Exhibit 10.17
CREDIT AGREEMENT
among
MOVIE GALLERY, INC.,
THE LENDERS NAMED HEREIN,
and
FIRST UNION NATIONAL BANK,
as Agent, as Issuing Lender and as Swingline Lender
Revolving Credit Facility
Arranged by
FIRST UNION CAPITAL MARKETS
A division of Wheat First Securities, Inc.
Dated as of January 7, 1999
TABLE OF CONTENTS
Page
RECITALS .....................................................................1
ARTICLE I
DEFINITIONS
1.1 Defined Terms............................................................1
1.2 Accounting Terms........................................................19
1.3 Other Terms; Construction...............................................19
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1 Commitments; Loans......................................................20
2.2 Borrowings..............................................................20
2.3 Disbursements; Funding Reliance; Domicile of Loans......................23
2.4 Notes...................................................................24
2.5 Termination and Reduction of Commitments and Swingline Commitment.......25
2.6 Voluntary and Mandatory Payments and Prepayments........................25
2.7 Interest................................................................27
2.8 Fees....................................................................29
2.9 Interest Periods........................................................29
2.10 Conversions and Continuations...........................................30
2.11 Method of Payments; Computations........................................31
2.12 Recovery of Payments....................................................32
2.13 Use of Proceeds.........................................................33
2.14 Pro Rata Treatment; Sharing of Payments.................................33
2.15 Increase of the Aggregate Commitments...................................34
2.16 Increased Costs; Change in Circumstances; Illegality; etc...............34
2.17 Taxes ..................................................................36
2.18 Compensation............................................................38
ARTICLE III
LETTERS OF CREDIT
3.1 Issuance................................................................38
3.2 Notices.................................................................39
3.3 Participations..........................................................40
3.4 Reimbursement...........................................................40
3.5 Payment by Revolving Loans..............................................40
3.6 Payment to Lenders......................................................41
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3.7 Obligations Absolute....................................................41
3.8 Cash Collateral Account.................................................42
3.9 Effectiveness...........................................................43
ARTICLE IV
CONDITIONS OF BORROWING
4.1 Conditions of Initial Borrowing.........................................43
4.2 Conditions of All Borrowings............................................46
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Corporate Organization and Power........................................47
5.2 Authorization; Enforceability...........................................47
5.3 No Violation............................................................47
5.4 Governmental Authorization; Permits.....................................48
5.5 Litigation..............................................................48
5.6 Taxes...................................................................48
5.7 Subsidiaries............................................................48
5.8 Full Disclosure.........................................................49
5.9 Margin Regulations......................................................49
5.10 No Material Adverse Change..............................................49
5.11 Financial Matters.......................................................49
5.12 Ownership of Properties.................................................50
5.13 ERISA ..................................................................50
5.14 Environmental Matters...................................................50
5.15 Compliance With Laws....................................................51
5.16 Regulated Industries....................................................51
5.17 Insurance...............................................................51
5.18 Material Contracts......................................................51
5.19 Security Documents......................................................52
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Financial Statements....................................................52
6.2 Other Business and Financial Information................................53
6.3 Corporate Existence; Franchises; Maintenance of Properties..............55
6.4 Compliance with Laws....................................................55
6.5 Payment of Obligations..................................................55
6.6 Insurance...............................................................56
6.7 Maintenance of Books and Records; Inspection............................56
6.8 Interest Rate Protection................................................56
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6.9 Permitted Acquisitions..................................................56
6.10 Creation or Acquisition of Subsidiaries.................................58
6.11 Further Assurances......................................................59
ARTICLE VII
FINANCIAL COVENANTS
7.1 Leverage Ratio..........................................................59
7.2 Interest Coverage Ratio.................................................59
7.3 Fixed Charge Coverage Ratio.............................................60
7.4 Consolidated Net Worth..................................................60
ARTICLE VIII
NEGATIVE COVENANTS
8.1 Merger; Consolidation...................................................60
8.2 Indebtedness............................................................61
8.3 Liens...................................................................62
8.4 Disposition of Assets...................................................63
8.5 Investments.............................................................64
8.6 Restricted Payments.....................................................65
8.7 Transactions with Affiliates............................................66
8.9 Lines of Business.......................................................66
8.10 Limitation on Certain Restrictions......................................66
8.11 Fiscal Periods..........................................................66
8.12 Accounting Changes......................................................67
ARTICLE IX
EVENTS OF DEFAULT
9.1 Events of Default.......................................................67
9.2 Remedies: Termination of Commitments, Acceleration, etc.................70
9.3 Remedies: Set-Off.......................................................70
ARTICLE X
THE AGENT
10.1 Appointment............................................................71
10.2 Nature of Duties.......................................................71
10.3 Exculpatory Provisions.................................................51
10.4 Reliance by Agent......................................................72
10.5 Non-Reliance on Agent and Other Lenders................................72
10.6 Notice of Default......................................................73
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10.7 Indemnification........................................................73
10.8 The Agent in its Individual Capacity...................................73
10.9 Successor Agent........................................................74
10.10 Collateral Matters.....................................................74
ARTICLE XI
MISCELLANEOUS
11.1 Fees and Expenses......................................................71
11.2 Indemnification........................................................75
11.3 Governing Law; Consent to Jurisdiction.................................76
11.4 Arbitration; Preservation and Limitation of Remedies...................77
11.5 Notices................................................................78
11.6 Amendments, Waivers, etc...............................................79
11.7 Assignments, Participations............................................79
11.8 No Waiver..............................................................82
11.9 Successors and Assigns. ...............................................82
11.10 Survival...............................................................82
11.11 Severability...........................................................82
11.12 Construction...........................................................83
11.13 Confidentiality........................................................83
11.14 Counterparts...........................................................83
11.15 Entire Agreement.......................................................83
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EXHIBITS
Exhibit A-1 Form of Revolving Credit Note
Exhibit A-2 Form of Swingline Note
Exhibit B-1 Form of Notice of Revolving Borrowing
Exhibit B-2 Form of Notice of Swingline Borrowing
Exhibit B-3 Form of Notice of Conversion/Continuation
Exhibit B-4 Form of Letter of Credit Notice
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Compliance Certificate
Exhibit E Form of Pledge Agreement
Exhibit F Form of Subsidiaries Guaranty
SCHEDULES
Schedule 5.6 Taxes
Schedule 5.7 Subsidiaries
Schedule 5.14 Environmental Matters
Schedule 5.17 Insurance
Schedule 8.2 Indebtedness
Schedule 8.3 Liens
Schedule 8.5 Investments
Schedule 8.7 Transactions with Affiliates
Schedule 8.10 Fiscal Periods
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of the 7th of January, 1999 (this
"Agreement"), is made among MOVIE GALLERY, INC., a Delaware corporation with its
principal offices in Dothan, Alabama (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 FIRST UNION NATIONAL
BANK ("First Union"), 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 Swingline Loans (in such capacity, the "Swingline Lender").
RECITALS
A. The Borrower has requested that the Lenders make available to the
Borrower a revolving credit facility in the initial aggregate principal amount
of $65,000,000. The 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 for
working capital and general corporate purposes, all as more fully described
herein.
B. The Lenders are willing to make available to the Borrower the revolving
credit facility described above subject to and on the terms and conditions set
forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual provisions, covenants and
agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. For purposes of this Agreement, in addition to the
terms 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" shall mean a letter from the Borrower to the
Agent, duly completed and signed by an Authorized Officer of the Borrower and in
form and substance satisfactory to the Agent, listing any one or more accounts
to which the Borrower may from time to time request the Agent to forward the
proceeds of any Loans made hereunder.
"Acquisition" shall mean any transaction or series of related
transactions, consummated on or after the Closing Date, by which the Borrower
directly, or indirectly through one or more Subsidiaries, (i) acquires any going
business, or all or substantially all of the assets, of any Person, whether
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through purchase of assets, merger or otherwise, or (ii) acquires securities or
other ownership interests of any Person having at least a majority of combined
voting power of the then outstanding securities or other ownership interests of
such Person.
"Acquisition Amount" shall mean, with respect to any Acquisition, the sum
(without duplication) of (i) the amount of cash paid by the Borrower and its
Subsidiaries in connection with such Acquisition, (ii) the Fair Market Value of
all capital stock of the Borrower 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 the 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 the 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
the Borrower and its Subsidiaries in connection with such Acquisition and (vii)
the aggregate fair market value of all other consideration given by the Borrower
and its Subsidiaries in connection with such Acquisition.
"Adjusted Base Rate" shall mean, at any time with respect to any Base Rate
Loan, a rate per annum equal to the Base Rate as in effect at such time plus the
applicable Margin Percentage as in effect at such time.
"Adjusted LIBOR Rate" shall mean, at any time with respect to any LIBOR
Loan, a rate per annum equal to the LIBOR Rate as in effect at such time plus
the applicable Margin Percentage as in effect at such time.
"Agent" shall mean First Union, in its capacity as Agent appointed under
Article X, and its successors and permitted assigns in such capacity.
"Affiliate" shall mean, 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" shall mean (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.
"Aggregate Commitments" shall mean, at any time, the sum of the
Commitments at such time.
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"Aggregate Unutilized Commitments" shall mean, at any time, (i) the
Aggregate Commitments at such time less (ii) the sum of (x) the aggregate
principal amount of Revolving Loans outstanding at such time, (y) the aggregate
Letter of Credit Exposure of all Lenders at such time and (z) the aggregate
principal amount of Swingline Loans outstanding at such time (excluding the
aggregate amount of any Swingline Loans to be repaid with proceeds of Revolving
Loans that are determined to be outstanding for purposes of this definition).
"Agreement" shall mean this Credit Agreement, as amended, modified or
supplemented from time to time.
"Allowed Acquisition" shall mean any Acquisition with respect to which all
of the following conditions are satisfied: (i) each business acquired shall be
within the Permitted Lines of Business, (ii) any capital stock or other equity
securities given as consideration in connection therewith shall be stock or
securities of the Borrower, (iii) in the case of an Acquisition involving the
acquisition of control of capital stock or other ownership interests of any
Person, immediately after giving effect to such Acquisition such Person (or the
surviving Person, if the Acquisition is effected through a merger or
consolidation) shall be the Borrower or a Wholly Owned Subsidiary of the
Borrower, and (iv) all of the requirements of Sections 6.9 and 6.10 applicable
to such Acquisition are satisfied.
"Asset Disposition" shall mean any sale, assignment, transfer or other
disposition by the Borrower or any of its Subsidiaries to any other Person of
any of its assets, business units or other properties (including (a) any
interests in property and (b) ownership interests in Subsidiaries), excluding
(i) Designated Store Exchanges, (ii) sales of inventory (including rental tapes)
in the ordinary course of business and (iii) 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 useful for the operations of the Borrower and
its Subsidiaries in the ordinary course of business.
"Assignee" shall have the meaning given to such term in Section 11.7(a).
"Assignment and Acceptance" shall mean an Assignment and Acceptance
entered into between a Lender and an Assignee and accepted by the Agent and the
Borrower, in substantially the form of Exhibit C.
"Authorized Officer" shall mean any officer of the Borrower authorized by
resolution of the board of directors of the Borrower to take the action
specified herein with respect to such officer and whose signature and incumbency
shall have been certified to the Agent by the secretary or an assistant
secretary of the Borrower.
"Bankruptcy Code" shall mean 11 U.S.C. ▇▇.▇▇. 101 et seq., as amended from
time to time, and any successor statute.
"Base Rate" shall mean the higher of (i) the per annum interest rate
publicly announced from time to time by First Union in Charlotte, North
Carolina, 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
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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 Loan" shall mean, at any time, any Loan that bears interest at
such time at the Adjusted Base Rate.
"Base Stock Purchases" shall mean purchases of video tapes and game
cartridges by the Borrower or any of its Subsidiaries (i) for use in a new
retail store as rental inventory and (ii) that are capitalized as rental
inventory.
"Borrower Margin Stock" shall mean shares of capital stock of the Borrower
that are held by the Borrower or any of its Subsidiaries and that constitute
Margin Stock.
"Borrowing" shall mean the incurrence by the Borrower (including as a
result of conversions and continuations of outstanding Revolving Loans pursuant
to Section 2.10) on a single date of a group of Revolving Loans of a single Type
(or a Swingline Loan made by the Swingline Lender) and, in the case of LIBOR
Loans, as to which a single Interest Period is in effect.
"Borrowing Date" shall mean, with respect to any Borrowing, the date upon
which such Borrowing is made.
"Business Day" shall mean (i) any day other than a Saturday or Sunday, a
legal holiday or a day on which commercial banks in Charlotte, North Carolina
are required by law to be closed and (ii) in respect of any determination
relevant to a LIBOR Loan, any such day that is also a day on which tradings are
conducted in the London interbank Eurodollar market.
"Capital Expenditures" shall mean, 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 the 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 video tapes or game
cartridges.
"Cash Collateral Account" shall have the meaning given to such term in
Section 3.8.
"Cash Equivalents" shall mean (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
4
the laws of the United States of America or any state thereof that has combined
capital and surplus of at least $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" shall mean, with respect to any property (including any
interest in property) of the Borrower or any of its Subsidiaries, any loss of,
damage to, or condemnation or other taking of, such property for which the
Borrower or such Subsidiary receives insurance proceeds, proceeds of a
condemnation award or other compensation.
"Closing Date" shall mean the date upon which the initial extensions of
credit are made pursuant to this Agreement.
"Collateral" shall mean 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.
"Commitment" shall mean, with respect to any Lender at any time, the
obligation of such Lender to make Loans to and participate in Letters of Credit
issued for the account of the Borrower in an aggregate or face amount at any
time outstanding not to exceed the amount set forth opposite such Lender's name
on its signature page hereto under the caption "Commitment" or, if such Lender
has made an increased or new commitment pursuant to Section 2.15 or has entered
into one or more Assignment and Acceptances, the amount set forth for such
Lender at such time in the Register maintained by the Agent pursuant to Section
11.7(b) as such Lender's "Commitment," as such amount may be reduced at or prior
to such time pursuant to the terms hereof.
"Compliance Certificate" shall mean a fully completed and duly executed
certificate in the form of Exhibit D.
"Consolidated Funded Debt" shall mean, as of the last day of any fiscal
quarter, the difference between (i) the aggregate (without duplication) of all
Funded Debt of the Borrower and its Subsidiaries as of such date (provided that
any Contingent Obligation of the Borrower and its Subsidiaries shall be included
only in the event that it relates to Indebtedness of any other Person),
determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles, and (ii) the amount by which the aggregate cash balances
and Cash Equivalents of the Borrower and its Subsidiaries as of such date,
determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles, exceed $1,500,000. For purposes of determining
Consolidated Funded Debt as of any date, each Contingent Obligation of the
Borrower and its Subsidiaries required to be included in such determination as
set forth hereinabove shall be valued at the maximum aggregate principal amount
5
(whether or not drawn or outstanding) of the Indebtedness that is the
corresponding "primary obligation" (as such term is defined in the definition of
Contingent Obligation) as of such date.
"Consolidated Interest Expense" shall mean, for any period, the sum
(without duplication) of (i) total interest expense of the Borrower and its
Subsidiaries for such period in respect of Funded Debt of the Borrower and its
Subsidiaries (including, without limitation, all such interest expense accrued
or capitalized during such period, whether or not actually paid during such
period), determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles, (ii) all net amounts paid or accrued by the
Borrower and its Subsidiaries during such period under or in respect of Hedge
Agreements, and (iii) all commitment fees and other ongoing fees in respect of
Funded Debt (including the commitment fee provided for under Section 2.8(c), and
including the fees provided for under the Fee Letter) amortized by the Borrower
and its Subsidiaries during such period (if required to be capitalized under
Generally Accepted Accounting Principles) or paid or accrued by the Borrower and
its Subsidiaries during such period (if not required to be capitalized under
Generally Accepted Accounting Principles).
"Consolidated Lease Expense" shall mean, for any period, the aggregate
(without duplication) of total lease and rental expense of the Borrower and its
Subsidiaries for such period (including, without limitation, all such lease and
rental expense accrued or capitalized during such period, whether or not
actually paid during such period, including capital lease obligations),
determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles (but excluding, in any event, amounts paid in respect of
taxes, utilities, insurance, common area maintenance and other like charges
associated with the lease and rental of real and personal property).
"Consolidated Net Income" shall mean, for any period, net income (or loss)
for the Borrower and its Subsidiaries for such period, determined on a
consolidated basis in accordance with Generally Accepted Accounting Principles.
"Consolidated Net Worth" shall mean, at any time, the net worth of the
Borrower and its Subsidiaries at such time, determined on a consolidated basis
in accordance with Generally Accepted Accounting Principles but excluding any
preferred stock or other class of equity securities that, by its stated terms
(or by the terms of any class of equity securities issuable upon conversion
thereof or in exchange therefor), or upon the occurrence of any event, matures
or is mandatorily redeemable, or is redeemable at the option of the holders
thereof, in whole or in part, at any time prior to two and one-half years after
the Maturity Date.
"Consolidated Operating Cash Flow" shall mean, for each applicable
Reference Period, the aggregate of (i) Consolidated Net Income for such
Reference Period, plus (ii) the sum of Consolidated Interest Expense, federal,
state, local and other income taxes, depreciation, amortization of intangible
assets and rental tapes, and extraordinary losses and other noncash expenses or
charges reducing income for such Reference Period, all to the extent taken into
account in the calculation of Consolidated Net Income for such Reference Period,
minus (iii) the sum of extraordinary gains and other noncash credits increasing
income for such Reference Period and all amounts paid in respect of New Release
Purchases, all to the extent taken into account in the calculation of
Consolidated Net Income for such Reference Period; provided, however, that
calculations of Consolidated Operating Cash Flow shall (i) exclude the results
6
of operations of any Person or business sold or otherwise disposed of by the
Borrower and its Subsidiaries at any time after the first day of the relevant
Reference Period, and (ii) include, for the entire Reference Period on a pro
forma basis, the results of operations of any Person or business acquired by the
Borrower or any of its Subsidiaries at any time after the first day of the
relevant Reference Period, so long as such Person or business is acquired in a
Permitted Acquisition with respect to which the Acquisition Amount exceeds
$5,000,000 and there have been furnished unqualified audited financial
statements with respect to such Person or business covering a period of not less
than one (1) year prior to the date of consummation of such Permitted
Acquisition (provided that, without the prior written approval of the Required
Lenders, such calculations shall not give effect to any increase in consolidated
operating cash flow that would otherwise be recognized on a pro forma basis, and
provided further that such calculations shall take into account any decrease in
future revenues, income or cash flow of any such Person or business anticipated
by the Borrower, in good faith and at the time such calculations are delivered
to the Lenders, to be recognized as a result of the relevant Acquisition).
"Contingent Obligation" shall mean, with respect to any Person, any direct
or indirect liability of such Person with respect to any Indebtedness, liability
or other obligation (the "primary obligation") of another Person (the "primary
obligor"), whether or not contingent, (a) to purchase, repurchase or otherwise
acquire such primary obligation or any property constituting direct or indirect
security therefor, (b) to advance or provide funds (i) for the payment or
discharge of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor in respect thereof to make payment of such
primary obligation or (d) otherwise to assure or hold harmless the owner of any
such primary obligation against loss or failure or inability to perform in
respect thereof; provided, however, that, with respect to the Borrower and its
Subsidiaries, the term "Contingent Obligation" shall not include endorsements
for collection or deposit in the ordinary course of business.
