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CREDIT AGREEMENT
among
HASTINGS ENTERTAINMENT, INC.,
as Borrower
and
NATIONSBANK, N.A.,
Individually, as the Issuing Bank and as the Agent
and
FINANCIAL INSTITUTIONS
NOW OR HEREAFTER PARTIES HERETO
December 16, 1998
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NATIONSBANC XXXXXXXXXX SECURITIES LLC, AS LEAD ARRANGER
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TABLE OF CONTENTS
ARTICLE 1
DEFINITIONAL PROVISIONS
SECTION 1.1 Certain Definitions of Terms..................................................1
SECTION 1.2 General Definitional Provisions..............................................19
ARTICLE 2
THE CREDITS
SECTION 2.1 Commitments to Lend..........................................................20
SECTION 2.2 Method of Borrowing..........................................................21
SECTION 2.3 Notes........................................................................22
SECTION 2.4 Interest Rates...............................................................22
SECTION 2.5 Continuations/Conversions, Etc...............................................24
SECTION 2.6 Commitment and Other Fees....................................................25
SECTION 2.7 Reduction and Termination of Commitments.....................................26
SECTION 2.8 Mandatory Prepayments........................................................26
SECTION 2.9 Principal Payments on Loans..................................................27
SECTION 2.10 Optional Prepayments.........................................................27
SECTION 2.11 General Provisions as to Payments............................................27
SECTION 2.12 Funding Losses...............................................................28
SECTION 2.13 Sharing of Payments, Etc. ..................................................29
SECTION 2.14 Letters of Credit............................................................30
SECTION 2.15 Pro Rata Treatment...........................................................34
SECTION 2.16 Proceeds of Loans............................................................34
ARTICLE 3
CONDITIONS
SECTION 3.1 Initial Loans on the Closing Date............................................34
SECTION 3.2 All Loans, Conversions/Continuations and Letters of Credit...................34
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Entity Status; Power and Authority...........................................35
SECTION 4.2 Authorization; Consents......................................................36
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SECTION 4.3 No Conflicts.................................................................36
SECTION 4.4 Enforceable Obligations......................................................36
SECTION 4.5 Title to Properties..........................................................36
SECTION 4.6 Financial Condition..........................................................37
SECTION 4.7 Full Disclosure..............................................................38
SECTION 4.8 No Default or Adverse Condition..............................................38
SECTION 4.9 Material Agreements; Insurance...............................................38
SECTION 4.10 No Litigation................................................................38
SECTION 4.11 Use of Proceeds; Margin Stock................................................39
SECTION 4.12 No Financing of Regulated Corporate Takeovers................................39
SECTION 4.13 Taxes........................................................................39
SECTION 4.14 Principal Office; Names; Primary Business....................................39
SECTION 4.15 Subsidiaries.................................................................40
SECTION 4.16 ERISA........................................................................40
SECTION 4.17 Compliance with Law..........................................................41
SECTION 4.18 Government Regulation.......................................................41
SECTION 4.19 Insider......................................................................41
SECTION 4.20 Certain Environmental Matters................................................41
SECTION 4.21 Insurance; Certifications....................................................42
SECTION 4.22 Year 2000 Compliance.........................................................42
ARTICLE 5
AFFIRMATIVE COVENANTS
SECTION 5.1 Financial Statements, Reports and Documents..................................43
SECTION 5.2 Payment of Taxes and Other Liabilities.......................................45
SECTION 5.3 Maintenance of Existence and Rights; Conduct of Business.....................45
SECTION 5.4 Notice of Default............................................................45
SECTION 5.5 Other Notices................................................................45
SECTION 5.6 Compliance with Loan Documents...............................................46
SECTION 5.7 Compliance with Agreements...................................................46
SECTION 5.8 Access; Books and Records....................................................46
SECTION 5.9 Compliance with Law..........................................................47
SECTION 5.10 Insurance....................................................................47
SECTION 5.11 ERISA Compliance.............................................................47
SECTION 5.12 Further Assurances...........................................................48
SECTION 5.13 Maintenance of Corporate Identity............................................48
SECTION 5.14 Primary Business.............................................................48
SECTION 5.15 Subordination of Affiliate Obligations.......................................48
SECTION 5.16 Year 2000 Compliance.........................................................49
SECTION 5.17 Material Subsidiaries........................................................49
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ARTICLE 6
NEGATIVE COVENANTS
SECTION 6.1 Certain Financial Matters....................................................49
SECTION 6.2 Limitation on Indebtedness...................................................50
SECTION 6.3 Limitation on Property.......................................................50
SECTION 6.4 Restricted Payments..........................................................51
SECTION 6.5 Limitation on Investments....................................................51
SECTION 6.6 Affiliate Transactions.......................................................51
SECTION 6.7 Limitation on Sale of Property...............................................51
SECTION 6.8 Internal Governance Documents; Name and Principal
Place of Business............................................................52
SECTION 6.9 Certain Environmental Matters................................................52
SECTION 6.10 Liquidations, Mergers........................................................52
SECTION 6.11 Subsidiaries.................................................................53
SECTION 6.12 Sale of Receivables..........................................................53
SECTION 6.13 Acquisitions.................................................................53
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.1 Events of Default............................................................54
SECTION 7.2 Remedies Upon Event of Default...............................................56
SECTION 7.3 Certain Additional Remedies Regarding Letters of Credit......................57
ARTICLE 8
THE AGENT AND BANKS
SECTION 8.1 Appointment of the Agent.....................................................57
SECTION 8.2 Exculpation; Agent's Reliance................................................58
SECTION 8.3 Defaults.....................................................................59
SECTION 8.4 Rights as a Bank.............................................................59
SECTION 8.5 Indemnification..............................................................59
SECTION 8.6 Bank's Credit Decision and Non-Reliance......................................60
SECTION 8.7 Deferral of Distributions; Investments.......................................61
SECTION 8.8 Name of Article 8............................................................61
SECTION 8.9 Resignation and Removal by Agent.............................................61
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ARTICLE 9
CHANGED CIRCUMSTANCES
SECTION 9.1 Basis for Determining Interest Rate Inadequate or Unfair.....................62
SECTION 9.2 Illegality...................................................................62
SECTION 9.3 Increased Cost and Reduced Return............................................63
SECTION 9.4 Substitute Rate for Affected LIBOR Loans.....................................64
SECTION 9.5 Alternate Lending Office Designation.........................................65
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 Notices......................................................................65
SECTION 10.2 No Waivers...................................................................66
SECTION 10.3 Payment of Costs and Expenses; Professionals and Consultants.................67
SECTION 10.4 Indemnification..............................................................67
SECTION 10.5 Sharing of Setoffs...........................................................69
SECTION 10.6 Amendments and Waivers.......................................................69
SECTION 10.7 Successors and Assigns; Participations; Assignments..........................70
SECTION 10.8 Maximum Interest Rate........................................................72
SECTION 10.9 Governing Law; Submission to Jurisdiction....................................73
SECTION 10.10 Counterparts; Effectiveness..................................................74
SECTION 10.11 Independence of Covenants....................................................74
SECTION 10.12 Survival.....................................................................74
SECTION 10.13 Severability.................................................................74
SECTION 10.14 Governmental Regulation......................................................74
SECTION 10.15 No Control...................................................................75
SECTION 10.16 Renewals, Extensions, Rearrangements, Termination, Etc.......................75
SECTION 10.17 Conflicts....................................................................75
SECTION 10.18 Confidentiality..............................................................76
SECTION 10.19 Payments Set Aside...........................................................76
SECTION 10.20 Limitation of Liability; Commencement of Actions.............................76
SECTION 10.21 Review.......................................................................77
SECTION 10.22 This Agreement...............................................................77
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EXHIBITS
Exhibit A Notice of Borrowing
Exhibit B Note
Exhibit C Guaranty Agreement
Exhibit D Pledge Agreement
Exhibit E Assignment Agreement
Exhibit F Continuation/Conversion Notice
Exhibit G Compliance Certificate
SCHEDULES
Schedule 4.1 Jurisdictions
Schedule 4.5 Liens
Schedule 4.9 Intellectual Property
Schedule 4.10 Litigation
Schedule 4.13 Taxes
Schedule 4.14 Names
Schedule 4.15 Subsidiaries
Schedule 4.20 Certain Environmental Matters
Schedule 5.15 Intercompany Notes
Schedule 6.2 Existing Indebtedness
Schedule 6.5 Existing Investments
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CREDIT AGREEMENT
This Credit Agreement is made and entered into as of the 16th day of
December, 1998, among (i) HASTINGS ENTERTAINMENT, INC., a Texas corporation
("Borrower"), (ii) each of the financial institutions that is a signatory hereto
or becomes a party hereto as provided in Section 10.7(d) (individually, a "Bank"
and collectively, the "Banks"), and (iii) NATIONSBANK, N.A., a national banking
association ("NationsBank"), individually as a Bank, as agent for the Banks
acting in the manner and to the extent provided in Article 8 (in such capacity,
the "Agent"), and as the issuer of the Letters of Credit hereinafter referred to
(as such issuer, the "Issuing Bank").
W I T N E S S E T H:
WHEREAS, Borrower has requested the Banks to provide it a revolving
credit facility, and the Issuing Bank to provide it a letter of credit facility
within said revolving credit facility, for the purposes hereinafter provided;
and
WHEREAS, the Banks, severally, are willing to commit and to advance to
the extent of their respective commitments, revolving credit loans to, and the
Issuing Bank is willing to issue its letters of credit for the account of,
Borrower upon the terms and subject to the conditions herein provided;
NOW THEREFORE, for and in consideration of the premises and the
promises herein, and for other good and valuable considerations, the receipt,
adequacy and reasonable equivalency of which are hereby acknowledged by each
party hereto, Borrower, each Bank, the Issuing Bank and the Agent agree as
follows:
ARTICLE 1
DEFINITIONAL PROVISIONS
SECTION 1.1 Certain Definitions of Terms. For purposes of this
Agreement, unless otherwise defined herein or the context otherwise requires,
capitalized terms used in this Agreement shall have the respective meanings
assigned to them as follows:
"Acquisition" means any transaction pursuant to which Borrower or any
of its Subsidiaries, (i) whether by means of a capital contribution or purchase
or other acquisition of stock or other securities or other equity participation
or interest, (a) acquires (or after giving effect to such transaction owns) more
than 50% of the equity interest in any Person pursuant to a solicitation by
Borrower or such Subsidiary of tenders of equity securities of such Person, or
through one or more negotiated block, market, private or other transactions, or
a combination of any of the foregoing, or (b) except as permitted by Section
6.11(ii), makes any corporation a Subsidiary of Borrower or such Subsidiary, or
causes any corporation, other than a Subsidiary of Borrower or such Subsidiary,
to be
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merged into Borrower or such Subsidiary (or agrees to be merged into any other
corporation other than a wholly-owned Subsidiary (excluding directors'
qualifying shares) of Borrower or such Subsidiary), or (ii) purchases in one
transaction or a series of related transactions purchases at least 50% of the
business or assets of any Person.
"Acquisition Consideration" means the consideration given by Borrower
or any of its Subsidiaries for an Acquisition, including but not limited to the
sum of (without duplication) (a) the fair market value of any cash, property
(but excluding capital stock or other equity securities or interests of Borrower
or its Subsidiaries), earn-outs or services given, plus (b) consideration paid
with proceeds of Indebtedness permitted pursuant to this Agreement, plus (c) the
amount of any indebtedness for borrowed money and operating leases (calculated
to be the product of annual rentals multiplied by six) assumed, incurred or
guaranteed in connection with such Acquisition by Borrower or any Subsidiary
which is a Subsidiary immediately prior to such Acquisition.
"Adjusted EBITDA" means, for any period, the net income (plus or minus
any extraordinary charges or credits) of Borrower and its Subsidiaries, on a
consolidated basis, for such period plus (i) interest expense of Borrower and
its Subsidiaries, on a consolidated basis, for such period with respect to the
Loans and all other borrowed-money Indebtedness and the interest expense
component under Capitalized Lease Obligations plus (ii) income tax expense of
Borrower and its Subsidiaries, on a consolidated basis, for such period plus
(iii) other non-cash items plus (iv) the aggregate amount deducted in
determining net income of Borrower and its Subsidiaries, on a consolidated
basis, for such period for depreciation (excluding depreciation relating to
video tapes held for rental) and amortization of Property; provided, however,
notwithstanding anything above to the contrary, for the Fiscal Quarter
commencing November 1, 1998 and ending January 31, 1999 Adjusted EBITDA shall be
increased, without duplication and only to the extent included in the
determination of net income, by the Rental Video Charge.
"Adjusted EBITDAR" means, for any period, the net income (plus or minus
any extraordinary charges or credits) of Borrower and its Subsidiaries, on a
consolidated basis, for such period plus (i) interest expense of Borrower and
its Subsidiaries, on a consolidated basis, for such period with respect to the
Loans and all other borrowed-money Indebtedness and the interest expense
component under a Capitalized Lease Obligations plus (ii) income tax expense of
Borrower and its Subsidiaries, on a consolidated basis, for such period plus
(iii) other non-cash items plus (iv) the aggregate amount deducted in
determining net income of Borrower and its Subsidiaries for such period for
depreciation (excluding depreciation relating to video tapes held for rental)
and amortization of Property plus (v) rental expense of Borrower and its
Subsidiaries, on a consolidated basis, for such period; provided, however,
notwithstanding anything above to the contrary, for the Fiscal Quarter
commencing November 1, 1998 and ending January 31, 1999 Adjusted EBITDAR shall
be increased, without duplication and only to the extent included in the
determination of net income, by the Rental Video Charge.
"Adjusted London Interbank Offered Rate" means, with respect to any
Interest Period, a rate per annum equal to the quotient obtained (rounded to the
nearest 1/100 of 1%) by dividing (i) the
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applicable London Interbank Offered Rate by (ii) 1.00 minus the LIBOR Reserve
Percentage. The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the LIBOR Reserve
Percentage.
"Affiliate" means any Person who, directly or indirectly, controls, is
controlled by or is under common control with the relevant Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with respect
to any Person, means any Person with possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, through the ownership (of record, as trustee or by proxy) of Voting
Shares, through a management contract, or otherwise. Any Person owning or
controlling directly or indirectly 25% or more of the Voting Shares, or other
equity interests of another Person shall be deemed to be an Affiliate of such
Person.
"Affected Bank has the meaning set forth in Section 9.2.
"Agent" has the meaning set forth in the introductory paragraph of this
Agreement and shall include, at all relevant times, each successor appointed in
the manner provided for in Article 8.
"Agent Indemnitees" has the meaning set forth in Section 8.2.
"Agreed Maximum Rate" means a per annum rate of interest equal to 5%
plus the Base Rate, which Agreed Maximum Rate shall apply only during a period
while there is no Maximum Rate applicable to the transactions contemplated
hereby.
"Agreement", "hereof", "hereto" "herein", "hereunder" and words of
similar import means this Agreement as a whole, and not any particular article
or section.
"Agreement" means this Credit Agreement, as the same may be amended,
modified or supplemented from time to time.
"Applicable Law" means (i) in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person and its properties, including,
without limiting the foregoing, all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a
party, and (b) in respect of contracts relating to interest or finance charges
that are made or performed in the State of Texas, "Applicable Law" shall mean
the laws of the United States of America, including without limitation 12 USC
Sections 85 and 86(a), as amended from time to time, and any other statute of
the United States of America now or at any time hereafter prescribing the
maximum rates of interest on loans and extensions of credit, and the laws of the
State of Texas, including, without limitation, Art. 1H, if applicable, and if
Art. 1H is not applicable, Art. 1D, and any other statute of the State of Texas
now or at any time hereafter prescribing maximum rates of interest on loans and
extensions of credit; provided that the parties hereto agree pursuant to Texas
Finance Code Section 346.004 that the
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provisions of Chapter 346 of the Texas Finance Code shall not apply to Loans,
this Agreement, the Notes or any other Loan Documents.
"Applicable Margin" means, with respect to any LIBOR Loan and the
Commitment Fee, the following per annum percentages determined by the Agent as
follows:
(a) The Applicable Margin shall be equal to the percentage set
forth below based upon the ratio of Funded Debt to Adjusted EBITDA as
of the end of each Fiscal Quarter with respect to the fourth
fiscal-quarter period ending as of the end of such Fiscal Quarter:
Ratio of Funded Debt to Adjusted Applicable Margin Applicable Margin
EBITDA for LIBOR Loans for Commitment Fee
-------------------------------- ----------------- ------------------
Less than 2.00 to 1.00 0.75 0.25
Greater than or equal to 2.00 to 1.00 1.00 0.30
(b) Each determination of the Applicable Margin determined
pursuant to subsection (a) above shall be determined by the Agent
within 10 days after the delivery to it of a certificate required by
Section 5.1(e). Promptly upon each such determination, the Agent shall
notify Borrower and each Bank of such determination. Each change in the
Applicable Margin shall remain effective until the next such
determination.
"Application" means an application, in such form as the Issuing Bank
may specify from time to time, requesting the Issuing Bank to open a Letter of
Credit.
"Art. 1D" means Article 5069-1D, Title 79, Revised Civil Statutes of
Texas, as amended.
"Art. 1H" means Article 5069-1H, Title 79, Revised Civil Statutes of
Texas, as amended.
"Assignment Agreement" has the meaning set forth in Section 10.7(d).
"Authorized Officer" means the president, chief financial officer,
controller, director of planning, or director of accounting of Borrower or any
other officer of Borrower which the president or chief financial officer may
from time to time designate in writing to the Agent as having authority to act
with respect to the Loan Documents and the transactions contemplated thereby.
"Availability Period" means the period from and including the Closing
Date to but not including the Commitment Termination Date.
"Bank" has the meaning set forth in the introductory paragraph of this
Agreement.
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"Base Rate" means, as determined by the Agent on a daily basis, a per
annum interest rate equal to the higher of (i) the Prime Rate on such day, and
(ii) the sum of (a) 1/2% plus (b) the Federal Funds Rate on such day. Each
change in the Base Rate shall become effective, without prior notice to
Borrower, automatically as of the opening of business on the date of such change
in the Base Rate.
"Base Rate Loan" means a Loan to be made or continued as or converted
into such a designated Loan pursuant to the applicable Notice of Borrowing or
Continuation/Conversion Notice, as the case may be, which will bear interest at
the Base Rate.
"Borrowing" means a borrowing pursuant to a Notice of Borrowing or
continuation or a conversion pursuant to Section 2.5 consisting, in each case,
of the same Type of Loan having in the case of LIBOR Loans, the same Interest
Period and made previously or being made concurrently by all of the Banks.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Dallas, Texas are authorized or required by law to
close.
"Capital Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP.
"Capital Stock" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital stock
in any Person that is a corporation, and each class of partnership interest
(including, without limitation, general, limited and preference units) in any
Person that is a partnership, and each class of member interest in any Person
that is a limited partnership company.
"Change in Control" means, other than as a result of the public
offering of previously unissued common stock of Borrower, (i) Xxxx Xxxxxxxxx,
the Estate of Xxx Xxxxxxxxx, the Xxxx X. Xxxxxxxxx Family Limited Partnership,
the Xxxxxxx X. Xxxxxxxxx Family Limited Partnership, and members of the
immediate families of Xxxx Xxxxxxxxx and Xxxxx Xxxxxxxxx (collectively, the
"Marmaduke Family") shall cease to collectively be the "beneficial owner" (as
that term is used in Rules 13d and 13d-5 under the Exchange Act) of at least 25%
of the combined voting power of the then outstanding voting securities of
Borrower normally entitled to vote in elections of directors; or (ii) any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Marmaduke Family or any member thereof, is or
becomes the "beneficial owner" (as that term is used in Rules 13d-3 and 13d-5
under the Exchange Act) of more than 40% of the combined voting power of the
then outstanding securities of Borrower normally entitled to vote in elections
of directors; or (iii) during any period of 12 consecutive months, Continuing
Directors cease for any reason (other than death or disability) to constitute a
majority of the Board of Directors of Borrower then in office.
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"Closing Date" means December 16, 1998.
"Code" means the Internal Revenue Code of 1986, as heretofore and
hereafter amended, or any successor statute.
"Commitment" means, as to any Bank and on each relevant date of
determination, the obligation of such Bank to make Loans to Borrower in an
aggregate principal amount at any one time outstanding not exceeding the amounts
set forth during each time period opposite such Bank's name in Annex A under the
caption "Commitment", as the same may be reduced from time to time pursuant to
this Agreement, or as adjusted or specified in any amendment to this Agreement
or in any Assignment Agreement.
"Commitment Fee" has the meaning set forth in Section 2.6(a)(i).
"Commitment Termination Date" means the earlier to occur of (i)
December 16, 2001 and (ii) the date upon which the Commitments of all Banks have
been terminated pursuant to the terms of this Agreement.
"Contested Claim" means any Tax, Indebtedness or other claim or
liability, (i) the validity or amount of which is being diligently contested in
good faith by appropriate proceedings being diligently prosecuted, (ii) for
which adequate reserves, if required by GAAP, have been established and (iii)
with respect to which any right to execute upon or sell any Property or assets
of Borrower has not matured or has been and continues to be effectively
enjoined, superseded or stayed.
"Continuation/Conversion Notice" has the meaning set forth in Section
2.5(a).
"Continuing Directors" means any member of the Board of Directors of
Borrower on the date of this Agreement, any director elected since the date
thereof in any annual meeting of the stockholders upon the recommendation of the
Board of Directors of Borrower or any other member of the Board of Directors of
Borrower who will be recommended or elected to succeed a Continuing Director by
a majority of Continuing Directors who are then members of the Board of
Directors of Borrower.
"Credit Event" means the making or continuation of, or conversion into,
any Loan or the issuance of any Letter of Credit, or any extension thereof or
other amendment or modification thereto.
"Debtor Laws" means all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization or
similar Laws, or general equitable principles, from time to time in effect,
affecting the Rights of creditors generally or providing for relief to debtors.
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"Default" means any of the events specified in Section 7.1, regardless
of whether there shall have occurred any passage of time or giving of notice or
both that would be necessary in order to constitute such event an Event of
Default.
"Default Rate" means, at the time in question, the lesser of (i) the
Base Rate, as in effect for each day during such time, plus 3% and (ii) the
Maximum Rate.
"Dividends" means, in respect of any corporation, partnership, limited
liability company or similar Person, cash distributions or any other
distributions (whether in cash, Property or obligations) on or in respect of,
any class of capital stock (or other equity or beneficial interest) of such
entity, except for distributions made solely in shares of common stock or
similar equity interests.
"Domestic Lending Office" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" opposite its name on
Annex A attached hereto and made a part hereof or such other office of such Bank
as such Bank may from time to time specify to Borrower and the Agent.
"Environmental Complaint" means any third party (including private
parties, governmental agencies, and employees) action, lawsuit, claim, demand,
event, condition, report, investigation or proceeding which seeks to impose
liability for (i) noise; (ii) pollution or contamination of the air, surface
water, groundwater, or land; (iii) generation, handling, treatment, storage,
disposal, or transportation of Hazardous Materials; (iv) exposure to Hazardous
Materials; or (v) non-compliance with any Environmental Law.
"Environmental Law" shall mean any federal, state, or local law,
statute, ordinance, or regulation pertaining to health, industrial hygiene, or
the environmental conditions, including without limitation, (i) the Resource
Conservation and Recovery Act, as amended by the Hazardous and Solid Waste
Amendments of 1984, as now or hereafter amended (42 U.S.C. Section 6901 et
seq.); (ii) the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, as now or hereafter amended (42 U.S.C. Section 9601 et seq.); (iii) the
Clean Water Act, as now or hereafter amended (33 U.S.C. Section 1251 et seq. );
(iv) the Toxic Substances Control Act, as now or hereafter amended (15 U.C.C.
Section 2601 et seq.); (v) the Clean Air Act, as now or hereafter amended (42)
U.S.C. Section 7401 et seq.), Texas Solid Waste Disposal Act (V.T.C.A. Health
and Safety Code Section 361.001 et seq.) and the Texas Water Code (V.T.C.A.
Water Code Sections 26.001-26.407); (vi) all regulations promulgated under any
of the foregoing; (vii) any local, state or foreign law, statute, regulation or
ordinance analogous to any of the foregoing; and (viii) any other federal,
state, local, or foreign law (including any common law), statute, regulation, or
ordinance, regulating, prohibiting, or otherwise restricting the placement,
discharge, release, threatened release, generation, treatment, or disposal upon
or into any environmental media of any substance, pollutant, or waste which is
now or hereafter classified or considered to be hazardous or toxic to human
health or the environment.
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"Environmental Liability" means any claim, demand, obligation, cause of
action, order, violation, damage, injury, judgment, penalty or fine, cost of
enforcement, cost of remedial action or any other cost or expense whatsoever,
including reasonable attorneys' fees and disbursements, resulting from the
violation or alleged violation of any Environmental Law, the storage, handling,
transportation or release of Hazardous Materials, or the imposition of any
Environmental Lien.
"Environmental Lien" means a Lien in favor of a Governmental Authority
or other Person (i) for any liability under an Environmental Law of (ii) for
damages arising from costs incurred by such Governmental Authority or other
person in response to a release or threatened release of hazardous or toxic
waste, substance or constituent into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with all presently effective and future regulations issued
pursuant thereto.
"Event of Default" shall have the meaning set forth in Section 7.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Existing Credit Agreement" means that certain Credit Agreement, dated
as of December 12, 1994, among Borrower, NationsBank (as successor to The
Boatmen's National Bank of St. Louis), individually, as an issuing bank and as
agent, and the other financial institutions parties thereto, as amended,
modified and supplemented.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of Dallas on the Business Day next
succeeding such day, provided that (i) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (ii) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate quoted to the
Agent on such day on such transactions as determined by the Agent.
"Financing Parties" has the meaning set forth in Section 10.8.
"Fiscal Quarter" and "Fiscal Year" refer to the fiscal quarter and
fiscal year of Borrower.
"Fixed Charges" means, for any period, without duplication, the sum of
(i) rental expense of Borrower and its Subsidiaries, on a consolidated basis,
for such period plus (ii) interest expense of Borrower and its Subsidiaries, on
a consolidated basis, for such period on Loans and any other borrowed-money
Indebtedness and the interest expense component under Capitalized Lease
Obligations.
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"Funded Debt" means, as of any time, the outstanding principal balance
of (i) the Notes plus (ii) Reimbursement Obligations plus (iii) any other
borrowed-money Indebtedness of Borrower and its Subsidiaries, on a consolidated
basis.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means, whether now or hereafter constituted
and/or existing, (i) any government or nation (ii) any state, province,
commonwealth, territory, possession, county, parish, town, township, city or
municipality, (iii) any other Person or entity that exercises executive,
legislative, judicial, regulatory or administrative function of, or pertaining
to government, (iv) any political or other authority, district or subdivision of
any of the Persons or entities referred to in the preceding clauses (i), (ii)
and (iii), (v) any court, tribunal, panel, board, commission, department,
agency, bureau, examiner or instrumentality of the Persons or entities referred
to in the preceding clauses (i), (ii), (iii) and (iv), and (vi) any arbitrator,
mediator or arbitration and/or mediation panel, board or the like, whether
impaneled pursuant to Laws, by contract or otherwise.
"Guarantee" means, directly or indirectly (without duplication): (i)
guarantee or guaranty, as applicable, an endorsement, an assumption or an
undertaking, an understanding or a contingent agreement or other agreement
(hereinafter in this definition, the foregoing shall be collectively referred to
as "any agreement", or "any other agreement", as the context may require) to
purchase or acquire, or to furnish funds or Property for the payment or
maintenance of, or otherwise to be or become liable (contingently, irrevocably,
absolutely or otherwise) under or with respect to, or to perform or cause to be
performed, the Indebtedness (or any Property constituting security therefor),
other obligations and liabilities, net worth, capital requirements, working
capital, earnings, financial condition or position, or financial covenants of
any Person, or the redemption or repurchase obligations of any Person's capital
stock, warrants or stock or other equity, partnership or similar capital
equivalents, or any class or nature; (ii) a guarantee of, or any other agreement
for, the payment of dividends or other distributions upon the stock, equity,
partnership or other interests of any Person; (iii) any agreement to purchase,
sell or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of its
obligations or Indebtedness, or to provide assurances thereof to any creditor or
other similar instrument for the benefit of another Person; or (v) any agreement
commonly known as or referred to as a "comfort" or "keepwell" letter or
agreement; provided however, in no event shall "Guarantee" include endorsements
for collection or deposit made in the ordinary course of business. The terms
"Guarantee" and "Guaranteed" used as a verb shall have a correlative meaning.
"Guaranty Agreement" means the Guaranty Agreement, executed by each
Material Subsidiary, substantially in the form of Exhibit C hereto and otherwise
in form and substance satisfactory to the Agent.
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"Hazardous Discharge" means the happening of any event, status or
circumstance involving the use, storage, spill, transportation, removal,
disposal, discharge or cleanup of any Hazardous Material.
"Hazardous Material" means (i) any hazardous substance defined in the
Comprehensive Response, Compensation and Liability Act 42 U.S.C. Section 9601 et
seq.; (ii) any substance the presence of which on any Property requires
reporting or remediation under any Environmental Law; (iii) gasoline, diesel
fuel, fuel oil, motor oil and any other petroleum hydrocarbons, including any
additives or other byproducts associated therewith; and (iv) asbestos and
asbestos-containing materials in any form.
"Indebtedness" means, for any Person (without duplication), any
liability, indebtedness or obligation, contingent or otherwise, of such Person:
(i) for borrowed money (whether by loan or the issuance and sale of debt
securities or instruments or the sale of Property to another Person subject to
an understanding or agreement, contingent or otherwise, to repurchase such
Property from such Person); (ii) evidenced by bonds, notes, debentures or
similar instruments; (iii) representing the deferred purchase or acquisition
price of Property or services, including trade accounts payable; (iv) with
respect to amounts or obligations Guaranteed or Indebtedness of another secured
by a Lien on the Property of such Person, whether or not the respective
indebtedness of another secured by a Lien on the Property of such Person,
whether or not the respective indebtedness or obligations so secured have been
assumed by such Person; (v) with respect to reimbursement of, or payment in
respect to, letters of credit, bankers' acceptances, surety or other bonds or
similar instruments issued or credit transactions; (vi) for any Guarantee of
such Person; (vii) under, or in respect of, any Interest Rate Protection
Agreement; (viii) under leases serving as a source of financing or otherwise
capitalized in accordance with GAAP; (ix) under sales or other title retention
agreements; (x) under, or in respect of, any indemnity and similar obligations,
howsoever arising, including, indemnities incurred or arising-in connection with
the purchase, sale or use of Property, the scope of which indemnity is
unlimited, unqualified or unquantifiable, or exceeds the fair market value of
the Property being purchased, sold or used, or pertains to Environmental
Liability or to the negligence, actions, omissions or other activities of any
Person; (xi) under, or in respect of, any partnership, joint venture or similar
entity in which such Person is a general partner, joint venturer or similar
participant; (xii) in respect of unfunded vested benefits under any Plan; (xiii)
to redeem, repurchase, retire or otherwise acquire any shares of capital stock,
warrants, stock equivalents or other evidences of equity or any class or nature
of such person, or to set apart any money or other Property for a defeasance,
sinking or analogous fund for any Dividend or distribution thereon, or for any
redemption, repurchase, retirement or other acquisition thereof; (xiv) under any
synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product where such transaction is considered
borrowed money indebtedness for tax purposes but is classified as an operating
lease pursuant to GAAP (excluding rental video revenue sharing agreements
entered into in the normal course of such Person's business); or (xv) which
would under GAAP be shown on such Person's balance sheet as a liability.
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"Interest Period" means with respect to each Borrowing consisting of a
LIBOR Loan, the period commencing on the date of such Borrowing and ending one,
two, three or six months thereafter, as Borrower may elect in the applicable
Notice of Borrowing or continuation/Conversion Notice; provided that:
(i) any Interest Period which would otherwise end on a day
that is not a LIBOR Business Day shall be extended to the next
succeeding LIBOR Business Day unless
such LIBOR Business Day falls in another calendar month, in which case
such Interest Period shall end on the immediately preceding LIBOR
Business Day;
(ii) any Interest Period which would otherwise end on a day
that is not a LIBOR Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall, subject to clause (iii)
below, end on the last LIBOR Business Day of a calendar month; and
(iii) no Interest Period shall be elected that extends beyond
the Commitment Termination Date.
"Interest Rate Protection Agreement" means any interest rate swap, cap,
collar or similar agreement or arrangement providing for the transfer or
amortization of interest rate or currency risks generally or under specific
contingencies.
"Investment" in any Person means any investment, whether by means of
share purchase, loan, advance, extension of credit (other than to customers of
such Person in the ordinary course of such Person's business), capital
contribution or otherwise, in or to such Person, the guarantee of any
Indebtedness of such Person or the subordination of any claim against such
Person to other Indebtedness of such Person.
"Issuing Bank" has the meaning set forth in the introductory paragraph
hereof.
"Issuing Bank Parties" has the meaning set forth in Section 2.14(g).
"Judgment" means any judgment, order, levy, abstract, mandamus, decree,
injunction, restraining order or other directive, demand or the like, of any
Governmental Authority, howsoever issued by it (whether pursuant to its equity
rights or powers, or otherwise).
"Laws" means all applicable statutes, laws, ordinances, regulations,
rules, directives, guidelines, interpretations, rulings, orders, requirements,
determinations, judgments, writs, injunctions, decrees and other similar
pronouncements or directives of any Governmental Authority, and "Law" means each
of the foregoing.
"LC Documents" means, collectively, (i) each Letter of Credit, (ii) any
application, reimbursement agreement, pledge agreement, remarketing agreement,
note, and other agreements,
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documents, certificates and instruments now or hereafter relating to such
Letters of Credit, and (iii) the other documents, instruments, agreements and
certificates executed or delivered in connection with the items in clauses (i)
and (ii) preceding, as the same may be amended, modified, supplemented, renewed,
extended, increased, restated, refinanced, refunded and/or replaced from time to
time, with such changes to (i), (ii) and (iii) as the Agent and the Issuing Bank
shall have approved.
"Legal Rights" means, with respect to a Person, and to such Person's
business, operations and Property, all licenses, permits, certificates,
franchises, authorizations, consents, approvals, patents and patent rights,
trademarks and trademark rights, tradenames and tradename rights, copyrights,
service marks, applications, registrations and other similar rights, privileges
and authorities, used or useful and required of such Person and/or for such
Person to own and/or operate its business and Property.
"Lending Office" means, as to any Bank, its Domestic Lending Office or
its LIBOR Lending Office, as the context may require.
"Letter of Credit" means any letter of credit issued pursuant to
Section 2.14.
"Letter of Credit Event" means any proceeding brought by or against
Borrower, or any event, occurrence or circumstance in respect to a Letter of
Credit, wherein the payment of such Letter of Credit is disputed, or the basis
for such payment is disputed, or assertions with respect to any of the foregoing
are made, including, without limitation, disputes between or involving the
respective account party and/or beneficiary of such Letter of Credit, or the
commencement of any injunctive action or relief by any Person in connection
therewith.
"Letter of Credit Exposure" means, at any time without duplication, the
sum of (i) the aggregate undrawn amount of all unexpired Letters of Credit, plus
(ii) the aggregate unpaid amount of all Reimbursement Obligations due and
payable at such time in respect of previous drawings made under Letters of
Credit or under any LC Documents.
"Letter of Credit Limit" means $5,000,000.
"LIBOR Business Day" means any Business Day on which commercial banks
are open for international business in London.
"LIBOR Lending Office" means, as to any Bank, its office, branch or
Affiliate identified in Annex A as its LIBOR Lending Office or such other
office, branch or Affiliate of such Bank as it may hereafter designate as its
LIBOR Lending Office by notice to Borrower and the Agent.
"LIBOR Loan" means a Loan to be made or continued as or converted into
such a designated Loan pursuant to the applicable Notice of Borrowing or
Continuation/Conversion Notice, as the case may be, which will bear interest at
the Adjusted London Interbank Offered Rate.
"LIBOR Rate Borrowing" means a Borrowing consisting of a LIBOR Loan.
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"LIBOR Reserve Percentage" means, at any time, the maximum rate at
which reserves (including, without limitation, any marginal, special,
supplemental or emergency reserves) are required to be maintained under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) by member banks of the Federal Reserve System
against "Eurocurrency liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the LIBOR Reserve Percentage shall
reflect any other reserves required to be maintained by such member banks with
respect to (i) any category of liabilities which includes deposits by reference
to which the Adjusted London Interbank Offered Rate is to be determined, or (ii)
any category of extensions of credit or other assets which include LIBOR Loans.
The Adjusted London Interbank Offered Rate shall be adjusted automatically on
and as of the effective date of any change in the LIBOR Reserve Percentage.
