1
EXHIBIT 10
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Loan Agreement"), is made and entered into as
of the 8th day of October, 1997, by and among (i) REGAL CINEMAS, INC., a
Tennessee corporation with principal office and place of business in Knoxville,
Tennessee (the "Borrower"), (ii) the BANKS party hereto (each of which is
hereinafter individually referred to as a "Bank", and all of which are
hereinafter collectively referred to as the "Banks"), (iii) PNC BANK, KENTUCKY,
INC., in its capacity as agent for the Banks (in such capacity, the "Agent"),
and (iv) BANKBOSTON, N.A., in its capacity as the co-agent (in such capacity,
the "Co-Agent").
P R E L I M I N A R Y S T A T E M E N T:
A. The Borrower desires to obtain from the Banks a revolving credit
facility in the principal amount of Two Hundred Fifty Million Dollars
($250,000,000.00) (the "Revolver"), upon the terms and conditions set forth in
this Loan Agreement, to refinance the Reducing Revolver Credit Facility, as such
term is defined below, to finance the acquisition and construction of additional
theaters by the Borrower, and for other general corporate purposes of the
Borrower.
B. The Banks desire to establish the Revolver in favor of the Borrower
upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the mutuality,
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1
DEFINITIONS
1. Definitions and Cross Reference. The following terms
used in this Loan Agreement shall have the following meanings:
1.1 "Acquired Debt" of the Borrower or any Subsidiary of the
Borrower means the Indebtedness of any other Person existing at the time such
other Person merged with or into the Borrower or became a Subsidiary of the
Borrower, or which was assumed by the Borrower or any Subsidiary of the Borrower
in connection with the acquisition of assets from any other Person, and in
either event which was not incurred by such other Person in connection with, or
in contemplation of, such other Person merging with or into the Borrower or
becoming a Subsidiary of the Borrower.
2
1.2 "Adjusted LIBOR Rate" means, on the particular Interest
Rate Determination Date, the rate determined by dividing (i) the per annum rate
of interest equal to the offered rate(s) for deposits in Dollars for the
applicable Interest Period which appear on Page 3750 of the TELERATE rate
reporting system or other similar system as of approximately 11:00 A.M.,
Greenwich Mean Time on the Interest Rate Determination Date, except as provided
below, by (ii) an amount equal to one minus the stated maximum rate (expressed
as a decimal) of all reserve requirements (including any marginal, emergency,
supplemental, special or other reserves) that is specified on the first day of
such Interest Period by the Board of Governors of the Federal Reserve System (or
any successor agency) for determining the maximum reserve requirement with
respect to eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a member bank of such
System. If more than one offered rate appears on Page 3750 of the TELERATE rate
reporting system or similar system, the rate in respect of the applicable
Interest Rate Determination Date will be the simple average of such offered
rates. Each determination by the Agent of the Adjusted LIBOR Rate shall be
conclusive and binding on the Borrower in the absence of manifest error on the
part of the Agent.
1.3 "Affected Bank" has the meaning assigned to that term in
Section 2.6C hereof.
1.4 "Affiliate" means, as applied to any specified Person, (i)
any other Person directly or indirectly controlling, controlled by, or under
direct or indirect common control with, such specified Person, or (ii) any other
Person that, directly or indirectly, owns or controls, whether beneficially or
as a trustee, guardian or other fiduciary, 10% or more of such Person's Capital
Stock, or (iii) any officer or director of any such Person or other Person or
with respect to any natural Person, any Person having a relationship with such
Person by blood, marriage or adoption not more remote than first cousin. For the
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling," "controlled by" and "under common control with"), as
applied to any specified Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities or by contract
or otherwise.
1.5 "Agent" has the meaning assigned to that term in the
introduction to this Loan Agreement, and includes any successor Agent under
Section 9.13 hereof.
2
3
1.6 "And/or" means one or the other or both, or any one or
more or all, of the things or persons or parties in connection with which the
conjunction is used.
1.7 "Applicable Base Rate Margin" means the per annum
percentages set forth in the first table appearing in Section 2.2A hereof.
1.8 "Applicable Commitment Fee Percentage" means the per annum
percentages set forth in the table appearing in Section 2.3B hereof.
1.9 "Applicable Letter of Credit Fee Percentage" means the per
annum percentages set forth in the table appearing in Section 2.7F hereof.
1.10 "Applicable LIBOR Rate Margin" means the per annum
percentages set forth in the second table appearing in Section 2.2A hereof.
1.11 "Application and Agreement For Letter of Credit" means
the document substantially in the form of Exhibit G attached hereto and made a
part hereof, with appropriate insertions and deletions, with respect to the
proposed issuance or amendment of a Letter of Credit.
1.12 "Asset Sale" means any transfer, conveyance, sale, lease
or other disposition by the Borrower or any of its Subsidiaries (including any
issuance or sale by a Subsidiary of Capital Stock of such Subsidiary, and
including a consolidation or merger or other sale of any such Subsidiary with,
into or to another Person in a transaction in which such Subsidiary ceases to be
a Subsidiary, but excluding a disposition by a Subsidiary of the Borrower to the
Borrower or a Wholly-Owned Subsidiary of the Borrower or by the Borrower to a
Wholly-Owned Subsidiary of the Borrower) of (i) any shares of Capital Stock
(other than directors' qualifying shares) or other ownership interests of a
Subsidiary of the Borrower, (ii) substantially all of the assets of the Borrower
or any of its Subsidiaries representing a division or line of business, (iii)
any Theaters, or (iv) any other assets or rights of the Borrower or any of its
Subsidiaries outside of the ordinary course of business.
1.13 "Assignment Agreement" means an Assignment Agreement
between an assigning Bank and its assignee, substantially in the form of Exhibit
J attached hereto and made a part hereof.
1.14 "Authorized Officer" means the President, the Chief
Financial Officer and any other officer of the Borrower who, by the
3
4
Charter, Bylaws or Resolutions of the Board of Directors of the Borrower, is
authorized to execute and deliver this Loan Agreement and the other Loan
Documents on behalf of the Borrower.
1.15 "Bank" and "Banks" have the meanings assigned to those
terms in the introduction to this Loan Agreement and shall include the Agent in
its capacity as a Bank hereunder.
1.16 "Bankruptcy Code" means Title 11 of the United States
Code entitled "Bankruptcy" as now and hereafter in effect, or any successor
statute.
1.17 "Base Rate" means the higher of (i) the Prime Rate, or
(ii) the Federal Funds Effective Rate plus one half of one percent (1/2 of 1%)
per annum.
1.18 "Base Rate Loans" means Revolving Loans bearing interest
at rates determined by reference to the Base Rate as provided in Section 2.2A
hereof.
1.19 "Borrower" has the meaning assigned to that term in the
introduction to this Loan Agreement.
1.20 "Borrowing Certificate" means the Certificate sub
stantially in the form of Exhibit D attached hereto and made a part hereof with
respect to a proposed Revolving Loan to be delivered by the Borrower to the
Agent on behalf of the Banks pursuant to Sections 2.1B, 2.7B and 5.3(a) hereof.
1.21 "Business Day" means (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the state in which each Bank
maintains its office for purposes of performing its obligations under this Loan
Agreement as set forth on the signature pages of this Loan Agreement or is a day
on which banking institutions located in such state are authorized or required
by law or other governmental action to close, and (ii) with respect to all
notices, determinations, fundings and payments in connection with the Adjusted
LIBOR Rate, any day which is a Business Day described in clause (i) above and
which is also a day for trading by and between banks in dollar deposits in the
London interbank market.
1.22 "Capital Expenditures" means the aggregate of all
expenditures, whether in cash or accrued as liabilities and including Capital
Lease Obligations, by the Borrower or its Subsidiaries that, in accordance with
GAAP, are included in the balance sheet of the Borrower or its Subsidiaries as
long-term assets.
4
5
1.23 "Capital Lease Obligations" of any Person means any
obligations of such Person and its Subsidiaries on a consolidated basis under
any capital lease of real or personal property which, in accordance with GAAP,
has been recorded as a capitalized lease obligation.
1.24 "Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents, however designated, of such
Person's capital stock, any rights, other than debt securities convertible into
capital stock, warrants or options to acquire such capital stock, whether now
outstanding or issued after the date of this Loan Agreement.
1.25 "Closing Date" means the date on which the initial
Revolving Loans are made to the Borrower and the conditions set forth in
Sections 3.1 and 3.2 hereof are satisfied.
1.26 "Compliance Certificate" means a certificate
substantially in the form of Exhibit F attached hereto and made a part hereof
delivered by the Borrower to the Agent on behalf of the Banks pursuant to
Section 5.3(f) hereof.
1.27 "Confidentiality Agreement" means a Confidentiality
Agreement between a potential assignee Bank and the Borrower substantially in
the form of Exhibit I attached hereto and made a part hereof.
1.28 "Consolidated EBITDA" means, for any period, on a
consolidated basis in accordance with GAAP for the Borrower and its consolidated
Subsidiaries, without duplication, the sum of the amounts for such period of (i)
Consolidated Net Income and, to the extent deducted in determining Consolidated
Net Income, (ii) Consolidated Interest Expense, (iii) Consolidated Income Tax
Expense, other than income taxes attributable to extraordinary, unusual or
non-recurring gains or losses, (iv) depreciation and amortization expense, (v)
other non-cash charges, (vi) other non-operating expenses that have been
deducted in the determination of Consolidated Net Income, and (vii)
non-recurring expenses and charges incurred by the Borrower in connection with
or as a result of the acquisition of another Person in a Permitted Business
Combination accounted for as a pooling of interests in accordance with
Accounting Principles Board Opinions No. 16 (or any successor thereto);
provided, however, that for each such consolidated Subsidiary the items (i)
through (vii) shall be included in such sum only to the extent and in the same
proportion that the Consolidated Net Income of such consolidated Subsidiary was
included in calculating the Consolidated Net Income of the Borrower.
5
6
1.29 "Consolidated EBITR" means, for any period, the
Consolidated Net Income of the Borrower for such period plus, to the extent
deducted in determining such Consolidated Net Income for such period, the sum of
(i) Consolidated Interest Expense, (ii) Consolidated Income Tax Expense, and
(iii) Consolidated Operating Lease Expense, all as determined on a consolidated
basis in accordance with GAAP; provided, Consolidated EBITR shall be calculated
to exclude the effect of (a) other non-cash charges, (b) other non-operating
expenses that have been deducted in the determination of Consolidated Net
Income, and (c) non-recurring expenses and charges incurred by the Borrower in
connection with or as a result of the acquisition of another Person in a
Permitted Business Combination accounted for as a pooling of interests in
accordance with Accounting Principles Board Opinions No. 16 (or any successor
thereto); provided, however, that for each such consolidated Subsidiary the
items referred to herein shall be included in such sum only to the extent and in
the same proportion that the Consolidated Net Income of such consolidated
Subsidiary was included in calculating the Consolidated Net Income of the
Borrower.
1.30 "Consolidated Fixed Charges" means, for any period, the
sum of the amounts for such period of (i) Consolidated Interest Expense, and
(ii) Consolidated Operating Lease Expense, as
determined in accordance with GAAP.
1.31 "Consolidated Income Tax Expense" means, for any period,
the consolidated provision for income taxes of the Borrower and its consolidated
Subsidiaries for such period determined in accordance with GAAP.
1.32 "Consolidated Interest Expense" means, for any period, on
a consolidated basis for the Borrower and its consolidated Subsidiaries, without
duplication, (i) the sum of (a) the aggregate of the interest expense on
Indebtedness of the Borrower and its consolidated Subsidiaries for such period,
on a consolidated basis, including, without limitation, (1) amortization of debt
discount, (2) the net cost under Interest Rate Protection Agreements, including
amortization of discounts, (3) the interest portion of any deferred payment
obligation, and (4) accrued interest, plus, (b) the interest component of the
Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued
by the Borrower and its consolidated Subsidiaries during such period minus (ii)
the cash interest income (exclusive of deferred financing fees) of the Borrower
and its consolidated Subsidiaries during such period, in each case determined in
accordance with GAAP.
6
7
1.33 "Consolidated Net Income" means, for any period, the
consolidated net income (or loss) of the Borrower and its consolidated
Subsidiaries for such period taken as a single accounting period determined in
accordance with GAAP; provided that there shall be excluded from Consolidated
Net Income (i) the net income or loss of any Person that is not a consolidated
Subsidiary of the Borrower except to the extent of the amount of dividends or
other distributions actually paid to the Borrower by such Person during the
period in question, (ii) extraordinary gains and losses (and any unusual gains
and losses arising outside the ordinary course of business not included in
extraordinary gains and losses), (iii) net gains and losses in respect of Asset
Sales, (iv) the cumulative effect of changes in accounting principles, and (v)
the tax effect of any of the items described in clauses (i) through (iv) above.
1.34 "Consolidated Net Worth" means, as of any Fiscal Quarter
end, the stockholders' equity of the Borrower as of such Fiscal Quarter end as
determined by reference to the balance sheet of the Borrower and its
consolidated Subsidiaries prepared as of such Fiscal Quarter end, in each case
determined in accordance with GAAP.
1.35 "Consolidated Operating Lease Expense" means, for any
period, all cash rent payments (including any percentage rent payment) paid or
payable by the Borrower and its Subsidiaries during such period under all
Operating Leases, in each case determined in accordance with GAAP.
1.36 "Consolidated Theater Level Cash Flow" means, with
respect to the period in question, the Borrower's Consolidated EBITDA for the
period in question plus the Borrower's corporate overhead, in each case
determined on a consolidated basis in accordance with GAAP; provided, for
purposes of Sections 2.1, 2.2, 2.7 and 6.10 of this Loan Agreement, (A) the
historical Theater Level Cash Flow of the seller of any existing Theaters
acquired by the Borrower with respect to the Theaters so acquired by the
Borrower for the period from the first day of the relevant four-Fiscal Quarter
or twelve-calendar month period, as applicable, of such seller to the date of
acquisition of such Theaters by the Borrower, in each case as determined in
conformity with GAAP and by reference to such seller's financial statements for
the period(s) in question, shall be included in the Borrower's Consolidated
Theater Level Cash Flow for the relevant four-Fiscal Quarter period or
twelve-calendar month period, as applicable, and (B) the historical Consolidated
Theater Level Cash Flow contributed by any Theaters closed or sold by the
Borrower for the period from the first day of the relevant four-Fiscal Quarter
period or twelve-calendar month period, as applicable, to the date such
Theaters are
7
8
so closed or sold by the Borrower shall be excluded from the Borrower's
Consolidated Theater Level Cash Flow for the relevant four-Fiscal Quarter period
or twelve-calendar month period, as
applicable.
1.37 "Consolidated Total Indebtedness" means, as at any date
on which the amount thereof shall be determined, without duplication, all
Indebtedness for borrowed money of the Borrower and its Subsidiaries as at such
date, including, without limitation, all unpaid Obligations, all unpaid
Subordinated Indebtedness, all Capital Lease Obligations of the Borrower and its
Subsidiaries and all Acquired Debt of the Borrower and its Subsidiaries,
together with all Contingent Obligations of the Borrower and its Subsidiaries,
all as determined on a consolidated basis in accordance with GAAP, but excluding
all Net Cash Proceeds on deposit in the account maintained by the Borrower with
the Bank pursuant to Section 6.15 hereof.
1.38 "Contingent Obligation" means, as applied to any Person,
any direct or indirect liability, contingent or otherwise, of that Person (i)
with respect to any indebtedness, lease, dividend, letter of credit or other
obligation of another if the primary purpose or intent thereof by the Person
incurring the Contingent Obligation is to provide assurance to the obligee of
such obligation of another that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holder of such obligation will be protected (in whole or in part)
against loss in respect thereof, or (ii) under any letter of credit issued for
the account of or for which that Person is otherwise liable for reimbursement
thereof, or (iii) under interest rate swap agreements, interest rate collar
agreements or other similar arrangements providing interest rate protection.
Contingent Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, and (b) any liability of
such Person for the obligations of another through any agreement (contingent or
otherwise) (1) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), (2) to maintain the solvency of any balance sheet
item, level of income or financial condition of another, or (3) to make
take-or-pay or similar payments if required regardless of nonperformance by any
other party or parties to an agreement, if the case of any agreement described
under subclauses (1), (2) or (3) of this sentence the primary purpose or intent
thereof is as described in clause (i) of the preceding sentence.
8
9
The amount of any Contingent Obligation, as at any time of determination, shall
be equal to the amount of the obligation so guaranteed or otherwise supported at
such time of determination which amount shall be deemed to be the amount of such
obligation guaranteed, as reasonably estimated by the Borrower, if such amount
cannot be specifically determined at the time of determinations.
1.39 "Covered Tax" means any Tax that is not an Excluded Tax.
1.40 "Currency Hedging Obligations" means the obligations of
the Borrower and its consolidated Subsidiaries pursuant to an arrangement
designed to protect such Person against fluctuations in currency exchange rates.
1.41 "Default Rate" means, upon the occurrence and during the
continuation of any Event of Default, a variable rate per annum equal to the sum
of two percent (2%) per annum plus (i) the Base Rate and (ii) the Applicable
Base Rate Margin.
1.42 "Environmental Laws" means any and all federal, state,
local and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, codes, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and governmental
restrictions relating to the environment or to the effect of the environment on
human health or to emissions, discharges or releases of pollutants,
contaminants, Hazardous Materials or wastes into the environment, including
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Materials or wastes
or the clean-up or other remediation thereof.
1.43 "Environmental Liabilities" means any and all liabilities
of or relating to the Borrower or any Subsidiary, including any entity which is,
in whole or in part, a predecessor of the Borrower or any Subsidiary, whether
vested or unvested, contingent or fixed, actual or potential, known or unknown,
which arise under or relate to matters covered by Environmental Laws.
1.44 "Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
1.45 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and any successor statute.
9
10
1.46 "Excluded Tax" means any of the following taxes, levies,
imposts, duties, deductions, withholdings or charges, and all liabilities with
respect thereto: (i) Taxes imposed on the net income of a Bank, the Agent or a
Tax Transferee, including without limitation branch profits taxes, minimum taxes
and taxes computed under alternative methods, at least one of which is based on
net income (collectively referred to as "net income taxes") by (A) the United
States of America, (B) the jurisdiction under the laws of which such Bank, the
Agent or Tax Transferee is organized or any political subdivision thereof, (C)
the jurisdiction of such Bank's, Tax Transferee's or the Agent's applicable
lending office or any political subdivision thereof, or (D) any jurisdiction in
which the Bank, the Agent or Tax Transferee is doing business, (ii) any Taxes to
the extent that they are in effect and would apply to a payment to such Bank or
the Agent, as applicable, as of the Closing Date, or as of the date such Person
becomes a Bank, in the case of any assignee pursuant to Section 10 hereof, (iii)
any Taxes that are in effect and would apply to a payment to a Tax Transferee as
of the date of acquisition of the Revolving Loans by such Tax Transferee or the
date of the change of lending office of such Tax Transferee, as the case may be
(provided however that a Person shall not be considered a Tax Transferee for
purposes of this clause (iii) as a result of a change of its lending office or
the taking of any other steps pursuant to Section 2.9 hereof), (iv) any Taxes to
the extent of any credit or other Tax benefit available to such Bank, Tax
Transferee or the Agent, as applicable, as a result thereof, or (v) any Taxes
that would not have been imposed but for the failure by the Agent or such Bank
or Tax Transferee, as applicable, to provide and keep current any certification
or other documentation required to qualify for an exemption from or reduced rate
of any Tax.
1.47 "Existing Letters of Credit" means the letters of credit
issued pursuant to the Reducing Revolver Credit Facility, listed on Schedule
1.47 attached hereto and made a part hereof which will, as of the Closing Date,
be deemed outstanding as Letters of Credit pursuant to Sections 2.7A and 2.7L of
this Loan Agreement.
1.48 "Events of Default" means the occurrence or happening of
any of the matters set forth in Section 7 hereof.
1.49 "Fair Market Value" means, with respect to any asset or
property, the sale value that would be obtained in an arm's length transaction
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer under no compulsion to buy.
1.50 "Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate equal for each day during such
10
11
period to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three federal funds brokers of recognized standing selected by the
Agent.
1.51 "Fiscal Quarter" means a fiscal quarter of the Borrower.
The Fiscal Quarters of the Borrower currently end on the Thursday closest to the
last day of each March, June, September and December of each calendar year.
1.52 "Fiscal Year" means a fiscal year of the Borrower. The
Borrower's current Fiscal Year ends on the Thursday closest to the last day of
December of each calendar year.
1.53 "Funding Date" means each date of the funding of a
Revolving Loan.
1.54 "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 approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination, as applied in accordance with the modifications contained
in Section 1.118(B) hereof.
1.55 "Guaranty Agreements" means the Guaranty Agreements
executed and delivered by the Wholly-Owned Subsidiaries of the Borrower in favor
of the Agent for the account of the Banks on or before the Closing Date, the
form of which is attached hereto and made a part hereof as Exhibit B.
1.56 "Hazardous Material" means any hazardous or toxic
substance, material or waste which is or becomes regulated by any applicable
federal, state or local governmental agency or authority. The term "Hazardous
Material" includes, without limitation, any material or substance which is (i)
petroleum, (ii) asbestos, (iii) designated as a "hazardous substance" pursuant
to Section 311 of the Federal Water Pollution Control Act (33 U.S.C. Sec. 1317),
(iv) defined as a "hazardous waste" pursuant to Section 1004 of the Federal
Resource Conservation and Recovery Act (42 U.S.C. Sec. 6903), (v) defined an a
"hazardous substance" pursuant to Section 101(14) of the Comprehensive
Environmental Response,
11
12
Compensation and Liability Act ("CERCLA") (42 U.S.C. Sec. 9601), or (vi) defined
as a "pollutant" or "contaminant" pursuant to Section 101(33) of CERCLA.
