EXECUTION
EXHIBIT 10.9
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CREDIT AGREEMENT
Dated as of May 14, 1998
among
LOEWS CINEPLEX ENTERTAINMENT CORPORATION,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
BANKERS TRUST COMPANY,
as Administrative Agent and as a Co-Syndication Agent,
BANK OF AMERICA NT&SA,
as a Co-Syndication Agent,
THE BANK OF NEW YORK,
as a Co-Syndication Agent,
and
CREDIT SUISSE FIRST BOSTON,
as a Co-Syndication Agent,
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LOEWS CINEPLEX ENTERTAINMENT CORPORATION
CREDIT AGREEMENT
TABLE OF CONTENTS
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Page
SECTION 1 DEFINITIONS......................................................... 3
1.1 CERTAIN DEFINED TERMS............................................... 3
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement........................................ 35
1.3 Other Definitional Provisions....................................... 35
SECTION 2 AMOUNTS AND TERMS OF COMMITMENTS AND LOANS.......................... 35
2.1 Commitments; Making of Loans; the Register; Notes................... 35
2.2 Interest on the Loans............................................... 43
2.3 Fees................................................................ 47
2.4 Prepayments and Reductions in Commitments of Revolving Loans;
General Provisions Regarding Payments; Termination of Commitments... 48
2.5 Use of Proceeds..................................................... 55
2.6 Special Provisions Governing Eurodollar Rate Loans.................. 56
2.7 Increased Costs; Taxes; Capital Adequacy............................ 58
2.8 Obligation of Lenders and Issuing Lenders to Mitigate............... 62
2.9 GUARANTOR DESIGNATED SENIOR INDEBTEDNESS............................ 63
SECTION 3 LETTERS OF CREDIT................................................... 63
3.1 Issuance of Letters of Credit and Lenders' Purchase of
Participations Therein.............................................. 63
3.2 Letter of Credit Fees............................................... 67
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of
Credit.............................................................. 67
3.4 Obligations Absolute................................................ 70
3.5 Indemnification; Nature of Issuing Lenders' Duties.................. 71
3.6 Increased Costs and Taxes Relating to Letters of Credit............. 72
3.7 Existing Letters of Credit.......................................... 73
SECTION 4 CONDITIONS TO LOANS AND LETTERS OF CREDIT........................... 74
4.1 Conditions to Initial Revolving Loans............................... 74
4.2 Conditions to All Loans............................................. 81
4.3 Conditions to Letters of Credit..................................... 83
(i)
PAGE
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SECTION 5 COMPANY'S REPRESENTATIONS AND WARRANTIES............................ 83
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries........................................................ 83
5.2 Authorization of Borrowing, etc..................................... 84
5.3 Financial Condition................................................. 86
5.4 No Material Adverse Change; No Restricted Junior Payments........... 86
5.5 Title to Properties; Liens.......................................... 87
5.6 Litigation; Adverse Facts........................................... 87
5.7 Payment of Taxes.................................................... 87
5.8 Performance of Agreements; Materially Adverse Agreements;
Material Contracts.................................................. 87
5.9 Governmental Regulation............................................. 88
5.10 Securities Activities............................................... 88
5.11 Employee Benefit Plans.............................................. 88
5.12 Certain Fees........................................................ 89
5.13 Environmental Protection............................................ 89
5.14 Employee Matters.................................................... 91
5.15 Solvency............................................................ 91
5.16 Disclosure.......................................................... 91
5.17 Related Agreements.................................................. 91
5.18 Insurance........................................................... 92
5.19 Intellectual Property............................................... 92
5.20 Loans and Guaranty Permitted under Subordinated Debt Documents...... 92
SECTION 6 COMPANY'S AFFIRMATIVE COVENANTS..................................... 93
6.1 Financial Statements and Other Reports.............................. 93
6.2 Corporate Existence, etc............................................ 98
6.3 Payment of Taxes and Claims; Tax Consolidation...................... 99
6.4 Maintenance of Properties; Insurance................................ 99
6.5 Inspection; Lender Meeting.......................................... 100
6.6 Compliance with Laws, etc........................................... 100
6.7 Environmental Disclosure and Inspection............................. 100
6.8 Company's Remedial Action Regarding Hazardous Materials............. 102
6.9 Execution of Guaranty and Collateral Documents by Future
Subsidiaries........................................................ 102
SECTION 7 COMPANY'S NEGATIVE COVENANTS........................................ 103
7.1 Indebtedness........................................................ 103
7.2 Liens and Related Matters........................................... 105
7.3 Investments; Joint Ventures......................................... 107
7.4 Contingent Obligations.............................................. 109
7.5 Restricted Junior Payments; Certain Other Payments.................. 110
(ii)
PAGE
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7.6 Financial Covenants................................................. 111
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions.... 113
7.8 Fiscal Year......................................................... 114
7.9 Sale or Discount of Receivables..................................... 114
7.10 Transactions with Shareholders and Affiliates....................... 114
7.11 Disposal of Subsidiary Stock........................................ 115
7.12 Conduct of Business................................................. 115
7.13 Amendments of Related Agreement; Documents Relating to
Subordinated Indebtedness; Amendments of Material Documents......... 115
SECTION 8 EVENTS OF DEFAULT................................................... 116
8.1 Failure to Make Payments When Due................................... 116
8.2 Default in Other Agreements......................................... 116
8.3 Breach of Certain Covenants......................................... 117
8.4 Breach of Warranty.................................................. 117
8.5 Other Defaults Under Loan Documents................................. 117
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc................ 117
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.................. 118
8.8 Judgments and Attachments........................................... 118
8.9 Dissolution......................................................... 118
8.10 Employee Benefit Plans.............................................. 118
8.11 Change in Control................................................... 119
8.12 Invalidity of Guaranty.............................................. 119
8.13 Failure of Security................................................. 119
SECTION 9 AGENT............................................................... 120
9.1 Appointment......................................................... 120
9.2 Powers and Duties; General Immunity................................. 120
9.3 Representations and Warranties; No Responsibility For Appraisal
of Creditworthiness................................................. 122
9.4 Right to Indemnity.................................................. 122
9.5 Successor Agent..................................................... 122
9.6 Collateral Documents and Guaranty................................... 123
SECTION 10 MISCELLANEOUS....................................................... 123
10.1 Assignments and Participations in Loans and Letters of Credit....... 123
10.2 Expenses............................................................ 126
10.3 Indemnity........................................................... 127
10.4 Set-Off; Security Interest in Deposit Accounts...................... 128
10.5 Ratable Sharing..................................................... 129
10.6 Amendments and Waivers.............................................. 130
10.7 Independence of Covenants........................................... 131
(iii)
PAGE
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10.8 Notices............................................................. 131
10.9 Survival of Representations, Warranties and Agreements.............. 132
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative............... 132
10.11 Marshalling; Payments Set Aside..................................... 132
10.12 Severability........................................................ 132
10.13 Obligations Several; Independent Nature of Lenders' Rights.......... 133
10.14 Headings............................................................ 133
10.15 Applicable Law...................................................... 133
10.16 Successors and Assigns.............................................. 133
10.17 Consent to Jurisdiction and Service of Process...................... 133
10.18 Waiver of Jury Trial................................................ 134
10.19 Confidentiality..................................................... 134
10.20 Counterparts; Effectiveness......................................... 135
Signature pages S-1
(iv)
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF REQUEST FOR ISSUANCE OF LETTER OF CREDIT
IV-A FORM OF TRANCHE A REVOLVING NOTE
IV-B FORM OF TRANCHE B REVOLVING NOTE
V FORM OF COMPLIANCE CERTIFICATE
VI FORM OF FINANCIAL CONDITION CERTIFICATE
VII FORM OF INTERCOMPANY NOTE
VIII-A FORM OF OPINION OF FRIED, FRANK, HARRIS, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
VIII-B FORM OF OPINION OF ▇▇▇▇▇▇▇ & ▇▇▇▇
IX FORM OF OPINION OF O'MELVENY & ▇▇▇▇▇ LLP
X FORM OF ASSIGNMENT AGREEMENT
XI FORM OF AUDITOR'S LETTER
XII FORM OF CERTIFICATE RE NON-BANK STATUS
XIII FORM OF COLLATERAL ACCOUNT AGREEMENT
XIV FORM OF TRANCHE B CONTINUATION NOTICE
XV FORM OF COMPANY SECURITY AGREEMENT
XVI FORM OF COMPANY PLEDGE AGREEMENT
XVII FORM OF COMPANY TRADEMARK SECURITY AGREEMENT
XVIII FORM OF SUBSIDIARY GUARANTY
XIX FORM OF SUBSIDIARY SECURITY AGREEMENT
XX FORM OF SUBSIDIARY PLEDGE AGREEMENT
XXI FORM OF SUBSIDIARY TRADEMARK SECURITY AGREEMENT
XXII INTENTIONALLY OMITTED
XXIII FORM OF NEW COMMITMENT ACCEPTANCE
XXIV FORM OF INCREASED COMMITMENT ACCEPTANCE
(v)
SCHEDULES
1.1L EXISTING LETTERS OF CREDIT
1.1W CERTAIN OPERATING LEASES
1.1WH CERTAIN INDEBTEDNESS
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1A(i) CERTAIN GOOD STANDING CERTIFICATE
4.1B CAPITAL AND OWNERSHIP STRUCTURE
5.1A CERTAIN LOAN PARTIES
5.1D SUBSIDIARIES OF COMPANY
5.6 LITIGATION
5.12 CERTAIN FEES
5.13 ENVIRONMENTAL MATTERS
7.1(vi) CERTAIN EXISTING INDEBTEDNESS
7.2(v) CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4(vi) CERTAIN EXISTING CONTINGENT OBLIGATIONS
7.4(xi) CERTAIN EXISTING LETTERS OF CREDIT
7.10 CERTAIN AFFILIATE TRANSACTIONS
(vi)
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of May 14, 1998 and entered into by and
among LOEWS CINEPLEX ENTERTAINMENT CORPORATION, a Delaware corporation
("COMPANY"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(each individually referred to herein as a "LENDER" and collectively as
"LENDERS"), BANKERS TRUST COMPANY ("BTCO"), as administrative agent for Lenders
(in such capacity, "ADMINISTRATIVE AGENT") and as a Co-Syndication Agent, BANK
OF AMERICA NT&SA, as a Co-Syndication Agent, THE BANK OF NEW YORK, as a Co-
Syndication Agent and CREDIT SUISSE FIRST BOSTON, as a Co-Syndication Agent.
R E C I T A L S
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WHEREAS, Company is an indirect wholly-owned Subsidiary (this and other
capitalized terms used in these recitals without definition being used as
defined in subsection 1.1) of Sony Pictures Entertainment Inc., a Delaware
corporation ("SPE");
WHEREAS, on or before the Closing Date SPE shall sell, assign and transfer
to a Subsidiary of Company all of the right, title and interest of SPE and its
Affiliates in the IMAX Agreements in exchange for a cash payment equal to the
IMAX Purchase Price (the "IMAX TRANSACTION");
WHEREAS, Company will (a) lend to various Subsidiaries of Company an amount
sufficient to, and cause such Subsidiaries to, repay the Sony Land Indebtedness,
(b) repay the Sony Capital Indebtedness and (c) refinance Indebtedness of
Cineplex Odeon under the Existing Cineplex Credit Agreement (the "EXISTING
CINEPLEX BANK REFINANCING");
WHEREAS, (i) ▇▇▇▇▇ and Cineplex Odeon are currently obligated with respect
to $200 million in aggregate outstanding principal amount of the ▇▇▇▇▇ Notes,
(ii) after giving effect to the Business Combination Transactions, (a) ▇▇▇▇▇
shall remain obligated with respect thereto, (b) Cineplex Odeon shall be
released from its guaranty with respect thereto and (c) Company shall guarantee
▇▇▇▇▇'▇ obligations with respect to the ▇▇▇▇▇ Notes on a senior subordinated
basis and (iii) ▇▇▇▇▇ shall be obligated to offer to repurchase the ▇▇▇▇▇ Notes
pursuant to the ▇▇▇▇▇ Change of Control Offer ("▇▇▇▇▇ NOTE REPURCHASE
TRANSACTIONS");
WHEREAS, Company will pay to its shareholders of record as of the day
prior to the Closing Date the SPE Dividend;
1
WHEREAS, Universal shall subscribe for 4,426,606 shares of Company's
Common Stock in consideration of the payment of not less than $84,500,000
pursuant to the Universal Subscription Agreement (the "UNIVERSAL INVESTMENT");
WHEREAS, Company and Cineplex Odeon will effect a business combination
pursuant to a plan of arrangement of Cineplex Odeon under Section 182 of the
Business Corporations Act (Ontario) in which: (i) Cineplex Odeon shall exchange
all of the issued and outstanding capital stock of ▇▇▇▇▇ with Company for
8,242,385 shares of Company Common Stock (the "EXCHANGE SHARES"), (b) Cineplex
Odeon shall distribute the Exchange Shares to its shareholders in consideration
of the purchase from them, and cancellation, of approximately 46.60% of their
shares of Cineplex Odeon Common Stock at the rate of one Exchange Share for each
ten shares of Cineplex Odeon Common Stock and (c) Company shall acquire from
Cineplex Odeon's shareholders the remaining outstanding shares of Cineplex Odeon
Common Stock (other than certain shares of Cineplex Odeon Common Stock with
respect to which the holders have exercised certain dissent rights) in exchange
for 9,437,548 shares of Company Common Stock (the "COMBINATION SHARES") at the
rate of one Combination Share for each ten shares of Cineplex Odeon Common
Stock, except that 800,000 shares of Cineplex Odeon Common Stock held by
Universal will be exchanged with Company for 80,000 shares of Company Class B
Non-Voting Common Stock and 40,000 shares of Cineplex Odeon Common Stock held by
the ▇▇▇▇▇▇▇▇ Trust will be exchanged with Company for 4,000 shares of Company
Class B Non-Voting Common Stock, in each case pursuant to the Plan of
Arrangement (collectively, the "ARRANGEMENT");
WHEREAS, SPE shall (a) cause CPE Holdings, Inc. to exchange all of the
shares of stock of S&J Theatres, Inc., a wholly-owned Subsidiary of SPE
("S&J") to Loews USA Cinemas, Inc., a wholly owned Subsidiary of Company, and
(b) cause Star Theatres, Inc., a wholly-owned Subsidiary of SPE ("STAR"), to
merge with and into Loews Theatres Enterprises, Inc., a wholly owned Subsidiary
of Company, with Loews Theatres Enterprises, Inc. surviving such merger, in each
case in exchange for shares of Company Common Stock (collectively, the
"SUBSIDIARY TRANSACTIONS");
WHEREAS, Lenders have agreed to extend certain credit facilities to
Company, the proceeds of which will be used (i) to finance (a) the Existing
Cineplex Bank Refinancing, (b) the Sony Debt Repayment, (c) the ▇▇▇▇▇ Note
Repurchase Transactions, (d) the IMAX Transaction and (e) the SPE Dividend, (ii)
to pay Transaction Costs, (iii) to finance Permitted Investments and (iv) to
provide for working capital and/or other general purposes of Company and its
Subsidiaries;
WHEREAS, Company chooses to secure all of the Obligations hereunder and the
other Loan Documents by granting to Administrative Agent, on behalf of Lenders,
a first priority Lien on substantially all of its personal property, including
without limitation, a pledge of all of the equity interests in each of its
Domestic Subsidiaries and 65% of the equity interests in each of its Foreign
Subsidiaries; and
2
WHEREAS, all of the Domestic Subsidiaries of Company have agreed to
guaranty the Obligations hereunder and under the other Loan Documents and each
Domestic Subsidiary has agreed to secure its guaranty by granting to
Administrative Agent a first priority Lien on substantially all of its
respective personal property including a pledge of all of the equity interests
in each of its Domestic Subsidiaries and 65% of the equity interests in each of
its Foreign Subsidiaries;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and Agents agree as
follows:
Section 1 DEFINITIONS
1.1 Certain Defined Terms.
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The following terms used in this Agreement shall have the following
meanings:
"ADDITIONAL INDEBTEDNESS" has the meaning assigned to that term in
subsection 7.1(ix).
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination
Date with respect to a Eurodollar Rate Loan, the rate per annum obtained by
dividing (i) the offered quotation (rounded upward to the nearest 1/16 of one
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percent) to first class banks in the interbank Eurodollar market by BTCo for
U.S. dollar deposits of amounts in same day funds comparable to the principal
amount of the Eurodollar Rate Loan of BTCo for which the Adjusted Eurodollar
Rate is then being determined with maturities comparable to the Interest Period
for which such Adjusted Eurodollar Rate will apply as of approximately 10:00
a.m. (New York time) on such Interest Rate Determination Date by (ii) a
--
percentage equal to 100% minus the stated maximum rate of all reserve
-----
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve System in respect
of "Eurocurrency liabilities" as defined in Regulation D (or any successor
category of liabilities under Regulation D).
"ADMINISTRATIVE AGENT" means BTCo in such capacity hereunder and under
the other Loan Documents.
"AFFECTED LENDER" has the meaning assigned to that term in subsection
2.6C.
"AFFECTED LOANS" has the meaning assigned to that term in subsection
2.6C.
"AFFILIATE", as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), as applied to any Person, means the
3
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.
"AGENT" means BTCo in its capacity as Administrative Agent, and BTCo, The
Bank of New York, Credit Suisse First Boston and Bank of America NT&SA, in their
respective capacities as a Co-Syndication Agent, hereunder and under the Loan
Documents, and also means and includes any successor Agent appointed pursuant to
subsection 9.5.
"AGREEMENT" means this Credit Agreement dated as of May 14, 1998, as it
may be amended, supplemented or otherwise modified from time to time.
"ANNUALIZED PRO FORMA EBITDA" means, for any period, the sum of (i)
EBITDA of the Company and its wholly owned Subsidiaries for such period
(excluding to the extent duplicative of clauses (ii) and (iii) equity in
earnings of Joint Ventures and non-wholly owned Subsidiaries) plus (ii) (a) the
----
EBITDA of each non-wholly owned Subsidiary of Company and Joint Venture of
Company or any of Company's wholly-owned Subsidiaries multiplied by (b) the
Ownership Percentage with respect to each such non-wholly owned Subsidiary and
Joint Venture, as the case may be, plus (iii) (other than for purposes of the
----
definition of Annualized Pro Forma Wholly Owned EBITDAR) without duplication of
amounts included in clause (ii), 100% of the EBITDA of the ▇▇▇▇▇ ▇▇▇▇▇▇▇
Theatres partnership (annualized in a manner consistent with the other elements
of this definition) for any period in which Indebtedness of the ▇▇▇▇▇ ▇▇▇▇▇▇▇
Theatres partnership is included in Wholly-Owned Total Debt plus (iv) Proforma
----
EBITDA for Annualized Theatres minus Actual Fiscal Quarter EBITDA.
-----
"Proforma EBITDA for Annualized Theatres" shall be the sum of the
Proforma EBITDA for each Annualized Theatre, calculated on an
Annualized Theatre by Annualized Theatre basis in accordance with the
formula set forth below.
Proforma EBITDA for each Actual Fiscal Quarter EBITDA
----------------------------
=
Annualized Theatre Annualization Factor
Where:
"Actual Fiscal Quarter EBITDA" means the sum of EBITDA from each
Annualized Theatre for each Included Quarter.
"Included Quarter" means each full Fiscal Quarter that such
Annualized Theatre was in operation during the measurement period.
4
"Annualization Factor" means the sum of annualization factors set
forth below for Included Quarters:
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Quarter ending May 31 of each year 0.16
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Quarter ending August 31 of each year 0.37
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Quarter ending November 30 of each year 0.17
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Quarter ending February 28 or 29 of each year 0.30
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Total 100.00
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"Annualized Theatres" means, for any period, newly constructed
theatres identified to the Administrative Agent that have had at least
one complete Fiscal Quarter of operation, but less than four complete
Fiscal Quarters of operation.
"ANNUALIZED PRO FORMA WHOLLY OWNED EBITDA" means, for any period,
Annualized Pro Forma EBITDA for such period, excluding, however, (i) an amount
equal to (a) Annualized Pro Forma EBITDA attributable to each Joint Venture (in
each case to the extent otherwise included in Annualized Pro Forma EBITDA) and
(ii) an amount equal to the amount of EBITDA attributable to any non-wholly
owned Subsidiary of Company (to the extent otherwise included in Annualized Pro
Forma EBITDA) but including 100% of the EBITDA of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ Theatres
partnership (annualized in a manner consistent with the definition of
"Annualized Pro Forma EBITDA") for any period in which Indebtedness of the
▇▇▇▇▇ ▇▇▇▇▇▇▇ Theatres partnership is included in Wholly-Owned Total Debt .
"ANNUALIZED PRO FORMA WHOLLY OWNED EBITDAR" means, for any period, the
sum of the amounts for such period of (i) Annualized Pro Forma Wholly Owned
EBITDA plus (ii) Annualized Pro Forma Wholly Owned Rent Expense.
----
"ANNUALIZED PRO FORMA WHOLLY OWNED RENT EXPENSE" means, for any period,
the sum of (i) Wholly Owned Rent Expense for such period plus (ii) Pro forma
----
Wholly Owned Rent Expense for Annualized Theatres minus Actual Fiscal Quarter
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Wholly Owned Rent Expense for Annualized Theatres.
"Pro forma Wholly Owned Rent Expense for Annualized Theatres" shall be
the sum of the Pro forma Wholly Owned Rent Expense for each Annualized
Theatre, calculated on an Annualized Theatre by Annualized Theatre basis in
accordance with the formula set forth below.
--------------------------------------------------------------------------------------------
Pro forma Wholly Owned Rent Expense for Actual base rent provided for in the
each Annualized Theatre with less than two applicable lease for such complete Fiscal
complete Fiscal Quarters of operation. Quarter multiplied by 4
----------
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5
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Pro forma Wholly Owned Rent Expense for Actual base rent provided for in the
each Annualized Theatre with more than applicable lease for such two complete
two complete Fiscal Quarters of operation Fiscal Quarters multiplied by 2
but less than four complete Fiscal Quarters ----------
of operation.
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Pro forma Wholly Owned Rent Expense for Actual base rent provided for in the
each Annualized Theatre with more than applicable lease for such three complete
three complete Fiscal Quarters of operation Fiscal Quarters multiplied by 4/3
but less than four complete Fiscal Quarters ----------
of operation.
--------------------------------------------------------------------------------------------
Where:
"Actual Fiscal Quarter Wholly Owned Rent Expense" means the sum of
Wholly Owned Rent Expense from each Annualized Theatre for each
Included Quarter.
"Included Quarter" means each full Fiscal Quarter that such
Annualized Theatre was in operation during the measurement period.
"Annualized Theatres" means, for any period, newly constructed
theatres identified to the Administrative Agent that have had at least
one complete Fiscal Quarter of operation, but less than four complete
Fiscal Quarters of operation.
"APPLICABLE MARGIN" has the meaning assigned that term in subsection
2.2A.
"ARRANGEMENT" has the meaning assigned that term in the Recitals hereto.
"ASSET SALE" means the sale by Company or any of its Subsidiaries to any
Person other than Company or any of its wholly-owned Subsidiaries of (i) any of
the stock of any of Company's Subsidiaries, (ii) substantially all of the assets
of any division or line of business of Company or any of its Subsidiaries, or
(iii) any other assets (whether tangible or intangible) of Company or any of its
Subsidiaries (other than (a) inventory sold in the ordinary course of business,
(b) obsolete equipment and (c) any such other assets to the extent that the
aggregate value of such assets sold in any single transaction or related series
of transactions is equal to $2,000,000 or less).
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in substantially the
form of Exhibit X annexed hereto.
---------
6
"AUDITOR'S LETTER" means a letter, substantially in the form of Exhibit
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XI annexed hereto, executed by a nationally recognized accounting firm and
--
delivered to Agent pursuant to subsection 4.1 or 6.1(ii).
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the higher of (x) the Prime Rate or (y)
the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"BASE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"BONY EXISTING LETTERS OF CREDIT" means the letters of credit outstanding
prior to, and with an expiration date later than, the Closing Date and listed on
part (ii) of Schedule 1.1L annexed hereto.
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"▇▇▇▇▇▇▇▇ TRUST" means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Family Trust, a trust
created under the laws of Quebec.
"BT EXISTING LETTERS OF CREDIT" means the letters of credit outstanding
prior to, and with an expiration date later than, the Closing Date and listed on
part (iii) of Schedule 1.1L annexed hereto.
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"BUSINESS COMBINATION TRANSACTIONS" means the Arrangement, the Subsidiary
Transactions, the IMAX Transaction, the SPE Dividend and the Universal
Investment.
"BUSINESS DAY" means (i) for all purposes other than as covered by clause
(ii) below, any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of New York or is a day on which banking
institutions located in such state are authorized or required by law or other
governmental action to close, and (ii) with respect to all notices,
determinations, fundings and payments in connection with the Adjusted Eurodollar
Rate or any Eurodollar Rate Loans, any day that is a Business Day described in
clause (i) above and that is also a day for trading by and between banks in
Dollar deposits in the applicable interbank Eurodollar market.
"CANADIAN DOLLARS" and the sign "CN$" means the lawful money of Canada.
"CAPITAL EXPENDITURES" means, for any period, the sum of (i) the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital Leases which is
capitalized on the balance sheet of Company and its Subsidiaries) by Company and
its Subsidiaries during that period that, in conformity with GAAP, are included
in "additions to property, plant or equipment" or comparable items reflected
in the
7
consolidated statement of cash flows of Company and its Subsidiaries plus (ii)
----
to the extent not covered by clause (i) of this definition, the aggregate of all
expenditures by Company and its Subsidiaries during that period to acquire (by
purchase or otherwise) the business, property or fixed assets of Company and its
Subsidiaries, or the stock or other evidence of beneficial ownership of, any
Person other than Company or any of its Subsidiaries plus (iii) to the extent
----
not covered by clauses (i) or (ii) of this definition, the aggregate of all
expenditures by Company and its Subsidiaries during that period to make
Permitted Investments and Permitted Acquisitions pursuant to subsection 7.3(ix).
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person; provided that, with respect to Company and its Subsidiaries,
"Capital Lease" shall also include any lease that Company or any of its
Subsidiaries is a party to with respect to a theatre which has been closed by
Company or such Subsidiary, as the case may be, and for which Company or such
Subsidiary, as the case may be, has established a liability on its balance sheet
in accordance with GAAP.
"CASH" means money, currency or a credit balance in a Deposit Account.
"CASH EQUIVALENTS" means, as at any date of determination, (a) marketable
securities (1) issued or directly and unconditionally guaranteed as to interest
and principal by the United States Government or (2) issued by any agency of the
United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within one year after such date; (b)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after such date
and having, at the time of the acquisition thereof, the highest rating
obtainable from either S&P or ▇▇▇▇▇'▇; (c) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
▇▇▇▇▇'▇; (d) certificates of deposit or bankers' acceptances maturing within one
year after such date and issued or accepted by any Lender or by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia that (1) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (2) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (e) shares of any money market mutual fund that (1)
has at least 95% of its assets invested continuously in the types of investments
referred to in clauses (a) and (b) above, (2) has net assets of not less than
$500,000,000, and (3) has the highest rating obtainable from either S&P or
▇▇▇▇▇'▇.
"CERTIFICATE RE NON-BANK STATUS" means a certificate substantially in the
form of Exhibit XII annexed hereto delivered by a Lender to Administrative Agent
-----------
pursuant to subsection 2.7B(iii).
8
"CHANGE OF CONTROL" means (i) as of any date, that any Person or any two
or more Persons acting in concert shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Exchange Act), directly or indirectly, of Securities of Company (or
other Securities convertible into such Securities) representing a percentage of
the combined voting power of all Securities of Company entitled to vote in the
election of directors (other than Securities having such power only by reason of
the happening of a contingency) which is equal to or greater than the aggregate
percentage of the combined voting power of all Securities of Company entitled to
vote in the election of directors (other than Securities having such power only
by reason of the happening of a contingency) beneficially owned by SPE,
Universal and their Affiliates in the aggregate as of such date or (ii) a
majority of the members of the Board of Directors of Company shall not be
Continuing Directors.
"CHANGE IN LAW" means the enactment, promulgation, execution or
ratification of, or any change in, modification of, or amendment to, any
applicable law, treaty or governmental rule, regulation or order, or any change
in the interpretation, administration or application thereof.
"CINEPLEX ODEON" means Cineplex Odeon Corporation, a corporation formed
under the laws of the province of Ontario, which immediately after the
consummation of the Business Combination Transactions will be a direct wholly-
owned Subsidiary of Company.
"CINEPLEX ODEON COMMON STOCK" means the common shares of Cineplex Odeon,
no par value per share.
"CLOSING DATE" means the date on or before May 30, 1998, on which the
conditions set forth in subsection 4.1 have been satisfied by Company or have
been waived in writing by Co-Syndication Agents.
"COLLATERAL" means, collectively, all of the personal property (including
capital stock) in which Liens are purported to be granted by the Collateral
Documents.
"COLLATERAL ACCOUNT" has the meaning assigned to that term in the
Collateral Account Agreement.
"COLLATERAL ACCOUNT AGREEMENT" means the Collateral Account Agreement
executed and delivered by Company and Administrative Agent on the Closing Date,
substantially in the form of Exhibit XIII annexed hereto, as such Collateral
------------
Account Agreement may hereafter be amended, supplemented or otherwise modified
from time to time.
"COLLATERAL DOCUMENTS" means the Collateral Account Agreement, Company
Security Agreement, Company Pledge Agreement, Company Trademark Security
Agreement, Subsidiary Security Agreement, Subsidiary Pledge Agreement and
Subsidiary Trademark Security Agreement.
9
"COMBINATION SHARES" has the meaning assigned that term in the Recitals
hereto.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by Company or
any of its Subsidiaries in the ordinary course of business of Company or such
Subsidiary.
"COMMITMENT" means any of the Tranche A Revolving Loan Commitment or
Tranche B Revolving Loan Commitment and "COMMITMENTS" means such commitments
of all Lenders in the aggregate.
"COMMITMENT FEE PERCENTAGE" has the meaning assigned to that term in
subsection 2.3A.
"COMPANY" has the meaning assigned to that term in the introduction to
this Agreement.
"COMPANY COMMON STOCK" means the common stock of Company, par value $.01
per share.
"COMPANY CLASS A NON-VOTING COMMON STOCK" means the Class A Non-Voting
Common Stock of Company, par value $.01 per share.
"COMPANY CLASS B NON-VOTING COMMON STOCK" means the Class B Non-Voting
Common Stock of Company, par value $.01 per share.
"COMPANY NON-VOTING COMMON STOCK" means the Company Class A Non-Voting
Common Stock and the Company Class B Non-Voting Common Stock.
"COMPANY PLEDGE AGREEMENT" means the Company Pledge Agreement executed and
delivered by Company on the Closing Date, substantially in the form of Exhibit
-------
XVI annexed hereto, as such Company Pledge Agreement may be amended,
---
supplemented or otherwise modified from time to time.
"COMPANY SECURITY AGREEMENT" means the Company Security Agreement
executed and delivered by Company on the Closing Date, substantially in the form
of Exhibit XV annexed hereto, as such Company Security Agreement may be amended
----------
or supplemented or otherwise modified from time to time.
"COMPANY TRADEMARK SECURITY AGREEMENT" means the Company Trademark
Security Agreement executed and delivered by Company on the Closing Date,
substantially in the form of Exhibit XVII annexed hereto, as such Company
------------
Trademark Security Agreement may be amended, supplemented or otherwise modified
from time to time.
10
"COMPETITOR" means any Person engaged directly or indirectly or having
any Affiliate engaged directly or indirectly in the production, distribution or
exhibition of motion pictures.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form of
Exhibit V annexed hereto delivered to Agent and Lenders by Company pursuant to
---------
subsection 6.1(iii).
"CONSOLIDATED DEBT" means, as at any date of determination, the sum of
(i) Wholly-Owned Total Debt plus (ii) (a) the aggregate stated balance sheet
----
amount of all Indebtedness of each non-wholly-owned Subsidiary of Company and
Joint Venture of Company or any of Company's Subsidiaries, net of Cash of such
Subsidiary or Joint Venture (excluding, however, an amount equal to the
Indebtedness of each non-wholly owned Subsidiary of Company and Joint Venture of
Company or any of Company's Subsidiaries to the extent included in Wholly-Owned
Total Debt) multiplied by (b) the Ownership Percentage with respect to each such
---------- --
non-wholly-owned Subsidiary and Joint Venture, as the case may be.
"CONSOLIDATED EBITDA" means, for any period, the sum of the amounts for
such period of EBITDA of Company and its Subsidiaries; provided that there
--------
shall be excluded (i) the income (or loss) of any other Person (other than a
Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, and (iii) the income
of any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary.
"CONTINGENT OBLIGATION", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Interest Rate Agreements and Currency Agreements. Contingent Obligations
shall include, without limitation, (a) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of non-performance by any other party or
parties to an agreement, and (c) any liability of such Person for the obligation
of another through any agreement (contingent or otherwise) (X) to purchase,
repurchase
11
or otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise) or (Y) to
maintain the solvency or any balance sheet item, level of income or financial
condition of another if, in the case of any agreement described under subclauses
(X) or (Y) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"CONTINUING DIRECTOR" shall mean, as of any date of determination, any
member of the Board of Directors of Company who (i) was a member of such Board
of Directors on the Closing Date or (ii) was nominated for election or elected
to such Board of Directors with the affirmative vote of SPE or Universal.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision
of any Security issued by that Person or of any material indenture, mortgage,
deed of trust, contract, undertaking, agreement or other instrument to which
that Person is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject.
"CO-SYNDICATION AGENTS" means BTCo, The Bank of New York, Bank of America
NT&SA and Credit Suisse First Boston, in their respective capacities as co-
syndication agents of the credit facilities described herein.
"COVERED TAX" or "COVERED TAXES" means all Tax or Taxes other than any
Excluded Tax or Excluded Taxes.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement.
"CURRENT ASSETS" means, as at any date of determination, the total assets
of Company and its Subsidiaries on a consolidated basis which may properly be
classified as current assets in conformity with GAAP, excluding Cash and Cash
Equivalents.
"CURRENT LIABILITIES" means, as at any date of determination, the total
liabilities of Company and its Subsidiaries on a consolidated basis which may
properly be classified as current liabilities in conformity with GAAP.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.
12
"DOJ SETTLEMENT" means the Stipulation and Order entered April 16, 1998
in the matter of United States et al vs. Sony Corporation of America, Company,
-----
Cineplex Odeon and ▇.▇. ▇▇▇▇▇▇▇ Corp. and the related Final Judgment in the
form entered by the court in such case.
"DOLLARS" and the sign "$" mean the lawful money of the United States
of America.
"DOMESTIC SUBSIDIARY" means any Subsidiary of Company other than a
Foreign Subsidiary.
"EBITDA" means, for any period, for any Person the sum of the amounts,
without duplication of component amounts, for such period of (i) Net Income,
(ii) Interest Expense, (iii) any amounts referred to in subsection 2.3 payable
to the Lenders and the Agents prior to the Closing Date to the extent such
amounts have been deducted from Net Income and excluded from Interest Expense,
(iv) provisions for taxes based on income or equity, (v) total depreciation
expense, (vi) total amortization expense, (vii) all extraordinary losses,
including losses arising from the sale or disposition of assets, (viii) any
amounts representing the amortization of deferred financing expense (to the
extent not already included in (1) Interest Expense or (2) clause (iii) above),
(ix) other non-cash items reducing Net Income less other non-cash items
----
increasing Net Income, (x) one-time costs and expenses in connection with the
Business Combination Transactions (to the extent not already included in clause
(iii) above), (xi) non-recurring and other one-time non-operating expenses and
(xii) the effect of accounting changes pursuant to opinion No. 20 of the
Accounting Principles Board, all of the foregoing as determined on a
consolidated basis for such Person and its Subsidiaries in conformity with GAAP.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized under the
laws of the United States or any state thereof having a combined capital and
surplus of at least $250,000,000; (ii) a savings and loan association or savings
bank organized under the laws of the United States or any state thereof having a
combined capital and surplus of at least $250,000,000; (iii) a commercial bank
organized under the laws of any other country or a political subdivision thereof
having a combined capital and surplus of at least $250,000,000; provided that
--------
(x) such bank is acting through a branch or agency located in the United States
or (y) such bank is organized under the laws of a country that is a member of
the Organization for Economic Cooperation and Development or a political
subdivision of such country; and (iv) any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act) which extends
credit or buys loans in the ordinary course of its businesses including, but not
limited to, insurance companies, mutual funds and lease financing companies; and
(B) any Lender and any Affiliate of any Lender; provided that (x) no Affiliate
--------
of Company shall be an Eligible Assignee and (y) no Competitor shall be an
Eligible Assignee.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is, or was at any time, maintained or contributed to
by Company or any of its ERISA Affiliates.
13
"ENVIRONMENTAL CLAIM" means any accusation, allegation, notice of
violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person for any
damage, including, without limitation, personal injury (including sickness,
disease or death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or restrictions, in each case relating to, resulting
from or in connection with Hazardous Materials and relating to Company, any of
its Subsidiaries, any of their respective Affiliates or any Facility.
