REVOLVING CREDIT AGREEMENT
as amended as of August 4, 2000
among
HOLLYWOOD ENTERTAINMENT CORPORATION,
as Borrower,
and
SOCIETE GENERALE
GOLDMAN SACHS CREDIT PARTNERS L.P.
and
the other financial institutions identified
on the signature pages hereto,
as Lenders,
and
SOCIETE GENERALE,
as Agent for the Lenders,
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Documentation Agent, and
CREDIT LYONNAIS LOS ANGELES BRANCH,
DEUTSCHE BANK AG, NEW YORK BRANCH,
U.S. BANK NATIONAL ASSOCIATION,
and
KEYBANK NATIONAL ASSOCIATION,
as Co-Agents
Arranged by
Societe Generale
Goldman Sachs Credit Partners L.P.
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS 2
1.1. Certain Defined Terms 2
1.2. General Principles 22
1.3. Accounting Terms 23
ARTICLE II. THE LOANS 23
2.1. The Facility 23
2.2. Manner of Borrowing a Loan 24
2.3. Reductions of Commitments 26
2.4. Repayment of Principal 27
2.5. Agent's Right to Fund 28
2.6. Interest on Loans 29
2.7. Compensation for Increased Costs 32
2.8. Prepayments 34
2.9. Notes 34
2.10. Manner of Payments 34
2.11. Fees 35
2.12. Sharing of Payments, Etc 37
2.13. Taxes 37
2.14. Certain Acknowledgments by Borrower 40
2.15. Designated Senior Indebtedness 40
ARTICLE III. CONDITIONS OF LENDING 40
3.1. Conditions to Effectiveness Availability 40
3.2. Conditions Precedent to all Loans 42
ARTICLE IV. REPRESENTATIONS AND WARRANTIES 437
4.1. Corporate Existence and Power 43
4.2. Corporate Authorization 44
4.3. Government Approvals, Etc 44
4.4. Binding Obligations, Etc 44
4.5. Litigation 44
4.6. Financial Condition 448
4.7. Indebtedness; Title and Liens 45
4.8. Taxes 39
4.9. Laws, Orders; Other Agreements 46
4.10. Lien Priority 46
4.11. Federal Reserve Regulations 46
4.12. ERISA 470
4.13. Patents, Licenses, Franchises 48
4.14. New Investment Company, Etc 481
4.15. Insurance 481
4.16. Certain Representations Regarding Subsidiaries 48
4.17. Subsidiaries 48
4.18. Hedging Agreements 48
4.19. Lessors 48
4.20. Representations as a Whole 48
ARTICLE V. AFFIRMATIVE COVENANTS 492
5.1. Use of Proceeds 492
5.2. Payment 492
5.3. Preservation of Corporate Existence, Etc 49
5.4. Visitation Rights 50
5.5. Keeping of Books and Records 50
5.6. Maintenance of Property, Etc 50
5.7. Compliance With Laws, Etc 503
5.8. Other Obligations 50
5.9. Insurance 51
5.10. Financial Information 535
5.11. Notification 55
5.12. Blocked Account Agreement 56
5.13. Additional Payments; Additional Acts 56
5.14. Independent Board of Directors and Committees 568
5.15. Tangible Net Worth 56
5.16. Leverage Ratio 49
5.17. Interest Coverage Ratio 580
5.18. Interest and Rent Coverage Ratio 58
5.19. Average Per Store Contribution to Profit 59
5.20. Adjusted Leverage Ratio 591
5.21. Dissolution of Subsidiary 602
5.22. Officer's Certificate 602
ARTICLE VI. NEGATIVE COVENANTS 60
6.1. Liquidation, Merger, Sale of Assets, Fundamental Change 61
6.2. Indebtedness 613
6.3. Guaranties, Etc 63
6.4. Liens 63
6.5. Location of Collateral 645
6.6. Investments 64
6.7. Limitations on Prepayment or Amendment of Subordinated Debt
646
6.8. ERISA Compliance 656
6.9. Transactions with Affiliates 65
6.10. Change in Business 65
6.11. Accounting Change 667
6.12. Capital Expenditures 667
6.13. Stores 67
ARTICLE VII. EVENTS OF DEFAULT 678
7.1. Events of Default 678
7.2. Consequences of Default 711
ARTICLE VIII. THE AGENT 722
8.1. Authorization and Action 722
8.2. Duties and Obligations 734
8.3. Dealings Between Agent and Borrower 75
8.4. Lender Credit Decision 755
8.5. Indemnification by Lenders 76
8.6. Successor Agent 766
8.7. Documentation Agent; Co-Agents 77
ARTICLE IX. MISCELLANEOUS 777
9.1. No Waiver; Remedies Cumulative 777
9.2. GOVERNING LAW 787
9.3. Notices 787
9.4. Assignment and Participations 788
9.5. Indemnification by Borrower; Expenses 83
9.6. Setoff 853
9.7. No Third Party Beneficiaries 853
9.8. Severability; Independence of Covenants 85
9.9. Survival 864
9.10. Release 864
9.11. Limitation on Liability 875
9.12. Entire Agreement; Amendment 875
9.13. WAIVER OF JURY TRIAL 885
9.14. Headings 88
9.15. Counterparts; Telecopied Signatures 886
9.16. FORUM SELECTION AND CONSENT TO JURISDICTION 886
EXHIBITS
Exhibit A - Form of Revolving Promissory Note
Exhibit B - Form of Assignment Agreement
SCHEDULE
Schedule 1 - Breakage Fee
Schedule 3.1.4 - Capital Leases
Schedule 4.17 - Subsidiary Assets
Schedule 6.2(a) - Funded Debt
Schedule 6.2(d) - Capital Leases
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT (this "Agreement") is the
Existing Credit Agreement (as defined below), as amended as of
August 4, 2000, by and among (i) HOLLYWOOD ENTERTAINMENT
CORPORATION, (d/b/a "Hollywood Video"), an Oregon corporation (the
"Borrower"), (ii) SOCIETE GENERALE, GOLDMAN SACHS CREDIT PARTNERS
L.P. and the other financial institutions identified as Lenders on
the signature pages hereto (each individually a "Lender" and
collectively the "Lenders"), and (iii) SOCIETE GENERALE, as agent
for the Lenders (in that capacity, the "Agent") and GOLDMAN SACHS
CREDIT PARTNERS L.P., as documentation agent (in that capacity, the
"Documentation Agent"), and CREDIT LYONNAIS LOS ANGELES BRANCH,
DEUTSCHE BANK AG, NEW YORK BRANCH, U.S. BANK NATIONAL ASSOCIATION,
and KEYBANK NATIONAL ASSOCIATION, as Co-Agents (in that capacity,
each individually a "Co-Agent" and collectively the "Co-Agents").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Revolving Credit
Agreement dated as of September 5, 1997 (as amended, supplemented or
otherwise modified prior to the date hereof by (a) the First
Amendment Agreement, dated as of March 31, 1998, (b) the Second
Amendment Agreement, dated as of March 1, 1999, (c) the Consent and
Waiver, dated May 18, 1999, (d) the Fourth Amendment Agreement and
Consent, dated as of November 22, 1999, (e) the Fifth Amendment
Agreement and Consent, dated as of March 22, 2000, (f) the Waiver
Letter, dated June 8, 2000, (g) the Waiver Extension Letter, dated
June 20, 2000 and (h) the Waiver Extension Letter, dated July 28,
2000, the "Existing Credit Agreement"), by and among (i) the
Borrower, (ii) SOCIETE GENERALE, GOLDMAN SACHS CREDIT PARTNERS L.P.,
and the Lenders, and (iii) the Agent and the Documentation Agent,
the Lenders agreed to provide the Borrower with a revolving credit
facility (the "Existing Facility");
WHEREAS, the Borrower has requested that the Agent and the
Lenders amend the Existing Credit Agreement, and the Agent and the
Lenders are willing to amend the Existing Credit Agreement as set
forth herein;
NOW, THEREFORE, the parties hereto hereby agree as
follows:
ARTICLE I.
DEFINITIONS
1.1. Certain Defined Terms. As used in this Agreement,
(i) terms defined in the preamble or in the recitals hereto, unless
otherwise defined, have the meanings given to them therein, and
(ii) the following terms have the following meanings:
"Acquisition Price" means, for any asset, the aggregate
purchase price therefor (whether paid in cash or other property, and
determined using the fair market value of property other than cash),
including bona fide purchase money financing provided by the seller
and all existing Indebtedness pertaining to such asset (a) that is
assumed as part of the acquisition of such asset or (b) subject to
which such asset is acquired.
"Additional Similar Assets" means (a) any property or
assets (other than Indebtedness or securities) in a line of business
in which the Borrower is engaged as of the date hereof or that is
not substantially different from any such line, provided that with
respect to the acquisition of a Store with Net Available Cash
derived from the disposition of a Store, such new Store shall not
encompass a materially greater amount of square footage than the
disposed of Store, or (b) the capital stock of a Person engaged in a
line of business in which the Borrower is engaged as of the date
hereof.
"Adjusted Base Rate" means a per annum rate of interest
equal to the Base Rate (changing as such Base Rate changes) plus the
Margin (changing as such Margin changes).
"Adjusted Current Assets" means, in relation to any Person
as at any date, all amounts (other than cash and Cash Equivalents)
which would be set forth opposite the caption "total current assets"
(or any like caption) on a balance sheet of such Person as at such
date, prepared in accordance with GAAP.
"Adjusted Current Liabilities" means, in relation to any
Person as at any date, all amounts which would be set forth opposite
the caption "total current liabilities" (or any like caption) on a
balance sheet of such Person as at such date, prepared in accordance
with GAAP.
"Adjusted EBITDA" means, for any Person for any period,
(a) such Person's EBITDA for such period minus (b) all costs of
acquisition of Rental Items for Stores for such period, to the
extent that (i) such costs of acquisition are accounted for as
Capital Expenditures under GAAP and (ii) such Rental Items were
acquired for a particular Store (A) after its opening or (B) in the
case of a Store acquired during such period, after it commenced to
operate as a Store (i.e., excluding the cost of acquisition of such
Store's initial inventory, the intent of the parties being to adjust
EBITDA for the recurring costs of keeping a Store in stock, and not
for the initial cost of equipping a Store with inventory), plus
(c) the cost of product transferred from rental inventory to
previously viewed merchandise inventory and sold.
"Adjusted Leverage Ratio" means the ratio of, for any
period of four consecutive fiscal quarters of the Borrower
(determined on a consolidated basis), (a) (x) the Borrower's Funded
Debt as of the last day of such period plus (y) an amount equal to
six times the aggregate rent expense incurred by the Borrower for
such period to (b) the Borrower's Adjusted Net Cash EBITDA for such
period plus the aggregate rent expense incurred by the Borrower for
such period.
"Adjusted Net Cash EBITDA" means Adjusted EBITDA minus
the cost of acquisition of initial inventory for new Stores for the
corresponding period.
"Affiliate" means, with respect to any specified Person,
any other Person that, directly or indirectly, controls, is
controlled by, or is under common control with, such specified
Person. For purposes of the Loan Documents, "control" means the
power to direct the management and policies of another Person,
directly or indirectly, through the ownership of voting securities,
by contract, or otherwise, and the terms "controlled by" and "under
common control with" have correlative meanings. In addition, the
term "Affiliate" also means, with respect to the Borrower or any
Subsidiary, (a) any beneficial owner of capital stock of the
Borrower (or of options, warrants or other rights to acquire capital
stock of the Borrower, whether or not exercisable at the time of
determination) representing ten percent (10%) or more, on a fully
diluted basis, of the total voting power of all voting securities of
the Borrower entitled to vote in the election of directors, and
(b) any Person who would be an Affiliate of such beneficial owner
pursuant to the first sentence of this definition.
"Agent" means Societe Generale in its capacity as agent
for the Lenders, and any successor agent selected pursuant to
Section 8.6.
"Agent-Related Persons" has the meaning given in
Section 8.4.
"Aggregate Investment" means (a) with respect to
Investments in a Person, the sum of (i) the Acquisition Price of the
securities of such Person, plus (ii) all contributions of cash or
other property (valued at fair market value) made, or committed to
be made, to such Person, plus (iii) all other Investments in such
Person, plus (iv) (without duplication of amounts included pursuant
to clause (a) of this definition) aggregate Indebtedness (including,
without limitation, guaranties and other contingent obligations in
support of Indebtedness of another Person) incurred in support of
the obligations of such Person; and (b) with respect to a line of
business not conducted through another Person, the sum of (i) the
aggregate Acquisition Price of all property used in the conduct of
such line of business (or, if such property is not acquired for the
purpose of conducting such line of business, but is later used
therein, the fair market value of such property at the time such use
commences), plus (ii) cumulative operating losses (before
depreciation) incurred in the conduct of such line of business.
"Agreement" has the meaning provided in the preamble
hereof.
"Ancillary Business" means any business (a) substantially
different from those lines of business carried on by the Borrower on
the date hereof, that (b) the Board of Directors of the Borrower
determines in good faith is ancillary or complementary to the lines
of business carried on by the Borrower on the date hereof.
"Applicable Interest Period" means, with respect to any
IBOR Loan, the period commencing on the first day the Borrower
elects to have such IBOR Rate apply to such Loan and (subject to
Section 2.10.3) ending on a day, one, two or three months
thereafter, as specified in the Interest Rate Notice given in
respect of such Loan or as otherwise determined pursuant to
Section 2.6.2; provided, however, that (a) no Applicable Interest
Period may be selected for a Loan if it extends beyond the Maturity
Date, and (b) no Applicable Interest Period may be selected so as to
end later than the next succeeding date of any scheduled reduction
in the Total Commitment if the aggregate principal amount of the
IBOR Loan subject thereto, when aggregated with the aggregate
principal amount of all other then outstanding IBOR Loans subject to
Applicable Interest Periods that end after the date of such
scheduled reduction, would exceed the amount of the Total
Commitment, as reduced thereon.
"Applicable Interest Rate" means, for each Loan, the
Adjusted Base Rate or IBOR Rate, as designated by the Borrower in an
Interest Rate Notice given with respect to such Loan (or portion
thereof) or as otherwise determined pursuant to Section 2.6.2.
"Arrangers" means Societe Generale and Goldman Sachs
Credit Partners L.P.
"Asset Disposition" means any sale, lease, transfer or
other disposition (or series of sales, leases, transfers or other
dispositions):
(a) by the Borrower or any Subsidiary (other than to
the Borrower) (including, without limitation, any disposition by way
of merger, consolidation or similar transaction),
(b) to any Person (other than in the case of a
disposition by a Subsidiary to the Borrower)
(each of the foregoing, for purposes of this definition, a
"disposition"), of (x) any shares of the capital stock of any
Subsidiary (other than directors' qualifying shares and, to the
extent required by local ownership laws in any foreign country,
shares owned by foreign shareholders), (y) all or substantially all
of the assets of any division, business segment or comparable line
of business of the Borrower or any Subsidiary, or (z) any other
assets of the Borrower or any Subsidiary outside the ordinary course
of such Person's business (including, without limitation, the
forgiveness of any debt owing to the Borrower); but excluding
(i) any disposition that constitutes a Permitted Investment;
(ii) distributions to shareholders, to the extent permitted under
the Loan Documents; (iii) sales of Rental Items consistent with past
practice; (iv) a disposition (other than a sale or closure of a
Store) for fair market value, of assets having a fair market value
of less than $500,000, if the fair market value of the assets
subject to such disposition, when aggregated with the fair market
value of the assets subject to all prior dispositions of assets
during the same fiscal year that have been excluded from the
definition of "Asset Disposition" pursuant to this clause (iv), does
not exceed $2,000,000, (v) in connection with a termination referred
to in the proviso in Section 6.13, (vi) the transfer of any or all
Trademarks to Hollywood Management on or prior to December 31, 2000,
provided that contemporaneously with such transaction, the Borrower
shall execute and deliver to the Agent any and all documentation
deemed necessary by the Agent such that the Lenders' security
interest in such assets shall continue in full force, effect and
priority, (vii) the maintenance of the Borrower's cash management
system in existence on the Closing Date in order to pay expenses in
the ordinary course of business and (viii) without limiting the
proviso in Section 6.13 and subject to the limitations contained in
clause (iv) above, the closure (other than a sale or transfer) of
not more than 20 Stores in any fiscal year of the Borrower
reasonably acceptable to the Agent.
"Assignment Agreement" has the meaning provided in
Section 8.2.1.
"Bankruptcy Code" means the Bankruptcy Code of the United
States, 11 U.S.C. 101 et seq., as amended from time to time, and any
successor statute.
"Base Rate" means, for any day, the higher of: (a) 0.50%
per annum above the latest Federal Funds Rate; and (b) the rate of
interest in effect for such day as publicly announced from time to
time by Societe Generale, New York Branch, as its "reference rate."
(The "reference rate" is a rate set by Societe Generale, New York
Branch, based upon various factors including its costs and desired
return and general economic conditions, and is used as a reference
point for pricing some loans, which may be priced at, above, or
below such announced rate.)
"Base Rate Loan" means a Loan bearing interest at the
Adjusted Base Rate.
"Blocked Account Agreement" means that certain Blocked
Account Agreement dated as of August 2, 2000, among Bank of America,
N.A., the Borrower, Hollywood Management and the Agent.
"Borrower" has the meaning provided in the preamble
hereof.
"Borrower Disclosure Letter" means that certain letter,
dated as of the date hereof, signed on behalf of Borrower and
delivered to the Agent on the Closing Date.
"Borrower Security Agreement" means that certain Security
Agreement dated as of September 5, 1997 made by the Borrower in
favor of the Agent.
"Business Day" means any day other than Saturday, Sunday
or another day on which banks are authorized or obligated by law to
close in New York City or Portland, Oregon, except in the context of
the selection of a Loan accruing interest at the IBOR Rate or the
calculation of the IBOR Rate for any Applicable Interest Period, in
which event "Business Day" means any day other than Saturday or
Sunday on which dealings in foreign currencies and exchange between
banks may be carried on in Grand Cayman, British West Indies, and
New York City.
"Capital Assets" means, with respect to any Person, all
equipment, fixed assets and real property or improvements of such
Person, or replacements or substitutions therefor or additions
thereto, that, in accordance with GAAP, have been capitalized on the
books of such Person. Capital Assets shall also (a) include Rental
Items excluded from the calculation of Adjusted EBITDA and
(b) exclude Rental Items included in the calculation of Adjusted
EBITDA.
"Capital Expenditures" means, with respect to any Person
for any period, all expenditures made directly or indirectly by such
Person during such period for Capital Assets (including all
expenditures for maintenance and repairs which are required, in
accordance with GAAP, to be capitalized on the books of such
Person).
"Capital Leases" means for any Person, all obligations of
such Person under leases which are, or, in accordance with GAAP, are
required to be, recorded as capital leases.
"Cash Equivalents" means any or all of the following:
(a) obligations of, or guaranteed as to principal and interest by,
the United States government or any agency thereof maturing within
one year after the date on which such obligations are purchased;
(b) open market commercial paper of any corporation (other than the
Borrower) incorporated under the laws of the United States or any
State thereof or the District of Columbia rated P-1 or its
equivalent or higher by Moody's or A-1 or its equivalent or higher
by S&P; (c) time deposits, certificates of deposit or bankers'
acceptances maturing within one year after the acquisition thereof
issued by commercial banks organized under the laws of any country
which is a member of the OECD and having a combined capital and
surplus in excess of $ 100,000,000 or which is a Lender;
(d) repurchase agreements with respect to Securities described in
clause (a) above entered into with an office of a bank or trust
company meeting the criteria specified in clause c); (e) money
market funds investing only in Investments described in clauses (a)
through (d); and (f) direct obligations of, or obligations the
principal and interest of which are unconditionally guaranteed by,
any State of the United States or any foreign state having, at the
date of its acquisition by the Borrower, a rating of at least AA
from S&P or Aa from Moody's, in each case maturing within one year
from the date of the acquisition.
"Closing Date" means August 4, 2000.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means, except to the extent expressly
excluded therefrom pursuant to the terms of any Security Agreement,
all personal property of the Borrower and of each Subsidiary
(whether or not the creation of a Lien thereon is subject to the
Uniform Commercial Code, as in effect in any relevant jurisdiction),
including, without limitation, whether now owned or hereafter
acquired, all right, title and interest of the Borrower and each
Subsidiary in any and all (a) goods, (b) accounts, (c) chattel
paper, (d) documents, (e) instruments, (f) investment property,
(g) rights to proceeds of written letters of credit, (h) money,
(i) general intangibles, (j) intellectual property and (k) subject
to the provisions of Section 5.13, real property and leasehold
interests.
"Commitment" has the meaning given in Section 2.1.1.
"Controlled Group" means all members of a controlled group
of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or
414(c) of the Code.
"Dallas Office" means Societe Generale, Southwest Agency.
"Default" means any event which, but for the passage of
time, with or without the giving of notice, would be an Event of
Default.
"Default Rate" has the meaning given in Section 2.6.1(a).
"Defaulting Lender" means any Lender that fails or refuses
to perform its obligations under this Agreement within the time
period specified for performance of such obligation or, if no time
frame is specified, for a period of five (5) Business Days after
notice from Agent.
"EBITDA" means, for any Person for any period, such
Person's net income (or net loss), excluding any extraordinary gains
or losses and taxes associated therewith, plus the sum of
(a) interest expense, (b) income tax expense, (c) depreciation
expense, (d) amortization expense, and (e) all other noncash items
deducted for purposes of determining net income (other than items
that will require cash payments and for which an accrual or reserve
is, or is required under GAAP, to be made), in each case determined
on a consolidated basis in accordance with GAAP for such Person for
such period, provided, that (x) for any period that includes results
from any or all of the fiscal quarters ended September 30, 1999,
December 31, 1999, March 31, 2000 and June 30, 2000, there shall be
excluded any EBITDA attributable to the results of operations of
Reel.com in an amount not to exceed $(9,200,000), $(22,200,000),
$(15,400,000) and $(15,000,000), respectively and (y) for any period
that includes the three months ended June 30, 2000, there shall be
excluded the amount of the Borrower's nonrecurring restructuring
charge (which may be categorized both in a restructuring charge line
item and in cost of goods sold) related to Reel.com after March 31,
2000 in an amount not to exceed $70,000,000, as reflected in the
Borrower's financial statements for the three months ended June 30,
2000; provided further, that in determining net income (or net loss)
for the Borrower x) for any period that includes the three months
ended September 30, 1999, December 31, 1999, March 31, 2000 or
June 30, 2000, there shall be excluded the nonrecurring $2.3 million
pre-tax expense related to the settlement in such period of the
lawsuit Twentieth Century Fox Home Entertainment, Inc. v. Hollywood
Entertainment Corporation and Does 1 through 100 and (y) for any
period that includes the three months ended December 31, 1999,
March 31, 2000, June 30, 2000 or September 30, 2000, there shall be
excluded the nonrecurring $23.1 million pre-tax expense related to
the settlement in such period of the lawsuit Rentrak Corporation v.
Hollywood Entertainment, et al.
"Eligible Assignee" means (a) (i) a commercial bank,
savings and loan association or savings bank, in each case,
organized under the laws of the United States or any state thereof;
(ii) a commercial bank organized under the laws of any other country
or a political subdivision thereof, provided that (A) such bank is
acting through a branch or agency located in the United States, or
(B) such bank is organized under the laws of a country that is a
member of the Organization for Economic Cooperation and Development
or a political subdivision of such a country; and (iii) any other
Person that (A) is an "accredited investor" (as defined in
Regulation D promulgated under the Securities Act of 1993, as
amended), and (B) extends credit or buys loans as one of its
businesses (including, without limitation, insurance companies,
mutual funds and lease financing companies); and (b) any Lender or
Affiliate of any Lender; provided, however, that (x) neither the
Borrower nor any Affiliate of the Borrower shall be an Eligible
Assignee, and (y) no Person shall be an Eligible Assignee unless, at
the time it first acquires an interest in the Loans, the Borrower
would not be required to deduct or withhold any Taxes or other
amounts from or in respect of any sum payable hereunder or under any
other Loan Document to such Person.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Event of Default" has the meaning given in Section 7.1.
"Excess Cash Flow" means, for any fiscal quarter of the
Borrower (commencing with the fiscal quarter ended March 31, 2001
and determined on or prior to the 45th day after the end of each
such fiscal quarter), the amount, if any, by which the sum of:
(i) Adjusted Net Cash EBITDA of the Borrower and its
Subsidiaries for such period, plus
(ii) any increase in Working Capital of the Borrower and
its Subsidiaries for such period,
exceeds an amount equal to 110% of the sum of:
(i) the aggregate amount of all prepayments of Loans
during such period, solely to the extent accompanied by a permanent
reduction of the Total Commitment, plus
(ii) Fixed Charges of the Borrower and its Subsidiaries
for such period, plus
(iii) any decrease in Working Capital of the Borrower and
its Subsidiaries for such period, plus
(iv) $10,000,000.
"Existing Credit Agreement" has the meaning provided in
the first recital hereof.
"Facility" means the revolving line of credit (including
the Swing Line subfacility) described in Section 2.1.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Agent from
three federal funds brokers of recognized standing selected by it.
"Financing Statements" means those Uniform Commercial Code
financing statements, satisfactory in form and substance to the
Agent and naming the Agent as secured party, executed by the
Borrower or any Subsidiary, as the case may be, as debtor, in form
acceptable for filing in each of the fifty states and the District
of Columbia and identifying by item or type the Collateral described
in the applicable Security Agreement.
