Exhibit 10.3
CREDIT AGREEMENT
among
MOVIE GALLERY, INC.
and
THE LENDERS NAMED HEREIN,
and
SOUTHTRUST BANK,
as Agent, as Issuing Lender and as Swing Line Lender
Revolving Credit Facility
Dated as of June 27, 2001
TABLE OF CONTENTS
ARTICLE PAGE
------- ----
ARTICLE I......................................................................1
1. DEFINITIONS...........................................................1
1.1 Defined Terms................................................1
1.2 Accounting Terms............................................26
1.3 Construction of Terms.......................................26
1.4 Computation of Time Periods.................................27
1.5 Computation of Applicable Margin and Financial Covenant.....27
ARTICLE II....................................................................27
2. THE REVOLVING LOAN...................................................27
2.1 General Terms...............................................27
2.2 Disbursement of the Revolving Loan..........................28
2.3 The Revolving Notes.........................................28
2.4 Interest Rate...............................................28
2.5 Payments of Principal and Interest..........................29
2.6 Use of Proceeds of Revolving Loan...........................29
ARTICLE III...................................................................29
3. THE SWING LINE LOAN..................................................29
3.1 General Terms...............................................29
3.2 Disbursement of the Swing Line Loan.........................30
3.3 The Swing Line Note.........................................30
3.4 Interest Rate...............................................31
3.5 Payments of Principal and Interest..........................31
3.6 Use of Proceeds of Swing Line Loan..........................31
ARTICLE IV....................................................................31
4. LETTERS OF CREDIT....................................................31
4.1 General Terms..................................................31
4.2 Issuance of a Letter of Credit.................................31
4.3 Reimbursement and Other Payments...............................31
4.4 Upon an Event of Default.......................................32
4.5 No Liability of the Issuing Lender.............................33
4.6 Indemnification................................................33
4.7 Pro Rata Participation, Drawing and Reimbursemen...............33
4.8 Failure to Purchase Pro Rata Share of Letter
of Credit Advances.............................................34
4.9 Letter of Credit Reports.......................................34
ARTICLE V.....................................................................35
5. PAYMENTS, ADDITIONAL COSTS, ETC....................... ..............35
i
5.1 Payment to Agent............................................35
5.2 Late Payments...............................................35
5.3 Voluntary and Mandatory Prepayments.........................35
5.4 Default Rate................................................36
5.5 No Setoff or Deduction......................................36
5.6 Payment on Non-Business Day; Payment Computations...........37
5.7 LIBOR Rate Borrowing Indemnification........................37
5.8 360-Day Year................................................37
5.9 No Requirement to Actually Obtain Funds.....................37
5.10 Usury Limitation............................................37
5.11 Increased Costs; Change in Circumstances; Illegality; etc...38
5.12 Taxes.......................................................40
ARTICLE VI....................................................................41
6. CONDITIONS OF BORROWING..............................................41
6.1 Documents Required for the Closing..........................41
6.2 Certain Events Required for Closing and for all Advances....43
6.3 Legal Matters...............................................44
6.4 Election to Make Advances Prior to
Satisfaction of Conditions Precedent........................44
ARTICLE VII..................................................................44
7. REPRESENTATIONS AND WARRANTIES.......................................44
7.1 Corporate Organization and Power............................44
7.2 Authorization; Enforceability...............................44
7.3 No Violation................................................44
7.4 Governmental Authorization; Permits.........................45
7.5 Litigation..................................................45
7.6 Taxes.......................................................45
7.7 Subsidiaries................................................46
7.8 Full Disclosure.............................................46
7.9 Margin Regulations..........................................46
7.10 No Material Adverse Change..................................46
7.11 Financial Matters...........................................46
7.12 Ownership of Properties.....................................47
7.13 ERISA.......................................................47
7.14 Environmental Matters.......................................47
7.15 Compliance with Laws........................................48
7.16 Regulated Industries........................................48
7.17 Insurance...................................................48
7.18 Material Contracts..........................................49
7.19 Security Documents..........................................49
7.20 Continuing Effectiveness....................................49
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ARTICLE VIII..................................................................49
8. AFFIRMATIVE COVENANTS................................................49
8.1 Financial Statements........................................49
8.2 Other Business and Financial Information....................50
8.3 Corporate Existence; Franchises; Maintenance of Properties..52
8.4 Compliance with Laws........................................52
8.5 Payment of Obligations......................................52
8.6 Insurance...................................................53
8.7 Maintenance of Books and Records; Inspection................53
8.8 Interest Rate Protection....................................53
8.9 Permitted Acquisitions......................................53
8.10 Creation or Acquisition of Subsidiaries.....................54
8.11 Further Assurances..........................................56
ARTICLE IX....................................................................56
9. FINANCIAL COVENANTS..................................................56
9.1 Leverage Ratio..............................................56
9.2 Interest Coverage Ratio.....................................56
9.3 Fixed Charge Coverage.......................................56
9.4 Net Worth...................................................57
ARTICLE X.....................................................................57
10. NEGATIVE COVENANTS...................................................57
10.1 Merger; Consolidation. ....................................57
10.2 Indebtedness................................................57
10.3 Liens.......................................................58
10.4 Disposition of Assets.......................................59
10.5 Investments.................................................59
10.6 Restricted Payments.........................................60
10.7 Transactions with Affiliates................................61
10.8 Lines of Business...........................................61
10.9 Limitation on Certain Restrictions..........................61
10.10 Fiscal Periods..............................................62
10.11 Accounting Changes..........................................62
ARTICLE XI....................................................................62
11. EVENTS OF DEFAULT....................................................62
11.1 Events of Default...........................................62
11.2 Remedies: Termination of Commitments, Acceleration, Etc.....65
11.3 Remedies: Set-Off...........................................65
ARTICLE XII...................................................................66
12. THE AGENT............................................................66
12.1 Appointment.................................................66
12.2 Nature of Duties............................................66
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12.3 Exculpatory Provisions......................................66
12.4 Reliance by Agent...........................................67
12.5 Non-Reliance on Agent and Other Lenders.....................67
12.6 Notice of Default...........................................68
12.7 Indemnification.............................................68
12.8 The Agent in its Individual Capacity........................68
12.9 Successor Agent.............................................69
12.10 Collateral Matters..........................................69
ARTICLE XIII..................................................................70
13. MISCELLANEOUS........................................................70
13.1 Fees and Expenses...........................................70
13.2 Indemnification.............................................70
13.3 Governing Law; Consent to Jurisdictions.....................71
13.4 Arbitration; Preservation and Limitation of Remedies........72
13.5 Notices.....................................................73
13.6 Amendments, Waivers, etc....................................74
13.7 Assignments, Participations.................................74
13.8 No Waiver...................................................77
13.9 Successors and Assigns......................................77
13.10 Survival....................................................77
13.11 Severability................................................77
13.12 Construction................................................78
13.13 Confidentiality.............................................78
13.14 Counterparts................................................78
13.15 Entire Agreement............................................78
EXHIBIT A ASSIGNMENT AND ACCEPTANCE
EXHIBIT B COMPLIANCE CERTIFICATE
EXHIBIT C LENDERS' COMMITMENTS
SCHEDULE 7.6 TAX AUDITS AND EXAMINATIONS
SCHEDULE 7.7 BORROWER'S SUBSIDIARIES AND OWNERSHIP
SCHEDULE 7.14 ENVIRONMENTAL MATTERS
SCHEDULE 7.17 INSURANCE POLICIES
SCHEDULE 10.2 PERMITTED INDEBTEDNESS
SCHEDULE 10.3 PERMITTED LIENS
iv
SCHEDULE 10.5 PERMITTED INVESTMENTS
SCHEDULE 10.7 PERMITTED TRANSACTIONS WITH AFFILIATES
SCHEDULE 10.10 FISCAL PERIODS
v
CREDIT AGREEMENT
----------------
THIS CREDIT AGREEMENT (this "Agreement"), dated as of the 27th day of June,
2001, is made among MOVIE GALLERY, INC., a Delaware corporation (the
"Borrower"), the banks and financial institutions listed on the signature pages
hereof or that become parties hereto after the date hereof (collectively, the
"Lenders"), and SOUTHTRUST BANK, an Alabama banking corporation ("SouthTrust"),
as agent for the Lenders (in such capacity, the "Agent"), as issuer of the
Letters of Credit (in such capacity, the "Issuing Lender"), and as maker of the
Swing Line Loan (in such capacity, the "Swing Line Lender").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrower has requested that Lenders make available to Borrower a
revolving credit facility in the initial aggregate principal amount of
$65,000,000. Borrower will use the proceeds of this facility to refinance
certain existing indebtedness, to pay or reimburse certain fees and expenses in
connection herewith and therewith, to finance certain acquisitions and treasury
stock repurchases, and for working capital and general corporate purposes, all
as more fully described herein; and
WHEREAS, Lenders are willing to make available to Borrower the revolving
credit facility described above subject to and on the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual provisions, covenants and
agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE I.
1. DEFINITIONS.
1.1 Defined Terms. For purposes of this Agreement, in addition to the terms
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defined elsewhere herein, the following terms shall have the meanings set forth
below (such meanings to be equally applicable to the singular and plural forms
thereof):
"Account Designation Letter" means a letter from Borrower to Agent
duly completed and signed by an Authorized Officer of Borrower and in form and
substance satisfactory to the Agent, listing any one or more accounts at
SouthTrust to which Borrower may from time to time request the Agent to deposit
the proceeds of any Advances made hereunder.
"Acquisition" means any acquisition (whether in a single transaction
or series of related transactions) of (i) any going business, or all or
substantially all of the assets of any Person, whether through purchase, merger
or otherwise; or (ii) Equity Interests of any Person of at least a majority of
the Voting Power of such Person.
"Acquisition Amount" means, with respect to any Acquisition, the sum
(without duplication) of (i) the amount of cash paid by Borrower and its
Subsidiaries in connection with such Acquisition, (ii) the Fair Market Value of
all Equity Interests of Borrower and its Subsidiaries issued or given in
connection with such Acquisition, (iii) the amount (determined by using the face
amount or the amount payable at maturity, whichever is greater) of all
Indebtedness incurred, assumed or acquired by Borrower and its Subsidiaries in
connection with such Acquisition, (iv) all additional purchase price amounts in
connection with such Acquisition in the form of earnouts and other contingent
obligations that should be recorded as a liability on the balance sheet of
Borrower and its Subsidiaries or expensed, in either event in accordance with
Generally Accepted Accounting Principles, Regulation S-X under the Securities
Act of 1933, as amended, or any other rule or regulation of the Securities and
Exchange Commission, (v) all amounts paid in respect of covenants not to
compete, consulting agreements and other affiliated contracts in connection with
such Acquisition, (vi) the amount of all transaction fees and expenses
(including without limitation legal, accounting and finders' fees and expenses)
incurred by Borrower and its Subsidiaries in connection with such Acquisition,
and (vii) the aggregate fair market value of all other consideration given by
Borrower and its Subsidiaries in connection with such Acquisition.
"Adjusted Base Rate" means an interest rate equal to the sum of (i)
the Base Rate, plus (ii) the Applicable Margin.
"Advance" means each loan of money or credit made or extended to or
for the benefit of Borrower by Lenders pursuant to this Agreement, including the
Revolving Loan Advances, the Swing Line Loan Advances, and Letter of Credit
Advances.
"Agent" means SouthTrust, in its capacity as Agent appointed under
Article X of this Agreement, and its successors and permitted assigns in such
capacity.
"Agent's Fee" means an annual fee payable to Agent in an amount as
agreed to between Agent and Borrower pursuant to the Fee Letter, such annual fee
to be paid in advance at the Closing and on or before July 1 of each year
beginning calendar year 2002.
"Agent's Lien" means any Lien granted to the Agent in the Collateral.
"Affiliate" means, as to any Person, each other Person that directly,
or indirectly through one or more intermediaries, owns or controls, is
controlled by or under common control with, such Person or is a director or
officer of such Person. For purposes of this definition, with respect to any
Person "control" means (i) the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise, or
(ii) the beneficial ownership of securities or other ownership interests of such
Person having 10% or more of the combined voting power of the then outstanding
securities or other ownership interests of such Person ordinarily (and apart
from rights accruing under special circumstances) having the right to vote in
the election of directors or other governing body of such Person.
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"Agreement" means this Credit Agreement, as amended, modified or
supplemented from time to time.
"Amortization Expense" means the amortization expense for an
applicable period (to the extent included in the computation of Net Income),
according to Generally Accepted Accounting Principles.
"Annualized Rolling Period" means the period from the date one year
prior to the applicable date through the applicable date.
"Applicable Margin" means a percentage based on the Leverage Ratio, as
follows:
Applicable Margin Applicable Margin
Leverage Ratio Base Rate Borrowings LIBOR Rate Borrowings
-------------- -------------------- ---------------------
Greater than or equal to 2.5 to 1.0 1.25% 3.0%
Greater than or equal to 2.0 to 1.0 1.0% 2.75%
but less than 2.5 to 1.0
Greater than or equal to 1.5 to 1.0 0.75% 2.5%
but less than 2.0 to 1.0
Greater than or equal to 1.0 to 1.0 0.5% 2.25%
but less than 1.5 to 1.0
Less than 1.0 to 1.0 0.0% 2.0%
"Assets" means all property that should be classified as assets on a
balance sheet according to Generally Accepted Accounting Principles.
"Asset Disposition" means any sale, assignment, transfer or other
disposition of any assets, business units or other properties (including any
interests in property or securities), excluding (i) sales of inventory
(including rental tapes) in the Ordinary Course of Business and (ii) the sale or
exchange of used or obsolete equipment to the extent (x) the proceeds of such
sale are applied towards, or such equipment is exchanged for, similar
replacement equipment or (y) such equipment is no longer useful for the
operations in the Ordinary Course of Business.
"Assignee" means a Person who is assigned an interest in accordance
with the provisions of Section 13.7(A) of this Agreement.
"Assignment and Acceptance" means an Assignment and Acceptance entered
into between a Lender and an Assignee and accepted by the Agent and Borrower, in
substantially the form of Exhibit "A".
3
"Authorized Officer" means, collectively, the president, chief
executive officer, chief financial officer, and general counsel of Borrower, any
vice president-finance or controller of Borrower or any Subsidiary of Borrower,
and any other person designated by Borrower as an Authorized Officer under this
Agreement.
"Available Amount" of any Letter of Credit means, at any time, the
maximum amount available to be drawn at such time under any Letter of Credit
issued under this Agreement.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar Laws of any
Jurisdiction for the relief of debtors, and "Bankruptcy" means the commencement
of any case or other action for relief under Bankruptcy Law.
"Base Rate" means the higher of (i) the per annum interest rate
publicly announced from time to time by SouthTrust, to be its prime or base rate
(which may not necessarily be its best lending rate), as adjusted to conform to
changes as of the opening of business on the date of any such change in such
prime or base rate, or (ii) 0.5% per annum plus the Federal Funds Rate, as
adjusted to conform to changes as of the opening of business on the date of any
such change in the Federal Funds Rate.
"Base Rate Borrowing" means, at any time, any Borrowing that bears
interest at such time at the Adjusted Base Rate.
"Borrower" means Movie Gallery, Inc., a Delaware corporation.
"Borrower Margin Stock" means Equity Interests of Borrower that are
held by Borrower or any of its Subsidiaries and that constitute Margin Stock.
"Borrower Parties" means Borrower, Guarantors, and any other Person
that hereafter becomes a party to this Agreement and/or any other Credit
Document, and which Person is responsible in whole or in part for any of the
Obligations.
"Borrower's Closing Affidavit" means an affidavit in form and
substance acceptable to Agent, and signed by a duly authorized representative of
Borrower.
"Borrowing" means a borrowing hereunder consisting of (i) with respect
to Revolving Loan Advances, the aggregate amount of the several Revolving Loan
Advances made on the same date by the Lenders to Borrower; and (ii) with respect
to Swing Line Loan Advances, the Swing Line Loan Advance made at any time by the
Swing Line Lender to Borrower.
"Business Day" means any day of the year, other than Saturday or
Sunday, on which dealings in United States Dollars are carried on in the London
interbank market and banks open for business in Birmingham, Alabama are not
required or authorized to close.
4
"Capital Expenditures" means, for any period, the aggregate amount
(whether paid in cash or accrued as a liability) that would, in accordance with
Generally Accepted Accounting Principles, be included on the consolidated
statement of cash flows of Borrower and its Subsidiaries for such period as
additions to equipment, fixed assets, real property or improvements or other
capital assets (including, without limitation, capital lease obligations);
provided, however, that Capital Expenditures shall not include any such
expenditures (i) for replacements and substitutions for capital assets, to the
extent made with the proceeds of insurance, (ii) made in connection with
Permitted Acquisitions, or (iii) for the purchase of Rental Inventory (other
than New Retail Store Rental Inventory).
"Cash Collateral Account" means the special cash collateral account
established pursuant to Section 4.4.
"Cash Equivalents" means (i) securities issued or unconditionally
guaranteed by the United States of America or any agency or instrumentality
thereof, backed by the full faith and credit of the United States of America and
maturing within 90 days from the date of acquisition, (ii) commercial paper
issued by any Person organized under the Laws of the United States of America,
maturing within 90 days from the date of acquisition and, at the time of
acquisition, having a rating of at least "A-1" or the equivalent thereof by
Standard & Poor's Ratings Services or at least "P-1" or the equivalent thereof
by ▇▇▇▇▇'▇ Investors Service, Inc., (iii) time deposits (which shall not include
demand deposit accounts) and certificates of deposit maturing within 90 days
from the date of issuance and issued by a bank or trust company organized under
the Laws of the United States of America or any state thereof that has combined
capital and surplus of at lest $500,000,000 and that has (or is a subsidiary of
a bank holding company that has) a long-term unsecured debt rating of at least
"A" or the equivalent thereof by Standard & Poor's Ratings Services or at least
"A2" or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc., (iv)
repurchase obligations with a term not exceeding seven (7) days with respect to
underlying securities of the types described in clause (i) above entered into
with any bank or trust company meeting the qualifications specified in clause
(iii) above, and (v) money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through (iv)
above.
"Casualty Event" means, with respect to any property (including any
interest in property) of Borrower or any of its Subsidiaries, any loss of,
damage to, or condemnation or other taking of, such property for which Borrower
or such Subsidiary receives insurance proceeds, proceeds of a condemnation award
or other compensation.
"Closing" means the time and place of actual execution and delivery of
this Agreement, the Notes, and except as waived by Agent, the other documents,
instruments, and things required by Section 6.1 hereof.
"Closing Date" means the date of Closing.
"Collateral" means all the assets, property and interests in property
that shall from time to time be pledged or be purported to be pledged as direct
or indirect security for the Obligations pursuant to any one or more of the
Security Documents.
5
"Commitments" means the Revolving Loan Commitment, the Swing Line Loan
Commitment, and the Letter of Credit Commitment.
"Commitment Fee" means commitment fees payable to SouthTrust in an
amount as set forth in the Fee Letter, and commitment fees payable to the
Lenders other than SouthTrust in an amount as indicated by letter dated of even
date herewith from SouthTrust to each Lender other than SouthTrust.
"Compliance Certificate" means a fully completed and duly executed
certificate (including the Covenant Compliance Worksheet attached thereto) in
the form of Exhibit "B".
"Consolidated Basis" means the consolidation of the assets,
liabilities, income and losses, as applicable, of the applicable Persons,
together with a separate statement of each of the foregoing for each Person
whose assets, liabilities, income and losses are the subject of the
consolidation.
"Credit Documents" means this Agreement, the Notes, the Guaranty, the
Security Documents, the Fee Letter, and all other agreements, instruments,
documents and certificates now or hereafter executed and delivered to the Agent
or any Lender by or on behalf of Borrower or any of its Subsidiaries with
respect to this Agreement and the transactions contemplated hereby (but
specifically excluding any Hedge Agreements), in each case as amended, modified,
supplemented or restated from time to time.
"Credit Percentage" means:
(A) Until such time as all Revolving Loan Commitments shall have
expired or terminated, with respect to each Lender, a percentage based on a
fraction, the numerator of which shall be the amount of such Lender's Revolving
Loan Commitments as set forth on Exhibit "C", and the denominator of which shall
be the Revolving Loan Commitments of all Lenders at such time; and
(B) At such time as all Revolving Loan Commitments shall have expired
or terminated, such percentage shall be based on a fraction, the numerator of
which shall be the sum of (a) the aggregate principal amount of the Advances
outstanding at such time and owing to such Lender at such time, plus (b) such
Lender's Pro Rata Share of the aggregate Available Amount of all Letters of
Credit outstanding at such time, and the denominator of which shall be the sum
of (a) the aggregate principal amount of all Advances outstanding at such time
and owing to the Lenders at such time, and (b) the aggregate Available Amount of
all Letters of Credit outstanding at such time; provided, that in calculating
such percentage and each Lender's Pro Rata Share, each Lender's Pro Rata Share
of the aggregate Available Amount of Letters of Credit shall, at such time, be
determined under subparagraph (A) above, and the aggregate principal amount of
Swing Line Loan Advances owing to the Swing Line Lender and of Letter of Credit
Advances owing to the Issuing Lender shall, at such time, be considered to be
owed to the Lenders that purchase Swing Line Loan Advances and Letter of Credit
6
Advances from the Swing Line Lender and the Issuing Lender as and when required
under the terms of this Agreement.
"Debt Issuance" means the issuance or sale by Borrower or any of its
Subsidiaries of any debt securities, whether in a public offering of such
securities or otherwise.
"Default" means the occurrence of an event or condition described in
Section 11.1 hereof regardless of whether there shall have occurred any passage
of time or giving of notice that would be necessary in order to constitute such
event as an Event of Default.
"Default Costs" means all Indemnified Losses incurred by Lender
Parties by reason of a Default.
"Default Rate" means a variable per annum rate of interest equal to
the lesser of (1) two percent (2%) in excess of the highest Interest Rate
otherwise payable hereunder, or (2) the maximum rate allowed by applicable Laws.
"Depreciation Expense" means the depreciation expense for an
applicable period (to the extent included in the computation of Net Income),
according to Generally Accepted Accounting Principles.
"Dollars" or "$" means dollars of the United States of America.
"Eligible Assignee" means (i) a commercial bank organized under the
Laws of the United States or any state thereof and having total assets in excess
of $1,000,000,000, (ii) a commercial bank organized under the Laws of any other
country that is a member of the Organization for Economic Cooperation and
Development or any successor thereto (the "OECD") or a political subdivision of
any such country and having total assets in excess of $1,000,000,000, provided
that such bank or other financial institution is acting through a branch or
agency located in the United States, in the country under the Laws of which it
is organized or in another country that is also a member of the OECD, (iii) the
central bank of any country that is a member of the OECD, (iv) a finance
company, insurance company or other financial institution or fund that is
engaged in making, purchasing or otherwise investing in loans in the Ordinary
Course of Business and having total assets in excess of $500,000,000, (v) any
Affiliate of an existing Lender or (vi) any other Person approved by the
Required Lenders, which approval shall not be unreasonably withheld.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by any Person in the Ordinary Course of Business and not in response to any
third party action or request of any kind) or proceedings relating in any way to
any Environmental Law or any permit issued, or any approval given, under any
such Environmental Law (collectively, "Claims"), including, without limitation,
(i) any and all Claims by Governmental Authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (ii) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
7
injunctive relief resulting from Hazardous Substances or arising from alleged
injury or threat of injury to human health or the environment.
"Environmental Laws" means any and all federal, state and local Laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations, rules of common law and orders of courts or Governmental
Authorities, relating to the protection of human health or occupational safety
or the environment, now or hereafter in effect and in each case as amended form
time to time, including, without limitation, requirements pertaining to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, handling, reporting, licensing, permitting, investigation or
remediation of Hazardous Substances, including without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA"), as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the
Resource Conservation and Recovery Act ("RCRA"), as amended (42 U.S.C. Sections
6901, et seq.), the Clean Water Act, as amended (42 U.S.C. Sections 7401, et
seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Sections 2601, et
seq.).
"Equity Interests" means any and all ownership or other equitable
interests in the applicable Person, including any interest represented by any
capital stock, membership interest, partnership interest, or similar interest,
but specifically excluding any interest of any Person solely as a creditor of
the applicable Person.
"Equity Issuance" means (i) the issuance, sale or other disposition by
Borrower or any of its Subsidiaries of its Equity Interests, any rights,
warrants or options to purchase or acquire any Equity Interests, or any other
security or instrument representing, convertible into or exchangeable for any
Equity Interest in Borrower or any of its Subsidiaries, and (ii) the receipt by
Borrower or any of its Subsidiaries of any capital contribution (whether or not
evidenced by any security or instrument); provided, however, that the term
"Equity Issuance" shall not include (x) any rights, warrants or options issued
to directors, officers or employees of Borrower or any of its Subsidiaries
pursuant to bona fide employee benefit plans established in the Ordinary Course
of Business and any capital stock issued upon the exercise thereof, (y) any
capital contribution to any Subsidiary, to the extent made directly or
indirectly by Borrower, or (z) any Equity Interest issued or sold in connection
with any Permitted Acquisition and constituting all or a portion of the
applicable purchase price.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"ERISA Affiliate" means any Person (including any trade or business,
whether or not incorporated) that would be deemed to be under "common control"
with, or a member of the same "controlled group" as, Borrower or any of its
Subsidiaries, within the meaning of Sections 414(b), (c), (m) or (0) of the
Internal Revenue Code or Section 4001 of ERISA.
8
"ERISA Event" means any of the following with respect to a Plan or
Multiemployer Plan, as applicable: (i) a Reportable Event with respect to a Plan
or a Multiemployer Plan, (ii) a complete or partial withdrawal by Borrower or
any ERISA Affiliate from a Multiemployer Plan that results in liability under
Section 4201 or 4202 of ERISA, or the receipt by Borrower or any ERISA Affiliate
of notice from a Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA, (iii) the distribution by Borrower or
any ERISA Affiliate under Section 4041 or 4041A of ERISA of a notice of intent
to terminate any Plan or the taking of any action to terminate any Plan, (iv)
the commencement of proceedings by the PBGC under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by Borrower or any ERISA Affiliate of a notice from any Multiemployer
Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of any
Multiemployer Plan against Borrower or any ERISA Affiliate to enforce Section
515 of ERISA, which is not dismissed within thirty (30) days, (vi) the
imposition upon Borrower or any ERISA Affiliate of any liability under Title IV
of ERISA, other than for PBGC premiums due but not delinquent under Section 4007
of ERISA, or the imposition or threatened imposition of any Lien upon any assets
of Borrower or any ERISA Affiliate as a result of any alleged failure to comply
with the Internal Revenue Code or ERISA in respect of any Plan, (vii) the
engaging in or otherwise becoming liable for a nonexempt Prohibited Transaction
by Borrower or any ERISA Affiliate, (viii) a violation of the applicable
requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under
Section 401(a) of the Internal Revenue Code by any fiduciary of any Plan for
which Borrower or any of its ERISA Affiliates may be directly or indirectly
liable, or (ix) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Internal Revenue Code or Section 307 of ERISA, would
result in the loss of a tax-exempt status of the trust of which such Plan is a
part of Borrower or an ERISA Affiliate fails to timely provide security to such
Plan in accordance with the provisions of such sections.
"Event of Default" means the occurrence of an event or condition
described in Section 11.1 hereof provided that there shall have occurred any
passage of time or giving of notice that would be necessary in order to
constitute such event or condition as an Event of Default under Section 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute, and all rules and regulations from
time to time promulgated thereunder.
"Extraordinary Receipt" means any cash received by or paid to or for
the account of any Person not in the Ordinary Course of Business, including,
without limitation, tax refunds, pension plan reversions, proceeds of insurance
(other than proceeds of business interruption insurance to the extent such
proceeds constitute compensation for lost earnings), condemnation awards (and
payments in lieu thereof) and indemnity payments.