1.57 "Indebtedness" means, with respect to the Borrower or any
Subsidiary, without duplication, (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services,
excluding any trade payables and other accrued current liabilities incurred in
the ordinary course of business, but including, without limitation, all
obligations of such Person in connection with any letters of credit and
acceptances issued under letter of credit facilities, acceptance facilities or
other similar facilities, now or hereafter outstanding, (ii) all obligations of
such Person evidenced by bonds, notes, debentures or other similar instruments,
(iii) all Indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person (even
if the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), but
excluding trade accounts payable arising in the ordinary course of business,
(iv) every obligation of the Borrower or its Subsidiaries issued or contracted
for as payment in consideration of the purchase by the Borrower or any
Subsidiary of the Borrower of the Capital Stock or substantially all of the
assets of another Person or in consideration for the merger or consolidation
with respect to which the Borrower or any Subsidiary of the Borrower was a
party, (v) all Indebtedness referred to in clauses (i) through (iv) above of
other Persons and all dividends of other Persons, the payment of which is
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, (vi) all Contingent Obligations of the Borrower and its
Subsidiaries, (vii) all obligations under Interest Rate Protection Agreements of
the Borrower and its Subsidiaries, (viii) all Currency Hedging Obligations of
the Borrower and its Subsidiaries, and (ix) any amendment, supplement,
modification, deferral, renewal, extension or refunding of any liability of the
types referred to clauses (i) through (viii) above.
1.58 "Interest Payment Date" means, (i) with respect to each
Base Rate Loan, the last day of each Fiscal Quarter during which such Base Rate
Loan is outstanding in whole or in part, and (ii) with respect to any LIBOR Rate
Loan, the last day of each Interest Period applicable to such LIBOR Rate Loan;
provided that in the case of each Interest Period of six months, the "Interest
12
13
Payment Date" shall also include each three month anniversary of the
commencement of that Interest Period.
1.59 "Interest Period" means any interest period applicable
to a LIBOR Rate Loan as determined pursuant to Section 2.2B hereof.
1.60 "Interest Rate Determination Date" means each date on
which the Agent shall provide the Adjusted LIBOR Rate to the Borrower for
purposes of determining the Adjusted LIBOR Rate in respect of an Interest
Period. The Interest Rate Determination Date shall be the second Business Day
prior to the first day of the related Interest Period.
1.61 "Interest Rate Protection Agreement" means any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement, option or future contract
or other similar agreement or arrangement designed to protect the Borrower or
any of its Subsidiaries against fluctuations in interest rates.
1.62 "Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended to the date hereof and from time to time hereafter.
1.63 "Investment" means any direct or indirect loan, advance
or other extension of credit or capital contribution (by means of transfers of
cash or other property to others or payments for property or services for the
account or use of others, or otherwise) to, or purchase or acquisition of
Capital Stock, bonds, notes, debentures or other securities or evidence of
indebtedness issued by, any other Person, including any payment on a Contingent
Obligation.
1.64 "Letters of Credit" means all letters of credit issued by
PNC (or any successor issuing lender) for the account of the Borrower pursuant
to this Loan Agreement for the purpose of securing the performance, payment,
deposit or surety obligations of the Borrower, other than in connection with the
purchase by the Borrower of materials, goods or services, pursuant to contracts
and/or Operating Leases or capital leases entered into or proposed to be entered
into or assumed or proposed to be assumed by the Borrower in connection with the
acquisition, construction and/or leasing of Theaters by the Borrower.
1.65 "Letter of Credit Fee" has the meaning assigned to that
term in Section 2.7F.(ii) hereof.
13
14
1.66 "Letter of Credit Usage" means, as of any date of
determination thereof, the sum of (i) the maximum aggregate amount which is or
at any time thereafter may become available for drawing under all Letters of
Credit then outstanding, plus (ii) the aggregate amount of all drawings under
all Letters of Credit honored by PNC and not theretofore reimbursed by the
Borrower to PNC, whether by virtue of the Banks making a Revolving Loan to the
Borrower to enable the Borrower to reimburse PNC for such drawing or otherwise.
1.67 "Leverage Ratio Determination Date" means, for purposes
of determining the applicable Pricing Level on any Pricing Level Calculation
Date, the last day of the most recently ended Fiscal Quarter of the Borrower
commencing with the third Fiscal Quarter of the Borrower's 1997 Fiscal Year.
1.68 "LIBOR Rate Loans" means Revolving Loans bearing interest
at rates determined by reference to the Adjusted LIBOR Rate as provided in
Section 2.2A. hereof.
1.69 "Lien" means any mortgage, lien (statutory or other),
pledge, security interest, encumbrance, claim, hypothecation, assignment for
security, deposit arrangement or preference or other security agreement of any
kind or nature whatsoever. The Borrower or any Subsidiary shall be deemed to own
subject to a Lien any property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement relating to Indebtedness of such
Person. The right of a distributor to the return of its film held by the
Borrower or any Subsidiary of the Borrower under a film licensing agreement is
not a Lien as used herein. The reservation of title under an operating lease by
the lessor and the interest of the lessee therein are not Liens as used herein
1.70 "Loan Agreement" means this Loan Agreement dated as of
October 8, 1997, as it may be amended, supplemented or otherwise modified from
time to time in accordance with the terms hereof.
1.71 "Loan Documents" means this Loan Agreement, the Notes,
the Guaranty Agreements, the Pledge Agreement, each Supplemental Pledge
Agreement, any applications, reimbursement agreements and other documents or
certificates executed in favor of PNC relating to the Letters of Credit, all
Borrowing Certificates and Compliance Certificates delivered to the Agent, and
all other agreements, documents and instruments securing and/or pertaining to
the Revolver.
14
15
1.72 "Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as in
effect from time to time.
1.73 "Material Adverse Effect" means (i) a material adverse
effect upon the business, operations, properties, assets, condition or prospects
(financial or otherwise) with respect to the Borrower determined on a
consolidated basis, or (ii) the material impairment of the ability of the
Borrower to perform, or of the Agent or the Banks to enforce, the Obligations of
the Borrower.
1.74 "Minority-Owned Affiliate" means any Person, other than a
Subsidiary, in which the Borrower or any Subsidiary owns 10% or more of any
class of Capital Stock or other Equity Interests or in which the Borrower or any
Subsidiary is a general partner, but less than a controlling interest.
1.75 "Net Cash Proceeds" means the aggregate cash proceeds
received by the Borrower or any Subsidiary in respect of any Asset Sale, net of
the reasonable direct costs relating to such Asset Sale including, without
limitation, legal, accounting and investment banking fees and sales commissions,
and any other expenses incurred or to be incurred by the Borrower or any
Subsidiary as a direct result of the sale of such assets including, without
limitation, severance, relocation, lease termination and other similar expenses,
taxes actually paid or payable as a result thereof, payments made to retire
indebtedness where payment of such indebtedness is required in connection with
such Asset Sale and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
1.76 "Note" means each promissory note issued by the Borrower
to a Bank to evidence the obligation of the Borrower to repay all Revolving
Loans made by such Bank together with accrued interest thereon and substantially
in the form of Exhibit A attached hereto and made a part hereof.
1.77 "Notice of Conversion/Continuation" means a notice in the
form of Exhibit E attached hereto and made a part hereof with respect to a
proposed conversion or continuation of the interest rate applicable to a
Revolving Loan.
1.78 "Obligations" means: (i) the entire unpaid principal
balance of and all interest now accrued or hereafter to accrue on the Notes
(including, without limitation, any interest accruing thereon after maturity, or
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding relating to the Borrower, whether
or not a claim for post-filing or post-petition interest is allowed
15
16
in such proceeding), (ii) the performance of all of the covenants, agreements
and obligations of the Borrower hereunder and under the other Loan Documents,
(iii) the Borrower's obligations under all hedging agreements entered into with
any Bank, and (iv) all other loans, advances, debts, liabilities, obligations,
covenants and duties owing to the Banks from the Borrower arising under or
pursuant to this Loan Agreement or the other Loan Documents of any kind or
nature, present or future (including, without limitation, any interest accruing
thereon after maturity, or after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether or not evidenced by any note,
guaranty or other instrument, whether or not for the payment of money, whether
arising by reason of an extension of credit, opening of a letter of credit, loan
or guarantee or in any other manner, whether arising out of overdrafts on
deposit or other accounts or electronic funds transfers (whether through
automated clearing houses or otherwise) or out of any Bank's non-receipt of or
inability to collect funds or otherwise not being made whole in connection with
depository transfer check or other similar arrangements, whether direct or
indirect (including those acquired by assignment or participation), absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising, and any amendments, extensions, renewals or increases and all costs and
expenses of any Bank incurred in the documentation, negotiation, modification,
enforcement, collection or otherwise in connection with any of the foregoing,
including reasonable attorneys' fees and expenses. The term "Obligations"
includes, without limitation, all interest, charges, expenses, reasonable
attorneys' fees and any other sums chargeable to the Borrower under this Loan
Agreement and/or any other Loan Document.
1.79 "Officer's Certificate" means a certificate executed on
behalf of the Borrower by an Authorized Officer.
1.80 "Operating Lease" means any lease of any property
(whether real, personal or mixed) which is not a capital lease and to which the
Borrower or any Subsidiary is a party as lessee or which is otherwise binding
upon the Borrower or any Subsidiary as lessee.
1.81 "Permitted Business Combination" means any merger, share
exchange, acquisition or other business combination of another Person by or with
the Borrower, whether directly or indirectly, whether accounted for as a
purchase or pooling of interests and regardless of whether the consideration
paid by the Borrower in connection therewith is in the form of cash, Capital
Stock, assumption of debt, other assets of the Borrower or other
16
17
consideration, provided that (i) such merger, share exchange, acquisition or
other business combination is voted upon favorably by the board of directors of
the Borrower, (ii) the Borrower shall be the surviving corporation in such
merger, share exchange, acquisition or other business combination, and (iii) the
Person being acquired directly or indirectly by the Borrower is engaged in the
ownership and operation of Theaters or any incidental business, and (iv) the
merger, share exchange, acquisition or other business combination will not
result on a pro forma basis in the Borrower being in violation of any of the
affirmative or negative covenants set forth in this Loan Agreement as
demonstrated in writing to the satisfaction of the Requisite Banks.
1.82 "Permitted Liens" means
(i) liens for taxes, assessments or other govern mental
charges the payment of which is not at the time required for the reasons set
forth by the proviso to the first sentence of Section 5.2(a);
(ii) statutory liens of landlords and liens of carriers,
warehousemen, mechanics, contractors and materialmen incurred in the ordinary
course of business for sums not yet due or being contested by the Borrower or
any Subsidiary in good faith and by appropriate proceedings promptly initiated
and diligently conducted, if the Borrower or such Subsidiary shall have made
such reserve or other appropriate provision, if any, as shall be required by
GAAP in connection therewith;
(iii) liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unem ployment
insurance and other types of social security or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
performance and return of money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money) for sums not yet due or being
contested by the Borrower or any Subsidiary in good faith and by appropriate
proceedings promptly initiated and diligently conducted, if the Borrower or such
Subsidiary shall have made such reserve or other appropriate provision, if any,
as shall be required by GAAP in connection therewith;
(iv) easements, rights-of-way, restrictions and other
similar charges or encumbrances incurred in the ordinary course of business
which do not in the aggregate materially detract from the value of the property
of the Borrower or any Subsidiary or materially impair the use thereof in the
operation of its business and which do not interfere with the ordinary conduct
of the business of the Borrower or any Subsidiary;
17
18
(v) liens securing the purchase price of real or
personal property to be used in the business of the Borrower or any Subsidiary,
acquired by the Borrower or any Subsidiary after the date hereof, provided that
(i) each such Lien shall at all times be confined solely to the item of property
so acquired, and (ii) no such Lien shall be permitted unless at the time of the
creation of such Lien the incurrence of such Indebtedness would be permitted by
Section 6.2 hereof;
(vi) liens, charges, encumbrances and priority claims
which (a) are incidental to the conduct of the business of the Borrower and its
Subsidiaries and the ownership of its properties and assets, (b) were not
incurred in connection with the borrowing of money or the obtaining of advances
of credit, and (c) do not in the aggregate materially detract from the value of
the property of the Borrower or materially impair the use thereof in the
operation of its business as determined on a consolidated basis;
(vii) security interests created under Capital Lease
Obligations expressly permitted to be entered into by the Borrower and its
Subsidiaries pursuant to Section 6.2 hereof; and
(viii) the Liens identified on Schedule 4.10 annexed
hereto.
1.83 "Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, limited liability partnership, other
entity or group, institution, party or government, whether federal, state,
county, city, municipal or other, or agency or division thereof.
1.84 "Pledge Agreement" means that certain Pledge Agreement of
even date herewith, between the Borrower and the Agent, a form of which is
attached hereto and made a part hereof as Exhibit C, together with all future
amendments and modifications thereto.
1.85 "PNC" means PNC Bank, Kentucky, Inc., a Kentucky banking
corporation with principal office and place of business in Louisville, Kentucky,
and its successors and assigns.
1.86 "Pricing Level" means, for any Pricing Period, Pricing
Level I, Pricing Level II, Pricing Level III or Pricing Level IV, as may be in
effect for such Pricing Period; provided that, notwithstanding the foregoing,
the Pricing Level in effect from the Closing Date to but excluding the first
Pricing Level Calculation Date following the Closing Date shall be Pricing Level
III;
18
19
provided further, the Default Rate shall be in effect upon the occurrence and
during the continuation of any Event of Default.
1.87 "Pricing Level I" means the Pricing Level that will be in
effect for the applicable Pricing Period if, as of the relevant Pricing Level
Calculation Date, the ratio of the Borrower's Consolidated Total Indebtedness as
measured on the immediately preceding Leverage Ratio Determination Date, to the
Borrower's Consolidated Theater Level Cash Flow for the four-Fiscal Quarter
period ended on such Leverage Ratio Determination Date, is equal to or less than
1.0 to 1.0.
1.88 "Pricing Level II" means the Pricing Level that will be
in effect for the applicable Pricing Period if, as at the relevant Pricing Level
Calculation Date, the ratio of the Borrower's Consolidated Total Indebtedness as
measured on the immediately preceding Leverage Ratio Determination Date, to the
Borrower's Consolidated Theater Level Cash Flow for the four-Fiscal Quarter
period ended on such Leverage Ratio Determination Date, is greater than 1.0 to
1.0 but is less than to or equal to 1.5 to 1.0.
1.89 "Pricing Level III" means the Pricing Level that will be
in effect for the applicable Pricing Period if, as at the relevant Pricing Level
Calculation Date, the ratio of the Borrower's Consolidated Total Indebtedness as
measured on the immediately preceding Leverage Ratio Determination Date, to the
Borrower's Consolidated Theater Level Cash Flow for the four-Fiscal Quarter
period ended on such Leverage Ratio Determination Date, is greater than 1.5 to
1.0 but is less than or is equal to 2.0 to 1.0.
1.90 "Pricing Level IV" means the Pricing Level that will be
in effect for the applicable Pricing Period if, as at the relevant Pricing Level
Calculation Date, the ratio of the Borrower's Consolidated Total Indebtedness as
measured on the immediately preceding Leverage Ratio Determination Date, to the
Borrower's Consolidated Theater Level Cash Flow for the four-Fiscal Quarter
Period ended on such Leverage Ratio Determination Date, is greater than 2.0 to
1.0
1.91 "Pricing Level Calculation Date" means, for purposes of
determining the applicable Pricing Level, the forty-fifth (45th) day following
the most recently ended Fiscal Quarter of the Borrower.
1.92 "Pricing Period" means each period commencing on the day
immediately after the most recent Pricing Level Calculation Date and ending on
the immediately succeeding Pricing Level Calculation Date.
19
20
1.93 "Prime Rate" means at any time the interest rate per
annum most recently designated or announced by PNC as its "Prime Rate" in effect
at its principal office in Louisville, Kentucky, it being expressly understood
and agreed to by the Borrower that the "Prime Rate" is the rate of interest
designated by PNC as its "Prime Rate" and such term does not necessarily mean or
imply that it is the lowest or best rate then available from PNC.
1.94 "Pro Rata Share" means, with respect to the Revolving
Loan Commitment of each Bank, the percentage set forth opposite that Bank's name
on Schedule 2.1 attached hereto and made a part hereof; provided, Schedule 2.1
shall be amended and each Bank's Pro Rata Share shall be adjusted from time to
time to give effect to the addition or removal of any Banks as provided herein.
1.95 "Reducing Revolver Credit Facility" means the existing
reducing revolver credit facility in the principal amount of One Hundred Fifty
Million Dollars ($150,000,000.00) established by certain of the Banks in favor
of the Borrower pursuant to the Reducing Revolver Loan Agreement.
1.96 "Reducing Revolver Loan Agreement" means the Second
Amended and Restated Loan Agreement dated as of July 7, 1993, among the
Borrower, certain of the Banks, and the Agent, as amended, pursuant to which the
Reducing Revolver Credit Facility was established in favor of the Borrower and
is currently existing.
1.97 "Regulation D" means Regulation D of the Board of
Governors of the Federal Reserve System as in affect from time to time.
1.98 "Requisite Banks" means Banks holding more than 66.67% of
the Total Utilization of Revolving Loan Commitments as of the date of
determination of the Requisite Banks. It is expressly understood that the Total
Utilization of Revolving Loan Commitments for purposes of determination of the
Requisite Banks includes each Bank's obligation to make Revolving Loans in an
amount equal to its Pro Rata Share of all drawings under Letters of Credit
issued by PNC pursuant to this Loan Agreement.
1.99 "Revolver" means the revolving line of credit in the
principal amount of Two Hundred Fifty Million Dollars ($250,000,000.00)
established by the Banks in favor of the Borrower pursuant to the terms and
conditions of this Loan Agreement, pursuant to which the Borrower may obtain
Revolving Loans and/or Letters of Credit during the term of the Revolver. All
references to the "aggregate principal balance of the Revolving Loans
outstanding" or similar phrases in this Loan Agreement shall mean, as of the
date of determination thereof, the sum of (i) the entire
20
21
aggregate outstanding principal balance of all Revolving Loans made by the Banks
pursuant to this Loan Agreement, and (ii) the then existing Letter of Credit
Usage.
1.100 "Restricted Payments" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any Capital Stock
of the Borrower now or hereafter outstanding, other than any dividend payable
solely in shares of Capital Stock or in options, warrants or other rights to
purchase Capital Stock and other than cash dividends on the common stock of the
Borrower in an aggregate amount not to exceed Five Hundred Thousand
($500,000.00) in any Fiscal Year of the Borrower, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any Capital Stock of the Borrower,
or of any warrants, options or other rights to acquire any such shares of
Capital Stock, now or hereafter outstanding, (iii) any payment or prepayment of
principal of, premium, if any, or any redemption, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, any Subordinated
Indebtedness, other than (a) the payment of interest on the Senior Subordinated
Notes and any other Subordinated Indebtedness in accordance with their terms as
long as no Event of Default has occurred and is continuing at the time of the
payment of such interest on the Senior Subordinated Notes or any other
Subordinated Indebtedness, and (b) the purchase of the One Hundred Seventy
Thousand Dollars ($170,000.00) in aggregate principal amount of those certain
105/8 Senior Secured Notes due 2003 in the original principal amount of
Eighty-Five Million Dollars ($85,000,000.00) issued by Xxxx Theatres, L.L.C. and
Xxxx Finance Corp. and assumed by the Borrower. The term "Restricted Payment"
shall not include any dividend on, or distribution in respect of, any shares of
the Capital Stock of a Person that is acquired by the Borrower in a Permitted
Business Combination accounted for as a pooling of interests in accordance with
Accounting Principles Board Opinion No. 16 (or any successor thereto), provided
such dividend or distribution is declared and paid prior to the date of such
acquisition and was not in contemplation of such acquisition.
1.101 "Revolving Loan Commitment" or "Revolving Loan
Commitments" means the commitment of each Bank to maintain or make Revolving
Loans and to participate in Letters of Credit as set forth in Sections 2.1 and
2.7 hereof.
1.102 "Revolving Loan Commitment Termination Date" means the
Revolving Loan Commitment Termination Date then in effect, which shall be the
earliest of (i) October 7, 2002, subject to extension thereof as provided in
Section 2.1E hereof, (ii) the date as of which the Obligations shall have become
immediately due and payable pursuant to Section 7 hereof, and (iii) the date on
which
21
22
all of the Obligations are paid in full (including, without limitation, the
repayment, expiration, termination or cash collateralization of Letters of
Credit pursuant to this Loan Agreement) and all Revolving Loan Commitments are
reduced to zero.
1.103 "Revolving Loans" means the Revolving Loans which the
Banks have agreed to maintain or make pursuant to Section 2.1A hereof.
1.104 "Senior Subordinated Notes" means the Borrower's 8.5%
Senior Subordinated Notes due October 1, 2007 in the principal amount of
$125,000,000.00.
1.105 "Stated Maturity Date" means the then existing stated
maturity date of the Revolver. The initial Stated Maturity Date of the Revolver
is October 7, 2002. The Stated Maturity Date of the Revolver is subject to
extension by the Banks pursuant to Section 2.1E hereof.
1.106 "Subordinated Indebtedness" means any Indebtedness of
the Borrower now or hereafter owing to any Person and which has been
subordinated to the prior payment of the Obligations in a manner satisfactory to
the Banks and which specifically includes the Senior Subordinated Notes.
1.107 "Subsidiary" means, with respect to the Borrower, (i)
any corporation of which more than 50% of the outstanding shares of Capital
Stock having ordinary voting power for the election of directors is owned
directly or indirectly by the Borrower, and (ii) any partnership, limited
liability company, association, joint venture or other entity in which the
Borrower, directly or indirectly, has more than a 50% equity interest.
