<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 1998
Commission file number 333-52943
---------
Regal Cinemas, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Tennessee 62-1412720
- ------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
7132 Commercial Park Drive
Knoxville, Tennessee 37918
-------------------------------------- ---------------------
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (423) 922-1123
----------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
1
<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
REGAL CINEMAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(in thousands of dollars)
ASSETS
<TABLE>
<CAPTION>
JULY 2, JANUARY 1,
1998 1998
--------- ---------
<S> <C> <C>
Current assets:
Cash and equivalents .................... $ 27,480 $ 18,398
Accounts receivable ..................... 1,080 4,791
Inventories ............................. 2,194 2,159
Prepaids and other current assets ....... 8,255 6,377
Refundable income taxes ................. 7,744 2,424
--------- ---------
Total current assets ................. 46,753 34,149
--------- ---------
Property and equipment:
Land .................................... 54,330 53,955
Buildings and leasehold improvements .... 415,345 366,323
Equipment ............................... 244,428 211,465
Construction in progress ................ 55,310 46,529
--------- ---------
769,413 678,272
Accumulated depreciation and amortization (131,232) (112,927)
--------- ---------
Total property and equipment, net .... 638,181 565,345
Goodwill, net ................................ 55,475 52,619
Other assets ................................. 44,005 8,537
--------- ---------
Total assets ......................... $ 784,414 $ 660,650
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE> 3
REGAL CINEMAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
-------------------------------------------------
(in thousands of dollars, except share amounts)
LIABILITIES AND SHAREHOLDERS' DEFICIT
<TABLE>
<CAPTION>
JULY 2, JANUARY 1,
1998 1998
--------- --------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt (Note 4) .......... $ 306 $ 306
Accounts payable ....................................... 38,582 38,982
Accrued expenses ....................................... 35,517 13,739
--------- --------
Total current liabilities ........................... 74,405 53,027
--------- --------
Long-term debt, less current maturities (Note 4) ............ 775,963 288,277
Other liabilities ........................................... 10,184 12,771
--------- --------
Total liabilities ................................... 860,552 354,075
--------- --------
Commitments (Note 4)
Shareholders' equity (deficit) (Note 1):
Preferred stock, no par; 100,000,000 shares
authorized, none issued ............................. --
Common stock, no par; 500,000,000 shares
authorized; 155,494,566 and 223,903,849 shares
issued and outstanding at July 2, 1998 and
January 1, 1998 ..................................... (118,941) 223,707
Retained earnings ........................................... 42,803 82,868
--------- --------
Total shareholders' equity (deficit) ................ $ (76,138) $306,575
--------- --------
Total liabilities and shareholders' equity .......... $ 784,414 $660,650
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
REGAL CINEMAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(in thousands of dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ ------------------------
JULY 2, JULY 3, JULY 2, JULY 3,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue:
Admissions ...................... $ 95,571 $ 73,941 $ 190,918 $ 150,455
Concessions ..................... 41,940 32,379 82,041 62,996
Other operating revenue ......... 8,485 4,860 15,184 8,739
--------- --------- --------- ---------
Total revenues ........... 145,996 111,180 288,143 222,190
--------- --------- --------- ---------
Operating expenses:
Film rental and advertising costs 55,141 41,122 103,987 81,298
Cost of concessions and other ... 6,626 5,252 12,995 10,217
Theatre operating expenses ...... 50,508 37,990 100,177 75,112
General and administrative
expenses .................... 3,801 4,977 8,011 9,544
Depreciation and amortization ... 10,336 7,272 19,917 14,460
Recapitalization expenses
(Note 1) .................... 62,047 -- 62,047 --
--------- --------- --------- ---------
Total operating expenses . 188,459 96,613 307,134 190,631
--------- --------- --------- ---------
Operating income (loss) ........... (42,463) 14,567 (18,991) 31,559
Other income (expense):
Interest expense ............ (8,536) (3,197) (13,327) (6,077)
Interest income ............. 318 56 467 173
Other ....................... 4 (141) (236) (331)
--------- --------- --------- ---------
Income (loss) before income taxes
and extraordinary loss .......... (50,677) 11,285 (32,087) 25,324
Provision for (benefit from)
income taxes (Note 5) ........... (11,162) 4,347 (3,912) 9,799
--------- --------- --------- ---------
Income (loss) before extraordinary
loss) ........................... (39,515) 6,938 (28,175) 15,525
Extraordinary loss -- loss on
retirement of debt, net of
income tax benefit of
$7,602 (Note 4) .......... (11,890) -- (11,890)
--------- --------- --------- ---------
Net income (loss) ................. $ (51,405) $ 6,938 $ (40,065) $ 15,525
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
REGAL CINEMAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(in thousands of dollars)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------------
JULY 2, JULY 3,
1998 1997
----------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)(1) ................................... $ (40,065) $ 15,525
Adjustments to reconcile net income to net cash
provided by operating activities:
Noncash loss on extinguishment of debt ......... 3,026 --
Depreciation and amortization .................. 19,917 14,460
Loss (gain) on sale of assets .................. (23) 331
Deferred income taxes .......................... (9,664) 133
Changes in operating assets and liabilities:
Accounts receivable .......................... 3,711 1,139
Inventories .................................. (35) (534)
Prepaids and other current assets ............ (7,198) (554)
Accounts payable ............................. (400) 1,594
Accrued expenses and other liabilities ....... 28,855 4,693
----------- --------
Net cash provided (used) by operating
activities(1) ........................... (1,876) 36,787
Cash flows from investing activities:
Capital expenditures, net ........................... (91,119) (77,387)
Investment in goodwill and other assets ............. (8,030) (13,775)
----------- --------
Net cash used in investing activities ... (99,149) (91,162)
Cash flows from financing activities:
Long-term debt borrowings ........................... 790,000 50,868
Payments made on long-term debt ..................... (302,314) --
Deferred financing costs ............................ (34,931) --
Proceeds from issuance of common stock .............. 774,717 751
Purchase and retirement of common stock ............. (1,117,407) --
Stock compensation expense .......................... 42 60
----------- --------
Net cash provided by financing activities 110,107 51,679
----------- --------
Net increase (decrease) in cash and equivalents ........ 9,082 (2,696)
Cash and equivalents at beginning of period ............ 18,398 17,116
----------- --------
Cash and equivalents at end of period .................. $ 27,480 $ 14,420
=========== ========
</TABLE>
- ----------
(1) Includes $46,451 of Recapitalization expenses, net of tax benefit.
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
REGAL CINEMAS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
---------------------------------------------------------------
1. RECAPITALIZATION
On May 27, 1998, an affiliate of Kohlberg Kravis Roberts & Co. L.P.
("KKR") and an affiliate of Hicks, Muse, Tate & Furst Incorporated
("Hicks Muse") merged with and into Regal Cinemas, Inc. (the "Merger"),
with the Company continuing as the surviving corporation of the Merger.
The Merger and related transactions have been recorded as a
recapitalization (the "Recapitalization"). In the Recapitalization, the
Company's existing shareholders, received cash for their shares of
common stock. In addition, in connection with the Recapitalization, the
Company canceled options and repurchased warrants held by certain
former directors, management and employees of the Company (the
"Option/Warrant Redemption"). The aggregate amount paid to effect the
Merger and the Option/Warrant Redemption was approximately $1.2
billion.
The net proceeds of the $400 million senior subordinated notes, initial
borrowings of $375.0 million under the senior credit facility and the
proceeds of $776.9 million from the investment by KKR, Hicks Muse, DLJ
Merchant Banking Partners II, L.P. and affiliated funds ("DLJ") and
management in the Company was used: (i) to fund the cash payments
required to effect the Merger and the Option/Warrant Redemption; (ii)
to repay and retire the Company's existing senior credit facilities;
(iii) to repurchase the existing Regal 8.5% senior subordinated notes;
(iv) to pay related fees and expenses; and (v) for general corporate
purposes. Upon consummation of the Merger, KKR owned $287.3 million of
the Company's equity securities, Hicks Muse owned $437.3 million of the
Company's equity securities and DLJ owned $50.0 million of the
Company's equity securities. Each investor received securities
consisting of a combination of Common Stock and the Company's Series A
Convertible Preferred Stock, no par value ("Convertible Preferred
Stock"), which was converted into Common Stock on June 3, 1998. To
equalize KKR's and Hicks Muse's investments in the Company at $362.3
million each, Hicks Muse exchanged $75.0 million of Convertible
Preferred Stock, with KKR for $75.0 million of common stock of Act III
Cinemas, Inc. ("Act III"). Upon completion of the Recapitalization and
the conversion of the Convertible Preferred Stock, KKR, Hicks Muse and
DLJ own approximately 46.6%, 46.6% and 6.4%, respectively, of the
Company's Common Stock.
During 1998, nonrecurring costs of approximately $62.0 million,
including approximately $39.8 million of compensation costs, were
incurred in connection with the Recapitalization. Financing costs of
approximately $34.2 million were incurred and classified as deferred
financing costs which will be amortized over the lives of the new debt
facilities (see Note 4). Of the total Merger Recapitalization costs
above, $19.5 million was paid to KKR and Hicks Muse.
2. THE COMPANY AND BASIS OF PRESENTATION
Regal Cinemas, Inc. ("Regal") and its wholly owned subsidiaries,
collectively referred to as the "Company" operates multi-screen motion
picture theatres principally throughout the eastern United States. The
Company formally operates on a fiscal year ending on the Thursday
closest to December 31.
On July 31, 1997, Regal issued 2,837,594 shares of its common stock for
all of the outstanding common stock of Cobb Theatres. The merger has
been accounted for as a pooling of interests and, accordingly, these
condensed consolidated financial statements have been restated for all
periods to include the results of operations and financial positions of
Cobb Theatres.
6
<PAGE> 7
REGAL CINEMAS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
---------------------------------------------------------------
Separate results of the combining entities for the three and six-month
periods ended July 3, 1997 are as follows:
<TABLE>
<CAPTION>
Three Six
Months Months
Ended Ended
July 3, 1997 July 3, 1997
------------ ------------
<S> <C> <C>
Revenues: (in thousands)
Regal ...................................... $ 79,083 $ 157,129
Cobb Theatres, L.L.C. and Tricob Partnership 32,097 65,061
--------- ---------
$ 111,180 $ 222,190
========= =========
Net (loss):
Regal ...................................... $ 7,812 $ 16,348
Cobb Theatres, L.L.C. and Tricob Partnership (874) (823)
--------- ---------
$ 6,938 $ 15,525
========= =========
</TABLE>
3. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet as of July 2, 1998, the
condensed consolidated statements of operations for the three months
and six months ended July 2, 1998 and July 3, 1997 and the condensed
consolidated statements of cash flows for the six months ended July 2,
1998 and July 3, 1997 have been prepared by the Company, without audit.
In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows for all periods
presented have been made. The January 1, 1998 information has been
derived from the audited January 1, 1998 balance sheet of Regal
Cinemas, Inc.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these condensed consolidated financial statements
be read in conjunction with the financial statements and notes thereto
included in the Company's Report filed on Form 10-K dated March 31,
1998. The results of operations for the three and six-month periods
ended July 2, 1998 are not necessarily indicative of the operating
results for the full year.
7
<PAGE> 8
REGAL CINEMAS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
---------------------------------------------------------------
4. LONG-TERM DEBT
Long-term debt at July 2, 1998 and January 1, 1998, consists of the
following:
<TABLE>
<CAPTION>
JULY 2, JANUARY 1,
1998 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
$400,000 Regal senior subordinated notes due June 1, 2008, with
interest payable semiannually at 9.5%. Notes are redeemable, in
whole or in part, at the option of the Company at any time on or
after June 1, 2003, at the redemption prices (expressed as
percentages of the principal amount thereof) set forth below
together with accrued and unpaid interest to the redemption date,
if redeemed during the 12 month period beginning on June 1 of
the years indicated:
Year Redemption Price
---- ----------------
2003 104.750%
2004 103.167%
2005 101.583%
2006 and thereafter 100.000% $400,000 --
Term Loans 375,000 --
Revolving credit facility -- --
$125,000 Regal senior subordinated notes, due October 1, 2007 with
interest payable semiannually at 8.5% 125,000
$250,000 Regal senior reducing revolving credit facility -- 162,000
Other 1,269 1,583
-------- --------
776,269 288,583
Less current maturities (306) (306)
-------- --------
$775,963 $288,277
======== ========
</TABLE>
The Company's debt at July 2, 1998, is scheduled to mature as follows:
(in thousands)
1998....................... $ 306
1999....................... 2,093
2000....................... 2,400
2001....................... 3,750
2002....................... 3,750
Thereafter................. $ 763,970
---------
Total...................... $ 776,269
=========
8
<PAGE> 9
REGAL CINEMAS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
---------------------------------------------------------------
4. LONG-TERM DEBT, CONTINUED
Under the Company's previous $250,000 senior reducing revolving credit
facility (the "revolving credit facility"), interest was payable
quarterly at LIBOR plus .65%. The margin added to LIBOR was determined
based upon certain financial ratios of the Company. The revolving
credit facility was repaid in conjunction with the Recapitalization.
NEW CREDIT FACILITIES -- In connection with the Merger and
Recapitalization, the Company entered into credit facilities provided
by a syndicate of financial institutions. Such credit facilities (the
"Credit Facilities") include a $350,000 Revolving Credit Facility
(including the availability of Revolving Loans, Swing Line Loans, and
Letters of Credit) and three term loan facilities: Term A ($120,000),
Term B ($120,000), and Term C ($135,000) (the "Term Loans"). The
Company must pay an annual commitment fee ranging from 0.2% to 0.425%,
depending on the Company's Total Leverage Ratio, as defined, of the
unused portion of the Revolving Credit Facility. The Revolving Credit
Facility expires in June 2005. No borrowings were outstanding under the
Revolving Credit Facility at July 2, 1998.
Borrowings under the Term A Loan or the Revolving Credit Facility can
be made at the "Base Rate" plus a margin of 0% to 1%, or the "LIBO
Rate," plus .625% to 2.25%, both depending on the Total Leverage Ratio.
The Base Rate on revolving loans is the rate established by the
Administrative Agent in New York as its base rate for dollars loaned in
the United States. The LIBO Rate is based on the LIBOR rate for the
corresponding length of loan. One percent of the outstanding balance on
the Term A Loan is due annually though 2004 with the balance of the
Term A Loan due in 2005.
Borrowings under the Term B Loan can be made at the Base Rate plus a
margin of 0.75% to 1.25% or the LIBO Rate plus 2.0% to 2.5%, both
depending on the Total Leverage Ratio. One percent of the outstanding
balance is due annually through 2005, with the balance of the loan due
in 2006.
Borrowings under the Term C Loan can be made at the Base Rate plus a
margin of 1.0% to 1.5% or the LIBO Rate plus 2.25% to 2.75%, both
depending on the Total Leverage Ratio. One percent of the outstanding
balance is due annually through 2006, with the balance of the loan due
in 2007.
The Credit Facilities contain customary covenants and restrictions on
the Company's ability to issue additional debt or engage in certain
activities and include customary events of default. In addition, the
Credit Facilities specify that the Company must meet or exceed defined
interest coverage ratios and must not exceed defined leverage ratios.
The Company was in compliance with such covenants at July 2, 1998.
The Credit Facility is secured by a pledge of the stock of the
Company's domestic subsidiaries. The Company's payment obligations
under the Credit Facility is guaranteed by its direct and indirect U.S.
subsidiaries.
9
<PAGE> 10
REGAL CINEMAS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
---------------------------------------------------------------
4. LONG-TERM DEBT, CONTINUED
TENDER OFFER -- In connection with the Recapitalization, the Company
commenced a tender offer for all of the Regal 8.5% senior subordinated
notes ("Regal Notes") and a consent solicitation in order to effect
certain changes in the Indenture. Upon completion of the tender offer,
holders had tendered and given consents with respect to 100% of the
outstanding principal amount of the Regal Notes. In addition, the
Company and the trustee executed a supplement to the Indenture,
effecting the proposed amendments which included, among other things,
the elimination of all financial covenants for the Regal Notes. On May
27, 1998, the Company paid, for each $1,000 principal amount, $1,116.24
for Regal Notes tendered plus, in each case, accrued and unpaid
interest of $13.22. Regal financed the purchase price of the Regal
Notes with funds from the Recapitalization.
EXTRAORDINARY LOSS -- An extraordinary loss of $11.9 million, net of
income taxes of $7.6 million, was recognized for the write-off of
deferred financing costs and prepayment penalties incurred in
connection with redeeming the Regal Notes as well as for the write-off
of deferred financing costs related to the Company's previous credit
facility.
5. INCOME TAXES
The effective income tax rate on income (loss) before extraordinary
items for the six month periods ended July 2, 1998 and July 3, 1997
differs from the statutory federal income tax rate of 35% as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------
JULY 2, JULY 3,
1998 1997
------- -------
<S> <C> <C>
Federal statutory tax rate.......................... 35.0% 35.0%
Nondeductible recapitalization costs................ (26.8%) --
State taxes, net of federal effect.................. 4.0% 3.7%
------ -------
Effective rate............................. 12.2% 38.7%
====== =======
</TABLE>
6. CAPITAL STOCK
Earnings per share information is not presented as the Company's shares
do not trade in a public market. After the Recapitalization, the
Company effected a stock split resulting in a price per share of $5.00,
which $5.00 per share price is equivalent to the $31.00 per share
consideration paid in the Merger. The January 1, 1998 shares
outstanding have been adjusted to reflect such equivalent shares.
7. RECLASSIFICATIONS
Certain reclassifications have been made to the 1997 financial
statements to conform with the 1998 presentation. These
reclassifications had no impact on previously reported results of
operations or shareholders' deficit.
10
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following analysis of the financial condition and results of
operations of the Company, should be read in conjunction with the Condensed
Consolidated Financial Statements and Notes thereto included herein.
BACKGROUND OF REGAL
Regal has achieved significant growth in theatres and screens since its
formation in November of 1989. Since inception through July 2, 1998, Regal
acquired 191 theatres with 1,510 screens, developed 70 new theatres with 879
screens and added 78 new screens to existing theatres. Theatres developed by the
Company typically generate positive theatre level cash flow within the first
three months following commencement of operation and reach a mature level of
attendance within one to three years following commencement of operation.
Theatre closings have had no significant effect on the operations of Regal.
RESULTS OF OPERATIONS
The Company's revenues are generated primarily from box office receipts
and concession sales. Additional revenues are generated by electronic video
games located adjacent to the lobbies of certain of the Company's theatres, and
by on-screen advertisements and revenues from the Company's five entertainment
centers which are adjacent to theatre complexes. Direct theatre costs consist of
film rental costs, costs of concessions and theatre operating expenses. Film
rental costs are related to the popularity of a film and the length of time
since the film's release and generally decline as a percentage of admission
revenues the longer a film has been released. Because certain concession items,
such as fountain drinks and popcorn, are purchased in bulk and not pre-packed
for individual servings, the Company is able to improve its margins by
negotiating volume discounts. Theatre operating expenses consist primarily of
theatre labor and occupancy costs. Future increases in minimum wage requirements
or legislation requiring additional employer funding of health care, among other
things, may increase theatre operating expenses as a percentage of total
revenues.
11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED
The following table sets forth for the fiscal periods indicated the
percentage of total revenues represented by certain items reflected in the
Company's consolidated statements of income.
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL REVENUES
----------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- ------------------
JULY 2, JULY 3, JULY 2, JULY 3,
1998 1997 1998 1997
------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Admissions................................... 65.5% 66.5% 66.2% 67.7%
Concessions.................................. 28.7% 29.1% 28.5% 28.4%
Other operating revenue...................... 5.8% 4.4% 5.3% 3.9%
------- ------ ------ -------
Total revenues........................ 100.0% 100.0% 100.0% 100.0%
------- ------ ------ -------
Operating expenses:
Film rental and advertising costs............ 37.8% 37.0% 36.1% 36.5%
Cost of concessions and other................ 4.5% 4.7% 4.5% 4.6%
Theatre operating expenses................... 34.6% 34.2% 34.8% 33.9%
General and administrative
expenses................................. 2.6% 4.5% 2.8% 4.3%
Depreciation and amortization................ 7.1% 6.5% 6.9% 6.5%
Recapitalization expenses.................... 42.5% -- 21.5% --
------- ------ ------ ------
Total operating expenses.............. 129.1% 86.9% 106.6% 85.8%
------- ------ ------ ------
Operating income (loss)........................ (29.1%) 13.1% (6.6%) 14.2%
Other income (expense):
Interest expense......................... (5.8%) (2.9%) (4.6%) (2.7%)
Interest income.......................... 0.2% 0.1% 0.2% --
Other.................................... -- (0.1%) (0.1%) (0.1%)
------- ------ ------ ------
Income (loss) before income taxes
and extraordinary loss....................... (34.7%) 10.2% (11.1%) 11.4%
Provision for (benefit from) income
taxes........................................ (7.6%) 4.0% (1.3%) 4.4%
------- ------ ------ ------
Income (loss) before extraordinary
loss)........................................ 27.1% 6.2% (9.8%) 7.0%
Extraordinary loss....................... (8.1%) -- (4.1%) --
------- ------ ------ ------
Net income (loss).............................. (35.2%) 6.2% (13.9%) 7.0%
======= ====== ====== ======
</TABLE>
12
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED
THREE MONTHS ENDED JULY 2, 1998 AND JULY 3, 1997
TOTAL REVENUES -- Total revenues for the second quarter of fiscal 1998
increased by 31.3% to $146.0 million from $111.1 million in the comparable 1997
period. This increase was due to a 19.6% increase in attendance attributable
primarily to the net addition of 407 screens in the last 12 months. Of the $34.9
million net increase in revenues for the period, a $6.1 million increase was
attributed to theatres previously operated by the Company, $5.6 million increase
was attributed to theatres acquired by the Company, and $23.0 million increase
was attributed to new theatres constructed by the Company. Average ticket prices
increased 8.0% during the period, reflecting an increase in ticket prices and a
greater proportion of larger market theatres in the 1998 period than in the same
period in 1997. Average concession sales per customer increased 8.3% for the
period, reflecting both an increase in consumption and, to a lesser degree, an
increase in concession prices.
DIRECT THEATRE COSTS -- Direct theatre costs increased by 33.1% to
$112.3 million in the second quarter 1998 from $84.4 million in the second
quarter 1997. Direct theatre costs as a percentage of total revenues increased
to 76.9% in the 1998 period from 75.9% in the 1997 period. The increase of
direct theatre costs as a percentage of total revenues was primarily
attributable to higher film rental and advertising costs as a percentage of
total revenues.
GENERAL AND ADMINISTRATIVE EXPENSES -- General and administrative
expenses decreased by 23.6% to $3.8 million in the second quarter 1998 from $5.0
million in the second quarter 1997. As a percentage of total revenues, general
and administrative expenses decreased to 2.6% in the 1998 period from 4.5% in
the 1997 period.
DEPRECIATION AND AMORTIZATION -- Depreciation and amortization expense
increased in the second quarter 1998 by 42.1% to $10.3 million from $7.3 million
in the second quarter 1997. This increase was primarily the result of theatre
property additions associated with the Company's expansion efforts.
OPERATING INCOME (LOSS) -- Operating income (loss) for the second
quarter 1998 decreased to $(42.5) million, or (29.1)% of total revenues, from
$14.6 million, or 13.1% of total revenues, in the second quarter 1997. Before
nonrecurring expenses associated with the Recapitalization, operating income for
the second quarter 1998 was $19.6 million or 13.4% of total revenues.
INTEREST EXPENSE -- Interest expense increased in the second quarter
1998 by 167.0% to $8.5 million from $3.2 million in the second quarter 1997. The
increase was primarily due to higher average borrowings outstanding associated
with the Recapitalization of the Company.
INCOME TAXES -- The provision (benefit) for income taxes in the second
quarter 1998 was $(11.2) million as compared to $4.3 million in the second
quarter 1997. The effective tax rate was
13
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED
(22.0)% in the 1998 period as compared to 38.5%% in the 1997 period as the 1998
period reflected certain Recapitalization expenses which were not deductible for
tax purposes.
NET INCOME (LOSS) -- The net income (loss) in the second quarter 1998
was ($51.4) million as compared to $6.9 million in the second quarter 1997. Net
income before nonrecurring and extraordinary items was $6.9 million or 4.8% of
total revenues in the second quarter of 1998 as compared to $6.9 million or 6.2%
of total revenues in the 1997 period.
SIX MONTHS ENDED JULY 2, 1998 AND JULY 3, 1997
TOTAL REVENUES -- Total revenues for the six months ended July 2, 1998
increased by 29.7% to $288.1 million from $222.2 million in the comparable 1997
period. This increase was due to a 18.8% increase in attendance attributable
primarily to the net addition of 407 screens in the last 12 months. Of the $65.9
million net increase in revenues for the period, a $16.3 million decrease was
attributed to theatres previously operated by the Company, $11.2 million
increase was attributed to theatres acquired by the Company, and $38.4 million
increase was attributed to new theatres constructed by the Company. Average
ticket prices increased 6.9% during the period, reflecting an increase in ticket
prices and a greater proportion of larger market theatres in the 1998 period
than in the same period in 1997. Average concession sales per customer increased
9.7% for the period, reflecting both an increase in consumption and, to a lesser
degree, an increase in concession prices.
DIRECT THEATRE COSTS -- Direct theatre costs increased by 30.4% to
$217.2 million for the six months ended July 2, 1998 from $166.6 million in the
comparable 1997 period. Direct theatre costs as a percentage of total revenues
increased to 75.4% in the 1998 period from 75.0% in the 1997 period. The
increase of direct theatre costs as a percentage of total revenues was primarily
attributable to higher theatre operating expenses as a percentage of total
revenues.
GENERAL AND ADMINISTRATIVE EXPENSES -- General and administrative
expenses decreased by 16.1% to $8.0 million for the six months ended July 2,
1998 from $9.5 million in the comparable 1997 period. As a percentage of total
revenues, general and administrative expenses decreased to 2.8% in the 1998
period from 4.3% in the 1997 period.
DEPRECIATION AND AMORTIZATION -- Depreciation and amortization expense
increased for the six months ended July 2, 1998 by 37.7% to $19.9 million from
$14.5 million in the comparable 1997 period. This increase was primarily the
result of theatre property additions associated with the Company's expansion
efforts.
OPERATING INCOME (LOSS) -- Operating income (loss) for the six months
ended July 2, 1998 decreased to $(19.0) million, or (6.6)% of total revenues,
from $31.6 million, or 14.2% of total revenues, in the comparable 1997 period.
Before nonrecurring expenses associated with the
14
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED
Recapitalization, operating income for the six month period ended July 2, 1998
was $43.1 million or 14.9% of total revenues.
INTEREST EXPENSE -- Interest expense increased for the six months ended
July 2, 1998 by 119.3% to $13.3 million from $6.1 million in the comparable 1997
period. The increase was primarily due to higher average borrowings outstanding
associated with the Recapitalization of the Company.
INCOME TAXES -- The provision (benefit) for income taxes for the six
months ended July 2, 1998 was $(13.9) million as compared to $9.8 million in the
1997 period. The effective tax rate was (12.2)% in the 1998 period as compared
to 38.7% in the 1997 period as the 1998 period reflected certain
Recapitalization expenses which were not deductible for tax purposes.
NET INCOME (LOSS) -- The net income (loss) for the six months ended
July 2, 1998 increased was $(40.1) million as compared to $15.5 million in the
1997 period. Net income before nonrecurring and extraordinary items was $18.2
million or 6.3% of total revenues in the six months ended July 2, 1998 as
compared to $15.5 million or 7.0% of total revenues in the 1997 period.
RECENT TRANSACTIONS
RECAPITALIZATION AND MERGER -- On May 27, 1998, an affiliate of
Kohlberg Kravis Roberts & Co. L.P. ("KKR") and an affiliate of Hicks, Muse, Tate
& Furst Incorporated ("Hicks Muse") merged with and into the Company (the
"Merger"), with the Company continuing as the surviving corporation of the
Merger. The Merger and related transactions have been recorded as a
recapitalization (the "Recapitalization"). In the Recapitalization, the
Company's existing shareholders, received cash for their shares of common stock.
In addition, in connection with the Recapitalization, the Company canceled
options and repurchased warrants held by certain former directors, management
and employees of the Company (the "Option/Warrant Redemption"). The aggregate
amount paid to effect the Merger and the Option/Warrant Redemption was
approximately $1.2 billion.
The net proceeds of the $400 million senior subordinated notes, initial
borrowings of $375.0 million under the senior credit facility and the proceeds
of $776.9 million from the investment by KKR, Hicks Muse, DLJ Merchant Banking
Partners II, L.P. and affiliated funds ("DLJ") and management in the Company was
used: (i) to fund the cash payments required to effect the Merger and the
Option/Warrant Redemption; (ii) to repay and retire the Company's existing
senior credit facilities; (iii) to repurchase the existing Regal 8.5% senior
subordinated notes; (iv) to pay related fees and expenses; and (v) for general
corporate purposes. Upon consummation of the Merger, KKR owned $287.3 million of
the Company's equity securities, Hicks Muse owned $437.3 million of the
Company's equity securities and DLJ owned $50.0 million of the Company's equity
securities. Each investor received securities consisting of a
15
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED
combination of Common Stock and the Company's Series A Convertible Preferred
Stock, no par value ("Convertible Preferred Stock"), which was converted into
Common Stock on June 3, 1998. To equalize KKR's and Hicks Muse's investments in
the Company at $362.3 million each, Hicks Muse exchanged $75.0 million of
Convertible Preferred Stock, with KKR for $75.0 million of common stock of Act
III Cinemas, Inc. ("Act III"). Upon completion of the Recapitalization and the
conversion of the Convertible Preferred Stock, KKR, Hicks Muse and DLJ own
approximately 46.6%, 46.6% and 6.4%, respectively, of the Company's Common
Stock.
During 1998, nonrecurring costs of approximately $62.0 million,
including approximately $39.8 million of compensation costs, were incurred in
connection with the Recapitalization. Financing costs of approximately $34.2
million were incurred and classified as deferred financing costs which will be
amortized over the lives of the new debt facilities (see Note 4). Of the total
Merger Recapitalization costs above, $19.5 million was paid to KKR and Hicks
Muse.
TENDER OFFER -- In connection with the Recapitalization, the Company
commenced a tender offer for all of the Regal 8.5% senior subordinated notes
("Regal Notes") and a consent solicitation in order to effect certain changes in
the Indenture. Upon completion of the tender offer, holders had tendered and
given consents with respect to 100% of the outstanding principal amount of the
Regal Notes. In addition, the Company and the trustee executed a supplement to
the Indenture, effecting the proposed amendments which included, among other
things, the elimination of all financial covenants for the Regal Notes. On May
27, 1998, the Company paid, for each $1,000 principal amount, $1,116.24 for
Regal Notes tendered plus, in each case, accrued and unpaid interest of $13.22.
Regal financed the purchase price of the Regal Notes with funds from the
Recapitalization.
LIQUIDITY AND CAPITAL RESOURCES
Substantially all of the Company's revenues are derived from cash box
office receipts and concession sales, while film rental fees are ordinarily paid
to distributors 15 to 45 days following receipt of admission revenues. The
Company thus has an operating cash "float" which partially finances its
operations, reducing the Company's needs for external sources of working
capital.
The Company's capital requirements have arisen principally in
connection with acquisitions of existing theatres, new theatre openings and the
addition of screens to existing theatres and have been financed with equity
(including equity issued in connection with acquisitions and public offerings),
borrowings under the Company's loan agreement and internally generated cash.
NEW CREDIT FACILITIES -- In connection with the Merger and
Recapitalization, the Company entered into credit facilities provided by a
syndicate of financial institutions. Such credit facilities (the "Credit
Facilities") include a $350,000 Revolving Credit Facility (including the
availability of Revolving Loans, Swing Line Loans, and Letters of Credit) and
three term loan facilities: Term A ($120,000), Term B ($120,000), and Term C
($135,000) (the "Term Loans"). The Company
16
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED
must pay an annual commitment fee ranging from 0.2% to 0.425%, depending on the
Company's Total Leverage Ratio, as defined, of the unused portion of the
Revolving Credit Facility. The Revolving Credit Facility expires in June 2005.
No borrowings were outstanding under the Revolving Credit Facility at July 2,
1998.
Borrowings under the Term A Loan or the Revolving Credit Facility can
be made at the "Base Rate" plus a margin of 0% to 1%, or the "LIBO Rate," plus
.625% to 2.25%, both depending on the Total Leverage Ratio. The Base Rate on
revolving loans is the rate established by the Administrative Agent in New York
as its base rate for dollars loaned in the United States. The LIBO Rate is based
on the LIBOR rate for the corresponding length of loan. One percent of the
outstanding balance on the Term A Loan is due annually though 2004 with the
balance of the Term A Loan due in 2005.
Borrowings under the Term B Loan can be made at the Base Rate plus a
margin of 0.75% to 1.25% or the LIBO Rate plus 2.0% to 2.5%, both depending on
the Total Leverage Ratio. One percent of the outstanding balance is due annually
through 2005, with the balance of the loan due in 2006.
Borrowings under the Term C Loan can be made at the Base Rate plus a
margin of 1.0% to 1.5% or the LIBO Rate plus 2.25% to 2.75%, both depending on
the Total Leverage Ratio. One percent of the outstanding balance is due annually
through 2006, with the balance of the loan due in 2007.
The Credit Facilities contain customary covenants and restrictions on
the Company's ability to issue additional debt or engage in certain activities
and include customary events of default. In addition, the Credit Facilities
specify that the Company must meet or exceed defined interest coverage ratios
and must not exceed defined leverage ratios. The Company was in compliance with
such covenants at July 2, 1998.
The Credit Facility is secured by a pledge of the stock of the
Company's domestic subsidiaries. The Company's payment obligations under the
Credit Facility is guaranteed by its direct and indirect U.S. subsidiaries.
During 1997, the Company effected three acquisitions (including one
acquisition accounted for as a pooling of interests). The aggregate
consideration paid was approximately $48.5 million in cash, the issuance of
2,837,594 shares of Common Stock and the assumption of approximately $110
million of liabilities.
At January 2, 1997, the Company anticipated that it would spend $125
million to $150 million to develop and renovate theatres during 1997, of which
the Company had approximately $58.1 million in contractual commitments for
expenditures. The actual capital expenditures for fiscal 1997 were $178.1
million.
17
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED
At July 2, 1998, the Company had 261 multi-screen theatres with an
aggregate of 2,467 screens. At such date, the Company had 35 new theatres with
571 screens and 32 screens at 6 existing locations under construction. The
Company intends to develop approximately 450 to 500 screens during the balance
of 1998 and approximately 600 to 700 screens during 1999. The Company expects
that the capital expenditures in connection with its development plan will
aggregate approximately $180.0 million for the balance of 1998 and approximately
$140.0 million during 1999. The Company believes that its capital needs for
completion of theatre construction and development for at least the next 6 to 12
months will be satisfied by available credit under the new loan agreement, as
amended, internally generated cash flow and available cash and equivalents.
NEW ACCOUNTING PRONOUNCEMENTS
During fiscal 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130 ("SFAS 130"), Reporting
Comprehensive Income, Statement of Financial Accounting Standards No. 131 ("SFAS
131"), Disclosures About Segment of an Enterprise and Related Information. SFAS
130 requires disclosure of comprehensive income and its components in a
company's financial statements and is effective for fiscal years beginning after
December 15, 1997. SFAS 131 requires new disclosures of segment information in a
company's financial statements and is effective for fiscal years beginning after
December 15, 1997. Adoption of these statements will not impact the Company's
consolidated financial position, results of operations or cash flows.
On June 15, 1998, the Financial Accounting Standards Board issued FAS No. 133,
Accounting for Derivative and Financial Instruments and Hedging Activities. FAS
133 establishes a new model for accounting for derivatives and hedging
activities based on these fundamental principles i) derivatives represent assets
and liabilities that should be recognized at fair value on the balance sheet ii)
derivative gains and losses do not represent liabilities or assets and,
therefore, should not be reported on the balance sheet as deferred credits or
deferred debits and iii) special hedge accounting should be provided only for
transactions that meet certain specified criteria, which include a requirement
that the change in the fair value of the derivative be highly effective in
offsetting the change in the fair value or cash flows of the hedged item. This
Statement is effective for fiscal years beginning after June 15, 1999 and is not
expected to have a material effect on the Company's financial position or
results of operations.
RECENT DEVELOPMENTS
Act III, the ninth largest motion picture exhibitor in the United
States based on number of screens in operation, is controlled by KKR and Hicks
Muse. As of July 2, 1998, Act III operated 131 theatres, with an aggregate of
843 screens in seven states. While KKR and Hicks Muse currently intend to merge
Act III with and into Regal or an affiliate of Regal (the "Act III
18
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED
Merger") approximately 90 days after the closing of the Recapitalization, there
is currently no definitive agreement to consummate the Act III Merger.
YEAR 2000
The Company is dependent on computer systems and applications to
conduct its business. Based on a current assessment of its computer systems and
applications, Regal believes that it will not experience any material Year 2000
problems with its computer systems. The Company estimates that costs to
remediate any Year 2000 issues will not be material and will be funded through
operating cash flows. The Company is expensing all costs associated with
remediation of Year 2000 issues as incurred.
19
<PAGE> 20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
- -----------------------------------------------------------------------------
<TABLE>
<S> <C>
(a) Exhibits:
(4) Indenture dated as of May 27, 1998, between Regal Cinemas, Inc. and IBJ
Schroder Bank & Trust Company.
(10.1) Employment Agreement, dated as of May 27, 1998, between Regal
Cinemas, Inc. and Michael L. Campbell.
(10.2) Employment Agreement, dated as of May 27, 1998, between Regal
Cinemas, Inc. and Lewis Frazer III.
(10.3) Employment Agreement, dated as of May 27, 1998, between Regal
Cinemas, Inc. and Gregory W. Dunn.
(10.4) Credit Agreement, dated as of May 27, 1998, among
Regal Cinemas, Inc., its subsidiaries and the lenders
named therein.
(27) Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K.
None.
</TABLE>
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REGAL CINEMAS, INC.
Date: August 10, 1998 By: /s/ Michael L. Campbell
-------------------------------------
Michael L. Campbell, Chairman,
President and Chief Executive Officer
By: /s/ Lewis Frazer III
-------------------------------------
Lewis Frazer III, Executive Vice
President and Chief Financial Officer
21
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
ITEM DESCRIPTION
- ------------------- -------------------------------------------------------------
<S> <C>
(4) Indenture dated as of May 27, 1998, between
Regal Cinemas, Inc. and IBJ Schroder Bank & Trust Company.
(10.1) Employment Agreement, dated as of May 27, 1998, between Regal
Cinemas, Inc. and Michael L. Campbell.
(10.2) Employment Agreement, dated as of May 27, 1998, between Regal
Cinemas, Inc. and Lewis Frazer III.
(10.3) Employment Agreement, dated as of May 27, 1998, between Regal
Cinemas, Inc. and Gregory W. Dunn.
(10.4) Credit Agreement, dated as of May 27, 1998, among Regal
Cinemas, Inc., its subsidiaries and the lenders named
therein.
(27) Financial Data Schedule (for SEC use only).
</TABLE>
<PAGE> 1
Exhibit 4
EXECUTION COPY
================================================================================
REGAL CINEMAS, INC.,
Issuer
and
IBJ SCHRODER BANK & TRUST COMPANY,
Trustee
----------
Indenture
Dated as of May 27, 1998
----------
9 1/2% Senior Subordinated Notes due 2008
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Sections Indenture Sections
- ------------ ------------------
<S> <C>
ss. 310(a)(1)....................................... 7.10
(a)(2)....................................... 7.10
(b).......................................... 7.03; 7.08
ss. 311(a).......................................... 7.03
(b).......................................... 7.03
ss. 312(a).......................................... 2.04
(b).......................................... 10.02
(c).......................................... 10.02
ss. 313(a).......................................... 7.06
(b)(2)....................................... 7.07
(c).......................................... 7.05; 7.06; 11.02
(d).......................................... 7.06
ss. 314(a).......................................... 7.05; 11.02
(a)(4)....................................... 4.12; 11.02
(c)(1)....................................... 11.03
(c)(2)....................................... 11.03
(e).......................................... 4.12; 11.04
ss. 315(a).......................................... 7.02
(b).......................................... 7.05; 11.02
(c).......................................... 7.02
(d).......................................... 7.02
(e).......................................... 6.11
ss. 316(a)(1)(A).................................... 6.05
(a)(1)(B).................................... 6.04
(b).......................................... 6.07
(c).......................................... 9.03
ss. 317(a)(1)....................................... 6.08
(a)(2)....................................... 6.09
(b).......................................... 2.05
ss. 318(a).......................................... 11.01
(c).......................................... 11.01
</TABLE>
Note: The Cross-Reference Table shall not for any purpose be deemed to be
a part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
SECTION 1.01. Definitions.......................................................1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act................17
SECTION 1.03. Rules of Construction............................................18
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating..................................................19
SECTION 2.02. Restrictive Legends..............................................20
SECTION 2.03. Execution, Authentication and Denominations......................22
SECTION 2.04. Registrar and Paying Agent.......................................23
SECTION 2.05. Paying Agent to Hold Money in Trust..............................24
SECTION 2.06. Transfer and Exchange............................................24
SECTION 2.07. Book-Entry Provisions for Global Notes...........................25
SECTION 2.08. Special Transfer Provisions......................................27
SECTION 2.09. Replacement Notes................................................30
SECTION 2.10. Outstanding Notes................................................30
SECTION 2.11. Temporary Notes..................................................31
SECTION 2.12. Cancellation.....................................................31
SECTION 2.13. CUSIP Numbers....................................................31
SECTION 2.14. Defaulted Interest...............................................32
SECTION 2.15. Issuance of Additional Notes.....................................32
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption..............................................32
SECTION 3.02. Notices to Trustee...............................................33
SECTION 3.03. Selection of Notes to Be Redeemed................................33
SECTION 3.04. Notice of Redemption.............................................33
SECTION 3.05. Effect of Notice of Redemption...................................35
SECTION 3.06. Deposit of Redemption Price......................................35
SECTION 3.07. Payment of Notes Called for Redemption...........................35
SECTION 3.08. Notes Redeemed in Part...........................................35
</TABLE>
- -------------
Note: The Table of Contents shall not for any purposes be deemed to be
a part of the Indenture.
<PAGE> 4
ii
ARTICLE FOUR
COVENANTS
<TABLE>
<S> <C> <C>
SECTION 4.01. Payment of Notes.................................................36
SECTION 4.02. Maintenance of Office or Agency..................................36
SECTION 4.03. Fall-away Event..................................................37
SECTION 4.04. Limitation on Restricted Payments................................37
SECTION 4.05. Limitation on the Incurrence of Additional Indebtedness and
Issuance of Capital Stock...................................39
SECTION 4.06. Limitations on Transactions with Affiliates......................40
SECTION 4.07. Repurchase of Notes upon a Change of Control.....................41
SECTION 4.08. Existence........................................................42
SECTION 4.09. Payment of Taxes and Other Claims................................42
SECTION 4.10. Maintenance of Properties and Insurance..........................43
SECTION 4.11. Notice of Defaults...............................................43
SECTION 4.12. Compliance Certificates..........................................43
SECTION 4.13. Commission Reports and Reports to Holders........................44
SECTION 4.14. Waiver of Stay, Extension or Usury Laws..........................44
SECTION 4.15. Limitation on Layering...........................................45
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc......................................45
SECTION 5.02. Successor Substituted............................................46
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default................................................46
SECTION 6.02. Acceleration.....................................................47
SECTION 6.03. Other Remedies...................................................48
SECTION 6.04. Waiver of Past Defaults..........................................48
SECTION 6.05. Control by Majority..............................................49
SECTION 6.06. Limitation on Suits..............................................49
SECTION 6.07. Rights of Holders to Receive Payment.............................50
SECTION 6.08. Collection Suit by Trustee.......................................50
SECTION 6.09. Trustee May File Proofs of Claim.................................50
SECTION 6.10. Priorities.......................................................51
SECTION 6.11. Undertaking for Costs............................................51
SECTION 6.12. Restoration of Rights and Remedies...............................51
SECTION 6.13. Rights and Remedies Cumulative...................................51
</TABLE>
<PAGE> 5
iii
<TABLE>
<S> <C> <C>
SECTION 6.14. Delay or Omission Not Waiver.....................................52
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General..........................................................52
SECTION 7.02. Certain Rights of Trustee........................................52
SECTION 7.03. Individual Rights of Trustee.....................................54
SECTION 7.04. Trustee's Disclaimer.............................................54
SECTION 7.05. Notice of Default................................................54
SECTION 7.06. Reports by Trustee to Holders....................................54
SECTION 7.07. Compensation and Indemnity.......................................54
SECTION 7.08. Replacement of Trustee...........................................55
SECTION 7.09. Successor Trustee by Merger, Etc.................................56
SECTION 7.10. Eligibility......................................................56
SECTION 7.11. Money Held in Trust..............................................57
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations.............................57
SECTION 8.02. Defeasance and Discharge of Indenture............................58
SECTION 8.03. Defeasance of Certain Obligations................................60
SECTION 8.04. Application of Trust Money.......................................62
SECTION 8.05. Repayment to Company.............................................62
SECTION 8.06. Reinstatement....................................................62
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.......................................63
SECTION 9.02. With Consent of Holders..........................................63
SECTION 9.03. Revocation and Effect of Consent.................................64
SECTION 9.04. Notation on or Exchange of Notes.................................65
SECTION 9.05. Trustee to Sign Amendments, Etc..................................65
SECTION 9.06. Conformity with Trust Indenture Act..............................65
ARTICLE TEN
SUBORDINATION OF NOTES
SECTION 10.01. Notes Subordinated to Senior Indebtedness.......................66
SECTION 10.02. No Payment on Notes in Certain Circumstances....................66
</TABLE>
<PAGE> 6
iv
<TABLE>
<S> <C> <C>
SECTION 10.03. Payment over of Proceeds upon Dissolution, Etc..................68
SECTION 10.04. Subrogation.....................................................70
SECTION 10.05. Obligations of Company Unconditional............................70
SECTION 10.06. Notice to Trustee...............................................71
SECTION 10.07. Reliance on Judicial Order or Certificate of Liquidating Agent..72
SECTION 10.08. Trustee's Relation to Senior Indebtedness.......................72
SECTION 10.09. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Indebtedness...........72
SECTION 10.10. Holders Authorize Trustee to Effectuate Subordination of Notes..73
SECTION 10.11. Not to Prevent Events of Default................................73
SECTION 10.12. Trustee's Compensation Not Prejudiced...........................73
SECTION 10.13. No Waiver of Subordination Provisions...........................73
SECTION 10.14. Payments May Be Paid Prior to Dissolution.......................73
SECTION 10.15. Consent of Holders of Senior Indebtedness Under
the Senior Credit Facilities...............................74
SECTION 10.16. Trust Moneys Not Subordinated...................................74
SECTION 10.17. Notice to Representative of Designated Senior Indebtedness......74
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act of 1939.....................................75
SECTION 11.02. Notices.........................................................75
SECTION 11.03. Certificate and Opinion as to Conditions Precedent..............76
SECTION 11.04. Statements Required in Certificate or Opinion...................76
SECTION 11.05. Rules by Trustee, Paying Agent or Registrar.....................77
SECTION 11.06. Payment Date Other Than a Business Day..........................77
SECTION 11.07. Governing Law...................................................77
SECTION 11.08. No Adverse Interpretation of Other Agreements...................77
SECTION 11.09. No Recourse Against Others......................................77
SECTION 11.10. Successors......................................................78
SECTION 11.11. Duplicate Originals.............................................78
SECTION 11.12. Separability....................................................78
SECTION 11.13. Table of Contents, Headings, Etc................................78
EXHIBIT A Form of Note.......................................................A-1
EXHIBIT B Form of Certificate................................................B-1
EXHIBIT C Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Non-QIB Accredited Investors...............C-1
EXHIBIT D Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S...............................D-1
</TABLE>
<PAGE> 7
INDENTURE, dated as of May 27, 1998, between REGAL CINEMAS, INC., a
Tennessee corporation (the "Company"), and IBJ SCHRODER BANK & TRUST COMPANY, a
New York banking corporation, trustee (the "Trustee").
RECITALS
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance initially of up to $400,000,000 aggregate
principal amount of the Company's 9 1/2% Senior Subordinated Notes due 2008 (the
"Notes") issuable as provided in this Indenture. All things necessary to make
this Indenture a valid agreement of the Company, in accordance with its terms,
have been done, and the Company has done all things necessary to make the Notes,
when executed by the Company and authenticated and delivered by the Trustee
hereunder and duly issued by the Company, valid obligations of the Company as
hereinafter provided.
This Indenture is subject to, and shall be governed by, the provisions
of the Trust Indenture Act of 1939, as amended, that are required to be a part
of and to govern indentures qualified under the Trust Indenture Act of 1939, as
amended.
AND THIS INDENTURE FURTHER WITNESSETH
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Company or at the time it merges or consolidates with the Company or any of
its Restricted Subsidiaries or assumed in connection with the acquisition of
assets from such Person and not incurred by such Person in connection with, or
in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary of the Company or such acquisition, merger or consolidation.
"Acquired Preferred Stock" means the Preferred Stock of any Person at
such time as such Person becomes a Restricted Subsidiary of the Company or at
the time it merges or consolidates with the Company or any of its Restricted
Subsidiaries and not issued by such Person in connection with, or in
anticipation or contemplation of, such acquisition, merger or consolidation.
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"Act III" means Act III Cinemas, Inc., a Delaware corporation.
"Act III Merger" means the merger of Act III with and into the Company.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, through one or more intermediaries, controls, or is controlled
by, or is under common control with, such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Affiliate Transaction" has the meaning specified in Section 4.06.
"Agent" means any Registrar, Co-Registrar, Paying Agent, Transfer Agent
or authenticating agent.
"Agent Members" has the meaning provided in Section 2.07(a).
"Asset Acquisition" means (i) any transaction pursuant to which any
Person shall become a Restricted Subsidiary of the Company or shall be
consolidated or merged with the Company or any Restricted Subsidiary of the
Company or (ii) the acquisition by the Company or any Restricted Subsidiary of
the Company of assets of any Person comprising a division, line of business or
theatre site of such Person.
"Board of Directors" means the Board of Directors of the Company or any
committee of such Board of Directors duly authorized to act under this
Indenture.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day (other than a day which is a Saturday,
Sunday or legal holiday in the State of New York) on which banks are open for
business in New York, New York.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital stock of such Person and (ii) with respect to
any Person that is not a corporation, any and all partnership or other equity
interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligation
of such Person to pay rent or other amounts under a lease to which such Person
is a party that is required to be classified and accounted for as a capital
lease obligation under GAAP, and for purposes of this
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definition, the amount of such obligation at any date shall be the capitalized
amount of such obligation at such date, determined in accordance with GAAP.
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act (a "Group") (whether or not otherwise in
compliance with the provisions of this Indenture), other than to Hicks Muse, KKR
or any of their respective officers or directors or any Affiliates of any of the
foregoing (the "Permitted Holders"); or (ii) the acquisition by any Person or
Group (other than the Permitted Holders or any direct or indirect subsidiary of
any Permitted Holder) of the power, directly or indirectly, to vote or direct
the voting of securities having more than 50% of the ordinary voting power for
the election of directors of the Company.
"Change of Control Offer" has the meaning provided in Section 4.07(a).
"Change of Control Payment Date" has the meaning provided in Section
4.07(c).
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the TIA, then the body performing such duties at
such time.
"Commodity Agreement" means any commodity futures contract, commodity
option or other similar agreement or arrangement.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to Article Five of this
Indenture and thereafter means the successor.
"Company Order" means a written request or order signed in the name of
the Company (i) by its Chairman of the Board, its Chief Executive Officer, its
President, a Vice President or its Chief Financial Officer and (ii) by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary and
delivered to the Trustee; provided, however, that such written request or order
may be signed by any two officers or directors listed in clause (i) above in
lieu of being signed by one of such officers or directors listed in such clause
(i) and one of the officers listed in clause (ii) above.
"Consolidated EBITDA" means, for any period, the net income of the
Company and its Restricted Subsidiaries for such period plus, to the extent such
amount was deducted in calculating such net income (i) Consolidated Interest
Expense, (ii) income taxes, (iii) depreciation expense, (iv) amortization
expense, (v) all other non-cash items, extraordinary items, nonrecurring and
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unusual items and cumulative effects of changes in accounting principles
reducing such net income, less all non-cash items, extraordinary items,
nonrecurring and unusual items and cumulative effects of changes in accounting
principles increasing such net income, all as determined on a consolidated basis
for the Company and its Restricted Subsidiaries in conformity with GAAP; (vi)
upfront expenses resulting from equity offerings, investments, mergers,
recapitalizations, option buyouts, Dispositions, Asset Acquisitions and similar
transactions to the extent such expenses reduce net income; (vii) restructuring
charges reducing net income; and (viii) gains or losses on Dispositions;
provided that Consolidated EBITDA shall not include (x) the net income (or net
loss) of any Person that is not a Restricted Subsidiary, except (I) with respect
to net income, to the extent of the amount of dividends or other distributions
actually paid to the Company or any of its Restricted Subsidiaries by such
Person during such period and (II) with respect to net losses, to the extent of
the amount of investments made by the Company or any Restricted Subsidiary in
such Person during such period; (y) solely for the purposes of calculating the
amount of Restricted Payments that may be made pursuant to clause (iii) of
Section 4.04(a) (and in such case, except to the extent includable pursuant to
clause (x) above), the net income (or net loss) of any Person accrued prior to
the date it becomes a Restricted Subsidiary or is merged into or consolidated
with the Company or any of its Restricted Subsidiaries or all or substantially
all of the property and assets of such Person are acquired by the Company or any
of its Restricted Subsidiaries; and (z) the net income of any Restricted
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of such net income is not at the
time permitted by the operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Restricted Subsidiary (other than any agreement or instrument
evidencing Indebtedness or Preferred Stock outstanding on the Issue Date or
incurred or issued thereafter in compliance with Section 4.05; provided that the
terms of any such agreement restricting the declaration and payment of dividends
or similar distributions apply only in the event of a default with respect to a
financial covenant or a covenant relating to payment (beyond any applicable
period of grace) contained in such agreement or instrument and provided such
terms are determined by the Company to be customary in comparable financings and
such restrictions are determined by the Company not to materially affect the
Company's ability to make principal or interest payments on the Notes when due).
"Consolidated Interest Expense" means, with respect to any Person for
any period, without duplication, the sum of (i) the interest expense of such
Person and its Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, including, without limitation, (a)
any amortization of debt discount, (b) the net cost under Interest Swap
Agreements (including any amortization of discounts), (c) the interest portion
of any deferred payment obligation, (d) all commissions, discounts and other
fees and charges owed with respect to letters of credit, bankers' acceptance
financing or similar facilities, and (e) all accrued interest and (ii) the
interest component of Capitalized Lease Obligations paid or accrued by such
Person and its Subsidiaries during such period as determined on a consolidated
basis in accordance with GAAP; excluding, however, any amount of such interest
of any Restricted Subsidiary if the net income of
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such Restricted Subsidiary is excluded in the calculation of Consolidated EBITDA
pursuant to clause (z) of the definition thereof (but only in the same
proportion as the net income of such Restricted Subsidiary is excluded from the
calculation of Consolidated EBITDA pursuant to clause (z) of the definition
thereof), all as determined on a consolidated basis (without taking into account
Unrestricted Subsidiaries) in conformity with GAAP.
"Construction Indebtedness Amount" shall mean an amount equal to the
lesser of (i) $100 million and (ii) the total Indebtedness of any Person and its
Restricted Subsidiaries outstanding on the last day of any Reference Period
incurred in connection with the construction or enhancement of motion picture
theatres or screens that, on such day, are not open for business.
"Contemplated Acquisition" means the business combination, by the Act
III Merger or otherwise, of Act III and the Company.
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at One State Street, New York, New York 10004; Attention: Corporate
Administration and, in the event the Notes are listed on the Luxembourg Stock
Exchange, at Greffier et Chef du Tribunal d'Arrondissement de et a Luxembourg,
Chief Registrar of the District Court in Luxembourg.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Debt Rating" shall mean the rating assigned to the Notes by Moody's or
S&P, as the case may be.
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Depositary" means The Depository Trust Company, its nominees, and
their respective successors.
"Designated Preferred Stock" means preferred stock of the Company
(other than Disqualified Capital Stock) that is issued for cash (other than to a
Restricted Subsidiary) and is so designated as Designated Preferred Stock,
pursuant to an Officers' Certificate executed by the principal executive officer
and the principal financial officer of the Company, on the issuance date
thereof, the cash proceeds of which are excluded from the calculation set forth
in clause (iii) of Section 4.04(a).
"Designated Senior Indebtedness" means (i) all obligations under the
Senior Credit Facilities and (ii) any other Senior Indebtedness of the Company
which, at the date of
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determination, has an aggregate principal amount outstanding of, or under which,
at the date of determination, the holders thereof are committed to lend up to,
at least $25.0 million and is specifically designated by the Company in the
instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness" for purposes of this Indenture.
"Disposition" means, with respect to any Person, any merger,
consolidation or other business combination involving such Person (whether or
not such Person is the Surviving Person) or the sale, assignment, or transfer,
lease, conveyance or other disposition of all or substantially all of such
Person's assets or Capital Stock.
"Disqualified Capital Stock" means any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof (except, in each case,
upon the occurrence of a Change of Control if such Capital Stock requires that
the Change of Control Offer with respect to the Notes be completed prior to any
similar offer being made with respect to such Capital Stock), in whole or in
part, on or prior to the final maturity date of the Notes; provided that only
the portion of Capital Stock which so matures or is mandatorily redeemable or is
so redeemable at the sole option of the holder thereof prior to the final
maturity date of the Notes shall be deemed Disqualified Capital Stock.
"Equity Offering" means a private sale or public offering of Capital
Stock or preferred stock (other than Disqualified Capital Stock) of the Company.
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934.
"Exchange Notes" means any securities of the Company containing terms
identical to the Notes (except that such Exchange Notes shall be registered
under the Securities Act) that are issued and exchanged for the Notes pursuant
to the Registration Rights Agreement and this Indenture.
"Existing Regal Notes" means the Company's 8 1/2% Senior Subordinated
Notes due October 1, 2007.
"GAAP" means generally accepted accounting principles in the United
States of America, including those set forth in the 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 the Commission or in such other statements by such other
entity as approved by a significant segment of the accounting profession. All
ratios and
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computations based on GAAP contained in this Indenture shall be computed in
conformity with GAAP as in effect on the date hereof.
"Global Notes" has the meaning provided in Section 2.01.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hicks Muse" means Hicks, Muse, Tate & Furst Incorporated.
"Holder" or "Noteholder" means the registered holder of any Note.
"Indebtedness" means with respect to any Person, without duplication,
any liability of such Person (i) for borrowed money, (ii) evidenced by bonds,
debentures, notes or other similar instruments, (iii) constituting Capitalized
Lease Obligations, (iv) incurred or assumed as the deferred purchase price of
property or services, or pursuant to conditional sale obligations and title
retention agreements (but excluding trade accounts payable arising in the
ordinary course of business), (v) for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction, (vi) for
Indebtedness of others guaranteed by such Person, (vii) for Interest Swap
Agreements, Commodity Agreements and Currency Agreements and (viii) for
Indebtedness of any other Person of the type referred to in clauses (i) through
(vii) which is secured by any Lien on any property or asset of such first
referred to Person, the amount of such Indebtedness being deemed to be the
lesser of the value of such property or asset or the amount of the Indebtedness
so secured. The amount of Indebtedness of any Person at any date shall be (i)
the outstanding principal amount of all unconditional obligations described
above, as such amount would be calculated in accordance with GAAP, (ii) the
accreted value thereof, in the case of any Indebtedness issued with original
issue discount and (iii) the principal amount thereof, together with any
interest thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"Indenture" means this Indenture as originally executed or as it may be
amended or supplemented from time to time by one or more indentures supplemental
to this Indenture entered into pursuant to the applicable provisions of this
Indenture.
"Independent Financial Advisor" means an accounting, appraisal,
investment banking firm or consultant to Persons engaged in the motion picture
exhibition and distribution business of nationally recognized standing that is,
in the judgment of the Company's Board of Directors, qualified to perform the
task for which it has been engaged.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
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"Interest Payment Date" means each semiannual interest payment date on
June 1 and December 1 of each year, commencing December 1, 1998.
"Interest Swap Agreements" means any interest rate protection
agreement, interest rate future, interest rate option, interest rate swap,
interest rate cap or other interest rate hedge or arrangement.
"Investment Grade Status" exists as of a date and thereafter if at such
date either (i) the Debt Rating of Moody's is at least Baa3 (or the equivalent)
or higher or (ii) the Debt Rating of S&P is at least BBB--(or the equivalent)
or higher.
"Issue Date" means the date of original issuance of the Notes.
"KKR" means Kohlberg Kravis Roberts & Co. L.P.
"Leverage Ratio" means the ratio of (i) the aggregate outstanding
amount of Indebtedness (excluding any Construction Indebtedness Amount and net
of any cash and cash equivalents) of the Company and its Restricted Subsidiaries
on a consolidated basis in accordance with GAAP plus the aggregate liquidation
preference of all Disqualified Capital Stock of such Person and all Preferred
Stock of Restricted Subsidiaries of such Person (other than any such
Disqualified Capital Stock or Preferred Stock held by such Person or any of its
Restricted Subsidiaries) on such date to (ii) the aggregate amount of
Consolidated EBITDA for the most recent four full fiscal quarters (the "Four
Quarter Period") for which financial statements of the Company have been filed
with the Commission or delivered to the Trustee pursuant to Section 4.13. The
Four Quarter Period shall be hereinafter referred to as the "Reference Period."
For purposes of this definition, the aggregate outstanding principal
amount of Indebtedness or aggregate liquidation preference of Preferred Stock of
the Person and its Restricted Subsidiaries for which such calculation is made
shall be determined on a pro forma basis as if the Indebtedness or Preferred
Stock giving rise to the need to perform such calculation had been incurred and
the proceeds therefrom had been applied, and all other transactions in respect
of which such Indebtedness or Preferred Stock is being incurred has occurred, on
the last day of the Reference Period. In addition to the foregoing, for purposes
of this definition, "Consolidated EBITDA" shall be calculated on a pro forma
basis after giving effect to (i) the Transactions, (ii) the incurrence of the
Indebtedness or Preferred Stock of such Person and its Restricted Subsidiaries
(and the application of the proceeds therefrom) giving rise to the need to make
such calculation and any incurrence (and the application of the proceeds
therefrom) or repayment of other Indebtedness or Preferred Stock, other than the
incurrence or repayment of Indebtedness pursuant to working capital facilities,
at any time subsequent to the beginning of the Reference Period and on or prior
to the date of determination, as if such incurrence (and the application of the
proceeds thereof), or the repayment, as the case may be, occurred on the first
day of the Reference Period, (iii) any Dispositions, Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise
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to the need to make such calculation as a result of such Person or one of its
Subsidiaries (including any Person that becomes a Restricted Subsidiary as a
result of such Asset Acquisition) incurring, assuming or otherwise becoming
liable for Indebtedness or Preferred Stock) or Theatre Completions at any time
on or subsequent to the first day of the Reference Period and on or prior to the
date of determination, as if such Disposition, Asset Acquisition (including the
incurrence, assumption or liability for any such Indebtedness or Preferred Stock
and also including any Consolidated EBITDA associated with such Asset
Acquisition) or Theatre Completion occurred on the first day of the Reference
Period, (iv) the effects of incremental contributions to Consolidated EBITDA the
Company reasonably believes in good faith could have been achieved during the
Reference Period as a result of such Asset Acquisition or Theatre Completion
(regardless of whether such incremental contributions could then be reflected in
pro forma financial statements under GAAP, Regulation S-X promulgated by the
Commission or any other regulation or policy of the Commission); provided,
however, that such incremental contributions were identified and quantified in
good faith in an Officers' Certificate delivered to the Trustee at the time of
any calculation of the Leverage Ratio and (v) any motion picture theatre that
was permanently closed for business at any time on or subsequent to the first
day of the Reference Period and on or prior to the date of determination as if
such theatre was closed on the first day of the Reference Period. In calculating
"Consolidated Interest Expense" for purposes of the calculation of "Consolidated
EBITDA," (i) interest on Indebtedness determined on a fluctuating basis as of
the date of determination (including Indebtedness actually incurred on the date
of the transaction giving rise to the need to calculate the Leverage Ratio) and
which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness as in effect on the date of determination and (ii) notwithstanding
(i) above, interest determined on a fluctuating basis, to the extent such
interest is covered by Interest Swap Agreements that will remain in effect for
at least 12 months, shall be deemed to accrue at the rate per annum resulting
after giving effect to the operation of such agreements. For purposes of
calculating the Consolidated EBITDA associated with any Theatre Completion, the
amount thereof for the Reference Period shall be the amount of Consolidated
EBITDA expected by the Company in good faith to be derived by the Company from
such Theatre Completion during the first 12-month period following the date on
which the relevant theatre or screen opens for business.
"Lien" means, with respect to any asset, any lien, mortgage, deed of
trust, pledge, 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).
"Moody's" means Moody's Investors Service, Inc. or any successor to the
rating agency business thereof.