"ENVIRONMENTAL LAWS" means all applicable statutes, ordinances, orders,
rules, regulations, plans, policies or decrees and requirements having the force
of law relating to (i) environmental matters, including, without limitation,
those relating to fines, injunctions, penalties, damages, contribution, cost
recovery compensation, losses or injuries resulting from the Release or
threatened Release of Hazardous Materials, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare from environmental hazards, in any manner applicable to
Company or any of its Subsidiaries or any of their respective properties,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. (S) 9601 et seq.) ("CERCLA"), the
-- ---
Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et seq.), the
-- ---
Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.), the Federal
-- ---
Water Pollution Control Act ( 33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42
-- ---
U.S.C. (S) 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. (S) 2601
-- ---
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
-- ---
(S)136 et seq.), the Occupational Safety and Health Act (29 U.S.C. (S) 651 et
-- --- --
seq.) and the Emergency Planning and Community Right-to-Know Act (42 U.S.C. (S)
---
11001 et seq.), each as amended or supplemented, and any analogous future or
-- ---
present local, state, provincial and federal statutes and regulations
promulgated pursuant thereto, each as in effect as of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA AFFILIATE", as applied to any Person, means (i) any corporation
which is, or was at any time, a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of which that
Person is a member; (ii) any trade or business (whether or not incorporated)
which is a member of a group of trades or businesses under common control within
the meaning of Section 414(c) of the Internal Revenue Code of which that Person
is a member; and (iii) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of which that
Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member. Any former ERISA Affiliate of a
Person shall continue to be considered an ERISA Affiliate within the meaning of
this definition with respect to the period such entity was an ERISA Affiliate of
the
14
Person and with respect to liabilities arising after such period for which the
Person could be liable under the Internal Revenue Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate
such plan in a distress termination described in Section 4041(c) of ERISA; (iv)
the withdrawal by Company or any of its ERISA Affiliates from any Pension Plan
with two or more contributing sponsors or the termination of any such Pension
Plan resulting in liability pursuant to Sections 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which is reasonably likely to result in the
termination of, or the appointment of a trustee to administer, any Pension Plan;
(vi) the imposition of liability on Company or any of its ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal by Company or any of its ERISA
Affiliates in a complete or partial withdrawal (within the meaning of Sections
4203 and 4205 of ERISA) from any Multiemployer Plan which is reasonably likely
to result in the imposition of withdrawal liability therefor, or the receipt by
Company or any of its ERISA Affiliates of notice from any Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of
ERISA, or that it intends to terminate or has terminated under Section 4041A or
4042 of ERISA; (viii) the occurrence of an act or omission which is reasonably
likely to result in the imposition on Company or any of its ERISA Affiliates of
fines, penalties, taxes or related charges under Chapter 43 of the Internal
Revenue Code or under Section 409 or 502(c), (i) or (l) or 4071 of ERISA in
respect of any Employee Benefit Plan; (ix) the assertion of a material claim
(other than routine claims for benefits) against any Employee Benefit Plan other
than a Multiemployer Plan or the assets thereof, or against Company or any of
its ERISA Affiliates in connection with any such Employee Benefit Plan; (x)
receipt from the Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Benefit Plan intended to be qualified under
Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of
the Internal Revenue Code, or the failure of any trust forming part of any
Pension Plan to qualify for exemption from taxation under Section 501(a) of the
Internal Revenue Code; or (xi) the imposition of a Lien pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with
respect to any Pension Plan.
"EURO" means the single currency of participating member states of the
European Monetary Union.
15
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates determined
by reference to the Adjusted Eurodollar Rate as provided in subsection 2.2A.
"EUROPEAN MONETARY UNION" means the European Economic and Monetary Union
as contemplated in the Treaty of Rome of March 25, 1957, as amended by the
Single ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ and the Maastricht Treaty (which was signed at
Maastricht on February 7, 1992 and became effective on November 1, 1993), as
amended from time to time.
"EVENT OF DEFAULT" means each of the events set forth in Section 8.
"EXCESS CASH FLOW" means, for any period, an amount (if positive), equal
to (i) the sum, without duplication, of the amounts for such period of (a)
Consolidated EBITDA and (b) the Working Capital Adjustment minus (ii) the sum,
-----
without duplication, of the amounts for such period of (a) voluntary and
scheduled repayments of Wholly-Owned Total Debt actually made (excluding
repayments of Loans except to the extent the Commitments are permanently reduced
in connection with such repayments), (b) Capital Expenditures (net of any
proceeds of any related financings with respect to such expenditures), (c)
Wholly-Owned Total Debt Interest Expense to the extent paid in cash by Company
and its wholly-owned Subsidiaries, (d) Permitted Investments and Permitted
Acquisitions to the extent made in cash by Company or any of its wholly-owned
Subsidiaries, (e) provisions for taxes based on income or equity of Company and
its wholly-owned Subsidiaries to the extent paid in cash with respect to such
periods, and (f) amounts paid in cash by Company and its wholly-owned
Subsidiaries to the extent included in clause (x) through (xii) of the
definition of "EBITDA."
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"EXCHANGE RATE" means, on any date when an amount expressed in a currency
other than Dollars is to be determined with respect to any Letter of Credit, the
spot rate of exchange (as provided by the foreign exchange trader of the
Administrative Agent) in the New York foreign exchange market for the purchase
of such currency in exchange for Dollars on such date, expressed as a number of
units of such currency per one Dollar.
"EXCHANGE SHARES" has the meaning assigned that term in the Recitals
hereto.
"EXCLUDED TAX" or "EXCLUDED TAXES" means Tax or Taxes imposed on or
measured by a Person's net income, profits or gains (including any franchise or
similar Taxes imposed in lieu thereof and any branch profits Taxes) by the
United States or any state, local or foreign jurisdiction (or political
subdivision thereof or taxing authority thereof or therein) in which the Lender
is organized, has its principal office or has its applicable lending office.
"EXISTING CINEPLEX BANK REFINANCING" has the meaning assigned that term
in the Recitals hereto.
16
"EXISTING CINEPLEX CREDIT AGREEMENT" means that certain Credit Agreement
dated as of June 23, 1994 by and among Cineplex Odeon and ▇▇▇▇▇, as Borrowers,
the financial institutions from time to time party thereto and the Bank of Nova
Scotia, as agent, and the Operating Loan Agreement dated as of June 23, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, as Agent, in each case as each of such
credit agreement and operating loan agreement has been amended, supplemented or
otherwise modified through the date hereof.
"EXISTING LETTERS OF CREDIT" means the BONY Existing Letters of Credit
and the BT Existing Letters of Credit.
"FACILITIES" means all real property (including, without limitation, all
buildings, fixtures or other improvements located thereon) and related
facilities now, hereafter or heretofore owned, leased, operated or used by
Company or any of its Subsidiaries or any of their respective predecessors or
Affiliates.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.
"FINANCIAL PLAN" has the meaning assigned to that term in subsection
6.1(xii).
"FIRST PRIORITY" means, with respect to any Lien purported to be created
in any Collateral pursuant to any Collateral Document, that such Lien has
priority over any other Lien on such Collateral, other than Liens permitted
under subsection 7.2A.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its Subsidiaries
ending on February 28 or February 29, as the case may be, of each calendar year.
"FOREIGN SUBSIDIARY" means any Subsidiary of Company (a) which is
organized under the laws of any jurisdiction outside of the United States of
America or (b) any Domestic Subsidiary whose sole assets consist of either (i)
stock of a Subsidiary, (ii) equity Securities in a Joint Venture or (iii) an
Investment in a Person, in each case that is organized under the laws of any
jurisdiction outside of the United States of America.
"FUNDING AND PAYMENT OFFICE" means (i) the office of Administrative Agent
located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or (ii) such other
office of Administrative
17
Agent as may from time to time hereafter be designated as such in a written
notice delivered by Administrative Agent to Company and each Lender.
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination; provided that, with respect to financial statements
of Cineplex Odeon and its Subsidiaries not included within the consolidated
financial statements of Company and its Subsidiaries, "GAAP" shall mean
generally accepted accounting principles as applied in Canada.
"GLOBAL NOTE" means that certain promissory note dated as of May 14, 1998
issued by those certain wholly owned Subsidiaries of Company party thereto to
Company to evidence certain intercompany indebtedness, as such promissory note
may be amended, supplemented or otherwise modified in accordance with subsection
7.13A.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state,
provincial or local governmental authority, agency or court.
"GUARANTY" means the Subsidiary Guaranty.
"HAZARDOUS MATERIALS" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", "infectious waste", "toxic substances" or
any other formulations intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar meaning and regulatory effect import under any
applicable Environmental Laws; (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) asbestos in any form; (vii) urea
formaldehyde foam insulation; (viii) electrical equipment which contains any oil
or dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million; (ix) pesticides; and (x) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by any
governmental authority.
18
"IMAX AGREEMENTS" means (i) the Lease Agreement between Lincoln
Metrocenter Partners, L.P. and SPE dated May 21, 1992, and all ancillary
agreements thereto, (ii) the Letter Agreement between IMAX Corporation and Sony
Retail Entertainment dated March 3, 1995 and (iii) the Agreement between IMAX
Corporation and SPE dated May 28, 1992, as amended January 19, 1996, as each
such agreement may hereafter be amended, supplemented or otherwise modified in
accordance with subsection 7.13A.
"IMAX PURCHASE PRICE" means an amount equal to the fair market value of
the IMAX Agreements on the Closing Date.
"IMAX TRANSACTION" has the meaning assigned to that term in the Recitals
hereto.
"INCREASE DATE" has the meaning assigned to that term in subsection
2.1F(ii).
"INDEBTEDNESS", as applied to any Person, means (i) all indebtedness for
borrowed money, (ii) that portion of obligations with respect to Capital Leases
that is properly classified as a liability on a balance sheet in conformity with
GAAP, (iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services
(excluding any such obligations incurred under ERISA), which purchase price is
(a) due more than six months from the date of incurrence of the obligation in
respect thereof or (b) evidenced by a note or similar written instrument, and
(v) all indebtedness secured by any Lien on any property or asset owned or held
by that Person regardless of whether the indebtedness secured thereby shall have
been assumed by that Person or is nonrecourse to the credit of that Person.
Obligations under Interest Rate Agreements and Currency Agreements constitute
Contingent Obligations and not Indebtedness.
"INDEMNITEE" has the meaning assigned to that term in subsection 10.3.
"INFORMATION CIRCULAR/PROSPECTUS" means that certain Management
Information Circular and Proxy Statement/Prospectus of Cineplex Odeon
Corporation dated February 13, 1998.
"INSOLVENCY EVENT" means, with respect to any Person, the occurrence of
any of the events described in subsection 8.6 or 8.7; provided that, solely for
--------
purposes of this definition, any references to Company or any of its
Subsidiaries in subsection 8.6 or 8.7 shall be deemed to be a reference to such
Person.
"INSOLVENCY LAWS" means the Bankruptcy Code or any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect in the United
States of America or any state thereof or Canada or any province thereof.
19
"INTELLECTUAL PROPERTY" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company and its Subsidiaries, taken as a whole.
"INTERCOMPANY NOTES" means the promissory notes issued by a wholly owned
Subsidiary of Company to Company or by Company to a wholly owned Subsidiary of
Company to evidence intercompany debt in the form of Exhibit VII annexed hereto,
as such Intercompany Notes may be amended, supplemented or otherwise modified in
accordance with subsection 7.13A.
"INTEREST EXPENSE" for any Person means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of such Person and its Subsidiaries with
respect to all outstanding Indebtedness of such Person and its Subsidiaries,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and net costs under Interest Rate Agreements, but excluding, however, in the
--------- -------
case of Company, any amounts referred to in subsection 2.3 payable to Agents and
Lenders on or before the Closing Date.
"INTEREST PAYMENT DATE" means (i) with respect to any Base Rate Loan,
each January 15, April 15, July 15, and October 15 of each year, commencing on
the first such date to occur after the Closing Date, and (ii) with respect to
any Eurodollar Rate Loan, the last day of each Interest Period applicable to
such Loan; provided that in the case of each Interest Period of longer than
--------
three months "Interest Payment Date" shall also include the date that is three
months after the commencement of such Interest Period or an integral multiple
thereof.
"INTEREST PERIOD" has the meaning assigned to that term in subsection
2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement.
"INTEREST RATE DETERMINATION DATE" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, stock or other Securities of any other Person (other than a Person
that prior to such purchase or acquisition was a wholly-owned Subsidiary of
Company and a party to a Guaranty), (ii) any direct or indirect redemption,
retirement, purchase or other acquisition for value, by any Subsidiary of
Company from any Person other than Company or any of its Subsidiaries, of any
equity Securities of such Subsidiary
20
or (iii) any direct or indirect loan, advance (other than advances to employees
for moving, entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
Company or any of its Subsidiaries to any other Person other than a wholly-owned
Subsidiary of Company which is a party to a Guaranty, including all indebtedness
and accounts receivable from that other Person that are not current assets or
did not arise from sales to that other Person in the ordinary course of
business. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"IP COLLATERAL" means, collectively, the Collateral under the IP
Collateral Documents.
"IP COLLATERAL DOCUMENTS" means, collectively, the Company Trademark
Security Agreement and the Subsidiary Trademark Security Agreements.
"ISSUING LENDER" means, (i) with respect to the BONY Existing Letters of
Credit, The Bank of New York, (ii) with respect to the BT Existing Letters of
Credit, BTCo, and (iii) with respect to any other Letters of Credit, BTCo or any
other Lender which agrees or is otherwise obligated to issue such Letter of
Credit, determined as provided in subsection 3.1B(ii).
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
--------
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement and any Person becoming a Lender
pursuant to subsection 2.1F together with their successors and permitted assigns
pursuant to subsection 10.1, and the term "Lenders" shall include BTCo as an
Issuing Lender unless the context otherwise requires; provided that the term
--------
"Lenders", when used in the context of a particular Commitment, shall mean
Lenders having that Commitment.
"LETTER AGREEMENT" means that certain amended and restated letter
agreement dated as of September 30, 1997 between the ▇▇▇▇▇▇▇▇ Trust and Company,
as such letter agreement may be amended, supplemented or otherwise modified in
accordance with subsection 7.13A.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Standby Letters of
Credit or Commercial Letters of Credit issued or to be issued by Issuing Lenders
for the account of Company pursuant to subsection 3.1 and includes, without
limitation, the Existing Letters of Credit pursuant to subsection 3.7.
"LETTER OF CREDIT USAGE" means, as at any date of determination, the sum
of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing
21
under all Letters of Credit then outstanding plus (ii) the aggregate amount of
----
all drawings under Letters of Credit honored by Issuing Lenders and not
theretofore reimbursed by Company. For purposes of this definition, any amount
described in clause (i) or (ii) of the preceding sentence which is denominated
in a currency other than Dollars shall be valued based on the applicable
Exchange Rate for such currency as of the applicable date of determination.
"LEVERAGE RATIO" has the meaning assigned to that term in subsection 7.6B
of this Agreement.
"LIEN" means any lien, mortgage, deed of trust, pledge, assignment,
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof, and
any agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"LIRA" and the sign "L" means the lawful money of the Republic of
Italy.
"LOAN" or "LOANS" means one or more of the Tranche A Revolving Loans or
Tranche B Revolving Loans or any combination thereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Letters of Credit
(and any applications for, or reimbursement agreements or other documents or
certificates executed by Company in favor of an Issuing Lender relating to, the
Letters of Credit), the Guaranty and the Collateral Documents.
"LOAN PARTIES" means any of Company or any Subsidiary of Company
executing the Guaranty.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.
"MARKS" and the sign "DM" means the lawful money of the Federal
Republic of Germany.
"MASTER AGREEMENT" means that certain Amended and Restated Master
Agreement dated as of September 30, 1997 by and among SPE, Company and Cineplex
Odeon, as such Amended and Restated Master Agreement may be amended,
supplemented or otherwise modified in accordance with subsection 7.13A.
"MATERIAL ADVERSE EFFECT" means (i) (a) prior to or concurrently with the
consummation of the Subject Transactions, a material adverse effect on the
business, operations, properties, assets, liabilities, condition (financial or
otherwise) or prospects of either Company and its wholly-owned Subsidiaries
taken as a whole or Cineplex Odeon and its wholly-owned Subsidiaries
22
taken as a whole or (b) after the consummation of the Subject Transactions, a
material adverse effect on the business, operations, properties, assets,
liabilities, condition (financial or otherwise) or prospects of the Company and
its wholly-owned Subsidiaries taken as a whole, or (ii) the impairment in any
material respect of the ability of any Loan Party to perform, or of any Agent or
Lenders to enforce, the Obligations.
"MATERIAL CONTRACT" means any contract or other arrangement to which
Company or any of its Subsidiaries is a party (other than the Loan Documents)
which would be required to be filed as an exhibit to an SEC Report under Item
601(b)(10) of Regulation S-K.
"▇▇▇▇▇'▇" means ▇▇▇▇▇'▇ Investors Services, Inc.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", as defined in
Section 3(37) of ERISA, to which Company or any of its ERISA Affiliates is
contributing, or ever has contributed, or to which Company or any of its ERISA
Affiliates has, or ever has had, an obligation to contribute.
"NET ASSET SALE PROCEEDS" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received) received by Company or any of its Subsidiaries from such Asset Sale,
net of any bona fide direct costs incurred in connection with such Asset Sale,
including without limitation (i) real property transfer tax, recording charges,
brokers' fees, investment banking fees and income taxes reasonably estimated to
be actually payable within two years of the date of such Asset Sale as a result
of any gain recognized in connection with such Asset Sale and (ii) payment of
the outstanding principal amount of, premium or penalty, if any, and interest on
any Indebtedness (other than the Loans) that is secured by a Lien on the equity
Securities or assets in question and that is required to be repaid under the
terms thereof as a result of such Asset Sale.
"NET DEBT SECURITIES PROCEEDS" has the meaning assigned to that term in
subsection 2.4A(iii)(c).
"NET INCOME" of a Person means, for any period, the net income (or loss)
of such Person and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
--------
that there shall be excluded (i) any after-tax gains or losses attributable to
Asset Sales or returned surplus assets of any Pension Plan, and (ii) (to the
extent not included in clause (i) above) any net extraordinary gains or net non-
cash extraordinary losses.
"NET INSURANCE/CONDEMNATION PROCEEDS" means any Cash payments or proceeds
received by Company or any of its Subsidiaries (i) under any business
interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Company or any of
its Subsidiaries by any Person pursuant to the power of eminent
23
domain, condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of any
actual and reasonable documented costs incurred by Company or such Subsidiary in
connection with the adjustment or settlement of any claims of Company or such
Subsidiary in respect thereof and, in the case of any such taking, net of (X)
income taxes reasonably estimated to be actually payable within two years of the
date of such taking as a result of any gain recognized in connection therewith
and (Y) payment of the outstanding principal amount of, premium or penalty, if
any, and interest on any Indebtedness (other than the Loans) that is secured by
a Lien on the assets taken that is required to be repaid under the terms thereof
as a result of such taking.
"NOTES" means one or more of the Tranche A Revolving Notes or the Tranche
B Revolving Notes or any combination thereof.
"NOTICE OF BORROWING" means a notice substantially in the form of Exhibit
-------
I annexed hereto delivered by Company to Administrative Agent pursuant to
-
subsection 2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in the
form of Exhibit II annexed hereto delivered by Company to Administrative Agent
----------
pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"OBLIGATIONS" means all obligations of every nature of each Loan Party
from time to time owed to Agents, Lenders or any of them under the Loan
Documents, whether for principal, interest (including interest accruing on or
after the occurrence of an Insolvency Event), reimbursement of amounts drawn
under Letters of Credit, fees, expenses, indemnification or otherwise.
"OFFER RESERVE" means, as of any date of determination, (y) $202,000,000
minus (z) an amount equal to 101% of the aggregate principal amount of ▇▇▇▇▇
Notes repurchased by ▇▇▇▇▇ as of such date pursuant to the ▇▇▇▇▇ Change of
Control Offer.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its vice presidents and by its chief
financial officer, its treasurer or controller; provided that every Officers'
--------
Certificate with respect to the compliance with a condition precedent to the
making of any Loans hereunder shall include (i) a statement that the officer or
officers making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this Agreement relating
thereto, (ii) a statement that, in the opinion of the signers, they have made or
have caused to be made such examination or investigation as is necessary to
enable them to express an informed opinion as to whether or not such condition
has been complied with, and (iii) a statement as to whether, in the opinion of
the signers, such condition has been complied with; and provided further that
-------- -------
with respect to any certificate required to be delivered
24
pursuant to subsection 4.1, such certificate may be executed by any one such
officer approved by Administrative Agent.
"OPERATING LEASE" means, as applied to any Person, any lease (including,
without limitation, leases that may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"OWNERSHIP PERCENTAGE" means, as at any date of determination, with
respect to any Joint Venture or non-wholly-owned Subsidiary, the percentage of
the equity interests of such Joint Venture or non-wholly owned Subsidiary which
is owned by Company or any of its Subsidiaries, adjusted to the extent necessary
to take into account any preferred returns allocated to Company or any of its
wholly-owned Subsidiaries.
"PBGC" means the Pension Benefit Guaranty Corporation (or any successor
thereto).
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"PERMITTED ACQUISITION" means an acquisition (whether pursuant to an
acquisition of stock, assets or otherwise) by Company or any Subsidiary from any
Person of a business or an interest in a business in which all of the following
is satisfied:
(a) such business is permitted by subsection 7.12;
(b) immediately before and after giving effect to such acquisition no
Potential Event of Default or Event of Default shall have occurred and be
continuing or would result therefrom; and
(c) Company can demonstrate in form and substance satisfactory to
Administrative Agent immediately after giving effect to such acquisition that
Company is in pro forma compliance with the covenants set forth in Section 7 of
this Agreement.
"PERMITTED ENCUMBRANCES" means the following types of Liens (other than
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not, at the time, required by subsection 6.3;
(ii) statutory Liens of landlords, statutory Liens of banks and
rights of set off, statutory Liens of carriers, warehousemen, mechanics and
materialmen, and other Liens imposed by law, in each case incurred in the
ordinary course of business for sums not yet
25
delinquent or being contested in good faith by appropriate proceedings, if
(1) such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor and (2) in the case of a
Lien with respect to any portion of the Collateral, such contest
proceedings conclusively operate to stay the sale of any material portion
of the Collateral on account of such Lien;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money), so long as no foreclosure, sale or similar
proceedings have been commenced with respect to any material portion of the
Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
(v) leases or subleases granted to others not interfering in any
material respect with the ordinary conduct of the business of Company or
any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, encroachments, minor
defects or irregularities in title, and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of Company or any of its Subsidiaries;
(vii) any (a) interest or title of a lessor or sublessor under any
lease permitted under this Agreement, (b) restriction or encumbrance that
the interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease
to any restriction or encumbrance referred to in the preceding clause (b);
(viii) Liens arising from filing UCC or other applicable personal
property financing statements relating solely to leases permitted by this
Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; and
(x) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course
of business and not interfering in any material respect with the ordinary
conduct of the business of Company or such Subsidiary.
26
"PERMITTED INVESTMENT" means a direct Investment by Company or a wholly-
owned Subsidiary of Company in a Joint Venture or non-wholly-owned Subsidiary
(i) in which Company or such wholly-owned Subsidiary acquires and maintains, or
is contractually obligated to acquire and maintain within 24 months of the
initial Investment, at least 50% of the equity interests in such Joint Venture
or non-wholly-owned Subsidiary and (ii) which is principally engaged in the
business of operating movie theatres. The value of any Permitted Investment
made by Company or a wholly-owned Subsidiary of Company with an asset other than
cash shall be equal to the fair market value of such asset at the time such
Permitted Investment is made, as determined in good faith by the Board of
Directors of Company or such wholly-owned Subsidiary, as the case may be.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"PESETAS" and the sign "P" means the lawful money of the Kingdom of
Spain.
"PLAN OF ARRANGEMENT" means the Plan of Arrangement of Cineplex Odeon
under Section 182 of the Business Corporations Act (Ontario) substantially in
the form attached as Annex B to the Information Circular Prospectus, with such
changes thereto as shall be consented to in writing by the Co-Syndication Agents
on or before the Closing Date.
"▇▇▇▇▇" means ▇▇▇▇▇ Theatres, Inc., a Delaware corporation, which, prior
to the consummation of the Business Combination Transactions, is a direct
wholly-owned Subsidiary of Cineplex Odeon and, immediately after the
consummation of the Business Combination Transactions, will be a direct wholly-
owned Subsidiary of Company.
"▇▇▇▇▇ CHANGE OF CONTROL OFFER" has the meaning assigned the term
"Change of Control Offer" in Section 4.19 of the ▇▇▇▇▇ Indenture.
"▇▇▇▇▇ INDENTURE" means that certain Indenture dated June 23, 1994 by and
among ▇▇▇▇▇, as Issuer, Cineplex Odeon, as Guarantor, and The Bank of New York,
as Trustee, as amended by that certain Supplemental Indenture dated as of May
14, 1998, as such Indenture may be further amended, supplemented or otherwise
modified in accordance with subsection 7.13B.
"▇▇▇▇▇ NOTES" means the 10 7/8% Senior Subordinated Securities due 2004
issued pursuant to the ▇▇▇▇▇ Indenture, as such Senior Subordinated Securities
may be amended, supplemented or otherwise modified in accordance with subsection
7.13B.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
27
"PRIME RATE" means the rate of interest per annum publicly announced from
time to time by BTCo as its prime commercial lending rate in effect at its
principal office in New York City. The Prime Rate is a reference rate and does
not necessarily represent the lowest or best rate actually charged to any
customer. BTCo or any other Lender may make commercial loans or other loans at
rates of interest at, above or below the Prime Rate.
"PROCEEDINGS" has the meaning assigned to that term in subsection
6.1(ix).
"PRO RATA SHARE" means (i) with respect to all payments, computations and
other matters relating to the Tranche A Revolving Loan Commitment or the Tranche
A Revolving Loans of any Lender or any Letters of Credit issued or
participations therein purchased by any Lender, the percentage obtained by
dividing (x) the Tranche A Revolving Loan Exposure of that Lender by (y) the
-------- --
aggregate Tranche A Revolving Loan Exposure of all Lenders, (ii) with respect to
all payments, computations and other matters relating to the Tranche B Revolving
Loan Commitment or the Tranche B Revolving Loans of any Lender, the percentage
obtained by dividing (x) the Tranche B Revolving Loan Exposure of that Lender by
-------- --
(y) the aggregate Tranche B Revolving Loan Exposure of all Lenders and (iii) for
all other purposes with respect to each Lender, the percentage obtained by
dividing (x) the sum of the Tranche A Revolving Loan Exposure of that Lender
--------
plus the Tranche B Revolving Loan Exposure of that Lender by (y) the sum of the
---- --
aggregate Tranche A Revolving Loan Exposure of all Lenders plus the sum of the
----
aggregate Tranche B Revolving Loan Exposure of all Lenders. The initial Pro
Rata Share of each Lender for purposes of each of clauses (i), (ii) and (iii) of
the preceding sentence is set forth opposite the name of that Lender in Schedule
--------
2.1 annexed hereto; provided that Schedule 2.1 shall be amended and each
--- -------- ------------
Lender's Pro Rata Share for purposes of each of clauses (i), (ii) and (iii) of
the preceding sentence shall be adjusted from time to time to give effect to the
addition of new Lenders pursuant to subsection 2.1F and any assignments pursuant
to subsection 10.1B.
"PROSPECTIVE LENDER" has the meaning assigned to that term in subsection
2.1F(ii).
"PURCHASE MONEY SECURITY INTEREST" has the meaning assigned to that term
in subsection 7.2A(iii).
"REFINANCING TRANSACTIONS" means the Sony Debt Repayment, the Existing
Cineplex Bank Refinancing and the ▇▇▇▇▇ Note Repurchase Transaction.
"REGISTER" has the meaning assigned to that term in subsection 2.1D.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REIMBURSEMENT DATE" has the meaning assigned to that term in subsection
3.3B.
28
"RELATED AGREEMENTS" means, collectively, the Master Agreement, the Plan
of Arrangement, the Universal Subscription Agreement, the Stockholders
Agreement, the Tax Sharing and Indemnity Agreement, the Sony Trademark
Agreement, the Transition Services Agreement, (if any), the Letter Agreement,
the Intercompany Notes, the Global Note and all other agreements or instruments
delivered pursuant to or in connection with any of the foregoing.
"RELEASE" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous Materials), or
into or out of any Facility, including the movement of any Hazardous Material
through the air, soil, surface water, groundwater or property.
"REQUEST FOR ISSUANCE OF LETTER OF CREDIT" means a notice substantially
in the form of Exhibit III annexed hereto delivered by Company to Administrative
-----------
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
"REQUIREMENT OF LAW" means (a) the certificates or articles of
incorporation, by-laws and other organizational or governing documents of a
Person, (b) any law, treaty, rule, regulation or determination of an arbitrator,
court or other governmental authority, or (c) any franchise, license, lease,
permit, certificate, authorization, qualification, easement, right of way, right
or approval binding on a Person or any of its property.
"REQUISITE LENDERS" means Lenders having or holding a majority of the sum
of the aggregate Tranche A Revolving Loan Exposure of all Lenders plus the
----
aggregate Tranche B Revolving Loan Exposure of all Lenders.
"RESPONSIBLE OFFICER" means the chief executive officer, president, vice
president, chief financial officer, principal accounting officer or treasurer of
Company or any of its Subsidiaries.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Company
now or hereafter outstanding, except a dividend payable solely in shares of that
class of stock to the holders of that class, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of Company now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of Company now or hereafter outstanding, and (iv) any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Subordinated Indebtedness.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means May 14, 2003.
29
"S&J" has the meaning assigned that term in the Recitals hereto.
"S&P" means Standard & Poor's Ratings Services.
"SEC REPORTS" means annual, quarterly and current reports filed by the
Company with the SEC under Section 13(a) of the Exchange Act and proxy
statements mailed by Company to its shareholders.
"SECURITIES" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, and any successor statute.
"SENIOR DEBT RATINGS" means ratings assigned to Company's long-term
senior debt.
"SIGNIFICANT SUBSIDIARY" has the meaning set forth in Rule 1-02(w) of
Regulation S-X under the Exchange Act, substituting 5 percent whenever 10
percent appears in such Rule.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"SONY CAPITAL" means Sony Capital Corporation, a Delaware corporation.
"SONY CAPITAL INDEBTEDNESS" means the intercompany Indebtedness
identified as "Working Capital Debt" in the Preliminary Closing Statement
prepared by Company pursuant
30
to Section 6.9 of the Master Agreement as being subject to repayment
simultaneously with the closing of the Business Combination Transactions which
is owed by Company and its Subsidiaries to Sony Capital, plus accrued interest
thereon through the Closing Date.
"SONY DEBT REPAYMENT" means the repayment of the Sony Capital Indebtedness
and the Sony Land Indebtedness.
"SONY LAND" means New York Bright Lights Corp., a New York corporation and
the successor in interest by merger to Sony/Columbia Land Corporation, a
California corporation.
"SONY LAND INDEBTEDNESS" means the intercompany Indebtedness identified as
"Intercompany Debt" in the Preliminary Closing Statement prepared by Company
pursuant to Section 6.9 of the Master Agreement as being subject to repayment
simultaneously with the closing of the Business Combination Transactions which
is owed by certain of Company's Subsidiaries to Sony Land, plus accrued interest
thereon through the Closing Date.
"SONY TRADEMARK AGREEMENT" means that certain trademark agreement dated as
of May 14, 1998 between Sony Corporation and Company, as such trademark
agreement may be amended, supplemented or otherwise modified in accordance with
subsection 7.13A.
"SPE" has the meaning assigned that term in the Recitals hereto.
"SPE DIVIDEND" means an amount equal to (y) $409,347,000 (as such amount
may be adjusted pursuant to Section 6.9 of the Master Agreement) minus (z) the
-----
sum of (i) the Sony Debt Repayment and (ii) the IMAX Purchase Price.
"STANDBY LETTER OF CREDIT" means any standby letter of credit or similar
instrument issued for the purpose of supporting (i) Indebtedness of Company or
any of its Subsidiaries in respect of industrial revenue or development bonds or
financings, (ii) workers' compensation liabilities of Company or any of its
Subsidiaries, (iii) the obligations of third party insurers of Company or any of
its Subsidiaries arising by virtue of the laws of any jurisdiction requiring
third party insurers, (iv) obligations with respect to Capital Leases or
Operating Leases of Company or any of its Subsidiaries, and (v) performance,
payment, deposit or surety obligations of Company or any of its Subsidiaries, in
any case if required by law or governmental rule or regulation or in accordance
with custom and practice in the industry; provided that Standby Letters of
--------
Credit may not be issued for the purpose of supporting (a) trade payables or (b)
any Indebtedness constituting "antecedent debt" (as that term is used in Section
547 of the Bankruptcy Code).
"STAR" has the meaning assigned that term in the Recitals hereto.
"STOCKHOLDERS AGREEMENT" means that certain Amended and Restated
Stockholders Agreement dated as of September 30, 1997 among Company, SPE,
Universal, ▇▇▇▇▇▇▇▇ Trust,
31
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, E. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Foundation and 3096475 Canada Inc., as such Stockholders Agreement may be
amended, supplemented or otherwise modified in accordance with subsection 7.13A.
"SUBJECT TRANSACTIONS" means the Business Combination Transactions and the
Refinancing Transactions.
"SUBORDINATED INDEBTEDNESS" means (y) the Indebtedness evidenced by the
▇▇▇▇▇ Notes and (z) Indebtedness of Company (other than Indebtedness to any of
its Subsidiaries) that is subordinated in right of payment to the Obligations
pursuant to documentation containing maturities, amortization schedules,
covenants, defaults, remedies, subordination provisions and other material terms
in form and substance satisfactory to Administrative Agent and Requisite
Lenders; provided that, solely for purposes of subsection 7.13A "Subordinated
--------
Indebtedness" shall include Additional Indebtedness issued pursuant to
subsection 7.1(ix) and refinancing thereof pursuant to subsection 7.1(xi). The
Indebtedness evidenced by the ▇▇▇▇▇ Notes (including ▇▇▇▇▇'▇ and Company's
guarantees thereof) shall be "Subordinated Indebtedness" for all purposes
under this Agreement.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"SUBSIDIARY GUARANTOR" means, at any time, any of Company's wholly owned
Domestic Subsidiaries that is then a party to the Subsidiary Guaranty.
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty executed and
delivered by Company's wholly-owned Domestic Subsidiaries on the Closing Date
and to be executed and delivered by Company's wholly-owned Domestic Subsidiaries
from time to time thereafter in accordance with subsection 6.9, substantially in
the form of Exhibit XVIII annexed hereto, as such Subsidiary Guaranty may be
-------------
amended, supplemented or otherwise modified from time to time.
"SUBSIDIARY PLEDGE AGREEMENT" means the Subsidiary Pledge Agreement
executed and delivered by each Subsidiary Guarantor on the Closing Date or to be
executed and delivered by a Subsidiary Guarantor from time to time thereafter in
accordance with subsection 6.9, in each case substantially in the form of
Exhibit XX annexed hereto, as such Subsidiary Pledge Agreement may be amended,
----------
supplemented or otherwise modified from time to time.
32
"SUBSIDIARY SECURITY AGREEMENT" means the Subsidiary Security Agreement
executed and delivered by each Subsidiary Guarantor on the Closing Date or to be
executed and delivered by a Subsidiary Guarantor from time to time thereafter in
accordance with subsection 6.9, in each case substantially in the form of
Exhibit XIX annexed hereto, as such Subsidiary Security Agreement may be
-----------
amended, supplemented or otherwise modified from time to time.
"SUBSIDIARY TRADEMARK SECURITY AGREEMENT" means the Subsidiary Trademark
Security Agreement executed and delivered by each Subsidiary Guarantor on the
Closing Date or to be executed and delivered by a Subsidiary Guarantor from time
to time thereafter in accordance with subsection 6.9, in each case substantially
in the form of Exhibit XXI annexed hereto, as such Subsidiary Trademark Security
-----------
Agreement may be amended, supplemented or otherwise modified from time to time.
"SUBSIDIARY TRANSACTIONS" has the meaning assigned to that term in the
Recitals hereto.
"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called,
including interest, penalties, additions to tax and similar liabilities with
respect thereto, by whomsoever, on whomsoever and wherever imposed, levied,
collected, withheld or assessed.
"TAX SHARING AND INDEMNITY AGREEMENT" means that certain Tax Sharing and
Indemnity Agreement dated as of May 14, 1998 between Sony Corporation of America
and Company, as such agreement may hereafter be amended, supplemented or
otherwise modified in accordance with subsection 7.13A.
"TOTAL UTILIZATION OF TRANCHE A REVOLVING LOAN COMMITMENTS" means, as at
any date of determination, the sum of (i) the aggregate principal amount of all
outstanding Tranche A Revolving Loans made to Company plus (ii) the Letter of
----
Credit Usage with respect to all Letters of Credit issued for the account of
Company.
"TOTAL UTILIZATION OF TRANCHE B REVOLVING LOAN COMMITMENTS" means, as at
any date of determination, the sum of the aggregate principal amount of all
outstanding Tranche B Revolving Loans made to Company.
"TRANCHE A REVOLVING LOAN COMMITMENT" means the commitment of a Lender to
make Tranche A Revolving Loans to Company pursuant to subsection 2.1A(i), and
"TRANCHE A REVOLVING LOAN COMMITMENTS" means such commitments of all Lenders
in the aggregate.
"TRANCHE A REVOLVING LOAN EXPOSURE" means, with respect to any Lender as
of any date of determination (i) prior to the termination of the Tranche A
Revolving Loan Commitments, that Lender's Tranche A Revolving Loan Commitment
and (ii) after the termination of the Tranche A Revolving Loan Commitments, the
sum of (a) the aggregate outstanding principal amount of the Tranche A Revolving
Loans of that Lender plus (b) in the event that Lender is an
----
33
Issuing Lender, the aggregate Letter of Credit Usage in respect of all Letters
of Credit issued by that Lender (in each case net of any participations
purchased by other Lenders in such Letters of Credit or any unreimbursed
drawings thereunder) plus (c) the aggregate amount of all participations
----
purchased by that Lender in any outstanding Letters of Credit or any
unreimbursed drawings under any Letters of Credit.
"TRANCHE A REVOLVING LOANS" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(i).
"TRANCHE A REVOLVING NOTES" means (i) the promissory notes of Company
issued pursuant to subsection 2.1E(i) on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of the Tranche A Revolving Loan
Commitments and Tranche A Revolving Loans of any Lenders, in each case
substantially in the form of Exhibit IV-A annexed hereto, as they may be
------------
amended, supplemented or otherwise modified from time to time.
"TRANCHE B ACTIVATION DATE" means the earlier of the dates, if any,
occurring on or before the Tranche B Expiration Date on which Company either (i)
makes its first borrowing under the Tranche B Revolving Loan Commitments or (ii)
delivers a Tranche B Continuation Notice to Administrative Agent.