1.108 "Supplemental Pledge Agreement" means the document in
the form of Annex A attached to and made a part of the Pledge Agreement,
pursuant to which the Borrower and each Wholly-Owned Subsidiary of the Borrower
that hereafter acquires or otherwise owns Equity Interests in any Subsidiaries
will pledge such Equity Interests to the Agent on behalf of the Banks.
1.109 "Tax" or "Taxes" means any present or future tax, levy,
impost, duty, charge, governmental fee, deduction or withholding of any nature
and whatever called, by whomsoever, on whomsoever and wherever imposed, levied,
collected, withheld or assessed; provided that "Tax on the overall net income"
of a Person shall be construed as a reference to a tax imposed by the
jurisdiction in which that Person's principal office (and/or, in the case of
a Bank, its lending office) is located on all or part of the net income, profits
or gains of that Person (whether worldwide,
22
23
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise).
1.110 "Tax Transferee" means any Person who acquires any
interest in the Revolving Loans (whether or not by operation of law) or in the
office to which a Bank or the Agent has transferred its Revolving Loans for
purposes of determining where the Revolving Loans are made, accounted for or
booked.
1.111 "Tender Offer Facility" means the tender offer facility
in the principal amount of One Hundred Million Dollars ($100,000,000.00) made by
PNC to the Borrower pursuant to the Tender Offer Facility Loan Agreement.
1.112 "Tender Offer Facility Loan Agreement" means the Loan
Agreement dated as of August 14, 1997, between the Borrower and PNC.
1.113 "Theaters" means (i) each and every theater now or
hereafter owned or leased by the Borrower or any Subsidiary or operated by the
Borrower or any Subsidiary under a management agreement to which the Borrower or
such Subsidiary is a party, including all the Borrower's or such Subsidiary's
tangible real and personal property constituting a part of each such Theater,
and including all auditoriums in each theater which share a common exterior
structure, and (ii) all entertainment centers and family activity centers now or
hereafter owned, leased or operated by the Borrower or any Subsidiary and which
are adjacent to, or otherwise within the same building in which are located,
Theaters owned or leased by the Borrower or any Subsidiary or operated by the
Borrower or any Subsidiary under a management agreement to which the Borrower or
such Subsidiary is a party.
1.114 "Transaction Date" means the date on which the Borrower
consummates a Permitted Business Combination.
1.115 "Total Utilization of Revolving Loan Commitments" means,
as of any date of determination thereof, the sum of (i) the aggregate principal
amount of all outstanding Revolving Loans, plus (ii) the Letter of Credit Usage.
1.116 "Voting Stock" means stock of the class or classes
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least the majority of the board of directors,
managers or trustees of a corporation (irrespective of whether or not at the
time, stock of any other class or classes shall have voting power by reason of
the happening of any contingency).
23
24
1.117 "Wholly-Owned Subsidiary" of the Borrower means a
Subsidiary of the Borrower, all of the Capital Stock (other than directors'
qualifying shares) or other ownership interests of which shall at the time be
owned by the Borrower or by one or more Wholly-Owned Subsidiaries of the
Borrower.
1.118 Accounting Terms and Financial Information.
A. For purposes of this Loan Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP and all financial statements and certificates
and reports as to financial matters required to be delivered to the Banks
hereunder shall (unless otherwise disclosed to the Banks in writing at the time
of delivery thereof in the manner described in Section 1.118(B) hereof) be
prepared in accordance with GAAP applied on a basis consistent with GAAP as
applied in the preparation of the latest financial statements furnished to the
Banks hereunder (or, prior to the delivery of the first financial statements
under Section 5.3(c) hereof, GAAP as applied in the preparation of the audited
financial statements of the Borrower as at the end of the Borrower's 1996 Fiscal
Year).
B. The Borrower shall deliver to the Banks at the same
time as the delivery of any annual or quarterly financial statement under
Section 5.3 hereof, (i) a description in reasonable detail of any variation
between the application of accounting principles employed in the preparation of
such statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements
(which variation materially affects the presentation of the financial position
or results of operations of the Borrower) and (ii) reasonable estimates of the
difference between such statements arising as a consequence thereof.
1.119 Other Definitional Provisions. Any reference in this
Loan Agreement (i) to a Section, a Schedule or an Exhibit is a reference to a
section hereof, a schedule hereto or an exhibit hereto, respectively, and (ii)
to a subsection or a clause is, unless otherwise stated, a reference to a
subsection or a clause of the section or subsection in which the reference
appears. In this Loan Agreement the singular includes the plural and the plural
the singular; "hereof," "wherein," "hereto," "hereunder" and the like mean and
refer to this Loan Agreement as a whole and not merely to the specific section,
paragraph or clause in which the respective word appears; words importing any
gender include the other genders; references to statutes are to be construed as
including all statu tory provisions consolidating, amending or replacing the
statute
24
25
referred to; references to "writing" include printing, typing, lithography and
other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to agreements and other contractual
instruments shall be deemed to include all subsequent amendments, supplements,
assignments, and other modifications thereto, but only to the extent such
modifications are not prohibited by the terms of this Loan Agreement, and
references to Persons include their respective permitted successors and assigns
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons.
SECTION 2
REVOLVER
2. Revolver. Pursuant to and subject to the terms and conditions of
this Loan Agreement, the Banks hereby establish the Revolver in favor of the
Borrower in the principal amount of Two Hundred Fifty Million Dollars
($250,000,000.00). Pursuant to the Revolver, the Borrower may obtain Revolving
Loans and Letters of Credit pursuant to, and subject to the terms and conditions
set forth in, this Loan Agreement for the purposes set forth in Section 2.5
hereof. The Revolver is subject to the following terms and conditions:
2.1 Revolving Loan Commitments; Revolving Loans.
A. Revolving Loan Commitments. Each Bank severally
agrees, subject to the limitations set forth below with respect to the maximum
amount of Revolving Loans permitted to be outstanding from time to time and to
the other terms and conditions herein, to lend to the Borrower from time to time
during the period from the Closing Date to but excluding the Revolving Loan
Commitment Termination Date an aggregate amount not exceeding its Pro Rata Share
of the aggregate Revolving Loan Commitments. Each Bank's commitment to make
Revolving Loans to the Borrower pursuant to this Section 2 is herein called its
"Revolving Loan Commitment", and such commitments of all of the Banks in the
aggregate are herein called the "Revolving Loan Commitments." The original
amount of each Bank's Revolving Loan Commitment is set forth opposite its name
on Schedule 2.1 attached hereto and made a part hereof and the aggregate
original amount of the Revolving Loan Commitments is Two Hundred Fifty Million
Dollars ($250,000,000.00); provided, the amount of the Revolving Loan
Commitments shall be reduced from time to time by the amount of any reductions
thereto made pursuant to Section 2.4C hereof (it being understood that all
references to the Revolving Loan Commitments of the Banks set forth in this Loan
Agreement shall mean the initial Revolving Loan
25
26
Commitments of the Banks set forth on Schedule 2.1 attached hereto and made a
part hereof as reduced by voluntary or mandatory reductions of the Revolving
Loan Commitments pursuant to Section 2.4C hereof). Each Bank's Revolving Loan
Commitment shall expire on the Revolving Loan Commitment Termination Date and
all Revolving Loans and all other Obligations owed hereunder with respect to the
Revolving Loans and the Revolving Loan Commitments shall be paid in full to the
Banks no later than the Revolving Loan Commitment Termination Date. Revolving
Loans obtained by the Borrower may be repaid and reborrowed to but excluding the
Revolving Loan Commitment Termination Date, subject to the provisions of Section
2.4C hereof.
Anything contained in this Loan Agreement to the contrary
notwithstanding, the Revolving Loans and the Revolving Loan Commitments shall
be subject to the following limitations (and the Borrower may be obligated to
prepay Revolving Loans outstanding to the extent they exceed such limitations):
(1) The ratio of the Borrower's Consolidated
Total Indebtedness, including the Total Utilization of Revolving Loan
Commitments, as of the most recent Fiscal Quarter end, to the Borrower's
Consolidated Theater Level Cash Flow for the four-Fiscal Quarter period ended as
of such Fiscal Quarter end, may not exceed the ratio set forth in Section 6.10
hereof; and
(2) The Total Utilization of Revolving Loan
Commitments shall not exceed the amount of the aggregate Revolving Loan
Commitments.
B. Borrowing Mechanics. Revolving Loans made on any
Funding Date shall be in an aggregate minimum amount of One Million Dollars
($1,000,000.00) and integral multiples of One Hundred Thousand Dollars
($100,000.00) in excess of that amount. Whenever the Borrower desires that the
Banks make a Revolving Loan to the Borrower, the Borrower shall deliver to the
Agent a Borrowing Certificate no later than 10:00 A.M. Louisville, Kentucky time
at least three (3) Business Days in advance of the proposed Funding Date in the
case of a LIBOR Rate Loan and at least one (1) Business Day in advance of the
proposed Funding Date in the case of a Base Rate Loan. The Borrowing Certificate
shall be in the form of Exhibit D attached hereto and made a part hereof and
shall specify (i) the proposed Funding Date, which must be a Business Day, (ii)
whether the Revolving Loan shall be a Base Rate Loan or a LIBOR Rate Loan, (iii)
in the case of any Revolving Loan requested to be made as a LIBOR Rate Loan, the
initial Interest Period applicable thereto, (iv) that the amount of the proposed
Revolving Loan will not cause the Total Utilization of Revolving Loan
Commitments to exceed the amount of the aggregate Revolving
26
27
Loan Commitments, and (v) that the amount of the proposed Revolving Loan will
not cause the ratio of the Borrower's Consolidated Total Indebtedness, including
the Total Utilization of Revolving Loan Commitments after taking into account
the proposed Revolving Loan in the calculation thereof, as of the most recent
Fiscal Quarter end, to the Borrower's Consolidated Theater Level Cash Flow for
the four-Fiscal Quarter period ended as of such Fiscal Quarter end, to exceed
the ratio set forth in Section 6.10 hereof. Revolving Loans may be continued as
or converted into Base Rate Loans and LIBOR Rate Loans in the manner provided in
Section 2.2D hereof. In lieu of delivering the above-described Borrowing
Certificate, the Borrower may give the Agent telephonic notice by the required
time of the requested Revolving Loan under this Section 2.1B; provided that such
notice shall be promptly confirmed in writing by the delivery of a Borrowing
Certificate to the Agent on or before the applicable Funding Date.
Neither the Agent nor any Bank shall incur any liability to the
Borrower in acting upon any telephonic notice referred to above which the Agent
believes in good faith to have been given by a duly Authorized officer or other
Person authorized to borrow on behalf of the Borrower or for otherwise acting in
good faith under this Section 2.1B and, upon the funding of any Revolving Loan
by the Banks in accordance with this Loan Agreement pursuant to any telephonic
notice, the Borrower shall have effected such Revolving Loan under this Loan
Agreement.
Except as provided in Sections 2.6B, 2.6C and 2.6G hereof, a Borrowing
Certificate for a LIBOR Rate Loan (or a telephonic notice in lieu thereof) shall
be irrevocable on and after the related Interest Rate Determination Date, and
the Borrower shall be bound to obtain such LIBOR Rate Loan in accordance
therewith.
C. Disbursement of Revolving Loans. All Revolving
Loans shall be made by the Banks simultaneously and proportionately to their
respective Pro Rata Shares of the Revolving Loan Commitments, it being
understood that no Bank shall be responsible for any failure by any other Bank
to fund its Pro Rata Share of a Revolving Loan requested hereunder, nor shall
the Revolving Loan Commitment of any Bank be increased or decreased as a result
of the failure by any other Bank to fund its Pro Rata Share of a Revolving Loan
requested by the Borrower. Promptly after receipt by the Agent of a Borrowing
Certificate pursuant to Section 2.1B hereof (or a telephonic notice in lieu
thereof), the Agent shall notify each Bank of the Revolving Loan requested by
the Borrower pursuant thereto. Each Bank shall make its Pro Rata Share of each
Revolving Loan to be made to the Borrower available to the Agent, in same day
funds, at the office of the Agent located at Citizens Plaza, Louisville Kentucky
not later than 1:00 P.M.
27
28
Louisville, Kentucky time on the Funding Date of the particular Revolving Loan.
Except with respect to the reimbursement to PNC for a drawing under a Letter of
Credit, as provided in Section 2.7 hereof, upon the satisfaction or waiver of
the conditions precedent specified in Section 3.1 in the case of the initial
Revolving Loan on the initial Funding Date and Section 3.2 in the case of a
Revolving Loan on any subsequent Funding Date, the Agent shall make the proceeds
of each Revolving Loan requested by the Borrower available to the Borrower on
the Funding Date of such Revolving Loan by causing an amount of same day funds
equal to the proceeds of the Banks' respective Pro Rata Shares of such Revolving
Loan received by the Agent at its office located at the address set forth in the
preceding sentence to be credited to the account of the Borrower at such office
of the Agent.
Unless the Agent shall have been notified by any Bank prior to a
Funding Date that such Bank does not intend to make available to the Agent such
Bank's Pro Rata Share of the Revolving Loan to be made to the Borrower on such
Funding Date, the Agent may assume that such Bank has made such amount available
to the Agent on such Funding Date and the Agent may, in its sole discretion, but
shall not be obligated to, make available to the Borrower a corresponding amount
on such Funding Date. If such corresponding amount is not in fact made available
to the Agent by such Bank, the Agent shall be entitled to recover such
corresponding amount on demand from such Bank together with interest thereon,
for each day from such Funding Date until the date such amount is paid to the
Agent, at the Federal Funds Effective Rate. If such Bank does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent shall
promptly notify the Borrower and the Borrower shall immediately pay such
corresponding amount to the Agent together with interest thereon, for each day
from such Funding Date until the date such amount is paid to the Agent, at the
interest rate borne by the particular Revolving Loan. Nothing in this Section
2.1C shall be construed to relieve any Bank from its obligation to fulfill its
Revolving Loan Commitment hereunder or to prejudice any rights that the Borrower
may have against any Bank as a result of any default by such Bank in the
performance of its obligations under this Section 2.1. In the event any Bank
gives notice to the Agent that such Bank does not intend to fund its Pro Rata
Share of any Revolving Loan to be made to the Borrower or in the event any Bank
otherwise fails to fund its Pro Rata Share of any Revolving Loan to be made to
the Borrower, the Agent shall promptly notify the other Banks of the occurrence
of any such event.
D. Records.
(i) The Agent shall record the names and addresses
of the Banks and the Revolving Loan Commitments and
28
29
Revolving Loans of each Bank from time to time in the electronic records of the
Agent. The Borrower, the Banks and the Agent may treat each Person whose name is
so recorded in the electronic records of the Agent as a Bank hereunder for all
purposes of this Loan Agreement. Printouts of the Agent's electronic records
shall be available for inspection by the Borrower or any Bank at any reasonable
time and from time to time upon reasonable prior notice to the Agent.
(ii) The Agent shall record in its electronic
records the Revolving Loan Commitment of each Bank, the Revolving Loans from
time to time made by each Bank, and each repayment or prepayment in respect of
the principal amount of the Revolving Loans made by each Bank. Any such
recordation in accordance with the terms of this Loan Agreement shall be
conclusive and binding on the Borrower absent manifest error; provided, the
failure to make any such recordation, or any error in such recordation, shall
not affect the Borrower's obligation to repay all Revolving Loans to the Banks
in accordance with this Loan Agreement and the Notes.
(iii) Each Bank shall record on its internal
records its Pro Rata Share of each Revolving Loan made by it to the Borrower and
each payment in respect thereof. Any such recordation in accordance with the
terms of this Loan Agreement shall be conclusive and binding on the Borrower
absent manifest error; provided, the failure to make any such recordation, or
any error in such recordation, shall not affect the Borrower's obligation to
repay all Revolving Loans to the Banks in accordance with this Loan Agreement
and the Notes; provided further, that in the event of any inconsistency between
the Agent's electronic records and any Bank's records, the Agent's electronic
records shall govern in the absence of manifest or demonstrable error.
E. Extension of Stated Maturity Date of the Revolver.
Subsequent to the first annual anniversary of the Closing Date, and annually
thereafter, all of the Banks shall have the right, at their sole option and upon
written notice to the Borrower, to extend the Stated Maturity Date of the
Revolver for an additional one (1) year period.
2.2 Interest on the Revolving Loans.
A. Rates of Interest. Subject to the provisions of Sections
2.2E and 2.8 hereof, each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity, whether by
acceleration or otherwise, at a rate determined by reference to the Base Rate or
the Adjusted LIBOR
29
30
Rate, as the case may be. The applicable basis for determining the rate of
interest with respect to Revolving Loans shall be selected by the Borrower
initially at the time a Borrowing Certificate is delivered to the Agent pursuant
to Section 2.1B hereof. The basis for determining the interest rate with respect
to any Revolving Loan may be changed from time to time pursuant to Section 2.2D
hereof. If on any day a Revolving Loan is outstanding with respect to which
notice has not been delivered to the Agent in accordance with this Loan
Agreement specifying the applicable basis for determining the rate of interest
on such Revolving Loan then, for that day, that Revolving Loan shall bear
interest determined by reference to the Base Rate.
Subject to the provisions of Sections 2.2E and 2.8 hereof, Revolving
Loans shall bear interest through maturity as follows:
(i) if a Base Rate Loan, then at a rate per annum
equal to the sum of the Base Rate plus the Applicable Base Rate Margin; provided
that, on each Leverage Ratio Determination Date, commencing with the first such
date to occur after the Closing Date, the Applicable Base Rate Margin in effect
for the Pricing Period commencing on such Leverage Ratio Determination Date and
continuing for the term of the Pricing Period that begins on such Leverage Ratio
Determination Date shall be the Applicable Base Rate Margin corresponding to the
Pricing Level in effect for such Pricing Period, as follows:
Applicable
Pricing Level Base Rate Margin
------------- ----------------
Pricing Level I 0%
Pricing Level II 0%
Pricing Level III 0%
Pricing Level IV 0%
(ii) if a LIBOR Rate Loan, then at a rate per annum
equal to the sum of the Adjusted LIBOR Rate plus the Applicable LIBOR Rate
Margin; provided that, on each Leverage Ratio Determination Date, commencing
with the first such date to occur after the Closing Date, the Applicable LIBOR
Rate Margin in effect for the Pricing Period commencing on such Leverage Ratio
Determination Date and continuing for the term of the Pricing Period that begins
on such Leverage Ratio Determination Date shall
30
31
be the Applicable LIBOR Rate Margin corresponding to the Pricing Level in effect
for such Pricing Period, as follows:
Applicable LIBOR
Pricing Level Rate Margin
------------- ----------------
Pricing Level I 1/4%
Pricing Level II 3/8%
Pricing Level III 1/2%
Pricing Level IV 3/4%
Notwithstanding anything in the foregoing to the contrary, if any
Compliance Certificate delivered by the Borrower demonstrating the appropriate
Pricing Level shall prove to be incorrect, as determined by reference to a
subsequent Compliance Certificate or subsequent publicly filed financial
statements of the Borrower or otherwise, such Compliance Certificate shall no
longer be in effect, and the Agent shall notify the Borrower of the
incorrectness of such Compliance Certificate and the Agent shall calculate the
difference (which must be a positive difference, i.e., an underpayment of
interest) between the amount of interest actually paid by the Borrower on the
basis of such incorrect Compliance Certificate and the amount of interest which
would have been due had such incorrect Compliance Certificate not been delivered
to the Agent. The Agent shall notify the Borrower of the amount of such
difference, if any, in a statement setting forth the method of calculation of
such amount, which calculation shall be deemed correct in the absence of
demonstrable error, and the Borrower shall pay such amount to the Agent for the
account of the Banks within three (3) Business Days after receipt of such
notice. Provided, the payment of such amount by the Borrower shall not in and of
itself constitute a waiver by the Banks of the Event of Default that has
otherwise resulted from the Borrower's delivery of such incorrect Compliance
Certificate to the Agent.
B. Interest Periods. In connection with each LIBOR
Rate Loan, the Borrower may, pursuant to the applicable Borrowing Certificate or
Notice of Conversion/Continuation, as the case may be, select an interest period
(each an "Interest Period") to be applicable to such LIBOR Rate Loan, which
Interest Period shall be at the Borrower's option either a one, two, three or
six month period; provided that:
(i) the initial Interest Period for any LIBOR Rate
Loan shall commence on the Funding Date of such LIBOR Rate Loan, in the case of
a Revolving Loan initially made as a LIBOR Rate Loan, or on the date specified
in the applicable Notice of Conversion/Continuation, in the case of a Revolving
Loan converted to a LIBOR Rate Loan;
31
32
(ii) in the case of immediately successive Interest Periods
applicable to a LIBOR Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on the
day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would otherwise
expire on a day that is not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of a calendar month;
(v) there shall be no more than ten (10) Interest Periods
relating to LIBOR Rate Loans outstanding at any time, unless there are Base Rate
Loans outstanding, in which event there shall be no more than nine (9) Interest
Periods relating to LIBOR Rate Loans outstanding at such time;
(vi) in the event the Borrower fails to specify an Interest
Period applicable to a LIBOR Rate Loan in the applicable Borrowing Certificate
or Notice of Conversion/Continuation, the Borrower shall be deemed to have
selected an Interest Period of one month; and
(vii) no Interest Period shall extend beyond the Revolving
Loan Commitment Termination Date.
