Exhibit 10.3
FIFTH AMENDMENT AND WAIVER
--------------------------
FIFTH AMENDMENT AND WAIVER (this "Amendment"), dated as of March 10,
1999, among VIDEO UPDATE, INC., a Delaware corporation (the "Borrower"), the
lending institutions party to the Credit Agreement referred to below (the
"Banks") and PARIBAS, as Agent (in such capacity, the "Agent"). Unless otherwise
indicated, all capitalized terms used herein and not otherwise defined shall
have the respective meanings provided such terms in the Credit Agreement
referred to below.
W I T N E S S E T H:
WHEREAS, the Borrower, the Banks and the Agent are parties to a
Credit Agreement, dated as of March 6, 1998 (as amended, modified or
supplemented to the date hereof, the "Credit Agreement"); and
WHEREAS, subject to and on the terms and conditions set forth in
this Amendment, the parties hereto wish to amend the Credit Agreement and the
Banks wish to grant certain waivers to the Credit Agreement, in each case as
herein provided;
NOW, THEREFORE, it is agreed:
I. Amendments to Credit Agreement.
1. Notwithstanding anything to the contrary contained in Section
4.02(A)(b) of the Credit Agreement, the mandatory repayment of A Term Loans
otherwise required to be made on March 12, 1999 pursuant to said Section (as
modified by the Fourth Amendment) shall instead be required to be made on April
30, 1999.
2. Notwithstanding anything to the contrary contained in Section
4.02(A)(c) of the Credit Agreement, the mandatory repayment of B Term Loans
otherwise required to be made on March 12, 1999 pursuant to said Section (as
modified by the Fourth Amendment) shall instead be required to be made on April
30, 1999.
3. Section 8.21 of the Credit Agreement is hereby amended by
deleting said Section in its entirety and inserting the following new Section
8.21 in lieu thereof:
"8.21 Forecasts and Other Analyses. On or prior to April 15, 1999,
the Borrower shall deliver to the Agent and each of the Banks (x) a
comprehensive forecast of the businesses of the Borrower and its Subsidiaries
and (y) an analysis and forecast for each store of the Borrower and each of its
Subsidiaries, all of which forecasts and analyses shall be in form and substance
satisfactory to the Agent and the Required Banks."
4. Section 9.09 of the Credit Agreement is hereby amended by
deleting said Section in its entirety and inserting the following new Section
9.09 in lieu thereof.
"9.09 Fixed Charge Coverage Ratio. The Borrower will not permit the
Fixed Charge Coverage Ratio for any period of four consecutive fiscal
quarters
(or, if shorter, the period beginning on November 1, 1998 and ending on
the last day of a fiscal quarter of the Borrower ended on or after January
31, 1999, in each case taken as one accounting period, ending on a date
set forth below to be less than the ratio set forth opposite such date:
Fiscal Quarter Ended Ratio
-------------------- -----
January 31, 1999 0.60:1.0
Last day of each fiscal quarter
of the Borrower thereafter 1.20:1.0".
5. Section 9.10 of the Credit Agreement is hereby amended by (i)
deleting the date "August 1, 1998" appearing in the parenthetical in said
Section and inserting the date "November 1, 1998" in lieu thereof, (ii) deleting
the date "October 31, 1998" appearing in the parenthetical in said Section and
inserting the date "January 31, 1999" in lieu thereof and (iii) deleting the
ratio "3.20:1.0" appearing in the table in said Section opposite the fiscal
quarter ended January 31, 1999 and inserting the ratio "1.50:1.0" in lieu
thereof.
6. Section 9.11 of the Credit Agreement is hereby amended by (i)
deleting the date "August 1, 1998" appearing in the parenthetical in said
Section and inserting the date "November 1, 1998" in lieu thereof, (ii) deleting
the date "October 31, 1998" appearing in the parenthetical in said Section and
inserting the date "January 31, 1999" in lieu thereof and (iii) deleting the
ratio "4.80:1.0" appearing in the table in said Section opposite the fiscal
quarter ended January 31, 1999 and inserting the ratio "6.00:1.0" in lieu
thereof.
7. Notwithstanding anything to the contrary contained in Section
9.12 of the Credit Agreement or elsewhere in the Credit Agreement, the Borrower
will not be required to comply with the requirements of said Section 9.12 for
the period from and including November 1, 1998 to and including April 30, 1999.
8. Section 9.13 of the Credit Agreement is hereby amended (i)
deleting the date "August 1, 1998" appearing in the parenthetical in said
Section and inserting the date "November 1, 1998" in lieu thereof, (ii) deleting
the date "October 31, 1998" appearing in the parenthetical in said Section and
inserting the date "January 31, 1999" in lieu thereof and (iii) deleting the
amount "$56,100" appearing in the table in said Section opposite the fiscal
quarter ended January 31, 1999 and inserting the amount "$26,500" in lieu
thereof.