"Fair Market Value" means, with respect to any Equity Interest of
Borrower given in connection with an Acquisition, the value given to such Equity
Interest for purposes of such Acquisition by the parties thereto, as determined
in good faith pursuant to the relevant acquisition agreement or otherwise in
connection with such Acquisition.
9
"Federal Funds Rate" means, for any period, a fluctuating per annum
interest rate (rounded upwards, if necessary, to the nearest 1/100 of one
percentage point) equal for each day during such period to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Fee Letter" means the letter from SouthTrust to Borrower, dated June
27, 2001, relating to certain fees payable by Borrower in respect of the
transactions contemplated by this Agreement, as amended, modified or
supplemented from time to time.
"Fees" means the Agent's Fee, the Commitment Fee, the Syndication Fee,
the Letter of Credit Facility Fee, the Letter of Credit Facing Fee, and the
Unused Fee.
"Financing Statements" means the UCC-1 financing statements (including
any amendments and continuations) and UCC-3 financing statements required
hereunder or under any other Security Document.
"Fixed Charge Coverage" means the ratio of (i) Operating Cash Flow
plus Lease Expense, to (ii) Interest Expense, plus Lease Expense, plus Income
Tax Expense (but only to the extent paid), plus principal payments in respect of
Funded Debt scheduled or otherwise required to have been made.
"Funded Debt" means the difference between (a) all Indebtedness, other
than Indebtedness that is accounts payable, accrued expenses or other current
liabilities not incurred through the borrowing of money, and Indebtedness under
Hedge Agreements, and (b) the amount by which the aggregate cash balances and
Cash Equivalents of Borrower and its Subsidiaries exceed $1,500,000.
"Generally Accepted Accounting Principles" means generally accepted
accounting principles, as set forth in the statements, opinions and
pronouncements of the Accounting Principles Board, the American Institute of
Certified Public Accountants and the Financial Accounting Standards Board (or,
to the extent not so set forth in such statements, opinions and pronouncements,
as generally followed by entities similar in size to Borrower and engaged in
generally similar lines of business), consistently applied and maintained and in
conformity with those used in the preparation of the Most Recent Financial
Statements.
10
"Governing Body" means the board of directors of a Person (or any
Person or group of Persons exercising similar authority).
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, any Governmental Authority.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guaranty" means that certain Guaranty dated of even date herewith
from Guarantors in favor of Agent, and any other Guaranty at any time executed
and delivered in connection with this Agreement, as the same may be amended or
supplemented from time to time.
"Guarantors" means M.G.A., ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Movie Gallery Finance,
and each other Person who becomes a Guarantor under this Agreement.
"Guarantor's Closing Affidavits" means affidavits in form and
substance acceptable to Agent, and signed by each Guarantor.
"Hazardous Substances" means any substances or materials (i) that are
or become defined as hazardous wastes, hazardous substance, pollutants,
contaminants or toxic substances under any Environmental Law, (ii) that are
defined by any Environmental Law as toxic, explosive, corrosive, ignitable,
infectious, radioactive, mutagenic or otherwise hazardous, (iii) the presence of
which require investigation or response under any Environmental Law, (iv) that
constitute a nuisance, trespass or health or safety hazard to Persons or
neighboring properties, (v) that consist of underground or aboveground storage
tanks, whether empty, filled or partially filled with any substance, or (vi)
that contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or wastes, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedge Agreement" means any interest or foreign currency rate swap,
cap, collar, option, hedge, forward rate or other similar agreement or
arrangement designed to protect against fluctuations in interest rates or
currency exchange rates.
"Immaterial Subsidiary" means any Subsidiary that (i) does not conduct
an active trade or business, and (ii) either (a) has assets with a fair market
value of less than $100,000 and gross revenues (for the most recently ended
period of twelve consecutive fiscal months) of less than $100,000 or (b) has
been organized by Borrower as an acquisition vehicle solely for the purpose of
merging with another person in connection with a Permitted Acquisition.
11
"Income Tax Expense" means the income tax expense for an applicable
period (to the extent included in the computation of Net Income), according to
Generally Accepted Accounting Principles.
"Indebtedness" means all items of indebtedness, obligation or
liability, whether matured or unmatured, liquidated or unliquidated, direct or
contingent, joint or several, and including, but without limitation or
duplication: (A) all Liabilities; (B) all indebtedness under leases that, in
accordance with Generally Accepted Accounting Principles, should not be
reflected on a balance sheet; and (C) all indebtedness secured by (or which the
holder of such indebtedness has a right, contingent or otherwise, to be secured
by) any lien upon property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed.
"Indemnified Lender Persons" means each and all of the Lender Parties
and their respective directors, officers, employees, agents, attorneys and
Affiliates.
"Indemnified Losses" means all damages, dues, penalties, fines, costs,
amounts paid in settlement, taxes, losses, expenses, and fees, including court
costs and attorneys' fees and expenses.
"Interest Coverage Ratio" means the ratio of (i) Operating Cash Flow
to (ii) Interest Expense.
"Interest Expense" means the sum (without duplication) of (i) total
interest expense in respect of Funded Debt (including, without limitation, all
interest expense accrued or capitalized, whether or not actually paid), (ii) all
net amounts paid or accrued under or in respect of Hedge Agreements, and (iii)
all commitment fees and other ongoing fees in respect of Funded Debt (including
the Unused Fee and the fees paid to the Agent) amortized or paid or accrued.
"Interest Rate" means the actual interest rate at which the
outstanding principal amount of a Note bears interest from time to time during
the term of such Note.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"Issuing Lender" means SouthTrust in its capacity as issuer of the
Letters of Credit, and its successors in such capacity.
"Jurisdiction" means each and every nation or any political
subdivision thereof.
"Laws" means each and all laws, treaties, ordinances, statutes, rules,
regulations, orders, injunctions, writs or decrees of any Governmental
Authority, or any court or similar entity established by any thereof, whether
now in effect or hereafter enacted.
12
"Lease Expense" means the aggregate (without duplication) of total
lease and rental expense (including, without limitation, all lease and rental
expense accrued or capitalized, whether or not paid, including capital lease
obligations), but excluding amounts paid in respect of taxes, utilities,
insurance, common area maintenance, and other like charges associated with the
lease and rental of property.
"Lender" means each financial institution signatory hereto and each
other financial institution that becomes a "Lender" hereunder pursuant to
Section 13.7, and their respective successors and assigns.
"Lender Parties" means, collectively, Lenders and Agent.
"Lending Office" means, with respect to any Lender, the office of such
Lender designated as its "Lending Office" on its signature page hereto or in an
Assignment and Acceptance, or such other office as may be otherwise designated
in writing from time to time by such Lender to Borrower and the Agent. A Lender
may designate separate Lending Offices as provided in the foregoing sentence for
the purposes of making or maintaining different types of Loans, and, with
respect to LIBOR Rate Borrowings, such office may be a domestic or foreign
branch or Affiliate of such Lender.
"Letter of Credit" means any Letter of Credit that is issued under
this Agreement.
"Letter of Credit Advances" means all amounts owing to the Issuing
Lender under any Letter of Credit Agreement, including, without limitation, all
drafts paid by the Issuing Lender under any Letter of Credit and with respect to
which the Issuing Lender has not been reimbursed, and all amounts owing to
Revolving Loan Lenders who purchase their Pro Rata Share of Letter of Credit
Advances in accordance with Section 4.7.
"Letter of Credit Agreement" means this Agreement and any other
agreement providing for the issuance of the Letters of Credit as contemplated
hereunder, together with any and all extensions, revisions, modifications or
amendments at any time made thereto.
"Letter of Credit Commitment" means the commitment of the Issuing
Lender, subject to the terms of this Agreement, to issue for the account of
Borrower Letters of Credit up to the lesser of (i) Five Million and 00/100
Dollars ($5,000,000.00), or (ii) the Unused Revolving Loan Commitment.
"Letter of Credit Facility Fee" means the fee payable by Borrower to
the Agent, for the account of the Lenders (based on each Lender's Pro Rata
Share), on each Quarter-End as determined by Agent as of such Quarter-End, in an
amount equal to the product of the daily average of the Available Amount of the
Letters of Credit for the applicable quarter, multiplied by the Applicable
Margin for LIBOR Rate Borrowings.
"Letter of Credit Facing Fee" means the fee payable by Borrower to
Issuing Lender for its own account, on each Quarter-End as determined by Agent
as of such Quarter-End, in an amount equal to the product of the daily average
of the Available Amount of the Letters of Credit for the applicable quarter,
multiplied by 0.125%.
13
"Leverage Ratio" means the ratio of (i) Funded Debt to (ii) Operating
Cash Flow.
"Liabilities" means all Indebtedness that should be classified as
liabilities on a balance sheet according to Generally Accepted Accounting
Principles.
"LIBOR Rate Borrowing" means any Borrowing bearing interest at the
30-Day Adjusted LIBOR Rate, the 60-Day Adjusted LIBOR Rate, or the 90-Day
Adjusted LIBOR Rate.
"LIBOR Rate Interest Period" means any 30-Day LIBOR Rate Interest
Period, 60-Day LIBOR Rate Interest Period, or 90-Day LIBOR Rate Interest Period.
"LIBOR Rate Notice" means any 30-Day LIBOR Rate Notice, 60-Day LIBOR
Rate Notice, or 90-Day LIBOR Rate Notice.
"Lien" means any mortgage, pledge, hypothecation, assignment, security
interest, lien (statutory or otherwise), preference, priority, charge or other
encumbrance of any nature, whether voluntary or involuntary, including, without
limitation, the interest of any vendor or lessor under any conditional sale
agreement, title retention agreement, capital lease or any other lease or
arrangement having substantially the same effect as any of the foregoing.
"Loans" means the Revolving Loan and the Swing Line Loan.
"M.G.A." means M.G.A., Inc., a Delaware corporation and a Wholly Owned
Subsidiary of Borrower.
"Margin Stock" shall have the meaning given to such term in Regulation
G, T, U or X.
"Material Adverse Change" means the occurrence of an event or the
existence of a condition giving rise to a Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect upon (i) the
condition (financial or otherwise), operations, business, or properties of the
Borrower Parties, taken as a whole, (ii) the ability of any Borrower Party to
perform its obligations under this Agreement or any of the other Credit
Documents, or (iii) the legality, validity or enforceability of this Agreement
or any of the other Credit Documents or the rights and remedies of the Agent and
the Lenders hereunder and thereunder.
"Material Contract" means any contract or agreement to which any
Borrower Party is a party, by which any of them or their respective properties
is bound or to which any of them is subject and that is required to be filed as
an exhibit to Borrower's registration statements or periodic reports (including
on Forms 10-Q and 10-K ) submitted to the Securities and Exchange Commission
under the Securities Act of 1933, as amended, and the rules and regulations from
time to time promulgated thereunder, or under the Exchange Act.
14
"Material Subsidiary" means any Subsidiary other than an Immaterial
Subsidiary.
"Most Recent Financial Statements" means the audited consolidated
balance sheets of Borrower and its Subsidiaries as of December 31, 2000 and
related statements of operations, stockholders' equity and cash flows, and the
unaudited consolidated balance sheets of Borrower and its Subsidiaries as of
April 1, 2001 and the related consolidated statements of operations,
stockholders' equity and cash flows for the three-month period then ended.
"▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇" means ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware
corporation and a Wholly Owned Subsidiary of Borrower.
"Movie Gallery Finance" means Movie Gallery Finance, Inc., a Delaware
corporation and a Wholly Owned Subsidiary of
"Multiemployer Plan" means any "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA to which Borrower or any ERISA Affiliate makes,
is making or is obligated to make contributions or has made or been obligated to
make contributions.
"Net Cash Proceeds" means (i) in the case of any Equity Issuance or
Debt Issuance, the aggregate cash payments received by Borrower and its
Subsidiaries less reasonable fees and expenses incurred by Borrower and its
Subsidiaries in connection therewith, (ii) in the case of any Casualty Event,
the aggregate cash proceeds of insurance, condemnation awards and other
compensation received by Borrower and its Subsidiaries in respect of such
Casualty Event less (y) reasonable fees and expenses incurred by Borrower and
its Subsidiaries in connection therewith and (z) contractually required
repayments of Indebtedness to the extent secured by Liens on the property
subject to such Casualty Event and any income or transfer taxes paid or
reasonably estimated by Borrower to be payable by Borrower and its Subsidiaries
as a result of such Casualty Event, and (iii) in the case of any Asset
Disposition, the aggregate cash payments received by Borrower and its
Subsidiaries in connection therewith, less (x) reasonable fees and expenses
incurred by Borrower and its Subsidiaries in connection therewith, (y)
Indebtedness to the extent the amount thereof is secured by a Lien on the
property that is the subject of such Asset Disposition and the transferee of (or
holder of the Lien on) such Property requires that such Indebtedness be repaid
as a condition to such Asset Disposition, and (z) any income or transfer taxes
paid or reasonably estimated by Borrower to be payable by Borrower and its
Subsidiaries as a result of such Asset Disposition.
"Net Worth" means the excess of total Assets over total Liabilities,
plus Subordinated Indebtedness to the extent included in Liabilities.
"New Retail Store Rental Inventory" means Rental Inventory which is
purchased for use in a new retail store of Borrower or its Subsidiaries.
"Notes" means the Revolving Notes and the Swing Line Note.
15
"Notice of Borrowing" means a notice from Borrower in form and
substance satisfactory to Agent (and, in the case of a Swing Line Loan Advance,
in form and substance satisfactory to Swing Line Lender), to be made by
telephone and confirmed in writing, specifying therein the information as may be
reasonably required by Agent (and, in the case of a Swing Line Loan Advance, as
may be reasonably required by Swing Line Lender) with respect to any Borrowing
under this Agreement.
"Notice of Funding" means a notice from Agent to Lenders to be made by
telephone and confirmed in writing, specifying therein the information as may be
reasonably required by Lenders with respect to any funding of any amounts under
this Agreement.
"Notice of Issuance" means a notice from Borrower to Agent and Issuing
Lender to be made by telephone and confirmed in writing, specifying therein the
information as may be reasonably required by Agent and Issuing Lender with
respect to the issuance of any Letter of Credit under this Agreement.
"Obligations" means the obligations (including obligations of
performance) and liabilities of any Borrower Party to any Lender Party of every
kind and description whatsoever, direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter incurred, contracted or arising, or
acquired by a Lender Party from any source, joint or several, liquidated or
unliquidated, whether incurred as maker, endorser, surety, guarantor, general
partner, drawer, tort-feasor, indemnitor, account party with respect to a Letter
of Credit, a Hedge Agreement, or otherwise, and arising under, pursuant to,
and/or in connection with this Agreement, any Note, and any of the other Credit
Documents, and any and all extensions and renewals of any of the same, including
but not limited to the obligation:
(A) To pay the principal of and interest on the Notes in accordance
with the terms hereof and thereof, including any and all extensions,
modifications, and renewals thereof and substitutions therefor;
(B) To pay the Reimbursement Obligation and Letter of Credit Advances
in accordance with the terms hereof;
(C) To pay or reimburse the Lender Parties all amounts advanced by the
Lender Parties hereunder, under any of the Credit Documents or otherwise in
accordance with the terms hereof; and
(D) To pay or reimburse the Lender Parties for all of the Lender
Parties' Default Costs and other Indemnified Losses in accordance with the terms
hereof.
"Operating Cash Flow" means the aggregate of (i) Net Income plus (ii)
the sum of Interest Expense, Income Tax Expense, Depreciation Expense,
Amortization Expense, and extraordinary losses and other non-cash expenses or
charges reducing income, all to the extent taken into account in the calculation
of Net Income, less (iii) Extraordinary Receipts, less (iv) extraordinary gains
and other non-cash credits increasing income, less (v) all amounts paid to
16
purchase Rental Inventory (other than New Retail Store Rental Inventory), all to
the extent taken into account in the calculation of Net Income; provided,
however, that there shall be (x) excluded therefrom the results of operations of
any Person sold or otherwise disposed of at any time after the first day of the
applicable Trailing Reference Period, and (y) with the consent of Agent and
subject to such conditions as may be imposed by Agent, included for the
applicable Pro-Forma Reference Period, on a pro-forma basis, the results of
operations of any Person acquired in a Permitted Acquisition.
"Ordinary Course of Business" means an action taken by a Person only
if:
(A) Such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
(B) Such action is not required to be authorized by the Governing Body
of such Person; and
(C) Such action is similar in nature and magnitude to actions
customarily taken, without any authorization by any Governing Body, in the
ordinary course of the normal day-to-day operations of other Persons that are in
the same or similar line of business as such Person.
"Organizational Documents" means (i) the articles of incorporation and
the bylaws of a corporation, (ii) the partnership agreement and any statement of
partnership of a general partnership, (iii) the limited partnership agreement
and the certificate of limited partnership of a limited partnership, (iv) the
articles of organization and the operating agreement of a limited liability
company, (v) any charter or similar document adopted or filed in connection with
the creation, formation, or organization of a Person, and (vi) any amendment to
any of the foregoing.
"Participant" means a Person purchasing a participation interest in
accordance with the provisions of Section 13.7(D) of this Agreement.
"Payment Due Date" means, except as otherwise expressly provided to
the contrary, (A) with respect to any payment of interest on any LIBOR Rate
Borrowing, the first Business Day following the expiration of any applicable
LIBOR Rate Interest Period; and (B) with respect to any payment of interest on
any Base Rate Borrowing, the first Business Day following each Quarter-End.
"Payment Obligation" means any Obligation to any Lender Party which
may be satisfied with the payment of money.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Permitted Acquisition" means any Acquisition if (i) the business
acquired is a Permitted Line of Business; (ii) any securities given as
consideration therewith are securities of Borrower; (iii) immediately after the
Acquisition, the business so acquired (and the assets constituting such
business) shall be owned and operated by Borrower or a wholly-owned Subsidiary
of Borrower (provided that, with respect to the Video Update Acquisition,
17
Borrower shall be allowed a period of up to 30 days (or such longer period of
time of up to 90 days if approved by Agent) for the business so acquired to be
wholly-owned by Borrower or a wholly-owned Subsidiary of Borrower, provided that
immediately after the Acquisition, Borrower shall own or control at least 90% of
the Voting Power of the entity owing the assets the subject of the Video Update
Acquisition); (iv) no Default shall have occurred and be continuing at the time
of the consummation of such Acquisition or would exist immediately after such
Acquisition; (v) other than the Video Update Acquisition, the Acquisition Amount
paid or payable in connection therewith, together with the consideration paid
for all other Acquisitions during the applicable Trailing Reference Period,
shall not exceed $35,000,000 (excluding therefrom the Video Update Acquisition);
and (vi) other than the Video Update Acquisition, to the extent paid or payable
in cash, the Acquisition Amount paid with respect thereto, together with the
consideration paid for all other Acquisitions during the applicable Trailing
Reference Period, shall not exceed $15,000,000 (excluding therefrom the Video
Update Acquisition).
"Permitted Liens" means:
(1) Liens created under the Security Documents;
(2) Liens in existence on the Closing Date and set forth on
Schedule 10.3;
(3) Liens imposed by Law, such as Liens of carriers,
warehousemen, mechanics, materialmen and landlords, and other similar Liens
incurred in the Ordinary Course of Business for sums not constituting borrowed
money that are not overdue for a period of more than thirty (30) days or that
are being contested in good faith by appropriate proceedings and for which
adequate reserves have been established in accordance with Generally Accepted
Accounting Principles;
(4) Liens (other than any Lien imposed by ERISA), the creation or
incurrence of which would not result in an Event of Default under Section
11.1(J), and incurred in the Ordinary Course of Business in connection with
worker's compensation, unemployment insurance or other forms of governmental
insurance or benefits, or to secure the performance of letters of credit, bids,
tenders, statutory obligations, surety and appeal bonds, leases, government
contracts and other similar obligations (other than obligations for borrowed
money) entered into in the Ordinary Course of Business;
(5) Liens for taxes, assessments or other governmental charges or
statutory obligations that are not delinquent or remain payable without any
penalty or that are being contested in good faith by appropriate proceedings and
for which adequate reserves have been established in accordance with Generally
Accepted Accounting Principles;
(6) Purchase money Liens upon property used by Borrower or any of
its Subsidiaries in the Ordinary Course of Business, securing Indebtedness
incurred solely to pay all or a portion of the purchase price thereof (including
in connection with capital leases), provided that the aggregate principal amount
at any time outstanding of all Indebtedness secured by such Liens, when taken
together with all other Indebtedness of Borrower and its Subsidiaries incurred
18
subject to the limitation set forth in Section 10.2(7), does not exceed the
dollar amount set forth in such clause, and provided further that any such Lien
(i) shall attach to such property concurrently with or within ten (10) days
after the acquisition thereof by Borrower or such Subsidiary, (ii) shall not
exceed the lesser of (y) the fair market value of such property, or (z) the cost
thereof to Borrower or such Subsidiary, and (iii) shall not encumber any other
property of Borrower or any of its Subsidiaries;
(7) Liens on Borrower Margin Stock, to the extent the fair market
value thereof exceeds 25% of the fair market value of the assets of Borrower and
its Subsidiaries (including Borrower Margin Stock);
(8) With respect to any real property occupied by Borrower or any
of its Subsidiaries, all easements, rights of way, licenses and similar
encumbrances on title that do not materially impair the use of such property for
its intended purposes; and
(9) Liens in favor of the trustee or agent under any agreement or
indenture relating to Subordinated Indebtedness of Borrower permitted under this
Agreement, covering sums required to be deposited with such trustee or agent
thereunder.
"Permitted Line of Business" means the business of movie and game
rental and sales, and the rental or sale of products and services reasonably
ancillary thereto, including, without limitation, rental by patrons of the use
of tanning beds and ancillary equipment.
"Person" means any individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture, court or Governmental Authority.
"Place for Payment" means a place for payment as from time to time
designated by Agent, which place for payment currently is at the address of
Agent as hereinafter provided for with respect to notices.
"Plan" means any "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA that is subject to the provisions of Title IV of ERISA
(other than a Multiemployer Plan) and to which Borrower or any ERISA Affiliate
may have any liability.
"Pledge Agreement" means that certain Pledge Agreement of even date
herewith, made by Borrower in favor of the Agent, as amended, modified or
supplemented from time to time.
"Pro-Forma Reference Period" means a period of one fiscal year
comprised of four quarters, the first quarter being the quarter during which the
applicable event occurs or with respect to which a calculation is to be made,
and the next three quarters being the three quarters immediately following such
last quarter.
"Prohibited Transaction" means any transaction described in (i)
Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or by
reason of a Department of Labor prohibited transaction individual or class
exemption or (ii) Section 4975(c) of the Internal Revenue Code that is not
exempt by reason of Section 4975(c)(2) or 4975(d) of the Internal Revenue Code.
19
"Pro Rata" or "Pro Rata Share" of any amount means, with respect to
any Lender at any time, the product of such amount times such Lender's Credit
Percentage.
"Quarter-End" means the last day of each fiscal quarter of Borrower.
"Register" means the register maintained by the Agent pursuant to
Section 13.7(B).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of the
Federal Reserve System.
"Regulation "G", Regulation "T", Regulation "U", and Regulation "X""
means Regulation G, Regulation T, Regulation U, and Regulation X, respectively,
of the Board of Governors of the Federal Reserve System as now or from time to
time hereafter in effect and shall include any successor or other regulation or
official interpretation of said Board of Governors relating to the extension of
credit by banks for the purpose of purchasing or carrying margin stocks
applicable to member banks of the Federal Reserve System.
"Reimbursement Obligation" means the obligation of Borrower to pay the
amounts required under Section 4.3.
"Rental Inventory" means video tapes or cassettes, digital video
discs, games and game cartridges, CD ROMs, and any other format or media which
is rental inventory of Borrower or its Subsidiaries and is capitalized by
Borrower or its Subsidiaries as rental inventory.
"Reportable Event" means (i) any "reportable event" within the meaning
of Section 4043(c) of ERISA for which the 30-day notice under Section 4043(a) of
ERISA has not been waived by the PBGC (including any failure to meet the minimum
funding standard of, or timely make any required installment under, Section 412
of the Internal Revenue Code or Section 302 of ERISA, regardless of the issuance
of any waivers in accordance with Section 412(d) of the Internal Revenue Code),
(ii) any such "reportable event" subject to advance notice to the PBGC under
Section 4043(b)(3) of ERISA, (iii) any application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Internal
Revenue Code, and (iv) a cessation of operations described in Section 4062(e) of
ERISA.
"Required Lenders" means at any time Lenders holding Credit
Percentages of at least fifty percent (50%).
"Requirement of Law" means, with respect to any Person, the charter,
articles or certificate of organization or incorporation and bylaws or other
organizational or governing documents of such Person, and any statute, Law,
20
treaty, rule, regulation, order, decree, writ, injunction or determination of
any arbitrator or court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject or otherwise pertaining to any or all of the
transactions contemplated by this Agreement and the other Credit Documents.
"Reserve Requirement" with respect to a LIBOR Rate Interest Period
means the weighted average during the LIBOR Rate Interest Period of the maximum
aggregate reserve requirement (including all basic, supplemental, marginal and
other reserves and taking into account any transitional adjustments or other
scheduled changes in reserve requirements during the LIBOR Rate Interest Period)
which is imposed under Regulation D.
"Responsible Officer" means, collectively, the president, chief
executive officer, chief financial officer, and general counsel of Borrower.
"Revolving Loan" means the loan which Lenders have agreed to advance
to Borrower in accordance with the terms of Article II of this Agreement.
"Revolving Loan Advancement Termination Date" means the earlier of (i)
the Revolving Loan Maturity Date, or (ii) the date of the occurrence of an Event
of Default.
"Revolving Loan Advances" means Advances of the Revolving Loan.
"Revolving Loan Amount" means (i) until July 7, 2002, Sixty-Five
Million and No/100 Dollars ($65,000,000.00), (ii) thereafter, until July 6,
2003, Fifty-Five Million and No/100 Dollars ($55,000,000.00); and (iii)
thereafter, Forty-Five Million and No/100 Dollars ($45,000,000.00); provided,
however, that upon five (5) Business Days' prior written notice to Agent,
Borrower may reduce the amount of the Revolving Loan Amount at any time in an
aggregate amount of not less than $5,000,000 (or if greater in integral
multiples of $1,000,000 in excess thereof) and the Revolving Loan Amount shall
be automatically and permanently reduced by prepayments required under Sections
5.3(B), (C) and (D).
"Revolving Loan Borrowing" means a Borrowing consisting of
simultaneous Revolving Loan Advances made by the Lenders.
"Revolving Loan Commitment" means (A) with reference to the Lenders in
the aggregate, the commitment of the Lenders, subject to the terms of this
Agreement, to lend Borrower up to the Revolving Loan Amount less the total
Available Amount of all Letters of Credit; and (B) with reference to each Lender
separately, the commitment of such Lender, subject to the terms of this
Agreement, to lend Borrower such Lender's Pro Rata Share of the Revolving Loan
Commitment.
"Revolving Loan Lenders" means the banks and financial institutions
listed on the signature pages hereof or that become parties hereto as Revolving
Loan Lenders after the date hereof, and their respective successors and assigns.
"Revolving Loan Maturity Date" means July 4, 2004, or if earlier, the
occurrence of an Event of Default.
21
"Revolving Notes" means those certain Revolving Notes from Borrower to
the Revolving Loan Lenders, dated of even date herewith, in the aggregate
principal amount of $65,000,000, and includes any amendment to or modification
of any such note and any promissory note given in extension or renewal of, or in
substitution for, such note.