C. Interest Payments. Subject to the provisions of Section
2.2E hereof, interest shall be payable on the Revolving Loans as follows:
(i) interest on each Base Rate Loan shall be payable in
arrears on and to each Interest Payment Date applicable to that Base Rate Loan,
upon any prepayment or repayment of any such Base Rate Loan to the extent
interest accrued on the amount being prepaid or repaid, and on the Revolving
Loan Commitment Termination Date; and
(ii) interest on each LIBOR Rate Loan shall be payable in
arrears on and to each Interest Payment Date applicable to that LIBOR Rate Loan,
upon any prepayment or repayment of that
32
33
LIBOR Rate Loan to the extent interest accrued on the amount being prepaid or
repaid, and on the Revolving Loan Commitment Termination Date.
D. Conversion or Continuation. Subject to the
provisions of Section 2.6 hereof, the Borrower shall have the option (i) to
convert at any time all or any part of outstanding Revolving Loans from
Revolving Loans bearing interest at a rate determined by reference to one basis
to Revolving Loans bearing interest at a rate determined by reference to an
alternative basis, or (ii) upon the expiration of any Interest Period applicable
to a LIBOR Rate Loan, to continue all or any portion of such LIBOR Rate Loan as
a LIBOR Rate Loan, and the succeeding Interest Period(s) of such continued LIBOR
Rate Loan shall commence on the most recent Interest Payment Date thereof;
provided however, that a LIBOR Rate Loan may only be converted into a Revolving
Loan bearing interest determined by reference to an alternative basis on the
expiration date of an Interest Period applicable thereto.
The Borrower shall deliver a Notice of Conversion/Continuation to the
Agent no later than 1:00 P.M. Louisville, Kentucky time at least one (1)
Business Day in advance of the proposed conversion/continuation date in the case
of a conversion to a Base Rate Loan and at least three (3) Business Days in
advance of the proposed conversion/continuation date in the case of a conversion
to, or a continuation of, a LIBOR Rate Loan. A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date, which must be a
Business Day, (ii) the amount of the Revolving Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or continuation of, a LIBOR Rate Loan, the requested Interest
Period, and (v) in the case of a conversion to, or a continuation of, a LIBOR
Rate Loan, that no Event of Default has occurred and is continuing. In lieu of
delivering the above-described Notice of Conversion/Continuation, the Borrower
may give the Agent telephonic notice by the required time of any proposed
conversion/continuation under this Section 2.2D; provided, such notice shall be
promptly confirmed in writing by delivery of a Notice of Conversion/Continuation
to the Agent on or before the proposed conversion/continuation date.
Neither the Agent nor any Bank shall incur any liability to the
Borrower in acting upon any telephonic notice referred to above that the Agent
believes in good faith to have been given by a duly Authorized Officer or other
Person authorized to act on behalf of the Borrower or for otherwise acting in
good faith under this Section 2.2D and, upon the conversion or continuation of
the applicable basis for determining the interest rate with respect to any
Revolving Loans in accordance with this Loan Agreement pursuant
33
34
to any such telephonic notice, the Borrower shall have effected a conversion or
continuation, as the case may be, of the interest rate applicable to the
particular Revolving Loan.
Except as otherwise provided in Sections 2.6B, 2.6C and 2.6G hereof, a
Notice of Conversion/Continuation for conversion to, or continuation of, a LIBOR
Rate Loan (or a telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date and the Borrower shall be
bound to effect the conversion or continuation of the interest rate applicable
to the particular Revolving Loan in accordance with such Notice of
Conversion/Continuation.
E. Post-Maturity Interest. Any principal payments
on the Revolving Loans not paid when due and, to the extent permitted by
applicable law, any interest payments on the Revolving Loans or any fees or
other Obligations owed hereunder not paid when due, in each case whether at
stated maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand
at a rate equal to the Default Rate. The payment or acceptance of the increased
rates of interest provided for in this Section 2.2E is not a permitted
alternative to the timely payment of all Obligations owed to the Banks and shall
not constitute a waiver of any Event of Default or otherwise prejudice or limit
any rights or remedies of the Agent or any Bank under this Loan Agreement or the
other Loan Documents.
F. Computation of Interest. Interest on the Base
Rate Loans shall be computed on the basis of a 365/366 day year. Interest on the
LIBOR Rate Loans shall be computed on the basis of a 360-day year, in each case
for the actual number of days elapsed in the period during which it accrues. In
computing interest on any Revolving Loan, the date of the making of such
Revolving Loan or the first day of an Interest Period applicable to such
Revolving Loan or, with respect to a Base Rate Loan being converted from a LIBOR
Rate Loan, the date of conversion of such LIBOR Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Revolving Loan or the expiration date of an Interest Period applicable to such
Revolving Loan or, with respect to a Base Rate Loan being converted to a LIBOR
Rate Loan, the date of conversion of such Base Rate Loan to such LIBOR Rate
Loan, as the case may be, shall be excluded; provided, if a Revolving Loan is
repaid on the same day on which it is made, one day's interest shall be paid on
that Revolving Loan.
34
35
2.3 Fees.
A. Closing Fees. The Borrower agrees to pay to the Agent
on behalf of the Banks closing fees equal to one-tenth of one percent
(1/10th of 1%) of the positive difference between (i) each Bank's Revolving Loan
Commitment under this Loan Agreement, and (ii) such Bank's Revolving Loan
Commitment under and as defined in the Reducing Revolver Loan Agreement.
B. Commitment Fees. The Borrower agrees to pay to the
Agent, for the benefit of the Banks in proportion to their respective Pro Rata
Shares, commitment fees for the period from and including the Closing Date to
and excluding the Revolving Loan Commitment Termination Date, equal to the
average of the daily excess of the Revolving Loan Commitments, as the same may
have been reduced pursuant to Section 2.4C hereof, over the aggregate principal
amount of Revolving Loans outstanding plus the Letter of Credit Usage multiplied
by the Applicable Commitment Fee Percentage. All commitment fees under this
Section 2.3B shall be calculated on the basis of a 360-day year and the actual
number of days elapsed and shall be payable quarterly in arrears in accordance
with the invoices therefor submitted by the Agent to the Borrower. Any
reductions in the amounts available for borrowing under the Revolving Loan
Commitments arising from the operation of the limitation set forth in the second
paragraph of Section 2.1A hereof shall not constitute usages of Revolving Loan
Commitments for purposes of this Section 2.3B and shall not reduce the amount of
the commitment fees payable by the Borrower under this Section 2.3B. On each
Pricing Level Calculation Date, commencing with the first such date to occur
after the Closing Date, the Applicable Commitment Fee Percentage in effect for
the Pricing Period commencing on the day immediately succeeding such Pricing
Level Calculation Date, and continuing for the term of the Pricing Period that
begins on the day immediately succeeding such Pricing Level Calculation Date
shall be the Applicable Commitment Fee Percentage corresponding to the Pricing
Level in effect for such Pricing Period, as follows:
Applicable Commitment
Pricing Level Fee Percentage
------------- --------------
Pricing Level I .125%
Pricing Level II .15%
Pricing Level III .175%
Pricing Level IV .20%
35
36
C. Other Fees. The Borrower agrees to pay to the Agent such
other fees in the amounts and at the times set forth in the fee letter issued
by the Agent to the Borrower.
2.4 Prepayments and Payments; Reductions in Revolving Loan
Commitments; Cash Collateralization of Letters of Credit.
A. Prepayments.
(i) Voluntary Prepayments. The Borrower may at any
time and from time to time prepay any Revolving Loans in whole or in part
in an aggregate minimum amount of Two Hundred Fifty Thousand Dollars
($250,000.00) and integral multiples of Fifty Thousand Dollars ($50,000.00) in
excess of that amount; provided however, in the event that the Borrower prepays
a LIBOR Rate Loan pursuant to this Section 2.4A on a date that is other than the
expiration date of the Interest Period applicable thereto, the Borrower shall
compensate the Banks receiving such prepayments in accordance with the
provisions of Section 2.6D hereof. The Borrower shall give the Agent written or
telephonic notice confirmed in writing of each proposed prepayment of Revolving
Loans at least one (1) Business Day in advance with respect to the prepayment of
Base Rate Loans and at least three (3) Business Days in advance with respect to
the prepayment of LIBOR Rate Loans. The Agent shall promptly transmit each such
notice to the Banks. If the Borrower has given notice of prepayment of Revolving
Loans to the Agent, the principal amount of the Revolving Loans specified in
such notice shall become due and payable on the prepayment date specified
therein.
(ii) Mandatory Prepayments. The Borrower shall from
time to time prepay the Revolving Loans to the extent necessary to give effect
to the limitations set forth in Section 2.1A. In addition, the Borrower shall
pay to the Agent for the account of the Banks, as a prepayment of the Revolving
Loans and as a permanent reduction of the Revolving Loan Commitments, (A) all
Net Cash Proceeds of any Asset Sale in excess of Ten Million Dollars
($10,000,000.00), and (B) all Net Cash Proceeds of any other Asset Sale which
are required to be paid by the Borrower to the Agent for the account of the
Banks pursuant to Section 6.15 hereof. All Net Cash Proceeds of Asset Sales
required to be paid by the Borrower to the Agent for the account of the Banks
pursuant to this Loan Agreement shall be applied by the Banks to the prepayment
of outstanding Revolving Loans designated by the Borrower and then, to the
extent that all Revolving Loans have been paid in full to the Banks, to
thereafter cash collateralize Letters of Credit outstanding. The Revolving Loan
Commitments shall be permanently reduced by the amount of the Net Cash Proceeds
of Asset Sales required to
36
37
be paid by the Borrower to the Agent for the account of the Banks pursuant to
this Loan Agreement.
(iii) General Provisions Regarding Prepayments.
All prepayments of principal of the Revolving Loans pursuant to this Section
2.4A shall be accompanied by the payment of accrued interest on the principal
amount being prepaid and shall be applied to the payment of interest before
application to principal. All prepayments of the Revolving Loans shall be
applied first to Base Rate Loans to the full extent thereof and then shall be
applied to LIBOR Rate Loans, in each case in a manner which minimizes the amount
of any payments required to be made by the Borrower pursuant to Section 2.6D
hereof.
B. General Provisions Regarding Payments.
(i) Manner and Time of Payment. Except as provided in
Section 2.7 hereof, all payments by the Borrower of principal, interest and fees
hereunder and under the Notes shall be made without defense, set off and
counterclaim and in same day funds and delivered to the Agent not later than
11:00 A.M. Louisville, Kentucky time on the date due at its office located at
Citizens Plaza, Louisville, Kentucky, for the account of the Banks; funds
received by the Agent after that time shall be deemed to have been paid by the
Borrower on the next succeeding Business Day. The Borrower hereby authorizes the
Agent to charge its account with the Agent in order to cause timely payment to
be made to the Agent of all principal, interest and fees due hereunder (subject
to sufficient funds being available in its account for that purpose).
(ii) Apportionment of Payments. The Agent shall apportion all
principal and interest payments on the Revolving Loans among all outstanding
Revolving Loans to which such payments relate, in each case proportionately to
the Banks' respective Pro Rata Shares of such Revolving Loans. Subject to the
last sentence of section 2.7E hereof, the Agent (or PNC in the case of payments
received by PNC from the Borrower after payments have been made to PNC by the
Banks pursuant to Section 2.7E hereof) shall promptly distribute to each Bank at
its primary address set forth below its name on the appropriate signature page
hereof or such other address as any Bank may request, such Bank's share of all
such payments received by the Agent (or PNC in respect of Letters of Credit) and
the closing fees and commitment fees of such Bank when received by the Agent
pursuant to Section 2.3 hereof. Notwithstanding the foregoing provisions of this
section 2.4B(ii), if, pursuant to the provisions of Section 2.6C hereof, any
Notice of Conversion/Continuation is withdrawn as to any Affected Bank or if any
Affected Bank makes Base Rate Loans in lieu of its Pro Rata Share of any LIBOR
Rate Loans, the Agent shall give effect thereto
37
38
in apportioning payments thereafter received in respect of the Revolving Loans.
(iii) Payments on Business Days. Whenever any payment to be
made hereunder or under the Notes shall be stated to be due on a day that is not
a Business Day, such payment shall be made on the next succeeding Business Day
(unless no further Business Day occurs in such Fiscal Quarter, in which case
payment shall be made on the next preceding Business Day) and such extension of
time shall be included in the computation of the payment of interest hereunder
or under the Notes or of the commitment fees hereunder, as the case may be.
C. Voluntary Reductions of Revolving Loan Commitments. The
Borrower shall have the right, at any time and from time to time, to terminate
in whole or permanently reduce in part, without premium or penalty, the
Revolving Loan Commitments in an amount up to the amount by which the Revolving
Loan Commitments exceed the Total Utilization of Revolving Loan Commitments. The
Borrower shall give not less than five (5) Business Days' prior written notice
to the Agent designating the date, which must be a Business Day, of such
termination or reduction and the amount of any partial reduction of the
Revolving Loan Commitments. Promptly after receipt of a notice of such
termination or partial reduction of the Revolving Loan Commitments, the Agent
shall notify each Bank of the proposed termination or reduction of the Revolving
Loan Commitments. Such termination or partial reduction of the Revolving Loan
Commitments shall be effective on the date specified in the Borrower's notice
and shall reduce the Revolving Loan Commitment of each Bank proportionately in
accordance with its Pro Rata Share. Any such partial reduction of the Revolving
Loan Commitments shall be in an aggregate minimum amount of Five Million Dollars
($5,000,000.00), and integral multiples of One Million Dollars ($1,000,000.00)
in excess of that amount.
2.5 Use of Proceeds.
A. Revolving Loans and Letters of Credit. The proceeds of the
Revolving Loans shall be used by the Borrower (i) to pay in full the Reducing
Revolver Credit Facility, and (ii) to finance the acquisition, construction
and/or equipping of Theaters hereafter acquired by the Borrower and for other
general corporate purposes of the Borrower. The Letters of Credit shall be used
to secure the Borrower's obligations under Operating Leases, capital leases and
other contracts, permits, applications and agreements to which the Borrower is
obligated.
B. Margin Regulations. No portion of the proceeds of any
Revolving Loans under this Loan Agreement shall be used by
38
39
the Borrower in any manner which might cause the making of the Revolving Loans
or the application of the proceeds thereof to violate Regulation G, Regulation
U, Regulation T or Regulation X of the Board of Governors of the Federal Reserve
System or any other regulation of such Board or to violate the Securities and
Exchange Act of 1934, in each case as in effect on the date or dates of the
making of any such Revolving Loan and such use of the proceeds thereof. If
requested by any Bank, the Borrower shall execute and deliver to such Bank a
completed F.R. Form U-1.
2.6 Special Provisions Governing LIBOR Rate Loans.
Notwithstanding any other provision of this Loan Agreement to the contrary, the
following provisions shall govern with respect to LIBOR Rate Loans as to the
matters covered:
A. Determination of Applicable Interest Rate. As soon as
practicable after 10:00 A.M. Louisville, Kentucky time on each Interest Rate
Determination Date, the Agent shall confirm to the Borrower the Adjusted LIBOR
Rate to apply to the particular LIBOR Rate Loan. The determination of each
Adjusted LIBOR Rate by the Agent, provided that the Agent shall have determined
the Adjusted LIBOR Rate in good faith, shall be final, conclusive and binding
upon all parties hereto in the absence of manifest or demonstrable error and
shall apply to the particular LIBOR Rate Loan for the applicable Interest
Period.
B. Inability to Determine Applicable Interest In the
event the Agent shall have determined in good faith, which determination shall
be final and conclusive and binding upon all parties hereto in the absence of
manifest or demonstrable error, that on any Interest Rate Determination Date or
Funding Date with respect to any LIBOR Rate Loans, by reason of circumstances
occurring after the date of this Loan Agreement affecting the London interbank
market, adequate and fair means do not exist for ascertaining the interest rate
applicable to such LIBOR Rate Loans on the basis provided for in the definition
of Adjusted LIBOR Rate, the Agent shall on such date give notice by telecopy or
by telephone confirmed in writing to the Borrower and each Bank of such
determination, whereupon (i) no Revolving Loans may be made as, or converted to,
LIBOR Rate Loans until such time as the Agent notifies the Borrower and the
Banks that the circumstances giving rise to such notice no longer exist; (ii)
any Notice of Conversion/Continuation given by the Borrower with respect to the
Revolving Loans in respect of which such determination was made shall be deemed
to be rescinded by the Borrower, and (iii) any Borrowing Certificate given by
the Borrower with respect to the Revolving Loans in respect of which such
determination was made shall be deemed to be a request to make Base Rate Loans.
39
40
C. Illegality or Impracticability of LIBOR Rate
Loans. In the event any Bank shall have determined in good faith, which
determination shall be final and conclusive and binding upon all parties hereto
but shall be made only after consultation with the Borrower and the Agent, that
the making, maintaining or continuation of its LIBOR Rate Loans (i) has become
unlawful as a result of compliance by such Bank in good faith with any law,
treaty, governmental rule, regulation, guideline or order, or would conflict
with any such treaty, governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply therewith would not be
unlawful, or (ii) has become impracticable, or would cause such Bank material
hardship, as a result of contingencies occurring after the date of this Loan
Agreement which materially and adversely affect the London interbank market or
the position of such Bank in that market, then, and in any such event, such Bank
shall be an "Affected Bank" and it shall on such date of determination give
notice by telecopy or telephone confirmed in writing of such determination to
the Borrower and the Agent. The Agent shall promptly transmit such notice to
each other Bank. Thereafter, (a) the obligation of the Affected Bank to make
Revolving Loans as, or to convert Revolving Loans to, LIBOR Rate Loans shall be
suspended until such notice shall be withdrawn by the Affected Bank, (b) to the
extent such determination by the Affected Bank relates to a LIBOR Rate Loan then
being requested by the Borrower pursuant to a Borrowing Certificate or a Notice
of Conversion/Continuation, the Affected Bank shall make such LIBOR Rate Loan
as, or convert such LIBOR Rate Loan to, as the case may be, a Base Rate Loan,
and (c) the Affected Bank's obligation to maintain its outstanding LIBOR Rate
Loans, as the case may be (the "Affected Loans"), shall be terminated at the
earlier to occur of the expiration of the Interest Period then in effect with
respect to the Affected Loans or when required by law, and the Affected Loans
shall automatically convert into Base Rate Loans on the date of such
termination. Notwithstanding the foregoing, to the extent a determination by an
Affected Bank as described above relates to a LIBOR Rate Loan then being
requested by the Borrower pursuant to a Borrowing Certificate or a Notice of
Conversion/Continuation, the Borrower shall have the option to rescind such
Borrowing Certificate or Notice of Conversion/Continuation as to all the Banks
by giving notice of such rescission by telecopy or telephone confirmed in
writing to the Agent on the date on which the Affected Bank gives notice of its
determination as described above. The Agent shall promptly transmit such notice
of rescission to each other Bank. Except as provided in the immediately
preceding sentence, nothing in this Section 2.6C shall affect the obligation of
any Bank other than an Affected Bank to make or maintain Revolving Loans as, or
to convert Revolving Loans to, LIBOR Rate Loans in accordance with the terms of
this Loan Agreement.
40
41
D. Compensation For Breakage or Non-Commencement of
Interest Periods. The Borrower shall compensate each Bank, upon written request
by that Bank setting forth the basis for such request, for all reasonable
losses, expenses and liabilities, including, without limitation, any interest
paid by that Bank to lenders of funds borrowed by it to make or carry its LIBOR
Rate Loans and any reasonable loss, expense or liability sustained by that Bank
in connection with the liquidation or re-employment of such funds, which that
Bank may sustain: (i) if for any reason, other than a default by that Bank or
the conversion of such Bank's Borrowing Certificate from a request to make LIBOR
Rate Loans into a request to make Base Rate Loans pursuant to Section 2.6B or
2.6C hereof, a borrowing of any LIBOR Rate Loan does not occur on a date
specified therefor in a Borrowing Certificate or a telephonic request for
borrowing, or a conversion to or continuation of any LIBOR Rate Loan does not
occur on a date specified therefor in a Notice of Conversion/Continuation or a
telephonic request for conversion or continuation of the interest rate
applicable to any Revolving Loan, (ii) if any prepayment or conversion of any of
its LIBOR Rate Loans occurs on a date that is not the last day of an Interest
Period applicable to that LIBOR Rate Loan, (iii) if any prepayment of any of its
LIBOR Rate Loans is not made on any date specified in a notice of prepayment
given by the Borrower, or (iv) as a consequence of any other default by the
Borrower to repay its LIBOR Rate Loans when required by the terms of this Loan
Agreement. Each Bank seeking compensation from the Borrower pursuant to this
Section 2.6D shall deliver to the Borrower a certificate setting forth the
calculation of the compensation claimed to be due to such Bank within thirty
(30) days after the occurrence of the event giving rise to such claim for
compensation, which calculations shall be binding upon the Borrower in the
absence of manifest or demonstrable error.
E. Booking of LIBOR Rate Loans. Any Bank may make,
carry or transfer LIBOR Rate Loans at, to, or for the account of any of its
branch offices or the office of an Affiliate of that Bank; provided however, if
any transfer of LIBOR Rate Loans from the office where such LIBOR Rate Loans
originated shall materially and unreasonably increase the cost to the Borrower
of such LIBOR Rate Loans, such transfer may occur only if required (y) by the
introduction of or any change in or in the interpretation of any law or
regulation, including, without limitation, any change by way of imposition or
increase of reserve requirements, or (z) to comply with any guideline or request
from any central bank or other governmental authority or quasi-governmental
authority exercising control over banks or financial institutions generally,
whether or not such guideline or request shall have the force of law.