"Non-U.S. Person" means a person who is not a "U.S. person" (as defined
in Regulation S).
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"Note Obligations" means all Obligations relating to the Notes,
including, without limitation, all principal, premium, if any, interest
(including, without limitation, any additional amounts payable with respect to
the Notes as a result of the failure to comply with the terms of the
Registration Rights Agreement).
"Notes" means any of the securities, as defined in the first paragraph
of the recitals hereof, that are authenticated and delivered under this
Indenture. For all purposes of this Indenture, the term "Notes" shall include
the Notes initially issued on the Issue Date, any Exchange Notes to be issued
and exchanged for any Notes pursuant to the Registration Rights Agreement and
this Indenture and any other Notes issued after the Closing Date under this
Indenture. For purposes of this Indenture, all Notes shall vote together as one
series of Notes under this Indenture.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing, or otherwise relating to, any
Indebtedness.
"Officer" means, with respect to the Company, (i) the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President or the
Chief Financial Officer, and (ii) the Treasurer or any Assistant Treasurer, or
the Secretary or any Assistant Secretary.
"Officers' Certificate" means a certificate signed by one Officer
listed in clause (i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof or two officers listed in clause (i) of the
definition thereof. Each Officers' Certificate shall include the statements
provided for in TIA Section 314(e) to the extent applicable.
"Offshore Global Note" has the meaning provided in Section 2.01.
"Offshore Physical Notes" has the meaning provided in Section 2.01.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.04 hereof. The counsel may be an employee of or counsel to the Company. Each
such Opinion of Counsel shall include the statements provided for in TIA Section
314(e).
"Paying Agent" has the meaning provided in Section 2.04, except that,
for the purposes of Article Eight, the Paying Agent shall not be the Company or
a Subsidiary of the Company or an Affiliate of any of them. The term "Paying
Agent" includes any additional Paying Agent.
"Payment Blockage Period" has the meaning provided in Section 10.02.
"Permitted Indebtedness" means, without duplication, (i) Indebtedness
outstanding on the Issue Date (including the Existing Regal Notes); (ii)
Indebtedness of the Company and any of its
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Restricted Subsidiaries incurred under the Senior Credit Facilities (including
letter of credit obligations), provided that the aggregate principal amount at
any time outstanding does not exceed $725.0 million, which amount shall be
increased to $1.22 billion upon the consummation of the Contemplated
Acquisition; (iii) Indebtedness evidenced by or arising under the Notes and this
Indenture in respect of the Notes; (iv) Interest Swap Agreements, Commodity
Agreements and Currency Agreements; provided, however, that such agreements are
entered into for bona fide hedging purposes and not for speculative purposes;
(v) additional Indebtedness of the Company or any of its Restricted Subsidiaries
not otherwise permitted under Section 4.05 of this Indenture, in an aggregate
principal amount, which when aggregated with the aggregate principal amount of
all other Indebtedness then outstanding and incurred pursuant to this clause
(v), does not at any one time outstanding exceed the sum of (x) $100.0 million
and (y) 100% of the net cash proceeds received by the Company from the issue or
sale after the Issue Date of Capital Stock (other than Disqualified Capital
Stock) of the Company or net cash proceeds contributed to the capital of the
Company (other than in respect of Disqualified Capital Stock) as determined in
accordance with clauses (iii)(b) and (iii)(c) of Section 4.04(a) to the extent
such net cash proceeds have not been applied pursuant to such clause to make
Restricted Payments or to effect other transactions pursuant to Section 4.04(b)
(it being understood that any Indebtedness incurred under this clause (v) shall
cease to be deemed incurred or outstanding for purposes of this clause (v) from
and after the first date on which the Company could have incurred such
Indebtedness under Section 4.05 without reliance upon this clause (v), and such
Indebtedness shall thereupon be deemed to have been so incurred); (vi)
Refinancing Indebtedness (other than in respect of Indebtedness incurred
pursuant to clauses (ii), (v) and (xiii) of this definition); (vii) Indebtedness
owed by the Company to any Restricted Subsidiary of the Company (so long as it
shall remain a Restricted Subsidiary of the Company) or by any Restricted
Subsidiary (so long as it remains a Restricted Subsidiary of the Company) of the
Company to the Company or any Restricted Subsidiary of the Company; (viii)
guarantees by the Company or Restricted Subsidiaries of any Indebtedness
permitted to be incurred pursuant to this Indenture; (ix) Indebtedness in
respect of performance bonds, reimbursement obligations with respect to letters
of credit, bankers' acceptances, completion guarantees and surety or appeal
bonds provided by the Company or any of its Restricted Subsidiaries in the
ordinary course of their business or Indebtedness with respect to reimbursement
type obligations regarding workers' compensation claims; (x) Indebtedness
arising from agreements providing for indemnification, adjustment of purchase
price or similar obligations, or from guarantees or letters of credit, surety
bonds or performance bonds securing any obligations of the Company or any of its
Restricted Subsidiaries pursuant to such agreements, in each case incurred in
connection with the disposition of any business assets or Subsidiaries of the
Company (other than guarantees of Indebtedness or other obligations incurred by
any Person acquiring all or any portion of such business assets or Restricted
Subsidiaries of the Company for the purpose of financing such acquisition) in a
principal amount not to exceed the gross proceeds, including non-cash proceeds,
actually received by the Company or any of its Restricted Subsidiaries in
connection with such disposition; provided, however, that such Indebtedness is
not reflected on the balance sheet of the Company or any Restricted Subsidiary
(contingent obligations referred to in a footnote to financial statements and
not otherwise reflected on the balance sheet will not be
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deemed to be reflected on such balance sheet for purposes of this clause); (xi)
Indebtedness (including but not limited to Capitalized Lease Obligations,
mortgage financings or purchase money obligations) incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property or assets (whether through direct purchase of assets or
the Capital Stock of any Person owning such assets) or incurred to refinance any
such purchase price or cost of construction or improvement; (xii) Indebtedness
or Disqualified Capital Stock of Persons that are acquired by the Company or any
of its Restricted Subsidiaries or merged into a Restricted Subsidiary in
accordance with the terms of this Indenture; provided, however, that such
Indebtedness or Disqualified Capital Stock is not incurred in contemplation of
such acquisition or merger; and provided further that after giving effect to
such acquisition or merger, either (i) the Company would be permitted to incur
at least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
under Section 4.05(a) or (ii) the Leverage Ratio is less than immediately prior
to such acquisition or merger; and (xiii) Indebtedness incurred in connection
with any Real Estate Financing Transaction; provided, however, that the amount
of Indebtedness outstanding under clause (ii) above and this clause (xiii) shall
not exceed $725.0 million (which amount shall be increased to $1.22 billion upon
consummation of the Contemplated Acquisition) at any time outstanding.
"Person" means an individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Physical Notes" has the meaning provided in Section 2.01.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"principal" of a debt security, including the Notes, means the
principal amount due on the stated maturity as shown on such debt security.
"Private Placement Legend" means the legend initially set forth on the
Notes in the form set forth in Section 2.02.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Real Estate Financing Transaction" means a financing or series of
financings consisting principally of one or more mortgage financings, real
estate sale or leaseback transactions or an asset-backed program based on real
estate owned by the Company or any of its Subsidiaries (funded by the issuance
of commercial paper, medium term notes or other forms of borrowing and
<PAGE> 19
13
including credit enhancement facilities), and which may consist of or include
such other forms of financing consistent with the foregoing as the Board of
Directors shall approve in good faith, in each case as such financing or
financings may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any amendment
extending the maturity of, refinancing, replacing or otherwise restructuring all
or any portion of the Indebtedness under such financing or financings or any
successor or replacement agreement and whether including the same or any other
lender or group of lenders, and whether including or replacing as borrowers or
guarantors one or more Subsidiaries of the Company.
"Redemption Date" means, when used with respect to any Note to be
redeemed, the date fixed for such redemption by or in accordance with this
Indenture.
"Redemption Price" means, when used with respect to any Note to be
redeemed, the price at which such Note is to be redeemed in accordance with this
Indenture.
"Refinancing Indebtedness" means any refinancing by the Company or its
Restricted Subsidiaries of Indebtedness of the Company or any of its Restricted
Subsidiaries incurred in accordance with Section 4.05 that does not (i) result
in an increase in the aggregate principal amount of Indebtedness (such principal
amount to include, for purposes of this definition, any premiums, fees,
penalties or accrued interest paid with the proceeds of the Refinancing
Indebtedness) of such Person or (ii) create Indebtedness with (A) a Weighted
Average Life to Maturity that is less than the Weighted Average Life to Maturity
of the Indebtedness being refinanced or (B) a final maturity earlier than the
final maturity of the Indebtedness being refinanced.
"Refunding Capital Stock" has the meaning provided in Section 4.04(b).
"Registrar" has the meaning provided in Section 2.04.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated May 27, 1998, between the Company and Morgan Stanley & Co.
Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation and Goldman,
Sachs & Co. and certain permitted assigns specified therein.
"Registration Statement" means the Registration Statement as defined
and described in the Registration Rights Agreement.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the May 15 or November 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
<PAGE> 20
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"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice chairman of the board of directors, the chairman or any
vice chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, any assistant vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or assistant
trust officer, the controller or any assistant controller or any other officer
of the Trustee in its corporate trust department customarily performing
functions similar to those performed by any of the above-designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Senior Indebtedness; provided, however, that
if, and for so long as, any issue of Senior Indebtedness lacks such a
representative, then the Representative for such issue of Senior Indebtedness
shall at all times constitute the holders of a majority in outstanding principal
amount of such issue of Senior Indebtedness.
"Restricted Payment" means (i) the declaration or payment of any
dividend or the making of any other distribution (other than dividends or
distributions payable in Qualified Capital Stock or in options, rights or
warrants to acquire Qualified Capital Stock or dividends or distributions by a
Restricted Subsidiary so long as in the case of any dividend or distribution
payable on or in respect of any class or series of Capital Stock issued by a
Subsidiary other than a Wholly Owned Subsidiary, the Company or a Restricted
Subsidiary receives at least its pro rata share of such dividend or distribution
in accordance with its Capital Stock) on shares of the Company's Capital Stock,
or (ii) the purchase, redemption, retirement or other acquisition for value of
any Capital Stock of the Company, or any warrants, rights or options to acquire
shares of Capital Stock of the Company, other than through the exchange of such
Capital Stock or any warrants, rights or options to acquire shares of any class
of such Capital Stock for Qualified Capital Stock or warrants, rights or options
to acquire Qualified Capital Stock.
"Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary and includes all of the Subsidiaries of the Company
existing as of the Issue Date. The Board of Directors may designate any
Unrestricted Subsidiary or any person that is to become a Subsidiary as a
Restricted Subsidiary if, immediately after giving effect to such action (and
treating any Acquired Indebtedness as having been incurred at the time of such
action), the Company could have incurred at least $1.00 of additional
indebtedness under the first paragraph of Section 4.05 of this Indenture.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc. or any successor to the rating agency business
thereof.
<PAGE> 21
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"Secured Indebtedness" means any Indebtedness of the Company or a
Restricted Subsidiary secured by a Lien.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" has the meaning provided in Section 2.04.
"Senior Credit Facilities" means the credit facilities under that
certain Credit Agreement dated as of the date hereof, among the Company and The
Bank of Nova Scotia, as administrative agent and collateral agent, BancAmerica
Robertson Stephens, as syndication agent, The Chase Manhattan Bank, as
documentation agent, and the other financial institutions from time to time
party thereto, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending or shortening the maturity of, refinancing, replacing or
otherwise restructuring (including by way of adding Subsidiaries of the Company
as additional borrowers or guarantors thereunder or increasing the amount of
Indebtedness thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders (or other institutions).
"Senior Indebtedness" means, whether outstanding on the Issue Date or
thereafter issued, all Indebtedness of the Company, including interest
(including interest accruing on or after the filing of, or which would have
accrued but for the filing of, any petition in bankruptcy or for reorganization
relating to the Company or any Restricted Subsidiary whether or not a claim for
post-filing interest is allowed in such proceeding) and premium, if any,
thereon, and other monetary amounts (including fees, expenses, reimbursement
obligations under letters of credit and indemnities) owing in respect thereof
unless, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is provided that the obligations in respect of such
Indebtedness ranks pari passu with the Notes; provided, however, that Senior
Indebtedness will not include (1) any obligation of the Company to any
Restricted Subsidiary, (2) any liability for federal, state, foreign, local or
other taxes owed or owing by the Company, (3) any accounts payable or other
liability to trade creditors arising in the ordinary course of business
(including Guarantees thereof or instruments evidencing such liabilities), (4)
any Indebtedness, Guarantee or obligation of the Company that is expressly
subordinate or junior in right of payment to any other Indebtedness, Guarantee
or obligation of the Company, including any Note Obligations and the Existing
Regal Notes or (5) obligations in respect of any Capital Stock.
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank pari passu with the Notes in right of payment and is not subordinated by
its terms in right of payment to any Indebtedness or other obligation of the
Company which is not Senior Indebtedness.
<PAGE> 22
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"Significant Restricted Subsidiary" means any Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the Issue Date.
"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, through one or more
intermediaries, by such Person or (ii) any other Person of which at least a
majority of the voting interest under ordinary circumstances is at the time,
directly or indirectly, through one or more intermediaries, owned by such
Person. Notwithstanding anything in this Indenture to the contrary, all
references to the Company and its consolidated Subsidiaries or to financial
information prepared on a consolidated basis in accordance with GAAP shall be
deemed to include the Company and its Subsidiaries as to which financial
statements are prepared on a combined basis in accordance with GAAP and to
financial information prepared on such a combined basis. Notwithstanding
anything in this Indenture to the contrary, an Unrestricted Subsidiary shall not
be deemed to be a Restricted Subsidiary for purposes of this Indenture.
"Surviving Person" means, with respect to any Person involved in or
that makes any Disposition, the Person formed by or surviving such Disposition
or the Person to which such Disposition is made.
"Theatre Completion" means any motion picture theatre or screen or
enhancement which was first opened for business during any applicable period.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended (15 U.S. Code ss.ss. 77aaa-77bbbb), as in effect on the date this
Indenture was executed, except as provided in Section 9.06.
"Total Assets" means the total consolidated assets of the Company and
its Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.
"Transaction Date" means, with respect to the incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
Article Seven of this Indenture and thereafter means such successor.
"United States Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as amended and as codified in Title 11 of the United States Code, as
amended from time to time hereafter, or any successor federal bankruptcy law.
<PAGE> 23
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"Unrestricted Subsidiary" means a Subsidiary of the Company created
after the Issue Date and so designated by a resolution adopted by the Board of
Directors; provided, however, that (a) neither the Company nor any of its other
Restricted Subsidiaries (1) provides any credit support for any Indebtedness or
other Obligations of such Subsidiary (including any undertaking, agreement or
instrument evidencing such Indebtedness) or (2) is directly or indirectly liable
for any Indebtedness or other Obligations of such Subsidiary and (b) at the time
of designation of such Subsidiary, such Subsidiary has no property or assets
(other than de minimis assets resulting from the initial capitalization of such
Subsidiary). The Board of Directors may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary; provided, however, that immediately after giving
effect to such designation (x) the Company could incur $1.00 of additional
Indebtedness under the first paragraph of Section 4.05 of this Indenture and (y)
no Default or Event of Default shall have occurred or be continuing. Any
designation pursuant to this definition by the Board of Directors shall be
evidenced to the Trustee by the filing with the Trustee of a certified copy of
the resolution of the Board of Directors giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"U.S. Global Notes" has the meaning provided in Section 2.01.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"U.S. Physical Notes" has the meaning provided in Section 2.01.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" means, with respect to any Subsidiary of any
Person, the ownership of all of the outstanding Capital Stock of such Subsidiary
(other than any director's qualifying shares or shares owned by foreign
nationals to the extent mandated by applicable law) by such Person or one or
more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
<PAGE> 24
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"indenture securities" means the Notes;
"indenture security holder" means a Holder or a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company or any
other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by a rule of the
Commission and not otherwise defined herein have the meanings assigned to them
therein.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in
the plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision;
(vii) all ratios and computations based on GAAP contained in
this Indenture shall be computed in accordance with the definition of
GAAP set forth in Section 1.01; and
(viii) all references to Sections or Articles refer to
Sections or Articles of this Indenture unless otherwise indicated.
<PAGE> 25
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ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating. The Notes and the Trustee's certificate
of authentication shall be substantially in the form annexed hereto as Exhibit A
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange agreements to which the
Company is subject. Each Note shall be dated the date of its authentication.
The terms and provisions contained in the form of the Notes annexed
hereto as Exhibit A shall constitute, and are hereby expressly made, a part of
this Indenture. To the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A (the "U.S. Global Notes"),
registered in the name of the nominee of the Depositary, deposited with the
Trustee, as custodian for the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the U.S. Global Notes may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for the
Depositary or its nominee, in accordance with the instructions given by the
Holder thereof, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of one or more temporary
global Notes in registered form substantially in the form set forth in Exhibit A
(the "Temporary Offshore Global Notes"), registered in the name of the nominee
of the Depositary, deposited with the Trustee, as custodian for the Depositary,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Offshore Global Notes may from
time to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided. At any time after the 40th day following the later of commencement of
the offering of the Notes and the Issue Date, upon receipt by the Trustee and
the Company of a certificate substantially in the form of Exhibit B hereto, one
or more permanent global Notes in registered form substantially in the form set
forth in Exhibit A (the "Permanent Offshore Global Notes"; and together with the
Temporary Offshore Global Notes, the "Offshore Global Notes") duly executed by
the Company and authenticated by the Trustee as hereinafter provided shall be
deposited with the Trustee, as custodian for the Depositary or its nominee, and
the Registrar shall reflect on its books and records the date and a decrease in
the principal amount of the Temporary Offshore Global Notes in an amount equal
to the principal amount of the beneficial interest in the Temporary Offshore
Global Notes transferred.
<PAGE> 26
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Notes offered and sold to Institutional Accredited Investors shall be
issued in the form of permanent certificated Notes in registered form in
substantially the form set forth in Exhibit A (the "U.S. Physical Notes").
Notes issued pursuant to Section 2.07 in exchange for interests in the
Offshore Global Notes shall be in the form of permanent certificated Notes in
registered form substantially in the form set forth in Exhibit A (the "Offshore
Physical Notes").
The Offshore Physical Notes and U.S. Physical Notes are sometimes
collectively herein referred to as the "Physical Notes." The U.S. Global Notes
and the Offshore Global Notes are sometimes referred to herein as the "Global
Notes."
The definitive Notes shall be typed, printed, lithographed or engraved
or produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the Notes may
be listed, all as determined by the Officers executing such Notes, as evidenced
by their execution of such Notes.
SECTION 2.02. Restrictive Legends. Unless and until a Note is exchanged
for an Exchange Note or otherwise sold in connection with an effective
Registration Statement pursuant to the Registration Rights Agreement, (i) the
U.S. Global Notes and U.S. Physical Notes shall bear the legend set forth below
on the face thereof and (ii) the Offshore Physical Notes and Offshore Global
Notes shall bear the legend set forth below on the face thereof until at least
the 41st day after the Closing Date and receipt by the Company and the Trustee
of a certificate substantially in the form of Exhibit B hereto, and the
Temporary Offshore Global Notes shall bear the legend set forth below on the
face thereof.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS
NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES
THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k)
UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF TRANSFER OF THIS
NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY
OR ANY SUBSIDIARY THEREOF, (B) TO
<PAGE> 27
21
A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN
$100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE
TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
Each Global Note, whether or not an Exchange Note, shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER ENTITY
AS IS REQUESTED BY AN
<PAGE> 28
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AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTION S 2.01, 2.06, 2.07 AND 2.08 OF THE INDENTURE.
SECTION 2.03. Execution, Authentication and Denominations. Subject to
Article Four and applicable law, the aggregate principal amount of Notes which
may be authenticated and delivered under this Indenture is unlimited. The Notes
shall be executed by two Officers of the Company. The signature of these
Officers on the Notes may be by facsimile or manual signature in the name and on
behalf of the Company.
If an Officer whose signature is on a Note no longer holds that office
at the time the Trustee or authenticating agent authenticates the Note, the Note
shall be valid nevertheless.
A Note shall not be valid until the Trustee or authenticating agent
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
At any time and from time to time after the execution of this
Indenture, the Trustee or an authenticating agent shall upon receipt of a
Company Order authenticate for original issue Notes in the aggregate principal
amount specified in such Company Order; provided that the Trustee shall be
entitled to receive an Officers' Certificate and an Opinion of Counsel of the
Company in connection with such authentication of Notes. Such Company Order
shall specify the amount of Notes to be authenticated and the date on which the
original issue of Notes is to be authenticated and, in case of an issuance of
Notes pursuant to Section 2.15, shall certify that such issuance is in
compliance with Article Four.
The Trustee may appoint an authenticating agent to authenticate Notes.
An authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such authenticating agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the Company.
<PAGE> 29
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The Notes shall be issuable only in registered form without coupons and
only in denominations of $1,000 in principal amount and any integral multiple
thereof.
SECTION 2.04. Registrar and Paying Agent. The Company shall maintain
one or more offices or agencies where Notes may be presented for registration of
transfer or for exchange (each a "Transfer Agent" and such Transfer Agent in the
Borough of Manhattan, The City of New York, the "Registrar"), one or more
offices or agencies where Notes may be presented for payment (each a "Paying
Agent") and an office or agency where notices and demands to or upon the Company
in respect of the Notes and this Indenture may be served, one of which in each
case shall be in the Borough of Manhattan, The City of New York and, so long as
the Notes are listed on the Luxembourg Stock Exchange, one of which shall be in
Luxembourg. The Company shall cause the Registrar to keep a register of the
Notes and of their transfer and exchange (the "Security Register"). The Security
Register shall be in written form or any other form capable of being converted
into written form within a reasonable time.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall give
prompt written notice to the Trustee of the name and address of any such Agent
and any change in the address of such Agent. If the Company fails to maintain a
Registrar, Paying Agent and/or agent for service of notices and demands, the
Trustee shall act as such Registrar, Paying Agent and/or agent for service of
notices and demands. The Company may remove any Agent upon written notice to
such Agent and the Trustee; provided that no such removal shall become effective
until (i) the acceptance of an appointment by a successor Agent to such Agent as
evidenced by an appropriate agency agreement entered into by the Company and
such successor Agent and delivered to the Trustee or (ii) notification to the
Trustee that the Trustee shall serve as such Agent until the appointment of a
successor Agent in accordance with clause (i) of this proviso. The Company, any
Subsidiary of the Company, or any Affiliate of any of them may act as Paying
Agent, Registrar or Transfer Agent, and/or agent for service of notice and
demands.
The Company initially appoints the Trustee as Registrar, Paying Agent,
authenticating agent and agent for service of notice and demands. The Trustee
shall preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of Holders and shall otherwise
comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company
shall furnish to the Trustee as of each Regular Record Date and at such other
times as the Trustee may reasonably request the names and addresses of Holders
as they appear in the Security Register, including the aggregate principal
amount of Notes held by each Holder.
<PAGE> 30
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SECTION 2.05. Paying Agent to Hold Money in Trust. Not later than 11:00
a.m. (New York City time) each due date of the principal, premium, if any, and
interest on any Notes, the Company shall deposit with one or more Paying Agents
money in immediately available funds sufficient to pay such principal, premium,
if any, and interest so becoming due. The Company shall require each Paying
Agent other than the Trustee to agree in writing that such Paying Agent shall
hold in trust for the benefit of the Holders or the Trustee all money held by
the Paying Agent for the payment of principal of, premium, if any, and interest
on the Notes (whether such money has been paid to it by the Company or any other
obligor on the Notes), and such Paying Agent shall promptly notify the Trustee
of any default by the Company (or any other obligor on the Notes) in making any
such payment. The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee and account for any funds disbursed, and the
Trustee may at any time during the continuance of any payment default, upon
written request to a Paying Agent, require such Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed. Upon doing so,
the Paying Agent shall have no further liability for the money so paid over to
the Trustee. If the Company or any Subsidiary of the Company or any Affiliate of
any of them acts as a Paying Agent, it will, on or before each due date of any
principal of, premium, if any, or interest on the Notes, segregate and hold in a
separate trust fund for the benefit of the Holders a sum of money sufficient,
with monies held by all other Paying Agents, to pay such principal, premium, if
any, or interest so becoming due until such sum of money shall be paid to such
Holders or otherwise disposed of as provided in this Indenture, and will
promptly notify the Trustee of its action or failure to act.
SECTION 2.06. Transfer and Exchange. The Notes are issuable only in
registered form. A Holder may transfer a Note only by written application to the
Registrar or another Transfer Agent stating the name of the proposed transferee
and otherwise complying with the terms of this Indenture. No such transfer shall
be effected until, and such transferee shall succeed to the rights of a Holder
only upon, final acceptance and registration of the transfer by the Registrar in
the Security Register. Prior to the registration of any transfer by a Holder as
provided herein, the Company, the Trustee, and any agent of the Company shall
treat the person in whose name the Note is registered as the owner thereof for
all purposes whether or not the Note shall be overdue, and neither the Company,
the Trustee, nor any such agent shall be affected by notice to the contrary.
Furthermore, any Holder of a Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent) and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry. When Notes are presented
to the Registrar or another Transfer Agent with a request to register the
transfer or to exchange them for an equal principal amount of Notes of other
authorized denominations (including an exchange of Notes for Exchange Notes),
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met (including that such Notes are
duly endorsed or accompanied by a written instrument of transfer duly executed
by the Holder thereof or by an attorney who is authorized in writing to act on
behalf of the Holder); provided that no exchanges of Notes for Exchange Notes
shall occur until a Registration
<PAGE> 31
25
Statement shall have been declared effective by the Commission and that any
Notes that are exchanged for Exchange Notes shall be cancelled by the Trustee.
To permit registrations of transfers and exchanges, the Company shall execute
and the Trustee shall authenticate Notes at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange or redemption
of the Notes, but the Company may require payment of a sum sufficient to cover
any transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or other similar governmental charge payable
upon exchanges pursuant to Section 2.11, 3.08 or 9.04).
Neither the Registrar nor any other Transfer Agent shall be required
(i) to issue, register the transfer of or exchange any Note during a period
beginning at the opening of business 15 days before the day of the mailing of a
notice of redemption of Notes selected for redemption under Section 3.03 and
ending at the close of business on the day of such mailing, or (ii) to register
the transfer of or exchange any Note so selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
SECTION 2.07. Book-Entry Provisions for Global Notes. (a) The U.S.
Global Notes and Offshore Global Notes initially shall (i) be registered in the
name of the Depositary for such Global Notes or the nominee of such Depositary,
(ii) be delivered to the Trustee as custodian for such Depositary and (iii) bear
legends as set forth in Section 2.02.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depositary, or the Trustee as its custodian, or under such
Global Note, and the Depositary may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of such Global
Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee, from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers of such
Global Note in whole, but not in part, to the Depositary, its successors or
their respective nominees. Interests of beneficial owners in Global Notes may be
transferred in accordance with the rules and procedures of the Depositary and
the provisions of Section 2.08. In addition, U.S. Physical Notes and Offshore
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in the U.S. Global Notes or the Offshore Global
Notes, as the case may be, if (i) the Company notifies the Trustee in writing
that the Depositary it no longer willing or able to act as Depositary or the
Depositary ceases to be registered as a clearing agency under the Exchange Act
and a successor depositary is not appointed by the Company within 90 days of
such notice, (ii) the Company, at its option, notifies the Trustee in writing
that it elects to cause the issuance of the Notes in definitive form under this
Indenture, (iii) an Event of Default has occurred
<PAGE> 32
26
and is continuing and the Registrar has received a request from the Depositary
or (iv) in accordance with the rules and procedures of the Depositary and the
provisions of Section 2.08.
(c) Any beneficial interest in one of the Global Notes that is
transferred to a person who takes delivery in the form of an interest in another
Global Note will, upon transfer, cease to be an interest in such Global Note and
become an interest in such other Global Note and, accordingly, will thereafter
be subject to all transfer restrictions, if any, and other procedures applicable
to beneficial interests in such other Global Note for as long as it remains such
an interest.
(d) In connection with any transfer of a portion of the beneficial
interests in a Global Note to beneficial owners pursuant to paragraph (b) of
this Section 2.07, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of such Global Note in an amount equal to
the principal amount of the beneficial interest in such Global Note to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more U.S. Physical Notes or Offshore Physical Notes, as the
case may be, of like tenor and amount.
(e) In connection with the transfer of the U.S. Global Notes or the
Offshore Global Notes, in whole, to beneficial owners pursuant to paragraph (b)
of this Section 2.07, the U.S. Global Notes or Offshore Global Notes, as the
case may be, shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall authenticate and deliver,
to each beneficial owner identified by the Depositary in exchange for its
beneficial interest in the U.S. Global Notes or Offshore Global Notes, as the
case may be, an equal aggregate principal amount of U.S. Physical Notes or
Offshore Physical Notes, as the case may be, of authorized denominations.
(f) Any U.S. Physical Note delivered in exchange for an interest in the
U.S. Global Notes pursuant to paragraph (b), (d) or (e) of this Section 2.07
shall, except as otherwise provided by paragraph (e) of Section 2.08, bear the
legend regarding transfer restrictions applicable to the U.S. Physical Note set
forth in Section 2.02.
(g) Any Offshore Physical Note delivered in exchange for an interest in
the Offshore Global Notes pursuant to paragraph (b), (d) or (e) of this Section
2.07 shall, except as otherwise provided by paragraph (e) of Section 2.08, bear
the legend regarding transfer restrictions applicable to the Offshore Physical
Note set forth in Section 2.02.
(h) The registered holder of a Global Note may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
<PAGE> 33
27
SECTION 2.08. Special Transfer Provisions. Unless and until a Note is
exchanged for an Exchange Note or otherwise sold in connection with an effective
Registration Statement pursuant to the Registration Rights Agreement, the
following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Note to any Institutional Accredited Investor which is
not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Note,
whether or not such Note bears the Private Placement Legend, if (x) the
requested transfer is after the time period referred to in Rule 144(k)
under the Securities Act or (y) the proposed transferee has delivered
to the Registrar (A) a certificate substantially in the form of Exhibit
C hereto and (B) if the aggregate principal amount of the Notes being
transferred is less than $100,000, an opinion of counsel acceptable to
the Company that such transfer is in compliance with the Securities
Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Notes, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) above
and (y) instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the U.S.
Global Notes in an amount equal to the principal amount of the
beneficial interest in the U.S. Global Notes to be transferred, and the
Company shall execute, and the Trustee shall authenticate and deliver,
one or more U.S. Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note to a QIB
(excluding Non-U.S. Persons):
(i) If the Note to be transferred consists of (x) either
Offshore Physical Notes prior to the removal of the Private Placement
Legend or U.S. Physical Notes, the Registrar shall register the
transfer if such transfer is being made by a proposed transferor who
has checked the box provided for on the form of Note stating, or has
otherwise advised the Company and the Registrar in writing, that the
sale has been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form of
Note stating, or has otherwise advised the Company and the Registrar in
writing, that it is purchasing the Note for its own account or an
account with respect to which it exercises sole investment discretion
and that it and any such account is a QIB within the meaning of Rule
144A and is aware that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such information regarding
the Company as it has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A
<PAGE> 34
28
or (y) an interest in the U.S. Global Notes, the transfer of such
interest may be effected only through the book entry system maintained
by the Depositary.
(ii) If the proposed transferee is an Agent Member, and the
Note to be transferred consists of U.S. Physical Notes, upon receipt by
the Registrar of the documents referred to in paragraph (i) above and
instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of U.S. Global
Notes in an amount equal to the principal amount of the U.S. Physical
Notes to be transferred, and the Trustee shall cancel the U.S. Physical
Notes so transferred.
(c) Transfers of Interests in the Temporary Offshore Global Notes. The
following provisions shall apply with respect to registration of any proposed
transfer of an interest in a Temporary Offshore Global Notes:
(i) The Registrar shall register the transfer of any Note (x)
if the proposed transferee is a Non-U.S. Person and the proposed
transferor has delivered to the Registrar a certificate substantially
in the form of Exhibit D hereto or (y) if the proposed transferee is a
QIB and the proposed transferor has checked the box provided for on the
form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Note stating, or has
otherwise advised the Company and the Registrar in writing, that it is
purchasing the Note for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such
account is a QIB within the meaning of Rule 144A, and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member, upon
receipt by the Registrar of the documents referred to in clause (i)(y)
above and instructions given in accordance with the Depositary's and
the Registrar's procedures, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of the
U.S. Global Notes in an amount equal to the principal amount of the
Temporary Offshore Global Notes to be transferred, and the Trustee
shall decrease the amount of the Temporary Offshore Global Notes.
(d) Transfers of Interests in the Permanent Offshore Global Notes or
Unlegended Offshore Physical Notes. The following provisions shall apply with
respect to any transfer of
<PAGE> 35
29
interests in Permanent Offshore Global Notes or unlegended Offshore Physical
Notes. The Registrar shall register the transfer of any such Note without
requiring any additional certification.
(e) Transfers to Non-U.S. Persons at Any Time. The following provisions
shall apply with respect to any transfer of a Note to a Non-U.S. Person:
(i) Prior to the 41st day following the later of commencement
of the offering of the Notes and the Issue Date, the Registrar shall
register any proposed transfer of a Note to a Non-U.S. Person upon
receipt of a certificate substantially in the form of Exhibit D hereto
from the proposed transferor.
(ii) On and after the 41st day following the later of
commencement of the offering of the Notes and the Issue Date, the
Registrar shall register any proposed transfer to any Non-U.S. Person
if the Note to be transferred is a U.S. Physical Note or an interest in
U.S. Global Notes, upon receipt of a certificate substantially in the
form of Exhibit D hereto from the proposed transferor.
(iii) (a) If the proposed transferor is an Agent Member
holding a beneficial interest in the U.S. Global Notes, upon receipt by
the Registrar of (x) the documents, if any, required by paragraph (ii)
and (y) instructions in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the U.S.
Global Notes in an amount equal to the principal amount of the
beneficial interest in the U.S. Global Notes to be transferred, and (b)
if the proposed transferee is an Agent Member, upon receipt by the
Registrar of instructions given in accordance with the Depositary's and
the Registrar's procedures, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of the
Offshore Global Notes in an amount equal to the principal amount of the
U.S. Physical Notes or the U.S. Global Notes, as the case may be, to be
transferred, and the Trustee shall cancel the Physical Note, if any, so
transferred or decrease the amount of the U.S. Global Notes.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless either (i) the circumstances contemplated by the fourth paragraph of
Section 2.01 or (a)(i)(x) or (e)(ii) of this Section 2.08 exist or (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Company and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
<PAGE> 36
30
(g) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture. The Registrar shall not register a transfer of any Note unless such
transfer complies with the restrictions on transfer of such Note set forth in
this Indenture. The Registrar shall be entitled to receive and rely on written
instructions from the Company verifying that such transfer complies with such
restrictions on transfer. In connection with any transfer of Notes, each Holder
agrees by its acceptance of the Notes to furnish the Registrar or the Company
such certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Registrar shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such certifications, legal opinions or other information.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.07 or this Section 2.08.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
SECTION 2.09. Replacement Notes. If a mutilated Note is surrendered to
the Trustee or if the Holder claims that the Note has been lost, destroyed or
wrongfully taken, then, in the absence of notice to the Company or the Trustee
that such Note has been acquired by a bona fide purchaser, the Company shall
issue and the Trustee shall authenticate a replacement Note of like tenor and
principal amount and bearing a number not contemporaneously outstanding;
provided that the requirements of this Section 2.09 are met. If required by the
Company, an indemnity bond must be furnished that is sufficient in the judgment
of the Company to protect the Company, the Trustee or any Agent from any loss
that any of them may suffer if a Note is replaced. The Company may charge such
Holder for its expenses and the expenses of the Trustee in replacing a Note. In
case any such mutilated, lost, destroyed or wrongfully taken Note has become or
is about to become due and payable, the Company in its discretion may pay such
Note instead of issuing a new Note in replacement thereof.
Every replacement Note is an additional obligation of the Company and
shall be entitled to the benefits of this Indenture.
SECTION 2.10. Outstanding Notes. Notes outstanding at any time are all
Notes that have been authenticated by the Trustee except for those cancelled by
it, those delivered to it for cancellation and those described in this Section
2.10 as not outstanding.
If a Note is replaced pursuant to Section 2.09, it ceases to be
outstanding unless and until the Trustee and the Company receive proof
satisfactory to them that the replaced Note is held by a bona fide purchaser.
<PAGE> 37
31
If the Paying Agent (other than the Company or an Affiliate of the
Company) holds on the maturity date money sufficient to pay Notes payable on
that date, then on and after that date such Notes cease to be outstanding and
interest on them shall cease to accrue.
A Note does not cease to be outstanding because the Company or one of
its Subsidiaries holds such Note, provided, however, that in determining whether
the Holders of the requisite principal amount of the outstanding Notes have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Notes owned by the Company or any other obligor upon the Notes or any
Subsidiaries of the Company or of such other obligor shall be disregarded and
deemed not to be outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes which the Trustee has actual
knowledge to be so owned shall be so disregarded. Notes so owned which have been
pledged in good faith may be regarded as outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Notes and that the pledgee is not the Company or any other obligor upon the
Notes or any Subsidiaries of the Company or of such other obligor.
SECTION 2.11. Temporary Notes. Until definitive Notes are ready for
delivery, the Company may prepare and execute and the Trustee shall authenticate
temporary Notes. Temporary Notes shall be substantially in the form of
definitive Notes but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the Officers executing the temporary
Notes, as evidenced by their execution of such temporary Notes. If temporary
Notes are issued, the Company will cause definitive Notes to be prepared without
unreasonable delay. After the preparation of definitive Notes, the temporary
Notes shall be exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company designated for such purpose
pursuant to Section 4.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Notes of authorized denominations. Until so exchanged, the
temporary Notes shall be entitled to the same benefits under this Indenture as
definitive Notes.
SECTION 2.12. Cancellation. The Company at any time may deliver to the
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Notes previously authenticated
hereunder which the Company has not issued and sold. Each Transfer Agent and
Paying Agent shall forward to the Trustee any Notes surrendered to them for
transfer, exchange or payment. The Trustee shall cancel all Notes surrendered
for transfer, exchange, payment or cancellation and shall destroy them in
accordance with its normal procedure.
SECTION 2.13. CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP", "CINS" or "ISIN" numbers (if then generally in use), and the Company
and the Trustee shall use
<PAGE> 38
32
CUSIP, CINS or ISIN numbers, as the case may be, in notices of redemption or
exchange as a convenience to Holders; provided that any such notice shall state
that no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of redemption or exchange and
that reliance may be placed only on the other identification numbers printed on
the Notes. The Company shall promptly notify the Trustee of any change in
"CUSIP", "CINS" or "ISIN" numbers for the Notes.
SECTION 2.14. Defaulted Interest. If the Company defaults in a payment
of interest on the Notes, it shall pay, or shall deposit with the Paying Agent
money in immediately available funds sufficient to pay, the defaulted interest,
plus (to the extent lawful) any interest payable on the defaulted interest, to
the Persons who are Holders on a subsequent special record date. A special
record date, as used in this Section 2.14 with respect to the payment of any
defaulted interest, shall mean the 15th day next preceding the date fixed by the
Company for the payment of defaulted interest, whether or not such day is a
Business Day. At least 15 days before the subsequent special record date, the
Company shall mail to each Holder and to the Trustee a notice that states the
subsequent special record date, the payment date and the amount of defaulted
interest to be paid.
SECTION 2.15. Issuance of Additional Notes. The Company may, subject to
Article Four of this Indenture and applicable law, issue additional Notes under
this Indenture. The Notes issued on the Closing Date and any additional Notes
subsequently issued shall be treated as a single class for all purposes under
this Indenture.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption. (a) The Notes are redeemable, at the
Company's option, in whole or in part, at any time or from time to time, on or
after June 1, 2003 and prior to maturity, upon not less than 30 nor more than 60
days' prior notice mailed by first-class mail to each Holder's last address (and
so long as the Notes are listed on the Luxembourg Stock Exchange, publication of
notice in Luxembourg), as it appears in the Security Register, at the following
Redemption Prices (expressed in percentages of principal amount thereof on the
applicable Redemption Date), plus accrued and unpaid interest to the Redemption
Date (subject to the right of Holders of record on the relevant Regular Record
Date that is prior to the Redemption Date to receive interest due on an Interest
Payment Date), if redeemed during the 12-month period commencing June 1 of the
years set forth below:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2003..................................104.750%
2004..................................103.167
</TABLE>
<PAGE> 39
33
2005....................................... 101.583
2006 and thereafter........................ 100.000
(b) In addition, at any time and from time to time prior to June 1,
2001, the Company may, at its option, redeem up to 35% of the aggregate
principal amount of the Notes originally issued with the proceeds of one or more
Equity Offerings, at a Redemption Price (expressed as a percentage of principal
amount) of 109.50%, plus accrued and unpaid interest to the Redemption Date
(subject to the rights of Holders of record on the relevant Regular Record Date
that is prior to the Redemption Date to receive interest due on an Interest
Payment Date); provided that (i) at least 65% of Notes initially issued remains
outstanding after each such redemption and (ii) any such redemption shall occur
on or prior to the date that is 90 days after receipt by the Company of the
proceeds of an Equity Offering. The Company shall effect such redemption on a
pro rata basis.
SECTION 3.02. Notices to Trustee. If the Company elects to redeem Notes
pursuant to Section 3.01, it shall notify the Trustee in writing of the
Redemption Date and the principal amount of Notes to be redeemed and the clause
of this Indenture pursuant to which redemption shall occur.
The Company shall give each notice provided for in this Section 3.02 in
an Officers' Certificate at least 45 days before the Redemption Date (unless a
shorter period shall be satisfactory to the Trustee).
SECTION 3.03. Selection of Notes to Be Redeemed. If less than all of
the Notes are to be redeemed at any time, the Trustee shall select the Notes to
be redeemed in compliance with the requirements, as certified to it by the
Company, of the principal national securities exchange, if any, on which the
Notes are listed or, in the absence of such requirements or if the Notes are not
listed on a national securities exchange, on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem fair and
appropriate; provided that no Note of $1,000 in principal amount or less shall
be redeemed in part.
The Trustee shall make the selection from the Notes outstanding and not
previously called for redemption. The Trustee may select for redemption portions
(equal to $1,000 in principal amount or any integral multiple thereof) of Notes
that have denominations larger than $1,000 in principal amount. Provisions of
this Indenture that apply to Notes called for redemption also apply to portions
of Notes called for redemption. The Trustee shall notify the Company and the
Registrar promptly in writing of the Notes or portions of Notes to be called for
redemption.
SECTION 3.04. Notice of Redemption. With respect to any redemption of
Notes pursuant to Section 3.01, at least 30 days but not more than 60 days
before a Redemption Date, the Company shall mail a notice of redemption by
first-class mail to each Holder whose Notes are to be redeemed at its registered
address and shall publish such notice in Luxembourg at Greffier et
<PAGE> 40
34
Chef du Tribunal d'Arrondissement de et a Luxembourg, Chief Registrar of the
District Court in Luxembourg.
The notice shall identify the Notes to be redeemed and shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the name and address of each Paying Agent;
(iv) that Notes called for redemption must be surrendered to a
Paying Agent in order to collect the Redemption Price;
(v) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on
and after the Redemption Date and the only remaining right of the
Holders is to receive payment of the Redemption Price plus accrued
interest to the Redemption Date upon surrender of the Notes to a Paying
Agent;
(vi) that, if any Note is being redeemed in part, the portion
of the principal amount (equal to $1,000 in principal amount or any
integral multiple thereof) of such Note to be redeemed and that, on and
after the Redemption Date, upon surrender of such Note, a new Note or
Notes in principal amount equal to the unredeemed portion thereof will
be reissued; and
(vii) that, if any Note contains a CUSIP, CINS or ISIN number
as provided in Section 2.13, no representation is being made as to the
correctness of the CUSIP, CINS or ISIN number either as printed on the
Notes or as contained in the notice of redemption and that reliance may
be placed only on the other identification numbers printed on the
Notes.
At the Company's request (which request may be revoked by the Company
at any time prior to the time at which the Trustee shall have given such notice
to the Holders), made in writing to the Trustee at least 45 days (or such
shorter period as shall be satisfactory to the Trustee) before a Redemption
Date, the Trustee shall give the notice of redemption in the name and at the
expense of the Company. If, however, the Company gives such notice to the
Holders, the Company shall concurrently deliver to the Trustee an Officers'
Certificate stating that such notice has been given.
<PAGE> 41
35
SECTION 3.05. Effect of Notice of Redemption. Once notice of redemption
is mailed, Notes called for redemption become due and payable on the Redemption
Date and at the Redemption Price. Upon surrender of any Notes to a Paying Agent,
such Notes shall be paid at the Redemption Price, plus accrued interest, if any,
to the Redemption Date.
Notice of redemption shall be deemed to be given when mailed, whether
or not the Holder receives the notice. In any event, failure to give such
notice, or any defect therein, shall not affect the validity of the proceedings
for the redemption of Notes held by Holders to whom such notice was properly
given.
SECTION 3.06. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with its Paying Agents not later than
11:00 a.m. (New York City time) (or, if the Company is acting as its own Paying
Agent, shall segregate and hold in trust as provided in Section 2.05) money
sufficient to pay the Redemption Price of and accrued interest on all Notes to
be redeemed on that date other than Notes or portions thereof called for
redemption on that date that have been delivered by the Company to the Trustee
for cancellation.
SECTION 3.07. Payment of Notes Called for Redemption. If notice of
redemption has been given in the manner provided above, the Notes or portion of
Notes specified in such notice to be redeemed shall become due and payable on
the Redemption Date at the Redemption Price stated therein, together with
accrued interest to such Redemption Date, and on and after such date (unless the
Company shall default in the payment of such Notes at the Redemption Price and
accrued interest to the Redemption Date, in which case the principal, until
paid, shall bear interest from the Redemption Date at the rate prescribed in the
Notes), such Notes shall cease to accrue interest. Upon surrender of any Note
for redemption in accordance with a notice of redemption, such Note shall be
paid and redeemed by the Company at the Redemption Price, together with accrued
interest, if any, to the Redemption Date; provided that installments of interest
whose stated maturity is on or prior to the Redemption Date shall be payable to
the Holders registered as such at the close of business on the relevant Regular
Record Date.
SECTION 3.08. Notes Redeemed in Part. Upon surrender of any Note that
is redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver by mail to the Holder without service charge, a new
Note equal in principal amount to the unredeemed portion of such surrendered
Note.
<PAGE> 42
36
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes. The Company shall pay the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes and this Indenture. An installment of principal, premium,
if any, or interest shall be considered paid on the date due if the Trustee or
the Paying Agents (other than the Company, a Subsidiary of the Company, or any
Affiliate of any of them) holds on that date money designated for and sufficient
to pay the installment, except that, at the option of the Company, payment of
interest may be made by check mailed to the address of each Holder as such
address is specified in the Security Register. If the Company or any Subsidiary
of the Company or any Affiliate of any of them acts as Paying Agent, an
installment of principal, premium, if any, or interest shall be considered paid
on the due date if the entity acting as Paying Agent complies with the last
sentence of Section 2.05. As provided in Section 6.09, upon any bankruptcy or
reorganization procedure relative to the Company, the Trustee shall serve as the
Paying Agent, if any, for the Notes.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
the rate per annum specified in the Notes.
SECTION 4.02. Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, The City of New York and, in the event the
Notes are listed on the Luxembourg Stock Exchange, in Luxembourg, an office or
agency where Notes may be surrendered for registration of transfer or exchange
or for presentation for payment and where notices and demands to or upon the
Company in respect of the Notes and this Indenture may be served. The Company
will give prompt written notice to the Trustee of the location, and any change
in the location, of any such office or agency. If at any time the Company shall
fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the address of the Trustee set forth in Section
11.02.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
The City of New York and, in the event the Notes are listed on the Luxembourg
Stock Exchange, in Luxembourg, for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
<PAGE> 43
37
The Company hereby initially designates the Corporate Trust Office of
the Trustee as such office of the Company in the Borough of Manhattan, The City
of New York in accordance with Section 2.04.
SECTION 4.03. Fall-away Event. The Company's and its Restricted
Subsidiaries' obligations to comply with the provisions of this Indenture under
Sections 4.04, 4.05, 4.06 and 5.01 will terminate if and when the Notes are
Investment Grade Status (a "Fall-away Event"); provided, however, that the
Company's and its Restricted Subsidiaries' obligations to comply with such
provisions shall be reinstated as to events occurring after such reinstatement
if the Notes cease to have Investment Grade Status, subject to the terms,
conditions and obligations set forth in this Indenture, provided, further, that
no such Default or Event of Default shall be deemed to have arisen as a result
of such reinstatement or as a result of any action taken or omitted from being
taken during the period that the foregoing covenants were not in effect.
SECTION 4.04. Limitation on Restricted Payments. (a) The Company will
not, and will not cause or permit any of its Restricted Subsidiaries to,
directly or indirectly, make any Restricted Payment if at the time of such
Restricted Payment and immediately after giving effect thereto:
(i) a Default or Event of Default shall have occurred and be
continuing; or
(ii) the Company is not able to incur $1.00 of additional
Indebtedness under the first paragraph of Section 4.05 of this
Indenture; or
(iii) the aggregate amount of Restricted Payments made
subsequent to the Issue Date (the amount expended for such purposes, if
other than in cash, being the fair market value of such property as
determined by the Board of Directors in good faith) exceeds the sum of
(a) (x) 100% of Consolidated EBITDA of the Company accrued subsequent
to the Issue Date to the most recent date for which financial
information is available to the Company (taken as one accounting
period), less (y) 1.75 times Consolidated Interest Expense for the same
period, plus (b) 100% of the aggregate net proceeds, including the fair
market value of property other than cash as determined by the Board of
Directors in good faith, received subsequent to the Issue Date by the
Company from any Person (other than a Restricted Subsidiary of the
Company) from the issuance and sale subsequent to the Issue Date of
Qualified Capital Stock of the Company (excluding (i) any net proceeds
from issuances and sales financed directly or indirectly using funds
borrowed from the Company or any Restricted Subsidiary of the Company,
until and to the extent such borrowing is repaid, but including the
proceeds from the issuance and sale of any securities convertible into
or exchangeable for Qualified Capital Stock to the extent such
securities are so converted or exchanged and including any additional
proceeds received by the Company upon such conversion or exchange, (ii)
any net proceeds received from issuances and sales that are used to
consummate a transaction described in clause (2) of paragraph (b) below
<PAGE> 44
38
and (iii) any net cash proceeds received from the issuance and sale of
Designated Preferred Stock), plus (c) without duplication of any amount
included in clause (iii)(b) above, 100% of the aggregate net proceeds,
including the fair market value of property other than cash (valued as
provided in clause (iii)(b) above), received by the Company as a
capital contribution subsequent to the Issue Date, plus (d) the greater
of (i) $100 million and (ii) 15% of the Total Assets of the Company and
its consolidated Subsidiaries as determined in accordance with GAAP as
of the date of the most recently prepared internal balance sheet of the
Company.
(b) Notwithstanding the foregoing, these provisions will not prohibit:
(1) the payment of any dividend or the making of any distribution within 60 days
after the date of its declaration if such dividend or distribution would have
been permitted on the date of declaration; (2) (A) the purchase, redemption or
other acquisition or retirement of any Capital Stock of the Company or any
warrants, options or other rights to acquire shares of any class of such Capital
Stock ("Retired Capital Stock") either (x) solely in exchange for shares of
Qualified Capital Stock or other warrants, options or rights to acquire
Qualified Capital Stock or (y) through the application of the net proceeds of a
substantially concurrent sale for cash (other than to a Restricted Subsidiary of
the Company) of shares of Qualified Capital Stock or warrants, options or other
rights to acquire Qualified Capital Stock or (z) in the case of Disqualified
Capital Stock, solely in exchange for, or through the application of the net
proceeds of a substantially concurrent sale for cash (other than to a Restricted
Subsidiary of the Company) of, Disqualified Capital Stock (in each case,
"Refunding Capital Stock") and (B) the declaration and payment of dividends on
Refunding Capital Stock in an aggregate amount per year no greater than the
aggregate amount of dividends per annum that could have been paid on such
Retired Capital Stock pursuant to this covenant (other than this clause
(b)(2)(B)) immediately prior to such retirement; provided, however, that at the
time of the declaration of any such dividends, no Default or Event of Default
shall have occurred and be continuing or would occur as a consequence thereof;
(3) payments made pursuant to any merger, consolidation or sale of assets
effected in accordance with Article Five; provided, however, that no such
payment may be made pursuant to this clause (3) unless, after giving pro forma
effect to such transaction (and the incurrence of any Indebtedness in connection
therewith and the use of the proceeds thereof), the Company would be able to
incur $1.00 of additional Indebtedness under the first paragraph of Section 4.05
of this Indenture; (4)(A) the declaration and payment of dividends to holders of
any class or series of Designated Preferred Stock (other than Disqualified
Capital Stock) issued after the Issue Date or (B) the declaration and payment of
dividends on Refunding Capital Stock in excess of the dividends declarable and
payable thereon pursuant to clause (2)(B) above; provided, however, in either
case, after giving effect to such issuance or declaration on a pro forma basis,
the Company and its Restricted Subsidiaries would be able to incur $1.00 of
Indebtedness under the first paragraph of Section 4.05 of this Indenture; (5)
repurchases of warrants, options or rights to acquire Capital Stock deemed to
occur upon exercise of warrants, options or rights to acquire Capital Stock if
such warrants, options or rights represent a portion of the exercise price of
such warrants, options or rights; (6) the declaration and
<PAGE> 45
39
payment of dividends to holders of any class or series of Disqualified Capital
Stock or the declaration and payment of dividends to holders of Preferred Stock
of Restricted Subsidiaries, in each case, issued in accordance with Section 4.05
of this Indenture; (7) commencing on the six month anniversary of the Issue
Date, a Restricted Payment to pay for the repurchase, retirement or other
acquisition or retirement for value of Equity Interests of the Company in
existence on the Issue Date and which are not held by KKR, Hicks Muse or any of
their respective affiliates on the Issue Date (including any Capital Stock
issued in respect of such Capital Stock as a result of a stock split,
recapitalization, merger, combination, consolidation or otherwise, but excluding
any Equity Interests issued pursuant to any management equity plan or stock
option plan or similar agreement); provided that notwithstanding the foregoing,
the Company and its Restricted Subsidiaries shall be permitted to make
Restricted Payments under this clause (7) only if after giving effect thereto,
the Company would be permitted to incur at least $1.00 of additional
Indebtedness under the first paragraph of Section 4.05 of this Indenture; and
(8) dividends on the Company's Capital Stock (other than Disqualified Capital
Stock) after the first underwritten Equity Offering in an annual amount not to
exceed 6.0% of the gross proceeds (before deducting underwriting discounts and
commissions and other fees and expenses of the offering) received from shares of
Capital Stock (other than Disqualified Capital Stock) sold for the account of
the issuer thereof (and not for the account of any stockholder) in such initial
underwritten Equity Offering; provided, however, that in the case of clauses
other than clauses (1) and (2)(A), no Event of Default shall have occurred or be
continuing at the time of such payment or as a result thereof. In determining
the aggregate amount of Restricted Payments made subsequent to the Issue Date,
amounts expended pursuant to clauses (1), 2(B), (3), (4) and (8) shall be
included in such calculation.
To the extent the issuance of Capital Stock and the receipt of capital
contributions are applied to permit the issuance of Indebtedness pursuant to
clause (v) of the definition of Permitted Indebtedness, the issuance of such
Capital Stock and the receipt of such capital contributions shall not be applied
to permit payments under this Section 4.04.
SECTION 4.05. Limitation on the Incurrence of Additional Indebtedness
and Issuance of Capital Stock. (a) The Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (other than Permitted Indebtedness) and the Company will not issue
any Disqualified Capital Stock and its Restricted Subsidiaries will not issue
any Preferred Stock (except Preferred Stock issued to the Company or a
Restricted Subsidiary of the Company so long as it is so held); provided,
however, that the Company and its Restricted Subsidiaries may incur Indebtedness
or issue shares of such Capital Stock if, in either case, the Company's Leverage
Ratio at the time of incurrence of such Indebtedness or the issuance of such
Capital Stock, as the case may be, after giving pro forma effect to such
incurrence or issuance as of such date and to the use of proceeds therefrom is
less than 7:1.
<PAGE> 46
40
(b) The Company will not incur or suffer to exist, or permit any of its
Restricted Subsidiaries to incur or suffer to exist, any Obligations with
respect to an Unrestricted Subsidiary that would violate the provisions set
forth in the definition of Unrestricted Subsidiary set forth in Section 1.01.
(c) For purposes of determining compliance with this Section 4.05, in
the event that an item of Permitted Indebtedness meets the criteria of more than
one of the categories of Permitted Indebtedness or is entitled to be incurred
pursuant to the first paragraph of this Section 4.05, the Company shall, in its
sole discretion, classify such item of Indebtedness in any manner that complies
with this Section 4.05 and such item of Indebtedness will be treated as having
been incurred pursuant to only one of the clauses of the definition of Permitted
Indebtedness or pursuant to the first paragraph hereof except as otherwise set
forth in clause (v) of the definition of Permitted Indebtedness. Accrual of
interest, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness will not be deemed to be an incurrence of
Indebtedness for purposes of this Section 4.05.
SECTION 4.06. Limitations on Transactions with Affiliates. The Company
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into or permit to exist any transaction or series of related
transactions involving aggregate payments or consideration in excess of $5.0
million (including, without limitation, the purchase, sale, lease, contribution
or exchange of any property or the rendering of any service) with or for the
benefit of any of its or any of its Restricted Subsidiary's Affiliates (other
than transactions between the Company and a Restricted Subsidiary of the Company
or among Restricted Subsidiaries of the Company) (an "Affiliate Transaction"),
other than Affiliate Transactions on terms that are no less favorable than those
that might reasonably have been obtained in a comparable transaction on an
arm's-length basis from a person that is not an Affiliate; provided, however,
that for a transaction or series of related transactions involving value of
$10.0 million or more, such determination will be made in good faith by a
majority of members of the Board of Directors and by a majority of the
disinterested members of the Board of Directors, if any. The foregoing
restrictions will not apply to (1) reasonable and customary directors' fees,
indemnification and similar arrangements and payments thereunder; (2) any
obligations of the Company under any employment agreement, noncompetition or
confidentiality agreement with any officer of the Company, as in effect on the
Issue Date (provided that each amendment of any of the foregoing agreements
shall be subject to the limitations of this covenant); (3) any Restricted
Payment permitted to be made pursuant to Section 4.04 of this Indenture; (4) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Board of Directors; (5) loans
or advances to employees in the ordinary course of business of the Company or
any of its Restricted Subsidiaries consistent with past practices; (6) payments
made in connection with the Transactions, including, without limitation, fees
payable to and expenses of Hicks Muse and KKR; (7) payments by the Company or
any of its Restricted Subsidiaries to KKR or Hicks Muse or their respective
Affiliates
<PAGE> 47
41
made for any financial advisory, financing, underwriting or placement services
or in respect of other investment banking activities, including, without
limitation, in connection with acquisitions or divestitures, which payments are
approved by a majority of the Board of Directors in good faith; (8) transactions
in which the Company or any of its Restricted Subsidiaries, as the case may be,
delivers to the Trustee a letter from an Independent Financial Advisor stating
that such transaction is fair to the Company or such Restricted Subsidiary from
a financial point of view or that is on terms that are no less favorable than
those that might reasonably have been obtained in a comparable transaction on an
arm's-length basis from a person that is not an Affiliate; (9) the existence of,
or the performance by the Company or any of its Restricted Subsidiaries of its
obligations under the terms of, any stockholders agreement (including any
registration rights agreement or purchase agreement related thereto) to which it
is a party as of the Issue Date and any similar agreements which it may enter
into thereafter; provided, however, that the existence of, or the performance by
the Company or any of its Restricted Subsidiaries of obligations under any
future amendment to any such existing agreement or under any similar agreement
entered into after the Issue Date shall only be permitted by this clause (9) to
the extent that the terms (taken as a whole) of any such amendment or new
agreement are not otherwise disadvantageous to the Holders in any material
respect; (10) transactions with customers, clients, suppliers, or purchasers or
sellers of goods or services, in each case in the ordinary course of business
and otherwise in compliance with the terms of this Indenture which are fair to
the Company or its Restricted Subsidiaries, in the reasonable determination of
the Board of Directors or the management thereof, or are on terms (taken as a
whole) at least as favorable as might reasonably have been obtained at such time
from an unaffiliated party; (11) any agreement as in effect as of the Issue Date
or any amendment thereto (so long as any such amendment, taken as a whole, is
not disadvantageous to the Holders in any material respect) or any transaction
contemplated thereby and (12) any purchases of Capital Stock (other than
Disqualified Capital Stock) of the Company by Affiliates thereof.
SECTION 4.07. Repurchase of Notes upon a Change of Control. (a) Upon
the occurrence of a Change of Control, each Holder shall have the right to
require that the Company purchase all or a portion of such Holder's Notes in
cash pursuant to the offer described in paragraph (c) of this Section 4.07 (the
"Change of Control Offer"), at a purchase price equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase.
(b) Prior to the mailing of the notice referred to below, but in any
event within 30 days following the date on which the Company becomes aware that
a Change of Control has occurred, if the purchase of the Notes would violate or
constitute a default under any other Indebtedness of the Company, then the
Company shall, to the extent needed to permit such purchase of Notes, either (i)
repay all such Indebtedness and terminate all commitments outstanding thereunder
or (ii) obtain the requisite consents, if any, under such Indebtedness to permit
the purchase of the Notes as provided below. The Company will first comply with
the covenant in the preceding sentence
<PAGE> 48
42
before it will be required to make the Change of Control Offer or purchase the
Notes pursuant to the provisions of paragraphs (c) and (d) below.
(c) Within 30 days following the date on which the Company becomes
aware that a Change of Control has occurred, the Company shall send, by
first-class mail, postage prepaid, a notice to each Holder (and publish notice
in Luxembourg at Greffier et Chef du Tribunal d'Arrondissement de et a
Luxembourg, Chief Registrar of the District Court in Luxembourg), which notice
shall govern the terms of the Change of Control Offer. Such notice shall state,
among other things, the purchase date, which must be no earlier than 30 days nor
later than 60 days from the date such notice is mailed, other than as may be
required by law (the "Change of Control Payment Date"). Holders electing to have
any Notes purchased pursuant to a Change of Control Offer must surrender such
Notes to the Transfer Agent and/or Paying Agent for the Notes at the addresses
specified in the notice prior to the close of business on the business day prior
to the Change of Control Payment Date. The Company will not be required to make
a Change of Control Offer pursuant to this covenant if a third party makes a
Change of Control Offer in compliance with this Section 4.07 and repurchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
(d) The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act, to the extent applicable in connection with the purchase of
Notes pursuant to a Change of Control Offer. To the extent that the provisions
of any securities laws or regulations conflict with the provisions of this
Indenture, the Company will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations described
in this Indenture by virtue hereof.
SECTION 4.08. Existence. Subject to Articles Four and Five of this
Indenture, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and the existence of
each of its Restricted Subsidiaries in accordance with the respective
organizational documents of the Company and each Restricted Subsidiary and the
rights (whether pursuant to charter, partnership certificate, agreement, statute
or otherwise), licenses and franchises of the Company and each Restricted
Subsidiary; provided that the Company shall not be required to preserve any such
right, license or franchise, or the existence of any Restricted Subsidiary, if
the maintenance or preservation thereof is no longer desirable in the conduct of
the business of the Company and its Restricted Subsidiaries taken as a whole.
SECTION 4.09. Payment of Taxes and Other Claims. The Company will pay
or discharge and shall cause each of its Subsidiaries to pay or discharge, or
cause to be paid or discharged, before the same shall become delinquent (i) all
material taxes, assessments and governmental charges levied or imposed upon (a)
the Company or any such Subsidiary, (b) the income or profits of any such
Subsidiary which is a corporation or (c) the property of the Company or any such
Subsidiary and (ii) all material lawful claims for labor, materials and
<PAGE> 49
43
supplies that, if unpaid, might by law become a lien upon the property of the
Company or any such Subsidiary; provided that the Company shall not be required
to pay or discharge, or cause to be paid or discharged, any such tax,
assessment, charge or claim the amount, applicability or validity of which is
being contested in good faith by appropriate proceedings and for which, if
necessary, adequate reserves have been established.
SECTION 4.10. Maintenance of Properties and Insurance. The Company will
cause all properties used or useful in the conduct of its business or the
business of any of its Restricted Subsidiaries to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided that nothing in
this Section 4.10 shall prevent the Company or any Restricted Subsidiary from
discontinuing the use, operation or maintenance of any of such properties or
disposing of any of them, if such discontinuance or disposal is, in the judgment
of the Company, desirable in the conduct of the business of the Company or such
Restricted Subsidiary.
The Company will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, including, but not limited to,
products liability insurance and public liability insurance, with reputable
insurers or with the government of the United States of America, or an agency or
instrumentality thereof, in such amounts, with such deductibles and by such
methods as shall be customary for corporations similarly situated in the
industry in which the Company or any such Restricted Subsidiary, as the case may
be, is then conducting business.