"Covenant Compliance Worksheet" shall mean a fully completed worksheet in
the form of Attachment A to Exhibit D.
"Credit Documents" shall mean 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 the 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.
"Debt Issuance" shall mean the issuance or sale by the Borrower or any of
its Subsidiaries of any debt securities, whether in a public offering of such
securities or otherwise.
"Default" shall mean any event or condition that, with the passage of time
or giving of notice, or both, would constitute an Event of Default.
7
"Designated Store Exchange" shall mean the swap or exchange by the
Borrower or any of its Subsidiaries of any one or more retail stores and the
inventory, fixtures, leasehold and other assets relating thereto, in exchange
for consideration consisting primarily of one or more comparable stores and
related assets, provided that (i) such swap or exchange shall be on commercially
reasonable terms and for fair value, (ii) such swap or exchange shall not expose
the Borrower or any Subsidiary to any material liability (other than with
respect to Indebtedness expressly assumed in connection therewith or
Indebtedness, not to exceed $1,000,000 per swap or exchange, incurred by the
Borrower or any Subsidiary in connection therewith, provided in each case that
such Indebtedness is expressly subordinated and made junior in right and time of
payment to the Obligations and is otherwise permitted hereunder), including
liability with respect to environmental matters, litigation, and adverse tax
consequences, and (iii) any consideration received by the Borrower or any
Subsidiary that does not consist of such comparable stores and related assets
shall consist of cash.
"Dollars" or "$" shall mean dollars of the United States of America.
"ERISA" shall mean 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" shall mean 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, the Borrower or any of its
Subsidiaries, within the meaning of Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code or Section 4001 of ERISA.
"ERISA Event" shall mean 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 the Borrower
or any ERISA Affiliate from a Multiemployer Plan that results in liability under
Section 4201 or 4204 of ERISA, or the receipt by the 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 the 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 the 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 the Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which is not dismissed within thirty (30) days, (vi) the
imposition upon the 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 the 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 the 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
8
Plan for which the 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 tax-exempt status of the trust of which such
Plan is a part if the Borrower or an ERISA Affiliate fails to timely provide
security to such Plan in accordance with the provisions of such sections.
"Eligible Assignee" shall mean (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 its 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" shall mean 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 its 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
injunctive relief resulting from Hazardous Substances or arising from alleged
injury or threat of injury to human health or the environment.
"Environmental Laws" shall mean 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 from
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.
"Equity Issuance" shall mean (i) the issuance, sale or other disposition
by the Borrower or any of its Subsidiaries of its capital stock, any rights,
warrants or options to purchase or acquire any shares of its capital stock, or
any other security or instrument representing, convertible into or exchangeable
for an equity interest in the Borrower or any of its Subsidiaries, and (ii) the
receipt by the 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 the Borrower or any of its
9
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 the Borrower, or (z) any capital stock or other equity
securities issued or sold in connection with any Permitted Acquisition and
constituting all or a portion of the applicable purchase price.
"Event of Default" shall have the meaning given to such term in Section
9.1.
"Exchange Act" shall mean 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.
"Fair Market Value" shall mean, with respect to any capital stock of the
Borrower given in connection with an Acquisition, the value given to such
capital stock 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.
"Federal Funds Rate" shall mean, 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" shall mean the Board of Governors of the Federal
Reserve System or any successor thereto.
"Fee Letter" shall mean the letter from First Union to the Borrower, dated
November 5, 1998, relating to certain fees payable by the Borrower in respect of
the transactions contemplated by this Agreement, as amended by the letter from
First Union to the Borrower dated December 17, 1998 and as further amended,
modified or supplemented from time to time.
"Fixed Charge Coverage Ratio" shall mean, as of the last day of any fiscal
quarter, the ratio of:
(i) the sum of (y) Consolidated Operating Cash Flow for the Reference
Period then ending and (z) Consolidated Lease Expense for the Reference Period
then ending; to
(ii) the aggregate (without duplication) of the following, all
determined on a consolidated basis for the Borrower and its Subsidiaries in
accordance with Generally Accepted Accounting Principles for the Reference
Period then ending: (a) Consolidated Interest Expense for such Reference Period,
(b) federal, state, local and other income taxes (but only to the extent
actually paid during such Reference Period), (c) Consolidated Lease Expense for
such Reference Period, (d) the aggregate of all amounts paid in cash by the
10
Borrower and its Subsidiaries during such Reference Period as dividends or
distributions in respect of, or to purchase, redeem, retire or otherwise
acquire, its capital stock or any warrants, rights or options to acquire its
capital stock, (e) all principal payments in respect of Funded Debt scheduled or
otherwise required to have been made by the Borrower and its Subsidiaries during
such Reference Period, and (f) Capital Expenditures made during such Reference
Period, other than Capital Expenditures made with respect to new retail stores.
"Funded Debt" shall mean any Indebtedness other than (i) Indebtedness
arising under Hedge Agreements and (ii) 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.
"Generally Accepted Accounting Principles" shall mean 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 the 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 of the Borrower referred to in Section 5.11(a).
"Governmental Authority" shall mean 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" shall mean a guaranty agreement made by the Subsidiaries of the
Borrower (other than Immaterial Subsidiaries), in substantially the form of
Exhibit F, as amended, modified or supplemented from time to time.
"Hazardous Substances" shall mean any substances or materials (i) that are
or become defined as hazardous wastes, hazardous substances, 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" shall mean 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.
11
"Immaterial Subsidiary" shall mean any Subsidiary of the Borrower that (i)
does not conduct any active trade or business and (ii) either (a) has assets
with a gross fair market value of less than $100,000 and gross revenues
(determined for the most recently ended period of twelve consecutive fiscal
months) of less than $100,000 or (b) has been organized by the Borrower as an
acquisition vehicle solely for the purpose of merging with another Person in
connection with a Permitted Acquisition; provided that Movie Time shall be
deemed an Immaterial Subsidiary notwithstanding the foregoing conditions, but
only for so long as it engages in no trade or business, and has no assets, other
than its licensing arrangements in effect as of the Closing Date.
"Indebtedness" shall mean, with respect to any Person (without
duplication), (i) all indebtedness of such Person for borrowed money or in
respect of loans or advances, (ii) all obligations of such Person evidenced by
notes, bonds, debentures or similar instruments, (iii) all reimbursement
obligations of such Person with respect to surety bonds, letters of credit and
bankers' acceptances (in each case, whether or not drawn or matured and in the
stated amount thereof), (iv) all obligations of such Person to pay the deferred
purchase price of property or services, (v) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person, (vi) all obligations of such Person as lessee
under leases that are or should be, in accordance with Generally Accepted
Accounting Principles, recorded as capital leases, to the extent such
obligations are required to be so recorded, (vii) all obligations of such Person
to purchase, redeem, retire, defease or otherwise make any payment in respect of
any capital stock or other equity securities that, by their stated terms (or by
the terms of any equity securities issuable upon conversion thereof or in
exchange therefor), or upon the occurrence of any event, mature or are
mandatorily redeemable, or are redeemable at the option of the holder thereof,
in whole or in part, at any time prior to the Maturity Date, (viii) the net
termination obligations of such Person under any Hedge Agreements, calculated as
of any date as if such agreement or arrangement were terminated as of such date,
(ix) all Contingent Obligations of such Person and (x) all indebtedness referred
to in clauses (i) through (ix) above secured by any Lien on any property or
asset owned or held by such Person regardless of whether the indebtedness
secured thereby shall have been assumed by such Person or is nonrecourse to the
credit of such Person.
"Interest Coverage Ratio" shall mean, as of the last day of any fiscal
quarter, the ratio of (i) Consolidated Operating Cash Flow for the Reference
Period then ending to (ii) Consolidated Interest Expense for the Reference
Period then ending.
"Interest Period" shall have the meaning given to such term in Section
2.9.
"Internal Revenue Code" shall mean 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" shall mean First Union in its capacity as issuer of the
Letters of Credit, and its successors in such capacity.
"LIBOR Loan" shall mean, at any time, any Revolving Loan that bears
interest at such time at the Adjusted LIBOR Rate.
12
"LIBOR Rate" shall mean, with respect to each LIBOR Loan comprising part
of the same Borrowing for any Interest Period, an interest rate per annum
obtained by dividing (i) (y) the rate of interest appearing on Telerate Page
3750 (or any successor page) or (z) if no such rate is readily ascertainable,
the rate of interest determined by the Agent to be the rate or the arithmetic
mean of rates (rounded upward, if necessary, to the nearest 1/16 of one
percentage point) at which Dollar deposits in immediately available funds are
offered by First Union to first-tier banks in the London interbank Eurodollar
market, in each case under (y) and (z) above at approximately 11:00 a.m., London
time, two (2) Business Days prior to the first day of such Interest Period for a
period substantially equal to such Interest Period and in an amount
substantially equal to the amount of First Union's LIBOR Loan comprising part of
such Borrowing, by (ii) the amount equal to 1.00 minus the Reserve Requirement
(expressed as a decimal) for such Interest Period.
"Lender" shall mean each financial institution signatory hereto and each
other financial institution that becomes a "Lender" hereunder pursuant to
Section 11.7, and their respective successors and assigns.
"Lending Office" shall mean, 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 the 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 Loans, such office may be a domestic or
foreign branch or Affiliate of such Lender.
"Letter of Credit Exposure" shall mean, with respect to any Lender at any
time, such Lender's ratable share (based on the proportion that its Commitment
bears to the Aggregate Commitments at such time) of the sum of (i) the aggregate
Stated Amount of all Letters of Credit outstanding at such time and (ii) the
aggregate amount of all Reimbursement Obligations outstanding at such time.
"Letter of Credit Notice" shall have the meaning given to such term in
Section 3.2.
"Letters of Credit" shall have the meaning given to such term in Section
3.1.
"Leverage Ratio" shall mean, as of the last day of any fiscal quarter, the
ratio of (i) Consolidated Funded Debt as of such date to (ii) Consolidated
Operating Cash Flow for the Reference Period then ending.
"Lien" shall mean 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" shall mean the Revolving Loans and the Swingline Loans.
13
"M.G.A." shall mean M.G.A., Inc., a Delaware corporation and a Wholly
Owned Subsidiary of the Borrower.
"Margin Percentage" shall mean, at any time (except as provided in the
last sentence of this definition), the applicable percentage (a) to be added to
the Base Rate pursuant to Section 2.7 for purposes of determining the Adjusted
Base Rate, (b) to be added to the LIBOR Rate pursuant to Section 2.7 for
purposes of determining the Adjusted LIBOR Rate, and (c) to be used in
calculating the commitment fee payable pursuant to Section 2.8(c), in each case
as determined under the following matrix with reference to the Leverage Ratio:
Applicable Margin Applicable Margin Applicable Margin
Percentage for Percentage for Percentage for
Leverage Ratio Base Rate Loans LIBOR Loans Commitment Fee
-------------- ----------------- ----------------- -----------------
Greater than or equal to 3.0 to 1.0 1.25% 2.5% 0.5%
Greater than or equal to 2.5 to 1.0 1.0% 2.25% 0.5%
but less than 3.0 to 1.0
Greater than or equal to 2.0 to 1.0 0.75% 2.0% 0.5%
but less than 2.5 to 1.0
Greater than or equal to 1.5 to 1.0 0.5% 1.75% 0.375%
but less than 2.0 to 1.0
Greater than or equal to 1.0 0.25% 1.5% 0.375%
but less than 1.5 to 1.0
Less than 1.0 to 1.0 0.0% 1.25% 0.375%
The Margin Percentages shall be reset from time to time in accordance with the
above matrix on the tenth (10th) day (or, if such day is not a Business Day, on
the next succeeding Business Day) after delivery by the Borrower in accordance
with Sections 6.1(a) and 6.1(b) of financial statements together with a
Compliance Certificate attaching a Covenant Compliance Worksheet (reflecting the
computation of the Leverage Ratio as of the last day of the preceding fiscal
quarter, beginning with the fiscal quarter ending January 3, 1999) that provides
for a change in any of the Margin Percentages from that then in effect. Until
the first effective date of any change in any of the Margin Percentages under
the matrix as provided above, the Margin Percentages shall be determined by
reference to the Leverage Ratio determined as of October 4, 1998 and as
reflected in the certificate of the Borrower described in Section 4.1(g).
"Margin Stock" shall have the meaning given to such term in Regulation U.
"Material Adverse Change" shall mean a material adverse change in the
condition (financial or otherwise), operations, business, properties or
financial prospects of the Borrower or the Borrower and its Subsidiaries, taken
as a whole.
14
"Material Adverse Effect" shall mean a material adverse effect upon (i)
the condition (financial or otherwise), operations, business, properties or
financial prospects of the Borrower or the Borrower and its Subsidiaries, taken
as a whole, (ii) the ability of the Borrower or any Subsidiary 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" shall mean any contract or agreement to which the
Borrower or any of its Subsidiaries 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 the 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.
"Material Subsidiary" shall mean any Subsidiary other than an Immaterial
Subsidiary.
"Maturity Date" shall mean the third anniversary of the Closing Date.
"Movie Time" shall mean Movie Time, Inc., a Virginia corporation and a
Wholly Owned Subsidiary of M.G.A.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which the 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" shall mean (i) in the case of any Equity Issuance or
Debt Issuance, the aggregate cash payments received by the Borrower and its
Subsidiaries less reasonable fees and expenses incurred by the 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 the Borrower and its Subsidiaries in respect of such
Casualty Event less (y) reasonable fees and expenses incurred by the 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 the Borrower to be payable by the Borrower and its
Subsidiaries as a result of such Casualty Event, and (iii) in the case of any
Asset Disposition, the aggregate amount of all cash payments and the fair market
value of any noncash consideration received by the Borrower and its Subsidiaries
in connection with such Asset Disposition less (x) reasonable fees and expenses
incurred by the 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 the Borrower to be payable by the Borrower and
its Subsidiaries as a result of such Asset Disposition.
"New Release Purchases" shall mean purchases of video tapes and game
cartridges by the Borrower or any of its Subsidiaries, other than Base Stock
Purchases, (i) for use as rental inventory and (ii) that are capitalized as
rental inventory.
15
"Notes" shall mean the Revolving Credit Notes and the Swingline Note.
"Notice of Borrowing" shall mean a Notice of Revolving Borrowing or a
Notice of Swingline Borrowing, as the context may require.
"Notice of Conversion/Continuation" shall have the meaning given to such
term in Section 2.10(b).
"Notice of Revolving Borrowing" shall have the meaning given to such term
in Section 2.2(b).
"Notice of Swingline Borrowing" shall have the meaning given to such term
in Section 2.2(c).
"Obligations" shall mean all principal of and interest (including, to the
greatest extent permitted by law, post-petition interest) on the Loans, all
Reimbursement Obligations and all fees, expenses, indemnities and other
obligations owing, due or payable at any time by the Borrower to the Agent, any
Lender, the Issuing Lender, the Swingline Lender or any other Person entitled
thereto under this Agreement or any of the other Credit Documents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
"Participant" shall have the meaning given to such term in Section
11.7(d).
"Permitted Acquisition" shall mean (i) any Allowed Acquisition or (ii) any
Acquisition to which the Required Lenders have consented pursuant to Section
6.9(b) and with respect to which all of the other requirements of Section 6.9
applicable to such Acquisition are satisfied or otherwise waived in writing by
the Required Lenders.
"Permitted Liens" shall have the meaning given to such term in Section
8.3.
"Permitted Lines of Business" shall mean the business of video tape and
game cartridge rental and sales and the rental or sale of products and services
reasonably ancillary thereto.
"Person" shall mean any corporation, association, joint venture,
partnership, limited liability company, organization, business, individual,
trust, government or agency or political subdivision thereof or any other legal
entity.
"Plan" shall mean 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 the Borrower or any ERISA
Affiliate may have any liability.
"Pledge Agreement" shall mean a pledge agreement made by the Borrower in
favor of the Agent, in substantially the form of Exhibit E, as amended, modified
or supplemented from time to time.
"Prohibited Transaction" shall mean 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.
16
"Reference Period" shall mean, in calculating any item for purposes of any
determination of compliance with the limitations set forth in clauses (ii) and
(iii) of Section 6.9 and the financial covenants set forth in Sections 7.1
through 7.3 as of the last day of any fiscal quarter, beginning with the fiscal
quarter ending January 3, 1999 (including the calculation of Consolidated
Operating Cash Flow for purposes of determining the Fixed Charge Coverage Ratio
and the Interest Coverage Ratio as of the last day of any such fiscal quarter),
the period of four consecutive fiscal quarters ending on such date.
"Refunded Swingline Loans" shall have the meaning given to such term in
Section 2.2(d).
"Register" shall have the meaning given to such term in Section 11.7(b).
"Regulations D, T, U and X" shall mean Regulations D, T, U and X,
respectively, of the Federal Reserve Board, and any successor regulations.
"Reimbursement Obligation" shall have the meaning given to such term in
Section 3.4.
"Reportable Event" shall mean (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" shall mean (i) at any time prior to the Termination
Date, the Lenders having more than fifty percent (50%) of the Aggregate
Commitments at such time, and (ii) on and after the Termination Date, the
Lenders having more than fifty percent (50%) of the sum of the aggregate
principal amount of the Loans outstanding at such time and the aggregate Letter
of Credit Exposure of all Lenders at such time (or, if at any time on or after
the Termination Date at which no Loans or Letters of Credit are outstanding, the
Lenders having more than fifty percent (50%) of the Aggregate Commitments
immediately prior to the termination of the Commitments).
"Requirement of Law" shall mean, 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,
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.
17
"Reserve Requirement" shall mean, with respect to any Interest Period, the
reserve percentage (expressed as a decimal) in effect from time to time during
such Interest Period, as provided by the Federal Reserve Board, applied for
determining the maximum reserve requirements (including, without limitation,
basic, supplemental, marginal and emergency reserves) applicable to First Union
under Regulation D with respect to "Eurocurrency liabilities" within the meaning
of Regulation D, or under any similar or successor regulation with respect to
Eurocurrency liabilities or Eurocurrency funding.
"Responsible Officer" shall mean, with respect to the Borrower, any of the
chief executive officer, the president, the chief financial officer, any
executive vice president or the chief accounting officer of the Borrower.
"Revolving Credit Notes" shall mean the promissory notes of the Borrower
in substantially the form of Exhibit A-1, together with any amendments,
modifications and supplements thereto, substitutions therefor and restatements
thereof.
"Revolving Loans" shall have the meaning given to such term in Section
2.1(a).
"Security Documents" shall mean the Pledge Agreement and all other pledge
or security agreements or instruments executed and delivered by the Borrower or
any of its Subsidiaries pursuant to Section 6.10 or otherwise in connection with
the transactions contemplated hereby, in each case as amended, modified or
supplemented from time to time.
"Stated Amount" shall mean, 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" shall have the meaning given to such term in
Section 8.2.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other Person of which more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of
directors, in the case of a corporation, or of the ownership or beneficial
interests, in the case of a Person not a corporation, is at the time, directly
or indirectly, owned or controlled by such Person and one or more of its other
Subsidiaries or a combination thereof (irrespective of whether, at the time,
securities of any other class or classes of any such corporation or other Person
shall or might have voting power by reason of the happening of any contingency).
