for the full amount of Taxes (including any
Taxes imposed by any jurisdiction on amounts payable under this Section 2.18)
paid by Agent or such Lender, as appropriate, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted.
(b) Each Lender organized under the laws of a jurisdiction outside
the United States (a "Foreign Lender") as to which payments to be made under
this Agreement or under the Notes are exempt from United States withholding tax
under an applicable statute or tax treaty shall provide to Borrower and Agent a
properly completed and executed IRS Form 4224 or Form 1001 or other applicable
form, certificate or document prescribed by the IRS or the United States
certifying as to such Foreign Lender's entitlement to such exemption (a
"Certificate of Exemption"). Any foreign Person that seeks to become a Lender
under this Agreement shall provide a Certificate of Exemption to Borrower and
Agent prior to becoming a Lender hereunder. No foreign Person may become a
Lender hereunder if such Person is unable to deliver a Certificate of Exemption.
(c) Borrower agrees to pay all present or future Taxes that arise
from any payment made under this Agreement, the Notes or any other Loan Document
or with respect to this Agreement, the Notes, the other Loan Documents or any
other agreements and instruments contemplated hereby or thereby.
3. CONDITIONS PRECEDENT
1. CONDITIONS TO EFFECTIVENESS OF RESTATED LOAN AGREEMENT. This
Restated Loan Agreement shall become effective on the date (the "Closing Date")
upon which each of the following conditions have been satisfied, including the
delivery to Agent, with sufficient copies (other than the new Notes) for each
Lender, of each of the documents set forth below in form and substance
satisfactory to Agent, each dated the Closing Date:
(a) Counterparts of this Restated Loan Agreement duly executed by
Borrower, Lenders and Agent.
(b) New Revolving Credit Notes of Borrower payable to the order of
each Lender, in a principal amount equal to its Commitment as in effect after
giving effect to this Restated Loan Agreement, which new Revolving Credit Notes
shall be in substitution for all of the Revolving Credit Notes existing and as
in effect before giving effect to this Restated Loan Agreement.
31
(c) Each Lender, other than GE Capital, shall have purchased from GE
Capital, by wire transfer of federal funds to an account designated by GE
Capital, its Ratable Portion of the outstanding Revolving Credit Loan, and
Borrower shall have similarly paid to GE Capital all accrued and unpaid interest
thereon through the Closing Date.
(d) Duly executed and acknowledged amendments to each Leasehold
Mortgage and/or Mortgage in form and substance acceptable to Agent and in
recordable form.
(e) Date-down and revolving credit endorsements to each title
insurance policy (or new mortgagee title insurance policies where such
endorsements are unavailable) insuring Lenders as first priority mortgagee
lienholders and showing the title to be free and clear of all encumbrances
except those reasonably acceptable to Agent.
(f) A favorable opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C., counsel
to Borrower, and favorable opinions of special local counsel of Borrower in each
of the states of Alaska, Idaho, Oregon, Texas and Washington, as selected by
Borrower and approved by the Lenders, in each case in form and substance
satisfactory to Agent and as to such matters as Agent may reasonably request.
(g) (i) An Acknowledgment and Consent duly executed by each
Guarantor party to the Guaranty, each Grantor party to the Security Agreement
and each Pledgor party to the Pledge Agreement, consenting to the terms of this
Restated Loan Agreement and confirming that the Guaranty, the Security Agreement
and the Pledge Agreement, as applicable, remain in full force and effect and
continue to secure the Obligations pursuant to the terms thereof and (ii) an
Acknowledgment and Consent duly executed by TEMT Alaska, Inc. ("TEMT"), as
guarantor under that certain Agreement, dated as of May 1, 1989 (the "TEMT
Guaranty Agreement"), by and between TEMT, Borrower and GE Capital (as lender
and Agent) as beneficiary, consenting to the terms of this Restated Loan
Agreement and confirming that the TEMT Guaranty Agreement remains in full force
and effect and that each of Borrower and TEMT continue to remain personally
liable for the amount due under the Revolving Credit Notes and the Guaranty.
(h) Certified copy of the resolutions of the Board of Directors of
Borrower approving this Restated Loan Agreement, the new Revolving Credit Notes
and the Mortgage amendments and the consummation of the transactions
contemplated hereby and thereby and the execution of the documents to be
delivered in connection herewith and therewith.
(i) A Certificate of an officer of Borrower certifying as to the
accuracy, as of the Closing Date as though made on and as of such date, of the
representations and warranties of Borrower in this Agreement and the other Loan
Documents, after giving effect to this Restated Loan Agreement and the
transactions contemplated hereby, except to the extent it expressly relates to
an earlier date and for changes permitted or contemplated hereby.
32
(j) A Certificate of the Secretary or Assistant Secretary of
Borrower as to incumbency and signatures of the officers of Borrower executing
this Restated Loan Agreement, the new Revolving Credit Notes, the Mortgage
amendments and any other certificate or other document to be delivered pursuant
hereto or thereto, together with evidence of the incumbency of such Secretary or
Assistant Secretary.
(k) Borrower shall have paid (i) to Agent all of the fees and
expenses required to be paid pursuant hereto and the fee letter referred to in
Section 2.10(a)(i) hereof and (ii) to Lenders all fees required to be paid
pursuant to Section 2.10(a)(ii) hereof.
(l) Such additional documents, opinions, consents, information and
materials as Agent may reasonably request.
2. CONDITIONS TO THE INITIAL AND EACH SUBSEQUENT REVOLVING CREDIT
ADVANCE. It shall be a condition precedent to the initial Revolving Credit
Advance made on or after the Closing Date and each subsequent Revolving Credit
Advance that Agent shall have received a Notice of Revolving Credit Advance and
that the following statements shall be true on the date of each such funding or
advance:
(a) All of the representations and warranties of the Loan Parties
contained herein or in any of the Loan Documents shall be correct on and as of
the Closing Date and the date of each such Revolving Credit Advance as though
made on and as of such date, except to the extent that any such representation
or warranty expressly relates to an earlier date and for changes therein
permitted or contemplated by this Agreement.
(b) No event shall have occurred and be continuing, or would result
from the funding of any Revolving Credit Advance, which constitutes or would
constitute a Default or an Event of Default.
(c) The aggregate unpaid principal amount of the Revolving Credit
Loan after giving effect to such Revolving Credit Advance, shall not exceed the
Maximum Revolving Credit Loan, as such amount may be reduced from time to time.
The acceptance by Borrower of the proceeds of any Revolving Credit
Advance shall be deemed to constitute, as of the date of such acceptance, (i) a
representation and warranty by Borrower that the conditions in this Section 3.2
have been satisfied and (ii) a confirmation by Borrower of the granting and
continuance of Agent's Lien pursuant to the Collateral Documents.
4. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Revolving Credit Loan as herein
provided for, Borrower makes the following representations and warranties to
Agent and Lenders, each and all of which shall be true and correct as of the
date of execution and delivery of this Agreement,
33
except to the extent that any such representation or warranty expressly relates
to an earlier date and for changes therein since September 10, 1996 permitted or
contemplated by this Agreement, and shall survive the execution and delivery of
this Agreement:
1. CORPORATE OR PARTNERSHIP EXISTENCE; COMPLIANCE WITH LAW. Parent,
Borrower and each Subsidiary of the Borrower (i) is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation (except for A 3 Ltd., which is a limited partnership duly formed
under the laws of the state of Texas); (ii) is duly qualified to do business and
is in good standing under the laws of each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification
(except for jurisdictions in which such failure so to qualify or to be in good
standing would not have a Material Adverse Effect); (iii) has the requisite
corporate power and authority (except for A 3 Ltd., which has the requisite
partnership power and authority) and the legal right to own, pledge, mortgage or
otherwise encumber and operate its properties, to lease the property it operates
under lease, and to conduct its business as now, heretofore and proposed to be
conducted; (iv) has all material licenses, permits, consents or approvals from
or by, and has made all material filings with, and has given all material
notices to, all governmental authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (v) is in compliance with
its certificate of incorporation and by-laws (except for A 3 Ltd., which is in
compliance with all terms and provisions of the Partnership Agreement) other
than where the failure to so comply would not have a Material Adverse Effect;
and (vi) except as set forth in Schedule 4.1 hereto, is in compliance with all
applicable provisions of law where the failure to comply would have a Material
Adverse Effect.
2. EXECUTIVE OFFICES. The current location of Borrower's and each
of its Subsidiary's executive offices and principal place of business is set
forth on Schedule 4.2 hereto.
3. SUBSIDIARIES. There currently exist no Subsidiaries of Borrower
other than as set forth on Schedule 4.3 hereto, which sets forth such
Subsidiaries, together with their respective jurisdictions of organization, and
the authorized and outstanding capital Stock of each such Subsidiary, by class
and number and percentage of each class legally owned by Borrower or a
Subsidiary of Borrower or any other Person, owned as of the Closing Date.
Except as set forth on Schedule 4.3, there are no options, warrants, rights to
purchase or similar rights covering capital Stock for any such Subsidiary.
Schedules 4.8(a) and 4.8(b) set forth a complete and correct list of each
Theatre owned by Borrower and/or any of its Subsidiaries, including the address
and number of screens of each such Theatre, and the ownership thereof.
4. CORPORATE AND PARTNERSHIP POWER; AUTHORIZATION; ENFORCEABLE
OBLIGATIONS. The execution, delivery and performance by Parent, Borrower and
its Subsidiaries of the Loan Documents, Ancillary Agreements and all instruments
and documents to be delivered by Parent, Borrower and its Subsidiaries, to the
extent they are parties thereto, hereunder and thereunder and the creation of
all Liens provided for herein and therein: (i) are within Parent's, Borrower's
and its Subsidiaries' corporate (or, with respect to A 3 Ltd., partnership)
power; (ii) have been duly authorized by all necessary or proper corporate (or,
with respect to A 3 Ltd., partnership)
34
action; (iii) are not in contravention of any provision of Parent's, Borrower's
or its Subsidiaries' respective certificates or articles of incorporation or by-
laws (or, with respect to A 3 Ltd., the Partnership Agreement); (iv) will not
violate any law or regulation applicable to such party, or any order or decree
of any court or governmental instrumentality binding such party; (v) will not
conflict with or result in the breach or termination of, constitute a default
under or accelerate any performance required by, any indenture, mortgage, deed
of trust, lease, agreement or other instrument (other than Exhibition Contracts)
to which Parent, Borrower or any of its Subsidiaries is a party or by which
Parent, Borrower or any of its Subsidiaries or any of their property is bound
which reasonably could be expected to have a Material Adverse Effect; (vi) will
not result in the creation or imposition of any Lien upon any of the property of
Parent, Borrower or any of its Subsidiaries other than those in favor of
Lenders, all pursuant to the Loan Documents; and (vii) do not require the
consent or approval of any governmental body, agency, authority or, except as
set forth on Schedule 4.4 hereto, any other Person other than those which may be
required under Exhibition Contracts or those which have been obtained and copies
of which have been delivered to the Agent pursuant to Section 3.1(y) hereof or
which the failure to have obtained could not reasonably be expected to have a
Material Adverse Effect, each of which is in full force and effect. Each of the
Loan Documents and other Ancillary Agreements have been duly executed and
delivered for the benefit of or on behalf of Parent, Borrower or its
Subsidiaries, as the case may be, and each constitute a legal, valid and binding
obligation of Parent, Borrower or its Subsidiaries, to the extent they are
parties thereto, enforceable against them in accordance with its terms subject
to bankruptcy, insolvency, and other laws affecting creditors' rights generally
and to the application of equitable remedies.
5. SOLVENCY. After giving effect to the outstanding Revolving
Credit Loan and the payment of all estimated legal and other fees related
hereto, Borrower and each of its Subsidiaries is Solvent.
6. FINANCIAL STATEMENTS.
(a) The audited financial statements of Borrower and its
Subsidiaries as of December 31, 1995, a copy of which has been furnished to
Agent prior to the date of this Agreement, have been prepared in accordance with
GAAP and have been certified without qualification by Price Waterhouse L.L.P.
(b) The consolidated unaudited balance sheet as at September 30,
1996 and the related consolidated and consolidating unaudited profit and loss
statements and consolidated cash flow statement of Borrower and its
Subsidiaries, as the case may be, for the nine months then ended, copies of
which have been furnished to Agent prior to the date of this Agreement, have
been prepared in conformity with GAAP consistently applied throughout the
periods involved and present fairly in all material respects the consolidated
financial position of Borrower and its Subsidiaries at the date thereof, and the
results of operations and cash flows for the period then ended subject to normal
year-end audit adjustments.
35
(c) None of Borrower or any of its Subsidiaries has any obligations,
contingent liability or liabilities for Charges or unusual forward or long-term
commitments which are not reflected in the September 30, 1996 consolidated
balance sheet of Borrower and its Subsidiaries, except those incurred in the
ordinary course of business since such date, none of which would have a Material
Adverse Effect.
(d) Except as previously disclosed in writing by Borrower to Agent
and Lenders, there has been no material adverse change in the business, assets,
operations, financial or other condition of Borrower and its Subsidiaries, taken
as a whole or in any given Market Segment, taken as a whole, in each case, since
December 31, 1995 (it being understood that, subsequent to the Closing Date,
this representation and warranty shall be subject to the fact that Borrower
shall have incurred the Obligations hereunder). No dividends or other
distributions have been declared, paid or made upon any shares of capital Stock
of Borrower or any of its Subsidiaries nor have any shares of capital Stock of
Borrower or any of its Subsidiaries been redeemed, retired, purchased or
otherwise acquired for value by Borrower or its Subsidiaries since December 31,
1995, otherwise than (i) as permitted by this Agreement, (ii) as reflected in
the September 30, 1996 consolidated balance sheet of Borrower and its
Subsidiaries or as set forth in Schedule 4.6(d) hereto or (iii) as previously
disclosed in writing by Borrower to, or consented to in writing by, Agent.
7. PROJECTIONS. The projected balance sheet, income statement and
statement of cash flows of Borrower and its consolidated Subsidiaries as at the
end of each month during the period commencing January 1, 1997, on a monthly
basis for Fiscal Year 1997 and on an annual basis for each of Fiscal Years 1998
through 2002, copies of which projections have been furnished to the Agent prior
to the date hereof, disclose all assumptions made with respect to general
economic, financial and market conditions in formulating such projections. To
the knowledge of Borrower no facts exist on the date hereof which would result
in any material change in any of such projections. The projections are based
upon reasonable estimates and assumptions on the date hereof, all of which are
fair in light of current conditions on such date, have been prepared on the
basis of the assumptions stated therein, and reflect the reasonable estimate of
Borrower on such date and the results of operations and other information
projected therein.