SECTION 4.11. Notice of Defaults. In the event that any Officer becomes
aware of any Default or Event of Default, the Company shall promptly deliver to
the Trustee an Officers' Certificate specifying such Default or Event of
Default.
SECTION 4.12. Compliance Certificates. (a) The Company shall deliver to
the Trustee, within 45 days after the end of each fiscal quarter (120 days after
the end of the last fiscal quarter of each year), an Officers' Certificate
stating whether or not the signers know of any Default or Event of Default that
occurred during such fiscal quarter. In the case of the Officers' Certificate
delivered within 120 days after the end of the Company's fiscal year, such
certificate shall contain a certification from the principal executive officer,
principal financial officer or principal accounting officer of the Company that
a review has been conducted of the activities of the Company and its Restricted
Subsidiaries and the Company's and its Restricted Subsidiaries' performance
under this Indenture and that the Company has complied with all conditions and
covenants under this Indenture. For purposes of this Section 4.12, such
compliance shall be
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determined without regard to any period of grace or requirement of notice
provided under this Indenture. If any of the Officers signing such certificate
has knowledge of such a Default or Event of Default, the certificate shall
describe any such Default or Event of Default and its status. The first
certificate to be delivered pursuant to this Section 4.12(a) shall be for the
first fiscal quarter beginning after the execution of this Indenture.
(b) The Company shall deliver to the Trustee, within 120 days after the
end of each fiscal year, beginning with the fiscal year in which this Indenture
was executed, a certificate signed by the Company's independent certified public
accountants stating (i) that their audit examination has included a review of
the terms of this Indenture and the Notes as they relate to accounting matters,
(ii) that they have read the most recent Officers' Certificate delivered to the
Trustee pursuant to paragraph (a) of this Section 4.12 and (iii) whether, in
connection with their audit examination, anything came to their attention that
caused them to believe that the Company was not in compliance with any of the
terms, covenants, provisions or conditions of Article Four and Section 5.01 of
this Indenture as they pertain to accounting matters and, if any Default or
Event of Default has come to their attention, specifying the nature and period
of existence thereof; provided that such independent certified public
accountants shall not be liable in respect of such statement by reason of any
failure to obtain knowledge of any such Default or Event of Default that would
not be disclosed in the course of an audit examination conducted in accordance
with generally accepted auditing standards in effect at the date of such
examination.
SECTION 4.13. Commission Reports and Reports to Holders. Whether or not
the Company is then required to file reports with the Commission, the Company
shall file with the Commission, to the extent such submissions are accepted for
filing, all such reports and other information as it would be required to file
with the Commission by Sections 13(a) or 15(d) under the Exchange Act if it were
subject thereto. The Company shall supply the Trustee and each Holder or shall
supply to the Trustee for forwarding to each such Holder, without cost to such
Holder, copies of such reports and other information within 15 days after the
date it would have been required to file such reports or other information with
the Commission had it been subject to such Sections. All such reports sent to
Holders shall be made available in Luxembourg at Greffier et Chef du Tribunal
d'Arrondissement de et a Luxembourg, Chief Registrar of the District Court in
Luxembourg. The Company also shall comply with the other provisions of TIA
Section 314(a).
SECTION 4.14. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Company from paying all or any portion of the
principal of, premium, if any, or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or that may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly
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45
waives all benefit or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 4.15. Limitation on Layering. The Company will not incur any
Indebtedness if such Indebtedness is subordinate or junior in ranking in any
respect to any Senior Indebtedness unless such Indebtedness is Senior
Subordinated Indebtedness or is contractually subordinated in right of payment
to all Senior Subordinated Indebtedness (including the Notes).
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc. The Company shall not, in a
single transaction or a series of related transactions, consolidate with or
merge with or into, or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of the Company's assets determined on a
consolidated basis for the Company to another Person or adopt a plan of
liquidation unless (i) either (1) the Company is the Surviving Person or (2) the
Person (if other than the Company) formed by such consolidation or into which
the Company is merged or the Person that acquires by conveyance, transfer or
lease the properties and assets of the Company substantially as an entirety or,
in the case of a plan of liquidation, the Person to which assets of the Company
have been transferred, shall be a corporation, partnership, limited liability
company or trust organized and existing under the laws of the United States or
any State thereof or the District of Columbia; (ii) such Surviving Person shall
assume all of the obligations of the Company under the Notes and this Indenture
pursuant to a supplemental indenture in a form reasonably satisfactory to the
Trustee; (iii) immediately after giving effect to such transaction and the use
of the proceeds therefrom (on a pro forma basis, including giving effect to any
Indebtedness incurred or anticipated to be incurred in connection with such
transaction and the use of the proceeds therefrom), (1) no Default or Event of
Default shall have occurred and be continuing and (2) either (x) such Surviving
Person shall be able to incur $1.00 of additional Indebtedness under the first
paragraph of Section 4.05 of this Indenture or (y) the Leverage Ratio for such
Surviving Person would be less than the Leverage Ratio of the Company
immediately prior to such transaction; and (iv) the Company has delivered to the
Trustee prior to the consummation of the proposed transaction an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer complies with this Indenture and that all conditions
precedent in this Indenture relating to such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of related transactions) of all or
substantially all of the properties and assets of one or more Restricted
Subsidiaries, the Capital Stock of which constitutes all or substantially all of
the properties or assets of the Company, will be deemed to be the transfer of
all or substantially all of the properties and assets of the Company.
Notwithstanding the foregoing
<PAGE> 52
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clauses (ii) and (iii), (1) any Restricted Subsidiary of the Company may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company and (2) the Company may merge with an Affiliate thereof
organized solely for the purpose of reorganizing the Company in another
jurisdiction in the U.S. to realize tax or other benefits.
SECTION 5.02. Successor Substituted. Upon any consolidation or merger,
or any sale, conveyance, transfer, lease or other disposition of all or
substantially all of the property and assets of the Company in accordance with
Section 5.01 of this Indenture, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
conveyance, transfer, lease or other disposition is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person had been named
as the Company herein, and the Company shall be discharged from its Obligations
under the Notes; provided that the Company shall not be released from its
obligation to pay the principal of, premium, if any, or interest on the Notes in
the case of a lease of all or substantially all of its property and assets.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. Any of the following events shall
constitute an "Event of Default" hereunder:
(i) the failure to pay interest on the Notes when the same
becomes due and payable and the Default continues for a period of 30
days (whether or not such payment is prohibited by the provisions of
Article Ten);
(ii) the failure to pay principal of or premium, if any, on
any Notes when such principal or premium, if any, becomes due and
payable, at maturity, upon redemption or otherwise (whether or not such
payment is prohibited by the provisions of Article Ten);
(iii) a default in the observance or performance of any other
covenant or agreement contained in the Notes or this Indenture, which
default continues for a period of 60 days after the Company receives
written notice thereof specifying the default from the Trustee or
holders of at least 30% in aggregate principal amount of outstanding
Notes;
(iv) the failure to pay at the final stated maturity (after
giving effect to any extensions thereof) the principal amount of any
Indebtedness of the Company or any Restricted Subsidiary of the
Company, or the acceleration of the final stated maturity of any such
Indebtedness, if the aggregate principal amount of such Indebtedness,
together with the aggregate principal amount of any other such
Indebtedness in default for failure
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to pay principal at the final stated maturity (giving effect to any
extensions thereof) or which has been accelerated, aggregates $20
million or more at any time;
(v) one or more judgments in an aggregate amount in excess of
$20 million (which are not covered by insurance as to which the insurer
has not disclaimed coverage) being rendered against the Company or any
of its Significant Restricted Subsidiaries and such judgment or
judgments remain undischarged or unstayed for a period of 60 days after
such judgment or judgments become final and nonappealable;
(vi) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company or any of its
Significant Restricted Subsidiaries in an involuntary case under any
applicable bankruptcy, insolvency or other similar law for relief of
debtors now or hereafter in effect, (B) appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Company or any of its Significant Restricted
Subsidiaries or for all or substantially all of the property and assets
of the Company or any of its Significant Restricted Subsidiaries or (C)
the winding up or liquidation of the affairs of the Company or any of
its Significant Restricted Subsidiaries and, in each case, such decree
or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(vii) the Company or any of its Significant Restricted
Subsidiaries (A) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law for relief of debtors now
or hereafter in effect, or consents to the entry of an order for relief
in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Company or any of its Significant Restricted Subsidiaries or for all or
substantially all of the property and assets of the Company or any of
its Significant Restricted Subsidiaries or (C) effects any general
assignment for the benefit of creditors.
SECTION 6.02. Acceleration. Upon the occurrence of an Event of Default
(other than an Event of Default specified in clause (vi) or (vii) of Section
6.01 that occurs with respect to the Company), the Trustee may, and the Trustee
upon the request of the Holders of 30% in principal amount of the outstanding
Notes shall, or the Holders of at least 30% in principal amount of outstanding
Note may, declare the principal of all the Notes, together with all accrued and
unpaid interest and premium, if any, due and payable by notice in writing to the
Company and the Trustee specifying the respective Event of Default and that it
is a "notice of acceleration" (the "Acceleration Notice"). Upon such a
declaration of acceleration, such principal, premium, if any, and accrued
interest (i) shall be immediately due and payable or (ii) if there are any
amounts outstanding under the Senior Credit Facilities, will become due and
payable upon the first to occur of an acceleration under the Senior Credit
Facilities or five Business Days after receipt by the Company and the agent
under the Senior Credit Facilities of such Acceleration Notice (unless all
Events of Default specified in such Acceleration Notice have been cured or
waived). If an Event
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of Default specified in clauses (vi) through (vii) of Section 6.01 occurs with
respect to the Company, the principal of, premium, if any, and accrued interest
on the Notes then outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
At any time after such declaration or occurrence of acceleration, but
before a judgment or decree for the payment of the money due has been obtained
by the Trustee, the Holders of at least a majority in principal amount of the
outstanding Notes by written notice to the Company and to the Trustee, may
rescind and annul a declaration or occurrence of acceleration and its
consequences if (a) the Company has paid or deposited with the Trustee a sum
sufficient to pay (i) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and (ii) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest and overdue payments of
principal which has become due otherwise than by such declaration of
acceleration, at the rate prescribed therefor by such Notes, (b) all existing
Defaults and Events of Default, other than the non-payment of the principal of,
premium, if any, and accrued interest on the Notes that have become due solely
by such declaration of acceleration, have been cured or waived, (c) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction and (d) in the event of the cure or waiver of a Default
or Event of Default of the type described in clauses (vi) or (vii) of Section
6.01, the Trustee has received an Officers' Certificate and Opinion of Counsel
that such Default or Event of Default has been cured or waived.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may, and at the direction of the Holders of at least a
majority in principal amount of the outstanding Notes shall, pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal of, premium, if any, or interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding.
SECTION 6.04. Waiver of Past Defaults. Subject to Sections 6.02, 6.07
and 9.02, the Holders of at least a majority in principal amount of the
outstanding Notes, by notice to the Trustee, may waive an existing Default or
Event of Default and its consequences, except a Default in the payment of
principal of, premium, if any, or interest on any Note as specified in clause
(i) or (ii) of Section 6.01 or in respect of a covenant or provision of this
Indenture which cannot be modified or amended without the consent of the Holder
of each outstanding Note affected. Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereto. In the event of any Event of Default specified in
clauses (iv), (vi) or (vii) of Section 6.01,
<PAGE> 55
49
such Event of Default and all consequences thereof (including without limitation
any acceleration or resulting payment default) shall be annulled, waived and
rescinded, automatically and without any action by the Trustee or Holders of the
Notes, if within 60 days after such Event of Default arose (x) the Indebtedness
that is the basis for such Event of Default has been discharged or (y) the
Holders of such Indebtedness have rescinded or waived the acceleration, notice
or action (as the case may be) giving rise to such Event of Default, or (z) if
the Default that is the basis for such Event of Default has been cured.
SECTION 6.05. Control by Majority. The Holders of at least a majority
in aggregate principal amount of the outstanding Notes may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee; provided that
the Trustee may refuse to follow any direction that conflicts with law or this
Indenture, that may involve the Trustee in personal liability, or that the
Trustee determines in good faith may be unduly prejudicial to the rights of
Holders of Notes not joining in the giving of such direction; and provided
further that the Trustee may take any other action it deems proper that is not
inconsistent with any such direction received from Holders of Notes.
SECTION 6.06. Limitation on Suits. A Holder may not institute any
proceeding, judicial or otherwise, with respect to this Indenture or the Notes,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(i) the Holder has previously given the Trustee written notice
of a continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount
of outstanding Notes shall have made a written request to the Trustee
to pursue such remedy;
(iii) such Holder or Holders offer the Trustee indemnity
reasonably satisfactory to the Trustee against any costs, liability or
expense;
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(v) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Notes do not give the
Trustee a direction that is inconsistent with the request.
For purposes of Section 6.05 of this Indenture and this Section 6.06,
the Trustee shall comply with TIA Section 316(a) in making any determination of
whether the Holders of the required aggregate principal amount of outstanding
Notes have concurred in any request or
<PAGE> 56
50
direction of the Trustee to pursue any remedy available to the Trustee or the
Holders with respect to this Indenture or the Notes or otherwise under the law.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder of a Note to receive
payment of the principal of, premium, if any, or interest on, such Note or to
bring suit for the enforcement of any such payment, on or after the due date
expressed in the Notes, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default in
payment of principal, premium or interest specified in clause (i) or (ii) of
Section 6.01 occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company or any other
obligor of the Notes for the whole amount of principal, premium, if any, and
accrued interest remaining unpaid, together with interest on overdue principal,
premium, if any, and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate specified
in the Notes, and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07) and the Holders allowed in any judicial proceedings relative to
the Company (or any other obligor of the Notes), its creditors or its property
and shall be entitled and empowered to collect and receive any monies,
securities or other property payable or deliverable upon conversion or exchange
of the Notes or upon any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein contained shall be
deemed to empower the Trustee to authorize or consent to, or accept or adopt on
behalf of any Holder, any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
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SECTION 6.10. Priorities. If the Trustee collects any money pursuant
to this Article Six, it shall pay out the money in the following order:
First: to the Trustee for all amounts due under Section 7.07;
Second: to the holders of Senior Indebtedness, and as to the
extent required by Article Ten;
Third: to Holders for amounts then due and unpaid for
principal of, premium, if any, and interest on the Notes in respect of
which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Notes for principal, premium, if any,
and interest, respectively; and
Fourth: to the Company or any other obligors of the Notes,
as their interests may appear, or as a court of competent jurisdiction
may direct.
The Trustee, upon prior written notice to the Company, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court may require any party
litigant in such suit to file an undertaking to pay the costs of the suit, and
the court may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.07, or a suit by Holders of more than 10% in principal amount of the
outstanding Notes.
SECTION 6.12. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then, and in
every such case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Company, Trustee and the Holders shall continue as though no such proceeding had
been instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or wrongfully taken Notes in Section 2.09, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy
<PAGE> 58
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shall, to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Holder to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article Six or by law to the Trustee or to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee or by
the Holders, as the case may be.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General. The duties and responsibilities of the Trustee
shall be as provided by the TIA and as set forth herein. Notwithstanding the
foregoing, no provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it. Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Article Seven.
SECTION 7.02. Certain Rights of Trustee. Subject to TIA
Sections 315(a) through (d):
(i) the Trustee may rely, and shall be protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed in good faith by it to be genuine and to
have been signed or presented by the proper person;
(ii) before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which shall
conform to Section 11.04. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such
certificate or opinion;
<PAGE> 59
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(iii) the Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any
attorney or agent appointed with due care by it hereunder;
(iv) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction;
(v) the Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within
its rights or powers, provided that the Trustee's conduct does not
constitute negligence or bad faith;
(vi) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(vii) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company personally or by agent or
attorney at the sole cost of the Company;
(viii) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(ix) the Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon; and
(x) the Trustee shall not be deemed to have notice of any
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in
fact such a Default is received by the Trustee at its Corporate Trust
Office, and such notice references the Notes and this Indenture.
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SECTION 7.03. Individual Rights of Trustee. The Trustee, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not the Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to TIA Sections 310(b) and 311.
SECTION 7.04. Trustee's Disclaimer. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the Notes,
(ii) shall not be accountable for the Company's use or application of the
proceeds from the Notes and (iii) shall not be responsible for any statement in
the Notes other than its certificate of authentication.
SECTION 7.05. Notice of Default. If any Default or any Event of Default
occurs and is continuing and if such Default or Event of Default is known to the
Trustee, the Trustee shall mail to each Holder in the manner and to the extent
provided in TIA Section 313(c) notice of the Default or Event of Default within
45 days after it occurs, unless such Default or Event of Default has been cured;
provided, however, that, except in the case of a Default in the payment of the
principal of, premium, if any, or interest on any Note, the Trustee shall be
protected in withholding such notice if and so long as the Board of Directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each
May 15, beginning with May 15, 1999, the Trustee shall mail to each Holder as
provided in TIA Section 313(c) a brief report dated as of such May 15, if
required by TIA Section 313(a).
A copy of each report at the time of its mailing to the Holders of
Securities shall be mailed to the Company and filed with the Commission and each
stock exchange on which the Securities are listed in accordance with TIA Section
313(d). The Company shall promptly notify the Trustee when the Securities are
listed on any stock exchange or of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to the
Trustee such compensation as shall be agreed upon in writing from time to time
for its services hereunder. The compensation of the Trustee shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by the Trustee in the administration of its duties
hereunder without negligence, willful misconduct or bad faith on its part. Such
disubrsements, expenses and advances shall include the reasonable compensation
and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless
against, any loss or liability or expense incurred by it without negligence,
wilful misconduct or bad faith on its part in connection with the acceptance or
administration of this Indenture and its duties under this
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Indenture and the Notes, including the costs and expenses of defending itself
against any claim or liability and of complying with any process served upon it
or any of its officers in connection with the exercise or performance of any of
its powers or duties under this Indenture and the Notes. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel.
The obligations of the Company under this Section 7.07 shall not be
subordinated to the payment of Senior Indebtedness pursuant to Article Ten. To
secure the Company's payment obligations in this Section 7.07, the Trustee shall
have a lien prior to the Notes on all money or property held or collected by the
Trustee, in its capacity as Trustee, except money or property held in trust to
pay principal of, premium, if any, and interest on particular Notes.
If the Trustee incurs expenses or renders services after the occurrence
of an Event of Default specified in clauses (vi) through (vii) of Section 6.01,
the expenses and the compensation for the services will be intended to
constitute expenses of administration under Title 11 of the United States
Bankruptcy Code or any applicable federal or state law for the relief of
debtors.
The provisions of this Section 7.07 shall survive the termination of
this Indenture.
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
SECTION 7.08. Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section
7.08.
The Trustee may resign at any time by so notifying the Company in
writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in principal amount of the outstanding Notes may remove
the Trustee by so notifying the Trustee in writing and may appoint a successor
Trustee with the consent of the Company. The Company may remove the Trustee if:
(i) the Trustee is no longer eligible under Section 7.10; (ii) the Trustee is
adjudged a bankrupt or an insolvent; (iii) a receiver or other public officer
takes charge of the Trustee or its property; or (iv) the Trustee becomes
incapable of acting.
If the Trustee resigns or is removed, or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the
<PAGE> 62
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Company. If the successor Trustee does not deliver its written acceptance
required by the next succeeding paragraph of this Section 7.08 within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal amount of the outstanding
Notes may, at the expense of the Company, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after the
delivery of such written acceptance, subject to the lien provided in Section
7.07, (i) the retiring Trustee shall transfer all property held by it as Trustee
to the successor Trustee, (ii) the resignation or removal of the retiring
Trustee shall become effective and (iii) the successor Trustee shall have all
the rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Holder and to the
administrative agent under the Senior Credit Facilities. No successor Trustee
shall accept its appointment unless at the time of such acceptance such
successor Trustee shall be qualified and eligible under this Article.
If the Trustee is no longer eligible under Section 7.10 or shall fail
to comply with TIA Section 310(b), any Holder who satisfies the requirements of
TIA Section 310(b) may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee. If at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section 7.08, the Trustee shall resign immediately in the manner and with
the effect provided in this Section.
The Company shall give notice of any resignation and any removal of the
Trustee and each appointment of a successor Trustee to all Holders. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligation under Section 7.07 shall continue for the benefit
of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein, provided such corporation shall be otherwise qualified and eligible
under this Article.
SECTION 7.10. Eligibility. This Indenture shall always have a Trustee
who satisfies the requirements of TIA Section 310(a)(1). The Trustee shall have
a combined capital and surplus of at least $25 million as set forth in its most
recent published annual report of condition that is subject to the requirements
of applicable Federal or state supervising or examining authority. If
<PAGE> 63
57
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in this Article.
SECTION 7.11. Money Held in Trust. The Trustee shall not be liable for
interest on any money received by it except as the Trustee may agree with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law and except for money held in trust
under Article Eight of this Indenture.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations. Except as
otherwise provided in this Section 8.01, the Company may terminate its
obligations under the Notes and this Indenture if:
(i) all Notes previously authenticated and delivered (other
than destroyed, lost or stolen Notes that have been replaced or Notes
that are paid pursuant to Section 4.01 or Notes for whose payment money
or securities have theretofore been held in trust and thereafter repaid
to the Company, as provided in Section 8.05) have been delivered to the
Trustee for cancellation and the Company has paid all sums payable by
it hereunder; or
(ii) (A) the Notes mature within one year or all of them are
to be called for redemption within one year under arrangements
satisfactory to the Trustee for giving the notice of redemption, (B)
the Company irrevocably deposits in trust with the Trustee during such
one-year period, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee, as trust funds solely
for the benefit of the Holders for that purpose, money, U.S. Government
Obligations or a combination thereof sufficient (in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee), without
consideration of any reinvestment of any interest thereon, to pay
principal, premium, if any, and interest on the Notes to maturity or
redemption, as the case may be, and to pay all other sums payable by it
hereunder, (C) no Default or Event of Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit, (D)
such deposit will not result in a breach or violation of, or constitute
a Default under, this Indenture or any other agreement or instrument to
which the Company is a party or by which it is bound and (E) the
Company has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, in each case stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.
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With respect to the foregoing clause (i), the Company's obligations
under Section 7.07 shall survive. With respect to the foregoing clause (ii), the
Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
2.09, 2.14, 4.01, 4.02, 7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the
Notes are no longer outstanding. Thereafter, only the Company's obligations in
Sections 7.07, 8.04 and 8.05 and Article Ten (with respect to payments in
respect of Note Obligations other than with the assets held in trust as
described in clause (ii) above) shall survive. After any such irrevocable
deposit, the Trustee upon request shall acknowledge in writing the discharge of
the Company's obligations under the Notes and this Indenture except for those
surviving obligations specified above.
SECTION 8.02. Defeasance and Discharge of Indenture. The Company will
be deemed to have paid and will be discharged from any and all obligations in
respect of the Notes on the date of the deposit referred to in clause (A) of
this Section 8.02, and the provisions of this Indenture will no longer be in
effect with respect to the Notes, and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the same if:
(A) with reference to this Section 8.02, the Company has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee (or another trustee satisfying the requirements of Section
7.10) and conveyed all right, title and interest to the Trustee for the
benefit of the Holders, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee as trust
funds in trust, specifically pledged to the Trustee for the benefit of
the Holders as security for payment of the principal of, premium, if
any, and interest, if any, on the Notes, and dedicated solely to, the
benefit of the Holders, in and to (1) money in an amount, (2) U.S.
Government Obligations that, through the payment of interest, premium,
if any, and principal in respect thereof in accordance with their
terms, will provide, not later than one day before the due date of any
payment referred to in this clause (A), money in an amount or (3) a
combination thereof in an amount sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge, without consideration of the reinvestment of such interest
and after payment of all federal, state and local taxes or other
charges and assessments in respect thereof payable by the Trustee, the
principal of, premium, if any, and interest on the outstanding Notes on
the stated maturity of such principal or interest or any applicable
Redemption Date selected by the Company; provided that the Trustee
shall have been irrevocably instructed to apply such money or the
proceeds of such U.S. Government Obligations to the payment of such
principal, premium, if any, and interest with respect to the Notes;
(B) the Company has delivered to the Trustee (1) either (x) an
Opinion of Counsel to the effect that Holders will not recognize
income, gain or loss for federal income tax purposes as a result of the
Company's exercise of its option under this Section 8.02 and will be
subject to federal income tax on the same amount and in the same manner
<PAGE> 65
59
and at the same times as would have been the case if such option had
not been exercised, which Opinion of Counsel shall be based upon (and
accompanied by a copy of) a ruling of the Internal Revenue Service
directed to the Company to the same effect unless there has been a
change in applicable federal income tax law after the Closing Date such
that a ruling is no longer required or (y) a ruling directed to the
Company received from the Internal Revenue Service to the same effect
as the aforementioned Opinion of Counsel and (2) an Opinion of Counsel
to the effect that the creation of the defeasance trust does not
violate the Investment Company Act of 1940 and that after the passage
of 123 days following the deposit (except, with respect to any trust
funds for the account of any Holder who may be deemed to be an
"insider" for purposes of the United States Bankruptcy Code, after one
year following the deposit), the trust funds will not be subject to the
effect of Section 547 of the United States Bankruptcy Code or Section
15 of the New York Debtor and Creditor Law in a case commenced by or
against the Company under either such statute, provided, that in
delivering any such Opinion of Counsel, such counsel shall be entitled
to rely upon the statements of experts as to the solvency of the
Company, and either (I) the trust funds will no longer remain the
property of the Company (and therefore will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally) or (II) if a court
were to rule under any such law in any case or proceeding that the
trust funds remained property of the Company, (a) assuming such trust
funds remained in the possession of the Trustee prior to such court
ruling to the extent not paid to the Holders, the Trustee will hold,
for the benefit of the Holders, a valid and perfected security interest
in such trust funds that is not avoidable in bankruptcy or otherwise
except for the effect of Section 552(b) of the United States Bankruptcy
Code on interest on the trust funds accruing after the commencement of
a case under such statute and (b) the Holders will be entitled to
receive adequate protection of their interests in such trust funds if
such trust funds are used in such case or proceeding;
(C) immediately after giving effect to such deposit, on a pro
forma basis, no Default or Event of Default shall have occurred and be
continuing on the date of such deposit, and such deposit shall not
result in a breach or violation of, or constitute a default under, this
Indenture or any other agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound and is permitted by Article Ten;
(D) if the Notes are then listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of
Counsel to the effect that the Notes will not be delisted as a result
of such deposit, defeasance and discharge; and
(E) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.02 have been complied with.
<PAGE> 66
60
Notwithstanding the foregoing, the Company's obligations in Sections
2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.14, 4.01, 4.02, 7.07, 8.04,
8.05, 8.06 and the rights, powers, trusts, duties and immunities of the Trustee
hereunder and Article Ten (with respect to payments in respect of Note
Obligations other than with the assets held in trust as described in this
Section 8.02) shall survive until the Notes are no longer outstanding.
Thereafter, only the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive. If and when a ruling from the Internal Revenue Service or an Opinion of
Counsel referred to in clause (B)(1) of this Section 8.02 is able to be provided
specifically without regard to, and not in reliance upon, the continuance of the
Company's obligations under Section 4.01, then the Company's obligations under
such Section 4.01 shall cease upon delivery to the Trustee of such ruling or
Opinion of Counsel and compliance with the other conditions precedent provided
for herein relating to the defeasance contemplated by this Section 8.02.
After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Notes and this Indenture except for those surviving obligations in the
immediately preceding paragraph.
SECTION 8.03. Defeasance of Certain Obligations. The Company may omit
to comply with any term, provision or condition set forth in clause (iii) of
Section 5.01, the proviso in Section 4.03 and Sections 4.04 through 4.07, 4.13
and 4.15 and clauses (iii) through (vii) of Section 6.01 shall be deemed not to
be Events of Default and Article Ten shall not apply to the money and/or U.S.
Government Obligations held by the trust referred to in clause (i) below, in
each case with respect to the outstanding Notes if:
(i) with reference to this Section 8.03, the Company has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee (or another trustee satisfying the requirements of Section
7.10) and conveyed all right, title and interest to the Trustee for the
benefit of the Holders, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee as trust
funds in trust, specifically pledged to the Trustee for the benefit of
the Holders as security for payment of the principal of, premium, if
any, and interest, if any, on the Notes, and dedicated solely to, the
benefit of the Holders, in and to (A) money in an amount, (B) U.S.
Government Obligations that, through the payment of interest, premium,
if any, and principal in respect thereof in accordance with their
terms, will provide, not later than one day before the due date of any
payment referred to in this clause (i), money in an amount or (C) a
combination thereof in an amount sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge, without consideration of the reinvestment of such interest
and after payment of all federal, state and local taxes or other
charges and assessments in respect thereof payable by the Trustee, the
principal of, premium, if any, and interest on the outstanding Notes on
the stated maturity of such principal or interest or on any applicable
<PAGE> 67
61
Redemption Date selected by the Company; provided that the Trustee
shall have been irrevocably instructed to apply such money or the
proceeds of such U.S. Government Obligations to the payment of such
principal, premium, if any, and interest with respect to the Notes;
(ii) the Company has delivered to the Trustee an Opinion of
Counsel to the effect that (A) the creation of the defeasance trust
does not violate the Investment Company Act of 1940, (B) after the
passage of 123 days following the deposit (except, with respect to any
trust funds for the account of any Holder who may be deemed to be an
"insider" for purposes of the United States Bankruptcy Code, after one
year following the deposit), the trust funds will not be subject to the
effect of Section 547 of the United States Bankruptcy Code or Section
15 of the New York Debtor and Creditor Law in a case commenced by or
against the Company under either such statute, provided, that in
delivering any such Opinion of Counsel, such counsel shall be entitled
to rely upon the statements of experts as to the solvency of the
Company, and either (1) the trust funds will no longer remain the
property of the Company (and therefore will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally) or (2) if a court
were to rule under any such law in any case or proceeding that the
trust funds remained property of the Company, (x) assuming such trust
funds remained in the possession of the Trustee prior to such court
ruling to the extent not paid to the Holders, the Trustee will hold,
for the benefit of the Holders, a valid and perfected security interest
in such trust funds that is not avoidable in bankruptcy or otherwise
(except for the effect of Section 552(b) of the United States
Bankruptcy Code on interest on the trust funds accruing after the
commencement of a case under such statute) and (y) the Holders will be
entitled to receive adequate protection of their interests in such
trust funds if such trust funds are used in such case or proceeding,
(C) the Holders will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and defeasance of
certain covenants and Events of Default and will be subject to federal
income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit and defeasance had
not occurred and (D) the Trustee, for the benefit of the Holders, has a
valid first-priority security interest in the trust funds;
(iii) immediately after giving effect to such deposit on a pro
forma basis, no Default or Event of Default shall have occurred and be
continuing on the date of such deposit, and such deposit shall not
result in a breach or violation of, or constitute a default under, this
Indenture or any other agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound and is permitted by Article Ten;
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(iv) if the Notes are then listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of
Counsel to the effect that the Notes will not be delisted as a result
of such deposit, defeasance and discharge; and
(v) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.03 have been complied with.
SECTION 8.04. Application of Trust Money. Subject to Section 8.06, the
Trustee or Paying Agent shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 8.01, 8.02 or 8.03, as the case may be,
and shall apply the deposited money and the money from U.S. Government
Obligations in accordance with the Notes and this Indenture to the payment of
principal of, premium, if any, and interest on the Notes; but such money need
not be segregated from other funds except to the extent required by law.
SECTION 8.05. Repayment to Company. Subject to Sections 7.07, 8.01,
8.02 and 8.03, the Trustee and the Paying Agent shall promptly pay to the
Company upon request set forth in an Officers' Certificate any excess money held
by them at any time and thereupon shall be relieved from all liability with
respect to such money. The Trustee and the Paying Agent shall pay to the Company
upon request any money held by them for the payment of principal, premium, if
any, or interest that remains unclaimed for two years; provided that the Trustee
or Paying Agent before being required to make any payment may cause to be
published at the expense of the Company once in a newspaper of general
circulation in The City of New York and, in the event the Notes are listed on
the Luxembourg Stock Exchange, in Luxembourg, or mail to each Holder entitled to
such money at such Holder's address (as set forth in the Security Register)
notice that such money remains unclaimed and that after a date specified therein
(which shall be at least 30 days from the date of such publication or mailing)
any unclaimed balance of such money then remaining will be repaid to the
Company. After payment to the Company, Holders entitled to such money must look
to the Company for payment as general creditors unless an applicable law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with Section
8.01, 8.02 or 8.03, as the case may be, by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 8.01, 8.02 or 8.03, as the
case may be, until such time as the Trustee or Paying Agent is permitted to
apply all such money or U.S. Government Obligations in accordance with Section
8.01, 8.02 or 8.03, as the case may be; provided that, if the Company has made
any payment of principal of, premium, if any, or interest
<PAGE> 69
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on any Notes because of the reinstatement of its obligations, the Company shall
be subrogated to the rights of the Holders of such Notes to receive such payment
from the money or U.S. Government Obligations held by the Trustee or Paying
Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company, when authorized
by a resolution of its Board of Directors (as evidenced by a Board Resolution
delivered to the Trustee), and the Trustee may amend or supplement this
Indenture or the Notes without notice to or the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency in this
Indenture;
(2) to comply with Article Five;
(3) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA;
(4) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee;
(5) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(6) to add one or more subsidiary guarantees on the terms
required by this Indenture; or
(7) to make any change that, in the good faith opinion of the
Board of Directors as evidenced by a Board Resolution, does not
materially and adversely affect the rights of any Holder.
SECTION 9.02. With Consent of Holders. Subject to Sections 6.04 and
6.07 and without prior notice to the Holders, the Company, when authorized by
its Board of Directors (as evidenced by a Board Resolution delivered to the
Trustee), and the Trustee may amend this Indenture and the Notes with the
written consent of the Holders of a majority in aggregate principal amount of
the Notes then outstanding, and the Holders of a majority in aggregate principal
amount of the Notes then outstanding by written notice to the Trustee may waive
future compliance by the Company with any provision of this Indenture or the
Notes.
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Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 6.04, may not:
(i) reduce the amount of Notes whose holders must consent to
an amendment;
(ii) reduce the rate of or change the time for payment of
interest, including defaulted interest, on any Notes;
(iii) reduce the principal of or change the fixed maturity of
any Notes, or change the fixed maturity of any Notes, or change the
date on which any Notes may be subject to redemption or repurchase, or
reduce the redemption or repurchase price therefor;
(iv) make any Notes payable in money other than that stated in
the Notes and the Indenture;
(v) make any change in provisions of the Indenture protecting
the right each Holder of a Note to receive payment of, premium on and
interest on such Note on or after the due date thereof or to bring suit
to enforce such payment or permitting Holders of a majority in
principal amount of Notes to waive a Default or Event of Default; or
(vi) after the Company's obligation to purchase Notes arises
under Section 4.07, amend, modify or change the obligation of the
Company to make or consummate a Change of Control Offer or modify any
of the provisions or definitions with respect to any such offer.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Company will
mail supplemental indentures to Holders upon request. Any failure of the Company
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture or waiver.
SECTION 9.03. Revocation and Effect of Consent. Until an amendment or
waiver becomes effective, a consent to it by a Holder is a continuing consent by
the Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the Note of the consenting Holder, even if notation
of the consent is not made on any Note. However, any such Holder or subsequent
Holder may revoke the consent as to its Note or portion of its Note. Such
revocation shall be effective only if the Trustee receives the notice of
revocation before the date
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the amendment, supplement or waiver becomes effective. An amendment, supplement
or waiver shall become effective on receipt by the Trustee of written consents
from the Holders of the requisite percentage in principal amount of the
outstanding Notes.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
two sentences of the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies) and only those
persons shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder unless it is of the type described in the second paragraph of
Section 9.02. In case of an amendment or waiver of the type described in the
second paragraph of Section 9.02, the amendment or waiver shall bind each Holder
who has consented to it and every subsequent Holder of a Note that evidences the
same indebtedness as the Note of the consenting Holder.
SECTION 9.04. Notation on or Exchange of Notes. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder to deliver such Note to the Trustee. At the Company's expense, the
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder and the Trustee may place an appropriate notation on
any Note thereafter authenticated. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Failure to make
the appropriate notation, or issue a new Note, shall not affect the validity and
effect of such amendment, supplement or waiver.
SECTION 9.05. Trustee to Sign Amendments, Etc. The Trustee shall be
entitled to receive, and shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture and that it will be valid and binding upon the Company. Subject to the
preceding sentence, the Trustee shall sign such amendment, supplement or waiver
if the same does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. The Trustee may, but shall not be obligated to,
execute any such amendment, supplement or waiver that affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
SECTION 9.06. Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article Nine shall conform to the
requirements of the TIA as then in effect.
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ARTICLE TEN
SUBORDINATION OF NOTES
SECTION 10.01. Notes Subordinated to Senior Indebtedness. The Company
and the Trustee each covenants and agrees, and each Holder, by its acceptance of
a Note, likewise covenants and agrees that all Notes shall be issued subject to
the provisions of this Article Ten; and each Person holding any Note, whether
upon original issue or upon transfer, assignment or exchange thereof, accepts
and agrees that Note Obligations shall, to the extent and in the manner set
forth in this Article Ten, be subordinated in right of payment to the prior
payment in full, in cash, of all existing and future Senior Indebtedness,
including, without limitation, the Company's obligations under the Senior Credit
Facilities (including any interest accruing on or subsequent to, or which would
have accrued but for the occurrence of, an event specified in Sections 6.01(vi)
and 6.01(vii) of this Indenture, whether or not such interest is an allowed
claim enforceable against the debtor under the United States Bankruptcy Code).
SECTION 10.02. No Payment on Notes in Certain Circumstances. (a) No
direct or indirect payment by or on behalf of the Company of Note Obligations
(other than with the money, securities or proceeds held under any defeasance
trust established in accordance with this Indenture), whether pursuant to the
terms of the Notes or upon acceleration or otherwise, shall be made if (i) any
Senior Indebtedness is not paid when due or (ii) any other default on Senior
Indebtedness occurs and the maturity of such Senior Indebtedness is accelerated
in accordance with its terms unless, in either case, the default has been cured
or waived and/or any such acceleration has been rescinded or such Senior
Indebtedness has been paid; provided, however, that the Company may pay any Note
Obligation without regard to the foregoing if the Company and the Trustee
receive written notice approving such payment from the Representative of the
Senior Indebtedness with respect to which either of the events set forth in
clause (i) or (ii) above has occurred and is continuing.
(b) During the continuance of any other event of default with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, upon receipt by the Trustee with a copy to the Company of written
notice from the trustee or other representative for the holders of such
Designated Senior Indebtedness (or the holders of at least a majority in
principal amount of such Designated Senior Indebtedness then outstanding
specifying an election to effect a Payment Blockage Period (as defined below) (a
"Blockage Notice")), no payment of Note Obligations (other than with the money,
securities or proceeds held under any defeasance trust established in accordance
with this Indenture) may be made by or on behalf of the Company and except that
holders of any Note Obligation may receive (i) Qualified Capital Stock issued by
the Company to pay interest on the Notes or issued in exchange for the Notes,
(ii) securities substantially identical
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to the Notes issued by the Company in payment of interest accrued thereon or
(iii) securities issued by the Company which are subordinated to Senior
Indebtedness at least to the same extent as the Notes and having a Weighted
Average Life to Maturity at least equal to the remaining Weighted Average Life
to Maturity of the Notes) may be made for a period (a "Payment Blockage Period")
commencing on the date of receipt of such notice and ending 179 days thereafter
(or earlier if such Payment Blockage Period shall be terminated (i) by written
notice to the Trustee with a copy to the Company from such trustee of, or other
Representatives who gave such notice, (ii) because the default giving rise to
such Blockage Notice has been cured or waived or is no longer continuing or
(iii) because such Designated Senior Indebtedness has been repaid in full).
Notwithstanding the provisions described in the immediately preceding sentence,
but subject to the provisions of paragraphs (a) and (c) of this Section 10.02,
the Company may resume payments on the Notes after the end of such Payment
Blockage Period. Not more than one Payment Blockage Period may be commenced with
respect to the Notes during any period of 360 consecutive days, irrespective of
the number of defaults with respect to Designated Senior Indebtedness during
such period. However, if any Blockage Notice within such 360-day period is given
by or on behalf of any holders of Designated Senior Indebtedness (other than the
agent under the Senior Credit Facilities), the agent under the Senior Credit
Facilities may give another Blockage Notice within such period. In no event,
however, may the total number of days during which any Payment Blockage Period
or Payment Blockage Periods is in effect exceed 179 days in the aggregate during
any 360-consecutive-day period. No nonpayment default that existed or was
continuing on the date of delivery of any Blockage Notice to the Trustee shall
be, or be made, the basis for a subsequent Blockage Notice unless such default
shall have been cured or waived for a period of not less than 90 consecutive
days. The failure of the Company to pay principal when due or to pay interest on
the Notes for more than 30 days after the scheduled payment therefor as a result
of the occurrence of a Payment Blockage Period shall nevertheless constitute an
Event of Default under this Indenture. For the purposes of this Article Ten (but
without limiting the effect of any other provision of this Article Ten), paying
any Note Obligation shall include any payment or distribution of any kind or
character by the Company or its Subsidiaries, by set-off or otherwise,
including, without limitation, any repurchase, redemption or acquisition of the
Notes and any direct or indirect payment payable by reason of any other
Indebtedness or Obligation being subordinated to the Notes. In addition, as long
as the Notes are listed on the Luxembourg Stock Exchange, in the event of the
issuance of a Blockage Notice, the Company shall notify the Luxembourg Stock
Exchange and the Holders, in each case in accordance with Section 11.02.
(c) In the event that, notwithstanding the foregoing, any payment shall
be received by the Trustee or any Holder when such payment is prohibited by
Section 10.02(a) or 10.02(b) of this Indenture, the Trustee shall promptly
notify the representatives of such Senior Indebtedness of such prohibited
payment and such payment shall be held in trust for the benefit of, and shall be
paid over or delivered to, the holders of Senior Indebtedness or their
respective representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, but only to the extent that, upon
<PAGE> 74
68
notice from the Trustee to the representatives of such Senior Indebtedness that
such prohibited payment has been made, such representatives within 30 days of
receipt of such notice from the Trustee notifies the Trustee of the amounts then
due and owing on the Senior Indebtedness, if any, and only the amounts specified
in such notice to the Trustee shall be paid to the representatives of such
Senior Indebtedness and any excess above such amounts due and owing on Senior
Indebtedness shall be paid to the Company.
SECTION 10.03. Payment over of Proceeds upon Dissolution, Etc. (a) Upon
any payment or distribution of assets or securities of the Company of any kind
or character, whether in cash, property or securities (other than with the
money, securities or proceeds held under any defeasance trust established in
accordance with this Indenture), in connection with any dissolution or
winding-up or total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other similar proceedings, any assignment for the benefit of creditors or any
marshalling of assets for the benefit of creditors, all amounts due or to become
due upon all Senior Indebtedness (including any interest accruing on or
subsequent to, or which would have accrued but for the occurrence of, an event
specified in paragraphs (vi) and (vii) of Section 6.01, whether or not such
interest is an allowed claim enforceable against the debtor under the United
States Bankruptcy Code) shall first be paid in full, in cash, before the Holders
or the Trustee on their behalf shall be entitled to receive any payment by (or
on behalf of) the Company on account of Note Obligations, or any payment to
acquire any of the Notes for cash, property or securities, or any distribution
with respect to the Notes of any cash, property or securities. Before any
payment may be made by, or on behalf of, the Company on any Note Obligations
(other than with the money, securities or proceeds held under any defeasance
trust established in accordance with this Indenture) in connection with any such
dissolution, winding-up, liquidation, reorganization, assignment, marshalling or
proceeding, any payment or distribution of assets or securities for the Company
of any kind or character, whether in cash, property or securities, to which the
Holders or the Trustee on their behalf would be entitled, but for the provisions
of this Article Ten, shall be made by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person making such
payment or distribution, or by the Holders or the Trustee if received by them or
it, directly to the representatives of such Senior Indebtedness (pro rata to
such holders on the basis of the respective amounts of Senior Indebtedness held
by such holders) or their representatives or to any trustee or trustees under
any other indenture pursuant to which any such Senior Indebtedness may have been
issued, as their respective interests appear, to the extent necessary to pay all
such Senior Indebtedness in full, in cash or cash equivalents after giving
effect to any concurrent payment, distribution or provision therefor to or for
the representatives of such Senior Indebtedness (except that Holders of the
Notes may receive (i) Qualified Capital Stock issued by the Company to pay
interest on the Notes or issued in exchange for the Notes, (ii) securities
substantially identical to the Notes issued by the Company in payment of
interest accrued thereon or (iii) securities issued by the Company which are
subordinated to Senior Indebtedness at least to the same extent as the
<PAGE> 75
69
Notes and having a Weighted Average Life to Maturity at least equal to the
remaining Weighted Average Life to Maturity of the Notes).
(b) To the extent any payment of Senior Indebtedness (whether by or on
behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee or other
similar Person, the Senior Indebtedness or part thereof originally intended to
be satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred. To the extent the obligation to repay any Senior Indebtedness
is declared to be fraudulent, invalid, or otherwise set aside under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then
the obligation so declared fraudulent, invalid or otherwise set aside (and all
other amounts that would come due with respect thereto had such obligation not
been so affected) shall be deemed to be reinstated and outstanding as Senior
Indebtedness for all purposes hereof as if such declaration, invalidity or
setting aside had not occurred.
(c) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Company of any kind or character, whether in cash, property
or securities, shall be received by the Trustee or any Holder at a time when
such payment or distribution is prohibited by Section 10.03(a) of this Indenture
and before all obligations in respect of Senior Indebtedness are paid in full,
in cash, such payment or distribution shall be received and held in trust for
the benefit of, and shall be paid over or delivered to, the representatives of
such Senior Indebtedness (pro rata to such holders on the basis of such
respective amount of Senior Indebtedness held by such holders) or their
representatives, or to the trustee or trustees under any indenture pursuant to
which any such Senior Indebtedness may have been issued, as their respective
interests appear, for application to the payment of Senior Indebtedness
remaining unpaid until all such Senior Indebtedness has been paid in full, in
cash, after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Indebtedness.
(d) For purposes of this Section 10.03, the words "cash, property or
securities" shall not be deemed to include, so long as the effect of this clause
is not to cause the Notes to be treated in any case or proceeding or similar
event described in this Section 10.03 as part of the same class of claims as the
Senior Indebtedness or any class of claims pari passu with, or senior to, the
Senior Indebtedness for any payment or distribution, securities of the Company
or any other corporation provided for by a plan of reorganization or
readjustment that are subordinated, at least to the extent that the Notes are
subordinated, to the payment of all Senior Indebtedness then outstanding;
provided that (1) if a new corporation results from such reorganization or
readjustment, such corporation assumes the Senior Indebtedness and (2) the
rights of the holders
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70
of the Senior Indebtedness are not, without the consent of such holders, altered
by such reorganization or readjustment. The consolidation of the Company with,
or the merger of the Company with or into, another corporation or the
liquidation or dissolution of the Company following the sale, conveyance,
transfer, lease or other disposition of all or substantially all of its property
and assets to another corporation upon the terms and conditions provided in
Article Five of this Indenture shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 10.03 if such
other corporation shall, as a part of such consolidation, merger, sale,
conveyance, transfer, lease or other disposition, comply (to the extent
required) with the conditions stated in Article Five of this Indenture.
SECTION 10.04. Subrogation. (a) Upon the payment in full of all Senior
Indebtedness in cash, the Holders shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Company made on such Senior Indebtedness until the
principal of, premium, if any, and interest on the Notes shall be paid in full;
and, for the purposes of such subrogation, no payments or distributions to the
representatives of the holders of the Senior Indebtedness of any cash, property
or securities to which the Holders or the Trustee on their behalf would be
entitled except for the provisions of this Article Ten, and no payment pursuant
to the provisions of this Article Ten to the holders of Senior Indebtedness by
Holders or the Trustee on their behalf shall, as between the Company, its
creditors other than holders of Senior Indebtedness, and the Holders, be deemed
to be a payment by the Company to or on account of the Senior Indebtedness. It
is understood that the provisions of this Article Ten are intended solely for
the purpose of defining the relative rights of the Holders, on the one hand, and
the holders of the Senior Indebtedness, on the other hand.
(b) If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article Ten shall have been
applied, pursuant to the provisions of this Article Ten, to the payment of all
amounts payable under Senior Indebtedness, then, and in such case, the Holders
shall be entitled to receive from the holders of such Senior Indebtedness any
payments or distributions received by such holders of Senior Indebtedness in
excess of the amount required to make payment in full, in cash, of such Senior
Indebtedness of such holders.
SECTION 10.05. Obligations of Company Unconditional. (a) Nothing
contained in this Article Ten or elsewhere in this Indenture or in the Notes is
intended to or shall impair, as among the Company and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders the principal of, premium, if any, and interest on the Notes as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Company other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Holders or the Trustee on their behalf
from exercising all remedies otherwise permitted by applicable law upon
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71
default under this Indenture, subject to the rights, if any, under this Article
Ten of the holders of the Senior Indebtedness.
(b) Without limiting the generality of the foregoing, nothing contained
in this Article Ten will restrict the right of the Trustee or the Holders to
take any action to declare the Notes to be due and payable prior to their stated
maturity pursuant to Section 6.01 of this Indenture or to pursue any rights or
remedies hereunder; provided, however, that all Senior Indebtedness then due and
payable or thereafter declared to be due and payable shall first be paid in
full, in cash, before the Holders or the Trustee on behalf of the Holders are
entitled to receive any direct or indirect payment from the Company of Note
Obligations.
SECTION 10.06. Notice to Trustee. (a) The Company shall give prompt
written notice to the Trustee of any fact known to the Company that would
prohibit the making of any payment to or by the Trustee in respect of the Notes
pursuant to the provisions of this Article Ten. The Trustee shall not be charged
with the knowledge of the existence of any default or event of default with
respect to any Senior Indebtedness or of any other facts that would prohibit the
making of any payment to or by the Trustee unless and until the Trustee shall
have received notice in writing at its Corporate Trust Office to that effect
signed by an Officer of the Company, or by a holder of Senior Indebtedness or
trustee or agent thereof; and prior to the receipt of any such written notice,
the Trustee shall, subject to Article Seven, be entitled to assume that no such
facts exist; provided that, if the Trustee shall not have received the notice
provided for in this Section 10.06 at least three Business Days prior to the
date upon which, by the terms of this Indenture, any monies shall become payable
for any purpose (including, without limitation, the payment of the principal of,
premium, if any, or interest on any Note), then, notwithstanding anything herein
to the contrary, the Trustee shall have full power and authority to receive any
monies from the Company and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it on or after such prior date except for an acceleration of the
Notes prior to such application. Nothing contained in this Section 10.06 shall
limit the right of the holders of Senior Indebtedness to recover payments as
contemplated by this Article Ten. The foregoing shall not apply if the Paying
Agent is the Company. The Trustee shall be entitled to rely in good faith on the
delivery to it of a written notice by a Person representing himself or itself to
be a holder of any Senior Indebtedness (or a trustee on behalf of, or other
representative of, such holder) to establish that such notice has been given by
a holder of such Senior Indebtedness or a trustee or representative on behalf of
any such holder.
(b) In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Ten, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article
<PAGE> 78
72
Ten and, if such evidence is not furnished to the Trustee, the Trustee may defer
any payment to such Person pending judicial determination as to the right of
such Person to receive such payment.
SECTION 10.07. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets or securities referred to in
this Article Ten, the Trustee and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or upon a certificate of the receiver, trustee in bankruptcy, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other
similar Person making such payment or distribution, delivered to the Trustee or
to the Holders for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Ten, provided that such court, trustee, receiver,
custodian, assignee, agent or other Person has been apprised of, or the order,
decree or certificate makes reference to, the provisions of this Article.
SECTION 10.08. Trustee's Relation to Senior Indebtedness. (a) The
Trustee and any Paying Agent shall be entitled to all the rights set forth in
this Article Ten with respect to any Senior Indebtedness that may at any time be
held by it in its individual or any other capacity to the same extent as any
other holder of Senior Indebtedness and nothing in this Indenture shall deprive
the Trustee or any Paying Agent of any of its rights as such holder.
(b) With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness (except as provided in
Sections 10.02(c) and 10.03(c) of this Indenture) and shall not be liable to any
such holders if the Trustee shall in good faith mistakenly pay over or
distribute to Holders of Notes or to the Company or to any other person cash,
property or securities to which any holders of Senior Indebtedness shall be
entitled by virtue of this Article Ten or otherwise.
SECTION 10.09. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Indebtedness. No right of any present or
future holders of any Senior Indebtedness to enforce subordination as provided
in this Article Ten will at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms of this Indenture, regardless of any knowledge thereof that any
such holder may have or otherwise be charged with. The provisions of this
Article Ten are intended to be for the benefit of, and shall be enforceable
directly by, the holders of Senior Indebtedness.
<PAGE> 79
73
SECTION 10.10. Holders Authorize Trustee to Effectuate Subordination of
Notes. Each Holder by his acceptance of any Notes authorizes and expressly
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article Ten, and
appoints the Trustee his attorney-in-fact for such purposes, including, in the
event of any dissolution, winding-up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the property and assets of the
Company, the filing of a claim for the unpaid balance of its Notes in the form
required in those proceedings. If the Trustee does not file a proper claim or
proof in indebtedness in the form required in such proceeding at least 30 days
before the expiration of the time to file such claim or claims, each holder of
Senior Indebtedness is hereby authorized to file an appropriate claim for and on
behalf of the Holders.
SECTION 10.11. Not to Prevent Events of Default. The failure to make a
payment on account of principal of, premium, if any, or interest on the Notes by
reason of any provision of this Article Ten will not be construed as preventing
the occurrence of an Event of Default.
SECTION 10.12. Trustee's Compensation Not Prejudiced. Nothing in this
Article Ten will apply to amounts due to the Trustee pursuant to other sections
of this Indenture, including without limitation Section 7.07.
SECTION 10.13. No Waiver of Subordination Provisions. Without in any
way limiting the generality of Section 10.09, the holders of Senior Indebtedness
may, at any time and from time to time, without the consent of or notice to the
Trustee or the Holders, without incurring responsibility to the Holders and
without impairing or releasing the subordination provided in this Article Ten or
the obligations hereunder of the Holders to the holders of Senior Indebtedness,
do any one or more of the following: (a) change the manner, place or terms of
payment or extend or shorten the time of payment of, or renew or alter, Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding or secured; (b) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (c) release any Person liable in any manner for the collection of
Senior Indebtedness; and (d) exercise or refrain from exercising any rights
against the Company and any other Person.
SECTION 10.14. Payments May Be Paid Prior to Dissolution. Nothing
contained in this Article Ten or elsewhere in this Indenture shall prevent (i)
the Company except under the conditions described in Section 10.02 or 10.03,
from making payments of principal of, premium, if any, and interest on the
Notes, or from depositing with the Trustee any money for such payments, or (ii)
the application by the Trustee of any money deposited with it for the purpose of
making such payments of principal of, premium, if any, and interest on the Notes
to the holders entitled thereto unless, at least three Business Days prior to
the date upon which such payment
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74
becomes due and payable, the Trustee shall have received the written notice
provided for in Section 10.02(b) of this Indenture (or there shall have been an
acceleration of the Notes prior to such application) or in Section 10.06 of this
Indenture. The Company shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of, or similar proceeding
(including any assignment for the benefit of creditors or any marshalling of
assets) with respect to, the Company.
SECTION 10.15. Consent of Holders of Senior Indebtedness Under the
Senior Credit Facilities. The provisions of this Article Ten (including the
definitions contained in this Article and references to this Article contained
in this Indenture) shall not be amended in a manner that would adversely affect
the rights of the holders of Senior Indebtedness under the Senior Credit
Facilities, and no such amendment shall become effective unless the holders of
Senior Indebtedness under the Senior Credit Facilities shall have consented (in
accordance with the provisions of the Senior Credit Facilities) to such
amendment. The Trustee shall be entitled to receive and rely on an Officers'
Certificate stating that such consent has been given.
SECTION 10.16. Trust Moneys Not Subordinated. Notwithstanding anything
contained herein to the contrary, payments from money or the proceeds of U.S.
Government Obligations held in trust under Article Eight by the Trustee for the
payment of principal of, premium, if any, and interest on the Notes shall not be
subordinated to the prior payment of any Senior Indebtedness (provided that, at
the time deposited, such deposit did not violate any then outstanding Senior
Indebtedness), and none of the Holders shall be obligated to pay over any such
amount to any holder of Senior Indebtedness.
SECTION 10.17. Notice to Representative of Designated Senior
Indebtedness. If payment of the Notes is accelerated because of an Event of
Default, the Company or the Trustee shall promptly notify the Representative (if
any) of any issue of Designated Senior Indebtedness which is then outstanding;
provided, however, that the Company and the Trustee shall be obligated to notify
such a Representative (other than with respect to the Senior Credit Facilities)
only if such Representative has delivered or caused to be delivered an address
for the service of such a notice to the Company and the Trustee (and the Company
and the Trustee shall be obligated only to deliver the notice to the address so
specified). If a notice is required pursuant to the immediately preceding
sentence, the Company may not pay the Notes (except payment (i) in Qualified
Capital Stock issued by the Company to pay interest on the Notes or issued in
exchange for the Notes, (ii) in securities substantially identical to the Notes
issued by the Company in payment of interest accrued thereon or (iii) in
securities issued by the Company which are subordinated to the Senior
Indebtedness at least to the same extent as the Notes and have a Weighted
Average Life to Maturity at least equal to the remaining Weighted Average Life
to Maturity of the Notes), until five Business Days after the respective
Representative of the Designated Senior Indebtedness receives notice (at the
address specified in the preceding sentence) of such acceleration and,
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thereafter, may pay the Notes only if the subordination provisions of the
Indenture otherwise permit payment at that time.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act of 1939. Prior to the effectiveness
of the Registration Statement, this Indenture shall incorporate and be governed
by the provisions of the TIA that are required or deemed to be part of and to
govern indentures qualified under the TIA. After the effectiveness of the
Registration Statement, this Indenture shall be subject to the provisions of the
TIA that are required or deemed to be a part of this Indenture and shall, to the
extent applicable, be governed by such provisions.
SECTION 11.02. Notices. Any notice or communication shall be
sufficiently given if in writing and delivered in person, mailed by first-class
mail or sent by telecopier transmission addressed as follows:
if to the Company:
Regal Cinemas, Inc.
7132 Commercial Park Drive
Knoxville, Tennessee 37918
Telecopier No.: 423-922-6085
Attention: Chief Financial Officer
if to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Telecopier No.: 212-858-2952
Attention: Corporate Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed to it at
its address as it appears on the Security Register by first-class mail and shall
be sufficiently given to him if so mailed within the time prescribed. Any notice
or communication shall also be so mailed to any Person described in TIA Section
313(c), to the extent required by the TIA. Copies of any such communication or
notice to a Holder shall also be mailed to the Trustee and each Agent at the
same time.
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76
Failure to mail a notice or communication to a Holder as provided
herein or any defect in any such notice or communication shall not affect its
sufficiency with respect to other Holders. Except for a notice to the Trustee,
which is deemed given only when received, and except as otherwise provided in
this Indenture, if a notice or communication is mailed in the manner provided in
this Section 11.02, it is duly given, whether or not the addressee receives it.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
SECTION 11.03. Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent have been complied with.
SECTION 11.04. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(i) a statement that each person signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion
contained in such certificate or opinion is based;
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77
(iii) a statement that, in the opinion of each such person, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of each
such person, such condition or covenant has been complied with;
provided, however, that, with respect to matters of fact, an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
SECTION 11.05. Rules by Trustee, Paying Agent or Registrar. The
Trustee may make reasonable rules for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 11.06. Payment Date Other Than a Business Day. If an Interest
Payment Date, Redemption Date, Payment Date, stated maturity or date of maturity
of any Note shall not be a Business Day, then payment of principal of, premium,
if any, or interest on such Note, as the case may be, need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Payment Date or Redemption
Date, or at the stated maturity or date of maturity of such Note; provided that
no interest shall accrue for the period from and after such Interest Payment
Date, Payment Date, Redemption Date, stated maturity or date of maturity, as the
case may be.
SECTION 11.07. Governing Law. This Indenture and the Notes shall be
governed by the laws of the State of New York without giving effect to
applicable principles of conflicts of law to the extent that the application of
the laws of another jurisdiction would be required thereby. The Trustee, the
Company and the Holders agree to submit to the jurisdiction of the courts of the
State of New York in any action or proceeding arising out of or relating to this
Indenture or the Notes.
SECTION 11.08. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any Subsidiary of the Company. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 11.09. No Recourse Against Others. No recourse for the payment
of the principal of, premium, if any, or interest on any of the Notes, or for
any claim based thereon or otherwise in respect thereof, and no recourse under
or upon any obligation, covenant or agreement of the Company contained in this
Indenture or in any of the Notes, or because of the creation of any Indebtedness
represented thereby, shall be had against any incorporator or against any past,
present or future partner, stockholder, other equityholder, officer, director,
employee or controlling person, as such, of the Company or of any successor
Person, either directly or through the Company or any successor Person, whether
by virtue of any constitution, statute or rule of
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78
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Notes.
SECTION 11.10. Successors. All agreements of the Company in this
Indenture and the Notes shall bind its successors. All agreements of the Trustee
in this Indenture shall bind its successors.
SECTION 11.11. Duplicate Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
SECTION 11.12. Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.13. Table of Contents, Headings, Etc. The Table of Contents,
Cross-Reference Table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the terms
and provisions hereof.
<PAGE> 85
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
REGAL CINEMAS, INC.
By:
-------------------------------------
Name: Lewis Frazer III
Title: Chief Financial Officer
IBJ SCHRODER BANK & TRUST COMPANY
By:
------------------------------------
Name: Stephen J. Giurlando
Title: Assistant Vice President
<PAGE> 86
EXHIBIT A
[APPLICABLE LEGENDS]
[FACE OF NOTE]
REGAL CINEMAS, INC.
9 1/2% Senior Subordinated Note due 2008
[CUSIP] [CINS] [ISIN] [__________]
No. ____ $_________
REGAL CINEMAS, INC., a Tennessee corporation (the "Company", which term
includes any successor under the Indenture hereinafter referred to), for value
received, promises to pay to _____________, or its registered assigns, the
principal sum of ______________________ ($____________) on [________,____].
Interest Payment Dates: June 1 and December 1, commencing December
1, 1998
Regular Record Dates: May 15 and November 15.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Date: May 27, 1998 REGAL CINEMAS, INC.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
<PAGE> 87
A-2
(Trustee's Certificate of Authentication)
This is one of the 9 1/2% Senior Subordinated Notes due 2008 described in the
within-mentioned Indenture.
IBJ SCHRODER BANK & TRUST
COMPANY,
as Trustee
By:
-----------------------------------
Authorized Signatory
<PAGE> 88
A-3
[REVERSE SIDE OF NOTE]
REGAL CINEMAS, INC.
9 1/2% Senior Subordinated Note due 2008
1. Principal and Interest.
The Company will pay the principal of this Note on June 1, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest will be payable semiannually (to the holders of record of the
Notes at the close of business on the May 15 or November 15 immediately
preceding the Interest Payment Date) on each Interest Payment Date, commencing
December 1, 1998.
If an exchange offer (the "Exchange Offer") registered under the
Securities Act is not consummated and a shelf registration statement (the "Shelf
Registration Statement") under the Securities Act with respect to resales of the
Notes is not declared effective by the Commission, on or before January 7, 1999
in accordance with the terms of the Registration Rights Agreement dated May 27,
1998 between the Company and Morgan Stanley & Co. Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation and Goldman, Sachs & Co., the annual
interest rate borne by the Notes shall be increased by 0.5% from the rate shown
above accruing from the date that is 225 days after the Issue Date, payable in
cash semiannually, in arrears, on each Interest Payment Date, commencing June 1,
1999 until the Exchange Offer is consummated or the Shelf Registration Statement
is declared effective. The Holder of this Note is entitled to the benefits of
such Registration Rights Agreement.
Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from May 27, 1998,
provided that, if there is no existing default in the payment of interest and
this Note is authenticated between a Regular Record Date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue from
such Interest Payment Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
<PAGE> 89
A-4
2. Method of Payment.
The Company will pay interest on the principal amount of the Notes as
provided above on each June 1 and December 1, commencing December 1, 1998 to the
persons who are Holders (as reflected in the Security Register at the close of
business on the May 15 or November 15 immediately preceding the Interest Payment
Date), in each case, even if the Note is cancelled on registration of transfer
or registration of exchange after such record date; provided that, with respect
to the payment of principal, the Company will make payment to the Holder that
surrenders this Note to a Paying Agent on or after June 1, 2008.
The Company will pay principal, premium, if any, and as provided above,
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may pay
principal, premium, if any, and interest by its check payable in such money. It
may mail an interest check to a Holder's registered address (as reflected in the
Security Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding day
that is a Business Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as authenticating agent, a Paying Agent
and the Registrar. The Company may change any authenticating agent, Paying Agent
or Transfer Agent without notice. The Company, any Subsidiary or any Affiliate
of any of them may act as a Paying Agent or a Transfer Agent.