41
42
F. Assumptions Concerning Funding of LIBOR Rate
Loans. The calculation of all amounts payable to a Bank under this Section 2.6
and under Section 2.8A hereof shall be made as though that Bank had actually
funded each of its relevant LIBOR Rate Loans through the purchase of a deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted LIBOR Rate in an amount equal to the amount of such LIBOR Rate Loan
and having a maturity comparable to the Interest Period applicable to such LIBOR
Rate Loan and through the transfer of such deposit from an offshore office of
that Bank to a domestic office of that Bank in the United States of America;
provided however, that each Bank may fund each of its LIBOR Rate Loans in any
manner it sees fit and the foregoing assumptions shall be utilized only for the
purposes of calculating amounts payable to such Bank under this Section 2.6 and
under Section 2.8A hereof.
G. LIBOR Rate Loans After Default. After the
occurrence and during the continuation of an Event of Default, (i) the Borrower
may not elect to have a Revolving Loan be made or maintained as, or converted
to, a LIBOR Rate Loan after the expiration of any Interest Period then in
effect for that Revolving Loan, (ii) subject to the provisions of Section 2.6D
hereof, any Borrowing Certificate or Notice of Conversion/Continuation given by
the Borrower with respect to a requested borrowing or conversion/con tinuation
of a Revolving Loan that has not yet occurred shall be deemed to be rescinded by
the Borrower, and (iii) all LIBOR Rate Loans and Base Rate Loans shall thereupon
bear interest at the Default Rate until the Event of Default is cured or the
Revolving Loans are paid in full to the Banks and the Revolving Loan Commitments
have expired or have been terminated by the Borrower or the Banks.
2.7 Letters of Credit.
A. Letters of Credit. Subject to the terms and
conditions of this Loan Agreement and in reliance upon the representations and
warranties of the Borrower set forth herein, the Borrower may request, in
accordance with the provisions of this Section 2.7A, that PNC issue Letters of
Credit for the account of the Borrower denominated in Dollars from and after the
Closing Date. The issuance of Letters of Credit shall be subject to the
following limitations:
(i) The Borrower shall not request that PNC
issue any Letter of Credit if, after giving effect to such issuance, (w) the
total Letter of Credit Usage would exceed Twenty Million Dollars
($20,000,000.00), (y) the Total Utilization of Revolving Loan Commitments would
exceed the Revolving Loan Commitments, as the amount available under such
Revolving Loan
42
43
Commitments may be limited from time to time pursuant to the second paragraph of
Section 2.1A or shall be reduced from time to time pursuant to Section 2.4C
hereof, or (z) the ratio of the Borrower's Consolidated Total Indebtedness,
including the Total Utilization of Revolving Loan Commitments after taking into
account the particular Letter of Credit in the calculation thereof, as of the
most recent Fiscal Quarter end, to the Borrower's Consolidated Theater Level
Cash Flow for the four-Fiscal Quarter period ended on such Fiscal Quarter end,
would exceed the ratio set forth in Section 6.10 hereof.
(ii) In no event shall PNC issue, reissue, amend
or permit the extension of: (y) any Letter of Credit having an expiration date
later than the Stated Maturity Date in effect at the time of the issuance,
reissuance, amendment or automatic or other extension thereof; or (z) subject to
the foregoing clause (y), any Letter of Credit having an expiration date more
than one (1) year after its date of issuance; provided that, subject to the
foregoing clause (y), this clause (z) shall not prevent PNC from agreeing that a
Letter of Credit will automatically be extended annually for one or more periods
each not to exceed one (1) year if PNC does not cancel such extension.
It shall be a condition precedent to the issuance of any Letter of
Credit in accordance with the provisions of this Section 2.7 that each condition
set forth in Sections 3.1 and 3.2 of this Loan Agreement shall have been
satisfied. Immediately upon the issuance of each Letter of Credit, and as of the
Closing Date with respect to each Existing Letter of Credit, each Bank shall be
deemed to, and hereby agrees to, have irrevocably purchased from PNC a
participation in such Letter of Credit and drawings thereunder in an amount
equal to such Bank's Pro Rata Share of the maximum amount which is or at any
time may become available to be drawn thereunder.
Each Letter of Credit may provide that PNC may, but shall not be
required to, pay the beneficiary thereof upon the occurrence of an Event of
Default and the acceleration of the Stated Maturity Date of the Revolving Loans
or, if payment is not then due to the beneficiary, provide for the deposit of
funds in an account to secure payment to the beneficiary. All such funds so
deposited in such account shall be paid to the beneficiary of the Letter of
Credit if the conditions to such payment are satisfied, or shall be returned to
PNC for distribution to the Banks or, if all of the Obligations shall have been
indefeasibly paid in full, to the Borrower, if no payment to the beneficiary has
been made and thirty (30) days after the final date available for drawings under
the Letter of Credit has passed. Each payment or deposit of funds by PNC as
provided in this paragraph shall be treated for all purposes
43
44
of this Loan Agreement as a drawing duly honored by PNC under the related Letter
of Credit.
B. Application and Agreement. Whenever the Borrower
desires the issuance of a Letter of Credit, the Borrower shall deliver to PNC an
Application and Agreement for Letter of Credit in the form of Exhibit G attached
hereto and made a part hereof and a Borrowing Certificate no later than 10:00
A.M. Louisville, Kentucky time at least ten (10) Business Days, or in each case
such shorter period as may be agreed to by PNC in any particular instance, in
advance of the proposed date of issuance of such Letter of Credit. The
Application and Agreement for Letter of Credit shall specify (i) the proposed
date of issuance of the Letter of Credit, which shall be a Business Day under
the laws of the Commonwealth of Kentucky, (ii) the face amount of the Letter of
Credit, (iii) the expiration date of the Letter of Credit, (iv) the name and
address of the beneficiary of the Letter of Credit, and (v) a summary of the
purpose and contemplated terms of the Letter of Credit. Prior to the date of
issuance of any Letter of Credit, the Borrower shall specify a precise
description of the documents related to such Letter of Credit and the proposed
text of any certificate to be presented by the beneficiary under such Letter of
Credit which, if presented by the beneficiary prior to the expiration date of
the Letter of Credit, would require PNC to make payment under the Letter of
Credit; provided, PNC may in its sole reasonable judgment require changes in any
such documents and certificates; provided further, no Letter of Credit shall
require payment against a conforming draft to be made thereunder on the same
Business Day that such draft is presented if such presentation is made after
11:00 A.M. Louisville, Kentucky time on such Business Day. In determining
whether to pay under any Letter of Credit, PNC shall be responsible only to
determine that the documents and certificates required to be delivered under
that Letter of Credit have been delivered and that they comply on their face
with the requirements of that Letter of Credit; provided, nothing contained in
this Section 2.7B shall be deemed to prejudice the right of the Borrower to
recover from PNC in respect of any amounts paid by PNC under any Letter of
Credit in the event that it is determined by a court of competent jurisdiction
that the payment with respect to such Letter of Credit by PNC constituted gross
negligence or willful misconduct on the part of PNC and all appeals therefrom
have been exhausted or waived.
C. Delivery of Copies of Letters of Credit and Letter
of Credit Amendments. PNC shall, promptly after the is suance of each Letter of
Credit, or any amendment thereto, any payment thereunder or any cancellation
thereof, furnish each other Bank with a copy of such Letter of Credit or of such
amendment, payment or cancellation, as the case may be.
44
45
D. Payment of Amounts Drawn Under Letters of Credit.
In the event of any drawing under any Letter of Credit by the beneficiary
thereof, PNC shall promptly notify the Borrower thereof, and the Borrower shall
reimburse PNC on the date on which such drawing is honored in an amount in same
day funds equal to the amount of such drawing.
E. Payment by Banks with Respect to Letters of
Credit. In the event that the Borrower shall fail to reimburse PNC as provided
in Section 2.7D hereof in an amount equal to the amount of any drawing honored
by PNC under a Letter of Credit, PNC shall promptly notify each Bank of the
unreimbursed amount of such drawing and of such Bank's participation therein,
which participation shall be equal to such Bank's Pro Rata Share of the
unreimbursed amount of such drawing. Each Bank shall make available to PNC an
amount equal to its participation in such unreimbursed drawing in same day funds
at the offices of PNC located at Citizens Plaza, Louisville, Kentucky, not later
than 1:00 P.M. Louisville, Kentucky time on the first Business Day after the
date of notification thereof by PNC, and each such amount so made available by
each Bank will be deemed a Revolving Loan made by such Bank under this Loan
Agreement as of the date such amount is so made available to PNC. In the event
that any Bank fails to make available to PNC the amount of such Bank's
participation in such unreimbursed drawing as provided in this Section 2.7E, PNC
shall be entitled to recover such amount on demand from such Bank together with
interest at the Federal Funds Effective Rate. Nothing in this Section 2.7 shall
be construed to prejudice the right of any Bank to recover from PNC any amounts
made available by such Bank to PNC pursuant to this Section 2.7E in the event
that it is determined by a court of competent jurisdiction that the payment with
respect to a Letter of Credit by PNC in respect of which payment was made by
such Bank constituted gross negligence or willful misconduct on the part of PNC.
PNC shall distribute to each other Bank, to the extent such Bank has paid all
amounts payable by it under this Section 2.7E with respect to any Letter of
Credit issued by PNC, such other Bank's Pro Rata Share of all payments received
by PNC from the Borrower in reimbursement of drawings honored by PNC under such
Letter of Credit, as the case may be, when such payments are received.
Notwithstanding anything to the contrary herein, each Bank which has paid all
amounts payable by it under this Section 2.7E shall have a direct right to
reimbursement of such amounts from the Borrower, subject to the procedures for
reimbursing Banks set forth in this Section 2.7.
F. Compensation. The Borrower agrees to pay, without
duplication, the following amounts to PNC with respect to each Letter of Credit
issued by it:
45
46
(i) with respect to each Letter of Credit, a
letter of credit issuance fee payable to PNC equal to 1/4 of 1% per annum of the
maximum amount available from time to time to be drawn under such Letter of
Credit, calculated on the basis of a 360-day year and the actual number of days
elapsed and payable quarterly in advance to PNC in immediately available funds
until the expiration of such Letter of Credit;
(ii) with respect to each Letter of Credit, a
letter of credit fee (the "Letter of Credit Fee") payable to PNC for the account
of the Banks equal to the Applicable Letter of Credit Fee Percentage multiplied
by the maximum amount available from time to time to be drawn under such Letter
of Credit, calculated on the basis of a 360-day year and the actual number of
days elapsed and payable in immediately available funds quarterly in advance on
the first Business Day immediately succeeding the last day of each Fiscal
Quarter and upon expiration of such Letter of Credit; provided, however, upon
the occurrence and during the continuation of any Event of Default, the Letter
of Credit Fee shall equal two percent (2%) per annum plus the Applicable Letter
of Credit Fee Percentage in effect on the date of the occurrence of such Event
of Default.
On each Pricing Level Calculation Date, commencing with the first such
date to occur after the Closing Date, the Applicable Letter of Credit Fee
Percentage in effect for the Pricing Period commencing on the day immediately
succeeding such Pricing Level Calculation Date and continuing for the term of
the Pricing Period that begins on the day immediately succeeding such Pricing
Level Calculation Date shall be the Applicable Letter of Credit Fee Percentage
corresponding to the Pricing Level in affect for such Pricing Period, as
follows:
Applicable Letter
Pricing Level of Credit Fee Percentage
------------- ------------------------
Pricing Level I .25%
Pricing Level II .375%
Pricing Level III .50%
Pricing Level IV .75%
(iii) with respect to drawings made under any
Letter of Credit, interest, payable in immediately available funds to PNC on
demand, on the amount paid by PNC in respect of each such drawing from the date
of the drawing through the date such amount is reimbursed by the Borrower to PNC
at a variable rate equal to the Base Rate plus the Applicable Base Rate Margin
then in effect for Base Rate Loans made or available to be made to the Borrower;
and
46
47
(iv) with respect to the issuance, amendment or
transfer of each Letter of Credit and each drawing made thereunder, documentary
and processing charges payable to PNC in accordance with PNC's standard schedule
for such charges in effect at the time of such issuance, amendment, transfer or
drawing, as the case may be.
Promptly upon receipt by PNC of the amount described in subdivisions
(ii) and (iii) of this Section 2.7F, PNC shall distribute to each Bank its Pro
Rata Share of such amount.
G. Obligations Absolute. Subject to the right of the
Borrower and the Banks to seek damages in the event that a court of competent
jurisdiction determines that PNC committed gross negligence or willful
misconduct in honoring any draft presented under any Letter of Credit issued by
PNC, after all appeals therefrom have been exhausted or waived, the obligation
of the Borrower to reimburse PNC for drawings made under the Letters of Credit
issued by it and the obligations by the Banks under Section 2.7E hereof shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Loan Agreement under all circumstances including, without
limitation, the following circumstances:
(i) any lack of validity or enforceability of any
Letter of Credit;
(ii) the existence of any claim, set-off, defense
or other right which the Borrower may have at any time against a beneficiary or
any transferee of any Letter of Credit, or any persons or entities for whom any
such transferee may be acting, the Agent, any Bank or any other Person, whether
in connection with this Loan Agreement, the transactions contemplated herein or
any unrelated transaction including, without limitation, any underlying
transaction between the Borrower and the beneficiary for which the Letter of
Credit was procured;
(iii) any draft, demand, certificate 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;
(iv) payment by PNC under any Letter of Credit
against presentation of a demand, draft or certificate or other document which
does not comply with the terms of such Letter of Credit, provided that such
payment does not constitute bad faith, gross negligence or willful misconduct on
the part of PNC;
47
48
(v) any other circumstance or happening
whatsoever, which is similar to any of the foregoing; or
(vi) the fact that an Event of Default or a
default under this Loan Agreement shall have occurred and be continuing.
H. Additional Payments. If by reason of (a) any
change in applicable law, regulation, rule, decree or regulatory requirement or
any change in the interpretation or application by any judicial or regulatory
authority of any law, regulation, rule, decree or regulatory requirement, or (b)
compliance by PNC or any other Bank with any direction, request or requirement,
whether or not having the force of law, of any governmental or monetary
authority including, without limitation, Regulation D:
(i) any reserve, deposit or similar requirement
is or shall be applicable, imposed or modified in respect of any Letters of
Credit issued by PNC or participations therein purchased by any other Bank; or
(ii) there shall be imposed on PNC or any other
Bank any other condition regarding this Section 2.7, any Letter of Credit or any
participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to PNC or any other Bank of issuing, making or maintaining any Letter of Credit
or of purchasing or maintaining any participation therein, or to reduce the
amount receivable in respect thereof by PNC or any other Bank, other than an
increase in cost or reduction in amounts receivable as a consequence of any Tax,
which shall be governed by the provisions of Section 2.8 hereof, then and in any
such case PNC or such other Bank may, at any time within a reasonable period
after the additional cost is incurred or the amount received is reduced, notify
the Borrower thereof, and the Borrower shall pay on demand such amounts as PNC
or such other Bank may specify to be necessary to compensate PNC or such other
Bank for such additional cost or reduced receipt, together with interest on such
amount from ten (10) days after the date of such demand until payment in full
thereof at a rate equal at all times to the Base Rate plus the Applicable Base
Rate Margin. The determination by PNC or any other Bank, as the case may be, of
any amount due pursuant to this Section 2.7H as set forth in a certificate
setting forth the calculation thereof in reasonable detail delivered to the
Borrower shall, in the absence of manifest or demonstrable error, be final and
conclusive and binding on all of the parties hereto.
48
49
I. Indemnification of PNC. In addition to amounts
payable to PNC as provided elsewhere in this Section 2.7, the Borrower hereby
agrees to indemnify and hold harmless PNC from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses including,
without limitation, reasonable attorneys' fees and allocated costs of internal
counsel, which PNC may incur or be subject to as a consequence, direct or
indirect, of (i) the issuance of the Letters of Credit, other than as a result
of the bad faith, gross negligence or willful misconduct of PNC as determined
by a court of competent jurisdiction, or the failure of PNC to honor a drawing
under any Letter of Credit as a result of any act or omission, whether rightful
or wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions herein called "Government
Acts").
J. Assumption of Risk. As between the Borrower and
PNC, the Borrower assumes all risks of the acts and omissions of, or the misuse
of the Letters of Credit issued by PNC by the respective beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the foregoing, PNC
shall not be responsible: (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and the issuance of such Letters of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (iii) for the failure of the beneficiary of any such Letter of Credit to
comply fully with conditions required in order to draw upon such Letter of
Credit; (iv) for errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (v) for errors in interpretation of technical terms;
(vi) for any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any such Letter of Credit or of the
proceeds thereof; (vii) for the misapplication by the beneficiary of any such
Letter of Credit of the proceeds of any drawing under such Letter of Credit; and
(viii) for any consequences arising from causes beyond the control of PNC,
including, without limitation, any Government Acts. None of the above shall
affect, impair or prevent the vesting of any of PNC's rights or powers
hereunder; provided however, PNC shall be responsible for any payment that PNC
makes under any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit in the event such payment
49
50
constitutes gross negligence or willful misconduct of PNC as determined by a
court of competent jurisdiction with all appeals therefrom having been exhausted
or waived.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by PNC under or in
connection with the Letters of Credit issued by it or the related certificates,
if taken or omitted in good faith and without bad faith, gross negligence or
willful misconduct, shall not impose any liability on PNC to the Borrower.
Notwithstanding anything to the contrary contained in this Section 2.7,
the Borrower shall have no obligation to indemnify PNC in respect of any
liability incurred by PNC arising out of the gross negligence or willful
misconduct of PNC, as determined by a court of competent jurisdiction with all
appeals therefrom having been exhausted or waived, or out of the wrongful
dishonor by PNC of proper demand for payment made under the Letters of Credit
issued by it.
K. Computation of Interest. All interest payable to
PNC pursuant to this Section 2.7 shall be computed on the basis of a 360-day
year and the actual number of days elapsed in the period during which it
accrues.
L. Amendments. The Borrower may request that PNC
enter into one or more amendments of any Letter of Credit issued by PNC by
delivering to PNC an Application and Agreement For Letter of Credit specifying
(i) the proposed date of the amendment, and (ii) the requested amendment. PNC
shall be entitled to enter into amendments with respect to the Letters of Credit
issued by it; provided, any such amendment extending the expiration date or
increasing the stated amount of any Letter of Credit shall only be permitted if
PNC would be permitted to issue a new Letter of Credit having such an expiration
date or stated amount under this Section 2.7 on the date of the amendment.
M. Existing Letters of Credit. Notwithstanding
anything to the contrary herein, as of the Closing Date, all of the Existing
Letters of Credit shall be deemed to be Letters of Credit issued hereunder and
shall be subject to all of the terms and provisions of this Loan Agreement,
including all terms and provisions applicable to Letters of Credit under this
Loan Agreement. Each Bank agrees that its obligations with respect to Letters of
Credit pursuant to Section 2.7E hereof shall include the Existing Letters of
Credit as of the Closing Date. With respect to each Existing Letter of Credit,
for the period commencing on the Closing Date to and including the expiration
date of any such Existing Letter of Credit, the Borrower shall pay all fees and
commissions set forth
50
51
in Section 2.7F hereof at the times and in the manner set forth therein. Each
Existing Letter of Credit shall be deemed reissued as a Letter of Credit under
this Loan Agreement as of the Closing Date, and PNC shall credit any letter of
credit fees paid to PNC in respect of the Existing Letters of Credit for periods
extending on and after the Closing Date, including any portion thereof shared by
PNC with the other banks who are parties to the Reducing Revolver Loan
Agreement, against any amounts owed by the Borrower to PNC individually (and not
as Agent) as of the Closing Date.
2.8 Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased costs and Taxes. In the
event that any Bank shall determine in good faith, which determination shall,
absent manifest or demonstrable error, be final and conclusive and binding upon
all parties hereto, that any law, treaty or governmental rule, regulation or
order, or any change therein or in the interpretation, administration or
application thereof and including the introduction of any new law, treaty or
governmental rule, regulation or order, or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or that the compliance by such Bank with any guideline, request or
directive issued or made after the date hereof by any central bank or other
governmental or quasi-governmental authority having jurisdiction over such Bank,
and which has the force of law and first becomes effective after the Closing
Date:
(i) subjects such Bank or its applicable lending office
to any additional Covered Tax with respect to this Loan Agreement or any of the
Revolving Loans or any of its obligations hereunder, or changes the basis of
taxation of payments to such Bank or its applicable lending office of principal,
interest, fees or any other amount payable hereunder, but not changes in
Excluded Taxes;
(ii) imposes, modifies or holds applicable any
additional reserve including, without limitation, any marginal, emergency,
supplemental, special or other reserve, special deposit, compulsory loan, FDIC
insurance or similar requirement against assets held by, or deposits or other
liabilities in or for the account of, or advances or loans by, or other credit
extended by, or any other acquisition of funds by, the Bank or its applicable
lending office, other than any such reserve or other requirements with respect
to LIBOR Rate Loans that are reflected in the definition of Adjusted LIBOR Rate,
as the case may be; or
(iii) imposes any other condition on or affecting such
Bank or its applicable lending office or its obligations
51
52
hereunder or the London interbank market, other than with respect to Taxes;
and the result of any of the foregoing is to increase the cost to such Bank of
agreeing to make, making or maintaining Revolving Loans hereunder or to reduce
any amount received or receivable by such Bank or its applicable lending office
with respect thereto, then, in any such case, the Borrower shall promptly pay to
such Bank, upon demand, such additional amount or amounts in the form of an
increased rate of, or a different method of calculating, interest as such Bank
in its reasonable discretion shall determine as may be necessary to compensate
such Bank on an after-tax basis for any such increased cost or reduction in
amounts received or receivable hereunder; provided, any increased cost arising
as a result of any of the foregoing other than in respect of Taxes shall apply
only to LIBOR Rate loans; and provided further, such Bank shall have the right
to seek such additional compensation from the Borrower only if such Bank is
generally seeking to recover the additional costs of the type referred to in
this Section 2.8A from its other borrowers similarly situated. Such Bank shall
deliver to the Borrower a written statement setting forth in reasonable detail
the basis for calculating the additional amounts owed to such Bank under this
Section 2.8A, which statement shall be conclusive and binding upon all parties
hereto absent manifest or demonstrable error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums
payable by the Borrower under this Loan Agreement and the other Loan Documents
to or for the benefit of any Bank or the Agent or any Person who acquires any
interest in the Revolving Loans pursuant to the provisions hereof shall be paid
free and clear of and, except to the extent required by law, without any
deduction or withholding on account of any Covered Tax imposed, levied,
collected, withheld or assessed by or within the United States of America or
any political subdivision in or of the United States of America or any other
jurisdiction from or to which a payment is made by or on behalf of the Borrower
or by any federation or organization of which the United States of America or
any such jurisdiction is a member at the time of payment.