8. OWNERSHIP OF PROPERTY; LIENS. (a) (i) Borrower or its
Subsidiaries owns good and marketable fee simple title to all of the Real Estate
described on Schedule 4.8(a) hereto, and good and valid leasehold interests in
the Leases described in Schedule 4.8(b) hereto, and good and marketable title
to, or valid leasehold interests, licenses or other similar interests in, all of
its other properties and assets; (ii) none of the properties and assets of
Borrower or its Subsidiaries including, without limitation, the Real Estate and
Leases are subject to any Liens, except (x) Permitted Encumbrances and (y) from
and after the Closing Date, the Lien in favor of Agent, for its benefit and the
ratable benefit of Lenders, pursuant to the Collateral Documents; PROVIDED,
HOWEVER, that Borrower and its Subsidiaries make no warranty regarding and shall
have no liability for, any encumbrance, survey or title matter which relates to
the fee title or other interest
36
in or to the premises leased under the Leases except only encumbrances, surveys
or other title matters related strictly to the Leases; and (iii) Borrower and
its Subsidiaries have received all deeds, assignments, waivers, consents, bills
of sale and other documents, and duly effected all recordings, filings and other
actions necessary to establish, protect and perfect Borrower's and its
Subsidiaries' right, title and interest in and to all such property except where
the failure to have received such documents or effected such actions will not,
in the aggregate, have a Material Adverse Effect.
(a) All real property owned or leased by Borrower and its
Subsidiaries is listed on Schedules 4.8(a) and 4.8(b) respectively. Neither
Borrower nor its Subsidiaries owns any other Real Estate or is a lessee or
lessor under any real property leases other than as set forth therein.
Schedules 4.8(a) and 4.8(b) are true and correct in all material respects. Part
One of Schedule 4.8(b) hereto sets forth all leases of real property held by
Borrower or any Subsidiary as lessee and Part Two of Schedule 4.8(b) describes
all leases of real property held by Borrower or any Subsidiary as lessor. Each
of such leases is valid and enforceable against Borrower or its Subsidiary, as
the case may be, and to Borrower's knowledge against the other party to such
lease in accordance with its terms, subject to bankruptcy, insolvency, and other
laws affecting creditors' rights generally and to the application of equitable
remedies, and is in full force and effect. Borrower has delivered to Agent true
and complete copies of each of such leases set forth on Part One and Part Two of
Schedule 4.8(b) and all documents affecting the rights or obligations of
Borrower or any Subsidiary which is a party thereto, including, without
limitation, any non-disturbance and recognition agreements, subordination
agreements, attornment agreements and agreements regarding the term or rental of
any of the leases. Neither Borrower nor the applicable Subsidiary nor, to the
best of Borrower's knowledge, any other party to any such lease, is in default
of its obligations thereunder or has delivered or received any notice of default
under any such lease, nor has any event occurred which, with the giving of
notice, the passage of time or both, would constitute a default under any such
lease, except for any default which could not reasonably be expected to have a
Material Adverse Effect.
(b) Except as set forth in the Leases or in the title reports
delivered to Agent on the Closing Date or on Schedule 4.8(c) hereto neither
Borrower nor any of its Subsidiaries owns or holds, or is obligated under or a
party to, any option, right of first refusal or other contractual right to
purchase, acquire, sell, assign, lease or dispose of any of the real property
owned or leased by Borrower or any of its Subsidiaries.
(c) Except as set forth in Schedule 4.8(d), all components of all
improvements included within the real property owned or leased by Borrower or
its Subsidiaries (hereinafter collectively referred to as the "Improvements"),
including, without limitation, the roofs and structural elements thereof and the
heating, ventilation, air conditioning, plumbing, electrical, mechanical, sewer,
waste water, storm water, paving and parking equipment, systems and facilities
included therein, are in good working order and repair, except to the extent
that such failure to be in good working order and repair does not have a
Material Adverse Effect. Except as set forth on Schedule 4.8(d) hereof all
water, gas, electrical, steam, compressed air, tele-
37
communication, sanitary and storm sewage lines and systems and other similar
systems serving the real property owned or leased by Borrower or its
Subsidiaries are installed and operating and are sufficient to enable the real
property owned or leased by Borrower or its Subsidiaries to continue to be used
and operated in the manner currently being used and operated except where such
failure does not have a Material Adverse Effect and neither Borrower nor any of
its Subsidiaries has any knowledge of any factor or condition that could result
in the termination or material impairment of the furnishing thereof, except
where such failure does not have a Material Adverse Effect. No improvement or
portion thereof is dependent for its access, operation or utility on any land,
building or other Improvement not included in the real property owned or leased
by Borrower or its Subsidiaries other than pursuant to valid, written and
enforceable easements which are in full force and effect, except where such
failure does not have a Material Adverse Effect. None of Borrower, or any of
its Subsidiaries or, to the best of Borrower's knowledge, any other party is in
default under any such easement and no event has occurred which, with the giving
of notice, lapse of time or both, could constitute a default under any such
easement, except where such failure does not have a Material Adverse Effect.
(d) Except as set forth on Schedule 4.8(e) hereto, all certificates
of occupancy, permits, licenses, franchises, approvals and authorizations
(hereinafter collectively referred to as the "Real Estate Permits") of all
governmental authorities having jurisdiction over the real property owned or
leased by Borrower or its Subsidiaries required to have been issued or
appropriate to enable the real property owned or leased by Borrower or its
Subsidiaries to be lawfully occupied and used for all of the purposes for which
they are currently occupied and used, have been lawfully issued and are, as of
the date hereof, in full force and effect except where the failure of such Real
Estate Permit to have been so issued or to be in full force and effect would not
have a Material Adverse Effect.
(e) Except as set forth on Schedule 4.8(f) hereto, neither the
Borrower nor any of its Subsidiaries has received any notice, nor has any
knowledge, of any pending, threatened or contemplated condemnation proceeding
affecting any real property owned or leased by Borrower or any of its
Subsidiaries or any part thereof, or any proposed termination or impairment of
any parking at any such owned or leased real property or of any sale or other
disposition of any real property owned or leased by Borrower or any of its
Subsidiaries or any part thereof in lieu of condemnation.
▇.▇▇ DEFAULT. Neither Borrower nor any of its Subsidiaries is in
default, nor to Borrower's knowledge is any third party in default, under or
with respect to any contract, agreement or other instrument (other than the
Leases) to which it is a party, except for any default which (either
individually or collectively with other defaults arising out of the same event
or events) would not have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
10. LABOR MATTERS. There are no strikes or other labor disputes
against Borrower or any of its Subsidiaries pending or, to Borrower's knowledge,
threatened which could be
38
reasonably expected to have a Material Adverse Effect. Hours worked by and
payments made to employees of Borrower and its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable law dealing
with such matters which could reasonably be expected to have a Material Adverse
Effect. All payments due from Borrower or any of its Subsidiaries on account of
employee health and welfare insurance which could reasonably be expected to have
a Material Adverse Effect if not paid have been paid or accrued as a liability
on the books of Borrower or such Subsidiary.
11. OTHER VENTURES. Except as set forth in Schedule 4.11, neither
Borrower nor any Subsidiary is engaged in any joint venture or partnership with
any other Person.
12. INVESTMENT COMPANY ACT. None of Parent, Borrower nor any
Subsidiary is an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended. The making
of the Revolving Credit Advances by Lenders, the application of the proceeds and
repayment thereof by Borrower and the consummation of the transactions
contemplated by this Agreement and the other Loan Documents will not violate any
provision of such Act or any rule, regulation or order issued by the Securities
and Exchange Commission thereunder.
13. MARGIN REGULATIONS. Borrower does not own any margin stock," as
that term is defined in Regulations G and U of the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"), and the proceeds of the
Revolving Credit Advances will be used only for the purposes contemplated
hereunder. None of the Revolving Credit Advances will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin stock, for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry any margin stock or for any other purpose which might cause
any of the loans under this Agreement to be considered a "purpose credit" within
the meaning of Regulation G, T, U or X of the Federal Reserve Board. Borrower
will not take or permit any agent acting on its behalf to take any action which
might cause this Agreement or any document or instrument delivered pursuant
hereto to violate any regulation of the Federal Reserve Board.
14. TAXES. All federal, state, local and foreign tax returns,
reports and statements required to be filed by Borrower and its Subsidiaries
(and each Affiliate with which Borrower or any of its Subsidiaries files
consolidated, combined or unitary returns) have been filed with the appropriate
governmental agencies and all Charges and other impositions shown thereon to be
due and payable have been paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment thereof, or any such
fine, penalty, interest, late charge or loss has been paid, except where
contested in good faith by appropriate proceedings and for which adequate
reserves have been established and maintained on the books of Borrower, its
Subsidiary or Affiliate, as the case may be, in accordance with and to the
extent required by GAAP. Each of Borrower and its Subsidiaries has paid when
due and payable all Charges required to be paid by it, except where being
contested in good faith by appropriate proceedings.
39
Proper and accurate amounts have been withheld by Borrower and its Subsidiaries
from their respective employees for all periods in full and complete compliance
with the tax, social security and unemployment withholding provisions of
applicable federal, state, local and foreign law and such withholdings have been
timely paid to the respective governmental agencies. Schedule 4.14 sets forth,
for each of Borrower and its Subsidiaries, those taxable years for which its tax
returns are currently being audited by the IRS or any other applicable
governmental authority. Except as described in Schedule 4.14 hereto, neither
Borrower nor any of its Subsidiaries has executed or filed with the IRS or any
other governmental authority any agreement or other document extending, or
having the effect of extending, the period for assessment or collection of any
Charges. Neither Borrower nor any of its Subsidiaries has filed a consent
pursuant to IRC Section 341(f) or agreed to have IRC Section 341(f)(2) apply to
any dispositions of subsection (f) assets (as such term is defined in IRC
Section 341(f)(4)). None of the property owned by Borrower or any of its
Subsidiaries is property which such company is required to treat as being owned
by any other Person pursuant to the provisions of IRC Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, and in effect immediately prior to
the enactment of the Tax Reform Act of 1986 or is "tax-exempt use property"
within the meaning of IRC Section 168(h). Neither Borrower nor any of its
Subsidiaries has agreed or has been requested to make any adjustment under IRC
Section 481(a) by reason of a change in accounting method or otherwise. Except
as set forth on Schedule 4.14, neither Borrower nor any of its Subsidiaries has
any obligation under any written tax sharing agreement.
15. ERISA. None of Borrower, any of its Subsidiaries or any ERISA
Affiliate maintains or contributes to any Plan other than those listed on
Schedule 4.15 hereto. Each Plan of the Borrower, any of its Subsidiaries or any
ERISA Affiliate which is not a Multiemployer Plan, and which is intended to be
tax qualified under IRC Section 401(a) has been determined by the IRS to qualify
under IRC Section 401, and the trusts created thereunder have been determined to
be exempt from tax under the provisions of IRC Section 501, and nothing has
occurred which would cause the loss of such qualification or the imposition of
any IRC or ERISA tax liability or penalty in excess of $500,000. With respect
to each Plan other than a Multiemployer Plan, all reports required under ERISA
or any other applicable law or regulation to be filed by Borrower, any of its
Subsidiaries or any ERISA Affiliate with the relevant governmental authority the
failure of which to file could reasonably result in a liability of Borrower, any
of its Subsidiaries or such ERISA Affiliate in excess of $500,000 have been duly
filed and all such reports are true and correct in all material respects as of
the date given. None of Borrower, any of its Subsidiaries or any ERISA
Affiliate has engaged in a "prohibited transaction," as such term is defined in
IRC Section 4975, Section 502 of ERISA and Title I of ERISA, in connection with
any Plan which would subject Borrower, such Subsidiary or such ERISA Affiliate
(after giving effect to any exemption) to the tax or penalty on prohibited
transactions imposed by IRC Section 4975, Section 502 of ERISA or any other
liability, provided that the "amount involved" under said section is in excess
of $500,000. No Plan has been terminated which resulted in any liability to
Borrower, any of its Subsidiaries or any ERISA Affiliate which has not been
satisfied, nor has any accumulated funding deficiency (as defined in IRC Section
412(a)) been incurred (without regard to any waiver granted under IRC Section
412), nor has any funding waiver from the IRS been
40
received or requested, nor has Borrower, any of its Subsidiaries or any ERISA
Affiliate failed to make any contributions or to pay any amounts due and owing
as required by Section 412 of the IRC, Section 302 of ERISA or the terms of any
Plan prior to the due date of such contribution under Section 412 of the IRC or
Section 302 of ERISA which are still outstanding or which would result in the
imposition of a Lien under such Sections, nor has there been any Reportable
Event or any event requiring disclosure under Section 4041(c)(3)(C), 4063(a) or
4068(f) of ERISA with respect to any Plan (other than a Multiemployer Plan)
which would result in liability to Borrower, any of its Subsidiaries or any
ERISA Affiliate in excess of $500,000.
The present value of the "benefit liabilities" as defined in Title
IV of ERISA of each such Plan as of the end of the preceding plan year using
Plan actuarial assumptions as in effect for such plan year do not exceed the
value of the assets of each Plan (other than a Multiemployer Plan) by more than
$500,000. There are no claims (other than claims for benefits in the normal
course), actions or lawsuits asserted or instituted against, and none of
Borrower, any of its Subsidiaries or any ERISA Affiliate has knowledge of any
threatened litigation or claims against (i) the assets of any Plan (other than a
Multiemployer Plan) or against any fiduciary of such Plan with respect to the
operation of such Plan or (ii) the assets of any employee welfare benefit plan
within the meaning of ERISA Section 3(1) or against any fiduciary thereof with
respect to the operation of any such Plan, which, if adversely determined, could
have a material effect on the business, operations, properties, assets or
condition (financial or otherwise) of Borrower, any of its Subsidiaries or any
ERISA Affiliate, taken as a whole. Any bond required to be obtained by
Borrower, any of its Subsidiaries or any ERISA Affiliate under ERISA with
respect to any Plan has been obtained and is in full force and effect. None of
Borrower, any of its Subsidiaries or any ERISA Affiliate has incurred (a) any
liability to the PBGC, (b) any withdrawal liability (and no event has occurred
which, with the giving of notice under Section 4219 of ERISA, would result in
such liability) under Section 4201 of ERISA as a result of a complete or partial
withdrawal (within the meaning of Section 4203 or 4205 of ERISA) from a
Multiemployer Plan or (c) any liability under ERISA Section 4062 to the PBGC or
to a trustee appointed under ERISA Section 4042, any of which liability would
exceed $500,000. None of Borrower, any of its Subsidiaries or any ERISA
Affiliate nor any organization to which Borrower, any of its Subsidiaries or any
such ERISA Affiliate is a successor or parent corporation within the meaning of
ERISA Section 4069(b) has engaged in a transaction within the meaning of ERISA
Section 4069. None of Borrower, any of its Subsidiaries or any ERISA Affiliate
maintains or has established any welfare benefit plan within the meaning of
Section 3(1) of ERISA which provides for continuing benefits or coverage for any
participant or any beneficiary of a participant after such participant's
termination of employment except as may be required by the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), and the regulations
thereunder, and at the expense of the participant or the beneficiary of the
participant. Borrower, any of its Subsidiaries and each ERISA Affiliate
maintain a welfare benefit plan within the meaning of Section 3(1) of ERISA and
has complied with the notice and continuation coverage requirements of COBRA and
the regulations thereunder.
41
16. NO LITIGATION. Except as set forth on Schedule 4.16 hereto, no
action, claim or proceeding is now pending or, to the knowledge of Borrower,
threatened against Parent, Borrower or any of its Subsidiaries, at law, in
equity or otherwise, before any court, board, commission, agency or
instrumentality of any federal, state, or local government or of any agency or
subdivision thereof, or before any arbitrator or panel of arbitrators, which, if
determined adversely, could reasonably be expected to have a Material Adverse
Effect, nor to the knowledge of Borrower does a state of facts exist which is
reasonably likely to give rise to such proceedings. None of the matters set
forth therein questions the validity of any of the Loan Documents or any action
taken or to be taken pursuant thereto.