4. Indenture; Limitations.
The Company issued the Notes under an Indenture dated as of May 27,
1998 (the "Indenture"), between the Company and IBJ Schroder Bank & Trust
Company, as trustee (the "Trustee"). Capitalized terms herein are used as
defined in the Indenture unless otherwise indicated. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act. The Notes are subject to all such terms,
and Holders are referred to the Indenture and the Trust Indenture Act for a
statement of all such terms. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control.
The Notes are general unsecured obligations of the Company.
The Company may, subject to Article Four of the Indenture and
applicable law, issue additional Notes under the Indenture.
<PAGE> 90
A-5
5. Optional Redemption.
The Notes are redeemable, at the Company's option, in whole or in part,
at any time or from time to time, on or after June 1, 2003 and prior to
maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's last address, as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of
principal amount thereof on the applicable Redemption Date), plus accrued and
unpaid interest to the Redemption Date (subject to the right of Holders of
record on the relevant Regular Record Date that is prior to the Redemption Date
to receive interest due on an Interest Payment Date), if redeemed during the
12-month period commencing June 1 of the years set forth below:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2003....................................... 104.750%
2004....................................... 103.167
2005....................................... 101.583
2006 and thereafter........................ 100.000
</TABLE>
At any time and from time to time prior to June 1, 2001, the Company
may redeem up to 35% of the principal amount of the Notes with the proceeds of
one or more Equity Offerings, at a Redemption Price (expressed as a percentage
of principal amount) of 109.50%, plus accrued and unpaid interest to the
Redemption Date (subject to the rights of Holders of record on the relevant
Regular Record Date that is prior to the Redemption Date to receive interest due
on an Interest Payment Date); provided that (i) at least 65% of Notes initially
issued remains outstanding after each such redemption and (ii) any such
redemption shall occur on or prior to the date that is 90 days after receipt by
the Company of the proceeds of an Equity Offering. The Company shall effect such
redemption on a pro rata basis.
Notes in original denominations larger than $1,000 may be redeemed in
part. On and after the Redemption Date, interest ceases to accrue on Notes or
portions of Notes called for redemption, unless the Company defaults in the
payment of the Redemption Price.
6. Repurchase upon Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder shall have
the right to require that the Company purchase all or a portion of such Holder's
Notes in cash pursuant to the offer described in Section 4.07(c) of the
Indenture, at a purchase price equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase.
<PAGE> 91
A-6
(b) Prior to the mailing of the notice referred to below, but in any
event within 30 days following the date on which the Company becomes aware that
a Change of Control has occurred, if the purchase of the Notes would violate or
constitute a default under any other Indebtedness of the Company, then the
Company shall, to the extent needed to permit such purchase of Notes, either (i)
repay all such Indebtedness and terminate all commitments outstanding thereunder
or (ii) obtain the requisite consents, if any, under such Indebtedness to permit
the purchase of the Notes as provided below. The Company will first comply with
the covenant in the preceding sentence before it will be required to make the
Change of Control Offer or purchase the Notes pursuant to the provisions of
Section 4.07(c) and Section 4.07(d) of the Indenture.
A notice of such Change of Control will be mailed within 30 days after
any Change of Control occurs to each Holder at its last address as it appears in
the Security Register. Notes in original denominations larger than $1,000 may be
sold to the Company in part. On and after the Payment Date, interest ceases to
accrue on Notes or portions of Notes surrendered for purchase by the Company,
unless the Company defaults in the payment of the purchase price.
7. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 of principal amount and multiples of $1,000 in excess thereof. A Holder
may register the transfer or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
or exchange of any Notes selected for redemption. Also, it need not register the
transfer or exchange of any Notes for a period of 15 days before the day of
mailing of a notice of redemption of Notes selected for redemption.
8. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
9. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
<PAGE> 92
A-7
10. Discharge Prior to Redemption or Maturity.
Under certain circumstances, if the Company deposits with the Trustee
money, U.S. Government Obligations or a combination thereof sufficient to pay
the then outstanding principal of, premium, if any, and accrued interest on the
Notes to redemption or maturity of the Notes, the Company may, under certain
circumstances, be discharged from the Indenture and the Notes, except in certain
circumstances for certain provisions thereof, or from certain covenants set
forth in the Indenture.
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding, and any existing default or
compliance with any provision may be waived with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding. Without
notice to or the consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency and make any change that does not materially
and adversely affect the rights of any Holder.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the Company
and its Restricted Subsidiaries, among other things, to incur additional
Indebtedness, make Restricted Payments, issue Preferred Stock of Restricted
Subsidiaries, Guarantee Indebtedness of the Company, engage in transactions with
Affiliates, or merge, consolidate or transfer substantially all of its assets.
Within 45 days after the end of each fiscal quarter (90 days after the end of
the last fiscal quarter of each year), the Company shall deliver to the Trustee
an Officers' Certificate stating whether or not the signers thereof know of any
Default or Event of Default under such restrictive covenants.
13. Successor Persons.
When a successor person or other entity assumes all the obligations of
its predecessor under the Notes and the Indenture, the predecessor person will
be released from those obligations.
14. Defaults and Remedies.
Any of the following events constitutes an "Event of Default" under the
Indenture:
<PAGE> 93
A-8
(i) the failure to pay interest on the Notes when the same
becomes due and payable and the Default continues for a period of 30
days (whether or not such payment is prohibited by the provisions of
Article Ten);
(ii) the failure to pay principal of or premium, if any, on
any Notes when such principal or premium, if any, becomes due and
payable, at maturity, upon redemption or otherwise (whether or not such
payment is prohibited by the provisions of Article Ten);
(iii) a default in the observance or performance of any other
covenant or agreement contained in the Notes or this Indenture, which
default continues for a period of 60 days after the Company receives
written notice thereof specifying the default from the Trustee or
holders of at least 30% in aggregate principal amount of outstanding
Notes;
(iv) the failure to pay at the final stated maturity (after
giving effect to any extensions thereof) the principal amount of any
Indebtedness of the Company or any Restricted Subsidiary of the
Company, or the acceleration of the final stated maturity of any such
Indebtedness, if the aggregate principal amount of such Indebtedness,
together with the aggregate principal amount of any other such
Indebtedness in default for failure to pay principal at the final
stated maturity (giving effect to any extensions thereof) or which has
been accelerated, aggregates $20 million or more at any time;
(v) one or more judgments in an aggregate amount in excess of
$20 million (which are not covered by insurance as to which the insurer
has not disclaimed coverage) being rendered against the Company or any
of its Significant Restricted Subsidiaries and such judgment or
judgments remain undischarged or unstayed for a period of 60 days after
such judgment or judgments become final and nonappealable;
(vi) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company or any of its
Significant Restricted Subsidiaries in an involuntary case under any
applicable bankruptcy, insolvency or other similar law for relief of
debtors now or hereafter in effect, (B) appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Company or any of its Significant Restricted
Subsidiaries or for all or substantially all of the property and assets
of the Company or any of its Significant Restricted Subsidiaries or (C)
the winding up or liquidation of the affairs of the Company or any of
its Significant Restricted Subsidiaries and, in each case, such decree
or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(vii) the Company or any of its Significant Restricted
Subsidiaries (A) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law for relief of debtors now
or hereafter in effect, or consents to the entry of an order for relief
in an involuntary case under any such law, (B) consents to the
appointment of or taking possession
<PAGE> 94
A-9
by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official of the Company or any of its Significant Restricted
Subsidiaries or for all or substantially all of the property and assets
of the Company or any of its Significant Restricted Subsidiaries or (C)
effects any general assignment for the benefit of creditors.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee may, and at the direction of the Holders of at least 30%
in aggregate principal amount of the Notes then outstanding shall, declare all
the Notes to be due and payable. If a bankruptcy or insolvency default with
respect to the Company occurs and is continuing, the Notes automatically become
due and payable. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Notes. Subject to certain limitations,
Holders of at least a majority in principal amount of the Notes then outstanding
may direct the Trustee in its exercise of any trust or power.
15. Subordination.
The payment of the Notes will, to the extent set forth in the
Indenture, be subordinated in right of payment to the prior payment in full, in
cash, of all Senior Indebtedness.
16. Trustee Dealings with the Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
17. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equityholder, officer, director, employee or controlling person, as such,
of the Company or of any successor Person shall have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
18. Authentication.
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
<PAGE> 95
A-10
19. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish a copy of the Indenture to any Holder upon
written request and without charge. Requests may be made to Regal Cinemas, Inc.,
7132 Commercial Park Drive, Knoxville, Tennessee 37918; Attention: Chief
Financial Officer.
<PAGE> 96
A-11
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- ----------------------------------
- --------------------------------------------------------------------------------
Please print or typewrite name and address including zip code of assignee
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ________________________________ attorney to transfer said Note on
the books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED OFFSHORE GLOBAL NOTES AND
UNLEGENDED OFFSHORE PHYSICAL NOTES]
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date the Shelf Registration Statement is
declared effective or (ii) the end of the period referred to in Rule 144(k)
under the Securities Act, the undersigned confirms that without utilizing any
general solicitation or general advertising that:
[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act of 1933
provided by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance
with (a) above and documents are being furnished which comply
with the conditions of transfer set forth in this Note and the
Indenture.
<PAGE> 97
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If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Date:
-------------------- ----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
Signature Guarantee:
-----------------------------
Signature must be guaranteed by a participant in a recognized signature guaranty
medallion program or other signature guarantor acceptable to the Trustee.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933 and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:
---------------------- -----------------------------------------------
NOTICE: To be executed by an executive officer
<PAGE> 98
A-13
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.07 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.07 of the Indenture, state the amount:
$___________________.
Date:
------------------
Your Signature:
-----------------------------------------------------------------
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee:
--------------------------------
Signature must be guaranteed by a participant in a recognized signature guaranty
medallion program or other signature guarantor acceptable to the Trustee.
<PAGE> 99
EXHIBIT B
Form of Certificate
___________, _____
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Administration
Regal Cinemas, Inc.
7132 Commercial Park Drive
Knoxville, Tennessee 37918
Attention: Chief Financial Officer
Re: Regal Cinemas, Inc. (the "Company")
9 1/2% Senior Subordinated Notes due 2008 (the "Notes")
Dear Sirs:
This letter relates to U.S. $____ principal amount of Notes represented
by a Note (the "Legended Note") which bears a legend outlining restrictions upon
transfer of such Legended Note. Pursuant to Section 2.02 of the Indenture dated
as of May 27, 1998 (the "Indenture") relating to the Notes, we hereby certify
that we are (or we will hold such securities on behalf of) a person outside the
United States to whom the Notes could be transferred in accordance with Rule 904
of Regulation S promulgated under the U.S. Securities Act of 1933. Accordingly,
you are hereby requested to exchange the legended certificate for an unlegended
certificate representing an identical principal amount of Notes, all in the
manner provided for in the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
---------------------------------
Authorized Signature
<PAGE> 100
EXHIBIT C
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
___________, _____
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Administration
Re: Regal Cinemas, Inc. (the "Company")
9 1/2% Senior Subordinated Notes due 2008 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of $__________ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is subject to
certain restrictions and conditions set forth in the Indenture dated as of May
27, 1998 (the "Indenture") relating to the Notes and the undersigned agrees to
be bound by, and not to resell, pledge or otherwise transfer the Notes except in
compliance with such restrictions and conditions and the Securities Act of 1933,
amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold except as permitted in the following sentence. We agree, on our own behalf
and on behalf of any accounts for which we are acting as hereinafter stated,
that if we should sell any Notes within the time period referred to in Rule
144(k) of the Securities Act, we will do so only (A) to the Company or any
subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to
a "qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and, if such
transfer is in respect of an aggregate principal amount of less than $100,000,
an opinion of counsel acceptable to the Company that such transfer is in
compliance with the Securities Act, (D) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
exemption from registration provided by Rule 144 under the Securities Act (if
available) or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to
<PAGE> 101
C-2
provide to any person purchasing any of the Notes from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we will be
required to furnish to you and the Company such certifications, legal opinions
and other information as you and the Company may reasonably require to confirm
that the proposed sale complies with the foregoing restrictions. We further
understand that the Notes purchased by us will bear a legend to the foregoing
effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes purchased by us for our own account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
---------------------------------
Authorized Signature
<PAGE> 102
EXHIBIT D
Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to Regulation S
___________, ______
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Administration
Re: Regal Cinemas, Inc.(the "Company")
9 1/2% Senior Subordinated Notes due 2008 (the "Notes")
Dear Sirs:
In connection with our proposed sale of U.S.$_______ aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the Securities Act of 1933 and,
accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) at the time the buy order was originated, the transferee was outside
the United States or we and any person acting on our behalf reasonably believed
that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
----------------------------------
Authorized Signature
<PAGE> 1
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, made as of May 27, 1998, by and between Regal
Cinemas, Inc., a Tennessee corporation (the "Company"), and Michael L. Campbell
("Executive").
RECITALS
In order to induce Executive to serve as the Chief Executive
Officer and Chairman of the Board of Directors of the Company, the Company
desires to provide Executive with compensation and other benefits on the terms
and conditions set forth in this Agreement.
Executive is willing to accept such employment and perform
services for the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as
follows:
1. Employment.
1.1 Subject to the terms and conditions of this Agreement, the
Company (or the company existing after the integration, if any, of the Company
and Act III Cinemas, Inc. ("Act III")) agrees to employ Executive during the
term hereof as its Chief Executive Officer and Chairman of the Board of
Directors. In his capacity as the Chief Executive Officer of the Company,
Executive shall report to the Board of Directors of the Company (the "Board")
and shall have the powers, responsibilities and authorities of chief executive
officers of corporations of the size, type and nature of the Company, as it
exists from time to time, as are assigned by the Board consistent with the
position of Chief Executive Officer.
- 1 -
<PAGE> 2
1.2 Subject to the terms and conditions of this Agreement,
Executive hereby agrees to be employed as the Chief Executive Officer and
Chairman of the Board of the Company (or the company existing after the
integration, if any, of the Company and Act III) and agrees to devote such
working time and efforts (except for permitted vacation periods and reasonable
periods of illness and other incapacity), to the best of his ability, experience
and talent, to the performance of services, duties and responsibilities in
connection therewith so that such performance shall be his primary business
activity. Executive shall perform such duties and exercise such powers with
respect to the activities of the Company, commensurate with his positions, as
the Chief Executive Officer and Chairman of the Board of the Company as the
Board shall from time to time delegate to him on such terms and conditions and
subject to such restrictions as such Board may reasonably from time to time
impose. Executive will be responsible for the selection of the members of the
Company's management team, subject to the good faith approval of the Board.
1.3 Nothing in this Agreement shall preclude Executive from
serving on boards of directors of other companies and participating in
charitable or community activities that do not substantially interfere with his
duties and responsibilities hereunder or conflict with the interest of the
Company.
1.4 Headquarters of the Company will be in Knoxville, TN, or
any other reasonable location acceptable to the Executive.
2. Term of Employment. Executive's term of employment under
this Agreement shall commence as of the date hereof, and, subject to the terms
hereof, shall terminate (the "Termination Date") on the earlier of (i) May 27,
2001, or (ii) termination of
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Executive's employment pursuant to this Agreement; provided, however, that any
termination of employment by Executive (other than for death or Permanent
Disability) may only be made upon 90 days prior written notice to the Company.
The Executive shall resign from the Board upon any termination of employment.
3. Compensation.
3.1 Salary. The Company shall pay Executive a base salary
("Base Salary") at the rate of $500,000 per annum for the period commencing on
the beginning of Executive's term of employment hereunder and ending on the
Termination Date. Base Salary shall be payable in accordance with the ordinary
payroll practices of the Company. Any increase in Base Salary shall be in the
discretion of the Board and, as so increased, shall constitute "Base Salary"
hereunder.
3.2 Annual Bonus. In addition to his Base Salary, Executive
shall, commencing with the 1998 fiscal year and continuing each fiscal year
thereafter, be paid an annual cash bonus (the "Bonus") during the term of his
employment hereunder. Executive's target bonus shall be 140% of Base Salary. For
1998, 70% of such bonus will depend on the achievement of the Company EBITDA
target of $156 million (excluding (i) synergies, if any, from the combined
operations and (ii) extraordinary charges related to the acquisition of the
Company and the integration, if any, of the Company and Act III) and 30% will
depend on achievement of Board established integration/synergy goals. After
1998, the Board, after consultation with management, will establish EBITDA
targets based on the performance of the Company, taking into account the
combined operations, if any, and synergies, if any. With respect to the EBITDA
component, upon attainment of 90% of the EBITDA target the
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Executive will earn 50% of the EBITDA component, which will increase from 50% to
100% in a linear progression for achievement between 90% and 100% of the EBITDA
target. Similarly, the EBITDA portion of the bonus will increase (up to a cap of
150% on the EBITDA portion of the bonus) in a linear progression from 100% to
150% for achievement of EBITDA over 100% of the EBITDA target. EBITDA
achievement will be measured using the budgeted capital expenditures previously
disclosed in the Goldman Sachs presentation to the Board dated December 29,
1997.
4. Employee Benefits.
4.1 Employee Benefit Programs, Plans and Practices. The
Company shall provide Executive during the term of his employment hereunder with
coverage under all employee pension and welfare benefit programs, plans and
practices (to the extent permitted under any employee benefit plan) in
accordance with the terms thereof, which the Company generally makes available
to its senior executives.
4.2 Vacation. While employed hereunder, Executive shall be
entitled to no less than 20 business days paid vacation in each calendar year,
which shall be taken at such times as are consistent with Executive's
responsibilities hereunder.
5. Expenses. Executive is authorized to incur reasonable
expenses in carrying out his duties and responsibilities under this Agreement.
The Company will reimburse Executive for such expenses upon presentation by
Executive from time to time of appropriately itemized and approved (consistent
with the Company's policy) accounts of such expenditures.
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6. Termination of Employment.
6.1 Termination Without Cause. The Company may terminate
Executive's employment at any time for any reason and nothing herein shall be
construed as a representation or covenant to continue Executive's employment. If
Executive's employment is terminated by the Company other than for Permanent
Disability, death or Cause (as such terms are defined in Sections 6.2 and 6.4
hereof) or the Executive resigns for Good Reason (as defined below) during the
term hereunder, Executive shall receive such payments, if any, under applicable
plans or programs, including but not limited to those referred to in Section 4.1
hereof, to which he is entitled pursuant to the terms of such plans or programs,
and any unpaid payments of Base Salary previously earned, bonus awarded, accrued
vacation and expense incurred for which Executive is entitled to reimbursement
hereunder. If Executive is terminated or resigns under this Section 6.1,
Executive shall also be entitled to receive (i) an amount (the "Termination
Amount") in lieu of any other cash compensation beyond that provided in the
immediately preceding sentence, which Termination Amount shall be equal to the
greater of (x) two times Executive's annual Base Salary and (y) Base Salary
payable over the then remaining balance of the employment term, in either case,
payable in installments as normal payroll over the 24 months following such
termination of employment (or, if longer, the remaining balance of the
employment term); and (ii) continued coverage for the same period that the
Termination Amount is payable under any employee medical, disability and life
insurance plans in accordance with the respective terms thereof (other than the
requirement of continued employment); provided, however, that payments and
benefits due hereunder shall be reduced by any amounts owed by the Executive to
the Company. Good Reason shall be
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defined as: (i) a reduction in Executive's Base Salary or an amendment to the
annual cash bonus plan which would materially impair the ability of the
Executive to receive a bonus (other than the establishment of the EBITDA or
other performance targets to be set in good faith by the Board), (ii) a
substantial reduction in Executive's duties and responsibilities, (iii) a
transfer of the Executive's primary workplace by more than fifty (50) miles from
the current workplace or (iv) Executive is not Chief Executive Officer of the
combined operations following an integration, if any, of the Company and Act
III.
6.2 Permanent Disability. If the Executive is unable to engage
in the activities required by the Executive's job by reason of any medically
determined physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months ("Permanent Disability"), the Company or Executive may
terminate Executive's employment on written notice thereof, and Executive shall
receive or commence receiving, as soon as practicable:
(i) the actual bonus, if any, he would have received in
respect of the fiscal year in which his termination occurs, prorated by
a fraction, the numerator of which is the number of days of the fiscal
year until termination and the denominator of which is 365, payable at
the same time as bonuses are paid to other executives; and
(ii) accrued but unpaid Base Salary and such payments under
applicable plans or programs, including but not limited to those
referred to in Sections 4.1, 4.2 and 5 hereof, to which he is entitled
pursuant to the terms of such plans or programs.
6.3 Death. In the event of Executive's death during the term
of his employment hereunder, Executive's estate or designated beneficiaries
shall receive or commence receiving, as soon as practicable:
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(i) the actual bonus, if any, he would have received in
respect of the fiscal year in which his death occurs, prorated by a
fraction, the numerator of which is the number of days of the fiscal
year until his death and the denominator of which is 365, payable at
the same time as bonuses are paid to other executives; and
(ii) accrued but unpaid Base Salary and such payments under
applicable plans or programs, including but not limited to those
referred to in Sections 4.1, 4.2 and 5 hereof, to which Executive's
estate or designated beneficiaries are entitled pursuant to the terms
of such plans or programs.
6.4 Termination for Cause; Resignation by Executive. (a) The
Company shall have the right to terminate the employment of Executive for Cause.
In the event that Executive's employment is terminated by the Company for Cause
or by Executive for any reason (other than by Executive for Good Reason or as a
result of the Executive's Permanent Disability or death) during the term
hereunder, Executive shall not be entitled to the payment of any compensation
otherwise included under this Agreement. After the termination of Executive's
employment under this Section 6.4., the obligations of the Company under this
Agreement to make any further payments, or provide any benefits specified
herein, to Executive shall thereupon cease and terminate.
(b) As used herein, the term "Cause" shall be limited to (i)
the willful refusal to perform in any material respect his duties or
responsibilities for the Company, or willful disregard in any material respect
of any financial or other budgetary limitations established in good faith by the
Board; (ii) the engaging by the Executive in conduct that causes material and
demonstrable injury, monetarily or otherwise, to the Company, including, but not
limited to, misappropriation or conversion of assets of the Company (other than
nonmaterial assets); (iii) conviction of or entry of a plea of nolo contendere
to a felony; or (iv)
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a material breach of this Agreement by engaging in action in violation of the
restrictive covenants in this Agreement. No act or failure to act by the
Executive shall be deemed "willful" if done, or omitted to be done, by him in
good faith and with the reasonable belief that his action or omission was in the
best interest of the Company.
7. Equity Arrangements. (a) Promptly upon commencement of his
employment hereunder, the Executive shall make a minimum investment of 60% of
the aggregate value of his equity ownership immediately prior to the Effective
Time (as defined in the Agreement and Plan of Merger dated as of January 19,
1998 among the Company, Screen Acquisition Corp. and Monarch Acquisition Corp.)
(which shall be calculated without regard to any interest held by his former
spouse, which interest shall be cashed out in full at the time of closing) on a
rollover or other basis in the equity ("Purchased Equity") of the Company. As a
result, Executive will cash out approximately $6.3 million in value (to be
comprised of directly owned shares) and roll over the balance of his directly
owned shares with a value of approximately $2.28 million and the unrealized gain
on his options with a value of approximately $7.18 million, for an aggregate
rollover value of approximately $9.46 million. The Company and the Executive
shall endeavor to structure such investment in the most tax efficient manner
possible under the relevant circumstances. In respect of such investment, the
Company will grant the Executive options to purchase shares of the Company's
Common Stock ("New Options") equal to 1.1 times the dollar value of his
Purchased Equity. In addition, the Company will grant the Executive Performance
Options (as defined in the Non-Qualified Stock Option Agreement between the
Executive and the Company) for 250,000 shares of the Company's Common Stock, on
a pre-split basis. All New Option terms will be
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consistent with the 1998 Stock Purchase and Option Plan for Key Employees of
Regal Cinemas, Inc. It is the intention of the parties that, in the event that a
combination of the Company and Act III is consummated, the value of each of the
companies shall be the purchase price therefor, absent any subsequent adverse
change.
(b) Other provisions for Purchased Equity and Options shall be
governed by a management shareholder agreement which will provide for repurchase
rights, piggyback registration rights, tag-along rights and drag-along rights as
heretofore agreed by the parties.
8. Notices. All notices or communications hereunder shall be
in writing, addressed as follows:
To the Company:
c/o Kohlberg Kravis
Roberts & Co.
9 West 57th Street
New York, New York 10019
Attn: Clifton Robbins
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: Alvin H. Brown, Esq.
and
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
and
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Weil Gotshal & Manges LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201
Attn: Jeremy W. Dickens, Esq.
To Executive:
Mr. Michael L. Campbell
7610 Saddlebrook Drive
Knoxville, Tennessee 37938
with a copy to:
Bass, Berry & Sims PLC
2700 First American Center
Nashville, Tennessee 37238
Attn: Mitch Walker
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
9. Separability; Legal Fees. If any provision of this
Agreement shall be declared to be invalid or unenforceable, in whole or in part,
such invalidity or unenforceability shall not affect the remaining provisions
hereof which shall remain in full force and effect. Each party shall bear the
costs of any legal fees and other fees and expenses which may be incurred in
respect of enforcing its respective rights under this Agreement.
10. Assignment. This contract shall be binding upon and inure
to the benefit of the heirs and representatives of Executive and the assigns and
successors of the Company,
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<PAGE> 11
but neither this Agreement nor any rights or obligations hereunder shall be
assignable or otherwise subject to hypothecation by Executive (except by will or
by operation of the laws of intestate succession) or by the Company, except that
the Company may assign this Agreement to any successor (whether by merger,
purchase or otherwise) to all or substantially all of the stock, assets or
businesses of the Company, if such successor expressly agrees to assume the
obligations of the Company hereunder.
11. Amendment. This Agreement may only be amended by written
agreement of the parties hereto.
12. Nondisclosure of Confidential Information;
Non-competition. (a) Executive shall not, without the prior written consent of
the Company, use, divulge, disclose or make accessible to any other person,
firm, partnership, corporation or other entity any Confidential Information
pertaining to the business of the Company or any of its affiliates, except (i)
while employed by the Company, in the business of and for the benefit of the
Company, or (ii) as required by law. For purposes of this Section 12(a),
"Confidential Information" shall mean non-public information concerning the
financial data, strategic business plans, product development (or other
proprietary product data), customer lists, marketing, acquisition and
divestiture plans and other non-public, proprietary and confidential information
of the Company, its subsidiaries, its theater affiliates, Kohlberg Kravis
Roberts & Co. ("KKR"), Hicks, Muse, Tate & Furst Incorporated ("HM") or any
affiliate of KKR or HM principally engaged in the theater business in existence
as of the date of Executive's termination of employment (the "Restricted Group")
or suppliers (including, without
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<PAGE> 12
limitation, any motion picture distributor or exhibitor) or vendors, that, in
any case, is not otherwise available to the public (other than by Executive's
breach of the terms hereof).
(b) During the period of his employment hereunder and for one
year thereafter Executive agrees that, without the prior written consent of the
Company, (A) he will not, directly or indirectly, either as principal, manager,
agent, consultant, officer, stockholder, partner, investor, lender or employee
or in any other capacity, carry on, be engaged in or have any financial interest
in, any business in Competition (as defined in Section 12(c)) with the business
of the Restricted Group (excluding KKR and HM in any non-theater business) and
(B) he shall not, on his own behalf or on behalf of any person, firm or company,
directly or indirectly, solicit or hire for the benefit of anyone, other than
the Restricted Group, any person who is, or was at any time during the 6 months
immediately preceding the time of the solicitation or hiring by the Executive
employed by the Restricted Group (other than Executive's secretary or other
administrative employee who worked directly for him).
(c) For purposes of this Section 12, a business shall be
deemed to be in "Competition" with the Restricted Group if it is principally
engaged in the theater business within the same geographic area in which the
Restricted Group conducts such business. Nothing in this Section 12 shall be
construed so as to preclude Executive from investing in any publicly or
privately held company, provided Executive's beneficial ownership of any class
of such company's securities does not exceed 1% of the outstanding securities of
such class.
(d) Executive and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances, and further agree that
if in the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall
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<PAGE> 13
have the right, power and authority to excise or modify such provision or
provisions of this covenant as to the court shall appear not reasonable and to
enforce the remainder of the covenant as so amended. Executive agrees that any
breach of the covenants contained in this Section 12 would irreparably injure
the Company. Accordingly, Executive agrees that the Company may, in addition to
pursuing any other remedies it may have in law or in equity, obtain an
injunction against Executive from any court having jurisdiction over the matter
restraining any further violation of this Agreement by Executive and cease
making any payments otherwise required by this Agreement; provided, however,
that in the event a court of competent jurisdiction, which recognizes the
validity of the provisions of this Section 12, finds the Executive not to be in
violation of the provisions of this Section 12, then the Company shall pay to
Executive, in a lump sum, within ten days of such determination, all amounts
that would have been payable to Executive hereunder through the date of such
determination and continue making any other payments due with respect to periods
of time subsequent to such determination in accordance with the provisions of
this Agreement.
13. Beneficiaries; References. Executive shall be entitled to
select (and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following Executive's death, and may change such election, in either
case by giving the Company written notice thereof. In the event of Executive's
death or a judicial determination of his incompetence, reference in this
Agreement to Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative, and the Company shall pay
amounts payable under this Agreement, unless otherwise provided herein, in
accordance with the terms of this Agreement,
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<PAGE> 14
to Executive's personal or legal representatives, executors, administrators,
heirs, distributees, devisees, legatees or estate, as the case may be. Any
reference to the masculine gender in this Agreement shall include, where
appropriate, the feminine.
14. Survival. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
Specifically, but not exclusively, notwithstanding the expiration of the term of
this Agreement, the provisions of Section 12 hereunder shall remain in effect as
long as is necessary to give effect thereto. The provisions of this Section 14
are in addition to the survivorship provisions of any other section of this
Agreement.
15. Governing Law. This Agreement shall be construed,
interpreted and governed in accordance with the laws of the state of New York,
without reference to rules relating to conflicts of law.
16. Effect on Prior Agreements. This Agreement contains the
entire understanding between the parties hereto and supersedes in all respects
any prior or other agreement or understanding between the Company or any
affiliate of the Company and Executive.
17. Withholding. The Company shall be entitled to withhold
from payment any amount of withholding required by law.
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<PAGE> 15
18. Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original.
REGAL CINEMAS, INC.
By
---------------------------------
Name:
Title:
-------------------------------------
Michael Campbell
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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT, made as of May 27, 1998, by and between Regal
Cinemas, Inc., a Tennessee corporation (the "Company"), and Lewis Frazer III
("Executive").
RECITALS
In order to induce Executive to serve as the Chief Financial
Officer of the Company, the Company desires to provide Executive with
compensation and other benefits on the terms and conditions set forth in this
Agreement.
Executive is willing to accept such employment and perform
services for the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as
follows:
1. Employment.
1.1 Subject to the terms and conditions of this Agreement, the
Company (or the company existing after the integration, if any, of the Company
and Act III Cinemas, Inc. ("Act III")) agrees to employ Executive during the
term hereof as its Chief Financial Officer. In his capacity as the Chief
Financial Officer of the Company, Executive shall report to the Chief Executive
Officer and the Board of Directors of the Company (the "Board") and shall have
the powers, responsibilities and authorities of chief financial officers of
corporations of the size, type and nature of the Company, as it exists from time
to time, as are assigned by the Board consistent with the position of Chief
Financial Officer.
1.2 Subject to the terms and conditions of this Agreement,
Executive hereby agrees to be employed as the Chief Financial Officer of the
Company (or the company existing
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after the integration, if any, of the Company and Act III) and agrees to devote
such working time and efforts (except for permitted vacation periods and
reasonable periods of illness and other incapacity), to the best of his ability,
experience and talent, to the performance of services, duties and
responsibilities in connection therewith so that such performance shall be his
primary business activity. Executive shall perform such duties and exercise such
powers with respect to the activities of the Company, commensurate with his
positions, as the Chief Financial Officer of the Company as the Chief Executive
Officer and the Board shall from time to time delegate to him on such terms and
conditions and subject to such restrictions as such Chief Executive Officer and
Board may reasonably from time to time impose.
1.3 Nothing in this Agreement shall preclude Executive from
serving on boards of directors of other companies and participating in
charitable or community activities that do not substantially interfere with his
duties and responsibilities hereunder or conflict with the interest of the
Company.
2. Term of Employment. Executive's term of employment under
this Agreement shall commence as of the date hereof, and, subject to the terms
hereof, shall terminate (the "Termination Date") on the earlier of (i) May 27,
2001, or (ii) termination of Executive's employment pursuant to this Agreement;
provided, however, that any termination of employment by Executive (other than
for death or Permanent Disability) may only be made upon 90 days prior written
notice to the Company.
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<PAGE> 3
3. Compensation.
3.1 Salary. The Company shall pay Executive a base salary
("Base Salary") at the rate of $275,000 per annum for the period commencing on
the beginning of Executive's term of employment hereunder and ending on the
Termination Date. Base Salary shall be payable in accordance with the ordinary
payroll practices of the Company. Any increase in Base Salary shall be in the
discretion of the Board and, as so increased, shall constitute "Base Salary"
hereunder.
3.2 Annual Bonus. In addition to his Base Salary, Executive
shall, commencing with the 1998 fiscal year and continuing each fiscal year
thereafter, be paid an annual cash bonus (the "Bonus") during the term of his
employment hereunder. Executive's target bonus shall be 100% of Base Salary. For
1998, 70% of such bonus will depend on the achievement of the Company EBITDA
target of $156 million (excluding (i) synergies, if any, from the combined
operations and (ii) extraordinary charges related to the acquisition of the
Company and the integration, if any, of the Company and Act III) and 30% will
depend on achievement of Board established integration/synergy goals. After
1998, the Board, after consultation with management, will establish EBITDA
targets based on the performance of the Company, taking into account the
combined operations, if any, and synergies, if any. With respect to the EBITDA
component, upon attainment of 90% of the EBITDA target the Executive will earn
50% of the EBITDA component, which will increase from 50% to 100% in a linear
progression for achievement between 90% and 100% of the EBITDA target.
Similarly, the EBITDA portion of the bonus will increase (up to a cap of 150% on
the EBITDA portion of the bonus) in a linear progression from 100% to 150% for
achievement of EBITDA over 100% of
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<PAGE> 4
the EBITDA target. EBITDA achievement will be measured using the budgeted
capital expenditures previously disclosed in the Goldman Sachs presentation to
the Board dated December 29, 1997.
4. Employee Benefits.
4.1 Employee Benefit Programs, Plans and Practices. The
Company shall provide Executive during the term of his employment hereunder with
coverage under all employee pension and welfare benefit programs, plans and
practices (to the extent permitted under any employee benefit plan) in
accordance with the terms thereof, which the Company generally makes available
to its senior executives.
4.2 Vacation. While employed hereunder, Executive shall be
entitled to no less than 20 business days paid vacation in each calendar year,
which shall be taken at such times as are consistent with Executive's
responsibilities hereunder.
5. Expenses. Executive is authorized to incur reasonable
expenses in carrying out his duties and responsibilities under this Agreement.
The Company will reimburse Executive for such expenses upon presentation by
Executive from time to time of appropriately itemized and approved (consistent
with the Company's policy) accounts of such expenditures.
6. Termination of Employment.
6.1 Termination Without Cause. The Company may terminate
Executive's employment at any time for any reason and nothing herein shall be
construed as a representation or covenant to continue Executive's employment. If
Executive's employment is terminated by the Company other than for Permanent
Disability, death or Cause (as such terms are defined in Sections 6.2 and 6.4
hereof) or the Executive resigns for Good Reason (as defined below) during
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<PAGE> 5
the term hereunder, Executive shall receive such payments, if any, under
applicable plans or programs, including but not limited to those referred to in
Section 4.1 hereof, to which he is entitled pursuant to the terms of such plans
or programs, and any unpaid payments of Base Salary previously earned, bonus
awarded, accrued vacation and expense incurred for which Executive is entitled
to reimbursement hereunder. If Executive is terminated or resigns under this
Section 6.1, Executive shall also be entitled to receive (i) an amount (the
"Termination Amount") in lieu of any other cash compensation beyond that
provided in the immediately preceding sentence, which Termination Amount shall
be equal to the greater of (x) two times Executive's annual Base Salary and (y)
Base Salary payable over the then remaining balance of the employment term, in
either case, payable in installments as normal payroll over the 24 months
following such termination of employment (or, if longer, the remaining balance
of the employment term); and (ii) continued coverage for the same period that
the Termination Amount is payable under any employee medical, disability and
life insurance plans in accordance with the respective terms thereof (other than
the requirement of continued employment); provided, however, that payments and
benefits due hereunder shall be reduced by any amounts owed by the Executive to
the Company. Good Reason shall be defined as: (i) a reduction in Executive's
Base Salary or an amendment to the annual cash bonus plan which would materially
impair the ability of the Executive to receive a bonus (other than the
establishment of the EBITDA or other performance targets to be set in good faith
by the Board), (ii) a substantial reduction in Executive's duties and
responsibilities, (iii) a transfer of the Executive's primary workplace by more
than fifty (50) miles from the current workplace or (iv) Executive is not Chief
Financial Officer of the combined operations following an integration, if any,
of the Company and Act III.
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6.2 Permanent Disability. If the Executive is unable to engage
in the activities required by the Executive's job by reason of any medically
determined physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months ("Permanent Disability"), the Company or Executive may
terminate Executive's employment on written notice thereof, and Executive shall
receive or commence receiving, as soon as practicable:
(i) the actual bonus, if any, he would have received in
respect of the fiscal year in which his termination occurs, prorated by
a fraction, the numerator of which is the number of days of the fiscal
year until termination and the denominator of which is 365, payable at
the same time as bonuses are paid to other executives; and
(ii) accrued but unpaid Base Salary and such payments under
applicable plans or programs, including but not limited to those
referred to in Sections 4.1, 4.2 and 5 hereof, to which he is entitled
pursuant to the terms of such plans or programs.
6.3 Death. In the event of Executive's death during the term
of his employment hereunder, Executive's estate or designated beneficiaries
shall receive or commence receiving, as soon as practicable:
(i) the actual bonus, if any, he would have received in
respect of the fiscal year in which his death occurs, prorated by a
fraction, the numerator of which is the number of days of the fiscal
year until his death and the denominator of which is 365, payable at
the same time as bonuses are paid to other executives; and
(ii) accrued but unpaid Base Salary and such payments under
applicable plans or programs, including but not limited to those
referred to in Sections 4.1, 4.2 and 5 hereof, to which Executive's
estate or designated beneficiaries are entitled pursuant to the terms
of such plans or programs.
6.4 Termination for Cause; Resignation by Executive. (a) The
Company shall have the right to terminate the employment of Executive for Cause.
In the event that Executive's
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employment is terminated by the Company for Cause or by Executive for any reason
(other than by Executive for Good Reason or as a result of the Executive's
Permanent Disability or death) during the term hereunder, Executive shall not be
entitled to the payment of any compensation otherwise included under this
Agreement. After the termination of Executive's employment under this Section
6.4., the obligations of the Company under this Agreement to make any further
payments, or provide any benefits specified herein, to Executive shall thereupon
cease and terminate.
(b) As used herein, the term "Cause" shall be limited to (i)
the willful refusal to perform in any material respect his duties or
responsibilities for the Company, or willful disregard in any material respect
of any financial or other budgetary limitations established in good faith by the
Board; (ii) the engaging by the Executive in conduct that causes material and
demonstrable injury, monetarily or otherwise, to the Company, including, but not
limited to, misappropriation or conversion of assets of the Company (other than
nonmaterial assets); (iii) conviction of or entry of a plea of nolo contendere
to a felony; or (iv) a material breach of this Agreement by engaging in action
in violation of the restrictive covenants in this Agreement. No act or failure
to act by the Executive shall be deemed "willful" if done, or omitted to be
done, by him in good faith and with the reasonable belief that his action or
omission was in the best interest of the Company.
7. Equity Arrangements. (a) Promptly upon commencement of his
employment hereunder, the Executive shall make a minimum investment of
$2,138,574, which is equal to 50% of the unrealized gain on options owned
immediately prior to the Effective Time (as defined in the Agreement and Plan of
Merger dated as of January 19, 1998 among the
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<PAGE> 8
Company, Screen Acquisition Corp. and Monarch Acquisition Corp.), on a rollover
or other basis in the equity ("Purchased Equity") of the Company. The Executive
will be permitted to cash out 50% of the unrealized gain on options currently
owned and 100% of his directly owned shares, subject to confirmation that such
direct share holdings are de minimis. The Company and the Executive shall
endeavor to structure such investment in the most tax efficient manner possible
under the relevant circumstances. In respect of such investment, the Company
will grant the Executive options to purchase shares of the Company's Common
Stock ("New Options") equal to 1.1 times the dollar value of his Purchased
Equity. All New Option terms will be consistent with the 1998 Stock Purchase and
Option Plan for Key Employees of Regal Cinemas, Inc. It is the intention of the
parties that, in the event that a combination of the Company and Act III is
consummated, the value of each of the companies shall be the purchase price
therefor, absent any subsequent adverse change.
(b) Other provisions for Purchased Equity and Options shall be
governed by a management shareholder agreement which will provide for repurchase
rights, piggyback registration rights, tag-along rights and drag-along rights as
heretofore agreed by the parties.
8. Notices. All notices or communications hereunder shall be
in writing, addressed as follows:
To the Company:
c/o Kohlberg Kravis
Roberts & Co.
9 West 57th Street
New York, New York 10019
Attn: Clifton Robbins
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<PAGE> 9
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: Alvin H. Brown, Esq.
and
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
and
Weil Gotshal & Manges LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201
Attn: Jeremy W. Dickens, Esq.
To Executive:
Mr. Lewis Frazer III
12129 Brookstone Drive
Knoxville, Tennessee 37922
with a copy to:
Bass, Berry & Sims PLC
2700 First American Center
Nashville, Tennessee 37238
Attn: Mitch Walker
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
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<PAGE> 10
9. Separability; Legal Fees. If any provision of this
Agreement shall be declared to be invalid or unenforceable, in whole or in part,
such invalidity or unenforceability shall not affect the remaining provisions
hereof which shall remain in full force and effect. Each party shall bear the
costs of any legal fees and other fees and expenses which may be incurred in
respect of enforcing its respective rights under this Agreement.
10. Assignment. This contract shall be binding upon and inure
to the benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this Agreement
to any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock, assets or businesses of the Company, if such
successor expressly agrees to assume the obligations of the Company hereunder.
11. Amendment. This Agreement may only be amended by written
agreement of the parties hereto.
12. Nondisclosure of Confidential Information;
Non-competition. (a) Executive shall not, without the prior written consent of
the Company, use, divulge, disclose or make accessible to any other person,
firm, partnership, corporation or other entity any Confidential Information
pertaining to the business of the Company or any of its affiliates, except (i)
while employed by the Company, in the business of and for the benefit of the
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<PAGE> 11
Company, or (ii) as required by law. For purposes of this Section 12(a),
"Confidential Information" shall mean non-public information concerning the
financial data, strategic business plans, product development (or other
proprietary product data), customer lists, marketing, acquisition and
divestiture plans and other non-public, proprietary and confidential information
of the Company, its subsidiaries, its theater affiliates, Kohlberg Kravis
Roberts & Co. ("KKR"), Hicks, Muse, Tate & Furst Incorporated ("HM") or any
affiliate of KKR or HM principally engaged in the theater business in existence
as of the date of Executive's termination of employment (the "Restricted Group")
or suppliers (including, without limitation, any motion picture distributor or
exhibitor) or vendors, that, in any case, is not otherwise available to the
public (other than by Executive's breach of the terms hereof).
(b) During the period of his employment hereunder and for one
year thereafter Executive agrees that, without the prior written consent of the
Company, (A) he will not, directly or indirectly, either as principal, manager,
agent, consultant, officer, stockholder, partner, investor, lender or employee
or in any other capacity, carry on, be engaged in or have any financial interest
in, any business in Competition (as defined in Section 12(c)) with the business
of the Restricted Group (excluding KKR and HM in any non-theater business) and
(B) he shall not, on his own behalf or on behalf of any person, firm or company,
directly or indirectly, solicit or hire for the benefit of anyone, other than
the Restricted Group, any person who is, or was at any time during the 6 months
immediately preceding the time of the solicitation or hiring by the
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<PAGE> 12
Executive employed by the Restricted Group (other than Executive's secretary or
other administrative employee who worked directly for him).
(c) For purposes of this Section 12, a business shall be
deemed to be in "Competition" with the Restricted Group if it is principally
engaged in the theater business within the same geographic area in which the
Restricted Group conducts such business. Nothing in this Section 12 shall be
construed so as to preclude Executive from investing in any publicly or
privately held company, provided Executive's beneficial ownership of any class
of such company's securities does not exceed 1% of the outstanding securities of
such class.
(d) Executive and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances, and further agree that
if in the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall have the right, power and authority
to excise or modify such provision or provisions of this covenant as to the
court shall appear not reasonable and to enforce the remainder of the covenant
as so amended. Executive agrees that any breach of the covenants contained in
this Section 12 would irreparably injure the Company. Accordingly, Executive
agrees that the Company may, in addition to pursuing any other remedies it may
have in law or in equity, obtain an injunction against Executive from any court
having jurisdiction over the matter restraining any further violation of this
Agreement by Executive and cease making any payments otherwise required by this
Agreement; provided, however, that in the event a court of competent
jurisdiction, which recognizes the validity of the provisions of this Section
12, finds the Executive not to be in
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<PAGE> 13
violation of the provisions of this Section 12, then the Company shall pay to
Executive, in a lump sum, within ten days of such determination, all amounts
that would have been payable to Executive hereunder through the date of such
determination and continue making any other payments due with respect to periods
of time subsequent to such determination in accordance with the provisions of
this Agreement.
13. Beneficiaries; References. Executive shall be entitled to
select (and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following Executive's death, and may change such election, in either
case by giving the Company written notice thereof. In the event of Executive's
death or a judicial determination of his incompetence, reference in this
Agreement to Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative, and the Company shall pay
amounts payable under this Agreement, unless otherwise provided herein, in
accordance with the terms of this Agreement, to Executive's personal or legal
representatives, executors, administrators, heirs, distributees, devisees,
legatees or estate, as the case may be. Any reference to the masculine gender in
this Agreement shall include, where appropriate, the feminine.
14. Survival. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
Specifically, but not exclusively, notwithstanding the expiration of the term of
this Agreement, the provisions of Section 12 hereunder shall remain
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<PAGE> 14
in effect as long as is necessary to give effect thereto. The provisions of this
Section 14 are in addition to the survivorship provisions of any other section
of this Agreement.
15. Governing Law. This Agreement shall be construed,
interpreted and governed in accordance with the laws of the state of New York,
without reference to rules relating to conflicts of law.
16. Effect on Prior Agreements. This Agreement contains the
entire understanding between the parties hereto and supersedes in all respects
any prior or other agreement or understanding between the Company or any
affiliate of the Company and Executive.
17. Withholding. The Company shall be entitled to withhold
from payment any amount of withholding required by law.
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<PAGE> 15
18. Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original.
REGAL CINEMAS, INC.
By
---------------------------------
Name:
Title:
-------------------------------------
Lewis Frazer III
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<PAGE> 1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT, made as of May 27, 1998, by and between Regal
Cinemas, Inc., a Tennessee corporation (the "Company"), and Gregory W. Dunn
("Executive").
RECITALS
In order to induce Executive to serve as the Chief Operating
Officer of the Company, the Company desires to provide Executive with
compensation and other benefits on the terms and conditions set forth in this
Agreement.
Executive is willing to accept such employment and perform
services for the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as
follows:
1. Employment.
1.1 Subject to the terms and conditions of this Agreement, the
Company (or the company existing after the integration, if any, of the Company
and Act III Cinemas, Inc. ("Act III")) agrees to employ Executive during the
term hereof as its Chief Operating Officer. In his capacity as the Chief
Operating Officer of the Company, Executive shall report to the Chief Executive
Officer and the Board of Directors of the Company (the "Board") and shall have
the powers, responsibilities and authorities of chief operating officers of
corporations of the size, type and nature of the Company, as it exists from time
to time, as are assigned by the Board consistent with the position of Chief
Operating Officer.
1.2 Subject to the terms and conditions of this Agreement,
Executive hereby agrees to be employed as the Chief Operating Officer of the
Company (or the company existing
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<PAGE> 2
after the integration, if any, of the Company and Act III) and agrees to devote
such working time and efforts (except for permitted vacation periods and
reasonable periods of illness and other incapacity), to the best of his ability,
experience and talent, to the performance of services, duties and
responsibilities in connection therewith so that such performance shall be his
primary business activity. Executive shall perform such duties and exercise such
powers with respect to the activities of the Company, commensurate with his
positions, as the Chief Operating Officer of the Company as the Chief Executive
Officer and the Board shall from time to time delegate to him on such terms and
conditions and subject to such restrictions as such Chief Executive Officer and
Board may reasonably from time to time impose.
1.3 Nothing in this Agreement shall preclude Executive from
serving on boards of directors of other companies and participating in
charitable or community activities that do not substantially interfere with his
duties and responsibilities hereunder or conflict with the interest of the
Company.
2. Term of Employment. Executive's term of employment under
this Agreement shall commence as of the date hereof, and, subject to the terms
hereof, shall terminate (the "Termination Date") on the earlier of (i) May 27,
2001, or (ii) termination of Executive's employment pursuant to this Agreement;
provided, however, that any termination of employment by Executive (other than
for death or Permanent Disability) may only be made upon 90 days prior written
notice to the Company.
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<PAGE> 3
3. Compensation.
3.1 Salary. The Company shall pay Executive a base salary
("Base Salary") at the rate of $325,000 per annum for the period commencing on
the beginning of Executive's term of employment hereunder and ending on the
Termination Date. Base Salary shall be payable in accordance with the ordinary
payroll practices of the Company. Any increase in Base Salary shall be in the
discretion of the Board and, as so increased, shall constitute "Base Salary"
hereunder.
3.2 Annual Bonus. In addition to his Base Salary, Executive
shall, commencing with the 1998 fiscal year and continuing each fiscal year
thereafter, be paid an annual cash bonus (the "Bonus") during the term of his
employment hereunder. Executive's target bonus shall be 100% of Base Salary. For
1998, 70% of such bonus will depend on the achievement of the Company EBITDA
target of $156 million (excluding (i) synergies, if any, from the combined
operations and (ii) extraordinary charges related to the acquisition of the
Company and the integration, if any, of the Company and Act III) and 30% will
depend on achievement of Board established integration/synergy goals. After
1998, the Board, after consultation with management, will establish EBITDA
targets based on the performance of the Company, taking into account the
combined operations, if any, and synergies, if any. With respect to the EBITDA
component, upon attainment of 90% of the EBITDA target the Executive will earn
50% of the EBITDA component, which will increase from 50% to 100% in a linear
progression for achievement between 90% and 100% of the EBITDA target.
Similarly, the EBITDA portion of the bonus will increase (up to a cap of 150% on
the EBITDA portion of the bonus) in a linear progression from 100% to 150% for
achievement of EBITDA over 100% of
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<PAGE> 4
the EBITDA target. EBITDA achievement will be measured using the budgeted
capital expenditures previously disclosed in the Goldman Sachs presentation to
the Board dated December 29, 1997.
4. Employee Benefits.
4.1 Employee Benefit Programs, Plans and Practices. The
Company shall provide Executive during the term of his employment hereunder with
coverage under all employee pension and welfare benefit programs, plans and
practices (to the extent permitted under any employee benefit plan) in
accordance with the terms thereof, which the Company generally makes available
to its senior executives.
4.2 Vacation. While employed hereunder, Executive shall be
entitled to no less than 20 business days paid vacation in each calendar year,
which shall be taken at such times as are consistent with Executive's
responsibilities hereunder.
5. Expenses. Executive is authorized to incur reasonable
expenses in carrying out his duties and responsibilities under this Agreement.
The Company will reimburse Executive for such expenses upon presentation by
Executive from time to time of appropriately itemized and approved (consistent
with the Company's policy) accounts of such expenditures.
6. Termination of Employment.
6.1 Termination Without Cause. The Company may terminate
Executive's employment at any time for any reason and nothing herein shall be
construed as a representation or covenant to continue Executive's employment. If
Executive's employment is terminated by the Company other than for Permanent
Disability, death or Cause (as such terms are defined in Sections 6.2 and 6.4
hereof) or the Executive resigns for Good Reason (as defined below) during
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<PAGE> 5
the term hereunder, Executive shall receive such payments, if any, under
applicable plans or programs, including but not limited to those referred to in
Section 4.1 hereof, to which he is entitled pursuant to the terms of such plans
or programs, and any unpaid payments of Base Salary previously earned, bonus
awarded, accrued vacation and expense incurred for which Executive is entitled
to reimbursement hereunder. If Executive is terminated or resigns under this
Section 6.1, Executive shall also be entitled to receive (i) an amount (the
"Termination Amount") in lieu of any other cash compensation beyond that
provided in the immediately preceding sentence, which Termination Amount shall
be equal to the greater of (x) two times Executive's annual Base Salary and (y)
Base Salary payable over the then remaining balance of the employment term, in
either case, payable in installments as normal payroll over the 24 months
following such termination of employment (or, if longer, the remaining balance
of the employment term); and (ii) continued coverage for the same period that
the Termination Amount is payable under any employee medical, disability and
life insurance plans in accordance with the respective terms thereof (other than
the requirement of continued employment); provided, however, that payments and
benefits due hereunder shall be reduced by any amounts owed by the Executive to
the Company. Good Reason shall be defined as: (i) a reduction in Executive's
Base Salary or an amendment to the annual cash bonus plan which would materially
impair the ability of the Executive to receive a bonus (other than the
establishment of the EBITDA or other performance targets to be set in good faith
by the Board), (ii) a substantial reduction in Executive's duties and
responsibilities, (iii) a transfer of the Executive's primary workplace by more
than fifty (50) miles from the current workplace or (iv) Executive is not Chief
Operating Officer of the combined operations following an integration, if any,
of the Company and Act III.
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<PAGE> 6
6.2 Permanent Disability. If the Executive is unable to engage
in the activities required by the Executive's job by reason of any medically
determined physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months ("Permanent Disability"), the Company or Executive may
terminate Executive's employment on written notice thereof, and Executive shall
receive or commence receiving, as soon as practicable:
(i) the actual bonus, if any, he would have received in
respect of the fiscal year in which his termination occurs, prorated by
a fraction, the numerator of which is the number of days of the fiscal
year until termination and the denominator of which is 365, payable at
the same time as bonuses are paid to other executives; and
(ii) accrued but unpaid Base Salary and such payments under
applicable plans or programs, including but not limited to those
referred to in Sections 4.1, 4.2 and 5 hereof, to which he is entitled
pursuant to the terms of such plans or programs.
6.3 Death. In the event of Executive's death during the term
of his employment hereunder, Executive's estate or designated beneficiaries
shall receive or commence receiving, as soon as practicable:
(i) the actual bonus, if any, he would have received in
respect of the fiscal year in which his death occurs, prorated by a
fraction, the numerator of which is the number of days of the fiscal
year until his death and the denominator of which is 365, payable at
the same time as bonuses are paid to other executives; and
(ii) accrued but unpaid Base Salary and such payments under
applicable plans or programs, including but not limited to those
referred to in Sections 4.1, 4.2 and 5 hereof, to which Executive's
estate or designated beneficiaries are entitled pursuant to the terms
of such plans or programs.
6.4 Termination for Cause; Resignation by Executive. (a) The
Company shall have the right to terminate the employment of Executive for Cause.
In the event that Executive's
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<PAGE> 7
employment is terminated by the Company for Cause or by Executive for any reason
(other than by Executive for Good Reason or as a result of the Executive's
Permanent Disability or death) during the term hereunder, Executive shall not be
entitled to the payment of any compensation otherwise included under this
Agreement. After the termination of Executive's employment under this Section
6.4., the obligations of the Company under this Agreement to make any further
payments, or provide any benefits specified herein, to Executive shall thereupon
cease and terminate.
(b) As used herein, the term "Cause" shall be limited to (i)
the willful refusal to perform in any material respect his duties or
responsibilities for the Company, or willful disregard in any material respect
of any financial or other budgetary limitations established in good faith by the
Board; (ii) the engaging by the Executive in conduct that causes material and
demonstrable injury, monetarily or otherwise, to the Company, including, but not
limited to, misappropriation or conversion of assets of the Company (other than
nonmaterial assets); (iii) conviction of or entry of a plea of nolo contendere
to a felony; or (iv) a material breach of this Agreement by engaging in action
in violation of the restrictive covenants in this Agreement. No act or failure
to act by the Executive shall be deemed "willful" if done, or omitted to be
done, by him in good faith and with the reasonable belief that his action or
omission was in the best interest of the Company.
7. Equity Arrangements. (a) Promptly upon commencement of his
employment hereunder, the Executive shall make a minimum investment of
$1,878,422, which is equal to 50% of the unrealized gain on options owned
immediately prior to the Effective Time (as defined in the Agreement and Plan of
Merger, dated as of January 19, 1998 among the
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<PAGE> 8
Company, Screen Acquisition Corp. and Monarch Acquisition Corp.), on a rollover
or other basis in the equity ("Purchased Equity") of the Company. The Executive
will be permitted to cash out 50% of the unrealized gain on options currently
owned and 100% of his directly owned shares, subject to confirmation that such
direct share holdings are approximately 6,700 shares. The Company and the
Executive shall endeavor to structure such investment in the most tax efficient
manner possible under the relevant circumstances. In respect of such investment,
the Company will grant the Executive options to purchase shares of the Company's
Common Stock ("New Options") equal to 1.1 times the dollar value of his
Purchased Equity. All New Option terms will be consistent with the 1998 Stock
Purchase and Option Plan for Key Employees of Regal Cinemas, Inc. It is the
intention of the parties that, in the event that a combination of the Company
and Act III is consummated, the value of each of the companies shall be the
purchase price therefor, absent any subsequent adverse change.
(b) Other provisions for Purchased Equity and Options shall be
governed by a management shareholder agreement which will provide for repurchase
rights, piggyback registration rights, tag-along rights and drag-along rights as
heretofore agreed by the parties.
8. Notices. All notices or communications hereunder shall be
in writing, addressed as follows:
To the Company:
c/o Kohlberg Kravis
Roberts & Co.
9 West 57th Street
New York, New York 10019
Attn: Clifton Robbins
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<PAGE> 9
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: Alvin H. Brown, Esq.
and
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
and
Weil Gotshal & Manges LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201
Attn: Jeremy W. Dickens, Esq.
To Executive:
Mr. Gregory W. Dunn
7809 Eden Lane
Knoxville, Tennessee 37938
with a copy to:
Bass, Berry & Sims PLC
2700 First American Center
Nashville, Tennessee 37238
Attn: Mitch Walker
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
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<PAGE> 10
9. Separability; Legal Fees. If any provision of this
Agreement shall be declared to be invalid or unenforceable, in whole or in part,
such invalidity or unenforceability shall not affect the remaining provisions
hereof which shall remain in full force and effect. Each party shall bear the
costs of any legal fees and other fees and expenses which may be incurred in
respect of enforcing its respective rights under this Agreement.
10. Assignment. This contract shall be binding upon and inure
to the benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this Agreement
to any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock, assets or businesses of the Company, if such
successor expressly agrees to assume the obligations of the Company hereunder.
11. Amendment. This Agreement may only be amended by written
agreement of the parties hereto.
12. Nondisclosure of Confidential Information;
Non-competition. (a) Executive shall not, without the prior written consent of
the Company, use, divulge, disclose or make accessible to any other person,
firm, partnership, corporation or other entity any Confidential Information
pertaining to the business of the Company or any of its affiliates, except (i)
while employed by the Company, in the business of and for the benefit of the
Company, or (ii) as required by law. For purposes of this Section 12(a),
"Confidential Information" shall mean non-public information concerning the
financial data, strategic business
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<PAGE> 11
plans, product development (or other proprietary product data), customer lists,
marketing, acquisition and divestiture plans and other non-public, proprietary
and confidential information of the Company, its subsidiaries, its theater
affiliates, Kohlberg Kravis Roberts & Co. ("KKR") and Hicks, Muse, Tate & Furst
Incorporated ("HM") or any affiliate of KKR or HM principally engaged in the
theater business in existence as of the date of Executive's termination of
employment (the "Restricted Group") or suppliers (including, without limitation,
any motion picture distributor or exhibitor) or vendors, that, in any case, is
not otherwise available to the public (other than by Executive's breach of the
terms hereof).
(b) During the period of his employment hereunder and for one
year thereafter Executive agrees that, without the prior written consent of the
Company, (A) he will not, directly or indirectly, either as principal, manager,
agent, consultant, officer, stockholder, partner, investor, lender or employee
or in any other capacity, carry on, be engaged in or have any financial interest
in, any business in Competition (as defined in Section 12(c)) with the business
of the Restricted Group (excluding KKR and HM in any non-theater business) and
(B) he shall not, on his own behalf or on behalf of any person, firm or company,
directly or indirectly, solicit or hire for the benefit of anyone, other than
the Restricted Group, any person who is, or was at any time during the 6 months
immediately preceding the time of the solicitation or hiring by the Executive
employed by the Restricted Group (other than Executive's secretary or other
administrative employee who worked directly for him).
(c) For purposes of this Section 12, a business shall be
deemed to be in "Competition" with the Restricted Group if it is principally
engaged in the theater business within the same geographic area in which the
Restricted Group conducts such business. Nothing
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<PAGE> 12
in this Section 12 shall be construed so as to preclude Executive from investing
in any publicly or privately held company, provided Executive's beneficial
ownership of any class of such company's securities does not exceed 1% of the
outstanding securities of such class.
(d) Executive and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances, and further agree that
if in the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall have the right, power and authority
to excise or modify such provision or provisions of this covenant as to the
court shall appear not reasonable and to enforce the remainder of the covenant
as so amended. Executive agrees that any breach of the covenants contained in
this Section 12 would irreparably injure the Company. Accordingly, Executive
agrees that the Company may, in addition to pursuing any other remedies it may
have in law or in equity, obtain an injunction against Executive from any court
having jurisdiction over the matter restraining any further violation of this
Agreement by Executive and cease making any payments otherwise required by this
Agreement; provided, however, that in the event a court of competent
jurisdiction, which recognizes the validity of the provisions of this Section
12, finds the Executive not to be in violation of the provisions of this Section
12, then the Company shall pay to Executive, in a lump sum, within ten days of
such determination, all amounts that would have been payable to Executive
hereunder through the date of such determination and continue making any other
payments due with respect to periods of time subsequent to such determination in
accordance with the provisions of this Agreement.
13. Beneficiaries; References. Executive shall be entitled to
select (and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive
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<PAGE> 13
any compensation or benefit payable hereunder following Executive's death, and
may change such election, in either case by giving the Company written notice
thereof. In the event of Executive's death or a judicial determination of his
incompetence, reference in this Agreement to Executive shall be deemed, where
appropriate, to refer to his beneficiary, estate or other legal representative,
and the Company shall pay amounts payable under this Agreement, unless otherwise
provided herein, in accordance with the terms of this Agreement, to Executive's
personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees or estate, as the case may be. Any reference to
the masculine gender in this Agreement shall include, where appropriate, the
feminine.
14. Survival. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
Specifically, but not exclusively, notwithstanding the expiration of the term of
this Agreement, the provisions of Section 12 hereunder shall remain in effect as
long as is necessary to give effect thereto. The provisions of this Section 14
are in addition to the survivorship provisions of any other section of this
Agreement.
15. Governing Law. This Agreement shall be construed,
interpreted and governed in accordance with the laws of the state of New York,
without reference to rules relating to conflicts of law.
16. Effect on Prior Agreements. This Agreement contains the
entire understanding between the parties hereto and supersedes in all respects
any prior or other agreement or understanding between the Company or any
affiliate of the Company and Executive.
- 13 -
<PAGE> 14
17. Withholding. The Company shall be entitled to withhold
from payment any amount of withholding required by law.
- 14 -
<PAGE> 15
18. Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original.
REGAL CINEMAS, INC.
By
---------------------------------
Name:
Title:
-------------------------------------
Gregory W. Dunn
- 15 -
<PAGE> 1
EXHIBIT 10.4
[EXECUTION COPY]
U.S.$725,000,000
CREDIT AGREEMENT,
dated as of May 27, 1998,
among
REGAL CINEMAS, INC.,
as the Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders,
THE BANK OF NOVA SCOTIA,
as the Administrative Agent,
BANCAMERICA ROBERTSON STEPHENS
as the Syndication Agent,
and
THE CHASE MANHATTAN BANK,
as the Documentation Agent.