"TRANCHE B CONTINUATION NOTICE" means a notice substantially in the form
of Exhibit XIV annexed hereto delivered by Company to Administrative Agent
pursuant to subsection 2.1A(ii) on or before the Tranche B Expiration Date with
respect to a continuation of the Tranche B Revolving Loan Commitments beyond the
Tranche B Expiration Date.
"TRANCHE B EXPIRATION DATE" means the earlier of (i) the date which is 60
days after the Closing Date and (ii) the expiration of the ▇▇▇▇▇ Change of
Control Offer in accordance with its terms.
"TRANCHE B REVOLVING LOAN COMMITMENT" means the commitment of a Lender to
make Tranche B Revolving Loans to Company pursuant to subsection 2.1A(ii), and
"TRANCHE B REVOLVING LOAN COMMITMENTS" means such commitments of all Lenders
in the aggregate.
"TRANCHE B REVOLVING LOAN EXPOSURE" means, with respect to any Lender as
of any date of determination (i) prior to the termination of the Tranche B
Revolving Loan Commitments, that Lender's Tranche B Revolving Loan Commitment
and (ii) after the termination of the Tranche B Revolving Loan Commitments, the
sum of the aggregate outstanding principal amount of the Tranche B Revolving
Loans of that Lender.
"TRANCHE B REVOLVING LOANS" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(ii).
34
"TRANCHE B REVOLVING NOTES" means (i) the promissory notes of Company
issued pursuant to subsection 2.1E(ii) on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of the Tranche B Revolving Loan
Commitments and Tranche B Revolving Loans of any Lenders, in each case
substantially in the form of Exhibit IV-B annexed hereto, as they may be
------------
amended, supplemented or otherwise modified from time to time.
"TRANSACTION COSTS" means the fees, costs and expenses payable by any
Loan Party on or before the Closing Date in connection with the transactions
contemplated hereby or by the Related Agreements.
"TRANSITION SERVICES AGREEMENT" means that certain Transition Services
Agreement between the Company, Sony Corporation of America and SPE dated as of
May 14, 1998 as such agreement may hereafter be amended, supplemented or
otherwise modified in accordance with subsection 7.13A.
"UNIVERSAL" means the Universal Studios, Inc., a Delaware corporation.
"UNIVERSAL INVESTMENT" has the meaning assigned that term in the Recitals
hereto.
"UNIVERSAL SUBSCRIPTION AGREEMENT" means that certain Amended and
Restated Subscription Agreement dated as of September 30, 1997 by and among
Universal and Company, as such Subscription Agreement may hereafter be amended,
supplemented or otherwise modified in accordance with subsection 7.13A.
"WHOLLY-OWNED RENT EXPENSE" means, for any period, the aggregate amount
of all rents paid or payable by Company and its Subsidiaries on a consolidated
basis (and not included in Interest Expense) during that period under all
Capital Leases and Operating Leases to which Company or any of its Subsidiaries
is a party as lessee excluding, however, an amount equal to the amount of all
rents paid or payable by any non-wholly owned Subsidiary of Company (to the
extent otherwise included in the aggregate amount of all rents paid or payable
by Company and its Subsidiaries) but including, however, an amount equal to the
aggregate maximum liability of Company and its wholly-owned Subsidiaries for
such period in respect of Contingent Obligations of Company or such wholly-owned
Subsidiary in respect of rent paid under Operating Leases of any non-wholly
owned Subsidiary of Company or any Joint Venture of Company or any of its
Subsidiaries (other than Contingent Obligations of Company existing on the
Closing Date in respect of rent paid under the Operating Leases set forth on
Schedule 1.1W).
--------------
"WHOLLY-OWNED TOTAL DEBT" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Company and its
wholly-owned Subsidiaries, determined on a consolidated basis in accordance with
GAAP, less Cash of Company and its wholly-owned Subsidiaries plus the aggregate
----
maximum liability of Company and its wholly-owned Subsidiaries in respect of
Contingent Obligations in respect of any Indebtedness of
35
any Joint Venture of Company or any of its Subsidiaries or any non-wholly-owned
Subsidiary of Company or any of its Subsidiaries (other than Contingent
Obligations of Company existing on the Closing Date in respect of the
Indebtedness set forth on Schedule 1.1Wh).
--------------
"WHOLLY-OWNED TOTAL DEBT INTEREST EXPENSE" means, for any period, total
Interest Expense of Company and its Subsidiaries with respect to Wholly-Owned
Total Debt.
"WORKING CAPITAL" means, as at any date of determination, the excess of
Current Assets over Current Liabilities.
"WORKING CAPITAL ADJUSTMENT" means, for any period on a consolidated
basis, the amount (which may be a negative number) by which Working Capital as
of the beginning of such period exceeds (or is less than) Working Capital as of
the end of such period.
"YEAR 2000 PROBLEMS" means limitations in the capacity or readiness to
handle date information for the Year 1999 or years beginning January 1, 2000 of
any of the hardware, firmware or software systems ("Systems") associated with
information processing and delivery, operations or services (e.g., security and
alarms, elevators, communications, and HVAC) operated by, provided to or
otherwise reasonably necessary to the business or operations of Company and its
Subsidiaries, which limitations could reasonably be expected to have a Material
Adverse Effect.
"YEN" and the sign "Y" means the lawful money of Japan.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
------------------------------------------------------------------------
AGREEMENT.
---------
Except as otherwise expressly provided in this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
delivered by Company to Lenders pursuant to clauses (i), (ii) and (xii) of
subsection 6.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 6.1(iv)). Calculations in connection with
the definitions, covenants and other provisions of this Agreement shall utilize
accounting principles and policies in conformity with those used to prepare the
financial statements referred to in subsection 5.3. Whenever this Agreement
refers to the calculation of amounts in a currency other than U.S. Dollars, the
maintenance of any Indebtedness, Lien, Contingent Obligation or Investment in
such currency shall be permitted, regardless of subsequent fluctuations in
exchange rates, if such Indebtedness, Lien, Contingent Obligation or Investment
was permitted under this Agreement at the date on which it was incurred.
1.3 OTHER DEFINITIONAL PROVISIONS.
-----------------------------
36
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. An Event of Default shall "continue" or be "continuing" until
such Event of Default has been waived in accordance with subsection 10.6 hereof.
SECTION 2 AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.
-------------------------------------------------
A. REVOLVING LOAN COMMITMENTS.
(i) Tranche A Revolving Loan Commitments. Subject to the terms and
------------------------------------
conditions of this Agreement and in reliance upon the representations and
warranties of Company herein set forth, each Lender hereby severally
agrees, subject to the limitations set forth below with respect to the
maximum amount of Tranche A Revolving Loans permitted to be outstanding
from time to time, to lend to Company from time to time during the period
from the Closing Date to but excluding the Revolving Loan Commitment
Termination Date an aggregate amount not exceeding its Pro Rata Share of
the aggregate amount of the Tranche A Revolving Loan Commitments then in
effect to be used for the purposes identified in subsection 2.5. The
original amount of each Lender's Tranche A Revolving Loan Commitment is set
forth opposite its name on Schedule 2.1 annexed hereto and the aggregate
------------
original amount of the Tranche A Revolving Loan Commitments is
$750,000,000; provided that the Tranche A Revolving Loan Commitments of
--------
Lenders shall be reduced as provided in subsection 2.4 and adjusted to give
effect to any assignments of the Tranche A Revolving Loan Commitments
pursuant to subsection 10.1B; and provided, further that, in the event that
-------- -------
(i) the Tranche B Revolving Loan Commitments terminate on the Tranche B
Expiration Date and (ii) there are no outstanding Tranche B Revolving Loans
on the Tranche B Expiration Date, after the Tranche B Expiration Date, the
amount of the Tranche A Revolving Loan Commitments may be increased from
time to time up to a maximum aggregate amount of $1,000,000,000 pursuant to
subsection 2.1F. Each Lender's Tranche A Revolving Loan Commitment shall
expire on the Tranche A Revolving Loan Commitment Termination Date and all
Tranche A Revolving Loans and all other amounts owed hereunder with respect
to the Tranche A Revolving Loans and the Tranche A Revolving Loan
Commitments shall be paid in full no later than that date. Amounts
borrowed under this subsection 2.1A(i) may be repaid and reborrowed to, but
excluding the Revolving Loan Commitment Termination Date, at any time and
from time to time without premium or penalty except as provided in
subsection 2.6D.
37
Anything contained in this Agreement to the contrary notwithstanding,
in no event shall the Total Utilization of Tranche A Revolving Loan
Commitments exceed the Tranche A Revolving Loan Commitments then in effect.
(ii) Tranche B Revolving Loan Commitments. Subject to the terms and
------------------------------------
conditions of this Agreement and in reliance upon the representations and
warranties of Company herein set forth, each Lender hereby severally
agrees, subject to the limitations set forth below with respect to the
maximum amount of Tranche B Revolving Loans permitted to be outstanding
from time to time, to lend to Company from time to time during the period
from the Closing Date to but excluding the Revolving Loan Commitment
Termination Date an aggregate amount not exceeding its Pro Rata Share of
the aggregate amount of the Tranche B Revolving Loan Commitments then in
effect to be used for the purposes identified in subsection 2.5. The
original amount of each Lender's Tranche B Revolving Loan Commitment is set
forth opposite its name on Schedule 2.1 annexed hereto and the aggregate
------------
original amount of the Tranche B Revolving Loan Commitments is
$250,000,000; provided that the Tranche B Revolving Loan Commitments of
--------
Lenders shall be reduced as provided in subsection 2.4 and adjusted to give
effect to any assignments of the Tranche B Revolving Loan Commitments
pursuant to subsection 10.1B. Notwithstanding anything to the contrary
contained herein, each Lender's Tranche B Revolving Loan Commitment shall
expire on the Tranche B Expiration Date unless on or before the Tranche B
Expiration Date Company shall have (i) paid any fees due and owing with
respect to the Tranche B Revolving Loan Commitments pursuant to subsection
2.3B and (ii) either (a) borrowed Tranche B Revolving Loans pursuant to the
Tranche B Revolving Loan Commitments or (b) delivered the Tranche B
Continuation Notice to Administrative Agent (the "TRANCHE B CONTINUATION
EVENT"). In the event that the Tranche B Continuation Event occurs, each
Lender's Tranche B Revolving Loan Commitment shall expire on the Revolving
Loan Commitment Termination Date and all Tranche B Revolving Loans and all
other amounts owed hereunder with respect to the Tranche B Revolving Loans
and the Tranche B Revolving Loan Commitments shall be paid in full no later
than that date. In the event that the Tranche B Continuation Event occurs,
amounts borrowed under this subsection 2.1A(ii) may be repaid and
reborrowed to, but excluding the Revolving Loan Commitment Termination
Date, at any time and from time to time without premium or penalty except
as provided in subsection 2.6D.
Anything contained in this Agreement to the contrary notwithstanding,
the Tranche B Revolving Loans and the Tranche B Revolving Loan Commitments
shall be subject to the following limitations in the amounts indicated:
(i) from the Closing Date through and including the Tranche B
Expiration Date, in no event shall the Total Utilization of Tranche B
Revolving Loan Commitments at any time exceed (i) the Tranche B
Revolving Loan Commitments then in effect minus (ii) the Offer Reserve
-----
then in effect; and
38
(ii) after the Tranche B Expiration Date, in no event shall the
Total Utilization of Tranche B Revolving Loan Commitments exceed the
Tranche B Revolving Loan Commitments then in effect.
B. BORROWING MECHANICS. Revolving Loans made on any Funding Date as Base
Rate Loans shall not be subject to any minimum amounts. Revolving Loans made on
any Funding Date as Eurodollar Rate Loans shall be in an aggregate minimum
amount of $1,000,000 and integral multiples of $500,000 in excess of that
amount. Whenever Company desires that Lenders make Revolving Loans, it shall
deliver to Administrative Agent a Notice of Borrowing no later than 11:00 A.M.
(New York time) at least three Business Days in advance of the proposed Funding
Date (in the case of a Eurodollar Rate Loan), or at least one Business Day in
advance of the proposed Funding Date (in the case of a Base Rate Loan). The
Notice of Borrowing shall specify (i) the proposed Funding Date (which shall be
a Business Day), (ii) the amount and type of Loans requested, (iii) in the case
of Loans made on the Closing Date, that such Loans shall be Base Rate Loans,
(iv) in the case of Loans not made on the Closing Date, whether such Loans shall
be Base Rate Loans or Eurodollar Rate Loans, (v) in the case of any Loans
requested to be made as Eurodollar Rate Loans, the initial Interest Period
requested therefor; provided that the initial Funding Date with respect to any
--------
Eurodollar Rate Loans requested to be made hereunder (x) as Tranche A Revolving
Loans shall not be earlier than the date (1) occurring 30 days after the Closing
Date or (2) on which Administrative Agent notifies Company in writing that the
primary syndication of the Tranche A Revolving Loan Commitments and the Tranche
A Revolving Loans has been completed and (y) as Tranche B Revolving Loans shall
not be earlier than the date (1) occurring 30 days after the Tranche B
Expiration Date or (2) on which Administrative Agent notifies Company in writing
that the primary syndication of the Tranche B Revolving Loan Commitments and the
Tranche B Revolving Loans has been completed; provided, further, that, subject
-------- -------
to the preceding proviso, (i) any Tranche A Revolving Loans made as Eurodollar
-------
Rate Loans on or before the date occurring 90 days after the Closing Date shall
not have an Interest Period in excess of one month and (ii) any Tranche B
Revolving Loans made as Eurodollar Rate Loans on or before the date occurring 90
days after the Tranche B Expiration Date shall not have an Interest Period in
excess of one month, (vi) in the case of Tranche A Revolving Loans, that, after
giving effect to the requested Loans, the Total Utilization of Tranche A
Revolving Loans will not exceed the Tranche A Revolving Loan Commitments then in
effect and (vii) (a) in the case of Tranche B Revolving Loans made on or before
the Tranche B Expiration Date, that, after giving effect to the requested Loans,
the Total Utilization of Tranche B Revolving Loan Commitments will not exceed
(i) the Tranche B Revolving Loan Commitments then in effect minus (ii) the Offer
-----
Reserve then in effect and (b) in the case of Tranche B Revolving Loans made
after the Tranche B Expiration Date, that, after giving effect to the requested
Loans, the Total Utilization of Tranche B Revolving Loan Commitments will not
exceed the Tranche B Revolving Loan Commitments then in effect. Revolving Loans
may be continued as or converted into Base Rate Loans and Eurodollar Rate Loans
in the manner provided in subsection 2.2D. In lieu of delivering the above-
described Notice of Borrowing, Company may give Administrative Agent telephonic
notice by the required time of any proposed borrowing under this subsection
2.1B;
39
provided that such notice shall be promptly confirmed in writing by delivery of
--------
a Notice of Borrowing to Administrative Agent on or before the applicable
Funding Date.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding of any Loans
in the event that any of the matters to which Company is required to certify in
the applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding Date, and the acceptance by Company of the proceeds of any
Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination Date,
and Company shall be bound to either (i) make a borrowing in accordance
therewith or (ii) pay all amounts due under subsection 2.6D.
C. DISBURSEMENT OF FUNDS. All Loans under this Agreement shall be made
by Lenders simultaneously and proportionately to their respective Pro Rata
Shares, it being under stood that no Lender shall be responsible for any default
by any other Lender in that other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender to make the particular type of
Loan requested be increased or decreased as a result of a default by any other
Lender in that other Lender's obligation to make a Loan requested hereunder.
Promptly after receipt by Administrative Agent of a Notice of Borrowing pursuant
to subsection 2.1B (or telephonic notice in lieu thereof), Administrative Agent
shall promptly notify each Lender of the proposed borrowing. Each Lender shall
make the amount of its Loan available to Administrative Agent, in same day funds
in Dollars, at the Funding and Payment Office, not later than 11:00 A.M. (New
York time) on the applicable Funding Date. Upon satisfaction or waiver of the
conditions precedent specified in subsections 4.1 (in the case of Loans made on
the Closing Date) and 4.2 (in the case of all Loans), Administrative Agent shall
make the proceeds of such Loans available to Company on the applicable Funding
Date by causing an amount of same day funds in Dollars equal to the proceeds of
all such Loans received by Administrative Agent from Lenders to be credited only
to the account of Company at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender prior to
the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Loan requested on
such Funding Date, Administrative Agent may
40
assume that such Lender has made such amount available to Administrative Agent
on such Funding Date and Administrative Agent may, in its sole discretion, but
shall not be obligated to, make available to Company a corresponding amount on
such Funding Date. If such corresponding amount is not in fact made available
to Administrative Agent by such Lender, Administrative Agent shall be entitled
to recover such corresponding amount on demand from such Lender together with
interest thereon, for each day from such Funding Date until the date such amount
is paid to Administrative Agent, at the customary rate set by Administrative
Agent for the correction of errors among banks for three Business Days and
thereafter at the Base Rate. If such Lender does not pay such corresponding
amount forthwith upon Administrative Agent's demand therefor, Administrative
Agent shall promptly notify Company and Company shall immediately pay such
corresponding amount to Administrative Agent together with interest thereon, for
each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the rate payable under this Agreement for Base Rate
Loans. Nothing in this subsection 2.1C shall be deemed to relieve any Lender
from its obligation to fulfill its Commitment hereunder or to prejudice any
rights that Company may have against any Lender as a result of any default by
such Lender hereunder.
D. THE REGISTER.
(i) Administrative Agent shall maintain, at its address referred to
in subsection 10.8, a register for the recordation of the names and
addresses of Lenders and the Commitments and Loans of each Lender from time
to time (the "REGISTER"). The Register shall be available for inspection by
Company or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(ii) Administrative Agent shall record in the Register the Tranche A
Revolving Loan Commitment and the Tranche B Revolving Loan Commitment and
the Tranche A Revolving Loans and the Tranche B Revolving Loans from time
to time of each Lender and each repayment or prepayment in respect of the
principal amount of the Tranche A Revolving Loans or Tranche B Revolving
Loans of each Lender. Any such recordation shall be conclusive and binding
on Company and each Lender, absent manifest error; provided that failure to
--------
make any such recordation, or any error in such recordation, shall not
affect Company's Obligations in respect of the applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation, the Notes held by such Lender) the amount of each
Tranche A Revolving Loan and Tranche B Revolving Loan made by it and each
payment in respect thereof. Any such recordation shall be conclusive and
binding on Company, absent manifest error; provided that failure to make
--------
any such recordation, or any error in such recordation, shall not affect
Company's Obligations in respect of the applicable Loans; and provided,
--------
further that in the event of any inconsistency between the Register and any
-------
Lender's records, the recordations in the Register shall govern.
41
(iv) Company, Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all purposes
hereof, and no assignment or transfer of any such Commitment or Loan shall
be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii). Prior to such recordation, all amounts owed with respect to the
applicable Commitment or Loan shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and
binding on any subsequent holder, assignee or transferee of the
corresponding Commitments or Loans.
(v) Company hereby designates Administrative Agent to serve as
Company's agent solely for purposes of maintaining the Register as provided
in this subsection 2.1E, and Company hereby agrees that, to the extent
Administrative Agent serves in such capacity, Administrative Agent and its
officers, directors, employees, agents and affiliates shall constitute
Indemnities for all purposes under subsection 10.3.
E. NOTES. Company shall execute and deliver to each Lender (or to
Administrative Agent for that Lender) on the Closing Date (i) a Tranche A
Revolving Note substantially in the form of Exhibit IV-A annexed hereto to
------------
evidence that Lender's Tranche A Revolving Loans, in the principal amount of
that Lender's Tranche A Revolving Loan Commitment and with other appropriate
insertions and (ii) a Tranche B Revolving Note substantially in the form of
Exhibit IV-B annexed hereto to evidence that Lender's Tranche B Revolving Loans,
------------
in the principal amount of that Lender's Tranche B Revolving Loan Commitment and
with other appropriate insertions.
F. OPTIONAL INCREASE OF TRANCHE A REVOLVING LOAN COMMITMENTS.
(i) Proposed Aggregate Tranche A Revolving Loan Commitment
------------------------------------------------------
Increase. In the event that (i) the Tranche B Revolving Loan Commitments
--------
terminate on the Tranche B Expiration Date and (ii) there are no
outstanding Tranche B Revolving Loans on the Tranche B Expiration Date,
after the Tranche B Expiration Date, and subject to the provisions of this
subsection 2.1F, not more than four times in any calendar year, Company may
propose to increase the aggregate amount of the Tranche A Revolving Loan
Commitments by an aggregate amount of not less than $50,000,000 or an
integral multiple of $25,000,000 in excess thereof in the manner set forth
in this subsection 2.1F; provided that (i) the aggregate amount of the
--------
Tranche A Revolving Loan Commitments shall in no event exceed
$1,000,000,000 and (ii) immediately prior to and after giving effect to any
increase in the Tranche A Revolving Loan Commitments, no Potential Event of
Default or Event of Default shall have occurred and be continuing.
42
(ii) Procedure for Requesting Tranche A Revolving Loan Commitment
------------------------------------------------------------
Increase. In the event that Company desires to elect to increase the
--------
amount of the Tranche A Revolving Loan Commitments, (a) Company may request
any one or more Lenders, selected by Company in its sole discretion, to
elect to increase their respective Tranche A Revolving Loan Commitments
(provided that Company shall, concurrently with such request, notify
---------
Administrative Agent, and Administrative Agent shall thereafter notify all
Lenders, of such request), (b) any Lender requested by Company to do so may
(but is not obligated to) elect to increase its Tranche A Revolving Loan
Commitment and (c) with the written consent of Administrative Agent (such
consent not to be unreasonably withheld), Company may request one or more
Persons meeting the requirements of the definition of "Eligible Assignee"
(each a "PROSPECTIVE LENDER"), by execution of a New Commitment Acceptance
substantially in the form of Exhibit XXIV annexed hereto, to become parties
hereto and undertake Tranche A Revolving Loan Commitments hereunder. To the
extent that no such Lender or Prospective Lender is willing to increase its
Tranche A Revolving Loan Commitment or undertake a Tranche A Revolving Loan
Commitment, as the case may be, the Tranche A Revolving Loan Commitments
shall not be increased. In the event one or more Lenders or Prospective
Lender agrees to increase their Tranche A Revolving Loan Commitments or
undertake a Tranche A Revolving Loan Commitment, as the case may be, (a)
Company shall give written notice to Administrative Agent specifying the
aggregate amount of the increase in the Tranche A Revolving Loan
Commitments, the Tranche A Revolving Loan Commitment amount of each Lender
or Prospective Lender and the proposed effective date of the increase in
the Tranche A Revolving Loan Commitments (it being understood that such
effective date shall not occur until all of the conditions to such increase
set forth in this subsection 2.1F have been satisfied, such date being the
"INCREASE DATE") and (b) each Lender increasing its Tranche A Revolving
Loan Commitment or Prospective Lender undertaking a Tranche A Revolving
Loan Commitment shall execute and deliver to Administrative Agent (x) in
the case of a Lender, an Increased Commitment Acceptance confirming the
amount of the increase to its Tranche A Revolving Loan Commitment, in
substantially the form of Exhibit XXIII annexed hereto, or (y) in the case
-------------
of a Prospective Lender, a New Commitment Acceptance confirming the amount
of the Tranche A Revolving Loan Commitment it is undertaking, in
substantially the form of Exhibit XXIV annexed hereto. If Administrative
------------
Agent deems it appropriate in connection with any such increase, and as a
condition thereto, Company and the affected Lenders and Prospective Lender
shall execute a master assignment and acceptance agreement or other
document mutually acceptable to the parties thereto. Upon the effectiveness
of any increase in the Tranche A Revolving Loan Commitments pursuant to
this subsection 2.1F, (1) Administrative Agent shall revise Schedule 2.1
------------
annexed hereto accordingly and deliver a copy of such revised schedule to
each Lender on the Increase Date and (2) any Lender increasing its Tranche
A Revolving Loan Commitment or any Prospective Lender undertaking a Tranche
A Revolving Loan Commitment shall thereafter be treated as a Lender
hereunder for all purposes as if it had been an original signatory hereto.
43
(iii) Reallocation of Outstanding Tranche A Revolving Loans. On or
-----------------------------------------------------
prior to each Increase Date, Administrative Agent will calculate the
appropriate adjustments to the Register to reflect the reallocation of
outstanding Tranche A Revolving Loans in accordance with the Pro Rata
Shares of the Lenders (including any new Lenders) after giving effect to
the increase in Tranche A Revolving Loan Commitments, and will prior to
10:00 A.M. (New York City time) on such date (i) notify each Lender and
Company of the amounts of such reallocation of Tranche A Revolving Loans
and (ii) notify each Lender of the amounts, representing the principal
amount of outstanding Tranche A Revolving Loans which are deemed to be made
by such Lender or which shall be repaid to such Lender, which such Lender
will either advance or receive, respectively, as a result of such
reallocation. No later than 12:00 Noon (New York City time) on the date of
receipt of the notice from Administrative Agent described in clause (i) of
the preceding sentence, each Lender which is deemed to make a Tranche A
Revolving Loan as described above shall make the amount of such Tranche A
Revolving Loan available to Administrative Agent in immediately available
funds. Promptly upon receipt of funds from a Lender making a Tranche A
Revolving Loan as set forth above, Administrative Agent shall remit such
amount to the Lender or Lenders entitled to receive such amount, pro rata
in proportion to the amounts to be received by them as determined above.
The making of a Tranche A Revolving Loan by a Lender as set forth above
shall be deemed to be the making of a Tranche A Revolving Loan to Company
on the date such funds are transmitted to Administrative Agent. The receipt
by a Lender of funds as set forth above shall be deemed to be a payment of
Tranche A Revolving Loans by Company on the date such payment is received.
Notwithstanding anything herein to the contrary, if any Eurodollar Rate
Loans are required to be repaid in connection with any reallocation under
this subsection 2.1F, Company shall make any payments required under
subsection 2.6D in connection with such prepayments.
2.2 INTEREST ON THE LOANS.
---------------------
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and
2.7, each Loan shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to, in the case of Loans, the Base Rate or the Adjusted
Eurodollar Rate. The applicable basis for determining the rate of interest with
respect to any Loan shall be selected by Company initially at the time a Notice
of Borrowing is given with respect to such Loan pursuant to subsection 2.1B, and
the basis for determining the interest rate with respect to any Loan may be
changed from time to time pursuant to subsection 2.2D. If on any day a Loan is
outstanding with respect to which notice has not been delivered to
Administrative Agent in accordance with the terms of this Agreement specifying
the applicable basis for determining the rate of interest, then for that day
that Loan shall bear interest determined by reference to the Base Rate.
44
Subject to the provisions of subsections 2.2E and 2.7, the Loans shall bear
interest through maturity based on (i) the Leverage Ratio at the end of the most
recently concluded Fiscal Quarter or (ii) the Senior Debt Ratings then in effect
as follows:
(a) if a Base Rate Loan, then at the Base Rate then in effect; or
(b) if a Eurodollar Rate Loan, then at the sum of the Adjusted Eurodollar
Rate plus the Applicable Margin per annum then in effect.
----
The "APPLICABLE MARGIN" for each Eurodollar Rate Loan shall be the
percentage per annum set forth below for that type of Loan based upon the
Leverage Ratio for the applicable period:
==================================================================================
Leverage Ratio Applicable Margin
----------------------------------------------------------------------------------
(A) Greater than or equal to 5.0:1.00 1.75%
----------------------------------------------------------------------------------
(B) Greater than or equal to 4.5:1.00 but less than 5.0:1.00 1.625%
----------------------------------------------------------------------------------
(C) Greater than or equal to 4.0:1.00 but less than 4.5:1.00 1.375%
----------------------------------------------------------------------------------
(D) Greater than or equal to 3.5:1.00 but less than 4.0:1.00 1.125%
----------------------------------------------------------------------------------
(E) Less than 3.5:1.00 1.000%
==================================================================================
; provided that, notwithstanding the foregoing, in the event that Company
--------
receives and maintains Senior Debt Ratings at or better than (i) BBB- from S&P
and (ii) Baa3 from ▇▇▇▇▇'▇, the "APPLICABLE MARGIN" for each Eurodollar Rate
Loan shall no longer be determined by reference to the Leverage Ratio but shall
instead be the percentage per annum set forth below for that type of Loan based
upon the Senior Debt Ratings then in effect.
==============================================================
Senior Debt Ratings Applicable Margin
--------------------------------------------------------------
S&P ▇▇▇▇▇'▇ Eurodollar
Rate Loan
--------------------------------------------------------------
BBB- Baa3 0.45%
--------------------------------------------------------------
BBB Baa2 0.35%
--------------------------------------------------------------
BBB+ Baa1 0.30%
==============================================================
45
; and provided further that if Company receives and maintains Senior Debt
-------- -------
Ratings from S&P and ▇▇▇▇▇'▇ that do not correspond to the same Applicable
Margin set forth above, the Applicable Margin shall be the higher percentage per
annum set forth above that corresponds to one such Senior Debt Rating; and
provided still further that, notwithstanding anything to the contrary herein,
-------- ----- -------
until Company delivers the Compliance Certificate required to be delivered
pursuant to subsection 6.1(iii) for the Fiscal Quarter ending August 31, 1998,
the Applicable Margin for Revolving Loans that are Eurodollar Rate Loans shall
not be less than 1.75% per annum.
To the extent the Applicable Margin is determined by reference to the
Leverage Ratio, the Applicable Margin shall be adjusted, to the extent required,
on the date of delivery of each Compliance Certificate delivered pursuant to
subsection 6.1(iii), such adjustment to remain in effect until the next date of
delivery of a Compliance Certificate (and related financial information required
at such time pursuant to subsection 6.1) pursuant to subsection 6.1(iii);
provided that without limiting any Event of Default or Potential Event of
--------
Default that may result therefrom, in the event Company does not deliver any
Compliance Certificate required pursuant to subsection 6.1 by the date specified
therefor then the Applicable Margin shall not be decreased until and following
the actual date of delivery thereof, and if the Applicable Margin is required to
be increased as a result of the information in such Compliance Certificate, then
such increase shall be retroactive to the date such Compliance Certificate was
originally required to be delivered hereunder.
In the event that Company receives and maintains Senior Debt Ratings at or
better than (i) BBB- from S&P and (ii) Baa3 from ▇▇▇▇▇'▇, the Applicable Margin
shall be adjusted, to the extent required, on the date of delivery to
Administrative Agent of an Officer's Certificate of Company certifying as to the
Senior Debt Ratings then in effect. During any period in which the Applicable
Margin is determined by reference to Senior Debt Ratings, Company shall deliver
an Officer's Certificate to Administrative Agent (i) each Fiscal Quarter (as
part of the applicable Compliance Certificate) and (ii) upon any change in such
Senior Debt Ratings; provided that without limiting any Event of Default or
--------
Potential Event of Default that may result therefrom, in the event that Company
does not deliver the Officer's Certificate required pursuant to this paragraph
by the date specified therefor then the Applicable Margin shall not be decreased
until and following the actual date of delivery thereof, and if the Applicable
Margin is required to be increased as a result of the information in such
Officer's Certificate, then such increase shall be retroactive to the date such
Officer's Certificate was required to be delivered pursuant to this paragraph.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three, six or, if generally
available, nine or twelve month period; provided that:
--------
46
(i) the initial Interest Period for any such Loan shall commence on
the Funding Date in respect of such Loan, in the case of a Loan initially
made as a Eurodollar Rate Loan, or on the date specified in the applicable
Notice of Conversion/Continuation, in the case of a Loan converted to a
Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a Notice
of Conversion/Continuation, each successive Interest Period shall commence
on the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
--------
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period shall extend beyond the Revolving Loan
Commitment Termination Date;
(vi) there shall be no more than fifteen Interest Periods
outstanding at any time; and
(vii) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan, in the applicable Notice of Borrowing or Notice
of Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, Company shall have the option (i)(a) from and after the earlier to occur of
(1) the date which is 30 days after the Closing Date and (2) the date on which
Administrative Agent notifies Company in writing that the primary syndication of
the Tranche A Revolving Loan Commitments and the Tranche A Revolving Loans has
been completed, to convert at any time all or any part of its outstanding
Tranche A Revolving Loans equal to $1,000,000 and integral multiples of
$1,000,000 in excess of that amount from Base Rate Loans to Eurodollar Rate
Loans; provided that any
--------
47
outstanding Tranche A Revolving Loan converted from a Base Rate Loan to a
Eurodollar Rate Loan on or before the date occurring 90 days' after the Closing
Date shall not have an Interest Period in excess of one month or (b) from and
after the earlier to occur of (1) the date which is 30 days after the Tranche B
Expiration Date and (2) the date on which Administrative Agent notifies Company
in writing that the primary syndication of the Tranche B Revolving Loan
Commitments and the Tranche B Revolving Loans has been completed, to convert at
any time all or any part of its outstanding Tranche B Revolving Loans equal to
$1,000,000 and integral multiples of $1,000,000 in excess of that amount from
Base Rate Loans to Eurodollar Rate Loans provided that any outstanding Tranche B
Revolving Loan converted from a Base Rate Loan to a Eurodollar Rate Loan on or
before the date occurring 90 days after the Tranche B Expiration Date shall not
have an Interest Period in excess of one month, or (ii) upon the expiration of
any Interest Period applicable to a Eurodollar Rate Loan, to continue all or any
portion of such Loan equal to $1,000,000 and integral multiples of $1,000,000 in
excess of that amount as a Eurodollar Rate Loan; provided that (i) any
--------
outstanding Tranche A Revolving Loan continued as a Eurodollar Rate Loan on or
before the date occurring 90 days after the Closing Date shall not have an
Interest Period in excess of one month and (ii) any outstanding Tranche B
Revolving Loan continued as a Eurodollar Rate Loan on or before the date
occurring 90 days after the Closing Date shall not have an Interest Period in
excess of one month; or (iii) subject to the payment of all amounts due under
subsection 2.6D, to convert a Eurodollar Rate Loan into a Base Rate Loan at any
time.
Company shall deliver a Notice of Conversion/ Continuation to
Administrative Agent no later than 11:00 A.M. (New York time) of the proposed
conversion date (in the case of a conversion to a Base Rate Loan) or at least
three Business Days in advance of the proposed conversion/continuation date (in
the case of a conversion to, or a continuation of, a Eurodollar Rate Loan). A
Notice of Conversion/Continuation shall specify (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount
and type of the Loan to be converted/continued, (iii) the nature of the proposed
conversion/continuation, (iv) in the case of a conversion to, or a continuation
of, a Eurodollar Rate Loan, the requested Interest Period, and (v) in the case
of a conversion to, or a continuation of, a Eurodollar Rate Loan, that no
Potential Event of Default or Event of Default has occurred and is continuing.
In lieu of delivering the above-described Notice of Conversion/Continuation,
Company may give Administrative Agent telephonic notice by the required time of
any proposed conversion/continuation under this subsection 2.2D; provided that
--------
such notice shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Administrative Agent on or before the proposed
conversion/continuation date.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
48
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Conversion/Continuation for conversion to, or continuation of, a Eurodollar
Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Company shall be bound
to effect a conversion or continuation in accordance therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable Insolvency Laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to Base Rate Loans. Payment or
acceptance of the increased rates of interest provided for in this subsection
2.2E is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of Administrative Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be computed (i)
in the case of Base Rate Loans, on the basis of a 365-day or 366-day year, as
the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of
a 360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, (i) the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate
Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate Loan
shall be included, and (ii) the date of payment of such Loan or the expiration
date of an Interest Period applicable to such Loan or, with respect to a Base
Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of
such Base Rate Loan to such Eurodollar Rate Loan shall be excluded; provided
--------
that if a Loan is repaid on the same day on which it is made, one day's interest
shall be paid on that Loan.
2.3 FEES.
----
A. COMMITMENT FEES.
Company agrees to pay to Administrative Agent, for distribution (i) to each
Lender having a Tranche A Revolving Loan Commitment in proportion to that
Lender's Pro Rata Share, commitment fees for the period from and including the
Closing Date to and excluding the Revolving Loan Commitment Termination Date
equal to (a) the average of the daily excess of the Tranche A Revolving Loan
Commitments over the Total Utilization of Tranche A Revolving Loan Commitments
multiplied by (b) 0.25% per annum (the "COMMITMENT FEE PERCENTAGE") and (ii)
-------------
each Lender having a Tranche B Revolving Loan Commitment in proportion to that
Lender's Pro Rata Share, commitment fees for the period from and including the
Tranche B Activation Date to and excluding the Revolving Loan Commitment
Termination Date equal to (a) the average of
49
the daily excess of the Tranche B Revolving Loan Commitments over the Total
Utilization of Tranche B Revolving Loan Commitments multiplied by (b) the
-------------
Commitment Fee Percentage; provided that if the Leverage Ratio is less than
--------
3.5:1.00, the Commitment Fee Percentage shall be reduced to 0.20% per annum; and
provided further that if Company receives and maintains Senior Debt Ratings at
--------
or better than (i) BBB- from S&P and (ii) Baa3 from ▇▇▇▇▇'▇, the Commitment Fee
Percentage shall be the percentage per annum set forth below for the applicable
periods:
================================================================================
Senior Debt Ratings Commitment Fee
Percentage
----------------------------------------------
S&P ▇▇▇▇▇'▇
--------------------------------------------------------------------------------
BBB- Baa3 0.15%
--------------------------------------------------------------------------------
BBB Baa2 0.12%
--------------------------------------------------------------------------------
BBB+ Baa1 0.10%
================================================================================
; provided that, if Company receives and maintains Senior Debt Ratings from S&P
--------
and ▇▇▇▇▇'▇ that do not correspond to the same Commitment Fee Percentage set
forth above, the Commitment Fee Percentage shall be the higher percentage per
annum set forth above that corresponds to one such Senior Debt Rating.