17. BROKERS. Except as set forth on Schedule 4.17, no broker or
finder acting on behalf of Borrower brought about the obtaining, making or
closing of the loans made pursuant to this Agreement and Borrower has no
obligation to any Person, except as set forth on Schedule 4.17, in respect of
any finder's or brokerage fees in connection with the Loans contemplated by this
Agreement.
18. Intentionally Omitted.
19. OUTSTANDING STOCK; OPTIONS; WARRANTS; ETC. The Stock of Borrower
owned by Parent and the Stock of Parent owned by the Stockholders of Parent
named on Schedule 4.19 at the Closing Date constitute all of the issued and
outstanding Stock of Borrower and Parent, respectively, immediately following
the Closing Date. Borrower has no outstanding rights, options, warrants or
agreements pursuant to which it may be required to issue or sell any Stock.
Except as set forth on Schedule 4.19, Parent has no outstanding rights, options,
warrants or agreements pursuant to which it may be required to issue or sell any
stock.
20. EMPLOYMENT AND LABOR AGREEMENTS. Except as set forth on Schedule
4.20, there are no employment or management agreements covering management of
Borrower or any of its Subsidiaries and there are no collective bargaining
agreements or other labor agreements covering any employees of Borrower or any
of its Subsidiaries. A true and complete copy of each such agreement has been
furnished to Agent.
21. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. To the best of
Borrower's knowledge, Borrower and its Subsidiaries own all material licenses,
patents, patent applications, copyrights, service marks, trademarks, trademark
applications, and trade names necessary to continue to conduct their business as
heretofore conducted by them, now conducted by them and proposed to be conducted
by them, each of which is listed, together with Patent and Trademark Office
application or registration numbers, where applicable, on Schedule 4.21 hereto.
To the best of Borrower's knowledge, except as set forth on Schedule 4.21
hereto, Borrower and its Subsidiaries conduct their respective businesses
without infringement or claim of infringement of any license, patent, copyright,
service ▇▇▇▇, trademark, trade name, trade secret or other intellectual property
right of others, except where such infringement or claim of infringement could
not reasonably be expected to have a Material Adverse Effect. To the best of
Borrower's
42
knowledge, except as set forth in Schedule 4.21 hereto, there is no infringement
or claim of infringement by others of any material license, patent, copyright,
service ▇▇▇▇, trademark, trade name, trade secret or other intellectual property
right of Borrower or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect.
22. FULL DISCLOSURE. No representation or warranty of any Loan Party
contained in this Agreement, including the Schedules hereto, or in the other
Loan Documents or Ancillary Agreements furnished by or on behalf of Parent,
Borrower or any of Borrower's Subsidiaries to Agent or any Lender pursuant to
the terms of this Agreement is untrue or incorrect in any material respect and
none of such Loan Documents or Ancillary Agreements contains any untrue
statement of any Loan Party of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which made.
23. LIENS. The Liens granted to the Lenders pursuant to the
Mortgages and the Leasehold Mortgages were at the Closing Date fully perfected
first priority Liens, subject to Permitted Encumbrances, in and to the
Collateral therein described upon their recording.
24. NO MATERIAL ADVERSE EFFECT. To the best of Borrower's knowledge,
except as set forth on Schedule 4.24, no event has occurred since December 31,
1995 and is continuing which has had or could reasonably be expected to have a
Material Adverse Effect.
25. ENVIRONMENTAL PROTECTION. To the best of Borrower's knowledge,
the operations of the Borrower and each of its Subsidiaries comply in all
material respects with all Environmental Laws; and to the best of Borrower's
knowledge and except as set forth on Schedule 4.25 (i) the Borrower and each of
its Subsidiaries have obtained all material environmental, health and safety
Permits necessary for their respective operations, and all such Permits are in
good standing, and the Borrower and each of its Subsidiaries are in compliance
with all material terms and conditions of such Permits; (ii) none of the
operations of the Borrower or any of its Subsidiaries is subject to any judicial
or administrative proceeding alleging the violation of any Environmental Laws
which if adversely determined could reasonably be expected to have a Material
Adverse Effect; (iii) the Borrower and each of its Subsidiaries and all of their
present Facilities or operations, as well as their past Facilities or
operations, are not subject to any outstanding written order or agreement with
any governmental authority or private party respecting (A) any Environmental
Laws, (B) any Remedial Action, or (C) any Environmental Claims; (iv) none of the
operations of the Borrower or any of its Subsidiaries is the subject of any
Federal or state investigation evaluating whether any Remedial Action is needed
to respond to a Release of any Contaminant into the environment; (v) neither the
Borrower nor any of its Subsidiaries or any predecessor of the Borrower or any
Subsidiary has filed any notice under any Federal or state law indicating past
or present treatment, storage, or disposal of a hazardous waste or reporting a
spill or Release of a Contaminant into the environment; (vi) neither the
Borrower nor any of its Subsidiaries has any contingent liability in connection
with any Release by Borrower or any of its Subsidiaries of any Contaminant into
the environment; (vii) none of the
43
Borrower's or any of its Subsidiary's operations involve the generation,
transportation, treatment or disposal of hazardous waste, as defined under 40
C.F.R. Parts 260-270 or any state equivalent; (viii) neither the Borrower nor
any of its Subsidiaries has disposed of any Contaminant by placing it in or on
the ground or waters of any premises owned, leased or used by the Borrower or
such Subsidiary and neither has any lessee, prior owner, or other Person; (ix)
no underground storage tanks or surface impoundments are on the Borrower's
Facilities or the Facilities of any of its Subsidiaries; and (x) no Lien in
favor of any governmental authority for (A) any liability under Environmental
Laws, or (B) damages arising from or costs incurred by such governmental
authority in response to a Release of a Contaminant into the environment has
been filed or attached to the Borrower's Facilities or the Facilities of any
Subsidiary of the Borrower.
26. PRIOR LIENS. Schedule 4.26 sets forth a true, correct and
complete list of Indebtedness outstanding as at the Closing Date which is
secured by any Lien on any of Borrower's or any Subsidiaries' interest in the
Real Estate and Leases which is superior to the Lien granted to Agent pursuant
to the Loan Documents, the outstanding principal balance due and payable on such
Indebtedness as of the respective dates set forth on Schedule 4.26, the interest
rate presently payable on such Indebtedness and the monthly payment required to
be made in respect thereof; PROVIDED, HOWEVER, that failure to list any
Indebtedness secured by any Lien which otherwise constitutes a Permitted
Encumbrance shall not constitute an Event of Default. Neither Borrower nor any
Subsidiary is in default under any loan document securing such Indebtedness and
no event has occurred which with the giving of notice, lapse of time or both,
would constitute a default thereunder, except for any such default which would
not have a Material Adverse Effect.
5. FINANCIAL STATEMENTS AND INFORMATION
1. REPORTS AND NOTICES. Borrower covenants and agrees that from and
after the Closing Date and until the Termination Date, it shall deliver to each
Lender:
(a) Within 37 days after the end of each fiscal month, (i) a copy of
the unaudited consolidated balance sheet of Borrower and its Subsidiaries as of
the end of such month and the related consolidated and consolidating profit and
loss (including attendance figures) statements of Borrower and its Subsidiaries
broken down by Market Segment, and consolidated statement of Corporate Overhead,
for that portion of the Fiscal Year ending as of the end of such month and (ii)
a copy of the unaudited consolidated and consolidating profit and loss
(including attendance figures) statements of Borrower and its Subsidiaries
broken down by Market Segment, consolidated statement of cash flows of Borrower
and its Subsidiaries, and consolidated statement of Corporate Overhead for such
month, all prepared in accordance with GAAP (subject to normal year end
adjustments and footnotes), setting forth, in comparative form, the projected
and historical consolidated and consolidating figures for such period.
(b) Within 45 days after the end of each fiscal quarter of each
Fiscal Year, (i) a copy of the unaudited consolidated balance sheet of Borrower
and its Subsidiaries as of the close
44
of such quarter and the related consolidated and consolidating profit and loss
(including attendance figures) statements of Borrower and its Subsidiaries
broken down by Market Segment, and statements of Corporate Overhead for that
portion of the Fiscal Year ending as of the close of such quarter and (ii) a
copy of the unaudited consolidated and consolidating profit and loss (including
attendance figures) statements of Borrower and its Subsidiaries broken down by
Market Segment, consolidated statement of cash flows of Borrower and its
Subsidiaries, and consolidated statement of Corporate Overhead for such quarter,
all prepared in accordance with GAAP (subject to normal year end adjustments and
footnotes), setting forth, in comparative form, the projected and historical
consolidated and consolidating figures for such period and accompanied by (A) a
statement in reasonable detail showing the calculations used in determining the
financial covenants under Sections 6.3 and 7.10 hereof, and (B) the
certification of the chief financial officer of Borrower that all such financial
statements present fairly in all material respects in accordance with GAAP
(subject to normal year end adjustments) the consolidated and consolidating
financial position of Borrower, its Subsidiaries, the Market Segments as at the
end of such quarter and for the period then ended, and that there was no Default
or Event of Default in existence as of such time.
(c) Within 90 days after the end of each Fiscal Year, (i) a copy of
the annual audited consolidated financial statements of Borrower and its
Subsidiaries consisting of the annual consolidated balance sheet and
consolidated profit and loss statements and statements of cash flows and
retained earnings as of the end of such Fiscal Year, (ii) a copy of the annual
unaudited consolidated and consolidating financial statements of Borrower and
its Subsidiaries, consisting of the consolidated and consolidating profit and
loss (including attendance figures) statements of Borrower and its Subsidiaries
broken down by Market Segment, and consolidated statement of Corporate Overhead,
for the Fiscal Year then ended and (iii) a summary of the profit and loss
statement for each Theatre (including attendance figures) for the Fiscal Year
then ended, setting forth, in comparative form, the historical consolidated and
consolidating figures for the previous Fiscal Year, which financial statements
shall be prepared in accordance with GAAP, certified (only with respect to the
consolidated financial statements) without qualification by Price Waterhouse, or
any other firm of independent certified public accountants of recognized
national standing selected by Borrower and reasonably acceptable to Agent, and
accompanied by (A) a statement in reasonable detail showing the calculations
used in determining the financial covenants under Sections 6.3 and 7.10 hereof,
(B) a report from such accountants to the effect that in connection with their
audit examination, nothing has come to their attention to cause them to believe
that a Default or Event of Default had occurred and (C) a certification of the
chief executive officer or chief financial officer of Borrower that all such
financial statements are complete and correct and present fairly in accordance
with GAAP the consolidated and consolidating financial position of Borrower, its
Subsidiaries and the Market Segments as at the end of such year and for the
period then ended and that there was no Default or Event of Default in existence
as of such time.
(d) As soon as practicable, but in any event within two (2) Business
Days after Borrower becomes aware of the existence of any Default or Event of
Default, or any development
45
or other information which would have a Material Adverse Effect, notice by
telephone or telecopy specifying the nature of such Default or Event of Default
or development or information, including the anticipated effect thereof, which
notice shall be promptly confirmed in writing within five (5) days.
(e) Not later than 45 days prior to the beginning of each Fiscal
Year:
(i) a projected consolidated balance sheet of Borrower and
its Subsidiaries for such Fiscal Year, on a monthly basis, and on an annual
basis for each remaining Fiscal Year through the Commitment Termination
Date;
(ii) projected consolidated and consolidating profit and
loss statements of Borrower and its Subsidiaries broken down by Market
Segment, consolidated statement of cash flow of Borrower and its
Subsidiaries, and consolidated statement of Corporate Overhead, including
summary details of cash disbursements, including for Capital Expenditures,
and a summary of Funded Debt, for such Fiscal Year, on a monthly basis, and
on an annual basis for each remaining Fiscal Year through the Commitment
Termination Date; and
(iii) an annual business plan approved by the board of
directors of Borrower, setting forth in reasonable detail (A) the
annual budget for Borrower and its Subsidiaries broken down by
Market Segment, and (B) the operating profit and loss (including
attendance figures) and cash flow projections for Borrower and its
Subsidiaries broken down by Market Segment and statements of
Corporate Overhead, in each case for the following Fiscal Year and
for each remaining Fiscal Year through the Commitment Termination
Date;
together with appropriate supporting details as reasonably requested by Agent.
(f) If requested by Agent or any Lender, copies of all federal,
state, local and foreign tax returns and reports in respect of income, franchise
or other taxes on or measured by income (excluding sales, use or like taxes)
filed by Borrower or any of its Subsidiaries.
(g) Such other information respecting Borrower's, any of its
Subsidiaries', or any of the Theatres' business, assets, operations or financial
condition as Agent may, from time to time, reasonably request.
(h) As soon as practicable, a list of the participants in the
Compensation Plan and all amounts to be paid annually under the Compensation
Plan and, as soon as practicable following any changes in the participants in or
the amounts to be paid annually under the Compensation Plan, a list of the
participants added to and the changes in the amounts to be paid under the
Compensation Plan, as well as a list of those participants removed from the
Compensation Plan.
46
(i) Within one fiscal month plus five Business Days following the
end of each fiscal month following the Closing Date, an itemized report of all
fees, costs and expenditures paid or incurred by the Borrower pursuant to
Section 7.7(a) hereof.
2. COMMUNICATION WITH ACCOUNTANTS. Borrower authorizes Agent, on
behalf of itself and on behalf of Lenders (at Agent's and Lenders' sole expense
unless an Event of Default shall have occurred and be continuing), to
communicate directly with Borrower's independent certified public accountants
and Borrower authorizes those accountants to disclose to Agent any and all
financial statements and other supporting financial documents and schedules
including copies of any management letter with respect to the business,
financial condition and other affairs of Borrower and any of its Subsidiaries.
Agent and each Lender shall maintain the confidentiality of any information
received by it as a result of any such communication and shall not disclose any
such information to any Person other than (a) to a potential purchaser of a Note
or a participant, in which event such potential purchaser or participant shall
similarly agree not to disclose such information received by it, (b) upon the
Occurrence and continuance of an Event of Default, in which event the recipient
thereof shall similarly agree not to disclose such information, (c) in
connection with the exercise of any remedies of Agent or any Lender, as the case
may be under any Collateral Document and (d) to the extent any such disclosure
is required by law. At or before the Closing Date, Borrower delivered a letter
addressed to such accountants instructing them to comply with the provisions of
this Section 5.2.
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, unless the Required Lenders
shall otherwise consent in writing, from and after the date hereof and until the
Termination Date:
1. MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Borrower
shall and shall cause each of its Subsidiaries to (a) do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence or its existence as a general or limited partnership, as the case may
be, and its rights, licenses, privileges and franchises material to the conduct
of its business; (b) continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder; (c) at all times maintain,
preserve and protect all of its trademarks and trade names, and preserve all the
remainder of its property, in use or useful in the conduct of its business and
keep the same in good repair, working order and condition (taking into
consideration ordinary wear and tear) and from time to time make, or cause to be
made, all needful and proper repairs, renewals and replacements, betterments and
improvements thereto consistent with motion picture theatre industry practices,
so that the business carried on in connection therewith may be properly and
advantageously conducted at all times; and (d) transact business in such names
as Borrower or such Subsidiary may from time to time use in conducting its
businesses.