When used without reference to a parent entity, the term "Subsidiary" shall be
deemed to refer to a Subsidiary of the Borrower.
"Swingline Commitment" shall mean $3,000,000 or, if less, the Aggregate
Commitments at the time of determination, as such amount may be reduced at or
prior to such time pursuant to the terms hereof.
"Swingline Lender" shall mean First Union in its capacity as maker of
Swingline Loans, and its successors in such capacity.
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"Swingline Loans" shall have the meaning given to such term in Section
2.1(b).
"Swingline Maturity Date" shall mean the date that is five (5) Business
Days prior to the Maturity Date.
"Swingline Note" shall mean the promissory note of the Borrower in
substantially the form of Exhibit A-2, together with any amendments,
modifications and supplements thereto, substitutions therefor and restatements
thereof.
"Terminating Senior Indebtedness" shall mean all indebtedness and other
monetary obligations of the Borrower under the Credit Agreement, dated as of
July 10, 1996, among the Borrower, certain banks and other financial
institutions party thereto, and First Union National Bank (formerly known as
First Union National Bank of North Carolina), as Agent, Issuing Lender and
Swingline Lender, as amended.
"Termination Date" shall mean the Maturity Date or such earlier date of
termination of the Commitments pursuant to Section 2.5 or Section 9.2.
"Type" shall have the meaning given to such term in Section 2.2(a).
"Unfunded Pension Liability" shall mean, 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.
"Unutilized Commitment" shall mean, with respect to any Lender at any
time, such Lender's Commitment at such time less the sum of (i) the aggregate
principal amount of all Revolving Loans made by such Lender that are outstanding
at such time and (ii) such Lender's Letter of Credit Exposure at such time.
"Unutilized Swingline Commitment" shall mean, with respect to the
Swingline Lender at any time, the Swingline Commitment at such time less the
aggregate principal amount of all Swingline Loans that are outstanding at such
time.
"Wholly Owned" shall mean, with respect to any Subsidiary of any Person,
that 100% of the outstanding capital stock or other ownership interests of such
Subsidiary is owned, directly or indirectly, by such Person.
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 7.1 through 7.4, as applicable,
such changes shall be followed only from and after the date this Agreement shall
have been amended to take into account any such changes.
1.3 Other Terms; Construction. Unless otherwise specified or unless the
context otherwise requires, all references herein to sections, annexes,
schedules and exhibits are references to sections, annexes, schedules and
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exhibits in and to this Agreement, and all terms defined in this Agreement shall
have the defined meanings when used in any other Credit Document or any
certificate or other document made or delivered pursuant hereto. All references
herein to the Lenders or any of them shall be deemed to include the Issuing
Lender and the Swingline Lender unless specifically provided otherwise or unless
the context otherwise requires.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1 Commitments; Loans. (a) Each Lender severally agrees, subject to and
on the terms and conditions of this Agreement, to make loans (each, a "Revolving
Loan," and collectively, the "Revolving Loans") to the Borrower, from time to
time on any Business Day during the period from and including the Closing Date
to but not including the Termination Date, in an aggregate principal amount at
any time outstanding not greater than the excess, if any, of its Commitment at
such time over its Letter of Credit Exposure at such time, provided that no
Borrowing of Revolving Loans shall be made if, immediately after giving effect
thereto, the sum of (x) the aggregate principal amount of Revolving Loans
outstanding at such time, (y) the aggregate Letter of Credit Exposure of all
Lenders at such time and (z) the aggregate principal amount of Swingline Loans
outstanding at such time (excluding the aggregate amount of any Swingline Loans
to be repaid with proceeds of Revolving Loans made pursuant to such Borrowing)
would exceed the Aggregate Commitments at such time. Subject to and on the terms
and conditions of this Agreement, the Borrower may borrow, repay and reborrow
Revolving Loans.
(b) The Swingline Lender agrees, subject to and on the terms and
conditions of this Agreement, to make loans (each, a "Swingline Loan," and
collectively, the "Swingline Loans") to the Borrower, from time to time on any
Business Day during the period from the Closing Date to but not including the
Swingline Maturity Date (or, if earlier, the Termination Date), in an aggregate
principal amount not exceeding the Swingline Commitment, notwithstanding that
the aggregate principal amount of Swingline Loans outstanding at any time, when
added to the aggregate principal amount of the Revolving Loans made by the
Swingline Lender in its capacity as a Lender outstanding at such time, may
exceed its Commitment at such time, but provided that no Borrowing of Swingline
Loans shall be made if, immediately after giving effect thereto, the sum of (x)
the aggregate principal amount of Revolving Loans outstanding at such time, (y)
the aggregate Letter of Credit Exposure of all Lenders at such time and (z) the
aggregate principal amount of Swingline Loans outstanding at such time would
exceed the Aggregate Commitments at such time. Subject to and on the terms and
conditions of this Agreement, the Borrower may borrow, repay (including by means
of a Borrowing of Revolving Loans pursuant to Section 2.2(d)) and reborrow
Swingline Loans.
2.2 Borrowings. (a) The Revolving Loans shall, at the option of the
Borrower and subject to the terms and conditions of this Agreement, be either
Base Rate Loans or LIBOR Loans (each, a "Type" of Revolving Loan), provided that
(i) all Revolving Loans comprising the same Borrowing shall, unless otherwise
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specifically provided herein, be of the same Type and (ii) no Borrowing of LIBOR
Loans may be made at any time prior to the third (3rd) Business Day after the
Closing Date. The Swingline Loans shall be Base Rate Loans at all times.
(b) In order to make a Borrowing of Revolving Loans (other than Borrowings
for the purpose of repaying Refunded Swingline Loans, which shall be made
pursuant to Section 2.2(d), and other than Borrowings involving continuations or
conversions of outstanding Revolving Loans, which shall be made pursuant to
Section 2.10), the Borrower will give the Agent written notice not later than
12:00 noon, Charlotte time, three (3) Business Days prior to each Borrowing to
be comprised of LIBOR Loans and on the intended date of each Borrowing to be
comprised of Base Rate Loans; provided, however, that a request for a Borrowing
to be made on the Closing Date may, at the discretion of the Agent, be given
later than the time specified therefor as set forth hereinabove. Each such
notice (each, a "Notice of Revolving Borrowing") shall be irrevocable, shall be
given in the form of Exhibit B-1 and shall specify (x) the aggregate principal
amount and initial Type of the Revolving Loans to be made pursuant to such
Borrowing, (y) in the case of a Borrowing of LIBOR Loans, the initial Interest
Period to be applicable thereto, and (z) the requested Borrowing Date, which
shall be a Business Day. Notwithstanding anything to the contrary contained
herein:
(i) the aggregate principal amount of each Borrowing comprised of Base
Rate Loans shall not be less than $1,000,000 or, if greater, an integral
multiple of $500,000 in excess thereof (or, if less, in the amount of the
Aggregate Unutilized Commitments), and the aggregate principal amount of
each Borrowing comprised of LIBOR Loans shall not be less than $2,000,000
or, if greater, an integral multiple of $1,000,000 in excess thereof;
(ii) if the Borrower shall have failed to designate the Type of
Revolving Loans comprising a Borrowing, the Borrower shall be deemed to
have requested a Borrowing comprised of Base Rate Loans; and
(iii) if the Borrower shall have failed to select the duration of the
Interest Period to be applicable to any Borrowing of LIBOR Loans, then the
Borrower shall be deemed to have selected an Interest Period with a
duration of one month.
Upon its receipt of a Notice of Revolving Borrowing, the Agent will promptly
notify each Lender of the proposed Borrowing. Not later than 1:00 p.m.,
Charlotte time, on the requested Borrowing Date, each Lender will make available
to the Agent at its office referred to in Section 11.5 (or at such other
location as the Agent may designate) an amount, in Dollars and in immediately
available funds, equal to the amount of the Revolving Loan to be made by such
Lender. To the extent the Lenders have made such amounts available to the Agent
as provided hereinabove, the Agent will make the aggregate of such amounts
available to the Borrower in accordance with Section 2.3(a) and in like funds as
received by the Agent.
(c) In order to make a Borrowing of a Swingline Loan, the Borrower will
give the Agent and the Swingline Lender written notice (or oral notice promptly
confirmed in writing) not later than 12:00 noon, Charlotte time, on the Business
Day of such Borrowing. Each such notice (each, a "Notice of Swingline
Borrowing") shall be irrevocable, shall be given in the form of Exhibit B-2 (or,
if oral notice is given, shall be promptly followed with a writing in the form
21
of Exhibit B-2) and shall specify (i) the principal amount of the Swingline Loan
to be made pursuant to such Borrowing (which shall not be less than $50,000 and,
if greater, shall be in an integral multiple of $10,000 in excess thereof (or,
if less, in the amount of the Unutilized Swingline Commitment)) and (ii) the
requested Borrowing Date, which shall be a Business Day. Not later than 1:00
p.m., Charlotte time, on the requested Borrowing Date, the Swingline Lender will
make available to the Agent at its office referred to in Section 11.5 (or at
such other location as the Agent may designate) an amount, in Dollars and in
immediately available funds, equal to the amount of the requested Swingline
Loan. To the extent the Swingline Lender has made such amount available to the
Agent as provided hereinabove, the Agent will make such amount available to the
Borrower in accordance with Section 2.3(a) and in like funds as received by the
Agent.
(d) With respect to any outstanding Swingline Loans, the Swingline Lender
may at any time (without regard to whether an Event of Default has occurred and
is continuing) in its sole and absolute discretion, and is hereby authorized and
empowered by the Borrower to, cause a Borrowing of Revolving Loans to be made
for the purpose of repaying such Swingline Loans by delivering to the Agent and
each other Lender (on behalf of, and with a copy to, the Borrower), not later
than 11:00 a.m., Charlotte time, on the proposed Borrowing Date therefor, a
notice (which shall be deemed to be a Notice of Revolving Borrowing given by the
Borrower) requesting the Lenders to make Revolving Loans (which shall be made
initially as Base Rate Loans and shall remain as Base Rate Loans until repaid or
converted into LIBOR Loans pursuant to the terms of this Agreement) on such
Borrowing Date in an aggregate amount equal to the amount of such Swingline
Loans (the "Refunded Swingline Loans") outstanding on the date such notice is
given that the Swingline Lender requests to be repaid. Not later than 1:00 p.m.,
Charlotte time, on the requested Borrowing Date, each Lender (other than the
Swingline Lender) will make available to the Agent at its office referred to in
Section 11.5 (or at such other location as the Agent may designate) an amount,
in Dollars and in immediately available funds, equal to the amount of the
Revolving Loan to be made by such Lender. To the extent the Lenders have made
such amounts available to the Agent as provided hereinabove, the Agent will make
the aggregate of such amounts available to the Swingline Lender in like funds as
received by the Agent, which shall apply such amounts in repayment of the
Refunded Swingline Loans. Notwithstanding any provision of this Agreement to the
contrary, on the relevant Borrowing Date, the Refunded Swingline Loans
(including the Swingline Lender's ratable share thereof, in its capacity as a
Lender) shall be deemed to be repaid with the proceeds of the Revolving Loans
made as provided above (including a Revolving Loan deemed to have been made by
the Swingline Lender), and such Refunded Swingline Loans deemed to be so repaid
shall no longer be outstanding as Swingline Loans but shall be outstanding as
Revolving Loans. If any portion of any such amount repaid (or deemed to be
repaid) to the Swingline Lender shall be recovered by or on behalf of the
Borrower from the Swingline Lender in any bankruptcy, insolvency or similar
proceeding or otherwise, the loss of the amount so recovered shall be shared
ratably among all the Lenders in the manner contemplated by Section 2.14(b).
(e) If, as a result of any bankruptcy, insolvency or similar proceeding
with respect to the Borrower, Revolving Loans are not made pursuant to
subsection (d) above in an amount sufficient to repay any amounts owed to the
Swingline Lender in respect of any outstanding Swingline Loans, or if the
Swingline Lender is otherwise precluded for any reason from giving a notice on
behalf of the Borrower as provided for hereinabove, the Swingline Lender shall
22
be deemed to have sold without recourse, representation or warranty, and each
Lender shall be deemed to have purchased and hereby agrees to purchase, a
participation in such outstanding Swingline Loans in an amount equal to its
ratable share (based on the proportion that its Commitment bears to the
Aggregate Commitments at such time) of the unpaid amount thereof together with
accrued interest thereon. Upon one (1) Business Day's prior notice from the
Swingline Lender, each Lender (other than the Swingline Lender) will make
available to the Agent at its office referred to in Section 11.5 (or at such
other location as the Agent may designate) an amount, in Dollars and in
immediately available funds, equal to its respective participation. To the
extent the Lenders have made such amounts available to the Agent as provided
hereinabove, the Agent will make the aggregate of such amounts available to the
Swingline Lender in like funds as received by the Agent. In the event any such
Lender fails to make available to the Agent the amount of such Lender's
participation as provided in this subsection (e), the Swingline Lender shall be
entitled to recover such amount on demand from such Lender, together with
interest thereon for each day from the date such amount is required to be made
available for the account of the Swingline Lender until the date such amount is
made available to the Swingline Lender at the Federal Funds Rate for the first
three (3) Business Days and thereafter at the Adjusted Base Rate. Promptly
following its receipt of any payment by or on behalf of the Borrower in respect
of a Swingline Loan, the Swingline Lender will pay to each Lender that has
acquired a participation therein such Lender's ratable share of such payment.
(f) Notwithstanding any provision of this Agreement to the contrary, the
obligation of each Lender (other than the Swingline Lender) to make Revolving
Loans for the purpose of repaying any Refunded Swingline Loans pursuant to
subsection (d) above and each such Lender's obligation to purchase a
participation in any unpaid Swingline Loans pursuant to subsection (e) above
shall be absolute and unconditional and shall not be affected by any
circumstance or event whatsoever, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right that such Lender may
have against the Swingline Lender, the Agent, the Borrower or any other Person
for any reason whatsoever, (ii) the occurrence or continuance of any Default or
Event of Default, (iii) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of the
Borrower or any of its Subsidiaries, or (iv) any breach of this Agreement by any
party hereto; provided, however, that no Lender shall have any obligation to
make a Revolving Loan for the purpose of repaying, or to purchase any
participation in, any Swingline Loan if, at the time of making such Swingline
Loan, the Swingline Lender had actual knowledge that the conditions to making
such Swingline Loan set forth herein were not satisfied or waived.
2.3 Disbursements; Funding Reliance; Domicile of Loans. (a) The Borrower
hereby authorizes the Agent to disburse the proceeds of each Borrowing in
accordance with the terms of any written instructions from any of the Authorized
Officers, provided that the Agent shall not be obligated under any circumstances
to forward amounts to any account not listed in an Account Designation Letter.
The Borrower may at any time deliver to the Agent an Account Designation Letter
listing any additional accounts or deleting any accounts listed in a previous
Account Designation Letter.
(b) Unless the Agent has received, prior to 1:00 p.m., Charlotte time, on
the relevant Borrowing Date, written notice from a Lender that such Lender will
not make available to the Agent such Lender's ratable portion, if any, of the
relevant Borrowing, the Agent may assume that such Lender has made such portion
23
available to the Agent in immediately available funds on such Borrowing Date in
accordance with the applicable provisions of Section 2.2, and the Agent may, in
reliance upon such assumption, but shall not be obligated to, make a
corresponding amount available to the Borrower on such Borrowing Date. If and to
the extent that such Lender shall not have made such portion available to the
Agent, and the Agent shall have made such corresponding amount available to the
Borrower, such Lender, on the one hand, and the Borrower, on the other,
severally agree to pay to the Agent forthwith on demand such corresponding
amount, together with interest thereon for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, (i) in the case of such Lender, at the Federal Funds Rate, and (ii) in
the case of the Borrower, at the rate of interest applicable at such time to
Loans comprising such Borrowing, as determined under the provisions of Section
2.7. If such Lender shall repay to the Agent such corresponding amount, such
amount shall constitute such Lender's Revolving Loan as part of such Borrowing
for purposes of this Agreement. The failure of any Lender to make any Revolving
Loan required to be made by it as part of any Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Revolving Loan as
part of such Borrowing, but no Lender shall be responsible for the failure of
any other Lender to make the Revolving Loan to be made by such other Lender as
part of any Borrowing.
(c) Each Lender may, at its option, make and maintain any Loan at, to or
for the account of any of its Lending Offices, provided that any exercise of
such option shall not affect the obligation of the Borrower to repay such Loan
to or for the account of such Lender in accordance with the terms of this
Agreement.
2.4 Notes. (a) The Revolving Loans made by each Lender shall be evidenced
by a Revolving Credit Note appropriately completed in substantially the form of
Exhibit A-1. Each Revolving Credit Note issued to a Lender shall (i) be executed
by the Borrower, (ii) be payable to the order of such Lender, (iii) be dated as
of the Closing Date, (iv) be in a stated principal amount equal to such Lender's
Commitment, (v) bear interest in accordance with the provisions of Section 2.7,
as the same may be applicable to the Revolving Loans made by such Lender from
time to time, and (vi) be entitled to all of the benefits of this Agreement and
the other Credit Documents and subject to the provisions hereof and thereof.
(b) The Swingline Loans made by the Swingline Lender shall be evidenced by
a Swingline Note appropriately completed in substantially the form of Exhibit
A-2. The Swingline Note shall (i) be executed by the Borrower, (ii) be payable
to the order of the Swingline Lender, (iii) be dated as of the Closing Date,
(iv) be in a stated principal amount equal to the Swingline Commitment, (v) bear
interest in accordance with the provisions of Section 2.7, as the same may be
applicable to the Swingline Loans made from time to time, and (vi) be entitled
to all of the benefits of this Agreement and the other Credit Documents and
subject to the provisions hereof and thereof.
(c) Each Lender will record on its internal records the amount of each
Loan made by it and each payment received by it in respect thereof and will, in
the event of any transfer of any of its Notes, either endorse on the reverse
side thereof or on a schedule attached thereto (or any continuation thereof) the
outstanding principal amount of the Loans evidenced thereby as of the date of
transfer or provide such information on a schedule to the Assignment and
24
Acceptance relating to such transfer; provided, however, that the failure of any
Lender to make any such recordation or provide any such information, or any
error therein, shall not affect the Borrower's obligations under this Agreement
or the Notes.
2.5 Termination and Reduction of Commitments and Swingline Commitment. (a)
The Commitments shall be automatically and permanently terminated on the
Maturity Date, and the Swingline Commitment shall be automatically and
permanently terminated on the Swingline Maturity Date, in each case unless
sooner terminated pursuant to subsections (b) or (c) below or Section 9.2.
(b) At any time and from time to time after the date hereof, upon not less
than five (5) Business Days' prior written notice to the Agent (and, in the case
of a termination or reduction of the Unutilized Swingline Commitment, the
Swingline Lender), the Borrower may terminate in whole or reduce in part the
Aggregate Unutilized Commitments or the Unutilized Swingline Commitment,
provided that any such partial reduction shall be in an aggregate amount of not
less than $5,000,000 ($1,000,000 in the case of the Unutilized Swingline
Commitment) or, if greater, an integral multiple thereof. The amount of any
termination or reduction made under this subsection (b) may not thereafter be
reinstated.