"Lien" means any lien, mortgage, tax lien, pledge, encumbrance,
Environmental Lien, easement, restriction, right-of-way, charge or adverse claim
affecting title or use of, or resulting in an encumbrance against, Property of a
Person, or a security interest, conditional sale or title retention arrangement,
or any other interest in Property designed to secure the repayment of a
liability or the performance of an obligation or agreement, whether arising by
agreement, under any Law or otherwise, including, without limitation, any lease
in the nature thereof, any option, right of first refusal or other similar
agreement to sell, and any filing of, or agreement to give, any financing
statement under the UCC or equivalent statute in any jurisdiction or any other
instrument that evidences the creation, perfection, continuation, notice and/or
other aspect of a present or future Lien or asserted Lien.
"Litigation" means any proceeding, (judicial, arbitral, mediation or
otherwise) claim, complaint, demand, lawsuit, hearing, inquiry and/or
investigation conducted or threatened by or before any Governmental Authority.
"Loan" has the meaning set forth in Section 2.1(a).
"Loan Documents" means this Agreement, each Note, each Guaranty
Agreement, each Pledge Agreement, each Interest Rate Protection Agreement
between the Borrower or any of its Subsidiaries and any Bank or any Affiliate of
a Bank, and any and all other agreements, documents, promissory notes,
instruments, reports, opinions, requests, certificates, notices, filings and all
other documents, instruments, agreements and writings, now or hereafter executed
or delivered pursuant to, or in connection with, this Agreement, or the
transactions provided for herein or contemplated hereby, or in or by any other
Loan Document, each of the foregoing being in form, scope and substance
satisfactory to the Banks.
"London Interbank Offered Rate" means, for any LIBOR Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page)
as the London Interbank Offered Rate for deposits in Dollars at approximately
11:00 a.m. (London time) two LIBOR Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. If for any reason
such rate
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is not available, the term "LIBOR Rate" shall mean, for any LIBOR Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
Interbank Offered Rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates (rounded upwards, if necessary, to the
nearest 1/100 of 1%).
"Material Adverse Effect" means any circumstance or event which,
individually or in the aggregate with other circumstances or events, (i) could
have any material adverse effect whatsoever upon the validity, performance,
perfection or enforceability of any Loan Documents, or (ii) could be material
and adverse to the financial condition, business, operations or prospects of
Borrower, taken as a whole, or the Property of Borrower and its Subsidiaries,
taken as a whole, (iii) could impair the ability of Borrower and its
Subsidiaries, taken as a whole, to fulfill promptly and completely their
respective obligations under any of the Loan Documents, or (iv) could result in
or cause a Default or an Event of Default.
"Material Subsidiary" means any direct or indirect Subsidiary of
Borrower in which one or more of the following are applicable, (i) such
Subsidiary has 5% or more of the total assets of Borrower and its Subsidiaries,
on a consolidated basis (determined as of the last day of the most recent Fiscal
Quarter), (ii) such Subsidiary has generated 5% or more of the EBITDA of
Borrower and its Subsidiaries, on a consolidated basis, for the four-quarter
period ending as of the end of the most recent Fiscal Quarter or (iii) such
Subsidiary has received loans and investments from Borrower and its Subsidiaries
in an aggregate amount of 5% or more of the total assets of the Borrower and its
Subsidiaries, on a consolidated basis (determined as of the last day of the most
recent Fiscal Quarter).
"Maximum Rate" means, with respect to each of the Agent, the Issuing
Bank and the Banks and on any and with respect to each day, the maximum lawful
non-usurious rate of interest (if any) which, under Applicable Law, it is
permitted or authorized to contract for, charge, collect, receive, take or
reserve from Borrower on its Notes or other Obligations owed or owing to it, as
the case may be, from time to time in effect, including changes in such Maximum
Rate attributable to changes under Applicable Law which permit a greater rate of
interest to be contracted for, charged, collected, received, taken or reserved
as of the effective dates of the respective changes.
"NationsBank" has the meaning set forth in the introductory paragraph
of this Agreement.
"Negative Pledge" means any term, provision, agreement, contract or
undertaking that, directly or indirectly, (i) precludes or restricts, or
purports to preclude or restrict, the imposition or voluntary creation of, a
Lien on Property, or (ii) upon the imposition or voluntary creation of a Lien on
Property, requires the owner, lessee or other interest holder therein or thereto
to incur an obligation (payment, performance, creation of a Lien or otherwise)
to a Person, or requires such owner, lessee or other interest holder to provide,
or cause to be provided, any assurances or security
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to a Person, which assurances and security did not theretofore exist and/or was
not theretofore required, whether such assurances or security consist of
collateral, guaranties, modifications or supplements to then existing
agreements, new agreements, or otherwise.
"Net Cash Proceeds" means, with respect to any sale, transfer or
issuance of Capital Stock to any Person, the amount of cash received by such
Person in connection with such transaction (including cash proceeds of any
property received in consideration of any such sale, transfer or other
disposition) after deducting therefrom the aggregate, without duplication, of
the following amounts to the extent properly attributable to such transaction or
to any asset that may be the subject thereof: (i) reasonable brokerage
commissions, legal fees, finder's fees, financial advisory fees, fees for
solvency opinions, accounting fees, underwriting fees, investment banking fees
and other similar commissions and fees, and all expenses incurred in such sale,
transfer or issuance, in each case, to the extent paid or payable by such
Person; (ii) filing, recording or registration fees or charges or similar fees
or charges paid by such Person; and (iii) taxes paid or payable by such Person
or any shareholder, partner or member of such Person to governmental taxing
authorities as a result of such sale or other disposition (after taking into
account any available tax credits or deductions or any tax sharing
arrangements).
"Net Income" means, for any period, the net earnings (or loss) after
taxes of Borrower and its Subsidiaries, on a consolidated basis, for such
period.
"Note" means a promissory note executed by Borrower, substantially in
the form of Exhibit A hereto and otherwise in form and substance satisfactory to
the Agent, payable to the order of each Bank and evidencing the obligation of
Borrower to repay Loans made to it by such Bank, and "Notes" means all of them.
"Note Offering" means those certain Senior Notes of Borrower issued on
or about December, 1996 in the aggregate principal amount of $25,000,000, which
amount may hereafter be increased to an aggregate principal amount not in excess
of $35,000,000.
"Notice of Borrowing" has the meaning set forth in Section 2.2(a).
"Notice of Default" has the meaning set forth in Section 8.3.
"Obligations" means all obligations, indebtedness, fees, expenses,
costs, indemnities and other indemnification obligations, and liabilities of
Borrower or any of its Subsidiaries to the Agent and/or the Banks (and/or any
Affiliate of any Bank), now existing or hereafter arising, whether direct or
indirect, related or unrelated, fixed or contingent, liquidated or unliquidated,
joint, several or joint or several, or otherwise, and all renewals, extensions,
increases, refinancings, rearrangements or modifications thereof, or any part
thereof, arising pursuant to, or in connection with, this Agreement or any other
Loan Document (including, without limitation and without duplication, the
Letters of Credit, the Letter of Credit Exposure and the Reimbursement
Obligations), and all interest accruing thereon (including, without limitation,
interest which, but for the filing of a petition in bankruptcy
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22
with respect to Borrower or any of its Subsidiaries, would accrue on such
Obligations), and attorneys' fees incurred in the enforcement or collection
thereof.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or any of the Pension Benefit Guaranty Corporation's functions
under ERISA.
"Participant" has the meaning set forth in Section 10.7(c).
"Permitted Indebtedness" has the meaning stated in Section 6.2.
"Permitted Liens" means: (i) Liens imposed by mandatory provisions of
Law such as carrier's, materialmen's, mechanics', warehousemen's, landlord's and
other like Liens arising in the ordinary course of business, securing
Indebtedness not yet due, (ii) Liens for Taxes, if the same are not yet due and
payable or qualify as a Contested Claim, (iii) encumbrances consisting of minor
zoning restrictions, easements or other restrictions on the use of real
Property, provided that such items do not or will not impair or interfere with
the use of such Property for the purposes intended or the value thereof, (iv)
pledges or deposits in connection with or to secure worker's compensation,
unemployment insurance, pensions or other employee benefits, or public or
statutory obligations, (v) purchase money security interests securing
Indebtedness permitted under Section 6.2(vi), and (vi) Liens that exist on
Property owned by Borrower on the date of this Agreement and are listed in
Schedule 4.5, together with all renewals, extensions, refinancing and
modifications (but not increases) of the Indebtedness secured thereby.
"Person" includes any individual, corporation, company, joint venture,
general or limited partnership, trust, organization, association, limited
liability partnership, limited liability company or other entity (whether or not
incorporated), or Governmental Authority.
"Plan" means any plan subject to Title IV of ERISA and maintained at
any time since January 1, 1986 for employees of Borrower or of any member of a
"controlled group of corporations" or "trade or business", as such terms are
defined in Section 414(b) or (c) of the Code, of which Borrower is a member, or
any plan subject to Title IV of ERISA to which Borrower is required to
contribute, or has been required to contribute at any time since January 1,
1986, on behalf of its employees.
"Pledge Agreement" means a pledge agreement executed by Borrower and
each Subsidiary which owns capital stock in a Material Subsidiary covering all
Capital Stock of each Material Subsidiary, substantially in the form of Exhibit
D hereto and otherwise in form and substance satisfactory to the Agent.
"Prime Rate" means, at any time, the prime interest rate announced or
published by NationsBank from time to time as its reference rate for the
determination of interest rates for loans of varying maturities in United States
dollars to United States residents of varying degrees of
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creditworthiness and being quoted at such time by NationsBank as its "prime
rate"; it being understood that such rate may not be the lowest rate of interest
charged by NationsBank.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed or tangible or intangible (including, without
limitation, Legal Rights).
"Purchaser" has the meaning set forth in Section 10.7(c).
"Qualified Bank" means (i) a Bank, (ii) an Affiliate of a Bank, and
(iii) any other Person approved by the Agent and, unless an Event of Default has
occurred and is continuing at the time any assignment is effected in accordance
with Section 10.7, Borrower, such approval not to be unreasonably withheld or
delayed by Borrower or the Agent and such approval to be deemed given by
Borrower if no objection is received by the assigning Bank and the Agent from
Borrower within two Business Days after notice of such proposed assignment has
been provided by the assigning Bank to Borrower; provided, however, that neither
Borrower nor any of its Affiliates shall qualify as a Qualified Bank.
"Quarterly Date" means each April 1, July 1, October 1 and January 1.
"Regulation D", "Regulation T", "Regulation U" and "Regulation X" mean
Regulation D, T, U or X, as the case may be, of the Board of Governors of the
Federal Reserve System, or any successor or other regulation hereafter
promulgated by said Board to replace the prior Regulation D, T, U or X and
having substantially the same function.
"Reimbursement Obligations" means, at any date, the obligations of
Borrower then outstanding, or which may thereafter arise, in respect of Letters
of Credit then outstanding, under Section 2.14 to reimburse the Issuing Bank for
the amount paid by the Issuing Bank in respect of a drawing under a Letter of
Credit or any other amounts payable under any of the LC Documents.
"Rental Video Charge" means the one-time charge against net income of
the Borrower taken during the Fiscal Quarter commencing November 1, 1998 and
ending January 31, 1999 related to the write-down of rental video cassettes not
to exceed $22,000,000 in aggregate amount calculated on a pre-tax basis.
"Required Banks" means, as of the date of any determination, Banks that
hold at least 66-2/3% of the Commitments or, if the Commitments shall have been
terminated, holding Notes and having issued (or purchased participations in)
Letters of Credit evidencing 66-2/3% of the sum of the aggregate unpaid
principal amount of the Loans and unexpired Letters of Credit.
"Rights" means rights, remedies, powers and privileges.
"Subsidiary" means, for any Person, any corporation or other entity
(including, without limitation, any partnership, joint venture, trust or limited
liability company) (i) of which at least a
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majority of the securities or other ownership interests having by the terms
thereof ordinary voting power to elect a majority of the board of directors or
other Persons having similar powers and/or performing similar functions of such
corporation or other entity (irrespective of whether or not at any time
securities or other ownership interests of any class or classes of such
corporation or other entity shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned or
controlled by such Person or one or more Subsidiaries of such Person, or (ii) of
which such Person is a general partner, joint venturer or similar capacity.
"Tangible Net Worth" means, as of any date, the total shareholders'
equity (including common stock and preferred stock [other than mandatorily
redeemable stock] at stated value, additional paid-in capital and retained
earnings after deducting treasury stock) which would appear on a balance sheet
of Borrower prepared as of such date in accordance with GAAP, plus (i)
subordinated Indebtedness in form and substance satisfactory to the Agent, (ii)
the LIBO reserve and (iii) deferred income taxes, less the sum of the following:
(i) intellectual property rights, (ii) goodwill and experimental expenses, (iii)
unamortized debt discount and expense, (iv) costs in excess of fair value of the
net assets acquired. If Borrower is required by Regulation S-X, any Financial
Reporting Releases, Staff Accounting Bulletins or other pronouncements or
promulgation by the U.S. Securities and Exchange Commission (collectively, "SEC
Requirements"), to present any portion of shareholders' equity separately in its
public-filed financial statements differently from a presentation that would
appear when presented in accordance with GAAP (SEC Requirements
notwithstanding), due to Borrower's obligations with respect to redemption or
repurchase of shares of its capital stock, then GAAP accounting conventions
shall prevail for the purpose of determining Tangible Net Worth.
"Taxes" means all taxes, assessments, fees, levies, imposts, duties,
penalties or other charges of any nature whatsoever from time to time or at any
time imposed by any Law or any Governmental Authority, whether on income,
profits, Property, sales, use, excise, franchises, capital, ownership,
operations or otherwise.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the USA or any agency thereof, or obligations fully guaranteed by
the USA or any agency thereof (including indirect investments in such
obligations through repurchase agreements with the Agent or any Qualified Bank),
provided that such obligations mature within 6 months of the date of acquisition
thereof, (ii) commercial paper rated at least A-1 by Standard & Poor's or at
least P-1 by Xxxxx'x Investor Service and maturing not more than 6 months from
the date of acquisition thereof, (iii) time deposits with, and certificates of
deposit and banker's acceptances issued by, the Agent, (iv) commercial paper
maturing not more than 30 days from the acquisition thereof issued by any Bank
(or the parent of any Bank) and (v) Eurodollar investments made available
through any Bank or brokerage company.
"Transferee" has the meaning set forth in Section 10.7(e).
"Type" has the meaning set forth in Section 1.2(f).
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"UCC" means the Uniform Commercial Code of the State of Texas and of
any other state to the extent Texas Law requires application of the same.
"UCP" has the meaning set forth in Section 2.14(b).
"USA" means the United States of America.
"Unavailable Commitment" means the difference, if any, between
$75,000,000 and the Commitments of all Banks.
"Unavailable Commitment Fee" has the meaning set forth in Section
2.6(a)(ii).
"Voting Shares" of any corporation means shares of any class or classes
(however designated) having ordinary voting power for the election of at least a
majority of the members of the Board of Directors (or other governing bodies) of
such corporation.
"Year 2000 Compliant" has the meaning set forth in Section 4.22.
SECTION 1.2 General Definitional Provisions.
(a) All terms defined in this Agreement shall have their defined
meanings when used in each Loan Document and in each certificate, exhibit,
schedule, annex or other instrument related thereto, unless in any case the
context states or implies otherwise; and when required by the context, each term
shall include the plural as well as the singular, and vice versa. Furthermore,
in each Loan Document: (i) the word "or" is not exclusive, and the word
"including" (in its various forms) means "including without limitation"; and
(ii) provisions in the masculine, feminine or neither genders should be
construed to include any gender.
(b) Definitions of each Person specifically defined herein or in each
other Loan Document shall mean and include herein and therein, unless otherwise
expressly provided to the contrary, the successors, assigns, heirs and legal
representatives of each such Person.
(c) Unless the context otherwise requires or unless otherwise expressly
provided, references to this Agreement and each other Loan Document shall
include all amendments, modifications, supplements, restatements, ratifications,
renewals, increases, extensions, replacements, substitutions and rearrangements
thereof or thereto, as applicable, and as in effect from time to time; provided,
however, nothing contained in this sentence shall be construed to authorize any
Person to execute or enter into any such amendments, modifications, supplements,
restatements, ratifications, renewals, increases, extensions or rearrangements
to a Loan Document to which it is a party, unless entered into and executed
pursuant to the applicable provisions of the respective Loan Documents.
(d) All accounting terms not specifically defined in a Loan Document
shall be construed, and all accounting procedures, calculations and reporting
required or provided for in any Loan
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Document shall be performed or prepared, as applicable, in accordance with GAAP
consistently applied.
(e) The term "Section" refers to Sections of this Agreement, and the
terms "Annex", "Exhibit" and "Schedule" refer to Annexes, Exhibits and Schedules
attached hereto, reference to which is hereby made for incorporation herein for
all intents and purposes, unless in any case the context states or implies
otherwise. The table of contents and headings in each Loan Document are inserted
for convenience of reference only and shall be ignored when construing any such
Loan Document.
(f) Loans hereunder are distinguished by "Type". The "Type" of a Loan
refers to the determination whether such Loan is a Base Rate Loan or a LIBOR
Loan.
ARTICLE 2
THE CREDITS
SECTION 2.1 Commitments to Lend.
(a) Loans. From time to time during the Availability Period, each Bank
severally agrees to make revolving loans (each, a "Loan") to Borrower, on and
subject to the terms and conditions set forth in this Agreement, in an aggregate
principal amount at any one time outstanding up to but not exceeding such Bank's
Commitment; provided, however, at no time shall the aggregate principal amount
of all Loans outstanding plus the Letter of Credit Exposure exceed the aggregate
Commitments of all Banks. Subject to the terms and conditions of this Agreement,
Loans may be borrowed, repaid and reborrowed at any time during the Availability
Period without premium or penalty.
(b) Amount of Borrowings; Borrowings Ratable. Each Borrowing requested
by Borrower as a Base Rate Loan shall be in a minimum principal amount of
$100,000, or a multiple thereof, or if a lesser amount, the amount of the
remaining unadvanced aggregate Commitments of all Banks. Each Borrowing
requested by Borrower as a LIBOR Loan shall be in a minimum principal amount of
$1,000,000, or a multiple of $500,000 in excess thereof. All Borrowings
hereunder shall be made from the Banks ratably in proportion to their respective
Commitments.
(c) Types. All Loans shall, at the option of Borrower, be either Base
Rate Loans or LIBOR Loans and may be continued or converted pursuant to Section
2.5, provided that all Loans made pursuant to the same Borrowing shall be of the
same Type; provided, however, no more than 10 LIBOR Loan Borrowings shall be
outstanding at any time.
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SECTION 2.2 Method of Borrowing.
(a) Borrower shall give the Agent notice (a "Notice of Borrowing"), in
the form attached hereto as Exhibit A, not later than 12:00 noon (Dallas time)
on (i) with respect to Base Rate Loans, the Business Day of each Borrowing
consisting of a Base Rate Loan and (ii) with respect to LIBOR Loans, the third
LIBOR Business Day before each Borrowing consisting of a LIBOR Loan, specifying:
(1) the date of such Borrowing, which shall be a Business Day
in the case of a Borrowing consisting of a Base Rate Loan or a LIBOR
Business Day in the case of a Borrowing consisting of a LIBOR Loan;
(2) the Type of the Loans comprising such Borrowing, provided
that with respect to the initial Credit Event hereunder, all Loans
shall be Base Rate Loans;
(3) the aggregate amount of such Borrowing and of each Loan
comprising such Borrowing; and
(4) the deposit account of the Agent's Domestic Lending Office
into which such Borrowing is requested to be deposited; and
(5) in the case of a LIBOR Rate Borrowing, the duration of the
Interest Period applicable thereto.
Notwithstanding the foregoing, Borrower's right to designate any Loan as a LIBOR
Loan shall be subject to the restrictions referred to in Section 2.5(c).
(b) By 1:00 p.m. (Dallas time) on the date of receipt of a Notice of
Borrowing, the Agent shall notify each Bank of the contents thereof and of such
Bank's ratable share of such Borrowing. Such Notice of Borrowing shall not be
revocable by Borrower.
(c) Not later than 2:00 p.m. (Dallas time) on the date of each
Borrowing, each Bank shall make available its ratable share of such Borrowing,
in immediately available funds, to the Agent at the account number of the Agent
set forth in Annex A. Unless the Agent determines that any applicable condition
precedent has not been satisfied, the Agent will make the funds so received
from each Bank available to Borrower in its deposit account designated in the
applicable Notice of Borrowing.
(d) Unless the Agent has received notice from a Bank, prior to any
proposed Borrowing, that such Bank does not intend to fund its Loan requested to
be made on such date, the Agent may assume that such Bank has funded its Loan
and is depositing the proceeds thereof with the Agent on such date, and the
Agent in its sole discretion may, but shall not be obligated to, disburse a
corresponding amount to Borrower on such date. If Loan proceeds corresponding to
that amount are not in fact deposited with the Agent by such Bank on or prior to
the funding date of such Loan, such Bank agrees to pay, and in the event such
Bank fails to immediately pay, Borrower agrees to
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repay, to the Agent forthwith on demand such corresponding amount, together with
interest on the balance thereof from time to time outstanding for each day from
the date such amount is disbursed to Borrower until the date such amount is paid
or repaid to the Agent, (i) in the case of Borrower, at the interest rate
applicable to such Borrowing, and (ii) in the case of such Bank, at the Federal
Funds Rate. If such Bank shall pay to the Agent such corresponding amount, the
amount so paid shall constitute such Bank's Loan a part of such Borrowing for
the purposes of this Agreement. If both such Bank and Borrower shall repay such
corresponding amount, the Agent shall promptly refund to Borrower such
corresponding amount (together with any interest paid thereon by Borrower). This
Section 2.2(d) does not relieve any Bank of its obligation to make its Loans on
any funding date therefor. The obligations of each Bank hereunder are several,
and neither any Bank nor the Agent shall be responsible for the obligation of
any other Person hereunder (or such other Person's default in the performance
thereof), nor will the failure by the Agent or any Bank to perform any of the
respective obligations hereunder relieve the Agent or any other Bank from the
performance of its respective obligations hereunder.
(e) All Borrowings made hereunder shall be disbursed by credit to the
deposit account maintained by Borrower at the Agent's Domestic Lending Office
that is designated in the applicable Notice of Borrowing.
SECTION 2.3 Notes.
(a) The Loans of each Bank shall be evidenced by a Note.
(b) Upon receipt of each Bank's Note pursuant to this Section 2.3, the
Agent shall promptly mail or deliver such Note to such Bank. Each Bank shall
record on its books, and prior to any transfer of its Note shall endorse on the
schedule forming a part thereof appropriate notations to evidence the date,
amount and maturity of each Loan made by it and the date and amount of each
payment of principal made by Borrower with respect thereto; provided that the
failure of any Bank to make any such recordation or endorsement shall not affect
the obligations of Borrower or any Bank hereunder or under any other Loan
Document. Each Bank is hereby irrevocably authorized by Borrower so to endorse
its Note and to attach to and make a part of its Note a continuation of any such
schedule as and when required.
SECTION 2.4 Interest Rates.
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until it
becomes due and payable, at a rate per annum equal to the lesser of (i) the Base
Rate as in effect for each such date and (ii) the Maximum Rate. Accrued, unpaid
interest on the outstanding principal of the Base Rate Loans shall be due and
payable on each Quarterly Date. Any principal of and, to the extent permitted by
Law, accrued and unpaid interest on any Base Rate Loan which has become due and
payable shall bear interest on the unpaid portion thereof, payable on demand,
for each day from such due date and until paid, at the Default
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Rate. Not less than 5 Business Days prior to each Quarterly Date, Agent shall
submit to Borrower a statement for accrued interest on Base Rate Loans due as of
such Quarterly Date.
(b) Each LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a rate per annum
equal to the lesser of (i) the sum of the Applicable Margin plus the applicable
Adjusted London Interbank Offered Rate and (ii) the Maximum Rate. Accrued,
unpaid interest on the outstanding principal of each LIBOR Loan shall be due and
payable for each Interest Period on the last day thereof; provided, however, if
the Interest Period for such LIBOR Loan exceeds three months, interest shall
also be due and payable in arrears on each three-month anniversary of the
commencement of such Interest Period during such Interest Period. Any principal
of and, to the extent permitted by Law, interest on any LIBOR Loan which has
become due and payable shall bear interest on the unpaid portion thereof,
payable on demand, for each day from such due date and until paid, at the
Default Rate. Not less than 5 LIBOR Business Days prior to the last day of each
Interest Period, Agent shall submit to Borrower a statement for accrued interest
on LIBOR Loans due as of the end of the Interest Period.
(c) The Agent shall determine each interest rate applicable to the
Loans hereunder and each fee hereunder. Interest for all Base Rate Loans and all
fees shall be computed on the basis of a year of 365 or 366 days (as
applicable), in each case for the actual number of days elapsed (including the
first day but excluding the last day). Interest shall be computed for all LIBOR
Loans on the basis of a year of 360 days, in each case for the actual number of
days elapsed (including the first day but excluding the last day), except that,
if use of a 360-day year would result in a rate in excess of the Maximum Rate,
such computation will be made on the basis of a year consisting of 365 or 366
days, as appropriate. Each determination by the Agent of an interest rate or fee
hereunder shall be conclusive and binding in the absence of manifest error.
(d) Notwithstanding the foregoing, if at any time the applicable
contractual rate of interest provided for herein (without reference to the
Maximum Rate limitation) exceeds the Maximum Rate, then the rate of interest on
any Loan or other Obligation shall be limited to the Maximum Rate during such
time, and at all times thereafter (including periods during which any or all of
such applicable rates of interest have fallen below the Maximum Rate), the
interest rate on any Loan or other Obligation shall be the Maximum Rate, or if
there is no Maximum Rate in effect, the Agreed Maximum Rate, until the total
amount of interest accrued on such Loan or other Obligation equals the amount of
interest which would have accrued thereon if the applicable contractual rate of
interest (without reference to the Maximum Rate limitation) had at all times
been in effect; but in no event shall the aggregate interest payable or paid
during the period beginning on the date the initial Loan is made until the
Obligations are paid in full exceed an amount equal to interest at the Maximum
Rate, so long as the Maximum Rate shall be applicable to this Agreement and the
transactions contemplated hereby. If at maturity or final payment of any Note or
other Obligations, as applicable, the total amount of interest paid or accrued
on such Note or other Obligations under the foregoing provisions is less than
the total amount of interest which would have been paid or accrued if the
applicable contractual rate of interest provided for herein had at all times
been in effect, then Borrower agrees, to the fullest extent permitted by Law, to
pay an amount equal to the difference between (i) the lesser
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of (A) the amount of interest which would have been paid or accrued on such Note
or other Obligations, as applicable, if the Maximum Rate had at all times been
in effect and (B) the amount of interest which would have been paid or accrued
on such Note or other Obligations, as applicable, if a rate per annum equal to
the applicable contractual rate of interest provided for herein had at all times
been in effect, and (ii) the amount of interest paid or accrued in accordance
with the other provisions of such Note or other Obligations, as applicable.
(e) The payment of interest (or any amount deemed to be interest) on
any Note and on any other Obligation shall, in all respects regarding each Loan
Document, be subject to the provisions of Section 10.8.
SECTION 2.5 Continuations/Conversions, Etc.
(a) Continuation/Conversion.
(i) Borrower may elect from time to time to convert all or any
portion of the outstanding Base Rate Loan to a LIBOR Loan by giving the
Agent a completed and duly executed irrevocable notice of such
election, in the form and substance of Exhibit F hereto (the
"Continuation/Conversion Notice") not later than 12:00 noon (Dallas
time) on the third LIBOR Business Day before the proposed date of
conversion, specifying the proposed date of conversion, the portion of
the Base Rate Loan to be converted, and the duration of the Interest
Period applicable thereto.
(ii) Borrower may elect to continue (as of the last day of the
applicable Interest Period) all or any part of any LIBOR Loan a the
same Type of Loan by giving the Agent an irrevocable
Continuation/Conversion Notice not later than 12:00 noon (Dallas time)
on the third LIBOR Business Day before the proposed date of
continuation. The Continuation/Conversion Notice shall specify the
proposed date of continuation, the portion of LIBOR Loan to be
continued, and the duration of the Interest Period applicable thereto.
(iii) Borrower may elect from time to time to convert all or
any portion of a LIBOR Loan into a Base Rate Loan by giving the Agent
an irrevocable Continuation/Conversion Notice not later than 12:00 noon
(Dallas time) one Business Day before the date of conversion. The
Continuation/Conversion Notice shall specify the portion of the LIBOR
Loan to be converted and the date of conversion.
(iv) Upon receipt of a Continuation/Conversion Notice, the
Agent shall promptly notify each Bank thereof. Any continuation
pursuant to the preceding clause (ii) or conversion pursuant to the
preceding clause (iii), may only occur on the last day of the
applicable Interest Period. Each Borrowing continued as, or converted
to, a LIBOR Loan shall be in a minimum principal amount of $1,000,000,
or a multiple of $500,000 in excess thereof, and each Borrowing
continued as, or converted to, a Base Rate Loan shall be in a minimum
principal amount of $100,000 or a multiple thereof.
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(b) No Notice. If no Continuation/Conversion Notice is given with
respect to any LIBOR Loan prior to the time specified in Section 2.5(a)(i) or
Section 2.5(a)(ii), or if a Continuation/Conversion Notice is timely or
otherwise given, but it is incomplete and is not completed before the respective
time required by this Agreement, Borrower shall be deemed to have converted such
Loan into a Base Rate Loan on the last day of the applicable Interest Period.
(c) Restrictions on Use of Options. Notwithstanding anything to the
contrary contained in this Section 2.5, no LIBOR Loan may be made or continued
as such, and no Loan shall be made or converted to a LIBOR Loan, (i) when any
Default or Event of Default has occurred and is continuing, (ii) when any
provision of any Loan Document prohibits or would preclude any such
continuation, election or conversion, or (iii) if after giving effect to any
such proposed continuation, election or conversion, it would be necessary to
prepay, in whole or part, a LIBOR Loan prior to the expiration of its then
applicable Interest Period in order for Borrower to pay, in full and in
accordance with this Agreement, a mandatory, scheduled or voluntary payment or
prepayment of principal hereunder, including the final maturity payment
hereunder. During the period that a LIBOR Loan is prohibited or precluded
hereunder from continuation, election or conversion, and unless otherwise
expressly provided herein, each such LIBOR Loan shall be automatically converted
to a Base Rate Loan on the last day of the applicable Interest Period, and each
other Loan shall be continued as a Base Rate Loan.
SECTION 2.6 Commitment and Other Fees. Subject to Section 10.8:
(a) Borrower shall pay to the Agent, for the ratable account of the
Banks, the following fees: (i) an amount equal to the product of (A) the
Applicable Margin for Commitment Fee and (B) the unused portion of the
Commitment of all Banks during the Availability Period (the "Commitment Fee")
and (ii) an amount equal to the product of (A) 1/10 of 1% per annum and (B) the
Unavailable Commitment (the "Unavailable Commitment Fee"). Such fees shall be
payable quarterly in arrears on each Quarterly Date during the Availability
Period and on the Commitment Termination Date.
(b) Borrower shall pay to the Issuing Bank and the Banks, by remittance
to the Agent, the respective fees referred to in Section 2.14 as consideration
for the issuance and maintenance of Letters of Credit. Such fees shall be for
the account of the Issuing Bank or for the ratable account of the Banks, as
provided in Section 2.14.
(c) On the Closing Date and on each anniversary date of the Closing
Date prior to the termination of all Commitments, Borrower shall pay the Agent,
for its own account, an annual, non-refundable Agent's fee as set forth in a fee
letter agreement of even date herewith, between Borrower and the Agent.
(d) On the Closing Date, Borrower shall pay the Agent, for its account
and the account of the Banks, as appropriate, the fees set forth in clause (q)
of Annex B.
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SECTION 2.7 Reduction and Termination of Commitments.
(a) After the Closing Date, Borrower may, upon at least 5 Business
Days' prior notice to the Agent, receipt of which notice Agent shall promptly
notify the Banks, terminate at any time, or permanently reduce from time to time
by an aggregate amount of $1,000,000 or any integral multiple of $500,000 in
excess thereof, the unused portion of the Commitments of all Banks.
(b) Each termination or reduction of the Commitment pursuant to the
provisions hereof shall apply proportionately to the respective Commitment of
each Bank, and each such termination or permanent reduction, once terminated or
so reduced, may not be reinstated. If the Commitment is terminated in its
entirety, all accrued Commitment Fees, Unavailable Commitment Fees and other
fees with respect thereto shall be due and payable on the effective day of such
termination.
(c) To the extent not theretofore terminated or permanently reduced, as
applicable, pursuant to other provisions of this Agreement, the Commitments of
all Banks shall terminate on December 16, 2001; provided, however, in the sole
and absolute discretion of all of the Banks, such termination date for the
Commitments of all Banks may be extended for up to an additional one-year period
on each anniversary of this Agreement upon such terms and conditions as shall be
prescribed by the all of the Banks. Any such election by all of the Banks shall
be made, if at all, pursuant to a written instrument executed by all of the
Banks, which instrument shall refer to this provision and set forth the extended
term of the Commitments of all Banks and, if applicable, the terms and
conditions for such extended term.
SECTION 2.8 Mandatory Prepayments.
(a) If at any time (whether as a result of a temporary or permanent
reduction in Commitments pursuant to Section 2.7), the aggregate principal
amount of all Loans outstanding plus the Letter of Credit Exposure exceeds the
aggregate amount of the Commitments of all Banks, Borrower shall immediately
prepay the Loans in an amount at least equal to such excess. All such mandatory
prepayments shall be accompanied by, and Borrower shall pay, interest thereon
which has accrued until the date of payment thereof.
(b) By 12:00 noon (Dallas time) on the date that a mandatory prepayment
is required under Section 2.8(a), Borrower shall select which outstanding Loans
(indicating the Type) are to be prepaid and shall notify the Agent thereof. Such
notice shall not be revocable by Borrower. By 1:00 p.m. (Dallas time) on the
date of receipt of such notice, the Agent shall notify each Bank of the contents
thereof and of such Bank's ratable share of such prepayment. Each such
prepayment shall be applied to prepay ratably the respective Loans so selected.
(c) As provided in Section 2.2(d), Borrower shall immediately prepay
the principal of, and accrued interest on, portions of Borrowings funded by the
Agent as to which and to the extent a Bank has not funded its pro rata portion.
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SECTION 2.9 Principal Payments on Loans. The aggregate unpaid principal
balance of the Loans, together with accrued, unpaid interest thereon shall
(unless the maturity thereof is sooner accelerated or otherwise becomes due and
payable in accordance with the terms hereof or any other Loan Document) mature
and be due and payable on the Commitment Termination Date.
SECTION 2.10 Optional Prepayments.
(a) Borrower may, upon notice to the Agent given not later than 1:00
p.m. (Dallas time) on (i) the Business Day of prepayment of any Base Rate Loan
and (ii) the LIBOR Business Day prior to the date of prepayment of any LIBOR
Loan, prepay (without premium or penalty, other than any funding losses as
provided in Section 2.12) any Loan in whole at any time, or from time to time in
part, in minimum principal amounts of $250,000 or any integral multiple of
$250,000. Such notice shall specify the date and amount of prepayment and the
Loan or Loans (indicating the corresponding Type) applicable to such prepayment
and shall not be revocable by Borrower. The payment amount specified in such
notice shall be due and payable on the date specified therein, together with
accrued interest thereon and other fees and expenses due and owing to the date
of prepayment.
(b) Upon receipt of a notice of prepayment pursuant to this Section
2.10, the Agent shall promptly notify each Bank of the contents thereof and of
such Bank's ratable share, if any, of such prepayment.
SECTION 2.11 General Provisions as to Payments. Except as otherwise
provided in Section 2.14(c), Borrower shall make each payment of principal of
and interest on the Loans, of the Reimbursement Obligations and of fees or any
other Obligations not later than 1:00 p.m. (Dallas time) on the date when due
(it being understood that interest shall accrue and be payable for such date on
any amounts which are paid after 1:00 p.m. (Dallas time)), in immediately
available funds, without deduction, setoff or counterclaim to the Agent, the
Issuing Bank or any Bank at the account of the Agent set forth in Annex A. By
2:00 p.m. (Dallas time) on the date of receipt, the Agent will distribute to the
Issuing Bank or each Bank (as applicable), in accordance with the terms of this
Agreement, its ratable share of each such payment. Whenever any payment of
principal of or interest on the LIBOR Loans shall be due on a day which is not a
LIBOR Business Day, the date for payment thereof shall be extended to the next
succeeding LIBOR Business Day unless such LIBOR Business Day falls in another
calendar month, in which case the date for payment thereof shall be the
immediately preceding LIBOR Business Day. Whenever any payment of any other
Obligations shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next succeeding Business Day. If the
date for any payment of principal is extended as provided above or by operation
of law or otherwise, interest thereon shall be payable for such extended time.