Such commitment fees to be calculated on the basis of a 365-day or 366-day
year and the actual number of days elapsed and to be payable quarterly in
arrears on January 15, April 15, July 15 and October 15 of each year, commencing
on the first such date to occur after the Closing Date (in the case of the
Tranche A Revolving Loan Commitments) and the Tranche B Activation Date (in the
case of the Tranche B Revolving Loan Commitments), and on the Revolving Loan
Commitment Termination Date. The Commitment Fee Percentage shall be
automatically adjusted, to the extent applicable, upon any corresponding
adjustment in the Applicable Margin pursuant to subsection 2.2A.
B. OTHER FEES. Company agrees to pay to (i) Administrative Agent such
other fees in the amounts and at the times separately agreed upon between
Company and Administrative Agent, and (ii) each Co-Syndication Agent such other
fees in the amounts and at the time separately agreed upon between Company and
such Co-Syndication Agent.
2.4 PREPAYMENTS AND REDUCTIONS IN COMMITMENTS OF REVOLVING LOANS; GENERAL
---------------------------------------------------------------------
PROVISIONS REGARDING PAYMENTS; TERMINATION OF COMMITMENTS.
---------------------------------------------------------
A. PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN REVOLVING LOANS COMMITMENTS.
50
(i) Voluntary Prepayments. Company may, upon not less than one
---------------------
Business Day's prior written or telephonic notice, in the case of Base Rate
Loans, and three Business Days' prior written or telephonic notice, in the
case of Eurodollar Rate Loans, in each case given to Administrative Agent
by 11:00 A.M. (New York City time) on the date required and, if given by
telephone, promptly confirmed in writing to Administrative Agent (which
original written or telephonic notice Administrative Agent will promptly
transmit by telefacsimile or telephone to each Lender), at any time and
from time to time prepay any Loans on any Business Day in whole or in part
in an aggregate minimum amount of $1,000,000 and integral multiples of
$1,000,000 in excess of that amount; provided, however, that a Eurodollar
-------- -------
Rate Loan may only be prepaid on the expiration of the Interest Period
applicable thereto unless Company complies with subsection 2.6D with
respect to any breakage costs resulting from such prepayment being made on
a date prior to the expiration of the applicable Interest Period. Notice
of prepayment having been given as aforesaid, the principal amount of the
Loans specified in such notice shall become due and payable on the
prepayment date specified therein. Any such voluntary prepayment shall be
applied as specified in subsection 2.4A(iv).
(ii) Voluntary Reductions of Commitments. Company may, upon not
-----------------------------------
less than three Business Days' prior written or telephonic notice confirmed
in writing to Administrative Agent (which original written or telephonic
notice Administrative Agent will promptly transmit by telefacsimile or
telephone to each Lender), at any time and from time to time terminate in
whole or permanently reduce in part, without premium or penalty, (a) the
Tranche A Revolving Loan Commitments in an amount up to the amount by which
the Tranche A Revolving Loan Commitments exceed the Total Utilization of
Tranche A Revolving Loan Commitments at the time of such proposed
termination or reduction after giving effect to any payments or prepayments
made on the date of such termination or reduction and (b) (1) from the
Closing Date through and including the Tranche B Expiration Date, the
Tranche B Revolving Loan Commitments in an amount up to the amount by which
the Tranche B Revolving Loan Commitments exceed the sum of (A) the Total
Utilization of Tranche B Revolving Loan Commitments at the time of such
proposed termination or reduction after giving effect to any payments or
prepayments made on the date of such termination or reduction plus (B) the
----
Offer Reserve at the time of such proposed termination or reduction and (2)
after the Tranche B Expiration Date, the Tranche B Revolving Loan
Commitments, if any, in an amount up to the amount by which the Tranche B
Revolving Loan Commitments exceed the Total Utilization of Tranche B
Revolving Loan Commitments at the time of such proposed termination or
reduction after giving effect to any payments or prepayments made on the
date of such termination or reduction; provided that any such partial
--------
reduction of the Revolving Loan Commitments shall be in an aggregate
minimum amount of $1,000,000 and integral multiples of $1,000,000 in excess
of that amount. Company's notice to Administrative Agent shall designate
the date (which shall be a Business Day) of such termination or reduction
and the amount of any partial reduction, and such termination or reduction
of the Tranche A Revolving Loan Commitments or the Tranche B Revolving Loan
51
Commitments, as the case may be, shall be effective on the date specified
in Company's notice and shall reduce the Tranche A Revolving Loan
Commitment or the Tranche B Revolving Loan Commitment, as the case may be,
of each Lender proportionately to its Pro Rata Share.
(iii) Mandatory Prepayments and Mandatory Reductions of Commitments.
-------------------------------------------------------------
The Loans shall be prepaid and/or the Commitments shall be permanently
reduced in the amounts and under the circumstances set forth below, all
such prepayments and/or reductions to be applied as set forth below or as
more specifically provided in subsection 2.4A(iv):
(a) Prepayments and Reductions From Net Asset Sale Proceeds. No
-------------------------------------------------------
later than the first Business Day following the date of receipt by
Company or any of its Subsidiaries of any Net Asset Sale Proceeds in
respect of any Asset Sale, Company shall prepay the Loans and the
Commitments shall be permanently reduced in an aggregate amount equal
to such Net Asset Sale Proceeds; provided, however, that so long as no
-------- -------
Event of Default or Potential Event of Default has occurred and is
continuing, no (1) such reduction shall be required to the extent
Company or such Subsidiary receives less than $25,000,000 in proceeds
from the sale of any asset in any single transaction or a related
series of transactions, (2) such prepayment or reduction shall be
required if Company or such Subsidiary receives such Net Asset Sale
Proceeds in connection with the sale of assets required by the terms
of the DOJ Settlement to the extent Company determines to utilize such
Net Asset Sale Proceeds to purchase equipment or other productive
assets, and Company so utilizes or contractually commits to utilize
such Net Asset Sale Proceeds within 360 days of the receipt thereof,
and (3) such prepayment or reduction shall be required to the extent
Company determines to utilize such Net Asset Sale Proceeds to purchase
equipment or other productive assets, and Company so utilizes or
contractually commits to utilize such Net Asset Sale Proceeds within
180 days of the receipt thereof.
(b) Prepayments and Reductions from Net Insurance/Condemnation
----------------------------------------------------------
Proceeds. No later than the second Business Day following the date of
--------
receipt by Administrative Agent or by Company or any of its
Subsidiaries of any Net Insurance/Condemnation Proceeds in excess of
$5,000,000 (determined with respect to each occurrence or event giving
rise to such Net Insurance/Condemnation Proceeds), Company shall
prepay the Loans and the Commitments shall be permanently reduced in
an aggregate amount equal to the amount of such Net
Insurance/Condemnation Proceeds; provided, however, that so long as no
-------- -------
Event of Default or Potential Event of Default has occurred and is
continuing, no such prepayment and reduction shall be required to the
extent Company determines to utilize such Net Insurance/Condemnation
Proceeds to (i) repair, restore or replace the assets in respect of
which such Net
52
Insurance/Condemnation Proceeds were received or (ii) purchase
equipment or other productive assets, and Company so utilizes or
contractually commits to utilize such Net Insurance/Condemnation
Proceeds within 180 days of the receipt thereof.
(c) Prepayments and Reductions Due to Issuance of Debt
--------------------------------------------------
Securities. On the date of receipt by Company or any of its
----------
Subsidiaries of the Cash proceeds (any such proceeds, net of
underwriting discounts and commissions and other reasonable costs and
expenses associated therewith, including reasonable legal fees and
expenses, being "NET DEBT SECURITIES PROCEEDS") from the issuance of
debt Securities of Company or any of its Subsidiaries after the
Closing Date (other than the proceeds of Indebtedness permitted
pursuant to subsections 7.1(i), 7.1(ii), 7.1(iii), 7.1(iv), 7.1(v),
7.1(vi), 7.1(vii), 7.1(viii), 7.1(x) and 7.1(xii)), Company shall
prepay the Loans and the Commitments shall be permanently reduced in
an aggregate amount equal to 100% of such Net Debt Securities
Proceeds; provided, however that if (x) Company issues unsecured debt
-------- -------
Securities, to the extent the Net Debt Securities Proceeds received by
Company are applied by Company or ▇▇▇▇▇ to repurchase the ▇▇▇▇▇ Notes
or pay premiums, fees or expenses incurred by Company or ▇▇▇▇▇ in
connection with repurchases of the ▇▇▇▇▇ Notes, then no such payment
or reduction shall be required or (y) if Company issues unsecured debt
Securities and the Leverage Ratio is less than 3.5:1.00 at the time of
such issuance after giving effect to such issuance, then no such
payment or reduction shall be required.
(d) Prepayments from Excess Cash Flow. In the event that there
---------------------------------
shall be Excess Cash Flow of Company and its Subsidiaries for any
Fiscal Year (commencing with the Fiscal Year beginning March 1, 1999),
Company shall, no later than 120 days after the end of such Fiscal
Year, prepay the Loans (but the Commitments shall not be permanently
reduced) in an aggregate amount equal to 50% of such Excess Cash Flow.
(e) Prepayments from Available Cash and Cash Equivalents. In
----------------------------------------------------
the event that Company and its Subsidiaries have on any date (the
"BALANCE DATE") an amount in Cash and Cash Equivalents in excess of
$20,000,000 (such amount, the "AVAILABLE CASH"), Company shall, no
later than 5 days after the Balance Date, prepay the Loans (but the
Commitments shall not be permanently reduced) in an aggregate amount
equal to the Available Cash.
(f) Calculations of Net Proceeds Amounts; Additional Prepayments
------------------------------------------------------------
and Reductions Based on Subsequent Calculations. Concurrently with
-----------------------------------------------
any prepayment of the Loans and/or reduction of the Commitments
pursuant to subsections 2.4B(iii)(a)-(e), Company shall deliver to
Administrative Agent an Officer's Certificate demonstrating the
calculation of the amount (the "NET PROCEEDS
53
AMOUNT") of the applicable Net Asset Sale Proceeds, the applicable
Net Insurance/Condemnation Proceeds, the applicable Net Debt
Securities Proceeds (as such term is defined in subsection
2.4B(iii)(c)), the Available Cash or the applicable Excess Cash Flow
that gave rise to such prepayment and/or reduction. In the event that
Company shall subsequently determine that the actual Net Proceeds
Amount was greater than the amount set forth in such Officer's
Certificate, Company shall promptly make an additional prepayment of
the Loans (and the Commitments shall be permanently reduced) in an
amount equal to the amount of such excess, and Company shall
concurrently therewith deliver to Administrative Agent an Officer's
Certificate demonstrating the derivation of the additional Net
Proceeds Amount resulting in such excess.
(g) Prepayments Due to Reductions or Restrictions of Revolving
----------------------------------------------------------
Loan Commitments. Company shall from time to time prepay (1) the
----------------
Tranche A Revolving Loans to the extent necessary to give effect to
the limitations set forth in the second paragraph of subsection
2.1A(i) and (2) the Tranche B Revolving Loans to the extent necessary
to give effect to the limitations set forth in the second paragraph of
subsection 2.1A(ii).
(iv) Application of Prepayments and Unscheduled Reductions of
--------------------------------------------------------
Commitments.
-----------
(a) Application of Voluntary Prepayments by Type of Loan;
-----------------------------------------------------
Application of Voluntary Reductions of the Commitments. Any voluntary
-------------------------------------------------------
prepayments pursuant to subsection 2.4A(i) shall be applied as
specified by Company in the applicable notice of prepayment; provided
--------
that in the event Company fails to specify the Loans to which any such
prepayment shall be applied, such prepayment shall be applied first to
-----
repay outstanding Revolving Loans to the full extent thereof and
second to cash collateralize any outstanding Letters of Credit.
------
Notwithstanding the preceding sentence, (1) any voluntary prepayments
of the Revolving Loans pursuant to subsection 2.4A(i) shall be applied
to prepay the Tranche A Revolving Loans and the Tranche B Revolving
Loans on a pro rata basis (in accordance with the respective
outstanding principal amounts thereof) and (2) any voluntary
reductions of the Revolving Loan Commitments shall be applied to
reduce the Tranche A Revolving Loan Commitments and the Tranche B
Revolving Loan Commitments on a pro rata basis (in accordance with the
respective amounts thereof as of the date of such reduction).
(b) Application of Prepayments to Base Rate Loans and
-------------------------------------------------
Eurodollar Rate Loans. Any prepayment of the Revolving Loans shall
---------------------
be applied first to Base Rate Loans to the full extent thereof before
application to Eurodollar Rate Loans, in a manner which minimizes the
amount of any payments required to be made by Company pursuant to
subsection 2.6D.
54
(c) Application of Mandatory Prepayments by Type of Loans. Any
-----------------------------------------------------
amount required to be applied as a mandatory prepayment of the Loans
and/or a reduction of the Commitments pursuant to subsections
2.4A(iii)(a)-(e) shall be applied first to permanently reduce the
-----
Revolving Loan Commitments and then, to the extent that the Revolving
----
Loan Commitments are less than the Letter of Credit Usage, cash
collateralize Letters of Credit outstanding.
(d) Application of Mandatory Prepayments and Permanent
--------------------------------------------------
Reductions of Revolving Loans by Type of Loans. Any mandatory
----------------------------------------------
prepayments of the Revolving Loans pursuant to subsection 2.4A(iii)
shall be applied to prepay the Tranche A Revolving Loans and the
Tranche B Revolving Loans on a pro rata basis in accordance with the
respective outstanding principal amounts thereof. Any mandatory
permanent reductions of the Revolving Loan Commitments pursuant to
subsection 2.4A(iii) shall be applied to permanently reduce the
Tranche A Revolving Loan Commitments and the Tranche B Revolving Loan
Commitments on a pro rata basis in accordance with the respective
amounts thereof as of the date of such reduction.
B. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company of
--------------------------
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made in Dollars in same day funds, without defense, setoff
or counterclaim, free of any restriction or condition, and delivered to
Administrative Agent not later than 12:00 Noon (New York time) on the date
due at the Funding and Payment Office for the account of Lenders. Funds
received by Administrative Agent after that time on such due date shall be
deemed to have been paid by Company on the next succeeding Business Day. In
order to effect timely payment of any interest, fees, commissions or other
amounts due hereunder, Company hereby authorizes Administrative Agent to
charge its accounts with Administrative Agent to make Loans for its own
account.
(ii) Application of Payments to Principal and Interest. Except as
-------------------------------------------------
provided in subsection 2.2C, all payments in respect of the principal
amount of any Loan shall include payment of accrued interest on the
principal amount being repaid or prepaid, and all such payments (and, in
any event, any payments in respect of any Loan on a date when interest is
due and payable with respect to such Loan) shall be applied to the payment
of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
-------------------------
payments shall be apportioned among all outstanding Loans to which such
payments relate, in each case proportionately to Lenders' respective Pro
Rata Shares of such Loans; provided that payments of interest in respect of
--------
Loans which are Base Rate Loans shall be apportioned
55
ratably among Lenders in proportion to the average daily amount of such
Base Rate Loans of each Lender outstanding during the period in which such
interest shall have accrued. Administrative Agent shall promptly distribute
to each Lender, at its primary address set forth below its name on the
appropriate signature page hereof or at such other address as such Lender
may request, its Pro Rata Share of all such payments received by
Administrative Agent in respect of Loans and the commitment fees of such
Lender when received by Administrative Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this subsection 2.4B(iii), if,
pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
Eurodollar Rate Loans, Administrative Agent shall give effect thereto in
apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
-------------------------
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing
-------------------
of any Note held by it, or any part thereof (other than by granting
participations therein), Lender will make a notation thereon of all Loans
evidenced by that Note and all principal payments previously made thereon
and of the date to which interest thereon has been paid; provided that the
--------
failure to make (or any error in the making of) a notation of any Loan made
under such Note shall not limit or otherwise affect the obligations of
Company hereunder or under such Note with respect to any Loan or any
payments of principal or interest on such Note.
C. APPLICATION OF PROCEEDS OF COLLATERAL AND PAYMENTS UNDER GUARANTY.
(i) Application of Proceeds of Collateral. Except as provided in
-------------------------------------
subsection 2.4B(iii)(a) with respect to prepayments from Net Asset Sale
Proceeds, all proceeds received by Administrative Agent in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral under any Collateral Document upon the occurrence and during the
continuation of an Event of Default or Potential Event of Default, may, in
the discretion of Administrative Agent, be held by Administrative Agent as
Collateral for, and/or (then or at any time thereafter) applied in full or
in part by Administrative Agent against, the applicable Secured Obligations
(as defined in such Collateral Document) in the following order of
priority:
(a) To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Administrative Agent and its agents and counsel, and all other
expenses, liabilities and advances made or
56
incurred by Administrative Agent in connection therewith, and all
amounts for which Administrative Agent is entitled to indemnification
under such Collateral Document and all advances made by Administrative
Agent thereunder for the account of the applicable Loan Party, and to
the payment of all costs and expenses paid or incurred by
Administrative Agent in connection with the exercise of any right or
remedy under such Collateral Document, all in accordance with the
terms of this Agreement and such Collateral Document;
(b) thereafter, to the extent of any excess such proceeds, to
the payment of all other such Secured Obligations for the ratable
benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such proceeds, to
the payment to or upon the order of such Loan Party or to whosoever
may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
(ii) Application of Payments Under Guaranty. All payments
--------------------------------------
received by Administrative Agent under the Guaranty shall be applied
promptly from time to time by Administrative Agent in the following order
of priority:
(a) To the payment of the costs and expenses of any collection
or other realization under the Guaranty, including reasonable
compensation to Administrative Agent and its agents and counsel, and
all expenses, liabilities and advances made or incurred by
Administrative Agent in connection therewith, all in accordance with
the terms of this Agreement and the Guaranty;
(b) thereafter, to the extent of any excess such payments, to
the payment of all other Guarantied Obligations (as defined in the
Guaranty) for the ratable benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such payments, to
the payment to the applicable Subsidiary Guarantor or to whosoever may
be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
2.5 USE OF PROCEEDS.
---------------
A. LOANS. The proceeds of any Loans (a) made on the Closing Date shall
be applied by Company to (i) finance the IMAX Transaction, (ii) refinance the
Existing Cineplex Credit Agreement, (iii) finance the Sony Debt Repayment, (iv)
finance the SPE Dividend and (v) pay Transaction Costs and (b) made after the
Closing Date shall be applied by Company to (i) repurchase ▇▇▇▇▇ Notes pursuant
to the ▇▇▇▇▇ Change of Control Offer, (ii) to finance Permitted Investments and
Permitted Acquisitions, and (iii) to provide for working capital and/or other
general purposes of Company and its Subsidiaries.
57
B. MARGIN REGULATIONS. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
--------------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 10:00 A.M. (New York time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and such Lenders that the circumstances
giving rise to such notice no longer exist and (ii) any Notice of Borrowing or
Notice of Conversion/Continuation given by Company with respect to the Loans in
respect of which such determination was made shall be deemed to be rescinded by
Company.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the event
that on any date any Lender shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto but shall be made only
after consultation with Company and Administrative Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Lender material hardship,
as a result of contingencies occurring after the date of this Agreement which
materially and adversely affect the interbank Eurodollar market or the position
of such Lender in that market, then, and in any such event, such Lender shall be
an "AFFECTED
58
LENDER" and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Administrative Agent of such determination
(which notice Administrative Agent shall promptly transmit to each other
Lender). Thereafter (a) the obligation of the Affected Lender to make Loans as,
or to convert Loans to, Eurodollar Rate Loans shall be suspended until such
notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) a Base Rate Loan (c) the Affected Lender's
obligation to maintain its outstanding Eurodollar Rate Loans (the "AFFECTED
LOANS"), shall be terminated at the earlier to occur of the expiration of the
Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
Base Rate Loans on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by an Affected Lender as described above relates
to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice
of Borrowing or a Notice of Conversion/Continuation, Company shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Borrowing or Notice of Conversion/Continuation as to all Lenders by giving
notice (by telefacsimile or by telephone confirmed in writing) to Administrative
Agent of such rescission on the date on which the Affected Lender gives notice
of its determination as described above (which notice of rescission
Administrative Agent shall promptly transmit to each other Lender). Except as
provided in the immediately preceding sentence, nothing in this subsection 2.6C
shall affect the obligation of any Lender other than an Affected Lender to make
or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in
accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date
specified therefor in a Notice of Borrowing or a telephonic request for
borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does
not occur on a date specified therefor in a Notice of Conversion/Continuation or
a telephonic request for conversion or continuation, (ii) if any prepayment or
other principal payment or any conversion of any of its Eurodollar Rate Loans
occurs on a date prior to the last day of an Interest Period applicable to that
Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on
any date specified in a notice of prepayment given by Company, or (iv) as a
consequence of any other default by Company in the repayment of its Eurodollar
Rate Loans when required by the terms of this Agreement.
59
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
-------- -------
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have a Loan be made or maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
----------------------------------------
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the provisions
of subsection 2.7B, in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
Covered Tax with respect to this Agreement or any of its obligations
hereunder or any payments to such Lender (or its applicable lending office)
of principal, interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special
60
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
or advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of such Lender (other than any such
reserve or other requirements with respect to Eurodollar Rate Loans that
are reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder; provided that a Lender shall not be entitled to avail itself of the
--------
benefit of this subsection 2.7A to the extent that any such increased cost or
reduction in amounts was incurred more than twenty-four months prior to the time
it gives notice to Company (as provided in the next sentence) of the relevant
circumstance, unless such circumstance arose or became applicable
retrospectively, in which case such Lender shall not be limited to such twenty-
four month period so long as such Lender has given such notice to Company no
later than twenty-four months from the time circumstance became applicable to
such Lender. Such Lender shall deliver to Company (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by Company
-----------------------------
under this Agreement and the other Loan Documents shall (except to the
extent required by law) be paid free and clear of, and without any
deduction or withholding on account of, any Covered Tax imposed, levied,
collected, withheld or assessed by or within the United States of America
or any political subdivision in or of the United States of America or any
other jurisdiction from or to which a payment is made by or on behalf of
Company or by any federation or organization of which the United States of
America or any such jurisdiction is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person is
-----------------------
required by law to make any deduction or withholding on account of any
Covered Tax from any sum
61
paid or payable by Company to Administrative Agent or any Lender under any
of the Loan Documents:
(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company
becomes aware of it;
(b) Company shall pay any such Covered Tax before the date on
which penalties attach thereto, such payment to be made (if the
liability to pay is imposed on Company) for its own account or (if
that liability is imposed on Administrative Agent or such Lender, as
the case may be) on behalf of and in the name of Administrative Agent
or such Lender;
(c) the sum payable by Company in respect of which the relevant
deduction or withholding with respect to such Covered Tax is required
shall be increased to the extent necessary to ensure that, after the
making of that deduction or withholding, Administrative Agent or such
Lender, as the case may be, receives on the due date a net sum equal
to what it would have received had no such deduction or withholding
been required or made; and
(d) within 30 days after the due date of payment of any such
Covered Tax which it is required by clause (b) above to pay, Company
shall deliver to Administrative Agent evidence reasonably satisfactory
to the Administrative Agent of such deduction, withholding or payment
and of the remittance of such Covered Tax to the relevant taxing or
other authority;
provided that Company will not be required to pay any additional amount to
--------
Administrative Agent or any Lender under clause (c) above with respect to
the deduction, withholding or payment of any Covered Tax or under clause
(i) of Section 2.7A or clause (i) of Section 3.6 in respect of any Covered
Tax unless, after the date hereof (in the case of each Lender listed on the
signature pages hereof) or after the date of the Assignment Agreement
pursuant to which such Lender became a Lender (in the case of each other
Lender) there has been a Change in Law which shall result in a required
increase in the rate of such deduction, withholding or payment with respect
to such Covered Tax from that in effect at the date of this Agreement or at
the date of such Assignment Agreement, as the case may be, in respect of
payments to such Lender or its applicable lending office on such date.
(iii) Evidence of Exemption from Withholding Taxes.
--------------------------------------------
(a) Each Lender that is not a United States Person within the
meaning of Section 7701(a)(30) of the Internal Revenue Code (for
purposes of this subsection 2.7B(iii), a "NON-US LENDER") shall
deliver to Administrative Agent and Company, on or prior to the
Closing Date (in the case of each Lender listed
62
on the signature pages hereof) or on or prior to the date of the
Assignment Agreement pursuant to which it becomes a Lender (in the
case of each other Lender), and at such other times as may be
necessary in the determination of Company or Administrative Agent
(each in the reasonable exercise of its discretion), (X) two original
copies of Internal Revenue Service Form 1001 or 4224 (or any successor
forms), properly completed and duly executed by such Lender, together
with any other form, certificate or statement of exemption required
under the Internal Revenue Code or the regulations issued thereunder,
in each case establishing that such Lender is not subject to any
deduction or withholding of United States federal income tax with
respect to any payments to such Lender of principal, interest, fees or
other amounts payable under any of the Loan Documents or (Y) if such
Lender is not a "bank" or other Person described in Section 881(c)(3)
of the Internal Revenue Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (X) above, a
Certificate re Non-Bank Status together with two original copies of
Internal Revenue Service Form W-8 (or any successor form), properly
completed and duly executed by such Lender, together with any other
form, certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder, in each
case establishing that such Lender is not subject to any deduction or
withholding of United States federal income tax with respect to any
payments to such Lender of interest payable under any of the Loan
Documents.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees,
from time to time after the initial delivery by such Lender of such
forms, certificates or other evidence, whenever a lapse in time or
change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that such
Lender shall (1) promptly deliver to Administrative Agent and Company,
two new original copies of Internal Revenue Service Form 1001 or 4224,
or a Certificate re Non-Bank Status and two original copies of
Internal Revenue Service Form W-8, as the case may be, properly
completed and duly executed by such Lender, together with any other
form, certificate or statement of exemption confirming or establishing
that such Lender is not subject to any deduction or withholding of
United States federal income tax with respect to payments to such
Lender under the Loan Documents or (2) notify Administrative Agent and
Company of its inability to deliver any such forms, certificates or
other evidence.
(c) Company shall not be required to pay any additional amount to
any Lender in respect of any Covered Tax under clause (c) of
subsection 2.7B(ii) or clause (i) of subsection 2.7A or clause (i) of
Section 3.6, (X) in the case of a Non-U.S. Lender, if (1) such Lender
shall have failed to satisfy the requirements of clause (a) or (b) of
this subsection 2.7B(iii) or (2) to the extent such amount results
63
from any Lender being treated as a "conduit entity" within the
meaning of Treasury Regulation Section 1.881-3 or any successor
provision thereto or (Y) in the case of any Lender, to the extent that
such Covered Tax would not have been required to be imposed, deducted
or withheld but for the failure of such Lender to comply with any
certification, information or other reporting requirement as to
nationality, residence or identity of such Lender which requirement
such Lender would otherwise be able to comply with on the date
requested by the Company, provided that at least 60 days prior to the
--------
first payment date with respect to which the Company shall apply this
clause (Y), Company shall have notified such Lender, in writing, that
such Lender will be required to comply with such certification,
information or other reporting requirement and provided further that
--------
such compliance is expressly required by law, statute, treaty, ruling
regulation or administrative practice of jurisdiction imposing such
Covered Tax as a necessary precondition to reduction in the rate of,
or exemption from, such Covered Tax; provided that, if such Lender
--------
shall have satisfied the requirements of subsection 2.7B(iii) on the
Closing Date (in the case of each Lender listed on the signature pages
hereof) or on the date of the Assignment Agreement or date of request
by Company pursuant to which it became a Lender (in the case of each
other Lender) and thereafter the requirements of subsection
2.7(iii)(b), nothing in this subsection 2.7B(iii)(c) shall relieve
Company of its obligation to pay any additional amounts pursuant to
clause (c) of subsection 2.7B(ii) in the event that, as a result of
any Change in Law occurring after the date hereof (in the case of each
Lender listed on the signature pages hereof) or after the date of the
Assignment Agreement pursuant to which such Lender becomes a Lender
(in the case of each other Lender), such Lender is no longer properly
entitled to deliver any forms, certificates, statements or other
evidence at a subsequent date establishing the fact that such Lender
is not subject to withholding as described in subsection 2.7B(iii)(a)
or clause (i) of subsection 3.6.
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have reasonably
determined that the adoption, effectiveness, phase-in or applicability after the
date hereof of any law, rule or regulation (or any provision thereof) regarding
capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of such Lender or
any corporation controlling such Lender as a consequence of, or with reference
to, such Lender's Loans, Commitments or Letters of Credit or participations
therein or other obligations hereunder with respect to the Loans or the Letters
of Credit, in the case of any Lender to a level below that which such Lender or
such controlling corporation could have achieved but for such adoption,
effectiveness, phase-in, applicability, change or compliance (taking into
consideration the policies of such Lender or such controlling corporation with
regard
64
to capital adequacy), then from time to time, within five Business Days after
receipt by Company from such Lender of the officer's certificate referred to in
the next sentence, Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling corporation on an
after-tax basis for such reduction. Such Lender shall deliver to Company (with a
copy to Administrative Agent) an officer's certificate, setting forth in
reasonable detail the basis of the calculation of such additional amounts, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
2.8 OBLIGATION OF LENDERS AND ISSUING LENDERS TO MITIGATE.
-----------------------------------------------------
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may
be, becomes aware of the occurrence of an event or the existence of a condition
that would cause such Lender to become an Affected Lender or that would entitle
such Lender or Issuing Lender to receive any payments under subsection 2.7 or
subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending or letter of credit office of
such Lender or Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the circumstances
which would cause such Lender to be an Affected Lender would cease to exist or
the additional amounts which would otherwise be required to be paid to such
Lender or Issuing Lender pursuant to subsection 2.7 or subsection 3.6 would be
materially reduced and if, as determined by such Lender or Issuing Lender in its
sole discretion, the making, issuing, funding or maintaining of such Commitments
or Loans or Letters of Credit through such other lending or letter of credit
office or in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect such Commitments or Loans or Letters of
Credit or the interests of such Lender or Issuing Lender; provided that such
--------
Lender or Issuing Lender will not be obligated to utilize such other lending or
letter of credit office pursuant to this subsection 2.8 unless Company agrees to
pay all incremental expenses incurred by such Lender or Issuing Lender as a
result of utilizing such other lending or letter of credit office as described
in clause (i) above. An officer's certificate as to the amount of any such
expenses payable by Company pursuant to this subsection 2.8 (setting forth in
reasonable detail the basis for requesting such amount) submitted by such Lender
or Issuing Lender to Company (with a copy to Administrative Agent) shall be
conclusive absent manifest error.
In the event that any such Lender does not make, issue, fund or maintain
such Commitments, Loans or Letters of Credit through such other lending or
letter of credit office or take such other measures, as the case may be, then
Company shall have the right, but not the obligation, upon notice to such Lender
and Administrative Agent, either to terminate such Lender's commitments and
prepay (without premium or penalty) the then outstanding Loans, Letters of
Credit, together with all unpaid interest and fees in respect thereof, and all
other Obligations owed to such Lender or to cause such lender to transfer and
assign (without
65
representation or warranty) the then outstanding Commitments, Loans, Letters of
Credit and other Obligations owed to such Lender at a purchase price that is no
less than the aggregate amount of such Lender's Loans and its Pro Rata Share of
outstanding Letters of Credit, together with all accrued and unpaid interest and
fees in respect thereof, plus all other Obligations, owing to such Lender, to an
Eligible Assignee, in accordance with the provisions of subsection 10.1B(i) and
(ii), that is able to make, issue, fund and maintain such Commitments, Loans or
Letters of Credit through a lending or letter of credit office that will avoid
the need for, or minimize the amount of, additional amounts or other payments
which would otherwise be required to be paid by Company under Section 2.7 or
Section 3.6.
2.9 GUARANTOR DESIGNATED SENIOR INDEBTEDNESS.
----------------------------------------
Without in any way limiting whether all or any portion of such Obligations
are Indebtedness (as defined in the ▇▇▇▇▇ Indenture) under the New Bank Credit
Facility (as defined in the ▇▇▇▇▇ Indenture), the Obligations of the Company
hereunder and under other Loan Documents are hereby designated "Guarantor
Designated Senior Indebtedness" (as such term is defined in the ▇▇▇▇▇
Indenture) by Company.
SECTION 3 LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
----------------------------------------------------------------------
THEREIN.
-------
A. LETTERS OF CREDIT. In addition to Company requesting that Lenders
having a Tranche A Revolving Loan Commitment make Tranche A Revolving Loans
pursuant to subsection 2.1A(i), Company may request, in accordance with the
provisions of this subsection 3.1, from time to time during the period from the
Closing Date to the date which is 30 days prior to the Revolving Loan Commitment
Termination Date, that one or more Lenders having a Tranche A Revolving Loan
Commitment issue Letters of Credit for the account of Company for the purposes
specified in the definitions of Standby Letters of Credit and Commercial Letters
of Credit. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Company herein set forth,
any one or more Lenders having a Tranche A Revolving Loan Commitment may, but
(except as provided in subsection 3.1B(ii)) shall not be obligated to, issue
such Letters of Credit in accordance with the provisions of this subsection 3.1;
provided that Company shall not request that any Lender issue (and no Lender
--------
shall issue):
(i) (a) any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Tranche A Revolving Loan Commitments
would exceed the Tranche A Revolving Loan Commitments then in effect;
66
(ii) any Letter of Credit if, after giving effect to such issuance,
the Letter of Credit Usage would exceed $50,000,000;
(iii) any Standby Letter of Credit having an expiration date later
than the earlier of (a) five Business Days prior to the Revolving Loan
Commitment Termination Date and (b) except with respect to an Existing
Letter of Credit, the date which is one year from the date of issuance of
such Letter of Credit; provided that the immediately preceding clause (b)
--------
shall not prevent any Issuing Lender from agreeing that such Standby Letter
of Credit will automatically be extended for one or more successive periods
not to exceed one year each unless such Issuing Lender elects not to extend
for any such additional period; and provided, further that such Issuing
-------- -------
Lender shall elect not to extend such Standby Letter of Credit if it has
knowledge that an Event of Default has occurred and is continuing (and has
not been waived in accordance with subsection 10.6) at the time such
Issuing Lender must elect whether or not to allow such extension;
(iv) any Commercial Letter of Credit having an expiration date (a)
later than the earlier of (X) the date which is 30 days prior to the
Revolving Loan Commitment Termination Date and (Y) the date which is 180
days from the date of issuance of such Commercial Letter of Credit or (b)
that is otherwise unacceptable to the applicable Issuing Lender in its
reasonable discretion;
(v) any Letter of Credit denominated in a currency other than (t)
Dollars, (u) Canadian Dollars, (v) Marks, (w) Pesetas, (x) Yen, (y) Lira or
(z) Euros; or
(vi) any Letter of Credit to be issued at a tenor other than on a
sight basis.
B. MECHANICS OF ISSUANCE.
(i) Notice of Issuance. Whenever Company desires the issuance of a
------------------
Letter of Credit, it shall deliver to Administrative Agent a Request for
Issuance of Letter of Credit substantially in the form of Exhibit III
-----------
annexed hereto no later than 11:00 A.M. (New York time) at least three
Business Days, or such shorter period as may be agreed to by the Issuing
Lender in any particular instance, in advance of the proposed date of
issuance. The Request for Issuance of Letter of Credit shall specify (a)
the proposed date of issuance (which shall be a Business Day), (b) whether
the Letter of Credit is to be a Standby Letter of Credit or a Commercial
Letter of Credit, (c) the face amount of the Letter of Credit, (d) the
expiration date of the Letter of Credit, (e) the name and address of the
beneficiary, (f) that, after giving effect to the requested Letter of
Credit, the Total Utilization of Tranche A Revolving Loan Commitments will
not exceed the Tranche A Revolving Loan Commitments then in effect, (g) in
the case of a Letter of Credit which Company requests to be denominated in
a currency other than Dollars, the currency in which Company requests such
Letter of Credit to be issued and (h) either the verbatim text of the
proposed Letter of Credit or the proposed terms and conditions thereof,
including
67
a precise description of any documents to be presented by the beneficiary
which, if presented by the beneficiary in conformity with the terms and
conditions of the Letter of Credit prior to the expiration date of the
Letter of Credit, would require the Issuing Lender to make payment under
the Letter of Credit; provided that the Issuing Lender, in its reasonable
--------
discretion, may require changes in the text of the proposed Letter of
Credit or any such documents.
Company shall notify the applicable Issuing Lender (and Administrative
Agent, if Administrative Agent is not such Issuing Lender) prior to the issuance
of any Letter of Credit in the event that any of the matters to which it is
required to certify in the applicable Request for Issuance of Letter of Credit
is no longer true and correct as of the proposed date of issuance of such Letter
of Credit, and upon the issuance of any Letter of Credit it shall be deemed to
have re-certified, as of the date of such issuance, as to the matters to which
it is required to certify in the applicable Request for Issuance of Letter of
Credit.
(ii) Determination of Issuing Lender. Upon receipt by
-------------------------------
Administrative Agent of a Request for Issuance of Letter of Credit pursuant
to subsection 3.1B(i) requesting the issuance of a Letter of Credit, in the
event Administrative Agent elects to issue such Letter of Credit,
Administrative Agent shall promptly so notify Company, and Administrative
Agent shall be the Issuing Lender with respect thereto. In the event that
Administrative Agent, in its sole discretion, elects not to issue such
Letter of Credit, Administrative Agent shall promptly so notify Company,
whereupon Company may request any other Lender having a Tranche A Revolving
Loan Commitment to issue such Letter of Credit by delivering to such Lender
a copy of the applicable Request for Issuance of Letter of Credit. Any
Lender so requested to issue such Letter of Credit shall promptly notify
Company and Administrative Agent whether or not, in its sole discretion, it
has elected to issue such Letter of Credit, and any such Lender which so
elects to issue such Letter of Credit shall be the Issuing Lender with
respect thereto. In the event that all other Lenders having a Tranche A
Revolving Loan Commitment shall have declined to issue such Letter of
Credit, notwithstanding the prior election of Administrative Agent not to
issue such Letter of Credit, Administrative Agent shall be obligated to
issue such Letter of Credit and shall be the Issuing Lender with respect
thereto, notwithstanding the fact that the Letter of Credit Usage with
respect to such Letter of Credit and with respect to all other Letters of
Credit issued by Administrative Agent, when aggregated with Administrative
Agent's outstanding Tranche A Revolving Loans, may exceed Administrative
Agent's Tranche A Revolving Loan Commitment then in effect; provided that
--------
Administrative Agent shall not be obligated to issue any Letter of Credit
denominated in a foreign currency which in the reasonable judgment of
Administrative Agent is not readily and freely available.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
----------------------------
accordance with subsection 10.6) of the conditions set forth in subsection
4.3, the Issuing Lender shall
68
issue the requested Letter of Credit in accordance with the Issuing
Lender's standard operating procedures.