(c) The Aggregate Commitments shall, on each date upon which a prepayment
of the Loans is required under Sections 2.6(d) through 2.6(f), be automatically
and permanently reduced by an amount equal to the amount of such required
prepayment.
(d) Each reduction of the Commitments pursuant to this Section 2.5 shall
be applied ratably among the Lenders according to their respective Commitments.
Notwithstanding any provision of this Agreement to the contrary, any reduction
of the Commitments pursuant to this Section 2.5 that has the effect of reducing
the Aggregate Commitments to an amount less than the amount of the Swingline
Commitment at such time shall result in an automatic corresponding reduction of
the Swingline Commitment to the amount of the Aggregate Commitments (as so
reduced), without any further action on the part of the Borrower or the
Swingline Lender.
2.6 Voluntary and Mandatory Payments and Prepayments. (a) At any time and
from time to time, the Borrower shall have the right to prepay the Revolving
Loans, in whole or in part, without premium or penalty (except as provided in
clause (iii) below), upon written notice to the Agent given not later than 12:00
noon, Charlotte time, three (3) Business Days prior to each intended prepayment
of LIBOR Loans and on the day of each intended prepayment of Base Rate Loans,
provided that (i) each partial prepayment of Revolving Loans shall be in an
aggregate principal amount of not less than $1,000,000 or, if greater, an
integral multiple of $500,000 in excess thereof, (ii) no partial prepayment of
LIBOR Loans made pursuant to any single Borrowing shall reduce the aggregate
outstanding principal amount of the remaining LIBOR Loans under such Borrowing
to less than $2,000,000 or to any greater amount not an integral multiple of
$1,000,000 in excess thereof, and (iii) unless made together with all amounts
required under Section 2.18 to be paid as a consequence of such prepayment, a
prepayment of a LIBOR Loan may be made only on the last day of the Interest
Period applicable thereto. Each such notice shall specify the proposed date of
such prepayment and the aggregate principal amount and the Types of the
Revolving Loans to be prepaid (and, in the case of LIBOR Loans, the Interest
Period of the Borrowing pursuant to which made) and shall be irrevocable and
25
shall bind the Borrower to make such prepayment on the terms specified therein.
The Borrower may prepay the Swingline Loans at any time and from time to time
after the date hereof, in whole or in part, without notice, premium or penalty,
provided that each partial prepayment of Swingline Loans shall be in an
aggregate principal amount of not less than $50,000 or, if greater, an integral
multiple of $10,000 in excess thereof. Amounts prepaid pursuant to this
subsection (a) may be reborrowed, subject to the terms and conditions of this
Agreement.
(b) Except to the extent due or made sooner pursuant to the provisions of
this Agreement, the Borrower will repay the aggregate outstanding principal
amount of the Revolving Loans in full on the Maturity Date and will repay the
aggregate outstanding principal amount of the Swingline Loans in full on the
Swingline Maturity Date.
(c) In the event that, at any time, the sum of (x) the aggregate principal
amount of Revolving Loans outstanding at such time, (y) the aggregate Letter of
Credit Exposure of all Lenders at such time and (z) the aggregate principal
amount of Swingline Loans outstanding at such time (excluding the aggregate
amount of any Swingline Loans to be repaid with proceeds of Revolving Loans made
on the date of determination) shall exceed the Aggregate Commitments at such
time (after giving effect to any concurrent termination or reduction thereof),
the Borrower will immediately prepay the outstanding principal amount of the
Loans in the amount of such excess; provided that, to the extent such excess
amount is greater than the aggregate principal amount of Loans outstanding
immediately prior to the application of such prepayment, the amount so prepaid
shall be retained by the Agent and held in the Cash Collateral Account as cover
for the Letter of Credit Exposure of the Lenders, as more particularly described
in Section 3.8, and thereupon such cash shall be deemed to reduce the aggregate
Letter of Credit Exposure by an equivalent amount.
(d) Promptly upon (and in any event not later than two (2) Business Days
after) its receipt thereof, the Borrower will prepay the outstanding principal
amount of the Loans in an amount equal to (i) 50% of the Net Cash Proceeds from
any Equity Issuance, or (ii) 100% of the Net Cash Proceeds from any Debt
Issuance; provided, however, that the Borrower shall be required to prepay the
Loans with only 50% of the Net Cash Proceeds from any Debt Issuance that
satisfies the requirements of Section 8.2(vi) so long as immediately after
giving effect to such Debt Issuance, the Leverage Ratio would be less than 1.75
to 1.0, such ratio to be determined on a pro forma basis in accordance with
Generally Accepted Accounting Principles as of the last day of the most recently
ended fiscal quarter as if such Debt Issuance had been effected as of such date
and as if all Indebtedness outstanding on the date of such Debt Issuance (after
giving effect to any actual repayment of Indebtedness with proceeds of such Debt
Issuance) had been outstanding as of the last day of the most recently ended
fiscal quarter; and the Borrower will in each case 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.
(e) 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), the 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
26
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 forth 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 (e) shall become subject to
prepayment.
(f) Not later than 180 days after its receipt thereof, the 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
(f) shall be deemed to permit any Asset Disposition not expressly permitted
under Section 8.4.
(g) Each prepayment of the Loans made pursuant to subsections (c) through
(f) above shall be applied ratably among the Lenders holding Loans in proportion
to the principal amount held by each, and in the case of prepayments made
pursuant to subsections (d) through (f) above, with a corresponding reduction to
the Commitments as provided in Section 2.5(c). Each prepayment made pursuant to
subsections (c) through (f) above shall be applied to prepay all Swingline Loans
(together with all accrued interest thereon) before any Revolving Loans are
prepaid and, as among Revolving Loans, shall be applied to prepay all Base Rate
Loans before any LIBOR Loans are prepaid.
(h) Each payment or prepayment of a LIBOR Loan made pursuant to the
provisions of this Section 2.6 on a day other than the last day of the Interest
Period applicable thereto shall be made together with all amounts required under
Section 2.18 to be paid as a consequence thereof.
2.7 Interest. (a) The Borrower will pay interest in respect of the unpaid
principal amount of each Loan, from the date of Borrowing thereof until such
principal amount shall be paid in full, (i) at the Adjusted Base Rate, as in
effect from time to time during such periods as such Loan is a Base Rate Loan,
and (ii) at the Adjusted LIBOR Rate, as in effect from time to time during such
periods as such Loan is a LIBOR Loan.
(b) Upon the occurrence and during the continuance of an Event of Default
under Section 9.1(a) or Section 9.1(b), and (at the election of the Required
Lenders) upon the occurrence and during the continuance of any other Event of
Default, all outstanding principal amounts of the Loans and, to the greatest
extent permitted by law, all interest accrued on the Loans and all other accrued
and outstanding fees and amounts hereunder, shall bear interest at a rate per
annum equal to the interest rate applicable from time to time thereafter to such
27
Loans (whether the Adjusted Base Rate or the Adjusted LIBOR Rate) plus 2% (or,
in the case of fees and other amounts, at the Adjusted Base Rate plus 2%), and,
in each case, such default interest shall be payable on demand. To the greatest
extent permitted by law, interest shall continue to accrue after the filing by
or against the Borrower of any petition seeking any relief in bankruptcy or
under any law pertaining to insolvency or debtor relief.
(c) Accrued (and theretofore unpaid) interest shall be payable as follows:
(i) in respect of each Base Rate Loan (including any Base Rate Loan or
portion thereof paid or prepaid pursuant to the provisions of Section 2.6,
except as provided hereinbelow), in arrears on the last Business Day of
each fiscal quarter, beginning with the first such day to occur after the
Closing Date; provided, that in the event the Loans are repaid or prepaid
in full and the Commitments have been terminated, then accrued interest in
respect of all Base Rate Loans shall be payable together with such
repayment or prepayment on the date thereof;
(ii) in respect of each LIBOR Loan (including any LIBOR Loan or
portion thereof paid or prepaid pursuant to the provisions of Section 2.6,
except as provided hereinbelow), in arrears (y) on the last Business Day of
the Interest Period applicable thereto (subject to the provisions of clause
(iv) in Section 2.9) and (z) in addition, in the case of a LIBOR Loan with
an Interest Period having a duration of six months, on the date three
months after the first day of such Interest Period; provided, that in the
event all LIBOR Loans made pursuant to a single Borrowing are repaid or
prepaid in full, then accrued interest in respect of such LIBOR Loans shall
be payable together with such repayment or prepayment on the date thereof;
and
(iii) in respect of any Loan, at maturity (whether pursuant to
acceleration or otherwise) and, after maturity, on demand.
(d) Nothing contained in this Agreement or in any other Credit Document
shall be deemed to establish or require the payment of interest to any Lender at
a rate in excess of the maximum rate permitted by applicable law. If the amount
of interest payable for the account of any Lender on any interest payment date
would exceed the maximum amount permitted by applicable law to be charged by
such Lender, the amount of interest payable for its account on such interest
payment date shall be automatically reduced to such maximum permissible amount.
In the event of any such reduction affecting any Lender, if from time to time
thereafter the amount of interest payable for the account of such Lender on any
interest payment date would be less than the maximum amount permitted by
applicable law to be charged by such Lender, then the amount of interest payable
for its account on such subsequent interest payment date shall be automatically
increased to such maximum permissible amount, provided that at no time shall the
aggregate amount by which interest paid for the account of any Lender has been
increased pursuant to this sentence exceed the aggregate amount by which
interest paid for its account has theretofore been reduced pursuant to the
previous sentence.
(e) The Agent shall promptly notify the Borrower and the Lenders upon
determining the interest rate for each Borrowing of LIBOR Loans after its
receipt of the relevant Notice of Revolving Borrowing or Notice of
Conversion/Continuation; provided, however, that the failure of the Agent to
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provide the Borrower or the Lenders with any such notice shall neither affect
any obligations of the Borrower or the Lenders hereunder nor result in any
liability on the part of the Agent to the Borrower or any Lender. Each such
determination (including each determination of the Reserve Requirement) shall,
absent manifest error, be conclusive and binding on all parties hereto.
2.8 Fees. The Borrower agrees to pay:
(a) To First Union (or, at First Union's request, to the Arranger or
another designated Affiliate of First Union), for its own account, on the
Closing Date, the fee described in paragraph (l) of the Fee Letter, in the
amount set forth therein and to the extent not theretofore paid to First Union
(or to the Arranger or any such other First Union Affiliate);
(b) To the Agent, for the ratable account of the Lenders that are parties
hereto as of the Closing Date, on the Closing Date, the fee described in
paragraph (2) of the Fee Letter, in the amount agreed upon by the Agent and the
Borrower pursuant thereto and to the extent not theretofore paid to the Agent;
(c) To the Agent, for the account of each Lender, a commitment fee for the
period from the date of this Agreement to the Termination Date, at a per annum
rate equal to the applicable Margin Percentage on such Lender's ratable share
(based on the proportion that its Commitment bears to the Aggregate Commitments)
of the average daily Aggregate Unutilized Commitments, payable in arrears (i) on
the last Business Day of each fiscal quarter, beginning with the first such day
to occur after the Closing Date, and (ii) on the Termination Date;
(d) To the Agent, for the account of each Lender, a letter of credit fee
for each calendar quarter in respect of all Letters of Credit outstanding during
such quarter, at a per annum rate equal to the applicable Margin Percentage for
LIBOR Loans in effect from time to time during such quarter on such Lender's
ratable share (based on the proportion that its Commitment bears to the
Aggregate Commitments) of the daily average aggregate Stated Amount of such
Letters of Credit, payable in arrears (i) on the last Business Day of each
fiscal quarter, beginning with the first such day to occur after the Closing
Date, and (ii) on the later of the Termination Date and the date of termination
of the last outstanding Letter of Credit;
(e) To the Issuing Lender, for its own account, a facing fee for each
calendar quarter in respect of all Letters of Credit outstanding during such
quarter, at a per annum rate of 0.125% on the daily average aggregate Stated
Amount of such Letters of Credit, payable in arrears (i) on the last Business
Day of each fiscal quarter, beginning with the first such day to occur after the
Closing Date, and (ii) on the later of the Termination Date and the date of
termination of the last outstanding Letter of Credit; and
(f) To the Agent, for its own account, the annual administrative fee
described in paragraph (3) of the Fee Letter, on the terms, in the amount and at
the times set forth therein.
2.9 Interest Periods. Concurrently with the giving of a Notice of
Revolving Borrowing or Notice of Conversion/Continuation in respect of any
Borrowing comprised of LIBOR Loans, the Borrower shall have the right to elect,
pursuant to such notice, the interest period (each, an "Interest Period") to be
29
applicable to such LIBOR Loans, which Interest Period shall, at the option of
the Borrower, be a one, three or six-month period; provided, however, that:
(i) all LIBOR Loans comprising a single Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any LIBOR Loan shall commence on
the date of the Borrowing of such LIBOR Loan (including the date of any
continuation of, or conversion into, such LIBOR Loan), and each successive
Interest Period applicable to such LIBOR Loan shall commence on the day on
which the next preceding Interest Period applicable thereto expires;
(iii) LIBOR Loans may not be outstanding under more than seven (7)
separate Interest Periods at any one time (for which purpose Interest
Periods shall be deemed to be separate even if they are coterminous);
(iv) if any Interest Period otherwise would expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day unless such next succeeding Business Day falls in
another calendar month, in which case such Interest Period shall expire on
the next preceding Business Day;
(v) the Borrower may not select any Interest Period that begins prior
to the third (3rd) Business Day after the Closing Date or that expires
after the Maturity Date;
(vi) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month during which such
Interest Period would otherwise expire, such Interest Period shall expire
on the last Business Day of such calendar month; and
(vii) if, upon the expiration of any Interest Period applicable to a
Borrowing of LIBOR Loans, the Borrower shall have failed to elect a new
Interest Period to be applicable to such LIBOR Loans, then the Borrower
shall be deemed to have elected to convert such LIBOR Loans into Base Rate
Loans as of the expiration of the then current Interest Period applicable
thereto.
2.10 Conversions and Continuations. (a) The Borrower shall have the right,
on any Business Day occurring on or after the Closing Date, to elect (i) to
convert all or a portion of the outstanding principal amount of any Base Rate
Loans into LIBOR Loans, or to convert any LIBOR Loans the Interest Periods for
which end on the same day into Base Rate Loans, or (ii) to continue all or a
portion of the outstanding principal amount of any LIBOR Loans the Interest
Periods for which end on the same day for an additional Interest Period,
provided that (w) any such conversion of LIBOR Loans into Base Rate Loans shall
involve an aggregate principal amount of not less than $1,000,000 or, if
greater, an integral multiple of $500,000 in excess thereof; any such conversion
of Base Rate Loans into, or continuation of, LIBOR Loans shall involve an
aggregate principal amount of not less than $2,000,000 or, if greater, an
integral multiple of $1,000,000 in excess thereof; and no partial conversion of
LIBOR Loans made pursuant to a single Borrowing shall reduce the outstanding
principal amount of such LIBOR Loans to less than $2,000,000 or to any greater
amount not an integral multiple of $1,000,000 in excess thereof, (x) except as
30
otherwise provided in Section 2.16(d), LIBOR Loans may be converted into Base
Rate Loans only on the last day of the Interest Period applicable thereto (and,
in any event, if a LIBOR Loan is converted into a Base Rate Loan on any day
other than the last day of the Interest Period applicable thereto, the Borrower
will pay, upon such conversion, all amounts required under Section 2.18 to be
paid as a consequence thereof), (y) no such conversion or continuation shall be
permitted with regard to any Base Rate Loans that are Swingline Loans, and (z)
no conversion of Base Rate Loans into LIBOR Loans or continuation of LIBOR Loans
shall be permitted during the continuance of a Default or Event of Default.
(b) The Borrower shall make each such election by giving the Agent written
notice not later than 12:00 noon, Charlotte time, three (3) Business Days prior
to the intended effective date of any conversion of Base Rate Loans into, or
continuation of, LIBOR Loans and on the intended effective date of any
conversion of LIBOR Loans into Base Rate Loans. Each such notice (each, a
"Notice of Conversion/Continuation") shall be irrevocable, shall be given in the
form of Exhibit B-3 and shall specify (x) the date of such conversion or
continuation (which shall be a Business Day), (y) in the case of a conversion
into, or a continuation of, LIBOR Loans, the Interest Period to be applicable
thereto, and (z) the aggregate amount and Type of the Revolving Loans being
converted or continued. Upon the receipt of a Notice of Conversion/Continuation,
the Agent will promptly notify each Lender of the proposed conversion or
continuation. In the event that the Borrower shall fail to deliver a Notice of
Conversion/Continuation as provided herein with respect to any outstanding LIBOR
Loans, such LIBOR Loans shall automatically be converted to Base Rate Loans upon
the expiration of the then current Interest Period applicable thereto (unless
repaid pursuant to the terms hereof).
2.11 Method of Payments; Computations. (a) All payments by the Borrower
hereunder shall be made without setoff, counterclaim or other defense, in
Dollars and in immediately available funds to the Agent, for the account of the
Lenders or the Swingline Lender, as applicable (except as otherwise expressly
provided herein as to payments required to be made directly to the Issuing
Lender and the Lenders) at its office referred to in Section 11.5, prior to 1:00
p.m., Charlotte time, on the date payment is due. Any payment made as required
hereinabove, but after 1:00 p.m., Charlotte time, shall be deemed to have been
made on the next succeeding Business Day. If any payment falls due on a day that
is not a Business Day, then such due date shall be extended to the next
succeeding Business Day (except that in the case of LIBOR Loans to which the
proviso of clause (iv) in Section 2.9 is applicable, such due date shall be the
next preceding Business Day), and such extension of time shall then be included
in the computation of payment of interest, fees or other applicable amounts.
(b) The Agent will distribute to the Lenders like amounts relating to
payments made to the Agent for the account of the Lenders as follows: (i) if the
payment is received by 1:00 p.m., Charlotte time, in immediately available
funds, the Agent will make available to each relevant Lender on the same date,
by wire transfer of immediately available funds, such Lender's ratable share of
such payment (based on the percentage that the amount of the relevant payment
owing to such Lender bears to the total amount of such payment owing to all of
the relevant Lenders), and (ii) if such payment is received after 1:00 p.m.,
Charlotte time, or in other than immediately available funds, the Agent will
make available to each such Lender its ratable share of such payment by wire
transfer of immediately available funds on the next succeeding Business Day (or
in the case of uncollected funds, as soon as practicable after collected). If
31
the Agent shall not have made a required distribution to the appropriate Lenders
as required hereinabove after receiving a payment for the account of such
Lenders, the Agent will pay to each such Lender, on demand, its ratable share of
such payment with interest thereon at the Federal Funds Rate for each day from
the date such amount was required to be disbursed by the Agent until the date
repaid to such Lender. The Agent will distribute to the Issuing Lender like
amounts relating to payments made to the Agent for the account of the Issuing
Lender in the same manner, and subject to the same terms and conditions, as set
forth hereinabove with respect to distributions of amounts to the Lenders.