"Fixed Charges" means, in relation to any Person for any
period, the sum (without duplication) of (a) the aggregate amount of
interest paid in cash with respect to Indebtedness for such period,
plus (b) the aggregate amount of income taxes paid (net of income
tax refunds received) in cash by such Person during such period,
plus (c) Capital Expenditures (other than the cost of acquisition of
initial inventory for new Stores) of such Person paid in cash for
such period, plus (d) all regularly scheduled principal payments
during such period with respect to Indebtedness of such Person, all
determined in accordance with GAAP.
"Funded Debt" means, for any Person, without duplication:
(a) all indebtedness or liability of such Person for borrowed money
and all indebtedness or liability for borrowed money secured by a
Lien on the assets of such Person, whether or not such indebtedness
or liability has been assumed by such Person, (b) all indebtedness
and liability of such Person for Capital Leases and (c) all
indebtedness or liability for borrowed money or for Capital Leases
for which such Person is indirectly or contingently liable (as
obligor, guarantor, or otherwise), but, in the case of Funded Debt
described in this clause (c), not in excess of any contractual limit
on such Person's liability therefor.
"Funding Date" means, with respect to any Loan, the date
on which such Loan is funded pursuant to Article II.
"GAAP" has the meaning given in Section 1.3.
"Government Approval" means an approval, permit, license,
authorization, certificate, or consent of any Governmental
Authority.
"Governmental Authority" means the government of the
United States or any State or any foreign country, or of any
political subdivision of any thereof, or any branch, department,
agency, instrumentality, court, tribunal or regulatory authority
which constitutes a part or exercises any sovereign power of any of
the foregoing.
"Guaranty" means any guaranty granted by any Subsidiary in
favor of the Agent, substantially in the form of the Hollywood
Management Guaranty.
"Hedging Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement
or arrangement designed to protect the Borrower or any Subsidiary
against fluctuations in interest rates or in the prices of any goods
or services.
"High Yield Notes" means (a) the "Initial Securities", as
defined in, and issued pursuant to, the Indenture, and (b) the
"Exchange Securities" (as defined in the Indenture), if any, issued
in exchange therefor as contemplated by the High Yield Offering
Memorandum and the Indenture, provided that such Exchange Securities
have terms (including subordination provisions) substantially
identical in all material respects to such Initial Securities,
except that such Exchange Securities need not contain the same
restrictions on transfer or registration rights as do such Initial
Securities.
"High Yield Offering" means (a) at any time prior to the
offering of the "Exchange Securities" described in the Indenture,
the Borrower's offering of the High Yield Notes outstanding as of
the September 5, 1997, and (b) upon commencement of the Borrower's
offering of such Exchange Securities, both the offering described in
the preceding clause (a) and the offering of such Exchange
Securities pursuant to the "Exchange Offer Registration Statement"
described in the High Yield offering Memorandum.
"High Yield Offering Memorandum" means (a) at any time
prior to the filing of the "Exchange Offer Registration Statement"
referred to above, the Offering Memorandum dated July 18, 1997,
relating to the issuance of the Borrower's senior subordinated notes
due 2004, and (b) following the filing of such Exchange Offer
Registration Statement, collectively, the Offering Memorandum
described in the preceding clause (a), such Exchange Offer
Registration Statement and any offering memorandum or prospectus, in
each case, as at any time amended.
"Hollywood Management" means Hollywood Management Company,
an Oregon corporation.
"Hollywood Management Guaranty" means that certain
Guaranty, dated as of June 23, 2000, between Hollywood Management
and the Agent.
"Hollywood Management Security Agreement" means that
certain Subsidiary Security Agreement, dated as of June 23, 2000,
between Hollywood Management and the Agent.
"IBOR Loan" means a Loan bearing interest at an IBOR Rate.
"IBOR Rate" means, with respect to any Loan for any
Applicable Interest Period, an interest rate per annum equal to the
sum of (a) the Margin (changing effective as of the date of each
change in the Margin) and (b) the product of (i) the Offshore Rate;
and (ii) the Eurodollar Reserves (as defined below) in effect on the
first day of such Applicable Interest Period. As used herein, the
"Offshore Rate" means the rate of interest per annum determined by
the Agent as the rate at which dollar deposits in the approximate
amount of such Loan for such Applicable Interest Period would be
offered by Societe Generale's Grand Cayman Branch, Grand Cayman
B.W.I. (or such other office as may be designated for such purpose
by Societe Generale) to major banks in the offshore dollar interbank
market at their request at approximately 11:00 a.m. (New York City
time) two (2) Business Days prior to the commencement of such
Applicable Interest Period. As used herein, "Eurodollar Reserves"
means a fraction (expressed as a decimal), the numerator of which is
the number one and the denominator of which is the number one minus
the aggregate of the maximum reserve percentages (including, without
limitation, any special, supplemental, marginal or emergency
reserves), expressed as a decimal, established by the Board of
Governors of the Federal Reserve System or any other banking
authority to which the Lenders are subject for Eurocurrency
Liability (as defined in Regulation D of such Board of Governors).
It is agreed that for purposes hereof, each Loan accruing interest
at the IBOR Rate shall be deemed to constitute a Eurocurrency
Liability and to be subject to the reserve requirements of
Regulation D, without benefit of credit or proration, exemptions or
offsets which might otherwise be available to the Lenders from time
to time under such Regulation D. Eurodollar Reserves shall be
adjusted automatically on and as of the effective date of any change
in any reserve percentage and shall apply to Applicable Interest
Periods commencing after the effective date of such change.
"Indebtedness" means, for any Person, without duplication:
(a) all items of indebtedness or liability (other than capital,
surplus, deferred credits and reserves) which, in accordance with
GAAP, would be included in determining total liabilities as shown on
the liability side of a balance sheet as of the date as of which
indebtedness is determined, (b) indebtedness secured by any Lien,
whether or not such indebtedness shall have been assumed, (c) any
other indebtedness or liability for borrowed money or for the
deferred purchase price of property or services for which such
Person is directly or contingently liable as obligor, guarantor, or
otherwise, or in respect of which such Person otherwise assures a
creditor against loss, (d) any other obligations of such Person
under Capital Leases, and (e) any obligations of such Person under
any Hedging Agreement.
"Indenture" means the Indenture dated as of August 13,
1997, between the Borrower, as Issuer, and U.S. Trust Company of
California, N.A., as Trustee, with respect to the Borrower's 10-5/8%
Senior Subordinated Notes Due 2004 as at any time amended or
supplemented in accordance with the provisions hereof.
"Interest and Rent Coverage Ratio" means, for any period
of four consecutive fiscal quarters of the Borrower, the ratio of
(a) Adjusted Net Cash EBITDA for such period, minus cash taxes paid
by the Borrower and its consolidated Subsidiaries during such period
(net of tax refunds received), plus the aggregate rent expense
incurred by the Borrower for such period to (b) total interest
expense of the Borrower for such period, plus the aggregate rent
expense incurred by the Borrower for such period determined on a
consolidated basis in accordance with GAAP.
"Interest Coverage Ratio" means, for any period of four
consecutive fiscal quarters of the Borrower, the ratio of
(a) Adjusted Net Cash EBITDA for such period, less cash taxes paid
by the Borrower and its consolidated Subsidiaries during such
period, to (b) total interest expense of the Borrower for such
period, determined on a consolidated basis in accordance with GAAP.
"Interest Rate Notice" has the meaning given in
Section 2.6.2.
"Investment" means, as applied to any Person, (a) any
direct or indirect purchase or other acquisition by that Person of
(i) any equity or debt securities (including, without limitation,
capital stock, shares, voting trust certificates, bonds, debentures,
notes or instruments or other securities or evidences of
indebtedness or other obligations), or (ii) a beneficial interest in
any equity or debt securities of any other Person; and (b) any
direct or indirect loan, advance (other than deposits with financial
institutions available for withdrawal on demand, prepaid expenses,
and similar items made or incurred in the ordinary course of
business), or capital contribution by such Person to any other
Person (including, without limitation, by means of any transfer of
cash or other property or payment for property or services for the
use of such other Person), including all Indebtedness and accounts
owed by that other Person (x) that arise from any Asset Disposition,
(y) that are not current assets or (z) that did not arise from sales
of goods or services to that Person in the ordinary course of
business and on arm's-length terms.
"Lenders" means Societe Generale, Goldman Sachs Credit
Partners L.P. and each of the other Persons identified as Lenders on
the signature pages hereto, and any Successors to or permitted
assigns under Section 9.4 of any of the foregoing.
"Leverage Ratio" means, for any period of four consecutive
fiscal quarters of the Borrower (determined on a consolidated
basis), the ratio of (a) the Borrower's Funded Debt as of the last
day of such period, to (b) the Borrower's Adjusted Net Cash EBITDA
for such period; provided that solely for the purpose of calculating
the applicable Margin, clause (b) shall be "the Borrower's Adjusted
EBITDA for such period."
"Lien" means, for any Person, any security interest,
pledge, mortgage, charge, assignment, hypothecation, encumbrance,
attachment, garnishment, execution or other voluntary or involuntary
security interest or lien in, on or affecting the revenues of such
Person or any real or personal property in which such Person has or
hereafter acquires any interest, except (i) (without limiting the
provisions of Section 7.1.12(b)) liens for Taxes which are not
delinquent or which remain payable without penalty or the validity
or amount of which is being contested in good faith by appropriate
proceedings upon stay of execution of the enforcement thereof with
appropriate reserves having been established therefor, (ii) liens
imposed by law (such as mechanics' liens) incurred in good faith in
the ordinary course of business which are not delinquent or which
remain payable without penalty or the validity or amount of which is
being contested in good faith by appropriate proceedings upon stay
of execution of the enforcement thereof with, in the case of liens
on property of the Borrower, provision having been made to the
satisfaction of the Agent for the payment thereof in the event the
contest is determined adversely to the Borrower, (iii) deposits or
pledges under worker's compensation, unemployment insurance, social
security or other similar laws or made to secure the performance of
bids, tenders, contracts (except for repayment of borrowed money),
or leases (other than Capital Leases), or to secure statutory
obligations or surety or appeal bonds or to secure indemnity,
performance or other similar bonds given in the ordinary course of
business and (iv) liens arising solely by virtue of any statutory or
common law provision relating to banker's liens, rights of setoff or
similar rights and remedies as to deposit accounts or other funds
maintained with a creditor depository institution (except as may be
modified by or under the Blocked Account Agreement), provided that
(A) such deposit account or other funds is/are available to such
Person on demand, and (B) such deposit account or other funds are
neither established nor maintained with such depository institution
as security for, or a condition to or other requirement imposed in
connection with the incurring or maintenance of, any Indebtedness to
such depository institution.
"Loan" means a loan made by one or more Lenders pursuant
hereto, provided that (a) if any Revolving Loan or Revolving Loans
(or portions thereof) are combined or subdivided pursuant to
Section 2.6.2, the term "Loan" means such combination or such
subdivided portion thereof, as the case may be, (b) where the
context so requires, the term "Loan" means, with respect to a
particular Lender, the advance made (or required to be made) by such
Lender in the amount of such Lender's Percentage Interest of a
borrowing hereunder (or, if less, the remaining unused portion of
such Lender's Commitment) and (c) except where the context otherwise
requires, the term "Loan" also means each advance under the Swing
Line.
"Loan Documents" means this Agreement, the Notes, the
Security Agreements, each Guaranty, the Blocked Account Agreement,
the Wattles Assignment Agreement and all other certificates,
instruments and other documents executed by the parties hereto (or
their predecessors or successors in interest) or any of their
respective officers or directors in connection with this Agreement
or the transactions contemplated hereby and any amendments thereto
made in accordance with the terms of this Agreement.
"Majority Lenders" means at any time Lenders having an
aggregate Percentage Interest of greater than fifty percent (50%).
"Mandatory Reduction" means a reduction in the Total
Commitment effected (a) pursuant to the definition of "Total
Commitment" or (b) pursuant to Section 2.3.2.
"Margin" means a per annum rate determined in accordance
with the following chart, adjusted as of the first day of the first
full calendar month beginning after the date on which the Borrower
delivers the quarterly compliance certificates required under
Section 5.10.3 with respect to any fiscal quarter, based on the
Leverage Ratio for the period of four consecutive fiscal quarters
ended as of the last day of such fiscal quarter, provided that if
the Borrower fails to deliver such quarterly compliance certificate
on or before the date it is due, then, from the first day of the
first full calendar month beginning after the date such delivery was
due until the first Business Day after such quarterly compliance
certificate is delivered, the Margin shall be the lesser of (a) 25
basis points over the Margin theretofore in effect, or (b) the
maximum Margin (for Base Rate Loans or IBOR Loans, as the case may
be) forth set in the following chart:
Leverage Rate Margin for use Margin for use
in determining in determining
IBOR Rate Adjusted Base Rate
Less than or equal to 1.50 0.875% 0.000%
Greater than 1.50 but less
than or equal to 1.75 1.125% 0.125%
Greater than 1.75 but less
than or equal to 2.00 1.375% 0.375%
Greater than 2.00 but less
than or equal to 2.50 1.625% 0.625%
Greater than 2.50 but less
than or equal to 3.00 1.875% 0.875%
Greater than 3.00 2.125% 1.125%
"Material Adverse Effect" means a material adverse effect
on the business, operations or financial condition of the Borrower
and its Subsidiaries taken as a whole; or a material adverse effect
on the ability of the Borrower and its Subsidiaries to perform their
obligations under any of the Loan Documents.
"Maturity Date" means September 5, 2002.
"Net Available Cash" means, with respect to any Asset
Disposition, the cash payments received by the Borrower or any
Subsidiary therefrom (including, without limitation (but without
limiting the provisions of Section 6.6), as and when received, any
cash payments received by way of deferred payment of principal
pursuant to any note or installment receivable or otherwise and cash
received upon the conversion into cash of marketable securities or
other property received as consideration for such Asset
Disposition), in each case net of all (a) (i) legal, title,
recording and transfer tax expenses relating to such Asset
Disposition, (ii) commissions and other fees and expenses incurred
to any Person other than an Affiliate of the Borrower in connection
with such Asset Disposition, and (iii) Federal, state, provincial,
foreign and local taxes required to be paid, as a consequence of
such Asset Disposition, within twelve months after the date thereof;
(b) payments made on any Indebtedness (i) secured by any assets
subject to such Asset Disposition, in accordance with the terms of
any Lien of any kind thereon, as a condition precedent to the
consummation of such Asset Disposition, (ii) required to be made, at
or before the consummation of such Asset Disposition, to obtain a
necessary consent thereto, or (iii) required to be paid from the
proceeds of such Asset Disposition under applicable law; (c) in the
case of an Asset Disposition by a Subsidiary, distributions and
other payments required to be made to any holders of minority
interests in such Subsidiary as a consequence of such Asset
Disposition; and (d) appropriate reserves established by the seller,
in accordance with GAAP or as otherwise agreed by the Majority
Lenders, against any liabilities (i) associated with the assets
subject to such Asset Disposition (including, without limitation,
liabilities under any indemnity obligations incurred as part of such
Asset Disposition), (ii) that are retained by the Borrower or the
Subsidiary party to such Asset Disposition.
"Net Cash Proceeds" means, with respect to any issuance or
sale of debt or capital stock by the Borrower, the cash proceeds of
such issuance or sale, net of (a) (i) attorneys' fees and
disbursements, (ii) accountants' fees, (iii) underwriters' or
placement agents' fees, discounts or commissions, and
(iv) brokerage, consultants' and other fees, in each case, actually
incurred in connection with such issuance or sale and (b) taxes paid
or payable as a result thereof.
"Net Income" means, for any accounting period, the
consolidated net income of the Borrower and its Subsidiaries for
such period, determined in accordance with GAAP.
"Net Worth" means, for any Person, such Person's owners'
or shareholders', as the case may be, equity, determined in
accordance with GAAP.
"New York Office" means Societe Generale, New York Branch.
"Notes" has the meaning given in Section 2.9.
"Notice of Borrowing" means a written request for a Loan,
executed by the Borrower and delivered to the Agent and containing
the information set forth in Section 2.2.
"Obligations" means, from time to time, all indebtedness
or other obligations of the Borrower and its Subsidiaries owing to
the Agent, any Lender or any Indemnified Person (as defined in
Section 9.5.1), or any of their respective Successors, transferees
or permitted assigns, of every type and description, whether or not
evidenced by any note, guaranty or other instrument, arising under
or in connection with this Agreement or any other Loan Document,
whether or not for the payment of money, whether direct or indirect
(including those acquired by assignment), absolute or contingent,
due or to become due, now existing or hereafter arising and however
acquired, and including, without limitation, all present and future
obligations for the payment of principal, premium, interest
(including interest accruing after the filing of any petition under
the Bankruptcy Code, at the Default Rate), penalties, fees,
indemnifications, reimbursements, damages and other liabilities at
any time payable under the Loan Documents.
"Officer's Certificate" means a certificate signed in the
name of the Borrower by its Chairman, its President, its Chief
Financial Officer, its Senior Vice President of Finance, its
Controller or its Treasurer.
"Passive Investment" means the acquisition by the Borrower
of voting securities of a Person, engaged (or being formed to
engage) in an Ancillary Business, provided that (a) such Person is a
corporation, limited partnership or other limited liability entity
and the securities therein acquired by the Borrower do not expose
the Borrower generally to liability for the obligations of such
Person; (b) Borrower does not own a majority of the outstanding
voting securities of such Person or otherwise have the right to
control the management of such Person; (c) the financial results of
such Person are not required, under GAAP, to be reported on a
consolidated basis with those of the Borrower; and (d) the Borrower
does not become indirectly or contingently liable (as obligor,
guarantor, or otherwise) for any obligation of such Person, or
otherwise assure any creditor of such Person against loss.
"PBGC" means the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Pension Plan" means an "employee pension benefit plan"
(as such term is defined in ERISA) from time to time maintained by
the Borrower or a member of the Controlled Group.
"Percentage Interest" means, for any Lender at any time,
the percentage that such Lender's Commitment is of the Total
Commitment.
"Permitted Acquisition" means an acquisition by the
Borrower of (a) all or substantially all of the assets (or of all or
substantially all of the assets of any division, business segment or
comparable line of business) of another Person, or (b) all of the
outstanding capital stock of another Person (including acquisitions
by merger), in either case, that does not otherwise cause the
occurrence of a Default or Event of Default, provided that no later
than twenty (20) Business Days prior to the consummation of such
acquisition, the Borrower delivers to the Agent the Pro Forma
Calculations with respect to such acquisition.
"Permitted Investment" means any Investment permitted
under Section 6.6.
"Person" means an individual, a corporation, a partnership
(whether general, limited, or limited liability), a limited
liability company, a trust, an unincorporated association, a joint
venture, a joint-stock company, a government (including any
political subdivision of a government), a Governmental Authority or
any other entity.
"Plan" means, at any time, an employee pension benefit
plan which is covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code and is either
(a) maintained by the Borrower or any member of the Controlled Group
for employees of the Borrower or any member of such Controlled Group
or (b) maintained pursuant to a collective bargaining agreement or
any other arrangement under which more than one employer makes
contributions and to which the Borrower or any member of the
Controlled Group is then making or accruing an obligation to make
contributions or has within the preceding five (5) plan years made
contributions.
"Pro Forma Calculations" means, with respect to any
transaction, pro forma financial statements of the Borrower
(a) prepared as of the last day of the then most recently completed
fiscal quarter of the Borrower, (b) giving pro forma effect to such
transaction as of such date, (c) establishing that, on a pro forma
basis, the Borrower would have been in compliance with each of the
financial covenants set forth in Sections 5.15 through 5.20 as of
the end of such most recently completed fiscal quarter
notwithstanding the consummation of such transaction (provided that
financial covenants otherwise required to be tested with respect to
any period of four consecutive fiscal quarters shall be calculated
on the basis of the twelve-month period ended as of the last day of
such then most recently completed fiscal quarter and as if such
transaction had been consummated on the first day of such twelve-
month period), and (d) certified by the Borrower's chief financial
officer as having been prepared in accordance with the provisions of
this Agreement as being accurate in all material respects.
"Reel.com" means Reel.com, Inc., a Delaware corporation,
which was merged as of June 9, 2000 into the Borrower.
"Rental Items" means videotapes, video discs (regardless
of format), videogames, audiotapes and related equipment to the
extent that such items were acquired by Borrower (or the relevant
Subsidiary) for sale or rental to its customers or are held by
Borrower (or the relevant Subsidiary) for rental to its customers.
"Rental Revenues" means revenues received by the Borrower
(on a consolidated basis) for the rental of Rental Items.
"Revolving Loan" means each Loan made by the Lenders under
the facility described in Section 2.1.1, as well as each Swing Line
Borrowing deemed converted into a Revolving Loan pursuant to
Section 2.2.1, provided that (a) if any Revolving Loan or Revolving
Loans (or portions thereof) are combined or subdivided pursuant to
Section 2.6.2, the term "Revolving Loan" means such combination or
such subdivided portion thereof, as the case may be; (b) where the
context so requires, the term "Revolving Loan" means with respect to
a particular Lender, the advance made (or required to be made) by
such Lender in the amount of such Lender's Percentage Interest of a
borrowing under the facility described in Section 2.1.1 (or, if
less, the remaining unused portion of such Lender's Commitment).
"Security Agreements" means the Borrower Security
Agreement and each Subsidiary Security Agreement.
"Store" means each separate location (notwithstanding the
corporate or other organization of any multitude of locations) at
which the Borrower engages in the rental of Rental Items to the
public.
"Subordinated Debt" means the obligations of the Borrower
in respect of (a) the High Yield Notes and (b) any other
subordinated debt issued in accordance with the provisions of
Section 6.2(f).
"Subsidiary" means any corporation, association, limited
liability company or other business entity of which the Borrower
owns directly or indirectly more than fifty percent (50%) of the
voting securities, membership interests or other equity interest
thereof or in which the Borrower otherwise owns a controlling
interest.
"Subsidiary Security Agreement" means any security
agreement executed by any Subsidiary substantially in the form of
the Hollywood Management Security Agreement.
"Successor" means, for any corporation or banking
association, any successor by (a) merger or consolidation or
(b) acquisition of substantially all of the assets of the
predecessor.
"Swing Line" means the subfacility for short-term
borrowings described in Section 2.1.2.
"Swing Line Borrowing" means a borrowing under the Swing
Line.
"Swing Line Lender" means Societe Generale, acting in its
capacity as the lender under the Swing Line, and any Successor to
Societe Generale in that capacity.
"Tangible Net Worth" means (a) Net Worth, less (b) all
components thereof attributable to intangible assets (determined in
accordance with GAAP).
"Tax" has the meaning provided in Section 2.13(a).
"Total Commitment" means (subject to reduction or
termination pursuant to Section 2.3 or Section 7.2):
Period Amount
September 5, 1997 through and including December 4, 2000 $300,000,000
December 5, 2000 through and including March 4, 2001 $262,500,000
March 5, 2001 through and including June 4, 2001 $225,000,000
June 5, 2001 through and including September 4, 2001 $187,500,000
September 5, 2001 through and including December 4, 2001 $150,000,000
December 5, 2001 through and including March 1, 2002 $112,500,000
March 2, 2002 through and including June 4, 2002 $75,000,000
June 5, 2002 through and including September 4, 2002 $37,500,000
Thereafter $0
"Total Revenues" means, for any period, the Borrower's
aggregate revenues for such period, determined in accordance with
GAAP.
"Trademarks" has the meaning given to such term in the
Trademark Mortgage and Security Agreement dated as of September 11,
1997 by the Borrower in favor of Societe Generale, as Agent, as
amended as of August 2, 2000.
"Unfunded Vested Liabilities" means, with respect to any
Plan, at any time, the amount (if any) by which (a) the present
value of all vested nonforfeitable benefits under such Plan exceeds
(b) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent valuation date
for such Plan, but only to the extent that such excess represents a
potential liability of the Borrower or any member of the Controlled
Group to the PBGC or the Plan under Title IV of ERISA.
"Voluntary Reduction" has the meaning given in
Section 2.3.1.
"Wattles Assignment Agreement" means that certain Security
Assignment Agreement dated as of August 2, 2000 between the Borrower
and the Agent.
"Wattles Loan" means the loan by the Borrower of an amount
not to exceed $15,000,000 to Mark J. Wattles and the related pledge
of stock by Mr. Wattles to the Borrower to collateralize such loan
under the Wattles Pledge Agreement.
"Wattles Note" means the Term Promissory Note, in the
aggregate principal amount of $15,000,000 executed by Mark J.
Wattles in favor of the Borrower, dated as of May 8, 2000.
"Wattles Pledge Agreement" means that certain Pledge
Agreement (Securities) dated as of June 30, 2000 made by Mark J.
Wattles in favor of the Borrower.
"Working Capital" means, in relation to the any Person as
at any date, the excess of the Adjusted Current Assets of such
Person as at such date, over the Adjusted Current Liabilities of
such Person as at such date.
1.2. General Principles. Applicable to Definitions,
Certain Usages of Terms. Definitions given in Section 1.1 shall be
equally applicable to both singular and plural forms of the terms
therein defined, and references herein to "he" or "it" shall be
applicable to Persons whether masculine, feminine or neuter.