Unless the Agent has received notice from Borrower prior to the date on which
any payment is due to each Bank or the Agent hereunder that Borrower will not
make such payment in full, the Agent may assume that Borrower has made such
payment in full to the Agent on such date, and the Agent may, in reliance upon
such assumption, cause to be distributed to each Bank on such due date an amount
equal to the amount then due such Bank. If and to the extent Borrower has not
made such payment in full to the Agent, each Bank shall repay to the Agent
forthwith on demand such amount distributed
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to such Bank, together with interest thereon, for each day from the date such
amount is distributed to such Bank until the date such Bank repays such amount
to the Agent, at a rate per annum equal to the Federal Funds Rate. In the event
any payment received by the Agent and so paid to Banks is rescinded or must
otherwise be returned by the Agent, each Bank shall, upon the request of the
Agent, repay to the Agent the amount of such payment paid to such Bank, together
with interest thereon, for each day from the date such amount is distributed to
such Bank until the date such Bank repays such amount to the Agent, at a rate
per annum equal to the Federal Funds Rate.
SECTION 2.12 Funding Losses. If Borrower (i) makes any payment or
prepayment of principal with respect to any LIBOR Loan, pursuant to Article 2 or
otherwise, on any day other than the last day of the Interest Period applicable
thereto, (ii) fails to borrow, pay or prepay any LIBOR Loans after notice has
been given to any Bank in accordance with Section 2.2(b) or 2.10(b), (iii)
defaults in making a Borrowing of, conversion into, or continuation of, LIBOR
Loans after it has given a notice regarding same in accordance with the
provisions of this Agreement, or (iv) converts or continues a LIBOR Loan, or
converts a Base Rate Loan into a LIBOR Loan, in any event in this clause (iv)
pursuant to Section 2.5 at any time other than at the end of (or in the case of
a conversion to a Base Rate Loan, at the beginning of) the relevant Interest
Period, then Borrower shall, subject to Section 10.8, pay to each Bank on demand
an amount sufficient to compensate such Bank for any actual loss or expense
incurred or sustained by it as a consequence of any thereof, which compensation
shall include an amount equal to the greater of zero or
[(B-C) x D x E]/360
wherein
"B" is decimal equivalent of the London Interbank Offered Rate that is
(or would be in the case of Borrower's failure to borrow after giving a
Notice of Borrowing) payable by Borrower on such LIBOR Loan;
"C" is the decimal equivalent of the Eurodollar rate that would apply
to a hypothetical Eurodollar deposit in the Affected Principal Amount
whose investment date were on the last Business Day on or before the
first day of the Remaining Interest Period and whose Interest Period
were approximately equal, as determined by the requesting Bank, to the
Remaining Interest Period (it being agreed that in the event the
Remaining Interest Period is not a 30, 60, 90 or 180 day period, the
requesting Bank shall determine the Eurodollar rate in its sole
discretion);
"D" is the number of days from the first day of the Remaining Interest
Period to the last day of the Remaining Interest Period;
"E" is the Affected Principal Amount.
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"Affected Principal Amount" shall mean, as applicable, (i) the principal amount
of a LIBOR Loan that Borrower fails to take after having given a Notice of
Borrowing therefor (unless such Notice of Borrowing has been withdrawn prior to
becoming irrevocable) or (ii) the amount of any prepayment or repayment of a
LIBOR Loan that occurs, or the entire principal amount of a LIBOR Loan that
converts to another Type of Loan on a date which is not the last day of the
Interest Period therefor.
"Remaining Interest Period" shall mean, as applicable, (i) the entire Interest
Period that would have been applicable to a LIBOR Loan that Borrower fails to
take after having given a Notice of Borrowing therefor (unless such Notice of
Borrowing has been withdrawn prior to becoming irrevocable) or (ii) if a
prepayment or repayment on a LIBOR Loan occurs, or a LIBOR Loan converts to a
Loan of another Type of Loan, whether or not required hereby, prior to the last
day of the Interest Period therefor, the period from and including the date
thereof to but excluding the last day of such Interest Period.
If a Bank claims compensation under this Section 2.12, such Bank shall furnish a
certificate to Borrower (with a copy to the Agent if it is not the Bank
involved) that provides a detailed calculation of the amount to be paid to such
Bank, which certificate shall be binding against Borrower, absent manifest
error.
SECTION 2.13 Sharing of Payments, Etc. Each of the Agent and the Banks
agrees that if it shall, whether through the exercise of rights under any Loan
Document or rights of banker's lien, setoff, counterclaim or otherwise against
Borrower or any of its Subsidiaries or otherwise, obtain payment of a portion of
the aggregate Obligations owed to it which, taking into account all
distributions made by the Agent under this Agreement causes the Agent or such
Bank to have received more than it would have received had such payment been
received by the Agent and distributed pursuant to this Agreement, then (i) it
shall notify the Agent and each of the other Banks, (ii) it shall be deemed to
have simultaneously purchased and shall be obligated to purchase interests in
the Obligations as necessary to cause the Agent and all Banks to share all
payments as provided for herein, and (iii) such other adjustments shall be made
from time to time as shall be equitable to ensure that the Agent and all Banks
share all payments of Obligations as provided for herein; provided, however,
nothing contained herein shall in any way affect the right of the Agent or any
Bank to obtain payment (whether by exercise of rights of banker's lien, setoff,
counterclaim or otherwise) of indebtedness other than the Obligations. Borrower,
on its behalf and on behalf of its Subsidiaries, expressly consents to the
foregoing arrangements and agrees that any holder of any such interest or other
participation in the Obligations, whether or not acquired pursuant to the
foregoing arrangements, may to the fullest extent permitted by law exercise any
and all rights of banker's lien, setoff or counterclaim (but not against trust
or escrow accounts or deposits) as fully as if such holder were a holder of the
Obligations in the amount of such interest or other participation. If all or any
part of any funds transferred pursuant to this Section 2.13 is thereafter
recovered from the seller under this Section 2.13 which received the same, the
purchase provided for in this Section 2.13 shall be deemed to have been
rescinded and the purchase price restored to the extent of such recovery,
together with interest, if any, if interest is required pursuant to court order
to be paid on account of the possession of such funds prior to such recovery.
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SECTION 2.14 Letters of Credit.
(a) Subject to the terms and conditions hereof, the Commitments may be
utilized, upon the request of Borrower, in addition to the Loans provided for in
Section 2.1 hereof, by the issuance by the Issuing Bank of one or more Letters
of Credit for the account of Borrower; provided, however, that no Letter of
Credit may be issued if (i) after giving effect thereto (A) the Letter of Credit
Exposure (including the amount of the requested Letter of Credit) would exceed
the Letter of Credit Limit or (B) such Letter of Credit Exposure plus the
aggregate outstanding principal balance of the Loans would exceed the
Commitments of all Banks, and (ii) the expiration date thereof extends beyond
the earlier of one year from issuance or 5 Business Days prior to the Commitment
Termination Date. In addition to the applicable provisions of Article 3, all
Letters of Credit shall be issued upon the request of Borrower on the terms and
conditions set forth in this Section 2.14; and the provisions hereof that are
applicable to the issuance of a Letter of Credit shall be correspondingly
applicable to each renewal, extension or reissuance thereof, or amendment
thereto. Upon the date of issuance by the Issuing Bank of a Letter of Credit,
the Issuing Bank shall be deemed, without further action by any party hereto, to
have sold to each Bank, and each Bank shall be deemed, without further action by
any party hereto, to have purchased from the Issuing Bank, a participation in
such Letter of Credit and the related Letter of Credit Exposure, to the extent
of such Bank's pro rata share of the Commitments of all Banks. Borrower hereby
acknowledges and agrees to all such participations.
(b) Borrower shall give the Agent and the Issuing Bank at least 5
Business Days' prior written notice specifying the date each Letter of Credit is
to be issued and describing the proposed terms of such Letter of Credit,
including without limitation, the date, face amount, beneficiary and expiry date
thereof, the nature of the transactions proposed to be supported thereby and
such other information as the Issuing Bank shall reasonably request, all in
detail reasonably satisfactory to the Issuing Bank. Upon receipt of such notice,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's pro rata share of the amount of such proposed Letter of Credit. The
issuance by the Issuing Bank of each Letter of Credit shall, in addition to the
conditions precedent set forth in Article 3, be subject to the conditions
precedent that such Letter of Credit shall be in such form, contain such terms
and support such transactions as shall be reasonably satisfactory to the Agent
and the Issuing Bank, and that Borrower shall have executed and delivered a
reimbursement agreement acceptable to the Issuing Bank, and such other
instruments and agreements relating to such Letter of Credit as either the Agent
or the Issuing Bank shall have reasonably requested. Each Letter of Credit
shall, to the extent not inconsistent with the express terms hereof or the
applicable Application, be such to the Uniform Customs and Practices for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500 (together with any subsequent revisions thereof approved by
a Congress of the International Chamber of Commerce and adhered to by the
Issuing Bank (the "UCP")), and shall, as to matters not governed by the UCP, be
governed by, and construed and interpreted in accordance with, the laws of the
State of Texas (other than conflict of law principles).
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(c) Borrower agrees to pay the following fees, by remittance to the
Agent, in respect of Letters of Credit issued hereunder: (i) for the account of
the Issuing Bank, a fee equal to the product of (x) 0.125% and (y) the average
daily amount available for drawings under all outstanding Letters of Credit;
(ii) for the ratable account of the Banks, a fee equal to the product of (x) the
per annum rate of interest equal to the Applicable Margin in effect from time to
time and (y) the average daily amount available for drawings under all
outstanding Letters of Credit; and (iii) with respect to the negotiation of each
Letter of Credit, for the account of the Issuing Bank, a fee equal to $75.00.
The foregoing fees shall be due and payable as follows: (A) fees under clauses
(i) and (ii) above shall be due and payable quarterly in arrears on each
Quarterly Date and on the Commitment Termination Date; and (B) fees under clause
(iii) shall be due and payable upon negotiation of the Letter of Credit. The
foregoing fees are distinct from, and in addition to, interest on the Notes and
Loans, if any, made in respect of the Letters of Credit, and fees and other
amounts otherwise provided herein.
(d) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment under such Letter of Credit, the Issuing Bank shall promptly
notify Borrower, the Agent and each Bank of Borrower's Reimbursement Obligations
as a result of such demand and the date on which any payment is to be made to
such beneficiary in respect of such demand. Borrower shall, by 1:00 p.m. (Dallas
time) on the date on which a drawing is to be made, reimburse the Issuing Bank
for any amount paid or to be paid by the Issuing Bank upon any drawing under any
Letter of Credit, without presentment, demand, protest or further notice or
other formalities of any kind, in an amount, in same day funds, and the unpaid
balance of such amount from time to time remaining outstanding and unpaid after
each such drawing shall accrue interest, until paid in full, at the Default Rate
which interest shall be due and payable on demand, or if demand is not sooner
made, then on the Quarterly Date next following such drawing and if applicable,
on each Quarterly Date thereafter.
(e) If, by 1:00 p.m. (Dallas time) on the day on which a drawing is to
be made or is made, Borrower fails to reimburse the Issuing Bank as provided in
Section 2.14(d), for whatever reason, the Issuing Bank shall promptly notify the
Agent, and the Agent shall promptly notify each Bank of the unreimbursed amount
of such drawing and of such Bank's respective pro rata portion thereof. On the
date of such notice (or if such notice is given after 1:00 p.m. (Dallas time) on
such date, the next succeeding Business Day), each Bank agrees, without regard
to the existence of a Default or Event of Default, to pay to the Issuing Bank,
an amount equal to such Bank's pro rata portion of such unreimbursed amount,
together with interest on such amount for each day from the date the Issuing
Bank pays such draw to the date of payment by such Bank of such amount at a rate
of interest per annum equal to the Federal Funds Rate for such period. The
Issuing Bank shall pay to each Bank such Bank's pro rata portion of all amounts
received from Borrower for payment, in whole or in part, of the Reimbursement
Obligation in respect of any Letter of Credit, but only to the extent such Bank
has made payment to the Issuing Bank in respect of such Letter of Credit
pursuant to this Section 2.14(e).
(f) Reimbursement Obligations of Borrower in respect of the Letters of
Credit shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this
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Agreement, under all circumstances whatsoever, including, without limitation,
the following circumstances:
(1) any lack of validity on enforceability of any Letter of
Credit, or any agreement or instrument related thereto, or any other
Loan Documents;
(2) any amendment or waiver of, or any consent to departure
from, the terms of any Letter of Credit or any other Loan Document,
without the express prior written consent of the Issuing Bank and the
Required Banks;
(3) the existence of any claim, setoff, defense or other
rights which Borrower may have at any time against any beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), any Bank or any
other Person, whether in connection with such Letter of Credit, this
Agreement, any other Loan Document or any agreement or instrument
related thereto, the transactions contemplated herein, or any unrelated
transaction;
(4) any statement, draft, certificate, demand or any other
document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect whatsoever;
(5) payment by the Issuing Bank under any Letter of Credit
against presentation of a draft, demand, certificate or other document
which appears on its face to comply but does not in fact comply with
the terms of such Letter of Credit;
(6) any material adverse change in the financial condition of
Borrower;
(7) any breach of any Loan Document by Borrower or any other
Person; or
(8) any other circumstances or happening whatsoever, whether
or not similar to any of the foregoing.
(g) IN ORDER TO INDUCE THE ISSUANCE OF LETTERS OF CREDIT BY THE ISSUING
BANK, (i) BORROWER AGREES THAT THE ISSUING BANK SHALL NOT BE RESPONSIBLE OR
LIABLE FOR, AND BORROWER'S OBLIGATIONS HEREUNDER AND UNDER EACH OTHER LOAN
DOCUMENT WITH RESPECT TO THE LETTERS OF CREDIT SHALL NOT BE AFFECTED BY, ANY
CIRCUMSTANCE, ACT OR OMISSION WHATSOEVER (WHETHER OR NOT KNOWN TO THE ISSUING
BANK) OTHER THAN A CIRCUMSTANCE, ACT OR OMISSION CAUSED SOLELY BY AND RESULTING
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE ISSUING BANK, AS
DETERMINED BY A COURT OF COMPETENT JURISDICTION, AND (ii) BORROWER ASSUMES ALL
RISK OF THE ACTS OR OMISSIONS OF THE BENEFICIARY OR ANY TRANSFEREE OF ANY LETTER
OF CREDIT WITH RESPECT TO THE USE OF SUCH
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LETTER OF CREDIT. NEITHER THE ISSUING BANK NOR ANY OF ITS AFFILIATES, NOR ANY OF
ITS OR THEIR OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS, DIRECTORS OR INSURERS, OR
ANY OF ITS OR THEIR SUCCESSORS, ASSIGNS, HEIRS AND LEGAL REPRESENTATIVES
(COLLECTIVELY, THE "ISSUING BANK PARTIES"), SHALL BE LIABLE OR RESPONSIBLE FOR:
(1) VALIDITY, SUFFICIENCY OR GENUINENESS OF CERTIFICATES OR OTHER DOCUMENTS, OR
OF ANY ENDORSEMENTS THEREON, EVEN IF SUCH CERTIFICATES OR OTHER DOCUMENTS SHOULD
IN FACT PROVE TO BE IN ANY OR ALL RESPECTS INVALID, INSUFFICIENT, FRAUDULENT OR
FORGED; (2) ERRORS, OMISSIONS, INTERRUPTIONS OR DELAYS IN TRANSMISSION OR
DELIVERY OF ANY MESSAGES OR ADVICES BY MAIL, TELEX OR OTHERWISE, WHETHER OR NOT
THEY BE IN CODE; (3) ERRORS IN TRANSLATION OR FOR ERRORS IN INTERPRETATION OF
FOREIGN, TECHNICAL OR INDUSTRY-SPECIFIC TERMS; (4) THE USE THAT MAY BE MADE OF
ANY LETTER OF CREDIT OR FOR ANY ACTS OR OMISSIONS OF THE BENEFICIARY AND ANY
TRANSFEREE IN CONNECTION THEREWITH; (5) PAYMENT BY THE ISSUING BANK AGAINST
PRESENTATION OF DOCUMENTS THAT DO NOT COMPLY WITH THE TERMS OF ANY CORRESPONDING
LETTER OF CREDIT, INCLUDING FAILURE OF ANY DOCUMENTS TO BEAR ANY REFERENCE OR
ADEQUATE REFERENCE TO SUCH LETTER OF CREDIT; (6) ANY CONSEQUENCE ARISING FROM
CAUSES BEYOND THE CONTROL OF THE ISSUING BANK; AND (7) ANY OTHER CIRCUMSTANCES
WHATSOEVER IN MAKING OR FAILING TO MAKE PAYMENT UNDER ANY LETTER OF CREDIT;
EXCEPT ONLY THAT BORROWER SHALL HAVE A CLAIM AGAINST THE ISSUING BANK, AND THE
ISSUING BANK SHALL BE LIABLE TO BORROWER, TO THE EXTENT, BUT ONLY TO THE EXTENT,
OF ANY DIRECT, AS OPPOSED TO CONSEQUENTIAL, SPECIAL, INDIRECT OR PUNITIVE
DAMAGES SUFFERED BY BORROWER WHICH BORROWER PROVES WERE CAUSED BY THE FAILURE OF
THE ISSUING BANK TO DETERMINE WHETHER ANY DRAFT, CERTIFICATE OR OTHER DOCUMENT
PRESENTED UNDER ANY LETTER OF CREDIT APPEARED ON ITS FACE TO COMPLY WITH THE
TERMS OF SUCH LETTER OF CREDIT. IN FURTHERANCE OF THE FOREGOING, AND NOT IN
LIMITATION THEREOF, THE ISSUING BANK MAY ACCEPT CERTIFICATES OR OTHER DOCUMENTS
THAT APPEAR ON THEIR FACE TO BE IN ORDER, WITHOUT RESPONSIBILITY FOR FURTHER
INVESTIGATION. NONE OF THE FOREGOING SHALL AFFECT, IMPAIR OR PREVENT THE VESTING
OF ANY OF THE RIGHTS AND POWERS OF THE ISSUING BANK, THE AGENT OR ANY BANK
HEREUNDER FOR ANY OF THE AGREEMENTS ENTERED INTO BY BORROWER WITH RESPECT TO ANY
LETTER OF CREDIT, ALL OF WHICH RIGHTS SHALL BE CUMULATIVE.
IN FURTHERANCE AND NOT IN LIMITATION OF THE FOREGOING PROVISIONS,
BORROWER AGREES THAT ANY ACTION TAKEN BY THE ISSUING BANK (INCLUDING AS A RESULT
OF ITS OWN NEGLIGENCE) WITHOUT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT UNDER OR
IN CONNECTION WITH ANY LETTER OF CREDIT, OR ANY RELATED DRAFTS, CERTIFICATES,
DOCUMENTS OR INSTRUMENTS, SHALL BE BINDING, ABSOLUTELY, IRREVOCABLY AND
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UNCONDITIONALLY, ON BORROWER AND SHALL NOT PUT THE ISSUING BANK UNDER ANY
RESULTING LIABILITY TO BORROWER, AND BORROWER MAKES LIKE AGREEMENT AS TO ANY
INACTION OR OMISSION, UNLESS WITH GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
BORROWER ACKNOWLEDGES AND AGREES THAT THE FOREGOING PROVISIONS OF THIS
SUBSECTION 2.14(G) ARE INTENDED TO RELEASE THE ISSUING BANK FROM ANY OBLIGATION
OR LIABILITY RESULTING FROM, OR ATTRIBUTABLE TO, ANY ISSUING BANK, UNDER, OR IN
CONNECTION WITH, ANY LETTER OF CREDIT.
SECTION 2.15 Pro Rata Treatment. Except as required under Section
2.6(b), Section 2.6(c), Section 2.12, Section 2.14(c), Section 2.14(d) and
Article 9, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the fees, each
termination or reduction of the Commitments, and each refinancing of any
Borrowing with, conversion of any Borrowing to or continuation of any Borrowing
as a Borrowing of any Type, shall be allocated ratably and pro rata among the
Banks in accordance with their respective Commitments. Each Bank agrees that in
computing such Bank's portion of any Borrowing to be made hereunder, the Agent
may, in its discretion, round each Bank's portion of such Borrowing to the next
higher or lower whole dollar amount.
SECTION 2.16 Proceeds of Loans. Subject to the terms of this Agreement,
the proceeds of the Loans and the Letters of Credit shall be used to refinance
Indebtedness under the Existing Credit Agreement and for accounts receivable and
inventory financing, new store opening costs, expansion costs of existing stores
and other general corporate purposes of Borrower and its Subsidiaries.
ARTICLE 3
CONDITIONS
SECTION 3.1 Initial Loans on the Closing Date. The obligations of the
Banks to make any Loan, or of the Issuing Bank to issue any Letter of Credit, on
the Closing Date are subject to the conditions precedent that on or before the
Closing Date, the Agent shall have received, there shall have been performed and
there shall exist, the documents, actions and other matters set forth in Annex
BC hereto, each in form, scope and substance, and (as applicable) dated as of a
date, satisfactory to the Agent and its counsel.
SECTION 3.2 All Loans, Conversions/Continuations and Letters of Credit.
The obligations of the Banks to make each Loan or to continue any Loan as, or to
convert any Loan into, a LIBOR Loan or a Base Rate Loan, or of the Issuing Bank
to issue any Letter of Credit, are subject to, in addition to the conditions
referred to in Section 3.1, the satisfaction of the Agent as to the following
conditions precedent:
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(a) Representations True and No Defaults. (i) The representations and
warranties contained and referred to in Article 4 (other than those
representations and warranties limited by their terms to a specific date) shall
be true, complete and accurate in all material respects on and as of the date of
the Credit Event as though made on and as of such date; (ii) no event shall have
occurred since the date of the most recent financial statements delivered
pursuant to Section 5.1 (or in the case of a Credit Event prior to the delivery
of such statements, July 31, 1998), that has caused a Material Adverse Effect;
and (iii) no Event of Default or Default shall have occurred and be continuing.
(b) No Material Adverse Change. As of the date of the Credit Event, no
change or event that might cause a Material Adverse Effect shall have occurred.
(c) Borrowing/Letter of Credit Documents. Other than a continuation or
conversion pursuant to Section 2.5, the Agent shall have received (i) a
certificate signed by an Authorized Officer dated as of such date to the effects
set forth in Section 3.2(a), (ii) a Notice of Borrowing delivered in accordance
with Section 2.2(a) or a notice requesting a Letter of Credit delivered in
accordance with Section 2.14(b), as the case may be, and (iii) such other
documents and certificates relating to the transactions herein contemplated as
the Issuing Bank or Banks, as applicable (through the Agent), may reasonably
require.
(d) Continuation/Conversion Documents. On the date of any continuation
or conversion pursuant to Section 2.5, the Agent shall have received (i) a
certificate executed by an Authorized Officer dated as of such date to the
effects set forth in Section 3.2(a), (ii) a Continuation/Conversion Notice
delivered in accordance with Section 2.5(b), and (iii) such other documents and
certificates relating to the transactions herein contemplated as the Banks
(through the Agent) may reasonably require.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
To induce each of the Agent, the Issuing Bank and the Banks to enter
into and perform its agreements pursuant to this Agreement, including, without
limitation, the making of the Loans and the issuance of Letters of Credit,
Borrower (i) makes and reaffirms to each of the Agent, the Issuing Bank and the
Banks each of the representations and warranties contained in each Loan
Document, and (ii) without duplication, represents and warrants to each of the
Agent, the Issuing Bank and the Banks that, at the time of execution hereof and
the transactions contemplated hereby and as of each of the dates of each of the
financial statements required to be delivered, from time to time, pursuant to
Section 5.1:
SECTION 4.1 Entity Status; Power and Authority. Borrower and each of
its Subsidiaries are duly organized and validly existing in good standing under
the laws of the state of its incorporation or organization and are corporations
or other legal Persons duly qualified as a
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foreign corporation or organization and in good standing in all states in which
the failure to be so qualified could have a Material Adverse Effect, all of
which jurisdictions are set forth in Schedule 4.1 hereto. Borrower and each of
its Subsidiaries has the corporate power and authority and all Legal Rights
which are necessary (i) to own, lease, use and operate its Property and to
transact its business as now being and as proposed to be conducted and (ii) to
execute and deliver each Loan Document executed by it, perform and comply with
all obligations and agreements thereunder and consummate the transactions
contemplated thereby. The outstanding Capital Stock of Borrower and each of its
Subsidiaries is duly authorized, validly issued, fully paid and non-assessable.
As of the Closing Date, there are no Material Subsidiaries.
SECTION 4.2 Authorization; Consents. The execution, delivery and
performance by Borrower and each of its Subsidiaries of each Loan Document
executed by it, and the consummation of the transactions contemplated thereby,
have been duly authorized by all necessary corporate and other action by, on
behalf of, and with respect to, Borrower and each of its Subsidiaries, and no
consent, approval, authorization, declaration, filing, order or other action by,
on behalf of, or with respect to, Borrower or any of its Subsidiaries is
required of, or from, any Governmental Authority or other Person in connection
with any of such execution, delivery or performance, or the validity or
enforceability of any Loan Document against Borrower or any of its Subsidiaries
or any of their respective Property covered thereby which has not been obtained
and is final and in full force and effect.
SECTION 4.3 No Conflicts. Neither the execution or delivery of any Loan
Document, nor the consummation of any transaction contemplated therein, nor the
performance of, or compliance with, any of the terms and provisions thereof,
does or will (i) conflict with, or result in or constitute a breach, violation
or default of, or require a consent under, (A) any provision of Law to which
Borrower, any of its Subsidiaries or any of their respective Property is subject
or bound, (B) any judgment or Legal Right applicable to Borrower, any of its
Subsidiaries or any of their respective Property, (C) any lease, indenture, loan
agreement, note, purchase or acquisition agreement, mortgage, deed of trust or
other agreement or instrument to which Borrower or any of its Subsidiaries is a
party or by which it or any of its Subsidiaries or any of their respective
Property may be bound or subject, or (D) any provision of the charter, bylaws or
other organizational or governance document of Borrower or any of its
Subsidiaries, or (ii) result in the creation or imposition of any Lien or
Negative Pledge upon Borrower, any of its Subsidiaries or any of their
respective Property, except for the benefit of the Agent, the Issuing Bank and
the Banks.
SECTION 4.4 Enforceable Obligations. Each Loan Document has been duly
executed and delivered by Borrower or its Subsidiaries executing it, and
constitutes the legal, valid and binding obligations of Borrower or its
Subsidiaries, as applicable, enforceable against Borrower or its Subsidiaries,
as applicable, in accordance with its respective terms.
SECTION 4.5 Title to Properties. Borrower and its Subsidiaries have
good and indefeasible title to, or valid leasehold interests in, as applicable,
all of their respective Property, free and clear of all Liens (except Permitted
Liens), Negative Pledges and any other adverse claims of any
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nature, except any of the foregoing which are for the benefit of the Agent, the
Issuing Bank and the Banks. Except as set forth in Schedule 4.5, there are no
financing statements, lien instruments, abstracts of judgment, levies,
executions or other filings of record in any jurisdiction naming Borrower or any
of its Subsidiaries as "debtor", "mortgagor", "obligor" or the like, or covering
any Property of Borrower or any of its Subsidiaries, except those evidencing
Permitted Liens.
SECTION 4.6 Financial Condition.
(a) Financial Statements. Borrower has delivered to the Agent copies of
the audited balance sheet of Borrower as of January 31, 1998, and the related
statements of income, stockholders' equity and cash flows for the year ended on
such date, with reports thereon by KPMG Peat Marwick, its independent public
accountants, and unaudited copies of such financial statements of Borrower for
the quarterly period ended October 31, 1998. Such financial statements (together
with related schedules and notes, the "Financial Statements") are true, complete
and accurate in all material respects, fairly present the financial condition of
Borrower as of the respective dates thereof and have been prepared in accordance
with GAAP applied throughout the periods covered thereby, subject to normal
year-end audit adjustments. As of the date hereof, Borrower has no (i)
obligations, liabilities or other Indebtedness (including Guarantees) or (ii)
Investments in any Person which are (separately or in the aggregate) not
reflected in such Financial Statements; and there has been no material adverse
change in the financial condition, management, control, operations, business or
prospects of Borrower or its Property (as applicable) since the date of the
Financial Statements. Without limiting the foregoing, the Banks recognize that
the above described interim financial statements of Borrower do not include full
footnote disclosures that are included in the year-end financial statements of
Borrower.
(b) Solvency. Upon giving effect to the issuance of each Note (and the
incurrence of the Indebtedness thereunder), the execution, delivery and
performance of each Loan Document by Borrower, and the consummation of the
transactions contemplated thereby, the following are and will be true, complete
and accurate in all material respects:
(i) the fair saleable value of the assets of Borrower exceeds
the amount that will be required to be paid on or in respect of the
existing debts and other liabilities (including contingent liabilities)
of Borrower, as they mature;
(ii) the assets of Borrower do not constitute unreasonably
small capital for Borrower to carry out its business as now conducted
and as proposed by it to be conducted;
(iii) Borrower does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be received by Borrower, and of amounts
to be payable on or in respect of debt of Borrower); and
(iv) Borrower does not intend, nor believe, that final
judgments against it in actions for money damages will be rendered at a
time when, or in an amount such that, it will be
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unable to satisfy any such judgments promptly in accordance with their
terms (taking into account the maximum reasonable amount of such
judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered).
SECTION 4.7 Full Disclosure. There is no fact that Borrower has not
disclosed to the Banks which might reasonably be expected to have a Material
Adverse Effect. Neither the financial information referenced in Section 4.6(a)
nor any certificate, report, exhibit, schedule, statement, disclosure letter or
other information furnished to the Agent or any Bank by, or on behalf of,
Borrower or any of its Subsidiaries, whether heretofore or herewith, in
connection with the negotiation, preparation, execution, delivery or
consummation of this Agreement and the other Loan Documents, or included therein
or delivered pursuant thereto, contains any untrue statement of a material fact
or omits or omitted to state any material fact necessary to make and keep the
statements contained herein or therein from being misleading. All information
furnished after the date hereof by or on behalf of Borrower and its Subsidiaries
shall be true, complete and accurate in all material respects.
SECTION 4.8 No Default or Adverse Condition. No event has occurred and
is continuing which constitutes a Default or an Event of Default, and there
exists no event, circumstance, condition or casualty (whether or not covered by
insurance) which could have a Material Adverse Effect.
SECTION 4.9 Material Agreements; Insurance. Neither Borrower nor any of
its Subsidiaries is in default under, or in violation or in breach of (nor has
any event or circumstance occurred which, but for the passage of time or the
giving of notice, or both, would constitute a default under, or a violation or
breach of), (i) its charter, bylaws or other internal governance document, (ii)
any Judgment affecting it or any of its Property, or (iii) any partnership
agreement or any material indenture promissory note, contract, lease, purchase
or acquisition agreement, loan agreement, mortgage, deed of trust, security
agreement, license, permit, franchise or other material agreement or obligation
to which it is a party or by which it or any of its Property is bound. Attached
hereto as Schedule 4.9 is a complete and correct list of all of Borrower's and
each of its Subsidiaries' material patents, trademarks, tradenames, copyrights
and service marks and all applications, registrations and licenses relating
thereto. Neither Borrower nor any of its Subsidiaries is a party to, or bound
by, any Interest Rate Protection Agreement or other hedging agreement or
material contract or agreement, except as otherwise permitted herein. Borrower
and its Subsidiaries maintain insurance in compliance with Section 5.10.
SECTION 4.10 No Litigation. Except as set forth on Schedule 4.10 (and
therein designating which of the following clauses (i) through (iv) is
applicable thereto), as of the date hereof, there is no Litigation or Judgment
pending, or to the knowledge of Borrower threatened, against, affecting or
challenging (as applicable) (i) any Property of Borrower or any of its
Subsidiaries, including, without limitation, Borrower's or any Subsidiary's sole
legal and beneficial title therein and all Legal Rights with respect thereto,
(ii) the validity or enforceability of any Loan Document, (iii) the ability of
Borrower or any of its Subsidiaries to enter into, execute, deliver and perform
its obligations
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under each Loan Document to which it is a party as provided therein, and
otherwise to consummate the actions and transactions contemplated thereby, (iv)
Borrower or any of its Subsidiaries which, if adversely determined, could
reasonably be expected to result in a Judgment, individually or when aggregated
with all other Judgments, (A) for the payment of money in excess of $1,000,000
(regardless of insurance coverage) or (B) for the forfeiture of any Legal Rights
of Borrower or any of its Subsidiaries(other than of a trivial or
non-consequential nature), or (v) Borrower or any of its Subsidiaries, or any of
their respective Property or Legal Rights, which might otherwise have a Material
Adverse Effect.
SECTION 4.11 Use of Proceeds; Margin Stock. The proceeds of the Loans
and each Letter of Credit will be used solely as provided in Section 2.16, and
none of such proceeds will be used (i) for the purpose of purchasing or carrying
any "margin stock" as defined in Regulations G, T, U or X, (ii) for the purpose
of maintaining, reducing or retiring any Indebtedness which was originally
incurred to purchase or carry a "margin stock", or (iii) for any other purpose
which might constitute this transaction a "purpose credit" within the meaning of
Regulations G, T, U or X. Neither Borrower nor any of its Subsidiaries is
engaged in the business of extending credit for the purpose, whether immediate,
incidental or ultimate, of buying or carrying "margin stock". Neither Borrower
nor any Person acting on behalf of Borrower has taken or will take any action
which might cause any of the Loan Documents to violate Regulations G, T, U or X,
or any other regulations of the Board of Governors of the Federal Reserve System
or to violate the Exchange or any rule or regulation thereunder, in each case as
now in effect or as the same may hereafter be in effect.
SECTION 4.12 No Financing of Regulated Corporate Takeovers. No proceeds
of the Loans will be used to acquire any security in any transaction which is
subject to Sections 13 or 14 of the Exchange Act, including particularly
Sections 13(d) and 14(d) thereof.
SECTION 4.13 Taxes. Borrower and its Subsidiaries have filed all
returns, reports, statements and filings with respect to all Taxes, deductions
and withholdings required to be filed by Borrower and its Subsidiaries; all such
returns, reports, statements and filings are true, complete and accurate in all
material respects; and all Taxes, deductions and withholdings with respect to
Borrower and its Subsidiaries or any of their respective Property have been paid
prior to the time that such Taxes, deductions or withholdings could give rise to
a Lien thereon, except for those being diligently contested in good faith by
appropriate proceedings and for which any reserves required under GAAP have been
established by Borrower and its Subsidiaries. Except as set forth on Schedule
4.13, to Borrower's knowledge, (i) no tax or similar Lien has been filed on, or
is being enforced against, Borrower, any of its Subsidiaries or any of their
respective Property, (ii) there is no proposed Tax assessment against Borrower,
any of its Subsidiaries or any of their respective Property, and there is no
basis for any such assessment, and (iii) the United States federal income tax
returns of Borrower have been examined and reported on by the taxing authorities
or closed by applicable Laws and satisfied for all years prior to and including
the 1994 fiscal year ended January 31, 1995.
SECTION 4.14 Principal Office; Names; Primary Business. The actual and
anticipated principal place of business of Borrower and each of its
Subsidiaries, or if it has more than one such
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place, its chief executive office, is shown in Schedule 4.14, and Borrower
intends to maintain, and cause each of its Subsidiaries to maintain, its
principal records and books at such office. Schedule 4.14 also lists the address
of each location at which Borrower and each of its Subsidiaries operates or
conducts its business or maintains or stores any of its equipment, inventory or
other Property. Except as set forth on Schedule 4.14, neither Borrower nor any
of its Subsidiaries (i) has conducted within the last 5 years and is now
conducting and does currently have any plans to hereafter conduct, and has owned
within the last 5 years and is now owning and does currently have any plans to
hereafter own, any material business, operations or Property in any name other
than "Hastings Entertainment, Inc." or any other name which includes the word
"Hastings", and (ii) has, within the last 5 years, merged into, consolidated
with, or acquired, any Person. The primary business of Borrower is the retail
sale of entertainment products, including music products, including tapes,
compact discs, prerecorded video tapes, records and accessories, as well as the
retail sale of books and the retail rental of prerecorded video tapes.
SECTION 4.15 Subsidiaries. Borrower does not have any Subsidiaries and
is not a general or limited partner in any Person, except as set forth in
Schedule 4.15, which lists as to each Subsidiary or general or limited
partnership interest: (i) name of entity; (ii) jurisdiction of incorporation or
organization; (iii) foreign qualification; (iv)
share/percentage/nature/ownership; and (v) primary business. Except as set forth
in Schedule 4.15, there are no outstanding warrants, options, rights, contracts
or commitments of Borrower or any of its Subsidiaries of any kind entitling any
one or more Persons to purchase or otherwise acquire (A) in excess of an
aggregate of 150,000 shares of Capital Stock of Borrower, (B) any securities
convertible into or exchangeable for in excess of an aggregate of 150,000 shares
of Capital Stock of Borrower or (C) any shares of Capital Stock of any
Subsidiary of Borrower or any securities convertible into or exchangeable for
shares of Capital Stock of any Subsidiary of Borrower.