(iv) Notification to Lenders. Upon the issuance of any Standby
-----------------------
Letter of Credit the applicable Issuing Lender shall promptly notify
Administrative Agent and each other Lender having a Tranche A Revolving
Loan Commitment of such issuance, which notice shall be accompanied by a
copy of such Standby Letter of Credit. Promptly after receipt of such
notice (or, if Administrative Agent is the Issuing Lender, together with
such notice), Administrative Agent shall notify each Lender having a
Tranche A Revolving Loan Commitment of the amount of such Lender's
respective participation in such Standby Letter of Credit, determined in
accordance with subsection 3.1C.
(v) Reports to Lenders. In the event that the Issuing Lender of
------------------
Commercial Letters of Credit is other than the Administrative Agent, such
Issuing Lender will send by facsimile transmission to the Administrative
Agent, promptly on the first Business Day of each week, its daily aggregate
maximum amount available to be drawn for Commercial Letters of Credit for
the previous week. The Administrative Agent shall deliver to each other
Lender having a Tranche A Revolving Loan Commitment, upon each calendar
month end, and upon each Letter of Credit fee payment, a report setting
forth for such period the daily aggregate maximum amount available to be
drawn under the Commercial Letters of Credit issued by all the Issuing
Lenders during such period.
C. LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF CREDIT.
Immediately upon the issuance of each Letter of Credit, each Lender having a
Tranche A Revolving Loan Commitment shall be deemed to, and hereby agrees to,
have irrevocably purchased from the Issuing Lender a participation in such
Letter of Credit and drawings thereunder in an amount equal to such Lender's Pro
Rata Share of the maximum amount which is or at any time may become available to
be drawn thereunder.
3.2 LETTER OF CREDIT FEES.
---------------------
Company agrees to pay the following fees with respect to Letters of Credit:
(i) to the applicable Issuing Lender, for its own account with
respect to each Standby Letter of Credit, a fronting fee equal to the
greater of $500 per year per Letter of Credit and 0.125% per annum of the
daily maximum amount available to be drawn under each such Letter of Credit
and with respect to each Commercial Letter of Credit a fronting fee equal
to 0.125% per annum of the daily maximum amount available to be drawn under
each such Letter of Credit. Fronting fees are payable from and including
the issue date, in arrears, on and to (but excluding) each January 15,
April 15, July 15, and October 15 of each year and will be computed on the
basis of a 360-day year for the actual number of days elapsed;
69
(ii) to the Administrative Agent, for the account of the
participating Lenders having a Tranche A Revolving Loan Commitment, with
respect to each Standby Letter of Credit and Commercial Letter of Credit, a
per annum letter of credit fee equal to the Applicable Margin for
Eurodollar Rate Loans, in effect from time to time, computed on the daily
maximum amount available to be drawn under such Letters of Credit. Such fee
is payable from and including the issue date, in arrears, on and to (but
excluding) each January 15, April 15, July 15 and October 15 of each year
and will be computed on the basis of a 360-day year for the actual number
of days elapsed; and
(iii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each payment of a drawing made thereunder (without
duplication of the fees payable under clause (i) above), documentary and
processing charges in accordance with such Issuing Lender's standard
schedule for such charges in effect at the time of such issuance,
amendment, transfer or payment, as the case may be.
For purposes of calculating any fees payable under clauses (i) and (ii) of
this subsection 3.2, (a) the maximum amount available to be drawn under any
Letter of Credit as of any date of determination shall be determined as of the
close of business on such date and (b) any amount described in such clauses
which is denominated in a currency other than Dollars shall be valued based on
the applicable Exchange Rate for such currency as of the applicable date of
determination. Promptly upon receipt of any amount described in clause (ii) of
this subsection 3.2, the Administrative Agent shall distribute to each other
Lender having a Tranche A Revolving Loan Commitment its Pro Rata Share of such
amount. Notwithstanding the currency the Letter of Credit is denominated in,
fees payable under clauses (i) and (ii) of this subsection 3.2 shall be paid in
Dollars.
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
-------------------------------------------------------------------
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO DRAWINGS. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to exercise
reasonable care to determine that the documents required to be delivered under
such Letter of Credit have been delivered and that they substantially comply on
their face with the requirements of such Letter of Credit.
B. REIMBURSEMENT BY COMPANY OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. In
the event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately notify Company and
Administrative Agent, and Company shall reimburse such Issuing Lender on or
before the Business Day immediately following the date on which such drawing is
honored (the "REIMBURSEMENT DATE") in an amount in Dollars and in same day
funds equal to the amount of such drawing (which amount, in the case of a
drawing under a Letter of Credit which is denominated in a currency other than
Dollars, shall be calculated by reference to the applicable Exchange Rate on the
date such drawing is honored); provided that, anything contained in this
--------
Agreement to the contrary notwithstanding,
70
(i) unless Company shall have notified Administrative Agent and such Issuing
Lender prior to 11:00 A.M. (New York time) on the date such drawing is honored
that Company intends to reimburse such Issuing Lender for the amount of such
drawing with funds other than the proceeds of Tranche A Revolving Loans, Company
shall be deemed to have given a timely Notice of Borrowing to Administrative
Agent requesting Lenders having a Tranche A Revolving Loan Commitment to make
Tranche A Revolving Loans that are Base Rate Loans on the Reimbursement Date in
an amount in Dollars equal to the amount of such drawing (which amount, in the
case of a drawing under a Letter of Credit which is denominated in a currency
other than Dollars, shall be calculated by reference to the applicable Exchange
Rate on the date such drawing is honored) and (ii) subject to satisfaction or
waiver of the conditions specified in subsection 4.2B, Lenders having a Tranche
A Revolving Loan Commitment shall, on the Reimbursement Date, make Tranche A
Revolving Loans that are Base Rate Loans in the amount of such drawing as
aforesaid, the proceeds of which shall be applied directly by Administrative
Agent to reimburse such Issuing Lender for the amount of such drawing; and
provided, further that if for any reason proceeds of Tranche A Revolving Loans
-------- -------
are not received by such Issuing Lender on the Reimbursement Date in an amount
equal to the amount of such drawing, Company shall reimburse such Issuing
Lender, on demand, in an amount in same day funds equal to the excess of the
amount of such drawing over the aggregate amount of such Tranche A Revolving
Loans, if any, which are so received. Nothing in this subsection 3.3B shall be
deemed to relieve any Lender having a Tranche A Revolving Loan Commitment from
its obligation to make Tranche A Revolving Loans on the terms and conditions set
forth in this Agreement, and Company shall retain any and all rights it may have
against any Lender having a Tranche A Revolving Loan Commitment resulting from
the failure of such Lender to make such Tranche A Revolving Loans under this
subsection 3.3B.
C. PAYMENT BY LENDERS OF UNREIMBURSED DRAWINGS UNDER LETTERS OF CREDIT.
(i) Payment by Lenders. In the event that Company shall fail for
------------------
any reason to reimburse any Issuing Lender as provided in subsection 3.3B
in an amount in Dollars (calculated, in the case of a drawing under a
Letter of Credit denominated in a currency other than Dollars, by reference
to the applicable Exchange Rate on the date such drawing is honored) equal
to the amount of any drawing honored by such Issuing Lender under a Letter
of Credit issued by it, such Issuing Lender shall promptly notify
Administrative Agent and Administrative Agent shall thereafter notify each
other Lender having a Tranche A Revolving Loan Commitment of the
unreimbursed amount of such drawing and of such other Lender's respective
participation therein based on such Lender's Pro Rata Share. Each Lender
having a Tranche A Revolving Loan Commitment shall make available to such
Issuing Lender an amount equal to its respective participation, in Dollars
and in same day funds, at the office of such Issuing Lender specified in
such notice, not later than 11:30 A.M. (New York time) on the first
business day (under the laws of the jurisdiction in which such office of
such Issuing Lender is located) after the date notified by such Issuing
Lender. In the event that any Lender having a Tranche A Revolving Loan
Commitment fails to make available to such Issuing Lender on such business
day the
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amount of such Lender's participation in such Letter of Credit as provided
in this subsection 3.3C, such Issuing Lender shall be entitled to recover
such amount on demand from such Lender together with interest thereon at
the rate customarily used by such Issuing Lender for the correction of
errors among banks for three Business Days and thereafter at the Base Rate.
Nothing in this subsection 3.3C shall be deemed to prejudice the right of
any Lender having a Tranche A Revolving Loan Commitment to recover from any
Issuing Lender any amounts made available by such Lender to such Issuing
Lender pursuant to this subsection 3.3C in the event that it is determined
by the final judgment of a court of competent jurisdiction that the payment
with respect to a Letter of Credit by such Issuing Lender in respect of
which payment was made by such Lender constituted gross negligence or
willful misconduct as determined by a final judgment of a court of
competent jurisdiction on the part of such Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From
-------------------------------------------------------
Company. In the event any Issuing Lender shall have been reimbursed by
-------
other Lenders having a Tranche A Revolving Loan Commitment pursuant to
subsection 3.3C(i) for all or any portion of any drawing honored by such
Issuing Lender under a Letter of Credit issued by it, such Issuing Lender
shall distribute to each other Lender having a Tranche A Revolving Loan
Commitment which has paid all amounts payable by it under subsection
3.3C(i) with respect to such drawing such other Lender's Pro Rata Share of
all payments subsequently received by such Issuing Lender from Company in
reimbursement of such drawing when such payments are received. Any such
distribution shall be made to a Lender at its primary address set forth
below its name on the appropriate signature page hereof or at such other
address as such Lender may request.
D. INTEREST ON AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Company. Company agrees to pay to each
------------------------------
Issuing Lender, with respect to drawings made under any Letters of Credit
issued by such Issuing Lender at its request, interest on the amount paid
by such Issuing Lender in respect of each such drawing from the date of
such drawing to but excluding the date such amount is reimbursed by Company
(including any such reimbursement out of the proceeds of Tranche A
Revolving Loans pursuant to subsection 3.3B) at a rate equal to (a) for the
period from the date of such drawing to but excluding the Reimbursement
Date, the rate then in effect under this Agreement with respect to Tranche
A Revolving Loans that are Base Rate Loans and (b) thereafter, a rate which
is 2% per annum in excess of the rate of interest otherwise payable under
this Agreement with respect to Revolving Loans that are Base Rate Loans.
Interest payable pursuant to this subsection 3.3D(i) shall be computed on
the basis of a 365-day or 366-day year, as the case may be, for the actual
number of days elapsed in the period during which it accrues and shall be
payable on demand or, if no demand is made, on the date on which the
related drawing under a Letter of Credit is reimbursed in full.
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(ii) Distribution of Interest Payments by Issuing Lender. Promptly
---------------------------------------------------
upon receipt by any Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i) with respect to a drawing under a Letter of Credit
issued by it, (a) such Issuing Lender shall distribute to each other Lender
having a Tranche A Revolving Loan Commitment, out of the interest received
by such Issuing Lender in respect of the period from the date of such
drawing to but excluding the date on which such Issuing Lender is
reimbursed for the amount of such drawing (including any such reimbursement
out of the proceeds of Tranche A Revolving Loans pursuant to subsection
3.3B), the amount that such other Lender would have been entitled to
receive in respect of the letter of credit fee that would have been payable
in respect of such Letter of Credit for such period pursuant to subsection
3.2 if no drawing had been made under such Letter of Credit, and (b) in the
event such Issuing Lender shall have been reimbursed by other Lenders
having a Tranche A Revolving Loan Commitment pursuant to subsection 3.3C(i)
for all or any portion of such drawing, such Issuing Lender shall
distribute to each other Lender having a Tranche A Revolving Loan
Commitment which has paid all amounts payable by it under subsection
3.3C(i) with respect to such drawing such other Lender's Pro Rata Share of
any interest received by such Issuing Lender in respect of that portion of
such drawing so reimbursed by other Lenders for the period from the date on
which such Issuing Lender was so reimbursed by other Lenders to but
excluding the date on which such portion of such drawing is reimbursed by
Company. Any such distribution shall be made to a Lender at its primary
address set forth below its name on the appropriate signature page hereof
or at such other address as such Lender may request.
3.4 OBLIGATIONS ABSOLUTE.
--------------------
The obligation of Company to reimburse each Issuing Lender for drawings
made under the Letters of Credit issued by it and to repay any Tranche A
Revolving Loans made by Lenders having a Tranche A Revolving Loan Commitment
pursuant to subsection 3.3B and the obligations of Lenders having a Tranche A
Revolving Loan Commitment under subsection 3.3C(i) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right
which Company or any Lender may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Lender or other Lender or any other
Person or, in the case of a Lender, against Company, whether in connection
with this Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Company or one of
its Subsidiaries and the beneficiary for which any Letter of Credit was
procured);
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(iii) any draft or document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(iv) payment by the applicable Issuing Lender under any Letter of
Credit against presentation of a draft or document which does not
substantially comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or any
of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
--------
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDERS' DUTIES.
--------------------------------------------------
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the gross negligence or willful misconduct
of such Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor
by such Issuing Lender of a proper demand for payment made under any Letter of
Credit issued by it or (ii) the failure of such Issuing Lender to honor a
drawing under any such Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions herein called
"GOVERNMENTAL ACTS").
B. NATURE OF ISSUING LENDERS' DUTIES. As between Company on the one hand
and any Issuing Lender on the other hand, Company assumes all risks of the acts
and omissions of,
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or misuse of the Letters of Credit issued by such Issuing Lender by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, such Issuing Lender shall not be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness or legal effect of
any document submitted by any party in connection with the application for and
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender, including without limitation any Governmental
Acts, and none of the above shall affect or impair, or prevent the vesting of,
any of such Issuing Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted without gross negligence or willful misconduct, shall not
put such Issuing Lender under any resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection 3.5,
Company shall retain any and all rights it may have against any Issuing Lender
for any liability arising out of the gross negligence or willful misconduct of
such Issuing Lender, as determined by a final judgment of a court of competent
jurisdiction.
3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT.
-------------------------------------------------------
Subject to subsection 2.7B, in the event that any Issuing Lender or Lender
having a Tranche A Revolving Loan Commitment shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by any Issuing Lender or Lender having a Tranche A
Revolving Loan Commitment with any guideline, request or directive issued or
made after the date hereof by any central bank or other governmental or quasi-
governmental authority (whether or not having the force of law):
75
(i) subjects such Issuing Lender or Lender (or its applicable
lending or letter of credit office) to any Covered Tax with respect to the
issuing or maintaining of any Letters of Credit or the purchasing or
maintaining of any participations therein or any other obligations under
this Section 3, whether directly or by such being imposed on or suffered by
any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement in respect of any Letters of Credit issued by any Issuing
Lender or participations therein purchased by any Lender; or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Issuing Lender or Lender (or its applicable
lending or letter of credit office) regarding this Section 3 or any Letter
of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto; then, in any case, Company shall promptly pay to such Issuing Lender or
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts as may be necessary to compensate such Issuing
Lender or Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Such Issuing Lender or Lender shall deliver to Company a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to such Issuing Lender or Lender under this
subsection 3.6, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.
3.7 EXISTING LETTERS OF CREDIT.
--------------------------
Anything to the contrary herein notwithstanding, as of the Closing Date,
all of the Existing Letters of Credit as listed in Schedule 1.1L annexed hereto
-------------
shall be deemed to be Letters of Credit issued hereunder and shall be subject to
all of the terms and provisions of this Agreement, including all terms and
provisions applicable to Letters of Credit under this Agreement and each person
liable as account parties thereunder shall be automatically released and Company
shall be deemed to be the account party for all purposes thereunder and
hereunder. Each Lender agrees that its obligations with respect to Letters of
Credit pursuant to this Section 3 shall include the Existing Letters of Credit.
With respect to each Existing Letter of Credit, for the period commencing on the
Closing Date to and including the expiration date of any such Existing Letter of
Credit, Company shall pay all fees and commissions set forth in subsection 3.2
at the times and in the manner set forth therein. Except to the extent
otherwise set forth in this ▇▇▇▇▇▇▇ ▇, ▇▇▇▇ of The Bank of New York, as Issuing
Lender for the Existing BONY Letters of Credit, and
76
BTCo, as Issuing Lender for the Existing BT Letters of Credit shall, have any
obligation to extend or renew any Existing Letter of Credit.
SECTION 4 CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters of
Credit hereunder are subject to the satisfaction of the following conditions.
4.1 CONDITIONS TO INITIAL REVOLVING LOANS.
-------------------------------------
The obligations of Lenders to make the initial Revolving Loans are, in
addition to the conditions precedent specified in subsection 4.2, subject to
prior or concurrent satisfaction of the following conditions:
A. LOAN PARTY DOCUMENTS. On or before the Closing Date, Company shall
and shall cause each other Loan Party to deliver to Lenders (or to
Administrative Agent for Lenders with sufficient originally executed copies,
where appropriate, for each Lender and its counsel) the following with respect
to Company or such Loan Party, as the case may be, each, unless otherwise noted,
dated the Closing Date:
(i) Certified copies of the constating documents of such Person,
together, except as set forth in Schedule 4.1A(i), with a good standing
certificate (or equivalent thereto) from its jurisdiction of incorporation
and, except where failure to be in good standing, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, each other state or province in which it is qualified as a foreign
corporation to do business and, except where failure to be in good
standing, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, a certificate or other
evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Closing Date;
(ii) Copies of the Bylaws of such Person, certified as of the
Closing Date by its corporate secretary or an assistant secretary;
(iii) Resolutions of the Board of Directors of such Person approving
and authorizing the execution, delivery and performance of the Loan
Documents and Related Agreements to which it is a party, certified as of
the Closing Date by its corporate secretary or an assistant secretary as
being in full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of the officers of such
Person executing this Agreement and the other Loan Documents to which it is
a party;
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(v) Executed originals of this Agreement, the Notes (duly executed
in accordance with subsection 2.1E, drawn to the order of each applicable
Lender and with appropriate insertions) and the other Loan Documents to
which such Person is a party; and
(vi) Such other documents as Co-Syndication Agents may reasonably
request.
B. CORPORATE AND CAPITAL STRUCTURE, OWNERSHIP, MANAGEMENT, ETC.
(i) Capital Structure and Ownership. The capital structure and
-------------------------------
ownership of Company and its Subsidiaries, after giving effect to the
Subject Transactions, shall be as set forth on Schedule 4.1B annexed
-------------
hereto.
(ii) Management; Employment Contracts. The management structure of
--------------------------------
Company after giving effect to the Subject Transactions shall be as set
forth on Schedule 4.1B annexed hereto, and Co-Syndication Agents shall have
-------------
received copies of, and shall be reasonably satisfied with the form and
substance of, any and all employment contracts with senior management of
each of Company and its Subsidiaries.
C. NECESSARY CONSENTS. Company shall have obtained all Governmental
Authorizations and consents of other Persons, in each case that are necessary or
advisable in connection with the Subject Transactions, the transactions
contemplated by the Loan Documents and the Related Agreements and the continued
operation of the business conducted by (x) Company and its Subsidiaries and (y)
Cineplex Odeon and its Subsidiaries, in each case in substantially the same
manner as conducted prior to the consummation of the Subject Transactions, and
each of the foregoing shall be in full force and effect, other than those the
failure to obtain or maintain which, either individually or in the aggregate,
would not be reasonably likely to have a Material Adverse Effect. All
applicable waiting periods shall have expired without any action being taken or
threatened by any competent authority which would restrain, prevent or otherwise
impose adverse conditions on the Subject Transactions or the financing thereof,
and no action, request for stay, petition for review or rehearing,
reconsideration or appeal with respect to any of the foregoing shall be pending,
and the time for any applicable agency to take action to set aside its consent
on its own motion shall have expired. Company shall have delivered an Officer's
Certificate in form and substance reasonably satisfactory to Co-Syndication
Agents confirming the foregoing matters and any other evidence requested by Co-
Syndication Agents in support thereof.
D. CONSUMMATION OF SUBJECT TRANSACTIONS
(i) Business Combination Transactions.
---------------------------------
(a) Related Agreements. On the Closing Date, (a) Co-Syndication
Agents shall have received executed or conformed copies of the Related
Agreements and any amendments thereto on or prior to the Closing Date, the
terms and conditions of which
78
shall be in all respects satisfactory to Co-Syndication Agents, (b) the
Related Agreements shall be in full force and effect and no material term
or condition thereof shall have been amended, modified or waived after the
execution thereof without the prior written approval of Co-Syndication
Agents, (c) none of the applicable parties shall have failed in any respect
to perform any obligation or covenant required by the Related Agreements to
be performed or complied with by it on or before the Closing Date and (d)
all conditions to the Subject Transactions set forth in Section 7 of the
Master Agreement (other than with respect to the amendment of the Letter
Agreement, the election of the independent directors and the delivery of
the Five Year Plan) shall have been satisfied or the fulfillment of such
conditions shall have been waived in writing by Co-Syndication Agents;
(b) Sources, Uses and Funding Certificate. Company shall have
delivered an Officer's Certificate detailing the sources and uses of all
funds (including the Loans) for the transactions occurring on the Closing
Date, with proper wire instructions for Administrative Agent for the
application of the Loan Proceeds on the Closing Date, all in form and
substance satisfactory to Co-Syndication Agents;
(c) SPE Dividend. On the Closing Date, Company shall have paid to its
shareholders of record as of the day prior to the Closing Date the SPE
Dividend;
(d) Universal Investment. On or before the Closing Date, Universal
shall have subscribed for and purchased, pursuant to the Universal
Subscription Agreement, 4,426,606 shares of Company's Common Stock, and
Company shall have received not less than $84,500,000 in proceeds
therefrom;
(e) Arrangement. On or before the Closing Date, Company and Cineplex
Odeon shall have effected a business combination pursuant to the Plan of
Arrangement pursuant to which: (a) Cineplex Odeon shall have exchanged all
of the issued and outstanding capital stock of ▇▇▇▇▇ with Company for the
Exchange Shares, (b) Cineplex Odeon shall have distributed the Exchange
Shares to its shareholders in consideration of the purchase from them, and
cancellation, of approximately 46.60% of their shares of Cineplex Odeon
Common Stock at the rate of one Exchange Share for each ten shares of
Cineplex Odeon Common Stock, (c) Company shall have acquired from Cineplex
Odeon's shareholders the remaining outstanding shares of Cineplex Odeon
Common Stock (other than certain shares of Cineplex Odeon Common Stock with
respect to which the holders have exercised certain dissent rights) in
exchange for the Combination Shares at the rate of one Combination Share
for each ten shares of Cineplex Odeon Common Stock, except that 800,000
shares of Cineplex Odeon Common Stock held by Universal will be exchanged
with Company for 80,000 shares of Company Class B Non-Voting Stock and
40,000 shares of Cineplex Odeon Common Stock held by the ▇▇▇▇▇▇▇▇ Trust
will be exchanged with Company for 4,000 shares of Company Class A Non-
Voting Common Stock, (d) all requisite shareholder approval for the
Arrangement shall have been obtained pursuant to, and the Arrangement shall
comply with, the Business Corporations Act
79
(Ontario) and, if necessary, applicable securities laws (including Ontario
Securities Act Policy 9.1 and Quebec Securities Act Policy Q-27), (e) an
order approving the Arrangement shall have been granted by the Ontario
Court (General Division), and (f) the Director under the Business
Corporations Act (Ontario) shall have issued articles of arrangement in
respect of the Arrangement;
(f) IMAX Transaction. On or before the Closing Date, SPE shall sell,
assign and transfer to a Subsidiary of Company all of the right, title and
interest of SPE and its Affiliates in the IMAX Agreements for a cash
payment equal to the IMAX Purchase Price; and
(g) Subsidiary Transactions. On the Closing Date, SPE shall (a) have
caused CPE Holdings, Inc. to exchange all of the shares of stock of S&J to
Loews USA Cinemas, Inc., a wholly owned subsidiary of Company in exchange
for 291,086.591 shares of Company Common Stock and (b) have caused Star to
merge with and into a Loews Theatres Enterprises, Inc., a wholly owned
Subsidiary of Company, with Loews Theatres Enterprises, Inc. surviving such
merger, in exchange for 2,373,217.409 shares of Company Common Stock.
(ii) Refinancing Transactions.
------------------------
(a) Termination of Existing Cineplex Credit Agreement and Related
Liens. On the Closing Date, Company and its Subsidiaries shall have (1)
repaid in full all Indebtedness outstanding under the Existing Cineplex
Credit Agreement (2) terminated any commitments to lend or make other
extensions of credit thereunder and delivered to Co-Syndication Agents all
documents and instruments necessary or advisable to evidence such
termination, in form and substance satisfactory to Co-Syndication Agents,
(3) delivered to Co-Syndication Agents all documents and instruments
necessary or advisable to release all Liens securing Indebtedness or other
obligations of Cineplex Odeon and its Subsidiaries thereunder and to
evidence such termination, in form and substance satisfactory to Co-
Syndication Agents, and (4) made arrangements satisfactory to Co-
Syndication Agents with respect to the cancellation of any letters of
credit outstanding thereunder or the issuance of Letters of Credit to
support the obligations of Company and its Subsidiaries with respect
thereto; and
(b) Sony Debt Repayment. On the Closing Date, (1)(A) Company shall
have lent to certain of its Subsidiaries funds sufficient to repay, and
caused such Subsidiaries to have repaid in full, the Sony Land Indebtedness
and delivered to Co-Syndication Agents all documents and instruments
necessary or advisable to evidence such repayment, satisfactory in form and
substance to Co-Syndication Agents and (B) delivered to Co-Syndication
Agents all documents or instruments necessary or advisable to release all
Liens securing the Sony Land Indebtedness or other obligations of Company
and its Subsidiaries thereunder, in form and substance satisfactory to Co-
Syndication Agents, (2)(A) Company
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shall have repaid in full the Sony Capital Indebtedness and delivered to
Co-Syndication Agents all documents and instruments necessary or
advisable to evidence such repayment, satisfactory in form and substance
to Co-Syndication Agents and (B) delivered to Co-Syndication Agents all
documents or instruments necessary or advisable to release all Liens
securing the Sony Capital Indebtedness or other obligations of Company
and its Subsidiaries thereunder, in form and substance satisfactory to
Co-Syndication Agents.
(iii) Officer's Certificate.
---------------------
Co-Syndication Agents shall have received an Officer's Certificate in
form and substance satisfactory to Co-Syndication Agents from Company confirming
the foregoing matters and any other evidence requested by Co-Syndication Agents
in support thereof.
E. PRO FORMA BALANCE SHEET. On or before the Closing Date, Lenders
shall have received pro forma consolidated balance sheets of Company and its
Subsidiaries as at March 31, 1998, prepared in accordance with GAAP and
reflecting the consummation of the Subject Transactions and the financings and
other transactions contemplated hereby, which pro forma financial statements
shall be in form and substance satisfactory to Lenders.
F. NO MATERIAL ADVERSE EFFECT. Since February 28, 1997, in the case of
Company and its Subsidiaries, or since December 31, 1997, in the case of
Cineplex Odeon and its Subsidiaries, no Material Adverse Effect (in the sole
opinion of Co-Syndication Agents) shall have occurred, which (x) was not
disclosed to Co-Syndication Agents in writing on or before the date of this
Agreement and (y) acknowledged by the Co-Syndication Agents in writing on or
before the date of this Agreement.
G. SOLVENCY ASSURANCES. On the Closing Date, Co-Syndication Agents and
Lenders shall have received a Financial Condition Certificate dated the Closing
Date, substantially in the form of Exhibit VI annexed hereto and otherwise in
----------
form and substance satisfactory to Co-Syndication Agents and with appropriate
attachments, demonstrating that, immediately after giving effect to the
consummation of the Subject Transactions, the related financings and the other
transactions contemplated by the Loan Documents and the Related Agreements to
occur on or before the Closing Date, Company and its Subsidiaries are Solvent.
H. SECURITY INTERESTS IN PERSONAL PROPERTY. Co-Syndication Agents
shall have received evidence satisfactory to them that Company and its
Subsidiaries shall have taken or caused to be taken all such actions, executed
and delivered or caused to be executed and delivered all such agreements,
documents and instruments, and made or caused to be made all such filings and
recordings (other than the filing or recording of items described in clauses
(iii) and (iv) below) that may be necessary or, in the opinion of Co-Syndication
Agents desirable in order to create in favor of Administrative Agent, for the
benefit of Lenders, a valid and (upon such filing and recording) perfected First
Priority security interest in the entire personal and mixed property Collateral.
Such actions shall include the following:
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(i) Schedules to Collateral Documents. Delivery to Co-Syndication
---------------------------------
Agents of accurate and complete schedules to all of the applicable
Collateral Documents;
(ii) Stock Certificates and Instruments. Delivery to Co-Syndication
----------------------------------
Agents of (a) certificates, if any (which certificates shall be
accompanied by irrevocable undated stock powers, duly endorsed in blank and
otherwise satisfactory in form and substance to Co-Syndication Agents)
representing all of the capital stock pledged pursuant to the Company
Pledge Agreement and the Subsidiary Pledge Agreements and (b) all
promissory notes or other instruments (duly endorsed, where appropriate, in
a manner satisfactory to Co-Syndication Agents) evidencing any Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery to Co-
--------------------------------------------
Syndication Agents of (a) the results of a recent search, by a Person
satisfactory to Co-Syndication Agents, of all effective UCC financing
statements and fixture filings and all judgment and tax lien filings which
may have been made with respect to any personal or mixed property of any
Loan Party, together with copies of all such filings disclosed by such
search, (b) UCC termination statements duly executed by all applicable
Persons for filing in all applicable jurisdictions as may be necessary to
terminate any effective UCC financing statements or fixture filings
disclosed in such search (other than any such financing statements or
fixture filings in respect of Liens permitted to remain outstanding
pursuant to the terms of this Agreement) and (c) the results of a recent
search, by a Person satisfactory to Co-Syndication Agents, of the personal
property security register of each jurisdiction in Canada in which Company
or any of its Subsidiaries (including Cineplex Odeon and its Subsidiaries)
carries on business or in which any assets of such Person are located,
together with copies of such searches and termination statements in respect
of any filings disclosed in such searches (other than such financing
statements in respect of Liens permitted to remain outstanding pursuant to
the terms of this Agreement);
(iv) UCC Financing Statements and Fixture Filings. (a) Delivery to
--------------------------------------------
Co-Syndication Agents of UCC financing statements and, where appropriate,
fixture filings, duly executed by each applicable Loan Party with respect
to all personal and mixed property Collateral of such Loan Party, for
filing in all jurisdictions as may be necessary or, in the opinion of Co-
Syndication Agents, desirable to perfect the security interests created in
such Collateral pursuant to the Collateral Documents and (b) registration
of personal property financing statements in each jurisdiction in Canada in
which Company or any of its Subsidiaries (including Cineplex Odeon and its
Subsidiaries) carries on business or in which any assets of such Person are
located with respect to all personal property of such Person as may be
necessary or, in the opinion of Co-Syndication Agents, desirable to perfect
the security interests created in such Collateral pursuant to the
Collateral Documents;
(v) PTO Cover Sheets, Etc. (a) Delivery to Co-Syndication Agents
---------------------
of all cover sheets or other documents or instruments required to be filed
with the United States Patent
82
and Trademark Office in order to create or perfect Liens in respect of any
IP Collateral and (b) delivery to Co-Syndication Agents of such information
as may be necessary to create or perfect Liens in Canada in respect of any
IP Collateral with the appropriate governmental authority in Canada; and
(vi) Opinions of Counsel. Delivery to Co-Syndication Agents of an
-------------------
opinion of counsel (which counsel shall be reasonably satisfactory to Co-
Syndication Agents) under the laws of each jurisdiction in which any Loan
Party or any personal or mixed property Collateral is located with respect
to the creation and perfection of the security interests in favor of
Administrative Agent in such Collateral and such other matters governed by
the laws of such jurisdiction regarding such security interests as Co-
Syndication Agents may reasonably request, in each case in form and
substance reasonably satisfactory to Co-Syndication Agents.
I. OPINIONS OF COMPANY'S COUNSEL. Lenders shall have received originally
executed copies of one or more favorable written opinions of (i) Fried, Frank,
Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Loan Parties, in form and substance
reasonably satisfactory to Co-Syndication Agents and their counsel, dated as of
the Closing Date and setting forth substantially the matters in the opinions
designated in Exhibit VIII-A annexed hereto and as to such other matters as Co-
--------------
Syndication Agents acting on behalf of Lenders may reasonably request, and (ii)
▇▇▇▇▇▇▇ & ▇▇▇▇, counsel for the Company, in form and substance reasonably
satisfactory to Co-Syndication Agents and their counsel, dated as of the Closing
Date and setting forth substantially the matters in the opinions designated in
Exhibit VIII-B annexed hereto and as to such other matters as Co-Syndication
--------------
Agents acting on behalf of Lenders may reasonably request.
J. OPINIONS OF O'MELVENY & ▇▇▇▇▇ LLP. Lenders shall have received
originally executed copies of one or more favorable written opinions of
O'Melveny & ▇▇▇▇▇ LLP, dated as of the Closing Date, substantially in the form
of Exhibit IX annexed hereto and as to such other matters as Administrative
----------
Agent acting on behalf of Lenders may reasonably request.
K. OPINIONS OF COUNSEL IN SUBJECT TRANSACTIONS. Co-Syndication Agents
and their counsel shall have received copies of each of the opinions of counsel
delivered to the parties in connection with the Subject Transactions together
with a letter from each such counsel authorizing Lenders to rely upon such
opinion to the same extent as though it were addressed to Lenders.
L. AUDITOR'S LETTER. Co-Syndication Agents shall have received an
executed Auditor's Letter.
M. EVIDENCE OF INSURANCE. Company shall deliver to Co-Syndication Agents
an Officer's Certificate in form and substance reasonably satisfactory to Co-
Syndication Agents certifying as to an attached schedule setting forth each
casualty, liability and business interruption insurance policy maintained by
Company and its Subsidiaries, the expiration date of each such insurance policy,
the amount of insurance coverage provided pursuant to each such policy, any
83
applicable deductibles and any other information reasonably requested by the Co-
Syndication Agents with respect to such insurance policies.
N. FEES. Company shall have paid to Administrative Agent, for
distribution (as appropriate) to Agents and Lenders, the fees payable on the
Closing Date referred to in subsection 2.3.
O. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Company
shall have delivered to Co-Syndication Agents an Officers' Certificate, in form
and substance satisfactory to Co-Syndication Agents, to the effect that the
representations and warranties in Section 5 hereof are true, correct and
complete in all material respects on and as of the Closing Date (after giving
effect to the consummation of the Subject Transactions) to the same extent as
though made on and as of that date (or, to the extent such representations and
warranties specifically relate to an earlier date, that such representations and
warranties were true, correct and complete in all material respects on and as of
such earlier date) and that Company shall have performed in all material
respects all agreements and satisfied all conditions which this Agreement
provides shall be performed or satisfied by it on or before the Closing Date
except as otherwise disclosed to and agreed to in writing by Co-Syndication
Agents.
P. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Co-Syndication
Agents, acting on behalf of Lenders, and their counsel shall be satisfactory in
form and substance to Co-Syndication Agents and such counsel, and Co-Syndication
Agents and such counsel shall have received all such counterpart originals or
certified copies of such documents as Co-Syndication Agents may reasonably
request.
4.2 CONDITIONS TO ALL LOANS.
-----------------------
The obligations of Lenders to make Loans on each Funding Date are subject
to the following further conditions precedent:
A. Administrative Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an originally executed Notice
of Borrowing, in each case signed by the chief executive officer, the chief
financial officer or the treasurer of Company or by any executive officer of
Company designated by any of the above-described officers on behalf of Company
in a writing delivered to Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made
on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which
84
case such representations and warranties shall have been true, correct and
complete in all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event of
Default;
(iii) Company shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement provides shall
be performed or satisfied by it on or before that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding Date shall
not violate any law including, without limitation, Regulation T, Regulation
U or Regulation X of the Board of Governors of the Federal Reserve System;
(vi) There shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that has not been disclosed
by Company in writing pursuant to subsection 5.6 or 6.1(ix) prior to the
making of the last preceding Loans (or, in the case of the initial Loans,
prior to the execution of this Agreement), and there shall have occurred no
development not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so disclosed, that, in either
event, in the opinion of Administrative Agent or of Requisite Lenders,
would be expected to have a Material Adverse Effect; and no injunction or
other restraining order shall have been issued and no hearing to cause an
injunction or other restraining order to be issued shall be pending or
noticed with respect to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of, or to recover any damages or obtain
relief as a result of, the transactions contemplated by this Agreement or
the making of Loans hereunder; and
(vii) so long as any ▇▇▇▇▇ Notes remain outstanding, (a) the Loans
requested to be made on such Funding Date, when made, together with all
other outstanding Loans and all other Obligations of Company as of such
date, shall constitute "Guarantor Senior Indebtedness" under the ▇▇▇▇▇
Indenture, (b) such Loans shall be permitted to be incurred by Company
under the ▇▇▇▇▇ Indenture, including Section 4.03 of the ▇▇▇▇▇ Indenture,
(c) the Indebtedness (as defined in the ▇▇▇▇▇ Indenture) of ▇▇▇▇▇ incurred
by ▇▇▇▇▇ pursuant to the Subsidiary Guaranty in connection with the Loans
requested to be made on such Funding Date, when made, together with all
other Indebtedness (as defined in the ▇▇▇▇▇ Indenture) incurred by ▇▇▇▇▇
pursuant to the Subsidiary Guaranty, shall constitute "Senior
85
Indebtedness" under the ▇▇▇▇▇ Indenture and (d) the Indebtedness (as
defined in the ▇▇▇▇▇ Indenture) of ▇▇▇▇▇ incurred by ▇▇▇▇▇ pursuant to the
Subsidiary Guaranty in connection with such Loans shall be permitted to be
incurred by ▇▇▇▇▇ under the ▇▇▇▇▇ Indenture, including Section 4.03 of the
▇▇▇▇▇ Indenture.