2. PAYMENT OF OBLIGATIONS. (a) Subject to the provisions of
Section 6.2(b), Borrower shall and shall cause each of its Subsidiaries to (i)
pay and discharge or cause to be paid
47
and discharged all its Indebtedness and all of its payment obligations under any
Lease including, without limitation, all the Obligations, as and when due and
payable, (ii) pay and discharge or cause to be paid and discharged promptly all
(A) Charges imposed upon it, its income and profits, or any of its property
(real, personal or mixed), and (B) lawful claims for labor, materials, supplies
and services or otherwise before any thereof shall become in default, and (iii)
pay and discharge all present and future documentary or stamp taxes or other
excise or property taxes, charges or similar levies of the United States or any
state or political subdivision thereof, or any applicable foreign jurisdiction
that arise from the execution, delivery or registration of the Notes or any of
the other Loan Documents.
(a) Borrower and its Subsidiaries may in good faith contest, by
appropriate proceedings, the validity or amount of any Indebtedness (other than
the Obligations) or any payment obligation under any Lease, Charges or claims
arising under Section 6.2(a)(i), (ii) or (iii), provided that at the time of
commencement of any such proceeding, and during the pendency thereof (i) no
Default or Event of Default shall have occurred; (ii) adequate Reserves with
respect thereto are maintained on the books of Borrower or such Subsidiary, in
accordance with and to the extent required by GAAP; (iii) an adverse
determination of such proceeding could not reasonably be expected to have a
Material Adverse Effect or result in a forfeiture or loss of Collateral, which
forfeiture or loss could reasonably be expected to have a Material Adverse
Effect; and (iv) Borrower or such Subsidiary shall promptly pay or discharge
such contested Charges and all additional charges, interest, penalties and
expenses, if any, and shall deliver to Agent evidence acceptable to Agent of
such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to Borrower or such Subsidiary.
(b) Notwithstanding anything to the contrary contained in Section
6.2(b) above, Borrower and each of its Subsidiaries shall have the right to pay
the Indebtedness, obligations, Charges or claims arising under Section 6.2(a)
and in good faith contest, by appropriate proceedings, the validity or amount of
such Indebtedness, obligations, Charges or claims.
3. FINANCIAL COVENANTS. Borrower and its Subsidiaries shall, on a
consolidated basis:
(a) maintain at the end of each fiscal quarter set forth below a
Consolidated Total Funded Debt to Consolidated Cash Flow Ratio equal to or less
than the ratio set forth below:
For Each Fiscal Quarter
Ending: Maximum Ratio:
-------------------- --------------
March 31, 1997 5.50:1.00
June 30, 1997 5.50:1.00
September 30, 1997 5.50:1.00
December 31, 1997 5.50:1:00
48
March 31, 1998 5.50:1.00
June 30, 1998 5.50:1.00
September 30, 1998 5.50:1.00
December 31, 1998 5.00:1.00
and thereafter
(b) maintain at the end of each fiscal quarter set forth below a
Consolidated Interest Coverage Ratio equal to or greater than the ratio set
forth below:
For Each Fiscal Quarter
Ending: Minimum Ratio:
-------------------- --------------
March 31, 1997 2.15:1.00
June 30, 1997 2.15:1.00
September 30, 1997 2.15:1.00
December 31, 1997 2.15:1:00
March 31, 1998 2.15:1.00
June 30, 1998 2.25:1.00
September 30, 1998 2.40:1.00
December 31, 1998 2.50:1.00
and thereafter
(c) maintain at the end of each fiscal quarter set forth below a
Consolidated Cash Flow to Consolidated Fixed Charges Ratio equal to or greater
than the ratio set forth below:
For Each Fiscal Quarter
Ending: Minimum Ratio:
-------------------- --------------
during 1997 2.00:1.00
March 31, 1998 2.00:1.00
June 30, 1998 2.10:1.00
September 30, 1998 2.25:1.00
December 31, 1998 2.25:1.00
during 1999 1.75:1.00
during 2000 1.50:1.00
and thereafter
4. LENDER'S FEES. Borrower shall pay to Agent, on demand, any and
all fees, costs or expenses that Agent shall pay to a bank or other similar
institution arising out of or in
49
connection with the forwarding to Borrower or any other Person on behalf of
Borrower by Agent of proceeds of the Revolving Credit Advances.
5. BOOKS AND RECORDS. Borrower shall and shall cause each of its
Subsidiaries to keep adequate records and books of account with respect to its
business activities, in which proper entries, reflecting all of their financial
transactions, are made in accordance with GAAP and on a basis consistent with
the financial statements referred to in Section 4.6(b) hereof.
6. LITIGATION. Borrower shall notify Agent in writing, promptly upon
learning thereof, of any litigation commenced against Borrower and/or any of the
Subsidiaries, and of the institution against any of them of any suit or
administrative proceeding that, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.
7. INSURANCE. Schedule 6.7 lists all insurance of any nature
maintained by Borrower and each Subsidiary of Borrower, as well as a summary of
the terms of such insurance. Borrower shall and shall cause each Subsidiary of
Borrower to maintain insurance in such amounts and covering such risks as is
usually carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which Borrower and such Subsidiary
operates, including, without limitation, fire, theft, burglary, public
liability, property damage, product liability, workers' compensation and
insurance on all property and assets, all under policies issued by insurers
reasonably satisfactory to Agent and with a lender's loss payable clause in
favor of Agent for the benefit of the Lenders and in accordance with the
provisions of Schedule 6.7B. Borrower shall and shall cause each of its
Subsidiaries to pay all insurance premiums payable by them as and when due and
payable.
8. COMPLIANCE WITH LAW. Borrower shall and shall cause each of its
Subsidiaries to comply with all federal, state and local laws and regulations
applicable to it, including, without limitation, ERISA, those regarding the
collection, payment and deposit of employees' income, unemployment and social
security taxes and those relating to environmental matters where the failure to
comply could reasonably be expected to have a Material Adverse Effect.
9. AGREEMENTS. Subject to the provisions of Section 6.2(b) hereof,
Borrower shall and shall cause each of its Subsidiaries to perform and comply,
within all required time periods (after giving effect to any applicable grace
periods), all of its obligations and enforce all of its rights under each
agreement to which it is a party, including, without limitation, any Lease or
Restricted Lease to which any such Loan Party is a party, whether now or
hereafter entered into by such party, where the failure to so perform, comply
and enforce could reasonably be expected to have a Material Adverse Effect.
10. SUPPLEMENTAL DISCLOSURE. Upon request of Agent or any Lender,
from time to time as may be necessary (in the event that such information is not
otherwise delivered by Borrower to Lenders pursuant to this Agreement), so long
as there are Obligations outstanding hereunder, Borrower will supplement or
amend each Schedule or representation herein with
50
respect to any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
such Schedule or as an exception to such representation or which is necessary to
correct any information in such Schedule or representation which has been
rendered inaccurate thereby. Delivery of any supplemental information pursuant
to this Section 6.10 shall not be deemed an amendment to the representations and
warranties of this Agreement.
11. EMPLOYEE PLANS. (a) With respect to other than a Multiemployer
Plan, or each Plan hereafter adopted or maintained by Borrower, or any of its
Subsidiaries or any ERISA Affiliate of Borrower, Borrower shall or shall cause
such Subsidiary and ERISA Affiliate to (i) use its best efforts to seek and
receive determination letters from the IRS to the effect that such Plan is
qualified within the meaning of IRC Section 401(a); (ii) from and after the
adoption of any Plan, use its best efforts to cause such Plan to be qualified
within the meaning of IRC Section 401(a) and to be administered in all material
respects in accordance with the requirements of ERISA and IRC Section 401(a);
(iii) make all required contributions to such Plans by the due date under
Section 412 of the IRC and Section 302 of ERISA in order to avoid the imposition
of a Lien under such Sections; and (iv) not take any action which would cause
such Plan not to be qualified within the meaning of IRC Section 401(a) or not to
be administered in all material respects in accordance with the requirements of
ERISA and IRC Section 401(a).
(a) Borrower shall and shall cause each Subsidiary and ERISA
Affiliate to deliver to Lender: (i) (A) as soon as possible and in any event
within 30 days, after Borrower, or any of its Subsidiaries or any such ERISA
Affiliate knows or has reason to know that any ERISA Event described in clause
(a) of the definition of ERISA Event or any event requiring disclosure under
Section 4063(a) of ERISA with respect to any Plan has occurred, and (B) within
10 days after the Borrower, or any of its Subsidiaries or any ERISA Affiliate
knows or has reason to know that any other ERISA Event with respect to any Plan
has occurred or a request for a minimum funding waiver under IRC Section 412
with respect to any Plan or any Multiemployer Plan, a statement of the chief
financial officer of Borrower, or any of its Subsidiaries or such ERISA
Affiliate setting forth details as to such ERISA Event or other event and the
action which Borrower, or any of its Subsidiaries or such ERISA Affiliate
proposes to take with respect thereto, together with a copy of the notice of
such ERISA Event or other event, if required by the applicable regulations under
ERISA, given to the PBGC; (ii) promptly after the filing thereof by Borrower, or
any of its Subsidiaries or such ERISA Affiliate with the DOL, IRS or the PBGC,
copies of each annual and other report with respect to each Plan; (iii) promptly
after receipt thereof, a copy of any notice, determination letter, ruling or
opinion Borrower, or any of its Subsidiaries or such ERISA Affiliate may receive
from the PBGC, DOL or IRS with respect to any Plan; (iv) promptly, and in any
event within ten Business Days, after receipt thereof, a copy of any
correspondence Borrower, or any of its Subsidiaries or such ERISA Affiliate
receives from the Plan Sponsor (as defined by ERISA Section 4001(a)(10)) of any
Plan concerning potential withdrawal liability pursuant to ERISA Section 4219
and/or Section 4202, and a statement from the chief financial officer of
Borrower, or any of its Subsidiaries or such ERISA Affiliate setting forth
details as to the events giving rise to such potential withdrawal liability and
the action which Borrower, or any
51
of its Subsidiaries or such ERISA Affiliate proposes to take with respect
thereto; (v) notification within 30 days of any material increases in the
benefits of any existing Plan which is not a Multiemployer Plan, or the
establishment of any new Plans, or the commencement of contributions to any Plan
to which Borrower, or any of its Subsidiaries or such ERISA Affiliate was not
previously contributing within 30 days; (vi) promptly, and in any event within
ten Business Days, after receipt thereof by Borrower, or any of its Subsidiaries
or such ERISA Affiliate from the PBGC, copies of each notice received by
Borrower, or any of its Subsidiaries or such ERISA Affiliate of the PBGC's
intention to terminate any Plan or to have a trustee appointed to administer any
Plan; (vii) notification within ten days of a request for a minimum funding
waiver under IRC Section 412 with respect to any Plan and a copy of such
request; (viii) notification within two Business Days after Borrower, or any of
its Subsidiaries or any ERISA Affiliate knows or has reason to know that
Borrower or such ERISA Affiliate has or intends to file a notice of intent to
terminate any Plan under a distress termination within the meaning of Section
4041(c) of ERISA and a copy of such notice; and (ix) promptly after the
commencement thereof, notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting Borrower, any of its
Subsidiaries or any ERISA Affiliate or any Plan except those which, if adversely
determined, would not have a reasonable likelihood of having a Material Adverse
Effect.
12. LEASES; NEW REAL ESTATE. (a) Borrower shall provide, or shall
cause the applicable Subsidiary to provide, Agent with copies of all leases of
real property or similar agreements (and all amendments thereto) entered into by
Borrower or any Subsidiary after the Closing Date, whether as lessor or lessee.
Any new lease of real property entered into by Borrower or any of its
Subsidiaries in respect of any Theatre shall expressly permit the mortgaging
thereof to Agent, on behalf of Lenders, and shall contain such customary
leasehold lender protections as may be reasonably required by Agent, it being
understood that the leasehold lender protections in substantially the form set
forth in Schedule 6.12 hereof shall be deemed to satisfy such leasehold lender
protection requirements and such non-disturbance and other provisions as shall
be reasonably satisfactory to Agent other than a provision requiring Agent's
consent to any modification, amendment, termination or surrender of such Lease;
PROVIDED, HOWEVER, that the foregoing shall not be construed as limiting or
modifying Borrower's covenants under Section 7.16(c) hereof. Borrower shall, or
shall cause the appropriate Subsidiary to, (i) provide Agent with a copy of each
notice of default received by Borrower or such Subsidiary under any such lease
upon receipt of any such notice and deliver to Agent a copy of each notice of
default sent by Borrower or such Subsidiary under any such lease simultaneously
with its delivery of such notice under such lease; (ii) use its best efforts to
notify Agent, not later than 30 days prior to the date of the expiration of the
term of any such lease, of intention either to renew or not renew any such
lease, and, if Borrower or such Subsidiary shall intend to renew such lease, the
terms and conditions of such renewal lease; and (iii) use its best efforts to
notify Agent at least 14 days prior to the date Borrower or such Subsidiary
takes possession of or becomes liable under any new leased premises or lease,
whichever is earlier. With respect to the Leases subject to any Leasehold
Mortgage, Borrower and the appropriate Subsidiary shall comply with the
provisions of the applicable Leasehold Mortgage with respect to the applicable
Leases; PROVIDED,
52
HOWEVER, that in the event of any conflict between the provisions of this
Agreement and the provisions of the applicable Leasehold Mortgage, the
provisions hereof shall control.
(a) If at any time prior to the Termination Date, Borrower or any of
its Subsidiaries shall acquire any Real Estate or enter into a Lease for a
Theatre, Borrower or any such Subsidiary shall cause such Lease or a memorandum
thereof to be recorded in the appropriate recording office.
(b) Any construction, architectural or similar building agreement
entered into by Borrower or any of its Subsidiaries in respect of any
construction to occur at any of the Real Estate or the real property leased by
Borrower or any of its Subsidiaries (other than a Lease for which the landlord
thereof performs the construction) for a cost to Borrower or any of its
Subsidiaries in excess of $500,000 for any one such agreement shall provide that
such agreement may be assigned to Agent or any subsequent assignee who shall be
financially capable of performing the Borrower's or any of its Subsidiaries'
obligations under such Agreement without additional compensation to such
contractor or architect who shall recognize Agent or such subsequent assignee as
the contract party thereto from and after the date of such assignment provided
that Agent or such assignee shall cure all defaults susceptible to being cured
by Agent and shall assume all of the Borrower's or its Subsidiaries' obligations
arising from and after the date of such assignment but only for so long as Agent
or such assignee shall have title to such Real Estate or leasehold interest.
13. ENVIRONMENTAL MATTERS. (a) Borrower shall and shall cause each
of its Subsidiaries to (i) comply in all material respects with the
Environmental Laws applicable to it, (ii) notify Agent promptly after knowledge
in the event of any Release of any Contaminant upon or affecting any premises
owned or occupied by such Person which Release is reasonably expected to have a
Material Adverse Effect, and (iii) promptly forward to Agent a copy of any
order, notice, permit, application, or any other written communication or report
received by Borrower or any of its Subsidiaries in connection with any such
Release or any other matter relating to the Environmental Laws as they may
materially adversely affect such premises.