SECTION 4.16 ERISA. No Reportable Event (as defined in Section 4043(b)
of ERISA) to which the notice requirement has not been waived has occurred with
respect to any Plan. Each Plan complies with all applicable provisions of ERISA,
and Borrower has filed all reports required by ERISA and the Code to be filed
with respect to each Plan. Borrower does not have knowledge of any event which
could result in a liability of Borrower or any of its Subsidiaries to the PBGC.
Borrower and each of its Subsidiaries have met all requirements with respect to
funding the Plans imposed by ERISA or the Code. Since January 1, 1986, there
have not been any, nor are there now existing any events or conditions that
would permit, termination of any Plan under circumstances which would cause the
Lien provided under Section 4068 of ERISA to attach to any Property of Borrower
or any of its Subsidiaries. The value of the Plans' liabilities as defined in
Section 4001(a)(16) of ERISA on the date hereof does not exceed the value of
such Plans' assets allocable to such benefits as of the date of this Agreement
by more than $500,000.00 and shall not be permitted to do so hereafter. No
existing Plan is a multiemployer plan (as defined in Section 3(37) of ERISA) and
neither Borrower nor any of its Subsidiaries has made a complete or partial
withdrawal from any such multiemployer plan so as to incur withdrawal liability
as defined in Section 4201 of ERISA.
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SECTION 4.17 Compliance with Law. Borrower and its Subsidiaries have
complied in all material respects with, and is in compliance in all material
respects with, all Laws applicable to it and its Property, including
Environmental Laws and the provisions of the Fair Labor Standards Act of 1938,
29 U.S.C. Section 200, et seq., as amended, including specifically, but without
limitation, 29 U.S.C. Section 215(a).
SECTION 4.18 Government Regulation. Neither Borrower nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Investment Company Act of 1940, the
Interstate Commerce Act (as any of the preceding acts have been amended), or any
other Law which regulates either the incurring by Borrower or any of its
Subsidiaries of Indebtedness or the determination or setting of, or changes to,
the rates or amounts charged by Borrower or any of its Subsidiaries for the
goods or products it sells or the services it performs, including Laws relating
to common contract carriers or the sale of electricity, gas, steam, water or
other public utility services. Neither Borrower nor any of its Subsidiaries is
(i) an "investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, and neither Borrower nor any of its
Subsidiaries is "controlled" by such a company, or (ii) a "holding company" or a
"public utility" within the meaning of the Public Utility Holding Company Act of
1935, as amended, and is not a "subsidiary company" or an "affiliate" or any
such company.
SECTION 4.19 Insider. Neither Borrower nor any of its Subsidiaries is,
and no Person having "control" (as that term is defined in 12 U.S.C. Section
375(b)(5) or in regulations promulgated pursuant thereto) of Borrower or any of
its Subsidiaries is, an "executive officer" who participates or who has the
authority to participate in major policymaking functions, "director" or
"principal shareholder" (as those terms are defined in 12 U.S.C. Section 375(b)
or in regulations promulgated pursuant thereto) of any Bank, of a bank holding
company or other legal Person of which any Bank is a Subsidiary, or of any
Subsidiary of a bank holding company of which any Bank is a Subsidiary.
SECTION 4.20 Certain Environmental Matters. Except as disclosed in
Schedule 4.20, and after reasonable inquiry made by or on behalf of Borrower,
(i) Borrower and each of its Subsidiaries (A) is not aware of, and has not
received notice or otherwise learned of, any Environmental Complaint or
Environmental Liability which could individually or in the aggregate have a
Material Adverse Effect, (B) has no threatened or actual liability (contingent,
direct or otherwise) in connection with the release or threatened release,
generation, handling, treatment, storage, disposal or transportation of any
Hazardous Material, or other substance which could individually or in the
aggregate have a Material Adverse Effect, (C) is not aware of, and has not
received notice or otherwise learned of, any federal or state investigation
evaluating whether any remedial action is needed to respond to a release or
threatened release, and/or the generation, handling, treatment, storage,
disposal or transportation of any Hazardous Material for which Borrower or any
of its Subsidiaries is or may be liable, which could individually or in the
aggregate have a Material Adverse Effect, (D) is not in violation of any
Judgment or Litigation based upon Environmental Laws, or subject to any such
Judgment or Litigation, which could individually or in the aggregate have a
Material Adverse Effect, (E) has, in full force and effect, all material
permits,
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licenses, approvals and other authorizations necessary for the use and operation
of its Property, including, the generation, handling, treatment, storage,
disposal, transportation or release of any Hazardous Material, and (F) is in
compliance with all Environmental Laws, except to the extent the failure to so
comply could not reasonably be expected to have a Material Adverse Effect or to
result in any Environmental Liability that could reasonably be expected to have
a Material Adverse Effect; and (ii) all Properties of Borrower and each of its
Subsidiaries are free from any Hazardous Material and Environmental Liens which
could individually or in the aggregate have a Material Adverse Effect. There
have been no environmental investigations, studies, audits, tests, reviews or
other analyses conducted by or on behalf of, or which are in the possession or
knowledge of, Borrower, or any of Borrower's or any of its Subsidiaries'
predecessors, in relation to any Property now or previously owned or leased by
Borrower or any of its Subsidiaries, or any of Borrower's or any of its
Subsidiaries' predecessors, which have not been (y) made available to any Bank
or its agents, employees or contractors and (z) listed in Schedule 4.20. Neither
Borrower nor any of its Subsidiaries has received a notice of any Environmental
Liability, Environmental Lien or Environmental Complaint other than those which
have been provided to the Agent and listed in Schedule 4.20.
SECTION 4.21 Insurance; Certifications. The insurance certificates
delivered pursuant to Section 3.1 are true, complete and accurate in all
material respects, and the insurance coverage set forth therein complies in all
regards with the requirements set forth in Section 5.10. In furtherance of the
foregoing, but not in limitation thereof, and in furtherance of all other
matters as to which certifications are required pursuant to Section 3.1, all
matters certified to by each and every Person which were evidenced by
certificates and certifications referred to in Section 3.1 were true, complete
and accurate in all material respects, as so certified and received by the
Agent, the Issuing Bank and each Bank, as of the Closing Date and were certified
by officers of Borrower, each of whom was authorized to execute and deliver such
certificate for and on behalf of Borrower.
SECTION 4.22 Year 2000 Compliance. Borrower has (i) initiated a review
and assessment of all areas within its and each of its Subsidiaries' business
and operations (including those affected by suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by Borrower or any of its Subsidiaries (or its suppliers and
vendors) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (ii) developed a plan and timeline for addressing the Year 2000 Problem
on a timely basis, and (iii) to date, implemented that plan in accordance with
the timetable. Borrower reasonably believes that all computer applications
(including those of its suppliers and vendors) that are material to its or any
of its Subsidiaries' business and operation will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "Year 2000 Compliant"), except to the extent that a failure
to do so could not reasonably be expected to have a Material Adverse Effect.
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ARTICLE 5
AFFIRMATIVE COVENANTS
Until payment in full of the Notes, the payment and performance of all
other Obligations, and the expiration and termination of all Letters of Credit,
and so long as the Banks have any obligation hereunder to make any Loans or the
Issuing Bank has any obligation to issue any Letters of Credit, Borrower agrees
that it will, and will cause each of its Material Subsidiaries to, punctually
and completely perform and observe each of the following covenants:
SECTION 5.1 Financial Statements, Reports and Documents. Borrower shall
deliver the following to the Agent, inform, substance and scope satisfactory to
Agent and otherwise as provided herein:
(a) Quarterly Statements. As soon as available, and in any event within
50 days after the end of each Fiscal Quarter, copies of the consolidated
statements of income, stockholders' equity and cash flow of Borrower and its
Subsidiaries for such quarter and for the portion of the Fiscal Year ending with
such quarter, and the related consolidated balance sheet as at the end of such
period, in each case setting forth in comparative form the corresponding figures
for the corresponding periods for the preceding Fiscal Year, all in reasonable
detail and certified by the president, chief financial officer or controller of
Borrower as being true, complete and accurate in all material respects, as
fairly presenting the consolidated financial condition and results of operations
of Borrower and its Subsidiaries for the periods therein covered, and as having
been prepared in accordance with GAAP, subject to normal year-end audit
adjustments;
(b) Annual Statements. As soon as available, and in any event within 95
days after the end of each Fiscal Year, copies of the audited statements of
consolidated income, stockholders' equity and cash flow of Borrower and its
Subsidiaries for such Fiscal Year, and the related consolidated balance sheet of
Borrower and its Subsidiaries as at the end of such Fiscal Year, in each case
setting forth in comparative form the corresponding figures for the preceding
Fiscal Year, all in reasonable detail and accompanied by (i) an unqualified
opinion of KPMG Peat Marwick or other independent public accountants of
recognized national standing selected by Borrower and reasonably satisfactory to
the Banks, to the effect that such financial statements have been prepared in
accordance with GAAP, and fairly present the consolidated financial condition
and results of operations of Borrower and its Subsidiaries, as at the end of,
and for, such Fiscal Year, and (ii) a certificate executed by the president,
chief financial officer or controller of Borrower to the same effect as such
opinion;
(c) Audit, Management and Other Reports. Promptly upon receipt thereof,
a copy of each written report submitted to Borrower by independent accountants
in any annual, quarterly or special audit, review or examination;
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(d) Compliance Certificate. Concurrently with the delivery of the
financial statements delivered pursuant to Sections 5.1(a) and (b),
respectively, a certificate in the form of Exhibit G ("Compliance Certificate"),
executed by the president, chief financial officer or controller of Borrower,
(i) stating that a review of the activities of Borrower and its Subsidiaries
during such period has been made under such officer's supervision and that to
the knowledge of such officer, Borrower and each of its Subsidiaries has
observed, performed and fulfilled each and every obligation and covenant
contained in each Loan Document to which it is a party and is not in Default
under any Loan Document to which it is a party, or, if any such Default has
occurred, specifying the nature and status thereof, and (ii) setting forth in
reasonable detail the computation and information necessary to determine whether
Borrower and its Subsidiaries are in compliance with Section 6.1 as of the end
of the respective Fiscal Quarter or Year, as applicable;
(e) Insurance Report. Within 30 days after any significant change in
insurance coverage by Borrower or any of its Subsidiaries, a report describing
such change; and, with the annual financial statements furnished to the Agent
under Section 5.1(b), a report describing the insurance coverage of Borrower and
its Subsidiaries;
(f) Litigation Reports. With the annual financial statements furnished
to the Agent under Section 5.1(b), reports by counsel to Borrower describing all
Litigation affecting Borrower or any of its Subsidiaries or any of their
respective Property which if adversely determined could reasonably be expected
to have a Material Adverse Effect; and if a significant change in such
Litigation occurs or additional Litigation is threatened or commenced during a
Fiscal Quarter which if adversely determined could reasonably be expected to
have a Material Adverse Effect, with the quarterly financial statements
furnished to the Agent under Section 5.1(a) for such Fiscal Quarter, reports by
counsel to Borrower describing such changes in or additions to such Litigation
since the date of the Litigation report most recently furnished to the Agent;
(g) Environmental Notices. Notice to the Agent, in writing, promptly
upon Borrower's receipt of notice or otherwise learning (whichever first occurs)
from any Person of any (i) Environmental Complaint or Environmental Lien or (ii)
any other claim, demand, action, event, condition, report or investigation
indicating any potential or actual liability (A) upon which any Environmental
Liability or Environmental Lien could result against Borrower, any of it
Subsidiaries, any Bank or any Property of Borrower or any of its Subsidiaries,
or (B) arising in connection with (1) the non-compliance with, or violation of,
the requirements of any Environmental law, (2) the release or threatened
release, generation, treatment, handling, storage, disposal or transportation of
any Hazardous Material into the environment or which act, occurrence or event
Borrower would have a duty to report to a Governmental Authority under an
Environmental Law, or (3) the existence of any Environmental Lien on any
Property of Borrower or any of its Subsidiaries; and Borrower shall immediately
deliver a copy of each such notice to the Agent;
(h) Supplemental Schedules. As soon as possible, and in any event
within 15 days after Borrower obtains knowledge thereof, Borrower shall provide
the Agent with a supplement to any existing Schedule which would make such
Schedule (and any subsequent supplement thereto), and
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the corresponding representation and warranty to which it applies, true,
complete and accurate in all material respects; provided, however, any such
supplement shall not be deemed to have amended any Schedule to this Agreement
unless and until the Banks have approved such amendment;
(i) Financial Projections. Concurrently with the delivery of the
financial statements delivered pursuant to Section 5.1(b), consolidated
financial projections of Borrower and its Subsidiaries (including a projected
income statement, balance sheet and statement of cash flow), in form reasonably
prepared by Borrower, through the Availability Period; and
(j) Other Information. Within such period reasonably prescribed by the
Agent, such other information concerning the business, operations, Property or
financial condition of Borrower or any of its Subsidiaries as any Bank (through
the Agent) shall reasonably request.
SECTION 5.2 Payment of Taxes and Other Liabilities. Except for (i)
Contested Claims and (ii) Taxes, Indebtedness and other claims and liabilities
which in the aggregate if unpaid could not reasonably be expected to have a
Material Adverse Effect, Borrower will, and will cause each of its Subsidiaries
to, timely pay and discharge when due (A) all Taxes, deductions and
withholdings, (B) all other lawful claims against it or any of its Property, and
(C) all of its other Indebtedness, obligations and liabilities.
SECTION 5.3 Maintenance of Existence and Rights; Conduct of Business.
Borrower will, and will cause each of its Subsidiaries to, preserve and maintain
its existence and all of its Legal Rights necessary or desirable in the ordinary
course of its business and conduct and the ownership, maintenance and operation
of its Property, and conduct its business in an orderly and efficient manner
consistent with good business practices and industry standards and in accordance
with all Laws, except where the failure to so preserve, maintain or conduct
would only result in a trivial and inconsequential effect. In addition, Borrower
will, and will cause each of its Subsidiaries to, act prudently and in
accordance with customary industry standards and with its contractual
obligations in managing and operating its Property, business and investments and
will keep in good working order and condition, ordinary wear and tear excepted,
all of its Property and Legal Rights which are necessary or desirable to the
conduct of its business and the ownership and maintenance of its Property.
SECTION 5.4 Notice of Default. As soon as possible, but in any event
within 5 Business Days of becoming aware thereof, Borrower shall furnish to the
Agent written notice of the existence of any condition or event which
constitutes or would become a Default or an Event of Default, which notice shall
specify the nature and period of existence thereof and the action which Borrower
is taking or proposes to take with respect thereto.
SECTION 5.5 Other Notices. As soon as possible, but in any event within
5 Business Days of becoming aware thereof, Borrower will promptly notify the
Agent of (i) any material adverse change in the financial condition, operations,
Property or business of Borrower or any of its Subsidiaries, (ii) any default
under, or any threatened or actual acceleration of the maturity of, any
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Indebtedness owing or secured by Borrower or any of its Subsidiaries (or any of
their respective Property), which individually or in the aggregate represents a
monetary obligation of $1,000,000 or more, or one with respect to which a
default thereunder might have a Material Adverse Effect, (iii) any default or
event of default under one or more leases pertaining to one or more locations at
which Borrower or any of its Subsidiaries operates or conducts any of its
business or stores any of their respective Property, if such event could
individually or in the aggregate have a Material Adverse Effect, (iv) any
significant adverse claim against or affecting Borrower or any of its
Subsidiaries or any of their respective Property, (v) any discovery or
determination by Borrower that any computer application (including those of its
suppliers and vendors) that is material to its or any of its Subsidiaries'
business and operations will not be Year 2000 Compliant on a timely basis,
except to the extent that such failure could not reasonably be expected to have
a Material Adverse Effect, and (b) the commencement of, and/or any material
determination in, any Litigation which could reasonably be expected to result in
a Judgment in excess of $1,000,000 (without regard to insurance coverage). In
respect to each of the foregoing notices, Borrower will promptly provide to the
Agent all reasonably related information requested by the Agent, in reasonable
detail satisfactory to the Agent.
SECTION 5.6 Compliance with Loan Documents. Borrower will, and will
cause each of its Subsidiaries to, promptly and completely comply with and
observe and perform all covenants and provisions of each Loan Document executed
by it. In furtherance of the foregoing, but in no way limiting the generality
thereof, the proceeds of each Loan will be used strictly in compliance with
Section 2.16.
SECTION 5.7 Compliance with Agreements. Borrower will, and will cause
each of its Subsidiaries to, promptly comply in all material respects with all
material contracts, leases, agreements, indentures, mortgages or documents
binding on it or affecting it or its Property, business or operations.
SECTION 5.8 Access; Books and Records. Upon reasonable notice, during
all business hours, and at any time that an Event of Default continues to exist,
Borrower authorizes and will permit any representatives of the Agent, the
Issuing Bank or any Bank (i) to have access to, and grant permission for such
representatives to examine, copy or make excerpts from, any and all books,
records and documents that relate to the business, operations or Property of
Borrower or any of its Subsidiaries, (ii) to inspect any and all Property of
Borrower or any of its Subsidiaries, and (iii) to discuss the business,
operations and financial condition of Borrower or any of its Subsidiaries with
its officers and employees and its independent certified public accountants,
legal counsel (except for attorney/client privileged information and work
product) and other consultants, all of the foregoing at the expense of (A)
Borrower, upon the occurrence and during the continuance of an Event of Default
and (B) the Agent, the Issuing Bank or any Bank, as applicable, if no Event of
Default has occurred and is continuing. Borrower will, and will cause each of
its Subsidiaries to, maintain adequate books and records of its respective
transactions in accordance with GAAP.
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SECTION 5.9 Compliance with Law. Borrower will, and will cause each of
its Subsidiaries to, comply in all material respects with all Laws applicable to
it or any of its Property, business operations or transactions.
SECTION 5.10 Insurance. Borrower will, and will cause each of its
Subsidiaries to, maintain insurance with reputable insurers of sound financial
strength and creditworthiness with respect to its Property and as to its
operations and business, all as required by each Loan Document and otherwise in
such types, amounts, scope and coverage, and against such risks, casualties,
contingencies and liabilities, as required or necessitated by Law, and
additionally, as is customarily maintained by other Persons engaged in similar
businesses and operations, the foregoing insurance coverage specifically
including the following: (i) worker's compensation or similar insurance as may
be required by applicable Law, (ii) public liability insurance against claims
for personal injury, death or property damage suffered upon, in or about, any
Property occupied by Borrower and each of its Subsidiaries or occurring as a
result of the ownership, maintenance or operation by Borrower and each of its
Subsidiaries of any equipment, vehicle or other Property or as the result of the
use of products or equipment manufactured, constructed, sold or operated by
Borrower and each of its Subsidiaries or services rendered by them, and (iii)
insurance against the loss or damage to the Property and businesses of Borrower
and each of its Subsidiaries now owned or hereafter acquired. In addition,
Borrower will provide such information regarding its insurance and the insurance
of its Subsidiaries as reasonably requested by the Agent.
SECTION 5.11 ERISA Compliance. Borrower will, and will cause each of
its Subsidiaries to, at all times:
(a) make contributions to each Plan in a timely manner and in an amount
sufficient to comply with the minimum funding standards requirements of ERISA
and the Code;
(b) immediately upon acquiring knowledge of any "reportable event" to
which the notice requirement has not been waived or of any "prohibited
transaction" (as such terms are defined in the Code or ERISA, as applicable) in
connection with a Plan, furnish the Agent with a statement executed by an
Authorized Officer setting forth the details thereof and the action which
Borrower proposes to take with respect thereto and, when known, any action taken
by the Internal Revenue Service with respect thereto;
(c) notify the Agent immediately upon receipt by Borrower or any of its
Subsidiaries of any notice of an interest by the PBGC to terminate or appoint a
trustee or of the institution of any proceeding or other action which may result
in the termination of any Plan and furnish to the Agent copies of such notice;
(d) if requested by the Agent, furnish the Agent with copies of each
annual report (together with all related schedules and attachments) for each
Plan filed with the Internal Revenue Service not later than 30 days after such
report has been filed; and
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(e) furnish the Agent with copies of any request for waiver of the
funding standards or extension of the amortization periods required by Sections
303 and 304 of ERISA or Section 412 of the Code promptly after the request is
submitted to the Secretary of the Treasury, the Department of Labor or the
Internal Revenue Service, as the case may be.
SECTION 5.12 Further Assurances. Borrower will, and will cause each of
its Subsidiaries to, cure and cause to be cured promptly any defects or
deficiencies in the execution, delivery, creation or issuance of the Loan
Documents, or any of them, and any of the transactions contemplated thereby. In
addition, Borrower will, and will cause each of its Subsidiaries to, promptly
make, execute or endorse, and acknowledge and deliver or file, or cause each of
the same to be done, all such vouchers, invoices, notices, certifications and
additional agreements, documents, instruments, undertakings or other assurances,
and take any and all such other action, as the Agent may, from time to time,
reasonably request or deem reasonably necessary or proper under any of the Loan
Documents and the obligations of Borrower and its Subsidiaries thereunder.
SECTION 5.13 Maintenance of Corporate Identity. Borrower will, and will
cause each of its Subsidiaries to, maintain separate corporate records, books
and accounts. Borrower will, and will cause each of its Subsidiaries to, observe
the formal legal, financial and accounting requirements necessary for the
maintenance of Borrower as a separate legal entity, including the keeping of
corporate records indicating that, to the extent required by Law or its charter
documents, transactions are reviewed and authorized by its Board of Directors
and stockholders. All monies and funds advanced and to be advanced to or on
behalf of Borrower by its Affiliates (other than capital contributions and other
equity infusions, in each case, that are of a "common stock" nature, by
shareholders or Affiliates of Borrower into Borrower), pursuant to a loan or
otherwise, will be evidenced by valid, binding and enforceable written
obligations to repay such monies and funds, the repayment of which shall be
subordinated to the full and final payment of the Obligations, on terms and
conditions satisfactory to the Banks.
SECTION 5.14 Primary Business. Borrower will continue the retail sale
of entertainment products, including music products, including tapes, compact
discs, prerecorded video tapes, records and accessories, as well as the retail
sale of books and the retail rental of prerecorded video tapes, as its primary
business.
SECTION 5.15 Subordination of Affiliate Obligations. Borrower will, and
will cause each of its Subsidiaries to, cause all loans or advances of Borrower
or any of its Subsidiaries to any Affiliate of Borrower or any of its
Subsidiaries at any time arising or existing to be evidenced by promissory
notes. All such promissory notes are set forth on Schedule 5.15. Borrower will
obtain and deliver to the Agent the written agreement, in form, substance and
scope satisfactory to the Agent, of the holder of each such promissory note
evidencing the subordination of such holder's right to payment under each such
note to the payment of the Obligations. Borrower will cause the face of each
promissory note to be marked with a reference to such subordination agreement,
and will take and cause to be taken all such further and additional actions as
the Agent may reasonably request to effect and evidence such subordination.
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SECTION 5.16 Year 2000 Compliance. Borrower will, and will cause each
of its Subsidiaries to, be Year 2000 Compliant, except to the extent that the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
SECTION 5.17 Material Subsidiaries. At any time that any Person becomes
a Material Subsidiary, (i) such Subsidiary shall execute a Guaranty Agreement,
(ii) 100% of such Subsidiary's Capital Stock shall be pledged to secure the
Obligations and (iii) the Banks shall receive such board resolutions, officer's
certificates and opinions of counsel as the Agent shall reasonably request in
connection with the actions described in clauses (i) and (ii) above.
ARTICLE 6
NEGATIVE COVENANTS
Until payment in full of the Notes, the payment and performance of all
other Obligations, and the expiration and termination of all Letters of Credit,
and so long as the Banks have any obligation hereunder to make any Loans or the
Issuing Bank has any obligation to issue any Letters of Credit, Borrower agrees
that it will punctually and completely perform and observe each of the following
covenants:
SECTION 6.1 Certain Financial Matters. Borrower will not permit:
(a) the ratio of Adjusted EBITDAR to Fixed Charges to be less than 2.00
to 1.00 a of the end of any Fiscal Quarter for the four-quarter period ending as
of the end of such Fiscal Quarter; or
(b) The Tangible Net Worth as of the end of any Fiscal Quarter to be
less than the sum of (i) $98,000,000 plus (ii) fifty percent (50%) of the
cumulative amount of net income of Borrower from August 1, 1998 through the end
of such Fiscal Quarter (without regard to, or reduction for, any net loss
reported for any Fiscal Quarter) plus (iii) an amount equal to 100% of the
tangible net worth of any Person that becomes a Subsidiary of Borrower or is
merged into or consolidated with Borrower or any Subsidiary of Borrower or
substantially all of the assets of which are acquired by Borrower or any
Subsidiary of Borrower to the extent the purchase price paid therefor is paid in
equity securities of Borrower or any Subsidiary of Borrower, plus (iv) 100% of
the Net Cash Proceeds of any offerings of Capital Stock of Borrower or any of
its Subsidiaries; or
(c) the ratio of (i) Funded Debt as of the end of any Fiscal Quarter to
(ii) Adjusted EBITDA for the four-quarter period ending as of the end of such
Fiscal Quarter, to be more than 2.50 to 1.00; or
(d) the aggregate amount of capital expenditures of Borrower and its
Subsidiaries (excluding, however, the capitalized cost of video tapes purchased
by Borrower and its Subsidiaries
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for rental) to exceed (i) $28,000,000 for the Fiscal Year ending January 31,
1999, (ii) $35,000,000 for the Fiscal Year ending January 31, 2000, or (iii)
$42,000,000 for any Fiscal Year commencing February 1, 2000 or thereafter.
SECTION 6.2 Limitation on Indebtedness. Borrower will not, and will not
permit any of its Subsidiaries to, incur, create, contract, assume, have
outstanding, permit or suffer to exist, Guarantee or otherwise be or become,
directly or indirectly, liable in respect of any Indebtedness, except the
following (collectively, "Permitted Indebtedness"):
(i) the Obligations;
(ii) current liabilities for Taxes incurred in the ordinary
course of business which are not yet due and payable;
(iii) so long as the same is paid in accordance with its terms
and neither paid in violation of, nor renewed, extended, refinanced or
modified in a manner or upon terms that would violate, any provision of
any Loan Document, Indebtedness listed in Schedule 6.2, together with
all renewals, extensions, refinancings and modifications (but not
increases) thereof;
(iv) trade payables arising in the ordinary course of business
that, except for Contested Claims, are paid within the earlier of (A)
60 days of the date when payment thereof is due and payable and (B) 180
days of the date the respective goods are delivered or services are
rendered;
(v) purchase-money Indebtedness for equipment purchases which
does not exceed, in aggregate, $8,000,000 for any Fiscal Year;
(vi) Indebtedness of Borrower and its Subsidiaries which,
prior to the incurrence thereof, is subordinated to the payment of the
Obligations pursuant to a subordination agreement in form, scope and
substance satisfactory to the Required Banks and which, when added
together with other such subordinated Indebtedness of Borrower and its
Subsidiaries, does not exceed an aggregate amount approved by the
Required Banks; and
(vii) Indebtedness of Borrower evidenced by promissory notes
issued by Borrower pursuant to the Note Offering.
SECTION 6.3 Limitation on Property. Borrower will not, and will not
permit any of its Subsidiaries to, (i) grant, create, enter into, incur, permit
or suffer to exist, upon or with regard to any of its respective Property now
owned or hereafter acquired, (a) any Lien, except for Permitted Liens, or (b)
any Negative Pledge, except for the benefit of the Agent, the Issuing Bank and
Banks, or the purchasers of the promissory notes issued by Borrower pursuant to
the Note Offering, or (ii) enter into any sale-and-lease-back transaction.
Anything in the foregoing or elsewhere in the Loan
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Documents to the contrary notwithstanding, it is understood that no Liens, other
than Permitted Liens, or Negative Pledges, except for the benefit of the Banks
or the purchasers of the promissory notes issued by Borrower pursuant to the
Note Offering, are permitted on or with respect to any of the Property of
Borrower or any of its Subsidiaries.
SECTION 6.4 Restricted Payments. Except in situations in which,
immediately before and after giving effect to the proposed transaction, Borrower
is in full compliance with the financial covenants set forth in Section 6.1 and
there is no other Default, Borrower will not directly or indirectly (i) declare
or make, or incur any liability to pay or make, any Dividends, or (ii) redeem,
repurchase, retire or otherwise acquire for value any of its capital stock,
warrants, stock equivalents or other evidence of equity of any class or nature.
Further, Borrower will not directly or indirectly set apart any money or other
Property for a defeasance, sinking or analogous fund for any Dividend or
distribution thereon, or for any redemption, retirement or other acquisition
thereof.
SECTION 6.5 Limitation on Investments. Borrower will not, and will not
permit any of its Subsidiaries to, make or have outstanding any Investments in
any Person, except for (i) Temporary Cash Investments; (ii) Investments in
Material Subsidiaries, and to the extent that such Material Subsidiaries are
acquired pursuant to Section 6.13, subject to the restrictions therein; (iii)
other Investments which are Acquisitions permitted pursuant to Section 6.13; and
(iv) other Investments which do not exceed $1,000,000 in aggregate at any given
time (including Investments listed in Schedule 6.5).
SECTION 6.6 Affiliate Transactions. Borrower will not, and will not
permit any of its Subsidiaries to, enter into any transaction with, or pay any
management or other fees or compensation to, any Affiliate of Borrower or any of
its Subsidiaries other than transactions in the ordinary course of business
which are on fair and reasonable terms no less favorable to Borrower or any of
its Subsidiaries than would be obtained in a comparable arm's-length transaction
with a Person who is not an Affiliate of Borrower or any of its Subsidiaries. In
addition, Borrower will not, and will not permit any of its Subsidiaries to,
enter into any transaction with, or pay any management or other fees or
compensation to, any Person (a "Non-Affiliated Person") who is not an Affiliate
of Borrower or any of its Subsidiaries, wherein an Affiliate of Borrower or any
of its Subsidiaries is directly or indirectly involved in, related to, or
associated with, such transaction other than transactions in the ordinary course
of business which are on fair and reasonable terms no less favorable to Borrower
or any of its Subsidiaries than would be obtained in a comparable arm's- length
transaction with a Non-Affiliated Person wherein an Affiliate of Borrower or any
of its Subsidiaries is not directly or indirectly involved, related or
associated.
SECTION 6.7 Limitation on Sale of Property. Borrower will not, and will
not permit any of its Subsidiaries to, sell, assign, lease, sublease or discount
or otherwise exchange or dispose of any of its Property other than (i) sales of
inventory in the ordinary course of its business, (ii) sales or other
dispositions of obsolete equipment that is no longer needed for its ordinary
business or which is being replaced by equipment of at least comparable value
and utility to the equipment replaced when such equipment was efficiently
operational and functional, (iii) sales of previously viewed video
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tapes, and (iv) sales of fixed assets (which shall not include sales of
previously viewed video tapes) during each Fiscal Year which have an aggregate
book value not in excess of 10% of the book value of Borrower's and its
Subsidiaries' total fixed assets as of the beginning of such Fiscal Year.
SECTION 6.8 Internal Governance Documents; Name and Principal Place of
Business. Borrower will not, and will not permit any of its Subsidiaries to,
amend its certificate or articles of incorporation, bylaws or other governance
documents in any respect which could have a Material Adverse Effect. Without
notifying the Agent in writing at least 30 Business Days prior to the effective
date of each of the following changes, Borrower will not, and will not permit
any of its Subsidiaries to, (i) change its name, or operate any of its business,
operations or Property or own or lease any Property under any name, different
than as set forth in Schedule 4.14, (ii) change its identity or corporate or
other legal structure, or (iii) change its principal place of business or chief
executive office, as applicable, from such address and location set forth in
Schedule 4.14. Further, Borrower will notify the Agent as soon as practical and
in any event within 30 days after Borrower or any of its Subsidiaries opens to
the public for business any location at which it will conduct its business or
store or maintain any of its inventory, equipment or other Property, other than
locations set forth in Schedule 4.14.
SECTION 6.9 Certain Environmental Matters. Except in compliance in all
respects with Environmental Laws, and otherwise in no way posing an imminent and
significant endangerment to public health or welfare or the environment,
Borrower will not, and will not permit any of its Subsidiaries to, knowingly (i)
cause or permit any Hazardous Material to be placed, held, transported, located,
released or disposed of on, under, from, to, or at, any Property now or
hereafter owned, leased or otherwise controlled directly or indirectly by
Borrower or any of its Subsidiaries (for purposes of this Section 6.9, the
"Subject Property"), or (ii) permit the Subject Property ever to be used
(whether by Borrower or any other Person) as a dump site or storage site
(whether permanent or temporary) for any Hazardous Material. Without limitation
of the Agent's, the Issuing Banks' and the Banks' rights under the Loan
Documents, the Agent and its representatives shall have the right, but not the
obligation, to enter upon the Subject Property or take such other actions as the
Agent or any Bank deems necessary or advisable to cleanup, remove, resolve or
minimize the impact of, or otherwise deal with, any Hazardous Discharge or
Environmental Complaint upon the Agent's or any Bank's receipt of any notice
from any Governmental Authority or other Person, asserting the existence of any
Hazardous Discharge or Environmental Complaint on or pertaining to the Subject
Property which, if true, could result in Environmental Liability against
Borrower, the Agent, the Issuing Bank, any Bank or otherwise which, in the sole
opinion of any of them, could jeopardize any of their present or future Liens
against or rights to the Subject Property. All costs and expenses incurred by
the Agent, the Banks and their representatives in the exercise of any such
Rights shall become part of the Obligations and by payable upon demand, together
with interest on the unpaid portion thereof at the Default Rate.
SECTION 6.10 Liquidations, Mergers. Borrower will not, and will not
permit any of its Subsidiaries to, at any time (i) liquidate or dissolve itself
(or suffer any liquidation or dissolution) or otherwise wind up, except that (a)
a Subsidiary of Borrower may liquidate or dissolve into
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Borrower or a Subsidiary of Borrower which is a Material Subsidiary, and (b) a
Subsidiary of Borrower which is not a Material Subsidiary may liquidate or
dissolve into Borrower or a Subsidiary of Borrower; or (ii) enter into any
merger or consolidation unless (a) with respect to a merger or consolidation,
Borrower shall be the surviving corporation, unless the merger or consolidation
involves a Material Subsidiary and Borrower is not merging with another Person,
and either (1) such Material Subsidiary shall be the surviving corporation, (2)
the survivor of the merger becomes a Material Subsidiary, or (3) the entity
formed in the consolidation becomes a Material Subsidiary, (b) such transaction
shall not be utilized to circumvent compliance with any term or provision
herein, and (c) no Default or Event of Default shall then be in existence or
occur as a result of such transaction.
SECTION 6.11 Subsidiaries. Borrower will not, and will not permit any
of its Subsidiaries to, create or permit to exist any Subsidiary and will not
become a general partner, venturer or similar capacity in any partnership,
venture or similar Person, except (i) Material Subsidiaries who execute a
Guaranty Agreement and 100% of whose Capital Stock is pledged pursuant to a
Pledge Agreement to secure the Obligations, and (ii) Subsidiaries who are not
Material Subsidiaries, provided that (a) the aggregate amount of EBITDA of all
Subsidiaries that are not Material Subsidiaries shall not exceed 5% of the
EBITDA of Borrower and its Subsidiaries, on a consolidated basis, for the
four-quarter period ending as of the most recent Fiscal Quarter, (b) the
aggregate amount of total assets of all Subsidiaries that are not Material
Subsidiaries shall not exceed 5% of the total assets of Borrower and its
Subsidiaries, on a consolidated basis (determined as of the last day of the most
recent Fiscal Quarter), and (c) the aggregate amount of loans to and investments
in all Subsidiaries that are not Material Subsidiaries by Borrower and its
Subsidiaries shall not exceed 5% of the total assets of Borrower and its
Subsidiaries (determined as of the last day of the most recent Fiscal Quarter).
SECTION 6.12 Sale of Receivables. Unless in favor of the Agent, the
Issuing Bank and the Banks or reasonably necessary in connection with collection
efforts on delinquent receivables, Borrower will not, and will not permit any of
its Subsidiaries to, sell or discount any of its accounts or notes receivable.