4.3 CONDITIONS TO LETTERS OF CREDIT.
-------------------------------
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the conditions set forth in subsection 4.1 shall
have been satisfied.
B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the provisions of
subsection 3.1B(i), an originally executed Request for Issuance of Letter of
Credit, in each case signed by the chief executive officer, the chief financial
officer or the treasurer of Company or by any executive officer of Company
designated by any of the above-described officers on behalf of Company in a
writing delivered to Administrative Agent, together with all other information
specified in subsection 3.1B(i) and such other documents or information as the
applicable Issuing Lender may reasonably require in connection with the issuance
of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
SECTION 5 COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, to induce Issuing Lenders to issue Letters of Credit and to induce other
Lenders having a Tranche A Revolving Loan Commitment to purchase participations
therein, Company represents and warrants to each Lender, on the date of this
Agreement and, except as otherwise provided, on each Funding Date and on the
date of issuance of each Letter of Credit, that the following statements are
true, correct and complete:
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
----------------------------------------------------------------
SUBSIDIARIES.
------------
A. ORGANIZATION AND POWERS. Each Loan Party is a corporation duly
organized, validly existing and, except as provided in Schedule 5.1A, in good
-------------
standing under the laws of its jurisdiction of incorporation. Each Loan Party
has all requisite corporate power and authority to
86
own and operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents and the Related
Agreements to which it is a party and to carry out the transactions contemplated
hereby and thereby and, in the case of Company, to issue and pay the Notes.
B. QUALIFICATION AND GOOD STANDING. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and will not have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Company and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.12.
D. SUBSIDIARIES. All of the Subsidiaries of Company are identified in
Schedule 5.1D annexed hereto, as said Schedule 5.1D may be supplemented from
------------- -------------
time to time pursuant to the provisions of subsection 6.1(xvi). The capital
stock of Company and of each of the Subsidiaries of Company identified in
Schedule 5.1D annexed hereto (as so supplemented) is duly authorized, validly
-------------
issued, fully paid and nonassessable and none of such capital stock constitutes
Margin Stock. Each of the Subsidiaries of Company identified in Schedule 5.1D
-------------
annexed hereto (as so supplemented) is a corporation duly organized, validly
existing and, except as set forth in Schedule 5.1D annexed hereto, in good
-------------
standing under the laws of its respective jurisdiction of incorporation set
forth therein, has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted, and is qualified to do business and in good standing
in every jurisdiction where its assets are located and wherever necessary to
carry out its business and operations, in each case except where failure to be
so qualified or in good standing or a lack of such corporate power and authority
has not had and will not have a Material Adverse Effect. Schedule 5.1D annexed
-------------
hereto (as so supplemented) correctly sets forth the ownership interest of
Company and each of its Subsidiaries in each of the Subsidiaries of Company
identified therein. The capital and ownership structure of Company and its
Subsidiaries, both before and after giving effect to the Business Combination
Transactions and the related transactions contemplated in connection therewith,
are as set forth on Schedule 4.1B annexed hereto.
-------------
5.2 AUTHORIZATION OF BORROWING, ETC.
--------------------------------
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance
of the Loan Documents and the Related Agreements have been duly authorized by
all necessary corporate action on the part of each Loan Party that is a party
thereto.
B. NO CONFLICT. The execution, delivery and performance by any Loan
Party of the Loan Documents and the Related Agreements to which it is a party
and the consummation of the transactions contemplated by the Loan Documents and
such Related Agreements do not and will not (i) violate any provision of any law
or any governmental rule or regulation applicable to any
87
Loan Party, the constating documents, bylaws or any shareholders agreement of
any Loan Party or any order, judgment or decree of any court or other agency of
government binding on any Loan Party, (ii) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of any Loan Party, except for such conflicts, breaches or
defaults which could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, (iii) result in or require the
creation or imposition of any Lien upon any of the properties or assets of any
Loan Party (other than any Liens created under any of the Loan Documents in
favor of Administrative Agent on behalf of Lenders), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of any Loan Party, except for such approvals or consents
which will be obtained on or before the Closing Date and such approvals or
consents the failure of which to obtain, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by any
Loan Party of the Loan Documents and the Related Agreements to which it is a
party, the issuance, delivery and payment of the Notes and the consummation of
the transactions contemplated by the Loan Documents and such Related Agreements
do not and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any federal, state, provincial or
other governmental authority or regulatory body, except for (i) filings required
by federal or state securities laws, (ii) such other registrations, consents,
approvals, notices or other actions which have been made, obtained, given or
taken on or before the Closing Date and (iii) such other filings the failure of
which to make, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
D. BINDING OBLIGATION. Each of the Loan Documents and the Related
Agreements has been duly executed and delivered by each Loan Party that is a
party thereto and is the legally valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability.
E. VALID ISSUANCE OF COMPANY COMMON STOCK, COMPANY NON-VOTING COMMON
STOCK AND ▇▇▇▇▇ NOTES. The Company Common Stock and the Company Non-Voting
Common Stock has been duly and validly issued and is fully paid and
nonassessable. Except as set forth on Schedule 5.2E, no stockholder of Company
has or will have any preemptive rights to subscribe for any additional
Securities of Company. The ▇▇▇▇▇ Note Documents (and all other Subordinated
Indebtedness) are the legally valid and binding obligations of ▇▇▇▇▇ or Company,
as the case may be, enforceable against ▇▇▇▇▇ or Company, as the case may be, in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability. The subordination provisions of the ▇▇▇▇▇ Note Documents (and
all other Subordinated Indebtedness) will be enforceable against the holders
thereof and the Loans and all
88
other monetary Obligations of Company hereunder are and will be within the
definition of "Senior Debt" included in such provisions, to the extent that
they are obligations of Company in respect of principal, interest,
reimbursements of amounts drawn under Letters of Credit, penalties, fees,
expenses, indemnification or other reimbursements. The issuance and sale of the
Company Common Stock, the Company Non-Voting Common Stock and the Subordinated
Indebtedness either (a) has been registered or qualified under applicable
federal, state and provincial securities laws or (b) was exempt therefrom.
5.3 FINANCIAL CONDITION.
-------------------
Company has heretofore delivered to Lenders, at Lenders' request, (i)
audited financial statements of Company and its Subsidiaries for Fiscal Years
ending February 29, 1996 and February 28, 1997, in each case consisting of
balance sheets and the related consolidated statements of income, stockholders'
equity and cash flows for such Fiscal Year, (ii) unaudited condensed combined
consolidated financial statements of Company and its Subsidiaries for the nine
months ended November 30, 1996 and November 30, 1997, in each case consisting of
balance sheets and related statements of operations and statements of cash flow,
(iii) audited financial statements of Cineplex Odeon and its Subsidiaries for
Fiscal Years ending December 31, 1996 and December 31, 1997, in each case
consisting of balance sheets and the related consolidated statements of income,
stockholders' equity and cash flows for such Fiscal Year, and (iv) unaudited
consolidated financial statements of Cineplex Odeon and its Subsidiaries for the
nine months ended September 30, 1996 and September 30, 1997, in each case
consisting of balance sheets, income statements and statements of changes in
cash resources. All such statements were prepared in conformity with GAAP and
fairly present, in all material respects, the financial position (on a
consolidated basis) of the entities described in such financial statements as at
the respective dates thereof and the results of operations and cash flows (on a
consolidated basis) of the entities described therein for each of the periods
then ended, subject, in the case of any such unaudited financial statements, to
the changes resulting from audit and normal year-end adjustments and absence of
footnotes. None of the Loan Parties has (and none of the Loan Parties will have
following the funding of the initial Loans) any Contingent Obligation,
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment that is required by GAAP to be, but is not, or to the
extent not required by GAAP which is known to or reasonably should be known to
Company, but is not, reflected in the foregoing financial statements or the most
recent financial statements delivered pursuant to subsection 6.1 or the notes
thereto and which in any such case is material in relation to the business,
operations, properties, assets, condition (financial or otherwise) or prospects
of Company and its Subsidiaries, taken as a whole.
5.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
---------------------------------------------------------
Since December 31, 1997, in the case of Cineplex Odeon and its
Subsidiaries, or since February 28, 1997, in the case of Company and its
Subsidiaries, no event or change has occurred that has caused or evidences,
either in any case or in the aggregate, a Material Adverse Effect,
89
other than the events or changes set forth on Schedule 5.4 which were (x)
disclosed to the Co-Syndication Agents in writing on or before the date of this
Agreement and (y) acknowledged by the Co-Syndication Agents in writing on or
before the date of this Agreement. Since December 31, 1997, neither Company nor
any of its Subsidiaries has directly or indirectly declared, ordered, paid or
made, or set apart any sum or property for, any Restricted Junior Payment or
agreed to do so except as permitted by subsection 7.5.
5.5 TITLE TO PROPERTIES; LIENS.
--------------------------
Company and Company's Subsidiaries have (i) good and indefeasible title to
(in the case of fee interests in real property), (ii) valid leasehold interests
in (in the case of leasehold interests in real or personal property), or (iii)
good title to (in the case of all other personal property), all of their
respective properties and assets reflected in the financial statements referred
to in subsection 5.3 or in the most recent financial statements delivered
pursuant to subsection 6.1, in each case except for assets disposed of since the
date of such financial statements in the ordinary course of business or as
otherwise permitted under subsection 7.7. All such properties and assets are
free and clear of Liens other than Liens permitted under subsection 7.2A.
5.6 LITIGATION; ADVERSE FACTS.
-------------------------
Except as set forth in Schedule 5.6 annexed hereto, there are no actions,
------------
suits, proceedings, arbitrations or governmental investigations (whether or not
purportedly on behalf of Company or any of Company's Subsidiaries) at law or in
equity or before or by any federal, state, provincial, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, pending or, to the knowledge of Company, threatened against
or affecting Company or any of Company's Subsidiaries or any property of Company
or any of Company's Subsidiaries that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. Neither Company
nor any of Company's Subsidiaries is (i) in violation of any applicable laws
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect or (ii) subject to or in default with respect to
any final judgments, writs, injunctions, decrees, rules or regulations of any
court or any federal, state, provincial, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.
5.7 PAYMENT OF TAXES.
----------------
Except to the extent permitted by subsection 6.3, all material tax returns
and reports of Company and Company's Subsidiaries required to be filed by any of
them have been timely filed, and all material taxes, assessments, fees and other
governmental charges upon Company and Company's Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when due and payable. Company does not know of any
proposed material tax assessment against Company or any of Company's
Subsidiaries
90
which is not being actively contested by Company or such Subsidiary in good
faith and by appropriate proceedings; provided that such reserves or other
--------
appropriate provisions, if any, as shall be required in conformity with GAAP
shall have been made or provided therefor.
5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS; MATERIAL
------------------------------------------------------------------
CONTRACTS.
---------
A. Neither Company nor any of Company's Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
B. Neither Company nor any of Company's Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
C. All Material Contracts of Company and Company's Subsidiaries are in
full force and effect and no defaults currently exist thereunder, except where
the consequences, direct or indirect, of such default or defaults, if any, would
not have a Material Adverse Effect.
5.9 GOVERNMENTAL REGULATION.
-----------------------
Neither Company nor any of Company's Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
5.10 SECURITIES ACTIVITIES.
---------------------
A. Neither Company nor any of Company's Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than 25%
of the value of the assets (either of Company only or of Company and its
Subsidiaries on a consolidated basis) subject to the provisions of subsection
7.2 or 7.7 or subject to any restriction contained in any agreement or
instrument, between Company and any Lender or any Affiliate of any Lender,
relating to Indebtedness and within the scope of subsection 8.2, will be Margin
Stock.
91
5.11 EMPLOYEE BENEFIT PLANS.
----------------------
A. Company and each of its ERISA Affiliates are in compliance in all
material respects with all applicable provisions and requirements of ERISA and
the regulations and published interpretations thereunder and the terms of each
Employee Benefit Plan, and have performed all their material obligations under
each Employee Benefit Plan, except where such noncompliance or nonperformance
would not reasonably be expected to have a Material Adverse Effect.
B. No ERISA Event has occurred or is reasonably expected to occur which
would reasonably be expected to have a Material Adverse Effect.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code or as disclosed on Schedule 5.11(c) annexed hereto, no Employee
----------------
Benefit Plan provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employees of Company or any of
its ERISA Affiliates.
D. In accordance with the most recent actuarial valuation for any Pension
Plan, the amount of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which assets exceed benefit liabilities), does not exceed $15,000,000.
5.12 CERTAIN FEES.
------------
Except as set forth in Schedule 5.12 annexed hereto, no broker's or
-------------
finder's fee or commission will be payable with respect to this Agreement or any
of the transactions contemplated hereby, and Company hereby indemnifies Lenders
against, and agrees that it will hold Lenders harmless from, any claim, demand
or liability for any such broker's or finder's fees alleged to have been
incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability.
5.13 ENVIRONMENTAL PROTECTION.
------------------------
Except as set forth in Schedule 5.13 annexed hereto:
-------------
(i) the operations of Company and each of its Subsidiaries
(including, without limitation, all operations and conditions at or in the
Facilities) comply with all Environmental Laws except for any such
noncompliance which would not reasonably be expected to have a Material
Adverse Effect;
(ii) Company and each of its Subsidiaries have obtained all
Governmental Authorizations under Environmental Laws necessary to conduct
their respective operations, and all such Governmental Authorizations are
being maintained in good
92
standing, and Company and each of its Subsidiaries are in compliance with
such Governmental Authorizations except for any such failure to obtain,
maintain or comply which would not reasonably be expected to have a
Material Adverse Effect;
(iii) neither Company nor any of its Subsidiaries has received (a)
any notice or claim to the effect that it is or may be liable to any Person
as a result of or in connection with any Hazardous Materials or (b) any
letter or request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S)
9604) or comparable state laws, and, to the best of Company's knowledge,
none of the operations of Company or any of its Subsidiaries is the subject
of any federal or state investigation relating to or in connection with any
Hazardous Materials at any Facility or at any other location except for
such of the foregoing which would not reasonably be expected to have a
Material Adverse Effect;
(iv) none of the operations of Company or any of its Subsidiaries is
subject to any judicial or administrative proceeding alleging the violation
of or liability under any Environmental Laws which if adversely determined
could reasonably be expected to have a Material Adverse Effect;
(v) neither Company nor any of its Subsidiaries nor any of their
respective Facilities or operations are subject to any outstanding written
order or agreement with any governmental authority or private party
relating to (a) any actual or potential violation of or liability under
Environmental Laws or (b) any Environmental Claims except for such of the
foregoing which would not reasonably be expected to have a Material Adverse
Effect;
(vi) neither Company nor any of its Subsidiaries has any contingent
liability in connection with any Release of any Hazardous Materials by
Company or any of its Subsidiaries except for such of the foregoing which
would not reasonably be expected to have a Material Adverse Effect;
(vii) neither Company nor any of its Subsidiaries nor, to the best
knowledge of Company, any predecessor of Company or any of its Subsidiaries
has filed any notice under any Environmental Law indicating past or present
treatment, storage or disposal of hazardous waste, as defined under 40
C.F.R. Parts 260-270 or any state equivalent, except for such of the
foregoing which could not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(viii) no Hazardous Materials exist on, under or about any Facility
in a manner that would reasonably be expected to give rise to an
Environmental Claim having a Material Adverse Effect, and neither Company
nor any of its Subsidiaries has filed any notice or report of a Release of
any Hazardous Materials that would reasonably be expected to give rise to
an Environmental Claim having a Material Adverse Effect;
93
(ix) neither Company nor any of its Subsidiaries nor, to the best
knowledge of Company, any of their respective predecessors has disposed of
any Hazardous Materials in a manner that would reasonably be expected to
give rise to an Environmental Claim having a Material Adverse Effect;
(x) to the best knowledge of Company, no underground storage tanks or
surface impoundments are on or at any Facility, except which underground
storage tanks or surface impoundments could not reasonably be expected to
result in a Material Adverse Effect; and
(xi) no Lien in favor of any Person relating to or in connection with
any Environmental Claim has been filed or has been attached to any Facility
except for any such Lien which would not reasonably be expected to have a
Material Adverse Effect.
5.14 EMPLOYEE MATTERS.
----------------
Except as set forth in Schedule 5.14 annexed hereto, there is no strike or
-------------
work stoppage in existence or, to the knowledge of Company or any of its
Subsidiaries, threatened involving Company or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.
5.15 SOLVENCY.
--------
Company and each of its Subsidiaries is and, upon the incurrence of any
Obligations by Company on any date on which this representation is made, will
be, Solvent.
5.16 DISCLOSURE.
----------
No representation or warranty of Company or any of its Subsidiaries
contained in the Information Circular/Prospectus, any Loan Document or Related
Agreement or in any other document, certificate or written statement furnished
to Lenders by or on behalf of Company or any of its Subsidiaries for use in
connection with the transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state a material fact (known to
Company, in the case of any document not furnished by it) necessary in order to
make the statements contained herein or therein not misleading in light of the
circumstances in which the same were made. Any projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by Company to be reasonable at the time made,
it being recognized by Lenders that such projections as to future events are not
to be viewed as facts and that actual results during the period or periods
covered by any such projections may differ from the projected results and that
such projections are subject to significant uncertainties and contingencies,
many of which are beyond Company's control, and that no assurance can be given
that such projections will be realized. There are no facts known (or which
should upon the reasonable exercise of diligence be known) to Company (other
than
94
matters of a general economic nature) that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect and that
have not been disclosed herein or in such other documents, certificates and
statements furnished to Lenders for use in connection with the transactions
contemplated hereby.
5.17 RELATED AGREEMENTS.
------------------
A. Company has delivered to Lenders complete and correct copies of the
Related Agreements and of all exhibits and schedules thereto.
B. Except to the extent otherwise set forth herein or in the schedules
hereto, each of the representations and warranties in the Related Agreements is
true and correct in all material respects as of the Closing Date, subject to the
qualifications set forth in the schedules to the applicable Related Agreements.
C. Notwithstanding anything in the Related Agreements to the contrary,
the representations and warranties of Company set forth in the Related
Agreements shall, solely for purposes of this Agreement, survive the Closing
Date for the benefit of Lenders.
5.18 INSURANCE.
---------
Company and its Subsidiaries maintain, with financially sound and reputable
insurers, insurance with respect to its properties and business and the
properties and business of its Subsidiaries, against loss or damage of the kinds
customarily insured against by corporations of established reputation engaged in
the same or similar business of such types and in such amounts as are
customarily carried under similar circumstances by such other corporations all
as determined by the officers of the Company in their reasonable discretion.
Attached as Schedule 5.18 hereto is a complete and accurate description of all
-------------
policies of insurance that are in effect for Company and its Subsidiaries.
5.19 INTELLECTUAL PROPERTY.
---------------------
A. Company and its Subsidiaries possess all of the trademarks,
tradenames, copyrights, patents and licenses reasonably necessary for the
conduct of their respective businesses. Company and its Subsidiaries own, or
are licensed to use, the Intellectual Property and all such Intellectual
Property is fully protected and duly and properly registered, filed or issued in
the appropriate office and jurisdictions for such registrations, filing or
issuances, except for such filings the failure of which to make, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
B. No material claim has been made, or to the best knowledge of Company,
asserted by any Person with respect to the use of any such Intellectual
Property, or challenging or questioning the validity or effectiveness of any
such Intellectual Property. The use of such
95
Intellectual Property by Company or any of its Subsidiaries does not infringe on
the rights of any Person, subject to such claims and infringements as do not, in
the aggregate, give rise to any liabilities on the part of Company or any of its
Subsidiaries that are material to Company or any of its Subsidiaries. The
consummation of the transactions contemplated by this Agreement will not in any
material manner or to any material extent impair the ownership of (or the
license to use, as the case may be) any of such Intellectual Property by Company
or any of its Subsidiaries.
5.20 LOANS AND GUARANTY PERMITTED UNDER SUBORDINATED DEBT DOCUMENTS.
--------------------------------------------------------------
At the time of borrowing thereof, (a) all Loans outstanding or requested
hereunder, together with all other Obligations of Company, are and will be
"Guarantor Senior Indebtedness" under the ▇▇▇▇▇ Indenture, (b) such Loans and
other Obligations shall be permitted to be incurred by Company under the ▇▇▇▇▇
Indenture, including Section 4.03 of the ▇▇▇▇▇ Indenture, (b) the Indebtedness
(as defined in the ▇▇▇▇▇ Indenture) incurred by ▇▇▇▇▇ pursuant to the Subsidiary
Guaranty in connection with such Loans and such other Obligations are and will
be "Senior Indebtedness" under the ▇▇▇▇▇ Indenture.
5.21 YEAR 2000 PROBLEMS.
------------------
Company and its Subsidiaries do not have Year 2000 Problems.
SECTION 6 COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
--------------------------------------
Company will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Administrative Agent:
(i) Quarterly Financials: as soon as available and in any event
--------------------
within 45 days after the end of each of the first three Fiscal Quarters,
(a) the consolidated balance sheets of Company and its Subsidiaries as at
the end of such Fiscal Quarter and the related consolidated statements of
income, stockholders' equity and cash flows of Company and its Subsidiaries
for such Fiscal Quarter, and for the period from the beginning of the then
current Fiscal Year to the end of such Fiscal Quarter (including segment
information
96
regarding Company's Canadian and international operations in accordance
with GAAP and, so long as the ▇▇▇▇▇ Notes shall remain outstanding, capsule
balance sheet and income statement data regarding ▇▇▇▇▇ providing detail
comparable to that included in the Cineplex Odeon SEC Reports), setting
forth in each case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year (it being understood that
the segment information and capsule information referred to in the
preceding parenthetical will not be available for comparative purposes for
the corresponding period of any Fiscal Year prior to the Fiscal Year ending
February 28, 1999) and the corresponding figures from the Financial Plan
for the current Fiscal Year, all in reasonable detail and certified by the
chief financial officer of Company that they fairly present, in all
material respects, the financial condition of Company and its Subsidiaries
as at the dates indicated and the results of their operations and their
cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments and the absence of footnotes, and (b)
a narrative report describing the operations of Company and its
Subsidiaries in the form prepared for presentation to senior management for
such Fiscal Quarter and for the period from the beginning of the then
current Fiscal Year to the end of such Fiscal Quarter;
(ii) Year-End Financials: as soon as available and in any event
-------------------
within 90 days after the end of each Fiscal Year, (a) the consolidated
balance sheets of Company and its Subsidiaries as at the end of such Fiscal
Year and the related consolidated statements of income, stockholders'
equity and cash flows of Company and its Subsidiaries for such Fiscal Year,
(including segment information regarding Company's Canadian and
international operations in accordance with GAAP and, so long as the ▇▇▇▇▇
Notes shall remain outstanding, capsule balance sheet and income statement
data regarding ▇▇▇▇▇ providing detail comparable to that included in the
Cineplex Odeon SEC Reports), setting forth in each case in comparative form
the corresponding figures for the previous Fiscal Year (it being understood
that the segment information and capsule information referred to in the
preceding parenthetical will not be available for comparative purposes for
any Fiscal Year prior to the Fiscal Year ending February 28, 1999) and the
corresponding figures from the Financial Plan for the Fiscal Year covered
by such financial statements, all in reasonable detail and certified by the
chief financial officer of Company that they fairly present, in all
material respects, the financial condition of Company and its Subsidiaries
as at the dates indicated and the results of their operations and their
cash flows for the periods indicated, (b) a narrative report describing the
operations of Company and its Subsidiaries in the form prepared for
presentation to senior management for such Fiscal Year, and (c) in the case
of such consolidated financial statements, (1) a report thereon of a
nationally recognized independent accounting firm, which report shall be
unqualified as to scope of audit, shall express no doubts about the ability
of Company and its Subsidiaries to continue as a going concern, and shall
state that such consolidated financial statements fairly present, in all
material respects, the consolidated financial position of Company and its
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated in conformity with GAAP
applied on a basis consistent with
97
prior years (except as otherwise disclosed in such financial statements)
and that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with
generally accepted auditing standards and (2) a letter from such accounting
firm, substantially in the form of Exhibit XI annexed hereto;
----------
(iii) Officers' and Compliance Certificates: together with each
-------------------------------------
delivery of financial statements of Company and its Subsidiaries pursuant
to subdivisions (i) and (ii) above, (a) an Officers' Certificate of Company
stating that the signers have reviewed the terms of this Agreement and have
made, or caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of Company and its Subsidiaries
during the accounting period covered by such financial statements and that
such review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the
existence as at the date of such Officers' Certificate, of any condition or
event that constitutes an Event of Default or Potential Event of Default,
or, if any such condition or event existed or exists, specifying the nature
and period of existence thereof and what action Company has taken, is
taking and proposes to take with respect thereto; and (b) a Compliance
Certificate demonstrating in reasonable detail compliance during and at the
end of the applicable accounting periods with the restrictions contained in
Section 7, in each case to the extent compliance with such restrictions is
required to be tested at the end of the applicable accounting period;
(iv) Reconciliation Statements: if, as a result of any change in
-------------------------
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in subsection 5.3, the
consolidated financial statements of Company and its Subsidiaries delivered
pursuant to subdivision (i), (ii) or (xii) of this subsection 6.1 will
differ in any material respect from the consolidated financial statements
that would have been delivered pursuant to such subdivisions had no such
change in accounting principles and policies been made, then (a) together
with the first delivery of financial statements pursuant to subdivision
(i), (ii) or (xii) of this subsection 6.1 following such change,
consolidated financial statements of Company and its Subsidiaries for (y)
the current Fiscal Year to the effective date of such change and (z) the
two full Fiscal Years immediately preceding the Fiscal Year in which such
change is made, in each case prepared on a pro forma basis as if such
change had been in effect during such periods, and (b) together with each
delivery of financial statements pursuant to subdivision (i), (ii) or (xii)
of this subsection 6.1 following such change, a written statement of the
chief accounting officer or chief financial officer of Company setting
forth the differences (including without limitation any differences that
would affect any calculations relating to the financial covenants set forth
in subsection 7.6) which would have resulted if such financial statements
had been prepared without giving effect to such change;
(v) Accountants' Certification: together with each delivery of
--------------------------
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (ii) above, a written statement by the independent certified
public accountants giving the report
98
thereon (a) stating that their audit examination has included a review of
the terms of this Agreement and the other Loan Documents as they relate to
accounting matters, (b) stating whether, in connection with their audit
examination, any condition or event that constitutes an Event of Default or
Potential Event of Default with respect to the covenants set forth in
Section 7, has come to their attention and, if such a condition or event
has come to their attention, specifying the nature and period of existence
thereof; provided that such accountants shall not be liable by reason of
--------
any failure to obtain knowledge of any such Event of Default or Potential
Event of Default that would not be disclosed in the course of their audit
examination, and (c) stating that based on their audit examination nothing
has come to their attention that causes them to believe either or both that
the information contained in the certificates delivered therewith pursuant
to subdivision (iv) above is not correct or that the matters set forth in
the Compliance Certificates delivered therewith pursuant to clause (b) of
subdivision (iv) above for the applicable Fiscal Year are not stated in
accordance with the terms of this Agreement;
(vi) Accountants' Reports: promptly upon receipt thereof (unless
--------------------
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Company and its Subsidiaries made by such accountants,
including, without limitation, any comment letter submitted by such
accountants to management in connection with their annual audit;
(vii) SEC Filings and Press Releases: promptly upon their becoming
------------------------------
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Company to its
security holders or by any Subsidiary of Company to its security holders
other than Company or another Subsidiary of Company, (b) all regular and
periodic reports and all registration statements (other than on Form S-8 or
a similar form) and prospectuses, if any, filed by Company or any of its
Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority,
and (c) all press releases and other statements made available generally by
Company or any of its Subsidiaries to the public concerning material
developments in the business of Company or any of its Subsidiaries;
(viii) Events of Default, etc.: promptly upon any Responsible
-----------------------
Officer of Company obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or becoming
aware that any Lender has given any notice (other than to Administrative
Agent) or taken any other action with respect to a claimed Event of Default
or Potential Event of Default, (b) that any Person has given any notice to
Company or any of its Subsidiaries or taken any other action with respect
to a claimed default or event or condition of the type referred to in
subsection 8.2, (c) of any condition or event that would be required to be
disclosed in a current report filed by Company with the Securities and
Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in
effect on the date hereof) if Company were required to file such
99
reports under the Exchange Act, or (d) of the occurrence of any event or
change that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect, an Officers' Certificate specifying
the nature and period of existence of such condition, event or change, or
specifying the notice given or action taken by any such Person and the
nature of such claimed Event of Default, Potential Event of Default,
default, event or condition, and what action Company have taken, are taking
and propose to take with respect thereto;
(ix) Litigation or Other Proceedings: (a) promptly upon any
-------------------------------
Responsible Officer of Company obtaining knowledge of (X) the institution
of, or non-frivolous threat of, any non-frivolous action, suit, proceeding
(whether administrative, judicial or otherwise), governmental investigation
or arbitration against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries (collectively,
"PROCEEDINGS") not previously disclosed in writing by Company to Lenders
or (Y) any material development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters; and (b) within twenty days after the end of each
Fiscal Quarter, a schedule of all Proceedings involving an alleged
liability of, or claims against or affecting, Company or any of its
Subsidiaries equal to or greater than $5,000,000 or the equivalent amount
in any other currency, and promptly after request by Administrative Agent
such other information as may be reasonably requested by Administrative
Agent to enable Administrative Agent and its counsel to evaluate any of
such Proceedings;
(x) ERISA Events: promptly upon becoming aware of the occurrence of
------------
or forthcoming occurrence of any ERISA Event, a written notice specifying
the nature thereof, what action Company or any of its ERISA Affiliates has
taken, is taking or proposes to take with respect thereto and, when known,
any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
(xi) ERISA Notices: with reasonable promptness, copies of (a) each
-------------
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by Company or any of its ERISA Affiliates with the Internal Revenue
Service with respect to each Pension Plan; (b) all material notices
received by Company or any of its ERISA Affiliates from a Multiemployer
Plan sponsor concerning an ERISA Event; and (c) such other documents
100
or governmental reports or filings relating to any Employee Benefit Plan as
Administrative Agent shall reasonably request;
(xii) Financial Plans: as soon as practicable, a consolidated plan
---------------
and financial forecast for such Fiscal Year (the "FINANCIAL PLAN" for
such Fiscal Year), including without limitation (a) a forecasted
consolidated balance sheet and forecasted consolidated statements of income
and cash flows of Company and its Subsidiaries for such Fiscal Year,
together with a pro forma Compliance Certificate for such Fiscal Year and
--- -----
an explanation of the assumptions on which such forecasts are based, and
(b) forecasted consolidated statements of income and cash flows of Company
and its Subsidiaries for each month of such Fiscal Year, together with an
explanation of the assumptions on which such forecasts are based;
(xiii) Insurance: as soon as practicable and in any event by the
---------
last day of each Fiscal Year, an Officer's Certificate of Company attaching
a schedule in form and substance satisfactory to Administrative Agent
outlining all material insurance coverage maintained as of the date of such
Officer's Certificate by Company and its Subsidiaries and all material
insurance coverage planned to be maintained by Company and its Subsidiaries
in the immediately succeeding Fiscal Year;
(xiv) Environmental Audits and Reports: as soon as practicable
--------------------------------
following receipt thereof, copies of all environmental audits and reports,
whether prepared by personnel of Company or any of its Subsidiaries or by
independent consultants, with respect to significant environmental matters
at any Facility or which relate to an Environmental Claim in either case
which could reasonably be expected to result in a Material Adverse Effect;
provided that the delivery of such reports would not in the opinion of
--------
counsel to Company adversely affect the availability of any privilege to
which it may be entitled in respect of such audits or reports; provided,
--------
further, that Company shall give Administrative Agent prompt written notice
-------
of any audits or reports not delivered in accordance with the preceding
proviso;
(xv) Board of Directors: with reasonable promptness, written notice
------------------
of any change in the Board of Directors of Company; provided that delivery
--------
of a current SEC Report containing a disclosure of such change in the Board
of Directors of Company shall be deemed to satisfy the requirements of this
subsection 7.1(xv);
(xvi) New Subsidiaries: promptly upon any Person becoming a
----------------
Subsidiary of Company, a written notice setting forth with respect to such
Person (a) the date on which such Person became a Subsidiary of Company and
(b) all of the data required to be set forth in Schedule 5.1 annexed hereto
------------
with respect to all Subsidiaries of Company (it being understood that such
written notice shall be deemed to supplement Schedule 5.1D annexed hereto
-------------
for all purposes of this Agreement);
101
(xvii) Material Contracts: promptly, and in any event within 10
------------------
Business Days after any Material Contract of Company or any of its
Subsidiaries is terminated or amended in a manner that is materially
adverse to Company or such Subsidiary, as the case may be, or any new
Material Contract is entered into, a written statement describing such
event with copies of such material amendments or new contracts, and an
explanation of any actions being taken with respect thereto; provided that
--------
Company shall have no obligation to deliver such written notice to the
extent that disclosure of such event would not be required to be disclosed
in an SEC Report; and provided further that delivery of an SEC Report
-------- -------
containing a disclosure of any such event shall be deemed to satisfy the
requirements of this subsection 7.1(xvii); and
(xviii) Other Information: with reasonable promptness, such other
-----------------
information and data with respect to Company or any of its Subsidiaries as
from time to time may be reasonably requested by any Lender.
6.2 CORPORATE EXISTENCE, ETC.
-------------------------
Except as permitted under subsection 7.7, Company will, and will cause each
of its Subsidiaries to, at all times preserve and keep in full force and effect
its corporate existence and all rights and franchises material to its business;
provided, however, that neither Company nor any of its Subsidiaries shall be
-------- -------
required to preserve any such right or franchise and, solely with respect to
Company's Subsidiaries, such existence, if the Board of Directors of Company or
such Subsidiary determines in good faith that the preservation thereof is no
longer desirable in the conduct of the business of Company or such Subsidiary,
as the case may be, and that the loss thereof, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
----------------------------------------------
A. Company will, and will cause each of its Subsidiaries to, pay all
material taxes, assessments and other governmental charges imposed upon it or
any of its properties or assets or in respect of any of its income, businesses
or franchises before any material penalty accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable and that by law have or may
become a Lien upon any of its properties or assets, prior to the time when any
material penalty or fine shall be incurred with respect thereto; provided that
--------
no such charge or claim need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor.
B. Company will not, and will not permit any of its Subsidiaries to, file
or consent to the filing of any consolidated income tax return with any Person
(other than Company or any of its Subsidiaries).
102
6.4 MAINTENANCE OF PROPERTIES; INSURANCE.
------------------------------------
Company will, and will cause each of its Subsidiaries to, maintain or cause
to be maintained in good repair, working order and condition, ordinary wear and
tear excepted, all of their respective material properties used or useful in the
business of Company and its Subsidiaries (including, without limitation,
Intellectual Property) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof; provided, however, that
-------- -------
(x) Company and its Subsidiaries may dispose of obsolete equipment in the
ordinary course of business, (y) Company and its Subsidiaries may sell or
otherwise dispose of theatres to the extent necessary to comply with the terms
of the DOJ Settlement and (z) Company and its Subsidiaries may close or
otherwise cease to operate theatres if the Board of Directors of Company or such
Subsidiary, as the case may be, determines in good faith that the maintenance
and continued operation thereof is no longer desirable in the conduct of the
business of Company or such Subsidiary, as the case may be, and that the loss
thereof, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. Company will maintain or cause to be
maintained, with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and businesses of its
Subsidiaries against loss or damage of the kinds customarily carried or
maintained under similar circumstances by corporations of established reputation
engaged in similar businesses.
6.5 INSPECTION; LENDER MEETING.
--------------------------
Company shall, and shall cause each of its Subsidiaries to, permit any
authorized representatives designated by any Lender to visit and inspect any of
the properties of Company or any of its Subsidiaries once during each Fiscal
Year, including its and their financial and accounting records, and to make
copies and take extracts therefrom, and to discuss its and their affairs,
finances and accounts with its and their officers and independent public
accountants (provided that Company may, if it so chooses, be present at or
--------
participate in any such discussion) upon reasonable notice and at such
reasonable times during normal business hours as may be reasonably requested;
provided that, at any time after the occurrence and during the continuance of an
--------
Event of Default, Company shall, and shall cause each of its Subsidiaries to
permit such additional audits as Administrative Agent may deem necessary or
advisable, upon reasonable notice and at such reasonable times during normal
business hours as may be reasonably requested. Without in any way limiting the
foregoing, Company will, upon the request of Administrative Agent or Requisite
Lenders, participate in a meeting of Agents and Lenders once during each Fiscal
Year to be held at Company's corporate offices (or such other location as may be
agreed to by Company and Administrative Agent) at such time as may be agreed to
by Company and Administrative Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
--------------------------
Company shall, and shall cause each of its Subsidiaries to, comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, noncompliance
103
with which could reasonably be expected to cause, individually or in the
aggregate at any time, a Material Adverse Effect.