<PAGE> 2
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of May 27, 1998, among REGAL CINEMAS,
INC., a Tennessee corporation (the "Borrower"), the several financial
institutions from time to time party to this Agreement (collectively, the
"Lenders", and, individually, a "Lender"), THE BANK OF NOVA SCOTIA
("Scotiabank"), as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), as Swing Line Lender and as an Issuer, BANCAMERICA
ROBERTSON STEPHENS, as syndication agent (in such capacity, the "Syndication
Agent") for the Lenders, and The Chase Manhattan Bank, as documentation agent
(in such capacity, the "Documentation Agent"),
W I T N E S S E T H:
WHEREAS, the Borrower and its Subsidiaries (such and other capitalized
terms being used herein with the meanings provided in Section 1.1) are engaged
in the development, acquisition and operation of motion picture theatres; and
WHEREAS, the Borrower is a party to an Agreement and Plan of Merger,
dated as of January 19, 1998 and amended as of May 8, 1998 (the "Merger
Agreement"), with Screen Acquisition Corp., a Delaware corporation ("KKR Merger
Subsidiary") owned by Affiliates of KKR, and Monarch Acquisition Corp., a
Delaware corporation ("HMTF Merger Subsidiary" and, together with KKR Merger
Subsidiary, the "Merger Subsidiaries") owned by Affiliates of HMTF, pursuant to
which,
(a) prior to the Merger, (x) Affiliates of KKR and Affiliates
of HMTF will make cash contributions (the "Sponsor Fund Contributions")
to the equity capital of KKR Merger Subsidiary and HMTF Merger
Subsidiary in the amounts of approximately $287,300,000 and
approximately $437,300,000, respectively and (y) DLJ Merchant Banking
Partners II, Inc. (the "Additional Investor") will make a contribution
(the "Additional Equity") to the Equity Capital of the KKR Merger
Subsidiary;
(b) each Merger Subsidiary will merge (the "Merger", and the
date of the consummation of the Merger being the "Merger Date") with
and into the Borrower (the Borrower also being sometimes referred to
(x) prior to the Merger, as "Old Regal" and (y) as the Tennessee
corporation surviving the Merger, "Surviving Regal");
(c) all of the shares of common stock, no par value per share,
of Old Regal (the "Old Regal Shares") issued and outstanding on the
Merger Date (which, as at March 31, 1998 was 36,119,028 shares of
common stock) (including certain Old Regal Shares held by Key
Management but excluding, however, any Old Regal Shares held by a
Merger Subsidiary) will be converted (the"Conversion") into the right
to receive cash in the amount of $31.00 per share (the "Merger
Consideration");
(d) options held by various directors, officers and employees
of Old Regal will either (x) be converted into cash at a price per
share equal to the Merger Consideration minus the related exercise
price per share (the "Option Redemption") or (y) be rolled-over (the
"Management RollOver") into continuing equity options to acquire
Surviving Regal Common Shares with an equivalent aggregate spread, with
new options to acquire Surviving Regal Common Shares at an exercise
price of $31.00 per share being issued in connection therewith;
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<PAGE> 3
(e) the Sponsors and their Affiliates will receive Surviving
Regal Preferred Shares and Surviving Regal Common Shares representing
in the aggregate approximately 93.2% of all of the issued and
outstanding Voting Stock of Surviving Regal on the Closing Date which,
after giving effect to the HMTF/KKR Swap, will be held equally by each
Sponsor and its respective Affiliates; and
(f) Surviving Regal will repay or defease, as the case may be,
all Indebtedness of Old Regal and its Subsidiaries identified on Item
7.2.1(b) ("Indebtedness to be Paid") of the Disclosure Schedule (the
"Refinancing"); and
WHEREAS, pursuant to a tender offer and consent solicitation, dated
April 23, 1998 and amended as of May 6, 1998 (as so amended, and collectively
with the related consent and letter of transmittal and other information and
exhibits furnished therewith, the "Offer to Purchase"), the Borrower has offered
to purchase for a maximum price of approximately $139,600,000 (including a
premium of approximately $14,600,000) all of its 8 1/2% Senior Subordinated
Notes due October 1, 2007 (the "Old Regal 8 1/2% Subordinated Notes")
outstanding in the aggregate principal amount of $125,000,000 and is soliciting
consents to amend the indenture, dated as of September 24, 1997 (the "Old Regal
8 1/2% Subordinated Note Indenture"), between Old Regal, as issuer, and IBJ
Schroder Bank & Trust Company, as trustee, including to eliminate substantially
all of the restrictive covenants contained therein; and
WHEREAS, immediately following the consummation of the Merger,
Surviving Regal will issue to the initial purchasers at 9 1/2% of par at least
$400,000,000 in aggregate principal amount of 9 1/2% senior subordinated
promissory notes (the "9 1/2% Subordinated Notes") due June 1, 2008, pursuant to
the 9 1/2% Subordinated Note Indenture; and
WHEREAS, to fund (together with the proceeds of the Sponsor Fund
Contributions, the Additional Equity and the 9 1/2% Subordinated Notes) the
Conversion, the Option Redemption, the Offer to Purchase, the Refinancing and
Transaction Costs and to provide financing for the working capital and other
ongoing general corporate purposes of Surviving Regal and Restricted
Subsidiaries, the Borrower has requested that the Lenders and Issuer (as
applicable) make available to Surviving Regal on the Closing Date and
thereafter:
(a) a Term A Loan Commitment pursuant to which Term A Loans in
an aggregate original principal amount of up to $120,000,000 may be
borrowed in a single Borrowing on the Closing Date;
(b) a Term B Loan Commitment pursuant to which Term B Loans in
an aggregate original principal amount of up to $120,000,000 may be
borrowed in a single Borrowing on the Closing Date;
(c) a Term C Loan Commitment pursuant to which Term C Loans in
an aggregate original principal amount of up to $135,000,000 may be
borrowed in a single Borrowing on the Closing Date;
(d) a Revolving Loan Commitment (to include availability for
Revolving Loans, Swing Line Loans and Letters of Credit) pursuant to
which Borrowings of Revolving Loans and Swing Line Loans in a maximum
aggregate outstanding principal amount (together with all Letter of
Credit Outstandings) not to exceed $350,000,000 (subject, however, to
Section 2.2.2) will be made
2
<PAGE> 4
to the Borrower from time to time on and subsequent to the Closing Date
but prior to the Revolving Loan Commitment Termination Date;
(e) a Letter of Credit Commitment pursuant to which the Issuer
will issue Letters of Credit (participated in by Revolving Loan
Lenders) for the account of the Borrower and Restricted Subsidiaries
from time to time on and subsequent to the Closing Date but prior to
the Revolving Loan Commitment Termination Date in a maximum aggregate
Stated Amount at any one time outstanding not to exceed the then
existing Letter of Credit Commitment Amount; provided, however, that
the aggregate outstanding principal amount of Revolving Loans, Swing
Line Loans and Letter of Credit Outstandings at any time shall not
exceed the then existing Revolving Loan Commitment Amount; and
(f) a Swing Line Loan Commitment pursuant to which Borrowings
of Swing Line Loans in an aggregate outstanding principal amount not to
exceed the then existing Swing Line Loan Commitment Amount will be made
by the Swing Line Lender (and participated in by the Revolving Loan
Lenders) on and subsequent to the Closing Date but prior to the
Revolving Loan Commitment Termination Date; provided, however, that the
aggregate outstanding principal amount of such Swing Line Loans,
Revolving Loans and Letter of Credit Outstandings at any time shall not
exceed the then existing Revolving Loan Commitment Amount;
with all the proceeds of the Credit Extensions to be used for the purposes
specified in Section 7.1.9;
WHEREAS, the Lenders and the Issuer are willing, on the terms and
subject to the conditions hereinafter set forth (including Article V), to extend
such Commitments and make such Loans to the Borrower and issue (or participate
in) Letters of Credit for the account of the Borrower and Restricted
Subsidiaries; and
WHEREAS, the Borrower wishes to provide for the ability of one or more
Lenders, in their respective sole and absolute individual discretion, to extend,
(a) in connection with a contemplated but uncommitted Act III
Acquisition, Revolving Credit Commitment Amount Increases or Additional
Commitments comprising the Act III Additional Financing; and
(b) in connection with Other Permitted Acquisitions, Revolving
Credit Commitment Amount Increases or Additional Commitments, all in an
aggregate principal amount, together with certain Indebtedness incurred
or assumed in connection with Other Permitted Acquisitions, not to
exceed $350,000,000 of which the amount in excess of $200,000,000 shall
constitute Permitted Additional Structured Indebtedness;
NOW, THEREFORE, the parties hereto agree as follows:
3
<PAGE> 5
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
italicized) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Acquired Person" means a Person acquired, or a Subsidiary created for
the purpose of acquiring all or substantially all of the assets of a Person (or
the business or any division of a Person) acquired, pursuant to a Permitted
Acquisition.
"Acquisition" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in
(a) the acquisition of all or substantially all of the assets
of a Person, or of any business or division of a Person;
(b) the acquisition of in excess of 50% of the Capital Stock
of any Person, or otherwise causing any Person to become a Subsidiary;
(c) a merger or consolidation or any other combination with
another Person (other than with a Person that is a Restricted
Subsidiary) that results in the surviving entity being the Borrower (or
its successor by merger) or a Restricted Subsidiary; or
(d) an Unrestricted Subsidiary becoming a Restricted
Subsidiary.
"Act III" means Act III Cinemas, Inc., a Delaware corporation.
"Act III Acquisition" means the merger of Act III with, or the purchase
of Act III by, the Borrower, for which, on the Effective Date, there exists no
contractual arrangement (written, verbal or otherwise) or obligation to enter
into or complete such merger or purchase.
"Act III Additional Financing" is defined in clause (a) of Section 2.8.
"Act III Credit Agreement" means, on any date, the Credit Agreement,
dated as of December 3, 1997, among Act III, various financial institutions,
Scotiabank, as administrative agent, and BancAmerica Robertson Stephens, as
syndication agent, as in effect on the Effective Date and as thereafter from
time to time amended, supplemented, amended and restated or otherwise modified
and in effect on such date.
"Additional Commitment" is defined in Section 2.8.
"Additional Equity" is defined in clause (a) of the second recital.
"Additional Financing Amendment" means an Instrument (x) which may from
time to time be entered into by the Borrower, Lenders extending Revolving Credit
Commitment Amount Increases or Additional Commitments pursuant to Section 2.8
and the Agents solely for the purpose of amending this Agreement as then in
effect to effect such extensions hereunder and (y) which, subject, however, to
its
4
<PAGE> 6
compliance with the requirements of Section 2.8 applicable thereto and to its
not violating the requirements of clauses (a), (b), (c), (d) (subject to the
proviso therein) and (e) of Section 10.1 with respect to other Loans and
Commitments of other Lenders, shall be binding upon all other Lenders parties
hereto without any requirement for their consenting, or being a party, thereto.
"Additional Investor" is defined in clause (a) of the second recital.
"Additional Loan" is defined in Section 2.8.
"Additional Note" means (x) a promissory note, if any, executed and
delivered by the Borrower pursuant to clause (b) of Section 2.7 and payable to
any Lender in a form established in accordance with Section 2.8 (as such
promissory note may be amended, endorsed or otherwise modified from time to
time), evidencing the aggregate Indebtedness of the Borrower to such Lender for
all Additional Loans made pursuant to any Additional Commitment and (y) all
other promissory notes accepted from time to time in substitution therefor or
renewal thereof.
"Adjusted EBITDA" means, relative to the Borrower and Restricted
Subsidiaries, for any applicable period, the difference of
(a) the sum (without duplication) of
(i) Consolidated Net Income of the Borrower and
Restricted Subsidiaries for such period,
plus
(ii) the amounts deducted by the Borrower and
Restricted Subsidiaries in determining Consolidated Net Income
of the Borrower and Restricted Subsidiaries for such period
representing (s) non-cash minority interest expense, (t)
non-cash charges (including non-cash Rental Expense),
amortization (including amortization of deferred financing
fees), depreciation, non-cash restructuring charges or
reserves, other non-cash reserves and non-recurring charges,
(u) all federal, state and local taxes (whether paid in cash
or deferred) computed on the basis of income, (v) Interest
Expense and non-cash interest expense of the Borrower and
Restricted Subsidiaries, (w) expenses or charges incurred in
connection with the issuance of debt or equity securities and
up-front fees paid with respect to credit facilities provided
by banks and other financial institutions, (x) Transaction
Costs, (y) expenses or charges incurred in connection with
Real Estate Financings consummated during such period and (z)
fees and expenses paid in connection with Permitted
Acquisitions consummated, and Investments made, during such
period,
minus
5
<PAGE> 7
(b) the amounts included by the Borrower and Restricted
Subsidiaries in determining Consolidated Net Income of the Borrower and
Restricted Subsidiaries for such period representing (x) non-cash gains
and (y) non-recurring gains;
provided, however, that (without duplication) "Adjusted EBITDA"
(c) for any applicable period shall be determined on the basis
that all Permitted Acquisitions which were consummated during such
period were consummated on the first day of such period;
(d) attributable to a particular motion picture theatre
complex (x) which was newly opened for business, (y) for which
additional screens were opened for business following an expansion of
the number of screens at such complex or (z) for which previously
existing screens were reopened for business following the installation
of "stadium riser" seating for such screen during any applicable period
shall be determined by the Borrower on a pro forma basis as if such
motion picture theatre complex or such screen, as the case may be, was
opened on the first day of such period; provided, however, that each
such determination shall be made on each date on which a Compliance
Certificate for such applicable period is delivered based on reasonable
assumptions at such time certified to the Administrative Agent and made
on a basis consistent with operating cash flows of similar motion
picture theatres (if any);
(e) attributable to a particular motion picture theatre which
was permanently closed for business during any applicable period shall
be determined on the basis that such motion picture theatre closed on
the last day of the previous period;
(f) for any applicable period shall be increased or decreased,
as the case may be, to reflect the projected good faith identifiable
and supportable net cost savings or additional net costs, as the case
may be, resulting from any Permitted Acquisition consummated during
such period (or either of the two Fiscal Quarters preceding such
period) realizable during such period by combining the operations of an
Acquired Person with the operations of the Borrower and Restricted
Subsidiaries (as determined by the Borrower based on reasonable
assumptions and computations set forth in sufficient detail and which
are acceptable, in substance, to the Administrative Agent, and which
determination shall be made on each date on which a Compliance
Certificate for such applicable period is delivered); provided,
however, that so long as such net savings or additional net costs will
be realizable at any time during such period, it may be assumed, for
the purpose of this clause, that such net cost savings or additional
net costs will be realizable during the entire period; and
(g) for any applicable period shall be determined on the basis
that any redesignation of a Subsidiary as an Unrestricted Subsidiary
or, as the case may be, a Restricted Subsidiary which occurred during
such period occurred on the first day of such period.
"Administrative Agent" is defined in the preamble and, in addition,
shall include each other Person as shall have subsequently been appointed as the
successor Administrative Agent pursuant to Section 9.4.
"Affiliate" means, relative to any Person, any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such Person (excluding, however, any trustee under, or any committee with
responsibility for administering, any Plan). With respect to
6
<PAGE> 8
(a) (i) any Lender or an Issuer, a Person shall be deemed to
be "controlled by" another Person if such other Person possesses,
directly or indirectly, 51% or more of the Voting Stock of such
"controlled" Person or (ii) any Lender that is a fund that invests in
commercial loans, such Lender shall be deemed to be "controlled by" any
other fund that invests in commercial loans and is managed or advised
by the same investment advisor as such Lender or by an Affiliate of
such investment advisor; and
(b) all Persons other than any Lender or an Issuer, a Person
shall be deemed to be "controlled by" another Person if such other
Person possesses, directly or indirectly, power (x) to vote 10% or more
of the Voting Stock of such "controlled" Person; or (y) to direct or
cause the direction of the management and policies of such "controlled"
Person whether through ownership of Voting Stock, by contract or
otherwise.
"Agent" means, as the context may require, the Administrative Agent,
the Syndication Agent or the Documentation Agent.
"this Agreement" means, on any date, this Credit Agreement as
originally in effect on the Effective Date and as thereafter from time to time
amended, supplemented, amended and restated or otherwise modified and in effect
on such date.
"Alternate Base Rate" means, on any date and relative to all Base Rate
Loans, a fluctuating rate of interest per annum (rounded upward, if necessary,
to the next highest 1/16 of 1%) equal to the higher of
(a) the Base Rate in effect on such day; and
(b) the Federal Funds Rate in effect on such day plus 1/2 of
1%.
Changes in the rate of interest on that portion of any Loans maintained as Base
Rate Loans will take effect simultaneously with each change in the Alternate
Base Rate. The Administrative Agent will give notice promptly to the Borrower
and the Lenders of changes in the Alternate Base Rate.
"Applicable Commitment Fee" means,
(a) relative to the fee payable to the Lenders pursuant to
Section 3.3.1, the applicable rate per annum set forth below under the
column entitled "Applicable Commitment Fee":
<TABLE>
<CAPTION>
Total Applicable
Leverage Ratio Commitment Fee
------------------------ ------------------------
<S> <C>
>=5.5:1 0.425%
<5.5:1 and >= 4.5:1 0.375%
<4.5:1 and >= 4.0:1 0.350%
<4.0:1 and >= 3.5:1 0.300%
<3.5:1 and >= 3.0:1 0.250%
< 3.0:1 0.200%; and
</TABLE>
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<PAGE> 9
(b) relative to Additional Commitments which are revolving
credit commitments, a rate per annum agreed to by the Borrower and the
Lenders providing such Additional Commitments in accordance with
Section 2.8.
The Total Leverage Ratio used to compute the Applicable Commitment Fee pursuant
to clause (a) shall be the Total Leverage Ratio set forth in the Current
Compliance Certificate; provided, however, that for any period prior to June 30,
1998 for which the Borrower shall not have delivered a Compliance Certificate,
the Applicable Commitment Fee shall be 0.375%.
"Applicable Law" means, relative to any Person, (x) all provisions of
laws, statutes, ordinances, rules, regulations, requirements, restrictions,
permits, certificates or orders of any Governmental Authority applicable to such
Person or any of its assets or property and (y) all judgments, injunctions,
orders and decrees of all courts and arbitrators in proceedings or actions in
which such Person is a party or by which any of its assets or properties is
bound or subject.
"Applicable Margin" means
(a) relative to the unpaid principal amount of each Term A
Loan and Revolving Loan, the applicable rate per annum set forth below
under the column entitled "Applicable Margin - Base Rate Term A Loans
and Revolving Loans" or, as the case may be, "Applicable Margin - LIBO
Rate Term A Loans and Revolving Loans":
<TABLE>
<CAPTION>
Applicable Margin
------------------------------------------------------------
Base Rate LIBO Rate
Total Term A Loans and Term A Loans and
Leverage Ratio Revolving Loans Revolving Loans
------------------------ ---------------------------- -----------------------------
<S> <C> <C>
>= 5.5:1 1.000% 2.250%
<5.5:1 and >= 5.0:1 0.750% 2.000%
<5.0:1 and >= 4.5:1 0.375% 1.625%
<4.5:1 and >= 4.0:1 0.125% 1.375%
<4.0:1 and >= 3.5:1 0.000% 1.125%
<3.5:1 and >= 3.0:1 0.000% 0.875%
< 3.0:1 0.000% 0.625%;
</TABLE>
(b) relative to the unpaid principal amount of each Term B
Loan, the applicable rate per annum set forth below under the column
entitled "Applicable Margin - Base Rate Term B Loans" or, as the case
may be, "Applicable Margin - LIBO Rate Term B Loans":
<TABLE>
<CAPTION>
Applicable Margin
------------------------------------------------------------
Total Base Rate LIBO Rate
Leverage Ratio Term B Loans Term B Loans
--------------------------- -------------------------- --------------------------
<S> <C> <C>
>= 5.5:1 1.250% 2.500%
< 5.5:1 and >= 4.5:1 1.000% 2.250%
< 4.5:1 0.750% 2.000%;
</TABLE>
8
<PAGE> 10
(c) relative to the unpaid principal amount of each Term C
Loan, the applicable rate per annum set forth below under the column
entitled "Applicable Margin - Base Rate Term C Loans" or, as the case
may be, "Applicable Margin - LIBO Rate Term C Loans":
<TABLE>
<CAPTION>
Applicable Margin
---------------------------------------------------------------
Total Base Rate LIBO Rate
Leverage Ratio Term C Loans Term C Loans
---------------------------- ---------------------------- -------------------------------
<S> <C> <C>
>= 5.5:1 1.500% 2.750%
< 5.5:1 and >= 4.5:1 1.250% 2.500%
< 4.5:1 1.000% 2.250%; and
</TABLE>
(d) relative to Additional Loans, a rate per annum agreed to
by the Borrower and the Lenders making such Additional Loans in
accordance with Section 2.8.
The Total Leverage Ratio used to compute the "Applicable Margin" for all types
of Loans as set forth in clauses (a) through (c) shall be the Total Leverage
Ratio set forth in the Current Compliance Certificate; provided, however, that
for any period prior to June 30, 1998 for which the Borrower shall not have
delivered a Compliance Certificate, the Applicable Margin for each type and
class of Loan shall be determined by reference to the second to highest Total
Leverage Ratio for each applicable type and class of Loan.
"Approval" means, relative to any Obligor, each approval, license,
permit, consent, exemption, filing, notice or registration by or with any
Governmental Authority necessary to authorize or permit (x) the execution,
delivery or performance of (1) this Agreement, any Note, any Security Document
or any other Loan Document or for the validity or enforceability hereof or
thereof or (2) the Merger Agreement or (y) its conduct of its business.
"Authorized Officer" means, relative to the Borrower and any other
Obligor, those of its officers who are Responsible Officers or whose signatures
and incumbency shall have been certified to the Agents and the Lenders pursuant
to Section 5.1.1 and such other officers of the Borrower as the Borrower
designates in writing as such to the Administrative Agent.
"Available Cumulative Consolidated Net Income" means, on any date, 50%
of the sum of (x) Consolidated Net Income determined for the period (treated as
one accounting period) consisting of all Fiscal Quarters elapsed since the
Closing Date plus (y) with respect to any Permitted Acquisition, any goodwill
and other intangibles resulting therefrom, for which financial statements and
the Compliance Certificates related thereto have been delivered to the
Administrative Agent pursuant to Section 7.1.1.
"Available Investment Amount" means, on any date (a "Reference Date"),
an amount equal to the difference of
(a) the sum, computed for the period commencing on the Closing
Date (and after giving effect to the Transaction) and continuing
through the Reference Date, of
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<PAGE> 11
(i) the aggregate amount of Net Cash Proceeds from
Dispositions which are refused by Lenders holding Term Loans
and retained by the Borrower in accordance with clause
(b)(iii) of Section 3.1.2 during such period,
plus
(ii) the Available Restricted Payment Amount (if
positive) determined on the Reference Date (and without giving
effect to clause (b)(iii) of such definition),
minus
(b) the aggregate amount of all Investments (as such aggregate
amount is determined in accordance with the definition of "Investment")
made by the Borrower and Restricted Subsidiaries pursuant to item (z)
of clause (h) of Section 7.2.4 during such period.
"Available Restricted Payment Amount" means, on any date (a "Reference
Date"), an amount equal to the difference of
(a) the sum, computed for the period commencing on the Closing
Date (and after giving effect to the Transaction) and continuing
through the Reference Date, of
(i) the aggregate amount of net cash proceeds
received by the Borrower during such periods (x) in respect of
equity contributions made to the Borrower by Persons other
than Subsidiaries and (y) from issuances of equity by the
Borrower, and, in each case, not applied to redemption
requirements pursuant to clause (b) or (c) of Section 7.2.5 or
item (x) of clause (e) of Section 7.2.5,
plus
(ii) Available Cumulative Consolidated Net Income (if
positive) on such Reference Date,
minus
(b) the sum, computed for the period commencing on the Closing
Date (as aforesaid) and continuing through the Reference Date, of
(i) the aggregate amount paid by the Borrower in
connection with any prepayment, repurchase or redemption of
the Subordinated Debt pursuant to item (y) of clause (e) of
Section 7.2.5 during such period,
plus
(ii) the aggregate amount of all cash dividends on
common or preferred stock (excluding, however, Qualified
Preferred Stock) paid by the Borrower pursuant to clause (f)
of Section 7.2.5 during such period,
plus
10
<PAGE> 12
(iii) the amount, if any, determined on the Reference
Date, by which the amount computed pursuant to clause (b) of
the definition of "Available Investment Amount" would exceed
the sum determined pursuant to clause (a)(i) thereof.
"Base Rate" means, at any time, the rate of interest then most recently
established by the Administrative Agent in New York, New York as its base rate
for Dollars loaned in the United States. The Base Rate is not necessarily
intended to be the lowest rate of interest determined by the Administrative
Agent in connection with extensions of credit.
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"Borrower" is defined in the preamble.
"Borrowing" means the Loans of the same type and, in the case of LIBO
Rate Loans, having the same Interest Period made by all Lenders required to make
such Loans on the same Business Day and pursuant to the same Borrowing Request
in accordance with Section 2.1.
"Borrowing Request" means a Loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of Exhibit
B-1 hereto.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a legal
holiday on which banks are authorized or required to be closed in New
York, New York; and
(b) relative to the making, continuing, prepaying or repaying
of any LIBO Rate Loans, any day which is a Business Day described in
clause (a) and which is also a day on which dealings in Dollars are
carried on in the London interbank eurodollar market.
"Capital Expenditures" means, for any period, the sum of
(a) the aggregate amount of all expenditures of the Borrower
and Restricted Subsidiaries for fixed or capital assets made during
such period which, in accordance with GAAP, would be classified as
capital expenditures,
plus
(b) without duplication, the aggregate amount of all cash
payments made during such period in respect of all Capitalized Lease
Liabilities allocable to the principal component thereof;
provided, however, that the term "Capital Expenditures" shall not include
(c) expenditures made in connection with the replacement,
substitution or restoration of assets to the extent financed from (x)
insurance proceeds paid on account of the loss of or damage to the
assets being replaced or restored or (y) awards of compensation arising
from the taking by eminent domain or condemnation of the assets being
replaced;
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(d) the purchase price of equipment that is purchased
simultaneously with the trade-in of existing equipment to the extent
that the gross amount of such purchase price is reduced by the credit
granted by the seller of such equipment for the equipment being traded
in at such time;
(e) Capitalized Lease Liabilities paid in respect of equipment
that is leased in substitution for, or as replacement in connection
with the trade-in of, existing similar equipment;
(f) the purchase of plant, property or equipment made within
one year of the sale of any asset in replacement of such asset to the
extent purchased with the proceeds of such sale and Capitalized Lease
Liabilities paid in respect of such replaced asset; and
(g) the portion of the purchase price in connection with any
Permitted Acquisition that would otherwise be included as additions to
property, plant or equipment and Capitalized Lease Liabilities assumed
or incurred in connection with any Permitted Acquisition.
"Capital Stock" means, relative to any Person, any and all shares,
partnership or membership interests, participations or other equivalents
(however designated, whether voting or non-voting) of capital of such Person,
including, if such Person is a partnership, partnership interests (whether
general or limited) and any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership.
"Capitalized Lease Liability" means any monetary obligation of the
Borrower or any Restricted Subsidiary under any leasing or similar arrangement
which, in accordance with GAAP, is classified as a capitalized lease, and, for
purposes of this Agreement and each other Loan Document, the amount of any such
obligation shall be the capitalized amount thereof determined in accordance with
GAAP, and the stated maturity thereof shall be determined in accordance with
GAAP.
"Cash Equivalent Investment" means, at any time:
(a) any direct obligation of (or guaranteed by) the United
States government (or any agency or instrumentality thereof) maturing
not more than two years after the date of acquisition thereof;
(b) any direct obligation of (or guaranteed by) any state of
the United States (or any political subdivision, agency or
instrumentality thereof) maturing not more than two years after the
date of acquisition thereof and, at the time of such acquisition, rated
at least investment grade by either S&P or Moody's (or, if at any time
neither S&P or Moody's shall be rating such obligations, then from
another nationally recognized rating agency);
(c) commercial paper, maturing not more than 12 months from
the date of issue, which is issued by (x) a corporation (other than an
Affiliate of any Obligor) organized under the laws of any state of the
United States or of the District of Columbia and rated at least A-2 by
S&P or P-2 by Moody's (or, if at any time neither S&P or Moody's shall
be rating such obligations, then by another comparable nationally
recognized rating agency) or (y) any Lender (or its holding company);
(d) any certificate of deposit or bankers acceptance, maturing
not more than two years after the date of acquisition thereof, which is
issued by either (x) any bank which has a combined capital
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<PAGE> 14
and surplus not less than $250,000,000 (or in the case of foreign
banks, the Dollar equivalent thereof) or (y) any Lender;
(e) any repurchase agreement entered into with any Lender or
any commercial banking institution of the stature referred to in item
(x) of clause (d) or securities dealers of recognized national standing
which (x) is for underlying obligations of the type described in clause
(a), (b) or (d) and (y) has a term of not more than 30 days;
(f) shares of investment companies that are registered under
the Investment Company Act of 1940 and invest solely in one or more of
the types of securities described in clauses (a) through (e); and
(g) short-term, high quality liquid investments made by a
Foreign Subsidiary in the ordinary course of managing its cash.
"CERCLA" is defined in the definition of "Environmental Law".
"Change of Control" means, and shall be deemed to have occurred if:
(a) either
(i) the Sponsors, their respective successors and
Affiliates and management of the Borrower shall cease to own
in the aggregate, directly or indirectly, beneficially and of
record, at least 35% of the outstanding Voting Stock of
Surviving Regal, other than, as the result of (1) one or more
public offerings of Capital Stock of Surviving Regal or (2) a
widely distributed private placement of Capital Stock of
Surviving Regal that does not provide any special director
designation or special election rights or other special
corporate governance rights to the holders of such Capital
Stock, in each case whether by Surviving Regal or another
Person), or
(ii) any Person or "group" (within the meaning of
Section 13(d) or 14(d) of the Exchange Act) shall at any time
have acquired direct or indirect beneficial ownership (within
the meaning of Rule 13d-3 of the Exchange Act) of a percentage
of the outstanding Voting Stock of Surviving Regal that
exceeds in the aggregate the percentage of such Voting Stock
then beneficially owned, directly or indirectly, by the
Sponsors, their respective successors and Affiliates and
management of the Borrower,
unless, in the case of any such event occurring pursuant to clause (a),
the Sponsors, their respective successors and Affiliates and management
of the Borrower have, at such time, the right or the ability by voting
power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of Surviving Regal;
(b) at any time Continuing Directors shall not constitute a
majority of the Board of Directors of Surviving Regal; or
(c) any "Change of Control" shall occur under (as defined in)
the 9 1/2% Subordinated Note Indenture or any analogous event shall
occur under, or in respect of, any other Subordinated Debt.
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"Closing Date" means the Business Day, if any, on or prior to June 15,
1998 when all of the conditions precedent set forth in Article V are satisfied
(or waived by each Lender and each Agent) and the initial Credit Extensions are
made.
"Clark-Regal" means Clark-Regal, LLC, a California limited liability
company.
"Closing Date Certificate" means the closing date certificate executed
and delivered by the Borrower pursuant to Section 5.1.15, substantially in the
form of Exhibit H hereto.
"Code" means the Internal Revenue Code of 1986, and the regulations
thereunder, in each case as amended, reformed or otherwise modified from time to
time.
"Commitment" means, as the context may require, (x) a Lender's Term A
Loan Commitment, Term B Loan Commitment, Term C Loan Commitment, Revolving Loan
Commitment or Letter of Credit Commitment, (y) the Swing Line Lender's Swing
Line Loan Commitment or (z) any Additional Commitment. No Lender shall have any
Additional Commitment to make an Additional Loan of any Series unless it is a
party to the Additional Financing Amendment pursuant to which such Additional
Commitments were extended (and applicable percentage relating to such Additional
Commitments is set forth below its signature thereto).
"Commitment Amount" means, as the context may require, (x) the Term A
Loan Commitment Amount, the Term B Loan Commitment Amount, the Term C Loan
Commitment Amount, the Revolving Loan Commitment Amount or the Letter of Credit
Commitment Amount, (y) the Swing Line Loan Commitment Amount or (z) the amount
of any Additional Commitments obtained in accordance with Section 2.8.
"Commitment Termination Event" means
(a) the occurrence of any Event of Default described in
clauses (a) through (d) of Section 8.1.9; or
(b) the occurrence and continuance of any other Event of
Default and either (x) the declaration of all or any portion of the
Loans to be due and payable pursuant to Section 8.3 or (y) the giving
of notice by the Administrative Agent, acting at the direction, or with
the consent, of the Required Lenders, to the Borrower that the
Commitments have been terminated.
"Compliance Certificate" means a certificate duly completed and
executed by the chief executive, financial or accounting Authorized Officer of
the Borrower, substantially in the form of Exhibit D hereto, as amended,
supplemented, amended and restated or otherwise modified from time to time,
together with such changes thereto as the Agents may from time to time
reasonably request for the purpose of monitoring the Borrower's compliance with
the financial covenants contained herein.
"Confidential Information" is defined in Section 10.12.
"Consolidated Net Income" means, relative to the Borrower and
Restricted Subsidiaries for any period, the aggregate of the Net Income of the
Borrower and Restricted Subsidiaries for such period; provided, however, that
(x) any net after-tax extraordinary gains or losses (less all fees and expenses
relating thereto) shall be excluded, (y) any net after-tax gains or losses (less
all fees and expenses relating
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<PAGE> 16
thereto) attributable to asset dispositions other than in the ordinary course of
business shall be excluded and (z) the Net Income for such period of the
Borrower or any Restricted Subsidiary attributable to any Person that is not a
Restricted Subsidiary, or that is accounted for by the equity method of
accounting, shall be included only to the extent of dividends or distributions
or other net payments paid in cash (or to the extent converted into cash) to the
Borrower or such Restricted Subsidiary (except for directors' qualifying shares)
in respect of such period.
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, with or
without recourse, to provide funds for payment to, to purchase from, to supply
funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor
against loss) the Indebtedness of any other Person, or guarantees the payment of
dividends or other distributions upon Capital Stock of any other Person. The
amount of any Person's obligation under any Contingent Liability shall (subject,
however, to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder), as determined by such
Person in good faith; provided, however, that the term "Contingent Liability"
shall not include (w) indemnities entered into by such Person in the ordinary
course of business in connection with management and director arrangements, (x)
endorsements of instruments for deposit or collection in the ordinary course of
business, (y) guarantees made by a Person of the obligations of a Restricted
Subsidiary of such Person that do not constitute Indebtedness of such Restricted
Subsidiary and are incurred in the ordinary course of business of such
Restricted Subsidiary and (z) obligations arising from agreements providing for
indemnification or adjustment of purchase price (or from guarantees supporting
any obligations pursuant to any such agreements) incurred in connection with the
disposition of any business of any assets or Restricted Subsidiary.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C hereto.
"Continuing Director" means, at any date, an individual (x) who is a
member of the Board of Directors of Surviving Regal immediately after the
Closing Date, (y) who, as at such date, has been a member of such Board of
Directors for at least the 12 preceding months (or, for the period comprising
the first 12 months after the Closing Date, has been a member of such Board of
Directors at least since the Closing Date) or (z) who has been nominated to be a
member of such Board of Directors of the Borrower, directly or indirectly, by a
Sponsor or its Affiliate or by Persons nominated by a Sponsor or its Affiliate
or by a majority of the other Continuing Directors then in office.
"Contractual Undertaking" means, relative to any Obligor, any provision
of any debt or equity security issued by it or of any other Instrument or
undertaking to which it is a party or by which it or any of its assets or
property is bound or subject.
"Conversion" is defined in clause (c) of the second recital.
"Credit Extension" means, as the context may require,
(a) the making of a Loan by a Lender; or
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<PAGE> 17
(b) the issuance of any Letter of Credit, or the extension of
any Stated Expiry Date of any existing Letter of Credit, by the Issuer.
"Credit Extension Request" means, as the context may require, any
Borrowing Request or Issuance Request.
"Current Compliance Certificate" means, on any date, the Compliance
Certificate most recently delivered by the Borrower to the Administrative Agent
pursuant to clause (c) of Section 7.1.1. Changes in the Applicable Commitment
Fee or Applicable Margin resulting from a change in the Total Leverage Ratio
shall become effective, as of the first day following the Fiscal Quarter in
respect of which such Compliance Certificate was required to be delivered (a
"Change Date"), upon delivery by the Borrower to the Administrative Agent of a
new Compliance Certificate pursuant to clause (c) of Section 7.1.1. In the event
such Compliance Certificate indicates a Total Leverage Ratio that would result
in an Applicable Commitment Fee or Applicable Margin which is greater or lesser
than the Applicable Commitment Fee or Applicable Margin then in effect, then (A)
such greater or lesser Applicable Commitment Fee or Applicable Margin shall be
deemed to be in effect for all purposes of this Agreement from the Change Date
and (B) if the Borrower shall have made any payment of fees or interest in
respect of the period from the Change Date, then, on the next Quarterly Payment
Date, the Borrower shall pay in the form of a supplemental payment of fees or
interest an amount which equals the difference between the amount of fees or
interest that would otherwise have been paid based on such new Total Leverage
Ratio and the amount of fees or interest so paid, or, as the case may be, an
amount shall be deducted from the fees or interest then otherwise payable in an
amount which equals the difference between the amount of fees or interest so
paid and the amount of fees or interest that would otherwise have been paid
based on such new Total Leverage Ratio.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of
Default.
"Defaulting Lender" means any Lender with respect to which a Lender
Default is in effect.
"Disbursement" is defined in Section 2.6.2.
"Disbursement Date" is defined in Section 2.6.2.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented, amended and restated or
otherwise modified from time to time by the Borrower with the consent of the
Agents and the Required Lenders.
"Disposition" means the sale (including in connection with a Real
Estate Financing), conveyance, issuance or other disposition of any property,
business or assets by the Borrower or any Restricted Subsidiary (including
receivables of or owned by, and Capital Stock owned by, the Borrower or such
Restricted Subsidiary, and in all cases whether now owned or hereafter
acquired), other than (x) the issuance of Capital Stock of the Borrower and (y)
sales, conveyances or other dispositions in the ordinary course of business
(including sales, conveyances or other dispositions of inventory, the sale or
discount of delinquent receivables and sales and dispositions of obsolete or
worn out property, in each case, in the ordinary course).
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"Documentation Agent" is defined in the preamble and, in addition,
shall include each other Person as shall have been subsequently appointed as the
successor Documentation Agent pursuant to Section 9.4.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such
Lender designated as such Lender's "Domestic Office" below its name in Annex I
hereto or as set forth in a Lender Assignment Agreement, or such other office of
a Lender (or any successor or assign of such Lender) within the United States as
may be designated from time to time by notice from such Lender, as the case may
be, to each other Person party hereto.
"Domestic Restricted Subsidiary" means each Restricted Subsidiary that
is not a Foreign Subsidiary.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 10.8.
"Eligible Assignee" means and includes each Lender (and any Affiliate
thereof), any commercial bank, any financial institution, any fund that is
regularly engaged in making, purchasing or investing in loans or any Person that
would satisfy the requirements of an "accredited investor" (as defined in SEC
Regulation D, but excluding, however, a natural Person).
"Environmental Claim" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by the Borrower or any Subsidiary (x) in the ordinary course of such Person's
business or (y) as required in connection with a financing transaction or an
acquisition or disposition of real estate) or proceedings relating in any way to
any Environmental Law or any permit issued, or any approval given, under any
such Environmental Law (collectively, "Claims"), including (1) any and all
Claims by governmental or regulatory authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (2) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
"Environmental Law" means any and all present and future Applicable
Laws pertaining to pollution (including Hazardous Materials), natural resources
or the environment, whether federal, state, or local, including environmental
response laws such as the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, and as the same may be further amended
(collectively, "CERCLA").
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
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"ERISA Event" means any of the following if such event or occurrence
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect: (u) the failure to make a required contribution to a
Pension Plan if such failure is sufficient to give rise to a Lien under Section
302(f) of ERISA; (v) a withdrawal by the Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (w) a complete or partial withdrawal by the Borrower or any
ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (x) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, the receipt of any notice from the PBGC of its intent to terminate or
the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (y) an event or condition which might reasonably be expected
to constitute grounds under Section 4042(a)(1), (2) or (3) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multiemployer Plan; or (z) the imposition of any liability under Title IV of
ERISA other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Borrower or any ERISA Affiliate.
"Event of Default" is defined in Section 8.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" is defined in clause (d) of Section 5.1.8.
"Exchange Fund" is defined in clause (d) of Section 5.1.8.
"Federal Funds Rate" means, for any day, a fluctuating interest rate
per annum equal to
(a) the rate set forth in the weekly statistical release
designated as H.15(519), or any successor publication, published by the
Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or
(b) 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 the Administrative Agent from three federal
funds brokers of recognized standing selected by it.
"Fee Letter" means each of (x) the confidential letter, dated April 30,
1998, between the Borrower and the Agents, (y) the confidential fee letter,
dated April 30, 1998, between the Borrower and the Administrative Agent and (z)
the confidential fee letter, dated April 30, 1998, between the Borrower, the
Administrative Agent and the Syndication Agent.
"Fiscal Quarter" or "FQ" means a period approximating three consecutive
calendar months, commencing on the Friday immediately following the Thursday
which is closest to December 31, March 31, June 30 and September 30 and
continuing through the Thursday which is closest to the next succeeding March
31, June 30, September 30 and December 31, respectively; references to a Fiscal
Quarter with numbers corresponding to a calendar year and a number corresponding
to a Fiscal Quarter (e.g. "1998 FQ 1") refer to such Fiscal Quarter (i.e. the
first) of such Fiscal Year.
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"Fiscal Year" or "FY" means a period a period approximating 12
consecutive calendar months, commencing on the Friday immediately following the
Thursday which is closest to December 31 of each calendar year and continuing
through the Thursday which is closest to December 31 of the succeeding calendar
year; references to a Fiscal Year with a number corresponding to any calendar
year (e.g., "the 1998 Fiscal Year" or "1998 FY") refer to the Fiscal Year ending
the Thursday closest to the end of such calendar year.
"Fixed Charge Coverage Ratio" means, as of the close of any Fiscal
Quarter, the ratio, computed for the period consisting of such Fiscal Quarter
and each of the three immediately prior Fiscal Quarters, with respect to the
Borrower and Restricted Subsidiaries on a consolidated basis of:
(a) the difference (for such period) of
(i) the sum of (without duplication) (x) Adjusted
EBITDA of the Borrower and Restricted Subsidiaries plus (y)
Rental Expense (to the extent deducted in determining Net
Income or pro forma Net Income determined pursuant to clause
(d) of the definition of "Adjusted EBITDA") of the Borrower
and Restricted Subsidiaries;
minus
(ii) the lesser of (x) Maintenance Capital
Expenditures of the Borrower and Restricted Subsidiaries and
(y) 3% of the consolidated gross revenues of the Borrower and
Restricted Subsidiaries for such period, determined in
accordance with GAAP
to
(b) the sum (for such period) of
(i) Interest Expense of the Borrower and Restricted
Subsidiaries payable with respect to Total Funded Debt;
plus
(ii) the aggregate amount of all scheduled principal
payments in respect of Total Funded Debt (including scheduled
principal repayments of the Term Loans pursuant to clause (c)
of Section 3.1.1 (after giving effect to the application
thereto of all optional or mandatory non-scheduled
prepayments)), but excluding, however, (x) repayments of Term
Loans and Additional Loans made as term loans, in each case
scheduled to become due on their respective Stated Maturity
Dates, (y) Unrelated Final Maturity Payments of other
Indebtedness and (z) mandatory reductions of revolving credit
facilities, including the Revolving Commitments and all
Additional Commitments which are revolving commitments;
plus
(iii) Rental Expense (to the extent deducted in
determining Net Income or pro forma Net Income determined
pursuant to clause (d) of the definition of "Adjusted EBITDA")
of the Borrower and Restricted Subsidiaries;
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plus
(iv) the aggregate amount of all cash dividends paid
on common or preferred stock (excluding, however, Qualified
Preferred Stock) by the Borrower pursuant to clause (f) of
Section 7.2.5.
"Foreign Subsidiary" means any Subsidiary of the Borrower (x) which is
organized under the laws of any jurisdiction outside of the United States, (y)
which conducts the major portion of its business outside of the United States or
(z) all or substantially all of the property and assets of which are located
outside of the United States.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" is defined in Section 1.4.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guaranty" means the guaranty to be executed and delivered from time to
time by each direct or indirect Domestic Restricted Subsidiary pursuant to
Section 5.1.3 or 7.1.8, substantially in the form of Exhibit F hereto, as
amended, supplemented, amended and restated or otherwise modified.
"Hazardous Material" means any substance that is defined or listed as a
hazardous, toxic or dangerous substance under any present or future
Environmental Law or that is otherwise regulated or prohibited or subject to
investigation or remediation under any present or future Environmental Law
because of its hazardous, toxic, or dangerous properties, including (x) any
substance that is a "hazardous substance" under CERCLA and (y) petroleum wastes
or products.
"Hedging Liability" means, relative to any Person, any liability of
such Person under currency exchange agreements, interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, or any other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency exchange rates.
"herein", "hereof", "hereto", "hereunder" and similar terms contained
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
"HMTF" means HMTF Operating, Inc.
"HMTF/KKR Swap" means the exchange by an Affiliate of HMTF with an
Affiliate of KKR of Surviving Regal Preferred Shares valued at $75,000,000 for
Common Stock of Act III, which will occur following the Merger.
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"HMTF Merger Subsidiary" is defined in the second recital
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of the Borrower, any qualification or exception to such opinion or certification
(x) which questions the status of the Borrower and Restricted Subsidiaries,
taken as a whole, as a "going concern", (y) which relates to the limited scope
of examination of any material portion of the records of the Borrower and
Restricted Subsidiaries, taken as a whole, relevant to such financial statement
or (z) which relates to the treatment or classification of any item in such
financial statement and which, as a condition to its removal, would require an
adjustment to such item the effect of which would be to cause the Borrower to be
in default of any of its obligations under Section 7.2.3.
"including" and "include" means including without limiting the
generality of any description preceding such term.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money;
(b) all obligations, contingent or otherwise, with respect to
the face amount of all letters of credit, whether or not drawn, and
banker's acceptances issued for the account of such Person;
(c) all Capitalized Lease Liabilities of such Person;
(d) net monetary liabilities of such Person under all Hedging
Liabilities (calculated, at any time, as the aggregate amount (giving
effect to any netting agreements) that such persons would be required
to pay if the agreements giving rise to such Hedging Liabilities were
terminated at such time);
(e) all obligations of such Person to pay the deferred
purchase price of property or services that, in accordance with GAAP,
would be included on the liability side of the balance sheet of such
Person as of the date at which Indebtedness is to be determined;
(f) all indebtedness referred to in clauses (a), (b), (c) and
(e) secured by a Lien on property owned or being purchased by such
Person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall
have been assumed by such Person or is limited in recourse; provided,
however, that in the case of any such Indebtedness which is by its
terms non-recourse to such Person, the amount of such Indebtedness
shall, for the purpose of this clause, be deemed to be the lesser of
(x) the aggregate unpaid principal amount of such Indebtedness and (y)
the fair market value of the property subject to such Lien, as
determined by such Person in good faith; and
(g) all Contingent Liabilities of such Person in respect of
any of the foregoing;
provided, however, that accrued expenses incurred in the ordinary course of
business and obligations in respect of operating leases shall not constitute
"Indebtedness".
"Indemnified Liability" is defined in Section 10.4.
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"Indemnified Party" is defined in Section 10.4.
"Insolvency Proceeding" means, relative to any Person, (x) any case,
action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, rehabilitation, dissolution, winding-up or relief of
debtors or (y) any general assignment for the benefit of creditors, composition,
marshalling of assets for creditors or other, similar arrangement in respect of
its creditors generally or any substantial portion of its creditors, undertaken
under U.S. Federal, state or foreign law, including the Federal Bankruptcy
Reform Act of 1978 (11 U.S.C. ss. 101, et seq.).
"Instrument" means any contract, agreement, indenture, mortgage,
document or other writing (whether by formal agreement, letter or otherwise)
under which any obligation is evidenced, assumed or undertaken or any Lien (or
right or interest therein) is granted or perfected.
"Interest Expense" means, for any period, the aggregate cash interest
expense (net of cash interest income) of the Borrower and Restricted
Subsidiaries for such period, as determined in accordance with GAAP, including
the portion of any payments made in respect of Capitalized Lease Liabilities
allocable to interest expense, but excluding, however, amortization of deferred
financing costs and any other non-cash interest expense.
"Interest Period" means, relative to any LIBO Rate Loan, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Sections 2.3 or
2.4 and ending on (but excluding) the day which numerically corresponds to such
date one, two, three or six (or, if available from all the Lenders making such
Loans as determined by such Lenders in good faith based on prevailing market
conditions, nine or twelve) months thereafter (or, if such month has no
numerically corresponding day, on the last Business Day of such month), as the
Borrower may select in its relevant notice pursuant to Sections 2.3 or 2.4;
provided, however, that
(a) the Borrower shall not be permitted to select Interest
Periods to be in effect at any one time which have expiration dates
occurring on more than twenty different dates;
(b) if such Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
following Business Day (unless such next following Business Day is the
first Business Day of a calendar month, in which case such Interest
Period shall end on the Business Day next preceding such numerically
corresponding day); and
(c) no Interest Period for any Loan may end later than the
Stated Maturity Date for such Loan.
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other
Person;
(b) any Contingent Liability of such Person incurred in
connection with Indebtedness of any other Person;
(c) any ownership or similar interest held by such Person in
any other Person; and
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(d) payments in respect of tax savings or liabilities made by
the Borrower or any Restricted Subsidiary to or for the benefit of an
Unrestricted Subsidiary with whom the Borrower or such Restricted
Subsidiary files a consolidated tax return.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity, or distributions or dividends
paid, thereon and shall, if made by the transfer or exchange of property other
than cash, be deemed to have been made in an original principal or capital
amount equal to the fair value of such property at the time of such Investment,
as determined in good faith by the Borrower.
"Issuance Request" means a Letter of Credit request and certificate
duly executed by an Authorized Officer of the Borrower, substantially in the
form of Exhibit B-2 hereto.
"Issuer" means Scotiabank in its capacity as issuer of the Letters of
Credit, together with each other Person as shall have subsequently been
appointed as the successor Issuer in accordance with Section 9.4. At the request
of Scotiabank or such successor Issuer, another Lender with a Revolving Loan
Commitment or an Affiliate of Scotiabank may, if it so desires, issue one or
more Letters of Credit hereunder and shall be deemed to be the Issuer with
respect to such Letters of Credit.
"Key Management" means Michael L. Campbell, Gregory W. Dunn or Lewis
Frazer III.
"KKR" means Kohlberg Kravis Roberts & Co., L.P.
"KKR Merger Subsidiary" is defined in the second recital.
"Lender" is defined in the preamble and, in addition, shall include any
Eligible Assignee that becomes a Lender pursuant to Section 10.11.1.
"Lender Assignment Agreement" means a lender assignment agreement
substantially in the form of Exhibit I hereto.
"Lender Default" means, as a result of the appointment of a receiver or
conservator for any Lender, at the direction or request of any regulatory agency
or authority, either (x) the refusal or failure (which has not been retracted or
cured) of such Lender to make available its portion of any Borrowing or to fund
its portion of any unreimbursed payment under Section 2.6.1 or (y) such Lender
having notified the Administrative Agent or the Borrower that it does not intend
to comply with its obligations under Section 2.1, 2.3.2 or 2.6.1.
"Lender's Environmental Liability" means any and all losses,
liabilities, obligations, penalties, claims, litigation, demands, defenses,
costs, judgments, suits, proceedings, damages (including consequential damages),
disbursements or expenses of any kind or nature whatsoever (including reasonable
attorneys' fees at trial and appellate levels and reasonable experts' fees and
disbursements and expenses incurred in investigating, defending against or
prosecuting any litigation, claim or proceeding) which may at any time be
imposed upon, incurred by or asserted or awarded against any Indemnified Party
in connection with or arising from (w) any Hazardous Material on, in, under or
affecting all or any portion of any property of the Borrower or any Subsidiary,
the groundwater thereunder, or any surrounding areas thereof to the extent
caused by Releases from the Borrower's or any Subsidiary's or any of their
respective predecessors' properties; (x) any misrepresentation, inaccuracy or
breach of any warranty, contained or
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referred to in Section 6.12; (y) any violation or claim of violation by the
Borrower or any Subsidiary of any Environmental Laws (including any
Environmental Claim); or (z) the imposition of any lien for damages caused by or
the recovery of any costs for the cleanup, release or threatened release of
Hazardous Material by the Borrower or any Subsidiary, or in connection with any
property owned or formerly owned by the Borrower or any Subsidiary.
"Letter of Credit" is defined in clause (a) of Section 2.1.2.
"Letter of Credit Commitment" means (x) relative to the Issuer, the
Issuer's obligation to issue Letters of Credit pursuant to Section 2.1.2 and (y)
to each other Lender that has a Revolving Loan Commitment, the obligations of
such Lender to participate in such Letters of Credit pursuant to Section 2.6.1.
"Letter of Credit Commitment Amount" means, on any date (i) prior to
the Act III Acquisition (if it shall occur), a maximum amount of $75,000,000 and
(ii) on and after the Act III Acquisition (if it shall occur), a maximum amount
of $150,000,000, in either case, as such amount may be permanently reduced from
time to time pursuant to Section 2.2.
"Letter of Credit Outstandings" means, on any date, an amount equal to
the sum of
(a) the then aggregate amount which is undrawn and available
under all issued and outstanding Letters of Credit,
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"LIBO Rate" means, relative to each day during each Interest Period
pertaining to a LIBO Rate Loan, the rate of interest per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Telerate
Page 3750 as of 11:00 a.m., London time, two Business Days prior to the
beginning of such Interest Period. In the event that such rate does not appear
on Telerate Page 3750, "LIBO Rate" for the purposes of this paragraph shall be
determined by reference to such other publicly available service for displaying
eurodollar rates as may be agreed upon by the Agents and the Borrower or, in the
absence of such agreement, "LIBO Rate" for the purposes of this paragraph shall
instead be the rate per annum equal to the arithmetic average of the respective
rates notified to the Administrative Agent by each of the Reference Lenders as
the rate at which such Reference Lender is offered Dollar deposits for the
duration of such Interest Period in the amount of the LIBO Rate Loan to be made
by such Lender at or about 11:00 a.m., London time, two Business Days prior to
the beginning of such Interest Period, in the interbank eurodollar market where
the eurodollar and foreign currency and exchange operations in respect of its
LIBO Rate Loans are then being conducted for delivery.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate.
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such Lender's "LIBOR Office" below its name in Annex I hereto or
as set forth in a Lender Assignment Agreement, or such other office of a Lender
as designated from time to time by notice from such Lender
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to the Borrower and the Administrative Agent, whether or not outside the United
States, which shall be making or maintaining LIBO Rate Loans of such Lender
hereunder.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, charge, lien (statutory or other), escrow or similar encumbrance
of any kind, or any other type of similar preferential arrangement (including
any agreement to give any of the foregoing, any conditional sale or other title
retention agreement or any lease in the nature thereof).
"Loan" means, as the context may require, (x) a Revolving Loan, a Term
A Loan, a Term B Loan or a Term C Loan, (y) a Swing Line Loan or (z) an
Additional Loan, in each case of any type.
"Loan Document" means this Agreement, the Notes (if any), the Letters
of Credit, the Pledge Agreement, the Guaranty, each Borrowing Request, each
Issuance Request, the Fee Letters or any other Instrument or writing required to
be delivered on the Closing Date pursuant to Section 5.1 or thereafter from time
to time pursuant to Section 7.1.8.
"Maintenance Capital Expenditures" means, for any period, the sum of
the aggregate amount of all Capital Expenditures of the Borrower and Restricted
Subsidiaries during such period, excluding, however, expenditures made, and
Capitalized Lease Liabilities incurred, for the purpose of building or acquiring
new motion picture theatres or making significant improvements, renovations or
remodelings to existing motion picture theatres.
"Management Rollover" is defined in clause (d) of the second recital.
"Material Adverse Change" means any change in the business, assets,
operations, properties or financial condition of the Borrower and Restricted
Subsidiaries taken as a whole that would materially adversely affect the ability
of the Borrower and the other Obligors taken as a whole to perform their
obligations under this Agreement and the other Loan Documents taken as a whole.
"Material Adverse Effect" means a circumstance or condition that (x)
constitutes a Material Adverse Change or (y) would materially adversely affect
the rights and remedies of the Administrative Agent, the Issuer or the Lenders
under this Agreement and the other Loan Documents taken as a whole.
"Material Restricted Subsidiary" means, at any time, each Restricted
Subsidiary having at such time either
(a) net sales (on a consolidated basis, including each of its
Subsidiaries that constitutes a Restricted Subsidiary, but excluding,
however, revenues received by any Restricted Subsidiary from the
Borrower or any other Restricted Subsidiary) for the applicable Test
Period in excess of 5% of the net sales of the Borrower and Restricted
Subsidiaries for such Test Period, or
(b) total assets (on a consolidated basis), as of the last day
of the preceding Fiscal Quarter, constituting in excess of 5% of the
total assets of the Borrower and Restricted Subsidiaries as of such
day,
in each case calculated, based upon the Borrower's most recent annual or
quarterly financial statements delivered to the Administrative Agent under
Section 7.1.1, in accordance with GAAP (it being acknowledged and understood
that, in the event the determination of whether a Restricted Subsidiary is a
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Material Restricted Subsidiary is to be made on or about the date such
Restricted Subsidiary was created or acquired, such determination shall be made
on a pro forma basis as if such Restricted Subsidiary were a Restricted
Subsidiary at the commencement of such Test Period for purposes of clause (a)
and on the last day of such Fiscal Quarter for purposes of clause (b); provided,
however, that, notwithstanding anything to the contrary in the foregoing, if, at
any time, "Material Restricted Subsidiaries" as defined above, taken together
with the Borrower, on a consolidated basis, account for less than 80% of
Adjusted EBITDA of the Borrower and Restricted Subsidiaries for the applicable
Test Period based upon the Borrower's most recent annual or quarterly financial
statements delivered to the Administrative Agent pursuant to Section 7.1.1, then
the term "Material Restricted Subsidiaries" shall be deemed to include such
number of the largest (pursuant to the foregoing criteria) Restricted
Subsidiaries as is sufficient to cause "Material Restricted Subsidiaries," when
taken together with the Borrower, to account for at least 80% of such Adjusted
EBITDA as set forth above.
"Merger" is defined in clause (b) of the second recital.
"Merger Agreement" is defined in the second recital.
"Merger Consideration" is defined in clause (c) of the second recital.
"Merger Date" is defined in clause (b) of the second recital.
"Merger Subsidiary" is defined in the second recital.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan," within the meaning
of Section 4001(a)(3) of ERISA, with respect to which the Borrower or any ERISA
Affiliate may have any liability.
"NAIC" means the National Association of Insurance Commissioners or any
successor thereto with similar authority.
"Net Cash Proceeds" means, relative to any Disposition by the Borrower
or any Restricted Subsidiary (other than a Disposition permitted pursuant to
clause (a) or (b) of Section 7.2.6), proceeds in cash as and when received by
such Person, net of
(a) the costs and expenses relating to such Disposition;
(b) the amount of all taxes paid or reasonably estimated to be
payable by the Borrower or Restricted Subsidiary in connection
therewith, but Net Cash Proceeds shall include the excess, if any, of
the estimated taxes payable in connection with such Disposition over
the actual amount of taxes paid, immediately after the payment of such
taxes;
(c) amounts required to be applied to repay principal,
interest and prepayment premiums and penalties on Indebtedness secured
by a Lien on the asset which is the subject of such Disposition; and
(d) the amount of any reasonable reserve established in
accordance with GAAP against any liabilities (other than any taxes
deducted pursuant to clause (b)) associated with the assets
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sold, disposed of or financed and retained by the Borrower or any
Restricted Subsidiary; provided, however, that the amount of any
subsequent reduction of such reserve (other than in connection with a
payment in respect of any such liability) shall be deemed to be Net
Cash Proceeds realized on the date of such reduction.
"Net Income" means, for any period, the net income (or loss) included
in accordance with GAAP as such on the consolidated financial statements of the
Borrower and Restricted Subsidiaries for such period.
"9 1/2% Subordinated Note" is defined in clause (b) of the fourth
recital.
"9 1/2% Subordinated Note Indenture" means the indenture, to be dated
the Closing Date, between the Borrower and IBJ Schroder Bank and Trust Company,
as trustee, pursuant to which the 9 1/2% Subordinated Notes will be issued.
"9 1/2% Subordinated Note Offering Memorandum" means the final offering
memorandum, dated May 21, 1998, with respect to the 9 1/2% Subordinated Notes.
"Non-Defaulting Lender" means and includes each Lender other than a
"Defaulting Lender".
"Non-Performing Lender" means any Lender that either (x) refuses or
fails (which refusal or failure has not been retracted or cured) to make
available its portion of any Borrowing or to fund its portion of any
unreimbursed payment under Section 2.6.1 or (y) has notified the Administrative
Agent and/or the Borrower that it does not intend to comply with its obligations
under Section 2.1 or 2.6.1.
"Non-U.S. Lender" is defined in clause (d) of Section 4.6.
"Non-U.S. Participant" means a Participant that is not incorporated or
organized in or under the laws of the United States or a state thereof.
"Note" means, as the context may require, (x) a Revolving Note, a Term
A Note, a Term B Note or a Term C Note, (y) a Swing Line Note or (z) a
promissory note evidencing an Additional Loan, if any.
"Obligations" means all monetary obligations (whether absolute or
contingent, matured or unmatured, direct or indirect, choate or inchoate, sole,
joint, several or joint and several, due or to become due, heretofore or
hereafter contracted or acquired) of the Borrower and each other Obligor to any
Lender or Issuer or Agent arising under this Agreement (including as recorded in
loan accounts maintained in accordance with Section 2.7), any Rate Protection
Agreement, the Notes, the Letters of Credit and each other Loan Document.
"Obligor" means, as the context may require, the Borrower, each
Restricted Subsidiary and any other Person (other than any Agent, the Issuer or
any Lender) to the extent such Person is obligated under this Agreement or any
other Loan Document.
"Offer to Purchase" is defined in the third recital.
"Old Regal" is defined in clause (b) of the second recital.
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"Old Regal 8 1/2% Subordinated Note" is defined in the third recital
and, in addition, after the Closing Date shall refer to any Old Regal 8 1/2%
Subordinated Note not tendered pursuant to the Offer to Purchase and remaining
outstanding under the Old Regal 8 1/2 Subordinated Note Indenture as amended in
accordance with Section 5.1.11.
"Old Regal 8 1/2% Subordinated Note Indenture" is defined in the third
recital.
"Old Regal Share" is defined in clause (c) of the second recital.
"Option Redemption" is defined in clause (d) of the second recital.
"Organizational Document" means, relative to any Obligor, as
applicable, its certificate of incorporation, by-laws, certificate of
partnership, partnership agreement, certificate of formation or limited
liability agreement and any certificate of designations or similar instrument
relating to the rights of preferred shareholders of such Person.
"Other Permitted Acquisition" means any Permitted Acquisition
(excluding, however, an Act III Acquisition, if any).
"Other Taxes" means any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, this
Agreement or any other Loan Document.
"Participant" is defined in Section 10.11.2.
"Payment Default" means a Default pursuant to Section 8.1.1.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA (other than a Multiemployer Plan) with
respect to which the Borrower or any ERISA Affiliate may have any liability.
"Percentage" means, relative to any Lender, the applicable percentage
relating to (x) Revolving Loans, Term A Loans, Term B Loans or Term C Loans, as
the case may be, as set forth below its name in Annex I hereto under the
applicable column heading or as set forth in a Lender Assignment Agreement under
the applicable column heading or (y) Additional Loans of any Series as set forth
below its name in the Additional Financing Amendment pursuant to which the
Additional Commitments for such Additional Loans were extended, in each case as
such percentage may be adjusted from time to time pursuant to Lender Assignment
Agreement(s) executed by such Lender and the Eligible Assignee(s) and delivered
pursuant to Section 10.11.1.; provided that upon the making of any Additional
Commitments or Additional Loans pursuant to Section 2.8, each Lender's
percentage shall be adjusted to reflect any appropriate change to such
percentage at such time which shall have resulted from the making of any such
Additional Commitments or Additional Loans. No Lender shall have any Commitment
to make Revolving Loans, Term A Loans, Term B Loans or Term C Loans (as the case
may be) if its percentage under the respective column heading is zero (0%).
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"Permitted Acquisition" is defined in clause (d) of Section 7.2.6.
"Permitted Acquisition Come-Along Indebtedness" means any Indebtedness
of a Person existing at the time of its becoming an Acquired Person and a
Restricted Subsidiary as the result of a Permitted Acquisition which, when
incurred, would have been permitted, assuming that such Person had then been a
Restricted Subsidiary, pursuant to clause (i) of Section 7.2.1.
"Permitted Acquisition Ordinary Course Indebtedness" means any
Indebtedness of a Person existing at the time of its becoming an Acquired Person
and a Restricted Subsidiary as the result of a Permitted Acquisition which, when
incurred, would have been permitted, assuming that such Person had then been a
Restricted Subsidiary, pursuant to clause (d) or (j) of Section 7.2.1.
"Permitted Acquisition Subordinated Indebtedness" means:
(a) any unsecured Indebtedness of a Person existing at the
time of its merger with the Borrower pursuant to a Permitted
Acquisition and which thereby becomes Indebtedness of the Borrower and
is subject to subordination, postponement, standstill and related
provisions which are materially no less favorable to holders of senior
indebtedness than those generally prevailing in the high-yield senior
subordinated debt market when such Indebtedness was incurred; provided,
however, that the Agents shall be reasonably satisfied that (x) the
merger of such Person with the Borrower shall have occurred in
accordance with (and without violation of) the terms of the instruments
evidencing or governing such Indebtedness and (y) all Obligations shall
constitute "senior debt" or "senior indebtedness" or the functionally
equivalent term used in such instruments and the Lenders shall be fully
entitled to the benefits of such subordination, postponement,
standstill and related provisions; and
(b) any unsecured refinancing, refunding, renewal or extension
by the Borrower of any Indebtedness referred to in clause (a) which, in
the case of any refinancing or refunding, would constitute
"Subordinated Debt" in accordance with clause (b) of the definition
thereof; provided, however, that in the case of any bridge refinancing
or refunding the interest rate applicable thereto need not comply with
item (x) of such clause (b), subject, however, to the limitation that
the interest rate and other compensation payable shall conform to
pricing generally prevailing in the senior subordinated bridge loan
market for issuers of comparable creditworthiness.