SECTION 6.13 Acquisitions. Borrower will not, and will not permit any
of its Subsidiaries to, make any Acquisitions unless (i) immediately prior to
and after giving effect to the proposed Acquisition there shall not exist a
Default or Event of Default, (ii) such Acquisition shall not be opposed by the
board of directors of the Person being acquired, (iii) the Banks shall have
received written notice thereof at least 20 Business Days prior to the date of
such Acquisition, together with a Compliance Certificate setting forth the
covenant calculations both immediately prior to and after giving effect to the
proposed Acquisition, but calculated to exclude any increases in EBITDA which
would be the result of any expenses that Borrower projects to be eliminated by
such proposed Acquisition, (iv) the assets, property or business acquired shall
be primarily in the business described in Section 5.14, (v) if such Acquisition
results in a Material Subsidiary, (a) such Material Subsidiary shall execute a
Guaranty Agreement, (b) 100% of such Material Subsidiary's Capital Stock shall
be pledged pursuant to a Pledge Agreement to secure the Obligations, and (c) the
Agent on
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behalf of the Banks shall receive such board resolutions, officer's certificates
and opinions of counsel as the Agent shall reasonably request in connection with
such Acquisition; and (vi) the aggregate Acquisition Consideration for all
Acquisitions during (a) the 1998 Fiscal Year shall not exceed $30,000,000 and
(b) during each Fiscal Year thereafter shall not exceed the sum of (1)
$30,000,000, plus (if Net Income is greater than zero) or minus (if Net Income
is less than zero) (2) 50% of Net Income for the immediately preceding Fiscal
Year.
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.1 Events of Default. An "Event of Default" shall exist if any
one or more of the following events shall occur and be continuing:
(a) failure or refusal to pay (i) when due, any principal of any Note
or any Reimbursement Obligations on any Letter of Credit or (ii) by the earlier
of (A) 5 Business Days of the date when due or (B) 3 Business Days after notice
by the Agent, any interest on any Note or any Reimbursement Obligations on any
Letter of Credit, or any fee, expense or other Obligations required hereunder;
or
(b) any representation, warranty or certification made or deemed made
by, or on behalf of, Borrower or any of its Subsidiaries under, or in connection
with, any of the Loan Documents, or in any certificate, notice, request,
statement or other communication furnished or made to the Agent, the Issuing
Bank or any Bank pursuant hereto or in connection herewith is untrue, misleading
or inaccurate in any material respect as of the date on which such
representation, warranty or certification was made (or deemed made) or
furnished; or
(c) (i) failure to perform, observe or comply with any covenant or
agreement contained in Article 6 or the occurrence of an event or circumstance
designated as a "default" or an "event of default" under any other Loan
Document; or (ii) except as provided in Section 7.1(a) or Section 7.1(c)(i),
failure to perform, observe or comply with any covenant or agreement contained
in this Agreement or any other Loan Document, which failure continues for a
period of 30 days after Borrower obtains knowledge of the occurrence thereof;
provided, however, that if such failure is susceptible to cure but not within
such 30-day period, a plan to cure such failure has been approved in writing by
the Required Banks and Borrower has commenced actions according to such plan
within the 30-day period and is prosecuting such plan diligently, then no Event
of Default shall occur under this Section 7.1(c)(ii) until the later of 60 days
after the Borrower obtains knowledge of such failure or such other date as
agreed to by Borrower and the Required Banks in the plan approved by the
Required Banks; provided further, however, that no such grace period shall
apply, and an Event of Default shall exist under this Section 7.1(c)(ii) upon
such failure to perform, observe or comply, if such failure (A) is not
susceptible to cure, as determined in the discretion of the Required Banks, or
(B) may not be cured, as determined in the discretion of the Required Banks,
within 60 days after
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Borrower obtains knowledge of such failure or within a reasonable time
thereafter according to any plan provided to the Required Banks; or
(d) either (i) default in the payment, within 3 Business Days of when
due, of Indebtedness of Borrower or any Material Subsidiary, individually or in
the aggregate, in excess of $1,000,000 or any default, event or condition in
respect of any note, agreement, indenture, loan agreement, credit agreement,
bond or other document evidencing or relating to any such Indebtedness shall
occur, and such default, event or condition continues for more than the period
of grace, if any, specified therein, if the effect of such default, event or
condition is to permit or cause the holder of such Indebtedness (or a trustee on
behalf of any such holder) to cause such Indebtedness to become due or prepaid
prior to its maturity or require Borrower or any Material Subsidiary to
purchase, prepay or redeem such Indebtedness or (ii) Indebtedness of Borrower or
any Material Subsidiary, individually or in the aggregate, in excess of
$1,000,000 becomes due or prepayable (or required to be redeemed or purchased)
before its stated maturity by acceleration of the maturity thereof or otherwise;
or
(e) Borrower or any Material Subsidiary shall (i) apply for or consent
to the appointment of, or the taking of possession by, a receiver, trustee,
custodian, intervenor or liquidator of Borrower or any Material Subsidiary or of
all or a substantial part of its Property, (ii) commence or file a voluntary
petition, proceeding or case in bankruptcy, or admit in writing that it is
unable to pay its debts as they become due or generally not pay its debts as
they become due, (iii) make a general assignment for the benefit of creditors,
(iv) file a petition or answer seeking reorganization or an arrangement with
creditors or take advantage of any Debtor Laws, (v) file an answer admitting the
material allegations of or consenting to, or default in answering, a petition,
proceeding or case filed against it in any bankruptcy, reorganization or
insolvency proceeding or (vi) take corporate action for the purpose of effecting
any of the foregoing; or
(f) an involuntary petition, proceeding, case or complaint is filed
against Borrower or any Material Subsidiary seeking bankruptcy, liquidation,
dissolution, winding-up or reorganization of Borrower or any Material
Subsidiary, or the composition or readjustments of its debts, or the appointment
of a receiver, custodian, trustee, intervenor or liquidator of it or all or
substantially all of its Property, and such petition, proceeding, case or
complaint is not dismissed within 30 days of the filing thereof; or an order,
order for relief, judgment or decree shall be entered by any court of competent
jurisdiction or other competent authority approving a petition, proceeding, case
or complaint seeking liquidation, reorganization, dissolution, winding-up or
bankruptcy of Borrower or any Material Subsidiary or appointing a receiver,
custodian, trustee, intervenor or liquidator of Borrower or any Material
Subsidiary, or of all or substantially all of its Property, and such order,
order for relief, judgment or decree continues unstayed for a period of 30 days;
or
(g) any Judgment or in the aggregate, Judgments for the payment of
money in excess of the sum of $1,000,000 or that would otherwise have a Material
Adverse Effect shall be rendered against Borrower or any Material Subsidiary or
with respect to any Property of Borrower or any of its Material Subsidiaries,
and such Judgment or Judgments shall not be satisfied, discharged or
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appealed (provided that during the pendency of such appeal prosecution of the
Judgment or Judgments is stayed) within 30 days of the date it is rendered; or
(h) both (i) and (ii) following shall occur: (i) either (A) proceedings
have been instituted to terminate, or a notice of termination has been filed
with respect to, any Plan by Borrower or any Subsidiary, any member of the
"controlled group" (as defined in the Code) of Borrower, PBGC or any
representative of any thereof, or any such Plan shall be terminated, in each
case under Section 4041 or 4042 of ERISA, or (B) a "reportable event" (as
defined in Title 4 of ERISA) has occurred with respect to any Plan and continues
for a period of 60 days, and (ii) the sum of the estimated liability to PBGC
under Section 4062 of ERISA and the currently payable obligations of Borrower or
any Subsidiary to fund liabilities (in excess of amounts required to be paid to
satisfy the minimum funding standard of Section 412 of the Internal Revenue
Code) under the Plan or Plans subject to such event exceeds 10% of the
consolidated net worth of Borrower and its Subsidiaries at such time; or
(i) a Change in Control shall occur; or
(j) except pursuant to the express terms of any Loan Document, any Loan
Document shall, at any time after its execution and delivery and for any reason,
cease to be in full force and effect or be declared to be null and void, or
Borrower or any other Person shall deny that it has any or any further liability
or obligations under any Loan Document to which it is a party; or
(k) the Banks shall fail (other than as a result of action or inaction
of Agent or any Bank) to have a perfected first priority Lien in 100% of the
outstanding Capital Stock of each Material Subsidiary.
SECTION 7.2 Remedies Upon Event of Default. In the event an Event of
Default occurs and is continuing, the Agent may, and upon written request of the
Required Banks, shall, exercise any one or more of the following Rights, and any
other Rights available at law or in equity or provided in any of the Loan
Documents: (i) terminate all or any portion of the Commitments (including the
commitment to issue Letters of Credit), and such Commitments shall thereupon
terminate, and (ii) declare the principal of, and all earned and accrued
interest on, the Notes then outstanding and all other accrued and unpaid
Obligations to be immediately due and payable, whereupon the same shall be and
become due and payable, each and all of the foregoing without presentment,
demand, protest, notice of default, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby waived by
Borrower, provided however, upon the occurrence of any Event of Default
specified in Section 7.1(e) or Section 7.1(f), all of the Commitments shall
thereupon automatically and immediately terminate and the principal of, and all
earned and accrued interest on the Notes then outstanding and all other accrued
and unpaid Obligations shall thereupon be and become automatically and
immediately due and payable, each and all of the foregoing without presentment,
demand, protest, notice of default, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby waived by
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Borrower. If any amount payable under any of the Loan Documents is not paid when
due the outstanding and unpaid portion of such amount shall bear interest at the
Default Rate.
SECTION 7.3 Certain Additional Remedies Regarding Letters of Credit.
Borrower hereby agrees, in addition to the provisions of Section 7.1 hereof,
that upon the occurrence and during the continuance of any Event of Default or
any Letter of Credit Event, it shall, if requested by the Agent remit (and, in
the case of an Event of Default specified in Section 7.1(e) or Section 7.1(f),
forthwith, without any presentment, demand, protest, notice if default or of
occurrence of a Letter of Credit Event, notice of any intent to accelerate,
notice of acceleration or any other notice of any kind or the taking of any
other action by the Agent, the Issuing Bank or the Banks (all of which are
hereby waived by Borrower), it shall remit) to the Agent an amount in
immediately available funds (which funds shall be held as collateral for the
Obligations) equal to the then aggregate amount of the Letter of Credit
Exposure. Borrower hereby grants to Agent a security interest in, a general lien
upon, and a right of setoff with respect to, all amounts from time to time and
at any time held by, or paid or remitted to, the Agent, the Issuing Bank or any
Bank, which are held as cash collateral as further security for the payment of
the Obligations.
ARTICLE 8
THE AGENT AND BANKS
SECTION 8.1 Appointment of the Agent. Each of the Banks and the Issuing
Bank hereby appoints NationsBank as Agent to act as herein specified, and acting
in the manner and to the extent provided in this Article 8, NationsBank accepts
such appointment as the Agent. Each of the Banks and the Issuing Bank hereby
irrevocably authorizes the Agent to receive payments of principal, interest and
other amounts due hereunder as specified herein and otherwise to take such
action on its behalf, to exercise such powers and to perform such duties under
the Loan Documents as are specifically delegated to, or required of, the Agent
by the terms of the Loan Documents, together with all other powers reasonably
incidental thereto, which authorization permits the Agent to perform any of its
duties under the Loan Documents by or through its agents, attorneys or
employees. The Agent shall have no duties or responsibilities except those
expressly set forth with respect to it in the Loan Documents. The relationship
of the Agent to the Banks and the Issuing Bank is only that of one company
acting solely as an administrative agent for others, and nothing in the Loan
Documents, express or implied, is intended to, or shall be construed to,
constitute the Agent a trustee or other fiduciary for the Issuing Bank, or any
holder of any of the Notes, or of any participation therein, nor to impose on
the Agent duties and obligations other than those expressly provided for in the
Loan Documents. As to any matters not expressly provided for in the Loan
Documents and any matters to which the Loan Documents place within the
discretion of the Agent, the Agent shall not be required to exercise any
discretion or take any action (and it may request instructions from the Banks
and the Issuing Bank with respect to any such matter), in which case it shall be
required to act or refrain from acting (and shall be fully protected an free
from liability to all Banks and the Issuing Bank in so acting or refraining from
acting) upon the instructions of the Required Banks (including itself),
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and such instructions shall be binding upon all Banks and the Issuing Bank, and
all holders of, and participants in, the Notes and the Letters of Credit;
provided, however, (i) the Agent shall in all cases be fully justified in
failing or refusing to act under any Loan Documents unless it shall be
indemnified to its satisfaction by the Banks and the Issuing Bank against any an
all liability and expense (other than any such liability or expense proximately
caused by the Agent's gross negligence or willful misconduct, as determined by a
final judgment) which may be incurred by it by reason of taking or continuing to
take any such action, and (ii) the Agent shall not in any event be required to
take any action which (A) is contrary to any Loan Document or Law or (B) exposes
it to a risk of personal liability that it considers unreasonable.
SECTION 8.2 Exculpation; Agent's Reliance. AS AMONG THE BANKS, NEITHER
THE AGENT NOR ANY OF ITS AFFILIATES, NOR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, AGENTS, ATTORNEYS, INSURERS OR EMPLOYEES, NOR ANY OF ITS OR THEIR
SUCCESSORS, HEIRS, LEGAL REPRESENTATIVES OR ASSIGNS (COLLECTIVELY, THE "AGENT
INDEMNITEES"), SHALL EVER BE LIABLE FOR ANY ACTION TAKEN OR OMITTED TO BE TAKEN
BY ANY OF THEM UNDER OR IN CONNECTION WITH ANY LOAN DOCUMENT, INCLUDING THEIR
NEGLIGENCE OF ANY KIND, EXCEPT THAT EACH SHALL RESPECTIVELY BE LIABLE FOR ITS
OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AS DETERMINED BY A FINAL JUDGMENT.
Without limiting the generality of the foregoing or any other provision of any
Loan Document, the Agent: (i) may treat the payee of any Note as the holder
thereof until the Agent receives and accepts an Assignment Agreement entered
into by the Persons as provided in Section 10.7 and all other provisions of
Section 10.7 are complied with to the reasonable satisfaction of the Agent; (ii)
may consult with legal counsel (including counsel for Borrower), independent
public accountants and other experts and advisors selected by it and shall be
fully protected and free from liability to all Banks and the Issuing Bank for
any action taken or omitted to be taken in good faith by it in accordance with
the advise of such counsel, accountants, experts or advisors; (iii) makes no
warranty or representation to any Bank or the Issuing Bank and shall not be
responsible to any Bank or the Issuing Bank for any statements, recitals,
information, warranties or representations made in or in connection with any
Loan Document, or in any communication or writing made or delivered in
connection therewith; (iv) shall not have any duty to ascertain, to inquire or
to keep itself informed as to the financial condition of Borrower or its
Subsidiaries or the performance or observance of any of the terms, covenants or
conditions of any Loan Document on the part of any Person or to inspect the
Property (including the books and records) of Borrower or its Subsidiaries or
any other Person; (v) shall not be responsible to any Bank or the Issuing Bank
for the financial condition of Borrower or its Subsidiaries or the due
execution, legality, validity, enforceability, collectibility, genuineness,
sufficiency or value of any Loan Document or instrument or document furnished in
connection therewith, or the creation, perfection, continued creation or
perfection, or priority, of any Lien purported to be created by any Loan
Document, or any other instrument or document furnished pursuant hereto or
thereto; and (vi) may rely, and shall be fully protected and free from liability
to all Banks and the Issuing Bank in relying, (A) upon the representations and
warranties of Borrower, the Banks and the Issuing Bank in exercising its powers
hereunder, and (B) upon any notice, consent, certificate, statement, resolution,
instrument or other writing (which may be by telegram, cable,
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telecopy, facsimile, telex, mail or telephone) believed by it to be genuine and
signed, sent, communicated or otherwise made by the proper Person or Persons.
SECTION 8.3 Defaults. The Agent shall not be deemed to have knowledge
of the occurrence of a Default or Event of Default (other than the non-payment
of principal of or interest on Loans or of Commitment Fees and Unavailable
Commitment Fees) unless the Agent has received written notice from a Bank, the
Issuing Bank or Borrower specifying the occurrence of such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event that
the Agent receives a Notice of Default, it shall give prompt notice thereof to
the Banks and the Issuing Bank (and shall give each Bank and the Issuing Bank
prompt notice of each such non-payment). Subject to Section 8.1, the Agent shall
take such action with respect to such Default or Event of Default as shall be
directed by the Required Banks; provided that, unless and until the Agent shall
have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall in its sole and absolute discretion deem
advisable in the best interest of the Banks and the Issuing Bank.
SECTION 8.4 Rights as a Bank. NationsBank (and any successor acting as
the Agent), in its capacity as a Bank or the Issuing Bank (as applicable)
hereunder shall have the same rights and powers hereunder as any Bank or Issuing
Bank (as applicable) and may exercise the same as though it were not the Agent,
and the term "Bank", "Banks", "Issuing Bank", Required Banks", "holders of
Notes" or similar terms shall, unless otherwise expressly indicated, include
NationsBank (and any successor acting as Agent) in its individual capacity.
NationsBank (and any successor acting as the Agent) and its Affiliates may
accept deposits from, lend money to, act as trustee under indentures or as
transfer agent in respect of capital stock of, and generally engage in any kind
of banking, trust, investment, financial advisory or other business with, the
Borrower or its Affiliates, and may accept fees and other consideration from the
Borrower or its Affiliates for services in connection with any of the foregoing,
any of the Loan Documents or otherwise, all as if it were not Agent hereunder
and without having to account for the same to the Banks or the Issuing Bank. All
fees and other amounts received by Agent for its capacity as Agent hereunder
shall solely be for its benefit and no other party hereto.
SECTION 8.5 Indemnification. EACH BANK AGREES TO INDEMNIFY, REIMBURSE
AND HOLD HARMLESS EACH AGENT INDEMNITEE (TO THE EXTENT NOT INDEMNIFIED AND
REIMBURSED, ON DEMAND, BY BORROWER), RATABLY ACCORDING TO ITS PERCENTAGE SHARE,
FROM AND AGAINST ANY AND ALL LOSSES, LIABILITIES, OBLIGATIONS, CLAIMS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, SUITS, JUDGMENTS, DEMAND, SETTLEMENTS, COSTS,
DISBURSEMENTS OR EXPENSES (INCLUDING FEES AND EXPENSES OF ATTORNEYS,
ACCOUNTANTS, EXPERTS AND ADVISORS) OF ANY KIND OR NATURE WHATSOEVER (IN THIS
SECTION 8.5, THE FOREGOING IS COLLECTIVELY REFERRED TO AS THE "LIABILITIES AND
COSTS", WHICH TO ANY EXTENT (IN WHOLE OR PART) MAY BE IMPOSED ON, INCURRED BY,
OR ASSERTED AGAINST, SUCH AGENT INDEMNITEE IN ANY WAY RELATING TO, OR ARISING
OUT OF, THE LOAN DOCUMENTS AND THE TRANSACTION
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AND EVENTS (INCLUDING THE ENFORCEMENT THEREOF) AT ANY TIME ASSOCIATED THEREWITH
OR CONTEMPLATED THEREIN (INCLUDING ANY VIOLATION OR NONCOMPLIANCE WITH ANY
ENVIRONMENTAL LAWS BY ANY PERSON OR ANY LIABILITIES OR DUTIES OF ANY PERSON WITH
RESPECT TO HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE ENVIRONMENT) OR AS
A RESULT OF ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY SUCH AGENT INDEMNITEE,
INCLUDING ITS NEGLIGENCE OF ANY KIND, OTHER THAN AS PROVIDED IN THE FOLLOWING
PROVISO, THE GROSS NEGLIGENCE OF AN AGENT INDEMNITEE; PROVIDED THAT NO BANK
SHALL BE LIABLE FOR ANY PORTION, IF ANY, OF ANY LIABILITIES AND COSTS WHICH IS
PROXIMATELY CAUSED BY THE AGENT'S OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, AS DETERMINED IN A FINAL JUDGMENT. WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, EACH BANK AGREES, IN PROPORTION WITH ITS PERCENTAGE SHARE, TO
REIMBURSE THE AGENT PROMPTLY UPON ITS DEMAND FOR ANY COSTS AND EXPENSES
(INCLUDING ATTORNEYS' FEES AND EXPENSES AND OTHER CHARGES) INCURRED BY THE AGENT
IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION,
MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL
PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF THEIR RIGHTS OR
RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, OR ANY OF THEM, OR ANY OTHER
DOCUMENTS CONTEMPLATED BY THE LOAN DOCUMENTS, TO THE EXTENT THAT THE AGENT IS
NOT REIMBURSED, ON DEMAND, FOR SUCH AMOUNTS BY BORROWER. Each Bank's obligations
under this paragraph shall survive the termination of this Agreement and the
discharge of Borrower's obligations hereunder.
SECTION 8.6 Bank's Credit Decision and Non-Reliance. Each Bank and the
Issuing Bank hereby acknowledges that it has, independently and without reliance
upon the Agent or any other Person, and based upon such documents and
information as it has deemed appropriate, made (i) its own independent
investigation and analysis (including legal and credit investigation and
analysis) of Borrower and its Affiliates, and its and their respective financial
conditions, operations and affairs, and Properties, and the transactions
provided for in, and contemplated by, each of the Loan Documents, and (ii) its
own independent decision to enter into and perform each Loan Document. Each Bank
and the Issuing Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Person, and based on such investigation,
analysis, documents and information as it shall deem appropriate at the time,
continue to make its own independent legal, credit and other decisions in taking
or omitting to take action under or in connection with the Loan Documents.
Except for notices, reports and other documents and information expressly
required to be furnished to the Banks and/or the Issuing Bank by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank or the Issuing Bank with any credit or other information concerning the
affairs, financial condition, or business of Borrower or its Affiliates which
may come into the possession of the Agent or any of its Affiliates.
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SECTION 8.7 Deferral of Distributions; Investments. Whenever the Agent
in good faith determines that it is uncertain about how to distribute to the
Banks or the Issuing Bank any funds which it has received, or whenever the Agent
in good faith determines that there is any dispute among the Banks and/or the
Issuing Bank about how such funds should be distributed, the Agent may choose to
defer distribution of the funds which are the subject of such uncertainty or
dispute. If the Agent in good faith believes that the uncertainty or dispute
will not be promptly resolved, it may, or if the Agent is otherwise required to
invest funds pending distribution to the Banks and/or the Issuing Bank, it
shall, invest such funds pending distribution in any manner it deems
appropriate, absent timely instructions from the Required Banks; all interest on
any such investment (net of investment and related costs, if any, incurred in
connection therewith) shall be distributed upon the distribution of such
investment and in the same proportion and to the same Persons as such
investment. All moneys received by the Agent for distribution to the Banks
and/or the Issuing Bank (other than to the Person who is the Agent in its
separate capacity as a Bank) shall be held by the Agent pending such
distribution solely as the Agent for such Banks and/or the Issuing Bank, and the
Agent shall have no equitable title to any portion thereof. ABSENT GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT ON ITS PART (BUT EXCLUDING ITS OWN NEGLIGENCE
OF ANY OTHER KIND), AS DETERMINED BY A FINAL JUDGMENT, THE AGENT SHALL BE
FULLY PROTECTED AND FREE FROM LIABILITY TO THE BANKS AND/OR THE ISSUING BANK,
FOR ANY COSTS AND LIABILITIES RESULTING FROM OR RELATED TO THE DEFERRAL OF
DISTRIBUTIONS AND/OR MAKING OF INVESTMENTS AS PROVIDED FOR IN THIS SECTION 8,
INCLUDING THE FAILURE OF ANY SUCH INVESTMENT.
SECTION 8.8 Name of Article 8. The provisions of this Article 8 (other
than the following Section 8.9) are intended solely for the benefit of the
Agent, Banks and the Issuing Bank, and neither the Borrower nor any other Person
shall be entitled to rely on any such provision or assert any such provision in
a claim or defense against the Agent, any Bank or the Issuing Bank. The Agent,
Banks and the Issuing Bank may waive or amend such provisions as they desire
without any notice to or consent of the Borrower. Nothing contained in any Loan
Document, and no action taken by any Bank, the Issuing Bank or the Agent
pursuant hereto or in connection herewith or pursuant to or in connection with
the Loan Documents, shall be deemed to constitute the Banks and the Issuing
Bank, together or with or without the Agent, a partnership, association, joint
venture or other entity.
SECTION 8.9 Resignation and Removal by Agent. The Agent may resign at
any time as the Agent under the Loan Documents by giving written notice thereof
(which notice shall contain the date of such resignation) to the Banks, the
Issuing Bank and Borrower and, upon the gross negligence or manifest
incompetence of the Agent, the Agent may be removed as the Agent under the Loan
Documents by the Required Banks. Upon any such resignation or removal, the
Required Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Banks and shall
have accepted such appointment within 30 calendar days after the retiring
Agent's giving notice of resignation or the Required Banks' removal of the
retiring Agent, as applicable, then the retiring Agent may, on behalf of Banks
and the Issuing Bank appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States of America or of any State thereof
having a combined capital and surplus of at least $500,000,000.
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In any case where a successor Agent is being selected, the parties agree to
attempt to select such successor from one of the Banks. If one of the Banks is
selected as a successor Agent, such selection shall not be subject to approval
by Borrower; however, if a Person other than one of the Banks is selected as a
successor Agent, such selection, so long as no Event of Default shall have
occurred and be continuing, shall be subject to the approval of Borrower, which
approval shall not be unreasonably withheld. Upon the acceptance of any
appointment as the Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all rights, powers, privileges
and duties of the retiring or removed Agent and the retiring or removed Agent
shall be discharged from its duties and obligations under the Loan Documents.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article 8 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Agent under the Loan Documents.
ARTICLE 9
CHANGED CIRCUMSTANCES
SECTION 9.1 Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period, (i) the Agent shall have
determined (which determination shall be conclusive and binding upon Borrower)
that, by reason of circumstances affecting the interbank Eurodollar market, or
reporting or data gathering and/or dissemination networks, systems or companies
related thereto or dealing therewith, adequate and reasonable means do not exist
for ascertaining the London Interbank Offered Rate for such Interest Period, or
(ii) the Agent shall have received written notice from the Required Banks that
the London Interbank Offered Rate determined or to be determined for such
Interest Rate Period will not adequately and fairly reflect the cost to such
Banks (as conclusively certified by such Banks) of making or maintaining their
LIBOR Loans during such Interest Period, then the Agent shall forthwith give
notice thereof to Borrower and the Banks. Until the Agent notifies Borrower that
such notice has been withdrawn by the Agent, no further LIBOR Loans by any Bank
shall be made or continued as such, nor shall Borrower have the right to convert
Loans to LIBOR Loans.
SECTION 9.2 Illegality. Notwithstanding any other provision herein, if
at any time a Bank determines (which determination shall be reasonably exercised
and if so reasonably exercised, shall be conclusive and binding upon the
parties, absent manifest error) that the making or maintaining LIBOR Loans
hereunder has become unlawful pursuant to applicable Law, or any interpretation,
application or administration thereof (whether or not having the force of law),
then such Bank (an "Affected Bank") shall so promptly notify the Agent, the
other Banks and Borrower. Upon giving such notice (i) the obligations of all
Banks to make or continue, or to convert Base Rate Loans into, LIBOR Loans shall
be suspended until the Affected Bank notifies the Agent, the other Banks and
Borrower that it may again make and maintain LIBOR Loans, and (ii) Borrower
shall, upon the request of any Bank, prepay any LIBOR Loan then outstanding
(which prepayment, if requested by Borrower, shall be made with the proceeds or
effect of a Base Rate Loan extended
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contemporaneously by such Bank, together with accrued interest thereon, and loss
and expenses, if any, provided for in Section 2.12.
SECTION 9.3 Increased Cost and Reduced Return.
(a) If the adoption of, or any change in, any Law, or in the
interpretation, application or administration thereof, or compliance by any Bank
(or its Lending Office) with any request or directive (whether or not having the
force of law) of any central bank or other Governmental Authority:
(i) shall subject any Bank (or its Lending Office) to any tax,
duty or other charge of any kind whatsoever with respect to this
Agreement, any Note, any Letter of Credit, any Application or any LIBOR
Loan made by it, or its obligations in respect to any of the foregoing,
or shall change the basis of taxation of payments to such Bank (or its
Lending Office) in respect to any amounts due to it in respect to any
of the foregoing (except for changes in the rate of tax on the overall
net income of such Bank or its Lending Office imposed by any
jurisdiction); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit, compulsory loan or similar requirement (including,
without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System) against assets of, deposits
with or other liabilities of or for the account of, advances, loans or
other extensions of credit by, or other acquisition of funds by, any
Bank (or its Lending Office), which is not otherwise included in the
determination of the Adjusted London Interbank Offered Rate; or
(iii) shall impose on any Bank (or its Lending Office) or on
the London interbank market any other condition affecting this
Agreement, any Note, any Letter of Credit, any Application or any LIBOR
Loan, or its obligations in respect to any of the foregoing;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making, converting into, continuing or maintaining any
LIBOR Loan or issuing or participating in any Letter of Credit, or to reduce the
amount of any sum received or receivable by such Bank (or its Lending Office)
under this Agreement or under its Notes with respect thereto, then subject to
Section 10.8, within 5 days after demand by such Bank (with a copy to the
Agent), Borrower shall, without limiting the effect of any other applicable
provision hereof (but without duplication) pay to such Bank such additional
amount or amounts as will compensate such Bank for such increased costs ir
reduction of amount receivable, but only to the extent of the actual amount of
such increased costs or reduction of amount received.
(b) If the adoption of, or any change in, any Law regarding capital
adequacy or risk-based capital guidelines or requirements, or in the
interpretation, application or administration thereof or compliance by any Bank
(or its Lending Office, or its or any of their Affiliates) with any request or
directive regarding capital adequacy or risk-based capital guidelines or
requirements (whether or not
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having the force of law) of any central bank or other Governmental Authority,
does or shall, in the reasonable determination of such Bank, have the effect of
reducing the rate of return on such Bank's (or its Lending Office, or its or
their Affiliates) capital or assets as a consequence of its obligations
hereunder, or under or in respect of any Letter of Credit, to a level below that
which such Bank (or its Lending Office, or its or their Affiliates) could have
achieved but for such adoption, change or compliance (taking into consideration
such Bank's (or its Lending Office, or its or their Affiliates) policies with
respect to capital adequacy or risk-based capital guidelines or requirements),
then from time to time, within 5 days after demand by such Bank (with a copy to
the Agent), subject to Section 10.8, Borrower shall, without limiting the effect
of the foregoing provisions of this Section 9.3 (but without duplication), pay
to such Bank such additional amount or amounts as will compensate such Bank for
the amount of such reduction, but only to the actual amount of such reduction.
(c) Each Bank will promptly notify Borrower and the Agent of any event
of which it has knowledge which will entitle such Bank to compensation pursuant
to this Section 9.3. A certificate of any Bank claiming compensation under this
Section 9.3 and setting forth the additional amount or amounts to be paid to it,
as well as the manner in which such amount or amounts were calculated, hereunder
shall be conclusive and binding on Borrower in the absence of manifest error. In
determining such amount, such Bank may use, among others, any reasonable
averaging and attribution methods.
(d) If Borrower pays any Bank compensation under this Section 9.3 and
thereafter such Bank receives a refund of amounts under this Section 9.3 with
respect to which such compensation was paid by Borrower, such Bank shall refund
to Borrower the amount of such compensation to the extent of such refund so
received by such Bank.
(e) The rights and benefits of the Banks under this Section 9.3 shall
also apply to the Issuing Bank in its capacity as such.
SECTION 9.4 Substitute Rate for Affected LIBOR Loans.
(a) If the obligation of any Bank to make, convert or continue (as
applicable) a LIBOR Loan shall be suspended pursuant to Section 9.1 or Section
9.2 (each such affected LIBOR Loan, an "Affected Loan"), then each such Affected
Loan that otherwise would have been made, converted or continued (as applicable)
by the Banks as a LIBOR Loan shall be made, converted or continued (as
applicable) instead as a Base Rate Loan.
(b) If the London Interbank Offered Rate is not published or reported
for 30 consecutive days or 30 days have passed since Borrower's receipt of an
Agent's notice a provided in Section 9.1 or an Affected Bank's notice as
provided in Section 9.2, as applicable, and the circumstance underlying such
notice continues to exist, then within 15 days after the earlier to occur of any
such event (such earliest to occur event, a "LIBOR Event"),. and so long as such
LIBOR Event shall be continuing, Borrower may notify the Agent and the Banks
that is desires to discuss with them the
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availability of a reasonably comparable alternate rate option or additional
interest rate option for the Loans that is mutually agreeable to Borrower, the
Agent and the Banks; and, if Borrower, the Agent and the Banks so mutually agree
within 30 days after such notice is given by Borrower, the parties shall as soon
as reasonably practical thereafter enter into an amendment to this Agreement and
any other affected Loan Documents in form, scope and substance, and upon terms
and conditions, satisfactory to the Agent and the Banks. If, in any event, any
Bank does not, in its sole discretion (with due respect for, among other
matters, its independent requirements, considerations and circumstances), agree
to any proposed alternate or additional interest rate option within such 30-day
period, no such alternate or additional interest rate option shall be available
with respect to the LIBOR Event initiating the discussions related to such
proposed alternative or additional interest rate option.
SECTION 9.5 Alternate Lending Office Designation. Each Bank agrees that
it will endeavor to use reasonable efforts to designate an alternate Lending
Office with respect to any LIBOR Loans affected by the matters or circumstances
described in any of Sections 9.1, 9.2 and 9.3 to reduce the liability of
Borrower or avoid the results provided thereunder, so long as such designation
is not disadvantageous to such Bank as determined by it in its sole discretion;
provided that notices to the Agent under Article 2 or Article 9 shall not be
effective until actually received by a representative of the Agent, as
distinguished from received at its place of business only.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 Notices.
(a) All notices, requests and other communications to any party under
any Loan Document shall be in writing or, in the case of a Notice of Borrowing,
by telephone confirmed the same day in writing on or before 12:00 noon (Dallas
time) (including bank wire, telecopy, telex or similar writing) and shall be
given to such party at its address, telecopy or telex number set forth in Annex
A (or in an Assignment Agreement, if applicable) or such other address, telecopy
or telex number as such party may hereafter specify for the purpose by notice to
the Agent and Borrower. Each such notice, request or other communication shall
be effective (i) if given by telex, when such telex is transmitted to the telex
number specified pursuant to this Section 10.1 and the appropriate answerback is
received, (ii) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified pursuant to this Section 10.1, and the sender has
received electronic confirmation thereof, (iii) if given by registered or
certified mail, return receipt requested, 72 hours after such communication is
deposited in the mails with postage prepaid, addressed as aforesaid or (iv) if
given by any other means, when delivered at the address specified pursuant to
this Section 10.1; provided that notices to the Agent under Article 2 or Article
9 shall not be effective until actually received by a representative of Agent,
as distinguished from received at its place of business only.
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(b) Any verbal communication or instrument in writing received by the
Agent in connection with a Borrowing or a Loan, the issuance of a Letter of
Credit or any other matter with respect to any Loan Document, which purports to
be dispatched or signed by or on behalf of Borrower and confirmed, in the case
of a verbal communication, by the Agent by telephone confirmation with an
Authorized Officer, shall conclusively be deemed to have been dispatched or
signed by or on behalf of Borrower pursuant to such Person's authority to bind
Borrower and all other Persons for the liabilities and matters in connection
therewith to the Agent, the Issuing Bank and each Bank; and the Agent, the
Issuing Bank and each Bank may conclusively rely thereon and shall have no
obligation, duty or responsibility to determine the validity or genuineness
thereof or the authority of the Person or Persons executing or dispatching the
same.
SECTION 10.2 No Waivers. No failure or delay by the Agent, the Issuing
Bank, any Bank or Borrower in exercising any Right under any Loan Document, and
no course of dealing with respect to any such Rights, shall operate as a waiver
thereof, nor shall any single or partial exercise thereof or any abandonment or
discontinuance of steps or actions to enforce any Rights, preclude or prejudice
the concurrent or subsequent exercise thereof or the exercise of any other such
Rights. The Rights provided in the Loan Documents shall be cumulative and not
exclusive of any rights or remedies provided by Law or in equity.
SECTION 10.3 Payment of Costs and Expenses; Professionals and
Consultants.
(a) Borrower agrees to pay all reasonable costs and expenses incurred
(whether before, after or during the Closing Date) by or on behalf of the Agent
(including audit costs and expenses and all attorneys' and other professionals'
and consultants' fees, costs and expenses of Agent incurred in connection with
the preparation of, advice or counsel regarding, or enforcement of, any Loan
Document) in connection with (i) the investigation, review, negotiation,
preparation, execution, delivery, administration, syndication, participation,
filing, recordation, refinancing, restructuring, renegotiation or enforcement of
each of the Loan Documents, and any and all renewals, amendments, extensions,
restatements, supplements, rearrangements, consents, waivers, assignments and
modifications thereto or thereof, and the transactions contemplated thereby,
(ii) the monitoring, evaluating, making, maintaining, servicing, enforcement and
collection of the Loans and the issuance, administration, maintaining,
servicing, enforcement and payment of the Letters of Credit and the
Reimbursement Obligations, (iii) the creation, preservation, maintenance,
protection, perfection and enforcement of Rights under each Loan Document and
Liens in Property (whether or not incurred in connection with the commencement
of a proceeding, litigation, foreclosure or other proceeding), specifically
including all costs and expenses incurred with respect to any bankruptcy,
insolvency or reorganization proceeding, regardless of whether the Agent
ultimately prevails in such bankruptcy, insolvency or reorganization proceeding,
and (iv) all amounts expended, advanced or incurred by or on behalf of the Agent
to satisfy any obligation of Borrower under any Loan Document which is not
timely satisfied by Borrower, if the Agent, at its discretion, so chooses to
incur any such expenses or costs.