References herein to any document, including, without limitation,
this Agreement, shall be deemed references to such document as it
now exists, and as, from time to time hereafter, the same may be
amended, supplemented or restated. Unless otherwise specified, any
reference in a Loan Document to an article, section, paragraph,
subparagraph, schedule or exhibit shall be deemed a reference to an
article, section, paragraph, subparagraph, schedule or exhibit of or
to such Loan Document. The word "or" shall not be limiting, but
shall have the meaning commonly ascribed to "and/or."
1.3. Accounting Terms. Except as otherwise expressly
provided herein, accounting terms not specifically defined shall be
construed, and all accounting procedures shall be performed: (a) in
accordance with generally accepted United States accounting
principles consistently applied ("GAAP") and as in effect on the
date of application, and (b) in the case of a Person whose financial
results would be reported, in accordance with GAAP, on a
consolidated basis with the results of Persons under such Person's
control, on a consolidated basis.
ARTICLE II.
THE LOANS
2.1. The Facility.
2.1.1. Revolving Line of Credit. Each Lender
severally agrees, on the terms and conditions of this Agreement, to
make loans ("Revolving Loans") to the Borrower from time to time on
Business Days during the period beginning on the September 5, 1997
and ending on the day before the Maturity Date, in an aggregate
principal amount not exceeding at any one time (a) for any Lender,
the principal amount set forth below such Lender's name on the
signature pages hereto, subject to reduction or termination in
accordance with Section 2.3 and Section 7.2 (such amount, at any
time, such Lender's "Commitment"), and (b) for all Lenders, (i) the
Total Commitment less (ii) the aggregate principal amount of all
Swing Line Borrowings that would remain outstanding immediately
following the making of any such Revolving Loan and the application
of the proceeds thereof to the payment of any outstanding Swing Line
Borrowings. The line of credit extended hereunder is a revolving
line of credit, and, subject to the terms and conditions hereof, the
Borrower may borrow, repay and reborrow up to the maximum principal
amount provided for in this Section 2.1.1, at any time before the
Maturity Date.
2.1.2. Swing Line. The Swing Line Lender
additionally agrees, on the terms and conditions of this Agreement,
to make advances to the Borrower from time to time on Business Days
during the period beginning on the September 5, 1997 and ending on
the day before the Maturity Date, in an aggregate principal amount
not exceeding at any one time the lesser of (a) (i) the Total
Commitment, less (ii) the outstanding principal of all Loans other
than Swing Line Borrowings, and (b) $10,000,000. The Swing Line
Lender's obligation to fund Swing Line Borrowings shall be
unaffected by its making of any Revolving Loans, notwithstanding
that the sum of the Swing Line Borrowings plus the Swing Line
Lender's Percentage Interest of the aggregate principal amount of
the outstanding Revolving Loans, may exceed the Swing Line Lender's
Commitment.
2.2. Manner of Borrowing a Loan.
2.2.1. Revolving Loans.
(a) In connection with each Revolving Loan, the
Borrower shall deliver to the Agent at both its Dallas Office and
its New York Office, no later than 12:30 p.m. (New York City time),
(i) at least one Business Day prior to the requested Funding Date in
the case of a Base Rate Loan, or (ii) at least three Business Days
prior to the requested Funding Date in the case of an IBOR Loan, a
Notice of Borrowing specifying the Funding Date of the requested
Revolving Loan and the amount thereof, which shall be in an amount
equal to $2,000,000 or an integral multiple of $1,000,000 in excess
thereof.
(b) If, as of 12:30 p.m. (New York City time) on the
fourteenth day after the Swing Line Lender has funded any Swing Line
Borrowing, the Borrower has not repaid such Swing Line Borrowing in
full (or if, prior thereto, an Event of Default shall have occurred
or the Loans shall be accelerated for any reason whatsoever):
(i) the Agent shall promptly (or, if an Event of Default has
occurred but the Loans have not been accelerated, may) notify each
Lender by telephone (confirmed promptly by telex, facsimile
transmission or cable), telex, facsimile transmission, or cable of
the amount of such Swing Line Borrowing; and (ii) each Lender shall
(subject to Section 2.1.1), before 2:30 p.m. (New York City time),
on such date, pay to the Agent at its Dallas Office (or at such
other place as the Agent may from time to time specify for such
purpose), in immediately available funds, such Lender's Percentage
Interest of the principal amount of such Swing Line Borrowing. Upon
such funding, each Lender shall be deemed to have acquired from the
Swing Line Lender (and the Swing Line Lender shall be deemed to have
assigned to each such Lender) a percentage interest in such Swing
Line Borrowing equal to such Lender's Percentage Interest, and, for
purposes of determining the availability of Swing Line Borrowings or
Revolving Loans, such Swing Line Borrowing shall be deemed a
Revolving Loan (and no longer a Swing Line Borrowing); provided that
the obligations of the Lenders under this Section 2.2.1(b) shall not
be subject to the notice or amount requirements, or to satisfaction
of conditions precedent, otherwise applicable to the making of
Revolving Loans. Each Lender's obligation to fund, and to purchase
from the Swing Line Lender, its Percentage Interest of a Swing Line
Borrowing pursuant to this Section 2.1.1(b) shall be absolute and
unconditional under any and all circumstances (including, without
limitation, any intervening bankruptcy of the Borrower or
termination of the Total Commitment). It is not the parties' intent
that the obligations of the Lenders under this Section 2.1.1(b)
constitute guaranties or obligations of suretyship. If and to the
extent, however, that the obligations of any Lender under this
Section 2.1.1(b) are determined to be those of a guarantor or
surety, such Lender, with full knowledge of the consequences
thereof, hereby expressly waives the benefit of each and every right
or defense of a guarantor or surety the effect of which would
relieve such Lender of all or any portion of its obligations under
this Section 2.1.1(b). In the event that any Lender fails to pay to
the Agent when due any amount it is required to fund under this
Section 2.2.1(b), such Lender and the Borrower severally agree to
pay to the Agent, on demand, the amount such Lender has failed to so
pay, together with interest thereon for each day from the date on
which such payment was due until the date such amount is repaid to
the Agent, at (x) in the case of the Borrower, the Applicable
Interest Rate, or (y) in the case of such Lender, the Federal Funds
Rate. Any such repayment by the Borrower shall be without prejudice
to any rights it may have against the Lender that has failed pay
when due any such amount.
2.2.2. Swing Line Borrowings. In connection with
each Swing Line Borrowing, the Borrower shall deliver to the Agent,
no later than 12:30 p.m. (New York City time) at its New York Office
and its Dallas Office on the requested Funding Date, a Notice of
Borrowing specifying the Funding Date of the requested Swing Line
Borrowing and the amount thereof, which shall be in an amount equal
to $500,000 or an integral multiple of $10,000 in excess thereof.
2.2.3. General Provisions.
(a) Any Notice of Borrowing received after
12:30 p.m. (New York City time) by either the Agent's New York
Office or its Dallas Office on any day will be deemed to have been
received on the next succeeding Business Day. Each Notice of
Borrowing shall be irrevocable and shall constitute a representation
and warranty by the Borrower that, as of the date of the Notice of
Borrowing, (i) no Default or Event of Default has occurred and is
continuing and (ii) each of the representations and warranties of
the Borrower or any Subsidiary set forth in any Loan Document are
true and correct in all material respects on and as of such date
(except to the extent such representations or warranties are
conditioned by reference to a specific date, in which case they
shall be true and correct in all material respects as of such date),
with the same effect as though such representations and warranties
had been made on and as of such date.
(b) (i) On receipt of any Notice of Borrowing with
respect to a Revolving Loan, the Agent shall promptly notify each
Lender by telephone (confirmed promptly by telex, facsimile
transmission or cable), telex, facsimile transmission, or cable of
the requested Funding Date. Each Lender shall, before 2:30 p.m.
(New York City time), on the Funding Date of the requested Revolving
Loan, pay to the Agent at its Dallas Office (or at such other place
as the Agent may from time to time specify for such purpose), in
immediately available funds, the lesser of (A) such Lender's
Percentage Interest of the aggregate principal amount of the
Revolving Loan requested in the Notice of Borrowing or (C) the
maximum amount such Lender is committed to advance pursuant to the
terms of Section 2.1.1.
(ii) Upon (A) fulfillment to the
Agent's satisfaction of the applicable conditions precedent set
forth in Article III, and (B) in the case of a Revolving Loan, after
receipt by the Agent of immediately available funds from the Lenders
pursuant to the preceding subparagraph (i), the Agent shall promptly
make funds available to the Borrower in the amount of the requested
Revolving Loan or Swing Line Borrowing, as the case may be, by wire
transfer in accordance with such written instructions as may be
delivered by the Borrower.
2.3. Reductions of Commitments.
2.3.1. Voluntary Reductions. Upon not less than
five (5) Business Days' written notice to the Agent, the Borrower
may terminate the Total Commitment, or reduce it in part, provided
that: (a) each partial reduction of the Total Commitment pursuant
to this Section 2.3.1 (each such partial reduction, a "Voluntary
Reduction") shall be in an amount equal to at least $5,000,000;
(b) in no event may the Total Commitment be reduced to an amount
less than the then outstanding aggregate principal balance of the
Loans (after giving effect to any prepayment of the Loans made at
the time of any Voluntary Reduction).
2.3.2. Mandatory Reductions. The Total Commitment
shall be reduced (a) (i) to the extent that, by the date that is 180
days after the Borrower's (or any Subsidiary's) receipt of any Net
Available Cash in respect of an Asset Disposition, the Borrower has
not reinvested such Net Available Cash in Additional Similar Assets
(determined on a first-in, first-out basis), or (ii) to the extent
that such Net Available Cash, when aggregated with all prior
acquisitions of Additional Similar Assets effected with Net
Available Cash during the fiscal year in which such Net Available
Cash is received, exceeds $50,000,000, on the date such excess Net
Available Cash is received (the amount of such unreinvested Net
Available Cash, or of such excess Net Available Cash, as the case
may be, the "Excess Disposition Proceeds"), by an amount equal to
such Excess Disposition Proceeds; (b) on or prior to the date which
is 30 days after the Borrower's receipt thereof, by an amount equal
to 50% of the Net Cash Proceeds of any issuance or sale by the
Borrower of its capital stock; (c) on or prior to the date which is
30 days after the Borrower's receipt thereof by an amount equal to
50% of the Net Cash Proceeds of any issuance or sale of Subordinated
Debt by the Borrower; and (d) on the date of any determination
thereof, by an amount equal 100% of any Excess Cash Flow; provided
that after payment by the Borrower to the Agent of any amounts owing
under clause (b) or (c), (i) an amount not to exceed 10% of Net Cash
Proceeds received by the Borrower (in addition to amounts not used
under clause (ii) below) shall be used by the Borrower for general
working capital purposes (other than Store improvements or growth)
and (ii) an amount not to exceed 40% of Net Cash Proceeds received
by the Borrower, shall (without limitation of the parenthetical in
clause (i) above) be used solely in accordance with clause (z)(III)
of Section 6.12.
2.3.3. Effect of Reduction.
(a) Each Voluntary Reduction or Mandatory Reduction
shall proportionately reduce each Lender's Commitment such that,
after such reduction takes effect, each Lender's Commitment will be
an amount equal to its Percentage Interest (calculated immediately
before such Voluntary Reduction or Mandatory Reduction) of the Total
Commitment, as reduced.
(b) No Voluntary Reduction or unscheduled Mandatory
Reduction shall affect the amount of any subsequent scheduled
Mandatory Reduction in the amount of the Total Commitment pursuant
to the definition of "Total Commitment", and, effective as of any
Voluntary Reduction or unscheduled Mandatory Reduction, the amount
of the Total Commitment set forth in the definition of "Total
Commitment" for any time after such Voluntary Reduction or
unscheduled Mandatory Reduction (if applicable, as previously
reduced in respect of any prior Voluntary Reduction or unscheduled
Mandatory Reduction) shall be deemed to have been amended so as to
reduce such amount by the amount of such Voluntary Reduction or
unscheduled Mandatory Reduction.
2.4. Repayment of Principal.
2.4.1. Maturity Date. Subject to Section 2.4.2, the
Borrower shall repay to the Agent, for the account of the Lenders,
the principal amount of each Loan on or before the Maturity Date.
2.4.2. Mandatory Payments and Prepayments.
(a) If at any time the outstanding principal amount
of the Loans exceeds the Total Commitment by reason of a scheduled
reduction in the Total Commitment or otherwise, the Borrower shall
pay to the Agent on such date, for the account of the Lenders and
for application to the repayment of the Loans, the amount of such
excess.
(b) Concurrently with each Mandatory Reduction of
the Total Commitment pursuant to Section 2.3.2, the Borrower shall
prepay the principal of the Loans in an amount equal to the lesser
of (a) the amount of such Mandatory Reduction or (b) the outstanding
principal amount of the Loans.
(c) (i) If, at the time of any payment or
prepayment of principal, there are outstanding any Swing Line
Borrowings, such payment or prepayment of principal shall be applied
first to the payment or prepayment, as applicable, of outstanding
Swing Line Borrowings, and then in accordance with the following
subparagraph (ii).
(ii) Subject to the preceding
subparagraph (i): unless otherwise specified by the Borrower
(solely with respect to voluntary prepayments) in writing at the
time of any payment or prepayment of principal, each payment or
prepayment of principal shall be applied first to the payment or
prepayment, as applicable, of outstanding Base Rate Loans, and
second to the payment or prepayment, as applicable, of outstanding
IBOR Rate Loans, in the order in which their respective Applicable
Interest Periods terminate (and, in the case of IBOR Loans having
Applicable Interest Periods ending on the same date, pro rata in
accordance with their outstanding principal amounts or, if no Event
of Default has occurred and is continuing and the Borrower so
directs at the time of such payment, in such manner as the Borrower
may direct to minimize the Borrower's liability under Section 2.8).
Any payment or prepayment of the principal of the Loans shall be
accompanied by the payment of (x) such fees, expenses or other
amounts as may then be due and payable under the Loan Documents and
(y) accrued but unpaid interest on the principal so paid or prepaid.
2.5. Agent's Right to Fund. Unless the Agent shall have
received notice from a Lender at both its New York Office and its
Dallas Office prior to 2:30 p.m. (New York City time) on the Funding
Date of any Revolving Loan that such Lender will not make available
to the Agent such Lender's Percentage Interest of the requested
Revolving Loan ("such Lender's Loan"), (a) the Agent may assume that
such Lender has made such funds available to the Agent on such
Funding Date in accordance with Section 2.2 and (b) the Agent may,
in reliance upon such assumption, make available to the Borrower on
such Funding Date the amount of such Lender's Loan. If and to the
extent that (x) such Lender shall not have so made the amount of
such Lender's Loan available to the Agent and (y) the Agent shall
have advanced the amount of such Lender's Loan to the Borrower, then
such Lender and the Borrower severally agree to pay to the Agent, on
demand, the amount of such Lender's Loan, together with interest
thereon for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at
(i) in the case of the Borrower, the Applicable Interest Rate, or
(ii) in the case of such Lender, the Federal Funds Rate. Any such
repayment by the Borrower shall be without prejudice to any rights
it may have against the Lender that has failed to make available
such Lender's Loan on any Funding Date.
2.6. Interest on Loans.
2.6.1. General Provisions.
(a) The Borrower agrees to pay to the Agent, for the
account of each Lender, interest on the unpaid principal amount of
each Loan from the date of such Loan until such Loan becomes due and
payable at a per annum rate equal to the Applicable Interest Rate,
and, if default shall occur in the payment when due of all or any
portion of the principal of such Loan, from the date such principal
becomes due until it is paid in full at a per annum rate equal to
two percentage points (2.00%) above the Base Rate (changing as the
Base Rate changes, the "Default Rate").
(b) Accrued but unpaid interest on each IBOR Loan
shall be paid on the last day of the Applicable Interest Period, on
the date of any payment of the principal of such IBOR Loan (to the
extent accrued on the principal amount paid), at the Maturity Date.
(c) Accrued but unpaid interest on each Base Rate
Loan shall be paid on the last Business Day of each calendar month
(the first such payment due August 31, 2000), on the date of any
payment of the principal of the Base Rate Loans (to the extent
accrued on the principal amount paid) and at the Maturity Date.
(d) Unpaid interest accruing on amounts in default
shall be payable on demand.
(e) Notwithstanding anything herein or in any other
Loan Document to the contrary, under no circumstances whatsoever
shall interest charged in respect of the Loans for the benefit of
any Lender, however such interest may be characterized or computed,
exceed the highest rate permissible under any law that a court of
competent jurisdiction shall, in a final determination, deem
applicable to the Loans of such Lender. If such a court determines
that any Lender has received interest hereunder in excess of the
highest rate applicable to its Loans, such Lender shall, at the
Lender's election, either (i) promptly refund such excess interest
to the Borrower or (ii) credit such excess to the principal balance
of such Lender's Loans. This provision shall control over every
other provision of all agreements between the Borrower and any
Lender.
2.6.2. Selection of Alternative Rate.
(a) (i) Each Swing Line Borrowing shall be a Base
Rate Loan. The Borrower may, subject to the requirements of this
Section 2.6.2, on at least three (3) Business Days' prior written
notice, elect to have interest accrue on any Revolving Loan or any
portion thereof at the IBOR Rate for an Applicable Interest Period.
Such notice (an "Interest Rate Notice") shall be deemed delivered
on receipt by Agent, except that an Interest Rate Notice received by
the Agent at either its New York Office or its Dallas Office after
12:30 p.m. (New York City time) on any Business Day shall be deemed
to have been received on the immediately succeeding Business Day.
The Interest Rate Notice may be given with, and contained in, any
Notice of Borrowing with respect to a Revolving Loan.
(ii) Each Interest Rate Notice shall
identify, subject to the conditions of this Section 2.6.2, the
Revolving Loan or, portions thereof and the Applicable Interest
Period which the Borrower selects. Any Interest Rate Notice that
specifies an IBOR Rate but fails to identify an Applicable Interest
Period shall be deemed to be a request for the designated IBOR Rate
for an Applicable Interest Period of one (1) month. The Borrower's
right to select an IBOR Rate to apply to a Revolving Loan or any
portion thereof shall be subject to the following conditions:
(A) the aggregate amount of all Revolving Loans or portions thereof
to accrue interest at a particular IBOR Rate for the same Applicable
Interest Period shall be $2,000,000 or an integral multiple of
$1,000,000 in excess thereof; (B) the Borrower shall not have
selected more than twelve (12) different IBOR Rates or Applicable
Interest Periods to be applicable to portions of the Revolving Loans
at any one time; (C) an IBOR Rate may not be selected for any Swing
Line Borrowing; (D) an IBOR Rate may not be selected for any
Revolving Loan or portion thereof that is already accruing interest
at an IBOR Rate unless such selection is only to become effective at
the maturity of the Applicable Interest Period then in effect;
(E) neither the Agent nor any Lender shall have given notice
pursuant to Section 2.6.4 that the IBOR Rate selected by Borrower is
not available; and (F) no Default or Event of Default shall have
occurred and be continuing.
(b) On receipt of any Interest Rate Notice, the
Agent shall promptly notify each Lender by telephone (confirmed
promptly by telex or facsimile transmission) of the information set
forth in the Interest Rate Notice. Each Interest Rate Notice shall
be irrevocable, and shall constitute a representation and warranty
by the Borrower that, as of the date of such Interest Rate Notice,
no Event of Default or Default has occurred and is continuing. If
the Borrower delivers an Interest Rate Notice with any Notice of
Borrowing for a Loan and the Borrower thereafter declines to take
such Loan, or a condition precedent to the making of such Loan is
not satisfied or waived, Borrower shall indemnify the Agent, and
each Lender, for all losses and any costs which the Agent or any
Lender may sustain as a consequence thereof, including, without
limitation, the costs of redeployment of funds at rates lower than
the cost to the Lenders of such funds. A certificate of the Agent
or any Lender setting forth the amount due to it pursuant to this
subparagraph (b) and the basis for, and the calculation of, such
amount shall, absent manifest error, be conclusive evidence of the
amount due pursuant to this subparagraph (b). Payment of the amount
owed shall be due within fifteen (15) days after the Borrower's
receipt of such certificate.
(c) Each IBOR Loan shall be allocated among the
Lenders in proportion to their respective Percentage Interests. In
the absence of an effective request for the application of an IBOR
Rate (including, without limitation, as of the last day of the
Applicable Interest Period of any IBOR Loan), the Loans shall accrue
interest at the Adjusted Base Rate.
2.6.3. Applicable Days for Computation of Interest.
Computations of interest accruing at an IBOR Rate shall be made on
the basis of a year of three hundred sixty (360) days, for the
actual number of days (including the first day but excluding the
last day) occurring in, the period for which such interest is
payable. Computations of interest accruing at the Adjusted Base
Rate or at Default Rate shall be made on the basis of a year of
three hundred sixty-five or three hundred sixty-six (365 or 366)
days, as the case may be, in each case, for the actual number of
days (including the first day but excluding the last day) occurring
in the period for which such interest is payable.
2.6.4. Unavailable IBOR Rate. If the Agent
determines that for any reason fair and adequate means do not exist
for establishing the IBOR Rate, or if any Lender determines (and
gives notice to the Agent) that accruing interest on any Loan at an
IBOR Rate by such Lender has become unlawful, or that the IBOR Rate
(exclusive of the Margin) does not accurately reflect the cost to
such Lender of making or maintaining IBOR Loans, the Agent shall
give notice of that fact to each Lender and to the Borrower, and
such determination shall be conclusive and binding absent manifest
error. After such notice has been given and until the Agent
notifies the Borrower, or such Lender notifies the Borrower and the
Agent, that the circumstances giving rise to such notice no longer
exist, the IBOR Rate shall no longer be available in respect of
Loans, and any request by the Borrower to have interest accrue on a
Loan at the IBOR Rate shall be deemed to be a request for interest
to accrue at the Adjusted Base Rate; provided, however, that if it
is unlawful for the affected Lender to maintain any then outstanding
IBOR Loans as IBOR Loans until the end of the relevant Applicable
Interest Period, such IBOR Loans shall automatically convert into
Base Rate Loans with effect from the date of such Lender's notice to
the Agent, and, if the interest rate applicable to Base Rate Loans
is then lower than the relevant IBOR Rate(s), the Borrower shall pay
to each Lender, within thirty (30) days following demand accompanied
by a certificate of such Lender describing the basis therefor and
the calculation thereof, such amount or amounts as may be necessary
to compensate such Lender for any loss in connection therewith. If
the circumstances giving rise to the notice described herein cease
to exist, the Agent or the relevant Lender, as the case may be,
shall, promptly upon becoming aware of that fact, notify the
Borrower and (if applicable) the Agent in writing of that fact, and
the Borrower shall then once again become entitled to request that
the IBOR Rate apply to Loans in accordance with Section 2.6.2.
2.7. Compensation for Increased Costs.
2.7.1. Borrower's Obligation to Compensate. In the
event that after the date hereof any change occurs in any applicable
law, regulation, guideline, treaty or directive or interpretation
thereof by any authority charged with the administration or
interpretation thereof, or any condition is imposed by any such
authority after the date hereof or any change occurs in any
condition imposed by any such authority on or prior to the date
hereof which:
(a) subjects any Lender to any Tax, or changes the
basis of taxation of any payments to any Lender on account of
principal of or interest on any IBOR Loan, such Lender's Note (to
the extent such Note evidences IBOR Loans) or other amounts payable
with respect to IBOR Loans (other than a change in the rate of tax
based solely on the overall net or gross income of such Lender); or
(b) imposes, modifies or determines applicable any
reserve, deposit or similar requirements against any assets held by,
deposits with or for the account of, or loans or commitments by, any
office of any Lender in connection with its IBOR Loans (but only to
the extent that any such amount is in excess of, or was not
applicable at the time of computation of, the amounts provided for
in the definition of the IBOR Rate); or
(c) imposes upon any Lender any other condition with
respect to its IBOR Loans or its obligation to make IBOR Loans;
which, as a result thereof, (i) increases the cost to any Lender of
making or maintaining its IBOR Loans or its Commitment hereunder, or
(ii) reduces the net amount of any payment received by any Lender in
respect of its IBOR Loans (whether of principal, interest,
commitment fees or otherwise), or (iii) requires any Lender to make
any payment on or calculated by reference to the gross amount of any
sum received by it in respect of its IBOR Loans; or
(d) affects the amount of capital required or
expected to be maintained by banks generally or corporations
controlling banks, and any Lender reasonably determines that the
capital such Lender or any corporation controlling such Lender is
required or expected to maintain, or the amount by which such Lender
or any corporation controlling such Lender is required or expected
to increase its capital, is increased by (or based upon), the
existence of this Agreement or of such Lender's Loans (whether or
not IBOR Loans) or Commitment hereunder by an amount which the
affected Lender in its sole but reasonable judgment deems material,
then and in any such case the Borrower shall pay to the Agent, for
the account of such Lender, on demand, such amount or amounts as
will compensate such Lender (on an after-tax basis) for any
increased cost, deduction or payment actually incurred or made by
such Lender in respect of such circumstances. The demand for
payment by any Lender shall be delivered to both the Agent and the
Borrower and shall state the subjection or change which occurred, or
the reserve or deposit requirements or other conditions which have
been imposed upon such Lender, or the request, direction or
requirement with which it has complied, together with the date
thereof, the amount of such cost, reduction or payment and the
manner in which such amount has been calculated. The statement of
any Lender as to the additional amounts payable pursuant to this
Section 2.7 shall, absent manifest error, be conclusive evidence of
the amounts payable hereunder.