"Security Documents" means the Pledge Agreement and all other pledge
or security agreements or instruments executed and delivered by Borrower or any
of its Subsidiaries pursuant to Section 8.10 or otherwise in connection with the
transactions contemplated hereby, in each case as amended, modified or
supplemented from time to time.
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay such debts and liabilities as they mature and (d) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"SouthTrust" means SouthTrust Bank, an Alabama banking corporation.
"Stated Amount" means, with respect to any Letter of Credit at any
time, the aggregate amount available to be drawn thereunder at such time
(regardless of whether any conditions for drawing could then be met).
"Subordinated Indebtedness" means Indebtedness of Borrower that is
expressly subordinated and made junior in right and time of payment to the
obligations of Borrower with respect to the Loans, and that is evidenced by one
or more written agreements having terms, conditions and provisions (including,
without limitation, provisions relating to the principal amount, maturity,
covenants, defaults, interest, subordination, and repayment) satisfactory in
form and substance to Agent (and approved by all the Lenders) in its sole
discretion, which shall provide, at a minimum and without limitation, that such
Indebtedness (a) shall mature no earlier than the second anniversary of the
Revolving Loan Maturity Date, (b) shall not require any scheduled payment of
principal prior to the first anniversary of the Revolving Loan Maturity Date,
and (c) shall have covenants and undertakings that, taken as a whole, are
materially less restrictive than those contained in the Credit Documents.
"Subsidiary" means, with respect to any Person, any Person of which
more than fifty percent (50%) of the outstanding Voting Power is at the time,
directly or indirectly, owned or controlled by such Person.
22
"Swing Line Lender" means SouthTrust in its capacity as the Swing Line
Lender and its successors in such capacity.
"Swing Line Loan" means the aggregate unpaid principal balance from
time to time of all Advances made under Article III of this Agreement.
"Swing Line Loan Advances" means the Advances made by the Swing Line
Lender pursuant to Article III hereof.
"Swing Line Loan Borrowing" a Borrowing consisting of a Swing Line
Loan Advance made by the Swing Line Lender.
"Swing Line Loan Commitment" means the commitment of the Swing Line
Lender, subject to the terms of this Agreement until the Revolving Loan
Advancement Termination Date, to lend Borrower in principal amount outstanding
from time to time up to the lesser of (i) Five Million and No/100 Dollars
($5,000,000.00), or (ii) the aggregate of the Unused Revolving Commitments of
the Lenders.
"Swing Line Loan Maturity Date" means the earlier of (a) the date five
(5) Business Days prior to the Revolving Loan Maturity Date, (b) the occurrence
of an Event of Default, or (c) the date of demand for payment of the Swing Line
Loan by the Swing Line Lender.
"Swing Line Note" means that certain Swing Line Note from Borrower to
the Swing Line Lender dated of even date herewith in the principal amount of
$5,000,000.00, and includes any amendment to or modification of such note and
any promissory note given in extension or renewal of, or in substitution for,
such note.
"Syndication Fee" means a fee payable to Agent in an amount as agreed
to between Agent and Borrower pursuant to the Fee Letter, such fee to be paid in
advance on or before the Closing Date.
"Third Party" means a Person not a party to this Agreement.
"Trailing Reference Period" means a period of one fiscal year
comprised of four quarters, the last quarter being the quarter during which the
applicable event occurs or with respect to which a calculation is to be made,
and the first three quarters being the three quarters immediately preceding such
last quarter.
"Unfunded Pension Liability" means, with respect to any Plan or
Multiemployer Plan, the excess of its benefit liabilities under Section
4001(a)(16) of ERISA over the current value of its assets, determined in
accordance with the applicable assumptions used for funding under Section 412 of
the Code for the applicable plan year.
"Unsecured Indebtedness" means Indebtedness not secured by any Lien.
23
"Unused Fee" means the fee payable by Borrower to the Agent for the
account of each Lender on each Quarter-End, as determined by Agent as of such
Quarter-End in an amount equal to the product of (A) the daily average of such
Lender's Unused Revolving Loan Commitment outstanding on each day during such
quarter, multiplied by (B) a percentage based on the Leverage Ratio as follows:
Leverage Ratio Unused Fee
-------------- ----------
Equal to or greater than 2.0 to 1.0 0.5%
Less than 2.0 to 1.0 0.375%
"Unused Revolving Loan Commitment" means, with respect to (i) any
Lender at any time, (a) such Lender's Revolving Loan Commitment at such time
minus (b) the sum of (x) the aggregate principal amount of all Revolving Loan
Advances and Letter of Credit Advances made by such Lender and outstanding at
such time, plus (y) such Lender's Pro Rata Share of the aggregate Available
Amount of all Letters of Credit outstanding at such time; and (ii) the Lenders
at any time (in the aggregate), (a) the Lenders' Revolving Loan Commitments at
such time minus (b) the sum of (x) the aggregate principal amount of all
Revolving Loan Advances and Letter of Credit Advances made by the Lenders and
outstanding at such time, plus (y) the aggregate Available Amount of all Letters
of Credit outstanding at such time.
"Video Update Acquisition" means the Acquisition of Video Update, Inc.
contemplated to be made by Borrower pursuant to a Plan of Reorganization to be
filed in connection with Chapter 11 Bankruptcy proceedings of Video Update,
Inc., and the transactions relating thereto, including the purchase by Borrower
and Movie Gallery No. 1, LLC of senior secured bank debt of Video Update, Inc.
and the extension of credit under the Debtor In Possession Financing Agreement
between Borrower and Video Update, Inc., as debtor in possession.
"Voting Power" means, with respect to any Person, the right to vote
for the election of the Governing Body of such Person under ordinary
circumstances.
"Wholly Owned" means, with respect to any Subsidiary of any Person,
that 100% of the outstanding Equity Interests of such Subsidiary is owned,
directly or indirectly, by such Person.
"30-Day Adjusted LIBOR Rate" means an interest rate equal to the sum
of (i) the applicable 30-Day LIBOR Rate, plus (ii) the Applicable Margin.
"30-Day LIBOR Rate" means, as applicable to each respective 30-Day
LIBOR Rate Interest Period, a per annum rate of interest equal to the quotient
obtained (stated as an annual percentage rate rounded upward to the next higher
100th of 1%) by dividing (A) the London Interbank Offered Rate ("LIBOR") for a
period of thirty (30) days as determined by Agent from Telerate (or such other
source as Agent may select if such a rate index is not available from Telerate),
24
by (B) 1.00 minus any Reserve Requirement for the 30-Day LIBOR Rate Interest
Period (expressed as a decimal).
"30-Day LIBOR Rate Interest Period" means a period of one month from
the first day of the applicable 30-Day LIBOR Rate Interest Period to the date
one month thereafter, and with respect to which a 30-Day LIBOR Rate Notice has
been given.
"30-Day LIBOR Rate Notice" means a written notice given to Agent by an
Authorized Officer providing for Borrower's election for the outstanding
principal balance of the Note to bear interest at the applicable 30-Day Adjusted
LIBOR Rate for a 30-Day LIBOR Rate Interest Period, such notice to be given no
later than 11:00 a.m. (Birmingham, Alabama time) three (3) Business Days prior
to and specifying the date of the commencement of the applicable 30-Day LIBOR
Rate Interest Period; provided, however, that, except as may be waived by Agent
in Agent's discretion, in no event may any 30-Day LIBOR Rate Interest Period
begin until the expiration of any current LIBOR Rate Interest Period and in no
event may a 30-Day Adjusted LIBOR Rate be elected at any time when the
corresponding 30-Day LIBOR Rate Interest Period would extend beyond the
Revolving Loan Maturity Date, and if any such 30-Day LIBOR Rate Notice is not
timely received or is otherwise not properly made, such 30-Day LIBOR Rate
Notice, at Agent's election, shall not be effective.
"60-Day Adjusted LIBOR Rate" means an interest rate equal to the sum
of (i) the applicable 60-Day LIBOR Rate, plus (ii) the Applicable Margin.
"60-Day LIBOR Rate" means, as applicable to each respective 60-Day
LIBOR Rate Interest Period, a per annum rate of interest equal to the quotient
obtained (stated as an annual percentage rate rounded upward to the next higher
100th of 1%) by dividing (A) the London Interbank Offered Rate ("LIBOR") for a
period of sixty (60) days as determined by Agent from Telerate (or such other
source as Agent may select if such a rate index is not available from Telerate),
by (B) 1.00 minus any Reserve Requirement for the 60-Day LIBOR Rate Interest
Period (expressed as a decimal).
"60-Day LIBOR Rate Interest Period" means a period of two months from
the first day of the applicable 60-Day LIBOR Rate Interest Period to the date
two months thereafter, and with respect to which a 60-Day LIBOR Rate Notice has
been given.
"60-Day LIBOR Rate Notice" means a written notice given to Agent by an
Authorized Officer providing for Borrower's election for the outstanding
principal balance of the Note to bear interest at the applicable 60-Day Adjusted
LIBOR Rate for a 60-Day LIBOR Rate Interest Period, such notice to be given no
later than 11:00 a.m. (Birmingham, Alabama time) three (3) Business Days prior
to and specifying the date of the commencement of the applicable 60-Day LIBOR
Rate Interest Period; provided, however, that, except as may be waived by Agent
in Agent's discretion, in no event may any 60-Day LIBOR Rate Interest Period
begin until the expiration of any current LIBOR Rate Interest Period and in no
event may a 60-Day Adjusted LIBOR Rate be elected at any time when the
corresponding 60-Day LIBOR Rate Interest Period would extend beyond the
Revolving Loan Maturity Date, and if any such 60-Day LIBOR Rate Notice is not
timely received or is otherwise not properly made, such 60-Day LIBOR Rate
Notice, at Agent's election, shall not be effective.
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"90-Day Adjusted LIBOR Rate" means an interest rate equal to the sum
of (i) the applicable 90-Day LIBOR Rate, plus (ii) the Applicable Margin.
"90-Day LIBOR Rate" means, as applicable to each respective 90-Day
LIBOR rate Interest Period, a per annum rate of interest equal to the quotient
obtained (stated as an annual percentage rate rounded upward to the next higher
100th of 1%) by dividing (A) the London Interbank Offered Rate ("LIBOR") for a
period of ninety (90) days as determined by Agent from Telerate (or such other
source as Agent may select if such a rate index is not available from Telerate),
by (B) 1.00 minus any Reserve Requirement for the 90-Day LIBOR Rate Interest
Period (expressed as a decimal).
"90-Day LIBOR Rate Interest Period" means a period of three months
from the irst day of the applicable 90-Day LIBOR Rate Interest Period to the
date three months thereafter, and with respect to which a 90-Day LIBOR Rate
Notice has been given.
"90-Day LIBOR Rate Notice" means a written notice given to Agent by an
Authorized Officer providing for Borrower's election for the outstanding
principal balance of the Note to bear interest at the applicable 90-Day Adjusted
LIBOR Rate for a 90-Day LIBOR Rate Interest Period, such notice to be given no
later than 11:00 a.m. (Birmingham, Alabama time) three (3) Business Days prior
to and specifying the date of the commencement of the applicable 90-Day LIBOR
Rate Interest Period; provided, however, that, except as may be waived by Agent
in Agent's discretion, in no event may any 90-Day LIBOR Rate Interest Period
begin until the expiration of any current LIBOR Rate Interest Period and in no
event may a 90-Day Adjusted LIBOR Rate be elected at any time when the
corresponding 90-Day LIBOR Rate Interest Period would extend beyond the
Revolving Loan Maturity Date, and if any such 90-Day LIBOR Rate Notice is not
timely received or is otherwise not properly made, such 90-Day LIBOR Rate
Notice, at Agent's election, shall not be effective.
1.2 Accounting Terms. Except as specifically provided otherwise in this
Agreement, all accounting terms used herein that are not specifically defined
shall have the meanings customarily given them, and all financial computations
hereunder shall be made, in accordance with Generally Accepted Accounting
Principles. Notwithstanding the foregoing, in the event that any changes in
Generally Accepted Accounting Principles after the date hereof are required to
be applied to the transactions described herein and would affect the computation
of the financial covenants contained in Sections 9.1 through 9.4, as applicable,
such changes shall be followed only from and after the date this Agreement shall
have been amended to taken into account any such changes.
1.3 Construction of Terms. Whenever used in this Agreement, the singular
number shall include the plural and the plural the singular, pronouns of one
gender shall include all genders, and use of the terms "herein", "hereof", and
"hereunder" shall be deemed to be references to this Agreement in its entirety
unless otherwise specifically provided.
26
1.4 Computation of Time Periods. For purposes of computation of periods of
time hereunder, the word "from" means "from and including", the words "to" and
"until" each mean "to but excluding", and the word "through" means "through and
including".
1.5 Computation of Applicable Margin and Financial Covenants. Except as may
otherwise be provided in this Agreement to the contrary, (i) for purposes of
computation of the Applicable Margin and the financial covenants set forth in
this Agreement, such computation (x) shall be determined by Agent as of each
Quarter-End, based on the Compliance Certificate most recently delivered by
Borrower in accordance with the terms of this Agreement, and (y) shall be
determined on a Consolidated Basis and based on an Annualized Rolling Period, if
applicable; and (ii) any adjustment in the Applicable Margin shall be
prospective and shall commence as of the tenth Business Day after the delivery
of the Compliance Certificate most recently delivered by Borrower in accordance
with the terms of this Agreement until such time as the Applicable Margin is
subsequently adjusted pursuant to this Agreement (provided that should Borrower
fail to so timely deliver a required Compliance Certificate, Agent at its option
may adjust the Applicable Margin to the highest applicable percentage as of the
date the Compliance Certificate was due to be delivered). Until the first
Quarter-End following the Closing Date, the Applicable Margin shall be
determined by reference to the Leverage Ratio determined as of April 1, 2001 and
as reflected in the certificate of Borrower described in Section 6.1(M).
ARTICLE II.
2. THE REVOLVING LOAN
2.1 General Terms. Subject to the terms hereof, the Revolving Loan Lenders
will lend Borrower, from time to time until the Revolving Loan Advancement
Termination Date, such amounts which shall not exceed, in the aggregate
principal amount at any one time outstanding, the Revolving Loan Commitment as
follows:
(A) Each Revolving Loan Lender severally agrees, on the terms and
conditions hereinafter set forth, to make Revolving Loan Advances to Borrower
from time to time on any Business Day during the period from the date hereof
until the Revolving Loan Advancement Termination Date in an amount for each such
Revolving Loan Advance not to exceed such Revolving Loan Lender's Unused
Revolving Loan Commitment at such time. Each Revolving Loan Borrowing shall be
in an aggregate amount of (i) with respect to Base Rate Borrowings, $1,000,000
or, if greater, an integral multiple of $500,000 in excess thereof; or (ii) with
respect to LIBOR Rate Borrowings, $1,000,000 or, if greater, an integral
multiple of $500,000 in excess thereof (other than a Revolving Loan Borrowing
the proceeds of which shall be used solely to repay or prepay in full
outstanding Swing Line Loan Advances or outstanding Letter of Credit Advances
and a Revolving Loan Borrowing in an amount equal to the entire Unused Revolving
Loan Commitment) and shall consist of Revolving Loan Advances made
simultaneously by the Revolving Loan Lenders ratably according to their
respective Revolving Loan Commitments.
(B) Subject to the terms hereof, Borrower may borrow, repay without
penalty or premium, and reborrow hereunder, the Revolving Loan from the date of
this Agreement until the Revolving Loan Advancement Termination Date. If at any
27
time the unpaid principal balance of the Revolving Loan exceeds the amount
Borrower could borrow at such time as set forth herein, Borrower shall
immediately upon demand of Agent pay or cause to be paid such amounts to Agent
for the account of the Revolving Loan Lenders (based on each such Revolving Loan
Lender's Pro Rata Share of the Revolving Loan Commitment at such time), to the
extent necessary to reduce the Revolving Loan to an amount which Borrower could
borrow at that time.
2.2 Disbursement of the Revolving Loan.
(A) In order to obtain a Revolving Loan Advance, an Authorized Officer
shall deliver a Notice of Borrowing to Agent not later than (i) with respect to
Revolving Loan Advances to be made at Closing, the time of commencement of the
Closing, and (ii) with respect to any other Revolving Loan Advances, 11:00 a.m.
(Birmingham, Alabama time) on a date not less than three (3) Business Days prior
to the date such Revolving Loan Advance is sought.
(B) Upon Agent's receipt of a Notice of Borrowing, Agent shall deliver
a Notice of Funding to each Revolving Loan Lender at least one (1) Business Day
prior to the date the Revolving Loan Advance is to be made to Borrower, and each
Revolving Loan Lender shall, before 11:00 a.m. (Birmingham, Alabama time) on the
date of such Revolving Loan Advance, make available to the Agent at the Agent's
Account, in same day funds, such Revolving Loan Lender's Pro Rata Share of such
Revolving Loan Advance.
(C) After Agent's receipt of such funds and upon fulfillment of any
applicable conditions set forth in this Agreement, Agent will make such funds
available to Borrower by crediting Borrower's deposit account with Agent;
provided, however, that upon (i) written notice to Agent from the Swing Line
Lender given prior to the funding of the Revolving Loan Advance, Agent shall
first make a portion of such funds equal to the aggregate principal amount of
any Swing Line Loan Advances (plus interest accrued and unpaid thereon)
available to the Swing Line Lender for repayment of such Swing Line Loan
Advances; and (ii) written notice to Agent from the Issuing Lender given prior
to the funding of the Revolving Loan Advance, Agent shall first make a portion
of such funds equal to the aggregate principal amount of any Letter of Credit
Advances (plus interest accrued and unpaid thereon) available to the Issuing
Lender (and, if applicable, each other Lender that has made a Letter of Credit
Advance that remains outstanding) for repayment of such Letter of Credit
Advances.
2.3 The Revolving Notes. Borrower's obligation to repay the Revolving Loan
shall be evidenced by the Revolving Notes.
2.4 Interest Rate. During the entire term of the Revolving Notes, the
outstanding principal balance of the Revolving Notes shall bear interest at the
Adjusted Base Rate; subject, however, to the right of an Authorized Officer to
deliver to Agent a LIBOR Rate Notice, in each which case all or a portion of the
outstanding principal balance of the Revolving Notes shall bear interest at the
Interest Rate as provided for in the applicable LIBOR Rate Notice. Following the
expiration of any applicable LIBOR Rate Interest Period, if an Authorized
Officer shall not have timely and properly delivered a LIBOR Rate Notice for a
LIBOR Rate Interest Period to commence as of the expiration of the applicable
expiring LIBOR Rate Interest Period, then the outstanding principal balance of
28
the Revolving Notes shall automatically bear interest at the Adjusted Base Rate
until the commencement of the next LIBOR Rate Interest Period, if any.
2.5 Payment of Principal and Interest. Principal and interest on the
Revolving Loan shall be payable as follows:
(A) On the first Payment Due Date following the date of the Revolving
Notes, and on each successive Payment Due Date thereafter until the entire
indebtedness evidenced by the Revolving Notes is paid in full, Borrower shall
pay to Agent for the account of the Revolving Loan Lenders (based on each such
Revolving Loan Lender's Pro Rata Share of the Revolving Loan Commitment at such
time) all accrued and unpaid interest on the outstanding principal balance of
the Revolving Notes.
(B) If not earlier demanded pursuant to Section 11.2 hereof, the
outstanding principal balance of the Revolving Loan, together with all accrued
and unpaid interest thereon, shall be due and payable to Agent for the account
of the Revolving Loan Lenders (based on each such Revolving Loan Lender's Pro
Rata Share of the Revolving Loan Commitment at such time) on the Revolving Loan
Maturity Date.
2.6 Use of Proceeds of Revolving Loan. The proceeds of the Revolving Loan
shall be used to refinance certain existing indebtedness, to pay or reimburse
certain fees and expenses in connection herewith and therewith, to finance
certain acquisitions and stock repurchases, for working capital and general
corporate purposes and to repay Swing Line Loan Advances and Letter of Credit
Advances.
ARTICLE III.
3. THE SWING LINE LOAN.
3.1 General Terms.
(A) Subject to the terms hereof, the Swing Line Lender will lend
Borrower, from time to time until the Swing Line Loan Maturity Date, such
amounts which shall not exceed, in the aggregate principal amount at any one
time outstanding, the Swing Line Loan Commitment.
(B) Subject to the terms hereof, Borrower may borrow, repay without
penalty or premium, and reborrow hereunder, the Swing Line Loan from the date of
this Agreement until the Swing Line Loan Maturity Date. If at any time the
unpaid principal balance of the Swing Line Loan exceeds the amount Borrower
could borrow at such time as set forth herein, Borrower shall immediately upon
demand of Agent pay or cause to be paid such amounts to the Swing Line Lender,
to the extent necessary to reduce the Swing Line Loan to an amount which
Borrower could borrow at that time.
29
3.2 Disbursement of the Swing Line Loan.
(A) Swing Line Lender will credit or pay the proceeds of each Swing
Line Loan Advance to Borrower's deposit account with Swing Line Lender or in
such other manner as Borrower and Swing Line Lender may agree.
(B) (i) Subject to the terms of any other agreement among Swing Line
Lender and Borrower to the contrary (including any cash management agreement),
in order to obtain a Swing Line Loan Advance, an Authorized Officer shall
deliver a Notice of Borrowing to Agent and Swing Line Lender not later than
11:00 a.m. (Birmingham, Alabama time) on the Business Day such Swing Line Loan
Advance is sought. Upon Swing Line Lender's receipt of such Notice of Borrowing
and upon satisfaction of the terms and conditions of this Agreement, Swing Line
Lender will make such funds available to Borrower as provided for above.
Notwithstanding anything contained herein to the contrary, Borrower shall not be
entitled to receive nor shall Swing Line Lender be required to disburse any
Swing Line Loan Advance after the Swing Line Loan Maturity Date.
(ii) Upon written demand by Swing Line Lender, with a copy of such
demand to the Agent, each other Lender shall purchase from Swing Line Lender,
and Swing Line Lender shall sell and assign to each such other Lender, such
other Lender's Pro Rata Share of such outstanding Swing Line Loan Advance as of
the date of such demand, by making available for the account of the Swing Line
Lender, by deposit to the Agent's Account, in same day funds, an amount equal to
the portion of the outstanding principal amount of such Swing Line Loan Advance
to be purchased by such Lender. Borrower hereby agrees to each such sale and
assignment. Each Lender agrees to purchase its Pro Rata Share of an outstanding
Swing Line Loan Advance on (i) the Business Day on which demand therefor is made
by Swing Line Lender, provided that notice of such demand is given not later
than 11:00 a.m. (Birmingham, Alabama time) on such Business Day or (ii) the
first Business Day next succeeding such demand if notice of such demand is given
after such time. Upon any such assignment by Swing Line Lender to any other
Lender of a portion of a Swing Line Loan Advance, Swing Line Lender represents
and warrants to such other Lender that Swing Line Lender is the legal and
beneficial owner of such interest being assigned by it, but makes no other
representation or warranty and assumes no responsibility with respect to such
Swing Line Loan Advance, the Credit Documents or any Lender. If and to the
extent that any Lender shall not have so made the amount of such Swing Line Loan
Advance available to the Agent, such Lender agrees to pay to the Agent forthwith
on demand of the Agent or Swing Line Lender such amount together with interest
thereon, for each day from the date of demand by Swing Line Lender until the
date such amount is paid to the Agent, at the Federal Funds Rate. If such Lender
shall pay to the Agent such amount for the account of Swing Line Lender on any
Business Day, such amount so paid in respect of principal shall constitute a
Swing Line Loan Advance made by such Lender on such Business Day for purposes of
this Agreement, and the outstanding principal amount of the Swing Line Loan
Advance made by Swing Line Lender shall be reduced by such amount on such
Business Day.
3.3 The Swing Line Note. Borrower's obligation to repay the Swing Line Loan
shall be evidenced by the Swing Line Note.
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3.4 Interest Rate. During the entire term of the Swing Line Note, the
outstanding principal balance of the Swing Line Note shall bear interest at the
Adjusted Base Rate.
3.5 Payments of Principal and Interest. If not earlier demanded by Swing
Line Lender or pursuant to Section 11.2 hereof, the outstanding principal
balance of the Swing Line Loan, together with all accrued and unpaid interest
thereon, shall be due and payable to the Agent for the account of Swing Line
Lender and each other Lender that has made a Swing Line Loan Advance which
remains outstanding on the Swing Line Loan Maturity Date, and Borrower shall
repay to Agent for the account of the Swing Line Lender and each other Lender
that has made a Swing Line Loan Advance which remains outstanding the
outstanding principal amount of each Swing Line Loan Advance made by each of
them upon demand of the Agent.
3.6 Use of Proceeds of Swing Line Loan. The proceeds of the Swing Line Loan
shall be used to refinance certain existing indebtedness, to pay or reimburse
certain fees and expenses in connection herewith and therewith, to finance
certain acquisitions and stock repurchases, for working capital and general
corporate purposes and to repay Letter of Credit Advances.
ARTICLE IV.
4. LETTERS OF CREDIT.
4.1 General Terms. Subject to the terms hereof, Borrower may request the
Issuing Lender, on the terms and conditions hereinafter set forth, to issue, and
the Issuing Lender shall issue, Letters of Credit for the account of Borrower
from time to time on any Business Day in an aggregate Available Amount for all
Letters of Credit not to exceed at any time the lesser of (i) Letter of Credit
Commitment, or (ii) the Unused Revolving Loan Commitment on such Business Day.
No Letter of Credit shall have an expiration date (including all rights of
Borrower or the beneficiary to require renewal) later than the earlier of (i) 30
days before the Revolving Loan Maturity Date, or (ii) one year after the date of
issuance thereof. Unless the Issuing Lender agrees otherwise, there shall be not
more than six (6) Letters of Credit outstanding at any time.
4.2 Issuance of a Letter of Credit. In order for a Letter of Credit to be
issued, an Authorized Officer shall deliver a Notice of Issuance to Agent and
Issuing Lender not later than 11:00 a.m. (Birmingham, Alabama time) on a date
not less than three (3) Business Days prior to the date the issuance of such
Letter of Credit is sought, such Notice of Issuance to be accompanied by the
form of the Letter of Credit to be issued. If (i) the requested form of such
Letter of Credit is acceptable to the Issuing Lender in its discretion, and,
(ii) if required by Agent and Issuing Lender, upon execution and delivery of a
Letter of Credit Agreement in form and substance satisfactory to Agent and
Issuing Lender, the Issuing Lender will, subject to the other terms and
conditions hereof, issue such Letter of Credit. In the event and to the extent
that the provisions of any Letter of Credit Agreement shall conflict with this
Agreement, the provisions of this Agreement shall govern.
4.3 Reimbursement and Other Payments. Borrower agrees to pay to the Agent
immediately upon demand of the Agent or the Issuing Lender for reimbursement to
the Issuing Lender (i) at the time when the Issuing Lender shall pay any draft
presented under any Letter of Credit, a sum equal to the amount so paid under
such Letter of Credit, plus (ii) interest at the Default Rate on any amount
remaining unpaid by Borrower to the Issuing Lender under clause (i) above from
such time until payment in full.
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4.4 Upon an Event of Default. In addition to any rights and remedies the
Lender Parties may otherwise have under this Agreement, if any Event of Default
shall have occurred, the Agent or the Issuing Lender may in their discretion (i)
by notice to Borrower, declare the obligation of the Issuing Lender to issue any
Letter of Credit to be terminated, whereupon the obligation of the Issuing
Lender to issue any Letter of Credit shall forthwith terminate, and (ii) make
demand upon Borrower to, and forthwith upon such demand Borrower will pay to the
Agent in same day funds at the Agent's office designated in such demand, for
deposit in a special Cash Collateral Account to be maintained at such office of
the Agent, an amount equal to the maximum amount then available to be drawn
under any Letter of Credit. The Cash Collateral Account shall be in the name of
Borrower, but under the sole dominion and control of the Agent, and shall be
held and disbursed as follows:
(A) The Agent may from time to time invest funds on deposit in the
Cash Collateral Account, reinvest proceeds of any such investments which may
mature or be sold, and invest interest or other income received from any such
investments, and all such investments and reinvestments shall, for purposes of
this Agreement, constitute part of the funds held in the Cash Collateral
Account.