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(b) Should Borrower fail to perform or observe any covenant or
agreement contained in any of the Loan Documents and such failure continues
through the cure period provided for therein, if any, the Agent, the Issuing
Bank or any Bank may then perform or attempt to perform such covenant or
agreement on behalf of Borrower. Such Person will endeavor to give Borrower
notice of such performance or attempted performance. Borrower shall, at the
request of such Person, promptly pay any amount expended in such performance or
attempted performance to such Person at the principal office of the Agent,
together with interest on the portion thereof form time to time remaining unpaid
at the Default Rate. Notwithstanding the foregoing, it is expressly understood
and agreed that (i) neither the Agent nor the Issuing Bank, nor any Bank,
assumes any liability or responsibility for the performance of any covenants or
agreements of Borrower hereunder or under any of the other Loan Documents, or
any other documents, or other control over the management and affairs of
Borrower, and (ii) Borrower's failure to perform any covenant or agreement that
is cured, in whole or in part, by any of their action shall be and continue a
Default unless and until (A) all of such Person's attendant costs and expenses
have been reimbursed as herein provided and (B) Borrower has submitted, and the
Agent has received and approved, with the consent of the Required Banks, such
objective evidence that supports the determination that such Default will not
reoccur.
(c) Borrower acknowledges and agrees that all attorneys, accountants,
auditors, and other professional Persons and consultants who are from time to
time engaged or employed by the Agent (including, without limitation, Xxxxxxx,
Xxxxxxx & Xxxxxxx, P.C.) and whose fees and expenses are or may be paid or
reimbursed, as applicable, by Borrower, pursuant to the terms of any Loan
Document, an the professionals of the Agent and not of Borrower, and each of
them (i) shall have the right to act exclusively in the interest of the Agent,
and (ii) shall have no duty of disclosure, duty or loyalty, duty of care or any
other duty of any type or nature whatsoever, or deemed to have any
attorney-client or other similar professional relationship whatsoever, to
Borrower.
SECTION 10.4 Indemnification. SUBJECT TO SECTION 10.8, BORROWER SHALL
INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS EACH BANK, THE AGENT, THE ISSUING
BANK, AND THEIR RESPECTIVE AFFILIATES, SUBSIDIARIES, PARENT COMPANIES AND OTHER
RELATED ENTITIES, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS AND OTHER PROFESSIONALS AND CONSULTANTS, INSURERS AND STOCKHOLDERS,
AND EACH OF THEM (AND TOGETHER WITH EACH AND ALL OF THEIR RESPECTIVE SUCCESSORS,
ASSIGNS, HEIRS AND LEGAL REPRESENTATIVES, THE "INDEMNIFIED PARTIES"), FROM AND
AGAINST ALL LIABILITIES, OBLIGATIONS, LOSSES, CLAIMS, ACTIONS, SUITS AND OTHER
LEGAL PROCEEDINGS, JUDGMENTS, PENALTIES, DAMAGES, COSTS, INTEREST, CHARGES,
ATTORNEYS' AND OTHER PROFESSIONALS' AND CONSULTANTS' FEES AND OTHER EXPENSES AND
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER ("INDEMNIFIED COSTS"), WHICH MAY
BE IMPOSED ON, INCURRED OR SUSTAINED BY, OR ASSERTED AGAINST, THE INDEMNIFIED
PARTIES, OR ANY OF THEM, BY REASON OF, ARISING OUT OF, OR IN ANY MANNER RELATED
TO (DIRECTLY OR INDIRECTLY, CONSEQUENTIALLY, OR OTHERWISE) ANY
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LOAN DOCUMENT (INCLUDING, WITHOUT LIMITATION, ANY LETTER OF CREDIT), THE
TRANSACTIONS CONTEMPLATED THEREBY, OR THE ENFORCEMENT, PROTECTION OR
ADMINISTRATION THEREOF OR WITH RESPECT THERETO (COLLECTIVELY, THE "SUBJECT
TRANSACTIONS"), INCLUDING, WITHOUT LIMITATION, DAMAGES, COSTS AND EXPENSES
INCURRED BY ANY OF THE INDEMNIFIED PARTIES IN INVESTIGATING, PREPARING FOR,
DEFENDING AGAINST, OR PROVIDING EVIDENCE, PRODUCING DOCUMENTS, OR TAKING ANY
OTHER ACTION IN RESPECT OF ANY COMMENCED OR THREATENED LITIGATION UNDER ANY
FEDERAL OR STATE, OR ANY SUBDIVISION THEREOF, SECURITIES OR ENVIRONMENTAL LAW OR
OTHER LAW OF ANY JURISDICTION OR AT COMMON LAW.
THIS FOREGOING IS INTENDED TO INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS EACH
OF THE INDEMNIFIED PARTIES AGAINST ALL RISKS, FORESEEABLE OR UNFORESEEABLE,
INVOLVED IN THE SUBJECT TRANSACTIONS, INCLUDING, WITHOUT LIMITATION, THE
NEGLIGENCE OR ALLEGED NEGLIGENCE (WHETHER SOLE, COMPARATIVE, CONTRIBUTORY OR
OTHERWISE) OF ANY OF THE INDEMNIFIED PARTIES, ALL OF WHICH RISKS ARE HEREBY
ASSUMED BY BORROWER; PROVIDED, HOWEVER AN INDEMNIFIED PARTY SHALL NOT BE
ENTITLED TO INDEMNIFICATION FOR INDEMNIFIED COSTS TO THE EXTENT SUCH INDEMNIFIED
COSTS ARE DIRECTLY CAUSED BY A BREACH OF ITS OBLIGATIONS UNDER ANY LOAN DOCUMENT
OR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A COURT OF
COMPETENT JURISDICTION. AN INDEMNIFIED PARTY WILL PROVIDE BORROWER WITH NOTICE
OF A CLAIM FOR INDEMNIFICATION HEREUNDER AS SOON AS REASONABLY PRACTICAL, AND
SUCH INDEMNIFIED PARTY WILL PROVIDE SUCH INFORMATION CONCERNING THE CLAIM AS
BORROWER MAY REASONABLY REQUEST. BORROWER SHALL HAVE THE RIGHT TO APPROVE, WHICH
APPROVAL WILL NOT BE UNREASONABLY WITHHELD OR DELAYED, ANY SETTLEMENT AGREEMENT
PROPOSED TO BE ENTERED INTO BY AN INDEMNIFIED PARTY IN CONNECTION WITH ANY
ACTION, SUIT, INVESTIGATION OR PROCEEDING UNDERLYING A CLAIM FOR INDEMNIFICATION
HEREAFTER PROVIDED THAT (i) BORROWER IS NOT IN DEFAULT (AS DEFINED IN SECTION
1.1) AS OF THE TIME AT WHICH SUCH INDEMNIFIED PARTY PROPOSES TO ENTER INTO SUCH
SETTLEMENT AGREEMENT, AND (ii) BORROWER HAS NOT TAKEN A POSITION IN SUCH ACTION,
SUIT, INVESTIGATION OR PROCEEDING WHICH, IN THE SOLE JUDGMENT OF SUCH
INDEMNIFIED PARTY, IS ADVERSE TO OR IN CONFLICT WITH THE POSITION OF SUCH
INDEMNIFIED PARTY. IF, UNDER THE PRECEDING SENTENCE, BORROWER DOES NOT APPROVE A
SETTLEMENT AGREEMENT PROPOSED BY AN INDEMNIFIED PARTY, BORROWER'S
INDEMNIFICATION OBLIGATIONS HEREUNDER SHALL CONTINUE IN ANY EVENT WITH RESPECT
TO THE CLAIM AND INDEMNIFIED COSTS NOT INCLUDED IN THE SETTLEMENT PROPOSAL. TO
THE EXTENT THAT THE FOREGOING INDEMNIFICATION MAY BE DEEMED UNENFORCEABLE, IN
WHOLE OR IN PART, FOR
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ANY REASON WHATSOEVER, INCLUDING BECAUSE IT IS VIOLATIVE OF LAW OR PUBLIC POLICY
AS DETERMINED BY A FINAL, NON-APPEALABLE JUDGMENT OR ORDER OF A COURT OF
COMPETENT JURISDICTION, BORROWER AGREES TO CONTRIBUTE THE MAXIMUM PORTION THAT
IT IS NOT PROHIBITED TO PAY UNDER APPLICABLE LAW, TO THE PAYMENT AND
SATISFACTION OF THE SUBJECT TRANSACTIONS.
SECTION 10.5 Sharing of Setoffs. Borrower hereby grants to Agent, the
Issuing Bank and each Bank the right of setoff, to secure repayment of the
Obligations, upon any and all monies, securities or other Property of Borrower
and its Subsidiaries and the proceeds therefrom, now or hereafter held or
received by or in transit to Agent, the Issuing Bank or any Bank or any of their
respective agents, from or for the account of Borrower and its Subsidiaries,
whether for safekeeping, custody, pledge, transmission, collection or otherwise,
and also upon any and all deposits (general or special, but excluding trust or
escrow accounts or deposits) and credits of Borrower and its Subsidiaries, and
any and all claims of Borrower or any of its Subsidiaries against Agent, the
Issuing Bank or any Bank at any time existing. In connection with any setoff,
counterclaim or similar action by any Bank, such Bank agrees that it shall
comply with, and otherwise be bound by, the provisions of Section 2.13.
Borrower, the Agent, the Issuing Bank and each Bank agree that any Person
purchasing a participation from a Bank pursuant to Section 10.7(b) shall, to the
fullest extent permitted by Law and if provided in the participation agreement
between the Bank and the participant, have all of the obligations of a Bank
pursuant to the terms of this Section 10.5. Without limiting any Bank's right of
setoff or counterclaim or otherwise, the Agent shall have the right to charge
any account of Borrower maintained with Agent for the amount of any payment due
under any Loan Document, under the Notes or with respect to any of the Letters
of Credit.
SECTION 10.6 Amendments and Waivers. All modifications, consents,
amendment, waivers and the like of any provision of any Loan Document, or
consent to any departure by Borrower or any of its Subsidiaries therefrom
(collectively, the foregoing are referred to in this Section 10.6 as a
"modification"), shall be effective only if the same is in a writing inform,
scope and substance, and subject to conditions and requirements, if any,
acceptable to the Agent and the Required Banks, and if so acceptable, is signed
by Borrower, the Agent and, at least, the Required Banks; provided that no such
modification shall, unless consented to in writing by all the Banks, (i) modify
the Commitment of any Bank or subject any Bank to any additional funding
obligation, (ii) reduce the principal amount or the stated rate of interest on
any Loan or reduce any fees hereunder (other than fees payable solely to the
Agent or the Issuing Bank, as applicable), (iii) extends the date fixed for any
principal reduction pursuant to Section 2.8 or Section 2.9, the payment of any
interest on any Loan, the payment of any Reimbursement Obligation or the payment
of any fees hereunder (other than fees payable solely to the Agent or the
Issuing Bank, as applicable), the maturity date of any of the Obligations or the
Commitment Termination Date, (iv) release or impair the Lien in any Property in
favor of the Banks, (v) release any guarantor of the Obligations, (vi) change
the percentage of the Commitments or the aggregate unpaid principal amount of
the Notes, or the number of Banks which shall be required for the Banks or any
of them to take any action under this Section 10.6 or any other provision of the
Loan Documents, or (vii) affects this
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Section 10.6 or Section 10.3 or Section 10.4 or modifies the definition of
"Required Banks"; provided, further, that, (y) no modification or waiver which
modifies the rights, duties or obligations of the Agent shall be effective
without the prior written consent of the Agent, and (z) no modification or
waiver which modifies the rights, duties, obligations or commitment of the
Issuing Bank shall be effective without the prior written consent of the Issuing
Bank.
SECTION 10.7 Successors and Assigns; Participations; Assignments.
(a) The Loan Documents shall be binding upon, and inure to the benefit
of the parties thereto and their respective successors and assigns, except that
(i) Borrower may not assign or transfer any of its right or obligations under
any Loan Document without the prior written consent of the Agent, the Issuing
Bank and all the Banks, and (ii) unless otherwise permitted under this Section
10.7, no Bank may transfer, pledge, assign, sell participations in or otherwise
convey or encumber its Commitments or Loans or interests in Letters of Credit.
Borrower shall not directly or indirectly purchase or otherwise retire any
Obligations owed to any Bank or the Issuing Bank nor will any Bank or the
Issuing Bank accept any offer to do so, unless each Bank or the Issuing Bank (or
both, as applicable) shall have received substantially the same offer with
respect to the same pro rata share of the Obligations owed to it. If Borrower,
directly or indirectly, at any time purchases some but less than all of the
Obligations owed to the Agent, the Issuing Bank and the Banks, then
notwithstanding any provision herein to the contrary such purchaser or
purchasers shall not be entitled to any rights of the Agent, the Issuing Bank or
the Banks under the Loan Documents (including voting rights or the right to
participate in or determine any modification (as that term is defined in Section
10.6)), unless and until Borrower has purchased all of the Obligations.
(b) Neither this Agreement nor any other Loan Document, nor any
benefits hereunder or thereunder, shall inure to or for the benefit of any
Person that is not a signatory party hereto, other than any of such Persons that
are expressly named or designated as indemnitees, releasees or exculpatees
herein. All conditions to make Loans hereunder or to issue Letters of Credit
hereunder, and all covenants, warranties, representations, and other terms and
provisions of, and applicable to, Borrower and its Subsidiaries in each Loan
Document are imposed solely and exclusively for the benefit of the Agent, the
Issuing Bank and each Bank, and their respective successors and assigns. No
other Person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that no Loans will be made
or Letters of Credit will be issued in the absence of strict compliance with any
or all of such conditions; and no other Person shall, under any circumstances,
be deemed to be a beneficiary of such conditions, covenants, warranties,
representations and other terms and provisions. Any of such conditions, and the
breach of, or noncompliance with, any such covenants, warranties,
representations and other terms and provisions may be freely waived in whole or
in part by the Agent, the Issuing Bank and the Banks (subject to applicable
provisions hereof) at any time if in its or their (as applicable) sole
discretion it or they (as applicable) deem it advisable to do so. No such
conditions, covenants, warranties, representations or other terms or provisions
are intended to release, or authorize or permit a breach by, Borrower or any of
its Subsidiaries of any of their respective obligations and requirements to any
third Person,
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or any noncompliance therewith, or to evidence the contractual interference
therewith by the Agent, the Issuing Bank and the Banks.
(c) Subject to the provisions of this Section 10.7, any Bank may in the
ordinary course of its business, with notice to but without any consent of
Borrower with respect thereto, and in accordance with applicable Law, at any
time sell to one or more Persons who are Affiliates of such Bank (each a
"Participant") a participating interests in all or any part of any Loans, or in
the Commitments, of such Bank. In the event of any such sale by a Bank to a
Participant, (i) such Bank shall remain a "Bank" for all purposes under this
Agreement, and the Participant shall not constitute a "Bank" hereunder, (ii)
such Bank's obligations under this Agreement shall remain unchanged, (iii) such
Bank shall remain solely responsible for the performance of its obligations
under this Agreement, (iv) such Bank shall remain the holder of any such Note
and the obligor to fund its respective Commitments for all purposes under this
Agreement, and (v) Borrower, the Issuing Bank, the Agent and the other Banks
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement and the other Loan
Documents. Participants shall have no rights under this Agreement or any of the
Loan Documents, other than rights of setoff (and attendant obligations)
expressly set forth herein. No Bank shall sell any participating interest under
which the Participant shall have, and no Participant shall have, any rights to
vote on any modification (as such term is defined in Section 10.6) of this
Agreement or any other Loan Document, and any agreement between any Bank and any
Participant granting any Participant any voting rights shall be void ab initio.
Except in the case of the sale of a participating interest to a Bank, the
relevant participation agreement shall not permit the Participant to transfer,
pledge, assign, sell participations in, or encumber its portion of, the
Commitments, the Loans, or the Letters of Credit.
(d) Subject to the provisions of this Section 10.7(d), any Bank may, in
the ordinary course of its business and in accordance with applicable Law,
assign to one or more Qualified Banks (each a "Purchaser") a proportional part
(not less than $5,000,000 of the Bank's Commitment, unless such Bank is reducing
its Commitment to zero) of its rights and obligations under the Loan Documents,
and such Purchaser shall (i) assume all such rights and obligations, pursuant to
an Assignment Agreement substantially in the form of Exhibit E hereto (an
"Assignment Agreement") and other necessary and related documents, all in form,
scope and substance satisfactory to the Agent, executed by such Purchaser, such
transferor Bank, the Agent and the Issuing Bank, and (ii) pay to the Agent, for
its account, a non-refundable processing fee in the amount of $3,500. Upon the
effectiveness of such Assignment Agreement, such Purchaser shall for all
purposes be a Bank party to this Agreement and shall have all the rights and
obligations of a Bank under this Agreement to the same extent as if it were an
original party hereto with a Commitment as set forth in the Assignment
Agreement, and the transferor Bank shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by
Borrower, the Banks or the Agent shall be required. Upon the consummation of any
transfer to a Purchaser pursuant to this Section 10.7(d), the transferor Bank,
the Agent, the Issuing Bank and Borrower shall make appropriate arrangements, at
Borrower's cost and expense, so that, if required, new Notes are issued to such
Purchaser. Any sale pursuant to this Section 10.7(d) shall be of an equal pro
rata portion of each of the transferor Bank's Commitment,
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Loans and interests in Letters of Credit. A Purchaser shall be subject to all
the provisions of this Section 10.7 the same as if it were a Bank signatory
hereto as of the Closing Date.
(e) Borrower authorizes each Bank to disclose to any Participant or
Purchaser (each a "Transferee") and any prospective Transferee any and all
financial information in such Bank's possession concerning Borrower which has
been delivered to such Bank by or on behalf of them pursuant to this Agreement
or which has been delivered to such Bank by them in connection with such Bank's
credit evaluation prior to entering into this Agreement.
(f) No Transferee (including for this purpose a different Lending
Office of a Bank) shall be entitled to receive any greater payment under this
Agreement than the transferor Bank would have been entitled to receive with
respect to the rights assigned, unless such assignment is made with the prior
written consent of Borrower or by reason of the provisions referred to in
Section 9.5 regarding the designation of a different Lending Office under
certain circumstances.
(g) Notwithstanding any other provisions of this Section 10.7, no
transfer or assignment of the interests or obligations of any Bank hereunder or
any grant of participations therein shall be permitted if such transfer,
assignment or grant would require Borrower to file a registration statement with
the Securities and Exchange Commission or to qualify the Loans or the Letters of
Credit under the "Blue Sky" laws of any state.
(h) Each Bank initially party to this Agreement hereby represents, and
each person that becomes a Bank pursuant to an assignment permitted by Section
10.7(d) will, upon its becoming party to this Agreement, represent that it is a
Qualified Bank, and that it will make or acquire Loans only for its own account
in the ordinary course of its business; provided, however, that subject to the
preceding provisions of this Section 10.7, the disposition of any promissory
notes or other evidences of or interests in Obligations held by it shall at all
times be within its exclusive control.
SECTION 10.8 Maximum Interest Rate. It is the intent of the parties
hereto that each of the Agent, the Issuing Bank and the Banks (collectively, the
"Financing Parties"), and Borrower and its Subsidiaries in the execution,
delivery and performance of all Loan Documents, the transactions provided for
therein and contemplated thereby, and all matters incidental and related thereto
and arising therefrom, shall comply and conform strictly with Applicable Law
from time to time in effect, including without limitation, Usury Laws. In
furtherance thereof, the Financing Parties and Borrower stipulate and agree that
none of the terms and provisions contained in, or pertaining to, the Loan
Documents shall ever be construed to create a contract to pay for the use or
forbearance or detention of money with interest at a rate or in an amount in
excess of the Maximum Rate or maximum amount of interest permitted or allowed to
be contracted for, charged, received, taken or reserved under said Laws. For
purposes of each Loan Document, (i) "interest" shall include the aggregate of
all amounts which constitute or are deemed to constitute interest under the Laws
of the State of Texas or, to the extent they may apply, the Laws of the United
States of America, that are contracted for, chargeable, receivable (whether
received or deemed to have been received), taken or reserved under each such
document, and (ii) all computations of the maximum amount of interest
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permitted or allowed under Applicable Law will be made on the basis of the
actual number of days elapsed over a 365 or 366 day year, whichever is
applicable. Neither Borrower nor any other Person shall ever be required to pay
unearned interest on, or with respect to any of, the Loan Documents and shall
never be required to pay interest on, or with respect to any of, the Loan
Documents at a rate or in an amount in excess of the Maximum Rate or maximum
amount of interest that may be lawfully contracted for, charged, received, taken
or reserved under Applicable Law, and the provisions of this paragraph shall
control over all other provisions of the Loan Documents. If the effective rate
or amount of interest which would otherwise be payable under the Loan Documents
would exceed the Maximum Rate or maximum amount of interest any Financing Party
or any other holder of any Note or other Obligations is allowed by Applicable
Law to charge, contract for, take, reserve or receive, or in the event any
Financing Party or any holder of any Note or other Obligations shall charge,
contract for, take, reserve or receive monies that are deemed to constitute
interest which would, in the absence of this provision, increase the effective
rate or amount of interest payable under the Loan Documents to a rate or amount
in excess of that permitted or allowed to be charged, contracted for, taken,
reserved or received under Applicable Law then in effect, then the principal
amount of such Note or other Obligations or the amount of interest which would
otherwise be payable thereunder shall be payable at, or reduced to, as
applicable, the maximum amount allowed pursuant to the then applicable weekly
rate ceiling under Applicable Law, or if no such ceiling is then in effect, as
authorized and allowed under said Laws as now or hereafter construed by the
courts having jurisdiction, and all such monies so charged, contracted for,
received, taken or reserved that are deemed to constitute interest in excess of
the Maximum Rate or maximum amount of interest permitted by Applicable Law shall
be immediately returned or credited to the account of Borrower upon such
determination.
SECTION 10.9 Governing Law; Submission to Jurisdiction. THIS AGREEMENT,
EACH NOTE AND EACH OTHER LOAN DOCUMENT (INCLUDING ITS AND THEIR VALIDITY,
ENFORCEABILITY AND INTERPRETATION) SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF TEAS (WITHOUT REGARD TO ANY CONFLICTS OF
LAW PRINCIPLES) AND TO THE EXTENT CONTROLLING, THE FEDERAL LAWS OF THE USA;
PROVIDED THAT (I) THE PROVISIONS OF CHAPTER 346 OF THE TEXAS FINANCE CODE ARE
EXPRESSLY DECLARED BY THE PARTIES NOT TO BE APPLICABLE TO ANY LOAN DOCUMENT OR
THE TRANSACTIONS CONTEMPLATED BY ANY OF THEM, AND (II) THE LAWS OF THE STATE OF
TEXAS AND/OR THE UNITED STATES OF AMERICA SHALL NOT LIMIT THE AMOUNT OR RATE OF
INTEREST WHICH THE HOLDER OF ANY NOTE MAY CONTRACT FOR, CHARGE, RECEIVE,
COLLECT, TAKE, RESERVE AND/OR APPLY IF OTHER APPLICABLE LAWS PERMIT AT ANY TIME
A HIGHER AMOUNT OR RATE. THE PARTIES EXPRESSLY ACKNOWLEDGE THAT (Y) THEY INTEND
THAT THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL BE GOVERNED BY THE
PROVISIONS (INCLUDING, WITHOUT LIMITATION, THE RIGHT OF THE PARTIES TO SELECT
THE GOVERNING LAW) OF THE UNIFORM COMMERCIAL CODE AND NOT BY COMMON LAW AND (Z)
THE STATE OF TEXAS BEARS A REASONABLE RELATIONSHIP TO THIS TRANSACTION
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AND NO OTHER STATE HAS A MATERIALLY GREATER INTEREST IN THIS TRANSACTION THAN
THE STATE OF TEXAS. BORROWER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS AND OF ANY
TEXAS STATE COURT SITTING IN DALLAS COUNTY, TEXAS FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
SECTION 10.10 Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, and by each of the parties on separate
counterparts, all of which taken together shall constitute one and the same
instrument. This Agreement shall become effective when the Agent shall have
received counterparts hereof signed by all of the parties hereto.
SECTION 10.11 Independence of Covenants. Each covenant and agreement of
Borrower under each Loan Document shall be given independent effect so that, if
a particular action or condition is prohibited or required by any covenant, 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 a Default or
Event of Default if such action is taken or condition exists.
SECTION 10.12 Survival. The obligations of Borrower under Sections
2.12, 9.3, 10.3, 10.4, 10.8, 10.18 and 10.20 shall survive the termination of
this Agreement, the payment of all other Obligations, the termination of the
Commitments and the return of the Letters of Credit to the Issuing Bank for a
period of 5 years after the law of such events to occur. The representations and
warranties set forth in this Agreement and each of the other Loan Documents
shall survive the execution, delivery and performance of this Agreement and the
other Loan Documents and shall continue until one year after the later of (i)
the repayment of the Obligations and (ii) the date on which the Banks'
obligations to make Loans and the Issuing Bank's obligation to issue Letters of
Credit shall have fully and finally terminated; and any investigation at any
time by or on behalf of the Agent, the Issuing Bank or any Bank shall not
diminish any of their respective rights to rely thereon.
SECTION 10.13 Severability. In case any one or more of the provisions
or part of a provision contained in any Loan Document shall for any reason be
held to be invalid, illegal or unenforceable in any respect in any jurisdiction,
such invalidity, illegality or unenforceability shall be deemed not to affect
any other jurisdiction or any other provision or part of a provision of any Loan
Document, but such Loan Document shall be reformed and construed in such
jurisdiction as if such provision or part of a provision held to be invalid or
illegal or unenforceable had never been contained herein and such provision or
part reformed so that it would be valid, legal and enforceable in such
jurisdiction to the maximum extent possible.
SECTION 10.14 Governmental Regulation. Anything contained in any Loan
Document to the contrary notwithstanding, Borrower acknowledges and agrees that
neither the Agent nor the Issuing Bank, nor any Bank, shall be obligated (i) to
extend or fund any credit or other financial accommodation to, or for the
benefit of, Borrower in an amount, or (ii) to perform any other
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agreement or obligation to, or for the benefit of, Borrower in any regard, in
contradiction or violation of any limitation or prohibition provided by any
applicable statute or regulation, or any interpretation, ruling decision,
opinion or other pronouncement in respect thereto (whether or not having the
effect of law), which any of them believes is applicable.
SECTION 10.15 No Control. None of the covenants, terms or other
provisions of any Loan Document or any document executed in conjunction
therewith or related thereto shall, or shall be deemed to, give the Agent, the
Issuing Bank or any Bank rights or powers to exercise control over, or
participate in the management of, the business, affairs, operations or
management of Borrower or any of its Subsidiaries or any of their respective
Property, including any right or power to influence or affect any of their
respective treatment, transportation, storage or disposal of toxic and/or
hazardous waste, substances or constituents. The relationship among Borrower,
its Subsidiaries and the other parties hereto created by this Agreement and each
of the other Loan Documents is only that of debtor-creditor (with or without
security, as applicable), and the Rights of such other parties hereunder and
thereunder are limited to the rights to receive payment of the Obligations and
to exercise the Rights provided herein and therein and in any other document
executed in conjunction herewith or therewith or related hereto or thereto.
SECTION 10.16 Renewals, Extensions, Rearrangements, Termination, Etc.
With respect to each and every (i) renewal, extension, increase and
rearrangement, if any, of the Obligations, or any part thereof, and (ii)
amendment, modification, supplement, restatement, waiver and consent, if any, of
or to this Agreement or any other Loan Document, all provisions of this
Agreement and the other Loan Documents shall apply with equal force and effect
to each such event or circumstance, except to the extent, if any, expressly set
forth in connection with each such event or circumstance; provided, however, the
foregoing is not intended in any regard to convey, acknowledge or otherwise
evidence on the part of the Agent, the Issuing Bank or any Bank, expressly or by
implication, any present consent or agreement to any such event or circumstance
occurring subsequent to the date hereof, it being acknowledged and agreed that
the entry by the parties hereto to any such events or circumstances shall be
evaluated as they occur and subject to the other provisions of the Loan
Documents, as same may be applicable. Except as expressly provided therein, all
Loan Documents shall remain in effect until full and complete payment of all
Obligations, termination of all commitments and obligations of the Issuing Bank
and/or the Banks to make or extend any credit or financial accommodation to, or
for the benefit of, Borrower, and receipt by the Agent, the Issuing Bank and the
Banks, or any of the foregoing Persons, if so requested, of such written
assurances of Borrower and any other designated Person or Persons that no other
claims, rights, defenses, liabilities or obligations exist in respect hereto or
against any of them or any other Indemnified Party.
SECTION 10.17 Conflicts. In the event of any inconsistency or conflict
between the terms of this Agreement and the terms of any other Loan Document,
the terms of this Agreement shall control.
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SECTION 10.18 Confidentiality. Each Bank, the Issuing Bank and the
Agent agree to use reasonable precautions to keep confidential, in accordance
with customary procedures for handling confidential information of this nature
and in accordance with safe and sound banking practices, any non-public
information supplied to it by Borrower pursuant to this Agreement which is
identified by Borrower as being confidential at the time the same is delivered
to the Banks, the Issuing Bank or the Agent, provided that nothing herein shall
limit the disclosure of any such information (i) to the extent required by
statute, rule, regulation or judicial process, (ii) to counsel for any Bank, the
Issuing Bank or the Agent, (iii) to bank examiners, auditors or accountants of
any Bank, the Issuing Bank or the Agent, (iv) to any other Bank, the Issuing
Bank or the Agent, (v) in connection with any litigation to which any Bank, the
Issuing Bank or the Agent is a party, provided, further, that, unless
specifically prohibited by applicable Law or court order, each Bank, the Issuing
Bank and the Agent shall, at least 5 Business Days prior to disclosure thereof,
notify Borrower of any request for disclosure of any such non-public information
(A) by any governmental agency or representative thereof (other than any such
request in connection with an examination of such Bank's financial condition by
such governmental agency) or (B) pursuant to legal process, (vi) to any
Transferee (or prospective Transferee) so long as such Transferee (or
prospective Transferee) agrees in writing to handle such information
confidentially, or (vii) to the extent necessary in connection with any Right
under this Agreement or any other Loan Document.
SECTION 10.19 Payments Set Aside. To the extent that Borrower makes a
payment or payments to the Agent, the Issuing Bank or any Bank, or any of them
(or their Transferee), or the Agent, the Issuing bank or any Bank, or any of
them (or their Transferee) enforces any Lien or exercises its right of setoff,
and such payment or payments or the proceeds of such enforcement or setoff, or
any part thereof, are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other Person under any Debtor Laws or equitable cause, then, to the extent
of such recovery, the obligation or part thereof originally intended to be
satisfied, and all rights and remedies therefor, shall be revived and shall
continue in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
SECTION 10.20 Limitation of Liability; Commencement of Actions. To the
extent not prohibited by applicable Law, no claim may be made by or on behalf of
Borrower or any other Person against the Agent, the Issuing Bank or any Bank or
any other Indemnified Party for any punitive damages in respect of any claim for
breach of contract arising out of or related to the transactions contemplated by
any Loan Document, or any action omission, or event occurring in connection
therewith (whether any of such is a claim based on contract, tort, duty imposed
by law or otherwise), and Borrower hereby waives, releases, and agrees not to
xxx, or commence or authorize the commencement of any Litigation, upon any claim
or any such damages, whether or not accrued and whether or not known or
suspected to exist in its favor. Further, any claim made by or on behalf of
Borrower or any other Person against the Agent, the Issuing Bank or any Bank or
any other Indemnified Party shall be barred unless it is asserted by the
commencement of an action or proceeding in a court as prescribed in Section 10.9
by the filing of a claim therein within two (2) years after the first act,
occurrence or omission upon which such claim or cause of action, or any part
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thereof, is based, discovered or, in the exercise of reasonable diligence,
should have been discovered; and Borrower agrees that such period of time is a
reasonable and sufficient time for it to investigate and act upon any such claim
or cause of action. The provisions of this Section 10.20 shall survive any
termination, howsoever occurring, of this Agreement and each Loan Document and
the full and final payment of the Notes and the other Obligations.
SECTION 10.21 Review. Borrower acknowledges and represents to the
Agent, the Issuing Bank and each Bank that Borrower has reviewed this Agreement
and each other Loan Document, has had the benefit of legal counsel of its own
choice throughout its review and negotiation of this Agreement and each other
Loan Document, has been afforded an opportunity to review and negotiate this
Agreement and each other Loan Document with the advice of its legal counsel, and
is fully informed and knowledgeable of the terms, provisions, rights and effects
of this Agreement and each other Loan Document. In furtherance of the foregoing,
but not in limitation thereof, Borrower acknowledges and agrees that each Loan
Document should be and shall be construed as if jointly drafted by the parties
hereto.
SECTION 10.22 This Agreement. THIS WRITTEN LOAN AGREEMENT AND ALL OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO
THE SUBJECT MATTER COVERED HEREBY AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG THE PARTIES.
Signatures on Next Page
77
84
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized signatories as of the day and year
first above written.
BORROWER:
HASTINGS ENTERTAINMENT, INC.
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
78
85
BANKS:
NATIONSBANK, N.A., Individually, as the Agent
and the Issuing Bank
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
79
00
XXXXX XXXX XX XXXXX, NATIONAL ASSOCIATION
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
80
87
XXXXX FARGO BANK (TEXAS), N.A.
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
81
88
AMARILLO NATIONAL BANK
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
82
89
Hastings Entertainment, Inc.
Schedule 4.1 of Credit Agreement
Jurisdictions of Foreign Qualification
Hastings Entertainment, Inc.,
a Texas corporation: Arizona
Arkansas
Colorado
Idaho
Indiana
Iowa
Kansas
Kentucky
Missouri
Montana
Nebraska
New Mexico
Oklahoma
Tennessee
Utah
Washington
Wyoming
Hastings College Stores, Inc.,
a Nevada corporation: Texas
Hastings Internet, Inc.,
a Nevada corporation: Texas
Hastings Properties, Inc.,
a Nevada corporation: Texas
90
Hastings Entertainment, Inc.
Schedule 4.5 of Credit Agreement
List of Existing Financing Statements, Lien Instruments
Abstracts of Judgment, Levies, Executions or Other Filings
Referred to in Section 4.5
CAPITAL LEASE: Landlord: BMV-Victoria, LTD.
0000 X-00 Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Location: Store 9622
0000 X. Xxxxxxx
Xxxxxxxx, XX 00000
Lease Date: 9-1-93
Initial Principal: $946,481.60
Interest Rate: 8.3%
Term: 15 Years
Monthly Payment: $8,985.17
Principal 12-1-94: $894,497.47
CAPITAL LEASE: Landlord: BMV-Missoula, LTD.
0000 X-00 Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Location: Store 9680
0000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Lease Date: 2-1-92
Initial Principal: $1,091,468.00
Interest Rate: 10.52%
Term: 15 Years
Monthly Payment: $12,238.00
Principal 12-1-94: $986,261.87
AIRPLANE PURCHASE: Owner: Hastings Entertainment, Inc.
Note: That certain Promissory
Note dated May 23, 1995
executed by Hastings Books,
Music & Video, Inc.,
payable to the order of
First Interstate Bank of
Texas, N.A., in the
original principal amount
of $1,600,000.00.
Payments: Quarterly installments of
$57,142.86 on the first day
of each August, November,
February, and May,
beginning August 1, 1995.
91
Interest: Due and payable quarterly
as it accrues. The entire
unpaid balance of this note
is due and payable on May
1, 2002.
2
92
Hastings Entertainment, Inc.
Schedule 4.9 of Credit Agreement
Material Patents, Trademarks and Copyrights and
Applications, Registrations and Licenses Related Thereto
Certificate of Registration No. 1557356 for Hastings service xxxx is attached.
93
Hastings Entertainment, Inc.
Schedule 4.10 of Credit Agreement
Pending and Threatened Litigation and Judgments
None.
94
Hastings Entertainment, Inc.
Schedule 4.13 of Credit Agreement
List of Tax Matters Referred to in Section 4.13
None.
95
Hastings Entertainment, Inc.
Schedule 4.14 of Credit Agreement
Principal Office; Names, Property Locations
o Principal Place of Business and Chief Executive Office:
Hastings Entertainment, Inc.