"Permitted Additional Structured Indebtedness" means any Indebtedness
which is assumed or incurred pursuant to clause (g) (excluding, however,
Permitted Acquisition Ordinary Course Indebtedness, Permitted Acquisition
Subordinated Indebtedness and Permitted Acquisition Come-Along Indebtedness) or
(k) of Section 7.2.1 or pursuant to clause (b) of Section 2.8 as Additional
Loans and which, on the date on which it is assumed or incurred, has a Weighted
Average Life to Maturity which is at least as long as the Weighted Average Life
to Maturity of Indebtedness (excluding, however, all Additional Loans,
Additional Commitments and Revolving Credit Commitment Amount Increases)
outstanding under this Agreement, assuming that the Revolving Credit Commitments
are fully drawn.
"Permitted Lien" means:
(a) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or to the extent payment is not required pursuant to Section
7.1.4;
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(b) Liens of carriers, warehousemen, mechanics, materialmen
and landlords and other similar Liens imposed by law incurred in the
ordinary course of business, in each case so long as such Liens could
not reasonably be expected, to individually or in the aggregate, have a
Material Adverse Effect;
(c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of
tenders, statutory and regulatory obligations, bids, leases and
contracts or other similar obligations (other than for borrowed money)
entered into in the ordinary course of business or to secure
obligations on surety or appeal bonds or performance or return-of-money
bonds;
(d) Liens consisting of judgment or judicial attachment liens
in circumstances not constituting an Event of Default under Section
8.1.6;
(e) easements, rights-of-way, municipal and zoning ordinances
or similar restrictions, 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 the Borrower or
any Restricted Subsidiary;
(f) Liens arising solely by virtue of any statutory or common
law provision relating to banks' liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; provided, however, that such
deposit account is not a cash collateral account; and
(g) any interest or title of a lessor secured by a lessor's
interest under any lease permitted by this Agreement, or any leases or
subleases granted to others not interfering in any material respect
with the business of the Borrower or the Restricted Subsidiary to which
the property subject to such lease or sublease relates.
"Permitted Ongoing Reinvestment Project" means the construction and
completion of a motion picture theatre which was commenced, or is the subject of
binding construction agreements which were executed and delivered, at a time
when no Event of Default or Payment Default had occurred and was continuing.
"Permitted Sale Leaseback" means any Sale Leaseback consummated by the
Borrower or any Restricted Subsidiary with respect to any Real Estate of the
Borrower or any Restricted Subsidiary; provided, however, that (x) such Sale
Leaseback is consummated for fair value as determined at the time of
consummation in good faith by the Board of Directors of the Borrower (which such
determination may take into account any retained interest or other Investment of
the Borrower or the applicable Restricted Subsidiary in connection with, and any
other material economic terms of, such Sale Leaseback) and (y) the proceeds of
such Sale Leaseback are, to the extent required by clause (d) of Section 3.1.1,
applied to the prepayment of Term Loans.
"Permitted Securitization" means any structured financing (or series of
related structured financings) by the Borrower or any Restricted Subsidiary that
involves the sale, transfer or other disposition of Real Estate of the Borrower
or any Restricted Subsidiary to a Real Estate Financing Subsidiary and the
issuance by such Real Estate Financing Subsidiary of commercial paper,
medium-term
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notes or any other forms of financing; provided, however, that (x) such
structured financing is consummated for fair value as determined at the time of
consummation in good faith by the Board of Directors of the Borrower (which such
determination may take into account any retained interest or other Investment of
the Borrower or the applicable Restricted Subsidiary in connection with, and any
other material economic terms of, such structured financing) and (y) the
proceeds of such structured financing are, to the extent required by clause (d)
of Section 3.1.1, applied to the prepayment of Term Loans.
"Person" means any natural person, corporation, limited liability
company, partnership, joint venture, joint stock company, firm, association,
trust or unincorporated organization, government, governmental agency, court or
any other legal entity, whether acting in an individual, fiduciary or other
capacity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Borrower or any Subsidiary sponsors or maintains or to which
the Borrower or any Subsidiary makes, is making or is obligated to make
contributions and includes any Pension Plan.
"Pledge Agreement" means the Pledge Agreement executed and delivered by
the Borrower on the Closing Date substantially in the form of Exhibit E hereto,
as from time to time thereafter amended, supplemented, amended and restated or
otherwise modified.
"PNC Letters of Credit" is defined in Section 2.6.
"Pro Forma Balance Sheet" is defined in clause (c) of Section 6.5.
"Proxy Statement" means the notice of annual meeting and proxy
statement, dated April 16, 1998, mailed to stockholders of Old Regal relative to
the special meeting of stockholders to be held on May 18, 1998.
"Qualified Preferred Stock" means Capital Stock of the Borrower which,
by its terms or by the terms of any security into which it is convertible,
exchangeable or otherwise,
(a) (x) is not, and, upon the happening of an event or passage
of time, would not, be required to be redeemed (for consideration other
than shares of common stock of the Borrower), (y) is not redeemable at
the option of the holder thereof (for consideration other than shares
of common stock of the Borrower) and (z) is not convertible into or
exchangeable for debt securities of the Borrower (other than
Subordinated Debt), in any case at any time prior to the tenth
anniversary of the Closing Date; and
(b) does not entitle the holders thereof to receive dividends
payable in cash at any time except as permitted by clause (f) (i) of
Section 7.2.5.
"Quarterly Payment Date" means the last day of each December, March,
June and September, or, if any such day is not a Business Day, the next
succeeding Business Day.
"Rate Protection Agreement" means, collectively, any interest rate
swap, cap, collar or similar agreement entered into by the Borrower pursuant to
the terms of this Agreement under which the counterparty to such agreement is
(or at the time such Rate Protection Agreement was entered into, was) a Lender
or an Affiliate of a Lender.
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"Real Estate" means land, buildings and improvements owned or leased by
the Borrower or any Subsidiary, but excluding, however, all operating fixtures
and equipment, whether or not incorporated into improvements.
"Real Estate Financing" means any Permitted Sale Leaseback or Permitted
Securitization.
"Real Estate Financing Subsidiary" means any special purpose entity of
the Borrower or any Restricted Subsidiary formed in connection with a Permitted
Securitization.
"Reference Lender" means Scotiabank or Bank of America National Trust &
Savings Association.
"Refinancing" is defined in the clause (f) of the second recital.
"Refunded Swing Line Loan" is defined in clause (b) of Section 2.3.2.
"Register" is defined in clause (c) of Section 10.11.1.
"Reimbursement Obligation" is defined in Section 2.6.3.
"Rental Expense" means, for any period, the aggregate expense of the
Borrower and Restricted Subsidiaries for such period, calculated on a
consolidated basis in accordance with GAAP, in respect of all rental obligations
under operating leases for real or personal property (excluding, however, real
estate taxes, common area maintenance charges and Capitalized Lease
Liabilities).
"Replaced Lender" is defined in Section 4.4.
"Replacement Lender" is defined in Section 4.4.
"Required Lenders" means, at any time,
(a) prior to the date of the making of the initial Credit
Extensions hereunder, Non-Defaulting Lenders having a majority of the
Commitments, taken as a whole, of all Non-Defaulting Lenders; and
(b) on and after the Closing Date, Non-Defaulting Lenders
having or holding a majority of the sum (without duplication) of (x)
the aggregate outstanding principal amount of the Loans, (including
Additional Loans if any), plus (y) the aggregate amount of the Letter
of Credit Outstandings plus (z) the unfunded amount of the Revolving
Loan Commitment Amount (including Additional Commitments, if any), in
each case, taken as a whole, of all Non-Defaulting Lenders.
"Required Revolving Lenders" means, at any time, Non-Defaulting Lenders
having or holding a majority of the sum (without duplication) of (x) the
aggregate outstanding principal amount of the Revolving Loans and Swing Line
Loans, plus (y) the aggregate amount of the Letter of Credit Outstandings plus
(z) the unfunded amount of the Revolving Loan Commitment Amount, in each case,
taken as a whole, of all such Non-Defaulting Lenders.
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"Required Term Lenders" means, at any time,
(a) prior to the date of the making of the initial Credit
Extensions hereunder, Non-Defaulting Lenders having a majority of the
Term A Loan Commitment, the Term B Loan Commitment and the Term C Loan
Commitment, taken as a whole, of all such Non-Defaulting Lenders; and
(b) on and after Closing Date, Non-Defaulting Lenders then
holding a majority of the aggregate outstanding principal amount of the
Term Loans, taken as a whole, of all such Non-Defaulting Lenders.
"Required Term Series Lenders" means, at any time relative to any
Series of Term Loans, Non-Defaulting Lenders then holding a majority of the
aggregate outstanding principal amount of all Term Loans of such Series, taken
as a whole, of all such Non-Defaulting Lenders.
"Responsible Officer" means, relative to any Person, its chief
executive officer, its president or any vice president, managing director, chief
financial officer, treasurer, controller and, with respect to non-financial
matters, secretary or assistant secretary, or other officer thereof having
substantially the same authority and responsibility.
"Restricted Payment" means (x) any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any shares of any class of Capital Stock of the Borrower, (y) any
purchase, redemption or other acquisition for value of any shares of Capital
Stock of the Borrower or warrants, rights or options to acquire such shares, now
or hereafter outstanding, or (z) any payment, prepayment, purchase, redemption
or defeasance of any Subordinated Debt.
"Restricted Subsidiary" means each Subsidiary of the Borrower which is
neither an Unrestricted Subsidiary nor a Real Estate Financing Subsidiary.
"Revolving Credit Commitment Amount Increase" is defined in Section
2.8. The aggregate amount, at any time, of Revolving Credit Commitment Amount
Increases (including for purposes of Section 2.2.2, Section 2.8 and clauses (g)
and (k) of Section 7.2.1) shall be the aggregate amount of all Revolving Credit
Commitment Amount Increases made at or prior to such time pursuant to Section
2.8 less the aggregate amount of all voluntary reductions of the Revolving Loan
Commitment Amount made while any such Revolving Credit Commitment Amount
Increases shall be in effect and prior to such time; provided, however, that any
Revolving Credit Commitment Amount Increase constituting Act III Additional
Financing shall be excluded from calculations made pursuant to clause (b) of
Section 2.8 and clauses (g) and (k) of Section 7.2.1.
"Revolving Loan" is defined in clause (a) of Section 2.1.1.
"Revolving Loan Commitment" is defined in clause (a) of Section 2.1.1.
"Revolving Loan Commitment Amount" means, on any date, $350,000,000, as
such amount may be from time to time increased by Revolving Credit Commitment
Amount Increases pursuant to Section 2.8 or reduced pursuant to Section 2.2.
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"Revolving Loan Commitment Termination Date" means the earliest of
(a) June 15, 1998 (if the initial Credit Extensions have not
occurred on or prior to such date);
(b) the Business Day immediately preceding the seventh
anniversary of the Closing Date;
(c) the date on which the Revolving Loan Commitment Amount is
terminated in full or reduced to zero pursuant to Section 2.2; and
(d) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (c) or (d), the Revolving
Loan Commitments shall terminate automatically and without any further action.
"Revolving Note" means (x) a promissory note, if any, executed and
delivered by the Borrower pursuant to clause (b) of Section 2.7 and payable to
any Lender, in the form of Exhibit A-1 hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Revolving Loans and (y) all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Sale Leaseback" means any transaction or series of related
transactions pursuant to which the Borrower or any Restricted Subsidiary sells,
transfers or otherwise disposes of any property, real or personal, whether now
owned or hereafter acquired, and thereafter rents or leases such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold, transferred or disposed.
"S&P" means Standard & Poor's Rating Service.
"Scotiabank" is defined in the preamble.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Leverage Ratio" means, as of the last day of any Fiscal
Quarter, the ratio of
(a) the difference of
(i) the excess on such day of Total Funded Debt
outstanding (excluding, however, Subordinated Debt) over
Unrestricted Cash,
minus
(ii) the lesser of (x) $50,000,000 and (y) Total
Funded Debt outstanding on such day incurred in connection
with the construction of motion picture theatres that, on such
day, are not open for business
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to
(b) Adjusted EBITDA computed for the period consisting of such
Fiscal Quarter and each of the three immediately preceding Fiscal
Quarters.
"Series" means, relative to
(a) Term Loans, as the context may require, all Term A Loans,
all Term B Loans or all Term C Loans; and
(b) Additional Loans made as term loans, all Additional Loans
made pursuant to an Additional Financing Amendment as a single series
of Additional Loans.
"Sponsor" means HMTF or KKR.
"Sponsor Fund Contribution" is defined in clause (a) of the second
recital.
"Stated Amount" of each Letter of Credit means the total amount
available to be drawn under such Letter of Credit upon the issuance thereof, as
such amount may be amended from time to time.
"Stated Expiry Date" is defined in Section 2.6.
"Stated Maturity Date" means
(a) relative to all Swing Line Loans, Revolving Loans and Term
A Loans, the seventh anniversary of the Closing Date;
(b) relative to all Term B Loans, the eighth anniversary of
the Closing Date;
(c) relative to all Term C Loans, the ninth anniversary of the
Closing Date; and
(d) relative to Additional Loans, if any, the final stated
maturity therefor established pursuant to Section 2.8.
"Subordinated Debt" means
(a) the 9 1/2% Subordinated Notes;
(b) at any time after the Closing Date, any Old Regal 8 1/2%
Subordinated Notes then remaining outstanding;
(c) any other unsecured subordinated Indebtedness of the
Borrower (w) having no mandatory payments or prepayments of principal,
or mandatory redemptions which are scheduled or may otherwise be
required to be made (excluding, however, pursuant to customary
high-yield put rights arising upon the occurrence of (1) a change of
control under circumstances no more advantageous to the holders of such
Subordinated Debt than those provided under the definition of the term
"Change of Control" in the 9 1/2% Subordinated Notes or (2) an asset
sale the Net Cash Proceeds of which are retained by the Borrower in
accordance with clause (b)(iii) of Section 3.1.2)
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prior to the tenth anniversary of the Closing Date, (x) bearing
interest at a rate not to exceed the rate then generally prevailing in
the high-yield senior subordinated debt market for issuers of
comparable creditworthiness, (y) having terms of subordination,
standstill, postponement and related provisions which are materially no
less favorable to the Lenders than the corresponding terms of the 9
1/2% Subordinated Note and (z) which are otherwise (except as otherwise
consented to by the Agents) in all respects material to the Lenders
(including as to voting percentages necessary for waivers, amendments,
accelerations, rescissions and the commencement of litigation),
consistent with customary high-yield senior subordinated debt
issuances; and
(d) Permitted Acquisition Subordinated Indebtedness.
"Subsidiary" means, relative to any Person, any other corporation,
partnership or other business entity of which more than 50% of the outstanding
Voting Stock is at the time directly or indirectly owned by such Person. Unless
the context otherwise specifically requires, the term "Subsidiary" shall be a
reference to a Subsidiary of the Borrower.
"Successor Borrower" is defined in clause (d) of Section 7.2.6.
"Supermajority Revolving Lenders" means, at any time, Non-Defaulting
Lenders having or holding at least 66-2/3% of the sum (without duplication) of
the aggregate outstanding principal amount of the Revolving Loans and the Swing
Line Loans, the aggregate amount of the Letter of Credit Outstandings the
unfunded amount of the Revolving Loan Commitment Amount, in each case, taken as
a whole, of all such Non-Defaulting Lenders.
"Supermajority Term Lenders" means, at any time,
(a) prior to the date of the making of the initial Credit
Extension hereunder, Non-Defaulting Lenders having at least 66-2/3% of
the Term A Loan Commitment, Term B Loan Commitment and Term C Loan
Commitment, taken as a whole, of all such Non-Defaulting Lenders; and
(b) on and after the Closing Date, Non-Defaulting Lenders
having or holding at least 66-2/3% of the aggregate outstanding
principal amount of all Term Loans, taken as a whole, of all such
Non-Defaulting Lenders.
"Surviving Regal" is defined in clause (b) of the second recital.
"Surviving Regal Common Share" means a share of common stock, $0.00 par
value per share, of Surviving Regal.
"Surviving Regal Preferred Share" means a share of Series A Convertible
Preferred Stock, $0.01 par value per share of Surviving Regal which is
mandatorily convertible into Surviving Regal Common Shares on the seventh day
after the Closing Date.
"Swing Line Lender" means, subject to the terms of this Agreement,
Scotiabank, its successors and assigns.
"Swing Line Loan" is defined in clause (b) of Section 2.1.1.
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"Swing Line Loan Commitment" is defined in clause (b) of Section 2.1.1.
"Swing Line Loan Commitment Amount" means, on any date, $15,000,000, as
such amount may be reduced from time to time pursuant to Section 2.2.
"Swing Line Note" means (x) a promissory note, if any, executed and
delivered by the Borrower pursuant to clause (b) of Section 2.7 and payable to
the Swing Line Lender, in the form of Exhibit A-5 hereto (as such promissory
note may be amended, endorsed or otherwise modified from time to time),
evidencing the aggregate Indebtedness of the Borrower to the Swing Line Lender
resulting from outstanding Swing Line Loans, and also means all other promissory
notes accepted from time to time in substitution therefor or renewal thereof.
"Syndication Agent" is defined in the preamble and, in addition, shall
include each other Person as shall have subsequently been appointed as the
successor Syndication Agent pursuant to Section 9.4.
"Syndication Memorandum" means the confidential information memorandum,
dated May 1998, containing information describing the Borrower for distribution
to prospective Lenders in connection with this Agreement
"Taxes" means any and all present or future taxes, levies, assessments,
imposts, duties, deductions, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, however, in the case of each Lender
and the Administrative Agent, respectively, taxes imposed on any Lender or the
Administrative Agent as a result of a present or former connection between such
Lender or the Administrative Agent and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from such
Lender or the Administrative Agent having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement).
"Telerate Page 3750" means the display designated as "Page 3750" on the
Telerate Service (or such other page as may replace Page 3750 on the service or
such other service as may be nominated by the British Bankers' Association as
the information vendor for the purpose of displaying British Bankers'
Association interest settlement rates for Dollar deposits).
"Term A Loan" is defined in clause (a) of Section 2.1.3.
"Term A Loan Commitment" is defined in clause (a) of Section 2.1.3.
"Term A Loan Commitment Amount" means, on any date, $120,000,000.
"Term A, B, and C Loan Commitment Termination Date" means the earliest
of
(a) June 15, 1998 (if each of the Term Loans have not been
made on or prior to such date);
(b) the Closing Date (immediately after the making of the Term
Loans on such date); and
(c) the date on which any Commitment Termination Event occurs.
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Upon the occurrence of any event described in clause (b) or (c), the Term A Loan
Commitments, the Term B Loan Commitments and the Term C Loan Commitments shall
terminate automatically and without any further action.
"Term A Note" means (x) a promissory note, if any, executed and
delivered by the Borrower pursuant to clause (b) of Section 2.7 and payable to
any Lender, in the form of Exhibit A-2 hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Term A Loans and (y) all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Term B Loan" is defined in clause (b) of Section 2.1.3.
"Term B Loan Commitment" is defined in clause (b) of Section 2.1.3.
"Term B Loan Commitment Amount" means, on any date, $120,000,000.
"Term B Note" means (x) a promissory note, if any, executed and
delivered by the Borrower pursuant to clause (b) of Section 2.7 and payable to
any Lender, in the form of Exhibit A-3 hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Term B Loans and (y) all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Term C Loan" is defined in clause (c) of Section 2.1.3.
"Term C Loan Commitment" is defined in clause (c) of Section 2.1.3.
"Term C Loan Commitment Amount" means, on any date, $135,000,000.
"Term C Note" means (x) a promissory note, if any, executed and
delivered by the Borrower pursuant to clause (b) of Section 2.7 and payable to
any Lender, in the form of Exhibit A-4 hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Term C Loans and (y) all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Term Loans" means, collectively, the Term A Loans, the Term B Loans
and the Term C Loans and the Additional Loans, if any, made as term loans.
"Test Period" means, relative to certain determinations to be made
under this Agreement at any time, the four consecutive Fiscal Quarters most
recently elapsed.
"Total Funded Debt" means, on any date (and without duplication), the
aggregate outstanding principal amount of all Indebtedness of the Borrower and
Restricted Subsidiaries of the type referred to in clauses (a) and (c), and all
unreimbursed drawings in respect of Indebtedness described in clause (b), in
each case of the definition of "Indebtedness" (excluding, however, intercompany
Indebtedness between the Borrower and any Restricted Subsidiary or between any
Restricted Subsidiaries).
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"Total Leverage Ratio" means, as of the last day of any Fiscal Quarter,
the ratio of
(a) the excess on such day of Total Funded Debt outstanding
over Unrestricted Cash
to
(b) Adjusted EBITDA computed for the period consisting of such
Fiscal Quarter and each of the three immediately preceding Fiscal
Quarters.
"Transaction" means the Sponsor Fund Contributions, the Merger, the
Conversion, the Management Roll-Over, the Option Redemption, the HMTF/KKR Swap,
the issuances of the Additional Equity and 9 1/2% Subordinated Notes, the
completion of the transactions contemplated to occur by the Offer to Purchase,
the initial Credit Extensions, the Refinancing and all other transactions
contemplated hereby (including pursuant to Section 5.1) to occur on the Closing
Date, including the payment of Transaction Costs.
"Transaction Cost" means any fee, cost, charge or expense payable by
the Borrower or any Subsidiary in connection with the Transaction.
"type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"U.C.C." means the Uniform Commercial Code as from time to time in
effect in the State of New York.
"UCP" is defined in Section 2.6.5.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Plan pursuant to Section 412 of the Code for the applicable plan year.
"United States" or "U.S." means the United States of America, its fifty
states and the District of Columbia.
"Unrelated Final Maturity Payment" means, relative to any Indebtedness
of any Person, the final payment of principal of such Indebtedness becoming due
on the final stated maturity thereof if such final payment would not, consistent
with prevailing market practices, reasonably be considered to be substantively
an interim installment of a set of related Indebtedness rather than a final
maturity of a separate Indebtedness based on its contractual relationship with
other Indebtedness and other indicia of common interests and risks (including
requirements to share payments or collateral proceeds or abide by collective
voting procedures).
"Unrestricted Cash" means on any day the excess of (x) all cash of the
Borrower and Restricted Subsidiaries on such day over (y) $3,000,000.
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"Unrestricted Subsidiary" means
(a) any Subsidiary that is first created or acquired by the
Borrower or a Restricted Subsidiary after the Closing Date if (x) the
acquisition price therefor is funded by the Borrower or such Restricted
Subsidiary in accordance with clause (h) of Section 7.2.4 and (y) such
Subsidiary is designated by the Borrower as an Unrestricted Subsidiary
in a notice delivered to the Agents prior to or reasonably promptly
after such creation or acquisition;
(b) any Subsidiary that is first created or acquired after the
Closing Date by an Unrestricted Subsidiary created or acquired in
accordance with the provisions of this definition;
(c) any Restricted Subsidiary existing on the Closing Date
which is subsequently re-designated as an Unrestricted Subsidiary by
the Borrower in a notice to the Agents; provided, however, that such
re-designation shall be deemed to be an Investment pursuant to clause
(h) of Section 7.2.4 on the date of such re-designation in an
Unrestricted Subsidiary in an amount equal to the sum of (x) the net
worth of such re-designated Restricted Subsidiary immediately prior to
such re-designation (such net worth to be calculated without regard to
any Guaranty provided by such re-designated Restricted Subsidiary) plus
(y) the aggregate principal amount of any Indebtedness owed by such
re-designated Restricted Subsidiary to the Borrower or any other
Restricted Subsidiary immediately prior to such re-designation, all
calculated, except as set forth in the parenthetical to the foregoing
item (x), on a consolidated basis in accordance with GAAP;
provided, however, that, in each case, the provisions of clause (h) of Section
7.2.4 are not breached in connection with such creation, acquisition or
re-designation, and that promptly after the date of such creation, acquisition
or re-designation, as applicable, such Subsidiary and the Borrower enter into a
tax sharing agreement containing terms that, in the reasonable judgment of the
Borrower and the Agents, provide for appropriate allocation of tax liabilities
and benefits. Notwithstanding anything to the contrary herein,
(d) a Restricted Subsidiary cannot be a Subsidiary of an
Unrestricted Subsidiary;
(e) an Unrestricted Subsidiary cannot be designated as a
Restricted Subsidiary except (x) with prior notice to the Agents and
(y) if a Default has occurred and is continuing or would result from
such re-designation; at the time of any notice of re-designation by the
Borrower to the Agents of any Unrestricted Subsidiary as a Restricted
Subsidiary in accordance with this clause, the Unrestricted Subsidiary
so re-designated shall no longer constitute an Unrestricted Subsidiary;
and
(f) in order for any Unrestricted Subsidiary to be permitted
to be created or acquired (or re-designated in accordance with clause
(c)) or to continue to exist, no recourse whatsoever may be had to the
Borrower or any Restricted Subsidiary or any of their respective
properties in respect of any obligations or liabilities (contingent or
otherwise) of such Unrestricted Subsidiary except to the extent the
aggregate maximum amount of such recourse constituted when made as an
Investment permitted pursuant to clause (h) of Section 7.2.4.
"Voting Stock" means, relative to any Person, Capital Stock of any
class or kind, including any Capital Stock of such Person of any other class or
kind which is then convertible Capital Stock of such class or kind but,
ordinarily having the power to vote (and irrespective of whether at the time
Capital Stock of such Person of any other class or kind shall or might upon the
occurrence of a contingency have
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voting power) for the election of directors, managers or other voting members of
the governing body of such Person.
"Weighted Average Life to Maturity" means, relative to any Indebtedness
at any date, the number of years (rounded to the nearest one-twelfth) obtained
by dividing
(a) the then outstanding principal amount of such Indebtedness
into
(b) the total of the product obtained by multiplying
(i) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of
principal, including payment of final maturity, in respect
thereof,
by
(ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making
of such payment.
"wholly-owned" means, relative to any direct or indirect Subsidiary,
any Subsidiary all of the outstanding Capital Stock of which is owned directly
or indirectly by the Borrower.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in each other Loan Document, the
Disclosure Schedule, or any Borrowing Request, Issuance Request,
Continuation/Conversion Notice, Compliance Certificate, Closing Date
Certificate, solvency certificate, Lender Assignment Agreement, notice or other
communications delivered from time to time in connection with this Agreement or
any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article, Section,
definition or recital are references to such Article, Section, definition or
recital of this Agreement or such other Loan Document, as the case may be, and,
unless otherwise specified, references in any Article, Section, definition or
recital to any clause are references to such clause of such Article, Section,
definition or recital.
SECTION 1.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document, or in
any Compliance Certificate or solvency certificate, shall be interpreted, all
accounting determinations and computations hereunder or thereunder (including
under Section 7.2.3) shall be made, and all financial statements required to be
delivered hereunder or thereunder shall be prepared, in accordance with, those
generally accepted accounting principles and policies ("GAAP") applied in the
preparation of the audited financial statements referred to in clause (a) of
Section 6.5; provided, however, that at any time the computations determining
compliance with Section 7.2 utilize accounting principles different from those
utilized in the financial statements furnished to the Lenders pursuant to
Section 7.1.1, such financial statements shall be accompanied by reconciliation
work-sheets. Unless otherwise expressly provided, all financial covenants
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and defined financial terms shall be computed on a consolidated basis for the
Borrower and Restricted Subsidiaries, in each case without duplication.
ARTICLE II
COMMITMENTS, BORROWING AND ISSUANCE
PROCEDURES, NOTES AND LETTERS OF CREDIT
SECTION 2.1. Commitments. On the terms and subject to the conditions of
this Agreement (including Section 2.1.4, Section 2.1.5 and Article V),
(a) each Lender severally agrees to make Loans (other than
Swing Line Loans) pursuant to the Commitments and the Swing Line Lender
severally agrees to make Swing Line Loans pursuant to the Swing Line
Loan Commitment, in each case as described in this Section 2.1; and
(b) the Issuer severally agrees that it will issue Letters of
Credit pursuant to Section 2.1.2, and each other Lender that has a
Revolving Loan Commitment severally agrees that it will purchase
participation interests in such Letters of Credit pursuant to Section
2.6.1.
SECTION 2.1.1. Revolving Loan Commitment and Swing Line Loan
Commitment. From time to time on any Business Day occurring on and after the
Closing Date but prior to the Revolving Loan Commitment Termination Date,
(a) each Lender that has a Revolving Loan Commitment will make
a loan (with respect to such Lender, its "Revolving Loan") to the
Borrower equal to such Lender's Percentage of the aggregate amount of
each Borrowing of the Revolving Loans requested by the Borrower to be
made on such day (the Commitment of each such Lender described in this
clause being its "Revolving Loan Commitment"). On the terms and subject
to the conditions hereof, the Borrower may from time to time borrow,
prepay and reborrow the Revolving Loans.
(b) the Swing Line Lender will make a loan (a "Swing Line
Loan") to the Borrower equal to the principal amount of the Swing Line
Loan requested by the Borrower to be made on such day (the Commitment
of the Swing Line Lender described in this clause being its "Swing Line
Loan Commitment"). On the terms and subject to the conditions hereof,
the Borrower may from time to time borrow, prepay and reborrow Swing
Line Loans.
SECTION 2.1.2. Letter of Credit Commitment. From time to time on any
Business Day occurring on and after the Closing Date but prior to the Revolving
Loan Commitment Termination Date, the Issuer will
(a) issue one or more standby or documentary letters of credit
(a "Letter of Credit") for the account of the Borrower in the Stated
Amount requested by the Borrower on such day; or
(b) extend the Stated Expiry Date of an existing standby
Letter of Credit previously issued hereunder to a date not later than
the earlier of (x) the Revolving Loan Commitment Termination Date and
(y) one year from the date of such extension.
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SECTION 2.1.3. Term Loan Commitments. In a single Borrowing occurring
on the Closing Date, each Lender that has a Term A Loan Commitment, a Term B
Loan Commitment or a Term C Loan Commitment, as applicable,
(a) will make a loan (with respect to such Lender, its "Term A
Loan") to the Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing of Term A Loans requested by the
Borrower to be made on the Closing Date (the commitment of each such
Lender described in this clause being its "Term A Loan Commitment");
(b) will make a loan (with respect to such Lender, its "Term B
Loan") to the Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing of Term B Loans requested by the
Borrower to be made on the Closing Date (with the commitment of each
such Lender described in this clause being its "Term B Loan
Commitment"); and
(c) will make a loan (with respect to such Lender, its "Term C
Loan") to the Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing of Term C Loans requested by the
Borrower to be made on the Closing Date (the commitment of each such
Lender described in this clause being its "Term C Loan Commitment").
No amounts paid or prepaid with respect to Term A Loans, Term B Loans or Term C
Loans may be reborrowed.
SECTION 2.1.4. Lenders Not Permitted or Required to Make Loans. No
Lender shall be permitted or required to make any Loan if, after giving effect
thereto, the aggregate outstanding principal amount of
(a) all Revolving Loans
(i) of all Lenders with a Revolving Loan Commitment
and the outstanding principal amount of all Swing Line Loans,
together with the aggregate amount of all Letter of Credit
Outstandings, would exceed the then existing Revolving Loan
Commitment Amount, or
(ii) of such Lender with a Revolving Loan Commitment,
together with such Lender's Percentage of the aggregate amount
of all Letter of Credit Outstandings, and such Lender's
Percentage of the outstanding principal amount of all Swing
Line Loans, would exceed such Lender's Percentage of the then
existing Revolving Loan Commitment Amount;
(b) all Term A Loans, all Term B Loans or all Term C Loans (as
the case may be)
(i) of all Lenders made on the Closing Date would
exceed the Term A Loan Commitment Amount (in the case of Term
A Loans) or the Term B Loan Commitment Amount (in the case of
Term B Loans) or the Term C Loan Commitment Amount (in the
case of Term C Loans), or
(ii) of such Lender with a Term A Loan Commitment,
with a Term B Loan Commitment or with a Term C Loan Commitment
Amount, as applicable, made on the
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Closing Date would exceed such Lender's Percentage of the Term
A Loan Commitment Amount (in the case of Term A Loans), the
Term B Loan Commitment Amount (in the case of Term B Loans) or
the Term C Loan Commitment Amount (in the case of Term C
Loans); or
(c) all Swing Line Loans would exceed the then existing Swing
Line Loan Commitment Amount.
SECTION 2.1.5. Issuer Not Permitted or Required to Issue Letters of
Credit. The Issuer shall not be permitted or required to issue any Letter of
Credit if,
(a) after giving effect thereto, (x) the aggregate amount of
all Letter of Credit Outstandings would exceed the Letter of Credit
Commitment Amount or (y) the sum of the aggregate amount of all Letter
of Credit Outstandings plus the then outstanding aggregate principal
amount of all Revolving Loans and Swing Line Loans would exceed the
Revolving Loan Commitment Amount; or
(b) a Lender Default known to the Issuer exists or the Issuer
becomes aware of any Lender being a Non-Performing Lender, unless the
Issuer has entered into arrangements reasonably satisfactory to it and
the Borrower to eliminate the Issuer's risk with respect to the
participation in Letter of Credit Outstandings by each Defaulting
Lender and each Non-Performing Lender, including cash collateralizing
such Defaulting Lender's (or such Non-Performing Lender's, as the case
may be) Percentage of Letter of Credit Outstandings in respect thereof.
SECTION 2.2. Reduction of the Commitment Amounts. The Commitment
Amounts are subject to reduction from time to time pursuant to this Section 2.2.
SECTION 2.2.1. Optional. The Borrower may, from time to time on any
Business Day occurring after the Effective Date, voluntarily reduce the amount
of the Revolving Loan Commitment Amount, the Swing Line Loan Commitment Amount
or the Letter of Credit Commitment Amount on the Business Day so specified by
the Borrower; provided, however, that all such reductions shall require at least
three Business Day's prior notice to the Administrative Agent (and the Swing
Line Lender in the case of a reduction to the Swing Line Commitment Amount) and
shall be permanent, and any partial reduction of any Commitment Amount shall be
in a minimum amount of $1,000,000 and in an integral multiple of $250,000. Upon
termination of the Revolving Loan Commitment Amount, Letter of Credit
Outstandings then existing which have been fully cash collateralized to the
satisfaction of the applicable Issuers shall no longer be considered "Letter of
Credit Outstandings" hereunder, and any participating interest heretofore
granted by the applicable Issuers to the Lenders with a Revolving Loan
Commitment shall be deemed terminated, provided that fees payable pursuant to
Section 3.3.3. shall continue to accrue to the applicable Issuers with respect
to the applicable Letters of Credit until the expiry thereof.
SECTION 2.2.2. Mandatory. On each anniversary of the Closing Date set
forth below, the then existing Revolving Loan Commitment Amount shall, without
any further action, automatically and permanently be reduced to an amount equal
to the product of (x) the percentage set forth below opposite such anniversary
date times (y) the sum of the Revolving Loan Commitment Amount on the Effective
Date plus the amount of the Revolving Credit Commitment Amount Increases
effective on such anniversary date (unless on or prior to any such date the
Revolving Loan Commitment Amount shall have
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<PAGE> 46
been reduced to a lesser amount, in which case the Revolving Loan Commitment
Amount shall not be required to be reduced below):
<TABLE>
<CAPTION>
% of Maximum
Anniversary of Revolving Credit
the Closing Date Commitment Amount
- ------------------------- ----------------------------
<S> <C>
Fourth 92%
Fifth 80%
Sixth 60%
</TABLE>
provided, however, that on the Revolving Loan Commitment Termination Date, the
Revolving Loan Commitment Amount shall be zero.
SECTION 2.3. Obtaining Loans. Loans (other than Swing Line Loans) shall
be made by the Lenders in accordance with Section 2.3.1, and Swing Line Loans
shall be made by the Swing Line Lender in accordance with Section 2.3.2.
SECTION 2.3.1. Borrowings. In the case of other than Swing Line Loans,
by delivering a Borrowing Request to the Administrative Agent on or before 2:00
p.m., New York City time, on a Business Day, the Borrower may from time to time
irrevocably request (including by telephonic notice promptly confirmed in
writing), on not less than one Business Day's notice in the case of Base Rate
Loans, or three Business Days' notice in the case of LIBO Rate Loans, and in
either case not more than five Business Days' notice, that a Borrowing be made,
in the case of LIBO Rate Loans, in a minimum amount of $5,000,000 and an
integral multiple of $500,000, in the case of Base Rate Loans, in a minimum
amount of $3,000,000 and an integral multiple of $500,000 or, in either case, in
the unused amount of the applicable Commitment, or, in the case of Refunded
Swing Line Loans, the amount thereof. On the terms and subject to the conditions
of this Agreement, each Borrowing shall be comprised of the type of Loans, and
shall be made on the Business Day, specified in such Borrowing Request. In the
case of other than Swing Line Loans, on or before 12:00 noon (New York City
time) on such Business Day each Lender that has a Commitment to make the Loans
being requested shall deposit with the Administrative Agent same day funds in an
amount equal to such Lender's Percentage of the requested Borrowing. Such
deposit will be made to an account which the Administrative Agent shall specify
from time to time by notice to the Lenders. To the extent funds are received
from the Lenders, the Administrative Agent shall make such funds available to
the Borrower by wire transfer to the accounts the Borrower shall have specified
in its Borrowing Request. No Lender's obligation to make any Loan shall be
affected by any other Lender's failure to make any Loan.
SECTION 2.3.2. Swing Line Loans. (a) By telephonic notice, promptly
followed (within one Business Day) by the delivery of a confirming Borrowing
Request, to the Administrative Agent and the Swing Line Lender on or before 2:00
p.m., New York City time, on the Business Day the proposed Swing Line Loan is to
be made, the Borrower may from time to time irrevocably request that a Swing
Line Loan be made by the Swing Line Lender in an aggregate minimum principal
amount of $250,000 and an integral multiple of $50,000. All Swing Line Loans
shall be made as Base Rate Loans and shall not be entitled to be converted into
LIBO Rate Loans. The proceeds of each Swing Line Loan shall be made available by
the Swing Line Lender to the Borrower (x) in the case that telephonic notice is
received on or prior to 11:00 a.m., New York City time on a Business Day, by
3:30 p.m., New York City time such the Business Day and (y) in the case that
telephonic notice is received after 11:00 a.m. and before 2:00 p.m.,
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<PAGE> 47
New York City time, by its close of business on such Business Day, by wire
transfer to the account the Borrower shall have specified in its notice
therefor.
(b) If (x) any Swing Line Loan shall be outstanding for more than five
Business Days, (y) any Swing Line Loan is or will be outstanding on a date when
the Borrower requests that a Revolving Loan be made or (z) any Default shall
occur and be continuing, then, each Lender with a Revolving Loan Commitment
(other than the Swing Line Lender) irrevocably agrees that it will, at the
request of the Administrative Agent (on behalf of, and at the request of, the
Swing Line Lender), make a Revolving Loan (which shall initially be funded as a
Base Rate Loan) in an amount equal to such Lender's Percentage of the aggregate
principal amount of all such Swing Line Loans then outstanding (such outstanding
Swing Line Loans being hereinafter referred to as the "Refunded Swing Line
Loans"). On or before 11:00 a.m. (New York City time) on the first Business Day
following receipt by each such Lender of a request to make Revolving Loans as
provided in the preceding sentence, each such Lender shall deposit in an account
specified by the Swing Line Lender the amount so requested in same day funds and
such funds shall be applied by the Swing Line Lender to repay the Refunded Swing
Line Loans. At the time such Lenders make such Revolving Loans, the Swing Line
Lender shall be deemed to have made, in consideration of the making of the
Refunded Swing Line Loans, Revolving Loans in an amount equal to its Percentage
of the aggregate principal amount of the Refunded Swing Line Loans. Upon the
making (or deemed making, in the case of the Swing Line Lender) of any Revolving
Loans pursuant to this clause (b), the amount so funded shall become outstanding
under such Lender's Revolving Note and shall no longer be owed under the Swing
Line Note. All interest payable with respect to any Revolving Loans made (or
deemed made, in the case of the Swing Line Lender) pursuant to this clause (b)
shall be appropriately adjusted to reflect the period of time during which the
Swing Line Lender had outstanding Swing Line Loans in respect of which such
Revolving Loans were made. The obligation of each Lender with a Revolving Loan
Commitment to make the Revolving Loans referred to in this clause (b) shall be
absolute and unconditional and shall not be affected by any circumstance,
including (1) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender, the Borrower or any
other Person for any reason whatsoever; (2) the occurrence or continuance of any
Default; (3) any adverse change in the condition (financial or otherwise) of the
Borrower; (4) the acceleration or maturity of any Loans or the termination of
any Commitment after the making of any Swing Line Loan; (5) any breach of this
Agreement or any other Loan Document by the Borrower or any Lender; or (6) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing.
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any notice it may give hereunder by telephone, the
Administrative Agent or the Swing Line Lender, as the case may be, may act prior
to receipt of written confirmation without liability upon the basis of such
telephonic notice believed by the Administrative Agent or the Swing Line Lender,
as the case may be, in good faith to be from an Authorized Officer of the
Borrower (or a designee of such Authorized Officer). In each such case the
record of the Administrative Agent or the Swing Line Lender, as the case may be,
of the terms of any such telephonic notice shall be conclusive absent manifest
error.
SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/ Conversion Notice to the Administrative Agent on or before 10:00
a.m., New York City time, on a Business Day, the Borrower may from time to time
irrevocably elect, on not less than one Business Days' notice in the case of any
Loans that are to be converted into Base Rate Loans, or three Business Days'
notice in the case of any Loans that are to be continued as, or converted into,
LIBO Rate Loans, and in either case not more than five Business Days' notice,
that all, or any portion in an aggregate minimum amount of $5,000,000
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<PAGE> 48
and an integral multiple of $250,000, in the case of any Loans that are to be
continued as, or converted into, LIBO Rate Loans, or an aggregate minimum amount
of $3,000,000 and an integral multiple of $250,000, in the case of any Loans
that are to be converted into Base Rate Loans, be, in the case of Base Rate
Loans, converted into LIBO Rate Loans or be, in the case of LIBO Rate Loans,
converted into Base Rate Loans or continued as LIBO Rate Loans (in the absence
of delivery of a Continuation/Conversion Notice with respect to any LIBO Rate
Loan at least three Business Days (but not more than five Business Days) before
the last day of the then current Interest Period with respect thereto, such LIBO
Rate Loan shall, on such last day, automatically be continued as a LIBO Rate
Loan having an Interest Period of one month); provided, however, that (x) each
such conversion or continuation shall be pro rated among the applicable
outstanding Loans of all Lenders that have made such Loans, and (y) if any
Default is in existence at the applicable time of any proposed continuation of,
or conversion into, any LIBO Rate Loans and the Administrative Agent has, or the
Required Lenders have, determined in its or their sole discretion not to permit
such continuation or conversion and have notified the Borrower telephonically or
in writing thereof, the Borrower may not elect to have a Loan converted into or
continued as a LIBO Rate Loan and any outstanding LIBO Rate Loans shall be
automatically converted on the last day of the current Interest Period
applicable thereto into a Base Rate Loan.
SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; provided,
however, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligation of the Borrower to repay such
LIBO Rate Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility; provided, however,
further, that in no event shall the Borrower be obligated to pay to any Lender
any amounts pursuant to Sections 4.1, 4.2, 4.3, 4.5 or 4.6 that would not have
arisen but for such Lender's election pursuant to the first sentence of this
Section (it being acknowledged and agreed that any change in lending office or
other action taken by a Lender in accordance with Section 4.7 shall not be
considered to be an "election" by such Lender under this Section).
SECTION 2.6. Issuance Procedures. By delivering to the Administrative
Agent an Issuance Request on or before 10:00 a.m., New York City time, on a
Business Day, the Borrower may, from time to time irrevocably request, on not
less than three nor more than ten Business Days' notice, in the case of an
initial issuance of a Letter of Credit for the account of the Borrower, and not
less than three Business Days' prior notice to the date any issued Letter of
Credit containing an "evergreen" or similar automatic extension feature is
scheduled to automatically be extended unless the beneficiary thereof shall have
received notice to the contrary from the Issuer and subject to the Issuer's
right not to extend if the conditions precedent to issuance of such a Letter of
Credit would not be satisfied, in the case of a request for the extension of the
Stated Expiry Date of a standby Letter of Credit, that the Issuer issue, or
extend the Stated Expiry Date of, as the case may be, an irrevocable Letter of
Credit in such form as may be requested by the Borrower and complying with the
provisions hereof. Each Letter of Credit shall by its terms be stated to expire
on a date (its "Stated Expiry Date") no later than the earlier to occur of
(a) in the case of a standby Letter of Credit, (x) the
Revolving Loan Commitment Termination Date and (y) one year from the
date of its issuance; and
(b) in the case of a documentary Letter of Credit, (x) the
Revolving Loan Commitment Termination Date and (y) 180 days from the
date of its issuance.
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<PAGE> 49
The Issuer will make available to the beneficiary thereof the original of each
Letter of Credit which it issues hereunder. Notwithstanding anything to the
contrary herein, the letters of credit described in Schedule II hereto are
deemed to be "Letters of Credit" hereunder issued by PNC Bank, N.A. (the "PNC
Letters of Credit") and PNC Bank, N.A. shall be an "Issuer" hereunder solely (as
of the Closing Date) with respect to the PNC Letters of Credit.
SECTION 2.6.1. Other Lenders' Participation. Upon the issuance of each
Letter of Credit issued by the Issuer pursuant hereto, and without further
action, each Lender (other than the Issuer) that has a Revolving Loan Commitment
shall be deemed to have irrevocably purchased, to the extent of its Percentage
of the Revolving Loan Commitment Amount, a participation interest in such Letter
of Credit (including the Contingent Liability and any Reimbursement Obligation
with respect thereto), and such Lender shall, to the extent of its Percentage of
the Revolving Loan Commitment Amount, be responsible for reimbursing promptly
(and in any event within one Business Day) the Issuer for Reimbursement
Obligations which have not been reimbursed by the Borrower in accordance with
Section 2.6.3. In addition, such Lender shall, to the extent of its Percentage
of the Revolving Loan Commitment Amount, be entitled to receive a ratable
portion of the Letter of Credit fees payable pursuant to Section 3.3.3 with
respect to each Letter of Credit (other than the issuance fees payable to the
Issuer of such Letter of Credit pursuant to the last sentence of Section 3.3.3)
and of interest payable pursuant to Section 3.2 with respect to any
Reimbursement Obligation. To the extent that any Lender has reimbursed the
Issuer for a Disbursement as required by this Section, such Lender shall be
entitled to receive its ratable portion of any amounts subsequently received
(from the Borrower or otherwise) in respect of such Disbursement.
SECTION 2.6.2. Disbursements. The Issuer will notify the Borrower and
the Administrative Agent promptly of the presentment for payment of any Letter
of Credit issued by the Issuer, together with notice of the date (the
"Disbursement Date") such payment shall be made (each such payment, a
"Disbursement"). Subject to the terms and provisions of such Letter of Credit
and this Agreement, the Issuer shall make such payment to the beneficiary (or
its designee) of such Letter of Credit. Prior to 11:00 a.m., New York City time,
on the first Business Day following the Disbursement Date, the Borrower will
reimburse the Administrative Agent, for the account of the Issuer, for all
amounts which the Issuer has disbursed under such Letter of Credit, together
with interest thereon at a rate per annum then in effect for Base Rate Loans
plus the Applicable Margin for Revolving Loans pursuant to Section 3.2 for the
period from the Disbursement Date through the date of such reimbursement;
provided, however, that unless the Borrower shall have notified the
Administrative Agent and the Issuer prior to such time on the Disbursement Date,
the Borrower will be deemed to have requested (and shall deliver a Borrowing
Request within one Business Day of the Disbursement Date confirming) that a
Swing Line Loan be made in the amount of such reimbursement and the
Administrative Agent shall so notify the Swing Line Lender which shall, subject,
however, to the conditions of Section 2.3.2 (except for the notice, the minimum
principal amount and the integral amount requirements), make a Swing Line Loan
in such amount (the proceeds of which will be wired to the Issuer unless the
Issuer and the Swing Line Lender are the same Person, in which case a book-entry
transfer may be made). Without limiting in any way the foregoing and
notwithstanding anything to the contrary contained herein or in any separate
application for any Letter of Credit, the Borrower hereby acknowledges and
agrees that it shall be obligated to reimburse the Issuer upon each Disbursement
of a Letter of Credit.
SECTION 2.6.3. Reimbursement. The obligation (a "Reimbursement
Obligation") of the Borrower under Section 2.6.2 to reimburse the Issuer with
respect to each Disbursement (including interest thereon), and, upon the failure
of the Borrower to reimburse the Issuer, each Lender's (to the extent it has a
Revolving Loan Commitment) obligation under Section 2.6.1 to reimburse the
Issuer, shall
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<PAGE> 50
be absolute and unconditional under any and all circumstances and irrespective
of any setoff, counterclaim or defense to payment which the Borrower or such
Lender, as the case may be, may have or have had against the Issuer or any such
Lender, including any defense based upon the failure of any Disbursement to
conform to the terms of the applicable Letter of Credit (if, in the Issuer's
good faith opinion, such Disbursement is determined to be appropriate) or any
non-application or misapplication by the beneficiary of the proceeds of such
Letter of Credit; provided, however, that, after paying in full its
Reimbursement Obligation hereunder, nothing herein shall preclude the right of
such Lender to commence any proceeding against the Issuer for any wrongful
Disbursement made by the Issuer under a Letter of Credit as a result of acts or
omissions constituting gross negligence or wilful misconduct as determined by a
court of competent jurisdiction on the part of the Issuer; provided, however,
further, that, in any event, the Borrower may have a claim against the Issuer,
and the Issuer may be liable to the extent (but only to the extent) of any
direct, as opposed to consequential or exemplary, damages suffered by the
Borrower which the Borrower proves were caused by the Issuer's wilful misconduct
or gross negligence as determined by a court of competent jurisdiction or the
Issuer's wilful failure to pay under any Letter of Credit after the presentation
to it by the beneficiary of a demand for payment strictly complying with the
terms and conditions of such Letter of Credit.
SECTION 2.6.4. Nature of Reimbursement Obligations. The Borrower and,
to the extent set forth in Section 2.6.1, each Lender with a Revolving Loan
Commitment shall assume all risks of the acts, omissions or misuse of any Letter
of Credit by the beneficiary thereof. The Issuer (except to the extent of its
own gross negligence or wilful misconduct) shall not be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any Letter of Credit or any document submitted by any
party in connection with the application for and issuance of a Letter
of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged;
(b) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any instrument transferring or assigning or purporting
to transfer or assign a Letter of Credit or the rights or benefits
thereunder or the proceeds thereof in whole or in part, which may prove
to be invalid or ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
(d) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or
otherwise; or
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under a
Letter of Credit.
None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted to the Issuer or any Lender with a Revolving Loan
Commitment hereunder. In furtherance and extension and not in limitation or
derogation of any of the foregoing, any action taken or omitted to be taken by
the Issuer in good faith (and not constituting gross negligence or willful
misconduct) shall be binding upon the Borrower and each such Lender, and shall
not put the Issuer under any resulting liability to the Borrower or any such
Lender, as the case may be.
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<PAGE> 51
SECTION 2.6.5. Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits as published by the International Chamber of
Commerce ("UCP") most recently at the time of issuance of any Letter of Credit
shall (unless otherwise expressly provided in the Letters of Credit) apply to
such Letter of Credit.
SECTION 2.7. Loan Accounts and Notes. (a) The Loans made by each Lender
and the Letters of Credit issued by the Issuer shall be evidenced by one or more
loan accounts or records maintained by the Administrative Agent in the ordinary
course of business. The loan accounts or records maintained by the
Administrative Agent shall be conclusive absent clearly demonstrable error of
the amount of the Loans made by the Lenders to, and the Letters of Credit issued
by the Issuer for the account of, the Borrower and the interest and payments
thereon. Any failure to so record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Borrower hereunder to pay any
amount owing with respect to the Loans and the Reimbursement Obligations.
(b) Upon the request of any Lender made through the Administrative
Agent, solely to facilitate the pledge or assignment of its Loans to any Federal
Reserve Bank or to comply with state law or regulations applicable to such
Lender pursuant to clause (b) of Section 10.11.1, the Loans made by such Lender
may be evidenced by one or more Notes, instead of or in addition to loan
accounts. Each such Lender is irrevocably authorized by the Borrower to endorse
on the schedules annexed to its Note(s) the date, amount and maturity of each
Loan made, continued or converted by it and the amount of each payment of
principal made by the Borrower with respect thereto. Each such Lender's record
shall be conclusive absent clearly demonstrable error; provided, however, that
the failure of a Lender to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of the
Borrower hereunder or under any such Note to such Lender.
SECTION 2.8. Additional Commitments and Loans, etc. Anything in this
Agreement (including Section 10.1) to the contrary notwithstanding, any Lender
may agree with the Borrower and the Agents (which Agents shall not unreasonably
withhold their agreement) and without the consent of the Required Lenders
(a) to increase (a "Revolving Credit Commitment Amount
Increase") its Revolving Loan Commitment (and such Lender's Percentage
and the Revolving Loan Commitment Amount may be increased accordingly)
and to make additional term loans hereunder, to refinance, in
connection with an Act III Acquisition becoming effective on or prior
to the date which is 120 days after the Effective Date, all Obligations
then outstanding under (and as defined in) the Act III Credit Agreement
and to repay the Subordinated Debt issued by Act III (and as defined in
the Act III Credit Agreement), provided, however, that such Revolving
Credit Commitment Amount Increases and Additional Loans (collectively,
the "Act III Additional Financing") shall (i) be in an amount (which
shall include all Loans outstanding under (and as defined in) the Act
III Credit Agreement immediately prior to such refinancing by the Act
III Additional Financing and the portion of the "Revolving Loan
Commitments" under (and as defined in) the Act III Credit Agreement to
be included as Additional Commitments hereunder), the aggregate of
which shall not exceed $495,000,000 plus the amount of all interest,
fees and other expenses then accrued and unpaid under the Act III
Credit Agreement, (ii) have a Weighted Average Life to Maturity on the
day of such refinancing which is at least as long as the Weighted
Average Life to Maturity on such day of all Loans outstanding
immediately prior to such refinancing under (and as defined in) the Act
III Credit Agreement as in effect on the Effective Date and (iii) have
rates of interest
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calculated in a manner which is no higher than the rates provided under
the existing Act III Credit Agreement as in effect on the Effective
Date; and
(b) to extend additional commitments (together with the Act
III Additional Financing, the "Additional Commitments") to make other
revolving credit loans or term loans hereunder (together with the Loans
constituting the Act III Additional Loans, "Additional Loans"), to
finance Other Permitted Acquisitions, provided, that, (w) the sum on
the date of the financing of each such Other Permitted Acquisition of
the aggregate original principal amount of the Revolving Credit
Commitment Amount Increases and Additional Commitments (in each case,
other than pursuant to the Act III Additional Financing) to finance
such Other Permitted Acquisition, plus the aggregate amount of all
Revolving Credit Commitment Amount Increases and all continuing
Additional Commitments (or, in the case of Additional Commitments for
term loans, the outstanding principal amount thereof) made previously
to finance Other Permitted Acquisitions plus the aggregate outstanding
principal amount of Indebtedness permitted by clauses (g) (excluding,
however, Permitted Acquisition Ordinary Course Indebtedness, Permitted
Acquisition Subordinated Indebtedness and Permitted Acquisition
Come-Along Indebtedness) and (k) of Section 7.2.1, shall not exceed
$350,000,000, (x) the aggregate amount by which the amounts described
in item (w) exceed $200,000,000 must constitute Permitted Additional
Structured Indebtedness and (y) such Revolving Credit Commitment Amount
Increases and Additional Commitments shall constitute "Senior
Indebtedness" under (and as defined in) the 9 1/2% Subordinated Note
Indenture and (z) to the extent representing additional revolving
credit commitments other than an increase of the Revolving Loan
Commitment, the material terms of any such Additional Commitments shall
be satisfactory to the Agents;
provided, however, that in the case of either clause (a) or (b),
(c) after giving effect to such Permitted Acquisition and the
incurrence of such Indebtedness, (x) no Default shall have occurred and
be continuing and (y) on a pro forma basis as of the last day of the
Fiscal Quarter most recently ended, the Borrower shall be in compliance
with clauses (a) and (b) of Section 7.2.3, as set forth in a pro forma
Compliance Certificate delivered to the Administrative Agent pursuant
to clause (d) of Section 7.2.6;
(d) the Borrower pledges the Capital Stock of any Acquired
Person acquired thereby to the Administrative Agent to the extent
required under Section 7.1.8, which shall (notwithstanding the proviso
therein set forth), with respect to the Act III Acquisition, include
the Capital Stock of Act III Cinemas, Inc. and Act III Theatres Inc.
(or, if such entities have merged, of the surviving corporation)
whether or not at such time such Person is a direct Restricted
Subsidiary;
(e) such Acquired Person and each of its Subsidiaries that
become Domestic Restricted Subsidiaries executes a supplement to the
Guaranty to the extent required under Section 7.1.8, which shall
(notwithstanding the proviso therein set forth), with respect to the
Act III Acquisition, include a Guaranty of Act III Cinemas, Inc. and
Act III Theatres Inc. (or, if such entities have merged, of the
surviving corporation) and their Domestic Subsidiaries,
(f) if such Acquired Person has any Indebtedness (other than
Permitted Acquisition Ordinary Course Indebtedness or Permitted
Acquisition Come-Along Indebtedness) which is secured, its Obligations
under the Guaranty, if required to be supplemented pursuant to clause
(e), are secured equally and ratably with such other Indebtedness; and
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(g) to the extent determined by the Administrative Agent to be
necessary to ensure pro rata borrowings commencing with the initial
Borrowing after giving effect to such increase, the Borrower shall
prepay any LIBO Rate Loans outstanding immediately prior to such
initial Borrowings.
Upon the effectiveness of Additional Commitments to make Additional Loans, such
Additional Loans shall become Loans hereunder subject, however, to the specific
terms of such Additional Loans that the applicable Lenders in respect thereof
and the Borrower may agree to that may differ from the corresponding terms
applicable to the Term Loans and the Revolving Loans, including interest rates,
fees and repayment schedules; provided, however, that (x) for the purposes of
voting matters, this Agreement shall be deemed amended to include protection for
any class of Lenders having Additional Loans or Additional Commitments
corresponding to those protections set forth thereunder for other classes of
Lenders and (y) the Administrative Agent is hereby authorized by the Lenders to
enter into any technical amendments or supplements with the Borrower to this and
any other Loan Document to the extent necessary to implement the foregoing and
include such Additional Loans and Additional Commitments hereunder.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments; Application.
SECTION 3.1.1. Repayments and Prepayments. The Borrower shall repay in
full the unpaid principal amount of each Loan upon the applicable Stated
Maturity Date therefor. Prior thereto, payments and prepayments of Loans shall
or may be made as set forth below.
(a) Voluntary Prepayments. From time to time on any Business
Day, the Borrower may make a voluntary prepayment, in whole or in part,
of the outstanding principal amount of any
(i) Loans (other than Swing Line Loans and Additional
Loans); provided, however, that
(A) any such prepayment of the Term A Loans,
Term B Loans or Term C Loans shall be applied to the
Term A Loans, Term B Loans or Term C Loans as the
Borrower shall direct (or, in the absence of any such
direction, pro rata among Term A Loans, Term B Loans
and Term C Loans)(with the amounts so allocated to
the Term A Loans, the Term B Loans or the Term C
Loans being applied to the remaining amortization
payments for the Term A Loans, the Term B Loans and
the Term C Loans, as the case may be, in such amounts
as the Borrower shall determine),
(B) all such voluntary prepayments shall
require at least one but no more than five Business
Days' prior notice to the Administrative Agent, and
(C) all such voluntary partial prepayments
shall be, in the case of LIBO Rate Loans, in an
aggregate minimum amount of $1,000,000 and an
integral
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multiple of $250,000 and, in the case of Base Rate
Loans, in an aggregate minimum amount of $1,000,000
and an integral multiple of $250,000,
(ii) Swing Line Loans; provided, however, that
(A) all such voluntary prepayments shall
require prior telephonic notice to the Administrative
Agent (which shall promptly notify the Swing Line
Lender) on or before 2:00 p.m., New York City time,
on the day of such prepayment (such notice to be
confirmed in writing by the Borrower within 24 hours
thereafter), and
(B) all such voluntary partial prepayments
shall be in an aggregate minimum amount of $250,000
and an integral multiple of $100,000, and
(iii) Additional Loans as agreed by the Borrower and
the Lenders making such Additional Loans in accordance with
Section 2.8.
(b) Exceeding the Revolving Loan Commitment Amount, etc.
(i) On each date when the sum of (x) the aggregate
outstanding principal amount of all Revolving Loans and Swing
Line Loans plus (y) the aggregate amount of all Letter of
Credit Outstandings exceeds the Revolving Loan Commitment
Amount (as it may be reduced from time to time, including
pursuant to Sections 2.2 and 3.1), the Borrower shall make a
mandatory prepayment of first, all Swing Line Loans, then, all
Revolving Loans and, if necessary, give cash collateral to the
Administrative Agent pursuant to an agreement satisfactory to
the Agents to collateralize Letter of Credit Outstandings, in
an aggregate amount equal to such excess, to be applied to
such Loans as agreed by the Borrower and the Lenders making
such Loans.
(ii) On each date when the aggregate outstanding
principal amount of Additional Loans made pursuant to
Additional Commitments which are revolving credit commitments
exceeds the amount of such Additional Commitments (as they may
be reduced from time to time as agreed by the Borrower and the
Lenders extending such Additional Commitments in accordance
with Section 2.8), the Borrower shall make a mandatory
prepayment of such Additional Loans in an aggregate amount
equal to such excess.
(c) Scheduled Repayments of Term A, B and C Loans.
(i) On each anniversary of the Closing Date prior to
and on the Stated Maturity Date for any particular Term Loans
specified below, the Borrower shall make a scheduled repayment
of the aggregate outstanding principal amount, if any, of such
Term Loans in respective amount set forth below (after giving
effect to any adjustments in respect of any optional or
mandatory non-scheduled prepayments of such Term Loan)
opposite such anniversary:
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<TABLE>
<CAPTION>
Term A Loans Term B Loans Term C Loans
Principal Principal Principal
Anniversary of Repayment Repayment Repayment
Closing Date Amount Amount Amount
- -------------- --------------- --------------- ---------------
<S> <C> <C> <C>
First $ 1,200,000 $ 1,200,000 $ 1,350,000
Second $ 1,200,000 $ 1,200,000 $ 1,350,000
Third $ 1,200,000 $ 1,200,000 $ 1,350,000
Fourth $ 1,200,000 $ 1,200,000 $ 1,350,000
Fifth $ 1,200,000 $ 1,200,000 $ 1,350,000
Sixth $ 1,200,000 $ 1,200,000 $ 1,350,000
Seventh $ 112,800,000 $ 1,200,000 $ 1,350,000
Eighth $ 111,600,000 $ 1,350,000
Ninth $ 124,200,000
</TABLE>
(ii) the Borrower shall make scheduled repayments of
the aggregate outstanding principal amount of Additional Loans
on such dates, and in such amounts, as shall be agreed by the
Borrower and the Lenders making such Additional Loans in
accordance with Section 2.8.
(d) Asset Dispositions and Real Estate Financings. If the
Borrower or any Restricted Subsidiary shall at any time (x) consummate
a Disposition (other than a Real Estate Financing or a Disposition
permitted pursuant to clause (a) or (b) of Section 7.2.6) having Net
Cash Proceeds which, when taken together with the Net Cash Proceeds for
all previous Dispositions, exceeds $1,000,000 or (y) consummate a Real
Estate Financing, then
(i) the Borrower or such Restricted Subsidiary may,
for a period not exceeding 540 days after the receipt by the
Borrower or such Restricted Subsidiary of such Net Cash
Proceeds, (x) reinvest up to 100% of such Net Cash Proceeds in
the businesses of the Borrower and Restricted Subsidiaries
described in Section 7.1.11, but (1) in the case of any such
reinvestment involving payments when due in respect of any
Permitted Ongoing Reinvestment Project, only if, on the date
of such reinvestment, no Payment Default shall have occurred
and be continuing and (2) in the case of any other such
reinvestment, only if, and to the extent that, on the date of
such reinvestment, no Event of Default or Payment Default
shall have occurred and be continuing, (y) prepay the Term A
Loans, Term B Loans, Term C Loans and Additional Loans made as
term loans in an amount equal to such Net Cash Proceeds (or a
portion thereof) or (z) retain the amount of such Net Cash
Proceeds not so applied pending such reinvestment or
prepayment, and
(ii) to the extent such Net Cash Proceeds are not so
reinvested during such 540-day period and the aggregate amount
of all such Net Cash Proceeds not so reinvested since the last
prepayment made pursuant to this clause (d) equals or exceeds
$2,000,000, the Borrower shall, except as and to the extent
otherwise provided in clause (b)(iii) of Section 3.1.2, make a
mandatory prepayment of the Term A Loans, Term B Loans, Term C
Loans and Additional Loans made as term loans on the Business
Day immediately succeeding the last day of such 540-day period
in an aggregate amount equal to the portion of such Net Cash
Proceeds not so applied.