(B) If at any time the Agent determines that any funds held in the
Cash Collateral Account are subject to any right or claim of any Person other
than claims arising under this Agreement and/or that the total amount of such
funds is less than the maximum amount at such time available to be drawn under
the Letters of Credit, Borrower will, forthwith upon demand by the Agent, pay to
the Agent, as additional funds to be deposited and held in the Cash Collateral
Account, an amount equal to the excess of (i) such maximum amount at such time
available to be drawn under the Letters of Credit over (ii) the total amount of
funds, if any, then held in the Cash Collateral Account which the Agent
determines to be free and clear of any such right and claim. Nothing in this
Agreement shall either obligate the Agent to require any funds to be deposited
in the Cash Collateral Account or limit the right of the Agent, which it may
exercise at any time and from time to time, to release to Borrower any funds
held in the Cash Collateral Account.
(C) Borrower hereby assigns, transfers and sets over, and grants to
Agent a Lien on and upon, the Cash Collateral Account, including all funds held
in the Cash Collateral Account from time to time and all proceeds thereof, as
security for the Obligations. Borrower agrees that, to the extent notice of sale
of any securities shall be required by Law, at least five Business Days' Notice
to Borrower of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it will so adjourned.
(D) The Agent may, at any time or from time to time, apply funds from
time to time held in the Cash Collateral Account to the payment of (i) any
Reimbursement Obligation and (ii) upon termination of all Letters of Credit and
payment in full of all the Reimbursement Obligation, in such order as the Agent
may elect, as shall have become or shall become due and payable by Borrower to
the Agent under this Agreement.
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(E) Neither Borrower nor any Person claiming on behalf of or through
Borrower shall have any right to withdraw any of the funds held in the Cash
Collateral Account after and during the continuance of any Event of Default.
4.5 No Liability of the Issuing Lender. Neither the Issuing Lender nor
any of its officers or directors shall be liable or responsible for: (a) the use
that may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (b) the validity, sufficiency
or genuineness of documents, or of any endorsement thereon, even if such
documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by the Issuing Lender against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit. In furtherance and not in limitation
of the foregoing, the Issuing Lender may accept documents that appear on their
face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
4.6 Indemnification. In addition to any other indemnification
obligation of Borrower under this Agreement or any other Credit Document,
Borrower hereby agrees to indemnify and hold the Lender Parties harmless from
and against any and all Indemnified Losses which the Lender Parties may incur or
which may be claimed against the Lender Parties by any Person by reason of or in
connection with the execution and delivery or transfer of, or payment or failure
to make lawful payment under, any Letter of Credit, except Borrower shall not be
required to indemnify the Issuing Lender for any action taken or omitted to be
taken by the Issuing Lender if the same constitutes gross negligence or wilful
misconduct on the part of the Issuing Lender.
4.7 Pro Rata Participation, Drawing and Reimbursement.
(A) Without any further action on the part of any Lender Party,
effective immediately upon the issuance of any Letter of Credit issued under
this Agreement, the Issuing Lender will be deemed to have sold, transferred, and
assigned to the Revolving Loan Lenders at such time, and such Revolving Loan
Lenders will have been deemed to have purchased and accepted from the Issuing
Lender, an undivided interest in the Issuing Lender's interest in the applicable
Letter of Credit equal to such Revolving Loan Lender's Pro Rata Share, which
purchase shall obligate each Revolving Loan Lender to purchase from the Issuing
Lender such Revolving Loan Lender's Pro Rata Share of any Letter of Credit
Advance in accordance with the provisions of Section 4.7(C) below, and upon such
purchase, shall entitle each Revolving Loan Lender, in accordance with and
subject to the provisions of this Agreement, to receive such Revolving Loan
Lender's Pro Rata Share of any and all payments made by Borrower with respect to
the applicable Letter of Credit and whether required hereunder or under any
Letter of Credit Agreement.
(B) The payment by the Issuing Lender of a draft drawn under any
Letter of Credit shall constitute for all purposes of this Agreement the making
by the Issuing Lender of a Letter of Credit Advance in the amount of such draft
and shall bear interest at the Default Rate from the date of payment until the
date of reimbursement by Borrower as provided hereunder.
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(C) Upon written demand by the Issuing Lender, with a copy of such
demand to the Agent, each Revolving Loan Lender shall purchase from the Issuing
Lender, and the Issuing Lender shall sell and assign to each such Revolving Loan
Lender, such Revolving Loan Lender's Pro Rata Share of any outstanding Letter of
Credit Advance as of the date of such purchase, by making available to the Agent
for the account of the Issuing Lender, by deposit to the Agent's Account, in
same day funds, an amount equal to the portion of the outstanding principal
amount of such Letter of Credit Advance to be purchased by such Revolving Loan
Lender. Promptly after receipt thereof, the Agent shall transfer such funds to
the Issuing Lender. Borrower hereby agrees to each such sale and assignment.
Each Revolving Loan Lender agrees to purchase its Pro Rata Share of an
outstanding Letter of Credit Advance on (i) the Business Day on which demand
therefor is made by the Issuing Lender which made such Advance, provided notice
of such demand is given not later than 11:00 a.m. (Birmingham, Alabama time) on
such Business Day or (ii) the first Business Day next succeeding such demand if
notice of such demand is given after such time. Upon any such assignment by the
Issuing Lender to any Revolving Loan Lender of a portion of a Letter of Credit
Advance, the Issuing Lender represents and warrants to such Revolving Loan
Lender that the Issuing Lender is the legal and beneficial owner of such
interest being assigned by it, free and clear of any Liens, but makes no other
representation or warranty and assumes no responsibility with respect to such
Letter of Credit Advance, the Credit Documents or any Lender Party. If and to
the extent that any Revolving Loan Lender shall not have so made the amount of
such Letter of Credit Advance available to the Agent, such Revolving Loan Lender
agrees to pay to the Agent forthwith on demand of Agent such amount together
with interest thereon, for each day from the date of demand by the Issuing
Lender until the date such amount is paid to the Agent, at the Federal Funds
Rate for its account or the account of the Issuing Lender, as applicable. If
such Revolving Loan Lender shall pay to the Agent such amount for the account of
the Issuing Lender on any Business Day, such amount so paid in respect of
principal shall constitute a Letter of Credit Advance made by such Revolving
Loan Lender on such Business Day for purposes of this Agreement, and the
outstanding principal amount of the Letter of Credit Advance made by the Issuing
Lender shall be reduced by such amount on such Business Day.
4.8 Failure to Purchase Pro Rata Share of Letter of Credit Advances. The
failure of any Revolving Loan Lender to purchase its Pro Rata Share of any
Letter of Credit Advance as required in Section 4.7 shall not relieve any other
Revolving Loan Lender of its obligation hereunder to purchase its Pro Rata Share
of such Letter of Credit Advance, but no Revolving Loan Lender shall be
responsible for the failure of any other Revolving Loan Lender to purchase its
Pro Rata Share of any Letter of Credit Advance.
4.9 Letter of Credit Reports. The Issuing Lender shall furnish to the Agent
and each Revolving Loan Lender on request (such request to be made not more
frequently than monthly) a written report summarizing issuance and expiration
dates of the Letters of Credit issued by the Issuing Lender and drawings under
all Letters of Credit issued by the Issuing Lender.
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ARTICLE V.
5. PAYMENTS, ADDITIONAL COSTS, ETC.
5.1 Payment to Agent.
(A) All monies payable to Agent under this Agreement or under the
Notes shall be paid directly to Agent in immediately available funds at the
Place for Payment. If Agent shall send Borrower statements of amounts due
hereunder, absent manifest error, such statements shall be considered correct
and conclusively binding on Borrower unless Borrower notifies Agent to the
contrary within sixty (60) days of its receipt of any statement which it deems
to be incorrect.
(B) All payments to be made by Borrower hereunder will be made to
Agent not later than 1:00 p.m. at the Place for Payment. Payments received after
1:00 p.m. at the Place for Payment shall be deemed to be payments made prior to
1:00 p.m. at the Place for Payment on the next succeeding Business Day. Borrower
hereby authorizes Agent to charge its accounts with Agent in order to cause
timely payment of amounts due hereunder to be made.
(C) At the time of making each such payment, Borrower shall, subject
to the other terms and conditions of this Agreement, specify to Agent the Loan
or other obligation of Borrower hereunder to which such payment is to be
applied. In the event that Borrower fails to so specify the relevant Loan or if
an Event of Default shall have occurred and be continuing, Agent may apply such
payments as it may determine in its discretion.
5.2 Late Payments. If any scheduled payment, whether principal, interest or
principal and interest, is late fifteen (15) days or more, Borrower agrees to
pay a late charge equal to four percent (4%) of the amount of the payment which
is late, but not more than the maximum amount allowed by applicable Laws. The
foregoing provision shall not be deemed to excuse a late payment or be deemed a
waiver of any other rights Lender Parties may have under this Agreement,
including, subject to the terms hereof, the right to declare the entire unpaid
principal and interest immediately due and payable.
5.3 Voluntary and Mandatory Prepayments.
(A) Subject to any contrary provision herein or in any other Credit
Document, Borrower may prepay or cause to be prepaid the principal of any Loan
in whole or, from time to time, in part. All partial prepayments, whether
voluntary or mandatory, shall (except as may be directed by an Authorized
Officer to the contrary) be applied against the Obligations as Agent may
determine in its discretion, provided that no prepayment shall entitle Borrower
to cease making any payment as otherwise scheduled hereunder, and any
application against the Revolving Loan shall be applied for the account of the
Lenders based on each Lender's Pro Rata Share thereof.
(B) Promptly upon (and in any event not later than two (2) Business
Days after) its receipt thereof, Borrower will prepay the outstanding principal
amount of the Loans in an amount equal to (i) 25% of the Net Cash Proceeds from
any Equity Issuance, or (ii) 100% of the Net Cash Proceeds from any Debt
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Issuance; provided, however, that Borrower shall not be required to prepay the
Loans with any of the Net Cash Proceeds from any Debt Issuance if such Debt
Issuance is Subordinated Indebtedness used solely for the purpose of the
repurchase of the Equity Interests of Borrower, and such repurchase does not
otherwise give rise to a Default hereunder.
(C) Not later than 180 days after its receipt of any proceeds of
insurance, condemnation award or other compensation in respect of any Casualty
Event (and in any event upon its determination not to repair or replace any
property subject to such Casualty Event), Borrower will prepay the outstanding
principal amount of the Loans in an amount equal to 100% of the Net Cash
Proceeds from such Casualty Event (less any amounts theretofore applied to the
repair or replacement of property subject to such Casualty Event) and will
deliver to the Agent, concurrently with such prepayment, a certificate signed by
its chief financial officer in form and substance satisfactory to the Agent and
setting for the calculation of such Net Cash Proceeds; provided, however, that
no such prepayment shall be required until the aggregate amount of Net Cash
Proceeds from any Casualty Event (less any amounts theretofore applied to the
repair or replacement of affected property) exceeds $500,000, but at such time
the cumulative aggregate amount of such Net Cash Proceeds not theretofore
subject to prepayment under this subsection (C) shall become subject to
prepayment.
(D) Not later than 180 days after its receipt thereof, Borrower will
prepay the outstanding principal amount of the Loans in an amount equal to 100%
of the Net Cash Proceeds from any Asset Disposition (less any amounts
theretofore expended to acquire assets or properties or otherwise reinvested in
its businesses) and will deliver to the Agent, concurrently with such
prepayment, a certificate signed by its chief financial officer in form and
substance satisfactory to the Agent and setting forth the calculation of such
Net Cash Proceeds; provided, however, that such prepayment shall only be
required to the extent the aggregate amount of Net Cash Proceeds from all such
Asset Dispositions made from and after the Closing Date (less any amounts
theretofore expended to acquire assets or properties or otherwise reinvested)
exceeds $1,000,000. Notwithstanding the foregoing, nothing in this subsection
(D) shall be deemed to permit any Asset Disposition not expressly permitted
under Section 10.4.
5.4 Default Rate. Notwithstanding any provision herein or in any other
Credit Document to the contrary, upon the occurrence and during the continuance
of an Event of Default, the Interest Rate payable on the Loans shall be the
Default Rate.
5.5 No Setoff or Deduction. All payments of principal of and interest on
the Loans and other amounts payable by Borrower hereunder shall be made by
Borrower without setoff or counterclaim, and, subject to the next succeeding
sentence, free and clear of, and without deduction or withholding for, or on
account of, any present or future taxes, levies, imposts, duties, fees,
assessments, or other charges of whatever nature, imposed by any Governmental
Authority, or by any department, agency or other political subdivision or taxing
authority. If any such taxes, levies, imposts, duties, fees, assessments or
other charges are imposed, Borrower will pay such additional amounts as may be
necessary so that payment of principal of and interest on the Loans and other
amounts payable hereunder, after withholding or deduction for or on account
thereof, will not be less than any amount provided to be paid hereunder and, in
36
any such case, Borrower will furnish to Agent certified copies of all tax
receipts evidencing the payment of such amounts within 30 days after the date
any such payment is due pursuant to applicable Laws.
5.6 Payment on Non-Business Day; Payment Computations. Except as otherwise
provided in this Agreement to the contrary, whenever any installment of
principal of, or interest on, the Loans or other amount due hereunder becomes
due and payable on a day which is not a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day and, in the case of any
installment of principal, interest shall be payable thereon at the rate per
annum determined in accordance with this Agreement during such extension.
5.7 LIBOR Rate Borrowing Indemnification. If Borrower makes any payment of
principal with respect to any LIBOR Rate Borrowing on any other date than the
last day of an interest period applicable thereto, or if Borrower fails to
borrow any LIBOR Rate Borrowing after notice has been given to the Agent in
accordance with this Agreement, or if Borrower fails to make any payment of
principal or interest in respect of any LIBOR Rate Borrowing when due, Borrower
shall reimburse each Lender Party on demand of Agent or such Lender Party for
any resulting loss or expense incurred by such Lender Party, including without
limitation any loss incurred in obtaining, liquidating or employing deposits
from third parties, whether or not the Lender Parties shall have funded or
committed to fund such loan. A statement as to the amount of such loss or
expense, prepared in good faith and in reasonable detail by a Lender Party and
submitted by a Lender Party to Borrower (with a copy to Agent), shall be
conclusive and binding for all purposes absent manifest error in computation.
Calculation of all amounts payable to a Lender Party under this Section shall be
made as though the Lender Party shall have actually funded or committed to fund
such LIBOR Rate Borrowing through the purchase of an underlying deposit in an
amount equal to the amount of such LIBOR Rate Borrowing in the relevant market
and having a maturity comparable to the related interest period and through the
transfer of such deposit to a domestic office of the Lender Party in the United
States; provided, however, that Agent may fund such LIBOR Rate Borrowing in any
manner it sees fit and the foregoing assumption shall be utilized only for the
purpose of calculation of amounts payable under this Section.
5.8 360-Day Year. All interest payable under the Notes shall be calculated
on the basis of a 360-day year by multiplying the outstanding principal amount
by the applicable per annum rate, multiplying the product thereof by the actual
number of days elapsed, and dividing the product so obtained by 360.
5.9 No Requirement to Actually Obtain Funds. Notwithstanding the fact that
the Interest Rate pursuant to the Loans may be calculated based upon Lenders'
cost of funds, Borrower agrees that no Lender Party shall be required actually
to obtain funds from such source at any time.
5.10 Usury Limitation. If, at any time, the Interest Rate payable on any
Loan shall be deemed by any competent court of law or any Governmental Authority
to exceed the maximum rate of interest permitted by any applicable Laws, then,
for such time as the Interest Rate would be deemed excessive, its application
shall be suspended and there shall be charged instead the maximum rate of
interest permissible under such Laws, and any excess interest actually collected
by Lender shall be credited as a partial prepayment of principal.
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5.11 Increased Costs; Change in Circumstances; Illegality; etc.
(A) If, at any time after the date hereof and from time to time, the
introduction of or any change in any applicable Law, rule or regulation or in
the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by any
Lender with any guideline or request from any such Governmental Authority
(whether or not having the force of law), shall (i) subject such Lender to any
tax or other charge, or change the basis of taxation of payments to such Lender,
in respect of any of its LIBOR Rate Borrowings or any other amounts payable
hereunder or its obligation to make, fund, or maintain any LIBOR Rate Borrowings
(other than any change in the rate or basis of tax on the overall net income of
such Lender or its applicable Lending Office), (ii) impose, modify or deem
applicable any reserve, special deposit or similar requirement (other than as a
result of any change in the Reserve Requirement) against assets of, deposits
with or for the account of, or credit extended by, such Lender or its applicable
Lending Office, or (iii) impose on such Lender or its applicable Lending Office
any other condition affecting its LIBOR Rate Borrowings, and the result of any
of the foregoing shall be to increase the cost to such Lender of making or
maintaining any LIBOR Rate Borrowings or to reduce the amount of any sum
received or receivable by such Lender hereunder (including with respect to
Letters of Credit), Borrower will, promptly upon demand therefor by such Lender
(which demand shall be accompanied by a written explanation in reasonable
detail, showing the basis for such demand), pay to such Lender such additional
amounts as shall compensate such Lender for such increase in costs or reduction
in return.
(B) If, at any time after the date hereof and from time to time, any
Lender shall have reasonably determined that the introduction of or any change
in any applicable Law, rule or regulation regarding capital adequacy or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by such Lender
with any guideline or request from any such Governmental Authority (whether or
not having the force of law), has or would have the effect, as a consequence of
such Lender's Commitment, Loans or participations in Letters of Credit
hereunder, of reducing the rate of return on the capital of such Lender or any
Person controlling such Lender to a level below that which such Lender or
controlling Person could have achieved but for such introduction, change or
compliance (taking into account such Lender's or controlling Person's policies
with respect to capital adequacy), Borrower will, promptly upon demand therefor
by such Lender therefor (which demand shall be accompanied by a written
explanation in reasonable detail, showing the basis for such demand), pay to
such Lender such additional amounts as will compensate such Lender or
controlling Person for such reduction in return.
(C) If, on or prior to the first day of any Interest Period, (y) the
Agent shall have determined that adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate for such Interest Period or (z) the Agent
shall have received written notice from the Required Lenders of their
determination that the rate of interest referred to in the definition of "30-Day
LIBOR Rate", "60-Day LIBOR Rate" or "90-Day LIBOR Rate" upon the basis of which
the 30-Day Adjusted LIBOR Rate, the 60-Day Adjusted LIBOR Rate and the 90-Day
Adjusted LIBOR Rate for LIBOR Rate Borrowings for such LIBOR Rate Interest
Period is to be determined will not adequately and fairly reflect the cost to
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such Lenders of making or maintaining LIBOR Rate Borrowings during such LIBOR
Rate Interest Period, the Agent will forthwith so notify Borrower and the
Lenders. Upon such notice, (i) all then outstanding LIBOR Rate Borrowings shall
automatically, on the expiration date of the respective LIBOR Rate Interest
Periods applicable thereto (unless then repaid in full), be converted into Base
Rate Borrowings, (ii) the obligation of the Lenders to make, to convert Base
Rate Borrowings into, or to continue, LIBOR Rate Borrowings shall be suspended
(including pursuant to the Borrowing to which such LIBOR Rate Interest Period
applies), and (iii) any LIBOR Rate Notice given at any time thereafter will not
be effective, in each case until the Agent or the Required Lenders, as the case
may be, shall have determined that the circumstances giving rise to such
suspension no longer exist (and the Required Lenders, if making such
determination, shall have so notified the Agent), and the Agent shall have so
notified Borrower and the Lenders.
(D) Notwithstanding any other provision in this Agreement, if, at any
time after the date hereof and from time to time, any Lender shall have
determined in good faith that the introduction of or any change in any
applicable Law, rule or regulation or in the interpretation or administration
thereof by and Governmental Authority charged with the interpretation or
administration thereof, or compliance with any guideline or request from any
such Governmental Authority (whether or not having the force of law), has or
would have the effect of making it unlawful for such Lender to make or to
continue to make or maintain LIBOR Rate Borrowings, such Lender will forthwith
so notify the Agent and Borrower. Upon such notice, (i) each of such Lender's
then outstanding LIBOR Rate Borrowings shall automatically, on the expiration
date of the respective Interest Period applicable thereto (or, to the extent any
such LIBOR Rate Borrowing may not lawfully be maintained as a LIBOR Rate
Borrowing until such expiration date, upon such notice), be converted into a
Base Rate Borrowing, (ii) the obligation of such Lender to make, to convert Base
Rate Borrowings into, or to continue, LIBOR Rate Borrowings shall be suspended
(including pursuant to any Borrowing for which the Agent has received a Notice
of Revolving Borrowing but for which the Borrowing Date has not arrived), and
(iii) any Notice of Revolving Borrowing or Notice of Conversion/Continuation
given at any time thereafter with respect to LIBOR Rate Borrowings shall, as to
such Lender, be deemed to be a request for a Base Rate Borrowing, in each case
until such Lender shall have determined that the circumstances giving rise to
such suspension no longer exist and shall have so notified the Agent, and the
Agent shall have so notified Borrower.
(E) Determinations by the Agent or any Lender for purposes of this
Section 5.11 of any increased costs, reduction in return, market contingencies,
illegality or any other matter shall, absent manifest error, be conclusive,
provided that such determinations are made in good faith. No failure by the
Agent or any Lender at any time to demand payment of any amounts payable under
this Section 5.11 shall constitute a waiver of its right to demand payment of
any additional amounts arising at any subsequent time. Nothing in this Section
5.11 shall require or be construed to require Borrower to pay any interest,
fees, costs or other amounts in excess of that permitted by applicable Laws.
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5.12 Taxes.
(A) Any and all payments by Borrower hereunder or under any Note shall
be made, in accordance with the terms hereof and thereof, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
other than net income and franchise taxes imposed on the Agent or any Lender by
the United States or by the Jurisdiction under the Laws of which the Agent or
such Lender, as the case may be, is organized or in which its principal office
or (in the case of a Lender) its applicable Lending Office is located, or any
political subdivision or taxing authority thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If Borrower shall be required by Law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to the Agent or any Lender, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 5.12), the Agent or
such Lender, as the case may be, receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the relevant taxation
authority or other authority in accordance with applicable Law and (iv) Borrower
will deliver to the Agent or such Lender, as the case may be, evidence of such
payment.
(B) Borrower will indemnify the Agent and each Lender for the full
amount of Taxes (including, without limitation, any Taxes imposed by any
Jurisdiction on amounts payable under this Section 5.12) paid by the Agent or
such Lender, as the case may be, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally asserted. This indemnification shall be
made within 30 days from the date the Agent or such Lender, as the case may be,
makes written demand therefor.
(C) Each of the Agent and the Lenders agrees that if it subsequently
recovers, or receives a permanent net tax benefit with respect to, any amount of
Taxes (i) previously paid by it and as to which it has been indemnified by or on
behalf of Borrower or (ii) previously deducted by Borrower (including, without
limitation, any Taxes deducted from any additional sums payable under clause (i)
of subsection (A) above), the Agent or such Lender, as the case may be, shall
reimburse Borrower to the extent of the amount of any such recovery or permanent
net tax benefit (but only to the extent of indemnity payments made, or
additional amounts paid, by or on behalf of Borrower under this Section 5.12
with respect to the Taxes giving rise to such recovery or tax benefit);
provided, however, that Borrower, upon the request of the Agent or such Lender,
agrees to repay to the Agent or such Lender, as the case may be, the amount paid
over to Borrower (together with any penalties, interest or other charges), in
the event the Agent or such Lender is required to repay such amount to the
relevant taxing authority or other Governmental Authority. The determination by
the Agent or any Lender of the amount of any such recovery or permanent net tax
benefit shall, in the absence of manifest error, be conclusive and binding.
(D) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the Internal Revenue Code, and such Lender claims
exemption from United States withholding tax under Section 1441 or 1442 of the
Internal Revenue Code, such Lender will deliver to each of the Agent and
Borrower, on or prior to the date of any payment by Borrower to such Lender
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under this Agreement or the Notes, a properly completed Internal Revenue Service
Form 4224 or 1001, as applicable (or successor forms), certifying that such
Lender is entitled to an exemption from or a reduction of withholding or
deduction for or on account of United States federal income taxes in connection
with payments under this Agreement or any of the Notes, together with a properly
completed Internal Revenue Service Form W-8 or W-9, as applicable (or successor
forms). Each such Lender further agrees to deliver to each of the Agent and
Borrower an additional copy of each such relevant form on or before the date
that such form expires (currently, three successive calendar years for Form 1001
and one calendar year for Form 4224) or becomes obsolete or after the occurrence
of any event requiring a change in the most recent forms so delivered by it, in
each case certifying that such Lender is entitled to an exemption from or a
reduction of withholding or deduction for or on account of United States federal
income taxes in connection with payments under this Agreement or any of the
Notes, unless an event (including, without limitation, any change in treaty, Law
or regulation ) has occurred prior to the date on which any such delivery would
otherwise be required, which event renders all such forms inapplicable or the
exemption to which such forms relate unavailable and such Lender notifies the
Agent and Borrower that it is not entitled to receive payments without deduction
or withholding of United States federal income taxes. Each such Lender will
promptly notify the Agent and Borrower of any changes in circumstances that
would modify or render invalid any claimed exemption or reduction.
(E) If any Lender is entitled to a reduction in (and not a complete
exemption from) the applicable withholding tax, Borrower and the Agent may
withhold from any interest payment to such Lender an amount equivalent to the
applicable withholding tax after taking into account such reduction. If any of
the forms or other documentation required under subsection (D) above are not
delivered to the Agent as therein required, then Borrower and the Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
ARTICLE VI.
6. CONDITIONS OF BORROWING
The obligation of Lenders to make the Loans and any Advance hereunder is
subject to the following conditions precedent:
6.1 Documents Required for the Closing. Prior to or concurrently with the
Closing, the following instruments and documents, duly executed by all proper
Persons shall have been delivered to Agent:
(A) This Agreement;
(B) The Notes;
(C) The Guaranty;
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(D) The Pledge Agreement, together with all documents and instruments
required to be executed and delivered by Borrower thereunder;
(E) The Borrower's Closing Affidavit;
(F) The Guarantor's Closing Affidavits;
(G) The Financing Statements, together with evidence that the
Financing Statements have been duly recorded in all filing or recording offices
that Agent may deem necessary or desirable in order to create a valid Lien on
the Collateral described therein, and that all filing and recording taxes and
fees have been paid;
(H) With respect to each Borrower Party (other than a Borrower Party
that is an individual), a certificate of an officer or other representative
acceptable to Agent dated as of the date of this Agreement, certifying as to the
incumbency and signatures of the representative(s) of such Borrower Party
signing, as applicable, this Agreement and each of the other Credit Documents,
and each other document to be delivered pursuant hereto, together with the
following documents attached thereto:
(1) A copy of the resolutions of such applicable Person's
Governing Body authorizing the execution, delivery and performance of this
Agreement, each of the Credit Documents, and each other document to be delivered
pursuant hereto, as applicable;
(2) A copy, certified as of the most recent date practicable by
the secretary of state (or similar Governmental Authority) of the state,
province, or other Jurisdiction where such Person is organized, of such Person's
Organizational Documents filed with such secretary of state (or similar
Governmental Authority);
(3) A copy of such Person's other Organizational Documents;
(I) A certificate, as of the most recent date practicable, of the
secretary of state (or similar appropriate Governmental Authority) and
department of revenue or taxation (or similar appropriate Governmental
Authority) of the State of Alabama and each Jurisdiction in which each Borrower
Party is organized as to the existence and good standing of each such Person
within such Jurisdiction, and a certificate, as of the most recent date
practicable, of the secretary of state (or similar appropriate Governmental
Authority) of each state where the Laws of such Jurisdiction require
qualification and/or registration as to the qualification and good standing of
each Borrower Party as a foreign entity doing business in each such state;
(J) A written opinion of counsel to Borrower Parties, dated as of the
Closing Date and addressed to Lender Parties, in form and substance acceptable
to Agent;
(K) An Account Designation Letter;
(L) UCC-11 reports showing no Liens superior to the Agent's Lien;
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(M) A Compliance Certificate as required under this Agreement and
reflecting compliance with the terms of this Agreement after giving effect to
the Advances to be made at Closing; and
(N) Receipt and approval by Agent of any other items reasonably
required to be provided to Agent, and not otherwise set forth above.