9. Section 9.14 of the Credit Agreement is hereby amended by (i)
deleting the date "August 1, 1998" appearing in the parenthetical in said
Section and inserting the date "November 1, 1998" in lieu thereof, (ii) deleting
the date "October 31, 1998" appearing in the parenthetical in said Section and
inserting the date "January 31, 1999" in lieu thereof and (iii) deleting the
amount "$18,325" appearing in the table in said Section opposite the fiscal
quarter ended January 31, 1999 and inserting the amount "$7,600" in lieu
thereof.
10. The Banks hereby waive (i) compliance by the Borrower with the
financial covenants contained in Sections 9.09, 9.10, 9.11, 9.12, 9.13 and 9.14
of the Credit Agreement for (and only for) the fiscal quarter of the Borrower
ending October 31, 1998 and (ii) any Default or Event of Default that may have
existed solely as a result of the Borrower's failure to comply
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with the financial covenants contained in Sections 9.09, 9.10, 9.11, 9.12, 9.13
and 9.14 of the Credit Agreement for (and only for) the fiscal quarter of the
Borrower ending October 31, 1998.
11. The Banks hereby waive (i) compliance by the Borrower with the
covenants contained in Sections 8.20(c) and 9.20 of the Credit Agreement for
(and only for) the monthly period ending January 31, 1999 and (ii) any Default
or Event of Default that may have existed solely as a result of the Borrower's
failure to comply with the covenants contained in Sections 8.20(c) and 9.20 of
the Credit Agreement for (and only for) the monthly period ending January 31,
1999.
12. The definition of "Pro Forma Basis" appearing in Section 11.01
of the Credit Agreement is hereby amended by deleting each reference to "August
1, 1998" appearing in clause (iii) of said definition and inserting the date
"November 1, 1998" in lieu thereof.
13. Section 11.01 of the Credit Agreement is hereby amended by
inserting the following new definitions in said Section in appropriate
alphabetical order:
"Fifth Amendment" shall mean the Fifth Amendment to this Agreement,
dated as of March 10, 1999.
"Fifth Amendment Effective Date" shall have the meaning provided in
the Fifth Amendment.
14. Section 13.12(a) of the Credit Agreement is hereby amended by
(i) inserting the text "(it being understood that additional extensions of
credit made on a super-priority basis (i.e., on a basis that provides priority
payment rights to holders of indebtedness evidencing such credit extensions
vis-a-vis the holders of the other Obligations hereunder or provides for
security for such credit extensions on a priority lien basis (rather than a pari
passu basis with all other Obligations)) shall not constitute a release of
Collateral for purposes of this clause (ii))" immediately after the text "Credit
Document)" appearing in clause (ii) of the first proviso to said Section and
(ii) inserting the text "release any portion of the Collateral (except in
connection with a sale or other disposition of Collateral permitted by Section
9.02 of this Agreement as in effect on the Fifth Amendment Effective Date) (it
being understood and agreed that additional extensions of credit made on a
super-priority basis (i.e., on a basis that provides priority payment rights to
holders of indebtedness evidencing such credit extensions vis-a-vis the holders
of the other Obligations hereunder or provides for security for such credit
extensions on a priority lien basis (rather than a pari passu basis with all
other Obligations)) shall constitute a release of Collateral for (and only for)
purposes of this clause (o)), or" immediately after the text "without the
consent of the Supermajority Banks," appearing in clause (o) of the second
proviso to said Section.
15. Each of the Credit Parties, on its own behalf and on behalf of
its successors and assigns, hereby waives, releases and discharges the Agent and
each Bank and all of the affiliates of the Agent and each Bank, and all of the
directors, officers, employees, attorneys and agents of the Agent, each Bank and
such affiliates, from any and all claims, demands, actions or causes of action
(known and unknown) arising out of or in any way relating to the Credit
Documents and any documents, agreements, dealings or other matters connected
with the Credit Documents, in each case to the extent arising (x) on or prior to
the Fifth Amendment Effective Date or (y) out of, or relating to, actions,
dealings or matters occurring on or prior to the Fifth
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Amendment Effective Date. The waivers, releases, and discharges in this Section
15 shall be effective regardless of whether the conditions to this Amendment are
satisfied and regardless of any other event that may occur or not occur after
the Fifth Amendment Effective Date.