(ii) Grossing-up of Payments. If the Borrower
or any other Person is required by law to make any deduction or withholding on
account of any Covered Tax from any sum paid or payable by the Borrower to the
Agent or any Bank under any of the Loan Documents:
52
53
(1) The Borrower shall notify the Agent of any
such requirement or any change in any such requirement as soon as the Borrower
becomes aware of it;
(2) The Borrower shall pay any such Tax before
the date on which penalties attach thereto, such payment to be made for
its own account if the liability to pay is imposed on the Borrower or, if that
liability is imposed on the Agent or such Bank, as the case may be, on behalf of
and in the name of the Agent or such Bank;
(3) The sum payable by the Borrower in respect
of which the relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making of that
deduction, withholding or payment, the Agent or such Bank, as the case may be,
receives on the due date and retains free from any liability in respect of any
such deduction, withholding or payment a net sum equal to what it would have
received and so retained had no such deduction, withholding or payment in
respect of Covered Taxes been required or made; and
(4) Within thirty (30) days after paying any
sum from which it is required by law to make any deduction or withholding, and
within thirty (30) days after the due date of payment of any Tax which it is
required to pay by clause (b) above, the Borrower shall deliver to the Agent
evidence satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant taxing or
other authority;
provided that no such additional amount shall be required to be paid to any Bank
under clause (3) above except to the extent that any change after the date
hereof in any such requirement for a deduction, withholding or payment as is
mentioned therein shall result in an increase in the rate of such deduction,
withholding or payment from that in effect at the date of this Loan Agreement in
respect of payments to such Bank.
(iii) Tax Refund. If the Borrower determines in good faith
that a reasonable basis exists for contesting a Covered Tax, the relevant Bank
or Tax Transferee or the Agent, as applicable, shall cooperate with the Borrower
in challenging such Tax at the Borrower's expense if requested by the Borrower,
provided, it is understood and agreed that neither the Agent nor any Bank shall
have any obligation to contest, or any responsibility for contesting, any Tax.
If any Tax Transferee, any Bank or the Agent, as applicable, receives a refund,
whether by way of a direct payment or by offset of any Covered Tax for which a
payment has been made pursuant to this Section 2.8, the amount of
53
54
such refund together with any interest received thereon shall be paid to the
Borrower to the extent payment has been made in full pursuant to this Section
2.8.
(iv) U.S. Tax Certificates. Each Bank that is organized
under the laws of any jurisdiction other than the United States or any
state or other political subdivision thereof shall deliver to the Agent for
transmission to the Borrower, on or prior to the Closing Date, in the case of
each Bank listed on the signature pages hereof, or on the date (and as a
condition to effectiveness) of the Assignment Agreement pursuant to which it
becomes a Bank (in the case of each other Bank), and at such other times as may
be necessary in the determination of the Borrower or the Agent, each in the
reasonable exercise of its discretion, such certificates, documents or other
evidence, including, without limitation, Internal Revenue Service Form 1001 or
Form 4224 or any other certificate or statement of exemption required by
Treasury Regulations Section 1.1441-4(a) or Section 1.1441-6(c) or any successor
thereto, in each case properly completed and duly executed by such Bank, to
establish that such Bank is not subject to deduction or withholding of United
States federal income tax under Section 1441 or 1442 of the Internal Revenue
Code or otherwise or under any comparable provisions of any successor statute
with respect to any payments to such Bank of principal, interest, fees or other
amounts payable under any of the Loan Documents. The Borrower shall not be
required to pay any additional amount to any such Bank under clause (3) of
Section 2.8B(ii) hereof if such Bank shall have failed to satisfy the
requirements of the immediately preceding sentence; provided, if such Bank shall
have satisfied such requirements on the Closing Date (in the case of each Bank
listed on the signature pages hereof) or on the date of the Assignment Agreement
pursuant to which it became a Bank (in the case of each other Bank), nothing in
this Section 2.8B(iv) shall relieve the Borrower of its obligation to pay any
additional amounts pursuant to clause (3) of Section 2.8B(ii) hereof in the
event that, as a result of any change in applicable law, such Bank is no longer
properly entitled to deliver certificates, documents or other evidence at a
subsequent date establishing the fact that such Bank is not subject to
withholding as described in the immediately preceding sentence.
C. Capital Adequacy Adjustment. If any Bank shall
have determined in good faith that the adoption, effectiveness, phase-in or
applicability of any law, rule or regulation or any provision thereof regarding
capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or that the
compliance by any Bank or its applicable lending office with any
54
55
guideline, request or directive regarding capital adequacy of any such
governmental authority, central bank or comparable agency, and which in either
events has the force of law and first becomes effective after the Closing Date,
has or will have the effect of reducing the rate of return on the capital of
such Bank or any corporation controlling such Bank as a consequence of, or with
reference to, such Bank's Revolving Loans or Revolving Loan Commitment or any
other Obligations hereunder to a level below that which such Bank or such
controlling corporation would have achieved but for such adoption,
effectiveness, phase-in, applicability, change or compliance, taking into
consideration the policies of such Bank or such controlling corporation with
regard to capital adequacy, then from time to time, within ten (10) Business
Days after demand by such Bank furnished to the Borrower with a copy to the
Agent, the Borrower shall pay to such Bank such additional amount or amounts as
will compensate such Bank or such controlling corporation on an after-tax basis
for such reduction as and when incurred; provided, such Bank shall have the
right to seek such additional compensation from the Borrower only if such Bank
is generally seeking to recover such additional compensation of the type
contemplated in this Section 2.8C from its other borrowers similarly situated.
Each Bank, upon determining in good faith that any additional amounts will be
payable pursuant to this Section 2.8C, will give prompt written notice thereof
to the Borrower, which notice shall set forth the basis of the calculation of
such additional amounts, although the failure to give any such notice shall not
release or diminish any of the Borrower's obligations to pay additional amounts
to the Banks under this Section 2.8C.
2.9 Bank's Obligation to Mitigate. Each Bank agrees that, as
promptly as practicable after the Bank becomes aware of the occurrence of an
event or the existence of a condition that would cause such Bank to become an
Affected Bank or that would entitle such Bank to receive payments under Sections
2.6, 2.7H or 2.8 hereof, such Bank will, to the extent not inconsistent with
such Bank's internal policies, use reasonable efforts (i) to make, fund or
maintain the Revolving Loan Commitment of such Bank or the Affected Loans of
such Bank through another lending office of such Bank, or (ii) take such other
reasonable measures if as a result thereof the circumstances which would cause
such Bank to be an Affected Bank would cease to exist or the additional amounts
which would otherwise be required to be paid to such Bank pursuant to Sections
2.6, 2.7H or 2.8 hereof would be materially reduced and if, as determined by
such Bank in its sole discretion, the making, funding or maintaining of such
Revolving Loan Commitment or Revolving Loans through such other lending office
or in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect the Revolving Loan Commitment or the
Revolving Loans of such Bank or the other interests of such Bank;
55
56
provided, such Bank will not be obligated to utilize such other lending office
pursuant to this Section 2.9 unless the Borrower agrees to pay all expenses
incurred by such Bank in utilizing such other lending office. A certificate as
to the amount of any such expenses payable by the Borrower pursuant to this
Section 2.9, which shall set forth in reasonable detail the basis for requesting
such amount, submitted by such Bank to the Borrower shall be conclusive and
binding upon the Borrower absent manifest or demonstrable error on the part of
such Bank.
SECTION 3
CONDITIONS PRECEDENT
3. Closing Conditions. The obligation of each Bank to make Revolving
Loans and the obligation of PNC to issue Letters of Credit, in each case
pursuant to this Loan Agreement, is subject to the satisfaction of all of the
following conditions:
3.1 Initial Closing Conditions. The obligation of the Banks to
make the initial Revolving Loans to the Borrower and the conversion of the
Existing Letters of Credit to Letters of Credit under this Loan Agreement are
subject to the condition that, in addition to the satisfaction of the conditions
precedent specified in Section 3.2 hereof as of the Closing Date, the Agent
shall have received on behalf of the Banks the following from the Borrower,
dated the Closing Date or such other date as shall be acceptable to the Banks:
A. Loan Agreement. This Loan Agreement, duly executed and
delivered by the Borrower.
B. Notes. The Notes, duly executed and delivered by the
Borrower.
C. Guaranty Agreements. The Guaranty Agreements, duly and
respectively executed and delivered by the Wholly-Owned Subsidiaries of the
Borrower.
D. Pledge Agreement. The Pledge Agreement, duly executed and
delivered by the Borrower.
E. Opinion of Counsel. A written opinion of counsel on behalf
of the Borrower and its Wholly-Owned Subsidiaries, in form and substance
satisfactory to the Banks, and substantially in the form of Exhibit H attached
hereto and made a part hereof.
F. Corporate Documents. A copy of the Charter or Articles of
Incorporation of the Borrower and each Subsidiary of
56
57
the Borrower, certified to be true, accurate and complete by the Secretary of
State of the jurisdiction of incorporation of the Borrower and each Subsidiary
of the Borrower, together with a copy of the By-Laws of the Borrower and each
Subsidiary of the Borrower, certified to be true, accurate and complete by its
Secretary.
G. Resolutions of the Borrower. Resolutions of the Board of
Directors of the Borrower, authorizing the Borrower to execute and deliver, and
to consummate the transactions contemplated by, this Loan Agreement and the
other Loan Documents to which the Borrower is a party, in form and substance
satisfactory to the Banks, and certified to be true, accurate and complete by
the Secretary of the Borrower.
H. Resolutions of Each Wholly-Owned Subsidiary. Resolutions of
the Board of Directors of each Wholly-Owned Subsidiary of the Borrower,
authorizing such Wholly-Owned Subsidiary to execute and deliver, and to
consummate the transactions contemplated by, the Guaranty Agreement to which it
is a party, in form and substance satisfactory to the Banks, and certified to be
true, accurate and complete by the Secretary of such Wholly-Owned Subsidiary of
the Borrower.
I. Certificate of Incumbency. A Certificate of Incumbency
signed by the Secretary of the Borrower and each Wholly-Owned Subsidiary of the
Borrower, certifying the names and the true signatures of the officers of the
Borrower and each Wholly-Owned Subsidiary authorized to execute and deliver the
applicable Loan Documents on behalf of the Borrower and such Wholly-Owned
Subsidiary.
J. Officers' Certificate. A Certificate of the President and
Chief Financial Officer of the Borrower, certifying the accuracy of the
representations and warranties of the Borrower set forth in this Loan Agreement
of the date hereof.
K. Certificate of Existence. A Certificate of Existence on
behalf of the Borrower from the Secretary of State of Tennessee.
L. Fees. The payment to the Banks, as applicable, of the fees
payable on the Closing Date pursuant to Sections 2.3 and 2.7 hereof.
M. Hazard and Liability Insurance. Certificates of insurance
evidencing hazard and liability insurance coverage satisfactory to the Banks
with respect to the Borrower.
57
58
N. Payment in Full of the Tender Offer Facility. The Borrower
shall have delivered written evidence satisfactory to the Banks that the
Borrower has paid in full the entire unpaid principal of and all accrued
interest on the Tender Offer Facility to PNC together with all other amounts
known to the Borrower to be due and owing under the Tender Offer Facility Loan
Agreement.
O. Other Documents. Such other documents, agreements and
Documents as the Banks may reasonably request.
3.2 Conditions to All Revolving Loans and Letters of Credit.
The obligation of the Banks to make each Revolving Loan on each Funding Date and
the obligation of PNC to issue or extend the stated expiration date of each
Letter of Credit is subject to the following additional conditions precedent:
A. The Agent shall have received with respect to each
Revolving Loan, in accordance with the provisions of Section 2.1B of this
Loan Agreement, an originally executed Borrowing Certificate, in each case
signed by an Authorized Officer of the Borrower.
B. PNC shall have received with respect to each Letter of
Credit, in accordance with the provisions of Section 2.7B of this Loan
Agreement, an originally executed Borrowing Certificate and an Application and
Agreement For Letter of Credit relating to such Letter of Credit, in each case
signed by an Authorized officer of the Borrower.
C. As of the Funding Date of the Revolving Loan or the
date of issuance or extension of the stated expiration date of the Letter of
Credit:
(i) The representations and warranties contained herein
shall be true and correct in all material respects on and as of that date to
the same extent as though made on and as of that date;
(ii) No event shall have occurred and be continuing or
would result from the funding of the Revolving Loan contemplated by such
Borrowing Certificate or the issuance or extension of the stated expiration date
of such Letter of Credit contemplated by such Application and Agreement For
Letter of Credit that would constitute an Event of Default;
(iii) The Borrower shall have performed in all material
respects all agreements and satisfied all conditions which
58
59
this Loan Agreement and the other Loan Documents provide shall be performed by
it on or before such date;
(iv) No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin or restrain any
Bank from making that Revolving Loan or PNC from issuing or extending the stated
expiration date of that Letter of Credit;
(v) There shall not be pending or, to the knowledge of
the Borrower threatened, any action, suit, proceeding or arbitration or, to the
knowledge of the Borrower, any governmental investigation pending or
threatened, against or affecting the Borrower or any property of the Borrower,
which has not been disclosed by the Borrower pursuant to Sections 5.3 and 5.6
hereof prior to the making of the last preceding Revolving Loans (or, in the
case of the initial Revolving Loans made hereunder, prior to the execution of
this Loan Agreement) or the issuance of the most recent Letter of Credit (or, in
the case of the initial Letter of Credit, prior to the execution of this Loan
Agreement) or the most recent extension of the stated expiration date of any
Letter of Credit and there shall not have occurred any development in any such
action, suit, proceeding, governmental investigation or arbitration previously
disclosed to the Agent and the Banks, which, in either event, in the opinion of
the Requisite Banks, could reasonably be expected to have a Material Adverse
Effect. No injunction or other restraining order shall have been issued and no
hearing to cause an injunction or other restraining order to be issued shall be
pending or noticed with respect to any action, suit or proceeding seeking to
enjoin or otherwise prevent the consummation of this Loan Agreement or the
making of the Revolving Loans or the issuing or extension of the respective
stated expiration dates of the Letters of Credit hereunder; and
(vi) The Borrowing Certificate delivered by the
Borrower shall confirm that the ratio of the Borrower's Consolidated Total
Indebtedness, including the Total Utilization of Revolving Loan Commitments,
after taking into account the particular Revolving Loan or Letter of Credit in
the calculation thereof, at the most recent Fiscal Quarter end to the Borrower's
Consolidated Theater Level Cash Flow for the four-Fiscal Quarter period ended as
of such Fiscal Quarter end, does not exceed the ratio set forth in Section 6.10
hereof.
SECTION 4
REPRESENTATIONS AND WARRANTIES
4. Representations and Warranties. The Borrower represents and
warrants to the Banks as follows, which representations and
59
60
warranties shall be deemed to be continuing representations and warranties until
the Notes have been paid in full to the Banks and the Revolving Loan Commitments
have expired or have terminated, and shall survive the execution and delivery of
this Loan Agreement:
4.1 Organization, Power and Authority of the Borrower and Each
Subsidiary. The Borrower and each Subsidiary of the Borrower is a corporation
duly organized, validly existing and in good standing under the law of its state
of incorporation, and the Borrower and each Subsidiary has all requisite power
and authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted, to execute, deliver and enter into the
Loan Documents to which it is a party and to perform all of its obligations
thereunder. The Borrower has delivered to the Agent a true and complete copy of
the Charter or Articles of Incorporation and Bylaws of the Borrower and each
Wholly-Owned Subsidiary of the Borrower as in effect on the date hereof.
4.2 Subsidiaries. A true and complete list of all Subsidiaries
of the Borrower is set forth on Schedule 4.2 attached hereto and made a part
hereof, and all such Subsidiaries constitute Wholly-Owned Subsidiaries of the
Borrower.
4.3 Qualification. The Borrower and each Wholly-Owned
Subsidiary of the Borrower is duly qualified to transact business as a foreign
corporation and is in good standing as a foreign corporation in each
jurisdiction in which the character of the properties owned or leased by it or
the nature of the activities conducted or proposed to be conducted by it makes
such qualification necessary.
4.4 Use of Proceeds. The Borrower's uses of the Revolving
Loans will at all times be legal and proper corporate uses duly authorized by
the Board of Directors of the Borrower, and such uses are consistent with all
applicable laws and statutes as in effect as of the date hereof.
4.5 Intellectual Property. The Borrower and each Subsidiary of
the Borrower owns or possesses adequate assets, licenses, patents, patent
applications, copyrights, trademarks, trademark applications, trade names,
franchises, consents, authorizations and service marks and rights with respect
to the foregoing necessary for the conduct of its business as presently
conducted and as proposed to be conducted without any known conflict with the
rights of others.
4.6 Contracts; Labor Disputes. Neither the Borrower nor any
Subsidiary of the Borrower is a party to any contract or agreement, or subject
to any charge, corporate restriction,
60
61
judgment, decree or order, materially adversely affecting its business,
property, assets, operations or financial condition, and neither the Borrower
nor any Subsidiary of the Borrower is a party to any labor dispute or other
grievance procedure that could have a Material Adverse Effect on the Borrower.
There are no strikes or walkouts relating to any labor contracts binding upon
the Borrower or any Subsidiary of the Borrower.
4.7 Accuracy of Financial Reports. The audited financial
statements of the Borrower for its 1996 Fiscal Year and the interim unaudited
financial statements of the Borrower as at and for the period ended July 3,
1997, in each case which have been delivered to the Banks, have been prepared in
accordance with GAAP and fairly and accurately present the financial condition
of the Borrower as of the dates and for the periods ended reflected in such
financial statements; provided, such interim financial statements shall be
without footnotes and shall be subject to normal year-end adjustments. There
have been no material adverse changes in the financial condition of the Borrower
subsequent to the periods ended reflected in such financial statements. The most
recent projections prepared by the Borrower and delivered to the Banks reflect
the Borrower's good faith and reasonable estimates of the results of its
operations for the periods reflected in such projections.
4.8 Disclosure. Neither this Loan Agreement nor any other Loan
Instrument furnished to the Banks by or on behalf of the Borrower and the
Wholly-Owned Subsidiaries of the Borrower in connection with the transactions
contemplated hereby taken as a whole contains any statement of any material fact
which is untrue or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading. There is no fact known to
the Borrower, other than as disclosed in the reports filed by the Borrower with
the Securities and Exchange Commission or is otherwise disclosed by the Borrower
in writing to the Agent, which materially adversely affects or in the future
will to the extent reasonably foreseeable by the Borrower materially adversely
affect the business, operations, affairs or financial condition of the Borrower
or any of its properties which has not been set forth in this Loan Agreement or
in the other Loan Documents furnished to the Banks by or on behalf of the
Borrower in connection with the transactions contemplated hereby. The Borrower
and each Wholly-Owned Subsidiary of the Borrower is currently solvent, and
neither the issuance and delivery of the Notes and the Guaranty Agreements to
the Banks, nor the performance of the transactions contemplated hereunder, will
render the Borrower or any Wholly-Owned Subsidiary of the Borrower insolvent,
inadequately capitalized to undertake the transactions contemplated hereunder or
to undertake the business in which it is presently engaged or about to engage or
61
62
render it unable to pay its debts as they become due. Neither the Borrower nor
any Wholly-Owned Subsidiary of the Borrower is contemplating either the filing
of a petition by it or the commencement of a case by it under the Bankruptcy
Code or any state insolvency laws or the liquidation of all or a major portion
of its property, and the Borrower has no knowledge of any Person contemplating
the filing of any such petition or commencement of any such case against the
Borrower or any Wholly-Owned Subsidiary of the Borrower.
4.9 Tax Returns and Payments. The Borrower has filed all tax
returns required by law to be filed by the Borrower and its Wholly-Owned
Subsidiaries and has paid all taxes, assessments and other governmental charges
levied upon their respective properties, assets, income and franchises, other
than those not yet delinquent and those, not substantial in aggregate amount,
being or about to be contested by the Borrower as provided in Section 5.2
hereof. The charges, accruals and reserves on the books of the Borrower in
respect of its taxes are adequate in the opinion of the Borrower. The Borrower
knows of no unpaid assessment for additional taxes on the part of the Borrower
or any of its Wholly-Owned Subsidiaries.
4.10 Indebtedness. etc. As of the date of this Loan Agreement,
and without regard to the transactions contemplated hereunder, the Borrower and
its Wholly-Owned Subsidiaries have no outstanding Indebtedness other than the
Indebtedness identified on Schedule 4.10 attached hereto and made a part hereof.
4.11 Title to Properties; Liens. The Borrower and each
Subsidiary of the Borrower has good and marketable title to all of its
properties and assets and none of such properties or assets is or will be, as of
the Closing Date, subject to any Lien other than Permitted Liens.