6.2 Certain Events Required for Closing and for all Advances. At the time
of the Closing and at the time of each Advance, Agent shall be satisfied that:
(A) No Default shall have occurred and be continuing;
(B) No Material Adverse Change shall have occurred;
(C) All of the Credit Documents shall have remained in full force and
effect;
(D) Borrower shall have paid all fees, expenses, costs, and other
amounts then owing to Lender Parties, including, but not limited to the Fees;
(E) All Indebtedness to be prepaid, redeemed or defeased with the
proceeds of any Advance shall have been satisfied and extinguished;
(F) There shall exist no action, suit, investigation, litigation or
proceeding affecting any Borrower Party pending or threatened before any court,
governmental agency or arbitrator that (i) could reasonably be expected to have
a Material Adverse Effect, or (ii) could be reasonably be expected to affect the
legality, validity or enforceability of this Agreement or any other Credit
Document or the consummation of the transactions contemplated hereby;
(G) All Governmental Approvals necessary in connection with the Credit
Documents and the transactions contemplated hereby and thereby shall have been
obtained (without the imposition of any conditions that are not acceptable to
Agent) and shall remain in effect other than such Governmental Approvals the
failure to obtain which shall not affect the enforceability, validity or binding
effect of any of the Credit Documents; all applicable waiting periods shall have
expired without any action being taken by any competent authority; and no Law
shall be applicable in the reasonable judgment of Agent that restrains, prevents
or imposes materially adverse conditions upon the Credit Documents and the
transactions contemplated hereby and thereby;
(H) All Collateral shall be owned free and clear of any Lien, except
for the Agent's Lien;
(I) Borrower will be able to meet its obligations under all Plans,
that the Plans are, in all material respects, funded in accordance with the
minimum statutory requirements, that no material "reportable event" (as defined
in ERISA, but excluding events for which reporting has been waived) has occurred
43
as to any such Plan and that no termination of, or withdrawal from, any such
Plan has occurred or is contemplated that could result in a material liability;
and
(J) There shall have been delivered to Agent a Compliance Certificate
as and when required under this Agreement and reflecting compliance with the
terms of this Agreement.
6.3 Legal Matters. At the time of Closing, and the disbursement of each
Advance, all legal matters incidental thereto shall be satisfactory to Gordon,
Silberman, ▇▇▇▇▇▇▇ & Childs, P.C., counsel to Agent.
6.4 Election to Make Advances Prior to Satisfaction of Conditions
Precedent. In the event Lender Party, at its option, elects to make one or more
Advances prior to receipt and approval of all items required by this Article,
such election shall not constitute any commitment or agreement of Lender Party
to make any subsequent Advance until all items required by this Article have
been delivered.
ARTICLE VII.
7. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and to
induce the Lenders to extend the credit contemplated hereby, Borrower represents
and warrants to the Agent and the Lenders as follows:
7.1 Corporate Organization and Power. Each Borrower Party (i) is an entity
duly organized, validly existing and in good standing under the Laws of the
Jurisdiction of its organization, (ii) has the full power and authority to
execute, deliver and perform the Credit Documents to which it is or will be a
party, to own and hold its property and to engage in its business as presently
conducted, and (iii) is duly qualified to do business as a foreign entity and is
in good standing in each Jurisdiction where the nature of its business or the
ownership of its properties requires it to be so qualified, except where the
failure to be so qualified would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect.
7.2 Authorization; Enforceability. Each Borrower Party has taken, or on the
Closing Date will have taken, all necessary corporate action to execute, deliver
and perform each of the Credit Documents to which it is or will be a party, and
has, or on the Closing Date (or any later date of execution and delivery) will
have, validly executed and delivered each of the Credit Documents to which it is
or will be a party. This Agreement constitutes, and each of the other Credit
Documents upon execution and delivery will constitute, the legal, valid and
binding obligation of each of Borrower and its Subsidiaries that is a party
hereto or thereto, enforceable against it in accordance with its terms, except
as enforceability may be limited by Bankruptcy Laws or by general equitable
principles.
7.3 No Violation. The execution, delivery and performance by each of the
Borrower Parties of this Agreement and each of the other Credit Documents to
which it is or will be a party, and compliance by it with the terms hereof and
44
thereof, do not (i) violate any provision of its Organizational Documents or
contravene any Requirement of Law applicable to it, (ii) conflict with, result
in a breach of or constitute (with notice, lapse of time or both) a default
under any Material Contract to which it is a party, by which it or any of its
properties is bound or to which it is subject, or (iii) result in or require the
creation or imposition of any Lien upon any of its properties or assets. No
Borrower Party is subject to any restriction or encumbrance on its ability to
make dividend payments or other distributions in respect of its Equity Interests
to make loans or advances to any other Borrower Party, or to transfer any of its
assets or properties to any other Borrower Party, in each case other than such
restrictions or encumbrances existing under or by reason of the Credit Documents
or applicable Requirements of Law.
7.4 Governmental Authorization; Permits.
(A) No consent, approval, authorization or other action by, notice to,
or registration or filing with, any Governmental Authority or other Person is or
will be required as a condition to or otherwise in connection with the due
execution, delivery and performance by each Borrower Party of this Agreement or
any of the other Credit Documents to which it is or will be a party or the
legality, validity or enforceability hereof or thereof.
(B) Each of the Borrower Parties has, and is in good standing with
respect to, all Governmental Approvals necessary to conduct its business as
presently conducted and to own or lease and operate its properties, except for
those the failure to obtain which would not be reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect.
7.5 Litigation. There are no actions, investigations, suits or proceedings
pending or, to the knowledge of Borrower, threatened, at law, in equity or in
arbitration, before any court, other Governmental Authority or other Person, (i)
against or affecting Borrower, any of its Subsidiaries or any of their
respective properties as to which there is a reasonable likelihood of a
determination and that would, if adversely determined, be reasonably likely to
have a Material Adverse Effect, or (ii) with respect to this Agreement or any of
the other Credit Documents;
7.6 Taxes. Each of the Borrower Parties has timely filed all federal, state
and local tax returns and reports required to be filed by it (other than such
local tax returns and reports the failure to file which would not be reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect) and
has paid all taxes, assessments, fees and other charges levied upon it or upon
its properties that are shown thereon as due and payable, other than those that
are being contested in good faith and by proper proceedings and for which
adequate reserves have been established in accordance with Generally Accepted
Accounting Principles. Such returns accurately reflect in all material respects
all liability for taxes of the Borrower Parties for the periods covered thereby.
Except as described in Schedule 7.6, there is no ongoing audit or examination
or, to the knowledge of Borrower or any of its Subsidiaries, and there is no
unresolved claim by any Governmental Authority concerning the tax liability of
the Borrower Parties for any period for which tax returns have been or were
required to have been filed, other than claims for which adequate reserves have
been established in accordance with Generally Accepted Accounting Principles. No
Borrower Party has waived or extended or has been requested to waive or extend
the statute of limitations relating to the payment of any taxes.
45
7.7 Subsidiaries. Schedule 7.7 sets forth a list, as of the Closing Date,
of all of the Subsidiaries of Borrower and, as to each such Subsidiary, the
percentage ownership (direct and indirect) of Borrower in each class of its
capital stock and each direct owner thereof (and such list indicates which
Subsidiaries are Immaterial Subsidiaries). Except for the Equity Interests
expressly indicated on Schedule 7.7, there are no Equity Interests or warrants,
rights, options or other Equity Interests of any Subsidiary of Borrower
outstanding or reserved for any purpose. All outstanding Equity Interests of
each Subsidiary of Borrower are duly and validly issued, fully paid and
nonassessable. Borrower is the sole legal, record and beneficial owner of, and
has good and valid title to, all such Equity Interests, free and clear of all
Liens, other than the Liens created pursuant to the Pledge Agreement.
7.8 Full Disclosure. All factual information heretofore or
contemporaneously furnished to the Agent or any Lender in writing by or on
behalf of any Borrower Party for purposes of or in connection with this
Agreement and the transactions contemplated hereby is, and all other such
factual information hereafter furnished to the Agent or any Lender in writing by
or on behalf of any Borrower Party will be, true and accurate in all material
respects on the date as of which such information is dated or certified (or, if
such information has been amended or supplemented, on the date as of which any
such amendment or supplement is date or certified) and not made incomplete by
omitting to state a material fact necessary to make the statements contained
therein, in light of the circumstances under which such information was
provided, not misleading.
7.9 Margin Regulations. No Borrower Party is engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying Margin Stock. No proceeds of the Loans will be used,
directly or indirectly, to purchase or carry any Margin Stock (except for
purchases by Borrower of outstanding shares of its capital stock permitted by
Section 10.6 and made in compliance with the applicable provisions of
Regulations G, T, U and X), to extend credit for such purpose or for any other
purpose that would violate or be inconsistent with Regulations G, T, U or X or
any provision of the Exchange Act.
7.10 No Material Adverse Change. There has been no Material Adverse Change
since December 31, 2000, and there exists no event, condition or state of facts
that could reasonably be expected to result in a Material Adverse Change.
7.11 Financial Matters.
(A) Borrower has heretofore furnished to the Agent copies of (i) the
audited consolidated balance sheets of Borrower and its Subsidiaries as of
December 31, 2000 and January 2, 2000, and the related consolidated statements
of operations, stockholders' equity and cash flows for the three-year period
ended December 31, 2000, together with the opinion of Ernst & Young thereon, and
(ii) the unaudited consolidated balance sheet of Borrower and its Subsidiaries
as of April 1, 2001, and the related consolidated statements of operations,
stockholders' equity and cash flows for the three-month period then ended. Such
financial statements have been prepared in accordance with Generally Accepted
46
Accounting Principles (subject, with respect to the unaudited financial
statements, to the absence of notes required by Generally Accepted Accounting
Principles and to normal year-end audit adjustments) and present fairly the
financial condition of Borrower and its Subsidiaries on a consolidated basis as
of the respective dates thereof and the consolidated results of operations of
Borrower and its Subsidiaries for the respective periods then ended. Except for
the Video Update Acquisition or as fully reflected in the most recent financial
statements referred to above and the notes thereto, there are no material
liabilities or obligations with respect to Borrower or any of its Subsidiaries
of any nature whatsoever (whether absolute, contingent or otherwise and whether
or not due).
(B) Each of Borrower and its Subsidiaries, after giving effect to the
consummation of the transactions contemplated hereby, will be Solvent.
7.12 Ownership of Properties. Each of Borrower and its Subsidiaries (i) has
good and marketable title to all real property owned by it, (ii) holds interests
as lessee under valid leases in full force and effect with respect to all
material leased real and personal property used in connection with its business,
(iii) possesses or has rights to use licenses, patents, copyrights, trademarks,
service marks, trade names and other assets sufficient to enable it to continue
to conduct its business substantially as heretofore conducted and without any
material conflict with the rights of others, and (iv) has good title to all of
its other properties and assets reflected in the Most Recent Financial
Statements (except as sold or otherwise disposed of since the date thereof in
the Ordinary Course of Business), in each case under (i), (ii), (iii) and (iv)
above free and clear of all Liens other than Permitted Liens.
7.13 ERISA. Each Plan is and has been administered in compliance in all
material respects with all applicable Requirements of Law, including without
limitation, the applicable provisions of ERISA and the Internal Revenue Code. No
ERISA Event has occurred and is continuing or, to the knowledge of Borrower, is
reasonably expected to occur with respect to any Plan, in either case that would
be reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect. No Plan has any Unfunded Pension Liability, and neither Borrower
nor any ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA, in either instance where the same would be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect. Neither Borrower nor any ERISA Affiliate is required to contribute to or
has, or has at any time had, any liability to a Multiemployer Plan.
7.14 Environmental Matters.
(A) Except as described in Schedule 7.14, no Hazardous Substances are
or have been generated, used, located, released, treated, disposed of or stored
by Borrower or any of its Subsidiaries or, to the knowledge of Borrower, by any
other Person or otherwise, in, on or under any portion of any real property,
leased or owned, of Borrower or any of its Subsidiaries, except in material
compliance with all applicable Environmental Laws, and no portion of any such
real property or, to the knowledge of Borrower, any other real property at any
time leased, owned or operated by Borrower or any of its Subsidiaries, has been
contaminated by any Hazardous Substance; and no portion of any real property,
leased or owned, of Borrower or any of its Subsidiaries has been or, to the
47
knowledge of Borrower, is presently the subject of an environmental audit,
assessment or remedial action.
(B) To the knowledge of Borrower, except as described in Schedule
7.14, (i) no portion of any real property, leased or owned, of Borrower or any
of its Subsidiaries has been used as or for a mine, a landfill, a dump or other
disposal facility, a gasoline service station, or (other than for petroleum
substances stored in the Ordinary Course of Business) a petroleum products
storage facility, (ii) no portion of such real property or any other property at
any time leased, owned or operated by Borrower or any of its Subsidiaries has,
pursuant to any Environmental Law, been placed on the "National Priorities List"
or "CERCLIS List" (or any similar federal, state or local list) of sites subject
to possible environmental problems, and (iii) there are not and have never been
any underground storage tanks situated on any real property, leased or owned, of
Borrower or any of its Subsidiaries.
(C) All activities and operations of Borrower and its Subsidiaries are
in compliance with the requirements of all applicable Environmental Laws, except
to the extent the failure so to comply, individually or in the aggregate, would
not be reasonably likely to have a Material Adverse Effect. Neither Borrower nor
any of its Subsidiaries is involved in any suit, action or proceeding, or has
received any notice, complaint or other request for information from any
Governmental Authority or other Person, with respect to any actual or alleged
Environmental Claims that, if adversely determined, would be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect; and, to the
knowledge of Borrower, there are no threatened actions, suits, proceedings or
investigations with respect to any such Environmental Claims, nor any basis
therefor.
7.15 Compliance with Laws. Each of Borrower and its Subsidiaries has timely
filed all material reports, documents and other materials required to be filed
by it under all applicable Requirements of Law with any Governmental Authority,
has retained all material records and documents required to be retained by it
under all applicable Requirements of Law, and is otherwise in compliance with
all applicable Requirements of Law in respect of the conduct of its business and
the ownership and operation of its properties, except for such Requirements of
Law the failure to comply with which, individually or in the aggregate, would
not be reasonably likely to have a Material Adverse Effect.
7.16 Regulated Industries. Neither Borrower nor any of its Subsidiaries is
(i) an "investment company," a company "controlled" by an "investment company,"
or an "investment advisor," within the meaning of the Investment Company Act of
1940, as amended, or (ii) a "holding company," a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company," or an "affiliate"
of a "holding company" or of a "subsidiary company" of a "holding company,"
within the meaning of the public Utility Holding Company Act of 1935, as
amended.
7.17 Insurance. Schedule 7.17 sets forth a true and complete summary of all
insurance policies or arrangements carried or maintained by Borrower and its
Subsidiaries. The assets, properties and business of Borrower and its
Subsidiaries are insured against such hazards and liabilities, under such
coverages and in such amounts, as are customarily maintained by prudent
companies similarly situated and under policies issued by insurers of recognized
responsibility.
48
7.18 Material Contracts. Each Material Contract existing as of the Closing
Date is (and each Material Contract entered into after the Closing Date, upon
execution and delivery, will be) in full force and effect, and neither Borrower
nor any of its Subsidiaries or, to the knowledge of Borrower, any other party
thereto, is in material default under any such Material Contract.
7.19 Security Documents. The provisions of each of the Security Documents
(whether executed and delivered prior to or on the Closing Date or thereafter)
are and will be effective to create in favor of the Agent, for the benefit of
the Lenders, upon the initial extension of credit hereunder and the possession
by the Agent of certificates evidencing the securities pledged thereby, a valid
and enforceable first priority perfected security interest in and Lien upon all
right, title and interest of Borrower and its Subsidiaries, as applicable, in
the Collateral described therein.
7.20 Continuing Effectiveness. All representations and warranties contained
herein shall be deemed continuing and in effect at all times while Borrower
remains indebted to the Lender Parties hereunder and shall be deemed to be
incorporated by reference in each Notice of Borrowing and Notice for Issuance
unless Borrower specifically notifies Agent of any change therein.
ARTICLE VIII.
8. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, until the termination of the
Commitments and all Letters of Credit, and the payment in full of all principal
and interest with respect to the Loans, all Letter of Credit Advances and all
Reimbursement Obligations, and with all other amounts due and owing hereunder:
8.1 Financial Statements. Borrower will deliver to each Lender:
(A) As soon as available and in any event within forty-five (45) days
after each Quarter-End of the first three quarters of each fiscal year,
beginning with the Quarter-End of July 1, 2001, an unaudited consolidated
balance sheet of Borrower and its Subsidiaries as of such Quarter-End, an
unaudited consolidated statement of income for Borrower and its Subsidiaries for
the quarter then ended and unaudited consolidated statements of cash flows for
that portion of the fiscal year then ended, in each case setting forth
comparative consolidated figures as of the end of and for the corresponding
period in the preceding fiscal year, all prepared in accordance with Generally
Accepted Accounting Principles (subject to the absence of notes required by
Generally Accepted Accounting Principles and subject to normal year-end audit
adjustments) applied on a basis consistent with that of the preceding quarter or
containing disclosure of the effect on the financial condition or results of
operations of any change in the application of accounting principles and
practices during such quarter; and
(B) As soon as available and in any event within ninety (90) days
after the end of each fiscal year, beginning with the fiscal year ending January
6, 2002, (i) an audited consolidated balance sheet of Borrower and its
Subsidiaries as of the end of such fiscal year and audited consolidated
statements of income and cash flows for Borrower and its Subsidiaries for the
49
fiscal year then ended, including the applicable notes, in each case setting
forth comparative figures as of the end of and for the preceding fiscal year,
certified by the independent certified public accounting firm regularly retained
by Borrower or another independent certified public accounting firm of
recognized national standing reasonably acceptable to the Required Lenders,
together with (y) a report thereon by such accountants that is not qualified as
to going concern or scope of audit and to the effect that such financial
statements present fairly the consolidated financial condition and results of
operations of Borrower and its Subsidiaries as of the dates and for the periods
indicated in accordance with Generally Accepted Accounting Principles applied on
a basis consistent with that of the preceding year or containing disclosure of
the effect on the financial position or results of operations of any change in
the application of accounting principles and practices during such year and (z)
a report by such accountants to the effect that, based on and in connection with
their examination of the financial statements of Borrower and its Subsidiaries,
they obtained no knowledge of the occurrence or existence of any Default or
Event of Default relating to accounting or financial reporting matters, or a
statement specifying the nature and period of existence of any such Default or
Event of Default disclosed by their audit; provided, however, that such
accountants shall not be liable by reason of the failure to obtain knowledge of
any Default or Event of Default that would not be disclosed or revealed in the
course of their audit examination, and (ii) an unaudited consolidating balance
sheet of Borrower and its Subsidiaries as of the end of such fiscal year and
unaudited consolidating statements of income and cash flows for Borrower and its
Subsidiaries for the fiscal year then ended, all in reasonable detail.
8.2 Other Business and Financial Information. Borrower will deliver to each
Lender:
(A) Concurrently with each delivery of the financial statements
described in Section 8.1, a Compliance Certificate with respect to the period
covered by the financial statements then being delivered, executed by the chief
financial officer of Borrower;
(B) As soon as available and in any event within thirty (30) days
prior to the end of each fiscal year, beginning with the fiscal year ending
January 6, 2002, a consolidated operating budget for Borrower and its
Subsidiaries for the succeeding fiscal year (prepared on a quarterly basis),
consisting of a consolidated balance sheet and consolidated statements of income
and cash flows, together with a certificate of the chief financial officer of
Borrower to the effect that such budgets have been prepared in good faith and
are reasonable estimates of the financial position and results of operations of
Borrower and its Subsidiaries for the period covered thereby;
(C) Promptly upon receipt thereof, copies of any "management letter"
submitted to Borrower or any of its Subsidiaries by its certified public
accountants in connection with each annual, interim or special audit, and
promptly upon completion thereof, any response reports from Borrower or any such
Subsidiary in respect thereof;
(D) Promptly upon the sending, filing or receipt thereof, copies of
(i) all financial statements, reports, notices and proxy statements that
Borrower or any of its Subsidiaries shall send or make available generally to
its shareholders, and (ii) all regular, periodic and special reports,
registration statements and prospectuses (other than on Form S-8) that Borrower
50
or any of it Subsidiaries shall render to or file with the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc. or any
national securities exchange;
(E) Promptly upon (and in any event within ten (10) Business Days
after) any Responsible Officer of Borrower obtaining knowledge thereof, written
notice of any of the following:
(1) the occurrence of any Default or Event of Default, together
with a written statement of the chief financial officer of Borrower specifying
the nature of such Default or Event of Default, the period of existence thereof
and the action that Borrower has taken and proposes to take with respect
thereto;
(2) the institution or threatened institution of any action,
suit, investigation or proceeding against or affecting Borrower of any of its
Subsidiaries, including any such investigation or proceeding by any Governmental
Authority (other than routine periodic inquiries, investigations or reviews), as
to which there is a reasonable likelihood of an adverse determination and that
would, if adversely determined, be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect, and any material development in
any litigation or other proceeding previously reported pursuant to Section 7.5
or this Section 8.3(E)(2);
(3) the receipt by Borrower or any of its Subsidiaries from any
Governmental Authority of (i) any notice asserting any failure by Borrower or
any of its Subsidiaries to be in compliance with applicable Requirements of Law
or that threatens the taking of any action against Borrower or such Subsidiary
or sets forth circumstances that, if taken or adversely determined, would be
reasonably likely to have a Material Adverse Effect, or (ii) any notice of any
actual or threatened suspension, limitation or revocation of, failure to renew,
or imposition of any restraining order, escrow or impoundment of funds in
connection with, any license, permit, accreditation or authorization of Borrower
or any of its Subsidiaries, where such action would be reasonably likely to have
a Material Adverse Effect;
(4) the occurrence of any ERISA Event, together with (i) a
written statement of the chief executive officer or chief financial officer of
Borrower specifying the details of such ERISA Event and the action that Borrower
has taken and proposes to take with respect thereto, (ii) a copy of any notice
with respect to such ERISA Event that may be required to be filed with the PBGC,
and (iii) a copy of any notice delivered by the PBGC to Borrower or such ERISA
Affiliate with respect to such ERISA Event;
(5) the occurrence of any material default under, or any proposed
or threatened termination or cancellation of, any Material Contract to which
Borrower or any of its Subsidiaries is a party, the termination or cancellation
of which would be reasonably likely to have a Material Adverse Effect;
51
(6) the occurrence of any of the following: (i) the assertion of
any Environmental Claim against or affecting Borrower, any of its Subsidiaries
or any of their respective real property, leased or owned; (ii) the receipt by
Borrower or any of its Subsidiaries of notice of any alleged violation of or
noncompliance with any Environmental Laws; or (iii) the taking of any remedial
action by Borrower, any of its Subsidiaries or any other Person in response to
the actual or alleged generation, storage, release, disposal or discharge of any
Hazardous Substances on, to, upon or from any real property leased or owned by
Borrower or any of its Subsidiaries; but in each case under clauses (i), (ii)
and (iii) above, only to the extent the same would be reasonably likely to have
a Material Adverse Effect; and
(7) any other matter or event that has, or would be reasonably
likely to have, a Material Adverse Effect, together with a written statement of
the chief executive officer or chief financial officer of Borrower setting forth
the nature and period of existence thereof and the actions that Borrower has
taken and proposes to take with respect thereto; and
(F) As promptly as reasonably possible, such other information about
the business, condition (financial or otherwise), operations or properties of
Borrower or any of its Subsidiaries (including any Plan and any information
required to be filed under ERISA, and including any statements, audits or other
reports submitted by or on behalf of Borrower or any of its Subsidiaries to any
state Governmental Authority) as the Agent or any Lender may from time to time
reasonably request.
8.3 Corporate Existence; Franchises; Maintenance of Properties. Borrower
will, and will cause each of its Subsidiaries (other than Immaterial
Subsidiaries) to, (i) maintain and preserve in full force and effect its
corporate existence, except as expressly permitted otherwise by Section 10.1,
(ii) obtain, maintain and preserve in full force and effect all other rights,
franchises, licenses, permits, certifications, approvals and authorizations
required by Governmental Authorities and necessary to the ownership, occupation
or use of its properties or the conduct of its business, except to the extent
the failure to do so would not be reasonably likely to have a Material Adverse
Effect, and (iii) keep all material properties in good working order and
condition (normal wear and tear excepted) and from time to time make all
necessary repairs to and renewals and replacements of such properties, except to
the extent that any of such properties are obsolete or are being replaced.
8.4 Compliance with Laws. Borrower will, and will cause each of its
Subsidiaries to, comply in all respects with all Requirements of Law applicable
in respect of the conduct of their respective businesses and the ownership and
operation of their respective properties, except to the extent the failure so to
comply would not be reasonably expected to have a Material Adverse Effect.
8.5 Payment of Obligations. Borrower will, and will cause each of its
Subsidiaries to, (i) pay all liabilities and obligations as and when due
(subject to any applicable subordination provisions), except to the extent
failure to do so would not be reasonably likely to have a Material Adverse
Effect, and (ii) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it, upon its income or profits or upon any of its
properties, prior to the date on which penalties would attach thereto, and all
lawful claims that, if unpaid, might become a Lien upon any of the properties of
52
Borrower or any of its Subsidiaries; provided, however, that neither Borrower
nor any of its Subsidiaries shall be required to pay any such tax, assessment,
charge, levy or claim that is being contested in good faith and by proper
proceedings and as to which Borrower or such Subsidiary is maintaining adequate
reserves with respect thereto in accordance with Generally Accepted Accounting
Principles.
8.6 Insurance. Borrower will, and will cause each of its Subsidiaries to,
maintain with financially sound and reputable insurance companies insurance with
respect to its assets, properties and businesses, against such hazards and
liabilities, of such types and in such amounts, as is customarily maintained by
companies in the same or similar businesses similarly situated.
8.7 Maintenance of Books and Records; Inspection. Borrower will, and will
cause each of its Subsidiaries to, (i) maintain adequate books, accounts and
records, in which full, true and correct entries shall be made of all financial
transactions in relation to its business and properties, and prepare all
financial statements required under this Agreement, in each case in accordance
with Generally Accepted Accounting Principles and in compliance with the
requirements of any Governmental Authority having jurisdiction over it, and (ii)
permit employees or agents of the Agent or any Lender to inspect its properties
and examine or audit its books, records, working papers and accounts and make
copies and memoranda of them, and to discuss its affairs, finances and accounts
with its officers and employees and, upon notice to Borrower, the independent
public accountants of Borrower and its Subsidiaries (and by this provision
Borrower authorizes such accountants to discuss the finances and affairs of
Borrower and its Subsidiaries), all at such times and from time to time, upon
reasonable notice and during business hours, as may be reasonably requested.