2.7.2. Effect of Invalidity or Inapplicability. The
protection of this Section 2.7 shall be available to each Lender
regardless of any possible contention of invalidity or
inapplicability of the relevant law, regulation, guideline, treaty,
directive, condition or interpretation thereof. In the event that
the Borrower pays to any Lender all or any portion of the amount
necessary to compensate such Lender for any charge, deduction or
payment incurred or made by such Lender as provided in this
Section 2.7, and such charge, deduction, payment, or any part
thereof, is subsequently returned to such Lender as a result of the
final determination of the invalidity or inapplicability of the
relevant law, regulation, guideline, treaty, directive or condition,
then such Lender shall remit to the Borrower the amount paid by the
Borrower which has actually been returned to such Lender (together
with any interest actually paid to Lender on such returned amount),
less such Lender's costs and expenses incurred in connection with
such governmental regulation or any challenge made by such Lender
with respect to its validity or applicability.
2.7.3. Failure or Delay. No failure of any Lender
to demand compensation for any increased cost or reduction in
amounts received or receivable or for any reduction in return on
capital shall constitute a waiver of such Lender's right to demand
such compensation; provided, however, that no Lender shall be
entitled under this Section 2.7 to any such compensation
attributable to any period preceding the date that is ninety (90)
days prior to the date of such Lender's demand.
2.8. Prepayments. Base Rate Loans may be repaid at any
time without penalty or premium. If any IBOR Loan (or portion
thereof) is paid prior to the end of the relevant Applicable
Interest Period, a fee computed in the manner set out in Schedule 1
shall be assessed and paid at the time of such prepayment. Such fee
shall apply in all circumstances where such a Loan (or portion
thereof) is paid prior to the end of the Applicable Interest Period,
regardless of whether such payment is voluntary, mandatory, or the
result of acceleration or of the Agent's or Lenders' collection
efforts.
2.9. Notes. The Loans made by each Lender shall, if
requested by such Lender, be evidenced by a promissory note of the
Borrower, substantially in the form of Exhibit A hereto, with
appropriate insertions, dated as of the date hereof and payable to
the order of such Lender, in the face amount of such Lender's
Commitment (all promissory notes so requested and issued, the
"Notes"). Each Lender is hereby authorized to record the date and
the amount of each Loan it makes, and the date and amount of each
payment of principal and interest thereon, (i) on a schedule annexed
to its Note, if any, or maintained in connection therewith or
(ii) otherwise in such Lender's records. Any such recordation by
any Lender shall constitute prima facie evidence of the accuracy of
the information so recorded; provided, however, that neither the
failure to make any such recordation, nor any error in any such
recordation, shall affect the Obligations. The election by any
Lender not to request the execution and delivery of a Note, or its
surrender of a Note for cancellation without requesting the issuance
of a replacement Note, shall in no way impair or otherwise adversely
affect the Borrowers' Obligations to such Lender in respect of the
Loans, which Obligations shall be evidenced (or continue to be
evidenced) by the Loan Documents. References in the Loan documents
to amounts payable under any Lender's Note shall mean, with respect
to a Lender to whom no Note is then outstanding, amounts payable to
such Lender under the Loan Documents. In connection with any
permitted assignment of an interest in the Loans by a Lender to whom
no Note is then issued, then, notwithstanding the provisions of
Section 9.4.5(b) requiring the surrender by the assigning Lender of
its Note, the assignee shall be entitled, upon request, to the
issuance to it of a Note reflecting the amount of its Commitment.
2.10. Manner of Payments.
2.10.1. Time, Place and Manner. All payments and
prepayments of principal and interest on any Loan, and all other
amounts payable hereunder or under any other Loan Document by the
Borrower to the Agent or any Lender, shall be made by paying the
same in United States dollars and in immediately available funds to
the Agent at its Dallas Office (or at such other place as the Agent
may from time to time specify for such purpose) not later than 11:30
a.m. (Dallas, Texas time) on the date on which such payment or
prepayment is due.
2.10.2. Statements. At least two (2) Business Days
prior to each date on which any regularly scheduled installment of
interest is due in respect of the Loans, the Agent shall give
written notice (which may be by telegram, facsimile transmission,
cable or telex) of the amounts that will be due on such date. The
calculation of the amounts due will be made on the assumption that
no new extensions of credit or payments will be made between the
date of such notice and the date on which such installment of
interest is due, and that there will be no changes in the relevant
interest rate(s). Notwithstanding the foregoing to the contrary,
amounts due on any date on which interest is payable hereunder shall
be calculated in accordance with this Agreement, and the failure of
the Agent to give notice as provided in this Section 2.10.2 shall
not affect the Obligations.
2.10.3. Payments on Days Other than Business Days.
Whenever any payment hereunder or under any other Loan Document
shall be stated to be due, and whenever the last day of any
Applicable Interest Period would otherwise occur, on a day other
than a Business Day, such payment shall be made, or the last day of
such Applicable Interest Period shall occur, as the case may be, on
the next succeeding Business Day, and such extension of time shall
in such case be included in the computation and payment of interest
or facility or commitment fees, as the case may be, unless such
extension would cause such payment to be made, or the last day of
such Applicable Interest Period to occur, in the next following
calendar month, in which case such payment shall be due, or the last
day of such Applicable Interest Period shall occur, as the case may
be, on the next preceding Business Day.
2.10.4. Application of Payments. Any payment made
by the Borrower hereunder shall be applied first, against fees,
expenses and indemnities then due and payable hereunder; second,
against accrued and unpaid interest; and thereafter, against the
principal of the Loans, in accordance with Section 2.4.2(c).
2.11. Fees.
2.11.1. Unused Commitment Fee. The Borrower agrees
to pay to the Agent, for the account of the Lenders in proportion to
their Percentage Interests, an unused commitment fee, computed daily
at the rate of 0.50% per annum for the period commencing on
September 5, 1997 and ending on the Maturity Date, on the difference
between (a) the Total Commitment and (b) the aggregate outstanding
principal amount of all Loans (including Swing Line Borrowings),
payable in arrears on the last Business Day of each calendar
quarter, on the Maturity Date, and on demand after the occurrence of
any Default or Event of Default but prior to termination of the
Commitments. Computations of the unused commitment fee shall be
made on the basis of a year of three hundred sixty (360) days for
the actual number of days (including the first day but excluding the
last day) occurring in the period for which such fee is payable.
2.11.2. Loan Fees. On or before the Closing Date,
the Borrower agrees to pay to the Agent, for its own account, the
fees provided in accordance with that certain letter agreement dated
as of June 20, 2000, between the Borrower and the Agent.
2.11.3. Agency Fees. The Borrower shall pay to the
Agent, for its own account, on September 5, 1997 and each
anniversary thereof during the term of the Loans, an agency fee in
an amount equal to the product of (a) $2,500 and (b) the number of
Lenders party to the Loan Agreement as of September 5, 1997 or such
anniversary, as the case may be.
2.11.4. Utilization Fee. The Borrower shall pay to
the Agent, for the account of the Lenders in proportion to their
Percentage Interests, a utilization fee, computed daily at the rate
of 0.375% per annum on the aggregate unpaid principal amount of the
Loans, payable in arrears on the last Business Day of each calendar
quarter, on the Maturity Date, and on demand after the occurrence of
any Default or Event of Default but prior to termination of the
Commitments. Computations of the utilization fee shall be made on
the basis of a year of three hundred sixty (360) days for the actual
number of days (including the first day but excluding the last day)
occurring in the period for which such fee is payable.
2.11.5. Facility Restatement Fee. The Borrower
shall pay to the Agent on the last day of each three-month period
commencing on the Closing Date for account of the Lenders in
proportion to their Percentage Interests, a facility restatement fee
computed daily at the rate of 1.50% per annum on the average daily
Total Commitment as in effect from time to time; provided that the
rate at which the facility restatement fee is calculated shall be
reduced by an amount equal to 1/4 of 1% per annum for each permanent
reduction of the Total Commitment of $25,000,000 (other than in
connection with scheduled Mandatory Reductions).
2.11.6. Step-up Fee. The Borrower shall pay to the
Agent for the account of the Lenders in proportion to their
Percentage Interests, on the last day of each three-month period
commencing on December 5, 2001, a step-up fee computed daily in the
amount of 3% per annum on the average daily Total Commitment, as in
effect from time to time.
2.11.7. Nonrefundable. Each of the fees provided
for under this Section 2.11 shall be fully earned as of the day it
is due hereunder, and shall be nonrefundable.
2.12. Sharing of Payments, Etc. Each borrowing of Loans
from the Lenders under Section 2.1 shall be made pro rata in
accordance with each Lender's Percentage Interest. Each payment and
prepayment of the Loans, and each payment of interest on the Loans,
shall be made pro rata to each Lender in accordance with its
Percentage Interest. If any Lender shall obtain any payment in
respect of the Borrower's Obligations, under this Agreement or the
Notes, or any other Loan Document (whether voluntary or involuntary,
through the exercise of any right of setoff or otherwise), in excess
of the share which it would have been entitled to receive had such
payment been made to the Agent, such Lender shall forthwith notify
the Agent and shall purchase from the other Lenders such
participations in the Loans made by them as shall be necessary to
cause such purchasing Lender to share the excess payment ratably
with each of them; provided that if all or any portion of such
excess payment is afterward recovered from such purchasing Lender,
the purchase shall be rescinded and the purchase price restored,
without interest, to the extent of such recovery. The Borrower
authorizes the purchase of such participations and agrees that any
Lender so purchasing a participation from another Lender may
exercise all of its rights to payment (including the right of set
off) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower (in addition to in respect
of its own Loans) in respect of such participation.
2.13. Taxes.
(a) Subject to Section 2.13(b), all payments made by
the Borrower under this Agreement and the Notes shall be made free
and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding, in the case of the Agent and each
Lender, income taxes and franchise taxes (or other similar taxes
imposed as a result of being incorporated, having an office or doing
business in a particular jurisdiction) imposed on the Agent or any
Lender, as the case may be, as a result of a present or former
connection between the jurisdiction of the government or taxing
authority imposing such tax and the Agent or such Lender (excluding
a connection arising solely from the Agent or such Lender having
executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or the Notes) or any
political subdivision or taxing authority thereof or therein (all
such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions and withholdings being hereinafter called "Taxes"). If
any Taxes are required to be withheld from any amounts payable to
the Agent or any Lender hereunder or under the Notes, and subject to
the Agent's or such Lender's compliance with this Section 2.13, the
amounts so payable to the Agent or such Lender shall be increased to
the extent necessary to yield to the Agent or such Lender (after
payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement
and the Notes. Whenever any Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the Agent
for its own account or for the account of such Lender, as the case
may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof. If any Lender shall become
entitled to any tax credit or receive a refund from any Governmental
Authority, in either case, directly attributable to the payment by
the Borrower of any Taxes, such Lender shall return to the Agent for
the benefit of the Borrower an amount equal to the lesser of (x) the
amount of such credit or refund, as the case may be, and (y) the
amount of the Taxes so paid by the Borrower that gave rise to such
credit or refund. Any payment to be made by a Lender to the
Borrower pursuant to the preceding sentence shall be made at the
time, and solely to the extent, that (i) in the case of a refund,
such refund is actually received by the Lender from the applicable
Governmental Authority, and (ii) in the case of a credit, a payment
of Taxes actually made by the Lender to a Governmental Authority is
reduced as a direct result of such credit. If the Borrower fails to
pay any Taxes when due to the appropriate taxing authority or fails
to remit to the Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Agent and the
Lenders for any incremental taxes, interest or penalties that may
become payable by the Agent or any Lender as a result of any such
failure. The agreements in this Section 2.13 shall survive the
payment of the Notes and all other Obligations.
(b) Each Lender that is not a United States person
(as such term is defined in Section 7701(a)(30) of the Code) agrees
to deliver to the Borrower and the Agent on or prior to the Closing
Date, or in the case of a Lender that is an assignee or transferee
of an interest under this Agreement pursuant to Section 9.4 (unless
the respective Lender was already a Lender hereunder immediately
prior to such assignment or transfer), on the date of such
assignment or transfer to such Lender, (i) (x) two accurate and
complete original signed copies of Internal Revenue Service Form
W-8BEN or W-8EC1 (or successor forms) certifying to such Lender's
entitlement to a complete exemption from United States withholding
tax with respect to payments to be made under this Agreement and
under any Note and (y) for periods prior to January 1, 2001, a duly
completed copy of Internal Revenue Service Form W-8 or W-9 (or
successor form), or (ii) if the Lender is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and cannot deliver
either Internal Revenue Service Form W-8BEN or W-8EC1 pursuant to
clause (i) above, (x) a certificate in form and substance
satisfactory to the Agent (any such certificate, a
"Section 2.13(b)(ii) Certificate") and (y) two accurate and complete
original signed copies of Internal Revenue Service Form W-8 (or
successor form) certifying to such Lender's entitlement to a
complete exemption from United States withholding tax with respect
to payments of interest to be made under this Agreement and under
any Note. In addition, each Lender agrees that from time to time
after the Closing Date, when a lapse in time or change in
circumstances renders the previous certification obsolete or
inaccurate in any material respect, it will deliver to the Borrower
and the Agent two new accurate and complete original signed copies
of Internal Revenue Service Form W-8BEN or W-8EC1 and Form W-8 and
W-9, or Form W-8 and a Section 2.13(b)(ii) Certificate, as the case
may be, and such other forms as may be required in order to confirm
or establish the entitlement of such Lender to a continued exemption
from or reduction in United States withholding tax with respect to
payments under this Agreement and any Note, or it shall immediately
notify the Borrower and the Agent of its inability to deliver any
such form or certificate. Notwithstanding anything to the contrary
contained in Section 2.13(a), but subject to Section 9.4.3 and the
immediately succeeding sentence, (x) the Borrower shall be entitled,
to the extent it is required to do so by law, to deduct or withhold
income or similar taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from
interest, fees or other amounts payable hereunder for the account of
any Lender which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income
tax purposes to the extent that such Lender has not provided to the
Borrower U.S. Internal Revenue Service Forms that establish a
complete exemption from such deduction or withholding and (y) the
Borrower shall not be obligated pursuant to Section 2.13(a) hereof
to gross-up payments to be made to a Lender in respect of income or
similar taxes imposed by the United States if (I) such Lender has
not provided to the Borrower the Internal Revenue Service Forms
required to be provided to the Borrower pursuant to this
Section 2.13(b) or (II) in the case of a payment, other than
interest, to a Lender described in clause (ii) above, to the extent
that such forms do not establish a complete exemption from
withholding of such taxes. Notwithstanding anything to the contrary
contained in the preceding sentence or elsewhere in this
Section 2.13(b), and except as set forth in Section 9.4.3, the
Borrower agrees to pay additional amounts and to indemnify each
Lender in the manner set forth in Section 2.13(a) (without regard to
the identity of the jurisdiction requiring the deduction or
withholding) in respect of any amounts deducted or withheld by it as
described in the immediately preceding sentence as a result of any
changes after September 5, 1997 in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the
interpretation thereof, relating to the deducting or withholding of
Taxes.
2.14. Certain Acknowledgments by Borrower. The Borrower
recognizes and acknowledges the credit facility made available
hereunder is being established and will be maintained in the manner
provided herein and in the other Loan Documents at the express
request of the Borrower, to accommodate the administrative and
operational requirements of the Borrower, its existing Subsidiaries
and such Persons as may, at any time during the continuance hereof,
become Subsidiaries. Specifically, the credit facility might have
been established to provide for direct borrowings by Borrower and by
each Subsidiary, subject to individual borrowing limits consistent
with the Lenders' prudent lending practices, based on each such
Person's borrowing capacity, with additional credit needs of such
Person in excess of such borrowing limit being accommodated by loans
made to such Person by the Borrower or other Subsidiaries having
excess borrowing capacity. For administrative and operational
reasons imposed by the Borrower as aforesaid, however, the credit
facility provided hereby has been established and will be maintained
as described above, but with the intention (but without limiting in
any manner the obligations of Borrower to repay any and all Loans in
accordance with the terms hereof and of the Notes) that the Borrower
and each of the Subsidiaries ultimately share, among themselves,
repayment obligations under the Loan Documents to the same extent as
if such borrowings had been made under the alternative,
individualized arrangement described above. In addition, it is
further recognized and acknowledged that Borrower, and each
Subsidiary, will directly and indirectly benefit from the Borrower's
and its Subsidiaries' collective business activities, as facilitated
by the Loans.
2.15. Designated Senior Indebtedness. The Borrower
acknowledges and agrees that the Obligations are intended to and
shall constitute "Designated Senior Indebtedness" for all purposes
of the High Yield Notes and the Indenture.
ARTICLE III.
CONDITIONS OF LENDING
3.1. Conditions to Effectiveness Availability. The
effectiveness of this Agreement is subject to the satisfaction of
the following conditions precedent on or before August 4, 2000:
3.1.1. Execution and Delivery of Loan Documents.
The Agent shall have received each of the following, in each case
duly executed and delivered by the Borrower:
(a) this Agreement;
(b) the Borrower Security Agreement;
(c) the Hollywood Management Guaranty;
(d) the Hollywood Management Security Agreement;
(e) the Amendment to Trademark Mortgage and Security
Agreement, dated as of August 2, 2000, between the Borrower and the
Agent;
(f) the Notes; and
each of the Agent and the Lenders shall have received, in form and
substance satisfactory to it, the Borrower Disclosure Letter.
3.1.2. Corporate Authority. The Agent shall have
received in form and substance reasonably satisfactory to it:
(a) a certified copy of resolutions adopted by the
Board of Directors of the Borrower authorizing the execution,
delivery and performance of the Loan Documents; and
(b) evidence of the authority and specimen
signatures of the individuals who have signed the Loan Documents on
behalf of the Borrower, together with such other evidence of
corporate existence, authority or good standing in any jurisdiction
as the Agent or any Lender may reasonably require.
3.1.3. Legal Opinion. The Agent shall have received
a written legal opinion of Stoel Rives LLP, in form and substance
reasonably satisfactory to the Agent, addressed to the Agent and the
Lenders and addressing such matters as the Agent or any Lender may
reasonably require.
3.1.4. Perfected Security Interests. The Agent
shall have received evidence, reasonably satisfactory to it, that
the security interests created by each of the Security Agreements
have been duly perfected by the filing of all Financing Statements,
and the taking of all such other or additional acts as the Agent may
reasonably deem necessary or advisable to create a valid and
perfected Lien in the Collateral enforceable in all jurisdictions to
secure the Obligations. The Agent shall have also received such
evidence as it may reasonably require (a) that its Liens in the
Collateral have priority over any and all other Liens therein except
for (i) purchase money Liens covering only assets purchased by the
Borrower in the ordinary course of business and permitted to exist
pursuant to Section 6.4, (ii) Liens of lessors under Capital Leases
permitted to exist pursuant to Section 6.4, including, without
limitation, Capital Leases on Schedule 3.1.4. and (iii) other Liens,
in existence as of the date hereof, permitted to exist pursuant to
Section 6.4 and (b) that the Collateral is free and clear of all
Liens, except as permitted by this Agreement.
3.1.5. Stock Certificates; Stock Powers. The Agent
shall have received original stock certificates representing
ownership of each of the Borrower's Subsidiaries and the related
undated stock powers duly endorsed in blank.
3.1.6. Payment of Fees. The Borrower shall have
paid all accrued and unpaid fees, costs and expenses due hereunder
and under that certain letter agreement referred to in
Section 2.11.2.
3.1.7. Wattles Collateral. The Agent shall have
received the Wattles Assignment Agreement, duly executed by the
Borrower, by which the Borrower transfers as Collateral pursuant to
the Borrower Security Agreement, all of its right, title and
interest in and to the securities pledged by Mark J. Wattles to the
Borrower under the Wattles Pledge Agreement.
3.1.8. Blocked Account Agreement. The Agent shall
have received duly executed counterparts from Bank of America, N.A.,
Hollywood Management and the Borrower of the Blocked Account
Agreement which shall be in full force and effect.
3.1.9. Perfection Certificate. The Agent shall have
received a completed perfection certificate, certified by an
Authorized Officer of the Borrower, containing information requested
by, and satisfactory to, the Agent, in its sole discretion.
3.1.10. Amendment Fee. The Agent shall have
received from the Borrower an amendment fee for the account of each
Lender which timely executes this Agreement, in an amount equal to
1/8 of 1% of each such Lender's Commitment.
3.1.11. Other Information. The Agent, and each
Lender, shall have received such other statements, opinions,
certificates, documents and information with respect to the matters
contemplated by this Agreement as it may reasonably request.
3.2. Conditions Precedent to all Loans. The obligation
of each Lender to deliver its Loan proceeds to the Agent, and the
obligation of the Agent to disburse such proceeds to the Borrower on
the date of any Loan hereunder, are subject to the satisfaction, as
reasonably determined by the Agent, of the following conditions
precedent:
3.2.1. Notice of Borrowing. The Borrower shall have
timely delivered to the Agent a Notice of Borrowing with respect to
the requested Loan.
3.2.2. Absence of Defaults, Accuracy of
Representations. At the date of each Loan:
(a) no Default or Event of Default shall have
occurred and be continuing or will occur as a result of the making
of the Loan; and
(b) each of the representations and warranties of
the Borrower or any Subsidiary set forth in any Loan Document shall
be true and correct in all material respects on the date of such
Loan (except to the extent such representations or warranties are
conditioned by reference to a specific date, in which case they
shall be true and correct in all material respects as of such date),
with the same effect as though such representations and warranties
had been made on and as of such date.
The Borrower's delivery of any Notice of Borrowing shall be deemed
the Borrower's representation and warranty that, as of the date of
such Notice of Borrowing and as of the date of the requested Loan,
each of the foregoing conditions will be satisfied.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Agent and the Lenders
as follows, which representations and warranties shall survive the
execution of this Agreement except as set forth in the Borrower
Disclosure Letter (which indicates which sections of this Agreement
are qualified by the disclosures set forth therein, provided that
inadvertent failure to indicate all sections of this Agreement that
a particular disclosure is intended to qualify shall not constitute
a breach hereunder):
4.1. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and active under the
laws of the State of Oregon. The Borrower is duly qualified to do
business in each other jurisdiction where the nature of its
activities or the ownership of its properties requires such
qualification, except where the failure to so qualify has not had
and is not reasonably likely to have a Material Adverse Effect on
the Borrower. The Borrower has full corporate power, authority and
legal right to carry on its business as presently conducted, to own
and operate its properties and assets, and to execute, deliver and
perform each of the Loan Documents.
4.2. Corporate Authorization. The execution, delivery
and performance by the Borrower of this Agreement and each of the
other Loan Documents, and any borrowing hereunder or thereunder,
have been duly authorized by all necessary corporate action of the
Borrower, do not require any shareholder approval or the approval or
consent of any trustee or the holders of any Indebtedness of the
Borrower, except such as have been obtained (certified copies
thereof having been delivered to the Agent), do not contravene any
law, regulation, rule or order binding on it or its Articles of
Incorporation or Bylaws and do not contravene the provisions of or
constitute a default under any indenture, mortgage, contract or
other agreement or instrument to which the Borrower is a party or by
which the Borrower or any of its properties may be bound or
affected.
4.3. Government Approvals, Etc. No Government Approval
or filing or registration with any Governmental Authority is
required for the execution, delivery and performance by the Borrower
of the Loan Documents or in connection with any of the transactions
contemplated thereby (including the Wattles Loan), except such as
have been heretofore obtained and are in full force and effect
(certified copies thereof having been delivered to the Agent).
4.4. Binding Obligations, Etc. This Agreement has been
duly executed and delivered by the Borrower and constitutes, and
each of the other Loan Documents when duly executed and delivered
will constitute, the legal, valid and binding obligations of the
Borrower and its Subsidiaries, as the case may be, enforceable
against the Borrower and its Subsidiaries, as the case may be, in
accordance with their respective terms.
4.5. Litigation. Except as reflected in the financial
statements referred to in Section 4.6 or in the Borrower Disclosure
Letter, there are no actions, proceedings, investigations, or claims
against or affecting the Borrower or any Subsidiary now pending
before any arbitrator or court or other Governmental Authority (nor,
to the knowledge of the Borrower has any thereof been threatened)
which, if determined adversely to the Borrower or such Subsidiary,
would be reasonably likely to have a Material Adverse Effect.
4.6. Financial Condition. The consolidated balance sheet
of the Borrower and its Subsidiaries as at March 31, 2000, and the
consolidated statements of operations and cash flows for the period
then ended, copies of which have been furnished to the Agent, fairly
present the financial condition of the Borrower and its Subsidiaries
as at such date, all determined in accordance with GAAP. Neither
the Borrower nor any of its Subsidiaries have on such date any
contingent liabilities for Taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in
the balance sheets or the notes thereto. Since the date of such
financial statements there has been no change in the financial
condition, operations, or business of the Borrower and its
Subsidiaries, taken as a whole, which has resulted, or could
reasonably be expected to result, in a Material Adverse Effect
(other than in connection with the merger of Reel.com into the
Borrower).