4.12 Operating Leases. The Borrower and each Subsidiary of the
Borrower enjoys quiet possession under all Operating Leases to which it is a
party as lessee, and all of such Operating Leases are to the best knowledge of
the Borrower, after due inquiry, validly existing and in full force and effect,
and, to the best knowledge of the Borrower, after due inquiry, neither the
lessor nor the Borrower or any Subsidiary of the Borrower as lessee is in
default under any of such Operating Leases. None of such Operating Leases
contains any provision restricting the incurrence of Indebtedness by the lessee
or any unusual or burdensome provision materially adversely affecting the
current and proposed operations of the Borrower or any Subsidiary of the
Borrower.
4.13 Litigation, etc. There is no action, proceeding or
investigation pending or, to the best knowledge of the Borrower,
62
63
threatened (or any basis therefor known to the Borrower) which questions the
validity of this Loan Agreement, the Notes, the Guaranty Agreements or the other
Loan Documents or any action taken or to be taken pursuant hereto or thereto or
which if determined adversely to the Borrower or any Subsidiary of the Borrower
would in the Borrower's reasonable judgment result, either in any case or in the
aggregate, in any material adverse change in the business, operations, affairs
or financial condition of the Borrower or in any of its properties or assets
determined on a consolidated basis or in any material liability on the part of
the Borrower or any Subsidiary of the Borrower.
4.14 Authorization and Compliance with Loan Documents by the
Borrower. The execution, delivery and performance of this Loan Agreement, the
Notes and the other Loan Documents to which the Borrower is a party have been
duly authorized by all necessary corporate action on the part of the Borrower,
are enforceable against the Borrower in accordance with their respective terms,
will not result in any violation of or be in conflict with or constitute a
default under the Charter or By-Laws of the Borrower or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to the Borrower, or result in the creation of any Lien upon any of
the properties or assets of the Borrower. The Borrower is not in material
violation of its Charter or By-Laws or any agreement or instrument to which it
is a party, or, to the Borrower's best knowledge, any judgment, decree, order,
statute, rule or governmental regulation applicable to the Borrower. Without
limiting the generality of the foregoing, to the best knowledge of the Borrower,
the Borrower is in compliance in all material respects with all federal and
state laws and all rules, regulations and administrative orders of all state and
local commissions or authorities which are applicable to the Borrower or to the
operation of its business.
4.15 Authorization and Compliance With Guaranty Agreements by
the Wholly-Owned Subsidiaries. The execution, delivery and performance of the
Guaranty Agreements by the Wholly-Owned Subsidiaries of the Borrower have been
duly authorized by all necessary corporate action on the part of each
Wholly-Owned Subsidiary of the Borrower, will not result in any violation of or
be in conflict with or constitute a default under the Charter or Articles of
Incorporation or By-Laws of any such Wholly-Owned Subsidiary or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Wholly-Owned Subsidiary, or result in the creation of any
Lien upon any of the properties or assets of any such Wholly-Owned Subsidiary.
None of the Wholly-Owned Subsidiaries of the Borrower is in material violation
of its Charter or Articles of Incorporation or By-Laws or any agreement or
instrument to which it is a party, or, to the
63
64
Borrower's best knowledge, any judgment, decree, order, statute, rule or
governmental regulation applicable to such Wholly-Owned Subsidiary. Without
limiting the generality of the foregoing, to the best knowledge of the Borrower,
each Wholly-Owned Subsidiary of the Borrower is in compliance in all material
respects with all federal and state laws and all rules, regulations and
administrative orders of all state and local commissions or authorities which
are applicable to the such Wholly-Owned Subsidiary or to the operation of its
business. The Guaranty Agreements are enforceable against the Wholly-Owned
Subsidiaries of the Borrower in accordance with their terms.
4.16 Governmental Consents. To the best knowledge of the
Borrower, (a) the Borrower is not required to obtain any order, consent,
approval or authorization of, and is not required to make any declaration or
filing with, any governmental authority in connection with the execution and
delivery of this Loan Agreement or the negotiation, offer, issue, sale and
delivery of the Notes to the Banks, or in connection with the execution,
delivery and performance of the other Loan Documents to which it is a party, and
(b) none of the Wholly-Owned Subsidiaries of the Borrower is required to obtain
any order, consent, approval or authorization of, and is not required to make
any declaration or filing with, any governmental authority in connection with
the execution and delivery of the Guaranty Agreement to which it is a party.
4.17 Investment Company Act Status. Neither the Borrower nor
any Wholly-Owned Subsidiary is an "investment company", as such term is defined
in the Investment Company Act of 1940, as amended.
4.18 Regulation G, etc. Neither the Borrower nor any
Subsidiary of the Borrower owns, or has any present intention of acquiring, any
Margin Stock. None of the Revolving Loans will be used, directly or indirectly,
by the Borrower for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry any Margin Stock or for any other
purpose which might constitute the transactions contemplated hereby a "purpose
credit" within the meaning of Regulation G or Regulation U of the Board of
Governors of the Federal Reserve System, or cause this Loan Agreement to violate
Regulation G, Regulation U, Regulation T, Regulation X or any other regulation
of the Board of Governors of the Federal Reserve System or the Securities
Exchange Act of 1934.
4.19 Holding Company Act. Neither the Borrower nor any
Subsidiary of the Borrower is a "Holding Company" or a "Subsidiary Company" of a
"Holding Company", or an "Affiliate" of a "Holding Company" or of a "Subsidiary
Company" of a "Holding Company", as
64
65
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended.
4.20 ERISA. The Borrower has not incurred, directly or
indirectly (a) any material accumulated funding deficiency within the meaning of
ERISA, or (b) any material liability to the Pension Benefit Guaranty Corporation
established under ERISA in connection with any employee benefit plan established
or maintained by the Borrower, nor has the Borrower had any tax assessed against
it by the Internal Revenue Service for any alleged violation under Section 4975
of the Internal Revenue Code. To the Borrower's knowledge, no prohibited
transaction within the meaning of Section 4975 of the Internal Revenue Code has
occurred with respect to any employee benefit plan established or maintained by
the Borrower.
4.21 Hazardous Materials. The Borrower and each Subsidiary of
the Borrower is in compliance in all material respects with all Environmental
Laws applicable to the Borrower and its Wholly-Owned Subsidiaries.
4.22 Xxxx Senior Notes. The Borrower has purchased and
irrevocably canceled all but One Hundred Seventy Thousand Dollars ($170,000.00)
in principal amount of those certain 105/8 Senior Secured Notes due 2003 in the
original principal amount of Eighty-Five Million Dollars ($85,000,000.00)
issued by Xxxx Theatres, L.L.C. and Xxxx Finance Corp. pursuant to an indenture
to which Xxxx Theatres, L.L.C., Xxxx Finance Corp., X. X. Xxxx, Inc. and Xxxx
Theatres II, Inc. are partners, and which Senior Secured Notes were assumed by
the Borrower.
4.23 Ownership. As of the Closing Date, the capitalization of
the Borrower and its Subsidiaries consists of the number of shares, authorized,
issued and outstanding, of such classes and series, with or without par value,
described on Schedule 4.23 attached hereto. All outstanding shares have been
duly authorized and validly issued and are fully paid and nonassessable. The
shareholders of the Subsidiaries of the Borrower and the number of shares owned
by each as of the Closing Date are described on Schedule 4.23. As of the Closing
Date, there are no outstanding stock purchase warrants, subscriptions, options,
securities, instruments, or other rights of any type or nature whatsoever, which
are convertible into, exchangeable for or otherwise provide for or permit the
issuance of capital stock of the Borrower or its Subsidiaries, except as
described on Schedule 4.23.
65
66
SECTION 5
AFFIRMATIVE COVENANTS
5. Affirmative Covenants. The Borrower hereby covenants and agrees that
until the Notes have been respectively paid in full to the Banks and the
Revolving Loan Commitments have expired or have terminated, the Borrower will
perform and observe all of the following provisions:
5.1 Maintenance of Properties. The Borrower will, insofar as
it is not prevented by causes beyond its control, maintain or cause to be
maintained in good repair, working order and condition all properties used or
useful in the business of the Borrower. The Borrower will from time to time,
insofar as it is not prevented by causes beyond its control, make or cause to be
made all appropriate repairs, renewals and replacements to all of the properties
of the Borrower.
5.2 Monetary Obligations.
(a) The Borrower will pay and discharge or cause to be
paid and discharged promptly when due and payable all taxes, assessments and
other governmental charges levied upon it or its income or upon any of its
properties or assets or in respect of its franchises, business, income or
profits, or upon any part thereof, as well as all lawful claims of any kind
including, without limitation, claims for labor, materials and supplies, which,
if unpaid, might by law become a lien or a charge upon its property before any
of the same become delinquent; provided, however, the Borrower shall not be
obligated to pay any such tax, assessment or charge if the Borrower is
contesting the amount or validity of, or its liability for, any such taxes,
assessments or charges in good faith and by appropriate proceedings promptly
initiated and diligently conducted by the Borrower and if the Borrower shall
have established such reserve or other appropriate provision, if any, as shall
be required by GAAP in respect thereof. The Borrower will satisfy or cause to be
satisfied the minimum annual funding standard within the meaning of ERISA for
any employee benefit plan established or maintained by the Borrower which is
subject to ERISA, and the Borrower will not permit any tax or penalty to be
incurred by it as a result of any failure to satisfy any such minimum funding
requirement or as a result of any violation of the provisions of Section 4975 of
the Internal Revenue Code or of any regulation issued thereunder.
(b) The Borrower will pay in full all its other
debts, obligations and liabilities allowed hereunder before the same become
delinquent, unless the same are being contested in good faith by the Borrower,
the Borrower has established adequate
66
67
reserves for the payment of the same in accordance with GAAP, and the contesting
thereof does not involve the risk of forfeiture or loss of any of the Borrower's
assets.
5.3 Financial Statements and Other Reports. The Borrower will
furnish to the Agent on behalf of the Banks:
(a) A Borrowing Certificate duly completed by the Borrower
and certified to be true, accurate and complete by an Authorized Officer of the
Borrower on each date specified in Sections 2.1B and 2.7B hereof;
(b) As soon as reasonably possible, and in any event
within ninety (90) days after the end of each Fiscal Year of the Borrower, the
audited balance sheet of the Borrower as at the end of such Fiscal Year, and the
related audited statements of income and cash flows of the Borrower for such
Fiscal Year, setting forth in comparative form the figures for the previous
Fiscal Year, all in reasonable detail and accompanied by the opinion thereon of
independent public accountants selected by the Borrower and reasonably
satisfactory to the Requisite Banks, which opinion shall be in a form generally
recognized as unqualified and shall state that such financial statements have
been prepared on a consolidated basis in accordance with GAAP applied on a basis
consistent with that of the preceding Fiscal Year (except for such changes, if
any, as shall be specified and approved by such accountants in such opinion) and
that the audit by such accountants in connection with such financial statements
has been made in accordance with GAAP relating to auditing;
(c) As soon as reasonably possible, and in any event
within forty-five (45) days after the end of each Fiscal Quarter in each Fiscal
Year of the Borrower, an unaudited balance sheet of the Borrower as at the end
of such Fiscal Quarter, and related unaudited statements of income and cash
flows of the Borrower for such Fiscal Quarter, all in reasonable detail,
prepared on a consolidated basis in accordance with GAAP consistently applied
and certified to be true, accurate and complete by the Chief Financial Officer
of the Borrower; provided, such interim financial statements shall be without
footnotes and shall be subject to normal year-end adjustments;
(d) Prior to the commencement of each Fiscal Year
of the Borrower, a budget prepared by the Borrower in respect of such Fiscal
Year, divided into Fiscal Quarters, including a projected balance sheet, income
statement and cash flow statement;
(e) Concurrently with the delivery to the Banks of the
interim financial statements referred to in subsection (c)
67
68
above, a summary of the operations of all Theaters then owned, operated or
controlled by the Borrower, all in reasonable detail and certified to be true,
accurate and complete by the Chief Financial officer of the Borrower;
(f) Together with each delivery of financial statements
pursuant to subdivisions (a), (b) and (c) above, a Compliance Certificate duly
executed by the Chief Executive Officer or Chief Financial Officer of the
Borrower (i) stating that the Chief Financial Officer of the Borrower has
reviewed the relevant terms of this Loan Agreement and has no knowledge of any
event or condition which constitutes a default under this Loan Agreement or an
Event of Default hereunder, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
the Borrower has taken or is taking or proposes to take with respect thereto,
and (ii) demonstrating in reasonable detail compliance at the end of such
accounting period with certain of the covenants of the Borrower set forth in
this Loan Agreement including, without limitation, the financial covenants set
forth in Sections 6.10 through 6.12 of this Loan Agreement. The Borrower shall
include with each Compliance Certificate, with respect to the financial
covenants set forth in Sections 6.10 through 6.12 hereof, appropriate work
papers demonstrating the Borrower's method of calculating the various financial
information included in the Compliance Certificate;
(g) Forthwith upon any principal officer of the Borrower
obtaining knowledge of, or receiving notice of any claim of or action taken with
respect to, any condition or event which constitutes a default under this Loan
Agreement or an Event of Default hereunder, including, without limitation,
knowledge that any claim by any creditor has been made that there exists, or
that any action has been taken by any creditor with respect to, any default as
set forth in Section 7(i) hereof, an Officer's Certificate specifying the
nature and period of existence thereof and what action the Borrower has taken or
is taking or proposes to take with respect thereto;
(h) Promptly upon receipt thereof, copies of any reports
submitted to the Borrower by its independent certified public accountants in
connection with the examination of the financial statements of the Borrower made
by such accountants;
(i) Promptly upon the filing thereof with The Securities
and Exchange Commission, copies of all reports hereafter filed by the Borrower
with The Securities and Exchange Commission; and
68
69
(j) With reasonable promptness, such other information and
data with respect to the Borrower as from time to time may be reasonably
requested by the Requisite Banks.
The Banks shall keep confidential all of the financial statements and
other information furnished to the Banks pursuant to this Loan Agreement, except
each Bank shall have the right to furnish copies of such financial statements
and other information furnished to each Bank (A) to any proposed assignee of
such Bank pursuant to Section 10 hereof, subject to such assignee executing a
confidentiality Agreement as required under Section 10 hereof, (B) to
governmental agencies having jurisdiction over such Bank and which request
copies of such financial statements and/or other information, (C) if required
to under applicable rules of civil procedure to any appropriate Person in any
litigation involving or affecting such Bank, provided, such Bank shall seek an
appropriate protective order in such litigation preserving the confidentiality
of any nonpublic information furnished to such Bank, and (D) to any
appropriate Person in connection with the enforcement by such Bank of its rights
under this Loan Agreement and the Note issued to such Bank.
5.4 Financial Records, Inspection.
A. The Borrower will maintain a system of accounting
established and administered in accordance with GAAP consistently applied,
and will set aside on its books all such proper reserves as shall be required by
GAAP.
B. The Borrower will permit the Banks and their authorized
representatives to inspect any of the properties of the Borrower, including its
books of account and to make copies thereof and to take extracts therefrom, and
to discuss its affairs, finances and accounts with its officers and with its
independent accountants, all at such reasonable times and as often as may be
reasonably requested by the Requisite Banks. Such inspection shall be for the
information and benefit of the Banks and, unless otherwise publicly available,
any information obtained thereby or otherwise pursuant thereto shall not be
divulged to others except in connection with the enforcement of the rights of
the Banks upon the occurrence of an Event of Default hereunder or in connection
with any disposition of any Bank's Note and except as may be required by law or
by any governmental authority having jurisdiction over any Bank.
5.5 Permits, Certificates, Leases, Licenses, Etc. The Borrower
will obtain, maintain and comply at all times with all permits, certificates,
licenses, approvals, authorizations, leases and other instruments necessary or
appropriate for the conduct of
69
70
its business as presently conducted or as contemplated to be conducted in the
future.
5.6 Notice. The Borrower will notify the Banks in writing, within
no more than three (3) Business Days and without the benefit of any grace period
afforded in any provision of this Loan Agreement, the Notes or any other Loan
Document after the Borrower learns of any of the following: (i) the existence or
occurrence of any default under this Loan Agreement and/or any of the other Loan
Documents, (ii) that any representation or warranty made herein or in the other
Loan Documents shall, for any reason, not be or shall cease in any material
respect to be true and complete and not misleading, (iii) the institution of, or
adverse determination in, any arbitration proceeding, including, without
limitation, an audit or examination by the Internal Revenue Service, involving
the Borrower and describing the nature thereof, what happened with respect
thereto and what steps are being taken by the Borrower with respect thereto, or
(iv) the institution of, or adverse determination in, any litigation involving a
claim against the Borrower in excess of the sum of Three Hundred Thousand
Dollars ($300,000.00), describing the nature thereof, what happened with respect
thereto, and what steps are being taken by the Borrower with respect thereto.
5.7 Further Assurances. The Borrower will from time to time
hereafter execute and deliver, or will cause to be executed and delivered, such
additional instruments, certificates or documents, will pay all filing fees and
taxes in connection therewith and will take all such further actions as the
Banks may reasonably request for the purposes of implementing or effectuating
the provisions of this Loan Agreement and/or the other Loan Documents. Upon the
exercise by the Agent of any power, right, privilege or remedy pursuant to the
Loan Documents which requires any consent, approval, registration, qualification
or authorization of any Person, the Borrower will execute and deliver, or will
cause the execution and delivery of, all applications, certificates, instruments
and other documents and papers that the Agent requires in order to obtain any
such consent, approval, registration, qualification or authorization.
5.8 Payment of Obligations. The Borrower will pay the Notes
and all other Obligations to the Agent on behalf of the Banks timely in
accordance with their respective terms in legal tender of the United States of
America. All payments on the Notes and all other Obligations shall be made to
the Agent in "good and collected funds" at the principal office of the Agent as
set forth in the Notes, not later than 11:00 A.M., Louisville, Kentucky time, on
the date due; funds received by the Agent after that hour shall be deemed to
have been received on the next following Business Day.
70
71
5.9 Preservation of Existence, Leases, etc. The Borrower will
at all times preserve and keep in full force and effect its corporate existence,
rights, patents, trademarks, service marks, trade names, copyrights, licenses,
consents and authorizations and Operating Leases and capital leases to which
the Borrower is a party, other than any changes to any of the same effected by
the Borrower in the ordinary course of business, and the Borrower shall comply
with all applicable laws and regulations of the United States of America and of
any state or municipality or other political subdivision thereof.
5.10 Insurance. The Borrower will maintain or cause to be
maintained, with financially sound and reputable insurers licensed to do
business in the State of Tennessee and in all other jurisdictions wherein the
Borrower transacts business, (a) casualty insurance with respect to the
Borrower's properties and business against loss or damage of the kinds
customarily insured against by corporations of established reputation engaged in
the same or a similar business and similarly situated, in such types and amounts
as are customarily carried under similar circumstances by such other
corporations, and (b) comprehensive general liability insurance as is
customarily carried by corporations of established reputation engaged in the
same or a similar business and similarly situated, in such types and amounts as
are customarily carried under similar circumstances by such other corporations.
5.11 Environmental Matters. The Borrower will cause any
Hazardous Material now or hereafter brought upon, kept or used in, about or in
connection with any real property now or hereafter owned or leased by the
Borrower to be administered in complete compliance with all applicable
Environmental Laws. If the Borrower breaches the provisions of this Section
5.11, or if the presence of Hazardous Material in or about any real property now
or hereafter owned or leased by the Borrower results in the contamination
thereof, or if contamination of any real property now or hereafter owned or
leased by the Borrower by any Hazardous Material otherwise occurs for which the
Banks are or may become legally liable, then, in addition to other remedies
available to the Banks, the Borrower will indemnify, defend and hold the Banks
and the Agent and their respective Affiliates harmless from any and all claims,
judgments, damages, penalties, fines, costs, liabilities, expenses, including,
without limitation, reasonable attorneys' fees, or losses which the Banks and/or
the Agent may incur by virtue of such contamination. The Borrower's
indemnification obligations hereunder include, without limitation, costs
incurred by the Banks and/or the Agent in connection with any investigation of
site conditions or any clean up, removal or restoration work required by any
federal, state or local governmental agency or political subdivision because of
Hazardous Material present in or about any real property now or
71
72
hereafter owned or leased by the Borrower. The Borrower will, in addition, at
its own expense, otherwise comply in all material respects with all
Environmental Laws applicable to all real property now or hereafter owned or
leased by the Borrower. The Borrower further agrees (a) to provide the Banks and
the Agent with copies of any communications between the Borrower and any
governmental agencies or authorities relative to any material contamination by
Hazardous Material of any real property now or hereafter owned or leased by the
Borrower, and (b) to grant to the Banks and the Agent the right, but not the
obligation, to participate in any proceeding with any enforcement agency
relative to any Hazardous Material on or affecting any real property now or
hereafter owned or leased by the Borrower. The indemnification obligations of
the Borrower under this Section 5.11 shall survive the payment of the Notes and
the other Obligations to the Banks.
5.12 Future Wholly-Owned Subsidiaries. The Borrower will cause
any Wholly-Owned Subsidiary hereafter created or acquired by the Borrower or any
of its Wholly-Owned Subsidiaries to execute and deliver a Guaranty Agreement
substantially in the form of Exhibit B attached hereto and made a part hereof in
favor of the Agent for the account of the Banks contemporaneously with the date
of creation or acquisition of such Wholly-Owned Subsidiary by the Borrower or
any of its Wholly-Owned Subsidiaries. The Borrower will in addition pledge to
the Agent for the account of the Banks, or will cause its Wholly-Owned
Subsidiaries to pledge to the Agent for the account of the Banks, all Equity
Interests of all Subsidiaries now or hereafter created or acquired by the
Borrower or any Wholly-Owned Subsidiary, in each case pursuant to a Supplemental
Pledge Agreement duly executed by the Borrower or such Wholly-Owned Subsidiary
of the Borrower.