8.8 Interest Rate Protection. At September 1, 2001, Borrower shall have
entered into or obtained, and Borrower will thereafter maintain in full force
and effect, Hedge Agreements in form and substance reasonably satisfactory to
the Agent the effect of which shall be to fix or limit interest rates payable by
Borrower as to at least thirty-three and one-third percent (331/3%) of all
principal amounts outstanding at such date under all Funded Debt of Borrower and
its Subsidiaries for a period of not less than two (2) years after such date.
Borrower will deliver to the Agent, promptly upon receipt thereof, copies of
such Hedge Agreements (and any supplements or amendments thereto), and promptly
upon request therefor, any other information reasonably requested by the Agent
to evidence its compliance with the provision of this Section.
8.9 Permitted Acquisitions.
(A) Borrower may from time to time on or after the Closing Date effect
Permitted Acquisitions.
(B) Borrower may from time to time after the Closing Date effect
Acquisitions that are not Permitted Acquisitions, but in each instance only with
the prior written consent of the Agent and the Required Lenders.
(C) (i) As soon as reasonably practicable before the plan of
reorganization is submitted in connection with the Video Update Acquisition, and
(ii) not less than five (5) Business Days after the consummation of any
53
Permitted Acquisition with respect to which the Acquisition Amount exceeds
$5,000,000 (other than the Video Update Acquisition), Borrower shall have
delivered to the Agent (i) with respect to the Video Update Acquisition, the
plan of reorganization, and (ii) with respect to any Acquisition other than the
Video Update Acquisition, a summary description of the material terms of such
Permitted Acquisition (including, without limitation, the purchase price and
method and structure of payment) and of each Person or business that is the
subject of such Permitted Acquisition, together with summary financial
information (including statements of revenues and cash flows) with respect to
each such acquired Person or business.
(D) Not less than five (5) Business Days after the consummation of any
Permitted Acquisition with respect to which the Acquisition Amount exceeds
$5,000,000, Borrower shall have delivered to the Agent a certificate, in form
and substance reasonably satisfactory to the Agent, executed by the chief
financial officer of Borrower, to the effect that, to the best of such
individual's knowledge, the consummation of such Permitted Acquisition will not
result in a violation of any provision of this Section, and after giving effect
to such Permitted Acquisition and any Borrowings made in connection therewith,
Borrower will be in compliance with the financial covenants contained in
Sections 9.1 through 9.4, such compliance determined with regard to calculations
made on a pro forma basis in accordance with Generally Accepted Accounting
Principles as if each Person or business that is the subject of such Permitted
Acquisition had been consolidated with Borrower for those periods applicable to
such covenants and following the Permitted Acquisition (such calculations to be
attached to the certificate).
(E) The consummation of each Permitted Acquisition shall be deemed to
be a representation and warranty by Borrower that (except as shall have been
approved in writing by the Required Lenders) all conditions thereto set forth in
this Section 8.9 and in the description furnished under subsection (C) above
have been satisfied, that the same is permitted in accordance with the terms of
this Agreement, and that the matters certified to by the chief financial officer
of Borrower in the certificate referred to in subsection (D) above are, to the
best of such individual's knowledge, true and correct in all material respects
as of the date such certificate is given, which representation and warranty
shall be deemed to be a representation and warranty as of the date thereof for
all purposes hereunder.
(F) Borrower will furnish to the Agent and the Lenders such other
information regarding any Permitted Acquisition and the assets, business or
Persons that are the subject thereof as the Agent or any Lender may from time to
time reasonably request (it being understood that the provisions of this
subsection (F) shall not be deemed to limit or restrict the ability of Borrower
to consummate Permitted Acquisitions subject to the other provisions of this
Section 8.9 and subject to the other terms and conditions of this Agreement).
8.10 Creation or Acquisition of Subsidiaries. Subject to the provisions of
Section 10.5, Borrower may from time to time create or acquire new Wholly Owned
Subsidiaries in connection with Permitted Acquisitions or otherwise, and the
Wholly Owned Subsidiaries of Borrower may create or acquire new Wholly Owned
Subsidiaries, provided that neither the aggregate fair market value at any time
of the assets of all Subsidiaries that are Immaterial Subsidiaries at such time,
nor the aggregate gross revenues (determined for the most recently ended period
of twelve consecutive fiscal months) of all Subsidiaries that are Immaterial
Subsidiaries at such time, shall exceed $1,000,000, and provided further that:
54
(A) Promptly (and in any event within fifteen (15) Business Days)
after the creation or direct or indirect acquisition by Borrower of a new Wholly
Owned Subsidiary, if such new Subsidiary is a Material Subsidiary (or, if such
new Subsidiary is an Immaterial Subsidiary when so created or acquired, promptly
(and in any event within fifteen (15) Business Days) after such new Subsidiary
ceases to be an Immaterial Subsidiary), such new Subsidiary will execute and
deliver to the Agent a supplement or joinder to the Guaranty, pursuant to which
such new Subsidiary shall become a guarantor thereunder;
(B) Promptly (and in any event within fifteen (15) Business Days)
after the creation or acquisition of a new Wholly Owned Subsidiary the Equity
Interests of which are directly owned by Borrower, if such new Subsidiary is a
Material Subsidiary (or, if such new Subsidiary is an Immaterial Subsidiary when
so created or acquired, promptly (and in any event within fifteen (15) Business
Days) after such new Subsidiary ceases to be an Immaterial Subsidiary), Borrower
will execute and deliver to the Agent an amendment or supplement to the Pledge
Agreement pursuant to which all of the Equity Interests of such new Subsidiary
and any promissory notes from such new Subsidiary to Borrower shall be pledged
to the Agent, together with the certificates, if any, evidencing such Equity
Interests of such new Subsidiary and any promissory notes from such new
Subsidiary to Borrower shall be pledged to the Agent, together with the
certificates, if any, evidencing such capital stock or other ownership interests
and undated stock powers duly executed in blank and any such promissory notes
duly endorsed in blank; and concurrently with the creation or acquisition of any
new Wholly Owned Subsidiary the Equity Interests of which are directly owned by
another Wholly Owned Subsidiary (the "Parent Subsidiary") of Borrower, if such
new Subsidiary is a Material Subsidiary (or, if such new Subsidiary is an
Immaterial Subsidiary when so created or acquired, promptly (and in any event
within fifteen (15) Business Days) after such new Subsidiary ceases to be an
Immaterial Subsidiary), the Parent Subsidiary will execute and deliver to the
Agent a pledge agreement, in form and substance substantially identical to the
Pledge Agreement, pursuant to which all of the capital stock or other ownership
interests of such new Subsidiary and any promissory notes from such new
Subsidiary to the parent Subsidiary shall be pledged to the Agent, together with
the certificates, if any, evidencing such Equity Interests and undated stock
powers duly executed in blank and any such promissory notes duly endorsed in
blank;
(C) Promptly (and in any event within fifteen (15) Business Days)
after any existing Wholly Owned Subsidiary that was an Immaterial Subsidiary as
of the Closing Date ceases to be an Immaterial Subsidiary, (i) such Subsidiary
will execute and deliver to the Agent a supplement or joinder to the Guaranty,
pursuant to which such Subsidiary shall become a guarantor thereunder, and (ii)
Borrower will execute and deliver to the Agent an amendment or supplement to the
Pledge Agreement pursuant to which all of the Equity Interests of such
Subsidiary and any promissory notes from such Subsidiary to Borrower shall be
pledged to the Agent, together with the certificates, if any, evidencing such
Equity Interests and undated stock powers duly executed in blank and any such
promissory notes duly endorsed in blank; and
55
(D) As promptly as reasonably possible, Borrower and its Subsidiaries
will deliver any such other documents, certificates and opinions (including
opinions of local counsel in the Jurisdiction of organization of each new
Subsidiary), in form and substance reasonably satisfactory to the Agent, as the
Agent may reasonably request in connection with the actions taken pursuant to
this Section 8.10.
8.11 Further Assurances. Borrower will, and will cause each of its
Subsidiaries to, make, execute, endorse, acknowledge and deliver any amendments,
modifications or supplements hereto and restatements hereof and any other
agreements, instruments or documents, and take any and all such other actions,
as may from time to time be reasonably requested by the Agent or the Required
Lenders to perfect and maintain the validity and priority of the Liens granted
pursuant to the Security Documents and to effect, confirm or further assure or
protect and preserve the interests, rights and remedies of the Agent and the
Lenders under this Agreement and the other Credit Documents.
ARTICLE IX.
9. FINANCIAL COVENANTS
Borrower covenants and agrees that, until the termination of the
Commitments and all Letters of Credit, and the payment in full of all principal
and interest with respect to the Loans, all Letter of Credit Advances and all
Reimbursement Obligations, and with all other amounts due and owing hereunder:
9.1 Leverage Ratio. Borrower will not permit the Leverage Ratio as of any
Quarter-End during the periods set forth below to be greater than the ratio set
forth below opposite such period:
Date Leverage Ratio
---- --------------
Closing Date through January 6, 2002 2.5 to 1.0
Thereafter 2.0 to 1.0
9.2 Interest Coverage Ratio. Borrower will not permit the Interest Coverage
Ratio as of any Quarter-End during the periods set forth below to be less than
the ratio set forth below opposite such period:
Date Interest Coverage Ratio
---- -----------------------
Closing Date through January 6, 2002 3.5 to 1.0
Thereafter 4.0 to 1.0
9.3 Fixed Charge Coverage. Borrower will not permit the Fixed Charge
Coverage as of any Quarter-End, beginning with the Quarter-End of July 1, 2001,
to be less than 1.05 to 1.0.
56
9.4 Net Worth. Borrower will not permit Net Worth as of any Quarter-End,
beginning with the Quarter-End of July 1, 2001, to be less than the sum of (i)
$125,000,000, plus (ii) 75% of the aggregate of Net Income for each fiscal
quarter beginning with the Quarter-End of April 1, 2001 (provided that Net
Income for any fiscal quarter shall be taken into account for purposes of this
calculation only if positive), plus (iii) 100% of the aggregate amount of all
increases in the stated capital and additional paid-in capital accounts of
Borrower and its Subsidiaries, resulting from the issuance of Equity Interests
(including Equity Interests issued pursuant to the exercise of options, rights
or warrants or pursuant to the conversion of convertible Equity Interests) or
other capital investments after December 31, 2000 (provided that nothing in this
section shall be deemed to permit any stock repurchases not expressly permitted
under Section 10.6(A)(3)), less (iv) 100% of the aggregate amount paid or
payable with respect to any purchase, redemption, retirement or other
acquisition of shares of its capital stock;
provided, however, that in all events, Borrower will not permit Net Worth as of
any Quarter-End to be less than $109,000,000 plus (ii) 75% of the aggregate of
Net Income for each fiscal quarter beginning with the Quarter-End of April 1,
2001 (provided that Net Income for any fiscal quarter shall be taken into
account for purposes of this calculation only if positive).
ARTICLE X.
10. NEGATIVE COVENANTS
Borrower covenants and agrees that, until the termination of the
Commitments and all Letters of Credit, and the payment in full of all principal
and interest with respect to the Loans, all Letter of Credit Advances and all
Reimbursement Obligations, and with all other amounts due and owing hereunder:
10.1 Merger; Consolidation. Borrower will not, and will not permit or cause
any of its Subsidiaries to, liquidate, wind up or dissolve, or enter into any
consolidation, merger or other combination, or agree to do any of the foregoing;
provided, however, that:
(1) Borrower may merge or consolidate with another Person so long
as (x) Borrower is the surviving corporation, (y) if such merger or
consolidation is in connection with a Permitted Acquisition, the applicable
conditions of Section 8.9 shall be satisfied, and (z) immediately after giving
effect thereto, no Default or Event of Default would exist; and
(2) any Subsidiary may merge or consolidate with another Person
so long as (x) the surviving corporation is Borrower or a Wholly Owned
Subsidiary, (y) if such merger or consolidation is in connection with a
Permitted Acquisition, the applicable conditions of Sections 8.9 and 8.10 shall
be satisfied, and (z) immediately after giving effect thereto, no Default or
Event of Default would exist.
10.2 Indebtedness. Borrower will not, and will not permit or cause any of
its Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness
other than:
(1) Indebtedness incurred under this Agreement;
57
(2) Indebtedness existing on the Closing Date and described on
Schedule 10.2;
(3) Indebtedness of Borrower under Hedge Agreements required
pursuant to Section 8.8;
(4) accrued expenses, current trade or other accounts payable and
other current liabilities arising in the Ordinary Course of Business and not
incurred through the borrowing of money, provided that the same shall be paid
when due except to the extent being contested in good faith and by appropriate
proceedings;
(5) Indebtedness under letters of credit (other than Letters of
Credit issued pursuant to Article III) issued for the benefit of Borrower and
its Subsidiaries incurred in the Ordinary Course of Business, in an aggregate
amount (whether drawn or available to be drawn thereunder) not exceeding
$2,000,000 at any time outstanding; and
(6) Unsecured Indebtedness of Borrower that is Subordinated
Indebtedness; provided that, as further conditions to the issuance of any
Subordinated Indebtedness, (1) immediately after giving effect to the issuance
of such Subordinated Indebtedness, no Default or Event of Default shall exist,
(2) all agreements and instruments evidencing or governing such Subordinated
Indebtedness shall have been approved in writing by the Agent, and (3) prior to
or concurrently with the issuance of such Subordinated Indebtedness, Borrower
shall have delivered to the Agent a certificate, signed by the chief financial
officer of Borrower, satisfactory in form and substance to the Agent and to the
effect that, after giving effect to the incurrence of such Subordinated
Indebtedness, Borrower is in compliance with the financial covenants set forth
in Sections 9.1 through 9.4, such compliance being determined with regard to
calculations made on a pro forma basis in accordance with Generally Accepted
Accounting Principles as of the last day of the fiscal quarter then most
recently ended and as if such Subordinated Indebtedness had been incurred on the
first day of the period applicable to such covenants (such calculations to be
attached to such certificate); and provided further that the Net Cash Proceeds
from the issuance of such Subordinated Indebtedness shall be applied to prepay
the Loans in accordance with, and to the extent required under, the provisions
of Section 5.3(B);
(7) Indebtedness (other than Indebtedness specified in clauses
(2) through (4) and clause (6) above) that shall not at any time, when combined
with the aggregate amount of all Indebtedness incurred under clause (5) above
outstanding at such time, exceed $5,000,000 in aggregate principal amount
outstanding at such time (which Indebtedness under this clause (7) shall
include, without limitation, any Indebtedness of Borrower and its Subsidiaries
secured by Permitted Liens which are purchase money Liens).
10.3 Liens. Borrower will not, and will not permit or cause any of its
Subsidiaries to, directly or indirectly, make, create, incur, assume or suffer
to exist, or enter into or suffer to exist any agreement or restriction that
prohibits or conditions the creation, incurrence or assumption of, any Lien upon
58
or with respect to any part of its property or assets, whether now owned or
hereafter acquired, or agree to do any of the foregoing, other than Permitted
Liens.
10.4 Disposition of Assets. Borrower will not, and will not permit or cause
any of its Subsidiaries to, sell, assign, lease, convey, transfer or otherwise
dispose of (whether in one or a series of transactions) all or any portion of
its assets, business or properties, or enter into any arrangement with any
Person providing for the lease by Borrower or any Subsidiary as lessee of any
asset that has been sold or transferred by Borrower or such Subsidiary to such
Person, or agree to do any of the foregoing, except for:
(1) sales of Rental Inventory in the Ordinary Course of Business;
(2) the sale or exchange of used or obsolete equipment to the
extent (y) the proceeds of such sale are applied towards, or such equipment is
exchanged for, similar replacement equipment, or (z) such equipment is no longer
necessary for the operations of Borrower or its applicable Subsidiary in the
Ordinary Course of Business;
(3) the sale or other disposition by Borrower and its
Subsidiaries of any Borrower Margin Stock to the extent the fair market value
thereof exceeds 25% of the fair market value of the assets of Borrower and its
Subsidiaries (including Borrower Margin Stock), provided that fair value is
received in exchange therefor;
(4) the sale, lease or other disposition of assets by a
Subsidiary of Borrower to Borrower or to another Wholly Owned Subsidiary if,
immediately after giving effect thereto, no Default or Event of Default would
exist; and
(5) the sale or disposition of assets outside the Ordinary Course
of Business for cash, provided that (w) the Net Cash Proceeds from such sales or
dispositions do not exceed $5,000,000 in the aggregate for Borrower and its
Subsidiaries during any fiscal year, (x) to the extent not theretofore expended
to acquire assets or properties or otherwise reinvested in the business of
Borrower, such Net Cash Proceeds are delivered to the Agent within one hundred
eighty (180) days after receipt thereof for application to prepayment of the
Loans in accordance with the provisions of Section 5.3(D), (y) in no event shall
Borrower or any of its Subsidiaries sell or otherwise dispose of any of the
Equity Interests of any Subsidiary (other than Immaterial Subsidiaries), and (z)
immediately after giving effect thereto, no Default or Event of Default would
exist.
10.5 Investments. Borrower will not, and will not permit or cause any of
its Subsidiaries to, directly or indirectly, purchase, own, invest in or
otherwise acquire any Equity Interest, evidence of indebtedness or other
obligation or security or any interest whatsoever in any other Person, or make
or permit to exist any loans, advances or extensions of credit to, or any
investment in cash or by delivery of property in, any other Person, or purchase
or otherwise acquire (whether in one or a series of related transactions) any
portion of the assets, business or properties of another Person (including
pursuant to an Acquisition), or become a partner or joint venturer in any
59
partnership or joint venture (collectively, "Investments"), or make a commitment
or otherwise agree to do any or the foregoing, other than:
(A) Cash Equivalents;
(B) Purchases and acquisitions of inventory, supplies, materials and
equipment in the Ordinary Course of Business;
(C) Investments consisting of loans and advances to employees for
reasonable travel, relocation and business expenses in the Ordinary Course of
Business or prepaid expenses incurred in the Ordinary Course of Business;
(D) Without duplication, Investments consisting of Indebtedness
permitted under Section 10.2;
(E) Investments existing on the Closing Date and described in Schedule
10.5;
(F) Investments in connection with Permitted Acquisitions with respect
to which the conditions and requirements of Section 8.9 have been satisfied;
(G) Investments in existing Subsidiaries and in newly created or
acquired Subsidiaries with respect to which the applicable conditions and
requirements of Sections 8.9 and 8.10 have been satisfied;
(H) Investments (other than Investments specified in clauses (A)
through (G) above) in an aggregate amount that shall not exceed $5,000,000 for
all such Investments from and after the Closing Date; and
(I) Any other Investments that may be approved in writing by the
Required Lenders from time to time.
10.6 Restricted Payments.
(A) Borrower will not, and will not permit or cause any of its
Subsidiaries to, directly or indirectly, declare or make any dividend payment,
or make any other distribution of cash, property or assets, in respect of any of
its Equity Interests or any warrants, rights or options to acquire its Equity
Interests, or purchase, redeem, retire or otherwise acquire for value any Equity
Interests or any warrants, rights or options to acquire its Equity Interests, or
set aside funds for any of the foregoing, except that:
(1) Borrower may declare and make dividend payments or other
distributions payable solely in its common stock;
60
(2) each Wholly Owned Subsidiary of Borrower may declare and make
dividend payments or other distributions to Borrower or another Wholly Owned
Subsidiary of Borrower, to the extent not prohibited under applicable
Requirements of Law; and
(3) so long as no Default or Event of Default would exist
immediately after giving effect thereto, Borrower may purchase, redeem, retire
or otherwise acquire shares of its capital stock.
(B) Borrower will not, and will not permit or cause any of its
Subsidiaries to, make (or give any notice in respect of) any voluntary or
optional payment or prepayment of principal on any Subordinated Indebtedness, or
directly or indirectly make any redemption (including pursuant to any change of
control provision), retirement, defeasance or other acquisition for value of any
Subordinated Indebtedness, or make any deposit or otherwise set aside funds for
any of the foregoing purposes.
10.7 Transactions with Affiliates. Borrower will not, and will not permit
or cause any of its Subsidiaries to, enter into any transaction with any
officer, director, stockholder or other Affiliate of Borrower or any Subsidiary,
except in the Ordinary Course of Business and upon fair and reasonable terms
that are no less favorable to it than would obtain in a comparable arm's length
transaction with a Person other than an Affiliate of Borrower or such
Subsidiary; provided, however, that nothing contained in this Section shall
prohibit:
(1) transactions described on Schedule 10.7 or otherwise
expressly permitted hereunder, provided that the terms of any agreement or
arrangement relating to any of the transactions described on Schedule 10.7 are
not, at any time from and after the Closing Date, materially less favorable to
Borrower and its Subsidiaries than the terms of such agreement or arrangement as
in effect during the period with regard to which such agreement or arrangement
is described on Schedule 10.7;
(2) the payment by Borrower of reasonable and customary fees to
members of its board of directors; and
(3) loans by Borrower to its officers or directors not to exceed
$1,000,000 outstanding in the aggregate at any time, provided that any such loan
is made upon fair and reasonable terms that are no less favorable to Borrower
than would obtain in a comparable arm's length transaction.
10.8 Lines of Business. Borrower will not, and will not permit or cause any
of its Subsidiaries to, engage in any business other than the Permitted Lines of
Business.
10.9 Limitation on Certain Restrictions. Borrower will not, and will not
permit or cause any of its Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any restriction or
encumbrance on (i) the ability of Borrower and its Subsidiaries to perform and
comply with their respective obligations under the Credit Documents, or (ii) the
ability of any Subsidiary of Borrower to make any dividend payments or other
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distributions in respect of its Equity Interests, to make loans or advances to
Borrower or any other Subsidiary, or to transfer any of its assets or properties
to Borrower or any other Subsidiary, in each case other than such restrictions
or encumbrances existing under or by reason of the Credit Documents or
applicable Requirements of Law.
10.10 Fiscal Periods. Borrower will not, and will not permit or cause any
of its Subsidiaries to, change any of the ending dates of its fiscal quarters
and fiscal years through and including the fiscal quarter ending July 4, 2004
from those set forth on Schedule 10.10, unless (i) Borrower shall have given the
Lenders written notice of its intention to change any such ending dates at least
sixty (60) days prior to the effective date thereof and (ii) prior to such
ending date this Agreement shall have been amended to make any changes in the
financial covenants and other terms and conditions to the extent necessary, in
the reasonable determination of the Required Lenders, solely to reflect such new
ending dates.
10.11 Accounting Changes. Borrower will not, and will not permit or cause
any of its Subsidiaries to, make or permit any material changes in its
accounting policies or reporting practices, except as may be required by
Generally Accepted Accounting Principles, and except for changes that would
shorten amortization periods for Rental Inventory, which changes are not
prohibited by Regulations S-X under the Securities Act of 1933, as amended, or
by any rulings or announcements by the Securities and Exchange Commission.
ARTICLE XI.
11. EVENTS OF DEFAULT
11.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default":
(A) Borrower shall fail to pay any principal of any Loan when due;
(B) Borrower shall fail to pay any interest on any Loan, any
Reimbursement Obligation, any Letter of Credit Advance, any Fee or any other
Payment Obligation when due, and such failure shall continue unremedied for five
(5) Business Days after written notice from Agent to Borrower of such failure of
payment (provided, however, that such written notice shall not be required more
than twice in any consecutive twelve-month period);
(C) Borrower shall fail to observe, perform or comply with any
Obligation or condition contained in any of Sections 2.6, 3.6, 8.2(E), 8.3(i),
8.9, 8.10 or Article IX or Article X;
(D) Borrower or any of its Subsidiaries shall fail to observe, perform
or comply with any Obligation or condition contained in this Agreement or any of
the other Credit Documents other than those enumerated in subsections (A), (B)
and (C) above, and such failure shall continue unremedied for any grace period
specifically applicable thereto or, if no such grace period is applicable, for a
period of thirty (30) days after the earlier of the date on which a Responsible
Officer of Borrower acquires knowledge thereof or the date of delivery of notice
thereof by the Agent;
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(E) Any representation or warranty made or deemed made by or on behalf
of Borrower or any of its Subsidiaries in this Agreement, any of the other
Credit Documents or in any certificate, instrument, report or other document
furnished in connection herewith or therewith or in connection with the
transactions contemplated hereby or thereby shall prove to have been false or
misleading in any material respect as of the time made, deemed made or
furnished;
(F) Borrower or any of its Subsidiaries shall (i) fail to pay when due
(whether by scheduled maturity, acceleration or otherwise and after giving
effect to any applicable grace period) any principal of or interest on any
Indebtedness (other than the Indebtedness incurred pursuant to this Agreement)
having an aggregate principal amount of at least $500,000; or (ii) fail to
observe, perform or comply with any condition, covenant or agreement contained
in any agreement or instrument evidencing or relating to any such Indebtedness,
or any other event shall occur or condition exist in respect thereof, and the
effect of such failure, event or condition is to cause, or permit the holder or
holders of such Indebtedness (or a trustee or agent on its or their behalf) to
cause (with the giving of notice, lapse of time, or both, and after giving
effect to any applicable grace period), such Indebtedness to become due, or to
be prepaid, redeemed, purchased or defeased, prior to its stated maturity;
(G) Borrower or any of its Subsidiaries shall (i) file a voluntary
petition or commence a voluntary case seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts or any other
relief under Bankruptcy Law, (ii) consent to the institution of, or fail to
controvert in a timely and appropriate manner, any petition or case of the type
described in subsection (H) below, (iii) apply for or consent to the appointment
of or taking possession by a custodian, trustee, receiver or similar official
for or of itself or all or a substantial part of its properties or assets, (iv)
fail generally, or admit in writing its inability, to pay its debts generally as
they become due, (v) make a general assignment for the benefit of creditors, or
(vi) take any corporate action to authorize or approve any of the foregoing;
(H) Any involuntary petition or case shall be filed or commenced
against Borrower or any of its Subsidiaries seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts, the appointment
of a custodian, trustee, receiver or similar official for it or all or a
substantial part of its properties or any other relief under Bankruptcy Law, and
such petition or case shall continue undismissed and unstayed for a period of
sixty (60) days; or an order, judgment or decree approving or ordering any of
the foregoing shall be entered in any such proceeding;
(I) Any one or more money judgments, writs or warrants of attachment,
executions or similar processes involving an aggregate amount (exclusive of
amounts fully bonded or covered by insurance as to which the surety or insurer,
as the case may be, has acknowledged its liability in writing) in excess of
$750,000 shall be entered or filed against Borrower or any of its Subsidiaries
or any of their respective properties and the same shall not be discussed,
stayed or discharged for a period of thirty (30) days;
(J) Any ERISA Event shall occur or exist with respect to any Plan or
Multiemployer Plan and, as a result thereof, together with all other ERISA
Events then existing, there shall exist a reasonable likelihood of liability to
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any one or more Plans or Multiemployer Plans or to the PBGC (or to any
combination thereof) in excess of $750,000 with respect to Borrower or any ERISA
Affiliate;
(K) Any one or more licenses, permits, accreditations or
authorizations of Borrower or any of its Subsidiaries shall be suspended,
limited or terminated or shall not be renewed, or any other action shall be
taken, by any Governmental Authority in response to any alleged failure by
Borrower or any of its Subsidiaries to be in compliance with applicable
Requirements of Law, and such action, individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect;
(L) Any Material Contract to which Borrower or any of its Subsidiaries
is a party shall be terminated or shall, for any other reason, fail to be in
full force and effect and enforceable in accordance with its terms, and such
event or condition, together with all other events or conditions, if any, would
be reasonably likely to have a Material Adverse Effect;
(M) There shall occur any uninsured damage to, or loss, theft or
destruction of, any assets or properties of Borrower and its Subsidiaries that
would be reasonably likely to have a Materiel Adverse Effect;
(N) Any Security Document to which Borrower or any of its Subsidiaries
is now or hereafter a party shall for any reason cease to be in full force and
effect or cease to be effective to give the Agent a valid and perfected security
interest in and Lien upon the Collateral purported to be covered thereby,
subject to no Liens other than Permitted Liens, in each case unless any such
cessation occurs in accordance with the terms thereof or is due to any act or
failure to act on the part of the Agent or any Lender; or Borrower or any such
Subsidiary shall assert any of the foregoing; or any Subsidiary or any Person
action on its behalf shall deny or disaffirm such Subsidiary's obligations under
the Guaranty; or
(O) Any of the following shall occur: (i) any Person or group of
Persons acting in concert as a partnership or other group shall, as a result of
a tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, have become, after the date hereof, the "beneficial
owner" (within the meaning of such term under Rule 13d-3 under the Exchange Act)
of securities of Borrower representing a percentage of the combined voting power
of the then outstanding securities of Borrower ordinarily (and apart from rights
accruing under special circumstances) having the right to vote in the election
of directors equal to the lower of (y) 20% or (z) the percentage of beneficial
ownership of Borrower's common stock that would , upon the lapse of time or the
occurrence of certain events, permit Borrower's stockholders (other than the
acquiring Person or group) to exercise stock purchase rights pursuant to any
stockholder rights plan then in effect; or (ii) the Board of Directors of
Borrower shall cease to consist of a majority of the individuals who constituted
the Board of Directors of Borrower as of the date hereof or who shall have
become a member thereof subsequent to the date hereof after having been
nominated, or otherwise approved in writing, by at least a majority of
individuals who constituted the Board of Directors of Borrower as of the date
hereof (or their replacements approved as herein required).