(c) Unless the Agent shall have received written notice from the Borrower
prior to the date on which any payment is due to any Lender hereunder that such
payment will not be made in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date, and the Agent may, in
reliance on such assumption, but shall not be obligated to, cause to be
distributed to such Lender on such due date an amount equal to the amount then
due to such Lender. If and to the extent the Borrower shall not have so made
such payment in full to the Agent, and without limiting the obligation of the
Borrower to make such payment in accordance with the terms hereof, such Lender
shall repay to the Agent forthwith on demand such amount so distributed to such
Lender, together with interest thereon for each day from the date such amount is
so distributed to such Lender until the date repaid to the Agent, at the Federal
Funds Rate.
(d) With respect to each payment hereunder, except as specifically
provided otherwise herein or in any of the other Credit Documents, the Borrower
may designate by written notice to the Agent prior to or concurrently with such
payment the specific Loans or other Obligations that are to be paid, repaid or
prepaid, provided that (i) unless made together with all amounts required under
Section 2.18 to be paid as a consequence thereof, a prepayment of a LIBOR Loan
may be made only on the last day of the Interest Period applicable thereto, and
(ii) each payment on account of any Obligations to or for the account of any one
or more Lenders shall be apportioned ratably among such Lenders in proportion to
the amounts of such Obligations owed to them respectively. In the absence of any
such designation by the Borrower, or if an Event of Default has occurred and is
continuing, the Agent shall make such designation in its sole discretion or as
the Required Lenders may direct, subject to the foregoing and to the other
provisions of this Agreement and provided that, notwithstanding the foregoing,
any payments received by the Agent under any circumstances described in this
sentence shall be applied first to repay all outstanding Swingline Loans
together with all accrued interest thereon.
(e) All computations of interest and fees hereunder (including
computations of the Reserve Requirement) shall be made on the basis of a year
consisting of 365 or 366 days, as the case may be (in the case of interest on
Base Rate Loans), or 360 days (in all other instances), and the actual number of
days (including the first day, but excluding the last day) elapsed.
2.12 Recovery of Payments. (a) The Borrower agrees that to the extent the
Borrower makes a payment or payments to or for the account of the Agent, the
Issuing Lender or any Lender, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy, insolvency or similar state or federal law, common law or equitable
32
cause, then, to the extent of such payment or repayment, the Obligation intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been received.
(b) If any amounts distributed by the Agent to any Lender are subsequently
returned or repaid by the Agent to the Borrower or its representative or
successor in interest, whether by court order or by settlement approved by the
Lender in question, such Lender will, promptly upon receipt of notice thereof
from the Agent, pay the Agent such amount. If any such amounts are recovered by
the Agent from the Borrower or its representative or successor in interest, the
Agent will redistribute such amounts to the Lenders on the same basis as such
amounts were originally distributed.
2.13 Use of Proceeds. The proceeds of the Loans shall be used solely (i)
to repay the Terminating Senior Indebtedness in full, (ii) to pay or reimburse
reasonable transaction fees and expenses in connection with the transactions
described in clause (i) above and the consummation of the transactions
contemplated hereby, and (iii) for working capital and general corporate
purposes and to finance stock repurchases and Permitted Acquisitions in
accordance with the terms and provisions of this Agreement, including, without
limitation, the provisions set forth in Sections 6.9 and 8.6.
2.14 Pro Rata Treatment; Sharing of Payments. (a) All fundings,
continuations and conversions of Revolving Loans shall be made by the Lenders
pro rata on the basis of their respective Commitments (in the case of the
initial funding of any Revolving Loans pursuant to Sections 2.2(b), 2.2(d) or
2.2(e)) or Revolving Loans (in the case of continuations and conversions of
outstanding Revolving Loans pursuant to Section 2.10), as applicable from time
to time.
(b) Each Lender agrees that if it shall receive any amount hereunder
(whether by voluntary payment, realization upon security, exercise of the right
of setoff or banker's lien, counterclaim or cross action, or otherwise, other
than pursuant to Section 11.7) applicable to the payment of any of the
Obligations that exceeds its ratable share (according to the proportion of (i)
the amount of such Obligations due and payable to such Lender at such time to
(ii) the aggregate amount of such Obligations due and payable to all Lenders at
such time) of payments on account of such Obligations then or therewith obtained
by all the Lenders to which such payments are required to have been made, such
Lender shall forthwith purchase from the other Lenders such participations in
such Obligations as shall be necessary to cause such purchasing Lender to share
the excess payment or other recovery ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from each such other Lender
shall be rescinded and each such other Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery, together with an
amount equal to such other Lender's ratable share (according to the proportion
of (i) the amount of such other Lender's required repayment to (ii) the total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to the provisions of this subsection may, to the
fullest extent permitted by law, exercise any and all rights of payment
(including, without limitation, setoff, banker's lien or counterclaim) with
respect to such participation as fully as if such participant were a direct
creditor of the Borrower in the amount of such participation. If under any
33
applicable bankruptcy, insolvency or similar law, any Lender receives a secured
claim in lieu of a setoff to which this subsection applies, such Lender shall,
to the extent practicable, exercise its rights in respect of such secured claim
in a manner consistent with the rights of the Lenders entitled under this
subsection to share in the benefits of any recovery on such secured claim.
2.15 Increase of the Aggregate Commitments. (a) At any time following the
ninetieth day after the Closing Date, provided no Event of Default has occurred
and is continuing, the Borrower may notify the Agent and the Lenders in writing
of its desire to increase the Aggregate Commitments then existing by an amount
up to $20,000,000.
(b) Upon its receipt of written notice as set forth in subsection (a)
above, properly made, the Agent, in consultation with the Borrower, shall
determine how best to increase the Aggregate Commitments as requested, which
strategies may include, without limitation, solicitation of additional
commitments from existing Lenders (with any additional commitment by an existing
Lender being made in such Lender's sole discretion), solicitation of new Lenders
(each of which shall be a financial institution that is an Eligible Assignee), a
combination thereof, or any other strategy deemed advisable by the Borrower and
the Agent; provided, however, that any such solicitation by the Agent shall be
made on a best-efforts basis only.
(c) Upon receipt of any additional commitment from an existing Lender or a
new commitment from a new Lender pursuant to this Section 2.15, the Agent shall
notify each Lender who is or becomes a party to this Agreement in writing of the
increase in the Aggregate Commitments effected thereby and such Lender's
percentage of the Aggregate Commitments as so increased.
(d) Within five (5) Business Days after its delivery of notice in
accordance with subsection (c) above, the Borrower shall execute and deliver to
each Lender providing an additional or new commitment a new Revolving Credit
Note in an amount equal to the amount of such Lender's Commitment. Such
Revolving Credit Note shall be dated the effective date of the applicable
increase in the Aggregate Commitments and shall otherwise be in the form of the
Revolving Credit Notes delivered pursuant to Section 2.4(a) hereof. Any
Revolving Credit Notes replaced therewith shall be canceled and returned to the
Borrower.
(e) As a condition precedent to the effectiveness of any increase in the
Aggregate Commitments pursuant to this Section 2.15, the Agent and each Lender
shall have received such other documents, certificates, opinions and instruments
in connection with the transactions contemplated by this Section as it shall
have reasonably requested.
2.16 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 Loans or any other amounts payable hereunder or its obligation to
make, fund or maintain any LIBOR Loans (other than any change in the rate or
34
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 Loans, and the result of any of the foregoing shall be to increase the
cost to such Lender of making or maintaining any LIBOR Loans or to reduce the
amount of any sum received or receivable by such Lender hereunder (including
with respect to Letters of Credit), the 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), the 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 "LIBOR
Rate" upon the basis of which the Adjusted LIBOR Rate for LIBOR Loans for such
Interest Period is to be determined will not adequately and fairly reflect the
cost to such Lenders of making or maintaining LIBOR Loans during such Interest
Period, the Agent will forthwith so notify the Borrower and the Lenders. Upon
such notice, (i) all then outstanding LIBOR Loans shall automatically, on the
expiration date of the respective Interest Periods applicable thereto (unless
then repaid in full), be converted into Base Rate Loans, (ii) the obligation of
the Lenders to make, to convert Base Rate Loans into, or to continue, LIBOR
Loans shall be suspended (including pursuant to the Borrowing to which such
Interest Period applies), and (iii) any Notice of Revolving Borrowing or Notice
of Conversion/Continuation given at any time thereafter with respect to LIBOR
Loans shall be deemed to be a request for Base Rate Loans, 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 the Borrower and the Lenders.
35
(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 any
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 Loans, such Lender will forthwith so notify the Agent and the Borrower.
Upon such notice, (i) each of such Lender's then outstanding LIBOR Loans shall
automatically, on the expiration date of the respective Interest Period
applicable thereto (or, to the extent any such LIBOR Loan may not lawfully be
maintained as a LIBOR Loan until such expiration date, upon such notice), be
converted into a Base Rate Loan, (ii) the obligation of such Lender to make, to
convert Base Rate Loans into, or to continue, LIBOR Loans 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 Loans shall, as to such
Lender, be deemed to be a request for a Base Rate Loan, 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 the Borrower.
(e) Determinations by the Agent or any Lender for purposes of this Section
2.16 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 2.16 shall constitute a waiver of its right to demand payment of
any additional amounts arising at any subsequent time. Nothing in this Section
2.16 shall require or be construed to require the Borrower to pay any interest,
fees, costs or other amounts in excess of that permitted by applicable law.
2.17 Taxes. (a) Any and all payments by the 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 the 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 2.17), 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 Borrower will make such deductions, (iii) the Borrower will pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower will deliver to the Agent
or such Lender, as the case may be, evidence of such payment.
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(b) The 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 2.17) 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 the Borrower or (ii) previously deducted by the 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 the 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 the Borrower under
this Section 2.17 with respect to the Taxes giving rise to such recovery or tax
benefit); provided, however, that the 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 the 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 the Borrower, on or
prior to the date of any payment by the Borrower to such Lender 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 the 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 the 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 the Borrower of any changes in circumstances
that would modify or render invalid any claimed exemption or reduction.
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(e) If any Lender is entitled to a reduction in (and not a complete
exemption from) the applicable withholding tax, the 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 the 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.
2.18 Compensation. The Borrower will compensate each Lender upon demand
(which demand shall be accompanied by a written explanation in reasonable
detail, showing the basis for such demand) for all losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Lender to fund or maintain LIBOR Loans) that such Lender may
incur or sustain (i) if for any reason (other than a default by such Lender) a
borrowing or continuation of, or conversion into, a LIBOR Loan does not occur on
a date specified therefor in a Notice of Revolving Borrowing or Notice of
Conversion/Continuation, (ii) if any repayment, prepayment or conversion of any
LIBOR Loan occurs on a date other than the last day of an Interest Period
applicable thereto (including as a consequence of acceleration of the maturity
of the Loans pursuant to Section 9.2), (iii) if any prepayment of any LIBOR Loan
is not made on any date specified in a notice of prepayment given by the
Borrower or (iv) as a consequence of any other failure by the Borrower to make
any payments with respect to any LIBOR Loan when due hereunder. Calculation of
all amounts payable to a Lender under this Section 2.18 shall be made as though
such Lender had actually funded its relevant LIBOR Loan through the purchase of
a Eurodollar deposit bearing interest at the LIBOR Rate in an amount equal to
the amount of such LIBOR Loan, having a maturity comparable to the relevant
Interest Period; provided, however, that each Lender may fund its LIBOR Loans in
any manner it sees fit and the foregoing assumption shall be utilized only for
the calculation of amounts payable under this Section 2.18. Determinations by
any Lender for purposes of this Section 2.18 of any such losses, expenses or
liabilities shall, absent manifest error, be conclusive, provided that such
determinations are made in good faith.
ARTICLE III
LETTERS OF CREDIT
3.1 Issuance. Subject to and upon the terms and conditions herein set
forth, so long as no Default or Event of Default has occurred and is continuing,
the Issuing Lender will, at any time and from time to time on and after the
Closing Date and prior to the earlier of (i) the seventh day prior to the
Maturity Date and (ii) the Termination Date, and upon request by the Borrower in
accordance with the provisions of Section 3.2, issue for the account of the
Borrower one or more irrevocable standby letters of credit denominated in
Dollars and in a form customarily used or otherwise approved by the Issuing
Lender (together with all amendments, modifications and supplements thereto,
substitutions therefor and renewals and restatements thereof, collectively, the
"Letters of Credit"). The Stated Amount of each Letter of Credit shall not be
less than such amount as may be acceptable to the Issuing Lender.
Notwithstanding the foregoing:
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(a) No Letter of Credit shall be issued the Stated Amount of which, upon
issuance, (i) when added to the aggregate Letter of Credit Exposure of the
Lenders at such time, would exceed $5,000,000 or (ii) when added to the sum of
(x) the aggregate Letter of Credit Exposure of all Lenders at such time, (y) the
aggregate principal amount of all Revolving Loans then outstanding and (z) the
aggregate principal amount of all Swingline Loans then outstanding, would exceed
the Aggregate Commitments at such time;
(b) Unless the Issuing Lender otherwise agrees, there shall not be more
than four (4) Letters of Credit issued and outstanding at any time;
(c) No Letter of Credit shall be issued that by its terms expires later
than the seventh day prior to the Maturity Date or, in any event, more than one
(1) year after its date of issuance; provided, however, that a Letter of Credit
may, if requested by the Borrower, provide by its terms, and on terms acceptable
to the Issuing Lender, for renewal for successive periods of one year or less
(but not beyond the seventh day prior to the Maturity Date), unless and until
the Issuing Lender shall have delivered a notice of nonrenewal to the
beneficiary of such Letter of Credit; and
(d) The Issuing Lender shall be under no obligation to issue any Letter of
Credit if, at the time of such proposed issuance, (i) any order, judgment or
decree of any Governmental Authority or arbitrator shall purport by its terms to
enjoin or restrain the Issuing Lender from issuing such Letter of Credit, or any
Requirement of Law applicable to the Issuing Lender or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Lender shall prohibit, or request that the Issuing
Lender refrain from, the issuance of letters of credit generally or such Letter
of Credit in particular or shall impose upon the Issuing Lender with respect to
such Letter of Credit any restriction or reserve or capital requirement (for
which the Issuing Lender is not otherwise compensated) not in effect on the
Closing Date, or any unreimbursed loss, cost or expense that was not applicable,
in effect or known to the Issuing Lender as of the Closing Date and that the
Issuing Lender in good ▇▇▇▇▇ ▇▇▇▇▇ material to it, or (ii) the Issuing Lender
shall have actual knowledge, or shall have received notice from any Lender,
prior to the issuance of such Letter of Credit that one or more of the
conditions specified in Section 4.2 are not then satisfied or that the issuance
of such Letter of Credit would violate the provisions of subsection (a) above.
3.2 Notices. Whenever the Borrower desires the issuance of a Letter of
Credit, the Borrower will give the Issuing Lender written notice (with a copy to
the Agent) not later than 12:00 noon, Charlotte time, three (3) Business Days
(or such shorter period as is acceptable to the Issuing Lender in any given
case) prior to the requested date of issuance thereof. Each such notice (each, a
"Letter of Credit Notice") shall be irrevocable, shall be given in the form of
Exhibit B-4 and shall specify (i) the requested date of issuance, which shall be
a Business Day, (ii) the requested Stated Amount and expiration date of the
Letter of Credit, and (iii) the name and address of the requested beneficiary or
beneficiaries of the Letter of Credit. The Borrower will also complete any
application procedures and documents required by the Issuing Lender in
connection with the issuance of any Letter of Credit. Upon its issuance of any
Letter of Credit, the Issuing Lender will promptly notify the Agent of such
issuance, and the Agent will give prompt notice thereof to each Lender.
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3.3 Participations. Immediately upon the issuance of any Letter of Credit,
the Issuing Lender shall be deemed to have sold and transferred to each Lender,
and each Lender shall be deemed irrevocably and unconditionally to have
purchased and received from the Issuing Lender, without recourse or warranty, an
undivided interest and participation, pro rata (based on the percentage of the
Aggregate Commitments represented by such Lender's Commitment), in such Letter
of Credit, each drawing made thereunder and the obligations of the Borrower
under this Agreement with respect thereto and any Collateral or other security
therefor or guaranty pertaining thereto; provided, however, that the fee
relating to Letters of Credit described in Section 2.8(e) shall be payable
directly to the Issuing Lender as provided therein, and the Lenders shall have
no right to receive any portion thereof. Upon any change in the Commitments of
any of the Lenders pursuant to Section 11.7(a), there shall be an automatic
adjustment to the participations with respect to all outstanding Letters of
Credit and Reimbursement Obligations pursuant to this Section to reflect the new
pro rata shares of the assigning Lender and the Assignee.
3.4 Reimbursement. The Borrower hereby agrees to reimburse the Issuing
Lender by making payment to the Agent, for the account of the Issuing Lender, in
immediately available funds, for any payment made by the Issuing Lender under
any Letter of Credit (each such amount so paid until reimbursed, together with
interest thereon payable as provided hereinbelow, a "Reimbursement Obligation")
immediately after, and in any event within one (1) Business Day after its
receipt of notice of, such payment, together with interest on the amount so paid
by the Issuing Lender, to the extent not reimbursed prior to 1:00 p.m.,
Charlotte time, on the date of such payment or disbursement, for the period from
the date of the respective payment to the date the Reimbursement Obligation
created thereby is satisfied, at the Adjusted Base Rate as in effect from time
to time during such period, such interest also to be payable on demand. The
Issuing Lender will provide the Agent and the Borrower with prompt notice of any
payment or disbursement made under any Letter of Credit, although the failure to
give, or any delay in giving, any such notice shall not release, diminish or
otherwise affect the Borrower's obligations under this Section or any other
provision of this Agreement. The Agent will promptly pay to the Issuing Lender
any such amounts received by it under this Section.
3.5 Payment by Revolving Loans. In the event that the Issuing Lender makes
any payment under any Letter of Credit and the Borrower shall not have timely
satisfied in full its Reimbursement Obligation to the Issuing Lender pursuant to
Section 3.4, and to the extent that any amounts then held in the Cash Collateral
Account established pursuant to Section 3.8 shall be insufficient to satisfy
such Reimbursement Obligation in full, the Issuing Lender will promptly notify
the Agent, and the Agent will promptly notify each Lender, of such failure. If
the Agent gives such notice prior to 11:00 a.m., Charlotte time, on any Business
Day, each Lender will make available to the Agent, for the account of the
Issuing Lender, its pro rata share (based on the percentage of the Aggregate
Commitments represented by such Lender's Commitment) of the amount of such
Reimbursement Obligation on such Business Day in immediately available funds. If
the Agent gives such notice after 11:00 a.m., Charlotte time, on any Business
Day, each Lender shall make its pro rata share of such amount available to the
Agent on the next succeeding Business Day. If and to the extent any Lender shall
not have so made its pro rata share of the amount of such Reimbursement
Obligation available to the Agent, such Lender agrees to pay to the Agent, for
the account of the Issuing Lender, forthwith on demand such amount, together
with interest thereon at the Federal Funds Rate for each day from such date
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until the date such amount is paid to the Agent. The failure of any Lender to
make available to the Agent its pro rata share of any outstanding Reimbursement
Obligation shall not relieve any other Lender of its obligation hereunder to
make available to the Agent its pro rata share of any outstanding Reimbursement
Obligation on the date required, as specified above, but no Lender shall be
responsible for the failure of any other Lender to make available to the Agent
such other Lender's pro rata share of any such Reimbursement Obligation. Each
such payment by a Lender under this Section 3.5 of its pro rata share of a
Reimbursement Obligation shall constitute a Revolving Loan by such Lender (the
Borrower being deemed to have given a timely Notice of Revolving Borrowing
therefor) and shall be treated as such for all purposes of this Agreement;
provided that for purposes of determining the Aggregate Unutilized Commitments
immediately prior to giving effect to the application of the proceeds of such
Revolving Loans, the Reimbursement Obligation being satisfied thereby shall be
deemed not to be outstanding at such time.