4.7. Indebtedness; Title and Liens.
4.7.1. Neither the Borrower nor any Subsidiary is
liable in respect of any Indebtedness other than in respect of
(i) the High Yield Notes; (ii) to the extent that they constitute
Indebtedness, obligations described in clauses (i) through (iv) of
the definition of "Lien"; (iii) accounts payable and other
liabilities that, in each case, do not constitute Funded Debt and
have been incurred in the ordinary course of business; (iv) the
Obligations; and (v) other Indebtedness permitted under Section 6.2.
The Obligations are prior in right of payment to any and all
obligations of the Borrower in respect of the High Yield Notes, as
and to the extent provided in the Indenture.
4.7.2. The Borrower, and each of its Subsidiaries,
as the case may be, has good and marketable title to each of the
properties and assets reflected in the balance sheets referred to in
Section 4.6 (except for such assets as (i) have been since sold or
otherwise disposed of in the ordinary course of business or
(ii) that, in the aggregate, are insignificant to the proper conduct
of the Borrower's or such Subsidiary's business). No assets or
revenues of the Borrower or any Subsidiary are subject to any Lien
except as permitted by this Agreement. Except to the extent that
failure to be so in compliance has not had, and cannot reasonably be
expected to have, a Material Adverse Effect: (x) all properties of
the Borrower and each Subsidiary, and such Person's use thereof,
comply in all material respects with applicable zoning and use
restrictions and with applicable laws and regulations relating to
health, safety and the environment; and (y) without limiting the
generality of the foregoing clause (x), the Borrower, and each
Subsidiary, is in compliance in all material respects with all laws
and regulations relating to pollution, hazardous substances and
environmental control in all jurisdictions in which the Borrower or
such Subsidiary, as the case may be, is doing business. The
Borrower, in the ordinary course of business, conducts a review of
the effect of existing laws and regulations pertaining to the
environment and existing claims advanced under or in respect of
environmental laws and regulations on its business, operations and
properties and those of its Subsidiaries, and, as a result thereof,
the Borrower has reasonably concluded that such environmental laws
and claims have not had, and cannot reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
4.8. Taxes. Each of the Borrower and its Subsidiaries
(a) has filed all United States federal and Oregon state income tax
returns and reports required of it; (b) except to the extent that
the failure to do so has not had, and is not reasonably likely to
have, a Material Adverse Effect, (i) has filed all other tax returns
and reports required of it and (ii) has paid all Taxes which are due
and payable, and (b) has provided adequate reserves for payment of
any Tax the payment of which is being contested. The charges,
accruals and reserves on the books of the Borrower or any Subsidiary
in respect of taxes for all fiscal periods to date are accurate in
all material respects. There are no material questions or disputes
between the Borrower or any Subsidiary, and any Governmental
Authority with respect to any Taxes except as disclosed in the
balance sheet referred to in Section 4.6.
4.9. Laws, Orders; Other Agreements. Except to the
extent that such occurrence has not had, and is not reasonably
likely to have, a Material Adverse Effect, neither the Borrower nor
any of its Subsidiaries (a) is in violation of, or subject to any
contingent liability on account of, any laws, statutes, rules,
regulations and orders of any Governmental Authority, or (b) is in
material breach of or default under any agreement to which it is a
party or which is binding on it or any of its assets. Each of the
Borrower and its Subsidiaries is in material compliance with the
Fair Labor Standards Act.
4.10. Lien Priority. On the date of any Loan:
(a) Financing Statements will have been duly filed in all places
where filing is necessary, and all other or additional acts will
have been taken as are necessary, to perfect the Agent's Liens on
the Collateral; (b) each of the Security Agreements will constitute
a valid and perfected Lien on the Collateral to which it relates,
enforceable in all jurisdictions, to secure (i) in the case of the
Borrower Security Agreement, all Obligations or (ii) in the case of
a Subsidiary Security Agreement, the obligations under the Loan
Documents of the Subsidiary party thereto; (c) the Agent's Liens on
the Collateral have priority over any and all other security
interests or other Liens therein except (i) for purchase money
Liens, to the extent permitted under Section 6.4(c), on assets
purchased by the Borrower or the relevant Subsidiary in the ordinary
course of business, (ii) the Liens of lessors under Capital Leases,
to the extent permitted under Section 6.4(d), and (iii) other Liens,
in existence as of the date hereof, permitted to exist under
Section 6.4 and (d) the Collateral is free and clear of all Liens
except for Liens permitted under Section 6.4.
4.11. Federal Reserve Regulations. The Borrower is not
engaged principally or as one of its important activities in the
business of extending credit for the purpose of purchasing or
carrying any margin stock (within the meaning of Federal Reserve
Regulation U), and no part of the proceeds of any Loan will be used
to purchase or carry any such margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin
stock, or for any other purpose that violates the applicable
provisions of any Federal Reserve Regulation. The Borrower will
furnish to the Agent or any Lender, on request, a statement
conforming with the requirements of Regulation U.
4.12. ERISA.
4.12.1. The present value of all benefits vested
under all Pension Plans did not, as of the most recent valuation
date of such Pension Plans, exceed the value of the assets of the
Pension Plans allocable to such vested benefits by an amount that
would (a) represent a potential material liability of the Borrower
or (b) affect materially the ability of the Borrower to perform its
Obligations.
4.12.2. No Plan or any trust created thereunder, or
any trustee or administrator thereof, has engaged in a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) that could subject such Plan or any other
Plan, any trust created thereunder, or any trustee or administrator
thereof, or any party dealing with any Plan or any such trust, to
the tax or penalty on prohibited transactions imposed by Section 502
of ERISA or Section 4975 of the Code.
4.12.3. No Pension Plan, or any trust created
thereunder, has been terminated, except in accordance with the Code,
ERISA, and the regulations of the Internal Revenue Service and the
PBGC as applicable to solvent plans in which benefits of
participants are fully protected. No "reportable event", as defined
in Section 4043 of ERISA, has occurred for which notice has not been
waived or for which alternative notice procedures are permitted.
4.12.4. No Pension Plan, or any trust created
thereunder, has incurred any "accumulated funding deficiency" (as
such term is defined in Section 302 of ERISA), whether or not
waived, since the effective date of ERISA.
4.12.5. The required allocations and contributions
to Pension Plans will not violate Section 415 of the Code.
4.12.6. The Borrower has no withdrawal liability to
any trust created pursuant to a multiemployer pension or benefit
plan, nor would it be subject to any such withdrawal liability in
excess of $1,000,000 if it withdrew from any such plan or if its
participation therein were otherwise terminated.
4.13. Patents, Licenses, Franchises. The Borrower and
its Subsidiaries own or possess all the patents, trademarks, service
marks, trade names, copyrights, licenses, franchises, permits and
rights with respect to the foregoing necessary to own and operate
their properties and to carry on their business, as presently
conducted and presently planned to be conducted, without conflict
with the rights of others, except to the extent that the failure to
do so has not had, and is not reasonably likely to have, a Material
Adverse Effect.
4.14. New Investment Company, Etc. The Borrower is not
now, and after the application by the Borrower of the proceeds of
any Loan will not be, subject to regulation under the Investment
Company Act of 1940, the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Interstate Commerce Act, any state public
utilities code or any other federal or state statute or regulation
limiting its ability to incur Indebtedness.
4.15. Insurance. The properties of the Borrower and of
each Subsidiary are insured with financially sound and reputable
insurance companies that are not Affiliates of the Borrower, in such
amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and
owning similar properties in localities where the Borrower or any of
its Subsidiaries operates.
4.16. Certain Representations Regarding Subsidiaries. As
of the date of this Agreement, the only Subsidiaries of the Borrower
in existence are listed in the Borrower Disclosure Letter, each of
which is wholly-owned by the Borrower. All of the Borrower's shares
of each of its Subsidiaries have been validly issued and are fully
paid and nonassessable, and all certificates evidencing such shares
have been delivered to the Agent prior to the Closing Date.
4.17. Subsidiaries. None of the Borrower's Subsidiaries
owns or possesses any assets other than as described on Schedule
4.17.
4.18. Hedging Agreements. On the Closing Date there are
no Hedging Agreements contemplated or in effect as permitted under
Section 6.2(g) to which the Borrower or any of its Subsidiaries is a
party.
4.19. Lessors. All obligations of the Borrower with
respect to any arrangements, by lease or otherwise, with Heller
Financial Leasing, Inc. and Transamerica Equipment Financial
Services Corporation are listed on Schedule 6.2.
4.20. Representations as a Whole. This Agreement, the
other Loan Documents, the financial statements referred to in
Section 4.6, and all other instruments, documents, certificates and
statements furnished to the Agent or any Lender by the Borrower,
taken as a whole, do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make
the statements contained herein or therein not misleading. The
Borrower has disclosed to the Lenders in writing any and all facts
known to the Borrower's general counsel or to any of the officers of
the Borrower listed in the definition of "Officer's Certificate,"
which could reasonably be expected to have a Material Adverse
Effect.
ARTICLE V.
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder,
and until payment in full of each Loan and the Notes and performance
of all other Obligations, the Borrower agrees that, unless the Agent
(with the consent of the Majority Lenders) shall otherwise give its
prior written consent:
5.1. Use of Proceeds. The Borrower shall use the
proceeds of the Loans for general corporate purposes.
5.2. Payment. The Borrower will pay the principal of and
interest on the Loans in accordance with the terms of this Agreement
and the Notes, and shall pay when due all other amounts payable by
the Borrower hereunder or under any other Loan Document.
5.3. Preservation of Corporate Existence, Etc. The
Borrower (a) shall preserve and maintain, and (except to the extent
otherwise expressly permitted hereunder or contemplated by the
Borrower Disclosure Letter) shall cause each Subsidiary to preserve
and to maintain, its corporate (or other entity, as the case may be)
existence, rights, franchises and privileges in the jurisdiction of
its formation, and (b) except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, (i) shall
qualify and remain qualified (and shall cause each Subsidiary to
qualify and remain qualified) as a foreign corporation (or other
entity, as the case may be) in each jurisdiction where such
qualification is necessary or desirable in view of its business and
operations or the ownership of its properties; and (ii) shall own or
possess (and shall cause each Subsidiary to own or possess) all the
patents, trademarks, service marks, trade names, copyrights,
licenses, franchises, permits and rights with respect to the
foregoing necessary to own and operate its properties and to carry
on its business, as at any time conducted, without conflict with the
rights of others.
5.4. Visitation Rights. At any time, and from time to
time upon reasonable notice, the Borrower shall permit, and shall
cause each of its Subsidiaries to permit, the Agent or any Lender,
or the representatives of the Agent or any Lender, to examine and
make copies of and abstracts from its records and books of account,
to visit its properties and to discuss the affairs, finances and
accounts of the Borrower or such Subsidiary with any of its
officers, directors or employees, and (provided that the Borrower
shall make the arrangements therefor) with the Borrower's
independent public accountants.
5.5. Keeping of Books and Records. The Borrower shall
keep, and shall cause each of its Subsidiaries to keep, adequate
records and books of account in which complete entries will be made,
in accordance with GAAP, reflecting all of its financial
transactions.
5.6. Maintenance of Property, Etc. The Borrower shall
maintain and preserve, and shall cause each Subsidiary to maintain
and preserve, all of its properties (except with respect to
properties that, in the aggregate, are insignificant to the proper
conduct of the Borrower's business) in good working order and
condition, ordinary wear and tear excepted, and will from time to
time make (and cause each Subsidiary to make) all needed repairs,
renewals, or replacements so that the efficiency of such properties
shall be fully maintained and preserved.
5.7. Compliance With Laws, Etc. Except to the extent
that failure to do so would not result in a Material Adverse Effect:
(i) the Borrower shall comply, and shall cause each of its
Subsidiaries to comply, in all material respects with all laws,
regulations, rules, and orders of Governmental Authorities, except
any thereof whose validity is being contested in good faith by
appropriate proceedings upon stay of execution of the enforcement
thereof and with provision having been made to the satisfaction of
the Agent for the payment of any fines, charges, penalties or other
costs in respect thereof in the event the contest is determined
adversely to the Borrower or the affected Subsidiary, and
(ii) without limiting the generality of the foregoing clause (i),
the Borrower shall conduct its operations, and keep and maintain its
property, in compliance with all environmental laws, regulations,
rules and orders (and shall cause each of its Subsidiaries to do so)
except, in each case, to the extent that noncompliance would not
result in a Material Adverse Effect.
5.8. Other Obligations. The Borrower shall pay and
discharge, and shall cause each Subsidiary to pay and discharge, all
Indebtedness, Taxes, and other obligations for which the Borrower or
such Subsidiary is liable or to which the Borrower's or such
Subsidiary's income or property is subject and all claims for labor
and materials or supplies which, if unpaid, might become by law a
Lien upon assets of the Borrower or any Subsidiary, except (a) any
such obligation the validity or amount of which is being contested
in good faith (and, if necessary, by appropriate proceedings upon
stay of execution of the enforcement thereof) and with provision
having been made to the satisfaction of the Agent for the payment
thereof in the event the contest is determined adversely to the
Borrower and (b) any trade payables, arising from the purchase of
inventory, that are paid in accordance with industry practice and
prior to the time any collection proceeding therefor is commenced by
any vendor.
5.9. Insurance.
5.9.1. The Borrower shall keep in force, and shall
cause each of its Subsidiaries to keep in force, upon all of their
respective properties and operations policies of insurance carried
with financially sound and reputable companies in such amounts and
covering all such risks as from time to time may be customary in the
industry and in the locations in which the Borrower or the relevant
Subsidiary is engaged in business and as shall be reasonably
satisfactory to the Agent, which insurance shall in any event
include:
(a) insurance against loss or damage to any of the
Collateral by fire or any of the risks covered by insurance known as
"all risk coverage," in an amount not less than the full replacement
cost thereof, each such policy to contain a replacement cost
endorsement reasonably satisfactory to the Agent;
(b) business interruption or loss of income
insurance;
(c) commercial general liability insurance against
claims for personal injury, including, but not limited to, bodily
injury, death or property damage occurring on, in or about the
premises of the Borrower and its Subsidiaries, including any real
property and adjoining ways; and
(d) products liability and contractual liability
insurance coverage or endorsements.
From time to time, on request, the Borrower will furnish to the
Agent certificates of insurance or duplicate policies evidencing
such coverages. If the Borrower shall fail to maintain or cause to
be maintained any of the foregoing insurance as and when required
hereby, or if any such insurance shall be materially reduced,
canceled, surrendered or not renewed (and not replaced so as to
avoid any lapse in the required coverages), the Agent may (but is
not required to do so), in its own name only, for the benefit of
itself and the Lenders or for the benefit of the Borrower, or both,
obtain all or a portion of such insurance from any carrier selected
by the Agent in its sole discretion, and the Borrower shall
reimburse the Agent, within fifteen (15) days after the Agent's
demand, for any premiums or other costs associated with obtaining
such insurance. Sums paid by the Agent hereunder shall bear
interest at the Default Rate.
5.9.2. All insurance required by this Section 5.9
shall be provided by policies written on terms, in amounts, and by
companies, reasonably satisfactory to the Agent; provided that
(a) the Borrower and its Subsidiaries may maintain a system of self-
insurance in an aggregate amount, and with respect to such risks, as
are both (i) customary for prudently managed corporations engaged in
the same or similar businesses as the Borrower and its Subsidiaries,
owning or operating similar properties as the Borrower and its
Subsidiaries, and having a credit standing similar to that of the
Borrower and its Subsidiaries, and (ii) reasonably acceptable to the
Agent; (b) the Agent, and each Lender, shall be named as additional
insured on all liability policies, as its interests may appear; and
(c) (i) losses under all policies insuring the Collateral, other
than policies insuring property subject to a Lien in favor of
another creditor (with priority over the Lien of the Agent), shall
be payable to the Agent, as its interests may appear, and
(ii) payments by any insurer in respect of business interruption or
loss of income coverage at any time that an Event of Default has
occurred and is continuing shall be payable to the Agent, in each
case, pursuant to a loss payee endorsement reasonably satisfactory
to the Agent.
5.9.3. At least twenty (20) days prior to the
expiration of each such policy, the Borrower shall furnish the Agent
with evidence reasonably satisfactory to the Agent of the
continuation or replacement of such policy, maintaining in force
such coverages as are required by this Agreement. All such policies
shall contain provisions to the effect that (a) except in the case
of liability insurance, they shall provide coverage to the Agent and
the Lenders notwithstanding any breach by the Borrower or any
Subsidiary of the Borrower (or by any predecessor of the Borrower or
of any Subsidiary of the Borrower) of any representation or
warranty, (b) there shall be no recourse to the Agent or to any
Lender for payment of premiums or other amounts with respect
thereto, (c) they shall not be subject to co-insurance, (d) they may
not be canceled (except for non-payment of premiums or fraud), or
amended to reduce any limitation of liability, to increase the
amount of any deductible or co-insurance, or to add any exclusions
to the coverage provided thereunder, without at least thirty (30)
days' prior written notice to the Agent, and (e) they may not be
canceled for non-payment of premiums or for fraud without at least
ten (10) days' prior written notice to the Agent. Upon the Agent's
(or any Lender's) reasonable request, the Borrower shall cause
copies of all bills, statements or other documents relating to the
foregoing insurance to be sent or mailed directly to the Agent, and
shall in any event give notice (with a copy to the Agent) to each
insurer providing any such insurance policy of the Agent's security
interest therein.
5.10. Financial Information. The Borrower will deliver
to the Agent and the Lenders:
5.10.1. Annual Audited Financial Statements. As
soon as available and in any event within ninety (90) days after the
end of each fiscal year of the Borrower, the Borrower's complete
Report on Form 10-K (together with the consolidated balance sheet of
the Borrower as at the end of such fiscal year and the consolidated
statements of operations, statements of changes in shareholders'
equity and statements of cash flows for such year, accompanied by
the audit report thereon by independent certified public accountants
of nationally recognized standing selected by the Borrower and
approved by the Agent (which approval shall not be unreasonably
withheld or delayed, and the Agent's consent to
PricewaterhouseCoopers LLP being hereby given) which report shall be
prepared in accordance with generally accepted auditing standards
and shall be unqualified, together with any related annual report to
the Borrower's shareholders.
5.10.2. Quarterly Reports.
(a) As soon as available and in any event within
sixty (60) days after the end of each of the first three fiscal
quarters of the Borrower, (i) the Borrower's Report on Form 10-Q
(including, without limitation, the consolidated balance sheet and
statements of operations and statements of cash flows of the
Borrower and its Subsidiaries (in each case, unaudited) as of the
end of such fiscal quarter (including the fiscal year to the end of
such fiscal quarter)) prepared in accordance with GAAP and (ii) an
Officer's Certificate to the effect that the unaudited balance sheet
and statements included therein have been prepared in accordance
with GAAP and present fairly the financial position and results of
operations of the Borrower and its Subsidiaries as at the end of and
for such fiscal quarter (subject to normal year-end audit
adjustments) and whether, since the then most recent fiscal year-end
report delivered pursuant to Section 5.10.1, there has been any
change in the financial condition or operations of the Borrower and
its Subsidiaries the result of which could reasonably be likely to
result in a Material Adverse Effect as shown on the balance sheet as
of said date and, if any such change has occurred, the nature
thereof.
(b) As soon as available and in any event within
sixty (60) days after the end of each of the Borrower's fiscal
quarters, (i) the unaudited statement of financial performance for
the Borrower's stores for such fiscal quarter, prepared in a manner
consistent with those heretofore delivered to the Lenders and
accompanied by an Officer's Certificate containing any changes in
the location of assets held or owned by each of the Subsidiaries of
the Borrower as of the date of such certificate, all in form and
substance reasonably acceptable to the Agent.
5.10.3. Quarterly Compliance Certificates. As soon
as available and in any event within sixty (60) days after the close
of each of the first three fiscal quarters of the Borrower and
within one hundred twenty (120) days after the close of each of the
Borrower's fiscal years, a compliance certificate of Borrower in
form reasonably acceptable to the Agent, (i) certifying that, as of
the close of such fiscal quarter no Default or Event of Default had
occurred and was continuing, and, (ii) setting forth calculations
demonstrating compliance as of the end of such fiscal quarter with
the financial and other covenants set forth in Sections 5.15 through
5.20 and Sections 6.2(d), 6.2(e), 6.2(f), 6.2(g), 6.4(c), 6.4(e),
6.6.2, 6.6.3, 6.6.5, 6.6.6, 6.7, 6.11, 6.12 and 6.13.
5.10.4. Monthly Store Sales Comparisons. As soon as
available and in any event within thirty (30) days after the end of
each calendar month, same store sales comparisons of the Borrower
for such month and monthly year to date and in comparative form to
the previous year, all in a form to be provided by the Agent not
later than August 20, 2000 and accompanied by an Officer's
Certificate.
5.10.5. Budget; Financial Projections.
(a) As soon as available and in any event not later
than November 30 of each fiscal year, the Borrower's business plan,
including, without limitation, the Borrower's annual operating
budget and financial projections (presented in a quarterly format)
for the period beginning on the first day of the next succeeding
fiscal year and ending December 31, 2003, in form and substance
satisfactory to the Agent (including, without limitation, any and
all major assumptions contemplated therein).
(b) As soon as available and in any event not later
than January 31 of each year, the Borrower's presentation of its
business plan described in clause (b) above, to the Lenders.
5.10.6. Shareholder, SEC and Government Reports. As
soon as available, all reports sent by the Borrower, or any
Subsidiary, to its shareholders and all quarterly and annual reports
filed by the Borrower, or any Subsidiary, with the Securities and
Exchange Commission and each other Governmental Authority having
jurisdiction over the Borrower or such Subsidiary.
5.10.7. Subordinated Debt. Concurrently with the
delivery thereof to any holder of (or trustee for the holders of)
any Subordinated Debt, copies of all notices or other communications
delivered by the Borrower or any Subsidiary with respect to such
Subordinated Debt.
5.10.8. Other Information.
(a) All monthly reports reasonably requested by the
Agent, which shall be reviewed by FTI Consulting/Policano & Manzo
until such time (after February 28, 2001) that the Agent shall
determine, in its sole discretion, that such review is no longer
required.
(b) On a bi-monthly basis, all information
pertaining to the financial performance of the Borrower for the two
fiscal month period most recently ended (the "Two-Month Period"),
past projections related to such Two-Month Period, projections for
the two fiscal month period commencing at the end of such Two-Month
Period and other information as requested by the Agent, commencing
on September 15, 2000 and on the 15th day of each second month
thereafter, to be reviewed with the Agent, until such time that the
Agent shall determine in its sole discretion that such reviews are
no longer required.
(c) All other statements, reports and other
information as the Agent, any Lender or FTI Consulting/Policano &
Manzo may reasonably request concerning the financial condition and
business affairs of the Borrower.
5.11. Notification. Promptly after learning thereof, the
Borrower shall notify the Agent and Lenders of (a) the details of
any action, proceeding, investigation or claim against or affecting
the Borrower or any Subsidiary, instituted before any arbitrator or
court or other Governmental Authority or, to the Borrower's
knowledge threatened to be instituted, which, if determined
adversely would be likely to have a Material Adverse Effect; (b) any
substantial dispute between the Borrower or any Subsidiary and any
Governmental Authority; (c) any labor controversy which has resulted
in or, to the Borrower's knowledge, threatens to result in a strike
which would materially affect the business operations of the
Borrower or any Subsidiary; (d) if the Borrower or any member of the
Controlled Group gives or is required to give notice to the PBGC of
any "reportable event" (as defined in subsections (b)(1), (2), (5)
or (6) of ' 4043 of ERISA) with respect to any Plan (or the Internal
Revenue Service gives notice to the PBGC of any "reportable event,"
as defined in subsection (c)(2) of ' 4043 of ERISA, and the Borrower
obtains knowledge thereof) which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the
plan administrator of any Plan has given or is required to give
notice of any such reportable event, the notice of such reportable
event given or required to be given to the PBGC; and (e) the
occurrence of any Default or Event of Default.
5.12. Blocked Account Agreement. The Borrower shall take
all actions necessary to maintain the Blocked Account Agreement in
full force and effect.
5.13. Additional Payments; Additional Acts. From time to
time and upon demand by the Agent, the Borrower shall (a) pay or
reimburse the Agent and the Lenders for all Taxes imposed on this
Agreement and any other Loan Document; (b) obtain and promptly
furnish to the Agent evidence of all such approvals of any
Governmental Authority as may be required to enable the Borrower to
comply with its obligations under the Loan Documents; and
(c) execute and deliver (and cause each Subsidiary to execute and
deliver) all such other instruments, and perform all such other
acts, as the Agent or any Lender may reasonably request to carry out
the transactions contemplated by this Agreement and the other Loan
Documents (including, without limitation, in connection with the
delivery to the Agent of leasehold mortgages and related documents,
approvals and filings).
5.14. Independent Board of Directors and Committees. The
Borrower shall take all actions necessary to timely comply with the
NASDAQ Stock Market regulations approved on December 14, 1999 by the
Securities and Exchange Commission in connection with independent
director and audit committee standards, provided, that if the
Borrower shall qualify for the one non-independent director
exception, it shall not avail itself of such option. In addition,
the Borrower shall take all necessary corporate action such that at
the time of compliance with such NASDAQ Stock Market regulations,
the compensation committee of the Borrower's Board of Directors is
comprised solely of independent directors.