(a) Borrower shall fully and promptly pay, perform, discharge,
defend, indemnify and hold harmless Agent and Lenders, their Subsidiaries and
Affiliates, and their respective directors, officers and employees from and
against any action, suit, proceeding, claim or loss suffered or incurred by
Agent, any Lender or any such other indemnified party, whether as mortgagee
pursuant to any Leasehold Mortgage other than as a result of Agent's, such
Lender's or such other indemnified party's gross negligence or willful
misconduct, as mortgagee in possession, or as successor in interest to Borrower
or any of its Subsidiaries as owner or lessee of any Facilities by virtue of
foreclosure or acceptance in lieu of foreclosure, or otherwise: (i) under or on
account of any Environmental Laws, including the assertion of any Lien
thereunder; (ii) with respect to any Release of a Contaminant, prior to such
foreclosure or acceptance in lieu of foreclosure, affecting such Facilities,
whether or not the same originates or emanates from such
53
Facilities or any contiguous real estate; and (iii) with respect to any other
matter affecting such Facilities pursuant to any Environmental Laws.
(b) In the event of any Release of any Contaminant or other Adverse
Environmental Condition upon or affecting any premises occupied by Borrower or
any of its Subsidiaries, whether or not the same originates or emanates from
such premises or any contiguous real estate, and if Borrower or such Subsidiary
shall fail to comply with any of the requirements of the Environmental Laws, if
required to do so under the applicable lease, Agent or any Lender may, upon
consent of the Required Lenders, but shall not be obligated to, give such
notices or cause such work to be performed or take any and all actions deemed
necessary or desirable to remedy such Adverse Environmental Condition or cure
such failure to comply and any amounts paid as a result thereof, together with
interest thereon at the rate set forth in Section 2.8 hereof with respect to the
Revolving Credit Loan, shall be immediately due and payable by Borrower and,
until paid, shall be added to the Obligations. Nothing in this Agreement shall
be construed as limiting or impeding Borrower's rights or obligations to take
any and all actions necessary or desirable to remedy any matter set forth in the
definition of Environmental Claim.
14. SEC FILINGS; CERTAIN OTHER NOTICES. Borrower shall furnish to
Agent (i) promptly after the filing thereof with the Securities and Exchange
Commission, a copy of each report, notice or other filing, if any, by Borrower
with the Securities and Exchange Commission, and, if requested by Agent, (ii) a
copy of each written communication received by Borrower from or delivered by
Borrower to (A) the Securities and Exchange Commission or (B) any other holder
of Stock or other securities of the Borrower pursuant to the terms thereof, in
each case promptly after each such receipt or delivery.
7. NEGATIVE COVENANTS
Borrower covenants and agrees that, without the Required Lenders'
prior written consent, from and after the date hereof and until the Termination
Date:
1. MERGERS, ETC. Neither Borrower nor any Subsidiary of Borrower
shall directly or indirectly, by operation of law or otherwise, merge with,
consolidate with, acquire all or substantially all of the assets or capital
stock (or partnership interests) of, or otherwise combine with, any Person nor
form any Subsidiary, unless with respect to the formation of any Subsidiary, (i)
any such newly formed Subsidiary shall have become a party to and have executed
and delivered to Agent such of the Collateral Documents and taken such other
action as Agent shall reasonably require in connection therewith, other than as
to Real Estate and Leases, (ii) the stock of such Subsidiary shall have been
pledged to Agent, for the benefit of Lenders, pursuant to the Pledge Agreement,
and (iii) Agent shall have reasonably determined that the formation of such
Subsidiary would not result in a Material Adverse Effect. Nothing in this
Section 7.1 shall be deemed to prevent Borrower or any of its Subsidiaries from
forming any Subsidiary, or from acquiring any entity, substantially all of the
assets of which newly-formed Subsidiary or entity consist of Leases and/or Real
Estate, provided that Borrower and/or any such Subsidiary complies
54
with the provisions of Section 6.12 with respect to any such Leases and/or Real
Estate and with the provisions of clauses (i) and (ii) of the immediately
preceding sentence with respect to any such newly-formed Subsidiary or acquired
entity, and after giving effect thereto Borrower shall be in compliance with
Sections 6.3 and 7.6 and no Default or Event of Default shall have occurred and
be continuing or would result therefrom.
2. INVESTMENTS; LOANS AND ADVANCES. Except as otherwise permitted by
Section 7.3 or 7.4 hereof, Borrower shall not and shall not permit any
Subsidiary of Borrower to make any investment in, or make or accrue loans or
advances of money to any Person, through the direct or indirect holding of
securities or otherwise; PROVIDED, HOWEVER, that Borrower shall be permitted
hereunder and may permit hereunder its Subsidiaries to make one or more
investments in, or make or accrue loans or advances of money to, Borrower or any
other Subsidiary and PROVIDED FURTHER, that Borrower and its Subsidiaries may
make and own investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within one year from the date of acquisition thereof, (ii) commercial
paper maturing no more than one year from the date of creation thereof and at
the time of their acquisition having a rating of A-1 or better from Standard &
Poor's Corporation or a rating of P-1 or better from ▇▇▇▇▇'▇ Investors Service,
Inc., (iii) debt securities having a rating of A or better from Standard &
Poor's Corporation or a rating of A-2 or better from ▇▇▇▇▇'▇ Investors Service,
Inc., (iv) certificates of deposit, maturing no more than one year from the date
of creation thereof, issued by banks listed on Schedule 7.2 hereof, (v)
certificates of deposit maturing no more than one year from the date of creation
thereof, issued by the banks listed in Schedule 7.2 hereof provided that the
aggregate amount invested in such certificates of deposit shall not at any time
exceed $100,000 for any one such certificate of deposit and $200,000 for any one
such bank, (vi) time deposits, maturing no more than 30 days from the date of
creation thereof with commercial banks or savings banks or savings and loan
associations each having membership either in the Federal Deposit Insurance
Corporation or in the Federal Savings and Loan Insurance Corporation (or their
respective successor entities) and in amounts not exceeding the maximum amounts
of insurance thereunder, (vii) agreements for the sale and repurchase of
securities entered into with banks or other financial institutions listed on
Schedule 7.2 hereof, and (viii) other investments with an aggregate cost at any
one time not to exceed $5,000,000; PROVIDED, HOWEVER, that any investments made
pursuant to this clause (viii) that are unrelated to the business of managing,
owning, leasing and/or operating motion picture theatres and all reasonably
related and ancillary businesses and activities, including the operation of
food, arcade and other concessions and game and amusement devices shall be made
by a Subsidiary of Borrower.
3. INDEBTEDNESS. (a) Except as otherwise expressly permitted by this
Section 7.3 or by any other section of this Agreement, Borrower shall not, nor
shall it permit any of its Subsidiaries to, create, incur, assume or permit to
exist any Indebtedness, whether recourse or nonrecourse, and whether superior or
junior, resulting from borrowings, loans, advances or the granting of credit,
whether secured or unsecured, except (i) Indebtedness secured by Liens permitted
under Section 7.9 hereof, including, without limitation, Indebtedness secured by
purchase money Liens or purchase money security interests, the aggregate
principal amount of which Indebtedness at any time outstanding shall not exceed
$5,000,000, (ii) the Revolving Credit Loan, (iii) lease payment obligations
under leases which Borrower or such Subsidiary is not prohibited from entering
into under the Loan Documents, (iv) all deferred taxes, (v) all unfunded pension
fund and other employee benefit plan obligations and liabilities but only to the
extent they are permitted to remain unfunded under applicable law, (vi)
intercompany debt to any Guarantor or to Borrower, (vii) Indebtedness of
Subsidiaries of Borrower created under the Guaranty, and (viii) Indebtedness of
Borrower in an aggregate principal amount not exceeding $85,000,000 represented
by the Senior Subordinated Notes, including interest payable thereon.
(a) Except as provided in Section 7.11, Borrower shall not and shall
not permit any Subsidiary of Borrower to sell or transfer, either with or
without recourse, any assets, of any nature whatsoever, in respect of which a
Lien is granted or to be granted pursuant to any Loan Document or engage in any
sale-leaseback or similar transaction involving any of such assets.
4. EMPLOYEE LOANS. Borrower shall not and shall not permit any
Subsidiary of Borrower to make or accrue any loans or other advances of money to
any employee of Borrower or such Subsidiary in excess at any one time
outstanding of $2,000,000 in the aggregate for all such loans and advances,
which loans or advances shall bear interest at a rate per annum so as to avoid
the application of Section 7872 of the IRC.
5. CAPITAL STRUCTURE. Borrower shall not and shall not permit any
Subsidiary of Borrower to issue or agree to issue any of their respective
authorized but not outstanding shares of Stock (including treasury shares),
except for Stock issued upon the exercise of stock options and/or warrants
granted to employees of Borrower and any of its Subsidiaries as approved from
time to time by the Board of Directors of Borrower.
6. MAINTENANCE OF BUSINESS. Borrower shall not and shall not permit
any Subsidiary of Borrower to engage in any business other than the business of
managing, owning, leasing and/or operating motion picture theatres and all
reasonably related and ancillary businesses and activities, including the
operation of food, arcade and other concessions and game and amusement devices.
In addition, Borrower or any Subsidiary of Borrower may lease, as lessor,
various premises owned or leased by Borrower or such Subsidiary that are not
being used by it for the foregoing purposes to any Person, including, without
limitation, pursuant to the leases set forth on Schedule 4.8(b) under which
Borrower and its Subsidiaries are lessors.
7. TRANSACTIONS WITH AFFILIATES. (a) Borrower shall not and shall
not permit any Subsidiary of Borrower to enter into or be a party to any
transaction with any Affiliate of Borrower or such Subsidiary, except (i) the
payment of certain management fees to the extent permitted under subsection (c)
hereof, (ii) as expressly provided herein, or (iii) subject to Section 7.7(d),
in the ordinary course of and pursuant to the reasonable requirements of
Borrower's or such Subsidiary's business and upon fair and reasonable terms that
are disclosed to Agent and that are no less favorable to Borrower or such
Subsidiary than would be obtained at the time of such
56
transaction in a comparable arm's length transaction with a Person not an
Affiliate of Borrower or such Subsidiary.
(a) Borrower shall not and shall not permit any Subsidiary of
Borrower to enter into any agreement or transaction to pay to any Person (other
than pursuant to employee compensation or similar plans) any management or
similar fee based on or related to Borrower's or any of its Subsidiaries'
operating performance or income or any percentage thereof, nor pay any
management or similar fee to an Affiliate, except (i) to the extent disclosed on
Schedule 7.7 and (ii) to the extent permitted by subsection 7.7(c) hereof.
(b) Borrower may pay a management fee to Act III or any of its
Affiliates of up to $1,200,000 in any Fiscal Year; PROVIDED, HOWEVER, that (i)
no Default or Event of Default has occurred and is continuing or would result
therefrom and (ii) with respect to the management fees payable in connection
with services rendered by Act III or any of its Affiliates during any Fiscal
Year commencing with the Fiscal Year ending December 31, 1996, such fees may be
payable throughout such Fiscal Year but in an amount not to exceed $300,000 with
respect to any given fiscal quarter plus amounts not paid in prior quarters. In
the event that all or any portion of the management fees otherwise payable by
Borrower to Act III or any of its Affiliates during any given Fiscal Year shall
not have been paid to Act III or any of its Affiliates by reason of the
restrictions set forth in the provisos to this Subsection 7.7(c) (the "Accrued
and Unpaid Management Fee"), then any such Accrued and Unpaid Management Fee
shall accrue, without interest, and may be paid by Borrower to Act III or any of
its Affiliates during any subsequent Fiscal Year solely to the extent that
(i) no Default or Event of Default has occurred and is continuing or would
result therefrom and (ii) such Accrued and Unpaid Management Fee to be paid in
any given Fiscal Year does not exceed $1,200,000.
(c) Borrower shall not and shall not permit any Subsidiary of
Borrower to pay to Act III or any Affiliate thereof more than $1,800,000 in any
Fiscal Year pursuant to Section 7.7(a)(iii) in respect of all goods and services
provided by Act III or such Affiliate to Borrower.
8. GUARANTEED INDEBTEDNESS. Borrower shall not and shall not permit
any Subsidiary of Borrower to incur any Guaranteed Indebtedness (excluding the
Guaranteed Indebtedness pursuant to the Guaranty) except (i) by endorsement of
instruments or items of payment for deposit to the general account of Borrower
or such Subsidiary, and (ii) for Guaranteed Indebtedness incurred for the
benefit of Borrower or any Subsidiary of Borrower if the primary obligation or
transaction is permitted by this Agreement.
9. LIENS. Borrower shall not and shall not permit any Subsidiary of
Borrower to create or permit any Lien on any of its properties or assets except:
(a) presently existing or hereafter created Liens in favor of
Lenders; and
(b) Permitted Encumbrances.
57
10. CAPITAL EXPENDITURES. Borrower shall not and shall not permit
any of its Subsidiaries to make Capital Expenditures (including Capital Lease
Obligations) in an aggregate amount during any Fiscal Year in excess of the
maximum amount set forth below opposite such Fiscal Year without the consent of
the Required Lenders:
FISCAL YEAR MAXIMUM AMOUNT
----------- --------------
1997 $135,000,000
1998 and $ 35,000,000
thereafter
PROVIDED, HOWEVER, that to the extent that the amount of actual Capital
Expenditures for any Fiscal Year shall be less than the maximum amount set forth
above for such Fiscal Year (without giving effect to the carryover permitted by
this proviso), then 50% of the difference between (i) such maximum amount for
such Fiscal Year and (ii) the amount of actual Capital Expenditures for such
Fiscal Year shall, in addition, be available for Capital Expenditures in the
next succeeding Fiscal Year.
11. SALE OF ASSETS. Borrower shall not and shall not permit any
Subsidiary of Borrower to sell, assign, transfer, convey or otherwise dispose of
any assets or properties; PROVIDED, HOWEVER, that the foregoing shall not
prohibit (i) Asset Sales yielding Net Cash Proceeds of up to $15,000,000
individually or in the aggregate during any Fiscal Year, (ii) the sale of
inventory in the ordinary course of business, (iii) the sale of surplus or
obsolete, nonfunctioning equipment and fixtures, and (iv) transfers resulting
from any casualty or condemnation of assets or properties; provided that the Net
Cash Proceeds derived from any such sale or transfer resulting from a casualty
or condemnation shall be used (x) as required pursuant to any applicable
Mortgage or Lease, (y) to repair or replace the property or asset so sold or
transferred or (z) to prepay the Loans.
12. CANCELLATION OF INDEBTEDNESS. Borrower shall not and shall not
permit any Subsidiary of Borrower to cancel any claim or debt owing to it,
except for reasonable consideration and in the ordinary course of business.
13. EVENTS OF DEFAULT. Borrower shall not and shall not permit any
Subsidiary of Borrower to take or omit to take any action, which act or omission
would constitute (i) a default or an event of default pursuant to, or
noncompliance with any of, the terms of any of the Loan Documents or the
Ancillary Agreements or (ii) a default or an event of default pursuant to, or
noncompliance with any other contract, lease, mortgage, deed of trust or
instrument to which it is a party or by which it or any of its property is
bound, or any document creating a Lien, unless such default, event of default or
non-compliance could not be reasonably expected to have a Material Adverse
Effect.