3.6 Payment to Lenders. Whenever the Issuing Lender receives a payment
from or on behalf of the Borrower in respect of a Reimbursement Obligation as to
which the Agent has received, for the account of the Issuing Lender, any
payments from the Lenders pursuant to Section 3.5, the Issuing Lender will
promptly pay to the Agent, and the Agent will promptly pay to each Lender that
has paid its pro rata share thereof, in immediately available funds, an amount
equal to such Lender's ratable share (based on the proportionate amount funded
by such Lender to the aggregate amount funded by all Lenders) of such
Reimbursement Obligation.
3.7 Obligations Absolute. The Reimbursement Obligations of the Borrower,
and the obligations of the Lenders under Section 3.5 to make payments to the
Agent, for the account of the Issuing Lender, with respect to Letters of Credit,
shall be irrevocable, shall remain in effect until the Issuing Lender shall have
no further obligations to make any payments or disbursements under any
circumstances with respect to any Letter of Credit, and, except to the extent
resulting from any gross negligence or willful misconduct on the part of the
Issuing Lender, shall be absolute and unconditional, shall not be subject to
counterclaim, setoff or other defense or any other qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(a) Any lack of validity or enforceability of this Agreement, any of the
other Credit Documents or any documents or instruments relating to any Letter of
Credit;
(b) Any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations in respect of any Letter of Credit or any
other amendment, modification or waiver of or any consent to departure from any
Letter of Credit or any documents or instruments relating thereto, in each case
whether or not the Borrower has notice or knowledge thereof;
(c) The existence of any claim, setoff, defense or other right that the
Borrower may have at any time against a beneficiary named in a Letter of Credit,
any transferee of any Letter of Credit (or any Person for whom any such
transferee may be acting), the Agent, the Issuing Lender, any Lender or other
Person, whether in connection with this Agreement, any Letter of Credit, the
41
transactions contemplated hereby or any unrelated transactions (including any
underlying transaction between the Borrower and the beneficiary named in any
such Letter of Credit);
(d) Any draft, certificate or any other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect,
any errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, telecopier or otherwise, or any errors in translation or
in interpretation of technical terms;
(e) Any defense based upon the failure of any drawing under a Letter of
Credit to conform to the terms of the Letter of Credit, any nonapplication or
misapplication by the beneficiary or any transferee of the proceeds of such
drawing or any other act or omission of such beneficiary or transferee in
connection with such Letter of Credit;
(f) The exchange, release, surrender or impairment of any Collateral or
other security for the Obligations;
(g) The occurrence of any Default or Event of Default; or
(h) Any other circumstance or event whatsoever, including, without
limitation, any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or a guarantor.
Any action taken or omitted to be taken by the Issuing Lender under or in
connection with any Letter of Credit, if taken or omitted in the absence of
gross negligence or willful misconduct, shall be binding upon the Borrower and
each Lender and shall not create or result in any liability of the Issuing
Lender to the Borrower or any Lender. It is expressly understood and agreed
that, for purposes of determining whether a wrongful payment under a Letter of
Credit resulted from the Issuing Lender's gross negligence or willful
misconduct, (i) the Issuing Lender's acceptance of documents that appear on
their face to comply with the terms of such Letter of Credit, without
responsibility for further investigation, regardless of any notice or
information to the contrary, (ii) the Issuing Lender's exclusive reliance on the
documents presented to it under such Letter of Credit as to any and all matters
set forth therein, including the amount of any draft presented under such Letter
of Credit, whether or not the amount due to the beneficiary thereunder equals
the amount of such draft and whether or not any document presented pursuant to
such Letter of Credit proves to be insufficient in any respect (so long as such
document appears on its face to comply with the terms of such Letter of Credit),
and whether or not any other statement or any other document presented pursuant
to such Letter of Credit proves to be forged or invalid or any statement therein
proves to be inaccurate or untrue in any respect whatsoever, and (iii) any
noncompliance in any immaterial respect of the documents presented under such
Letter of Credit with the terms thereof shall, in each case, be deemed not to
constitute gross negligence or willful misconduct of the Issuing Lender.
3.8 Cash Collateral Account. At any time and from time to time (i) after
the occurrence and during the continuance of an Event of Default, the Agent, at
the direction, or with the consent, of the Required Lenders, may require the
Borrower to deliver to the Agent such additional amount of cash as is equal to
42
the aggregate Stated Amount of all Letters of Credit at any time outstanding
(whether or not any beneficiary under any Letter of Credit shall have drawn or
be entitled at such time to draw thereunder) and (ii) in the event of a
prepayment under Section 2.6(c), the Agent will retain such amount as may then
be required to be retained under the proviso in Section 2.6(c), such amounts in
each case under clauses (i) and (ii) above to be held by the Agent in a cash
collateral account (the "Cash Collateral Account") as security for Letter of
Credit Exposure, and for application to the Borrower's Reimbursement Obligations
as and when the same shall arise. The Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest on the investment of such amounts in Cash Equivalents, which
investments shall be made at the direction of the Borrower (unless a Default or
Event of Default shall have occurred and be continuing, in which case the
determination as to investments shall be made at the option and in the
discretion of the Agent), amounts in the Cash Collateral Account shall not bear
interest. Interest and profits, if any, on such investments shall accumulate in
such account. In the event the Agent receives notice of a drawing, and
subsequent payment by the Issuing Lender, under any Letter of Credit at any time
during which any amounts are held in the Cash Collateral Account, the Agent will
deliver to the Issuing Lender an amount equal to the Reimbursement Obligation
created as a result of such payment (or, if the amounts so held are less than
such Reimbursement Obligation, all of such amounts) to reimburse the Issuing
Lender therefor. Any amounts remaining in the Cash Collateral Account after the
expiration of all Letters of Credit and reimbursement in full of the Issuing
Lender for all of its obligations thereunder shall be held by the Agent, for the
benefit of the Borrower, to be applied against the Obligations in such order and
manner as the Agent may direct. If the Borrower is required to provide cash
collateral pursuant to Section 2.6(c), such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower on demand, provided that after
giving effect to such return (i) the sum of (x) the aggregate principal amount
of all Revolving Loans outstanding at such time, (y) the aggregate principal
amount of all Swingline Loans outstanding at such time and (z) the aggregate
Letter of Credit Exposure of all Lenders at such time would not exceed the
Aggregate Commitments at such time and (ii) no Default or Event of Default shall
have occurred and be continuing at such time. If the Borrower is required to
provide cash collateral as a result of an Event of Default, such amount (to the
extent not applied as aforesaid) shall be returned to the Borrower within three
(3) Business Days after all Events of Default have been cured or waived.
3.9 Effectiveness. Notwithstanding any termination of the Commitments or
repayment of the Loans, or both, the obligations of the Borrower under this
Article III shall remain in full force and effect until the Issuing Lender and
the Lenders shall have no further obligations to make any payments or
disbursements under any circumstances with respect to any Letter of Credit.
ARTICLE IV
CONDITIONS OF BORROWING
4.1 Conditions of Initial Borrowing. The obligation of each Lender to make
Loans in connection with the initial Borrowing hereunder, and the obligation of
the Issuing Lender to issue Letters of Credit hereunder, is subject to the
satisfaction of the following conditions precedent:
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(a) The Agent shall have received the following, each dated as of the
Closing Date (unless otherwise specified) and, except for the Notes and the
certificates and instruments required to be delivered under the Pledge
Agreement, in sufficient copies for each Lender:
(i) a Revolving Credit Note for each Lender that is a party hereto as
of the Closing Date, in the amount of such Lender's Commitment, and a
Swingline Note for the Swingline Lender, in the amount of the Swingline
Commitment, each duly completed and executed by the Borrower;
(ii) the Pledge Agreement, duly completed and executed by the
Borrower, together with all certificates evidencing the capital stock being
pledged thereunder and undated stock powers for each such certificate, duly
executed in blank, and any promissory notes being pledged thereunder, duly
endorsed in blank;
(iii) the Guaranty, duly completed and executed by the Subsidiaries of
the Borrower (other than Immaterial Subsidiaries);
(iv) a certificate, signed by the chief executive officer or chief
financial officer of the Borrower, in form and substance satisfactory to
the Agent, certifying that (A) all representations and warranties of the
Borrower contained in this Agreement and the other Credit Documents are
true and correct as of the Closing Date, both immediately before and after
giving effect to the initial Loans hereunder and the application of the
proceeds thereof, (B) no Default or Event of Default has occurred and is
continuing, both immediately before and after giving effect to the initial
Loans hereunder and the application of the proceeds thereof, and (C) both
immediately before and after giving effect to the consummation of the
transactions contemplated by this Agreement, no Material Adverse Change has
occurred since January 4, 1998, and there exists no event, condition or
state of facts that could reasonably be expected to result in a Material
Adverse Change;
(v) a certificate of the secretary or an assistant secretary of each
of the Borrower and its Subsidiaries (other than Immaterial Subsidiaries),
in form and substance satisfactory to the Agent, certifying (A) that
attached thereto is a true and complete copy of the articles or certificate
of incorporation and all amendments thereto of the Borrower or such
Subsidiary, as the case may be, certified as of a recent date by the
Secretary of State (or comparable Governmental Authority) of its
jurisdiction of organization, and that the same has not been amended since
the date of such certification, (B) that attached thereto is a true and
complete copy of the bylaws of the Borrower or such Subsidiary, as the case
may be, as then in effect and as in effect at all times from the date on
which the resolutions referred to in clause (C) below were adopted to and
including the date of such certificate, and (C) that attached thereto is a
true and complete copy of resolutions adopted by the board of directors of
the Borrower or such Subsidiary, as the case may be, authorizing the
execution, delivery and performance of this Agreement and the other Credit
Documents to which it is a party, and as to the incumbency and genuineness
of the signature of each officer of the Borrower or such Subsidiary
executing this Agreement or any of the other Credit Documents, and
attaching all such copies of the documents described above; and
44
(vi) the favorable opinions of (i) S. Page ▇▇▇▇, general counsel to
the Borrower, addressed to the Agent and the Lenders, and (ii) ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇, P.C., special counsel to the Borrower, addressed to the
Agent and the Lenders, in each case in form and substance satisfactory to
the Agent and the Lenders.
(b) The Agent shall have received (i) a certificate as of a recent date of
the good standing of each of the Borrower and its Subsidiaries (other than
Immaterial Subsidiaries) under the laws of its jurisdiction of organization,
from the Secretary of State (or comparable Governmental Authority) of such
jurisdiction, (ii) a certificate as of a recent date of the qualification of
each of the Borrower and M.G.A. to conduct business as a foreign corporation,
from the Secretary of State of Alabama, and (iii) a certificate as of a recent
date of the good standing of each of the Borrower and M.G.A. from the Department
of Revenue of the State of Alabama.
(c) All legal matters, documentation and corporate or other proceedings
incident to the transactions contemplated hereby shall be reasonably acceptable
to the Agent; all approvals, permits and consents of any Governmental
Authorities or other Persons required in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby shall have been obtained (without the imposition of conditions that are
not reasonably acceptable to the Agent), and all related filings, if any, shall
have been made, and all such approvals, permits, consents and filings shall be
in full force and effect and the Agent shall have received such copies thereof
as it shall have requested; all applicable waiting periods shall have expired
without any adverse action being taken by any Governmental Authority having
jurisdiction; and no action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before, and no
order, injunction or decree shall have been entered by, any court or other
Governmental Authority, in each case to enjoin, restrain or prohibit, to obtain
substantial damages in respect of, or that is otherwise related to or arises out
of, this Agreement or the consummation of the transactions contemplated hereby,
or that in the opinion of the Agent would otherwise be reasonably likely to have
a Material Adverse Effect.
(d) Since January 4, 1998, both immediately before and after giving effect
to the consummation of the transactions contemplated by this Agreement, there
shall not have occurred any Material Adverse Change or any event, condition or
state of facts that could reasonably be expected to result in a Material Adverse
Change.
(e) The Borrower shall have paid (i) to First Union (or, at First Union's
request, a designated Affiliate of First Union), the unpaid balance of the fee
described in paragraph (l) of the Fee Letter, (ii) to the Agent, the fee
described in paragraph (2) of the Fee Letter, (iii) to the Agent, the initial
payment of the annual administrative fee described in paragraph (3) of the Fee
Letter, and (iv) all other fees and expenses of the Agent and the Lenders
required hereunder or under any other Credit Document to be paid on or prior to
the Closing Date (including fees and expenses of counsel) in connection with
this Agreement and the transactions contemplated hereby.
45
(f) The Agent shall have received the results of Lien searches in the
names of the Borrower and its Subsidiaries in jurisdictions designated by the
Agent, and such results shall indicate to the satisfaction of the Agent the
absence of any Liens upon the assets or properties of the Borrower and its
Subsidiaries other than Permitted Liens.
(g) The Agent shall have received a Covenant Compliance Worksheet, duly
completed and certified by the chief financial officer of the Borrower and in
form and substance satisfactory to the Agent, demonstrating the Borrower's
compliance with the financial covenants set forth in Sections 7.1 through 7.4,
determined on a pro forma basis as of October 4, 1998 after giving effect to the
making of the initial Loans hereunder and the consummation of the transactions
contemplated hereby.
(h) The Agent shall have received evidence satisfactory to it that,
concurrently with the making of the initial Loans hereunder, (i) all principal,
interest and other amounts outstanding with respect to the Terminating Senior
Indebtedness shall be repaid and satisfied in full, (ii) all commitments to
extend credit under the agreements and instruments relating thereto shall be
terminated, and (iii) any Liens securing any Terminating Senior Indebtedness
shall be released and any related filings terminated of record (or arrangements
satisfactory to the Agent made therefor).
(i) The Agent shall have received an Account Designation Letter, together
with written instructions from an Authorized Officer of the Borrower, including
wire transfer information, directing the payment of the proceeds of the initial
Loans to be made hereunder.
(j) The Agent and each Lender shall have received such other documents,
certificates, opinions and instruments as it shall have reasonably requested.
4.2 Conditions of All Borrowings. The obligation of each Lender to make
any Loans hereunder, including the initial Loans (but excluding Revolving Loans
made for the purpose of repaying Refunded Swingline Loans pursuant to Section
2.2(d)), and the obligation of the Issuing Lender to issue any Letters of Credit
hereunder, is subject to the satisfaction of the following conditions precedent
on the relevant Borrowing Date or date of issuance:
(a) The Agent shall have received a Notice of Revolving Borrowing in
accordance with Section 2.2(b), or (together with the Swingline Lender) a Notice
of Swingline Borrowing in accordance with Section 2.2(c), or (together with the
Issuing Lender) a Letter of Credit Notice in accordance with Section 3.2, as
applicable;
(b) Each of the representations and warranties contained in Article V and
in the other Credit Documents shall be true and correct on and as of such
Borrowing Date (including the Closing Date, in the case of the initial Loans
made hereunder) or date of issuance with the same effect as if made on and as of
such date, both immediately before and after giving effect to the Loans to be
made or Letter of Credit to be issued on such date (except to the extent any
such representation or warranty is expressly stated to have been made as of a
specific date, in which case such representation or warranty shall be true and
correct as of such date); and
(c) No Default or Event of Default shall have occurred and be continuing
on such date, both immediately before and after giving effect to the Loans to be
made or Letter of Credit to be issued on such date.
46
Each giving of a Notice of Borrowing or a Letter of Credit Notice, and the
consummation of each Borrowing or issuance of a Letter of Credit, shall be
deemed to constitute a representation by the Borrower that the statements
contained in subsections (b) and (c) above are true, both as of the date of such
notice or request and as of the relevant Borrowing Date or date of issuance.
ARTICLE V
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, the Borrower
represents and warrants to the Agent and the Lenders as follows:
5.1 Corporate Organization and Power. Each of the Borrower and its
Subsidiaries (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) has the
full corporate 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 corporation 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. Each of the Borrower and M.G.A. is duly qualified to do business
as a foreign corporation and is in good standing in the State of Alabama.
5.2 Authorization; Enforceability. Each of the Borrower and its
Subsidiaries 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 the 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, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally or by general equitable principles.
5.3 No Violation. The execution, delivery and performance by each of the
Borrower and its Subsidiaries 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 thereof, do not and will not (i) violate any provision of its
certificate of incorporation or bylaws or contravene any other 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 Subsidiary is subject to any
restriction or encumbrance on its ability to make dividend payments or other
distributions in respect of its capital stock, to make loans or advances to the
Borrower or any other Subsidiary, or to transfer any of its assets or properties
47
to the 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.
5.4 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 of the Borrower and its Subsidiaries 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 and its Subsidiaries has, and is in good standing
with respect to, all governmental approvals, licenses, permits and
authorizations 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.
5.5 Litigation. There are no actions, investigations, suits or proceedings
pending or, to the knowledge of the Borrower, threatened, at law, in equity or
in arbitration, before any court, other Governmental Authority or other Person,
(i) against or affecting the Borrower, any of its Subsidiaries or any of their
respective properties as to which there is a reasonable likelihood of an adverse
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.
5.6 Taxes. Each of the Borrower and its Subsidiaries 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 and its
Subsidiaries for the periods covered thereby. Except as described in Schedule
5.6, there is no ongoing audit or examination or, to the knowledge of the
Borrower, other investigation by any Governmental Authority of the tax liability
of the Borrower or any of its Subsidiaries, and there is no unresolved claim by
any Governmental Authority concerning the tax liability of the Borrower or any
of its Subsidiaries 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.
Neither the Borrower nor any of its Subsidiaries has waived or extended or has
been requested to waive or extend the statute of limitations relating to the
payment of any taxes.
5.7 Subsidiaries. Schedule 5.7 sets forth a list, as of the Closing Date,
of all of the Subsidiaries of the Borrower and, as to each such Subsidiary, the
percentage ownership (direct and indirect) of the 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 shares of capital
48
stock expressly indicated on Schedule 5.7, there are no shares of capital stock
or warrants, rights, options or other equity securities of any Subsidiary of the
Borrower outstanding or reserved for any purpose. All outstanding shares of
capital stock of each Subsidiary of the Borrower are duly and validly issued,
fully paid and nonassessable. The Borrower is the sole legal, record and
beneficial owner of, and has good and valid title to, all such capital stock,
free and clear of all Liens other than the Liens created pursuant to the Pledge
Agreement.
5.8 Full Disclosure. All factual information heretofore or
contemporaneously furnished to the Agent or any Lender in writing by or on
behalf of the Borrower or any of its Subsidiaries 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 the Borrower or any of its Subsidiaries
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 dated
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.
5.9 Margin Regulations. Neither the Borrower nor any of its Subsidiaries
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying Margin Stock. No
proceeds of the Loans will be used, directly or indirectly, to purchase or carry
any Margin Stock (except for purchases by the Borrower of outstanding shares of
its capital stock permitted by Section 8.6 and made in compliance with the
applicable provisions of Regulations T, U and X), to extend credit for such
purpose or for any other purpose that would violate or be inconsistent with
Regulations T, U or X or any provision of the Exchange Act.