5.15. Tangible Net Worth. The Borrower shall maintain at
all times a Tangible Net Worth not less than the sum of:
(a) $105,000,000, plus
(b) 75% of the Borrower's cumulative Net Income for
those fiscal quarters of the Borrower ended after June 30, 2000, in
which the Borrower's Net Income was greater than zero, plus
(c) 100% of the amount, if any, by which the
Tangible Net Worth of the Borrower increases after June 30, 2000, as
a result of the issuance of common stock or the conversion of debt
securities into common stock in connection with the acquisition of
another Person (or of some or all of the assets of another Person),
plus
(d) 90% of the amount, if any, by which the
shareholders' equity of the Borrower increases after June 30, 2000,
as a result of all other issuances of common stock or conversions of
debt securities into common stock; minus
(e) the amount by which Borrower writes down the
value of its inventory after March 31, 2000, in an amount not to
exceed $24,000,000, as reflected in Borrower's financial statements
for the year ended December 31, 2000; minus
(f) the amount of the Borrower's nonrecurring
restructuring charge (which may be categorized both in a
restructuring charge line item and in cost of goods sold) related to
Reel.com after March 31, 2000, in an amount not to exceed
$70,000,000, as reflected in Borrower's financial statements for the
three months ended June 30, 2000.
5.16. Leverage Ratio. The Borrower shall maintain its
Leverage Ratio for the four fiscal quarters ended on the following
respective dates such that it shall not exceed the following
respective ratios:
Date Leverage Ratio
June 30, 2000 5.70 to 1.00
September 30, 2000 5.70 to 1.00
December 31, 2000 4.00 to 1.00
March 31, 2001 3.10 to 1.00
June 30, 2001 2.15 to 1.00
September 30, 2001 1.80 to 1.00
December 31, 2001 1.50 to 1.00
March 31, 2002 1.30 to 1.00
June 30, 2002 1.15 to 1.00
September 30, 2002 1.00 to 1.00;
provided, that if the Borrower incurs Subordinated Debt under
Section 6.2(f), the Borrower shall maintain its Leverage Ratio for
the four fiscal quarters ended on the following respective dates
such that it shall not exceed the following respective ratios:
Date Leverage Ratio
June 30, 2000 6.70 to 1.00
September 30, 2000 6.70 to 1.00
December 31, 2000 4.40 to 1.00
March 31, 2001 3.40 to 1.00
June 30, 2001 2.35 to 1.00
September 30, 2001 1.95 to 1.00
December 31, 2001 1.70 to 1.00
March 31, 2002 1.50 to 1.00
June 30, 2002 1.35 to 1.00
September 30, 2002 1.30 to 1.00.
5.17. Interest Coverage Ratio. The Borrower shall
maintain its Interest Coverage Ratio for the four fiscal quarters
ended on the following respective dates at a level which is not to
be less than the following respective ratios:
Date Interest Coverage Ratio
June 30, 2000 1.80 to 1.00
September 30, 2000 1.80 to 1.00
December 31, 2000 2.20 to 1.00
March 31, 2001 2.65 to 1.00
June 30, 2001 and thereafter 3.50 to 1.00
5.18. Interest and Rent Coverage Ratio. The Borrower
shall maintain its Interest and Rent Coverage Ratio for the four
fiscal quarters ended on the following respective dates at a level
which is not to be less than the following respective ratios:
Date Interest Coverage Ratio
June 30, 2000 1.00 to 1.00
September 30, 2000 1.00 to 1.00
December 31, 2000 1.10 to 1.00
March 31, 2001 1.15 to 1.00
June 30, 2001 1.40 to 1.00
September 30, 2001 and thereafter 1.50 to 1.00
5.19. Average Per Store Contribution to Profit. The
Borrower shall maintain for each period of four consecutive fiscal
quarters of the Borrower an Average Per Store Contribution to Profit
of $90,000. As used herein, "Average Per Store Contribution to
Profit" means, for any period of four fiscal quarters of the
Borrower, (a) the sum of Borrower's (i) operating income,
(ii) general and administrative expense, and (iii) amortization of
intangibles for such period (in each case, determined in the same
manner in which such amount is determined for purposes of preparing
the Borrower's financial statements in accordance with GAAP and in a
manner consistent with the financial statements referred to in
Section 4.6, but limited to amounts properly allocable to Stores);
divided by the time-weighted average number of such Stores of the
Borrower open during such period of four consecutive fiscal quarters
(determined in accordance with the Borrower's current practices for
determining such time-weighted average, as delivered to the Lenders
in connection with this Agreement).
5.20. Adjusted Leverage Ratio. The Borrower shall
maintain its Adjusted Leverage Ratio for the four fiscal quarters
ended on the following respective dates such that it shall not
exceed the following respective ratios:
Date Adjusted Leverage Ratio
June 30, 2000 6.50 to 1.00
September 30, 2000 6.50 to 1.00
December 31, 2000 5.70 to 1.00
March 31, 2001 5.25 to 1.00
June 30, 2001 4.45 to 1.00
September 30, 2001 4.15 to 1.00
December 31, 2001 4.00 to 1.00
March 31, 2002 3.75 to 1.00
June 30, 2002 3.65 to 1.00
September 30, 2002 3.55 to 1.00;
provided, that if the Borrower incurs Subordinated Debt under
Section 6.2(f), the Borrower shall maintain its Adjusted Leverage
Ratio for the four fiscal quarters ended on the following respective
dates such that it shall not exceed the following respective ratios:
Date Adjusted Leverage Ratio
June 30, 2000 6.50 to 1.00
September 30, 2000 6.80 to 1.00
December 31, 2000 5.90 to 1.00
March 31, 2001 5.35 to 1.00
June 30, 2001 4.50 to 1.00
September 30, 2001 4.20 to 1.00
December 31, 2001 4.00 to 1.00
March 31, 2002 3.85 to 1.00
June 30, 2002 3.75 to 1.00
September 30, 2002 3.75 to 1.00.
5.21. Dissolution of Subsidiary. Title Wave Stores,
Inc., a Minnesota corporation, shall be legally dissolved no later
than September 6, 2000.
5.22. Officer's Certificate. On the day which is 15 days
prior the date on which an interest payment with respect to any
Subordinated Debt is due, the Borrower shall deliver to the Agent an
Officer's Certificate which shall certify to the Agent's
satisfaction (with all relevant calculations to support such
certification attached thereto) that such interest payment when
taken together with (a) the amount necessary to effect the next
succeeding Mandatory Reduction and (b) other relevant factors then
existing, will not result in a breach of any of the covenants in
Sections 5.15 through 5.20.
ARTICLE VI.
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder,
and until payment in full of each Loan and the Notes and performance
of all other Obligations, the Borrower agrees that, unless the Agent
(with the consent of the Majority Lenders) shall otherwise give its
prior written consent:
6.1. Liquidation, Merger, Sale of Assets, Fundamental
Change. The Borrower shall not (and shall not permit any Subsidiary
to):
(a) merge with or into any other Person, except
(i) in a transaction in which the Borrower is the surviving entity
and if, immediately after giving effect to such transaction, the
surviving entity will have a Net Worth equal to at least the Net
Worth of the Borrower immediately prior to giving effect to such
transaction;
(b) liquidate or dissolve (except (i) as
contemplated by the Borrower Disclosure Letter and (ii) that any
Subsidiary may liquidate or dissolve into the Borrower);
(c) enter into any consolidation, joint venture,
partnership or other combination with any other Person, except to
the extent permitted under Section 6.6.3;
(d) contract to effect, or consummate, any Asset
Disposition except with the prior written consent of the Majority
Lenders; or
(e) create or acquire or otherwise own or possess
any Subsidiary not in existence on the Closing Date, without (x) 30
days' prior written notice to the Agent and (y) causing the Agent to
receive immediately upon the formation or acquisition thereof, (i) a
duly executed Subsidiary Security Agreement which shall grant the
Agent a first priority security interest in all of such Subsidiary's
assets, (ii) duly executed Financing Statements for filing in
jurisdictions as requested by the Agent in its sole discretion and
(iii) a Guaranty with respect to such new Subsidiary.
Upon any sale or other transfer, to a Person other than the Borrower
or a Subsidiary, of the Borrower's or any Subsidiary's entire
interest in any assets effected in accordance with the provisions of
the Loan Documents, then the Agent shall (i) release its Lien on the
assets subject to such sale or transfer; and (ii) in the case of the
Borrower's sale or transfer of its entire interest in a Subsidiary,
release (A) the Agent's pledge of and Lien on the outstanding
capital stock of such Subsidiary and its Lien on the assets of such
Subsidiary, and (B) the applicable Guaranty.
6.2. Indebtedness. The Borrower shall not create,
incur, become liable for or suffer to exist (or permit any
Subsidiary to create, incur or become liable for or suffer to exist)
any Indebtedness other than the following (determined on a
consolidated basis):
(a) the Loans (including any Guaranty);
(b) Funded Debt, other than Capital Leases, in
existence as of the date hereof and identified in Schedule 6.2(a)
(c) Funded Debt incurred in the ordinary course of
the Borrower's business to finance the acquisition of Rental Items,
secured solely by a purchase money Lien on the Rental Items so
acquired (to the extent such Lien is permitted under
Section 6.4(c));
(d) Funded Debt in the form of Capital Leases
(including Capital Leases in existence as of the date hereof and
identified in Schedule 6.2(d)) the aggregate principal amount of
which (determined in accordance with GAAP and measured in connection
with each entry into a Capital Lease after the date hereof, at the
time such obligation is incurred), does not exceed an amount equal
to 5% of the Borrower's Total Revenues for the period of four fiscal
quarters then most recently ended;
(e) Indebtedness under the High Yield Notes, subject
to the limitation that the aggregate original principal amount of
the High Yield Notes, whenever issued, shall not exceed
$250,000,000;
(f) subordinated debt (in addition to the
Indebtedness under the High Yield Notes) (i) issued in an aggregate
principal amount over the term of the Loans that does not exceed the
sum of (A) $350,000,000 minus (B) the aggregate principal amount of
all High Yield Notes, whenever issued; and (ii) that (A) contains
subordination provisions substantially identical to those contained
in the Indenture (or otherwise acceptable to the Majority Lenders in
their sole discretion), (B) matures after the Maturity Date and
provides for no amortization of principal until after the Maturity
Date, and (C) is unsecured; provided that, no later than twenty (20)
Business Days prior to the incurrence thereof, the Borrower delivers
to the Agent the Pro Forma Calculations with respect to the
incurrence of such Indebtedness;
(g) obligations of such Person under any Hedging
Agreement, provided that no such agreement increases the
Indebtedness of the Borrower at any time except as a result of
fluctuations in interest rates or by reason of fees, indemnities and
compensation payable thereunder;
(h) guaranties permitted to exist under Section 6.3;
(i) to the extent that they constitute Indebtedness,
obligations described in clauses (i) through (iv) of the definition
of "Lien";
(j) accounts payable and other liabilities, in each
case, that do not constitute Funded Debt and that have been, or are,
incurred in the ordinary course of such Person's business; and
(k) Indebtedness in connection with Investments
under Section 6.6.5 and Section 6.6.6.
6.3. Guaranties, Etc. The Borrower shall not (and shall
not permit any Subsidiary to) assume, guaranty, endorse or otherwise
become or remain directly or contingently liable for, or obligated
to purchase, pay or provide funds for the payment of or otherwise
assure a creditor against loss in respect of, any obligation or
Indebtedness of any other Person, except that (a) the Borrower and
its Subsidiaries may endorse negotiable instruments for deposit or
collection, or incur similar liabilities in the ordinary course of
business and (b) any Subsidiary required, under the terms of the
Indenture (as in effect on August 13, 1997, or as amended with the
prior written consent of the Majority Lenders), to guaranty the
Borrower's obligations with respect to the High Yield Notes may so
guaranty such obligations, provided that such Subsidiary's
obligations under such guaranty are contractually subordinated to
the payment of the Obligations, to the same extent that the
Borrower's obligations in respect of the High Yield Notes are
subordinated to the Obligations.
6.4. Liens. The Borrower shall not create, assume or
suffer to exist (or permit any Subsidiary to create, assume or
suffer to exist) any Lien on any of its assets, except for
(determined, in each case, on a consolidated basis): (a) existing
Liens securing liabilities reflected in the balance sheets referred
to in Section 4.6 or disclosed in the Borrower Disclosure Letter;
(b) Liens in favor of the Agent under the Security Agreements or any
other Loan Document; (c) purchase money Liens covering videotapes,
video discs or videogames purchased by the Borrower or any
Subsidiary in the ordinary course of business; provided that such
purchase money Liens do not secure at any time an amount which
exceeds 5% of the Borrower's Total Revenues for the period of four
fiscal quarters then most recently ended; (d) Liens securing
Indebtedness under Capital Leases incurred in compliance with
Section 6.2; (e) additional Liens (including, without limitation,
Liens existing on assets at the time they are, or the Person owning
them is, acquired by the Borrower or any Subsidiary) which do not at
any one time, in the aggregate, secure Indebtedness exceeding an
amount equal to five percent (5%) of the Borrower's Net Worth;
(f) judgment Liens, to the extent that the existence thereof does
not constitute an Event of Default; and (g) Liens securing the
extension, renewal or refinancing of the Indebtedness secured by
Liens previously existing in compliance with this Section 6.4,
provided that (i) each such Lien is limited to the property
theretofore encumbered by such Lien (and proceeds thereof) and
(ii) the principal amount of the Indebtedness so extended, renewed
or refinanced is not increased.
6.5. Location of Collateral. The Borrower shall not
move, and shall not permit any Subsidiary to move, the location of
any Collateral except (a) in the ordinary course of its business and
(b) to a jurisdiction within the United States in which the Agent
has previously filed UCC-1 financing statements naming the Borrower
or Subsidiary, as the case may be, as debtor and perfecting in favor
of the Agent a security interest in such Collateral with the
priority required by the Agreement.
6.6. Investments. The Borrower shall not make or permit
to remain outstanding (and shall not permit any Subsidiary to make
or permit to remain outstanding) any Investment, except that the
Borrower may:
6.6.1. Own, purchase or acquire Cash Equivalents;
6.6.2. Without limiting the provisions of
Section 6.12 or Section 6.13, make any Permitted Acquisition on or
after April 1, 2001;
6.6.3. Make or permit to remain outstanding a
Passive Investment;
6.6.4. Transfer Trademarks to Hollywood Management
and maintain its cash management system as contemplated under
clauses (vi) and (vii), respectively, in the definition of "Asset
Disposition."
6.6.5. Permit to remain outstanding loans to Mark J.
Wattles in the aggregate principal amount not to exceed $14,900,000
subject to scheduled principal amortization thereof set forth in the
Wattles Note; and
6.6.6. Make or permit to remain outstanding
(a) employee loans (other than to Mr. Wattles), in an aggregate
principal amount outstanding at any time not to exceed $2,675,000
and (b) advances to employees (other than Affiliates) in an
aggregate principal amount outstanding at any time not to exceed
$1,000,000;
provided that (x) the cost of any individual Investment or series of
related Investments described in Section 6.6.2 and 6.6.3 shall not
exceed $2,000,000 and (y) the aggregate cost of all Investments
shall not exceed $5,000,000 in the aggregate at any time.
6.7. Limitations on Prepayment or Amendment of
Subordinated Debt. The Borrower shall not, and shall not permit any
Subsidiary to: (a) make any payments in respect of the principal of
any Subordinated Debt, (b) make any payment or transfer of assets in
respect of the defeasance of any Subordinated Debt, (c) repurchase,
redeem or otherwise acquire any Subordinated Debt, (d) make any
payment in respect of Subordinated Debt more than one (1) Business
Day prior to the date on which it becomes due and payable, (e) at
any time that a Default or Event of Default has occurred and is
continuing, make any payment of interest or any other amount due in
respect of Subordinated Debt, or (f) amend, or consent to any
amendment of, the documentation governing any Subordinated Debt
(other than the Second Supplemental Indenture, dated as of January
20, 2000, among Borrower and U.S. Trust Company, National
Association, as trustee under the Indenture, in the form filed with
the Securities and Exchange Commission as Exhibit 10.3 to Borrower's
Annual Report on Form 10-K for the fiscal year ended December 31,
1999).
6.8. ERISA Compliance. Neither Borrower nor any member
of the Controlled Group nor any Plan of any of them shall (a) engage
in any "prohibited transaction" (as such term is defined in ' 406 of
ERISA or 4975 of the Code); (b) incur any "accumulated funding
deficiency" (as such term is defined in ' 302 of ERISA) whether or
not waived; (c) terminate any Pension Plan in a manner which could
result in the imposition of a Lien on any property of Borrower or
any member of the Controlled Group pursuant to ' 4068 of ERISA; or
(d) violate state or federal securities laws applicable to any Plan.
6.9. Transactions with Affiliates. The Borrower shall
not (and shall not permit any Subsidiary to) enter into any
transaction with any Affiliate of the Borrower except (a) upon fair
and reasonable terms no less favorable to the Borrower or the
affected Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate of the Borrower;
(b) (i) if any such transaction (or series of such transactions)
involves aggregate payments in excess of $1,000,000 in any fiscal
year, such transaction(s) is/are: (A) set forth in writing,
(B) approved by a majority of the disinterested members of the
Borrower's Board of Directors; (c) if any transaction or series of
transactions (other than royalty arrangements between the Borrower
and Hollywood Management in connection with the Tradename transfer
permitted under Section 6.6.4) involves aggregate payments in excess
of $5,000,000 in any fiscal year, such transaction(s) are
additionally determined to be fair, from a financial standpoint, to
the Borrower or the relevant Subsidiary by a nationally recognized
consulting, accounting, appraisal or investment banking firm and
(d) without limiting the foregoing, as permitted under
Section 6.6.5.
6.10. Change in Business. The Borrower shall not (and
shall not permit any Subsidiary to) engage in any material line of
business substantially different from those lines of business
carried on by the Borrower on the date hereof; except that the
Borrower may, either directly or through one or more Subsidiaries,
engage in one or more Ancillary Businesses, provided that the sum of
Borrower's Aggregate Investments in such Ancillary Businesses, plus
Borrower's Aggregate Investments in Passive Investments permitted
under Section 6.6.3, does not at any time exceed 5% of the
Borrower's Net Worth.
6.11. Accounting Change. The Borrower, and each of its
Subsidiaries, shall maintain a fiscal year ending on December 31 and
shall not make any significant change in accounting policies or
reporting practices other than changes required by law.
6.12. Capital Expenditures. The Borrower shall not (and
shall not permit any of its Subsidiaries to) incur any Capital
Expenditures other than those incurred in connection with
(x) inventory acquired in the ordinary course of business,
(y) repair and maintenance costs, in the ordinary course of business
and (z) building or acquiring new Stores, provided, that
(I) for the period commencing on June 30, 2000
and extending through and including December 31,
2000, the aggregate number of additional Stores
permitted under Section 6.13 shall not exceed 65
Stores;
(II) for the period commencing on January 1,
2001 and extending through and including June 30,
2001, the aggregate number of additional Stores
permitted under Section 6.13 shall not exceed an
amount equal to the sum of (x) 139 minus
(y) additional Stores permitted (for which expenses
have been incurred) under clause (I); and
(III) subject to the limitation set forth in the
proviso in Section 2.3.2, the aggregate number of
additional Stores permitted under clauses (I) and
(II) may be augmented if the Borrower shall have
received any Net Cash Proceeds, by (a) for newly
built (by the Borrower) Stores, an amount equal to
(i) 40% of such Net Cash Proceeds divided by
(ii) $500,000 and (b) for acquired Stores, any number
of additional Stores for which the maximum cost of
each individual acquisition is not greater than
$700,000, provided that the aggregate acquisition
cost of all such Stores shall not exceed the sum of
(i) 40% of Net Cash Proceeds minus (ii) amounts used
under clause (III)(a).
6.13. Stores. Other than as provided in Section
6.12(z)(III), the Borrower shall not enter into any new store
leases, or make any material expenditure in connection with any new
store lease or store opening unless there is already in existence as
of the Closing Date a fully-executed store lease; provided that the
Borrower may enter into a substitute lease (contemporaneously or
within a reasonable time) after terminating an existing lease so
long as such substitute lease (x) does not increase the Borrower's
total store count and (y) does not contemplate a space which
encompasses a materially greater amount of square footage than the
original lease.
ARTICLE VII.
EVENTS OF DEFAULT
7.1. Events of Default. The occurrence of any of the
following events (for whatever reason, and whether voluntarily or
involuntarily, by operation of law or otherwise) shall constitute an
"Event of Default" hereunder:
7.1.1. Loan Payment Default. The Borrower shall
fail to pay when due any amount of principal on any Loan; or
7.1.2. Other Payment Default. (a) The Borrower
shall fail to pay any interest on any Loan and such failure shall
remain unremedied for two (2) Business Days, or (b) the Borrower, or
any Subsidiary, shall fail to pay any other amount payable by it
hereunder or under any Loan Document and such failure shall remain
unremedied for five (5) days; or
7.1.3. Breach of Warranty. Any representation or
warranty made or deemed made by the Borrower or any Subsidiary under
or in connection with this Agreement or any other Loan Document, or
set forth in any other certificate or document delivered in
connection herewith or therewith, shall prove to have been incorrect
in any material respect when made or deemed made; or
7.1.4. Breach of Certain Covenants; Failure of
Security.
(a) The Borrower shall fail to perform or observe
any covenant set forth in Sections 5.11(e), 5.12, 5.14, 5.15 through
5.22, Article VI or in Section 5 or 8 of the Borrower Security
Agreement, or any Subsidiary shall fail to perform any covenant set
forth in Section 5 or 8 of the Subsidiary Security Agreement to
which it is a party; or
(b) (i) the Borrower or any Subsidiary shall
disavow, or purport to revoke, its obligations under this Agreement
or any other Loan Document or (ii) this Agreement, any Security
Agreement, any Guaranty or any other Loan Document shall fail to be
valid or enforceable in any material respect.
7.1.5. Breach of Other Covenants. The Borrower or
any Subsidiary shall fail to perform or observe any other covenant,
obligation or term of this Agreement or any other Loan Document and
such failure shall remain unremedied for thirty (30) days after
written notice thereof shall have been given to the Borrower by the
Agent; or
7.1.6. Material Adverse Changes; Extraordinary
Situation. There shall occur (a) any event or occurrence having, or
that could reasonably be expected to have, a Material Adverse
Effect, or (b) any extraordinary situation, in either case, which
gives the Lenders reasonable grounds to believe that the Borrower
may not, or will be unable to, perform or observe in the normal
course, in any material respect, its obligations under the Loan
Documents; or
7.1.7. Cross-Default.
(a) (i) The Borrower, or any Subsidiary, shall fail
to pay when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) any principal of any Indebtedness
the outstanding principal amount of which, at the time of such
failure, exceeds $2,000,000 but does not exceed $10,000,000, or any
interest or premium thereon, and such failure shall continue after
the expiration of the applicable grace period, if any, specified in
the agreement or instrument relating to such Indebtedness; or
(ii) the Borrower, or any Subsidiary, shall fail to perform any term
or covenant on its part to be performed under any agreement or
instrument relating to any such Indebtedness and required to be
performed, and such failure shall continue after the expiration of
the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such failure to perform is to
accelerate or to legally and in accordance with the applicable
documents permit the acceleration of the maturity of such
Indebtedness; or
(b) (i) the Borrower, or any Subsidiary, shall fail
to pay when due any amount due in respect of any Indebtedness the
outstanding principal amount of which, at the time of such failure,
exceeds $10,000,000, or (ii) any event shall occur that, with or
without the giving of notice or the lapse of time, or both,
(A) causes, or would cause, the acceleration of any Indebtedness of
the Borrower or any Subsidiary having at the time an outstanding
principal amount in excess of $10,000,000, or (B) entitles, or would
entitle, the holders of any such Indebtedness to accelerate, or to
require the repurchase, redemption, defeasance, repayment or
retirement of, such Indebtedness (including, without limitation, the
occurrence of any "Change of Control," as defined in the Indenture),
and, in either case (but only if the agreement or instrument
governing such Indebtedness specifically provides a grace period
with respect to such failure or occurrence), such event continues
beyond the earlier of (1) the date that is five (5) Business Days
after the occurrence thereof or (2) the expiration of the applicable
grace period specified in the agreement or instrument governing such
Indebtedness;
provided, however, in any such case, that mere allegations of a
default by the Borrower under any agreement or instrument governing
any such Indebtedness shall not, without more, be an Event of
Default hereunder (it being understood that the delivery by any
affected Person, in writing, of a notice of default, or of a notice
asserting that a default exists, constitutes more than a mere
allegation); or
7.1.8. Voluntary Bankruptcy, Etc. The Borrower, or
any Subsidiary, shall: (a) file a petition seeking relief for
itself under Title 11 of the United States Code, as now constituted
or hereafter amended, or file an answer consenting to, admitting the
material allegations of or otherwise not controverting, or fail
timely to controvert a petition filed against it seeking relief
under Title 11 of the United States Code, as now constituted or
hereafter amended; or (b) file such petition or answer with respect
to relief under the provisions of any other now existing or future
applicable bankruptcy, insolvency, or other similar law of the
United States of America or any state thereof or of any other
country or jurisdiction providing for the reorganization, winding up
or liquidation of corporations or an arrangement, composition,
extension or adjustment with creditors; or
7.1.9. Involuntary Bankruptcy, Etc. (a) An order
for relief shall be entered against the Borrower or any Subsidiary
under Title 11 of the United States Code, as now constituted or
hereafter amended, which order is not stayed within sixty (60) days
thereafter; or (b) there shall be entered an order, judgment or
decree by operation of law or by a court having jurisdiction in the
premises, which is not stayed within sixty (60) days after its
entry, (i) (A) adjudging the Borrower or any Subsidiary a bankrupt
or insolvent under, or (B) ordering relief against it under, or
(C) approving as properly filed a petition seeking relief against it
under, the provisions of any other bankruptcy, insolvency or other
similar law of the United States of America or any state thereof or
of any other country or jurisdiction (whether now existing or
hereafter becoming applicable) providing for the reorganization,
winding-up or liquidation of corporations or any arrangement,
composition, extension or adjustment with creditors, or
(ii) appointing a receiver, liquidator, assignee, sequestrator,
trustee or custodian of the Borrower or any Subsidiary or of any
substantial part of the property of Borrower or any Subsidiary, or
ordering the reorganization, winding-up or liquidation of its
affairs; or (c) a period of sixty (60) days shall expire after the
filing of any involuntary petition against the Borrower or any
Subsidiary seeking any of the relief specified in Section 7.1.8 or
this Section 7.1.9 without the petition being dismissed prior to
that time; or
7.1.10. Insolvency, Etc. The Borrower, or any
Subsidiary, shall (a) make a general assignment for the benefit of
its creditors, or (b) consent to the appointment of, or taking of
possession by, a receiver, liquidator, assignee, trustee, or
custodian of all or a substantial part of the property of the
Borrower or any Subsidiary, or (c) admit its insolvency or inability
to pay its debts generally as they become due, or (d) fail generally
to pay its debts as they become due, or (e) take any action (or
suffer any action to be taken by its directors or shareholders)
looking to the dissolution or liquidation of the Borrower or such
Subsidiary (other than a voluntary liquidation, by the Borrower, of
a Subsidiary); or
7.1.11. ERISA. The Borrower, or any member of the
Controlled Group, shall fail to pay when due an amount or amounts
aggregating in excess of $1,000,000 that it shall have become liable
to pay to the PBGC or to a Plan under Section 515 of ERISA or Title
IV of ERISA; or notice of intent to terminate a Plan or Plans (other
than a multiemployer plan, as defined in Section 4001(3) of ERISA),
having aggregate Unfunded Vested Liabilities in excess of $1,000,000
shall be filed under Title IV of ERISA by the Borrower, any member
of the Controlled Group, or any plan administrator of any such Plan,
or any combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate any such Plan or
Plans; or
7.1.12. Judgments; Recorded Tax Liens. (a) One or
more final judgments or orders for the payment of money exceeding,
in the aggregate, $2,000,000, or its equivalent in another currency,
shall be rendered against the Borrower or any Subsidiary and such
judgment or order shall continue unsatisfied and in effect for a
period of thirty (30) consecutive days without having being vacated,
discharged or satisfied, or stayed or bonded pending appeal; or
(b) the filing or recording, by any Governmental Authority with
respect to any assets of the Borrower or any Subsidiary, of any one
or more notices of lien in respect of unsatisfied, undischarged or
unreleased claims of or Taxes (other than ad valorem real or
personal property taxes that are not yet delinquent) aggregating in
excess of $2,000,000, if such condition remains in effect for
thirty (30) consecutive days.