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<PAGE> 56
(e) Acceleration of Maturity. Immediately upon any
acceleration of the Stated Maturity Date of any Loans pursuant to
Section 8.2 or 8.3, the Borrower shall repay all the Loans, unless,
pursuant to Section 8.3, only a portion of all the Loans is so
accelerated (in which case the portion so accelerated shall be so
prepaid).
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.5. No prepayment of
principal of any Revolving Loans or Swing Line Loans pursuant to clause (a) or
(b) shall cause a reduction in the Revolving Loan Commitment Amount or the Swing
Line Loan Commitment Amount, as the case may be.
SECTION 3.1.2. Application. Amounts prepaid shall be applied as set
forth in this Section.
(a) Subject to clauses (b) and (c), each prepayment or
repayment of the principal of Loans (other than Swing Line Loans) shall
be applied, to the extent of such prepayment or repayment, as the
Borrower shall direct (and in the absence of such direction, shall be
applied first, to the principal amount thereof being maintained as Base
Rate Loans, and second, to the principal amount thereof being
maintained as LIBO Rate Loans with the shortest Interest Periods
remaining); provided, however, that prepayments or repayments of LIBO
Rate Loans not made on the last day of the Interest Period with respect
thereto, shall be prepaid or repaid subject to the provisions of
Section 4.5 (together with a payment of all accrued interest). In the
case of any mandatory prepayments of Loans to be made pursuant to
clause (d) of Section 3.1.1, at the Borrower's option, exercised in
writing to the Administrative Agent at least one Business Day before
such prepayment is to be distributed, such prepayments pursuant to this
Section 3.1.2 shall not be applied to any Loan of a Defaulting Lender,
but shall be allocated ratably to the Loans of the Non-Defaulting
Lenders.
(b) Each prepayment made pursuant to clause (d) of Section
3.1.1 shall be applied to a mandatory prepayment of the outstanding
principal amount of all Term A Loans, Term B Loans, Term C Loans and
Additional Loans made as term loans, pro rata according to the
respective aggregate outstanding principal amounts thereof (with the
amount of such prepayment of the Term A Loans, the Term B Loans, the
Term C Loans and such Additional Loans being applied to the scheduled
repayments thereafter remaining to become due prior to and on their
respective Stated Maturity Dates pursuant to clause (c) of Section
3.1.1, first, sequentially, in the order of their maturity, to each of
the next two such unpaid scheduled repayments thereof and second, pro
rata according to their respective amounts, to the remaining scheduled
repayments); provided, however, that
(i) the Borrower will, prior to prepaying any such
Loans, give the Administrative Agent telephonic notice
(promptly confirmed in writing) requesting that the
Administrative Agent provide notice of such prepayment to each
Lender entitled to receive any portion of such prepayment,
(ii) each such Lender will have the right to refuse
any such prepayment by giving notice of such refusal to the
Borrower within seven Business Days after such Lender's
receipt of notice from the Administrative Agent of such
prepayment (and the Borrower shall not prepay any such Term A
Loans, Term B Loans, Term C Loans or Additional Loans until
such seventh Business Day or such time as the Borrower
receives notice from such Lender that it consents to such
prepayment, whichever is earlier), and
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(iii) the aggregate amount of any prepayment so
refused may be retained by the Borrower.
(c) Interest Periods. In lieu of making any payment pursuant
to clause (d) of Section 3.1.1 in respect of any LIBO Rate Loan other
than on the last day of the Interest Period therefor, so long as no
Default shall have occurred and be continuing, the Borrower at its
option may deposit with the Administrative Agent an amount equal to the
amount of the LIBO Rate Loan to be prepaid and such LIBO Rate Loan
shall be repaid on the last day of the Interest Period therefor in the
required amount (it being understood and agreed that such LIBO Rate
Loan shall not be considered repaid until such last day of such
Interest Period). Such deposit shall be held by the Administrative
Agent in a corporate time deposit account established on terms
reasonably satisfactory to the Administrative Agent, earning interest
(for the account of the Borrower) at the then customary rate for
accounts of such type. Such deposit shall cash collateralize the
Obligations, provided, however, that the Borrower may at any time
direct that such deposit be applied to make the applicable payment
required pursuant to Section 3.1.1, subject to the provisions of
Section 4.5.
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
SECTION 3.2.1. Rates. Subject to the first sentence of Section 2.3.1
and clause (a) of Section 2.3.2 regarding telephonic notice, pursuant to an
appropriately delivered Borrowing Request or Continuation/Conversion Notice, the
Borrower may elect that Loans comprising a Borrowing accrue interest at a rate
per annum:
(a) on that portion maintained from time to time as a Base
Rate Loan, equal to the sum of the Alternate Base Rate from time to
time in effect plus the Applicable Margin; provided, however, that all
Swing Line Loans shall always accrue interest at a rate per annum equal
to the higher of (x) the Alternate Base Rate (for Revolving Loans
maintained as Base Rate Loans) and (y) the sum of the Alternate Base
Rate (for Revolving Loans maintained as Base Rate Loans) plus the
Applicable Margin (for Revolving Loans maintained as Base Rate Loans)
minus the Applicable Commitment Fee; and
(b) on that portion maintained as a LIBO Rate Loan, during
each Interest Period applicable thereto, equal to the sum of the LIBO
Rate for such Interest Period plus the Applicable Margin.
All LIBO Rate Loans shall bear interest from and including the first day of the
applicable Interest Period to (but not including) the last day of such Interest
Period at the interest rate determined as applicable to such LIBO Rate Loan.
SECTION 3.2.2. Post-Maturity Rates. After the date any principal amount
of any Loan or Reimbursement Obligation is due and payable (whether on its
Stated Maturity Date, upon acceleration or otherwise), or after any other
monetary Obligation of the Borrower shall have become due and payable, the
Borrower shall pay, but only to the extent permitted by law, interest (after as
well as before the entry of judgment thereon) on such overdue amounts at a rate
per annum equal to the Alternate Base Rate from time to time in effect plus the
Applicable Margin plus a margin of 2%. Anything herein to the contrary
notwithstanding, the obligations of the Borrower to any Lender hereunder shall
be subject to the limitation that payments of interest shall not be required for
any period for which interest is computed hereunder, to the extent (but only to
the extent) that contracting for or receiving such payment by such Lender would
be
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contrary to the provisions of any law applicable to such Lender limiting the
highest rate of interest that may be lawfully contracted for, charged or
received by such Lender, and in such event the Borrower shall pay such Lender
interest at the highest rate permitted by applicable law.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment of Loans other
than Base Rate Loans, in whole or in part, of principal outstanding on
such Loan on the principal amount so paid or prepaid;
(c) with respect to Base Rate Loans, on each Quarterly Payment
Date occurring after the Closing Date;
(d) with respect to LIBO Rate Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed
three months, on each date occurring at three-month intervals after the
first day of such Interest Period);
(e) with respect to any Base Rate Loans converted into LIBO
Rate Loans on a day when interest would not otherwise have been payable
pursuant to clause (c), on the date of such conversion; and
(f) on that portion of any Loans the Stated Maturity Date of
which is accelerated pursuant to Section 8.2 or Section 8.3,
immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on a Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth in
this Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender, for the period (including
any portion thereof when any of its Commitments are suspended by reason of the
Borrower's inability to satisfy any condition of Article V) commencing on the
Closing Date and continuing through the Revolving Loan Commitment Termination
Date, a commitment fee in an amount equal to the Applicable Commitment Fee, in
each case on such Lender's Percentage of the sum of the average daily unused
portion of the Revolving Loan Commitment Amount (net of Letter of Credit
Outstandings). All commitment fees payable pursuant to this Section shall be
calculated on a year comprised of 365 days or 366 days, as the case may be, and
payable by the Borrower in arrears on each Quarterly Payment Date, commencing
with the first Quarterly Payment Date following the Closing Date, and on the
Revolving Loan Commitment Termination Date. The making of Swing Line Loans shall
not constitute usage of the Revolving Loan Commitment with respect to the
calculation of commitment fees to be paid by the Borrower to the Lenders.
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SECTION 3.3.2. Arrangement and Agency Fees. The Borrower agrees to pay
to the Administrative Agent, for its own account and the account of each Agent
(as the case may be), the fees in the amounts and on the dates set forth in the
applicable Fee Letter.
SECTION 3.3.3. Letter of Credit Fee. The Borrower agrees to pay to the
Administrative Agent, for the pro rata account of the Issuer and each other
Lender that has a Revolving Loan Commitment, a Letter of Credit fee in an amount
equal to
(a) with respect to each standby Letter of Credit, a rate per
annum equal to the then Applicable Margin for Revolving Loans
maintained as LIBO Rate Loans, minus 1/8 of 1% per annum, multiplied by
the Stated Amount of each such Letter of Credit; and
(b) with respect to each documentary Letter of Credit, 1/8 of
1% multiplied by the Stated Amount of each such Letter of Credit,
such fees being payable quarterly in arrears on each Quarterly Payment Date. The
Borrower further agrees to pay to the Issuer (x) quarterly in arrears payable on
each Quarterly Payment Date, an issuance fee as specified in the applicable Fee
Letter and (y) from time to time promptly after demand, the normal issuance,
presentation, amendment and other processing fees, and other standard
administrative costs and charges, of the Issuer relating to Letters of Credit as
from time to time in effect.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO Rate Lending Unlawful. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower and the Lenders,
be conclusive and binding on the Borrower absent demonstrable error) that the
introduction of or any change in or in the interpretation of any law makes it
unlawful, or any central bank or other Governmental Authority asserts that it is
unlawful, for such Lender to make, continue or maintain any Loan as, or to
convert any Loan into, a LIBO Rate Loan, the obligations of such Lender to make,
continue or maintain or to convert any Loan into, a LIBO Rate Loan shall, upon
such determination, forthwith be suspended until such Lender shall notify the
Administrative Agent that the circumstances causing such suspension no longer
exist (which notice the Administrative Agent shall give promptly upon the
applicable circumstances ceasing to exist), and all outstanding LIBO Rate Loans
of such Lender shall automatically convert into Base Rate Loans at the end of
the then current Interest Periods with respect thereto or sooner, if required by
such law or assertion. Each Lender agrees to promptly give notice to the
Administrative Agent and the Borrower when the circumstances causing such
suspension cease to exist.
SECTION 4.2. Deposits Unavailable. If the Required Lenders shall have
determined that (x) Dollar deposits in the relevant amount and for the relevant
Interest Period are neither available to such Required Lenders in the eurodollar
market nor available to them in their respective relevant markets, or (y) by
reason of circumstances arising on or after the Effective Date affecting the
eurodollar market, adequate means do not exist for ascertaining the interest
rate applicable hereunder to LIBO Rate Loans, then, upon notice from the
Administrative Agent to the Borrower and the Lenders, the obligations of all
Lenders under Sections 2.3 and 2.4 to make or continue any Loans as, or to
convert any Loans into, LIBO Rate Loans shall forthwith be suspended until the
Administrative Agent shall notify the Borrower and the
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Lenders that the circumstances causing such suspension no longer exist. Upon
receipt of notice from the Administrative Agent that the Required Lenders are
unable to determine the LIBO Rate, the Borrower may revoke any Borrowing Request
or Conversion/Continuation Notice then submitted by it. If the Borrower does not
revoke such Borrowing Request or Continuation/Conversion Notice, the Lenders
shall make, convert or continue the Loans, as proposed by the Borrower, in the
amount specified in the applicable notice submitted by the Borrower, but such
Loans shall be made, converted or continued as Base Rate Loans instead of LIBO
Rate Loans.
SECTION 4.3. Change of Circumstances. If, after the Effective Date, the
introduction of or any change in or in the interpretation of, or any change in
the application of, any law or any regulation (including Regulation D of the
Board) or guideline issued by any central bank or other Governmental Authority
(whether or not having the force of law), or by NAIC or any other comparable
agency charged with the interpretation or administration thereof or including
any reserve or special deposit requirement or any tax (other than Taxes covered
by Section 4.6 and taxes on a Lender's general income) or any capital
requirement, has, due to a Lender's compliance has the effect, directly or
indirectly, of (x) increasing the cost to such Lender of performing its
obligations hereunder (including the making, continuing or maintaining of any
Loans as or converting any Loans into, LIBO Rate Loans), (y) reducing any amount
received or receivable by such Lender hereunder or its effective return
hereunder or on its capital or (z) causing such Lender to make any payment or to
forego any return based on any amount received or receivable by such Lender
hereunder, then, upon demand of such Lender to the Borrower through the
Administrative Agent, accompanied by notice showing in reasonable detail the
basis for calculation of any such amounts, from time to time, the Borrower shall
be obligated to pay such amounts and shall compensate such Lender promptly after
receipt of such notice and demand for any such cost, reduction, payment or
foregone return. Any certificate of a Lender in respect of the foregoing will be
conclusive and binding upon the Borrower, except for clearly demonstrable error.
SECTION 4.4. Replacement of Lender. If (w) the Borrower receives notice
from any Lender requesting increased costs or additional amounts under Section
4.3 or 4.6, (x) any Lender is affected in the manner described in Section 4.1,
(y) a Lender becomes a Non-Performing Lender or a Defaulting Lender or (z) S&P
or Moody's, after the date that any Person becomes a Lender with a Revolving
Loan Commitment, downgrades the long-term certificate of deposit ratings of such
Lender, and the resulting rating is below BBB- or Baa3, respectively, or the
equivalent, then
(a) in each case, the Borrower shall have the right, so long
as no Event of Default shall have occurred and be continuing and
unless,
(i) in the case of item (w), such Lender has removed
or cured the conditions which resulted in the obligation to
pay such increased costs or additional amounts or agreed to
waive and otherwise forego any right it may have to any
payments provided for under Section 4.3 or 4.6 in respect of
such conditions, or
(ii) in the case of item (z), such Lender's rating is
upgraded by S&P or Moody's to a rating of at least BBB- or
Baa3, respectively, or the equivalent, and
(b) in the case of item (z), the Swing Line Lender and the
Issuer shall have the right (with the consent of the Borrower, which
consent shall not be unreasonably withheld) but not the obligation,
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to replace in its entirety such Lender (the "Replaced Lender"), upon prior
notice to the Administrative Agent and such Replaced Lender, with one or more
other Eligible Assignee(s) (collectively, the "Replacement Lender") reasonably
acceptable to the Administrative Agent and, in the case of item (w), (x) or (z)
and in the event the Replaced Lender is a Lender with a Revolving Loan
Commitment, the Swing Line Lender and the Issuer (which acceptance, in each
case, shall not be unreasonably withheld); provided, however, that, at the time
of any replacement pursuant to this Section, the Replaced Lender and the
Replacement Lender shall enter into (each Replaced Lender hereby unconditionally
agreeing to enter into) one or more Lender Assignment Agreements (appropriately
completed), pursuant to which (A) the Replacement Lender shall acquire all of
the Commitments and outstanding Revolving Loans and Term Loans of, and
participations in Swing Line Loans and Letter of Credit Outstandings of, the
Replaced Lender and, in connection therewith, shall pay (1) to the Replaced
Lender in respect thereof an amount equal to the sum of the principal of, and
all accrued but unpaid interest on, all outstanding Loans of the Replaced Lender
plus all accrued but theretofore unpaid fees owing to the Replaced Lender
pursuant to Section 3.3 and (2) to the Issuer, an amount equal to any portion of
the Replaced Lender's funding of an unpaid drawing under a Letter of Credit as
to which the Replaced Lender is then in default and (B) the Borrower shall pay
to the Replaced Lender any other amounts payable to the Replaced Lender under
this Agreement (including amounts payable under Sections 3.3.3, 4.1, 4.3, 4.5
and 4.6 which have accrued to the date of such replacement). Upon the execution
of the Lender Assignment Agreement(s), the payment of the amounts referred to in
the preceding sentence and, if so requested by the Replacement Lender in
accordance with clause (b) of Section 10.11.1, delivery to the Replacement
Lender of the applicable Notes executed by the Borrower, the Replacement Lender
shall automatically become a Lender hereunder and the Replaced Lender shall
cease to constitute a Lender hereunder, except with respect to indemnification
provisions under this Agreement, which shall survive as to such Replaced Lender.
It is understood and agreed that if any Replaced Lender shall fail to enter into
a Lender Assignment Agreement in accordance with the foregoing, it shall be
deemed to have entered into such a Lender Assignment Agreement.
SECTION 4.5. Funding Losses. In the event any Lender shall reasonably
incur any loss or expense (including any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to make, continue or maintain any portion of the principal amount of any
Loan as, or to convert any portion of the principal amount of any Loan into, a
LIBO Rate Loan) as a result of (w) any conversion or repayment or prepayment of
the principal amount of any LIBO Rate Loans on a date other than the scheduled
last day of the Interest Period applicable thereto, whether pursuant to Section
3.1 or otherwise, (x) any Loans not being made as LIBO Rate Loans in accordance
with the Borrowing Request therefor, (y) any Loans not being made or continued
as, or continued into, LIBO Rate Loans as a result of a withdrawn or revoked
Borrowing Request or Continuation/Conversion Notice or for any other reason
(other than a default by any Lender or the Administrative Agent) or (z) any
Loans not being continued as, or converted into, LIBO Rate Loans in accordance
with the Continuation/ Conversion Notice therefor, then, upon the notice of such
Lender to the Borrower (with a copy to the Administrative Agent), the Borrower
shall, promptly after its receipt thereof, pay to the Administrative Agent for
the account of such Lender such amounts required to compensate such Lender for
any additional losses, costs or expenses that such Lender may reasonably incur
as a result of such payment, failure to convert or failure to continue,
including any loss, cost or expense (excluding, however, loss of anticipated
profits) actually incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by any Lender to fund or maintain such LIBO
Rate Loan. Such notice (which shall set forth in reasonable detail the basis for
requesting such amount and include calculations in reasonable detail in support
thereof) shall, in the absence of clearly demonstrable error, be conclusive and
binding on the Borrower.
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SECTION 4.6. Taxes. (a) Any and all payments by the Borrower to each
Lender and the Administrative Agent under this Agreement and any other Loan
Document shall be made free and clear of, and without deduction or withholding
for, any Taxes. In addition, the Borrower shall pay all Other Taxes to the
relevant taxing authority or other authority in accordance with applicable law.
(b) If the Borrower shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Administrative Agent, then, (x) the sum payable shall be increased
as necessary so that, after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums payable
under this Section), such Lender or the Administrative Agent, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions or withholdings been made, (y) the Borrower shall make such
deductions and withholdings and (z) the Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law and shall as promptly as possible thereafter send
to the Administrative Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original receipt (or other
written evidence) showing payment thereof.
(c) The Borrower agrees to indemnify and hold harmless each Lender and
the Administrative Agent for the full amount of Taxes and Other Taxes that are
payable by such Lender or the Administrative Agent and any penalties, interest,
additions to tax, expenses or other similar liabilities arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within 45
days after the date such Lender or the Administrative Agent makes written demand
therefor.
(d) Each Lender that is not incorporated or organized in or under the
laws of the United States or a state thereof (a "Non-U.S. Lender") shall:
(i) deliver to the Borrower and the Administrative Agent,
prior to the first day on which the Borrower is required to make any
payments hereunder to such Lender, two copies of either United States
Internal Revenue Service Form 1001 or Form 4224 or, in the case of a
Non-U.S. Lender claiming exemption from U.S. Federal withholding tax
under Section 871(h) or 881(c) of the Code with respect to payments of
"portfolio interest", a Form W-8, or any subsequent versions thereof or
successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, a
certificate representing that such Non-U.S. Lender (x) is not a bank
for purposes of Section 881(c) of the Code, is not subject to
regulatory or other legal requirements as a bank in any jurisdiction,
and has not been treated as a bank for purposes of any tax, securities
law or other filing or submission made to any Governmental Authority,
any application made to a rating agency or qualification for any
exemption from tax, securities law or other legal requirements, (y) is
not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of the Borrower and (z) is not a controlled
foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed
by such Non-U.S. Lender claiming complete exemption from, or a reduced
rate of, U.S. Federal withholding tax on payments by the Borrower under
this Agreement;
(ii) deliver to the Borrower and the Administrative Agent two
further copies of any such form of certification on or before the date
that any such form or certification expires or becomes obsolete and
after the occurrence of any event requiring a change in the most recent
form previously delivered by it to the Borrower; and
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(iii) obtain such extensions of time for filing and completing
such forms or certifications as may reasonably be requested by the
Borrower or the Administrative Agent;
unless in any such case any change in treaty, law or regulation has occurred
prior to the date on which any such delivery would otherwise be required that
renders any such form inapplicable or would prevent such Lender from duly
completing and delivering any such form with respect to it and such Lender so
advises the Borrower and the Administrative Agent. Each Non-U.S. Lender that
shall become a Participant pursuant to Section 10.11.2 or a Lender pursuant to
Section 10.11.1 shall, upon the effectiveness of the related transfer, be
required to provide all the forms and statements required pursuant to this
clause (d), provided, however, that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Lender
from which the related participation shall have been purchased.
(e) The Borrower shall not be required to indemnify any Non-U.S. Lender
or the Administrative Agent, or to pay any additional amounts to such Non-U.S.
Lender or the Administrative Agent, in respect of U.S. Federal withholding tax
pursuant to clause (a) to the extent that (x) the obligation to withhold amounts
with respect to U.S. Federal withholding tax existed on the date such Non-U.S.
Lender became a party to this Agreement (or, in the case of a Non-U.S.
Participant, on the date such Participant became a Participant hereunder) or as
of the date such Non-U.S. Lender changes its applicable lending office
(provided, however, that this item (x) shall not apply to the extent that (1) in
the case of an assignee Lender or a Participant or a change in the Lender's
applicable lending office, the indemnity payments or additional amounts any
Lender (or Participant) would be entitled to receive (without regard to this
item (x)) do not exceed the indemnity payment or additional amounts that the
Person making the assignment, participation, transfer or change in lending
office would have been entitled to receive in the absence of such assignment,
participation, transfer or change in lending office, or (2) such assignment,
participation, transfer or change in lending office had been requested by the
Borrower), (y) the obligation to pay such additional amounts would not have
arisen but for a failure by such Non-U.S. Lender or Non-U.S. Participant to
comply with the provisions of clause (d) or (z) any of the representations or
certifications made by a Non-U.S. Lender or Non-U.S. Participant pursuant to
clause (d) are incorrect at the time a payment hereunder is made, other than by
reason of any change in treaty, law or regulation having effect after the date
such representations or certifications were made.
(f) If the Borrower determines in good faith that a reasonable basis
exists for contesting any Taxes for which indemnification has been demanded
hereunder, the relevant Lender (to the extent such Lender reasonably determines
in good faith that it will not suffer any adverse effect as a result thereof) or
the Administrative Agent, as applicable, shall cooperate with the Borrower in
challenging such Taxes at the Borrower's expense if so requested by the Borrower
in writing. If any Lender or the Administrative Agent, as applicable, receives a
refund of a Tax for which a payment has been made by the Borrower pursuant to
this Agreement, which refund in the good faith judgment of such Lender or the
Administrative Agent, as the case may be, is attributable to the Borrower, then
such Lender or the Administrative Agent, as the case may be, shall reimburse the
Borrower for such amount as such Lender or the Administrative Agent, as the case
may be, determines to be the proportion of the refund as will leave it, after
such reimbursement, in no better or worse position than it would have been in if
the payment had not been required. Neither the Lenders nor the Administrative
Agent shall be obliged to disclose information regarding its tax affairs or
computations to the Borrower in connection with this clause (f) or any other
provision of this Section.
(g) Promptly after the date of any payment by the Borrower of Taxes or
Other Taxes, the Borrower shall furnish to each Lender and the Administrative
Agent the original or a certified copy of a
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receipt evidencing payment thereof, or other evidence of payment satisfactory to
such Lender or the Administrative Agent.
SECTION 4.7. Change of Lending Office. Each Lender agrees that, as
promptly as practicable after it becomes aware of the occurrence of an event or
the existence of a condition that would give rise to the operation of Section
4.1, 4.3 or clause (b) or (c) of Section 4.6 with respect to such Lender, it
will exercise commercially reasonable efforts to make, fund or maintain the
affected Loans of such Lender through another lending office and to take such
other actions as it deems appropriate to remove or lessen the impact of such
condition and if, as determined by such Lender in its sole discretion, the
making, funding or maintaining of such affected Loans through such other lending
office or the taking of such other actions would not otherwise adversely affect
such Loans or such Lender and would not, in such Lender's sole discretion, be
commercially unreasonable. Nothing in this Section 4.7 shall affect or postpone
any of the Obligations of the Borrower or the right of any Lender provided in
Section 4.1, 4.3 or clause (b) or (c) of Section 4.6.
SECTION 4.8. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Notes,
each Letter of Credit or any other Loan Document shall be made by the Borrower
to the Administrative Agent for the pro rata account of the Lenders entitled to
receive such payment. All such payments required to be made to the
Administrative Agent shall be made, without setoff, deduction or counterclaim,
not later than 1:00 p.m., New York City time, on the date due, in same day or
immediately available funds, to such account as the Administrative Agent shall
specify from time to time by notice to the Borrower. Funds received after 3:30
p.m., New York City time, on such due date shall be deemed to have been received
by the Administrative Agent on the next succeeding Business Day. The
Administrative Agent shall promptly remit in same day funds to each Lender its
share, if any, of such payments received by the Administrative Agent for the
account of such Lender. All computations of interest for LIBO Rate Loans and
Base Rate Loans (calculated at the Federal Funds Rate) shall be made on the
basis of a 360-day year and actual days elapsed. All other computations
(including for interest on Base Rate Loans (calculated at other than the Federal
Funds Rate) and fees) shall be made on the basis of a year or 365 or 366 days,
as the case may be, and actual days elapsed. Whenever any payment to be made
shall otherwise be due on a day which is not a Business Day, such payment shall
(except as otherwise required by clause (c) of the definition of "Interest
Period") be made on the next succeeding Business Day and such extension of time
shall be included in computing interest and fees, if any, in connection with
such payment.
SECTION 4.9. Sharing of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Loan or Reimbursement Obligation (other
than pursuant to the terms of Section 4.3, 4.4, 4.5 or 4.6) in excess of its pro
rata share of payments then or therewith obtained by all Lenders, such Lender
shall purchase from the other Lenders such participations in Credit Extensions
made by them as shall be necessary to cause such purchasing Lender to share the
excess payment or other recovery ratably with each of them; provided, however,
that if all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing Lender, the purchase shall be rescinded and each
Lender which has sold a participation to the purchasing Lender shall repay to
the purchasing Lender the purchase price to the ratable extent of such recovery
together with an amount equal to such selling Lender's ratable share (according
to a fraction having a numerator of (x) the amount of such selling Lender's
required repayment to the purchasing Lender and a denominator of (y) total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this
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Section may, to the fullest extent permitted by law, exercise all its rights of
payment (including pursuant to Section 4.10) with respect to such participation
as fully as if such Lender were the direct creditor of the Borrower in the
amount of such participation. If under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a setoff to
which this Section applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders entitled under this Section to share in the benefits
of any recovery on such secured claim.
SECTION 4.10. Setoff. Each Lender shall, upon the occurrence and during
the continuance of any Default described in clauses (a) through (d) of Section
8.1.9 or, with the consent of the Required Lenders, upon the occurrence and
during the continuance of any other Event of Default, without prior notice to
the Borrower (any such notice being waived by the Borrower to the fullest extent
permitted by law), have the right to appropriate and apply to the payment of the
Obligations then due and payable to it, any and all balances, credits, deposits,
accounts or moneys of the Borrower then or thereafter maintained with such
Lender; provided, however, that any such appropriation and application shall be
subject to the provisions of Section 4.9. Each Lender agrees promptly to notify
the Borrower and the Administrative Agent after any such setoff and application
made by such Lender; provided, however, that the failure to give such notice
shall not affect the validity of such setoff and application. The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff under applicable law or otherwise) which such
Lender may have.
SECTION 4.11. Notice of Certain Costs. Notwithstanding anything in this
Agreement to the contrary, to the extent any notice required by Section 4.1, 4.3
or 4.6 is given by any Lender more than 180 days after such Lender has knowledge
of the occurrence of the event giving rise to the additional cost, reduction in
amounts, loss, tax or other additional amounts described in such Sections, such
Lender shall not be entitled to compensation under Section 4.1, 4.3 or 4.6, as
the case may be, for any such amounts incurred or accruing more than 180 days
prior to the giving of such notice to the Borrower.
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
SECTION 5.1. Initial Credit Extensions. The obligations of the Lenders
and, if applicable, the Issuer, to fund the initial Credit Extensions shall be
subject to the prior or concurrent satisfaction of each of the conditions
precedent set forth in this Section 5.1.
SECTION 5.1.1. Resolutions, etc. The Administrative Agent shall have
received from each Obligor, as applicable,
(a) good standing certificates for each Obligor from the
Secretary of State (or similar, applicable Governmental Authority) of
such Obligor's state of incorporation; and
(b) a certificate, dated the Closing Date and with
counterparts for each Agent and copies for each Lender, duly executed
and delivered by such Obligor's Secretary or Assistant Secretary, as to
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(i) resolutions of each such Obligor's Board of
Directors then in full force and effect authorizing, to the
extent relevant, the execution, delivery and performance of
this Agreement, the Notes, each other Loan Document to be
executed by such Obligor and the Transaction;
(ii) the incumbency and signatures of those of its
officers authorized to act with respect to this Agreement, the
Notes and each other Loan Document to be executed by such
Obligor; and
(iii) each Organizational Document of such Obligor,
upon which certificates each Agent and each Lender may conclusively
rely until it shall have received a further certificate of the
Secretary or Assistant Secretary of any such Obligor canceling or
amending the prior certificate of such Obligor.
SECTION 5.1.2. Pledge Agreement. The Administrative Agent shall have
received, with counterparts for each Lender,
(a) the Pledge Agreement, dated the Closing Date, duly
executed and delivered by an Authorized Officer of Surviving Regal,
together with certificates evidencing all of the issued and outstanding
shares of Capital Stock pledged pursuant to the Pledge Agreement (which
shall include all of the issued and outstanding shares of Capital Stock
of each direct Domestic Restricted Subsidiary (other than Clark-Regal)
and 65% of the issued and outstanding shares of Capital Stock of each
direct Foreign Subsidiary that is also a Material Restricted
Subsidiary, if any, all as such direct Domestic Subsidiaries and direct
Foreign Subsidiaries which are also Material Restricted Subsidiaries
are listed on Schedule I to the Pledge Agreement), which certificates
shall in each case be accompanied by undated stock powers duly executed
in blank, or, if any securities subject thereto are uncertificated
securities, confirmation and evidence satisfactory to the Agents that
the control of such uncertificated securities has been transferred to,
and the security interest therein has been perfected by, the
Administrative Agent for the benefit of the Lenders in accordance with
Section 9-115 of the Uniform Commercial Code, as in effect in the State
of New York, and all laws otherwise applicable to the perfection of the
pledge of such shares; and
(b) the Agents and their counsel shall be satisfied that
(i) the Lien granted to the Administrative Agent,
for the benefit of the Agents, the Issuers and the Lenders, in
the collateral described in clause (a) is a first priority
security interest; and
(ii) no Lien exists on any of the collateral
described clause (a) other than the Lien created in favor of
the Administrative Agent, for the benefit of the Agents, the
Issuers and the Lenders, pursuant to the Pledge Agreement.
SECTION 5.1.3. Guaranty. The Administrative Agent shall have received,
with counterparts for each Lender, a Guaranty, dated the Closing Date, duly
executed and delivered by an Authorized Officer of each direct and indirect
Domestic Restricted Subsidiary (other than Clark-Regal).
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SECTION 5.1.4. No Material Adverse Change. Except as may be disclosed
by the financial statements referred to in clause (b) of Section 6.5., no
material adverse change has occurred since January 2, 1998 with respect to the
business, assets, operations, results of operations, properties, condition
(financial or otherwise) or prospects of Old Regal and its Subsidiaries, taken
as a whole.
SECTION 5.1.5. Approvals. All necessary material governmental and
third-party Approvals in connection with the Merger and the other transactions
contemplated by the Merger Agreement and the execution, delivery and performance
of this Agreement and the other Loan Documents shall have been duly obtained and
all applicable waiting periods shall have expired without, in all such cases,
any action being taken by any competent authority that restrains, prevents or
imposes materially adverse conditions or material increased costs upon the
consummation of the Merger or the Transaction.
SECTION 5.1.6. Litigation. Neither the Borrower nor any Subsidiary
shall be subject to any material litigation, governmental or administrative
proceeding that would reasonably be expected to have a material adverse effect
on the business, assets, operations, properties, financial condition or
prospects of the Borrower and Subsidiaries, taken as whole, or on the ability of
the parties to consummate the Merger and the Transaction.
SECTION 5.1.7. Sponsor Fund Contributions. Each Merger Subsidiary shall
have received its Sponsor Fund Contribution in the amount referred to in clause
(a) of the second recital from its respective Sponsor or its Affiliates in cash
in immediately available funds.
SECTION 5.1.8. Additional Equity. The KKR Merger Subsidiary shall have
received net cash proceeds of at least approximately $50,000,000 constituting
the Additional Equity.
SECTION 5.1.9. Consummation of Merger. Currently with the initial
funding hereunder, pursuant to the Merger Agreement (which shall not have been
amended nor shall any provision thereof have been waived by any party thereto,
in each case unless such amendment or waiver is not adverse in any material
respect to the interests of the Lenders)
(a) a majority of the stockholders of Old Regal entitled to
vote at the Special Meeting (as defined in the Proxy Statement) shall
have approved the Merger in accordance with the Tennessee Business
Corporation Act (which approval shall not have been rescinded or
withdrawn);
(b) the Merger (and the other transactions contemplated by the
Merger Agreement) shall have been consummated in accordance with
applicable law and pursuant to the Merger Agreement;
(c) the Sponsors and their Affiliates shall have received
pursuant to the Merger, Surviving Regal Preferred Shares and Surviving
Regal Common Shares in the aggregate sufficient that the Sponsors and
their Affiliates shall own in the aggregate approximately 93.2% of the
Surviving Regal Preferred Shares and Surviving Regal Common Shares
issued and outstanding after giving effect to the Transaction;
(d) the Merger Consideration shall have been transferred to
the paying agent appointed pursuant to the Merger Agreement (the
"Exchange Agent") to be paid as the Merger Consideration for the Old
Regal Shares (the "Exchange Fund"); and
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(e) the Additional Investor shall have received, pursuant to
the Merger, Surviving Regal Preferred Shares and Surviving Regal Common
Shares.
SECTION 5.1.10. Issuance of 9 1/2% Subordinated Notes. Surviving Regal
shall have (w) duly authorized, executed and delivered the 9 1/2% Subordinated
Note Indenture in substantially the form of the draft thereof dated May 26, 1998
furnished to the Lenders in connection with the execution and delivery of this
Agreement, (x) issued pursuant thereto to the initial purchasers at 99.831% of
par 9 1/2% Subordinated Notes in an aggregate original principal amount of at
least $400,000,000, (y) received from the initial purchasers thereof net
proceeds of at least $399,324,000 in immediately available funds and (z)
delivered to the Administrative Agent true and correct copies of certificates,
documents, agreements, consents and opinion letters furnished pursuant to or in
connection therewith, the terms and conditions of which shall be consistent with
the 9 1/2% Subordinated Note Offering Memorandum.
SECTION 5.1.11. Offer to Purchase, etc. Pursuant to the Offer to
Purchase, Surviving Regal shall have (x) purchased at least $120,000,000
aggregate outstanding principal amount of the Old Regal 8 1/2% Subordinated
Notes and (y) entered into with the trustee under the Old Regal 8 1/2%
Subordinated Note Indenture a supplemental indenture substantially as described
in the Offer to Purchase or otherwise satisfactory as to terms material to the
Lenders in form and substance to the Agents.
SECTION 5.1.12. Payment of Outstanding Indebtedness, etc. All
Indebtedness identified in Item 7.2.1(b) ("Indebtedness to be Paid") of the
Disclosure Schedule, together with all interest, all prepayment premiums and
other amounts due and payable with respect thereto, shall have been paid in full
from or, as the case may be, defeased with the proceeds of the initial Credit
Extensions and the commitments in respect of such Indebtedness shall have been
terminated, and all Liens securing payment of any such Indebtedness have been
released and the Administrative Agent shall have received all Uniform Commercial
Code Form UCC-3 termination statements or other instruments as may be suitable
or appropriate in connection therewith.
SECTION 5.1.13. Total Equity Capitalization, etc. After giving effect
to the Merger and the Transaction,
(a) the total equity capitalization of the Borrower (including
the Sponsor Fund Contributions, the Additional Equity and the
Management Roll-Over) shall be at least $790,000,000;
(b) the Borrower and Subsidiaries shall have outstanding no
Indebtedness other than (w) Indebtedness under this Agreement, (x) Old
Regal 8 1/2% Subordinated Notes in an aggregate outstanding principal
amount not to exceed $1,000,000, (y) the 9 1/2% Subordinated Notes and
(z) other Indebtedness existing on the Closing Date and permitted to be
outstanding Section 7.2.1 (other than clauses (g), (h), (k) and (n));
and
(c) the Pro Forma Balance Sheet shall be accurate and complete
in all material respects.
SECTION 5.1.14. Solvency. The Administrative Agent shall have received,
with counterparts for each Lender, a letter, dated the Closing Date, from
Houlihan, Lokey, Howard & Zukin as to the solvency of Surviving Regal and
Subsidiaries, taken as a whole after giving effect to the Merger and the
Transaction in the form of Exhibit G hereto.
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SECTION 5.1.15. Closing Date Certificate. The Administrative Agent
shall have received, with copies for each Lender, the Closing Date Certificate,
dated the Closing Date, duly executed and delivered by an Authorized Officer of
Surviving Regal, in which certificate Regal shall agree and acknowledge that the
statements made therein shall be deemed to be true and correct representations
and warranties in all material respects of the Borrower made as of the Closing
Date and under this Agreement, and, at the time such certificate is delivered,
such statements shall in fact be true and correct in all material respects. All
documents and agreements required to be appended to the Closing Date Certificate
(which shall include true and complete, as certified in such certificate, copies
of the Merger Agreement, the Offer to Purchase, the Proxy Statement, the
Syndication Memorandum, the 9 1/2% Subordinated Note Offering Memorandum, the 9
1/2% Subordinated Note Indenture and any tax sharing agreement) shall be in form
and substance reasonably satisfactory to each Agent and such certificate shall
specify that none of such documents or agreements have been modified except as
set forth in such certificate.
SECTION 5.1.16. Opinions of Counsel. The Administrative Agent shall
have received opinions, dated the date of the initial Credit Extensions and
addressed to each Agent, each Lender and the Issuer, from
(a) Simpson Thacher & Bartlett, special counsel to the
Obligors, substantially in the form of Exhibit J-1 hereto; and
(b) Wagner, Myers and Sanger, P.C., counsel to the Borrower
and each of the other Obligors, substantially in the form of Exhibit
J-2 hereto.
SECTION 5.1.17. Closing Fees, Expenses, etc. The Administrative Agent
shall have received evidence of payment by the Borrower of (x) all accrued and
unpaid fees, costs and expenses to the extent then due and payable under this
Agreement or the Fee Letters and (y) all reasonable and documented legal costs
and expenses of the Agents to the extent then or theretofore invoiced prior to
the Closing Date, including any such fees, costs and expenses arising under or
referenced in Sections 3.3 and 10.3.
SECTION 5.2. All Credit Extensions. The obligation of each Lender and
the Issuer to make any Credit Extension (including the initial Credit
Extensions) shall be subject to Sections 2.1.4 and 2.1.5 and the satisfaction of
each of the conditions precedent set forth in this Section 5.2.
SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both before
and after giving effect to any Credit Extension:
(a) the representations and warranties set forth in Article VI
and in each other Loan Document shall, in each case, be true and
correct in all material respects with the same effect as if then made
(unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct in all
material respects as of such earlier date); and
(b) no Default shall have then occurred and be continuing.
SECTION 5.2.2. Credit Extension Request, etc. Subject to Sections
2.3.1, 2.3.2 and 2.6.2, the Administrative Agent shall have received a Borrowing
Request if Loans are being requested, or an Issuance Request if a Letter of
Credit is being requested or extended. Each of the delivery of a Borrowing
Request or Issuance Request, the giving of telephonic notice pursuant to
Sections 2.3.1 and 2.3.2 and the deemed making of a request for a Swing Line
Loan as set forth in Section 2.6.2 and the acceptance by the
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Borrower of the proceeds of such Credit Extension shall constitute a
representation and warranty by the Borrower that on the date of such Credit
Extension (both immediately before and after giving effect to such Credit
Extension and the application of the proceeds thereof) the statements made in
Section 5.2.1 are true and correct in all material respects.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, the Issuer and each Agent to enter into
this Agreement and to make Credit Extensions hereunder, the Borrower represents
and warrants unto each Agent, the Issuer and each Lender as set forth in this
Article VI.
SECTION 6.1. Organization, etc. Each Obligor:
(a) is a corporation or limited partnership validly organized
and existing and in good standing under the laws of the state or
jurisdiction of its incorporation or organization;
(b) is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the nature of its
business requires such qualification; and
(c) has full power and authority and holds all requisite
governmental licenses, permits and other approvals to enter into and
perform its Obligations under this Agreement, the Notes and each other
Loan Document to which it is a party and to own and hold under lease
its property and to conduct its business substantially as currently
conducted by it,
except with respect to each Material Restricted Subsidiary and each other
Obligor other than the Borrower, and, in the case of clause (b), with respect to
the Borrower and each Material Restricted Subsidiary and each other Obligor, to
the extent that the failure of which could not reasonably be expected to have a
Material Adverse Effect.
SECTION 6.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower of this Agreement, the Notes and each
other Loan Document executed or to be executed by it, the execution, delivery
and performance by each other Obligor of each Loan Document executed or to be
executed by it, the granting of the Liens contemplated by the Pledge Agreement,
the consummation of the Merger and the Transaction, and the Borrower's, each
Material Restricted Subsidiary's and each other Obligor's participation in the
consummation of all aspects of the Transaction, are in each case within each
such Person's corporate or partnership powers, have been duly authorized by all
necessary corporate or partnership action, and do not
(a) contravene any such Person's Organizational Documents;
(b) contravene any material Contractual Undertaking binding
on or affecting any such Person or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default
under the terms of any material Contractual Undertaking to which the
Borrower or any of the Restricted Subsidiaries is a party or by which
it or any of its property or assets is bound;
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(c) contravene any material Applicable Law; or
(d) result in, or require the creation or imposition of, any
Lien on any of such Person's material properties (except as permitted
by this Agreement).
SECTION 6.3. Government Approval, Regulation, etc. No Approval by any
Governmental Authority and no authorization, approval or other action by, or
notice or other filing with, any other Person (other than those that have been,
or on the Closing Date will be, duly obtained or made and which are, or on the
Closing Date will be, in full force and effect and other than those, singly or
in the aggregate, with respect to which the failure to obtain or make could not
reasonably be expected to have a Material Adverse Effect) is necessary or
required for the consummation of the Transaction or the due execution, delivery
or performance by, or enforcement against, the Borrower or any other Obligor of
this Agreement, the Notes or any other Loan Document to which it is a party or
the granting of the Liens contemplated by the Pledge Agreement or as of the
Closing Date, the consummation of the Transaction. Neither the Borrower nor any
other Obligor nor any Subsidiary is an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
SECTION 6.4. Validity, etc. This Agreement constitutes, and the Notes
and each other Loan Document, executed by the Borrower will, on the due
execution and delivery thereof, constitute, the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms; and each other Loan Document executed pursuant hereto by
each other Obligor will, on the due execution and delivery thereof by such
Obligor, constitute the legal, valid and binding obligation of such Obligor
enforceable against such Obligor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and by
principles of equity.
SECTION 6.5. Financial Information. The following financial information
previously furnished by or on behalf of the Borrower to the Administrative
Agent, the Issuer and the Lenders:
(a) the audited consolidated balance sheets as of January 2,
1997 and January 1, 1998, and the consolidated statements of income,
changes in shareholders' equity and cash flows for each of the three
Fiscal Years in the period ended January 1, 1998, certified by Coopers
& Lybrand,
(b) the summary unaudited consolidated financial data for each
of the five Fiscal Years in the period ended January 1, 1998 and for
1997 FQ 1 and 1998 FQ 1 set forth in the 9 1/2% Subordinated Note
Offering Memorandum,
(c) the unaudited pro forma consolidated balance sheet of
Surviving Regal and its Subsidiaries as of April 2, 1998, assuming that
the Merger and the Transaction had occurred on such date (the "Pro
Forma Balance Sheet"), set forth in the 9 1/2% Subordinated Note
Offering Memorandum, and
(d) the unaudited pro forma consolidated statement of
operations of Surviving Regal and its Subsidiaries for the 1997 FQ 1,
the 1998 FQ 1 and for the Fiscal Year ended January 1, 1998, and the
summary unaudited pro forma financial data of Surviving Regal and its
Subsidiaries for the Fiscal Year ending January 1, 1998, for 1997 FQ 1
and 1998 FQ 1 and for the 12 month period ending April 2, 1998, all
assuming that the Merger and the Transaction had occurred on January 3,
1997 and as set forth in the 9 1/2% Subordinated Note Offering
Memorandum,
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have been prepared (to the extent GAAP may be applied to such preparation) in
accordance with GAAP consistently applied, except as otherwise expressly noted
therein and subject to normal year-end audit adjustments, and present fairly in
all material respects (subject, however, in the case of pro forma financial
information specified therein, including as to the occurrence of the Merger and
the Transaction at an earlier date) the consolidated financial condition of the
Persons covered thereby as at the dates thereof and the results of their
operations for the periods then ended. All balance sheets, all statements of
operations, shareholders' equity, earnings and cash flow and all other financial
information of each of the Borrower and Subsidiaries furnished pursuant to
Section 7.1.1 will for periods following the Closing Date be prepared in
accordance with GAAP consistently applied, except as otherwise expressly noted
therein and subject to normal year-end audit adjustments, and do or will present
fairly in all material respects the consolidated financial condition of the
Persons covered thereby as at the dates thereof and the results of their
operations for the periods then ended.
SECTION 6.6. No Material Adverse Change. Except as may be disclosed in
the financial statements referred to in clause (a) of Section 6.5 or in the
Syndication Memorandum, there has been no Material Adverse Change since January
2, 1998.
SECTION 6.7. Litigation, etc. There is no pending or, to the knowledge
of the Borrower, threatened litigation, action or proceeding affecting the
Borrower or any Subsidiary which could reasonably be expected to have a Material
Adverse Effect, except as disclosed in Item 6.7 ("Litigation") of the Disclosure
Schedule.
SECTION 6.8. Subsidiaries. On the Closing Date, the Borrower will have
no Subsidiaries, except those Subsidiaries which are identified in Item 6.8
("Existing Subsidiaries") of the Disclosure Schedule (and each Material
Restricted Subsidiary as of the Closing Date has been so designated therein).
SECTION 6.9. Ownership of Properties. The Borrower and each Material
Restricted Subsidiary has good title to, or leasehold interests in, all of its
properties that are necessary for the operation of their respective businesses
as currently conducted and proposed to be conducted, free and clear of all Liens
or claims, except (x) for Liens permitted pursuant to Section 7.2.2 and (y)
where the failure to have such good title or leasehold interests could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each of the Borrower and Material Restricted Subsidiaries owns
or are licensed or otherwise have the right to use all of the trademarks,
copyrights, patents, licenses and other rights that are reasonably necessary for
the operation of each of their respective businesses, without, to the knowledge
of the Borrower, conflict with the rights of any other Person and free of
burdensome restrictions, except where the failure to have any such rights could
not reasonably be expected to have a Material Adverse Effect.
SECTION 6.10. Taxes. The Borrower, the Restricted Subsidiaries and all
other Persons with whom the Borrower or any Restricted Subsidiary joins in the
filing of a consolidated tax return have filed all Federal income tax returns
and other material tax returns and reports, domestic and foreign, required by
Applicable Law to have been filed, and have paid all material taxes,
assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets otherwise due and payable except those not
yet delinquent, those which are being contested in good faith or those for which
the unpaid amount, in the aggregate, is not significant. The Borrower, each
Restricted Subsidiary and each such other Person with whom the Borrower or any
Restricted Subsidiary joins in the filing of a consolidated tax return have
paid, or have provided adequate reserves (in the good faith judgement of the
management of the Borrower) in accordance with GAAP for the payment of all such
material taxes,
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assessments, fees and charges relating to all prior taxable years and the
current taxable year of the Borrower, each Restricted Subsidiary and each such
other Person with whom the Borrower or any Restricted Subsidiary joins in the
filing of a consolidated tax return. To the best knowledge of the Borrower,
there is no proposed tax assessment against the Borrower or any Subsidiary or
any such other Person with whom the Borrower or any Subsidiary joins in the
filing of a consolidated tax return that could reasonably be expected to have a
Material Adverse Effect.
SECTION 6.11. ERISA Compliance. Except as specifically disclosed in
Item 6.11 ("Employee Benefit Plans") of the Disclosure Schedule:
(a) Each Plan is in compliance in all material respects with
the terms thereof and the applicable provisions of ERISA, the Code and
other federal or state law except to the extent that failure to comply
would not result, individually or in the aggregate, in an amount of
liability that could reasonably be expected to have a Material Adverse
Effect. The Borrower and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, except to
the extent that a failure to do so could not reasonably be expected to
have a Material Adverse Effect, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of
the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of
Borrower, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Pension Plan which has
resulted or could reasonably be expected to result in a Material
Adverse Effect.
(c) (x) No ERISA Event has occurred or is reasonably expected
to occur; and (y) neither the Borrower nor any ERISA Affiliate has
engaged in a transaction that could reasonably be expected to be
subject to Section 4069 or 4212(c) of ERISA and could reasonably be
expected to have a Material Adverse Effect.
SECTION 6.12. Compliance with Environmental Laws. The Borrower and each
Subsidiary is in compliance with all applicable Environmental Laws in respect of
the conduct of its business and the ownership of its property, except such
noncompliance as could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect. Without limiting the effect of the preceding sentence:
(a) neither the Borrower nor any Subsidiary has received a
complaint, order, citation, notice or other written communication with
respect to the existence or alleged existence of a violation of, or
liability arising under, any Environmental Law, the outcome of which,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect;
(b) to the best of the Borrower's knowledge, after due
inquiry, there are no environmental, health or safety conditions
existing or reasonably expected to exist at any real property owned,
operated, leased or used by the Borrower or any existing or former
Subsidiary including off-site treatment or disposal facilities used by
the Borrower or its existing or former Subsidiaries or any of their
respective predecessors, for wastes treatment or disposal, which could
reasonably be expected to require any construction or other capital
costs or clean-up obligations to be incurred prior to the Stated
Maturity Date for all Term C Loans in order to assure compliance with
any Environmental Law, including provisions regarding clean-up, to the
extent that any of such conditions, construction or other capital costs
or clean-up obligations, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect; and
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(c) neither the Borrower nor any current or former Subsidiary
has treated, stored, transported or disposed of Hazardous Materials at
or from any currently or formerly owned Real Estate or facility in a
manner that could reasonably be expected to have a Material Adverse
Effect.
SECTION 6.13. Regulations U and X. Neither the Borrower nor any
Subsidiary is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock, and no use of any proceeds of any Credit
Extensions will violate F.R.S. Board Regulation U or X. Terms for which meanings
are provided in F.R.S. Board Regulation U or X or any regulations substituted
therefor, as from time to time in effect, are used in this Section with such
meanings.
SECTION 6.14. Year 2000 Compliance. The Borrower does not believe that
the risk that the computer applications of the Borrower and its Subsidiaries may
not be able to perform properly date sensitive functions after December 31, 1999
could reasonably be expected to cause a Material Adverse Effect.
SECTION 6.15. Accuracy of Information. (a) All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on behalf of
the Borrower or any Subsidiary in writing to any Agent, the Issuer or any Lender
on or before the Closing Date (including (v) the Offer to Purchase, (w) the
Proxy Statement, (x) the Syndication Memorandum, (y) the 9 1/2% Subordinated
Note Offering Memorandum and (z) all information contained in the Loan
Documents) for purposes of or in connection with this Agreement or Transaction
is true and complete in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided, it being understood and agreed that for purposes of
this clause (a), such factual information shall not include projections and pro
forma financial information.
(b) The projections contained in the factual information referred to in
clause (a) were or are based on good faith estimates and assumptions believed to
be reasonable at the time made, it being recognized by the 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
significantly from the projected results.
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants. The Borrower agrees with each
Agent, the Issuer and each Lender that, until all Commitments have terminated,
all Letters of Credit have terminated or expired and all Obligations have been
paid and performed in full, the Borrower will perform or cause to be performed
the obligations set forth in this Section 7.1.
SECTION 7.1.1. Financial Information, Reports, Notices, etc. The
Borrower will furnish, or will cause to be furnished to the Administrative Agent
for distribution to each Lender and the Issuer copies of the following financial
statements, reports, notices and information:
(a) as soon as available and in any event within 60 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year
(commencing on the last day of 1998 FQ 3), unaudited
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consolidated balance sheets of the Borrower and Restricted Subsidiaries
and, to the extent available, unaudited consolidated balance sheets of
the Borrower and Subsidiaries, in each case as of the end of such
Fiscal Quarter and unaudited consolidated statements of earnings and
cash flow of the Borrower and Restricted Subsidiaries and, to the
extent available, unaudited consolidated statements of earnings and
cash flow of the Borrower and Subsidiaries, in each case for such
Fiscal Quarter and for the period commencing at the end of the previous
Fiscal Year and ending with the end of such Fiscal Quarter, certified
by a Responsible Officer of the Borrower as fairly presenting in all
material respects, in accordance with GAAP (subject to year-end audit
adjustments), the financial position and results of operations of the
Borrower and Subsidiaries covered thereby as of the date thereof;
(b) as soon as available and in any event within (x) 90 days
after the end of Fiscal Year 1998 and (y) 120 days after the end of
each Fiscal Year other than Fiscal Year 1998, a copy of the annual
audited financial statements for such Fiscal Year for the Borrower and
Restricted Subsidiaries, including therein consolidated balance sheets
of the Borrower and Restricted Subsidiaries as of the end of such
Fiscal Year and consolidated statements of earnings and cash flow of
the Borrower and Restricted Subsidiaries for such Fiscal Year, in each
case as audited (without any Impermissible Qualification) by a
nationally recognized independent public accounting firm, together in
any event with a certificate of such accounting firm stating that in
the course of its regular audit of the business of the Borrower and
Restricted Subsidiaries, which audit was conducted in accordance with
generally accepted auditing standards, such accounting firm has
obtained no knowledge of any Default or Event of Default relating to
clause (a) or (b) of Section 7.2.3 that has occurred and is continuing
or, if in the opinion of such accounting firm such a Default or Event
of Default has occurred and is continuing, a statement as to the nature
thereof;
(c) within 45 days following the end of any 1998 FQ, a
Compliance Certificate, executed by a Responsible Officer of the
Borrower, showing in reasonable detail, including with respect to
appropriate calculations and computations, the Total Leverage Ratio for
the purpose of determining the Applicable Commitment Fee and the
Applicable Margin for each Loan, and concurrently with the financial
information delivered pursuant to clause (a) or (b),
(i) a Compliance Certificate, executed by a
Responsible Officer of the Borrower, showing in reasonable
detail, including with respect to appropriate calculations and
computations, (w) pro forma calculations showing the effect of
Permitted Acquisitions proposed to be made during the
succeeding Fiscal Quarter, (x) the identity of all Permitted
Ongoing Reinvestment Projects which shall have been publicly
announced or disclosed or as to which permitting or
construction activity shall have commenced during the prior
Fiscal Quarter, (y) compliance with the financial covenants
set forth in Section 7.2.3 and (z) the Total Leverage Ratio
for the purpose of determining the Applicable Commitment Fee
and the Applicable Margin for each Loan, and
(ii) financial statements prepared on a pro forma
basis (x) assuming each Permitted Acquisition consummated
during the Test Period relating to the financial statements
then being delivered pursuant to clause (a) or (b) had been
consummated on the first day of such Test Period and (y)
otherwise consistent with the proviso to the definition of the
term "Adjusted EBITDA", together with a pro forma Compliance
Certificate based thereon executed by the chief executive,
financial or accounting Authorized Officer of the Borrower;
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(d) promptly after any Responsible Officer of the Borrower or
any Restricted Subsidiary obtains knowledge of the occurrence of a
Default (including any default, or event which after notice or lapse of
time or both would constitute a default, under any Subordinated Debt),
a statement of a Responsible Officer of the Borrower setting forth
details of such Default and the action which the Borrower has taken and
proposes to take with respect thereto;
(e) promptly after any Responsible Officer of the Borrower or
any Restricted Subsidiary obtains knowledge of (x) the occurrence of
any material adverse development with respect to any litigation,
action, proceeding or labor controversy or (y) the commencement of any
litigation, action, proceeding or labor controversy, in each case to
the extent the same, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect, notice thereof;
(f) promptly after any receipt of any notice of acceleration,
redemption or purchase demands or other similar notices provided by the
holder of or the trustee for the 9 1/2% Subordinated Notes or any other
Subordinated Debt, notice thereof and copies of all documentation
relating thereto;
(g) promptly upon filing thereof, copies of any reports filed
on Forms 10-K, 10-Q, and 8-K, effective registration statements filed
on Forms S-1, S-2, S-3 and S-4, and any proxy statements, as well as
any substitute or similar documents to substantially the same effect as
the foregoing, including, to the extent requested by the Administrative
Agent, the schedules and exhibits thereto, in such each case as filed
with the SEC by the Borrower or any Restricted Subsidiary (other than
immaterial amendments to any such registration statement);
(h) promptly after transmission thereof, copies of any notices
of reports that the Borrower or any Subsidiary shall send to the
holders of any publicly issued debt of the Borrower (including any
Subordinated Debt) or any Subsidiary in their capacity as such holders
(in each case to the extent not theretofore delivered to the
Administrative Agent or the Lenders pursuant to this Agreement);
(i) promptly after a Responsible Officer of the Borrower or
any Restricted Subsidiary obtains knowledge of the occurrence of any
ERISA Event (but in no event, in the case of an ERISA Event described
in clause (u) of the definition of "ERISA Event", more than 10 days,
and in the case of any other ERISA Event, 30 days after such
Responsible Officer obtains knowledge of such ERISA Event), notice
thereof together with a copy of any notice with respect to such event
that is filed with a Governmental Authority and any notice delivered by
a Governmental Authority to the Borrower or any ERISA Affiliate with
respect to such event;
(j) promptly when available and in any event within 60
Business Days after the end of each Fiscal Year (ending after the
Closing Date), a budget for the then current Fiscal Year as customarily
prepared by the management of the Borrower for its internal use, which
budget shall be prepared on a Fiscal Quarter basis and shall set forth
the principal assumptions on which such budget is based;
(k) promptly after obtaining knowledge of any one or more of
the following environmental matters, unless such environmental matters
would not, individually or when aggregated with all other such matters,
be reasonably expected to result in a Material Adverse Effect, notice
of:
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(i) any pending or threatened Environmental Claim
against the Borrower or any Subsidiary or any Real Estate,
(ii) any condition or occurrence on any Real Estate
that (x) results in noncompliance by the Borrower or any
Subsidiary with any applicable Environmental Law or (y) could
reasonably be anticipated to form the basis of an
Environmental Claim against the Borrower or any Subsidiary or
any Real Estate,
(iii) any condition or occurrence on any Real Estate
that could reasonably be anticipated to cause such Real Estate
to be subject to any restrictions on the ownership, occupancy,
use or transferability of such Real Estate under any
Environmental Law, and
(iv) the taking of any removal or remedial action in
response to the actual or alleged presence of any Hazardous
Material on any Real Estate,
all such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial
action and the Borrower's response thereto; and
(l) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any Subsidiary
as any Agent, or the Required Lenders through the Administrative Agent,
may from time to time reasonably request in writing.
SECTION 7.1.2. Preservation of Corporate Existence, etc. The Borrower
will, and will cause each Restricted Subsidiary to:
(a) preserve and maintain in full force and effect its
corporate or partnership existence under the laws of its state or
jurisdiction of incorporation or organization (provided, however, that
the Borrower and Restricted Subsidiaries may consummate any transaction
permitted under Section 7.2.6), except, in the case of any such
Restricted Subsidiary, to the extent that the failure to do so could
not reasonably be expected to have a Material Adverse Effect; and
(b) preserve and maintain in full force and effect its good
standing under the laws of its state or jurisdiction of incorporation
or organization and all material governmental rights, privileges,
qualification, permits, licenses and franchises necessary in the normal
conduct of its business except in each case to the extent that the
failure to do so could not reasonably be expected to have a Material
Adverse Effect.
SECTION 7.1.3. Maintenance of Properties. The Borrower will, and will
cause each Restricted Subsidiary to, ensure that its properties and equipment
used or useful in its business, in whomsoever's possession they may be to the
extent that it is within the Borrower's or such Restricted Subsidiary's control
to cause same, are kept in good repair, working order and condition, normal wear
and tear excepted, and that from time to time there are made in such properties
and equipment all needful and proper repairs, renewals, replacements,
extensions, additions, betterments and improvements thereto, to the extent and
in the manner customary for companies in similar businesses and consistent with
third-party leases, except in each case to the extent the failure to do so could
not reasonably be expected to have a Material Adverse Effect.
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SECTION 7.1.4. Payment of Taxes. The Borrower will, and will cause each
Subsidiary to, pay and discharge all material taxes, assessments and
governmental charges or levies upon it or upon its income or profits, or upon
any properties belonging to it, prior to the date on which material penalties
attach thereto, and all lawful material claims that, if unpaid, could reasonably
be expected to become a material Lien upon any properties of the Borrower or any
Restricted Subsidiary; provided, however, that neither the Borrower nor any
Subsidiary shall be required hereunder to pay any such tax, assessment, charge,
levy or claim that is being contested in good faith if it has maintained
adequate reserves (in the good faith judgment of the management of the Borrower
or such Subsidiary) with respect thereto in accordance with GAAP.
SECTION 7.1.5. Compliance with Statutes, etc. The Borrower will, and
will cause each Subsidiary to comply, in all material respects, with all
Applicable Laws (including Environmental Laws) having jurisdiction over it or
its business, except such as may be contested in good faith or as to which a
bona fide dispute may exist or except to the extent that the failure to so
comply could not reasonably be expected to have a Material Adverse Effect.
SECTION 7.1.6. Insurance. The Borrower shall, and shall cause each
Restricted Subsidiary to, at all times maintain in full force and effect, with
insurance companies which the Borrower believes (in the good faith judgment of
the management of the Borrower) are financially sound and responsible at the
time the relevant coverage is placed or renewed, insurance with respect to its
properties and business (including business interruption insurance) against such
casualties and contingencies and of such types and in such amounts, and with
such deductibles, retentions, self-insured amounts and reinsurance provisions,
as are customarily maintained by companies engaged in the same or similar
businesses and will, upon request of the Administrative Agent, furnish to each
Lender information presented in reasonable detail as to the insurance maintained
by the Borrower and Restricted Subsidiaries.
SECTION 7.1.7. Inspection Of Property and Books and Records. The
Borrower will, and will cause each Restricted Subsidiary to, permit officers and
designated representatives of the Agents or the Required Lenders, upon
reasonable advance notice and at reasonable times and intervals, to visit and
inspect any of its properties or its assets, to discuss its financial matters
with its officers and independent public accountant and to examine (and, at the
expense of the Borrower, photocopy extracts from) any of its books or other
corporate records, provided, that, the Borrower shall be given reasonable prior
notice of any such contact with such officers or accountants and shall have the
right (which, if not exercised, does not otherwise affect the obligations
hereunder) to participate in such discussions. The Borrower shall pay any fees
of such independent public accountant incurred in connection with such Agent's
or any Lender's reasonable exercise of its rights pursuant to this Section.