5.10 No Material Adverse Change. There has been no Material Adverse Change
since January 4, 1998, and there exists no event, condition or state of facts
that could reasonably be expected to result in a Material Adverse Change.
5.11 Financial Matters. (a) The Borrower has heretofore furnished to the
Agent copies of (i) the audited consolidated balance sheets of the Borrower and
its Subsidiaries as of January 4, 1998, January 5, 1997 and December 31, 1995,
and the related statements of income and cash flows for the fiscal years ended
January 4, 1998, January 5, 1997 and December 31, 1995, together with the
opinion of Ernst & Young thereon, and (ii) the unaudited consolidated balance
sheet of the Borrower and its Subsidiaries as of October 4, 1998, and the
related statements of income and cash flows for the three-month and nine-month
periods then ended, respectively. Such financial statements have been prepared
in accordance with Generally Accepted 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 the Borrower and its
Subsidiaries on a consolidated basis as of the respective dates thereof and the
consolidated results of operations of the Borrower and its Subsidiaries for the
respective periods then ended. Except 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 the Borrower or any of its
Subsidiaries of any nature whatsoever (whether absolute, contingent or otherwise
and whether or not due).
49
(b) Each of the Borrower and its Subsidiaries, after giving effect to the
consummation of the transactions contemplated hereby, (i) will have capital
sufficient to carry on its businesses as conducted and as proposed to be
conducted, (ii) will have assets with a fair saleable value, determined on a
going concern basis, (y) not less than the amount required to pay the probable
liability on its existing debts as they become absolute and matured and (z)
greater than the total amount of its liabilities (including identified
contingent liabilities, valued at the amount that can reasonably be expected to
become absolute and matured), and (iii) will not intend to, and will not believe
that it will, incur debts or liabilities beyond its ability to pay such debts
and liabilities as they mature.
5.12 Ownership of Properties. Each of the 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 referred to in Section 5.11(a) (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.
5.13 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 the 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 the
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 the Borrower nor any ERISA Affiliate is required to
contribute to or has, or has at any time had, any liability to a Multiemployer
Plan.
5.14 Environmental Matters. (a) Except as described in Schedule 5.14, no
Hazardous Substances are or have been generated, used, located, released,
treated, disposed of or stored by the Borrower or any of its Subsidiaries or, to
the knowledge of the Borrower, by any other Person or otherwise, in, on or under
any portion of any real property, leased or owned, of the 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 the
Borrower, any other real property at any time leased, owned or operated by the
Borrower or any of its Subsidiaries, has been contaminated by any Hazardous
Substance; and no portion of any real property, leased or owned, of the Borrower
or any of its Subsidiaries has been or, to the knowledge of the Borrower, is
presently the subject of an environmental audit, assessment or remedial action.
50
(b) To the knowledge of the Borrower, except as described in Schedule
5.14, (i) no portion of any real property, leased or owned, of the 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
real property at any time leased, owned or operated by the 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 the Borrower or any of its Subsidiaries.
(c) All activities and operations of the 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 the 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 the Borrower, there are no threatened actions, suits, proceedings
or investigations with respect to any such Environmental Claims, nor any basis
therefor.
5.15 Compliance With Laws. Each of the 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.
5.16 Regulated Industries. Neither the 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 of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
5.17 Insurance. Schedule 5.17 sets forth a true and complete summary of
all insurance policies or arrangements carried or maintained by the Borrower and
its Subsidiaries. The assets, properties and business of the 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.
5.18 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 the
Borrower nor any of its Subsidiaries or, to the knowledge of the Borrower, any
other party thereto, is in material default under any such Material Contract.
51
5.19 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 the Borrower and its Subsidiaries, as applicable,
in the Collateral described therein, subject only to Permitted Liens.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments and the Swingline Commitment and all Letters of Credit and the
payment in full of all principal and interest with respect to the Loans and all
Reimbursement Obligations together with all other amounts then due and owing
hereunder:
6.1 Financial Statements. The Borrower will deliver to each Lender:
(a) As soon as available and in any event within forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year,
beginning with the fiscal quarter ending April 4, 1999, an unaudited
consolidated balance sheet of the Borrower and its Subsidiaries as of the end of
such fiscal quarter, an unaudited consolidated statement of income for the
Borrower and its Subsidiaries for the fiscal 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 3,
1999, (i) an audited consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such fiscal year and audited consolidated
statements of income and cash flows for the Borrower and its Subsidiaries for
the 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 the 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 the 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
52
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 the 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 the Borrower and its Subsidiaries as of the end
of such fiscal year and unaudited consolidating statements of income and cash
flows for the Borrower and its Subsidiaries for the fiscal year then ended, all
in reasonable detail.
6.2 Other Business and Financial Information. The Borrower will deliver to
each Lender:
(a) Concurrently with each delivery of the financial statements described
in Section 6.1, a Compliance Certificate in the form of Exhibit D with respect
to the period covered by the financial statements then being delivered, executed
by the chief financial officer of the Borrower, together with a Covenant
Compliance Worksheet reflecting the computation of the Acquisition covenants set
forth in clauses (ii) and (iii) of Section 6.9(a) and the financial covenants
set forth in Sections 7.1 through 7.4 as of the last day of the period covered
by such financial statements;
(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 3,
1999, a consolidated operating budget for the 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 the 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 the Borrower
and its Subsidiaries for the period covered thereby;
(c) Promptly upon receipt thereof, copies of any "management letter"
submitted to the 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 the 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 the
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 the
Borrower or any of its Subsidiaries shall render to or file with the Securities
and Exchange Commission, the National Association of Securities Dealers, Inc. or
any national securities exchange;
53
(e) Promptly upon (and in any event within ten (10) Business Days after)
any Responsible Officer of the Borrower obtaining knowledge thereof, written
notice of any of the following:
(i) the occurrence of any Default or Event of Default, together with a
written statement of the chief executive officer or chief financial officer
of the Borrower specifying the nature of such Default or Event of Default,
the period of existence thereof and the action that the Borrower has taken
and proposes to take with respect thereto;
(ii) the institution or threatened institution of any action, suit,
investigation or proceeding against or affecting the Borrower or 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 5.5 or this Section
6.3(e)(ii);
(iii) the receipt by the Borrower or any of its Subsidiaries from any
Governmental Authority of (i) any notice asserting any failure by the
Borrower or any of its Subsidiaries to be in compliance with applicable
Requirements of Law or that threatens the taking of any action against the
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 the Borrower or any of
its Subsidiaries, where such action would be reasonably likely to have a
Material Adverse Effect;
(iv) the occurrence of any ERISA Event, together with (i) a written
statement of the chief executive officer or chief financial officer of the
Borrower specifying the details of such ERISA Event and the action that the
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
the Borrower or such ERISA Affiliate with respect to such ERISA Event;
(v) the occurrence of any material default under, or any proposed or
threatened termination or cancellation of, any Material Contract to which
the 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;
(vi) the occurrence of any of the following: (i) the assertion of any
Environmental Claim against or affecting the Borrower, any of its
Subsidiaries or any of their respective real property, leased or owned;
(ii) the receipt by the 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 the Borrower, any of its
Subsidiaries or any other Person in response to the actual or alleged
54
generation, storage, release, disposal or discharge of any Hazardous
Substances on, to, upon or from any real property leased or owned by the
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
(vii) 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 the
Borrower setting forth the nature and period of existence thereof and the
actions that the 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 the
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 the Borrower or any of its Subsidiaries to
any state Governmental Authority) as the Agent or any Lender may from time to
time reasonably request.
6.3 Corporate Existence; Franchises; Maintenance of Properties. The
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 8.1,
(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.
6.4 Compliance with Laws. The 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 its business and the ownership and operation of its
properties, except to the extent the failure so to comply would not be
reasonably likely to have a Material Adverse Effect.
6.5 Payment of Obligations. The 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
the Borrower or any of its Subsidiaries; provided, however, that neither the
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 the Borrower or such Subsidiary is
maintaining adequate reserves with respect thereto in accordance with Generally
Accepted Accounting Principles.
55
6.6 Insurance. The 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 business, 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.
6.7 Maintenance of Books and Records; Inspection. The 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 the Borrower, the
independent public accountants of the Borrower and its Subsidiaries (and by this
provision the Borrower authorizes such accountants to discuss the finances and
affairs of the 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.
6.8 Interest Rate Protection. At March 31, 1999, the Borrower shall have
entered into or obtained, and the 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 the Borrower as to at least fifty percent (50%) of all principal amounts
outstanding at such date under all Funded Debt of the Borrower and its
Subsidiaries for a period of not less than two (2) years after such date. The
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 provisions of this Section.
6.9 Permitted Acquisitions. (a) Subject to the provisions of subsection
(c) below and the requirements contained in the definition of Allowed
Acquisition, and subject to the other terms and conditions of this Agreement,
the Borrower may from time to time on or after the Closing Date effect Allowed
Acquisitions, provided that, with respect to each Allowed Acquisition:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of the consummation of such Allowed Acquisition or
would exist immediately after giving effect thereto;
(ii) To the extent payable in cash, the Acquisition Amount with
respect thereto, together with the aggregate of the Acquisition Amounts (to
the extent paid or payable in cash) for all other Allowed Acquisitions
consummated during the same Reference Period, shall not exceed $15,000,000;
and
(iii) the Acquisition Amount with respect thereto (regardless of the
form of consideration), together with the aggregate of the Acquisition
56
Amounts (regardless of the form of consideration) for all other Allowed
Acquisitions consummated during the same Reference Period, shall not exceed
$35,000,000.
(b) Subject to the terms and conditions of this Agreement and any
additional terms and conditions that may be specified by the Agent or the
Required Lenders, the Borrower may from time to time after the Closing Date
effect Acquisitions that are not Allowed Acquisitions, but in each instance only
with the prior written consent of the Required Lenders (i.e., such acquisitions
must be Permitted Acquisitions).
(c) 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, the Borrower shall have delivered to the Agent and each Lender a
summary description of the material terms of such Allowed 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 Allowed
Acquisition (each, a "Target"), 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, the Borrower shall have delivered to the Agent and each Lender a
certificate, in form and substance reasonably satisfactory to the Agent,
executed by the chief financial officer of the 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, the Borrower will be in compliance with the financial
covenants contained in Sections 7.1 through 7.4, such compliance determined with
regard to calculations made on a pro forma basis in accordance with Generally
Accepted Accounting Principles as if each Target had been consolidated with the
Borrower for those periods applicable to such covenants (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 the Borrower that (except as shall have been
approved in writing by the Required Lenders) all conditions thereto set forth in
this Section 6.9 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 the 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, including, without limitation, for purposes
of Sections 4.2 and 9.1.
(f) The Borrower will furnish to the Agent and the Lenders such other
information regarding any Allowed 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 (e) shall not be deemed to limit or restrict the ability of the
Borrower to consummate Allowed Acquisitions subject to the other provisions of
this Section 6.9 and subject to the other terms and conditions of this
Agreement).
57
6.10 Creation or Acquisition of Subsidiaries. Subject to the provisions of
Section 8.5, the 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 the 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:
(a) Promptly (and in any event within fifteen (15) Business Days) after
the creation or direct or indirect acquisition by the 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 capital stock
or other ownership interests of which are directly owned by the 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 Borrower will execute and deliver to the Agent an
amendment or supplement 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 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 capital stock or
other ownership interests of which are directly owned by another Wholly Owned
Subsidiary (the "Parent Subsidiary") of the 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 capital stock or other ownership 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)
the Borrower will execute and deliver to the Agent an amendment or supplement to
the Pledge Agreement pursuant to which all of the common stock or other
ownership interests of such Subsidiary and any promissory notes from such
58
Subsidiary to the 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
(d) As promptly as reasonably possible, the 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 6.10, and will take such other action as the Agent may reasonably
request to create in favor of the Agent a perfected security interest in the
Collateral pledged pursuant to this Section 6.10.
6.11 Further Assurances. The 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 VII
FINANCIAL COVENANTS
The 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 and all Reimbursement Obligations
together with all other amounts then due and owing hereunder:
7.1 Leverage Ratio. The Borrower will not permit the Leverage Ratio as of
the last day of any fiscal quarter during the periods set forth below to be
greater than the ratio set forth below opposite such period:
Date Leverage Ratio
---- --------------
Closing Date through 2.50 : 1.0
October 1, 2000
October 2, 2000 through 2.25 : 1.0
July 8, 2001
Thereafter 1.75 : 1.0
7.2 Interest Coverage Ratio. The Borrower will not permit the Interest
Coverage Ratio as of the last day of any fiscal quarter during the periods set
forth below to be less than the ratio set forth below opposite such period:
59
Date Interest Coverage Ratio
---- -----------------------
Closing Date through 3.0 : 1.0
January 2, 2000
January 3, 2000 through 3.5 : 1.0
October 1, 2000
Thereafter 4.0 : 1.0
7.3 Fixed Charge Coverage Ratio. The Borrower will not permit the Fixed
Charge Coverage Ratio as of the last day of any fiscal quarter, beginning with
the fiscal quarter ending January 3, 1999, to be less than 1.1 to 1.0.
7.4 Consolidated Net Worth. The Borrower will not permit Consolidated Net
Worth as of the last day of any fiscal quarter, beginning with the fiscal
quarter ending January 3, 1999, to be less than the sum of (i) $115,000,000,
plus (ii) 75% of the aggregate of Consolidated Net Income for each fiscal
quarter ending after October 4, 1998 (provided that Consolidated Net Income for
any such 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 the
Borrower and its Subsidiaries, as determined on a consolidated basis in
accordance with Generally Accepted Accounting Principles, resulting from the
issuance of equity securities (including pursuant to the exercise of options,
rights or warrants or pursuant to the conversion of convertible securities) or
other capital investments after October 4, 1998, minus (iv) 100% of the
aggregate amount of stock repurchases effected by the Borrower during such
fiscal quarter, provided that nothing in this section shall be deemed to permit
any stock repurchases not expressly permitted under Section 8.6(a)(iii).
ARTICLE VIII
NEGATIVE COVENANTS
The 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 and all Reimbursement Obligations,
together with all other amounts then due and owing hereunder:
8.1 Merger; Consolidation. The 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:
(i) the Borrower may merge or consolidate with another Person so long
as (x) the Borrower is the surviving corporation, (y) if such merger or
consolidation is in connection with a Permitted Acquisition, the applicable
conditions of Section 6.9 shall be satisfied and (z) immediately after
giving effect thereto, no Default or Event of Default would exist; and
60
(ii) any Subsidiary may merge or consolidate with another Person so
long as (x) the surviving corporation is the Borrower or a Wholly Owned
Subsidiary, (y) if such merger or consolidation is in connection with a
Permitted Acquisition, the applicable conditions of Sections 6.9 and 6.10
shall be satisfied and (z) immediately after giving effect thereto, no
Default or Event of Default would exist.
8.2 Indebtedness. The 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:
(i) Indebtedness incurred under this Agreement;
(ii) Indebtedness existing on the Closing Date and described on
Schedule 8.2;
(iii) Indebtedness of the Borrower under Hedge Agreements required
pursuant to Section 6.8;
(iv) 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;
(v) Indebtedness under letters of credit (other than Letters of Credit
issued pursuant to Article III) issued for the benefit of the 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 $1,000,000 at any time outstanding; and
(vi) unsecured Indebtedness of the Borrower that is expressly
subordinated and made junior in right and time of payment to the
Obligations and that is evidenced by one or more written agreements or
instruments having terms, conditions and provisions (including, without
limitation, provisions relating to principal amount, maturity, covenants,
defaults, interest, and subordination) satisfactory in form and substance
to the Required Lenders in their sole discretion and which shall provide,
at a minimum and without limitation, that such Indebtedness (a) shall
mature by its terms no earlier than the second anniversary of the Maturity
Date, (b) shall not require any scheduled payment of principal prior to the
first anniversary of the Maturity Date, and (c) shall have covenants and
undertakings that, taken as a whole, are materially less restrictive than
those contained herein (the Indebtedness described hereinabove,
"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 Required Lenders (or the Agent on their behalf), and (3)
prior to or concurrently with the issuance of such Subordinated
Indebtedness, the Borrower shall have delivered to each Lender a
certificate, signed by the chief financial officer of the Borrower,
satisfactory in form and substance to the Required Lenders and to the
effect that, after giving effect to the incurrence of such Subordinated
Indebtedness, the Borrower is in compliance with the financial covenants
set forth in Sections 7.1 through 7.4, such compliance being determined
61
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 2.6(d);
(vii) Indebtedness (other than Indebtedness specified in clauses (i)
through (iv) and clause (vi) above) that shall not at any time, when
combined with the aggregate amount of all Indebtedness incurred under
clause (v) above outstanding at such time, exceed $5,000,000 in aggregate
principal amount outstanding at such time (which Indebtedness under this
clause (vi) shall include, without limitation, any Indebtedness of the
Borrower and its Subsidiaries of the type described in, and secured by
Liens of the types described in, clause (vi) of Section 8.3).
8.3 Liens. The 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
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 the
following (collectively, "Permitted Liens"):
(i) Liens created under the Security Documents;
(ii) Liens in existence on the Closing Date and set forth on Schedule
8.3;
(iii) 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;
(iv) Liens (other than any Lien imposed by ERISA, the creation or
incurrence of which would result in an Event of Default under Section
9.1(j)) 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;
(v) 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;
62
(vi) Purchase money Liens upon property used by the Borrower or any of
its Subsidiaries in the ordinary course of its 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
the Borrower and its Subsidiaries incurred subject to the limitation set
forth in clause (vii) of Section 8.2, 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 the 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 the Borrower or such Subsidiary and (iii) shall not
encumber any other property of the Borrower or any of its Subsidiaries;
(vii) Liens on Borrower Margin Stock, to the extent the fair market
value thereof exceeds 25% of the fair market value of the assets of the
Borrower and its Subsidiaries (including Borrower Margin Stock);
(viii) With respect to any real property occupied by the 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
(ix) Liens in favor of the trustee or agent under any agreement or
indenture relating to Subordinated Indebtedness of the Borrower permitted
under this Agreement, covering sums required to be deposited with such
trustee or agent thereunder.