7.1.13. Government Approvals, Etc. (a) Any approval
of any Governmental Authority or registration or filing with any
Governmental Authority now or hereafter required in connection with
the performance by the Borrower or any Subsidiary of its obligations
under this Agreement or any other Loan Document is revoked,
withdrawn or withheld or shall fail to remain in full force and
effect; or (b) any Governmental Authority shall take any act that,
in the reasonable opinion of the Agent, deprives the Borrower or any
Subsidiary of any substantial right, privilege or franchise or
substantially restricts the exercise thereof, where the effect of
such act, if not revoked or rescinded, could reasonably be expected
to have a Material Adverse Effect on the Borrower or any Subsidiary
and such act shall not be revoked or rescinded within thirty (30)
days after it shall have become effective.
7.2. Consequences of Default.
7.2.1. If any of the Events of Default described in
Section 7.1.8 or Section 7.1.9 shall occur: (a) the Total
Commitment and each Lender's respective Commitment shall immediately
terminate, and the principal of and the interest on the Loans and
all other sums payable by Borrower hereunder, under the Notes and
under the other Loan Documents shall become immediately due and
payable, all without protest, presentment, notice or demand, all of
which the Borrower expressly waives.
7.2.2. If any other Event of Default shall occur and
be continuing, then in any such case and at any time thereafter so
long as any such Event of Default shall be continuing: (a) the
Agent (i) shall, at the request of the Majority Lenders, or
(ii) may, with the consent of the Majority Lenders, immediately
terminate (by written notice to the Borrower) the Total Commitment
and each of the Lenders' respective Commitments, and (b) if Loans
shall have been made, the Agent (i) shall, at the request of the
Majority Lenders, or (ii) may, with the consent of the Majority
Lenders, declare (by written notice to the Borrower) the principal
of and the interest on the Loans and the Notes and all other sums
payable by the Borrower hereunder or under the Notes or any other
Loan Document to be immediately due and payable, whereupon the same
shall become immediately due and payable, all without protest,
presentment, notice, or demand, all of which the Borrower expressly
waives. In addition, regardless of whether the Borrower's
obligations to repay the Loans shall have been accelerated pursuant
to the preceding sentences, the Agent may, at its option, realize on
any or all of the Collateral by exercising any rights or remedies
provided in each Security Agreement or in any other Loan Document or
otherwise available under applicable law.
ARTICLE VIII.
THE AGENT
8.1. Authorization and Action. Each Lender hereby
(subject to Section 8.6) irrevocably appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are
delegated to the Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto. The Agent
shall have no duties or responsibilities except those expressly set
forth in this Agreement. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of any
Lender, and nothing in this Agreement or the other Loan Documents,
expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement
or the other Loan Documents except as expressly set forth herein.
As to any matters not expressly provided for by this Agreement,
including enforcement or collection of the Loans, the Agent shall
not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining) upon the instructions of
the Majority Lenders, and such instructions shall be binding upon
all Lenders and any holders of any Note; provided, however, that:
(a) the Agent shall not be required to take any
action which exposes the Agent to personal liability or which is
contrary to the Loan Documents or applicable law;
(b) if the Agent so requests, the Agent shall first
be indemnified to its satisfaction by the Lenders against any and
all liability and expense that may be incurred by it by reason of
taking or continuing to take any action upon the instructions of the
Majority Lenders;
(c) without the consent of all Lenders, the Agent
shall not:
(i) (except in connection with a sale or
transfer of assets permitted under the terms of the Loan
Documents or as otherwise expressly permitted hereunder or
under any other Loan Document) release any Collateral or
Guaranty;
(ii) change the Total Commitment (other
than changes made pursuant to Section 2.3);
(iii) change any Lender's Commitment (other
than changes made pursuant to Section 2.3);
(iv) change the definition of "Majority
Lenders";
(v) change the conditions precedent set
forth in Article III; or
(vi) change the time of payment or rates of
interest, the time of payment or amounts of fees, or the
timing of payments or amounts of principal due in respect
of Loans; and
(d) the terms of Section 2.5, Section 2.11.3 and
this Article VIII shall not be amended without the prior written
consent of the Agent (acting for its own account). In the absence
of instructions from the Majority Lenders, the Agent shall have the
authority (but no obligation), in its sole discretion, to take or
not to take any action (unless this Agreement specifically requires
the consent of the Lenders or the consent of the Majority Lenders
therefor), and any such action or failure to act shall be binding on
all the Lenders and on all holders of the Notes; provided, however,
that, upon any Lender's request that the Agent deliver a notice to
the Borrower pursuant to Section 7.1.5, the Agent shall, if it
concurs in such Lender's determination that the Borrower has failed
to perform or observe any covenant, obligation or term of any Loan
Document described therein, promptly deliver such notice. Each
Lender, and each holder of any Note, shall execute and deliver such
additional instruments, including powers of attorney in favor of the
Agent, as may be necessary or desirable to enable the Agent to
exercise its powers hereunder. With respect to matters requiring
the consent or approval of all Lenders at any given time, all then
existing Defaulting Lenders will be disregarded and excluded, and,
for voting purposes only, "all Lenders" shall be deemed to mean "all
Lenders other than Defaulting Lenders." Notwithstanding the
foregoing, if a Defaulting Lender shall dispute the Agent's
determination of the defaulted status of such Lender, such Lender
may give written notice to the Agent and each other Lender setting
forth the basis upon which such Lender disputes the Agent's
determination; under such circumstances, the Lenders shall attempt
in good faith to resolve such dispute within the ninety (90)-day
period following Agent's original determination, and during such
period the suspension of voting rights for such Defaulting Lender
referred to in the preceding sentence shall not apply, provided that
if such dispute is not resolved within such 90-day period, then such
suspension of voting rights shall thereafter apply. The provisions
of the immediately preceding sentence shall not alter a condition or
any other provision of this Agreement with respect to a failure on
the part of any Lender to fund its Percentage Interest of any Loan
or otherwise to perform its obligations under the Loan Documents.
8.2. Duties and Obligations.
8.2.1. Limitations on Obligations. Neither the
Agent nor any of its directors, officers, agents or employees shall
be liable for any action taken or omitted to be taken by it or any
of them under or in connection with this Agreement or any of the
other Loan Documents except for its or their own gross negligence or
willful misconduct. Without limiting the generality of the
foregoing, the Agent:
(a) may treat each Lender that is a party hereto as
the party entitled to receive payments hereunder until the Agent
receives written notice of the assignment of such Lender's interest
herein, signed by such Lender and made in accordance with the terms
hereof and an Assignment Agreement, duly executed by such Lender and
its assignee, in substantially the form of Exhibit B (each such
agreement, an "Assignment Agreement");
(b) may consult with legal counsel (including
counsel for the Borrower), independent public accountants and other
experts selected by it, and shall not be liable for any action taken
or omitted to be taken in good faith by it in accordance with the
advice of such experts;
(c) (i) makes no warranty or representation to any
Lender, and (ii) shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection
with this Agreement, the other Loan Documents or in any instrument
or document furnished pursuant hereto or thereto;
(d) shall not have any duty to ascertain or to
inquire as to the performance of any of the terms, covenants, or
conditions of the Loan Documents on the part of the Borrower or any
Subsidiary or as to the use of the proceeds of any Loan or as to the
existence or possible existence of any Default or Event of Default;
(e) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness,
effectiveness, or value of this Agreement or any other Loan Document
or of any instrument or document furnished pursuant hereto or
thereto; and
(f) shall incur no liability under or in respect of
this Agreement (i) by acting upon any oral or written notice,
consent, certificate or other instrument or writing (which may be by
telegram, facsimile transmission, cable or telex) believed by it to
be (A) genuine and (B) signed or sent by the proper party or parties
or (ii) by acting upon any representation or warranty of the
Borrower or any Subsidiary made or deemed to be made hereunder.
8.2.2. Use of Agents, Employees, Etc. The Agent may
execute any of its duties under this Agreement or any other Loan
Document by or through agents, employees or attorneys-in-fact, and
shall be entitled to advice of counsel concerning all matters
pertaining to such duties. The Agent shall not be responsible for
the negligence or misconduct of any agent or attorney-in-fact that
it selects with reasonable care.
8.2.3. Payments, Deliveries to Lenders. The Agent
shall account to each Lender for such Lender's Percentage Interest
of payments of principal of, interest on and fees in respect of the
Loans (other than fees payable to the Agent for its own account)
received by the Agent from the Borrower or any Subsidiary, and shall
promptly remit to the Lenders entitled thereto all such payments.
The Agent shall transmit to each Lender copies of all documents
received from the Borrower or any Subsidiary pursuant to the
requirements of this Agreement, other than documents which by the
terms of this Agreement the Borrower is obligated to deliver
directly to the Lenders.
8.3. Dealings Between Agent and Borrower. With respect
to its Commitment and the Loans made by it, the Agent shall have the
same rights and powers under this Agreement and the other Loan
Documents as any other Lender and may exercise the same as though it
were not the Agent, and the term "Lender" shall, unless otherwise
expressly indicated, include the Agent in its individual capacity.
The Agent may accept deposits from, lend money to, act and generally
engage in any kind of business with the Borrower and its
Subsidiaries, and any Person that may do business with the Borrower
or any of its Subsidiaries, all as if the Agent were not the Agent
hereunder and without any duty to account therefor to the Lenders.
8.4. Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Agent or
any other Lender and based upon such documents, information and
investigation into the business, prospects, operations, property,
financial and other condition and creditworthiness of the Borrower
as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents,
as applicable. Each Lender also acknowledges that it will,
independently and without reliance upon the Agent or any other
Lender and based upon such documents, information and investigation
as it shall deem appropriate at the time, continue to make its own
credit analysis and decisions with respect to the taking or not
taking of any action under this Agreement or the other Loan
Documents. Except for notices, reports and other documents
expressly required by this Agreement or any other Loan Document to
be furnished to the Lenders by the Agent, the Agent shall have no
duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operation,
financial or other condition or creditworthiness of the Borrower or
any of its Subsidiaries that may come into the possession of the
Agent or any of its Affiliates or any officer, director, employee,
agent or attorney-in-fact of the Agent or any of its Affiliates
(collectively (with the Agent), the "Agent-Related Persons").
8.5. Indemnification by Lenders. The Lenders agree to
indemnify the Agent and each other Agent-Related Person (to the
extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their
respective Percentage Interests, from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by or asserted
against such Agent-Related Person in any way relating to or arising
out of (a) this Agreement or any other Loan Document or (b) any
action taken or omitted by or on behalf of the Agent under this
Agreement or any other Loan Document or otherwise in connection with
the making, funding, administration or enforcement of the Loans or
the preservation of any right in respect thereof, except as a result
of such Agent-Related Person's gross negligence or willful
misconduct. Without limiting the generality of the foregoing, each
Lender agrees to reimburse the Agent promptly on demand, in
proportion to its Percentage Interest, for any out-of-pocket
expenses, including legal fees, incurred by the Agent in connection
with the administration or enforcement of or the preservation of any
rights under this Agreement or any other Loan Document (to the
extent that the Agent is not reimbursed for such expenses by the
Borrower and without limiting the obligation of the Borrower to do
so).
8.6. Successor Agent. The Agent may give written notice
of its resignation at any time to the Lenders and the Borrower, and
may be removed at any time, with cause, by the Majority Lenders.
Upon any such resignation or removal, the Majority Lenders shall
have the right (with the approval (not to be unreasonably withheld)
of the Borrower, unless (i) such successor Agent is the
Documentation Agent or a Co-Agent, or (ii) an Event of Default has
occurred and is continuing) to appoint a successor Agent, who shall
concurrently assume the rights and obligations of the Swing Line
Lender hereunder (including the Swing Line Lender's commitment to
fund Swing Line Borrowings and its interest in outstanding advances
under the Swing Line). If no successor Agent shall have been so
appointed by the Majority Lenders and shall have accepted such
appointment within thirty (30) days after the Agent's giving of
notice of resignation or the Majority Lenders' removal of the Agent,
then the Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a bank organized under the laws of the United
States or of any state thereof, or any Affiliate of such bank,
having a combined capital and surplus of at least $500,000,000.
Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of
the retiring Agent and Swing Line Lender, and the retiring Agent and
Swing Line Lender shall be discharged from its duties and
obligations under this Agreement. Until such acceptance by a
successor Agent and Swing Line Lender, the retiring Agent shall
continue as "Agent" and "Swing Line Lender" hereunder.
Notwithstanding any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article VIII shall inure
to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement. Any company into which the
Agent may be merged or converted, or with which it may be
consolidated, and any company resulting from any merger, conversion
or consolidation to which the Agent shall be a party, and any
company to which the Agent may sell or transfer all or substantially
all of its agency relationships, shall be the successor to the Agent
without the execution or filing of any paper or further act,
anything herein to the contrary notwithstanding.
8.7. Documentation Agent; Co-Agents. No Lender
identified in this Agreement or any other Loan Document as
"Documentation Agent" or "Co-Agent" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement
or any other Loan Document other than those that are applicable to
all Lenders as such; and no other Person identified in this
Agreement or any other Loan Document as "Documentation Agent" or
"Co-Agent" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement or any other Loan
Document other than those, if any, that are expressly to such
Person. Without limiting the generality of the foregoing, no Lender
or other Person so identified shall, or be deemed to, have any
fiduciary relationship with any Lender. Each Lender acknowledges
that it has not relied, and will not rely, on any of the Lenders or
other Persons so identified in deciding to enter into this Agreement
or any of the other Loan Documents or in taking or not taking action
hereunder or thereunder.
ARTICLE IX.
MISCELLANEOUS
9.1. No Waiver; Remedies Cumulative. No failure by the
Agent or any Lender to exercise, and no delay in exercising, any
right, power or remedy under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or remedy under this Agreement
or any other Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power, or remedy. The
exercise of any right, power, or remedy shall in no event
(a) constitute a cure or waiver of any Default Event of Default
under this Agreement or any other Loan Document or (b) prejudice the
rights of the Agent or any Lender in the exercise of any right
hereunder or thereunder. The rights and remedies provided herein
and therein are cumulative and not exclusive of any right or remedy
provided by law.
9.2. GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (EXCEPT, IN THE CASE OF ANY OTHER LOAN DOCUMENT, TO THE
EXTENT OTHERWISE PROVIDED THEREIN) SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO NEW YORK CONFLICTS OF LAWS PRINCIPLES.
9.3. Notices. All notices and other communications
provided for in this Agreement, or that any party shall desire to
deliver to any other party with respect to the transactions
contemplated hereby, shall be in writing or (unless otherwise
specified) by telex, facsimile transmission, telegram or cable, and
shall be mailed (with first class postage prepaid) or sent or
delivered to each party (a) at the address set forth under its name
on the signature pages hereof, or (b) at such other address as shall
be designated by such party in a written notice to each other party
delivered in accordance with the provision of this Section 9.3.
Except as otherwise specified: (x) all notices or other
communications sent by mail, if duly given, shall be effective
three (3) Business Days after deposit into the mails, (y) all
notices or other communications sent by a nationally recognized
overnight courier service, if duly given, shall be effective one (1)
Business Day after delivery to such courier service (with the
relevant fees paid or duly provided for), and (z) all other notices
or other communications, if duly given or made, shall be effective
upon receipt.
9.4. Assignment and Participations.
9.4.1. Agreement Binding. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective Successors and permitted assigns, provided that the
Borrower may not assign or otherwise transfer all or any part of its
rights or obligations hereunder or under any other Loan Document
without the prior written consent of the Agent and each Lender, and
any such assignment or transfer purported to be made without such
consent shall be ineffective.
9.4.2. Sale of Participations.
(a) Any Lender may at any time sell participation
interests in its Loans and Commitment to any other Person, provided
that no such participation shall, without the consent of the
Borrower, require the Borrower to file a registration statement with
the Securities and Exchange Commission or apply to qualify such
participation under the securities laws of any jurisdiction. Such
sales may be made without the consent of the Agent, the Borrower or
any other Lender; provided, however, that (i) the selling Lender
shall have provided the Borrower and the Agent with prior written
notice of the proposed sale of any participation interest in any
Loan or in such Lender's Commitment; and (ii) the selling Lender
retains the right to vote as a Lender hereunder in respect of the
interest sold without being bound to (A) obtain the consent of its
participant or (B) exercise its rights in accordance with
instructions received from its participant, except that the
participant's consent may be required for (w) proposed increases in
the Total Commitment; (x) proposed changes to the timing or amount
of principal payments; (y) proposed changes to the timing, rate(s)
or amount(s) of payments of interest or fees; or (z) proposed
releases of any Collateral or Guaranties for which the consent of
such Lender would be required hereunder.
(b) All amounts payable by the Borrower hereunder or
under any other Loan Document (including, without limitation,
amounts payable to any Lender selling a participation under
Section 2.7 or Section 2.13), shall be determined as if such Lender
had not sold such participation; provided that the Borrower and each
Lender hereby acknowledge and agree that, for purposes of
Sections 9.5.1 and 9.6, (i) such participation shall give rise to a
direct obligation of the Borrower to the participant, and (ii) such
participant shall be considered to be a "Lender."
(c) No Lender shall, as between (i) the Borrower,
the Agent or any other Lender and (ii) such Lender, be relieved of
any of its obligations hereunder or under any other Loan Document as
a result of any such sale of a participation.
9.4.3. Assignments. Any Lender may at any time:
(a) assign to any other Lender or to any Affiliate
of any Lender or to a fund managed by the same investment manager as
such Lender, or
(b) after first obtaining the approval of (i) unless
the assigning Lender is the Documentation Agent or an Affiliate
thereof, the Agent, and (ii) unless any Event of Default has
occurred and is continuing, the Borrower (in either case, which
approval will not be unreasonably withheld),
assign, to any Eligible Assignee, all or a portion of its rights and
obligations under this Agreement (including without limitation all
or a portion of its Commitment and the Loans owing to it); provided
that no such, assignment shall, without the consent of the Borrower,
require the Borrower to file a registration statement with the
Securities and Exchange Commission or apply to qualify such
participation under the securities laws of any jurisdiction; and
provided further that (v) (i) each such assignment shall be of a
constant, and not a varying, percentage of the assigning Lender's
rights and obligations under this Agreement and other Loan
Documents, and the assignment shall cover the same percentage of
such Lender's Commitment and Loans, and (ii) the commitment of the
Swing Line Lender to fund Swing Line Borrowings and the Swing Line
Lender's interest in outstanding Swing Line Borrowings may not be
assigned to any Person other than a Person who concurrently becomes
both a successor Agent pursuant to Section 8.6 and the Swing Line
Lender, (w) unless the Agent and (unless any Event of Default has
occurred and is continuing) the Borrower otherwise consent, the
aggregate amount of the Commitment of the assigning Lender being
assigned pursuant to each such assignment to any Person other than a
Person that is already a Lender (determined as of the date of the
Assignment Agreement with respect to such assignment) shall in no
event be less than $5,000,000 and shall be an integral multiple of
$1,000,000, (x) after giving effect to such assignment (unless the
assignment is of the assigning Lender's entire remaining interest in
the Loans), the aggregate amount of the Commitment retained by the
assigning Lender shall in no event be less than $5,000,000, (y) the
parties to each such assignment shall execute and deliver to the
Agent (to the extent applicable, for its acceptance and the
acceptance of the Borrower), an Assignment Agreement, and (z) the
Agent shall receive from the assignor a processing fee of $3,000.
Unless the Agent or (where the Borrower's consent is required) the
Borrower gives written notice to the assigning Lender that it
objects to the proposed assignment (together with a written
explanation of the reasons behind such objection) within ten (10)
Business Days following receipt of the assigning Lender's written
request for approval of the proposed assignment, the Agent or the
Borrower, as the case may be, shall be deemed to have approved such
assignment. Upon such execution, delivery, approval and acceptance,
and upon the effective date specified in the applicable Assignment
Agreement, (x) the assignee thereunder shall be a party hereto and,
to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment Agreement, have the
rights and obligations of a Lender hereunder, and (y) the assigning
Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights (other than rights of
indemnification) and be released from its obligations under this
Agreement (and, if such assignment is of such Lender's entire
remaining Commitment, shall cease to be a party hereto).
9.4.4. Assignments or Pledges to Federal Reserve
Bank or Trustee.
(a) Any Lender may pledge or assign all or any part
of its interest under the Assignments or Pledges to Federal Reserve
Bank. Any Loan Documents for security purposes to any Federal
Reserve Bank pursuant to Regulation A of the Board of Governors of
the Federal Reserve System and any operating circular issued by the
pledgee Federal Reserve Bank; provided that (a) no Lender shall, by
reason of such pledge or assignment, be relieved of any of its
obligations hereunder or under any other Loan Document, and (b) in
no event shall such Federal Reserve Bank be considered to be a
"Lender" or be entitled to require the pledging/assigning Lender to
take, or omit to take, any action in respect of the Loans.
(b) Any Lender which is a trust may pledge all or
any part of its interest hereunder to its trustee for the benefit of
the trust's beneficiaries.
9.4.5. Certain Effects of Assignments,
Participations and Pledges.
(a) Upon its receipt of an Assignment Agreement
executed by an assigning Lender and an assignee, together with the
processing fee referred to in Section 9.4.3 and any withholding
documentation required to be delivered pursuant to Section 2.13, the
Agent shall (subject to the provisions of Section 9.4.3 relating to
the Agent's right of consent to assignments): (i) accept such
Assignment Agreement by executing a counterpart thereof, (ii) record
the information contained therein in the Agent's records relating to
the Loans; and (iii) give prompt notice thereof to the Borrower
(including, to the extent that the Borrower's consent thereto is
required, the delivery of a counterpart thereof to the Borrower for
its execution and return to the Agent for transmittal to the
assigning Lender). The Agent shall maintain a copy of each
Assignment Agreement delivered to it and accepted as provided
herein.