58
14. HEDGING TRANSACTIONS. Borrower shall not, and shall not permit
any of its Subsidiaries to, engage in any interest rate hedging, swaps, caps or
similar transaction except that Borrower may enter into an Interest Rate
Contract or Contracts with a Qualified Issuer, on terms reasonably satisfactory
to Agent, providing protection over a period of not less than 2 years; PROVIDED,
that in no event shall Borrower enter into any such contract if the cost thereof
shall in the aggregate exceed 7/10 of 1% of the amount so protected.
15. RESTRICTED PAYMENTS. Borrower shall not directly or indirectly
make any Restricted Payments, other than:
(A) so long as no Default or Event of Default has occurred
and is continuing, or would exist after giving effect to such
Restricted Payment, Borrower may declare and pay cash dividends on
its common stock to the extent utilized by Parent (i) to effect
mandatory repurchases of Stock of Parent issued as compensation to
(or in connection with the employment of) employees of Borrower,
(ii) to make dividend payments on its common stock, and (iii) to
make dividend payments on the Senior Subordinated Convertible
Preferred Stock in accordance with the terms thereof relating to the
payment of dividends as in effect on February 14, 1990;
(B) in the event that one or more events of the type
specified in clauses (i) or (ii) of Subsection 9.1(j) of this
Agreement (a "Change in Control") shall have occurred and the
Required Lenders shall have affirmatively waived in writing the
Event of Default under this Agreement which would otherwise result
from such Change in Control, then, provided that no Default or Event
of Default (other than a Default or Event of Default due solely to
the occurrence of a Change in Control and which shall have been
waived by the Required Lenders as set forth above) has occurred and
is continuing, or would exist after giving effect to such Restricted
Payment, Borrower may declare and pay cash dividends on its common
stock to the extent utilized by Parent to perform its obligations
with respect to the put rights granted to Electra Investment Trust
P.L.C.(and its permitted successors and assigns) with respect to the
Senior Subordinated Convertible Preferred Stock originally issued to
Electra Investment Trust P.L.C. pursuant to the Stockholders
Agreement as in effect on February 14, 1990 (other than the put
rights granted in respect of the Electra Preferred Stock (as such
term is defined in the Stockholders Agreement as in effect on
February 14, 1990) pursuant to Section 13.4 of the Stockholders
Agreement); and
(C) so long as no Default or Event of Default has occurred
and is continuing, or would exist after giving effect to such
Restricted Payment, Borrower may declare and pay cash dividends on
its common stock to the extent utilized by Parent to perform its
obligations with respect to the put rights granted in respect of the
Electra Preferred Stock (as such term is defined in the Stockholders
Agreement as in effect on February 14, 1990) pursuant to Section
13.4 of the Stockholders Agreement as in effect on February 14,
1990;
59
PROVIDED, HOWEVER, that (1) dividends paid by Borrower pursuant to clauses
(A)(ii), (A)(iii), (B) and (C) above shall be payable only to the extent that
Borrower's Consolidated Total Funded Debt to Consolidated Cash Flow Ratio for
the Fiscal Year during which any such dividend would be paid is less than or
equal to 3.5 to 1; and (2) Borrower may declare dividends referred to in clauses
(A)(i), (A)(ii), (A)(iii), (B) and (C) above only in an amount which does not
exceed, in the aggregate, the amount of Borrower's Available Cash.
(D) Borrower may declare and pay cash dividends on its common
stock to the extent utilized by Parent to repurchase Stock of Parent owned
on the Closing Date by Persons other than ▇▇▇▇, his Permitted Transferees
and Affiliates and members of Senior Management; PROVIDED, HOWEVER, that
(i) no Default or Event of Default has occurred and is continuing or would
result therefrom, (ii) after giving effect thereto the Consolidated Senior
Debt to Consolidated Cash Flow Ratio would not exceed 4.5:1.00, (iii) no
Default or Event of Default would occur under the financial covenants
contained in Section 6.3 hereof determined on a pro forma basis as if such
repurchase had occurred on the first day of the full four fiscal quarter
period ending prior to such repurchase and (iv) Borrower shall deliver to
Agent a certificate of an appropriate officer certifying compliance with
each of the provisions of this clause (D) and showing the calculations of
such financial tests.
16. RESTRICTED LEASES AND LEASES. (a) Borrower shall not, and
shall not permit any Subsidiary of Borrower to become, directly or
indirectly, or remain liable as lessee or as guarantor or other surety with
respect to any Restricted Lease, unless, on the date Borrower or such
Subsidiary becomes liable with respect to any Restricted Lease and
immediately after giving effect to the incurrence of such liability, the
aggregate amount of all obligations payable by Borrower and its Subsidiaries
under such Restricted Leases and all other Restricted Leases during the four
consecutive calendar quarters next succeeding such date shall not exceed
$2,000,000 (increasing by 5% each Fiscal Year beginning with the Fiscal Year
ending December 31, 1997).
(a) Borrower shall comply with the provisions of Section 6.12 prior
to entering into any new Lease permitted under this Section 7.16 and any new
Lease permitted under this Section 7.16 shall be entered into by either a newly
formed Subsidiary of Borrower, which Subsidiary shall have been formed in
compliance with Section 7.1 hereof for the purpose of operating the motion
picture theatre covered by such Lease, or an existing Subsidiary of Borrower the
other Theatres owned or leased by which are located in the same Market Segment
as the motion picture theatre subject to such new Lease.
(b) Borrower shall not, and shall not permit any of its Subsidiaries
to, modify, amend, cancel, extend (except pursuant to any rights granted to
Borrower or any of its Subsidiaries under any Lease) or otherwise change any
of the terms, covenants or conditions contained in any Lease which would
increase any monetary obligations of Borrower or such
60
Subsidiary thereunder or materially increase any of the other obligations of
Borrower or such Subsidiary thereunder or materially and adversely affect the
rights of Borrower or such Subsidiary thereunder without the consent of
Agent, except where such modification, amendment, cancellation, extension or
other change could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except with respect to those
Leases set forth on Schedule 7.16 hereto (all of which Leases may be freely
assigned or subleased) and any non-motion picture theatre Leases, Borrower
shall not permit and shall not permit any of its Subsidiaries to assign any
Leases or sublet any portion of the premises described therein other than to
Borrower or any of its Subsidiaries, except that (i) Borrower or any of its
Subsidiaries may enter into such assignments and subleases to the extent
permitted by Section 7.11 and (ii) Borrower or any of its Subsidiaries shall
have the right to license, sublease or enter into a concession agreement with
respect to any portion of the premises described therein to any other Person
for the purpose of operating food, arcade and other concessions and game and
amusement devices in connection with the operation by Borrower or any of its
Subsidiaries of the leased premises as a motion picture theatre.
17. ERISA. Borrower shall not directly or indirectly, and will not
permit any of its Subsidiaries or any ERISA Affiliate to directly or indirectly
(i) terminate, any Plan subject to Title IV of ERISA so as to result in
liability to Borrower, any of its Subsidiaries or any ERISA Affiliate in excess
of $500,000, or (ii) permit to exist any ERISA Event or any other event or
condition, which presents the risk of liability of Borrower, any of its
Subsidiaries or any ERISA Affiliate in excess of $500,000, or (iii) make or
permit any of its Subsidiaries or any ERISA Affiliate to make a complete or
partial withdrawal (within the meaning of Section 4201 of ERISA) from any
Multiemployer Plan so as to result in liability to Borrower, any of its
Subsidiaries or any ERISA Affiliate in excess of $500,000, or (iv) enter into
any new Plan or modify any existing Plan so as to increase its obligations
thereunder, except in the ordinary course of business consistent with past
practice, which could result in liability to Borrower, any of its Subsidiaries
or any ERISA Affiliate in excess of $500,000, or (v) permit the present value of
all nonforfeitable accrued benefits under each Plan (using the actuarial
assumptions utilized by the PBGC upon termination of a plan) to exceed the fair
market value of Plan assets allocable to such benefits by more than $500,000,
all as determined as of the most recent valuation date for each such Plan.
18. PAYMENT OF BROKERS FEES, ETC. Borrower shall not and shall not
permit any Subsidiary to pay any broker's, finder's, "break up", or investment
banker's fees or commissions to any person in connection with the transactions
contemplated hereby, other than (i) amounts payable to any real estate brokers
in connection with entering into any Lease or the purchase of any Real Estate
and (ii) amounts payable to the Agent pursuant to this Agreement.
19. Intentionally Omitted.
20. Intentionally Omitted.
61
21. PAYMENT OR MODIFICATION OF NOTE DOCUMENTS. (a) Borrower shall
not, and shall not permit any of its Subsidiaries to, make any payments on,
or with respect to, any Senior Subordinated Notes, including any payments in
redemption or repurchase thereof, except (i) mandatory payments of interest,
fees and expenses required by the terms of the Note Documents, but only to
the extent permitted under the subordination provisions applicable thereto,
and (ii) repurchases of up to $85,000,000 thereof provided that (A) no
Default or Event of Default has occurred and is continuing or would result
therefrom, (B) after giving effect thereto the Consolidated Senior Debt to
Consolidated Cash Flow Ratio would not exceed 4.5:1.00, (C) no Default or
Event of Default would occur under the financial covenants contained in
Section 6.3 hereof determined on a pro forma basis as if such repurchase had
occurred on the first day of the full four fiscal quarter period ending prior
to such repurchase and (D) Borrower shall deliver to Agent a certificate of
an appropriate officer certifying compliance with each of the provisions of
this clause (ii) and showing the calculations of such financial tests.
(a) Borrower shall not, and shall not permit any Subsidiary of
Borrower to, amend, supplement or otherwise modify any of the provisions of
the Note Documents:
(i) which amends or modifies the subordination provisions contained
therein,
(ii) which shortens the fixed maturity or increases the principal
amount of, or increases the rate or shortens the time of payment of
interest on, or increases the amount or shortens the time of payment of any
principal or premium payable whether at maturity, at a date fixed for
prepayment or by acceleration or otherwise of the Senior Subordinated
Notes, or increases the amount of, or accelerates the time of payment of,
any fees payable in connection therewith,
(iii) which relates to the affirmative or negative covenants, events
of default or remedies under the Indenture and the effect of which is to
subject Borrower or any of its Subsidiaries, to any more onerous or more
restrictive provisions, or
(iv) which adversely affects the interests of Lenders as senior
creditors with respect to the Senior Subordinated Notes or the interests of
Lenders under this Agreement or any other Loan Document in any respect.
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22. MODIFICATION OF COMPENSATION PLAN. Borrower shall not amend,
supplement or otherwise modify any of the terms and conditions of the
Compensation Plan (i) which increases the amount of, or accelerates the time
of payment of, any compensation or other amounts payable in connection
therewith or (ii) which adversely affects the interests of the Agent or any
Lender under this Agreement or under any other Loan Document in any respect.
8. TERM
1. TERMINATION. Subject to the provisions of Section 2 hereof,
the financing arrangement contemplated hereby in respect of the Revolving
Credit Loan shall be in effect until the Commitment Termination Date;
PROVIDED, HOWEVER, that in the event of a prepayment of any part or the
entire Revolving Credit Loan prior to the Commitment Termination Date with
funds borrowed from any Person other than Lenders, Borrower shall
simultaneously therewith pay to Lenders, in immediately available funds, all
Obligations in full, in accordance with the terms of the agreements creating
and instruments evidencing such Obligations.
2. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENT. Except as otherwise expressly provided for in the Loan
Documents, no termination or cancellation (regardless of cause or procedure)
of any financing arrangement under this Agreement shall in any way affect or
impair the powers, obligations, duties, rights and liabilities of Borrower or
the rights of Agent or any Lender relating to any transaction or event
occurring prior to such termination. Except as otherwise expressly provided
herein or in any other Loan Document, all undertakings, agreements,
covenants, warranties and representations contained in the Loan Documents
shall survive such termination or cancellation and shall continue in full
force and effect until such time as all of the Obligations have been paid in
full in accordance with the terms of the agreements creating such
Obligations, at which time the same shall terminate.
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an
"Event of Default" hereunder:
(a) Borrower shall fail to (i) make any payment of principal of, or
interest on, or fees owing in respect of, the Revolving Credit Loan or any of
the other Obligations when due and payable or declared due and payable or (ii)
pay or reimburse Agent or Lenders for any expense reimbursable hereunder or
under any other Loan Document within five (5) days following Borrower's receipt
of Agent's written demand for such reimbursement or payment of expenses.
(b) Borrower shall fail or neglect to perform, keep or observe any
of the provisions of Section 6.3 or Article 7 of this Agreement.
(c) Borrower shall fail or neglect to perform, keep or observe any
other provision of this Agreement or of any of the other Loan Documents, or any
other Loan Party shall fail or
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neglect to perform, keep or observe any of the provisions of any other Loan
Document and the same shall remain unremedied for a period ending on the
first to occur of ten (10) days after Borrower shall receive written notice
of any such failure from Agent or thirty (30) days after Borrower shall
become aware thereof.
(d) (Except where the same is being contested in good faith as
permitted under Section 6.2(b) hereof) a default shall occur under any other
agreement, document or instrument (including, without limitation, any Lease)
to which any Loan Party is a party or by which any such Loan Party or any
such Loan Party's property is bound, and such default (i) involves the
failure to make any payment (whether of principal, interest or otherwise) due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) in respect of any Indebtedness of any Loan Party (or any payment
obligation of any Loan Party under any Lease) after giving effect to the
applicable grace period, if any, in an aggregate amount exceeding $1,000,000;
or (ii) causes (or permits any holder of such Indebtedness or a trustee or
party to any Lease to cause) such Indebtedness (or payment obligation under
any Lease) or a portion thereof in an aggregate amount exceeding $1,000,000,
to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment.
(e) Any representation or warranty of any Loan Party contained in
this Agreement, including the Schedules hereto, or in the other Loan
Documents or Ancillary Agreements furnished by or on behalf of Parent,
Borrower or any of Borrower's Subsidiaries pursuant to the terms of this
Agreement shall be untrue or incorrect in any material respect, as of the
date when made or deemed made (including those made or deemed made pursuant
to Section 3.3 hereof).
(f) All or any material portion of the assets of any Loan Party
shall be attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of any Loan Party and shall remain
unstayed or undismissed for sixty (60) consecutive days; or any Person other
than any Loan Party shall apply for the appointment of a receiver, trustee or
custodian for any of the assets of any Loan Party and such application shall
remain unstayed or undismissed for sixty (60) consecutive days; or any Loan
Party shall have concealed, removed or permitted to be concealed or removed,
any material part of its property, with intent to hinder, delay or defraud
its creditors or any of them or made or suffered a transfer of any of its
property or the incurring of an obligation which is fraudulent under any
bankruptcy, fraudulent conveyance or other similar law.
(g) A case or proceeding shall have been commenced against any
Loan Party in a court having competent jurisdiction seeking a decree or order
in respect of such Loan Party (i) under title 11 of the United States Code,
as now constituted or hereafter amended, or any other applicable federal,
state or foreign bankruptcy or other similar law, (ii) appointing a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) of such Loan Party or of any substantial part of its or
their properties, or (iii) ordering the winding-up or liquidation of the
affairs of such Loan Party, and such case or proceeding shall remain
undismissed or unstayed for
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sixty (60) consecutive days or such court shall enter a decree or order
granting the relief sought in such case or proceeding.