8.4 Disposition of Assets. The 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 the Borrower or any Subsidiary as
lessee of any asset that has been sold or transferred by the Borrower or such
Subsidiary to such Person, or agree to do any of the foregoing, except for:
(i) sales of inventory (including rental tapes) in the ordinary course
of business;
(ii) 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 the Borrower or its applicable
Subsidiary in the ordinary course of business;
(iii) the sale or other disposition by the 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 the
Borrower and its Subsidiaries (including Borrower Margin Stock), provided
that fair value is received in exchange therefor;
(iv) the sale, lease or other disposition of assets by a Subsidiary of
the Borrower to the Borrower or to another Wholly Owned Subsidiary if,
immediately after giving effect thereto, no Default or Event of Default
would exist;
63
(v) 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 the Borrower
and its Subsidiaries during any fiscal year, (x) to the extent not
theretofore expended to acquire assets or properties or otherwise
reinvested in its businesses of the Borrower, such Net Cash Proceeds are
delivered to the Agent within one hundred eighty (180) days after receipt
thereof for application in prepayment of the Loans in accordance with the
provisions of Section 2.6(f), (y) in no event shall the Borrower or any of
its Subsidiaries sell or otherwise dispose of any of the capital stock or
other ownership interests of any Subsidiary (other than Immaterial
Subsidiaries), and (z) immediately after giving effect thereto, no Default
or Event of Default would exist; and
(vi) Designated Store Exchanges, provided that (w) the fair market
value of all assets and properties that are the subject of Designated Store
Exchanges during any fiscal year do not exceed $7,500,000 in the aggregate
for the Borrower and its Subsidiaries, (x) to the extent not theretofore
expended to acquire assets or properties or otherwise reinvested in the
businesses of the Borrower, the Net Cash Proceeds (if any) received in
connection with each Designated Store Exchange are delivered to the Agent
within ninety (90) days after receipt thereof for application in prepayment
of the Loans in accordance with the provisions of Section 2.6(f), (y) not
less than five (5) days prior to the consummation of any Designated Store
Exchange involving stores of the Borrower with greater than $1,250,000 in
revenues for the twelve-month period then most recently ended, the Borrower
furnishes the Agent with notice and a reasonably detailed description of
the terms thereof, and (z) immediately after giving effect thereto, no
Default or Event of Default would exist.
8.5 Investments. The 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 capital stock, 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
partnership or joint venture (collectively, "Investments"), or make a commitment
or otherwise agree to do any of the foregoing, other than:
(i) Cash Equivalents;
(ii) purchases and acquisitions of inventory, supplies, materials and
equipment in the ordinary course of business;
(iii) 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;
(iv) Without duplication, Investments consisting of (y) Indebtedness
permitted under Section 8.2 and (z) Designated Store Exchanges permitted
under Section 8.4;
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(v) Investments existing on the Closing Date and described in Schedule
8.5;
(vi) Investments in connection with Permitted Acquisitions with
respect to which the conditions and requirements of Section 6.9 have been
satisfied;
(vii) Investments in existing Subsidiaries and in newly created or
acquired Subsidiaries with respect to which the applicable conditions and
requirements of Sections 6.9 and 6.10 have been satisfied;
(viii) Investments (other than Investments specified in clauses (i)
through (vii) above) in an aggregate amount that shall not exceed
$5,000,000 for all such Investments from and after the Closing Date; and
(ix) any other Investments that may be approved in writing by the
Required Lenders from time to time.
8.6 Restricted Payments. (a) The 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 capital stock or any warrants, rights or options to
acquire its capital stock, or purchase, redeem, retire or otherwise acquire for
value any shares of its capital stock or any warrants, rights or options to
acquire its capital stock, or set aside funds for any of the foregoing, except
that:
(i) the Borrower may declare and make dividend payments or other
distributions payable solely in its common stock;
(ii) each Wholly Owned Subsidiary of the Borrower may declare and make
dividend payments or other distributions to the Borrower or another Wholly
Owned Subsidiary of the Borrower, to the extent not prohibited under
applicable Requirements of Law; and
(iii) so long as no Default or Event of Default would exist
immediately after giving effect thereto, the Borrower may purchase, redeem,
retire or otherwise acquire shares of its capital stock in an aggregate
amount that, when combined with the aggregate amount of all Investments
made by the Borrower and its Subsidiaries pursuant to clause (viii) of
Section 8.5, shall not exceed $5,000,000 for all such Investments and
acquisitions from and after the Closing Date; provided, however, that the
Borrower may effect incremental acquisitions of shares of its capital stock
in an aggregate amount that, when combined with the aggregate amount of all
Investments made by the Borrower and its Subsidiaries pursuant to clause
(viii) of Section 8.5, shall not exceed $10,000,000 for all such
Investments and acquisitions from and after the Closing Date, so long as,
immediately after giving effect to each such incremental acquisition, the
Leverage Ratio would be less than 2.0 to 1.0, such ratio to be determined
on a pro forma basis in accordance with Generally Accepted Accounting
Principles as of the last day of the most recently ended fiscal quarter as
if such acquisition had been effected as of such date and as if all
Indebtedness outstanding on the date of such acquisition had been
outstanding as of the last day of the most recently ended fiscal quarter.
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(b) The 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.
8.7 Transactions with Affiliates. The 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 the Borrower or any
Subsidiary, except in the ordinary course of its 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 the
Borrower or such Subsidiary; provided, however, that nothing contained in this
Section shall prohibit:
(i) transactions described on Schedule 8.7 or otherwise expressly
permitted hereunder, provided that the terms of any agreement or
arrangement relating to any of the transactions described on Schedule 8.7
are not, at any time from and after the Closing Date, materially less
favorable to the 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 8.7;
(ii) the payment by the Borrower of reasonable and customary fees to
members of its board of directors; and
(iii) loans by the 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
the Borrower than would obtain in a comparable arm's length transaction
with a Person other than an Affiliate of the Borrower.
8.8 Lines of Business. The 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.
8.9 Limitation on Certain Restrictions. The 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 the Borrower and its Subsidiaries to perform
and comply with their respective obligations under the Credit Documents or (ii)
the ability of any Subsidiary of the Borrower to make any dividend payments or
other distributions in respect of its capital stock, to make loans or advances
to the Borrower or any other Subsidiary, or to transfer any of its assets or
properties to the 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.
8.10 Fiscal Periods. The 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
April7, 2002 from those set forth on Schedule 8.10, unless (i) the Borrower
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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 effective 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.
8.11 Accounting Changes. The Borrower will not, and will not permit or
cause any of its Subsidiaries to, make or permit any material change 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 video tapes, which changes are not
prohibited by Regulation S-X under the Securities Act of 1933, as amended, or by
any rulings or announcements by the Securities and Exchange Commission.
ARTICLE IX
EVENTS OF DEFAULT
9.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default":
(a) The Borrower shall fail to pay any principal of any Loan when due;
(b) The Borrower shall fail to pay any interest on any Loan, any
Reimbursement Obligation, any fee or any other Obligation when due, and such
failure shall continue unremedied for one (1) Business Day;
(c) The Borrower shall fail to observe, perform or comply with any
condition, covenant or agreement contained in any of Sections 2.13, 6.2(e)(i),
6.3(i), 6.9, 6.10, Article VII or Article VIII;
(d) The Borrower or any of its Subsidiaries shall fail to observe, perform
or comply with any condition, covenant or agreement 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 the Borrower acquires knowledge thereof or the
date of delivery of notice thereof by the Agent;
(e) Any representation or warranty made or deemed made by or on behalf of
the 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;
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(f) The 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) The 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 the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, (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
the 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 the Bankruptcy Code
or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, 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 the Borrower or any of its
Subsidiaries or any of their respective properties and the same shall not be
dismissed, 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
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 the Borrower or any
ERISA Affiliate;
(k) Any one or more licenses, permits, accreditations or authorizations of
the 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 the Borrower or any
of its Subsidiaries to be in compliance with applicable Requirements of Law, and
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such action, individually or in the aggregate, would be reasonably likely to
have a Material Adverse Effect;
(l) Any Material Contract to which the 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 such 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 the Borrower and its Subsidiaries
that would be reasonably likely to have a Material Adverse Effect;
(n) Any Security Document to which the 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 the Borrower or any
such Subsidiary shall assert any of the foregoing; or any Subsidiary or any
Person acting on its behalf shall deny or disaffirm such Subsidiary's
obligations under the Guaranty;
(o) Either (i) ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have ceased to be the chief
executive officer of the Borrower or to continue to perform his current duties
as chief executive officer, or (ii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have ceased to be the
chief operating officer of the Borrower or to continue to perform his current
duties as chief operating officer, and in either case under (i) or (ii) above
the Borrower shall have failed to hire or appoint a replacement reasonably
satisfactory to the Required Lenders within 180 days thereafter; or
(p) 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 the Borrower representing a percentage of the combined voting power of the
then outstanding securities of the 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 the Borrower's common stock that would, upon the lapse of time or
the occurrence of certain events, permit the Borrower's stockholders (other than
the acquiring Person or group) to exercise stock purchase rights pursuant to any
stockholder rights plan then in effect; (ii) the Board of Directors of the
Borrower shall cease to consist of a majority of the individuals who constituted
the Board of Directors of the 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 the Borrower as of the
date hereof (or their replacements approved as herein required); or (iii) ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall cease to be the beneficial owner of the number of shares of
the Borrower's common stock that constitutes 75% of the number of shares of such
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common stock (as such number may be adjusted from time to time after the date
hereof to give effect to any stock splits, stock dividends, or subdivisions,
combinations, reclassifications or reorganizations with regard to such common
stock) beneficially owned by him as of April 15, 1998.
9.2 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, the Swingline Commitment, and the Issuing
Lender's obligation to issue Letters of Credit to be terminated, whereupon the
same shall terminate (provided that, upon the occurrence of an Event of Default
pursuant to Section 9.1(g) or Section 9.1(h), the Commitments, the Swingline
Commitment 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 the Borrower (provided that, upon the occurrence of an Event of
Default pursuant to Section 9.1(g) or Section 9.1(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 the
Borrower);
(c) Direct the Borrower to deposit (and the 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 Amount 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 Letter of Credit Exposure as
described in Section 3.8; and
(d) Exercise all rights and remedies available to it under this Agreement,
the other Credit Documents and applicable law.
9.3 Remedies: Set-Off. In addition to all other rights and remedies
available under the Credit Documents or applicable law 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 the 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 the 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 the 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, the Borrower hereby granting to
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each Lender a continuing security interest in and Lien upon all such deposits
and other property as security for such Obligations. Each Lender agrees to
notify the 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 X
THE AGENT
10.1 Appointment. Each Lender hereby irrevocably appoints and authorizes
First Union 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.
10.2 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).
10.3 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 the 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
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any Default or Event of Default, or to inspect the properties, books or records
of the Borrower or any of its Subsidiaries.
10.4 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 any 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).
10.5 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 the 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 the Borrower and its Subsidiaries
and made its own decision to enter into this Agreement and extend credit to the
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 condition and creditworthiness of the 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
72
condition or creditworthiness of the 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.
10.6 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 the 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
a 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 10.4 and
11.6) 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.
10.7 Indemnification. To the extent the Agent is not reimbursed by or on
behalf of the Borrower, and without limiting the obligation of the 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, losses, 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 of
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 proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
or any of the 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.
10.8 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
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Affiliates may accept deposits from, lend money to and generally engage in any
kind of banking, trust, financial advisory or other business with the Borrower,
any of its Subsidiaries or any of their respective Affiliates as if the Agent
were 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.
10.9 Successor Agent. The Agent may resign at any time by giving thirty
(30) days' prior written notice to the Borrower and the Lenders. Upon any such
notice of resignation, the Required Lenders will, with the prior written consent
of the Borrower (which consent shall not be unreasonably withheld), appoint from
among the Lenders a successor to the Agent (provided that the Borrower's consent
shall not be required in the event a Default or Event of Default shall have
occurred and 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 the 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.
10.10 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 XI
MISCELLANEOUS
11.1 Fees and Expenses. The Borrower agrees (i) whether or not the
transactions contemplated by this Agreement shall be consummated, to pay upon
demand all reasonable out-of-pocket costs and expenses of the Agent (including,
without limitation, the reasonable fees and expenses of counsel to the Agent,
including local counsel to the Agent in Alabama, and including the allocated
costs of internal counsel, but subject in any event to the provisions of the
commitment letter from First Union to the Borrower dated November 5, 1998) in
connection with the preparation, negotiation, execution, delivery and
syndication of this Agreement and the other Credit Documents, and any amendment,
modification or waiver hereof or thereof or consent with respect hereto or
thereto, (ii) to pay upon demand all reasonable out-of-pocket costs and expenses
of the Agent and each Lender (including, without limitation, the reasonable fees
and expenses of counsel to the Agent or any Lender, including the allocated
costs of internal counsel) in connection with (y) after the occurrence and
during the continuance of an Event of Default, any refinancing or restructuring
of the credit arrangement provided under this Agreement, whether in the nature
of a "work-out," in any insolvency or bankruptcy proceeding or otherwise and
whether or not consummated, and (z) 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 or insolvency proceeding) or otherwise, and (iii) to 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).
11.2 Indemnification. The Borrower agrees, whether or not the transactions
contemplated by this Agreement shall be consummated, to indemnify and hold
harmless the Agent and each Lender and each of their respective directors,
officers, employees, agents and Affiliates (each, an "Indemnified Person") from
and against any and all claims, losses, damages, obligations, liabilities,
penalties, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) of any kind or nature whatsoever, whether direct,
indirect or consequential (collectively, "Indemnified Costs"), that may at any
time be imposed on, incurred by or asserted against any such Indemnified Person
as a result of, arising from or in any way relating to 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
hereunder for any Indemnified Costs to the extent resulting from the gross
negligence or willful misconduct of such Indemnified Person. All of the
foregoing Indemnified Costs of any Indemnified Person shall be paid or
reimbursed by the Borrower, as and when incurred and upon demand.
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11.3 Governing Law; Consent to Jurisdiction. THIS AGREEMENT AND THE OTHER
CREDIT DOCUMENTS HAVE BEEN EXECUTED, DELIVERED AND ACCEPTED IN, AND SHALL BE
DEEMED TO HAVE BEEN MADE IN, NORTH CAROLINA AND SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA (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 NORTH CAROLINA (WITHOUT REGARD TO THE
CONFLICTS OF LAW PROVISIONS THEREOF). THE BORROWER HEREBY CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF ANY STATE COURT WITHIN MECKLENBURG COUNTY, NORTH
CAROLINA OR ANY FEDERAL COURT LOCATED WITHIN THE WESTERN DISTRICT OF THE STATE
OF NORTH CAROLINA 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 THE 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 THE
BORROWER. THE 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. THE
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 North
Carolina and that the Loans and the other transactions contemplated hereby and
thereby have been and will be made and consummated in the State of North
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Carolina. Furthermore, the parties hereto believe that, inasmuch as this
Agreement and the transactions contemplated hereby have been and will be entered
into and consummated outside the State of Alabama, such transactions constitute
transactions in interstate commerce, so that neither the Agent nor any Lender is
or will be required, solely by entering into this Agreement and consummating the
transactions contemplated hereby and holding any Note, to qualify to do business
as a foreign corporation within the State of Alabama. Notwithstanding the
foregoing, however, the Borrower hereby irrevocably waives all rights that it
may have to raise, in any action brought by the Agent or any Lender to enforce
its rights hereunder, under the Notes or under any of the other Credit
Documents, any defense that is based upon the failure of the Agent or any Lender
to qualify to do business as a foreign corporation in the State of Alabama,
including, but not limited to, any defenses based upon ss. 232 of the Alabama
Constitution of 1901, ss. 10-2B-15.02 of the Code of Alabama (1975) or ss.
40-14-4 of the Code of Alabama (1975), or any successor provisions thereof. The
foregoing waiver is made knowingly and voluntarily and is a material inducement
for the Agent and the Lenders to enter into this Agreement and to consummate the
transactions contemplated hereby.
11.4 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 the 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.
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(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
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 it 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.
11.5 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:
(a) if to the Borrower, to Movie Gallery, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: J. ▇▇▇▇▇▇ ▇▇▇, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇,
with a copy to Movie Gallery, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: S. Page ▇▇▇▇, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇;
(b) if to the Agent, to First Union National Bank of North Carolina, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: Syndication Agency Services, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇;
and
(c) 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);
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 service, telegraphed,
telexed, telecopied or cabled, when delivered for overnight delivery, delivered
to the telegraph company, confirmed by telex answerback, transmitted by
telecopier or delivered 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.
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11.6 Amendments, Waivers, etc. No amendment, modification, waiver or
discharge or termination of, or consent to any departure by the 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 Maturity Date) fixed for the payment of any principal of or
interest on any Loan (other than additional interest payable under Section
2.7(b) 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 other than pursuant to Section 2.15, provided that the
consent of a Lender shall be required for the increase of its own Commitment (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 Section 2.14 or this Section 11.6; and
(c) unless agreed to by the Issuing Lender, the Swingline 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
Swingline 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.
11.7 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
an Affiliate of a Lender) shall not be made without the prior written consent of
the Agent, the Issuing Lender and the Borrower (to be evidenced by their
counterexecution of the relevant Assignment and Acceptance), which consent shall
not be unreasonably withheld, (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 Swingline Lender may assign all (but not less than
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all) of the Swingline Commitment, the Swingline Loans and the Swingline Note
without the necessity of assigning a corresponding portion of its Commitment,
Revolving Loans and Revolving Credit 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 assigning 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 Swingline Lender, shall not be less than the
entire Swingline 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 "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the 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 the 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 and counterexecuted by the
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 thereof, record the information contained therein in the Register
and (iii) give notice thereof to the Borrower and the Lenders. Within five (5)
Business Days after its receipt of such notice, the Borrower will execute and
deliver to the Agent in exchange for the surrendered Note or Notes a new Note or
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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 Exhibit A-1 or Exhibit A-2, as applicable. The Agent
will return cancelled Notes to the Borrower.
(d) Each Lender may, without the consent of the 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) the 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 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 the 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 2.16(a), 2.16(b), 2.17, 2.18 and 9.3, 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.
(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 the Borrower and its Subsidiaries furnished to it by or on behalf of
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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 11.13.
(g) As used in this Section 11.7, the terms "Commitments" and "Commitment"
shall include the Swingline Commitment in the case of the Swingline Lender.
11.8 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 the 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 the Borrower in any case shall entitle
the 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.
11.9 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) the 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
11.7.
11.10 Survival. All representations, warranties and agreements made by or
on behalf of the 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 2.16(a),
2.16(b), 2.17, 2.18, 10.7, 11.1 and 11.2, 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.
11.11 Severability. To the extent any provision of this Agreement is
prohibited by or invalid under the applicable law of any jurisdiction, such
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.
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11.12 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.
11.13 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 the 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 11.7(f).
11.14 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 the Borrower of written or
telephonic notification of such execution and authorization of delivery thereof.
11.15 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 FIRST
UNION TO THE BORROWER DATED NOVEMBER 5, 1998 (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,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
83
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized officers as of the date first above
written.
MOVIE GALLERY, INC.
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇
-----------------------
Title: Chief Financial Officer
-----------------------
(signatures continued)
S-1
FIRST UNION NATIONAL BANK, as Agent, as
Issuing Lender, as Swingline Lender and as a
Lender
Commitment: By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
$25,000,000 ------------------------
Title: Assistant Vice President
------------------------
Instructions for wire transfers to the Agent:
First Union National Bank
ABA Routing ▇▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Account Number: 5000000009116
Account Name: Movie Gallery, Inc.
Attention: Syndication Agency Services
Address for notices (as Issuing Lender, as
Swingline Lender and as a Lender):
First Union National Bank
One First Union Center, 5th Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office:
First Union National Bank
One First Union Center, 5th Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(signatures continued)
S-2
MERCANTILE BANK OF ST. LOUIS,
NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Commitment: ----------------------
$20,000,000 Title: Vice President
----------------------
Address for notices and Lending Office:
Mercantile Bank of St. Louis
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Tram ▇▇-▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(signatures continued)
S-3
SOUTHTRUST BANK, NATIONAL ASSOCIATION
By: /s/ W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Commitment: ----------------------
$20,000,000 Title: Vice President
----------------------
Address for notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office:
Commercial Loan Operations
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
S-4