0000 Xxxxxx Xxxx.
Xxxxxxxx, XX 00000
o Places where Hastings conducts business or maintains or
stores inventory equipment or other property:
Hastings Cabinet Shop
0000 X. 0xx Xxxxxx, Xxxxx X
Xxxxxxxx, XX 00000
Hastings Cabinet Shop Storage
Xxxxx Building
00 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Hastings Cabinet Shop Storage
Cameron Building
0000 Xxxx 0xx Xxxxxx
Xxxxxxxx, XX 00000
See accompanying listing of Hastings store locations
o Names previously (within the last five years) and currently
used or proposed to be used in business:
Hastings Entertainment, Inc.
Hastings Books, Music & Video, Inc.
o Mergers and Acquisitions which have occurred within the last
five years or which are proposed:
None
96
Hastings Entertainment, Inc.
Schedule 4.15 of Credit Agreement
List of Subsidiaries, Existing Options, Warrants or Other
Rights With Respect to Capital Stock of Hastings
o Subsidiaries (All 100% owned by Hastings):
Hastings College Stores, Inc., a Nevada corporation - owns
and operates college bookstores
Hastings Properties, Inc., a Nevada corporation - owns and
operates certain trademarks
Hastings Internet, Inc., a Nevada corporation - owns and
operates electronic commerce
o Existing Options:
Xxxx X. Xxxxxxxxx: 662,522
Xxxxxxx Xxxx: 225,025
97
Hastings Entertainment, Inc.
Schedule 4.20 of Credit Agreement
List of Environmental Matters, Including Notices, Claims,
Tests, Audits and Reports
See accompanying reports.
98
Hastings Entertainment, Inc.
Schedule 5.15 of Credit Agreement
List of Subordinated Notes
None.
99
Hastings Entertainment, Inc.
Schedule 6.2 of Credit Agreement
List of Certain Indebtedness Referred to in Section 6.2
CAPITAL LEASE: Landlord: BMV-Victoria, LTD.
0000 X-00 Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Location: Store 9622
0000 X. Xxxxxxx
Xxxxxxxx, XX 00000
Lease Date: 9-1-93
Initial Principal: $946,481.60
Interest Rate: 8.3%
Term: 15 Years
Monthly Payment: $8,985.17
Principal 12-1-94: $894,497.47
CAPITAL LEASE: Landlord: BMV-Missoula, LTD.
0000 X-00 Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Location: Store 9680
0000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Lease Date: 2-1-92
Initial Principal: $1,091,468.00
Interest Rate: 10.52%
Term: 15 Years
Monthly Payment: $12,238.00
Principal 12-1-94: $986,261.87
AIRPLANE PURCHASE: Owner: Hastings Entertainment, Inc.
Note: That certain Promissory
Note dated May 23, 1995
executed by Hastings Books,
Music & Video, Inc.,
payable to the order of
First Interstate Bank of
Texas, N.A., in the
original principal amount
of $1,600,000.00.
Payments: Quarterly installments of
$57,142.86 on the first day
of each August, November,
February, and May,
beginning August 1, 1995.
Interest: Due and payable quarterly
as it accrues. The entire
unpaid balance of this note
is due and payable on May
1, 2002.
100
Hastings Entertainment, Inc.
Schedule 6.5 of Credit Agreement
List of Existing Investments
o Camelot Music Holdings, Inc. - 6,149 shares
o From time to time, Hastings invests in Temporary Cash
Investments.
101
EXHIBIT A
NOTICE OF BORROWING
TO: NATIONSBANK, N.A., as the Agent under the Credit Agreement dated as of
December 16, 1998 (including any amendments or modifications thereof,
the "Credit Agreement"), among Hastings Entertainment, Inc., a Texas
corporation ("Borrower"), NationsBank, N.A., individually, as the
Agent and the Issuing Bank, and the financial institutions now or
hereafter parties thereto. Unless otherwise defined herein, terms
defined in the Credit Agreement shall have the same meanings in this
Notice of Borrowing.
1. Borrower hereby requests a Borrowing on the date and in the amount
as follows:
(a) LOANS:
$_____________ under the Notes
Requested funding date: ______________, ______
Type of Borrowing: Base Rate Loans
-----
LIBOR Loans
-----
If LIBOR Loans,
duration of Interest Period: one month
-----
two months
-----
three months
-----
six months
-----
(b) DEPOSIT ACCOUNT: The Agent is hereby instructed to deposit the
proceeds of the Loans requested above into Account No.
_____________ at the Agent's Domestic Lending Office.
2. Borrower hereby certifies, warrants and represents to the Agent,
the Issuing Bank and each Bank as follows:
(a) the representations and warranties contained and referred to in
Article 4 of the Credit Agreement (other than those by their
terms limited to a specific date) are true and correct in all
material respects as of the date hereof and will be true and
correct upon the making of the requested Loans, with the same
force and effect as though made on and as of the date hereof
and thereof;
(b) no event has occurred since the date of the most recent
financial statements delivered pursuant to Section 5.1 of the
Credit Agreement (or if this
102
Borrowing request precedes the delivery of such financial
statements, July 31, 1998) that has caused a Material Adverse
Effect;
(c) as of the date hereof, and as a result of the making of
the requested Loans, there does not and will not exist any
Default or Event of Default; and
(d) as of the date hereof, no change or event has occurred
that might cause a Material Adverse Effect.
3. The undersigned certifies that he/she is the [president] [chief
financial officer] of Borrower, and that as such he/she is familiar with the
terms of the Credit Agreement, has knowledge of all information required to
deliver this certificate and is authorized to execute this certificate on
behalf of the Borrower.
DATED: _______________, _____
HASTINGS ENTERTAINMENT, INC.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
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103
EXHIBIT B
PROMISSORY NOTE
$______________ December 16, 1998
For value received, HASTINGS ENTERTAINMENT, INC., a Texas corporation
(the "Maker"), irrevocably and unconditionally promises to pay to the order of
__________________ (the "Bank"), at the principal office of NATIONSBANK, N.A.
in Dallas, Texas, as the Agent for the Banks, the principal sum of
__________________ AND NO/100 DOLLARS ($__________), or such lesser amount as
shall equal the aggregate unpaid principal amount of Loans made by the Bank to
the Maker pursuant to the terms of the Credit Agreement referred to below, in
lawful money of the USA and in immediately available funds, on the dates and in
the principal amounts provided for in the Credit Agreement, and to pay interest
on the unpaid principal amount of such Loans at such office, in like money and
funds for the period commencing on the date of each such Loan until it is paid
in full, at the rates and on the dates provided for in the Credit Agreement.
All capitalized terms used but not defined herein shall have the meanings set
forth in the Credit Agreement referred to below.
Principal of and interest on the unpaid principal balance of Loans
under this Note from time to time outstanding shall be due and payable as set
forth in the Credit Agreement.
This Note is one of the "Notes" executed by the Maker and is referred
to in, governed by, and entitled to the benefits of, the Credit Agreement dated
as of December 16, 1998, among the Maker, NATIONSBANK, N.A., individually, as
the Agent and as the Issuing Bank, and the financial institutions that are now
or hereafter parties thereto (including the Bank) (as amended, restated,
supplemented, renewed, extended or otherwise modified from time to time,
"Credit Agreement"), to which reference is made for all relevant intents and
purposes, including for a statement of the rights and obligations of the Agent
and the Banks and the duties and obligations of the Maker in relation thereto,
including mandatory and voluntary prepayments hereof, interest rate and amount
limitations and the acceleration of the maturity hereof. However, neither the
foregoing reference to the Credit Agreement nor to any provision thereof or
referred to therein, shall affect or impair the irrevocable absolute and
unconditional obligation of the Maker to pay principal of, and interest on,
this Note when due. Unless the maturity of this Note shall have sooner
occurred, the outstanding principal balance of this Note and all accrued and
unpaid interest thereof shall be finally and fully payable on Commitment
Termination Date.
The date, amount, Type, interest rate and duration of Interest Period (if
applicable) of each Loan made by the Bank to the Maker, and each payment made
on account of the principal thereof, and accrued interest thereon, shall be
recorded by the Bank on its books and prior to any transfer of this Note,
endorsed by the Bank on a schedule attached hereto or any continuation thereof.
The Bank's failure to make or error in making any such recordations or
endorsements shall not diminish, reduce or relieve the Maker's obligation to
pay (i) all Loans made by the Bank to the Maker and then
104
outstanding and (ii) all accrued and earned interest on the amounts thereof
from time to time outstanding and unpaid, pursuant to this Note.
The Maker and all sureties, endorsers, guarantors and other Persons
ever liable for the payment of any sums payable on this Note, jointly and
severally, waive notice, demand, notice of presentment, presentment,
presentment for payment, demand for payment, non-payment, notice of dishonor,
dishonor, notice of intent to accelerate maturity, notice of acceleration of
maturity, notice of intent to demand, protest, notice of protest, grace and all
formalities and other notices of any and every kind, and filing of suit or
diligence in collecting this Note or enforcing (in whole or part) any security
or guaranty nor or hereafter for the payment of this Note, and consent and
agree to any partial or full substitution, exchange or release of any such
security or guaranty or the partial or full release of any Person primarily or
secondarily liable hereon, and consent and agree that it will not be necessary
for any holder hereof, in order to enforce payment by it of this Note to first
institute suit or exhaust its remedies against the Maker or any other Persons
liable herefor, or to enforce its rights against any such security herefor or
guarantor or any other Person with respect hereto, and consent to any or all
extensions, increases or renewals or postponements, modifications or
rearrangements of time or payment of this Note or any other indulgence with
respect hereto, without notice thereof to, or consent thereto from, any of
them.
Except as provided by Section 10.7(d) of the Credit Agreement, this
Note may not be assigned by the Bank to any Person.
This Note (including its validity, enforceability and interpretation)
shall be governed by, and construed in accordance with, the laws of the State
of Texas (without regard to conflict of law principles) and, to the extent
controlling, the federal laws of the USA.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
HASTINGS ENTERTAINMENT, INC.
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
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105
EXHIBIT C
GUARANTY AGREEMENT
GUARANTY AGREEMENT (this "Guaranty"), dated ____________________, made
by ______________, a ___________ (the "Guarantor"), in favor of the Guarantied
Parties referred to below.
W I T N E S S E T H:
WHEREAS, Hastings Entertainment, Inc., a Texas corporation (the
"Borrower"), has entered into a Credit Agreement, dated as of December 16,
1998, among the financial institutions party thereto, and NationsBank, N.A., as
the agent for said financial institutions (said Credit Agreement, as it may be
amended, supplemented or otherwise modified from time to time, being the
"Credit Agreement", and capitalized terms not defined herein but defined
therein being used herein as therein defined); and
WHEREAS, the Guarantor is a Material Subsidiary; and
WHEREAS, it is a requirement of Section 5.18 of the Credit Agreement
that the Guarantor have executed and delivered this Guaranty; and
WHEREAS, the Banks, the Agent and any Affiliate of any Bank entering
into an Interest Rate Protection Agreement with the Borrower or any Affiliate
of the Borrower are herein referred to as the "Guarantied Parties";
NOW, THEREFORE, in consideration of the premises and to induce the
Banks to make Loans and issue Letters of Credit, the Guarantor hereby agrees as
follows:
SECTION 1. Guaranty. The Guarantor hereby unconditionally and
irrevocably guarantees the full and prompt payment when due, whether at stated
maturity, by acceleration or otherwise, of, and the performance of, (a) the
Obligations, whether now or hereafter existing and whether for principal,
interest, fees, expenses or otherwise, (b) any and all reasonable out-of-pocket
expenses (including, without limitation, reasonable counsel fees and expenses)
incurred by any of the Guarantied Parties in enforcing any rights under this
Guaranty and (c) all present and future amounts that would become due but for
the operation of Section 502 or 506 or any other provision of Title 11 of the
United States Code and all present and future accrued and unpaid interest
(including, without limitation, all post-petition interest if the Borrower or
any other guarantor (the Borrower or any other guarantor being herein referred
to as an "Obligor") voluntarily or involuntarily becomes subject to any
applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
insolvency, reorganization or similar debtor relief Laws affecting the rights
of creditors generally from time to time in effect, collectively, the "Debtor
Relief Laws") (the items set forth in clauses (a), (b) and (c)
106
immediately above being herein referred to as the "Guarantied Obligations").
Upon failure of the Borrower to pay any of the Guarantied Obligations when due
(whether at stated maturity, by acceleration or otherwise), the Guarantor
hereby further agrees to pay the same, and the Guarantor will promptly pay the
same, without any demand or notice whatsoever, including without limitation,
any notice having been given to the Guarantor of either the acceptance by the
Guarantied Parties of this Guaranty or the creation or incurrence of any of the
Obligation. This Guaranty is an absolute guaranty of payment and performance
and not a guaranty of collection, meaning that it is not necessary for the
Guarantied Parties, in order to enforce payment by the Guarantor, first or
contemporaneously to accelerate payment of any of the Guarantied Obligations,
to institute suit or exhaust any rights against any Obligor, or to enforce any
Rights against any collateral. In any action or proceeding involving any state
corporate Law or any Debtor Relief Law (collectively, the "Fraudulent Transfer
Laws") if the obligations of the Guarantor hereunder would otherwise, in each
case after giving effect to all other liabilities of the Guarantor, contingent
or otherwise, that are relevant under the Fraudulent Transfer Laws
(specifically excluding, however, any liabilities of the Guarantor in respect
of intercompany indebtedness to the Borrower, other Affiliates of the Borrower
or other Obligors to the extent that such indebtedness would be discharged in
an amount equal to the amount paid by the Guarantor hereunder) and after giving
effect as assets to the value (as determined under the applicable provisions of
Fraudulent Transfer Laws) of any agreement providing for an equitable
allocation among the Guarantor and other Obligors of obligations arising under
guaranties by such parties, be held or determined to be void, invalid or
unenforceable or subordinated to the claims of any other creditors, on account
of the amount of its liability under this Guaranty, then, notwithstanding any
other provision hereof to the contrary, the amount of such liability shall,
without any further action by the Guarantor, any Bank, the Agent or any other
Person, be automatically limited and reduced to the highest amount that is
valid and enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.
SECTION 2. Guaranty Absolute. The Guarantor guaranties that the
Guarantied Obligations will be paid strictly in accordance with the terms of
the Credit Agreement, the Notes and the other Loan Documents, without set-off
or counterclaim, and regardless of any Law now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Guarantied
Parties with respect thereto. The liability of the Guarantor under this
Guaranty shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of any
other Loan Document or any other agreement or instrument relating to any Loan
Document, or avoidance or subordination of any of the Guarantied Obligations;
(b) any change in the time, manner or place of payment of, or in any
other term of, or any increase in the amount of, all or any of the Guarantied
Obligations, or any other amendment or waiver of any term of, or any consent to
departure from any requirement of, the Credit Agreement, the Notes or any of
the other Loan Documents;
- 2 -
107
(c) any exchange, release or non-perfection of any Lien on any
collateral for, or any release or amendment or waiver of any term of any other
guaranty of, or any consent to departure from any requirement of any other
guaranty of, all or any of the Guarantied Obligations;
(d) the absence of any attempt to collect any of the Guarantied
Obligations from the Borrower, any other Obligor or any other Person or any
other action to enforce the same or the election of any remedy by any of the
Guarantied Parties;
(e) any waiver, consent, extension, forbearance or granting of any
indulgence by any of the Guarantied Parties with respect to any provision of
any other Loan Document;
(f) the election by any of the Guarantied Parties in any proceeding
under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code")
of the application of section 1111(b)(2) of the Bankruptcy Code;
(g) any borrowing or grant of a security interest by the Borrower, as
debtor-in-possession, under section 364 of the Bankruptcy Code; or
(h) any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a borrower or a guarantor.
SECTION 3. Waiver. (a) The Guarantor hereby (i) waives (A) promptness,
diligence, notice of acceptance and any and all other notices with respect to
any of the Obligations or this Guaranty, (B) any requirement that any of the
Guarantied Parties protect, secure, perfect or insure any security interest in
or other Lien on any property subject thereto or exhaust any right or take any
action against the Borrower, any other Obligor or any other Person or any
Collateral, (C) the filing of any claim with a court in the event of
receivership or bankruptcy of the Borrower or any other Obligor, (D) protest or
notice with respect to nonpayment of all or any of the Guarantied Obligations,
(E) the benefit of any statute of limitation, (F) all demands whatsoever (and
any requirement that same be made on the Borrower, any other Obligor or any
other Person as a condition precedent to the Guarantor's obligations hereunder)
and (G) all rights by which it might be entitled to require suit on an accrued
right of action in respect of any of the Guarantied Obligations or require suit
against the Borrower, any other Obligor or other Person, whether arising
pursuant to Section 34.02 of the Texas Business and Commerce Code, as amended,
Section 17.001 of the Texas Civil Practice and Remedies Code, as amended, Rule
31 of the Texas Rules of Civil Procedure, as amended, or otherwise; and (ii)
covenants and agrees that, except as set forth in Section 11 hereof, this
Guaranty will not be discharged except by complete performance of the
Guarantied Obligations and any other obligations of the Guarantor contained
herein.
(b) If, in the exercise of any of its rights and remedies, any of the
Guarantied Parties shall forfeit any of its rights or remedies, including,
without limitation, its right to enter a deficiency judgment against the
Borrower or any other Person, whether because of any applicable law pertaining
to "election of remedies" or the like, the Guarantor hereby consents to such
action by such Guarantied
- 3 -
108
Party and waives any claim based upon such action. Any election of remedies
which results in the denial or impairment of the right of such Guarantied Party
to seek a deficiency judgment against the Borrower shall not impair the
obligation of the Guarantor to pay the full amount of the Guarantied
Obligations or any other obligation of the Guarantor contained herein.
(c) In the event any of the Guarantied Parties shall bid at any
foreclosure or trustee's sale or at any private sale permitted by law or under
any of the Loan Documents, such Guarantied Party may bid all or less than the
amount of the Guarantied Obligations and the amount of such bid, if successful,
need not be paid by such Guarantied Party but shall be credited against the
Guarantied Obligations. The amount of the successful bid at any such sale,
whether such Guarantied Party or any other Person is the successful bidder,
shall be conclusively deemed to be the fair market value of the collateral and
the difference between such bid amount and the remaining balance of the
Guarantied Obligations shall be deemed to be the amount of the Guarantied
Obligations guaranteed under this Guaranty, subject to any present or future
law or court decision or ruling may have the effect of reducing the amount of
any deficiency claim to which any of the Guarantied Parties might otherwise be
entitled by reason of such bidding at any such sale.
(d) The Guarantor agrees that notwithstanding the foregoing and
without limiting the generality of the foregoing if, after the occurrence and
during the continuance of an Event of Default, the Guarantied Parties are
prevented by Applicable Law from exercising their respective rights to
accelerate the maturity of the Guarantied Obligations, to collect interest on
the Guarantied Obligations, or to enforce or exercise any other right or remedy
with respect to the Guarantied Obligations, or the Agent is prevented from
taking any action to realize on the Collateral, the Guarantor agrees to pay to
the Agent for the account of the Guarantied Parties, upon demand therefor, the
amount that would otherwise have been due and payable had such rights and
remedies been permitted to be exercised by the Guarantied Parties.
(e) The Guarantor hereby assumes responsibility for keeping itself
informed of the financial condition of the Borrower and of each other Obligor,
and of all other circumstances bearing upon the risk of nonpayment of the
Guarantied Obligations or any part thereof, that diligent inquiry would reveal.
The Guarantor hereby agrees that the Guarantied Parties shall have no duty to
advise the Guarantor of information known to any of the Guarantied Parties
regarding such condition or any such circumstance. In the event that any of the
Guarantied Parties in its sole discretion undertakes at any time or from time
to time to provide any such information to the Guarantor, such Guarantied Party
shall be under no obligation (i) to undertake any investigation not a part of
its regular business routine, (ii) to disclose any information which, pursuant
to accepted or reasonable banking or commercial finance practices, such
Guarantied Party wishes to maintain confidential, or (iii) to make any other or
future disclosures of such information or any other information to the
Guarantor.
(f) The Guarantor consents and agrees that the Guarantied Parties
shall be under no obligation to xxxxxxxx any assets in favor of the Guarantor
or otherwise in connection with obtaining payment of any or all of the
Guarantied Obligations from any Person or source.
- 4 -
109
SECTION 4. Representations and Warranties. The Guarantor hereby
represents and warrants that all representations and warranties set forth in
Article 4 of the Credit Agreement as they apply to the Guarantor (each of which
is hereby incorporated by reference) are true and correct.
SECTION 5. Amendments. Etc. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by the Guarantor herefrom shall in
any event be effective unless the same shall be in writing, approved by the
Required Banks (or by all the Banks where the approval of each Bank is required
under the Credit Agreement) and signed by the Agent, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 6. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (except in those cases where giving
notice by telephone is expressly permitted) and shall be deemed to have been
given on the date personally delivered or sent by telecopy (answer back
received), or three days after deposit in the mail, designated as certified
mail, return receipt requested, postage prepaid, or one day after being
entrusted to a reputable commercial overnight delivery service, if to the
Guarantor, addressed to it at its address specified on the signature pages
hereof, and if to any Guarantied Party, addressed to it at the address of such
Guarantied Party specified in the Credit Agreement.
SECTION 7. No Waiver; Remedies. (a) No failure on the part of any
Guarantied Party to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by Law or any of the other Loan
Documents.
(b) Failure by any of the Guarantied Parties at any time or times
hereafter to require strict performance by the Borrower, any other Obligor or
any other Person of any of the provisions, warranties, terms or conditions
contained in any of the Loan Documents now or at any time or times hereafter
executed by the Borrower, any other Obligor or such other Person and delivered
to any of the Guarantied Parties shall not waive, affect or diminish any right
of any of the Guarantied Parties at any time or times hereafter to demand
strict performance thereof, and such right shall not be deemed to have been
modified or waived by any course of conduct or knowledge of any of the
Guarantied Parties or any agent, officer, employee of any of the Guarantied
Parties.
(c) No waiver by the Guarantied Parties of any default shall operate
as a waiver of any other default or the same default on a future occasion, and
no action by any of the Guarantied Parties permitted hereunder shall in way
affect or impair any of the rights of the Guarantied Parties or the obligations
of the Guarantor under this Guaranty or under any of the other Loan Documents,
except as specifically set forth in any such waiver. Any determination by a
court of competent jurisdiction of the amount of any principal and/or interest
or other amount constituting any of the Guarantied Obligations shall be
conclusive and binding on the Guarantor irrespective of whether the Guarantor
was a party to the suit or action in which such determination was made.
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SECTION 8. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, each of the Guarantied Parties, is hereby
authorized at any time and from time to time, to the fullest extent permitted
by Law, to set off and apply any and all deposits (general or special (except
trust and escrow accounts), time or demand, provisional or final) at any time
held and other Indebtedness at any time owing by such Guarantied Party to or
for the credit or the account of the Guarantor against any and all of the
obligations of the Guarantor now or hereafter existing under this Guaranty,
irrespective of whether or not such Guarantied Party shall have made any demand
under this Guaranty and although such obligations may be contingent and
unmatured. The rights of each Guarantied Party under this Section 8 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Guarantied Party may have.
SECTION 9. Continuing Guaranty; Transfer of Notes. Subject to Section
10, this Guaranty is a continuing guaranty and shall remain in full force and
effect until the date of payment in full of the Obligations and termination of
the Commitments of all Banks (the "Release Date"), (ii) be binding upon the
Guarantor, its successors and assigns, and (iii) inure to the benefit of and be
enforceable by the Guarantied Parties and their respective successors,
transferees, and permitted assigns. Without limiting the generality of the
foregoing clause (iii), each of the Guarantied Parties may assign or otherwise
transfer any Note held by it or Guarantied Obligations owing to it to any other
Person, and such other Person shall thereupon become vested with all the rights
in respect thereof granted to such Guarantied Party herein or otherwise with
respect to such of the Notes and Guarantied Obligations so transferred or
assigned, subject, however, to compliance with the provisions of Section
10.7(d) of the Credit Agreement in respect of assignments. No Guarantor may
assign any of its obligations under this Guaranty without first obtaining the
written consent of all Banks, and any purported assignment or transfer without
such consent shall be void.
SECTION 10. Reinstatement. This Guaranty shall remain in full force
and effect and continue to be effective should any petition be filed by or
against the Guarantor for liquidation or reorganization, should the Guarantor
become insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of the
Guarantor's assets, and shall, to the fullest extent permitted by Applicable
Law, continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Obligations, or any part thereof, is,
pursuant to Applicable Law, rescinded or reduced in amount, or must otherwise
be restored or returned by any obligees of the Guarantied Obligations or such
part thereof, whether as a "voidable preference," "fraudulent transfer," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Guarantied Obligations shall, to the fullest extent permitted by
law, be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
SECTION 11. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND THE UNITED STATES OF
AMERICA.
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SECTION 12. Submission to Jurisdiction; Jury Trial. (a) Any legal
action or proceeding with respect to this Guaranty or any document related
thereto may be brought in the courts of the State of Texas or the United States
of America for Dallas, Texas, and, each of the Guarantor and Guarantied Parties
hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each of the
Guarantor and Guarantied Parties hereby irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions.
(b) Nothing contained in this Section 12 shall affect the right of the
Guarantor or Guarantied Party to serve process in any other manner permitted by
law or commence legal proceedings or otherwise proceed against any other party
or its property in any other jurisdiction.
(c) THE GUARANTOR AND GUARANTIED PARTIES EACH, TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON OR ARISING OUT OF THIS GUARANTY OR ANY OTHER
LOAN DOCUMENT.
SECTION 13. Section Titles. The Section titles contained in this
Guaranty are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Guaranty.
SECTION 14. Execution in Counterparts. This Guaranty may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute one and the
same Guaranty.
SECTION 15. Miscellaneous. All references herein to the Borrower or to
the Guarantor shall include their respective successors and assigns, including,
without limitation, a receiver, trustee or debtor-in-possession of or for the
Borrower or the Guarantor. All references to the singular shall be deemed to
include the plural where the context so requires.
SECTION 16. Subrogation and Subordination.
(a) Subrogation. Notwithstanding any reference to subrogation
contained herein to the contrary, until the Release Date, the Guarantor hereby
irrevocably waives any claim or other rights which it may have or hereafter
acquire against the Borrower that arise from the existence, payment,
performance or enforcement of the Guarantor's obligations under this Guaranty,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, any right to participate in any
claim or remedy of any Bank against the Borrower or any collateral which any
Bank now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity, or under contract, statutes or common law, including without
limitation, the right to take or receive from the Borrower, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid
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to the Guarantor in violation of the preceding sentence and the Guarantied
Obligations shall not have been paid in full, such amount shall be deemed to
have been paid to the Guarantor for the benefit of, and held in trust for the
benefit of, the Banks, and shall forthwith be paid to the Agent to be credited
and applied upon the Guarantied Obligations, whether matured or unmatured, in
accordance with the terms of the Credit Agreement. The Guarantor acknowledges
that it will receive direct and indirect benefits from the financing
arrangements contemplated by the Credit Agreement and that the waiver set forth
in this Section 16(a) is knowingly made in contemplation of such benefits.
(b) Subordination. All debt and other liabilities of the Borrower to
the Guarantor ("Borrower Debt") is expressly subordinate and junior to the
Guarantied Obligations and any instruments evidencing the Borrower Debt to the
extent provided below.
(i) Until the Release Date, the Guarantor agrees that it will
not request, demand, accept, or receive (by set-off or other manner)
any payment amount, credit or reduction of all or any part of the
amounts owing under the Borrower Debt or any security therefor, except
as specifically allowed pursuant to clause (ii) below;
(ii) Notwithstanding the provisions of clause (i) above, the
Borrower may pay to the Guarantor and the Guarantor may receive and
retain from the Borrower regularly scheduled payments due and owing
under the terms of the Borrower Debt, provided that the Borrower's
right to pay and the Guarantors' right to receive any such regularly
scheduled amount shall automatically and be immediately suspended and
cease (A) upon the occurrence of a Default or (B) if, after taking
into account the effect of such payment, a Default would occur and be
continuing. The Guarantor's right to receive amounts under this clause
(ii) (including any amounts which theretofore may have been suspended)
shall automatically be reinstated in such time as the Default which
was the basis of such suspension has been cured to the Banks'
satisfaction (provided that no subsequent Default has occurred) or
such earlier date, if any, and the Agent gives notice to the Guarantor
of reinstatement by the Required Banks, in the Required Banks' sole
discretion;
(iii) If the Guarantor receives any payment on the Borrower
Debt in violation of this Guaranty, the Guarantor will hold such
payment in trust for the Banks and will immediately deliver such
payment to the Agent;
(iv) Until the Release Date, the Guarantor will not demand or
accelerate the maturity of all or any part of the Borrower Debt, nor
collect or enforce, or attempt to collect or enforce, from the
Borrower all or any part of the Borrower Debt, whether through the
commencement or joinder of a suit, action or proceeding of any type
(judicial or otherwise) or proceeding under any Debtor Relief Laws
(the "Insolvency Proceeding"), the enforcement of any rights against
any property of the Borrower, or otherwise, except where any
Guaranteed Party shall request the Guarantor to file a claim in
connection with any such proceeding and except as set forth in clause
(v) below; and
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(v) In the event of any Insolvency Proceeding, the Guarantied
Obligations shall first be paid, discharged and performed in full
before any payment or performance is made upon the Borrower Debt
notwithstanding any other provisions which may be made in such
Insolvency Proceeding. In the event of any Insolvency Proceeding, the
Guarantor will at any time prior to the Release Date (A) file, at the
request of any Guarantied Party, any claim, proof of claim or similar
instrument necessary to enforce the Borrower's obligation to pay the
Borrower Debt, and (B) hold in trust for and pay to the Guarantied
Parties any and all monies, obligations, property, stock dividends or
other assets received in any such proceeding on account of the
Borrower Debt in order that the Guarantied Parties may apply such
monies or the cash proceeds of such other assets to the Obligations.
In the event that the Guarantor fails to take such action upon any
Guarantied Party's request, such Guarantied Party shall be deemed to
have been appointed the attorney-in-fact for the Guarantor with
respect to the Borrower Debt, and such Guarantied Party may in that
capacity (i) demand, xxx for, collect and receive any and all such
monies, dividends or other assets, (ii) file any claim, proof of claim
or similar instrument, and (iii) institute such other proceedings
which such Guarantied Party, may deem reasonably necessary for the
collection of the Guarantied Obligations and the enforcement of the
terms of this Guaranty. Upon request of any Guarantied Party, the
Guarantor will execute and deliver to such Guarantied Party such other
and further powers of attorney or other instruments as such Guarantied
Party may reasonably request to effect the purposes of this Guaranty.
If in any proceeding to enforce the payment of the Guarantied
Obligations it becomes necessary that the Guarantor itself prove such
claims, the Guarantor shall do so upon reasonable request by such
Guarantied Party. In proving these claims, however, the Guarantor
shall act as the collection agent of such Guarantied Party and shall
promptly pay any funds so received to such Guarantied Party.
SECTION 17. Guarantor Insolvency. Should the Guarantor voluntarily
seek, consent to, or acquiesce in the benefits of any Debtor Relief Law or
become a party to or be made the subject of any proceeding provided for by any
Debtor Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the rights of any Guarantied Party granted
hereunder, then, the obligations of the Guarantor under this Guaranty shall be,
as between the Guarantor and such Guarantied Party, a fully-matured, due, and
payable obligation of the Guarantor to such Guarantied Party (without regard to
whether the Borrower is then in default under the Credit Agreement or whether
any part of the Guarantied Obligations is then due and owing by the Borrower to
such Guarantied Party), payable in full by the Guarantor to such Guarantied
Party upon demand, which shall be the estimated amount owing in respect of the
contingent claim created hereunder.
SECTION 18. Rate Provision. It is not the intention of any Bank to
make an agreement violative of the laws of any applicable jurisdiction relating
to usury. Regardless of any provision in this Guaranty, no Guarantied Party
shall ever be entitled to contract, charge, receive, collect or apply, as
interest on the Guarantied Obligations, any amount in excess of the Maximum
Rate. In no event shall the Guarantor be obligated to pay any amount in excess
of the Maximum Rate. If from any circumstance the Agent or any Bank shall ever
receive, collect or apply anything of value deemed excess interest under
Applicable Law, an amount equal to such excess shall be applied to the
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reduction of the principal amount of outstanding Guarantied Obligations, and
any remainder shall be promptly refunded to the payor. In determining whether
or not interest paid or payable with respect to the Guarantied Obligations,
under any specified contingency, exceeds the Maximum Rate, the Guarantor and
the Guarantied Parties shall, to the maximum extent permitted by Applicable
Law, (a) characterize any non-principal payment as an expense, fee or premium
rather than as interest, (b) amortize, prorate, allocate and spread the total
amount of interest throughout the full term of such Guarantied Obligations so
that the interest paid on account of such Guarantied Obligations does not
exceed the Maximum Rate and/or (c) allocate interest between portions of such
Guarantied Obligations; provided that if the Guarantied Obligations are paid
and performed in full prior to the end of the full contemplated term thereof,
and if the interest received for the actual period of existence thereof exceeds
the Maximum Rate, the Guarantied Parties shall refund to the payor the amount
of such excess or credit the amount of such excess against the total principal
amount owing, and, in such event, no Guarantied Party shall be subject to any
penalties provided by any laws for contracting for, charging or receiving
interest in excess of the Maximum Rate.
Section 19. Severability. Any provision of this Guaranty which is for
any reason prohibited or found or held invalid or unenforceable by any court or
governmental agency shall be ineffective to the extent of such prohibition or
invalidity or unenforceability, without invalidating the remaining provisions
hereof in such jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 20. ENTIRE AGREEMENT. THIS GUARANTY REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer on the date first above
written.
------------------------------
Notice Address for the Guarantor
for this Guaranty:
By:
---------------------------
---------------------------------- Name:
----------------------
---------------------------------- Title:
---------------------
----------------------------------
Telephone:
-----------------------
Telecopier:
----------------------
Accepted and Acknowledged:
NATIONSBANK, N.A., as
the Agent
By:
----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
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EXHIBIT D
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made as of __________,
_____, by Hastings Entertainment, Inc., a Texas corporation ("Pledgor"), in
favor of NationsBank, N.A., a national banking association, in its capacity as
Agent ("Agent") for itself, and each other lender a party to the Credit
Agreement described below (the "Banks") and each Affiliate (as defined in the
Credit Agreement) of each Bank that has entered into an Interest Rate
Protection Agreement with Pledgor or any Subsidiary (as defined in the Credit
Agreement) of Pledgor (singly, a "Secured Party" and collectively, the "Secured
Parties").
BACKGROUND
(1) Pledgor, Agent and Banks are party to that certain Credit
Agreement, dated as of December 16, 1998 (as amended, modified, supplemented or
restated from time to time, the "Credit Agreement"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings given to them
in the Credit Agreement.
(2) It is the intention of the parties hereto that this Agreement
create a first priority security interest in all Capital Stock of
__________________, a _______________, which is a Material Subsidiary (the
"Company").
(3) It is a requirement of Section 5.18 of the Credit Agreement that
Pledgor execute and deliver this Agreement.
NOW, THEREFORE, for and in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Pledgor hereby agrees with the Agent for the ratable
benefit of the Secured Parties as follows:
A. AGREEMENT
1. Pledge. Pledgor hereby irrevocably and unconditionally pledges,
grants, assigns, hypothecates and transfers to the Agent, for the ratable
benefit of the Secured Parties to secure the Secured Obligation (as defined
herein), a first and prior pledge and security interest in (a) 100% of all
shares of stock, whether common, preferred or otherwise, together with all
rights to acquire any such shares, whether by purchase, exercise of any type of
option, conversion of debt, or otherwise, of the Company now or hereafter owned
beneficially or of record by Pledgor, including, but not limited to, the stock
interests described on Exhibit A attached hereto, (b) all rights to acquire
such stock interests, whether by purchase, exercise of any type of option,
warrant, conversion of debt or otherwise, and (c) all proceeds thereof, and all
distributions, interest, cash dividends, increases, profits
117
and other property distributed in respect of, or received in exchange for, any
or all of such stock (collectively, the "Collateral").
B. OBLIGATION
1. Description of Obligation. This Agreement creates a security
interest in the Collateral to secure the payment and performance of any and all
obligations now or hereafter existing of Pledgor and each Subsidiary of Pledgor
(collectively, "Obligors") under the Credit Agreement and the other Loan
Documents, including any extensions, modifications, substitutions, amendments
and renewals thereof, whether for principal, interest, fees, premium, expenses,
reimbursement obligations, indemnification or otherwise (all such obligations
of Pledgor and each other Obligor being the "Secured Obligation"). Without
limiting the generality of the foregoing, this Agreement secures the payment of
all amounts which constitute part of the Secured Obligation and would be owed
by Pledgor or any other Obligor to Agent or any other Secured Party under any
Loan Document, but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
under any applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, insolvency, reorganization or similar debtor relief Laws
affecting the rights of creditors generally from time to time in effect
("Debtor Relief Laws") involving Pledgor, any other Obligor or any other Person
(including all such amounts which would become due or would be secured but for
the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding of Pledgor, any other Obligor or
any other Person under any Debtor Relief Law).