6.7 ENVIRONMENTAL DISCLOSURE AND INSPECTION.
---------------------------------------
A. Company shall, and shall cause each of its Subsidiaries to, exercise
commercially reasonable due diligence in order to comply in all material
respects, and cause (i) all tenants under any leases or occupancy agreements
affecting any portion of the Facilities and (ii) all other Persons on or
occupying such property to comply in all material respects, with all
Environmental Laws, except where failure to comply, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
B. Company agrees that Administrative Agent may, upon a reasonable belief
that Company has breached any covenant or representation with respect to
environmental matters set forth herein or that there has been a violation of
Environmental Laws at any Facility or by Company which breach or violation could
reasonably be expected to have a Material Adverse Effect, retain, at Company's
reasonable expense, an independent professional consultant (the selection of
which shall be subject to Company's reasonable consent) to review any report
relating to Hazardous Materials prepared by or for Company in connection with
such potential breach or violation and to conduct its own reasonable
investigation of such matter at such Facility currently owned, leased, operated
or used by Company or any of its Subsidiaries which is the subject of such
potential breach or violation, and Company agrees to use its commercially
reasonable efforts to obtain permission for Administrative Agent's professional
consultant to conduct its own investigation of any such matter at any Facility
previously owned, leased, operated or used by Company or any of its Subsidiaries
which is the subject of such potential breach or violation. Company hereby
grants to Administrative Agent and its agents, employees, consultants and
contractors the right to enter into or onto the aforementioned Facilities
currently owned, leased, operated or used by Company or any of its Subsidiaries
upon reasonable notice to Company to perform such assessments on such property
as are reasonably necessary to conduct such a review and/or investigation. Any
such investigation of any such Facility shall be conducted, unless otherwise
agreed to by Company and Administrative Agent, during normal business hours and,
to the extent reasonably practicable, shall be conducted so as not to interfere
with the ongoing operations at any such Facility or to cause any damage or loss
to any property at such Facility. Company and Administrative Agent hereby
acknowledge and agree that any report of any investigation conducted at the
request of Administrative Agent pursuant to this subsection 6.7B may be obtained
and may be used by Administrative Agent and Lenders only for the purposes of
Lenders' internal credit decisions, to monitor and police the Loans and to
protect Lenders' security interests, if any, created by the Loan Documents.
Administrative Agent agrees to deliver a copy of any such report to Company with
the understanding that Company acknowledges and agrees that (i) it will
indemnify and hold harmless Administrative Agent and each Lender from any
reasonable costs, losses or liabilities relating to Company's use of or reliance
on such report, (ii) neither Administrative Agent nor any Lender makes any
representation or warranty with respect to such report, and (iii) by delivering
such report to Company, neither Administrative
104
Agent nor any Lender is requiring or recommending the implementation of any
suggestions or recommendations contained in such report.
C. Company shall promptly advise Lenders in writing and in reasonable
detail of (i) any Release of any Hazardous Materials required to be reported to
any federal, state or local governmental or regulatory agency under any
applicable Environmental Laws, which Release has a reasonable possibility of
giving rise to a Material Adverse Effect, (ii) any and all written
communications with respect to any Environmental Claims that have a reasonable
possibility of giving rise to a Material Adverse Effect or with respect to any
Release of Hazardous Materials required to be reported to any federal, state or
local governmental or regulatory agency which Release has a reasonable
possibility of giving rise to a Material Adverse Effect, (iii) any remedial
action taken by Company or any other Person in response to (x) any Hazardous
Materials on, under or about any Facility, the existence of which has a
reasonable possibility of resulting in an Environmental Claim having a Material
Adverse Effect, or (y) any Environmental Claim that has a reasonable possibility
of having a Material Adverse Effect, (iv) Company's discovery of any occurrence
or condition on any real property adjoining or in the vicinity of any Facility
that could reasonably be expected to cause such Facility or any part thereof to
be subject to any material restrictions on the ownership, occupancy,
transferability or use thereof under any Environmental Laws which restriction
would have a reasonable possibility of having a Material Adverse Effect, and (v)
any request for information from any governmental agency that suggests such
agency is investigating whether Company or any of its Subsidiaries may be
potentially responsible for a Release of Hazardous Materials, which Release has
a reasonably possibility of giving rise to a Material Adverse Effect.
D. Company shall promptly notify Lenders of any proposed acquisition of
stock, assets, or property by Company or any of its Subsidiaries that could
reasonably be expected to expose Company or any of its Subsidiaries to, or
result in, Environmental Claims that could reasonably be expected to have a
Material Adverse Effect.
E. Company shall, at its own expense, provide copies of such documents or
information as Administrative Agent may reasonably request in relation to any
matters disclosed pursuant to this subsection 6.7.
6.8 COMPANY'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS.
-------------------------------------------------------
Company shall promptly take, and shall cause each of its Subsidiaries
promptly to take, any and all remedial action in connection with the presence,
storage, use, disposal, transportation or Release of any Hazardous Materials on,
under or about any Facility to the extent required under all applicable
Environmental Laws and Governmental Authorizations except where failure to
comply, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. In the event Company or any of its
Subsidiaries undertakes any remedial action with respect to any Hazardous
Materials on, under or about any Facility, Company or such Subsidiary shall
conduct and complete such remedial action in compliance with applicable
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Environmental Laws, except where failure to comply, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
6.9 EXECUTION OF GUARANTY AND COLLATERAL DOCUMENTS BY FUTURE SUBSIDIARIES.
---------------------------------------------------------------------
A. EXECUTION OF SUBSIDIARY GUARANTY AND COLLATERAL DOCUMENTS. In the
event that any Person becomes a wholly-owned Domestic Subsidiary of Company
after the date hereof, Company will promptly notify Administrative Agent of that
fact and cause such Subsidiary to execute and deliver to Administrative Agent a
counterpart of the Subsidiary Guaranty and a Subsidiary Pledge Agreement, a
Subsidiary Trademark Security Agreement, a Subsidiary Security Agreement and to
take all such further action and execute all such further documents and
instruments as may be reasonably required to grant and perfect in favor of
Administrative Agent, for the benefit of Lenders, a First Priority security
interest in all of the personal property assets of such Subsidiary described in
the applicable Collateral Documents. With respect to any Person that becomes a
Subsidiary of Company or a Joint Venture of Company or any of its wholly owned
Domestic Subsidiaries after the date hereof, Company shall also deliver to
Administrative Agent a pledge amendment to the Company Pledge Agreement or the
Subsidiary Pledge Agreement, as appropriate, granting to Administrative Agent on
behalf of Lenders a First Priority security interest in one hundred percent
(100%) of the equity interests in such Subsidiary (sixty-five percent (65%) of
such equity interests if such Subsidiary is a Foreign Subsidiary) or one hundred
percent (100%) of the equity interests owned by Company or any of its wholly
owned Domestic Subsidiaries in such Joint Venture, as the case may be, and
Company shall take, or cause to be taken, all such other actions as
Administrative Agent shall deem necessary or desirable to perfect such security
interest.
B. SUBSIDIARY CHARTER DOCUMENTS, LEGAL OPINIONS, ETC. Company shall
deliver to Administrative Agent, together with the counterpart to the Subsidiary
Guaranty and such Collateral Documents, (i) certified copies of such
Subsidiary's constating documents, together with a good standing certificate (or
equivalent thereof) from the jurisdiction of its incorporation, each to be dated
a recent date prior to their delivery to Administrative Agent, (ii) a copy of
such Subsidiary's Bylaws, certified by its corporate secretary or an assistant
corporate secretary as of a recent date prior to their delivery to
Administrative Agent, (iii) a certificate executed by the secretary or an
assistant secretary of such Subsidiary as to (a) the incumbency and signatures
of the officers of such Subsidiary executing the Subsidiary Guaranty and the
Collateral Documents to which such Subsidiary is a party and (b) the fact that
the attached resolutions of the Board of Directors of such Subsidiary
authorizing the execution, delivery and performance of the Subsidiary Guaranty
and such Collateral Documents are in full force and effect and have not been
modified or rescinded, (iv) an Intercompany Note executed and delivered by such
Subsidiary evidencing all intercompany Indebtedness permitted with respect to
such Subsidiary pursuant to subsection 7.1(iv) and cause such Intercompany Note
to be pledged to Administrative Agent on behalf of Lenders under the applicable
Collateral Document, and (v) a favorable opinion of counsel to such Subsidiary,
in form and substance satisfactory to Administrative Agent and its counsel, as
to (a) the due organization and good standing of such Subsidiary, (b) the due
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authorization, execution and delivery by such Subsidiary of the Subsidiary
Guaranty, and such Collateral Documents, (c) the enforceability of the
Subsidiary Guaranty and such Collateral Documents against such Subsidiary, and
(d) such other matters as Administrative Agent may reasonably request, all of
the foregoing to be satisfactory in form and substance to Administrative Agent
and its counsel.
SECTION 7 COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 7.
7.1 INDEBTEDNESS.
------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Company may become and remain liable with respect to the
Obligations;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of Capital Leases;
(iv) Company may become and remain liable with respect to
Indebtedness to any of its wholly-owned Subsidiaries, and any wholly-owned
Subsidiary of Company may become and remain liable with respect to
Indebtedness to Company or any other wholly-owned Subsidiary of Company;
provided that (a) all such intercompany Indebtedness shall be evidenced by
--------
(a) an Intercompany Note that is pledged to Administrative Agent pursuant
to the terms of the applicable Collateral Document or (b) the Global Note
that is pledged to Administrative Agent pursuant to the terms of the
applicable Collateral Documents; provided that Company shall cause the
--------
Global Note to be amended and restated in the form of an Intercompany Note
in form and substance reasonably satisfactory to Administrative Agent on or
before November 1, 1998, (b) all such intercompany Indebtedness shall be
subordinated in right of payment to the payment in full of the Obligations
pursuant to the terms of the applicable promissory notes or an intercompany
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subordination agreement, and (c) any payment by any wholly-owned Subsidiary
of Company under any guaranty of the Obligations shall result in a pro
---
tanto reduction of the amount of any intercompany Indebtedness owed by such
-----
wholly-owned Subsidiary to Company or to any of its wholly-owned
Subsidiaries for whose benefit such payment is made;
(v) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness secured by Liens permitted under subsection
7.2A(iii);
(vi) Company and its Subsidiaries may remain liable with respect to
Indebtedness existing on the Closing Date set forth in Schedule 7.1(vi);
(vii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness of a Person existing at the time such Person is
merged into or consolidated with Company or any Subsidiary of Company or
becomes a Subsidiary of Company; provided that such Indebtedness was not
--------
incurred in connection with, in contemplation of, or with the purpose of
financing such merger, consolidation or acquisition, provided, further that
-------- -------
Company can demonstrate in form and substance satisfactory to
Administrative Agent that, immediately before and after giving effect to
the incurrence of such Indebtedness, (x) Company is in compliance on a pro
forma basis with all covenants set forth in Section 7 of this Agreement and
(y) there is no Potential Event of Default or Event of Default;
(viii) ▇▇▇▇▇ may remain liable with respect to the ▇▇▇▇▇ Notes;
(ix) so long as at the time of incurrence thereof no Event of
Default or Potential Event of Default has occurred and is continuing or
would be caused thereby, Company may from time to time following the
Closing Date issue debt Securities (the "ADDITIONAL INDEBTEDNESS");
provided that (a) such Additional Indebtedness is unsecured, (b) the
--------
maturity of such Additional Indebtedness is no earlier than November 30,
2003 and such Additional Indebtedness shall not have any amortization prior
to November 30, 2003, (c) such Additional Indebtedness includes
representations and warranties, covenants, events of default and other
provisions that are not more restrictive or burdensome to Company or any of
its Subsidiaries than the ▇▇▇▇▇ Notes are to Company and its Subsidiaries,
(d) immediately before and after giving effect to the incurrence of such
Additional Indebtedness (other than Additional Indebtedness the net
proceeds of which are utilized to refinance the ▇▇▇▇▇ Notes) and to the
application of the net proceeds of such incurrence, the Leverage Ratio
shall be less than 4.0:1.00, (e) the mandatory redemption, retirement,
sinking fund or payment provisions of such Additional Indebtedness do not
require redemption, repurchase or payment of any amount in any
circumstances which the ▇▇▇▇▇ Notes would not require redemption,
repurchase or similar payment of any amount, (f) Company can demonstrate in
form and substance satisfactory to Administrative Agent that, immediately
before and after giving effect to the incurrence of such Additional
108
Indebtedness, Company is in compliance on a pro forma basis with all
covenants set forth in Section 7 of this Agreement through the Revolving
Loan Commitment Termination Date, (g) such Additional Indebtedness is
otherwise reasonably satisfactory in form and substance to Administrative
Agent and Requisite Lenders, (h) none of Company's Subsidiaries incurs any
Contingent Obligations with respect to such Additional Indebtedness and (i)
Company applies the Net Debt Securities Proceeds of such Additional
Indebtedness to prepay the Loans and reduce the Commitments pursuant to
subsection 2.4A(iii)(c) to the extent required thereby;
(x) Company and its Subsidiaries may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to
exceed $30,000,000 at any time outstanding;
(xi) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness which refinances Indebtedness permitted under
clause (ix) of this subsection 7.1; and
(xii) non-wholly owned Subsidiaries may become and remain liable with
respect to Investments by the Company and its Subsidiaries in such non-
wholly owned Subsidiaries to the extent permitted by subsection 7.3(ix).
7.2 LIENS AND RELATED MATTERS.
-------------------------
A. PROHIBITION ON LIENS. Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) (A) Liens securing Indebtedness incurred to finance the
acquisition, construction or improvement of any real property assets
acquired or held by Company or any of its Subsidiaries in the ordinary
course of business (hereinafter referred to individually as a "MORTGAGE"),
and (B) purchase money mortgages or security interests, conditional sale
arrangements and other similar security interests, on motor vehicles and
equipment acquired by Company or any Subsidiary (hereinafter referred to
individually as a "PURCHASE MONEY SECURITY INTEREST"); provided, however,
-------- -------
that:
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(a) the aggregate amount of Indebtedness outstanding at any time
secured by Mortgages and Purchase Money Security Interests shall not
exceed $50,000,000 or the equivalent amount in any other currency;
(b) the transaction in which any Mortgage or Purchase Money
Security Interest is proposed to be created is not then prohibited by
this Agreement;
(c) any Mortgage or Purchase Money Security Interest shall
attach only to the property or asset acquired, constructed or improved
(in the case of a Mortgage) or acquired (in the case of a Purchase
Money Security Interest) in such transaction and, in each case, shall
not extend to or cover any other assets or properties of Company, or,
as the case may be, a Subsidiary;
(d) the Indebtedness secured or covered by any Mortgage or
Purchase Money Security Interest shall not exceed the lesser of the
cost or fair market value of the property or asset acquired and shall
not be renewed, extended or prepaid from the proceeds of any borrowing
by Company or any Subsidiary;
(iv) Other Liens securing Indebtedness in an aggregate amount not to
exceed $30,000,000 or the equivalent amount in any other currency at any
time outstanding;
(v) Liens existing on the Closing Date set forth on Schedule 7.2(v)
or extending (without increasing the amount of Indebtedness secured by such
Lien at the time of such extension) any of the Liens set forth on Schedule
7.2(v);
(vi) Liens securing Indebtedness permitted by subsection 7.1(vii) on
property or assets of a Person existing at the time such Person is merged
into or consolidated with Company or any Subsidiary of Company or becomes a
Subsidiary of Company; provided that such Liens were not incurred in
--------
connection with, in contemplation of, or for the purpose of facilitating
the financing of, such merger, consolidation or acquisition; and
(vii) Liens securing payment of Currency Agreements or Interest Rate
Agreements in each case to the extent the counterparty to any such
agreement is (or at the time such agreement was entered into, was) a Lender
or an Affiliate of a Lender.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
--------
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
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C. NO FURTHER NEGATIVE PLEDGES. Except with respect to (i) specific
property encumbered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to an Asset Sale and (ii) Liens
on properties leased in the ordinary course of business with respect to the
property so leased, none of Company or any of its Subsidiaries shall enter into
any agreement prohibiting the creation or assumption of any Lien for the benefit
of the Lenders upon any of its properties or assets, whether now owned or
hereafter acquired.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except (i) as provided herein and in the ▇▇▇▇▇ Note Indenture,
(ii) for restrictions on non-wholly owned Subsidiaries, (iii) for customary
provisions restricting subletting or assignment of leases, licenses and other
contractual rights and obligations, and (iv) by reason of applicable law,
Company will not, and will not permit any of its Subsidiaries to, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary to
(i) pay dividends or make any other distributions on any of such Subsidiary's
capital stock owned by Company or any other Subsidiary of Company, (ii) repay or
prepay any Indebtedness owed by such Subsidiary to Company or any other
Subsidiary of Company, (iii) make loans or advances to Company or any other
Subsidiary of Company, or (iv) transfer any of its property or assets to Company
or any other Subsidiary of Company.
7.3 INVESTMENTS; JOINT VENTURES.
---------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments in
Cash Equivalents;
(ii) Company and its Subsidiaries may continue to own the Investments
owned by them as of the Closing Date in any Subsidiaries of Company;
(iii) Company and its wholly-owned Subsidiaries may make intercompany
loans to the extent permitted under subsection 7.1(iv);
(iv) Company and its wholly-owned Subsidiaries may make and continue
to own equity Investments in any Person which, upon the making of such
Investments, is or becomes a wholly-owned Subsidiary of Company;
(v) Company and its Subsidiaries may continue to own the Investments
owned by them and described in Schedule 7.3 annexed hereto;
------------
(vi) [Intentionally Omitted]
111
(vii) Company and its Subsidiaries may make Investments constituting
(a) accounts receivable arising, (b) prepaid film rentals, (c) deposits
made in connection with the purchase price of goods or services, in each
case in the ordinary course of business or (d) refundable construction
advances made with respect to the construction of properties that are to be
used in the business of the Company or its wholly-owned Subsidiaries and
that are not outstanding more than one year from the date made; provided
--------
that any Investments made pursuant to the preceding clause (d) that are not
repaid within one year of being made shall be deemed to be Permitted
Investments for the purpose of calculating compliance with subsection
7.3(ix) and subsection 7.7(iii);
(viii) Company and its Subsidiaries may make Investments constituting
(i) payroll advances, (ii) travel and entertainment advances and (iii)
relocation loans to officers and employees of Company or any of its
Subsidiaries in the ordinary course of business; provided, that the
--------
aggregate amount of Investments permitted under this clause shall not
exceed $2,500,000 or the equivalent amount in any other currency at any
time outstanding; and
(ix) Company and its Subsidiaries may make and continue to own
Permitted Investments and Permitted Acquisitions; provided that (i) Company
--------
and its Subsidiaries shall not make Permitted Investments and Permitted
Acquisitions in an aggregate amount (net of the amount of loans, advances
and Contingent Obligations constituting Permitted Investments that are
repaid, released or cancelled, as the case may be, during the term of this
Agreement) in excess of $200,000,000 or the equivalent amount in any other
currency during the term of this Agreement and (ii) Company's non-wholly
owned Subsidiaries shall not make Permitted Investments and Permitted
Acquisitions in an aggregate amount (net of the amount of loans, advances
and Contingent Obligations constituting such Permitted Investments that are
repaid, released or cancelled, as the case may be, during the term of this
Agreement) in excess of $20,000,000 or the equivalent amount in any other
currency during the term of this Agreement; and provided further that if
-------- -------
Company and its Subsidiaries have made Permitted Investments and Permitted
Acquisitions equal to $200,000,000 or the equivalent amount in any other
currency and the Leverage Ratio is less than 4.0:1.00, Company and its
wholly-owned Subsidiaries may make additional Permitted Investments and
Permitted Acquisitions until the Leverage Ratio is equal to or greater than
4.0:1.00;
provided, that the foregoing shall not prohibit any Subsidiary from making
--------
dividends or distributions to Company or any wholly-owned Subsidiary; and
provided further, that any Investment which when made complies with the
-------- -------
requirements of the definition of the term Cash Equivalent may continue to be
held notwithstanding that such Investment if made thereafter would not comply
with such requirements.
7.4 CONTINGENT OBLIGATIONS.
----------------------
112
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of Letters of Credit;
(ii) Each of Company's Subsidiaries may become and remain liable with
respect to Contingent Obligations arising under the Guaranty;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of customary indemnification
and purchase price adjustment obligations incurred in connection with Asset
Sales or other sales of assets;
(iv) (A) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of any Indebtedness of
Company or any of its wholly-owned Subsidiaries and (B) Company and its
Subsidiaries may become and remain liable with respect to Contingent
Obligations in respect of any Indebtedness, Operating Leases or other
obligations of any Joint Venture or non-wholly-owned Subsidiary; provided
--------
that the aggregate maximum liability of Company and its Subsidiaries with
respect to the Contingent Obligations permitted under the preceding clause
(B) shall not exceed $30,000,000 or the equivalent amount in any other
currency at any time; provided further than the aggregate maximum liability
-------- -------
of Company and its Subsidiaries with respect to the Contingent Obligations
permitted under the preceding clause (B) shall be deemed to be a "Permitted
Investment" for purposes of calculating to be included in such calculation
upon the permanent release or cancellation of such Contingent Obligations;
(v) The Company may become and remain liable with respect to
Contingent Obligations in respect of the ▇▇▇▇▇ Notes; provided, however,
-------- -------
that the principal amount of such Contingent Obligation shall not exceed
the principal amount of the ▇▇▇▇▇ Notes; provided, further that, any such
-------- -------
Contingent Obligation shall be subordinate to the Obligations to the same
extent, and on the same terms, as the ▇▇▇▇▇ Notes are so subordinated;
(vi) Company and its Subsidiaries may remain liable with respect to
the Contingent Obligations existing on the Closing Date set forth in
Schedule 7.4(vi);
(vii) Company and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum
--------
aggregate liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such Contingent Obligations shall at no time
exceed $20,000,000 or the equivalent amount in any other currency;
113
(viii) Company and its Subsidiaries may become and remain liable with
respect to guaranties of Operating Leases, construction contracts and other
contracts and agreements of Company and its wholly-owned Subsidiaries
entered into the ordinary course of business of Company and its wholly-
owned Subsidiaries;
(ix) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of Currency Agreements and
Interest Rate Agreements, in each case to the extent the counterparty to
any such Currency Agreements and Interest Rate Agreements is (or at the
time such Currency Agreement or Interest Rate Agreement was entered into,
was) a Lender or an Affiliate of a Lender;
(x) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of leases assumed by other
Persons in connection with theatres that are closed by Company or any of
its Subsidiaries, in each case to the extent Company or any of its
Subsidiaries remains liable for any deficiencies thereunder; and
(xi) Company and its Subsidiaries may remain liable with respect to
Contingent Obligations in respect of the letters of credit set forth on
Schedule 7.4(xi) annexed hereto; provided that the aggregate amount of such
---------------- --------
letters of credit issued by the Royal Bank of Canada shall not exceed
CN$44,000; provided, further, that such letters of credit shall not be
-------- -------
reissued, renewed or extended beyond the expiration date of such letters of
credit as in effect on the date hereof (except to the extent refinanced
with a Letter of Credit issued under this Agreement in accordance with the
terms hereof).
7.5 RESTRICTED JUNIOR PAYMENTS; CERTAIN OTHER PAYMENTS.
--------------------------------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment, except that Company may make payments on the
Additional Indebtedness as required by the terms of the instruments evidencing
such Additional Indebtedness, and Company and ▇▇▇▇▇ may make payments on the
▇▇▇▇▇ Notes as required by the terms of the ▇▇▇▇▇ Notes, but subject, in each
case to the subordination provisions contained therein; provided that (v)
--------
Company and ▇▇▇▇▇ may repurchase the ▇▇▇▇▇ Notes pursuant to the ▇▇▇▇▇ Change of
Control Offer to the extent required; (w) Company and ▇▇▇▇▇ may repurchase, in
one or a series of transactions, ▇▇▇▇▇ Notes; provided that (a) no Event of
--------
Default or Potential Event of Default shall have occurred and be continuing at
the time of such purchase or repurchase, and (b) immediately after giving effect
to each such purchase or repurchase, Company is in compliance on a pro forma
basis with all covenants set forth in Section 7 of this Agreement, (x) ▇▇▇▇▇ may
redeem the ▇▇▇▇▇ Notes on the maturity date thereof strictly in accordance with
the terms of the ▇▇▇▇▇ Indenture; provided, that (a) no Event of Default or
--------
Potential Event of Default shall have occurred and be continuing at the time of
such redemption and (b) immediately after giving effect to such redemption,
Company is in compliance on a pro forma basis with all covenants set forth in
Section 7 of this Agreement, (y) Company may make payments in connection with
the Business Combination Transactions on or before the Closing Date
114
and in accordance with the terms of the Related Agreements, and (z) so long as
no Potential Event of Default or Event of Default has occurred and is continuing
or would result therefrom, Company may purchase, redeem, acquire, cancel or
otherwise retire for value shares of capital stock of Company, or warrants or
options on any such shares or related stock appreciation rights or similar
securities, in each case that are owned by officers or employees (or their
estates or beneficiaries under their estates), upon the death, disability,
retirement, termination of employment or pursuant to the terms of the stock
option plan or any other agreement under which such shares of capital stock,
options, related rights or similar securities were issued or under which they
may be put or called; provided, that the aggregate cash consideration paid for
--------
such purchase, redemption, acquisition, cancellation or other retirement for
value of such shares of capital stock, options, related rights or similar
securities shall not exceed $10,000,000 during the term of this Agreement.
7.6 FINANCIAL COVENANTS.
-------------------
A. MAXIMUM TOTAL LEVERAGE RATIO. Company shall not permit the ratio of
(i) Wholly-Owned Total Debt on the last day of a Fiscal Quarter ending during
any of the periods set forth below to (ii) Annualized Pro Forma Wholly Owned
EBITDA (plus (w) for the period ending on the last day of the first Fiscal
Quarter ending after the Closing Date, $17,600,000, (x) for the period ending on
the last day of the second Fiscal Quarter ending after the Closing Date,
$17,600,000, (y) for the period ending on the last day of the third Fiscal
Quarter ending after the Closing Date, $11,700,000 and (z) for the period ending
on the last day of the fourth Fiscal Quarter ending after the Closing Date,
$5,800,000) for the four-Fiscal Quarter period ending on such last day to exceed
the correlative ratio indicated:
================================================================================
Period Maximum Total Leverage Ratio
--------------------------------------------------------------------------------
Closing Date - February 29, 2000 5.25 : 1:00
--------------------------------------------------------------------------------
March 1, 2000 - February 28, 2001 4.80 : 1.00
--------------------------------------------------------------------------------
March 1, 2001 - February 28, 2002 4.60 : 1.00
--------------------------------------------------------------------------------
March 1, 2002 and thereafter 4.25 : 1.00
================================================================================
B. MAXIMUM CONSOLIDATED LEVERAGE RATIO. Company shall not permit the
ratio of (i) Consolidated Debt of Company and its Subsidiaries on the last day
of a Fiscal Quarter ending during any of the periods set forth below to (ii)
Annualized Pro Forma EBITDA of Company and its Subsidiaries (plus (w) for the
period ending on the last day of the first Fiscal Quarter ending after the
Closing Date, $17,600,000, (x) for the period ending on the last day of the
second Fiscal Quarter ending after the Closing Date, $17,600,000, (y) for the
period ending on the last day of the third Fiscal Quarter ending after the
Closing Date, $11,700,000 and (z) for the period ending on the last day of the
fourth Fiscal Quarter ending after the Closing Date, $5,800,000) for the
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four-Fiscal Quarter period ending on such last day (the "LEVERAGE RATIO") to
exceed the correlative ratio indicated:
================================================================================
Period Maximum Consolidated Leverage Ratio
--------------------------------------------------------------------------------
Closing Date - February 29, 2000 5.00 : 1.00
--------------------------------------------------------------------------------
March 1, 2000 - February 28, 2001 4.50 : 1.00
--------------------------------------------------------------------------------
March 1, 2001 - February 28, 2002 4.25 : 1.00
--------------------------------------------------------------------------------
March 1, 2002 and thereafter 3.75 : 1.00
================================================================================
C. MINIMUM DEBT SERVICE COVERAGE RATIO. Company shall not permit the
ratio of (i) Annualized Pro Forma Wholly Owned EBITDAR (plus (a) for the period
ending on the last day of the first Fiscal Quarter ending after the Closing
Date, $17,600,000, (b) for the period ending on the last day of the second
Fiscal Quarter ending after the Closing Date, $17,600,000, (c) for the period
ending on the last day of the third Fiscal Quarter ending after the Closing
Date, $11,700,000 and (d) for the period ending on the last day of the fourth
Fiscal Quarter ending after the Closing Date, $5,800,000) for any four-Fiscal
Quarter period ending during any of the periods set forth below to (ii) the sum
of (a) Wholly-Owned Total Debt Interest Expense for such period plus (b) Wholly
----
Owned Rent Expense for such period to be less than the correlative ratio
indicated.
================================================================================
Period Minimum Debt Service Coverage Ratio
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Closing Date - February 29, 2000 1.35 : 1.00
--------------------------------------------------------------------------------
March 1, 2000 - February 28, 2002 1.40 : 1.00
--------------------------------------------------------------------------------
March 1, 2002 and thereafter 1.45 : 1.00
================================================================================
In making the foregoing calculations, (A) pro forma effect shall be given to
asset dispositions (including Asset Sales) and acquisitions (including the
Business Combination Transactions) that occur during such reference period or
thereafter and on or prior to the reporting date as if they had occurred on the
first day of such reference period; and (B) pro forma effect shall be given to
asset dispositions and asset acquisitions that have been made by any Person
that has become a Subsidiary of Company or has been merged with or into the
Company or any Subsidiary of Company during such reference period or subsequent
to such period and on or prior to the reporting date as if such asset
dispositions or asset acquisitions had occurred on the first day of such
reference period; provided that, notwithstanding anything to the contrary
--------
contained in the sentence preceding this proviso, pro forma effect shall not be
given to any cost savings, synergies or similar anticipated benefits from such
asset dispositions and acquisitions to which pro forma effect would not be
permitted to be given in pro forma financial information prepared in accordance
with rules 11-01 and 11-02 of Regulation S-X.
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7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
----------------------------------------------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
alter the corporate, capital or legal structure of Company or any of its
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sub-lessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or substantially all of its business, property or fixed
assets, whether now owned or hereafter acquired, or acquire by purchase or
otherwise all or substantially all the business, property or fixed assets of, or
stock or other evidence of beneficial ownership of, any Person or any division
or line of business of any Person, except:
(i) any wholly-owned Subsidiary of Company may be merged with or
into Company or any wholly-owned Subsidiary of Company, or may be
liquidated, wound up or dissolved, or all or any part of its business,
property or assets may be conveyed, sold, leased, transferred or otherwise
disposed of, in one transaction or a series of transactions, to Company or
any wholly-owned Subsidiary of Company; provided that, in the case of such
--------
a merger described in the foregoing clause (a) or (b), Company or such
wholly-owned Subsidiary shall be the continuing or surviving corporation;
(ii) Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales; provided that
--------
the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof (as reasonably determined by the
Board of Directors of Company);
(iii) Company and its Subsidiaries may make Permitted Acquisitions
and Permitted Investments; provided that (i) Company and its Subsidiaries
--------
shall not make Permitted Acquisitions and Permitted Investments in an
aggregate amount (net of the amount of loans, advances and Contingent
Obligations constituting Permitted Investments that are repaid, released or
cancelled, as the case may be, during the term of this Agreement) in excess
of $200,000,000 or the equivalent amount in any other currency during the
term of this Agreement and (ii) Company's non-wholly owned Subsidiaries
shall not make Permitted Investments and Permitted Acquisitions in an
aggregate amount (net of the amount of loans, advances and Contingent
Obligations constituting such Permitted Investments that are repaid,
released or cancelled, as the case may be, during the term of this
Agreement) in excess of $20,000,000 or the equivalent amount in any other
currency during the term of this Agreement; and provided further that if
-------- -------
Company and its Subsidiaries have made Permitted Investments and Permitted
Acquisitions equal to $200,000,000 or the equivalent amount in any other
currency and the Leverage Ratio is less than 4.0:1.00, Company and its
wholly-owned Subsidiaries may make additional Permitted Investments and
Permitted Acquisitions until the Leverage Ratio is greater than or equal to
4.0:1.00;
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(iv) Company and its Subsidiaries may make Asset Sales in compliance
with subsection 2.4A(iii); and
(v) Company may cause the dissolution of any Subsidiary to the
extent permitted by subsection 6.2.
7.8 FISCAL YEAR.
-----------
Company shall not change its Fiscal Year-end from February 28 or February
29, as the case may be, of each calendar year.
7.9 SALE OR DISCOUNT OF RECEIVABLES.
-------------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable other
than sales for collection of defaulted receivables over 120 days past due.
7.10 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
---------------------------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any material transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity Securities of Company or with any Affiliate of Company or of any
such holder, on terms that are less favorable to Company or that Subsidiary, as
the case may be, than those that might be obtained at the time in a comparable
arms-length transaction from Persons who are not such a holder or Affiliate;
provided that the foregoing restriction shall not apply to (i) any transaction
--------
between Company and any of its wholly-owned Subsidiaries or between any of its
wholly-owned Subsidiaries; (ii) reasonable and customary fees paid to members of
the Boards of Directors of Company and its Subsidiaries, (iii) the Subject
Transactions, (iv) the transactions set forth on Schedule 7.10 hereto, (v)
-------------
transactions contemplated by the Related Agreements, (vi) transactions
contemplated in the Transition Services Agreements, or (vii) Restricted Junior
Payments permitted by subsection 7.5.
7.11 DISPOSAL OF SUBSIDIARY STOCK.
----------------------------
Except pursuant to the Collateral Documents and except for any sale of (x)
100% of the capital stock or other equity Securities of any of its Subsidiaries
in compliance with the provisions of subsection 7.7 and (y) in connection with
the formation or sale of interests in Joint Ventures and non-wholly-owned
Subsidiaries in compliance with subsection 2.4A(iii), Company shall not:
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(i) directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock or other equity Securities of any
of its Subsidiaries, except to qualify directors if required by applicable
law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including such
Subsidiary), except to Company, to a wholly-owned Subsidiary of Company, or
to qualify directors if required by applicable law.
7.12 CONDUCT OF BUSINESS.
-------------------
From and after the Closing Date, Company shall not, and shall not permit
any of its Subsidiaries to, engage in any business other than (i) the business
of operating movie theatres and similar or related businesses and (ii) such
other lines of business as may be consented to in writing by Requisite Lenders.
7.13 AMENDMENTS OF RELATED AGREEMENT; DOCUMENTS RELATING TO SUBORDINATED
-------------------------------------------------------------------
INDEBTEDNESS; AMENDMENTS OF MATERIAL DOCUMENTS.
-----------------------------------------------
A. Company shall not, and shall not permit any Subsidiary to, modify,
amend, supplement or terminate, or agree to modify, amend, supplement or
terminate any Related Agreement (other than (i) Subordinated Indebtedness which
is governed by subsection 7.13B below and (ii) amendments or waivers which
individually or together with all other amendments, waivers or changes made,
would not be adverse to any Loan Party, any Agent or any Lender) without
obtaining the written consent of Administrative Agent and Requisite Lenders.
B. Company shall not, and shall not permit any of its Subsidiaries to,
amend or otherwise change the terms of any Subordinated Indebtedness (or any
documents, instruments or agreements pursuant to which such Subordinated
Indebtedness is issued including, without limitation, the ▇▇▇▇▇ Indenture), or
make any payment consistent with an amendment thereof or change thereto, if the
effect of such amendment or change is to increase the interest rate on such
Subordinated Indebtedness, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate any such event of default), change the redemption, prepayment or
defeasance provisions thereof, change the subordination provisions thereof (or
of any guaranty thereof), or change any collateral therefor (other than to
release such collateral), or if the effect of such amendment or change, together
with all other amendments or changes made, is to increase materially the
obligations of the obligor thereunder or to confer any additional rights on the
holders of such Subordinated Indebtedness (or a trustee or other representative
on their behalf) which would be adverse to any Loan Party, any Agent or any
Lender.
C. Company shall not, and shall not permit any of its Subsidiaries to,
agree to any material amendment to, or waive any of its material rights under,
its Certificate or Articles of
119
Incorporation, its Bylaws, its Certificate of Limited Partnership, Agreement of
Limited Partnership or other organizational documents (other than amendments or
waivers which individually, or together with all other amendments, waivers or
changes made, would not be adverse to any Loan Party, any Agent or any Lender)
without, in each case, obtaining the written consent of Administrative Agent and
Requisite Lenders to such amendment or waiver.
SECTION 8 EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default") shall
occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
---------------------------------
Failure by Company to pay any installment of principal on any Loan when
due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by Company to pay when
due any amount payable to an Issuing Lender in reimbursement of any drawing
under a Letter of Credit; or failure by Company to pay any interest on any Loan
or any fee or any other amount due under this Agreement within five days after
the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
---------------------------
(i) Failure of Company or any of its Subsidiaries to pay when due any
principal of or interest on one or more items of Indebtedness (other than
Indebtedness referred to in subsection 8.1) or Contingent Obligations in an
individual principal amount of $5,000,000 or the equivalent amount in any other
currency or more or with an aggregate principal amount of $10,000,000 or the
equivalent amount in any other currency or more, in each case beyond the end of
any grace period provided therefor; or (ii) breach or default by Company or any
of its Subsidiaries with respect to any other material term of (a) one or more
items of Indebtedness or Contingent Obligations in the individual or aggregate
principal amounts referred to in clause (i) above or (b) any loan agreement,
mortgage, indenture or other agreement relating to such item(s) of Indebtedness
or Contingent Obligation(s), if the effect of such breach or default is to
cause, or to permit the holder or holders of that Indebtedness or Contingent
Obligation(s) (or a trustee on behalf of such holder or holders) to cause, that
Indebtedness or Contingent Obligation(s) to become or be declared due and
payable prior to its stated maturity or the stated maturity of any underlying
obligation, as the case may be (upon the giving or receiving of notice, lapse of
time, both, or otherwise); provided, however, that no such Event of Default
-------- -------
shall be deemed to occur as a result of an event of default under Section
6.01(h) of the ▇▇▇▇▇ Indenture solely to the extent that such event of default
occurs as a direct result of the Business Combination Transactions; or
120
8.3 BREACH OF CERTAIN COVENANTS.
---------------------------
Failure of Company to perform or comply with any term or condition
contained in subsection 2.4, 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 BREACH OF WARRANTY.