(h) Any Loan Party shall (i) file a petition seeking relief under
title 11 of the United States Code, as now constituted or hereafter amended,
or any other applicable federal, state or foreign bankruptcy or other similar
law, (ii) consent to the institution of proceedings thereunder or to the
filing of any such petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) of Borrower or such Loan Party or of any substantial part
of its properties, (iii) fail generally to pay its debts as such debts become
due, or (iv) take any corporate action authorizing any such action.
(i) Final judgment or judgments (after the expiration of all times
to appeal therefrom) for the payment of money in excess of $500,000 in the
aggregate shall be rendered against Borrower or any of its Subsidiaries and
the same shall not be (i) fully covered by insurance in accordance with
Section 6.7 hereof, or (ii) vacated, stayed, bonded, paid or discharged for a
period of thirty (30) days.
(j) Any of the following events shall have occurred and shall not
have been cured within ten (10) days thereafter:
(i) ▇▇▇▇, any of his Permitted Transferees (including through
a Derivative Ownership Interest) and Affiliates, any executor, heir or
successor appointed to take control of ▇▇▇▇'▇ affairs in the event of his
death disability, incapacity, bankruptcy or by operation of law, and Senior
Management shall, taken as a group, cease to own, in the aggregate, at
least a majority of each of Parent's Voting Stock and Common Stock;
(ii) Parent shall cease to own all of Borrower's outstanding
Capital Stock;
(iv) Borrower sells, transfers or otherwise disposes of all or substantially
all of the assets of Borrower; or
(v) the Continuing Directors cease for any reason to
constitute a majority of the directors of Borrower then in office.
(k) With respect to any Plan: (i) Borrower, or any of its
Subsidiaries or any other party-in-interest or disqualified person shall
engage in any transactions which in the aggregate would reasonably result in
a direct or indirect liability to Borrower, or any of its Subsidiaries or any
ERISA Affiliate in excess of $500,000 under Section 409 or 502 of ERISA or
IRC Section 4975; (ii) Borrower, or any of its Subsidiaries or any ERISA
Affiliate shall incur any accumulated funding deficiency, as defined in IRC
Section 412, in the aggregate in excess of $500,000, or request a funding
waiver from the IRS for contributions in the aggregate in excess of $500,000;
(iii) Borrower, or any of its Subsidiaries or any ERISA Affiliate shall incur
any withdrawal liability
65
in the aggregate in excess of $500,000 as a result of a complete or partial
withdrawal within the meaning of Section 4203 or 4205 of ERISA; (iv)
Borrower, or any of its Subsidiaries or any ERISA Affiliate shall fail to
make a required contribution by the due date under Section 412 of the IRC or
Section 302 of ERISA which would result in the imposition of a lien under
such Sections; (v) Borrower, or any of its Subsidiaries or any ERISA
Affiliate shall notify the PBGC of an intent to terminate, or the PBGC shall
institute proceedings to terminate, a Plan; (vi) a Reportable Event shall
occur with respect to a Plan, and within 15 days after the reporting of such
Reportable Event to any Lender, such Lender shall have notified Borrower in
writing that (A) it has made a determination that, on the basis of such
Reportable Event, there are reasonable grounds for the termination of such
Plan by the PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer such Plan and (B) as a result
thereof a Default or an Event of Default shall occur hereunder; (vii) a
trustee shall be appointed by a court of competent jurisdiction to administer
any Plan or the assets thereof; (viii) the benefits of any Plan shall be
increased, or Borrower, or any of its Subsidiaries or any ERISA Affiliate
shall begin to maintain, or begin to contribute to, any Plan, without the
prior written consent of Lender; or (ix) any ERISA Event with respect to a
Plan shall have occurred, and 30 days thereafter (A) such ERISA Event, other
than such event described in clause (e) of the definition of ERISA Event
herein (if correctable) shall not have been corrected and (B) the then
present value of such Plan's vested benefits shall exceed the then current
value of assets accumulated in such Plan; PROVIDED, HOWEVER, that the events
listed in subsections (iv)-(ix) shall constitute Events of Default only if,
as of the date thereof or any subsequent date, the maximum amount of
liability Borrower, any of its Subsidiaries or any ERISA Affiliate could
incur in the aggregate under Section 4062, 4063, 4064, 4219 or 4243 of ERISA
or any other provision of law with respect to all such Plans, computed by the
actuary of the Plan taking into account any applicable rules and regulations
of the PBGC at such time, and based on the actuarial assumptions used by the
Plan, resulting from or otherwise associated with such event exceeds $500,000.
(l) Any material provision of any Collateral Document, after
delivery thereof pursuant to Section 3.1 and/or 3.2 shall for any reason
cease to be valid or enforceable in accordance with its terms, or any
security interest created under any Collateral Document shall cease to be a
valid and perfected first priority security interest or Lien (subject to
Permitted Encumbrances) in any of the Collateral purported to be covered
thereby.
2. REMEDIES. If any Event of Default specified in Section 9.1 shall
have occurred and be continuing, (i) GE Capital may, without notice, terminate
this facility with respect to further Revolving Credit Advances, whereupon no
Revolving Credit Advances may be made hereunder, and/or (ii) Agent shall at the
request, or may with the consent, of the Required Lenders, without notice,
declare all Obligations to be forthwith due and payable, whereupon all such
Obligations shall become and be due and payable, without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by
Borrower; PROVIDED, HOWEVER, that upon the occurrence of an Event of Default
specified in Section 9.1(f), (g) or (h) hereof, such obligations shall become
due and payable without declaration, notice or demand by Agent or any Lender.
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Agent shall take such action with respect to any Default or Event of
Default specified in Section 9.1 as shall be directed by the Required Lenders;
PROVIDED, THAT, unless and until Agent shall have received such directions,
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of Agent and Lenders, taken as a whole,
including any action (or the failure to act) pursuant to the Loan Documents.
3. WAIVERS BY BORROWER. Except as otherwise provided for in this
Agreement or by applicable law, Borrower waives (i) presentment, demand and
protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agent or any Lender on which Borrower may in
any way be liable and hereby ratifies and confirms whatever Agent or any
Lender may do in this regard, (ii) all rights to notice and a hearing prior
to Agent's or any Lender's taking possession or control of, or to Agent's or
any Lender's replevy, attachment or levy upon, the Collateral or any bond or
security which might be required by any court prior to allowing Agent or any
Lender to exercise any of its remedies, and (iii) the benefit of all
valuation, appraisal and exemption laws. Borrower acknowledges that it has
been advised by counsel of its choice with respect to this Agreement, the
other Loan Documents and the transactions evidenced by this Agreement and the
other Loan Documents.
4. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default and, except in the case of an event
referred to in Section 9.1(f), (g) or (h), the making of the request or the
granting of the consent specified by Section 9.2 to authorize Agent to
declare the Notes due and payable pursuant to the provisions of Section 9.2,
each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held
and other indebtedness at any time owing by such Lender to or for the credit
or the account of Borrower against any and all of the obligations of Borrower
now or hereafter existing under this Agreement, and the Notes held by such
Lender irrespective of whether or not such Lender shall have made any demand
under this Agreement or any such Note and although such obligations may be
unmatured. Each Lender agrees promptly to notify Borrower after any such
set-off and application made by such Lender; PROVIDED, HOWEVER, that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which such Lender may have.
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10. THE AGENT
1. AUTHORIZATION AND ACTION. Each Lender hereby appoints and
authorizes Agent to take such action on its behalf and to exercise such
powers under this Agreement and the other Loan Documents as are delegated to
Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for
by this Agreement and the other Loan Documents (including, without
limitation, enforcement or collection of the Notes), Agent shall not be
required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting
or refraining from acting) upon the instructions of the Required Lenders, and
such instructions shall be binding upon all Lenders; PROVIDED, HOWEVER, that
Agent shall not be required to take any action which exposes Agent to
personal liability or which is contrary to this Agreement or the other Loan
Documents or applicable law. Agent agrees to give each Lender prompt notice
of each notice given to it by Borrower pursuant to the terms of this
Agreement and the other Loan Documents.
2. AGENT'S RELIANCE, ETC. Neither Agent nor any of its directors,
officers, agents or employees shall be liable to any Lender for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement or the other Loan Documents, except for its or their own gross
negligence or wilful misconduct. Without limitation of the generality of the
foregoing, Agent: (i) may treat the payee of any Note as the holder thereof
until Agent receives written notice of the assignment or transfer thereof
signed by such payee and in form satisfactory to Agent; (ii) may consult with
legal counsel (including counsel for any Loan Party), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (iii) makes no warranty
or representations to any Lender and shall not be responsible to any Lender
for any statements, warranties or representations made in or in connection
with this Agreement or the other Loan Documents; (iv) shall not have any duty
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement or the other Loan Documents
on the part of any Loan Party or to inspect the property (including the books
and records) of any Loan Party; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; and (vi)
shall incur no liability under or in respect of this Agreement or the other
Loan Documents by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopy, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper party or
parties.
3. GE CAPITAL AND AFFILIATES. With respect to its commitment
hereunder to make Revolving Credit Advances made by it, GE Capital shall have
the same rights and powers under this Agreement and the other Loan Documents
as any other Lender and may exercise the same as
68
though it were not Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include GE Capital in its individual capacity.
GE Capital and its affiliates may lend money to, and generally engage in any
kind of business with, any Loan Party, any of its Subsidiaries and any Person
who may do business with or own securities of any Loan Party or any such
Subsidiary, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders.
4. LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based
on the financial statements referred to in Section 4.6 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under this Agreement.
5. INDEMNIFICATION. Lenders agree to indemnify Agent (to the
extent not reimbursed by Borrower), ratably according to the respective
principal amounts of the Notes then held by each of them, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against Agent in
any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by Agent under this Agreement;
PROVIDED, HOWEVER, 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 Agent's gross
negligence or wilful misconduct. Without limitation of the foregoing, each
Lender agrees to reimburse Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including counsel fees) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the
extent that Agent is not reimbursed for such expenses by Borrower.
6. SUCCESSOR AGENT. Agent may resign at any time by giving
written notice thereof to Lenders and Borrower. Upon any such resignation,
the Required Lenders shall have the right to appoint a successor Agent. If
no successor Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Agent's giving notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States of America or of any state
thereof and having a combined capital and surplus of at least $200,000,000 or
a subsidiary of such a commercial bank. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents. After any retiring Agent's resignation hereunder as
69
Agent, the provisions of this Article 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it, while it was Agent under this
Agreement and the other Loan Documents.
11. MISCELLANEOUS
1. COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT; SALE OF INTEREST.
(a) The Loan Documents constitute the complete agreement between the parties
with respect to the subject matter hereof and may not be modified, altered or
amended, except by an agreement in writing signed by Borrower, Agent and Lenders
as required by Section 11.1(d) below. Borrower may not sell, assign or transfer
any of the Loan Documents or any portion thereof, including, without limitation,
Borrower's rights, title, interests, remedies, powers and duties hereunder or
thereunder. Borrower hereby consents to Agent's and any Lender's sale of
participations, assignment, transfer or other disposition, at any time or times,
of any of the Loan Documents or of any portion thereof or interest therein,
including, without limitation, Agent's and any Lender's rights, title,
interests, remedies, powers or duties thereunder, whether evidenced by a writing
or not. Borrower agrees that it will use its best efforts to assist and
cooperate with Agent in any manner reasonably requested by Agent to effect the
sale of participations in or assignments of any of the Loan Documents or of any
portion thereof or interest therein, including, without limitation, assistance
in the preparation of appropriate disclosure documents or placement memoranda.
(a) In the event Agent or any Lender assigns or otherwise transfers
all or any part of the Revolving Credit Note, Borrower shall, upon the request
of Agent or such Lender issue new Revolving Credit Notes to effectuate such
assignment or transfer.
(b) Each Lender may sell, assign, transfer or negotiate to one or
more other Lenders, commercial banks, insurance companies, other financial
institutions or any other Person acceptable to Agent all or a portion of its
rights and obligations under any Note held by such Lender and this Agreement;
PROVIDED, HOWEVER, that (i) each such sale, assignment, transfer or negotiation
shall be of a constant, and not a varying, percentage of all of the assigning
Lender's rights and obligations under such Note and this Agreement, (ii) any
such sale, assignment, transfer or negotiation shall not require Borrower to
file a registration statement with the Securities and Exchange Commission or
apply to qualify the Notes under the blue sky law of any state, (iii) any such
sale, assignment or transfer shall be in an aggregate principal amount of not
less than $5,000,000 and any assigning Lender shall have retained a Commitment
in a minimum amount equal to $5,000,000 unless such assignment represents 100%
of the assigning Lender's Commitment, (iv) acceptance of such assignment by any
assignees shall constitute the agreement of such assignee to be bound by the
terms of this Agreement applicable to Lender, and (v) the assigning Lender pays
to the Agent an assignment fee of $3,500. From and after the effective date of
such an assignment, (x) the assignees thereunder shall, in addition to the
rights and obligations hereunder held by it immediately prior to such effective
date, have the rights and obligations hereunder that have been assigned to it
pursuant to such assignment and (y) the assignor Lender thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such assignment, relinquish its rights and be released from its
70
obligations under the Agreement (and, in the case of an assignment and
acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto).
(c) No amendment or waiver of any provision of this Agreement or
the Notes or any other Loan Document, nor consent to any departure by Borrower
therefrom, nor release of any Collateral or Guaranty, shall in any event be
effective unless the same shall be in writing and signed by the Required
Lenders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; PROVIDED, HOWEVER, that
no amendment, waiver or consent shall, unless in writing and signed by each
Lender affected thereby do any of the following: (i) increase the Maximum
Revolving Credit Loan, (ii) reduce the principal of, or interest on, the Notes
or other amounts payable hereunder or release or discharge the Borrower from its
obligations to make such payments, other than those payable only to Agent which
may be reduced by Agent unilaterally, (iii) postpone any date fixed for any
payment of principal of, or interest on, the Notes or other amounts payable
hereunder, other than those payable only to Agent which may be postponed by
Agent unilaterally, or change the definition of Commitment Termination Date,
(iv) release any Collateral, except in connection with transactions permitted by
Section 7.11 or as otherwise contemplated hereby or by the Collateral Documents,
(v) change the aggregate unpaid principal amount of the Notes, or the number of
Lenders, which shall be required for the Lenders or any of them to take any
action hereunder, or change the definition of Required Lenders, or (vi) amend
this Section 11.1(d); and PROVIDED, FURTHER, HOWEVER, that no amendment, waiver
or consent shall unless in writing and signed by the Agent in addition to the
Required Lenders required above to take such action, affect the rights or duties
of the Agent under this Agreement, any Note or any Loan Document.