C. COVENANTS, REPRESENTATIONS AND WARRANTIES
1. Representations and Warranties. Pledgor represents and warrants
that (a) it has full power, authority and legal right to execute, deliver and
perform this Agreement; (b) the shareholder interests in the Company described
on Exhibit A constitute 100% of the issued and outstanding shareholder
interests in the Company; (c) the shareholder interests pledged hereunder are
duly authorized, validly issued, fully paid and nonassessable; (d) the pledge,
assignment and delivery of the Collateral create a valid, and so long as the
Agent (or a bailee on behalf of the Secured Parties) retains physical
possession of the Collateral, first and prior perfected security interest in
the Collateral, and no other security agreement covering the Collateral, or any
part thereof, has been made, and no pledge or security interest, other than the
one herein created, has attached or been perfected in the Collateral or in any
part thereof; and (e) no dispute, right of setoff, counterclaim or defense
exists with respect to any part of the Collateral. The delivery at any time by
Pledgor to the Agent of Collateral shall constitute a representation and
warranty by the Pledgor under this Agreement that, with respect to such
Collateral, and each item thereof, the Pledgor is the sole legal and beneficial
owner of, with good title to, the Collateral, and the matters warranted in this
paragraph are true and correct.
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2. Covenants.
a. Affirmative Covenants. Pledgor covenants and agrees (i)
promptly to deliver to the Agent all instruments, certificates,
documents or agreements evidencing any of the Collateral; (ii) from
time to time promptly to execute and deliver to the Agent all such
other assignments, certificates, supplemental writings and financing
statements, and do all other acts or things, as the Agent or any
Secured Party may reasonably request in order more fully to evidence
and perfect the security interest and pledge herein created or to
effect the purposes of this Agreement; and (iii) promptly to notify
the Agent of any claim, action or proceeding materially adversely
affecting title to the Collateral, or any part thereof, or the
security interest therein.
b. Negative Covenants. Pledgor covenants and agrees that
Pledgor will not (i) sell, assign or transfer any of Pledgor's rights
in the Collateral; (ii) create any other security interest or pledge
in, mortgage or otherwise encumber the Collateral or any part thereof;
(iii) cause, permit, or suffer the Company to issue any of their
respective stock or rights to acquire any such stock to Pledgor or to
any Subsidiary or Affiliate of Pledgor that are not concurrently
pledged and delivered to the Agent which would result in the
Collateral pledged hereunder representing less than 100% of all
outstanding shares of stock, whether common, preferred or otherwise,
of the Company; or (iv) agree to amend or modify the articles of
incorporation, by-laws, or other agreement or document for the Company
(or otherwise agree or obligate Pledgor) in such a manner as to reduce
the percentage of shareholder interests of the Company owned by
Pledgor or otherwise affect the rights of the Agent and the other
Secured Parties in the Collateral.
D. RIGHTS OF SECURED PARTIES
1. Rights to Dividends, Distributions, and Payments. Subject to
Pledgor's right to receive cash distributions prior to the occurrence of an
Event of Default as provided herein, with respect to such instruments which are
certificates, bonds or other securities, the Agent may demand of the Company,
and may receive and receipt for, any and all dividends and other distributions
payable in respect thereof, whether ordinary or extraordinary. The Agent shall
have the authority, following an Event of Default and upon written notice to
Pledgor to do so, to have such certificates, bonds or other securities
registered either in the Agent's name or in the name of a nominee. If, while
this Agreement is in effect, Pledgor shall become entitled to receive or shall
receive any certificate (including, without limitation, any certificate
representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital, or issued in connection
with any reorganization), option or rights, whether as an addition to, in
substitution of, as a conversion of or in exchange for any of the Collateral,
or otherwise, Pledgor agrees to accept the same as the Agent's agent and to
hold the same in trust on behalf of and for the benefit of the Agent, and to
deliver the same forthwith to the Agent in the exact form received, with
appropriate undated stock powers, duly executed in blank, to be held by the
Agent, subject to the terms hereof, as additional collateral
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security for the Secured Obligation. Until an Event of Default shall have
occurred, Pledgor shall be entitled to receive all cash distributions paid in
respect of the Collateral. After the occurrence of an Event of Default, the
Agent shall be entitled to all cash distributions, and to any sums paid upon or
in respect of the Collateral upon the liquidation, dissolution or
reorganization of the issuer thereof which shall be paid to the Agent to be
held by it as additional collateral security for the Secured Obligation. In
case any distribution shall be made on or in respect of the Collateral pursuant
to the reorganization, liquidation or dissolution of the Company, the property
so distributed shall be delivered to the Agent to be held by it as additional
collateral security for the Secured Obligation. After an Event of Default, all
sums of money and property so paid or distributed in respect of the Collateral
which are received by Pledgor shall, until paid or delivered to the Agent, be
held by Pledgor in trust as additional Collateral for the Secured Obligation.
2. Preservation of Collateral. Neither the Agent nor any other Secured
Party shall have any duty to fix or preserve rights against prior parties to
the Collateral, nor be liable for any delay in the collection of, or failure to
use diligence to collect on, the Secured Obligation or any amount payable in
respect of the Collateral.
3. Performance by the Agent. Should any covenant, duty or agreement of
Pledgor fail to be performed in accordance with its terms hereunder, the Agent
may, but shall never be obligated to, perform or attempt to perform such
covenant, duty or agreement on behalf of Pledgor, and any amount expended by
the Agent in such performance or attempted performance shall become a part of
the Secured Obligation, shall be payable upon demand and shall bear interest at
a per annum rate equal to the Default Rate.
4. Voting Rights. It is expressly understood and agreed that Pledgor
shall retain all voting rights to the Collateral until the occurrence of an
Event of Default, at which time such voting rights shall transfer to the Agent,
at its sole discretion.
5. Power of Attorney. PLEDGOR HEREBY IRREVOCABLY GRANTS TO THE AGENT
PLEDGOR'S PROXY (EXERCISABLE FROM AND AFTER THE OCCURRENCE OF AN EVENT OF
DEFAULT WHICH IS CONTINUING) TO VOTE ANY COLLATERAL AND APPOINTS THE AGENT AS
PLEDGOR'S ATTORNEY-IN-FACT (EXERCISABLE FROM AND AFTER THE OCCURRENCE OF AN
EVENT OF DEFAULT WHICH IS CONTINUING) TO PERFORM ALL OBLIGATIONS OF PLEDGOR
UNDER THIS AGREEMENT AND TO EXERCISE ALL OF THE AGENT'S RIGHTS HEREUNDER. THE
PROXY AND POWER OF ATTORNEY HEREIN GRANTED, AND EACH STOCK POWER AND SIMILAR
POWER NOW OR HEREAFTER GRANTED (INCLUDING ANY EVIDENCED BY A SEPARATE WRITING)
ARE COUPLED WITH AN INTEREST AND ARE IRREVOCABLE PRIOR TO FINAL PAYMENT IN FULL
OF THE SECURED OBLIGATION.
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E. DEFAULT
1. Rights and Remedies. Upon the occurrence of an Event of Default, in
addition to any and all other rights and remedies which the Agent or any other
Secured Party may then have hereunder, under any other Loan Documents, under
Applicable Law or otherwise, the Agent at its option may, subject to any
limitation or restriction imposed by any applicable bankruptcy, insolvency or
other law relating to the relief of debtors, (a) obtain from any Person
information regarding Pledgor, any issuer of the Collateral, or any of their
businesses, which information any such Person may furnish without liability to
Pledgor; (b) require Pledgor to give possession or control of any of the
Collateral to the Agent; (c) unless earlier permitted hereunder, take control
of funds generated by the Collateral and any other proceeds and exercise all
other Rights which an owner of such Collateral may exercise; (d) declare the
entire unpaid balance of principal and interest on the Secured Obligation
immediately due and payable, without notice, demand or presentment, which are
hereby expressly waived; (e) reduce its claim to judgment, foreclose or
otherwise enforce its security interest in all or any part of the Collateral by
any available judicial procedure; (f) after notification, if any, provided for
in this Agreement or any other Loan Documents, sell or otherwise dispose of,
all or any part of the Collateral, and any such sale or other disposition shall
be in accordance with Applicable Law, and may be as a unit or in parcels, by
public or private proceedings, and by way of one or more contracts (it being
agreed that the sale of any part of the Collateral shall not exhaust the
Agent's power of sale, but sales may be made from time to time until all of the
Collateral has been sold or until the Secured Obligation has been paid in
full), and at any such sale it shall not be necessary to exhibit the
Collateral; (g) at its discretion, retain the Collateral in satisfaction of the
Obligation whenever the circumstances are such that the Agent is entitled to do
so under Applicable Law; (h) apply by appropriate judicial proceedings for
appointment of a receiver for the Collateral, or any part hereof, and Pledgor
hereby consents to any appointment; (i) buy the Collateral at any public sale;
and (j) buy the Collateral at any private sale, subject to any restrictions
imposed by Applicable Law. Any Secured Party may buy the Collateral at any
public sale and buy the Collateral at any private sale, subject to the
restrictions imposed by Applicable Law and this Agreement. Pledgor agrees that,
if notice is required to be given by Applicable Law, 10 days' advance written
notice shall constitute reasonable notice. The Agent shall apply the proceeds
of any collection, sale, disposition or other realization upon any Collateral
as follows:
First, to the payment of the reasonable costs and expenses of
such collection, sale, disposition, or other realization, including
reasonable out-of-pocket costs and expenses of the Agent and the
reasonable fees and expenses of its agents and counsel;
Next, to the payment of the Secured Obligation, equally and
ratably to each Secured Party in accordance with the respective
amounts thereof due and owing to each Secured Party; and
Finally, to the payment to Pledgor, or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining.
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121
If the proceeds of collection, sale, disposition, or other realization are
insufficient to cover the costs and expenses of such realization and the
payment in full of the Secured Obligation, Pledgor shall remain liable for any
deficiency.
2. Transfer
a. Pledgor recognizes that the Agent may be unable to effect
a public sale of any or all of the Collateral by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act") and applicable state securities laws, but may be
compelled to resort to one or more private sales thereof to a
restricted group of purchasers who will be obliged to agree, among
other things, to acquire such Collateral for their own account for
investment and not with a view to the distribution or resale thereof.
Pledgor acknowledges and agrees that any such private sale conducted
in the manner described herein may result in prices and other terms
less favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any private sale shall
be made in a commercially reasonable manner. The Agent shall be under
no obligation to delay a sale of any of the Collateral for the period
of time necessary to permit the issuer of the Collateral to register
such Collateral for public sale under the Securities Act, or under
applicable state securities laws, even if the issuer of the Collateral
would agree to do so.
b. Pledgor agrees (i) that in the event the Agent shall, upon
any Event of Default, sell the Collateral or any portion thereof, at a
private sale or sales, the Agent shall have the right to rely upon the
advice and opinion of a member of a nationally recognized investment
banking firm acceptable to the Agent, as to the best price reasonably
obtainable upon such a private sale thereof, and (ii) in the absence
of fraud, wilful misconduct and gross negligence, that such reliance
shall be conclusive evidence that the Agent handled such matter in a
commercially reasonable manner under the UCC.
3. Notice. Notification of the time and place of any public sale of
the Collateral, or reasonable notification of the time after which any private
sale or other intended disposition of the Collateral is to be made, shall be
sent to Pledgor and to any other Person entitled under Applicable Law to
notice.
F. GENERAL
1. Agent's Duties. The Secured Parties hereby appoint NationsBank,
N.A. as Agent to act as their agent as provided herein. In the event the Agent
is replaced pursuant to the provisions of the Credit Agreement, the successor
Agent appointed in accordance with the provisions of the Credit Agreement shall
be the Agent hereunder. The powers conferred on the Agent hereunder are solely
to protect the Secured Parties' interest in the Collateral and shall not impose
any duty upon it to exercise any such powers. Except for the safe custody of
any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Agent shall have no duty as to any
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122
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders, or other matters relative to any
Collateral, whether or not the Agent or any other Secured Party has or is
deemed to have knowledge of such matters, or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining
to any reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which the Agent accords its own property. Except as set forth herein, the Agent
shall not have any duty or liability to protect or preserve any Collateral or
to preserve rights pertaining thereto. Nothing contained in this Agreement
shall be construed as requiring or obligating the Agent, and the Agent shall
not be required or obligated, (a) to present or file any claim or notice or
take any action, with respect to any Collateral or in connection therewith or
(b) to notify Pledgor of any decline in the value of any Collateral.
2. Cumulative Rights. All rights and remedies of the Agent and the
other Secured Parties hereunder are cumulative of each other and of every other
right or remedy which the Agent or the other Secured Parties may otherwise have
at law or in equity or under any other contract or other writing for the
enforcement of the security interest herein or the collection of the Secured
Obligation, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other rights or
remedies.
3. Waiver. Should any part of the Secured Obligation be payable in
installments, the acceptance by any Secured Party at any time and from time to
time of partial payment of the aggregate amount of all installments then
matured shall not be deemed as a waiver of any Event of Default then existing.
No waiver by the Agent or any other Secured Party of any Event of Default shall
be deemed to be a waiver of any other subsequent Event of Default, nor shall
any such waiver by the Agent or any other Secured Party be deemed to be a
continuing waiver. No delay or omission by the Agent or any other Secured Party
in exercising any right or power hereunder or under any other Loan Documents
shall impair any such right or power or be construed as a waiver thereof or an
acquiescence therein, nor shall any single or partial exercise of any such
right or power preclude other or further exercise thereof, or the exercise of
any other right or power of the Agent or any other Secured Party hereunder or
under such other writings.
4. Interest; Limitation of Law. No provision herein or in any other
Loan Document shall require the payment or permit the collection of interest in
excess of the maximum permitted by Applicable Law. If, in any contingency
whatsoever, the Agent or any other Secured Party shall receive anything of
value from Pledgor deemed interest under Applicable Law which would exceed the
maximum amount of interest permissible under Applicable Law, the provisions of
the Credit Agreement shall govern.
5. Parties Bound. This Agreement shall be binding on Pledgor and its
heirs, successors, assigns, administrators and legal representatives, and shall
inure to the benefit of the Agent and the other Secured Parties, and their
respective successors, permitted assigns and legal representatives; provided,
however, that Pledgor may not assign its rights or obligations hereunder
without the prior written consent of the Agent. The rights, powers and
interests held by the Agent hereunder may be
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123
transferred and assigned by the Agent, in whole or in part, at such time and
upon such terms as permitted by the Credit Agreement.
6. Notice; Waivers by Pledgor. All notices and other communications
provided for hereunder shall be in writing and mailed, telecopied or delivered
by reputable overnight delivery service or by hand, addressed to Pledgor at its
address specified on the signature pages hereof, if to the Agent, addressed to
it at its address specified in the Credit Agreement, or, as to each party at
such other address as shall be designated by such party in a written notice to
the other party complying as to delivery with the terms of this Section 6. All
such notices and other communications shall, when mailed, telecopied, or
delivered, be effective three days after being deposited in the mails, when
telecopied with confirmation of receipt, or when delivered by reputable
overnight delivery service or by hand to the addressee or its agent,
respectively. Except as expressly provided to the contrary in the Credit
Agreement, Pledgor waives presentment, demand, notice of dishonor and protest;
waives notice of the amount of the Secured Obligation outstanding at any time,
notice of any change in financial condition of any Person liable for the
Secured Obligation or any part thereof, notice of any Event of Default and all
other notices respecting the Secured Obligation; waives all rights of
redemption, appraisal, or valuation; and agrees that maturity of the Secured
Obligation and any part thereof may be accelerated, increased, extended or
renewed one or more times by the Secured Parties in their discretion, without
notice to Pledgor.
7. Modifications. No provision hereof shall be modified or limited
except by a written agreement expressly referring hereto and to the provisions
so modified or limited and signed by the Agent.
8. Control. Notwithstanding anything herein to the contrary, this
Agreement and the transactions contemplated hereby do not and will not
constitute, create, or have the effect of constituting or creating, directly or
indirectly, actual or practical ownership of Pledgor or the issuer of the
Collateral by the Agent, or control, affirmative or negative, direct or
indirect, by the Agent or the other Secured Parties, over the management or any
aspect of the day-to-day operation of Pledgor or the issuer of the Collateral,
which control remains in Pledgor and the issuer of the Collateral.
9. Obligations Not Affected. To the fullest extent permitted by
Applicable Law, the pledge, assignment and security interest granted herein and
obligations of Pledgor under this Agreement shall remain in full force and
effect without regard to, and shall not be impaired or affected by:
a. any amendment or modification or addition or supplement to
any Loan Document, any instrument delivered in connection therewith or
any assignment or transfer thereof, including but not limited to any
increase in the Commitments;
b. any exercise, non-exercise, or waiver by the Agent or any
other Secured Party of any right, remedy, power or privilege under or
in respect of, or any release of any
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124
guaranty, any collateral or the Collateral or any part thereof
provided pursuant to, this Agreement or any other Loan Document;
c. any waiver, consent, extension, indulgence or other action
or inaction in respect of this Agreement or any other Loan Document or
any assignment or transfer of any thereof; or
d. any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Company, any
other Obligor or any other Person, whether or not Pledgor shall have
notice or knowledge of any of the foregoing.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW) AND THE UNITED STATES OF AMERICA. WITHOUT EXCLUDING ANY
OTHER JURISDICTION, PLEDGOR AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS
LOCATED IN DALLAS, TEXAS SHALL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION
HEREWITH.
11. WAIVER OF JURY TRIAL. PLEDGOR AND THE AGENT HEREBY KNOWINGLY,
VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT
PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT TO
EACH LENDER ENTERING INTO THE CREDIT AGREEMENT.
12. ENTIRE AGREEMENT. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE
PARTIES.
===============================================================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
===============================================================================
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125
IN WITNESS WHEREOF, Pledgor and the Agent have executed this Agreement
as of the date specified hereinabove.
HASTINGS ENTERTAINMENT, INC.
By:
---------------------------------
Name:
---------------------------
Title:
--------------------------
Address of Pledgor:
--------------------------
--------------------------
Attn:
---------------------
NATIONSBANK, N.A., as Agent
By:
---------------------------------
Name:
---------------------------
Title:
--------------------------
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126
Exhibit A to Pledge Agreement
Description of Pledged Stock Interests
127
EXHIBIT E
ASSIGNMENT AND ACCEPTANCE
Dated _______________, _____
Reference is made to the Credit Agreement dated as of December 16, 1998
(as amended, modified or supplemented, the "Credit Agreement") among Hastings
Entertainment, Inc., a Texas corporation ("Borrower"), NationsBank, N.A. as
Agent ("Agent") and financial institutions parties thereto. Capitalized terms
used but not defined herein shall have the meanings set forth in the Credit
Agreement.
____________ ("Assignor") and ___________ ("Assignee") agree as
follows:
1. Subject to the terms and conditions of this Assignment and
Acceptance, Assignor hereby sells and assigns to Assignee, and Assignee hereby
purchases and assumes from Assignor, $ in aggregate amount of the Commitment in
effect on the Effective Date (as defined below), and the related pro rata share
of the principal amount of Loans owing to Assignor on the Effective Date, the
Note held by Assignor, and Assignor's participation in any Letters of Credit and
Reimbursement Obligations outstanding on the Effective Date.
2. Assignor (a) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to (i) any statements,
warranties, or representations made in or in connection with the Credit
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency, or value of the Credit Agreement or any other Loan Document or (ii)
the financial condition of the Borrower or any other obligor or the performance
or observance by the Borrower or any other obligor of any of their respective
obligations under the Credit Agreement or any other Loan Document; and (c)
attaches the Note referred to in Paragraph 1 above to exchange such Note for new
Notes as provided in Section 10.7(d) of the Credit Agreement.
3. Assignee (a) confirms that it has received a copy of the Credit
Agreement and the other Loan Documents, together with copies of the financial
statements referred to in Sections 4.6(a) and 5.1 of the Credit Agreement and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and Acceptance;
(b) agrees that it will, independently and without reliance upon the Agent,
Assignor, or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement and the other Loan
Documents; (c) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement, the other
Loan Documents, and this Assignment and Acceptance as are delegated to the Agent
and the Collateral Agent by the terms thereof and hereof, together with such
powers as are reasonably incidental thereto and hereto; (d) agrees that it will
perform in accordance with its terms all of the obligations which by
128
the terms of the Credit Agreement, the other Loan Documents, and this Assignment
and Acceptance are required to be performed by it as a Lender; (e) certifies
that it is an Eligible Assignee; and (f) specifies the addresses set forth in
Schedule I attached hereto as its address for the receipt of notices and as its
initial LIBOR Lender Office, respectively[; and (g) attaches the forms
prescribed by the IRS certifying as to Assignee's status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to Assignee under the Credit Agreement, the other Loan
Documents, and this Assignment and Acceptance].
4. The effective date for this Assignment and Acceptance shall be ,
(the "Effective Date").
5. Upon such acceptance as of the Effective Date, the recordation of
the information herein in the Register and upon the remittance of a $3,500
processing fee to the Agent, (a) Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of a Lender thereunder and (b) Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of Texas. Without excluding any other
jurisdiction, Assignee agrees that the courts of Texas will have jurisdiction
over proceedings in connection herewith.
7. After giving effect to this Assignment and Acceptance, Assignee's
Specified Percentage shall be _____%.
8. This Assignment and Acceptance may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
[NAME OF ASSIGNOR]
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
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129
[NAME OF ASSIGNEE]
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
Accepted this ___ day of ________, ___
NATIONSBANK, N.A.,
as Agent
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
HASTINGS ENTERTAINMENT, INC.
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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130
Schedule I
ASSIGNEE'S ADDRESS
1. Address for the Advances and Receipt of Notices
2. Initial LIBOR Lending Office
131
EXHIBIT F
CONTINUATION/CONVERSION NOTICE
TO: NATIONSBANK, N.A., as the Agent under the Credit Agreement dated as of
December 16, 1998 (including any amendments or modifications thereof,
the "Credit Agreement"), among Hastings Entertainment, Inc., a Texas
corporation ("Borrower"), NationsBank, N.A., individually, as the Agent
and the Issuing Bank, and the financial institutions now or hereafter
parties thereto. Unless otherwise defined herein, terms defined in the
Credit Agreement shall have the same meanings in this
Continuation/Conversion Notice.
Pursuant to Section 2.5 of the Credit Agreement, this
Continuation/Conversion Notice (this "Notice") represents Borrower's election to
[complete, as applicable, one or more of the following]:
1. Use if converting LIBOR Loans to Base Rate Loans.
Convert $___________ in aggregate principal amount of LIBOR
Loans with a current Interest Period ending on _____________,
_____, to Base Rate Loans on ________________, ______. [and]
2. Use if converting Base Rate Loans to LIBOR Loans.
Convert $____________ in aggregate principal amount of Base
Rate Loans to LIBOR Loans on _____________, _____. The
Interest Period for such LIBOR Loans is requested to be [one]
[two] [three] [six] (_________) month period.
3. Use if continuing LIBOR Loans.
Continue $___________ in aggregate principal amount of LIBOR
Loans with a current Interest Period ending on __________,
_____. The initial Interest Period for such continued LIBOR
Loans is requested to be a [one] [two] [three] [six]
(_________) month period.
4. Borrower hereby certifies, warrants and represents to the
Agent, the Issuing Bank and each Bank as follows:
(a) the representations and warranties contained and
referred to in Article 4 of the Credit Agreement
(other than those by their terms limited to a
specific date) are true and correct in all material
respects as of the date hereof and will be true and
correct upon the making of the requested Loans, with
the same force and effect as though made on and as of
the date hereof and thereof;
132
(b) no event has occurred since the of the most recent
financial statements delivered pursuant to Section
5.1 of the Credit Agreement (or if this Borrowing
request precedes the delivery of such financial
statements, July 31, 1998) that has caused a Material
Adverse Effect;
(c) as of the date hereof, and as a result of the making
of the requested Loans, there does not and will not
exist any Default or Event of Default; and
(d) as of the date hereof, no change or event has
occurred that might cause a Material Adverse Effect.
5. The undersigned certifies that he/she is the [president] [chief
financial officer] of Borrower, and that as such he/she is familiar with the
terms of the Credit Agreement, has knowledge of all information necessary to
deliver this Certificate and is authorized to execute this certificate on behalf
of Borrower.
DATED: ____________________, _____
HASTINGS ENTERTAINMENT, INC.
By:
------------------------------------
Name:
-----------------------------
Title:
-----------------------------
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133
EXHIBIT G
COMPLIANCE CERTIFICATE
TO: NATIONSBANK, N.A., as the Agent under the Credit Agreement dated as of
December 16, 1998 (including any amendments or modifications thereof,
the "Credit Agreement"), among Hastings Entertainment, Inc., a Texas
corporation ("Borrower"), NationsBank, N.A., individually, as the Agent
and the Issuing Bank, and the financial institutions now or hereafter
parties thereto. Unless otherwise defined herein, terms defined in the
Credit Agreement shall have the same meanings in this Compliance
Certificate.
This Compliance Certificate is delivered pursuant to Section 5.1(d) of
the Credit Agreement and relates to Borrower's compliance with the covenants set
forth in Section 6.1 of the Credit Agreement. This Compliance Certificate
contains "short-hand" descriptions of such covenants. The precise descriptions
of such covenants, including defined terms used in connection therewith, are
more fully set forth in the Credit Agreement, which shall control to the extent
of any inconsistency with the "short-hand" descriptions used herein.
1. Borrower is in compliance with the covenants set forth in Section
6.1 of the Credit Agreement for the Fiscal Quarter ended ______________, _____
(the "Determination Date"), as follows:
SECTION 6.1(a): FIXED COVERAGE RATIO
For the four-quarter period ended as of the Determination
Date:
(1) net income (GAAP) $
-------------
(2) interest expense $
-------------
(3) income tax expense $
-------------
(4) other non-cash items $
-------------
(5) depreciation/amortization expense $
-------------
(6) rental expense $
-------------
(7) Adjusted EBITDAR: sum of (1) through (6) $
-------------
[Plus Rental Video Charge for calculations
including Fiscal quarter commencing November 1,
1998 and ending January 31, 1999]
(8) rental expense $
-------------
(9) interest expense $
-------------
(10) Fixed Charges: sum of (8) and (9) $
-------------
Ratio: EBITR (7) to Fixed Charges (10) _____ to _____
Minimum Ratio: 2.00 to 1.00
134
SECTION 6.1(b): MINIMUM TANGIBLE NET WORTH
As of the Determination Date:
(1) net worth (GAAP) $
-------------
(2) approved Subordinated Indebtedness $
-------------
(3) LIBO Reserve $
-------------
(4) deferred income taxes $
-------------
(5) intellectual property $
-------------
(6) good will and experimental expenses $
-------------
(7) unamortized debt discount and expense $
-------------
(8) costs in excess of fair value of the net assets acquired $
-------------
(9) Tangible Net Worth: (1) plus (2) plus (3) plus (4) $
minus [the sum of (5) through (8)] -------------
(10) 50% of cumulative net income (GAAP) from 8/1/98 $
through Determination Date (no deduction for losses) -------------
(11) tangible net worth of Subsidiary acquired with capital $
stock -------------
(12) Net Cash Proceeds from issuance of Capital Stock $
-------------
Tangible Net Worth: (9) above $
-------------
Minimum Required: $98,000,000 plus (10) $
plus (11) plus (12) -------------
SECTION 6.1(c): FUNDED DEBT TO ADJUSTED EBITDA
As of the Determination Date:
(1) unpaid principal balance of Notes $
-------------
(2) unpaid Reimbursement Obligations $
-------------
(3) unpaid principal amount of other borrowed-money $
Indebtedness -------------
(4) Funded Debt: (1) plus (2) plus (3) $
-------------
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135
For the four-quarter period ended on the Determination Date:
(5) net income (GAAP) $
-------------
(6) interest expense $
-------------
(7) income tax expense $
-------------
(8) other non-cash items $
-------------
(9) depreciation/amortization expense $
-------------
(10) EBITDA: sum of (5) through (9) $
-------------
[Plus Rental Video Charge for calculations including
Fiscal Quarter commencing November 1, 1998 and ending
January 31, 1999]
Ratio: (4) to (10) _____ to _____
Maximum Ratio: 2.50 to 1.0
SECTION 6.1(d): CAPITAL EXPENDITURES
For the current Fiscal Year through the Determination Date:
(1) capital expenditures (GAAP) $
-------------
(2) capitalized cost of video tapes purchased by $
Borrower and its Subsidiaries for rental -------------
Amount: (1) minus (2) $
-------------
Maximum Amount:
Fiscal Year ending 01/31/99 $28,000,000
Fiscal Year ending 01/31/00 $35,000,000
Thereafter $42,000,000
2. Borrower hereby certifies, warrants and represents to the Agent, the
Issuing Bank and each Bank as follows:
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136
(a) the representations and warranties contained and
referred to in Article 4 of the Credit Agreement
(other than those by their terms limited to a
specific date) are true and correct in all material
respects as of the date hereof, with the same force
and effect as though made on and as of the date
hereof and thereof;
(b) no event has occurred since the date of the most
recent financial statements delivered pursuant to
Section 5.1 of the Credit Agreement (or if this
Borrowing request precedes the delivery of such
financial statements, July 31, 1998) that has caused
a Material Adverse Effect;
(c) as of the date hereof, there does not exist any
Default or Event of Default; and
(d) as of the date hereof, no change or event has
occurred that might cause a Material Adverse Effect.
3. The undersigned certifies there he/she is the [president] [chief
financial officer] of Borrower, and that as such he/she is familiar with the
terms of the Credit Agreement, has knowledge of all information required to
deliver this certificate and is authorized to execute this certificate on behalf
of Borrower.
DATED: ________________, ______
HASTINGS ENTERTAINMENT, INC.
By:
-----------------------------------
Name:
------------------------------
Title:
------------------------------
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137
ANNEX A
NATIONSBANK, N.A.
1. Domestic Lending Office:
NationsBank, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
2. LIBOR Lending Office
NationsBank, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
3. Commitment:
(a) From and including Closing Date to and including $15,000,000
December 16, 1999
(b) From and including December 16, 1999 to and including $20,000,000
December 16, 2000
(c) From and including December 16, 2000 to and including $25,000,000
December 16, 2001
4. Information for Notices:
NationsBank, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxxxx X. Xxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
5. Account Number:
----------------------
----------------------
----------------------
Annex A-1
000
XXXXX X
XXXXX XXXX XX XXXXX, NATIONAL ASSOCIATION
1. Domestic Lending Office:
Chase Bank of Texas, National Association
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
2. LIBOR Lending Office
Chase Bank of Texas, National Association
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
3. Commitment:
(a) From and including Closing Date to and including $12,000,000
December 16, 1999
(b) From and including December 16, 1999 to and including $16,000,000
December 16, 2000
(c) From and including December 16, 2000 to and including $20,000,000
December 16, 2001
4. Information for Notices:
Chase National Bank of Texas, National Association
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
5. Account Number:
----------------------
----------------------
----------------------
Annex A-2
139
ANNEX A
XXXXX FARGO BANK (TEXAS), N.A.
1. Domestic Lending Office:
Xxxxx Fargo Bank (Texas), N.A.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
2. LIBOR Lending Office
Xxxxx Fargo Bank (Texas), N.A.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
3. Commitment:
(a) From and including Closing Date to and including $12,000,000
December 16, 1999
(b) From and including December 16, 1999 to and including $16,000,000
December 16, 2000
(c) From and including December 16, 2000 to and including $20,000,000
December 16, 2001
4. Information for Notices:
Xxxxx Fargo Bank (Texas), N.A.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
5. Account Number:
----------------------
----------------------
----------------------
Annex A-3
140
AMARILLO NATIONAL BANK
1. Domestic Lending Office:
Amarillo National Bank
Plaza One
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
2. LIBOR Lending Office
Amarillo National Bank
Plaza One
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
3. Commitment:
(a) From and including Closing Date to and including $6,000,000
December 16, 1999
(b) From and including December 16, 1999 to and including $8,000,000
December 16, 2000
(c) From and including December 16, 2000 to and including $10,000,000
December 16, 2001
4. Information for Notices:
Amarillo National Xxxx
Xxxxx Xxx
Xxxxxxxx, Xxxxx 00000
X.X. Xxx 0
Xxxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
5. Account Number:
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Annex A-4
141
ANNEX B
CONDITIONS PRECEDENT:
INITIAL LOAN (AND/OR INITIAL LETTER OF CREDIT)
(a) Agreement and Schedules. This Agreement duly executed by Borrower,
and all Schedules, duly and fully completed, that are provided for in this
Agreement.
(b) Notes. A Note duly executed by Borrower in favor of each Bank in
the respective amount of such Bank's Revolving Commitment.
(c) Guaranty Agreement. A Guaranty Agreement duly executed by each
Material Subsidiary.
(d) Pledge Agreement. A Pledge Agreement duly executed by Borrower with
respect to all of the capital stock of each Material Subsidiary, together with
original certificates of such stock, blank stock powers, and related UCC
Financing Statements.
(e) Opinion of Counsel to Borrower. Opinion of legal counsel for
Borrower in the form of Exhibit F.
(f) Notice of Borrowing. A Notice of Borrowing duly completed and
executed by Borrower.
(g) Secretary Certificate. A Certificate signed by the secretary of
Borrower and each Material Subsidiary, which secretary's office and signature
shall be confirmed by another officer of Borrower and each Material Subsidiary
dated and effective as of the Closing Date attaching thereto or containing
therein, and certifying as to the following: (i) corporate resolutions, as in
effect and neither revoked nor rescinded, duly adopted by the board of directors
of Borrower and each Material Subsidiary authorizing the execution, delivery and
performance of the Loan Documents to be executed by each of them and the
transactions contemplated thereby; (ii) true, complete and accurate copies of
the articles of incorporation and bylaws, as amended and in effect, of Borrower
and each Material Subsidiary, and (iii) names, incumbency and specimen
signatures of the officers of the Borrower and each Material Subsidiary
authorized to execute and deliver the Loan Documents to be executed by each of
them.
(h) Official Certificates. Certificates as to incorporation, existence
and good standing for Borrower and each Material Subsidiary issued by the
Secretary of State (and/or other appropriate officer) of the state of
incorporation of Borrower and each Material Subsidiary and certificates of
foreign qualification and good standing (or other similar instruments) for
Borrower and each Material Subsidiary, issued by the Secretary of State (and/or
other appropriate official) of each of the states where in Borrower and each
Material Subsidiary is or should be qualified to do business as a foreign
Annex B-1
142
corporation, each of the foregoing certificates being dated within 60 days prior
to the date of the Closing Date.
(i) Articles of Incorporation and Bylaws. A copy of the Articles of
Incorporation of Borrower and each Material Subsidiary and all amendments
thereto, certified by the Secretary of State of the state of incorporation of
Borrower and each Material Subsidiary as being true, complete and accurate, and
being dated within 60 days prior to the Closing Date.
(j) Environmental Reports. Copies of all environmental surveys or
reports relating to real Property owned or leased by Borrower and its
Subsidiaries which have heretofore been performed or prepared (each of which is
described in Schedule 4.20 hereof).
(k) Insurance Certificates. A certificate from each issuer or duly
authorized insurer's Agent of Borrower setting forth a listing of all insurance
coverage of Borrower and its Subsidiaries and reflecting that the policies
evidencing such coverage conforms to the requirements of this Agreement and each
of the other Loan Documents.
(l) Financial Statements. Copies of financial statements of Borrower
for the most recent period required under Section 5.1.
(m) Regulatory and Other Approvals. Evidence that all necessary
approvals or consents of Governmental Authorities and all other Persons have
been obtained.
(n) Compliance with Laws. Evidence that Borrower and each Subsidiary of
Borrower has complied with all Laws necessary to consummate the transactions
contemplated by this Agreement and each of the other Loan Documents.
(o) Fees. Payment of (i) the facility fee payable to the Agent on the
Closing Date, (ii) upfront fees payable to each Bank on the Closing Date in the
amount of (A) 0.10% of each Bank's final Commitment with respect to Banks whose
initial Commitment was $20,000,000 or more and (B) 0.075% of each Bank's final
Commitment with respect to Banks whose initial Commitment was less than
$20,000,000, and (iii) fees of counsel to the Banks payable by Borrower in
connection with the preparation, negotiation and closing of the transactions
contemplated by this Agreement.
(p) Additional Documentation. Such additional approvals, opinions,
documents, instruments, reports, certifications and/or agreements as the Agent,
the Banks or their counsel may reasonably request.
Annex B-2