------------------
Any representation, warranty, certification or other statement made by
Company or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Company or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
-----------------------------------
Company or any of its Subsidiaries shall default in the performance of or
compliance with any term contained in this Agreement or any of the other Loan
Documents, other than any such term referred to in any other subsection of this
Section 8, and such default shall not have been remedied or waived within 30
days after the earlier of (i) an officer of Company or such Subsidiary becoming
aware of such default or (ii) receipt by Company or such Subsidiary of notice
from Agent or any Lender of such default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
-----------------------------------------------------
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Company or any of its Significant Subsidiaries in
an involuntary case or similar proceeding under the Bankruptcy Code or under any
other Insolvency Laws which decree or order is not stayed; or any other similar
relief shall be granted under any applicable Insolvency Laws; or (ii) an
involuntary case or similar proceeding shall be commenced against Company or any
of its Significant Subsidiaries under the Bankruptcy Code or under any other
Insolvency Laws; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Company or any of its
Significant Subsidiaries, or over all or a substantial part of its property,
shall have been entered; or there shall have occurred the involuntary
appointment or similar proceeding of an interim receiver, trustee or other
custodian of Company or any of its Significant Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Company or any of its Significant Subsidiaries, and any such event
described in this clause (ii) shall continue for 60 days unless dismissed,
bonded or discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
---------------------------------------------------
(i) Company or any of its Significant Subsidiaries shall have an order for
relief entered with respect to it or commence a voluntary case or similar
proceeding under the Bankruptcy Code
121
or under any other Insolvency Laws, or shall consent to the entry of an order
for relief in an involuntary case or similar proceeding, or to the conversion of
an involuntary case or similar proceeding to a voluntary case or similar
proceeding, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property; or Company or any of its Significant Subsidiaries shall
make any assignment for the benefit of creditors; or (ii) Company or any of its
Significant Subsidiaries shall be unable, or shall fail generally, or shall
admit in writing its inability, to pay its debts as such debts become due; or
the Board of Directors of Company or any of its Significant Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize any action
to approve any of the actions referred to in clause (i) above or this clause
(ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
-------------------------
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $5,000,000 or the
equivalent amount in any other currency or (ii) in the aggregate at any time an
amount in excess of $10,000,000 or the equivalent amount in any other currency
(in either case not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage) shall be entered or
filed against Company or any of its Significant Subsidiaries or any of their
respective assets and shall remain undischarged, unvacated, unbonded or unstayed
for a period of 60 days (or in any event later than five days prior to the date
of any proposed sale thereunder); or
8.9 DISSOLUTION.
-----------
Any order, judgment or decree shall be entered against Company or any of
its Significant Subsidiaries decreeing the dissolution or split up or similar
proceeding of Company or that Significant Subsidiary and such order shall remain
undischarged or unstayed for a period in excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
----------------------
There shall occur one or more ERISA Events which individually or in the
aggregate results in or would reasonably be expected to result in liability of
Company, any of its Subsidiaries or any of their respective ERISA Affiliates in
excess of $15,000,000 or the equivalent amount in any other currency during the
term of this Agreement; or there shall exist an amount of unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the
aggregate for all Pension Plans (excluding for purposes of such computation any
Pension Plans with respect to which assets exceed benefit liabilities), which
exceeds $20,000,000 or the equivalent amount in any other currency; or
122
8.11 CHANGE IN CONTROL.
-----------------
There shall have occurred a Change of Control; or
8.12 INVALIDITY OF GUARANTY.
----------------------
The Guaranty for any reason, other than the satisfaction in full of all
Obligations or the release of the Guaranty in accordance with its terms and the
terms of this Agreement, ceases to be in full force and effect (other than in
accordance with its terms) or is declared to be null and void, or any Loan Party
denies that it has any further liability, including without limitation with
respect to future advances by Lenders, under any Loan Document to which it is a
party, or gives notice to such effect; or
8.13 FAILURE OF SECURITY.
-------------------
Any Collateral Document shall, at any time, cease to be in full force and
effect (other than by reason of a release of Collateral in accordance with the
terms thereof) or shall be declared null and void, or the validity or
enforceability thereof shall be contested by any Loan Party, or Administrative
Agent shall not have or cease to have a valid and perfected First Priority
security interest in the Collateral:
THEN (i) upon the occurrence of any Event of Default described in
subsection 8.6 or 8.7, each of (a) the unpaid principal amount of and accrued
interest on the Loans, (b) an amount equal to the maximum amount that may at any
time be drawn under all Letters of Credit then outstanding (whether or not any
beneficiary under any such Letter of Credit shall have presented, or shall be
entitled at such time to present, the drafts or other documents or certificates
required to draw under such Letter of Credit), and (c) all other Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by Company, and the obligation of each Lender to make any Loan,
the obligation of Administrative Agent to issue any Letter of Credit and the
right of any Lender to issue any Letter of Credit hereunder shall thereupon
terminate, and (ii) upon the occurrence and during the continuation of any other
Event of Default, Administrative Agent shall, upon the written request or with
the written consent of Requisite Lenders, by written notice to Company, declare
all or any portion of the amounts described in clauses (a) through (c) above to
be, and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation of Administrative
Agent to issue any Letter of Credit and the right of any Lender to issue any
Letter of Credit hereunder shall thereupon terminate; provided that the
--------
foregoing shall not affect in any way the obligations of Lenders under
subsection 3.3C(i).
Any amounts described in clause (b) above, when received by Administrative
Agent, shall be held by Administrative Agent pursuant to the terms of the
Collateral Account Agreement and shall be applied as therein provided.
123
Notwithstanding anything contained in the second preceding paragraph, if at
any time within 60 days after an acceleration of the Loans pursuant to such
paragraph Company shall pay all arrears of interest and all payments on account
of principal which shall have become due otherwise than as a result of such
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events of
Default and Potential Events of Default (other than non-payment of the principal
of and accrued interest on the Loans, in each case which is due and payable
solely by virtue of acceleration) shall be remedied or waived pursuant to
subsection 10.6, then Requisite Lenders, by written notice to Company, may at
their option rescind and annul such acceleration and its consequences; but such
action shall not affect any subsequent Event of Default or Potential Event of
Default or impair any right consequent thereon. The provisions of this
paragraph are intended merely to bind Lenders to a decision which may be made at
the election of Requisite Lenders and are not intended to benefit Company and do
not grant Company the right to require Lenders to rescind or annul any
acceleration hereunder, even if the conditions set forth herein are met.
SECTION 9 AGENT
9.1 APPOINTMENT.
-----------
BTCo is hereby appointed Administrative Agent and each of BTCo, Bank of
America NT&SA, The Bank of New York and Credit Suisse First Boston is hereby
appointed a Co-Syndication Agent hereunder and under the other Loan Documents
and each Lender hereby authorizes each such Agent to act as its agent in
accordance with the terms of this Agreement and the other Loan Documents.
Except as to the determination of the satisfaction of certain conditions set
forth in subsection 4.1, the Co-Syndication Agents shall have no duties or
obligations under this Agreement or the other Loan Documents. Each such Agent
agrees to act upon the express conditions contained in this Agreement and the
other Loan Documents, as applicable. The provisions of this Section 9 are
solely for the benefit of Agents and Lenders and Company shall have no rights as
a third party beneficiary of any of the provisions thereof. In performing its
functions and duties as an Agent under this Agreement, each Agent shall act
solely as an agent of Lenders and does not assume and shall not be deemed to
have assumed any obligation towards or relationship of agency or trust with or
for Company or any of its Subsidiaries.
9.2 POWERS AND DUTIES; GENERAL IMMUNITY.
-----------------------------------
▇. ▇▇▇▇▇▇; DUTIES SPECIFIED. Each Lender irrevocably authorizes each
Agent to take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other Loan Documents as are
specifically delegated or granted to such Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto. Each Agent shall have only those duties and responsibilities that are
expressly specified in this Agreement and the other Loan Documents. Each such
Agent may exercise such powers, rights and remedies and perform such duties by
or through its agents or employees. No
124
Agent shall have, by reason of this Agreement or any of the other Loan
Documents, a fiduciary relationship in respect of any Lender; and nothing in
this Agreement or any of the other Loan Documents, expressed or implied, is
intended to or shall be so construed as to impose upon any Agent any obligations
in respect of this Agreement or any of the other Loan Documents except as
expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. No Agent shall be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by any Agent to Lenders or by or on behalf of
Company to any Agent or any Lender in connection with the Loan Documents and the
transactions contemplated thereby or for the financial condition or business
affairs of Company or any other Person liable for the payment of any
Obligations, nor shall any Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or as to the existence
or possible existence of any Event of Default or Potential Event of Default.
Anything contained in this Agreement to the contrary notwithstanding, no Agent
shall have any liability arising from confirmations of the amount of outstanding
Loans or the Letter of Credit Usage or the component amounts thereof.
C. EXCULPATORY PROVISIONS. Neither any Agent nor any of its officers,
directors, employees or agents shall be liable to Lenders for any action taken
or omitted by such Agent ("ACTING AGENT") or any other Agent under or in
connection with any of the Loan Documents except to the extent caused by Acting
Agent's gross negligence or willful misconduct. If any Agent shall request
instructions from Lenders with respect to any act or action (including the
failure to take an action) in connection with this Agreement or any of the other
Loan Documents, such Agent shall be entitled to refrain from such act or taking
such action unless and until such Agent shall have received instructions from
Requisite Lenders. Without prejudice to the generality of the foregoing, (i)
each Agent shall be entitled to rely, and shall be fully protected in relying,
upon any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for Company and its Subsidiaries),
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against any Agent as a result
of such Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of Requisite Lenders. Each Agent shall be entitled to refrain from exercising
any power, discretion or authority vested in it under this Agreement or any of
the other Loan Documents unless and until it has obtained the instructions of
Requisite Lenders.
125
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans and the Letters of Credit, each
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not performing the duties and functions
delegated to it hereunder, and the term "Lender" or "Lenders" or any similar
term shall, unless the context clearly otherwise indicates, include such Agent
in its individual capacity. Any Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with Company or any of its Affiliates as if
it were not performing the duties specified herein, and may accept fees and
other consideration from Company for services in connection with this Agreement
and otherwise without having to account for the same to Lenders.
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
------------------------------------------------------------------
CREDITWORTHINESS.
----------------
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Company and its
Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. No Agent
shall have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders
or to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter, and no Agent shall have any responsibility with
respect to the accuracy of or the completeness of any information provided to
Lenders.
9.4 RIGHT TO INDEMNITY.
------------------
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and disbursements) or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against such Agent in exercising its powers, rights and remedies or
performing its duties hereunder or under the other Loan Documents or otherwise
in its capacity as an Agent in any way relating to or arising out of this
Agreement or the other Loan Documents; provided that no Lender shall be liable
--------
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from such
Agent's gross negligence or willful misconduct. If any indemnity furnished to
any Agent for any purpose shall, in the opinion of such Agent, be insufficient
or become impaired, such Agent may call for additional indemnity and cease, or
not commence, to do the acts indemnified against until such additional indemnity
is furnished.
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9.5 SUCCESSOR AGENT.
---------------
Any Agent may resign at any time by giving 30 days' prior written notice
thereof to Lenders and Company, and any Agent may be removed at any time with
cause by an instrument or concurrent instruments in writing delivered to Company
and such Agent and signed by Requisite Lenders. Upon any such notice of
resignation or any such removal, Requisite Lenders shall have the right, upon
five Business Days' notice to Company, to appoint a successor Agent to the
retiring or removed Agent. Upon the acceptance of any appointment as an Agent
hereunder by a successor Agent to the retiring or removed Agent, that successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Agent and the retiring or
removed Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Agent's resignation or removal
hereunder as an Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was such
Agent under this Agreement.
9.6 COLLATERAL DOCUMENTS AND GUARANTY.
---------------------------------
Each Lender hereby further authorizes Administrative Agent to enter into
each Collateral Document as secured party on behalf of and for the benefit of
Lenders and agrees to be bound by the terms of each Collateral Document;
provided that, subject to any provision of subsection 10.6 requiring the consent
--------
of any additional Lenders, Administrative Agent shall not enter into or consent
to any amendment, modification, termination or waiver of any provision contained
in any Collateral Document or the Guaranty without the prior consent of
Requisite Lenders, but Administrative Agent may (i) release any Lien covering
any items of Collateral that are the subject of a sale or other disposition of
assets permitted by this Agreement or to which Requisite Lenders have consented
and (ii) release any Subsidiary Guarantor from the Subsidiary Guaranty if all of
the capital stock of such Subsidiary Guarantor is sold to a Person that is not
any Affiliate of Company pursuant to a sale or other disposition permitted
hereunder or to which Requisite Lenders have consented. Anything contained in
any of the Loan Documents to the contrary notwithstanding, each Lender agrees
that no Lender shall have any right individually to realize upon any of the
Collateral under any Collateral Document or to enforce the Guaranty, it being
understood and agreed that all rights and remedies under the Collateral
Documents and the Guaranty may be exercised solely by Administrative Agent for
the benefit of Lenders in accordance with the terms thereof.
SECTION 10 MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
-------------------------------------------------------------
A. GENERAL. Subject to subsection 10.1B, each Lender shall have the
right at any time to (i) sell, assign or transfer to any Eligible Assignee, or
(ii) sell participations to any Person in, all or any part of its Commitments or
any Loan or Loans made by it or its Letters of Credit or
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participations therein or any other interest herein or in any other Obligations
owed to it; provided that no such sale, assignment, transfer or participation
--------
shall, without the consent of Company, require Company to file a registration
statement with the Securities and Exchange Commission or apply to qualify such
sale, assignment, transfer or participation under the securities laws of any
state; provided, further that no such sale, assignment or transfer described in
-------- -------
clause (i) above shall be effective unless and until an Assignment Agreement
effecting such sale, assignment or transfer shall have been accepted by
Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii); and provided, further that no such sale, assignment, transfer or
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participation of any Letter of Credit or any participation therein may be made
separately from a sale, assignment, transfer or participation of a corresponding
interest in the Tranche A Revolving Loan Commitment and the Tranche A Revolving
Loans of the Lender effecting such sale, assignment, transfer or participation;
and provided further that no Lender shall sell any participation to a Person
-------- -------
that is a Non-U.S. Person that is unable to deliver to such Lender either an
Internal Revenue Service Form 4224 or Form 1001 pursuant to clause (x) of
subsection 2.7B(iii)(a). Except as otherwise provided in this subsection 10.1,
no Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or any
granting of participations in, all or any part of its Commitments or the Loans,
the Letters of Credit or participations therein, or the other Obligations owed
to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter
--------------------------------
of Credit or participation therein, or other Obligation may (a) be assigned
in any amount to another Lender, or to an Affiliate of the assigning Lender
or another Lender, with the giving of notice to Company and Agent or (b) be
assigned in an aggregate amount of not less than $5,000,000 (or such lesser
amount as shall constitute the aggregate amount of the Commitments, Loans,
Letters of Credit and participations therein, and other Obligations of the
assigning Lender) to any other Eligible Assignee with the consent of
Administrative Agent and Company (which consent shall not be unreasonably
withheld). To the extent of any such assignment in accordance with either
clause (a) or (b) above, the assigning Lender shall be relieved of its
obligations with respect to its Commitments, Loans, Letters of Credit or
participations therein, or other Obligations or the portion thereof so
assigned. The parties to each such assignment shall execute and deliver to
Administrative Agent, for its acceptance and recording in the Register, an
Assignment Agreement, together with a processing and recordation fee of
$3,500 and such forms, certificates or other evidence, if any, with respect
to United States federal income tax withholding matters as the assignee
under such Assignment Agreement may be required to deliver to
Administrative Agent and Company pursuant to subsection 2.7B(iii)(a). Upon
such execution, delivery, acceptance and recordation, from and after the
effective date specified in such Assignment Agreement, (y) 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
Agreement, shall have the rights and obligations of a Lender hereunder and
(z) the assigning Lender
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thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment Agreement, relinquish its
rights and be released from its obligations under this Agreement, subject
to subsection 10.9B (and, in the case of an Assignment Agreement covering
all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party
hereto; provided that, anything contained in any of the Loan Documents to
--------
the contrary notwithstanding, if such Lender is the Issuing Lender with
respect to any outstanding Letters of Credit such Lender shall continue to
have all rights and obligations of an Issuing Lender with respect to such
Letters of Credit until the cancellation or expiration of such Letters of
Credit and the reimbursement of any amounts drawn thereunder). The
Commitments hereunder shall be modified to reflect the Commitment of such
assignee and any remaining Commitment of such assigning Lender and, if any
such assignment occurs after the issuance of the Notes hereunder, the
assigning Lender shall, upon the effectiveness of such assignment or as
promptly thereafter as practicable, surrender its applicable Notes to
Administrative Agent for cancellation, and thereupon new Notes shall be
issued to the assignee and/or to the assigning Lender, substantially in the
form of Exhibit IV-A or Exhibit IV-B annexed hereto, as the case may be,
------------ ------------
with appropriate insertions, to reflect the new Commitments, of the
assignee and/or the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register.
-----------------------------------------------------------
Upon its receipt of an Assignment Agreement executed by an assigning Lender
and an assignee representing that it is an Eligible Assignee, together with
the processing and recordation fee referred to in subsection 10.1B(i) and
any forms, certificates or other evidence with respect to United States
federal income tax withholding matters that such assignee may be required
to deliver to Administrative Agent pursuant to subsection 2.7B(iii)(a),
Administrative Agent shall, if Administrative Agent and Company have
consented to the assignment evidenced thereby (in each case to the extent
such consent is required pursuant to subsection 10.1B(i)), (a) accept such
Assignment Agreement by executing a counterpart thereof as provided therein
(which acceptance shall evidence any required consent of Administrative
Agent to such assignment), (b) record the information contained therein in
the Register, and (c) give prompt notice thereof to Company. Administrative
Agent shall maintain a copy of each Assignment Agreement delivered to and
accepted by it as provided in this subsection 10.1B(ii).
(iii) In the event that any Lender shall be or become a Competitor,
then Company shall have the right but not the obligation, upon notice to
such Lender and the Administrative Agent, to replace such Lender with an
Eligible Assignee (a "Replacement Lender") acceptable to Company and the
Administrative Agent (such consent not to be unreasonably withheld or
delayed; provided, that no such consent shall be required if the
--------
Replacement Lender is an existing Lender). Subject to the preceding
sentence, each such Lender which is a Competitor hereby agrees to transfer
and assign all of its Commitments, Loans, Letters of Credit or
participations therein or other Obligations owed to it to such Replacement
Lender in accordance with subsection 10.1B(i) and (ii); provided, however,
-------- -------
129
that (i) such assignment shall be without recourse, representation or
warranty (other than to the effect that such Lender owns the Commitments,
Loans and Letters of Credit or participations therein or other Obligations
being assigned, free and clear of any Liens) and (ii) the purchase price
paid by the Replacement Lender shall be in the aggregate amount of such
Lender's Loans and its Pro Rata Share of outstanding Letters of Credit,
together with all accrued and unpaid interest and fees in respect thereof,
plus all other amounts, owing to such Lender hereunder. Upon any such
termination or assignment, such Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of any provisions of this
Agreement which by their terms survive the termination of this Agreement.
(iv) Upon the effective date of an assignment described in clause
(iii), Company shall issue a replacement Note or Notes, as the case may be,
to such Replacement Lender and such Replacement Lender shall become a
"Lender" for all purposes under this Agreement and the other Loan
Documents.
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final maturity date of any
Loan allocated to such participation or (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan allocated to such participation,
and all amounts payable by Company hereunder (including without limitation
amounts payable to such Lender pursuant to subsections 2.6D, 2.7 and 3.6) shall
be determined as if such Lender had not sold such participation. Company and
each Lender hereby acknowledges and agrees that, solely for purposes of
subsections 10.4 and 10.5, (a) any participation will give rise to a direct
obligation of Company to the participant and (b) the participant shall be
considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender, and its Notes to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
--------
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit
to take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
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10.2 EXPENSES.
--------
Whether or not the transactions contemplated hereby shall be consummated,
Company agrees to pay promptly (i) all the actual and reasonable costs and
expenses of preparation of the Loan Documents and any consents, amendments,
waivers or other modifications thereto; (ii) all the reasonable costs of
furnishing all opinions by counsel for Company (including without limitation any
opinions requested by Lenders as to any legal matters arising hereunder) and of
Company's performance of and compliance with all agreements and conditions on
its part to be performed or complied with under this Agreement and the other
Loan Documents including, without limitation, with respect to confirming
compliance with environmental and insurance requirements; (iii) the reasonable
fees, expenses and disbursements of counsel to Administrative Agent and each of
the other Agents (including allocated costs of internal counsel) in connection
with the negotiation, preparation, execution and administration of the Loan
Documents and any consents, amendments, waivers or other modifications thereto
and any other documents or matters requested by Company; (iv) all the actual
costs and reasonable expenses of creating and perfecting Liens in favor of
Administrative Agent on behalf of Lenders pursuant to the Loan Documents,
including without limitation costs of conducting record searches, examining
Collateral, opening bank accounts and lockboxes, depositing checks, receiving
and transferring funds (including charges for checks for which there are
insufficient funds), and fees and taxes in connection with the filing of
financing statements, costs of preparing and recording Loan Documents, fees and
expenses of counsel for providing such opinions as Agents or Requisite Lenders
may reasonably request, and fees and expenses of legal counsel to Administrative
Agent; (v) all other actual and reasonable costs and expenses incurred by Agents
in connection with the syndication of the Commitments and the negotiation,
preparation and execution of the Loan Documents and any consents, amendments,
waivers or other modifications thereto and the transactions contemplated
thereby; and (vi) after the occurrence of an Event of Default, all costs and
expenses, including reasonable attorneys' fees (including allocated costs of
internal counsel) and costs of settlement, incurred by Agents and Lenders in
enforcing any Obligations of or in collecting any payments due from any Loan
Party hereunder or under the other Loan Documents by reason of such Event of
Default or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
10.3 INDEMNITY.
---------
In addition to the payment of expenses pursuant to subsection 10.2, whether
or not the transactions contemplated hereby shall be consummated, Company agrees
to defend, indemnify, pay and hold harmless Agents and Lenders, and the
officers, directors, employees, agents and affiliates of Agents and Lenders
(collectively called the "INDEMNITIES") from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including without limitation the reasonable fees and disbursements of counsel
for such Indemnities in connection with any investigative, administrative or
judicial proceeding commenced or threatened by any Person,
131
whether or not any such Indemnitee shall be designated as a party or a potential
party thereto), whether direct, indirect or consequential and whether based on
any federal, state or foreign laws, statutes, rules or regulations (including
without limitation securities and commercial laws, statutes, rules or
regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of this Agreement
or the other Loan Documents or the Related Agreements or the transactions
contemplated hereby or thereby (including without limitation Lenders' agreement
to make the Loans hereunder or the use or intended use of the proceeds of any of
the Loans or the issuance of Letters of Credit hereunder or the use or intended
use of any of the Letters of Credit) or the statements contained in the
commitment letter delivered by any Lender to Company with respect thereto
(collectively called the "INDEMNIFIED LIABILITIES"); provided, however, that
-------- -------
Company shall not have any obligation to any Indemnitee hereunder with respect
to any Indemnified Liabilities to the extent such Indemnified Liabilities arise
from the gross negligence or willful misconduct of that Indemnitee as determined
by a final judgment of a court of competent jurisdiction. To the extent that the
undertaking to defend, indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, Company shall contribute the maximum portion that it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnities or any of them.
Without limiting the generality of the foregoing, Company further agrees to
fully and promptly pay, perform, discharge, defend (subject to Indemnitee's
selection of counsel), indemnify and hold harmless each Indemnitee from and
against any Indemnified Environmental Liabilities; provided that Company shall
--------
not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Environmental Liabilities to the extent such Indemnified
Environmental Liabilities arise from the gross negligence or willful misconduct
of that Indemnitee as determined by a final judgment of a court of competent
jurisdiction. To the extent that the undertaking to defend, indemnify, pay and
hold harmless set forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, Company shall contribute the
maximum portion that it is permitted to pay and satisfy under applicable law to
the payment and satisfaction of all Indemnified Environmental Liabilities
incurred by the Indemnities or any of them. As used herein, "INDEMNIFIED
ENVIRONMENTAL LIABILITIES" means any liabilities, obligations, losses, damages
(including, without limitation, natural resource damages), penalties, actions,
judgments, suits, claims (including Environmental Claims), costs (including,
without limitation, the costs of any investigation, study, sampling, testing,
abatement, cleanup, removal, remediation, or other response action necessary to
remove, remediate, clean up, or ▇▇▇▇▇ any Hazardous Materials or any activity
relating to Hazardous Materials that is in violation of any Environmental Laws
or that presents a material risk of giving rise to an Environmental Claim),
expenses and disbursements of any kind or nature whatsoever, whether direct,
indirect or consequential and whether based on any federal, state or foreign
laws, statutes, rules or regulations (including without limitation securities
and commercial laws, statutes, rules or regulations and Environmental Laws), on
common law or equitable cause or on contract or otherwise, that may be imposed
on, incurred by, or asserted against any such Indemnitee, in any
132
manner relating to or arising out of: (i) any Release, threatened Release or
disposal of any Hazardous Materials at any of the Facilities; (ii) the Release,
threatened Release, or disposal at any location of any Hazardous Materials
generated at or originating from any of the Facilities by or at the direction of
Company or any of its Subsidiaries; (iii) any Environmental Claim in connection
with any of the Facilities; or (iv) the operation of or violation of any
Environmental Law at any of the Facilities.
10.4 SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS.
----------------------------------------------
In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon the occurrence and during the
continuance of any Event of Default and after consultation with Administrative
Agent each Lender is hereby authorized by Company at any time or from time to
time, without prior notice to Company or to any other Person, any such prior
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time held or
owing by that Lender to or for the credit or the account of Company against and
on account of the obligations and liabilities of Company to that Lender under
this Agreement, the Letters of Credit and participations therein and the other
Loan Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with this Agreement, the Letters of
Credit and participations therein or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have become due and
payable pursuant to Section 8 and although said obligations and liabilities, or
any of them, may be contingent or unmatured. Company hereby further grants to
Administrative Agent and each Lender a security interest in all deposits and
accounts maintained with Administrative Agent or such Lender as security for the
Obligations.
10.5 RATABLE SHARING.
---------------
AMOUNTS OWED BY COMPANY. Lenders hereby agree among themselves that if any
of them shall, whether by voluntary payment, by realization upon security,
through the exercise of any right of set-off or banker's lien, by counterclaim
or cross action or by the enforcement of any right under the Loan Documents or
otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code or under any other Insolvency Laws, receive payment or
reduction of a proportion of the aggregate amount of principal, interest,
amounts payable in respect of Letters of Credit, fees and other amounts then due
and owing to that Lender from Company hereunder or under the other Loan
Documents (collectively, the "AGGREGATE AMOUNTS DUE FROM COMPANY" to such
Lender) which is greater than the proportion received by any other Lender in
respect of the Aggregate Amounts Due From Company to such other Lender, then the
Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to
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purchase participations (which it shall be deemed to have purchased from each
seller of a participation simultaneously upon the receipt by such seller of its
portion of such payment) in the Aggregate Amounts Due From Company to the other
Lenders so that all such recoveries of Aggregate Amounts Due From Company shall
be shared by all Lenders in proportion to the Aggregate Amounts Due From Company
to them; provided that if all or part of such proportionately greater payment
--------
received by such purchasing Lender is thereafter recovered from such Lender upon
the bankruptcy or reorganization of Company or otherwise, those purchases shall
be rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. Company expressly consents to the foregoing arrangement and
agrees that any holder of a participation so purchased may exercise any and all
rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by Company to that holder with respect thereto as fully as if that
holder were owed the amount of the participation held by that holder.
10.6 AMENDMENTS AND WAIVERS.
----------------------
A. AMENDMENTS AND WAIVERS. No amendment, modification, termination or
waiver of any provision of this Agreement or of the Notes, and no consent to any
departure by Company therefrom, shall in any event be effective without the
written concurrence of Company and Requisite Lenders; provided that any such
--------
amendment, modification, termination, waiver or consent which: increases the
amount of any of the Commitments or reduces the principal amount of any of the
Loans; changes in any manner the definition of "Pro Rata Share" or the
definition of "Requisite Lenders" (it being understood that, with the consent
of Requisite Lenders, additional extensions of credit pursuant to this Agreement
may be included in the determination of Pro Rata Share and Requisite Lenders on
substantially the same basis as the extensions of credit set forth in this
Agreement on the date hereof); changes in any manner any provision of this
Agreement which, by its terms, expressly requires the approval or concurrence of
all Lenders; postpones the scheduled final maturity date (but not the date of
any scheduled installment of principal) of any of the Loans; postpones the date
on which any interest or any fees are payable to Lenders; decreases the interest
rate borne by any of the Loans (other than any waiver of any increase in the
interest rate applicable to any of the Loans pursuant to subsection 2.2E) or the
amount of any fees payable to Lenders hereunder; increases the maximum duration
of Interest Periods permitted hereunder; reduces the amounts or postpones the
due date of any amount payable in respect of, or extends the required expiration
date beyond the Revolving Loan Commitment Termination Date of, any Letter of
Credit; changes in any manner the obligations of Lenders relating to the
purchase of participations in Letters of Credit; releases any Lien granted in
favor of Administrative Agent with respect to all or substantially all of the
Collateral (except as expressly provided in the Loan Documents); or releases any
Loan Party from its obligations under the Guaranty in each case other than in
accordance with the terms of the Loan Documents or changes in any manner the
provisions contained in subsection 8.1 or this subsection 10.6 shall be
effective only if evidenced by a writing signed by or on behalf of all Lenders
affected thereby; provided further that no such amendment, modification,
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termination, waiver or consent shall increase the Commitments of a Lender over
the amount hereof then in effect without the consent
134
of such Lender. In addition, (i) any amendment, modification, termination or
waiver of any of the provisions contained in Section 4 shall be effective only
if evidenced by a writing by or on behalf of Agents, Requisite Lenders and
Company, (ii) no amendment, modification, termination or waiver of any provision
of any Note shall be effective without the written concurrence of the Lender
which is the holder of that Note and (iii) no amendment, modification,
termination or waiver of any provision of Section 9 or of any other provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of Administrative Agent shall be effective without the written
concurrence of Administrative Agent. Administrative Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Company in any case
shall entitle Company to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.6 shall be binding upon each
Lender at the time outstanding, each future Lender and, if signed by Company, on
Company.
B. REPLACEMENT OF LENDER. If, in connection with any proposed change,
waiver, discharge or termination to any of the provisions of this Agreement as
contemplated by the first proviso to subsection 10.6A, the consent of the
Requisite Lenders is obtained but the consent of one or more of such other
Lenders whose consent is required is not obtained, then Company shall have the
right, so long as all non-consenting Lenders whose individual consent is
required are treated as described in either clauses (A) or (B) below, to either
(A) replace each such non-consenting Lender or Lenders with one or more Persons
satisfying the requirements of the definition of Eligible Assignee (each such
Person being a "REPLACEMENT LENDER") so long as at the time of such
replacement each outstanding Loan, Letter of Credit and other Obligations owed
to each such Lender being replaced is repaid in full and so long as each such
Replacement Lender consents to the proposed change, waiver, discharge or
termination or (B) terminate such non-consenting Lender's Commitments and/or
repay in full each outstanding Loan, Letters of Credit and other Obligations
owed to such Lender; provided that, unless the Commitments that are terminated,
--------
and Loans, Letters of Credit and other Obligations repaid, pursuant to preceding
clause (B) are immediately replaced in full at such time through the addition of
new Lenders or the increase of the Commitments and/or outstanding Loans of
existing Lenders (who in each case must specifically consent thereto), then in
the case of any action pursuant to preceding clause (B) the Requisite Lenders
(determined after giving effect to the proposed action) shall specifically
consent thereto; provided further, that in any event Company shall not have the
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right to replace a Lender, terminate its Commitments or repay its Loans, Letters
of Credit and other Obligations owed to such Lender solely as a result of the
exercise of such Lender's rights (and the withholding of any required consent by
such Lender) pursuant to the second proviso to subsection 10.6A.
135
10.7 INDEPENDENCE OF COVENANTS.
-------------------------
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 NOTICES.
-------
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to any Agent shall not be
--------
effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or (i) as to Company and Administrative Agent, such other address as
shall be designated by such Person in a written notice delivered to the other
parties hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Administrative Agent.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
------------------------------------------------------
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 3.5A,
3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections
9.2C, 9.4, 10.5, and 10.19 shall survive the payment of the Loans, the
cancellation or expiration of the Letters of Credit and the reimbursement of any
amounts drawn thereunder, and the termination of this Agreement.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
-----------------------------------------------------
No failure or delay on the part of any Agent or any Lender in the exercise
of any power, right or privilege hereunder or under any other Loan Document
shall impair such power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing under
this Agreement and the other Loan Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
136
10.11 MARSHALLING; PAYMENTS SET ASIDE.
-------------------------------
Neither any Agent nor any Lender shall be under any obligation to marshal
any assets in favor of Company or any other party or against or in payment of
any or all of the Obligations. To the extent that Company makes a payment or
payments to any Agent or Lenders (or to any Agent for the benefit of Lenders),
or any Agent or Lenders enforce any security interests or exercise their rights
of setoff, and such payment or payments or the proceeds of such enforcement or
setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, any other state or federal
law, common law or any equitable cause, then, to the extent of such recovery,
the obligation or part thereof originally intended to be satisfied, and all
Liens, rights and remedies therefor or related thereto, shall be revived and
continued in full force and effect as if such payment or payments had not been
made or such enforcement or setoff had not occurred.
10.12 SEVERABILITY.
------------
In case any provision in or obligation under this Agreement or the Notes
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
----------------------------------------------------------
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14 HEADINGS.
--------
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
10.15 APPLICABLE LAW.
--------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
137
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. Each
Letter of Credit shall be governed by, and shall be 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 (1993 Revisions), International Chamber of Commerce,
Publication No. 500 (the "UNIFORM CUSTOMS") and as to matters not governed by
the Uniform Customs, the laws of the State of New York.
10.16 SUCCESSORS AND ASSIGNS.
----------------------
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the permitted successors and permitted assigns of Lenders (it being
understood that Lenders' rights of assignment are subject to subsection 10.1).
None of Company's rights or obligations hereunder nor any interest therein may
be assigned or delegated by Company without the prior written consent of all
Lenders.
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE,
COUNTY AND CITY OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT
COMPANY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN
DOCUMENT OR SUCH OBLIGATION. Company hereby agrees that service of all process
in any such proceeding in any such court may be made by registered or certified
mail, return receipt requested, to Company at its address provided in subsection
10.8, such service being hereby acknowledged by Company to be sufficient for
personal jurisdiction in any action against Company in any such court and to be
otherwise effective and binding service in every respect. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of any Lender to bring proceedings against Company in the courts
of any other jurisdiction.
10.18 WAIVER OF JURY TRIAL.
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
138
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED.
The scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter of
this transaction, including without limitation contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. Each party
hereto acknowledges that this waiver is a material inducement to enter into a
business relationship, that each has already relied on this waiver in entering
into this Agreement, and that each will continue to rely on this waiver in their
related future dealings. Each party hereto further warrants and represents that
it has reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO),
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event
of litigation, this Agreement may be filed as a written consent to a trial by
the court.
10.19 CONFIDENTIALITY.
---------------
Each Lender shall hold all non-public information obtained pursuant to the
requirements of this Agreement in accordance with such Lender's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, it being understood and agreed
by Company that in any event a Lender may after the proposed recipient of such
information has agreed in writing to be bound by this subsection 10.19, make
disclosures to Affiliates (other than any Affiliate that is a Competitor) of
such Lender or disclosures reasonably required by any bona fide assignee,
transferee or participant in connection with the contemplated assignment or
transfer by such Lender of any Loans or any participations therein or
disclosures required or requested by any governmental agency or representative
thereof or pursuant to legal process; provided that, unless specifically
--------
prohibited by applicable law or court order, each Lender shall notify Company of
any request by any governmental agency or representative thereof (other than any
such request in connection with any examination of the financial condition of
such Lender by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information; and provided, further that
-------- -------
in no event shall any Lender be obligated or required to return any materials
furnished by Company or any of its Subsidiaries.
139
10.20 COUNTERPARTS; EFFECTIVENESS.
---------------------------
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
140
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
LOEWS CINEPLEX ENTERTAINMENT
CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
Notice Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
With a copy to:
Loews Cineplex Entertainment Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
S-1
LENDERS:
BANKERS TRUST COMPANY,
as Administrative Agent, Co-Syndication Agent and as a
Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
_________________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-2
CREDIT SUISSE FIRST BOSTON,
as a Co-Syndication Agent and as a
Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
______________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
______________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
Notice Address:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇-▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ NT&SA,
as a Co-Syndication Agent and as a
Lender
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
___________________________
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
Notice Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-4
THE BANK OF NEW YORK,
as a Co-Syndication Agent and as a
Lender
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Notice Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-5
ABN AMRO BANK N.V.
By: /s/ ▇▇▇▇ ▇▇ ▇▇▇▇▇
_______________________________
Name: ▇▇▇▇ ▇▇ ▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
Notice Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇-▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
______________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Authorized Signatory
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-7
THE BANK OF TOKYO MITSUBISHI TRUST
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Notice Address:
1251 Avenue of the ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-8
BARCLAYS BANK PLC
By: /s/ ▇▇▇ ▇▇▇
______________________________
Name: ▇▇▇ ▇▇▇
Title: Director
Notice Address:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-9
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇'▇▇▇▇▇
______________________ ___________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇ Name: ▇▇▇▇▇ ▇'▇▇▇▇▇
Title: Vice President Title: Vice President
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-10
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ Kasuki Shimizu
__________________________
Kasuki Shimizu
Vice President
Notice Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-11
ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN AG
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
_______________________________ _______________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Vice President Title: First Vice President
Notice Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇-▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇
BRANCH
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President & Manager
Notice Address:
Two World Trade ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-13
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Senior Vice President
Notice Address:
New York Branch
1251 Avenue of the Americas
New York, New York 10020-1104
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-14
▇▇▇▇▇ BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Notice Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-15
SUMMIT BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President &
Regional Manager
Notice Address:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-16
THE TOYO TRUST & BANKING CO., LTD.
By: /s/ T. Mikumo
_______________________________
Name: T. Mikumo
Title: Vice President
Notice Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-17
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
___________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
Notice Address:
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25th Floor
New York, New York 1022
Attention: Bea Kossado
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