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11.2 Remedies: Termination of Commitments, Acceleration, Etc. Upon and at
any time after the occurrence and during the continuance of any Event of
Default, the Agent shall at the direction, or may with the consent, of the
Required Lenders, take any or all of the following actions at the same or
different times:
(A) Declare the Commitments and the Issuing Lender's obligation to
issue Letters of Credit to be terminated, whereupon the same shall be terminated
(provided that, upon the occurrence of an Event of Default pursuant to Section
11.1(G) or Section 11.1(H), the Commitments and the Issuing Lender's obligation
to issue Letters of Credit shall automatically be terminated);
(B) Declare all or any part of the outstanding principal amount of the
Loans to be immediately due and payable, whereupon the principal amount so
declared to be immediately due and payable, together with all interest accrued
thereon and all other amounts payable under this Agreement, the Notes and the
other Credit Documents, shall become immediately due and payable without
presentment, demand, protest, notice of intent to accelerate or other notice or
legal process of any kind, all of which are hereby knowingly and expressly
waived by Borrower (provided that, upon the occurrence of any Event of Default
pursuant to Section 11.1(G) or Section 11.1(H), all of the outstanding principal
amount of the Loans and all other amounts described in this subsection (B) shall
automatically become immediately due and payable without presentment, demand,
protest, notice of intent to accelerate or other notice or legal process of any
kind, all of which are hereby knowingly and expressly waived by Borrower);
(C) Direct Borrower to deposit (and Borrower hereby agrees, forthwith
upon receipt of notice of such direction from the Agent, to deposit) with the
Agent from time to time such additional amount of cash as is equal to the
aggregate Stated Amounts of all Letters of Credit then outstanding (whether or
not any beneficiary under any Letter of Credit shall have drawn or be entitled
at such time to draw thereunder), such amount to be held by the Agent in the
Cash Collateral Account as security for the Obligations as described in Section
4.4; and
(D) Exercise all rights and remedies available to it under this
Agreement the other Credit Documents and applicable Laws.
11.3 Remedies: Set-Off. In addition to all other rights and remedies
available under the Credit Documents or applicable Laws or otherwise, upon and
at any time after the occurrence and during the continuance of any Event of
Default, each Lender may, and each is hereby authorized by Borrower, at any such
time and from time to time, to the fullest extent permitted by applicable Law,
without presentment, demand, protest or other notice of any kind, all of which
are hereby knowingly and expressly waived by Borrower, to set off and to apply
any and all deposits (general or special, time or demand, provisional or final)
and any other property at any time held (including at any branches or agencies,
wherever located), and any other indebtedness at any time owing, by such Lender
to or for the credit or the account of Borrower against any or all of the
Obligations to such Lender now or hereafter existing, whether or not such
Obligations may be contingent or unmatured, Borrower hereby granting to each
Lender a continuing security interest in and Lien upon all such deposits and
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other property as security for such Obligations. Each Lender agrees to notify
Borrower promptly after any such set-off and application; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application.
ARTICLE XII.
12. THE AGENT
12.1 Appointment. Each Lender hereby irrevocably appoints and authorizes
SouthTrust to act as Agent hereunder and under the other Credit Documents and to
take such actions as agent on its behalf hereunder and under the other Credit
Documents, and to exercise such powers and to perform such duties, as are
specifically delegated to the Agent by the terms hereof or thereof, together
with such other powers and duties as are reasonably incidental thereto.
12.2 Nature of Duties. The Agent shall have no duties or responsibilities
other than those expressly set forth in this Agreement and the other Credit
Documents. The Agent shall not have, by reason of this Agreement or any other
Credit Document, a fiduciary relationship in respect of any Lender; and nothing
in this Agreement or any other Credit Document, express or implied, is intended
to or shall be so construed as to impose upon the Agent any obligations or
liabilities in respect of this Agreement or any other Credit Document except as
expressly set forth herein or therein. The Agent may execute any of its duties
under this Agreement or any other Credit Document by or through agents or
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact that it selects with reasonable care. The
Agent shall be entitled to consult with legal counsel, independent public
accountants and other experts selected by it with respect to all matters
pertaining to this Agreement and the other Credit Documents and its duties
hereunder and thereunder 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. The Lenders hereby acknowledge that the Agent shall not
be under any duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement or any other Credit Document unless
it shall be requested in writing to do so by the Required Lenders (or, where a
higher percentage of the Lenders is expressly required hereunder, such Lenders).
12.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action taken or omitted to be taken by it or such Person under or
in connection with the Credit Documents, except for its or such Person's own
gross negligence or willful misconduct, (ii) responsible in any manner to any
Lender for any recitals, statements, information, representations or warranties
herein or in any other Credit Document or in any document, instrument,
certificate, report or other writing delivered in connection herewith or
therewith, for the execution, effectiveness, genuineness, validity,
enforceability or sufficiency of this Agreement or any other Credit Document, or
for the financial condition of Borrower, its Subsidiaries or any other Person,
or (iii) required to ascertain or make any inquiry concerning the performance or
observance of any of the terms, provisions or conditions of this Agreement or
any other Credit Document or the existence or possible existence of any Default
or Event of Default, or to inspect the properties books or records of Borrower
or any of its Subsidiaries.
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12.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any notice, statement, consent or other
communication (including, without limitation, any thereof by telephone,
telecopy, telex, telegram or cable) believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons. The Agent may deem and treat each Lender as the owner of its interest
hereunder for all purposes hereof unless and until a written notice of the
assignment, negotiation or transfer thereof shall have been given to the Agent
in accordance with the provisions of this Agreement. The Agent shall be entitled
to refrain from taking or omitting to take any action in connection with this
Agreement or any other Credit Document (i) if such action or omission would, in
the reasonable opinion of the Agent, violate any applicable Law or any provision
of this Agreement or any other Credit Document or (ii) unless and until it shall
have received such advice or concurrence of the Required Lenders (or, where a
higher percentage of the Lenders is expressly required hereunder, such Lenders)
as it deems appropriate or it shall first have been indemnified to its
satisfaction by the Lenders against any and all liability and expense (other
than liability and expense arising from its own gross negligence or willful
misconduct) that may be incurred by it by reason of taking, continuing to take
or omitting to take any such action. Without limiting the foregoing, no Lender
shall have the right of action whatsoever against the Agent as a result of the
Agent's acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Lenders (or, where
a higher percentage of the Lenders is expressly required hereunder, such
Lenders), and such instructions and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders (including all subsequent
Lenders).
12.5 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representation
or warranty to it and that no act by the Agent or any such Person hereafter
taken, including any review of the affairs of Borrower and its Subsidiaries,
shall be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that (i) it has, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, properties, financial
and other condition and creditworthiness of Borrower and its Subsidiaries and
made its own decision to enter into this Agreement and extend credit to Borrower
hereunder, and (ii) it will, independently and without reliance upon the 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 analysis, appraisals
and decisions in taking or not taking action hereunder and under the other
Credit Documents and to make such investigation as it deems necessary to inform
itself as to the business, prospects, operations, properties, financial and
other financial condition and creditworthiness of Borrower and its Subsidiaries.
Except as expressly provided in this Agreement and the other Credit Documents,
the Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
concerning the business, prospects, operations, properties, financial or other
condition or creditworthiness of Borrower, its Subsidiaries or any other Person
that may at any time come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
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12.6 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless the Agent
shall have received written notice from Borrower or a Lender referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that the Agent receives such
notice, the Agent will give notice thereof to the Lenders as soon as reasonably
practicable; provided, however, that if any such notice has also been furnished
to the Lenders, the Agent shall have no obligation to notify the Lenders with
respect thereto. The Agent shall (subject to Sections 12.4 and 13.6) take such
action with respect to such Default or Event of Default as shall reasonably be
directed by the Required Lenders; provided that, unless and until the Agent
shall have received such directions, the 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
the Lenders.
12.7 Indemnification. To the extent the Agent is not reimbursed by or on
behalf of Borrower, and without limiting the obligation of Borrower to do so,
the Lenders agree (i) to indemnify the Agent and its officers, directors,
employees, agents, attorneys-in-fact and Affiliates, ratably in proportion to
their respective percentages as used in determining the Required Lenders as of
the date of determination, from and against any and all liabilities,
obligations, loses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, attorneys' fees and expenses) or
disbursements of any kind or nature whatsoever that may at any time (including
at any time following the repayment in full of the Loans and the termination the
Commitments) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or any other Credit Document or any
documents contemplated by or referred to herein or the transactions contemplated
hereby or thereby or any action taken or omitted by the Agent under or in
connection with any of the foregoing, and (ii) to reimburse the Agent upon
demand, ratably in proportion to their respective percentages as used in
determining the Required Lenders as of the date of determination, for any
expenses incurred by the Agent in connection with the preparation, negotiation,
execution, delivery, administration, amendment, modification, waiver or
enforcement (whether through negotiations, legal proceeding or otherwise) of ,
or legal advice in respect of rights or responsibilities under, this Agreement
or any other Credit Documents (including, without limitation, reasonable
attorneys' fees and expenses and compensation of agents and employees paid for
services rendered on behalf of the Lenders); 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
to the extent resulting from the gross negligence or willful misconduct of the
party to be indemnified.
12.8 The Agent in its Individual Capacity. With respect to its Commitment,
the Loans made by it, the Letters of Credit issued by it and the Note or Notes
issued to it, the Agent in its individual capacity and not as Agent shall have
the same rights and powers under the Credit Documents as any other Lender and
may exercise the same as though it were not performing the agency duties
specified herein; and the terms "Lenders," "Required Lenders," "holders of
Notes" and any similar terms shall, unless the context clearly otherwise
indicates, include the Agent in its individual capacity. The Agent and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of banking, trust, financial advisory or other business with Borrower, any
of its Subsidiaries or any of their respective Affiliates as if the Agent were
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not performing the agency duties specified herein, and may accept fees and other
consideration from any of them for services in connection with this Agreement
and otherwise without having to account for the same to the Lenders.
12.9 Successor Agent. The Agent may resign at any time by giving thirty
(30) days' prior written notice to Borrower and the Lenders. Upon any such
notice of resignation, the Required Lenders will, with the prior written consent
of Borrower (which consent shall not be unreasonably withheld), appoint from
among the Lenders a successor to the Agent (provided that Borrower's consent
shall not be required in the event a Default or Event of Default shall have
occurred or be continuing). If no successor to the Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within such thirty-day period, then the retiring Agent may, on behalf of the
Lenders and after consulting with the Lenders and Borrower, appoint a successor
Agent from among the Lenders. Upon the acceptance of any appointment as Agent 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
hereunder and under the other Credit Documents. After any retiring Agent's
resignation as Agent, the provisions of this Article shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent. If no
successor to the Agent has accepted appointment as Agent by the thirtieth (30th)
day following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective, and the Lenders shall
thereafter perform all of the duties of the Agent hereunder and under the other
Credit Documents until such time, if any, as the Required Lenders appoint a
successor Agent as provided for hereinabove.
12.10 Collateral Matters.
(A) The Agent is hereby authorized on behalf of the Lenders, without
the necessity of any notice to or further consent from the Lenders, from time to
time (but without any obligation) to take any action with respect to the
Collateral and the Security Documents that may be necessary to perfect and
maintain perfected the Liens upon the Collateral granted pursuant to the
Security Documents.
(B) The Lenders hereby irrevocably authorize the Agent, at its option
and in its discretion, to release any Lien granted to or held by the Agent upon
any Collateral (i) upon termination of the Commitments and payment in full of
all of the Obligations, (ii) constituting property sold or to be sold or
disposed of as part of or in connection with any disposition that may be
expressly permitted hereunder or under any other Credit Document, or (iii)
otherwise pursuant to and in accordance with the provisions of any applicable
Credit Document. Upon request by the Agent at any time, the Lenders will confirm
in writing the Agent's authority to release Collateral pursuant to this
subsection (B).
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ARTICLE XIII.
13. MISCELLANEOUS
13.1 Fees and Expenses. Borrower agrees, whether or not the transactions
contemplated by this Agreement shall be consummated, to (i) pay upon demand all
out-of-pocket costs and expenses of the Agent (including, without limitation,
the fees and expenses of counsel to the Agent, but subject in any event to the
provisions of the commitment letter from SouthTrust to Borrower dated April 12,
2001) in connection with (x) the preparation, negotiation, execution, delivery
and syndication of this Agreement and the other Credit Documents, and (y) any
amendment, modification or waiver hereof or thereof or consent with respect
hereto or thereto; (ii) pay upon demand all out-of-pocket costs and expenses of
the Agent and each Lender (including, without limitation, the out-of-pocket fees
and expenses of counsel to the Agent or any Lender) in connection with a
Default, including all such costs and expenses incurred with respect to any
refinancing or restructuring of the credit arrangement provided under this
Agreement (whether in the nature of a "work-out," in any Bankruptcy proceeding
or otherwise and whether or not consummated), and the enforcement, attempted
enforcement or preservation of any rights or remedies under this Agreement or
any of the other Credit Documents, whether in any action, suit or proceeding
(including any Bankruptcy proceeding) or otherwise; and (iii) pay and hold
harmless the Agent and each Lender from and against all liability for any
intangibles, documentary, stamp or other similar taxes, fees and excises, if
any, including any interest and penalties, and any finder's or brokerage fees,
commissions and expenses (other than any fees, commissions or expenses of
finders or brokers engaged by the Agent or any Lender), that may be payable in
connection with the transactions contemplated by this Agreement and the other
Credit Documents (other than any transfer, stamp or similar taxes that may be
payable in connection with the transfer of any Loans or Notes pursuant to an
Assignment and Acceptance).
13.2 Indemnification. Borrower agrees, whether or not the transactions
contemplated by this Agreement shall be consummated, to indemnify and hold
harmless the Indemnified Lender Persons from and against any and all Indemnified
Losses (including all Default Costs) of any kind or nature whatsoever, whether
direct, indirect or consequential, that may at any time be imposed on, incurred
by or asserted against any such Indemnified Lender Person as a result of,
arising from or in any way relating to (i) an Event of Default (which
indemnification is in addition to, and not in derogation of, any statutory,
equitable, or common law right or remedy the Lender Parties may have for breach
of representation, warranty, statement or covenant or otherwise may have under
any of the Credit Documents); and (ii) the preparation, execution, performance
or enforcement of this Agreement or any of the other Credit Documents, any of
the transactions contemplated herein or therein or any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
any Loans or Letters of Credit, or any action, suit or proceeding (including any
inquiry or investigation) by any Person, whether threatened or initiated,
related to any of the foregoing, and in any case whether or not such Indemnified
Person is a party to any such action, proceeding or suit or a subject of any
such inquiry or investigation; provided, however, that no Indemnified Person
shall have the right to be indemnified under this Section 13.2 for any
Indemnified Losses to the extent resulting from the gross negligence or willful
misconduct of such Indemnified Person. All of the foregoing Indemnified Losses
70
of any Indemnified Lender Person shall be paid or reimbursed by Borrower, as and
when incurred and upon demand and shall survive the termination of this
Agreement.
13.3 Governing Law; Consent to Jurisdictions. THIS AGREEMENT AND THE OTHER
CREDIT DOCUMENTS HAVE BEEN EXECUTED, DELIVERED AND ACCEPTED IN, AND SHALL BE
DEEMED TO HAVE BEEN MADE IN, ALABAMA AND SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ALABAMA (WITHOUT REGARD TO
THE CONFLICTS OF LAW PROVISIONS THEREOF); PROVIDED THAT EACH LETTER OF CREDIT
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OR
RULES DESIGNATED IN SUCH LETTER OF CREDIT OR, IF NO SUCH LAWS OR RULES ARE
DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICES FOR DOCUMENTARY CREDITS,
INTERNATIONAL CHAMBER OF COMMERCE, AS IN EFFECT FROM TIME TO TIME (THE "UNIFORM
CUSTOMS"), AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF
THE STATE OF ALABAMA (WITHOUT REGARD TO THE CONFLICTS OF THE LAW PROVISIONS
THEREOF). BORROWER HEREBY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE
COURT WITHIN JEFFERSON COUNTY, ALABAMA OR ANY FEDERAL COURT LOCATED WITHIN THE
NORTHERN DISTRICT, SOUTHERN DIVISION OF THE STATE OF ALABAMA FOR ANY PROCEEDING
INSTITUTED HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS, OR ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS, OR
ANY PROCEEDING TO WHICH THE AGENT OR ANY LENDER OR BORROWER IS A PARTY,
INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH, ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE AGENT OR ANY LENDER OR BORROWER. BORROWER IRREVOCABLY AGREES TO
BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY JUDGMENT RENDERED OR
RELIEF GRANTED THEREBY AND FURTHER WAIVES ANY OBJECTION THAT IT MAY HAVE BASED
ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT
OF ANY SUCH PROCEEDING. BORROWER CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY
REGISTERED OR CERTIFIED MAIL DIRECTED TO IT AT ITS ADDRESS SET FORTH
HEREINBELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE
EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED
STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED. NOTHING IN THIS
SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY PARTY TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY OTHER PARTY IN THE COURTS OF ANY OTHER JURISDICTION.
The parties hereto agree that this Agreement and the other Credit Documents have
been and will be made and entered into within the State of Alabama and that the
71
Loans and the other transactions contemplated hereby and thereby have been and
will be made and consummated in the State of Alabama.
13.4 Arbitration; Preservation and Limitation of Remedies.
(A) Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement or any other Credit
Document ("Disputes") between or among Borrower, its Subsidiaries, the Agent and
the Lenders, or any of them, shall be resolved by binding arbitration as
provided herein. Institution of a judicial proceeding by a party does not waive
the right of that party to demand arbitration hereunder. Disputes may include,
without limitation, tort claims, counterclaims, claims brought as class actions,
claims arising from documents executed in the future, disputes as to whether a
matter is subject to arbitration, or claims arising out of or connected with the
transactions contemplated by this Agreement and the other Credit Documents.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA"), as in effect from time to time, and the Federal
Arbitration Act, Title 9 of the U.S. Code, as amended. All arbitration hearings
shall be conducted in the city in which the principal office of the Agent is
located. A hearing shall begin within ninety (90) days of demand for arbitration
and all hearings shall be concluded within 120 days of demand for arbitration.
These time limitations may not be extended unless a party shows cause for
extension and then for no more than a total of sixty (60) days. The expedited
procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000. All applicable statutes of
limitation shall apply to any Dispute. A judgment upon the award may be entered
in any court having jurisdiction. The panel from which all arbitrators are
selected shall be comprised of licensed attorneys selected from the Commercial
Financial Dispute Arbitration Panel of the AAA. The single arbitrator selected
for expedited procedure shall be a retired judge from the highest court of
general jurisdiction, state or federal, of the state where the hearing will be
conducted. Notwithstanding the foregoing, this arbitration provision does not
apply to Disputes under or related to any Hedge Agreement. The parties do not
waive applicable federal or state substantive Law except as provided herein.
(B) Notwithstanding the preceding binding arbitration provisions, the
parties hereto agree to preserve, without diminution, certain remedies that any
party hereto may employ or exercise freely, either alone, in conjunction with or
during a Dispute. Any party hereto shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any Collateral by
exercising a power of sale granted pursuant to any of the Credit Documents or
under applicable Law or by judicial foreclosure and sale, including a proceeding
to confirm the sale; (ii) all rights of self-help, including peaceful occupation
of real property and collection of rents, set-off, and peaceful possession of
personal property; (iii) obtaining provisional or ancillary remedies, including
injunctive relief, sequestration, garnishment, attachment, appointment of a
receiver and filing an involuntary Bankruptcy proceeding; and (iv) when
applicable, a judgment by confession of judgment. Any claim or controversy with
regard to any party's entitlement to such remedies is a Dispute. Preservation of
these remedies does not limit the power of an arbitrator to grant similar
remedies that may be requested by a party in a Dispute. The parties hereto agree
72
that no party shall have a remedy of punitive or exemplary damages against any
other party in any Dispute, and each party hereby waives any right or claim to
punitive or exemplary damages that is has now or that may arise in the future in
connection with any Dispute, whether such Dispute is resolved by arbitration or
judicially. The Parties acknowledge that by agreeing to binding arbitration they
have irrevocably waived any right they may have to a jury trial with regard to a
Dispute.
13.5 Notices. All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed, telecopied, cabled or
delivered to the party to be notified at the following addresses:
if to Borrower: Movie Gallery, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇ ▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Movie Gallery, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: S. Page ▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
if to Agent: SouthTrust Bank
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Banking Department
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
and with a copy to: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Gordon, Silberman, ▇▇▇▇▇▇▇ & Childs, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
if to any Lender, to it at the address for notices set forth on its signature
page hereto (or if to any Lender not a party hereto as of the date hereof, at
the address for notices set forth in its Assignment and Acceptance), with a copy
to the Agent;
or in each case, to such other address as any party may designate for itself by
like notice to all other parties hereto. All such notices and communications
shall be deemed to have been given (i) if mailed as provided above by any method
other than overnight delivery service, on the third Business Day after deposit
in the mails, (ii) if mailed by overnight delivery, delivered to the telegraph
company, confirmed by telex answerback, transmitted by telecopier or delivered
73
to the cable company, respectively, or (iii) if delivered by hand, upon
delivery; provided that notices and communications to the Agent shall not be
effective until received by the Agent.
13.6 Amendments, Waivers, etc. No amendment, modification, waiver or
discharge or termination of, or consent to any departure by Borrower from, any
provision of this Agreement or any other Credit Document, shall be effective
unless in a writing signed by the Required Lenders (or by the Agent at the
direction or with the consent of the Required Lenders), and then the same shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such amendment, modification, waiver,
discharge, termination or consent shall:
(A) unless agreed to by each Lender holding or owed Obligations
directly affected thereby, (i) reduce or forgive the principal amount of, or
rate of interest on, any Loan, or reduce or forgive any fees or other
Obligations (other than fees payable to the Agent for its own account), or (ii)
extend any date (including the Revolving Loan Maturity Date) fixed for the
payment of any principal of or interest on any Loan (other than additional
interest payable under Section 5.4) during the continuance of an Event of
Default), any fees (other than fees payable to the Agent for its own account) or
any other Obligations;
(B) unless agreed to by all of the Lenders, (i) increase or extend the
Commitment of any Lender (it being understood that a waiver of any Event of
Default, if agreed to by the requisite Lenders hereunder, shall not constitute
such an increase or extension), (ii) change the percentage of the Commitments,
or the percentage of the aggregate unpaid principal amount of the Loans, or the
number or percentage of Lenders, that shall be required for the Lenders or any
of them to take or approve, or direct the Agent to take or approve, any action
hereunder (including as set forth in the definition of "Required Lenders"),
(iii) except as may be otherwise specifically provided in this Agreement or in
any other Credit Document, release all or substantially all of the Collateral,
or (iv) change any provision of this Section 13.6; and
(C) unless agreed to by the Issuing Lender, the Swing Line Lender or
the Agent in addition to the Lenders required as provided hereinabove to take
such action, affect the respective rights or obligations of the Issuing Lender,
the Swing Line Lender or the Agent, as applicable, hereunder or under any of the
other Credit Documents;
and provided further that the Fee Letter may be amended or modified, and any
rights thereunder waived, in a writing signed by the parties thereto.
13.7 Assignments, Participations.
(A) Each Lender may assign to one or more other Eligible Assignees
(each, an "Assignee") all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment,
the outstanding Loans made by it, the Note or Notes held by it and its
participations in Letters of Credit); provided, however, that (i) any such
assignment (other than an assignment to a Lender or any Affiliate of a Lender)
shall not be made without the prior written consent of the Agent, the Issuing
Lender and Borrower (to be evidenced by their counterexecution of the relevant
Assignment and Acceptance), which consent shall not be unreasonably withheld,
74
(ii) each such assignment by a Lender shall be made in such manner so that the
same portion of its Commitment, Loans, Note or Notes and participations in
Letters of Credit is assigned to the relevant Assignee (provided that the Swing
Line Lender may assign all (but not less than all) of the Swing Line Loan
Commitment, the Swing Line Loan and the Swing Line Note without the necessity of
assigning a corresponding portion of its Commitment, Revolving Loans and
Revolving Note), (iii) except in the case of an assignment to a Lender or an
Affiliate of a Lender, the amount of the Commitment of the assignment to a
Lender being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to each such assignment)
shall in no event be less than the lesser of (y) the entire Commitment of such
Lender immediately prior to such assignment or (z) $5,000,000, and, in the case
of the Swing Line Lender, shall not be less than the entire Swing Line Loan
Commitment, and (iv) the parties to each such assignment will execute and
deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note or Notes subject to such
assignment, and will pay a nonrefundable processing fee of $3,000 to the Agent
for its own account. Upon such execution, delivery, acceptance and recording of
the Assignment and Acceptance, from and after the effective date specified
therein, which effective date shall be at least five Business Days after the
execution thereof (unless the Agent shall otherwise agree), (A) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of the assigning Lender
hereunder with respect thereto, and (B) the assigning Lender shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights (other than rights
under the provisions of this Agreement and the other Credit Documents relating
to indemnification or payment of fees, costs and expenses, to the extent such
rights relate to the time prior to the effective date of such Assignment and
Acceptance) and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of such assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto). The terms and provisions of each
Assignment and Acceptance shall, upon the effectiveness thereof, be incorporated
into and made a part of this Agreement, and the covenants, agreements and
obligations of each Lender set forth therein shall be deemed made to and for the
benefit of the Agent and the other parties hereto as if set forth at length
herein.
(B) The Agent will maintain at its address for notices referred to
herein a copy of each Assignment and Acceptance delivered to and accepted by it
and a Register for the recordation of the names and addresses of the Lenders and
the Commitments of, and principal amount of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and Borrower, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by Borrower and each Lender at any reasonable time and from time to
time upon reasonable prior notice.