(b) The assignee of any permitted sale or assignment
(including assignments for security and sales of participations)
shall have the same rights and benefits against the Borrower and
otherwise under the Loan Documents (except however, in the case of
sales of participations, the right to grant or withhold consents or
otherwise vote in respect thereof and the right to payment of
certain increased costs and amounts in respect of withholding taxes,
as provided in Section 9.4.2(b)), including the right of setoff, and
in the case of any outright assignment (as distinguished from an
assignment for security or the sale of a participation) the same
obligations in respect thereof, as if such assignee were an original
Lender. Except to the extent otherwise required by the context of
this Agreement, the word "Lender" where used in this Agreement shall
mean and include any holder of a Note originally issued to a Lender
hereunder, and each such holder shall be bound by and have the
benefits of this Agreement the same as if such holder had been a
signatory hereto. Any outright assignment of a Lender's interest
hereunder to another Lender made in conformance with the terms of
this Section 9.4 shall result in a corresponding adjustment to the
selling and purchasing Lenders' Commitments and Percentage
Interests. At the request of any assignee of a Lender, the
assigning Lender shall, upon the effectiveness of any assignment (or
as promptly thereafter as practicable), surrender its Note to the
Agent to be exchanged for a new Note(s) in the name(s) of the
assigning Lender (if it retains any interest hereunder) and its
assignee, to reflect the Commitment(s) of the assigning Lender and
its assignee after giving effect to such assignment.
9.4.6. Confidentiality. The Agent, and each of the
Lenders, understands that some of the information and documents
furnished to it pursuant to this Agreement or the other Loan
Documents may be confidential, and agrees that it will keep all
non-public information, documents and agreements so furnished to it
confidential and will make no disclosure to other Persons of such
information or agreements until it shall have become public, except
(a) to the extent required in connection with matters involving
operations under or enforcement or amendment of the Loan Documents;
(b) in accordance with the Agent's or such Lender's obligations
under law or regulations or pursuant to subpoenas or other legal
process to make information available to governmental agencies and
examiners or to others; (c) to any corporate parent or (if such
Affiliate is a financial institution) other Affiliate of Agent or
such Lender, solely for purposes of the administration or
enforcement of the Loans, so long as such parent or other Affiliate
agrees to accept such information or agreement subject to the
restrictions provided in this Section 9.4.6; (d) to any participant
of the Agent or such Lender that agrees to keep such information,
documents or agreement confidential in accordance with the
restrictions provided in this Section 9.4.6; (e) to the Agent or to
any other Lender and such Agent's and such other Lender's respective
counsel and other professional advisors so long as such Persons are
instructed to keep such information confidential in accordance with
the provisions of this Section 9.4.6; (f) to proposed assignees and
participants that agree to keep such information, documents or
agreements confidential in accordance with the restrictions provided
in this Section 9.4.6; or (g) with the prior written consent of the
Borrower.
9.4.7. Representations of Lenders. Each Lender
represents and warrants to the Borrower, the Agent and each of the
other Lenders as follows:
(a) Such Lender is an Eligible Assignee described in
clause (a) of the definition of "Eligible Assignee" (and each
Guarantor shall be entitled to rely on such representation and
warranty);
(b) Such Lender has experience and expertise in the
making of loans such as the Loans; and
(c) Such Lender will make (or purchase, as the case
may be) its Loans for its own account in the ordinary course of its
business and without a view to distribution of such Loans within the
meaning of the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, or other federal securities laws
(it being understood that, subject to the provisions of the Loan
Documents relating to the transfer of interests thereunder, the
disposition of such Loans, or any interests therein, shall at all
times remain within such Lender's exclusive control).
9.5. Indemnification by Borrower; Expenses.
9.5.1. Indemnification. Whether or not the
transactions contemplated hereby shall be consummated, the Borrower
shall pay, indemnify and hold each Agent-Related Person, and each of
the Documentation Agent, each Co-Agent and each Lender and their
respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person"), harmless from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or
disbursements (including reasonable attorneys' fees and expenses
incurred by the Agent or any of the Lenders), of any kind or nature
whatsoever, that may at any time (including at any time following
repayment of the Loans and the termination, resignation or
replacement of the Agent or the replacement of any
Lender)(collectively, "Indemnified Liabilities") be imposed on,
incurred by or asserted against any such Indemnified Person in any
way arising out of or in connection with or by reason of, the
negotiation, performance, enforcement, preparation of a defense of
any claim, litigation, investigation or proceeding relating to or
arising out of or in connection with (a) this Agreement or any other
Loan Document, (b) the High Yield Offering, (c) the transactions
contemplated hereby or thereby, (d) the use of any Loan proceeds, or
(e) any action taken or omitted by any such Indemnified Person under
or in connection with any of the foregoing; provided that (x) the
Borrower shall have no obligation hereunder to any Indemnified
Person with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct of such Indemnified Person;
and (y) no Indemnified Person that is (i) an Initial Purchaser, as
defined in the Purchase Agreement dated August 7, 1997 (the
"Purchase Agreement") for the purchase and sale of the High Yield
Notes, or (ii) an officer, employee or person who controls any
Initial Purchaser within the meaning of the Securities Act and the
Exchange Act (as such terms are defined in the Purchase
Agreement)(any such Person, in its capacity as an Initial Purchaser
or an officer, employee or person who so controls any Initial
Purchaser (and not in its capacity as a Lender, Agent or Agent-
Related Person, Documentation Agent or Co-Agent or an officer,
director, employee, counsel, agent or attorney-in-fact of any of the
foregoing), a "High Yield Offering Person"), shall be entitled to be
indemnified under clause (b) of this Section 9.5.1 for Indemnified
Liabilities imposed on, incurred by or asserted against such
Indemnified Person solely in its capacity as a High Yield Offering
Person, it being the intent that each such Person's rights of
indemnity with respect to the High Yield Offering and the purchase
and sale of the High Yield Notes, in such Person's capacity as a
High Yield Offering Person, shall arise solely under, and be
governed exclusively by, the Purchase Agreement. All amounts owing
under this Section 9.5.1 shall be paid promptly upon demand. At the
election of any Indemnified Person, the Borrower shall defend such
Indemnified Person in respect of any Indemnified Liabilities using
legal counsel selected by the Borrower to such Indemnified Person at
the sole cost and expense of the Borrower. Without limiting the
generality of the foregoing, in the event that any Indemnified
Person becomes involved in any capacity other than in such Person's
capacity as a High Offering Person in any action, proceeding or
investigation brought by or against any Person in connection with or
as a result of the Loans or any matter referred to in this Agreement
or any other Loan Document or the transactions contemplated hereby
or thereby, the Borrower shall periodically reimburse such
Indemnified Person for its legal and other expenses (including the
cost of any investigation and preparation) incurred in connection
therewith.
9.5.2. Expenses. The Borrower shall pay immediately
upon demand (a) all reasonable costs, fees and expenses, including
reasonable attorneys' fees and expenses, incurred by the Agent in
connection with the preparation, review, execution and delivery of,
and the exercise of its duties under, this Agreement and any of the
other Loan Documents, and the preparation of amendments, supplements
and waivers hereunder and thereunder; (b) all reasonable costs, fees
and expenses, including reasonable attorneys' fees and expenses,
incurred by the Agent or the Lenders in connection with the
enforcement, preservation or protection (or attempted enforcement,
preservation or protection) of any rights or remedies of the Agent
or any of the Lenders under this Agreement or any other Loan
Document (including in connection with any "workout" or
restructuring relating to this Agreement or any bankruptcy or
insolvency case involving Borrower or any of its Subsidiaries or
other Affiliates); and (c) all reasonable costs, fees and expenses
incurred by Agent and each of the Lenders for appraisals, audits,
environmental inspections and reviews, searches and filings in
connection with any of the foregoing. As used in this Agreement,
the term "reasonable attorneys' fees and expenses" shall include,
without limitation, reasonable allocable costs and expenses of the
Agent's and the Lenders' in-house legal counsel, outside legal
counsel and financial advisors and staff, and "reasonable costs,
fees and expenses" shall include, without limitation, reasonable
allocable costs, fees and expenses of the Agent's and the Lenders'
internal appraisal, audit, environmental and other similar services,
and reasonable fees and disbursements of expert witnesses and other
outside consultants.
9.6. Setoff. In addition to all Liens upon, and rights
of setoff against, the monies, securities or other property of the
Borrower given to the Agent or any Lender by law, the Agent, and
each Lender, shall have a lien upon and a right of setoff against
all monies, securities and other property of the Borrower now or
hereafter in the possession of or on deposit with such Person,
whether held in a general or special account or deposit or for
safekeeping or otherwise, and, subject to any provision of this
Agreement to the contrary, every such Lien and right of setoff may
be exercised without demand upon or prior notice to the Borrower.
Each Person exercising any such right of setoff shall notify the
Agent and the Borrower thereof promptly thereafter, but no failure
to give any such notice shall affect the validity of the relevant
setoff. No Lien or right of setoff shall be deemed to have been
waived by any act or conduct on the part of the Agent or any Lender,
or by any neglect to exercise such right of setoff or to enforce
such Lien, or by any delay in so doing, and every right of setoff
and Lien shall continue in full force and effect until such right of
setoff or Lien is specifically waived or released by an instrument
in writing executed by the Person entitled thereto.
9.7. No Third Party Beneficiaries. This Agreement and
each of the other Loan Documents are made and entered into for the
sole protection and legal benefit of the Borrower, the Agents, the
Lenders, the Arrangers and the Indemnified Persons and their
respective permitted Successors and assigns, and, except as
expressly provided (a) in Section 9.4.2(b) with respect to
participants, or (b) in Section 9.4.7(a) with respect to permitted
reliance thereon by the Guarantors, no other Person shall be a
direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement
or any of the other Loan Documents.
9.8. Severability; Independence of Covenants.
9.8.1. Severability. Any provision of this
Agreement or any other Loan Document that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction
only, be ineffective to the extent of such prohibition or
unenforceability, without (a) invalidating the remaining provisions
hereof or (b) affecting the validity or enforceability of such
provision in any other jurisdiction. To the extent permitted by
applicable law, the parties waive any provision of law which renders
any provision hereof prohibited or unenforceable in any respect.
9.8.2. Independence of Covenants. All covenants
hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any one or more of such
covenants, the fact that it would be permitted by an exception to,
or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of an Event of Default or Default if such
action is taken or such condition exists. Notwithstanding any other
provision of any Loan Document, any action or circumstance otherwise
permitted under the Loan Documents that requires any waiver, consent
or amendment of any documentation governing an issuance of
Subordinated Debt shall be prohibited unless such waiver, consent or
amendment is obtained prior to the taking or occurrence thereof.
9.9. Survival. The representations, warranties and
indemnities of the Borrower in favor of the Agent and the Lenders,
and the representations, warranties and indemnities of the Lenders
in favor of the Agent, shall survive indefinitely and, without
limiting the foregoing, shall survive the execution and delivery of
this Agreement and each of the other Loan Documents, the making of
any Loan, the expiration of the Total Commitment and the repayment
of all Obligations and other amounts due hereunder.
9.10. Release. The Borrower and its Subsidiaries on
behalf of each of them and for each of their direct and indirect
affiliates, parent corporations, subsidiaries, subdivisions,
successors, predecessors, shareholders, and assigns, and their
present and former officers, directors, legal representatives,
employees, agents, and attorneys, and their heirs, executors,
administrators, trustee, successors and assigns (collectively, the
"Releasors"), hereby release and forever discharge (this "Release")
each Lender and the Agent and each of their respective direct and
indirect affiliates, parent corporations, subsidiaries,
subdivisions, successors, predecessors, shareholders, and assigns,
and their present and former officers, directors, legal
representatives, employees, agents, and attorneys, and their heirs,
executors, administrators, trustees, successors and assigns
(collectively, the "Releasees") of and from any and all claims,
liabilities, demands, rights, obligations, damages, expenses,
attorneys' fees and causes of action whatsoever from the beginning
of the world to the date hereof, whether individual, class or
derivative in nature, whether at law or in equity, whether based on
federal, state or foreign law or right of action, foreseen or
unforeseen, mature or unmatured, known or unknown, accrued or not
accrued, which Releasors have or had against the Releasees, arising
out of or relating to this Agreement or any other Loan Document (the
"Released Claims"), and covenants not to institute, maintain, or
prosecute any action, claim, suit, proceeding or cause of action of
any kind to enforce any of the Released Claims. In any litigation
arising from or related to an alleged breach of this Release, this
Release may be pleaded as a defense, counterclaim or crossclaim, and
shall be admissible into evidence without any foundation testimony
whatsoever. The Releasors expressly covenant and agree that this
Release shall be binding in all respects upon their respective
successors, heirs, assigns and transferees, and shall inure to the
benefit of the heirs, successors and assigns of Releasees.
Notwithstanding the foregoing, (x) the Agent and the Lenders hereby
expressly reserve any rights they have or may have, collectively and
individually, in connection with the Wattles Loan and (y) the
Borrower hereby reserves its rights to assert any defense it may
have with respect to the Wattles Loan in a proceeding brought
against the Borrower by the Agent or any Lender, provided that the
Borrower may not assert any such defense or defenses with respect to
any of the Obligations.
9.11. Limitation on Liability. To the extent permitted
by applicable law, no claim may be made by the Borrower, any Lender
or any other Person against the Agent or any Agent-Related Person,
the Documentation Agent, any Co-Agent or any Lender, or the
Affiliates, directors, officers, employees, attorneys or agents of
any of them, for any special, indirect, consequential or punitive
damages in respect of any claim for breach of contract or any other
theory of liability arising out of or related to the transactions
contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and the Borrower and each Lender
hereby waive, release and agree not to sue upon any claim for any
such damages, whether or not accrued and whether or not known or
suspected to exist in its favor; provided, however, that if a Lender
refuses to fund a Loan and a court of competent jurisdiction finds
that such refusal was without justification and in bad faith, such
Lender may be liable to the Borrower for the Borrower's reasonable
and foreseeable damages resulting from such refusal to fund. If for
any reason any Lender breaches its obligation to make any Loan
hereunder, neither the Agent nor any other Lender shall be
responsible to the Borrower for any damage or loss by reason
thereof, nor shall the Borrower, or any other Lender, be excused
from its own performance hereunder.
9.12. Entire Agreement; Amendment. This Agreement,
together with the Exhibits and Schedules hereto and the letter
agreement referred to in Section 2.11.2, comprise the entire
agreement of the parties, and may not be amended or modified except
by written agreement of the Borrower and the Majority Lenders
executed in conformance with the terms of Section 8.1. No provision
of this Agreement may be waived except in writing, and then only in
the specific instance and for the specific purpose for which given.
9.13. WAIVER OF JURY TRIAL. THE PARTIES HERETO (a) WAIVE
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE,
DETERMINE OR DEFEND ANY RIGHTS UNDER OR RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, AND (b) AGREE THAT (i) ANY SUCH ACTION OR PROCEEDING SHALL
NOT BE TRIED BEFORE A JURY, AND (ii) ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER
OF THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY.
9.14. Headings. The headings of the various provisions
of this Agreement are for convenience of reference only, do not
constitute a part hereof, and shall not affect the meaning or
construction of any provision hereof.
9.15. Counterparts; Telecopied Signatures. This
Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which
taken together shall constitute one and the same Agreement. This
Agreement may be executed and delivered by telecopier or other
facsimile transmission all with the same force and effect as if the
same were a fully executed and delivered original manual
counterpart.
9.16. FORUM SELECTION AND CONSENT TO JURISDICTION. TO
THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, 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 THE AGENT, THE LENDERS, OR THE BORROWER SHALL BE BROUGHT AND
MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR SOUTHERN COURT OF NEW YORK; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE 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
JURISDICTION OF THE COURTS OF THE STATE 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. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY CERTIFIED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF NEW YORK. 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 OF 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, TO THE FULLEST
EXTENT PERMITTED UNDER APPLICABLE LAW, THE BORROWER HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers or agents
thereunto duly authorized as of the date first written above.
BORROWER:
HOLLYWOOD ENTERTAINMENT CORPORATION
By:
Name:
Title:
Address: 9275 S.W. Peyton Lane
Wilsonville, Oregon 97070
Attn: Donald J. Ekman
Telephone: (503) 570-1600
Facsimile: (503) 570-1680
AGENT:
SOCIETE GENERALE, NEW YORK BRANCH
By:
Name:
Title:
Address: 1221 Avenue of the Americas
New York, New York 10020
Attention: Elaine Khalil
Telephone: (212) 278-6852
Facsimile: (212) 278-7997
LENDERS:
SOCIETE GENERALE, NEW YORK BRANCH
By:
Name:
Title:
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Documentation Agent and as a Lender
By:
Name:
Title:
CREDIT LYONNAIS LOS ANGELES BRANCH,
as a Co-Agent and a Lender
By:
Name:
Title:
DEUTSCHE BANK AG, NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH,
as a Co-Agent and a Lender
By:
Name:
Title:
By:
Name:
Title:
KEYBANK NATIONAL ASSOCIATION,
as a Co-Agent and a Lender
By:
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION
By:
Name:
Title:
THE SUMITOMO BANK, LIMITED
By:
Name:
Title:
By:
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
Name:
Title:
VAN KAMPEN PRIME RATE INCOME TRUST
By: Van Kampen Investment Advisory Corp.
By:
Name:
Title:
THE BANK OF NOVA SCOTIA
By:
Name:
Title:
By:
Name:
Title:
THE FUJI BANK, LIMITED
By:
Name:
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By:
Name:
Title:
SUNTRUST BANK CENTRAL FLORIDA, N.A.
By:
Name:
Title:
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By:
Name:
Title:
CITY NATIONAL BANK
By:
Name:
Title:
BANQUE WORMS CAPITAL CORPORATION
By:
Name:
Title:
By:
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
Name:
Title:
FLEET BUSINESS CREDIT CORPORATION
By:
Name:
Title:
FLEET NATIONAL BANK (FORMERLY KNOWN AS
BANKBOSTON, N.A.)
By:
Name:
Title:
THE TORONTO-DOMINION BANK
By:
Name:
Title:
BLACK DIAMOND INTERNATIONAL
FUNDING, LTD
By:
Name:
Title:
<TABLE>
<S> <C>
3.1.4. Capital Leases
Lessor/Assignor * Lease # * Effective Date * Maturity Date * Original
Cost * Lease Payment * Balance @ 6/30/00
CIT (KeyCorp Leasing) * 2/23/00-01 * 03/01/2000 * 02/28/2003 * 2,566,242
* 62,323 * 2,310,921
GE Capital (KeyCorp Leasing) * 2/23/00-02 * 03/01/2000 * 02/28/2003 *
5,434,010 * 131,968 * 5,038,104
Safeco Credit (KeyCorp Leasing) * 2/23/00-03 * 03/01/2000 * 02/28/2003 *
2,023,759 * 61,147 * 1,876,315
KeyCorp Leasing * 2/23/00-04 * 03/01/2000 * 02/28/2003 * 2,517,851 *
49,148 * 2,370,406
TransAmerica * 1173-053-01 * 12/16/1999 * 12/16/2002 * 4,152,294* 100,841
* 3,547,246
TransAmerica * 1173-053-02 * 12/16/1999 * 12/16/2002 * 2,711,596 * 65,853
*2,382,331
TransAmerica * 1173-053-03 * 12/16/1999 * 12/16/2002 * 3,109,311 * 75,511
* 2,731,751
TransAmerica * 1173-053-04 * 12/23/1999 * 12/23/2002 * 2,956,308 * 71,796
* 2,597,328
TransAmerica * 1173-053-05 * 12/23/1999 * 12/23/2002 * 2,555,372 * 62,059
* 2,245,077
TransAmerica * 1173-053-06 * 12/23/1999 * 12/23/2002 * 1,802,452 * 43,774
* 1,583,583
TransAmerica * 1173-053-07 * 12/23/1999 * 12/23/2002 * 1,608,012 * 39,051
* 1,412,753
TransAmerica * 1173-053-08 * 12/23/1999 * 12/23/2002 * 2,162,462 * 52,516
* 1,850,719
TransAmerica * 1173-053-09 * 12/23/1999 * 12/23/2002 * 1,677,130 * 40,730
* 1,473,478
TransAmerica * 1173-053-10 * 12/23/1999 * 12/23/2002 * 665,669 * 16,166 *
584,838
TransAmerica * 1173-053-11 * 12/23/1999 * 12/23/2002 * 2,444,961 * 59,377
* 2,148,073
TransAmerica * 1173-053-12 * 12/23/1999 * 12/23/2002 * 1,168,934 * 28,388
* 1,026,992
TransAmerica * 1173-053-13 * 12/23/1999 * 12/23/2002 * 684,628 * 16,626 *
601,495
TransAmerica * 1173-053-14 * 12/23/1999 * 12/23/2002 * 2,301,227 * 55,886
* 2,021,792
TransAmerica * 1173-016-01 * 01/01/2000 * 12/01/2003 * 10,311,987 *
186,493 * 9,193,027
Heller Financial * 1910092-09 * 03/01/1997 * 11/01/2000 * 5,058,350 *
121,578 * 1,212,720
Heller Financial * 1910092-10 * 03/01/1997 * 11/01/2000 * 2,547,260 *
61,224 * 610,696
Heller Financial * 1910092-11 * 03/01/1997 * 11/01/2000 * 2,395,374 *
57,574 * 574,284
Vision Information Services * 05/15/1998 * 07/01/1998 * 06/01/2001 *
270,254 * 9,694 * 98,696
Creekridge Capital (CFC Funding) * 6/8/98-02 * 03/01/1999 * 02/28/2002 *
95,424 * 3,079 * 57,437
Total Balance at 6/30/00 was $49,550,062.
</TABLE>
4.17. Subsidiary Assets
As of May 31, 2000, the assets held by Hollywood Management Company were
approximately as follows:
Cash (as permitted per Section 6.6.4) $ (14,822,804)
Receivables 5,794,898
Prepaid Marketing Expenses 6,992,349
Furniture, Fixture and Equipment 28,314,048
Total Assets $ 26,278,491
6.2(a). Funded Debt
Indebtedness under the High Yield Notes, as of the
Closing Date $ 250,000,000
Indebtedness under the Credit Agreement, as of
June 30, 2000 289,000,000
<TABLE>
<S> <C>
6.2(d). Capital Leases
Lessor/Assignor * Lease # * Effective Date * Maturity Date * Original
Cost * Lease Payment * Balance @ 6/30/00
CIT (KeyCorp Leasing) * 2/23/00-01 * 03/01/2000 * 02/28/2003 * 2,566,242
* 62,323 * 2,310,921
GE Capital (KeyCorp Leasing) * 2/23/00-02 * 03/01/2000 * 02/28/2003 *
5,434,010 * 131,968 * 5,038,104
Safeco Credit (KeyCorp Leasing) * 2/23/00-03 * 03/01/2000 * 02/28/2003 *
2,023,759 * 61,147 * 1,876,315
KeyCorp Leasing * 2/23/00-04 * 03/01/2000 * 02/28/2003 * 2,517,851 *
49,148 * 2,370,406
TransAmerica * 1173-053-01 * 12/16/1999 * 12/16/2002 * 4,152,294* 100,841
* 3,547,246
TransAmerica * 1173-053-02 * 12/16/1999 * 12/16/2002 * 2,711,596 * 65,853
*2,382,331
TransAmerica * 1173-053-03 * 12/16/1999 * 12/16/2002 * 3,109,311 * 75,511
* 2,731,751
TransAmerica * 1173-053-04 * 12/23/1999 * 12/23/2002 * 2,956,308 * 71,796
* 2,597,328
TransAmerica * 1173-053-05 * 12/23/1999 * 12/23/2002 * 2,555,372 * 62,059
* 2,245,077
TransAmerica * 1173-053-06 * 12/23/1999 * 12/23/2002 * 1,802,452 * 43,774
* 1,583,583
TransAmerica * 1173-053-07 * 12/23/1999 * 12/23/2002 * 1,608,012 * 39,051
* 1,412,753
TransAmerica * 1173-053-08 * 12/23/1999 * 12/23/2002 * 2,162,462 * 52,516
* 1,850,719
TransAmerica * 1173-053-09 * 12/23/1999 * 12/23/2002 * 1,677,130 * 40,730
* 1,473,478
TransAmerica * 1173-053-10 * 12/23/1999 * 12/23/2002 * 665,669 * 16,166 *
584,838
TransAmerica * 1173-053-11 * 12/23/1999 * 12/23/2002 * 2,444,961 * 59,377
* 2,148,073
TransAmerica * 1173-053-12 * 12/23/1999 * 12/23/2002 * 1,168,934 * 28,388
* 1,026,992
TransAmerica * 1173-053-13 * 12/23/1999 * 12/23/2002 * 684,628 * 16,626 *
601,495
TransAmerica * 1173-053-14 * 12/23/1999 * 12/23/2002 * 2,301,227 * 55,886
* 2,021,792
TransAmerica * 1173-016-01 * 01/01/2000 * 12/01/2003 * 10,311,987 *
186,493 * 9,193,027
Heller Financial * 1910092-09 * 03/01/1997 * 11/01/2000 * 5,058,350 *
121,578 * 1,212,720
Heller Financial * 1910092-10 * 03/01/1997 * 11/01/2000 * 2,547,260 *
61,224 * 610,696
Heller Financial * 1910092-11 * 03/01/1997 * 11/01/2000 * 2,395,374 *
57,574 * 574,284
Vision Information Services * 05/15/1998 * 07/01/1998 * 06/01/2001 *
270,254 * 9,694 * 98,696
Creekridge Capital (CFC Funding) * 6/8/98-02 * 03/01/1999 * 02/28/2002 *
95,424 * 3,079 * 57,437
Total Balance at 6/30/00 was $49,550,062.
</TABLE>