2. FEES AND EXPENSES. Borrower shall pay all reasonable out-of-
pocket expenses of Agent in connection with the preparation of the Loan
Documents (including the reasonable fees and expenses of all of its counsel
retained in connection with the Loan Documents and the transactions
contemplated thereby). If, at any time or times, regardless of the existence
of an Event of Default (except with respect to paragraphs (iii) and (iv)
below, which shall be subject to an Event of Default having occurred and be
continuing), Agent (or in the case of paragraphs (iii) and (iv) below, Agent
or any Lender) shall employ counsel for advice or other representation or
shall incur reasonable legal or other costs and expenses in connection with:
(ii) any amendment, modification or waiver, or consent with respect to, any of
the Loan Documents or advice in connection with the administration of the
loans made pursuant hereto or its rights hereunder or thereunder;
(iii) any litigation, contest, dispute, suit, proceeding or action (whether
instituted by Agent or any Lender, Borrower, any Subsidiary of Borrower
or any other Person) in any way relating to the Collateral, any of the
Loan Documents or any other agreements to be executed or delivered in
connection herewith;
71
(iv) any attempt to enforce any rights of Agent or any Lender against Borrower,
any Subsidiary of Borrower or any other Person, that may be obligated to
any Lender by virtue of any of the Loan Documents or, with respect to
Agent only, determining what actions, if any, to take upon the occurrence
of an Event of Default;
(v) any attempt to verify, protect, collect, sell, liquidate or otherwise
dispose of the Collateral;
then, and in any such event, the reasonable attorneys' fees and other third
party fees arising from such services, including those of any appellate
proceedings, and all reasonable expenses, costs, charges and other fees
incurred by such counsel and third parties in any way or respect arising in
connection with or relating to any of the events or actions described in this
Section shall be payable, on demand, by Borrower to Agent or such Lender and
shall be additional Obligations secured under this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, such
expenses, costs, charges and fees may include: paralegal fees, costs and
expenses; accountants' and investment bankers' fees, costs and expenses which
fees, costs and expenses shall be payable upon an Event of Default having
occurred and continuing when incurred (to the extent such accountants' and
investment bankers' fees, costs and expenses shall have been incurred); court
costs and expenses; photocopying and duplicating expenses; court reporter
fees, costs and expenses; long distance telephone charges; air express
charges; telegram charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance
of such services.
3. NO WAIVER BY AGENT OR ANY LENDER. Agent's or any Lender's
failure, at any time or times, to require strict performance by any Loan
Party of any provision of this Agreement and any of the other Loan Documents
shall not waive, affect or diminish any right of Agent or such Lender
thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by Agent or Lenders of an Event of Default by any Loan
Party under the Loan Documents shall not suspend, waive or affect any other
Event of Default by any Loan Party under this Agreement and any of the other
Loan Documents, whether the same is prior or subsequent thereto and whether
of the same or of a different type. None of the undertakings, agreements,
warranties, covenants and representations of any Loan Party contained in this
Agreement or any of the other Loan Documents and no Event of Default by
Borrower under this Agreement and no defaults by any Loan Party under any of
the other Loan Documents shall be deemed to have been suspended or waived by
Agent or Lenders, unless such suspension or waiver is by an instrument in
writing signed by an officer of Agent and Required Lenders (as such term is
defined in the applicable provision hereof) and directed to such Loan Party
specifying such suspension or waiver.
4. REMEDIES. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and non-exclusive of any other rights and
remedies which Agent and Lenders may
72
have under any other agreement, including without limitation, the Loan
Documents, by operation of law or otherwise. Recourse to the Collateral shall
not be required.
5. WAIVER OF JURY TRIAL. The parties hereto waive all right to
trial by jury in any action or proceeding to enforce or defend any rights
under the Loan Documents.
6. SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
7. PARTIES. This Agreement and the other Loan Documents shall be
binding upon, and inure to the benefit of, the successors of Borrower, Agent
and Lenders and the assigns, transferees and endorsees of Agent and Lenders.
8. CONFLICT OF TERMS. Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of
the other Loan Documents, the provision contained in this Agreement shall
govern and control.
9. AUTHORIZED SIGNATURE. Until Agent shall be notified by
Borrower to the contrary, the signature upon any document or instrument
delivered pursuant hereto of an officer of Borrower listed in Schedule 11.9
hereto shall bind Borrower and be deemed to be the act of Borrower affixed
pursuant to and in accordance with resolutions duly adopted by Borrower's
Board of Directors.
10. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY
OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF
REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. AGENT, EACH LENDER AND BORROWER EACH HEREBY IRREVOCABLY AGREE THAT
ANY LEGAL ACTION OR PROCEEDING AGAINST IT ARISING OUT OF OR RELATING TO ANY
OF THE LOAN DOCUMENTS MAY BE BROUGHT IN THE SUPREME COURT OF THE STATE OF NEW
YORK, COUNTY OF NEW YORK, STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. BORROWER, BY THE EXECUTION AND
DELIVERY OF THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY
73
CONSENTS TO THE PERSONAL JURISDICTION OF SUCH COURTS IN ANY SUCH ACTION OR
PROCEEDING. BORROWER EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE
IN ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT BASED ON ANY ALLEGED LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY
SIMILAR BASIS. SERVICE OF SUMMONS, NOTICE OR OTHER PROCESS ON BORROWER,
AGENT OR ANY LENDER IN ANY ACTION ARISING OUT OF OR RELATING TO ANY OF THE
LOAN DOCUMENTS SHALL BE EFFECTIVE IF MAILED TO SUCH PARTY AT THE ADDRESS
LISTED IN SECTION 11.11 HEREOF OR DELIVERED TO ANY SUCH PARTY BY HAND.
NOTHING HEREIN SHALL PRECLUDE AGENT, ANY LENDER OR BORROWER FROM BRINGING
SUIT OR SERVING PROCESS OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION.
11. NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon
any of the parties by another, or whenever any of the parties desires to give
or serve upon another any communication with respect to this Agreement, each
such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and either shall be delivered in person or
by registered or certified mail, return receipt requested, postage prepaid,
by telecopy or by overnight air courier guaranteeing next day delivery,
directed to the party to receive the same at its address stated below:
(a) If to Agent at:
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Finance - Act III Account Manager
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Finance - Legal Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
74
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Borrower at:
Act III Theatres, Inc.
▇▇▇ ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention.: ▇▇▇▇ ▇. ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
Pacwest Center, Suites 1600-1800
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to any Lender, at its address indicated on the signature
pages hereof
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration or other communication hereunder
shall be deemed to have been duly given or served on the date on which
personally delivered, on the date actually received, if sent by telecopy or
overnight courier service, with receipt acknowledged or three (3) Business
Days after the same shall have been deposited in the United States mail.
Failure or delay in delivering copies of any notice, demand, request,
consent, approval, declaration or other communication to the persons
designated above to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration
or other communication.
12. SURVIVAL. The representations and warranties of Borrower in
this Agreement shall survive the execution, delivery and acceptance hereof by
the parties hereto and the closing of the transactions described herein or
related hereto.
75
13. SECTION TITLES. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not part of the agreement between the
parties hereto.
14. COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
76
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
in New York, New York as of the date first above written.
ACT III THEATRES, INC.
By: /s/ ▇.▇. ▇▇▇▇
--------------------------------
Name: ▇.▇. ▇▇▇▇
Title: President
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Duly Authorized Signatory
Commitment Lenders:
---------- --------
$125,000,000 GENERAL ELECTRIC CAPITAL CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Finance - Act III
Account Manager
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Duly Authorized Signatory
$42,000,000 CIBC INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director, CIBC Wood Gundy
Securities Corp., as Agent
$42,000,000 BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
10th Floor, Unit 3283
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Vice President
$41,000,000 ▇▇▇▇▇▇ GUA
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
By: /s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: R. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
EXECUTION COPY
U.S. $250,000,000
AMENDED AND RESTATED LOAN AGREEMENT
Dated as of February 14, 1997,
among
ACT III THEATRES, INC.
as Borrower
and
GENERAL ELECTRIC CAPITAL CORPORATION
as Agent and Lender
and
THE LENDERS NAMED HEREIN
as Lenders and Co-Agents
TABLE OF CONTENTS
SECTION PAGE
------- ----
1. DEFINITIONS............................................................. 1
2. AMOUNT AND TERMS OF CREDIT ............................................. 23
2.1. Revolving Credit Advances................................. 23
2.2. Intentionally Omitted..................................... 25
2.3. Intentionally Omitted..................................... 25
2.4. Mandatory Prepayment...................................... 25
2.5. Intentionally Omitted..................................... 26
2.6. Use of Proceeds........................................... 26
2.7. Single Loan............................................... 26
2.8. Interest on Revolving Credit Loan......................... 26
2.9. Intentionally Omitted..................................... 28
2.10. Fees...................................................... 28
2.11. Receipt of Payments....................................... 29
2.12. Application of Payments................................... 29
2.13. Sharing of Payments, Etc. ................................ 30
2.14. Accounting ............................................... 30
2.15. Indemnity................................................. 31
2.16. Access ................................................... 32
2.17. Capital Adequacy; Increased Costs; Illegality............. 33
2.18. Taxes..................................................... 35
3. CONDITIONS PRECEDENT
3.1. Conditions to Effectiveness of Restated Loan Agreement.... 36
3.2. Conditions to the Initial and Each Subsequent Revolving
Credit Advance.......................................... 38
4. REPRESENTATIONS AND WARRANTIES ......................................... 38
4.1. Corporate or Partnership Existence; Compliance with Law... 38
4.2. Executive Offices......................................... 39
4.3. Subsidiaries ............................................. 39
4.4. Corporate and Partnership Power; Authorization;
Enforceable Obligations................................. 39
4.5. Solvency.................................................. 40
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PAGE
----
4.6. Financial Statements...................................... 40
4.7. Projections............................................... 41
4.8. Ownership of Property; Liens.............................. 42
4.9. No Default................................................ 44
4.10. Labor Matters............................................. 44
4.11. Other Ventures............................................ 45
4.12. Investment Company Act.................................... 45
4.13. Margin Regulations........................................ 45
4.14. Taxes..................................................... 45
4.15. ERISA..................................................... 46
4.16. No Litigation............................................. 48
4.17. Brokers................................................... 48
4.18. Intentionally Omitted..................................... 48
4.19. Outstanding Stock; Options; Warrants; Etc. ............... 48
4.20. Employment and Labor Agreements........................... 49
4.21. Patents, Trademarks, Copyrights and Licenses.............. 49
4.22. Full Disclosure........................................... 49
4.23. Liens..................................................... 50
4.24. No Material Adverse Effect................................ 50
4.25. Environmental Protection.................................. 50
4.26. Prior Liens............................................... 51
5. FINANCIAL STATEMENTS AND INFORMATION.................................... 51
5.1. Reports and Notices....................................... 51
5.2. Communication with Accountants............................ 54
6. AFFIRMATIVE COVENANTS................................................... 55
6.1. Maintenance of Existence and Conduct of Business.......... 55
6.2. Payment of Obligations.................................... 55
6.3. Financial Covenants....................................... 56
6.4. Lender's Fees............................................. 57
6.5. Books and Records......................................... 57
6.6. Litigation................................................ 57
6.7. Insurance................................................. 58
6.8. Compliance with Law....................................... 58
6.9. Agreements................................................ 58
6.10. Supplemental Disclosure................................... 58
6.11. Employee Plans............................................ 59
6.12. Leases; New Real Estate................................... 60
ii
PAGE
----
6.13. Environmental Matters..................................... 62
6.14. SEC Filings; Certain Other Notices........................ 63
7. NEGATIVE COVENANTS...................................................... 63
7.1. Mergers, Etc. ............................................ 63
7.2. Investments; Loans and Advances........................... 63
7.3. Indebtedness.............................................. 64
7.4. Employee Loans............................................ 65
7.5. Capital Structure......................................... 65
7.6. Maintenance of Business................................... 65
7.7. Transactions with Affiliates.............................. 65
7.8. Guaranteed Indebtedness................................... 66
7.9. Liens..................................................... 67
7.10. Capital Expenditures...................................... 67
7.11. Sale of Assets............................................ 67
7.12. Cancellation of Indebtedness.............................. 68
7.13. Events of Default......................................... 68
7.14. Hedging Transactions...................................... 68
7.15. Restricted Payments....................................... 68
7.16. Restricted Leases and Leases.............................. 70
7.17. ERISA..................................................... 71
7.18. Payment of Brokers Fees, Etc. ............................ 71
7.19. Intentionally Omitted..................................... 71
7.20. Intentionally Omitted..................................... 71
7.21. Payment or Modification of Note Documents................. 72
7.22. Modification of Compensation Plan......................... 72
8. TERM.................................................................... 73
8.1. Termination............................................... 73
8.2. Survival of Obligations Upon Termination of
Financing Arrangement................................... 73
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES.................................. 73
9.1. Events of Default......................................... 73
9.2. Remedies.................................................. 77
9.3. Waivers by Borrower....................................... 78
9.4. Right of Set-Off.......................................... 78
10. THE AGENT............................................................... 78
10.1. Authorization and Action.................................. 78
iii
PAGE
----
10.2. Agent's Reliance, Etc. ................................... 79
10.3. GE Capital and Affiliates................................. 79
10.4. Lender Credit Decision.................................... 80
10.5. Indemnification........................................... 80
10.6. Successor Agent........................................... 80
11. MISCELLANEOUS........................................................... 81
11.1. Complete Agreement; Modification of Agreement; Sale of
Interest................................................ 81
11.2. Fees and Expenses......................................... 83
11.3. No Waiver by Agent or Any Lender.......................... 84
11.4. Remedies.................................................. 84
11.5. Waiver of Jury Trial...................................... 85
11.6. Severability.............................................. 85
11.7. Parties................................................... 85
11.8. Conflict of Terms......................................... 85
11.9. Authorized Signature...................................... 85
11.10. GOVERNING LAW............................................. 85
11.11. Notices................................................... 86
11.12. Survival.................................................. 87
11.13. Section Titles............................................ 87
11.14. Counterparts.............................................. 87
iv
PAGE
----
INDEX OF EXHIBITS AND SCHEDULES
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Notice of Revolving Credit Advance
Exhibit C - Form of Leasehold Mortgage
Exhibit D - Form of Mortgage
Schedule 1.1 - LIBOR Lending Offices
Schedule 1.2 - Permitted Encumbrances
Schedule 2.1 - Permitted Depository Banks
Schedule 4.1 - Compliance With Law
Schedule 4.2 - Executive Offices
Schedule 4.3 - Subsidiaries
Schedule 4.4 - Required Consents
Schedule 4.6(d) - Dividends and Distributions
Schedule 4.8(a) - Owned Real Estate
Schedule 4.8(b) - Leases
Schedule 4.8(c) - Real Property Options, Rights, etc.
Schedule 4.8(d) - Improvements
Schedule 4.8(e) - Real Estate Permits
Schedule 4.8(f) Condemnation Proceedings
Schedule 4.11 - Other Ventures
Schedule 4.14 - Tax Matters
Schedule 4.15 - ERISA Matters
Schedule 4.16 - Litigation
Schedule 4.17 - Brokers and Brokerage Fees
Schedule 4.19 - Outstanding Stock; Options, Warrants;
etc.
Schedule 4.20 - Employment and Labor Agreements
Schedule 4.21 - Patents and Trademarks
Schedule 4.24 - Events Subsequent to December 31, 1988
Schedule 4.25 - Environmental Matters
Schedule 4.26 - Prior Liens
Schedule 6.7 - Insurance
v
Schedule 6.7B - Insurance Requirements
Schedule 6.12 - Mandatory Leasehold Language
Schedule 7.2 - Permitted Banks and Other Financial
Institutions for Investments
Schedule 7.7 - Management Fee
Schedule 7.16 - Assignable Leases
Schedule 11.9 - Authorized Signatures
vi