SECTION 7.1.8. Future Subsidiaries. Upon (w) any Person becoming, after
the Closing Date, a Subsidiary of the Borrower (other than any Unrestricted
Subsidiary), (x) the Borrower acquiring additional Capital Stock of any existing
Restricted Subsidiary the Capital Stock of which is then pledged under the
Pledge Agreement, (y) any indirect Restricted Subsidiary becoming a direct
Restricted Subsidiary or (z) any Unrestricted Subsidiary being designated as a
Restricted Subsidiary, the Borrower shall notify the Agents of such event, and,
unless otherwise agreed to among the Borrower, the Agents and the Required
Lenders,
(a) such Person shall, if it is a Domestic Restricted
Subsidiary and not theretofore a party to the Guaranty, execute and
deliver to the Administrative Agent a supplement to the Guaranty in the
form of Annex I thereto for the purposes of becoming a guarantor
thereunder;
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(b) the Borrower shall, if such Person is a direct Domestic
Restricted Subsidiary of the Borrower or a direct Foreign Subsidiary
which is a Material Restricted Subsidiary, pledge to the Administrative
Agent pursuant to the Pledge Agreement all of the outstanding shares of
Capital Stock of such Subsidiary owned directly by it (provided,
however, that, in the event such Subsidiary is a Foreign Subsidiary,
the Borrower shall not be required to pledge more than 65% of the
outstanding shares of the Capital Stock of such Subsidiary), along with
undated stock powers for such certificates, executed in blank (or, if
any such shares of capital stock are uncertificated, confirmation and
evidence satisfactory to the Agents that the control of such
uncertificated securities has been transferred to, and the security
interest therein has been perfected by, the Administrative Agent, for
the benefit of the Lenders, the Agents and the Issuer, in accordance
with Section 9-115 of the U.C.C. or any other similar law which may be
applicable); and
(c) if and to the extent required by clause (g)(iii) or
(k)(ii) of Section 7.2.1, such Subsidiary shall secure its Obligations
under the Guaranty by executing and delivering to the Administrative
Agent security instruments satisfactory to the Administrative Agent and
taking all such further actions as may reasonably be required by the
Administrative Agent so as to create in favor of the Administrative
Agent a pari passu Lien on all assets of such Subsidiary in which a
Lien shall continue in existence pursuant to clause (e) or (f) of
Section 7.2.2;
provided, however, that the Borrower may, by notice to the Administrative Agent
on the date of any Permitted Acquisition, elect to exclude the Restricted
Subsidiary so becoming a Restricted Subsidiary (and elect to continue so to
exclude any Restricted Subsidiaries previously so designated in a notice
delivered pursuant to this proviso) from the requirements of this Section if
such Restricted Subsidiary has no Contingent Liability in respect of any
Subordinated Debt and the aggregate outstanding principal amount of all other
Indebtedness of such Restricted Subsidiary outstanding pursuant to clause (g)
(excluding, however, Permitted Acquisition Come-Along Indebtedness, Permitted
Acquisition Subordinated Indebtedness and Permitted Acquisition Ordinary Course
Indebtedness) and (k) of Section 7.2.1 is at least $10,000,000 and does not
exceed, together with the aggregate outstanding principal amount of all such
Indebtedness of all other such Restricted Subsidiaries continuing to be so
designated, $50,000,000 (it being understood that the Borrower shall comply on
the date of delivering a notice pursuant to this proviso with the requirements
of this Section as to any Restricted Subsidiary (x) which shall have been so
designated in such a notice previously delivered pursuant to this proviso and
(y) which shall not continue to be so designated in such notice).
SECTION 7.1.9. Use of Proceeds. The Borrower shall apply the proceeds
of the Credit Extensions
(a) to finance the Merger (and the other transactions
contemplated by the Merger Agreement);
(b) to complete the Offer to Purchase and to repay or, as the
case may be, defease the Indebtedness identified in Item 7.2.1(b)
("Indebtedness to be Paid") of the Disclosure Schedule;
(c) for working capital and general corporate purposes of the
Borrower and Restricted Subsidiaries, including Permitted Acquisitions
by such Persons; and
(d) to pay Transaction Costs.
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SECTION 7.1.10. Transactions with Affiliates. The Borrower shall, and
shall cause each Restricted Subsidiary to, conduct all transactions with any of
its Affiliates (other than the Borrower and Restricted Subsidiaries) upon terms
that are substantially as favorable to the Borrower or such Restricted
Subsidiary as it would obtain in a comparable arm's-length transaction with a
Person not an Affiliate of the Borrower or such Restricted Subsidiary; provided,
however, that the foregoing restrictions shall not apply to
(a) the payment of customary annual fees and reimbursement of
expenses to the Sponsors and their Affiliates for management,
consulting and financial services rendered to the Borrower and
Restricted Subsidiaries, and customary investment banking fees paid to
the Sponsors and their Affiliates for services rendered to the Borrower
or to Restricted Subsidiaries in connection with divestitures,
acquisitions, financings and other transactions;
(b) customary fees paid to members of the Board of Directors
of the Borrower and any Restricted Subsidiary; and
(c) the performance of the management agreements entered into
with the Borrower identified in Item 7.1.10 ("Management Agreements
with the Borrower") of the Disclosure Schedule; and
(d) employment arrangements with respect to the procurement of
services of directors, officers and employees in the ordinary course of
business and the payment of reasonable fees in connection therewith.
SECTION 7.1.11. Business Activities. The Borrower will, and will cause
each Restricted Subsidiary to, engage primarily in the business referred to in
the first recital or such other activities as are reasonably related, incidental
or substantially similar thereto.
SECTION 7.1.12. End of Fiscal Year. The Borrower will, for financial
reporting purposes, cause each of its, and each Domestic Restricted
Subsidiary's, Fiscal Years to end on the Thursday which is the closest to each
December 31; provided, however, that the Borrower may, upon prior notice to the
Administrative Agent, change the last day of its Fiscal Year to any other date
reasonably acceptable to the Administrative Agent, in which case the Borrower
and the Administrative Agent will, and are hereby authorized by the Lenders to,
make any adjustments to this Agreement that are necessary in order to reflect
such change in financial reporting.
SECTION 7.2. Negative Covenants. The Borrower agrees with each Agent,
the Issuer and each Lender that, until all Commitments have terminated, all
Letters of Credit have terminated or expired and all Obligations have been paid
and performed in full, the Borrower will perform the obligations set forth in
this Section 7.2.
SECTION 7.2.1. Indebtedness. The Borrower will not, and will not permit
any Restricted Subsidiary to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:
(a) Indebtedness in respect of the Credit Extensions and other
Obligations;
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(b) until the date of the initial Credit Extension,
Indebtedness identified in Item 7.2.1(b) ("Indebtedness to be Paid") of
the Disclosure Schedule;
(c) Indebtedness existing as of the Effective Date which is
identified in Item 7.2.1(c) ("Ongoing Indebtedness") of the Disclosure
Schedule;
(d) unsecured Indebtedness incurred in the ordinary course of
business of the Borrower and Restricted Subsidiaries (consisting of
open accounts extended by suppliers on normal trade terms in connection
with purchases of goods and services and Indebtedness in respect of
performance, surety or appeal bonds provided in the ordinary course of
business, but excluding, however, Indebtedness incurred through the
borrowing of money and Contingent Liabilities in respect thereof);
(e) Indebtedness in respect of Capitalized Lease Liabilities
(other than any Indebtedness permitted by clauses (i) or (g)) at any
time not exceeding $50,000,000;
(f) unsecured Indebtedness between the Borrower and Restricted
Subsidiaries and unsecured Indebtedness between Restricted
Subsidiaries;
(g) Indebtedness of a Person existing at the time of its
becoming an Acquired Person as a result of a Permitted Acquisition;
provided, however, that
(i) such Indebtedness existed at the time such
Person became an Acquired Person or at the time such assets
were acquired and, in each case, was not created in
anticipation thereof,
(ii) such Indebtedness is not guaranteed in any
respect by the Borrower or any other Restricted Subsidiary
(other than any other Acquired Person which was the parent or
a Subsidiary of the Person so being acquired and it being
understood that a merger does not constitute a guarantee),
(iii) if such Person becomes a Restricted Subsidiary,
concurrently therewith, the requirements of Section 7.1.8 are
satisfied to the extent required thereby, and
(iv) if such Indebtedness subordinates the rights of
the holders thereof to any other creditors, such Indebtedness
qualifies as Permitted Acquisition Subordinated Indebtedness;
(h) unsecured Subordinated Debt of the Borrower;
(i) Indebtedness (including Indebtedness constituting
Capitalized Lease Liabilities) incurred by the Borrower or any
Restricted Subsidiary specifically to finance the acquisition,
improvement or construction of fixed or capital assets of a particular
motion picture theatre and its directly related assets which (x) is
incurred substantially concurrently therewith or within 270 days prior
to or after the completion thereof and (y) either (1) is secured by a
Lien permitted by clause (d)(iii) of Section 7.2.2 or (2) has the
benefit of a covenant which restricts the Borrower or such Restricted
Subsidiary from liening, mortgaging or otherwise disposing of such
asset (or any or all assets comprising such motion picture theatre and
its directly related assets and up to four additional motion picture
theatres and their directly related assets);
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(j) Indebtedness in respect of Hedging Liabilities of the
Borrower or any Restricted Subsidiary incurred in the ordinary course
of business and not for speculative purposes (as determined in good
faith by the Borrower);
(k) Indebtedness of the Borrower or any Restricted Subsidiary
incurred to finance a Permitted Acquisition; provided, however, that
(i) such Indebtedness is not guaranteed in any
respect by any other Restricted Subsidiary (other than any
Person which as a result of such Permitted Acquisition becomes
an Acquired Person) or, in the case of Indebtedness of any
Restricted Subsidiary, by the Borrower (it being understood
that a merger does not constitute a guarantee), and
(ii) concurrently therewith, the requirements of
Section 7.1.8 are satisfied to the extent required thereby;
(l) any refinancing, refunding, renewal or extension of any
Indebtedness permitted under clauses (c) through (g) and (i) through
(k); provided, however, that (x) the principal amount thereof is not
increased above the principal amount thereof outstanding immediately
prior to such refinancing, refunding, renewal or extension (except to
the extent otherwise permitted under this Section) and (y) the direct
and contingent obligors with respect to such Indebtedness are not
changed unless permitted under the applicable provisions hereof;
(m) Contingent Liabilities of the Borrower or any Restricted
Subsidiary
(i) in respect of any Indebtedness which is (x)
permitted by any other clause of this Section to be incurred
by the Borrower or any other Restricted Subsidiary and (y)
which, by the terms of such other clause, is not restricted
from being guaranteed by the Borrower or Restricted
Subsidiaries (provided, however, that the Contingent Liability
of a Restricted Subsidiary in respect of any Subordinated Debt
of the Borrower shall be subordinated to such Restricted
Subsidiary's Guaranty on terms identical to the terms of the
subordination of the Borrower's obligations in respect of such
Subordinated Debt to the Obligations), and
(ii) in respect of any Indebtedness of other Persons
(including in Unrestricted Subsidiaries), but only if such
Contingent Liability (x) is incurred when the Total Leverage
Ratio as of the last day of the most recently ended Fiscal
Quarter was greater than 4.0:1.0 and (y) was permitted to have
been made as an Investment pursuant to clause (h) of Section
7.2.4;
(n) additional Indebtedness in an aggregate principal amount
not exceeding $125,000,000 at any time outstanding; and
(o) Indebtedness of Surviving Regal to former stockholders of
Old Regal in respect of Merger Consideration, including after the
release by the Exchange Agent of the Exchange Fund;
provided, however, that (x) the sum of (1) the aggregate outstanding principal
amount of all Indebtedness permitted by clauses (g) (excluding, however,
Permitted Acquisition Ordinary Course Indebtedness, Permitted Acquisition
Subordinated Indebtedness and Permitted Acquisition Come-Along Indebtedness) and
(k) plus (2) to the extent not constituting Act III Additional Financing, the
Revolving Credit
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Commitment Amount Increase plus the aggregate outstanding principal amount of
all Additional Loans shall not at any time exceed $350,000,000 and (y) on each
date of incurring any such Indebtedness as the result of which the aggregate
outstanding principal amount of all such Indebtedness shall exceed $200,000,000,
an aggregate principal amount of such Indebtedness in the amount of such excess
shall constitute Permitted Additional Structured Indebtedness.
SECTION 7.2.2. Liens. The Borrower will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or suffer to exist any Lien upon
any of its property, revenues or assets, whether now owned or hereafter
acquired, except:
(a) Liens securing payment of the Obligations granted pursuant
to any Loan Document or any Rate Protection Agreement;
(b) until the date of the initial Credit Extension, Liens
securing payment of Indebtedness permitted by clause (b) of Section
7.2.1;
(c) Liens existing as of the Effective Date securing
Indebtedness of the type permitted by clause (c) of Section 7.2.1 and
described in Item 7.2.1(c) ("Ongoing Indebtedness") of the Disclosure
Schedule;
(d) Liens securing
(i) payment of foreign currency exchange or rate
swap and similar agreements referred to in clause (j) of
Section 7.2.1, 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,
(ii) Indebtedness of the type permitted by clause
(e) of Section 7.2.1 (which Liens shall extend to only the
assets that are the subject of the lease giving rise to such
Capitalized Lease Liabilities), and
(iii) Indebtedness of the type permitted by clause
(i) of Section 7.2.1 (which Liens shall extend to only (x) the
asset the construction, improvement or acquisition of which
was financed with the proceeds of such Indebtedness, or (y)
any and all assets comprising (1) the motion picture theatre
and directly related assets of which such asset is a part or
(2) up to four additional motion picture theatres and their
directly related assets),
and renewals, extensions and refinancing of such Indebtedness;
provided, however, that the Liens permitted by this clause shall only
cover the same assets (or substitutions or replacements therefor of the
same general type) which originally secured the Indebtedness incurred
pursuant to such clauses;
(e) Liens existing on the assets of any Person that becomes a
Restricted Subsidiary, or existing on assets acquired, pursuant to a
Permitted Acquisition under clause (d) of Section 7.2.6 to the extent
such Liens secure Indebtedness permitted by clause (g) of Section
7.2.1; provided, however, that such Liens (x) existed on the date of
such Permitted Acquisition and were not created in anticipation
thereof, (y) attach only to a specific asset or type of asset of such
Person and not assets of such Person generally and (z) attach at all
times only to the same assets that such
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Liens attached to, and secure only the same Indebtedness that such
Liens secured, immediately prior to such Permitted Acquisition;
(f) Liens placed upon the Capital Stock or assets of any
Restricted Subsidiary acquired pursuant to a Permitted Acquisition
under clause (d) of Section 7.2.6 to the extent such Liens secure
Indebtedness incurred pursuant to clause (k) of Section 7.2.1 to
finance the Acquisition of such Restricted Subsidiary by the Borrower
or any of its other Restricted Subsidiaries;
(g) Permitted Liens;
(h) other Liens securing Indebtedness permitted by Section
7.2.1 in an aggregate outstanding amount not to exceed $25,000,000 at
any time; and
(i) the replacement, extension or renewal of any Lien
permitted by clauses (c) or (e) through (h) upon or in the same assets
theretofore subject to such Lien (or substitution or replacement assets
of the same general type) or the replacement, extension or renewal
(without increase in the amount or change in any direct or contingent
obligor except to the extent otherwise permitted under this Agreement)
of the Indebtedness secured thereby.
SECTION 7.2.3. Financial Condition and Operations. The Borrower will
not permit to occur any of the events set forth below.
(a) Fixed Charge Coverage Ratio. The Borrower will not
permit the Fixed Charge Coverage Ratio as of the last day of any Fiscal
Quarter ending on or about any date set forth below or occurring during
any period set forth below to be less than the ratio set forth opposite
such period:
<TABLE>
<CAPTION>
Fixed Charge
Period Coverage Ratio
------ --------------
<S> <C>
12/31/1998 through 06/30/1999 1.20:1
09/30/1999 through 12/31/1999 1.25:1
03/31/2000 through 12/31/2000 1.30:1
03/31/2001 through 12/31/2001 1.40:1
03/31/2002 and thereafter 1.50:1.
</TABLE>
(b) Maximum Senior Leverage Ratio. The Borrower will not
permit the Senior Leverage Ratio as of the last day of any Fiscal
Quarter ending on or about any date set forth below or occurring during
any period set forth below to be greater than the ratio set forth
opposite such date or such period, as applicable:
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<PAGE> 85
<TABLE>
<CAPTION>
Maximum Senior
Period Leverage Ratio
------ --------------
<S> <C>
12/31/1998 through 06/30/1999 5.000:1
09/30/1999 through 12/31/1999 4.750:1
03/31/2000 through 06/30/2000 4.625:1
09/30/2000 through 12/31/2000 4.500:1
03/31/2001 through 06/30/2001 4.375:1
09/30/2001 through 12/31/2001 4.250:1
03/31/2002 through 06/30/2002 4.125:1
09/30/2002 through 12/31/2002 3.875:1
03/31/2003 through 12/31/2003 3.625:1
03/31/2004 and thereafter 3.500:1
</TABLE>
SECTION 7.2.4. Investments. The Borrower will not, and will not permit
any Restricted Subsidiary to, make, incur, assume or suffer to exist any
Investment in any other Person, except:
(a) Investments existing on the Effective Date and identified
in Item 7.2.4(a) ("Ongoing Investments") of the Disclosure Schedule and
any extensions, renewals, modifications, restatements or replacements
thereof, provided, that, no such extension, renewal, modification,
restatement or replacement shall increase the amount of the original
Investment;
(b) Cash Equivalent Investments;
(c) without duplication, Investments to the extent permitted
as Indebtedness pursuant to Section 7.2.1;
(d) without duplication, Investments permitted by Section
7.2.6;
(e) Investments by way of contributions to capital or
purchases of equity by the Borrower in any Restricted Subsidiary or by
any Restricted Subsidiary in the Borrower or any other Restricted
Subsidiary;
(f) Investments constituting (x) accounts receivable arising,
(y) trade debt granted or (z) deposits made in connection with the
purchase price of goods or services, in each case in the ordinary
course of business;
(g) Investments constituting loans and advances to officers,
directors and employees of the Borrower or any Restricted Subsidiary
(x) to finance the purchase of Capital Stock of the Borrower and (y)
for additional purposes not contemplated by item (x), in an aggregate
principal amount at any time outstanding not exceeding $25,000,000;
(h) additional Investments (including Contingent Liabilities)
by the Borrower or any Restricted Subsidiary (including in Unrestricted
Subsidiaries); provided, however, that at any time
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that the Total Leverage Ratio as of the last day of the most recently
ended Fiscal Quarter is greater than 4.0:1.0, additional Investments
may not be made pursuant to this clause if, after giving effect
thereto, the aggregate amount of all Investments made pursuant to this
clause at such time would exceed the sum of (x) $100,000,000 plus (y)
with respect to each Permitted Acquisition, the greater, on the date of
such Permitted Acquisition, of (1) 100% of Adjusted EBITDA of such
Acquired Person determined for its four most recently elapsed fiscal
quarters and (2) 20% of the total value of all of such Acquired
Person's assets on such date plus (z) the then Available Investment
Amount;
(i) payments made in accordance with tax sharing agreements of
the nature referred to in the proviso to the definition of
"Unrestricted Subsidiary";
(j) promissory notes and other non-cash consideration received
by the Borrower and any Restricted Subsidiary in connection with asset
sales permitted pursuant to Section 7.2.6;
(k) Investments (including debt obligations and Capital Stock)
received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations of,
and other disputes with, suppliers arising in the ordinary course of
business;
provided, however, that
(l) any Investment which when made complies with the
requirements of clause (a), (b) or (c) of the definition of "Cash
Equivalent Investment" may continue to be held notwithstanding that
such Investment if made thereafter would not comply with such
requirements;
(m) no Investment otherwise permitted by clause (d) or (h)
shall be permitted to be made if any Event of Default or Payment
Default has occurred and is continuing or would result therefrom;
(n) no Contingent Liability shall be permitted to be incurred
pursuant to clause (c) (insofar as it relates to clause (m) of Section
7.2.1) or (h) if, after giving effect thereto, the aggregate amount of
all Contingent Liabilities then outstanding pursuant to clauses (c)
(insofar as it relates to clause (m) of Section 7.2.1) and (h) shall
exceed the sum determined at such time pursuant to the proviso to
clause (h); and
(o) notwithstanding anything herein to the contrary, the
aggregate Investments made pursuant to this Section in Clark-Regal
shall not exceed $10,000,000 unless, on or prior to the date which is
90 days after the Closing Date, Clark-Regal shall have delivered a
Guaranty and the Borrower shall have pledged to the Administrative
Agent, on behalf of the Lenders, its Capital Stock of Clark-Regal.
SECTION 7.2.5. Restricted Payments, etc. The Borrower will not, and
will not permit any Restricted Subsidiary to, make any Restricted Payment;
provided, however, except that, so long as before and after giving effect to any
such payment no Default shall have occurred, the Borrower may:
(a) declare and make dividends or other distributions payable
solely in shares of its Capital Stock;
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<PAGE> 87
(b) purchase, redeem or otherwise acquire shares of common
stock of the Borrower or warrants or options to acquire any such shares
with the proceeds received from the substantially concurrent issuance
of new shares of common stock of the Borrower;
(c) redeem or exchange in whole or in part any Capital Stock
of the Borrower for another class of Capital Stock or rights to acquire
such other class of Capital Stock of the Borrower; provided, however,
that such other class of Capital Stock contains terms and provisions
(taken as a whole) at least as advantageous to the Lenders as those
contained in the Capital Stock redeemed or exchanged thereby;
(d) repurchase shares of its Capital Stock (together with
options or warrants in respect of any thereof) held by the officers,
directors and employees of the Borrower, so long as such repurchase is
pursuant to, and in accordance with the terms of, management and/or
employee stock plans, stock subscription agreements or shareholder
agreements;
(e) subject to the subordination provisions applicable thereto
(1), redeem, defease or otherwise prepay or retire any Subordinated
Debt (x) from the net proceeds of the issuance of other Subordinated
Debt, Qualified Preferred Stock or common stock of the Borrower or (y)
in an aggregate amount not to exceed at any time the then Available
Restricted Payment Amount, or (2) redeem any 8 1/2 % Regal Notes not
purchased on the Closing Date;
(f) pay cash dividends on common stock or preferred stock to
the extent that
(i) the Borrower shall have delivered to the
Administrative Agent (x) financial statements prepared on a
pro forma basis after giving effect to the payment of such
cash dividends for the period of four consecutive Fiscal
Quarters ending with the Fiscal Quarter then last ended for
which financial statements and the Compliance Certificate
relating thereto have been delivered to the Administrative
Agent pursuant to Section 7.1.1 and (y) a certificate of the
Borrower executed by a Responsible Officer demonstrating that
the financial results reflected in such financial statements
would (1) comply with the requirements of clauses (a) and (b)
of Section 7.2.3 for the Fiscal Quarter in which such dividend
is to be made and (2) satisfy a requirement (A) in the case of
Qualified Preferred Stock, that the Fixed Charge Coverage
Ratio (which shall be adjusted to include the amount of such
dividend being paid as additional Interest Expense in clause
(b)(i) of the definition of such term) shall be at least
1.15:1.00 and (B) in the case of other preferred stock or
common stock, that the Total Leverage Ratio as at the end of
such period be not greater than 4.0:1.0, and
(ii) the aggregate amount expended by the Borrower
with respect to dividends on common and preferred (excluding,
however, Qualified Preferred Stock) stock pursuant to this
clause shall not at any time exceed in the aggregate of then
Available Restricted Payment Amount.
SECTION 7.2.6. Consolidations and Mergers; Sales of Assets. The
Borrower shall not, and shall not suffer or permit any Restricted Subsidiary to,
merge, consolidate or otherwise combine or liquidate with or into, or enter into
or consummate any Disposition (other than any Disposition resulting from a
casualty or condemnation) or any Acquisition, whether in one transaction or in a
series of transactions to or in favor of, any Person, except:
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<PAGE> 88
(a) any Restricted Subsidiary may merge or otherwise
consolidate with (x) the Borrower (provided, however, that the Borrower
shall be the continuing or surviving corporation) or (y) any other
Restricted Subsidiary;
(b) any Restricted Subsidiary may sell or otherwise transfer
its assets (upon voluntary liquidation or otherwise) to the Borrower or
any other Restricted Subsidiary, and the Borrower may sell or otherwise
transfer its assets to any Restricted Subsidiary (which Restricted
Subsidiary shall, immediately after giving effect to such transfer,
continue to be a Restricted Subsidiary);
(c) the Borrower or any Restricted Subsidiary may consummate
one or more Dispositions; provided, however, that (x) the Borrower
complies with the requirements of clause (d) of Section 3.1.1, (y) such
Disposition is made for fair value (as determined in good faith by the
Borrower) and (z) the aggregate consideration received for all assets
disposed of in Dispositions not constituting Real Estate Financings
from and after the Closing Date pursuant to this clause shall not
exceed the sum of (1) $150,000,000 plus (2) at any time, 25% of the
total value (determined,
with respect to each Permitted Acquisition, on the date of such
Permitted Acquisition) of the assets acquired pursuant to all Permitted
Acquisitions consummated at or prior to such time;
(d) the Borrower or any Restricted Subsidiary may consummate
an Acquisition (any such Acquisition permitted pursuant to this clause,
a "Permitted Acquisition"), so long as
(i) such Acquisition and all transactions related
thereto are consummated in accordance with applicable law,
(ii) in the case of an Acquisition of Capital Stock
or other equity interest by the Borrower or a Restricted
Subsidiary of any Person,
(A) such Acquisition results in the issuer
of such Capital Stock or other equity interest
becoming a Restricted Subsidiary,
(B) the Borrower pledges the Capital Stock
of such Person to the Administrative Agent to the
extent required under Section 7.1.8, and
(C) such Person executes a supplement to the
Guaranty to the extent required under Section 7.1.8,
(iii) in the case of a merger of the Borrower with
another Person that results in such Person being the surviving
entity, (u) the Person formed by or surviving any such merger
or consolidation (if other than the Borrower) shall be a
corporation organized or existing under the laws of the United
States, any state thereof, the District of Columbia or any
territory thereof (such Person being the "Successor
Borrower"), (v) the Successor Borrower shall expressly assume
all the obligations of the Borrower under this Agreement and
the other Loan Documents pursuant to a supplement hereto or
thereto in form and substance reasonably satisfactory to the
Administrative Agent, (w) no Default would occur as a result
of the consummation of such merger or consolidation, (x) the
Successor Borrower shall be in compliance, on a pro forma
basis as set forth in clause (d)(vii), (y) each Guarantor,
unless it is the other party to such merger or consolidation,
shall have by a supplement to the Guaranty confirmed that its
Guaranty shall continue to be effective with
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<PAGE> 89
respect to the Successor Borrower's Obligations under this
Agreement and (z) the Borrower shall have delivered to the
Administrative Agent an officer's certificate and an opinion
of counsel, each stating that such merger or consolidation and
such supplement to this Agreement or any Guaranty comply with
this Agreement, in which event, if all of the foregoing are
satisfied, the Successor Borrower will succeed to, and be
substituted for, the Borrower under this Agreement,
(iv) no Capital Stock or other equity interest or
assets acquired in connection with such Acquisition shall be
subject to any Lien (other than Liens permitted by Section
7.2.2),
(v) neither the Borrower nor any other Restricted
Subsidiary shall assume or incur, directly or indirectly, any
Indebtedness in connection with such Acquisition (other than
as specifically permitted by clause (g) or (k) of Section
7.2.1),
(vi) after giving effect to such Acquisition, no
Default shall have occurred and be continuing (provided,
however, that, for purposes of this clause, the pendency of a
change of control put right with respect to any Permitted
Acquisition Subordinated Indebtedness shall not constitute a
Default),
(vii) in the case that the total cash and non-cash
consideration with respect to such Acquisition is $30,000,000
or more, the Borrower shall have delivered to the
Administrative Agent prior to the consummation of such
Acquisition
(A) financial statements or reconciliations
prepared on a pro forma basis for the period of four
consecutive Fiscal Quarters ending with the Fiscal
Quarter then last ended for which financial
statements and the Compliance Certificate relating
thereto have been delivered to the Administrative
Agent pursuant to Section 7.1.1 (assuming, for
purposes of such pro forma calculation, that such
Acquisition had been consummated on the first day of
such period), and
(B) a certificate of the Borrower executed
by its chief financial Authorized Officer
demonstrating that the financial results reflected in
such financial statements would comply with the
requirements of Section 7.2.3 for the Fiscal Quarter
in which such Acquisition is to be made,
(viii) after giving effect to such Acquisition, not
more than the greater of (x) 20% of the Adjusted EBITDA and
(y) 20% of the total assets of the Borrower and Restricted
Subsidiaries, shall be attributable to Foreign Subsidiaries.
SECTION 7.2.7. Modification of Subordinated Instruments. The Borrower
will not, and will not permit any Restricted Subsidiary to, consent to or permit
or suffer to exist any amendment, supplement or other modification of the 9 1/2%
Subordinated Note Indenture, the Old Regal 8 1/2% Subordinated Note Indenture
(as amended through the Closing Date) or any other Instrument evidencing or
applicable to any other Subordinated Debt in a manner which would be adverse to
Lenders in any material respect.
SECTION 7.2.8. Designation of Senior Indebtedness. The Borrower will
not designate any Indebtedness as "Designated Senior Indebtedness" pursuant to
clause (ii) of the definition of such term in the 9 1/2% Subordinated Note
Indenture.
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ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the following
events or occurrences described in this Section 8.1 shall constitute an "Event
of Default".
SECTION 8.1.1. Non-Payment of Obligations. The Borrower shall default
in the payment or prepayment when due of
(a) any principal of any Loan; or
(b) any interest on any Loan, any Reimbursement Obligation,
any fee described in Article III or of any other amount payable
hereunder or under any other Loan Document and such default shall
continue unremedied for a period of five days.
SECTION 8.1.2. Breach of Warranty. Any representation or warranty of
the Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any other writing or certificate furnished
by or on behalf of the Borrower or any other Obligor to any Agent, the Issuer or
any Lender for the purposes of or in connection with this Agreement or any such
other Loan Document (including any certificates delivered pursuant to Article
V), is or shall be untrue when made or deemed to have been made in any material
respect.
SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations.
The Borrower shall default in the due performance and observance of any of its
obligations under (x) clause (d) or (f) of Section 7.1.1 or Section 7.2 or (y)
Section 8 of the Pledge Agreement.
SECTION 8.1.4. Non-Performance of Other Covenants and Obligations. The
Borrower or any other Obligor shall default in the due performance and
observance of any other agreement contained herein or in any other Loan Document
executed by it, and such default shall continue unremedied for a period of 30
days after notice thereof shall have been given to the Borrower or such other
Obligor, as applicable, by the Administrative Agent or the Required Lenders.
SECTION 8.1.5. Default on Other Indebtedness. A default shall occur in
the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 8.1.1) of the Borrower or any Restricted Subsidiary having
a principal amount, individually or in the aggregate, in excess of $20,000,000,
or a default or other event shall occur in the performance or observance of any
obligation or condition with respect to such Indebtedness (subject, however, to
any applicable grace period) if the effect of such default or event is to
accelerate the maturity of any such Indebtedness or such default or event shall
continue unremedied for any applicable period of time sufficient to permit the
holder or holders of such Indebtedness, or any trustee or agent for such
holders, to cause or declare such Indebtedness to become due and payable or to
require such Indebtedness to be prepaid, redeemed, purchased or defeased, or to
cause an offer to purchase or defease such Indebtedness to be required to be
made, prior to its expressed maturity.
SECTION 8.1.6. Judgments. Any judgment, order, decree or arbitration
award for the payment of money in excess of $20,000,000 (to the extent not fully
covered by insurance, other than self-insurance
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(less any applicable deductible) or indemnification and as to which the insurer
or the indemnifying party, as the case may be, has not disputed in writing its
responsibility to cover such judgment, order, decree or arbitration award) shall
be rendered against the Borrower or any Restricted Subsidiary and either (x)
enforcement proceedings have been commenced by any creditor upon such judgement
or order or (y) the same shall not have been satisfied or vacated or discharged
or stayed or bonded pending appeal within 60 days after the entry thereof.
SECTION 8.1.7. ERISA. An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan.
SECTION 8.1.8. Control of the Borrower. Any Change of Control shall
occur.
SECTION 8.1.9. Bankruptcy, Insolvency, etc. The Borrower or any
Material Restricted Subsidiary shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness generally to pay, debts as they
become due;
(b) apply for, consent to, or acquiesce in, the appointment of
a trustee, receiver, sequestrator or other custodian for any
substantial part of the property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for a substantial part of the
property of any thereof, and such trustee, receiver, sequestrator or
other custodian shall not be discharged within 60 days;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect thereof, and, if any
such case or proceeding is not commenced by the Borrower or any such
Subsidiary, such case or proceeding shall be consented to or acquiesced
in by the Borrower or such Subsidiary, as the case may be, or shall
result in the entry of an order for relief or shall remain for 60 days
undismissed; or
(e) take any corporate action authorizing, or in furtherance
of, any of the foregoing.
SECTION 8.1.10. Impairment of Security, etc. The Pledge Agreement or
the Guaranty, in whole or in material part, or any Lien granted under the Pledge
Agreement, shall (except in accordance with its terms and except as a result of
acts or omissions of any Agent or Lender) terminate, cease to be effective or
cease to be the legally valid, binding and enforceable obligation of any Obligor
party thereto; the Borrower, any other Obligor or any other party shall,
directly or indirectly, deny or disaffirm in writing such effectiveness,
validity, binding nature or enforceability; or, except as permitted under any
Loan Document, any Lien securing any Obligation shall, in whole or in part,
cease to be a perfected first priority Lien and, in any such event, the Borrower
or such Obligor shall have failed to cure such invalidity within 5 days after
notice thereof from the Administrative Agent.
SECTION 8.2. Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of Section 8.1.9 shall occur with respect to the
Borrower, the Commitments (if not theretofore terminated)
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shall automatically terminate and the outstanding principal amount of all
outstanding Loans and all other Obligations (including Reimbursement
Obligations) shall automatically be and become immediately due and payable,
without notice or demand, the Issuer shall terminate any Letter of Credit that
may be terminated in accordance with its terms, and the Borrower shall
automatically and immediately be obligated to pay to the Administrative Agent at
the Administrative Agent's Office such additional amounts of cash, to be held as
security for the Borrower's reimbursement obligations for drawings that may
subsequently occur thereunder, equal to the aggregate Stated Amount of all
Letters of Credit issued and then outstanding.
SECTION 8.3. Action if Other Event of Default. If any Event of Default
(other than any Event of Default with respect to the Borrower described in
clauses (a) through (d) of Section 8.1.9) shall occur for any reason, whether
voluntary or involuntary, and be continuing, the Administrative Agent, upon the
direction of the Required Lenders, shall by notice to the Borrower (w) declare
all Commitments (if not theretofore terminated) to be terminated, whereupon the
Commitments shall terminate, (x) declare all or any portion of the outstanding
principal amount of the Loans and other Obligations (including Reimbursement
Obligations) to be due and payable, whereupon the full unpaid amount of such
Loans and other Obligations which shall be so declared due and payable shall be
and become immediately due and payable, without further notice, demand or
presentment, (y) terminate any Letter of Credit that may be terminated in
accordance with its terms; and (z) direct the Borrower to pay (and the Borrower
agrees that upon receipt of such notice it will pay) to the Administrative
Agent at the Administrative Agent's Office such additional amounts of cash, to
be held as security for the Borrower's reimbursement obligations for drawings
that may subsequently occur thereunder, equal to the aggregate Stated Amount of
all Letters of Credit issued and then outstanding.
ARTICLE IX
THE AGENTS
SECTION 9.1. Actions. (a) Each Lender hereby appoints (x) Scotiabank as
its Administrative Agent, (y) BancAmerica Robertson Stephens as its Syndication
Agent and (z) The Chase Manhattan Bank as its Documentation Agent, in each case
under and for purposes of this Agreement, the Notes and each other Loan
Document. Each Lender authorizes each such Agent to act on behalf of such Lender
under this Agreement, the Notes and each other Loan Document and, in the absence
of other written instructions from the Required Lenders received from time to
time by any particular Agent (with respect to which each Agent agrees that it
will comply, except as otherwise provided in this Section or as otherwise
advised by counsel in order to avoid contravention of applicable law), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of such Agent by the terms hereof or thereof, together with such
powers as may be reasonably incidental thereto. Each Lender hereby indemnifies
(which indemnity shall survive any termination of this Agreement) each of the
Agents and their respective directors, officers, employees or agents, ratably in
accordance with each such Lender's respective Term Loans outstanding and
Commitments (or, if no Term Loans or Commitments are at the time outstanding or
in effect, then ratably in accordance with the principal amount of Term Loans
held by such Lender, and each such Lender's respective Commitments as in effect
in each case on the date of the termination of this Agreement), from and against
any and all liabilities, obligations, losses, damages, claims, costs or expenses
of any kind or nature whatsoever which may at any time be imposed on, incurred
by, or asserted against, such Agent, in any way relating to or arising out of
this Agreement, the Notes and any other Loan Document, including reasonable
attorneys' fees, and as to which the same is not reimbursed by the
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Borrower; provided, however, that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, claims, costs or
expenses which are determined by a court of competent jurisdiction in a final
proceeding to have resulted solely from the gross negligence or wilful
misconduct of such Agent or any of its directors, officers, employees or agents.
No Agent shall be required to take any action hereunder, under the Notes or
under any other Loan Document, or to prosecute or defend any suit in respect of
this Agreement, the Notes or any other Loan Document, unless it is indemnified
hereunder to its satisfaction. If any indemnity in favor of any Agent shall be
or become, in such Agent's determination inadequate, such Agent may call for
additional indemnification from the Lenders and cease to do the acts indemnified
against hereunder until such additional indemnity is given.
(b) Each Lender with a Revolving Loan Commitment hereby irrevocably
appoints the Issuer to act on behalf of such Lender with respect to any Letters
of Credit issued by the Issuer and the documents associated therewith until such
time and except for so long as the Administrative Agent may agree at the request
of the Required Lenders to act for such Issuer with respect thereto; provided,
however, that the Issuer shall have all of the benefits and immunities (x)
provided to the Administrative Agent in this Article with respect to any acts
taken or omissions suffered by the Issuer in connection with Letters of Credit
issued by it or proposed to be issued by it and the application and agreements
for letters of credit pertaining to the Letters of Credit as fully as if the
term "Administrative Agent", as used in this Article, included the Issuer with
respect to such acts or omissions and (y) as additionally provided in this
Agreement with respect to the Issuer.
SECTION 9.2. Funding Reliance, etc. Unless the Administrative Agent
shall have been notified by telephone, confirmed in writing, by any Lender by
5:00 p.m., New York City time, on the Business Day prior to a Borrowing that
such Lender will not make available the amount which would constitute its
Percentage of such Borrowing on the date specified therefor, the Administrative
Agent may assume that such Lender will make such amount available to the
Administrative Agent and, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If and to the extent that such Lender shall
not have made such amount available to the Administrative Agent, such Lender and
the Borrower severally agree to repay the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date the Administrative Agent made such amount available to the
Borrower to the date such amount is repaid to the Administrative Agent, at the
interest rate applicable at the time to Loans comprising such Borrowing, in the
case of the Borrower, and, in the case of a Lender, at the Federal Funds Rate
for the first two Business Days after which such amount has not been repaid, and
thereafter at the interest rate applicable to Loans comprising such Borrowing.
SECTION 9.3. Exculpation. None of the Agents nor any of their
respective directors, officers, employees or agents shall be liable to any
Lender or the Issuer for any action taken or omitted to be taken by it under
this Agreement or any other Loan Document, or in connection herewith or
therewith, except for its own wilful misconduct or gross negligence, nor
responsible for any recitals or warranties herein or therein, nor for the
effectiveness, enforceability, validity or due execution of this Agreement or
any other Loan Document, nor for the creation, perfection or priority of any
Liens purported to be created by any of the Loan Documents, or the validity,
genuineness, enforceability, existence, value or sufficiency of any collateral
security, nor to make any inquiry respecting the performance by the Borrower of
its obligations hereunder or under any other Loan Document. Any such inquiry
which may be made by any such Agent shall not obligate such Person to make any
further inquiry or to take any action. Each of the Agents shall be entitled to
rely upon advice of counsel concerning legal matters and upon any notice,
consent, certificate, statement or writing which it believes to be genuine and
to have been presented by a proper Person.
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SECTION 9.4. Successor. Any Agent may resign as such at any time upon
at least 30 days' prior notice to the Borrower and all Lenders. If any Agent at
any time shall resign, the Required Lenders may appoint another Lender
reasonably acceptable to the Borrower as a successor to such Agent which shall
thereupon become an Agent hereunder in such capacity as the retiring Agent. If
no successor Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring Agent's
giving notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be one of the Lenders or a
commercial banking institution organized under the laws of the U.S. (or any
State thereof) or a U.S. branch or agency of a commercial banking institution,
and having (x) a combined capital and surplus of at least $1,000,000,000 and (y)
a credit rating of AA or better by Moody's or a comparable rating by S&P;
provided, however, that if, after expending all reasonable commercial efforts,
such retiring Agent is unable to find a commercial banking institution which is
willing to accept such appointment and which meets the qualifications set forth
in item (y), such retiring Agent, shall be permitted to appoint as its successor
from all available commercial banking institutions willing to accept such
appointment such institution having the highest credit rating of all such
available and willing institutions. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall be entitled to
receive from the retiring Agent such documents of transfer and assignment as
such successor Agent may reasonably request, and shall thereupon succeed to and
become vested with all rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was an Agent under
this Agreement, and Sections 10.3 and 10.4 shall continue to inure to its
benefit.
SECTION 9.5. Loans by Agents. Each Agent shall have the same rights and
powers with respect to (x) the Credit Extensions made by it or any of its
Affiliates, and (y) the Notes held by it or any of its Affiliates, as any other
Lender and may exercise the same as if it were not an Agent hereunder. Each
Agent and its Affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with the Borrower or any Subsidiary or Affiliate
of the Borrower as if it were not an Agent hereunder.
SECTION 9.6. Credit Decisions. Each Lender acknowledges that it has,
independently of each Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrower, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitments.
Each Lender also acknowledges that it will, independently of each Agent and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.
SECTION 9.7. Copies, etc. Each Agent shall give prompt notice to each
Lender and each other Agent of each notice or request required or permitted to
be given to such Agent by the Borrower pursuant to the terms of this Agreement
(unless concurrently delivered to the Lenders by the Borrower). Each Agent will
distribute to each Lender and each other Agent each document or instrument
received for its account and copies of all other communications received by such
Agent from the Borrower for distribution to the Lenders by the such Agent in
accordance with the terms of this Agreement or any other Loan Document.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
waived or otherwise modified, if such amendment, waiver or modification is in
writing and consented to by the Borrower and the Required Lenders (except as
provided in Section 2.8) provided, however, that no such amendment, waiver or
modification shall:
(a) extend the Revolving Loan Commitment Termination Date or
the Term A, B and C Loan Commitment Termination Date, change any
Commitment to any other Commitment, amend, waive or modify any
provision of this Section 10.1 or reduce the percentages specified in
the definitions of the terms "Required Lenders", "Supermajority
Revolving Lenders" or "Supermajority Term Lenders", or consent to the
assignment or transfer by the Borrower of its rights and obligations
under any Loan Document to which it is a party, in each case without
the consent of each Lender directly and adversely affected thereby;
(b) forgive any principal of or interest on any Lender's Loan,
reduce the stated rate of any interest hereunder or any fees described
in Article III payable to any Lender, extend the Stated Maturity Date
for any Lender's Loan or extend any scheduled time of payment of such
interest or such fees (other than as a result of waiving the
applicability of any post-default increase in interest rates) without
the consent of such Lender;
(c) increase the aggregate amount of any Lender's Percentage
of any Commitment Amount or increase the aggregate amount of any Loans
required to be made by a Lender pursuant to its Commitments without the
consent of such Lender;
(d) extend the due date (other than the Stated Maturity Date,
as to which clause (b) applies) for any scheduled repayment of or any
scheduled reduction of a Commitment, or decrease the relative
proportion of any mandatory prepayment to be received by the Lenders
holding
(i) Revolving Loans without the consent of the
Required Revolving Lenders, or
(ii) any Series of Term Loans without the consent of
the Required Term Series Lenders for such Series;
(e) except to the extent expressly permitted under the Loan
Documents, release
(i) all or substantially all of the Obligors that
are guarantors under the Guaranty from their obligations under
the Guaranty, or
(ii) all or substantially all of the collateral
security provided under the Loan Documents, including all
Pledged Shares (as such term is defined in the Pledge
Agreement),
in either case without the consent of (x) the Supermajority Revolving
Lenders and (y) the Supermajority Term Lenders; or
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(f) affect adversely the interests, rights or obligations of
any Agent qua such Agent, the Swing Line Lender qua the Swing Line
Lender or the Issuer qua the Issuer, unless consented to by such Agent,
the Swing Line Lender or the Issuer, as the case may be;
provided, however, that no extension of Additional Commitments (nor the making
and repayment of Additional Loans pursuant thereto nor the securing of
Additional Loans pursuant to Guaranty and Pledge Agreement as Loans hereunder)
pursuant to an Additional Financing Amendment shall require the consent of the
Required Lenders or shall be construed as a decrease of the "relative proportion
of any mandatory prepayment" of any Lenders pursuant to clause (d).
No failure or delay on the part of any Agent, the Issuer or any Lender
in exercising any power or right under this Agreement or any other Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power or right preclude any other or further exercise thereof or the
exercise of any other power or right. No notice to or demand on the Borrower in
any case shall entitle it to any notice or demand in similar or other
circumstances. No waiver or approval by any Agent, the Issuer or any Lender
under this Agreement or any other Loan Document shall, except as may be
otherwise stated in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 10.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth below its signature hereto, in the
case of the Borrower or any Agent, or set forth below its name in Annex I hereto
or in a Lender Assignment Agreement, in the case of any Lender (including in its
separate capacity as the Swing Line Lender or Issuer, if applicable), or at such
other address or facsimile number as may be designated by such party in a notice
to the other parties. Any notice, if mailed and properly addressed with postage
prepaid or if properly addressed and sent by pre-paid courier service, shall be
deemed given when received; any notice, if transmitted by facsimile, shall be
deemed given when the confirmation of transmission thereof is received by the
transmitter.
SECTION 10.3. Payment of Costs and Expenses. The Borrower agrees to pay
or reimburse on demand all reasonable and documented costs and expenses of the
Agents (including the reasonable, itemized fees and out-of-pocket expenses of a
single primary counsel to the Agents and of each local and foreign counsel, if
any, who may be retained by counsel to the Agents) in connection with
(a) the negotiation, preparation, execution, delivery and
syndication of this Agreement and of each other Loan Document,
including schedules and exhibits, and any amendments, waivers,
consents, supplements or other modifications to this Agreement or any
other Loan Document as may from time to time hereafter be required;
(b) the filing, recording, refiling or rerecording of any Loan
Document and/or any Uniform Commercial Code financing statements
relating thereto and all amendments, supplements, amendments and
restatements and other modifications to any thereof and any and all
other documents or instruments of further assurance required to be
filed or recorded or refiled or rerecorded by the terms hereof or the
terms of any Loan Document; and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
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The Borrower further agrees to pay, and to save each Agent, the Issuer and the
Lenders harmless from all liability for, any stamp or other taxes which may be
payable in connection with the execution or delivery of this Agreement (subject
to the applicable provisions of Article IV), the Credit Extensions hereunder, or
the issuance of the Notes, Letters of Credit or any other Loan Documents. The
Borrower also agrees to reimburse each Agent, the Issuer and each Lender upon
demand for all reasonable and documented out-of-pocket costs and expenses
(including reasonable attorneys' fees and legal expenses of counsel to each
Agent, the Issuer and each Lender) incurred by such Agent, the Issuer or such
Lender in connection with (x) the negotiation of any restructuring or "work-out"
with the Borrower, whether or not consummated, of any Obligations and (y) the
enforcement of any Obligations.
SECTION 10.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds each Agent, the Issuer and
each Lender and each of their respective Affiliates, and each other Person
controlling any of the foregoing within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and each of their respective
officers, directors, employees, trustees and agents (collectively, the
"Indemnified Parties") free and harmless from and against any and all actions,
causes of action, suits, losses, costs, liabilities and damages, and expenses
incurred in connection therewith (irrespective of whether any such Indemnified
Party is a party to the action for which indemnification hereunder is sought),
including reasonable attorneys' fees and disbursements, whether incurred in
connection with actions between or among the parties hereto or the parties
hereto and third parties (collectively, the "Indemnified Liabilities"), incurred
by the Indemnified Parties or any of them as a result of, or arising out of, or
relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Credit
Extension;
(b) the entering into, performance and enforcement of this
Agreement and any other Loan Document by any of the Indemnified
Parties;
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any Subsidiary
of all or any portion of the stock or assets of any Person, whether or
not any Agent, the Issuer or any Lender is party thereto;
(d) any investigation, litigation or proceeding regarding the
Borrower or any Subsidiary related to any environmental cleanup, audit,
compliance or other matter relating to the protection of the
environment or the Release by the Borrower or any Subsidiary of any
Hazardous Material;
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any Subsidiary thereof of
any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the
control of, the Borrower or such Subsidiary; or
(f) each Lender's Environmental Liability (the indemnification
herein shall survive payment in full of the Obligations and any
transfer of the property of the Borrower or any Subsidiary by
foreclosure or by a deed in lieu of foreclosure for any Lender's
Environmental Liability, regardless of whether caused by, or within the
control of, the Borrower or such Subsidiary);
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except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct or resulting from disputes among the Agents, the
Lenders and/or their transferees or, with respect to a Lender, resulting from a
material breach by such Lender of its obligations hereunder. If and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
SECTION 10.5. Survival. The obligations of the Borrower under Sections
4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under
Section 9.1, shall in each case survive any assignment from one Lender to
another (in the case of Sections 10.3 and 10.4) and any termination of this
Agreement, the payment in full of all the Obligations and the termination of all
the Commitments. The representations and warranties made by the Borrower and
each other Obligor in this Agreement and in each other Loan Document shall
survive the execution and delivery of this Agreement and each such other Loan
Document.
SECTION 10.6. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 10.7. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 10.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be an original and all of which shall constitute together but one
and the same agreement. This Agreement shall become effective when counterparts
hereof executed on behalf of the Borrower, each Agent and each Lender (or notice
thereof satisfactory to the Agents) shall have been received by the
Administrative Agent and notice thereof shall have been given by the
Administrative Agent to the Borrower and each Lender.
SECTION 10.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE
NOTES AND EACH OTHER LOAN DOCUMENT (INCLUDING PROVISIONS WITH RESPECT TO
INTEREST, LOAN CHARGES AND COMMITMENT FEES) SHALL EACH BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF A SECURITY INTEREST OR MORTGAGE HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. This Agreement, the Notes, the
other Loan Documents and each of the Regal Fee Letters constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and thereof and supersede any prior agreements, written or oral, with respect
thereto.
97
<PAGE> 99
SECTION 10.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) the Borrower may not assign or transfer its rights or
obligations hereunder without the prior written consent of the Agents
and all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders
are subject to Section 10.11.
SECTION 10.11. Sale and Transfer of Loans and Notes; Participations in
Loans and Notes. Each Lender may assign, or sell participations in, its Loans,
Letters of Credit Outstandings and Commitments to one or more other Persons in
accordance with this Section.
SECTION 10.11.1. Assignments. (a) Upon prior notice to the Borrower and
the Administrative Agent, any Lender may at any time assign and delegate to one
or more Eligible Assignees with the consent of the Borrower and the
Administrative Agent (which consents shall not be required if the Eligible
Assignee is a Lender or an Affiliate of a Lender and shall not be unreasonably
withheld or delayed if such consents are in fact required), all or any fraction
of such Lender's total Loans, Letter of Credit Outstandings and Commitments in a
minimum aggregate amount of the lesser of $5,000,000 (or such lesser amount as
may be agreed to by the Borrower and the Administrative Agent in their sole and
absolute discretion) and the entire remaining amount of such Lender's Loans,
Letter of Credit Outstandings and Commitments (except that no such minimum shall
be applicable on an assignment to a Lender or an Affiliate of a Lender);
provided, however, that with respect to assignments solely of Revolving Loans,
the assigning Lender must assign a pro-rata portion of each of its Revolving
Loan Commitments, Revolving Loans and interest in Letters of Credit
Outstandings. The Borrower and each other Obligor and each of the Agents shall
be entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned and delegated to an Eligible Assignee
until
(i) notice of such assignment and delegation,
together with (A) payment instructions, (B) the Internal
Revenue Service Forms or other statements contemplated or
required to be delivered pursuant to Section 4.6, if
applicable, (C) addresses and related information with respect
to such Eligible Assignee, shall have been delivered to the
Borrower and the Administrative Agent by such Lender and such
Eligible Assignee and (D) the Administrative Agent has made
the appropriate entries in the Register;
(ii) such Eligible Assignee shall have executed and
delivered to the Borrower and the Administrative Agent a
Lender Assignment Agreement, accepted by such Agent; and
(iii) the processing fees described below shall have
been paid.
From and after the date that such Agent accepts such Lender Assignment
Agreement, (x) the Eligible Assignee thereunder shall be deemed automatically to
have become a party hereto and to the extent that rights and obligations
hereunder have been assigned and delegated to such Eligible Assignee in
connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents. Accrued interest on that part of the Loans assigned, if any, and
accrued fees, shall be paid as provided in the Lender Assignment Agreement.
Accrued interest and accrued fees shall be paid at the same time or
98
<PAGE> 100
times provided in this Agreement. Such assignor Lender or such Eligible Assignee
must also pay a processing fee in the amount of $3,500 to the Administrative
Agent upon delivery of any Lender Assignment Agreement. Notwithstanding any
other term of this Section, the agreement of the Swing Line Lender to provide
the Swing Line Loan Commitment shall not impair or otherwise restrict in any
manner the ability of the Swing Line Lender to make any assignment of its Loans
or Commitments, it being understood and agreed that the Swing Line Lender may
terminate its Swing Line Loan Commitment, either in whole or in part, in
connection with the making of any assignment. Any attempted assignment and
delegation not made in accordance with this Section shall be null and void.
(b) Notwithstanding anything to the contrary set forth above, any
Lender may (without requesting the consent of the Borrower or the Administrative
Agent) pledge its Loans to a Federal Reserve Bank in support of borrowings made
by such Person from such Federal Reserve Bank. Upon the request of the Lender,
solely to facilitate the pledge or assignment of its Loans to any Federal
Reserve Bank, the Borrower shall issue Notes to such Lender. Upon the request of
an assignor Lender, if applicable, solely to facilitate such pledge or
assignment of its Loans to any Federal Reserve Bank, the Borrower shall issue a
reduced Note to such assignor in exchange and replacement for its then existing
Note. The reasonable costs and expenses incurred in connection with the issuance
of each Note shall be for the account of the Borrower.
(c) The Administrative Agent, on behalf of the Borrower, shall maintain
at the address of the Administrative Agent specified below its signature hereto
(or at such other address as may be designated by the Administrative Agent from
time to time in accordance with Section 10.2) a copy of each Lender Assignment
Agreement delivered to it and a register (the "Register") for the recordation of
the names and addresses of the Lenders and the Commitment of and principal
amount of the Loans owing to each Lender from time to time. The entries in the
Register shall be conclusive and binding, in the absence of clearly demonstrable
error, and the Borrower, the Agents and the Lenders shall treat each Person
whose name is recorded in the Register as the owner of a Loan or other
obligation hereunder as the owner thereof for all purposes of this Agreement and
the other Loan Documents, notwithstanding any notice to the contrary. Any
assignment of any Loan or other obligation hereunder shall be effective only
upon appropriate entries with respect thereto being made in the Register. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
SECTION 10.11.2. Participations. Upon prior notice to the Borrower and
the Administrative Agent, any Lender may at any time sell to one or more
commercial lenders, financial institutions or other Persons (each of such
commercial lenders, financial institutions or other Persons, a "Participant")
participating interests in any of the Loans, Letter of Credit Outstandings,
Commitments, or other interests of such Lender hereunder (including loan
derivatives and similar swap arrangements based on such Lender's interests
hereunder); provided, however, that
(a) no participation contemplated in this Section shall
relieve such Lender from its Commitments or its other obligations
hereunder or under any other Loan Document;
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations;
(c) the Borrower and each other Obligor and each Agent shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and each
of the other Loan Documents;
99
<PAGE> 101
(d) no Participant, unless such Participant is an Affiliate of
such Lender or is itself a Lender, or unless the Borrower otherwise
agrees in writing, shall be entitled to require such Lender to take or
refrain from taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any Participant that
such Lender will not, without such Participant's consent, to the extent
requiring the consent of such Lender, take any action of the type
described in clause (b) of Section 10.1; and
(e) the Borrower shall not be required to pay any amount under
this Agreement that is greater than the amount which it would have been
required to pay had no participating interest been sold.
Each Participant shall only be indemnified for increased costs pursuant to
Section 4.3, 4.5 or 4.6 if and to the extent that the Lender which sold such
participating interest to such Participant concurrently is entitled to make, and
does make, a claim on the Borrower for such increased costs. Any Lender that
sells a participating interest in any Loan, Commitment or other interest to a
Participant under this Section shall indemnify and hold harmless the Borrower
and each Agent from and against any taxes, penalties, interest or other costs or
losses (including reasonable attorneys' fees and expenses) incurred or payable
by the Borrower or such Agent as a result of the failure of the Borrower or such
Agent to comply with its obligations to deduct or withhold any Taxes from any
payments made pursuant to this Agreement to such Lender or such Agent, as the
case may be, which Taxes would not have been incurred or payable if such
Participant had been a Non-U.S. Lender that was entitled to deliver to the
Borrower, such Agent or such Lender, and did in fact so deliver, a duly
completed and valid Form 1001 or 4224 (or applicable successor form) entitling
such Participant to receive payments under this Agreement without deduction or
withholding of any United States federal taxes. If amounts outstanding under
this Agreement are due and unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement.
SECTION 10.12. Confidentiality. Each Lender agrees to maintain, in
accordance with its customary procedures for handling confidential information,
the confidentiality of all information provided to it by or on behalf of the
Borrower or any Subsidiary, or by any Agent on the Borrower's or such
Subsidiary's behalf, under this Agreement or any other Loan Document
("Confidential Information"), and neither it nor any of its Affiliates shall use
any such information other than in connection with or in enforcement of this
Agreement and the other Loan Documents or in connection with other business now
or hereafter existing or contemplated with the Borrower or any Subsidiary,
except to the extent such information (x) was or becomes generally available to
the public other than as a result of disclosure by the Lender or (y) was or
becomes available on a non-confidential basis from a source other than the
Borrower, provided that such source is not bound by a confidentiality agreement
with the Borrower known to the Lender; provided, however, that any Lender may
disclose such information (A) at the request or pursuant to any requirement of
the NAIC or any Governmental Authority to which the Lender is subject or in
connection with an examination of such Lender by any such Governmental
Authority; (B) pursuant to subpoena or other court process; (C) when required to
do so in accordance with the provisions of any Applicable Law; (D) to the extent
reasonably required in connection with any litigation or proceeding to which any
Agent, any Lender or their respective Affiliates may be party; (E) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (F) to such Lender's independent auditors and
other professional advisors who have been advised that such information is
confidential pursuant to this Section; (G) to any Participant or Eligible
100
<PAGE> 102
Assignee, actual or potential, provided, however, that such Person shall have
agreed in writing to keep such information confidential to the same extent
required of the Lenders hereunder; and (H) to its Affiliates who have been
advised that such information is confidential pursuant to this Section. Unless
prohibited by applicable law or court order, each Lender and each Agent shall
notify the Borrower of any request by any Governmental Authority (other than any
request in connection with an examination of the financial condition of such
Lender) for disclosure of Confidential Information prior to such disclosure;
provided, however, further, that in no event shall any Agent or any Lender be
obligated to return any materials furnished by the Borrower or any Subsidiary.
This Section shall supersede any confidentiality letter or agreement with
respect to the Borrower or the Facilities entered into prior to the date hereof.
SECTION 10.13. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY AGENT, THE
LENDERS, THE ISSUER OR THE BORROWER IN CONNECTION HEREWITH OR THEREWITH SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK
LOCATED IN THE COUNTY OF NEW YORK IN THE SATE OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER,
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY
BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE PERSONAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK LOCATED IN THE COUNTY OF NEW YORK OF THE STATE
OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH SUCH LITIGATION, SUBJECT TO THE BORROWER'S RIGHT TO CONTEST SUCH JUDGMENT
BY MOTION OR APPEAL ON ANY GROUNDS NOT EXPRESSLY WAIVED IN THIS SECTION. THE
BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK
AT THE ADDRESS FOR NOTICES SPECIFIED IN SECTION 10.2. THE BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF
ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES TO THE
FULLEST EXTENT PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
101
<PAGE> 103
SECTION 10.14. Waiver of Jury Trial. THE AGENTS, THE LENDERS, THE
ISSUER AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO
THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
ANY AGENT, THE LENDERS, THE ISSUER OR THE BORROWER IN CONNECTION HEREWITH OR
THEREWITH. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE AGENTS, THE LENDERS AND THE ISSUER ENTERING INTO
THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
102
<PAGE> 104
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
REGAL CINEMAS, INC.
By
-------------------------------------
Title: Executive Vice President
Address: 7132 Commercial Park Drive
Knoxville, Tennessee 37918
Facsimile No.: (310) 553-3928
Attention: Executive Vice President
and Chief Financial Officer
with copies to:
Hicks, Muse, Tate & First Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Facsimile No.: 214-720-7888
Attention: Lawrence D. Stuart, Jr. and
Patrick K. McGee
Kohlberg Kravis Roberts & Co., L.P.
9 West 57th Street
New York, N.Y. 10022
Facsimile No.: 212-750-0003
Attention: Alexander Navab, Jr.
<PAGE> 105
AGENTS:
THE BANK OF NOVA SCOTIA, as the Administrative
Agent
By
-------------------------------------------
Title: Senior Relationship Manager
Address: One Liberty Plaza
New York, New York 10006
Facsimile No.: (212) 225-5090
Attention: Eric Knight and Stuart Malakoff
BANCAMERICA ROBERTSON STEPHENS, as the
Syndication Agent
By
--------------------------------------------
Title: Vice President
Address: 335 Madison Avenue
6th Floor
New York, New York 10017
Facsimile No.: (212) 503-7502
Attention: Michael O'Brien
THE CHASE MANHATTAN BANK, as the Documentation
Agent
By
--------------------------------------------
Title: Vice President
Address: 270 Park Avenue
4th Floor
New York, New York 10017
Facsimile No.: (212) 270-1063
Attention: John Sorice
<PAGE> 106
SCHEDULE I
DISCLOSURE SCHEDULE
<PAGE> 107
SCHEDULE II
PNC LETTERS OF CREDIT
<TABLE>
<CAPTION>
Beneficiary Account Party Face Amount Type of Letter Issuance Expiry Date
of Credit Date
<S> <C> <C> <C> <C> <C>
County of Hearico, Virginia Regal Cinemas, Inc. $41,970 Standby 2/2/94 2/2/99
Township of Edgmont Regal Cinemas, Inc. $44,880 Standby 12/12/96 11/18/98
Theodore Lappas, Jr. Regal Cinemas, Inc. $40,002 Standby 9/6/97 6/9/98
Township of Upper Providence Regal Cinemas, Inc. $1,275,000 Standby 11/5/97 1/1/99
Florida Power & Light Regal Cinemas, Inc. $450,000 Standby 3/9/98 3/9/98
</TABLE>
106
<PAGE> 108
ANNEX I
LENDER INFORMATION
<TABLE>
<CAPTION>
1. THE BANK OF NOVA SCOTIA
<S> <C> <C>
Domestic Office: LIBOR Office:
---------------- ------------- Revolving Loan Commitment
Address: One Liberty Plaza Address: One Liberty Plaza __%
New York, NY 10006 New York, NY 10006
Term A Loan Commitment
Facsimile No.: (212) 225-5090 Facsimile No.: (212) 225-5090 __%
Attention: Paul Weissenberger Attention: Paul Weissenberger Term B Loan Commitment
__%
Term C Loan Commitment
__%
2. BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION
Domestic Office: LIBOR Office:
---------------- ------------- Revolving Loan Commitment
Address: 200 West Jackson Blvd. Address: 335 Madison Avenue __%
Chicago, IL 60697 6th Floor
New York, NY 10017 Term A Loan Commitment
Facsimile No.: (312) 974-9626 __%
Facsimile No.: (212) 503-7502
Attention: Renee Walker Term B Loan Commitment
Attention: Michael O'Brien __%
Term C Loan Commitment
__%
</TABLE>
<PAGE> 109
<TABLE>
<S> <C> <C>
3. THE CHASE MANHATTAN BANK
Domestic Office:
----------------
Address: LIBOR Office:
------------- Revolving Loan Commitment
Address: __%
Facsimile No.:
Facsimile No.: Term A Loan Commitment
Attention: __%
Attention:
Term B Loan Commitment
__%
Term C Loan Commitment
__%
</TABLE>
A-2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF REGAL CINEMAS, INC. FOR THE SIX MONTHS ENDED JULY 2,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-02-1998
<PERIOD-END> JUL-02-1998
<CASH> 27,480
<SECURITIES> 0
<RECEIVABLES> 1,080
<ALLOWANCES> 0
<INVENTORY> 2,194
<CURRENT-ASSETS> 46,753
<PP&E> 769,413
<DEPRECIATION> (131,232)
<TOTAL-ASSETS> 784,414
<CURRENT-LIABILITIES> 74,405
<BONDS> 0
0
0
<COMMON> (118,941)
<OTHER-SE> 42,803
<TOTAL-LIABILITY-AND-EQUITY> 784,414
<SALES> 82,041
<TOTAL-REVENUES> 288,143
<CGS> 12,995
<TOTAL-COSTS> 116,982
<OTHER-EXPENSES> 190,152
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,327
<INCOME-PRETAX> (32,087)
<INCOME-TAX> (3,912)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (11,890)
<CHANGES> 0
<NET-INCOME> (40,065)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