(C) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an Assignee or counterexecuted by Borrower
(if required) and the Issuing Lender, together with any Note or Notes subject to
such assignment and the processing fee referred to in subsection (A) above, the
Agent will (i) accept such Assignment and Acceptance, (ii) on the effective date
75
thereof, record the information contained therein in the Register, and (iii)
give notice thereof to Borrower and the Lenders. Within five (5) Business Days
after its receipt of such notice, Borrower will execute and deliver to the Agent
in exchange for the surrendered Note or Notes a new Note or Notes to the order
of such Assignee in an aggregate principal amount equal to the principal amount
of the Commitment (or, if the Commitments have been terminated, the principal
amount of the Loans) assumed by it pursuant to such Assignment and Acceptance
and, to the extent the assigning Lender has retained its Loans and/or Commitment
hereunder, a new Note or Notes to the order of the assigning Lender in an
aggregate principal amount equal to the principal amount of the Commitment (or,
if the Commitments have been terminated, the principal amount of the Loans)
retained by it hereunder. Such new Note or Notes shall be dated the date of the
replaced Note or Notes and shall otherwise be in substantially the form of the
Notes delivered at Closing, as applicable. The Agent will return cancelled Notes
to Borrower.
(D) Each Lender may, without the consent of Borrower, the Agent or any
other Lender, sell to one or more other Persons (each, a "Participant")
participations in any portion comprising less than all of its rights and
obligations under this Agreement (including, without limitation, a portion of
its Commitment, the outstanding Loans made by it, the Note or Notes held by it
and its participations in Letters of Credit); provided, however, that (i) such
Lender's obligations under this Agreement shall remain unchanged and such Lender
shall remain solely responsible for the performance of such obligations, (ii) no
Lender shall sell any participation that, when taken together with all other
participations, if any, sold by such Lender, covers all of such Lender's rights
and obligations under this Agreement, (iii) Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
no Lender shall permit any Participant to have any voting rights or any right to
control the vote of such Lender with respect to any amendment, modification,
waiver, consent or other action hereunder or under any other Credit Document
(except as to actions that would (x) reduce or forgive the principal amount of,
or rate of interest on, any Loan, or reduce or forgive any fees or other
Obligations, (y) extend any date (including the Revolving Loan Maturity Date)
fixed for the payment of any principal of or interest on any Loan, any fees or
any other Obligations, or (z) increase any Commitment of any Lender), and (iv)
no Participant shall have any rights under this Agreement or any of the other
Credit Documents, each Participant's rights against the granting Lender in
respect of any participation to be those set forth in the participation
agreement, and all amounts payable by Borrower hereunder shall be determined as
if such Lender had not granted such participation. Notwithstanding the
foregoing, each Participant shall have the rights of a Lender for purposes of
Sections 5.7, 5.11, 5.12 and 11.3, and shall be entitled to the benefits
thereto, to the extent that the Lender granting such participation would be
entitled to such benefits if the participation had not been made, provided that
no Participant shall be entitled to receive any greater amount pursuant to any
of such Sections than the Lender granting such participation would have been
entitled to receive in respect of the amount of the participation made by such
Lender to such Participant had such participation not been made.
(E) Nothing in this Agreement shall be construed to prohibit any
Lender from pledging or assigning all or any portion of its rights and interest
hereunder or under any Note to any Federal Reserve Bank as security for
borrowings therefrom; provided, however, that no such pledge or assignment shall
release a Lender from any of its obligations hereunder.
76
(F) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section, disclose to
the Assignee or Participant or proposed Assignee or Participant any information
relating to Borrower and its Subsidiaries furnished to it by or on behalf of any
other party hereto, provided that such Assignee or Participant or proposed
Assignee or Participant agrees in writing to keep such information confidential
to the same extent required of the Lenders under Section 13.13.
(G) As used in this Section 13.7, the terms "Commitments" and
"Commitment" shall include the Swing Line Loan Commitment in the case of the
Swing Line Lender.
13.8 No Waiver. The rights and remedies of the Agent and the Lenders
expressly set forth in this Agreement and the other Credit Documents are
cumulative and in addition to, and not exclusive of, all other rights and
remedies available at law, in equity or otherwise. No failure or delay on the
part of the Agent or any Lender in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege or be construed
to be a waiver of any Default or Event of Default. No course of dealing between
any of Borrower and the Agent or the Lenders or their agents or employees shall
be effective to amend, modify or discharge any provision of this Agreement or
any other Credit Document or to constitute a waiver of any Default or Event of
Default. No notice to or demand upon Borrower in any case shall entitle Borrower
to any other or further notice or demand in similar or other circumstances or
constitute a waiver of the right of the Agent or any Lender to exercise any
right or remedy or take any other or further action in any circumstances without
notice or demand.
13.9 Successors and Assigns. This Agreement shall be binding upon, inure to
the benefit of and be enforceable by the respective successors and assigns of
the parties hereto, and all references herein to any party shall be deemed to
include its successors and assigns; provided, however, that (i) Borrower shall
not sell, assign or transfer any of its rights, interests, duties or obligations
under this Agreement or any other Credit Document without the prior written
consent of all of the Lenders, and (ii) any Assignees shall have such rights and
obligations with respect to this Agreement and the other Credit Documents as are
provided for under and pursuant to the provisions of Section 13.7.
13.10 Survival. All representations, warranties and agreements made by or
on behalf of Borrower or any of its Subsidiaries in this Agreement and in the
other Credit Documents shall survive the execution and delivery hereof or
thereof, the making and repayment of the Loans and the issuance and repayment of
the Letters of Credit. In addition, notwithstanding anything herein or under
applicable Law to the contrary, the provisions of this Agreement and the other
Credit Documents relating to indemnification or payment of fees, costs and
expenses, including, without limitation, the provisions of Sections 5.7, 5.11,
5.12, 12.7, 13.1 and 13.2, shall survive the payment in full of all Loans and
Letters of Credit, the termination of the Commitments and all Letters of Credit,
and any termination of this Agreement or any of the other Credit Documents.
13.11 Severability. To the extent any provision of this Agreement is
prohibited by or invalid under the applicable Law of any Jurisdiction, such
77
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such Jurisdiction, without prohibiting or invalidating
such provision in any other Jurisdiction or the remaining provisions of this
Agreement in any Jurisdiction.
13.12 Construction. The headings of the various articles, sections and
subsections of this Agreement have been inserted for convenience only and shall
not in any way affect the meaning or construction of any of the provisions
hereof. Except as otherwise expressly provided herein and in the other Credit
Documents, in the event of any inconsistency or conflict between any provision
of this Agreement and any provision of any of the other Credit Documents, the
provision of this Agreement shall control.
13.13 Confidentiality. Each Lender agrees to keep confidential, pursuant to
its customary procedures for handling confidential information of a similar
nature and in accordance with safe and sound banking practices, all nonpublic
information provided to it by or on behalf of Borrower or any of its
Subsidiaries in connection with this Agreement or any other Credit Document;
provided, however, that any Lender may disclose such information (i) to its
directors, employees and agents and to its auditors, counsel and other
professional advisors, (ii) at the demand or request of any bank regulatory
authority, court or other Governmental Authority having or asserting
jurisdiction over such Lender, as may be required pursuant to subpoena or other
legal process, or otherwise in order to comply with any applicable Requirement
of Law, (iii) in connection with any proceeding to enforce its rights hereunder
or under any other Credit Document or any other litigation or proceeding related
hereto or to which it is a party, (iv) to the Agent or any other Lender, (v) to
the extent the same has become publicly available other than as a result of a
breach of this Agreement, and (vi) pursuant to and in accordance with the
provisions of Section 13.7(F).
13.14 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. This Agreement shall
become effective upon the execution of a counterpart hereof by each of the
parties hereto and receipt by the Agent and Borrower of written or telephonic
notification of such execution and authorization of delivery thereof.
13.15 Entire Agreement. THIS AGREEMENT AND THE OTHER DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH (A) EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND THERETO RELATING TO
THE SUBJECT MATTER HEREOF AND THEREOF, (B) SUPERSEDE ANY AND ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, ORAL OR WRITTEN, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF, INCLUDING THE COMMITMENT LETTER FROM
SOUTHTRUST TO BORROWER DATED APRIL 12, 2001 (EXCEPT AS SPECIFICALLY OTHERWISE
PROVIDED THEREIN AS TO CERTAIN PROVISIONS THAT SHALL SURVIVE THE EXECUTION OF
THIS AGREEMENT), BUT SPECIFICALLY EXCLUDING THE FEE LETTER, AND (C) MAY NOT BE
AMENDED, SUPPLEMENTED, CONTRADICTED OR OTHERWISE MODIFIED BY EVIDENCE OF PRIOR,
78
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
79
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the day and year
first above written.
MOVIE GALLERY, INC.
By:/s/ S. Page ▇▇▇▇
-----------------------------------
S. Page ▇▇▇▇, Senior Vice President
STATE OF ALABAMA
COUNTY OF JEFFERSON
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that S. Page ▇▇▇▇, whose name as Senior Vice President of
Movie Gallery, Inc., a Delaware corporation, is signed to the foregoing
instrument, and who is known to me, acknowledged before me that, being informed
of the contents of such instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.
Given under my hand and official seal, this the 27th day of June,
2001.
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------(SEAL)
Notary Public
My Commission Expires: 1/10/2005
80
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the day and year
first above written.
Commitment: $25,000,000 SOUTHTRUST BANK, as Agent, as Issuing Lender,
as Swing Line Lender, and as a Revolving Loan
Lender
By:/s/ W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------
Its: Vice President
STATE OF ALABAMA
COUNTY OF JEFFERSON
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, whose name as Vice President of
SouthTrust Bank, an Alabama banking corporation, is signed to the foregoing
instrument, and who is known to me, acknowledged before me that, being informed
of the contents of such instrument, he/she, as such officer and with full
authority, executed the same voluntarily for and as the act of said banking
corporation.
Given under my hand and official seal, this the 27th day of June,
2001.
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------(SEAL)
Notary Public
My Commission Expires: 1/10/2005
Address for Notices (as Issuing Lender, Lending Office:
Swing Line Lender, and a Revolving Loan
Lender):
SouthTrust Bank SouthTrust Bank
▇.▇. ▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Banking Dept. Attention: Corporate Banking Dept.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
81
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the day and year
first above written.
Commitment: $20,000,000 FIRSTAR BANK, N.A., as a Revolving Loan Lender
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Its: Vice President
STATE OF MISSOURI
CITY OF ST. LOUIS
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, whose name as Vice President of
Firstar Bank, N.A., a national banking association, is signed to the foregoing
instrument, and who is known to me, acknowledged before me that, being informed
of the contents of such instrument, he/she, as such officer and with full
authority, executed the same voluntarily for and as the act of said banking
association.
Given under my hand and official seal, this the 25th day of June,
2001.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------(SEAL)
Notary Public
My Commission Expires: March 10, 2003
Address for Notices: Lending Office:
Firstar Bank, N.A. Firstar Bank, N.A.
One Firstar Plaza One Firstar Plaza
Twelfth Floor Twelfth Floor
St. Louis, Missouri 63101 ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
82
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the day and year
first above written.
Commitment: $10,000,000 REGIONS BANK, as a Revolving Loan Lender
By:/s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------
Its: Assistant Vice President
STATE OF ALABAMA
COUNTY OF JEFFERSON
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that ▇▇▇ ▇▇▇▇▇▇▇▇▇, whose name as Asst. Vice President of
Regions Bank, an Alabama banking corporation, is signed to the foregoing
instrument, and who is known to me, acknowledged before me that, being informed
of the contents of such instrument, he/she, as such officer and with full
authority, executed the same voluntarily for and as the act of said banking
corporation.
Given under my hand and official seal, this the 26th day of June,
2001.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------(SEAL)
Notary Public
My Commission Expires: March 27, 2004
Address for Notices: Lending Office:
Regions Bank Regions Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇ Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
83
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the day and year
first above written.
Commitment: $10,000,000 COMPASS BANK, as a Revolving Loan Lender
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Its: Assistant Vice President
STATE OF ALABAMA
COUNTY OF HOUSTON
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, whose name as Assistant Vice
President of Compass Bank, an Alabama banking corporation, is signed to the
foregoing instrument, and who is known to me, acknowledged before me that, being
informed of the contents of such instrument, he/she, as such officer and with
full authority, executed the same voluntarily for and as the act of said banking
corporation.
Given under my hand and official seal, this the 25th day of June,
2001.
/s/ Joy ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------(SEAL)
Notary Public
My Commission Expires: 2/2/2002
Address for Notices: Lending Office:
Compass Bank Compass Bank
1263 West Main ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
84
EXHIBIT A
ASSIGNMENT AND ACCEPTANCE
Reference is made to that certain Credit Agreement dated as of June 27,
2001 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Movie Gallery, Inc. (the "Borrower"), the Agent and
the other Lender Parties (both as defined in the Credit Agreement). Terms
defined in the Credit Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 hereto
agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, an interest in and to
the Assignor's rights and obligations under the Credit Agreement as of the date
hereof equal to the percentage interest specified on Schedule 1 hereto of all
outstanding rights and obligations under the Credit Agreement. After giving
effect to such sale and assignment, the Assignee's Commitments and the amount of
the Advances owing to the Assignee will be as set forth on Schedule 1 hereto.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of, or the perfection or priority of any lien or security interest
created or purported to be created under or in connection with, the Credit
Documents or any other instrument or document furnished pursuant thereto; and
(iii) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Borrower Party or any Lender Party or
the performance or observance by any Borrower Party or any Lender Party of any
of its obligations under any Credit Document or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Note or Notes held by the
Assignor and requests that the Agent exchange such Note or Notes for a new Note
or Notes payable to the order of the Assignee in an amount equal to the
Commitments assumed by the Assignee pursuant hereto or new Notes payable to the
order of the Assignee in an amount equal to the Commitments assumed by the
Assignee pursuant hereto and the Assignor in an amount equal to the Commitments
retained by the Assignor under the Credit Agreement, respectively, as specified
on Schedule 1 hereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with such financial information and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender Party 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 the Credit Agreement; (iii) confirms that it is an
Eligible Assignee; (iv) appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers and discretion under the Credit
A-1
Documents as are delegated to the Agent by the terms thereof, together with such
powers and discretion as are reasonably incidental thereto; and (v) agrees that
it will perform in accordance with their terms all of the obligations that by
the terms of the Credit Agreement are required to be performed by it as a Lender
Party.
4. Following the execution of this Assignment and Acceptance, this
document will be delivered to the Agent for acceptance and recording by the
Agent. The effective date for this Assignment and Acceptance (the "Effective
Date") shall be the date of acceptance hereof by the Agent, unless otherwise
specified on Schedule 1 hereto.
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender Party thereunder and (ii) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement and
the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Notes for periods
prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the Laws of the State of Alabama.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to
this Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.
[NAME OF ASSIGNOR], as Assignor [NAME OF ASSIGNEE], as Assignee
By: By:
---------------------------- -------------------------------
Title: Title:
Dated: ___________, 20__ Dated: ___________, 20__
A-2
Accepted and Approved this ____
day of ___________, 20__
[NAME OF AGENT]
By:
----------------------------
Title:
-------------------------
Dated: ___________, 20__
A-3
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
A. Assignor's Credit Percentage before assignment __________%
B. Assignor's Credit Percentage being assigned __________%
C. Assignor's Credit Percentage remaining after assignment __________%
Note: The sum of B and C must total A.
A. Aggregate outstanding Advances of Assignor before assignment $__________
B. Aggregate outstanding Advances of Assignor after assignment $__________
C. Aggregate outstanding Advances of Assignee after assignment $__________
A. Maximum principal amount of Revolving Note
payable to Assignor before assignment $__________
B. Maximum principal amount of Revolving Note
payable to Assignor after assignment $__________
C. Maximum principal amount of Revolving Note
payable to Assignee after assignment $__________
[NAME OF ASSIGNOR], as Assignor [NAME OF ASSIGNEE], as Assignee
By: By:
---------------------------- -------------------------------
Title: Title:
Dated: ___________, 20__ Dated: ___________, 20__
Accepted and Approved this ____
day of ___________, 20__
[NAME OF AGENT]
By:
----------------------------
Title:
-------------------------
Dated: ___________, 20__
A-4
EXHIBIT B
COMPLIANCE CERTIFICATE
To: SouthTrust Bank
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Banking Department
Reference is made to that certain Credit Agreement dated as of June 27,
2001 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Movie Gallery, Inc. (the "Borrower"), the Agent and
the other Lender Parties (both as defined in the Credit Agreement). Terms
defined in the Credit Agreement are used herein with the same meaning.
A. Set forth below (and on the attached covenant compliance worksheets) is the
financial data and computation evidencing Borrower's compliance with the
financial covenants set forth in the Credit Agreement.
(1) Leverage Ratio -------------------------- 1
(2) Interest Coverage Ratio -------------------------- 2
(3) Fixed Charge Coverage -------------------------- 3
(4) Net Worth -------------------------- 4
(5) Permitted Acquisitions -------------------------- 5
B. Attached hereto are copies of the financial statements required under Section
8.1 of the Credit Agreement.
-------------
1 Requirement-Not more than 2.5 to 1.0 through 1/6/2002 and 2.0 to 1.0
thereafter.
2 Requirement - Not less than 3.5 to 1.0 through 1/6/2002 and 4.0 to 1.0
thereafter.
3 Requirement - Not less thatn 1.05 to 1.0.
4 Requirement - $125,000,000 plus 75% of Net Income per quarter, plus 100% of
increases in capital, less 100% of stock repurchases, but not less than
$109,000,000.
5 Requirement- Limited to $15,000,000 cash and $35,000,000 total during each
trailing Reference Period.
B-1
C. The undersigned is the chief financial officer of the Borrower, and hereby
certifies that the information contained herein and attached hereto is true and
correct, and that I have individually reviewed the provisions of the Credit
Agreement and the activities of the Borrower and its Subsidiaries through the
period covered by this report with a view to determining whether the Borrower
has kept, observed, performed and fulfilled all of its obligations under the
Credit Agreement, and to the best of my knowledge, the Borrower has observed and
performed each and every undertaking contained in the Credit Agreement, there
has occurred no Material Adverse Change since the date of the Credit Agreement,
and there does not exist on the date hereof a Default, except as follows:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Executed this ______ day of __________________, 20__.
---------------------------------------------
Print Name:
-----------------------------------
B-2
ATTACHMENT A
COVENANT COMPLIANCE WORKSHEET
1 Leverage Ratio 1(1)
(Section 9.1 of the Credit Agreement)
(1) Funded Debt
(a) Aggregate amount of Funded Debt $__________
(b) Less cash and Cash Equivalents in excess of
$1,500,000 ($__________)
(c) Funded Debt $__________
Subtract line 1(b) from line 1(a))
(2) Operating Cash Flow (2)
(a) Net Income $__________
(b) Interest Expense, Income Tax Expense, $__________
Depreciation Expense, Amortization Expense
and Extraordinary Losses and Other Non-Cash
Expenses and Charges reducing income
(c) Less Extraordinary Receipts ($__________)
(d) Less Extraordinary Gains and other ($__________)
Non-Cash Credits increasing income
(e) Less Rental Inventory purchases ($__________)
(other than New Retail Store Rental
Inventory purchases)
(f) Operating Cash Flow $__________
(Total of 2(a) through 2(e))
(3) Ratio of Funded Debt to Operating Cash Flow: __________
(Divide Line 1(c) by Line 2(f))
2 Interest Coverage Ratio 3 Not less than ____ to 1.0
--------------
1 Ratio of Funded Debt to Operating Cash Flow.
2 Excluding results from operations sold after the first day of the
applicable Trailing Reference Period and including (with the consent of the
Agent) the operations of a Permitted Acquisition if the Acquisition Amount
exceeds $5,000,000.
3 Ratio of Operating Cash Flow to Interest Expense.
B-3
(1) Operating Cash Flow 4 $__________
(2) Interest Expense $__________
(3) Interest Coverage Ratio __________
(Divide Line 1 by Line 2)
3 Fixed Charge Coverage 5
(Section 9.3 of the Credit Agreement)
(1) Operating Cash Flow plus Lease Expense
(a) Operating Cash Flow 6 $__________
(b) Lease Expense $__________
(c) Operating Cash Flow plus Lease Expense $__________
(Total of 1(a) plus 1(b))
(2) Interest Expense, Lease Expense, Income Tax
Expense, and Principal Payments of Funded Debt
(a) Interest Expense $__________
(b) Lease Expenses $__________
(c) Income Tax Expense $__________
(d) Principal Payments of Funded Debt $__________
(e) Interest Expense, Lease Expense, Income Tax $__________
Expense, and Principal Payments of Funded Debt
(Total of 2(a) through 2(d))
(3) Fixed Charge Coverage __________
(Divide Line 1(c) by Line 2(e))
4 Net Worth 7
(Section 9.4 of the Credit Agreement):
--------------
4 Refer to Leverage Ratio for Detail of computation of Operating Cash
Flow.
5 Ratio ofOperating Cash Flow plus Lease Expense to Interest Expense,
Lease Expense, Income Tax Expense and principal payments of Funded Debt.
6 Refer to Leverage Ratio for detail of computation of Operating Cash
Flow.
7 Excess of total Assets over total Liabilities, plus Subordinated
Indebtedness.
B-4
(1) Base Net Worth Requirement $125,000,000
(2) Net Income for each fiscal quarter (if positive)
ending after April 1, 2001, multiplied by 75% $__________
(3) Aggregate amount of all increases in the stated $__________
capital and additional paid-in capital accounts
resulting from the issuance of Equity Interests
after December 31, 2000
(4) Less aggregate amount of stock repurchases effected ($__________)
by the Borrower after December 31, 2000
(5) Required Net Worth: $__________
(Total of (1), (2) (3), less (4))
(6) Actual Net Worth as of measurement date $__________
5 Permitted Acquisitions8 Not greater than the following:
(1) Cash Limitation:
(a) Maximum permitted Acquisition Amounts (to
the extent paid or payable in cash) for all
Acquisitions consummated during the
applicable Trailing Reference Period $__________
(b) Actual Acquisition Amounts (to the extent
paid or payable in cash) for all Acquisitions
consummated during the applicable Trailing
Reference Period $__________
(2) Aggregate Limitation:
(a) Maximum permitted Acquisition Amounts
(regardless of the form of consideration)
for all Acquisitions consummated during the
applicable Trailing Reference Period $__________
(b) Actual Acquisition Amounts (regardless of
the form of consideration) for all
Acquisitions consummated during the
applicable Trailing Reference Period $__________
--------------
8 As defined in the Credit Agreement.
B-5
EXHIBIT C
LENDERS' COMMITMENTS
SouthTrust $25,000,000
Firstar Bank, N.A. 20,000,000
Regions Bank 10,000,000
Compass Bank 10,000,000
C-1
SCHEDULE 7.6
TAX AUDITS AND EXAMINATIONS
M.G.A., Inc. is currently under audit by the Florida Department of Revenue. The
focus of the audit concerns the Florida sales and use taxes for the period
12/01/95 through 12/31/2000. The use tax portion of the audit has been completed
successfully with zero discrepancies. The sales tax portion has not been
finalized as the company is still gathering information for the state. The only
potential exposure will be some additional tax due as a result of an effective
tax rate higher than the flat tax rate. We expect that any additional tax due
will be minimal compared to what the company remits on a monthly basis.
M.G.A., Inc. has been recently notified by the Georgia Department of Revenue of
an impending Sales and Use tax audit. The audit is set to begin July 9, 2001.
The audit will cover a three (3) year period.
There are no other audits in progress or pending for Movie Gallery, Inc. or any
of its subsidiaries.
SCHEDULE 7.7
BORROWER'S SUBSIDIARIES AND OWNERSHIP
State of Incorporation/ Percentage Type of
Name of Entity Organization Ownership Security
-------------- ---------------------- ---------- --------
M.G.A., Inc. Delaware 100% Common Stock
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. Delaware 100% Common Stock
Movie Gallery Finance, Inc. Delaware 100% Common Stock
*Movie Gallery No. 1, LLC Delaware 100% Ownership Interest
*Movie Gallery No. 2, LLC Delaware 100% Ownership Interest
*Immaterial Subsidiaries
SCHEDULE 7.14
ENVIRONMENTAL MATTERS
NONE
SCHEDULE 7.17
INSURANCE POLICIES
General Liability, Automobile Liability, Excess Liability, Workers Compensation
and Employers Liability and Personal Property (See Attached Certificate of
Insurance)
Directors, Officers and Corporate Liability (See Attached Coverage Summary)
Aircraft Liability and Aircraft Hull (See Attached Certificate of Insurance)
SCHEDULE 10.2
PERMITTED INDEBTEDNESS
NONE
SCHEDULE 10.3
PERMITTED LIENS
NONE
SCHEDULE 10.5
PERMITTED INVESTMENTS
Video Update, Inc.
--------------------
In connection with the proposed acquisition of Video Update, Inc., Borrower and
Movie Gallery No. 1, LLC have acquired approximately 92% of Video Update's
senior secured bank debt. The bank debt, which has a face value of approximately
$111.3 million, was purchased for the sum of $8.5 million. Borrower is also
providing additional financing to Video Update for its working capital needs
under a $5 million debtor-in-possession credit facility.
Echo, LLC, d/b/a Xpresss Source
-------------------------------
Echo, LLC is an Alabama limited liability company in which M.G.A., Inc. owns a
33 1/3% ownership interest. Echo is in the wholesale business products and
janitorial supply business, and it provides Borrower and its subsidiaries with
various products. M.G.A. provides financing to Echo for its working capital
needs under a $250,000 revolving credit facility.
SCHEDULE 10.7
PERMITTED TRANSACTIONS WITH AFFILIATES
NONE
SCHEDULE 10.10
FISCAL PERIODS
2001 Fiscal Year 2002 Fiscal Year 2003 Fiscal Year 2004 Fiscal Year
Period 1 1/1/01 - 2/4/01 1/7/02 - 2/10/02 1/6/03 - 2/9/03 1/5/04 - 2/8/04
Period 2 2/5/01 - 3/4/01 2/11/02 - 3/10/02 2/10/03 - 3/9/03 2/9/04 - 3/7/04
Period 3 3/5/01 - 4/1/01 3/11/02 - 4/7/02 3/10/03 - 4/6/03 3/8/04 - 4/4/04
Period 4 4/2/01 - 5/6/01 4/8/02 - 5/12/02 4/7/03 - 5/11/03 4/5/04 - 5/9/04
Period 5 5/7/01 - 6/3/01 5/13/02 - 6/9/02 5/12/03 - 6/8/03 5/10/04 - 6/6/04
Period 6 6/4/01 - 7/1/01 6/10/02 - 7/7/02 6/9/03 - 7/6/03 6/7/04 - 7/4/04
Period 7 7/2/01 - 8/5/01 7/8/02 - 8/11/02 7/7/03 - 8/10/03 7/5/04 - 8/8/04
Period 8 8/6/01 - 9/2/01 8/12/02 - 9/8/02 8/11/03 - 9/7/03 8/9/04 - 9/5/04
Period 9 9/3/01 - 9/30/01 9/9/02 - 10/6/02 9/8/03 - 10/5/03 9/6/04 - 10/3/04
Period 10 10/1/01 - 11/4/01 10/7/02 - 11/10/02 10/6/03 - 11/9/03 10/4/04 - 11/7/04
Period 11 11/5/01 - 12/2/01 11/11/02 - 12/8/02 11/10/03 - 12/7/03 11/8/04 - 12/5/04
Period 12 12/3/01 - 1/6/02 12/9/02 - 1/5/03 12/8/03 - 1/4/04 12/6/04 - 1/2/05