II. Miscellaneous.
1. In order to induce the Banks to enter into this Amendment, the
Borrower hereby (i) makes each of the representations, warranties and agreements
contained in Section 7 of the Credit Agreement (other than, in the case of
representations made by the Borrower immediately prior to the effectiveness of
this Amendment, the representation contained in the last sentence of Section
7.05(a)), in each case on the Fifth Amendment Effective Date, both before and
after giving effect to this Amendment, and (ii) represents and warrants that no
Default or Event of Default is in existence on the Fifth Amendment Effective
Date, after giving effect to this Amendment.
2. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
3. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Agent.
4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
5. This Amendment shall become effective on the date (the "Fifth
Amendment Effective Date") when (i) the Borrower shall have paid to the Agent
and the Banks all costs, fees and expenses (including, without limitation, legal
fees and expenses of White & Case LLP) payable to the Agent and the Banks to the
extent then due, (ii) each of the Borrower and the Agent shall have executed and
delivered a side letter relating to the Fifth Amendment in form and substance
satisfactory to the Agent and the Banks and (iii) each of the Borrower and each
of the Banks shall have signed a copy hereof (whether the same or different
copies) and shall have delivered (including by way of facsimile transmission)
the same to White & Case LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 Attention: Xxxxx Xxxxxx (facsimile number 212-354-8113).
6. By executing and delivering a copy hereof, each Credit Party
hereby agrees that all Loans shall be fully guaranteed pursuant to the
Subsidiaries Guaranty in accordance with the terms and provisions thereof and
shall be (and are) fully secured pursuant to the Security Documents.
7. From and after the Fifth Amendment Effective Date, all references
to the Credit Agreement in the Credit Agreement and each of the other Credit
Documents shall be deemed to be references to the Credit Agreement as modified
hereby.
* * *
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered as of the date first above
written.
VIDEO UPDATE, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman & CEO
BANQUE PARIBAS,
Individually and as Agent
By: /s/Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
By: /s/Xxxxxx X. Xxxxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Director, Merchant Banking Group
CAROLINA FIRST BANK
By: /s/Xxxxxxx X. Xxxxxxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Executive Vice President
BANK AUSTRIA CREDITANSTALT CORPORATE
FINANCE, INC.
By: /s/Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Associate
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FIRST SOURCE FINANCIAL LLP
By: /s/Xxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
FLEET NATIONAL BANK
By: /s/Xxxxxxx X. X'Xxxxx
-----------------------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Senior Vice President
XXXXXXX XXXXX SENIOR FLOATING RATE
FUND LLC
By: /s/Xxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Authorized Signatory
PPM AMERICA, INC. as agent, on behalf
of Xxxxxxx National Life Insurance
Company
By: /s/Xxxxxxx DiRe
-----------------------------------------
Name: Xxxxxxx DiRe
Title: Managing Director
BOEING CAPITAL CORPORATION
By: /s/Xxxxx Xxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxx
Title: Special Credits Officer
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KEY CORPORATE CAPITAL INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Designated Signer
PARIBAS CAPITAL FUNDING LLC
By: /s/X.X. Xxxxxxxxx
-----------------------------------------
Name: X.X. Xxxxxxxxx
Title: Director
THE BANK OF NOVA SCOTIA
By: /s/F.C.H. Xxxxx
-----------------------------------------
Name: F.C.H. Xxxxx
Title: Senior Manager Loan Operations
ML CLO XIX STERLING (CAYMEN) LTD.
By: Sterling Asset Manager, as its Investment
Advisor
By: /s/Xxxxx X. Pistecchia
-----------------------------------------
Name: Xxxxx X. Pistecchia
Title: Executive Vice President
KZH STERLING LLC
By: /s/Xxxxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Authorized Agent
Each of the undersigned, each being a Subsidiary Guarantor under,
and as defined in, the Credit Agreement referenced in the foregoing Fifth
Amendment, hereby consents to the entering into of the Fifth Amendment, and
agrees to the provisions thereof (including without limitation, Sections 6 and 7
of Part III thereof).
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MOOVIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
TINSELTOWN VIDEO, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
XXXXXXXX VIDEO, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
MOOVIES OF THE CAROLINAS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
MOOVIES OF GEORGIA, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
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MOOVIES OF IOWA, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
MOOVIES OF MICHIGAN, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
MOVIE WAREHOUSE FRANCHISE SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
E.C.6., INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
SONI, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
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PQ3, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
SNO, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
GBO, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
D-XXXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
DCO, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
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PTO, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
THE MOVIE STORE, INC. #2
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
THE MOVIE STORE III, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
ALPHARETTA MEDIA ASSOCIATES, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
VIDEO UPDATE CANADA INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
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24 HOUR ENTERTAINMENT GROUP LTD.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
24 HOUR ENTERTAINMENT LEASING LTD.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
1137239 ONTARIO LIMITED
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
RIO MEDIA ASSOCIATES, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
PIC-A-FLICK OF GREENVILLE, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
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