5.13 Year 2000 Compatibility. The Borrower shall take all
actions reasonably necessary to assure that the Borrower's computer based
systems are able to operate and effectively process data which includes dates on
and after January 1, 2000. At the request of the Agent, the Borrower shall
provide reasonable assurances satisfactory to the Agent of the Borrower's Year
2000 compatibility.
5.14 Payment in Full of the Reducing Revolver Credit Facility.
The Borrower shall use the proceeds of the initial Revolving Loans made to the
Borrower pursuant to this Loan Agreement to pay in full the entire unpaid
principal of and all accrued interest in the Reducing Revolver Credit Facility
together with all amounts known to the Borrower to be due and owing under the
Reducing Revolving Loan Agreement.
72
73
5.15 Compliance with Covenants by the Wholly-Owned
Subsidiaries of the Borrower. The Borrower will to the extent applicable cause
each Subsidiary of the Borrower to comply with all of the affirmative and
negative covenants now or hereafter binding upon the Borrower pursuant to this
Loan Agreement.
SECTION 6
NEGATIVE COVENANTS
6. Negative Covenants. The Borrower hereby covenants and agrees that
until the Notes have been respectively paid in full to the Banks and the
Revolving Loan Commitments have expired or have terminated, the Borrower will
perform and observe all of the following provisions:
6.1 Mergers, Dissolutions and Other Extraordinary Events. The
Borrower will not:
(a) Be or become a party to any consolidation,
reorganization, including, without limitation, the types referred to in Section
368 of the Internal Revenue Code of 1986, as amended, merger or
recapitalization, other than a Permitted Business Combination;
(b) Sell, lease, assign, transfer or dispose of ten
percent (10%) or more of the fair market value of its properties or assets in
any period of twelve (12) consecutive months, other than if such assets or
properties are replaced by assets or properties of comparable utility to the
Borrower within one hundred eighty (180) days after the date of the sale, lease,
assignment, transfer or disposition of such assets; or
(c) Purchase or otherwise acquire or become obligated for
the purchase of all or a substantial part of the assets or business interests of
any Person, or any shares of stock of any Person, other than a Permitted
Business Combination; or
(d) Make, acquire or hold any Investment in any
Minority-Owned Affiliate.
6.2 Indebtedness. The Borrower will not, directly or
indirectly, create, incur, assume, guarantee, agree to purchase or repurchase or
provide funds in respect of, or otherwise become liable with respect to any
Indebtedness other than
(a) the Notes;
(b) the Senior Subordinated Notes;
73
74
(c) Indebtedness of the Borrower and its Subsidiaries
(other than Indebtedness described under any clause of this Section 6.2)
outstanding on the Closing Date after giving effect to the application of the
proceeds of the initial Revolving Loans made hereunder and the Senior
Subordinated Notes;
(d) trade payables and other current liabilities,
other than for borrowed money, incurred in the ordinary course of
its business and in accordance with customary trade practices;
(e) Indebtedness of the Borrower or any of its
Subsidiaries consisting of Interest Rate Protection Agreements that are entered
into by the Borrower or any of its Subsidiaries in the ordinary course of
business and that are designed to protect the Borrower or its Subsidiaries
against fluctuations in interest rates with respect to Indebtedness permitted to
be incurred by the Borrower and its Subsidiaries under this Section 6.2 and that
have a notional amount no greater than the payment due with respect to the
Indebtedness hedged thereby;
(f) Indebtedness owed by the Borrower to any
Wholly-Owned Subsidiary of the Borrower or Indebtedness owed by a Subsidiary of
the Borrower to the Borrower or any Wholly-Owned Subsidiary of the Borrower;
(g) Indebtedness which is exchanged for or the
proceeds of which are used to refinance or refund, or any extension or renewal
of, outstanding indebtedness incurred pursuant to clause (c) of this Section 6.2
(each of the foregoing, a "refinancing") in an aggregate principal amount not to
exceed the principal amount of the Indebtedness so refinanced plus the amount of
any premium required to be paid in connection with such refinancing pursuant to
the terms of the Indebtedness so refinanced or the amount of any premium
reasonably determined by the Borrower as necessary to accomplish such
refinancing by means of a tender offer or privately negotiated repurchase, plus
the expenses of the Borrower or its Subsidiaries incurred in connection with
such refinancing;
(h) Indebtedness of any Subsidiary of the Borrower
incurred in connection with the guarantee of Indebtedness of the
Borrower;
(i) Indebtedness relating to Currency Hedging
Obligations entered into solely to protect the Borrower or any of its
Subsidiaries from fluctuations in currency exchange rates and not to speculate
on such fluctuations;
(j) Capital Lease Obligations of the Borrower and
its Subsidiaries;
74
75
(k) Indebtedness of the Borrower or any of its
Subsidiaries in connection with one or more standby letters of credit or
performance bonds issued in the ordinary course of business or pursuant to
self-insurance obligations;
(l) Indebtedness represented by property, liability
and workers' compensation insurance (which may be in the form of
letters of credit);
(m) Acquired Debt, provided that the Borrower will
not be in default under any of the financial covenants set forth in this Loan
Agreement as a result of the incurrence of such Acquired Debt.
6.3 Use of Assets. The Borrower will not use, or cause or
permit the use of, any of its assets in any manner prohibited by law,
governmental regulations or applicable insurance policies.
6.4 Liens. The Borrower will not, without the prior written
consent of the Banks, directly or indirectly create, incur, assume or permit to
continue in existence any Lien on, or pledge or deposit of, or conditional sale
or other title retention agreement with respect to, any property or asset now
owned or hereafter acquired by the Borrower, other than Permitted Liens.
6.5 Restricted Payments. The Borrower will not make any
Restricted Payments.
6.6 Nature of Business. The Borrower will not engage in any
business other than the ownership and operation of Theaters and all businesses
incidental thereto, including, without limitation, film distribution.
6.7 Limitation on Restrictions. The Borrower shall not enter
into, or suffer to exist, any agreement (other than the Loan Documents) which
prohibits or limits the right or ability of the Borrower to grant or create any
Lien on its assets. Further, the Borrower shall not enter into, or suffer to
exist, any agreement, or permit any Subsidiary to enter into, or suffer to
exist, any agreement (other than the Loan Documents) which prohibits or limits
the ability of any Subsidiary to (i) pay dividends or make other distributions
to or pay any Indebtedness owed to the Borrower, (ii) make loans or advances to
the Borrower, or (iii) create, incur, assume or suffer to exist any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, to secure the obligations of the Borrower under the Loan Documents.
6.8 Agreements and Licenses. The Borrower will not transfer,
terminate, cancel, modify or amend, other than in the
75
76
ordinary course of business, or encumber, except pursuant to the Loan Documents,
or commit a default under, any Operating Lease or capital lease to which the
Borrower is a party, or any license, permit, consent, approval or authorization
necessary or appropriate for the conduct of the Borrower's business.
6.9 Leverage Ratio. The Borrower will not permit, as at each
Fiscal Quarter end, as at each Funding Date and as at each Transaction Date, the
ratio of (a) its Consolidated Total Indebtedness as at such Fiscal Quarter end,
as at each Funding Date and as at each Transaction Date to (b) its Consolidated
Theater Level Cash Flow for the four-Fiscal Quarter period ended on such Fiscal
Quarter end, on such Funding Date or on such Transaction Date to exceed 3.0 to
1.0. For purposes of determining the Borrower's compliance with this section
6.09 as of each Funding Date and/or Transaction Date, the Borrower's
Consolidated Total Indebtedness shall also be determined as of the particular
Funding Date and/or Transaction Date, the Borrower's Consolidated Theater Level
Cash Flow will be determined for the twelve full calendar months preceding the
particular Funding Date and/or Transaction Date, and the Borrower will not
otherwise violate the ratio set forth in this section 6.09 as of such
Transaction Date or Funding Date.
6.10 Fixed Charge Coverage Ratio. The Borrower will not
permit, as at each Fiscal Quarter end, the ratio of (a) its Consolidated EBITR
for the four-Fiscal Quarter period ended on such Fiscal Quarter end, to (b) its
Consolidated Fixed Charges for the four-Fiscal Quarter period ended on such
Fiscal Quarter end, to be less than 1.75 to 1.0.
6.11 Minimum Consolidated Net Worth. The Borrower will not
permit its Consolidated Net Worth as of any Fiscal Quarter end to be less than
ninety percent (90%) of its Consolidated Net Worth as of the Closing Date plus
(a) for each Fiscal Quarter beginning after October 2, 1997, 50% of its
Consolidated Net Income for such Fiscal Quarter, (b) 100% of the proceeds (net
of underwriters' discount and other customary and usual closing costs) realized
by the Borrower from the sale of any of any of its Equity Interests and/or from
the conversion of any of its Indebtedness to Equity Interests of the Borrower,
and (c) 100% of all additions to the Borrower's shareholders' equity resulting
from the issuance by the Borrower of its Capital Stock to pay in whole or in
part the purchase price of Theaters acquired by the Borrower during the
Borrower's Fiscal Quarter then ended, and less (d) adjustments to the Borrower's
Consolidated Net Worth resulting from extraordinary charges and expenses
associated with the acquisition and/or disposition of Theaters by the Borrower,
including, without limitation, any write-down of the assets of the Borrower or
any
76
77
Subsidiary pursuant to FASB 121 including any such write-down associated with
the Xxxx Merger, up to an amount equal to Ten Million Dollars ($10,000,000.00)
in any Fiscal Year of the Borrower not to exceed in the aggregate an amount
equal to ten percent (10%) of the Borrower's Consolidated Net Worth as of such
Fiscal Quarter end prior to giving effect to this subpart (d).
Except to the express extent set forth above, no non-recurring expenses
and charges hereafter incurred by the Borrower and no net losses hereafter
incurred by the Borrower will reduce the amount of the minimum Consolidated Net
Worth required to be maintained by the Borrower pursuant to this Section 6.11.
6.12 Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly enter into or
suffer to exist any transaction or series of related transactions, including,
without limitation, the sale, purchase, exchange or lease of assets, property or
services, with any Affiliate of the Borrower (other than a Wholly-Owned
Subsidiary of the Borrower) unless (a) such transaction or series of
transactions is on terms that are no less favorable to the Borrower or such
Subsidiary, as the case may be, than would be available at the time of such
transaction or series of transactions in a comparable arm's length transaction
with a Person that is not an Affiliate of the Borrower, (b) such transaction or
series of transactions is in the best interests of the Borrower, and (c) such
transaction or series of transactions have been determined by a majority of
disinterested members of the board of directors of the Borrower to be in
compliance with clauses (a) and (b) of this Section 6.12 as evidenced by a
resolution of the board of directors of the Borrower.
Notwithstanding the foregoing limitations, the Borrower and its
Subsidiaries may enter into or suffer to exist the following: (i) any
transaction pursuant to any contract in existence on the Closing Date, (ii) any
payment specifically excluded from the definition of Restricted Payments, (iii)
any transaction or series of transactions between the Borrower and one or more
of its Subsidiaries or between two or more of its Subsidiaries (provided that no
more than 5% of the Capital Stock in any such Subsidiary is owned, directly or
indirectly (other than by direct or indirect ownership of Capital Stock in the
Borrower), by any Affiliate of the Borrower other than a Subsidiary), and (iv)
the payment of compensation (including amounts paid pursuant to employee benefit
plans) for the personal services of officers, directors and employees of the
Borrower or any of its Subsidiaries.
6.13 Guarantees. The Borrower will not guarantee or otherwise
become liable by agreement in any respect with respect to
77
78
any Contingent Obligations except by endorsement of instruments or items of
payment in the ordinary course of business or pursuant to any Interest Rate
Agreements hereafter entered into by the Borrower in order to comply with the
provisions of Section 5.11 hereof.
6.14 Disposition of Proceeds of Asset Sales. The Borrower will
not, and will not permit any of its Subsidiaries to, consummate an Asset Sale
unless (a) the Borrower (or the Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value (as conclusively determined by a resolution of the Board of Directors of
the Borrower set forth in an Officer's Certificate delivered to the Banks) of
the assets or Equity Interests issued or sold or otherwise disposed of and (b)
at least 75% of the consideration therefor received by the Borrower or such
Subsidiary is in the form of cash; provided that for purposes of this provision,
the amount of (A) any liabilities (as shown on the Borrower's or such
Subsidiary's most recent balance sheet or in the notes thereto), of the Borrower
or any Subsidiary (other than, in the case of an Asset Sale by the Borrower,
liabilities that are by their terms subordinated to the Notes) that are assumed
by the transferee of any such assets, and (B) any securities or other
obligations received by the Borrower or any such Subsidiary from such transferee
that are immediately converted by the Borrower or such Subsidiary into cash (or
as to which the Borrower or such Subsidiary has received at or prior to the
consummation of the Asset Sale a commitment which may be subject to customary
conditions) from a nationally recognized investment, merchant or commercial bank
to convert into cash within ninety (90) days of the consummation of such Asset
Sale (and which are thereafter actually converted into cash within such 90-day
period) will be deemed to be cash (but shall not be deemed to be Net Cash
Proceeds for purposes of the following provisions until reduced to cash). If the
Net Cash Proceeds of the Asset Sale are in excess of Ten Million Dollars
($10,000,000.00), the Borrower shall use the full amount thereof to prepay
outstanding Revolving Loans and to permanently reduce the Revolving Loan
Commitments. With respect to all other Asset Sales the Borrower or the
Subsidiary, as the case may be, shall, within 365 days after the receipt of the
Net Cash Proceeds from such Asset Sale, apply such Net Cash Proceeds (i) to
purchase one or more Theaters and/or a controlling interest in the Capital Stock
of a Person owning one or more Theaters, (ii) to make Capital Expenditures that
are used or useful in any business in which the Borrower or any of its
Subsidiaries is permitted to be engaged pursuant to Section 6.6 hereof, and/or
(iii) to prepay outstanding Revolving Loans and to permanently reduce the
Revolving Loan Commitments.
78
79
Concurrently with any Asset Sale, the Borrower shall deliver to the
Agent an Officer's Certificate setting forth the amount of the Net Cash Proceeds
of such Asset Sale and the particular assets that were sold by the Borrower to
generate such Net Cash Proceeds. The Borrower shall deposit all Net Cash
Proceeds received from all Asset Sales in any Fiscal Year of the Borrower into a
separate account maintained by the Borrower with the Agent, and the Agent shall
invest all such Net Cash Proceeds in investments directed by the Borrower, until
such Net Cash Proceeds are used by the Borrower for the purposes herein
required. So long as no Event of Default has occurred and is continuing, the
Borrower shall be entitled to receive, and the Agent shall remit to the Borrower
when received, all interest and other income paid on or in respect of the
investments held in the account maintained by the Borrower with the Agent
pursuant to this Section 6.14.
SECTION 7
EVENTS OF DEFAULT, ACCELERATION
7. Events of Default; Acceleration. If any of the following events
("Events of Default") shall occur:
(a) If the Borrower shall default in the payment of any
interest on and/or any principal of the Notes when the same becomes due and
payable, and such default continues for three (3) Business Days; or
(b) If the Borrower shall breach or default in the performance
or observance of any of the provisions of Section 6.10 through Section 6.12
hereof, and such breach or default continues for twenty (20) days after written
notice of such breach or default shall have been delivered to the Borrower; or
(c) If the Borrower or any Subsidiary shall default in the
performance of or compliance with any covenant, obligation or provision
contained in this Loan Agreement, other than those referred to above in this
Section 7, and any such default shall not have been remedied (i) within ten (10)
days after written notice of such default shall have been delivered to the
Borrower, or (ii) if such default cannot be cured within such ten (10) day
period, within such longer period of time as may be necessary to effect such
cure, but in any event within thirty (30) days after written notice of such
default shall have been delivered to the Borrower, provided that the Borrower or
such Subsidiary commences to cure the particular default within such ten (10)
day period and prosecutes the cure to completion with due diligence within
thirty (30) days after written notice of such default shall have been delivered
to the Borrower; or
79
80
(d) If the Borrower or any Subsidiary shall default in the
performance of or compliance with any covenant, obligation or provision
contained in any of the other Loan Documents, and such default shall not have
been remedied (i) within ten (10) days after written notice of such default
shall have been delivered to the Borrower, or (ii) if such default cannot be
cured within such ten (10) day period, within such longer period of time as may
be necessary to effect such cure, but in any event within thirty (30) days after
written notice of such default shall have been delivered to the Borrower,
provided that the Borrower or such Subsidiary commences to cure the particular
default within such ten (10) day period and prosecutes the cure to completion
with due diligence within thirty (30) days after written notice of such default
shall have been delivered to the Borrower; or
(e) If any material representation or warranty made in writing
by or on behalf of the Borrower or any Subsidiary herein or pursuant hereto or
otherwise in connection with the transactions contemplated hereby shall have
been materially false or misleading or incorrect when made, and the Borrower
shall have known or should have known of the falsity, misleading nature of or
incorrectness of such representation or warranty when it was made, and the
Borrower fails to cause such representation and warranty to cease to be
materially false, misleading or incorrect within ten (10) days after written
notice of such materially false, misleading or incorrect representation or
warranty shall have been delivered to the Borrower; or
(f) If the Borrower or any Subsidiary shall default, as
principal or guarantor or other surety or otherwise, in the payment of any
principal of or premium, if any, or interest on any Indebtedness in respect of
borrowed money or Capital Lease Obligations or in the deferred purchase price of
property which, at the time of the default in the payment thereof, has an unpaid
balance in excess of Five Hundred Thousand Dollars ($500,000.00), or if the
Borrower or any Subsidiary defaults in the performance of or compliance with any
term of any evidence of such Indebtedness or of any mortgage, indenture or other
agreement relating thereto, and such default shall continue for more than the
period of grace, if any, specified therein and shall not have been waived
pursuant thereto; or
(g) If the Borrower or any Subsidiary shall discontinue its
business or shall make an assignment for the benefit of its creditors, or shall
fail generally to pay its debts as such debts become due, or shall apply for or
consent to the appointment of or taking possession by a trustee, receiver or
liquidator or other similar official of any substantial part of its property, or
shall commence a case or have an order for relief entered against it
80
81
under the federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or if
the Borrower or any Subsidiary shall take any action in furtherance of its
dissolution or liquidation; or
(h) If, within thirty (30) days after the commencement against
the Borrower or any Subsidiary of a case under the Bankruptcy Code, as now or
hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, such case shall have been consented to or shall
not have been dismissed or all orders or proceedings thereunder affecting the
operations or the business of the Borrower or such Subsidiary shall not have
been stayed, or if the stay of any such order or proceeding shall thereafter be
set aside, or if within sixty (60) days after the entry of a decree appointing a
trustee, receiver or liquidator (or other similar official) of any substantial
part of the property of the Borrower or any Subsidiary, such appointment shall
not have been vacated; or
(i) If a final uninsured judgment which, with other
outstanding final judgments against the Borrower or any Subsidiary exceeds an
aggregate of Five Hundred Thousand Dollars ($500,000.00) shall be rendered
against the Borrower or any Subsidiary and (i) if, prior to the availability of
any execution thereon, such judgment shall not have been discharged or execution
thereof shall not have been stayed pending appeal, or if, after the expiration
of any such stay, such judgment shall not have been discharged, or (ii) the
Borrower or such Subsidiary shall not have established adequate reserves on its
books in respect of such final uninsurable judgment or judgments; or
(j) If any Operating Lease shall be terminated by virtue of
the default by the Borrower or any Subsidiary thereunder and such termination
would have a Material Adverse Effect on the Borrower's consolidated financial
condition; or
(k) If Xxxxxxx X. Xxxxxxxx shall cease for any reason
whatsoever, including, without limitation, his death or disability, to be and
continuously to perform the duties of the chief executive officer of the
Borrower unless, within one hundred eighty (180) days after such cessation, a
successor to Xxxxxxx X. Xxxxxxxx with demonstrated ability and experience to
serve as the chief executive officer of the Borrower shall have commenced to
perform the duties of the chief executive officer of the Borrower (provided,
however, that if any such successor shall have been so elected and shall have
commenced the performance of such duties within such period, the name of such
successor shall be deemed to have been inserted in this subsection (k) in place
of Xxxxxxx X. Xxxxxxxx);
81
82
(l) If any Person or group of Persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by
The Securities and Exchange Commission under said Act) of 35% or more of the
outstanding Equity Interests of the Borrower; or during any period of 24
consecutive months, individuals who were members of the board of directors of
the Borrower on the first day of such period shall cease to constitute a
majority of the board of directors of the Borrower;
(m) If any provision of any Guaranty Agreement shall cease to
be in full force and effect or any Wholly-Owned Subsidiary shall so assert in
writing; or
(n) If, for any reason (other than the Banks' affirmative
election to release or terminate the Liens created by the Pledge Agreement and
any Supplemental Pledge Agreement) the Pledge Agreement or any Supplemental
Pledge Agreement shall cease (i) to create valid and perfected first priority
Liens on the collateral encumbered in favor of the Agent, or (ii) to be in full
force and effect or shall be declared null and void, or the validity or
enforceability thereof shall be contested by the Borrower or any Subsidiary of
the Borrower;
Then (i) upon the occurrence of any Event of Default described in clause (g) or
(h) of this Section 7 with respect to the Borrower or any Subsidiary, the
respective unpaid principal balances of the Notes together with all accrued
interest thereon and all other Obligations of the Borrower to the Banks shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by the Borrower, or (ii) upon the occurrence of any other Event of
Default referred to in this Section 7, the Requisite Banks may at any time at
their option, by written notice to the Borrower, declare the respective unpaid
principal balances of the Notes together with all accrued interest thereon and
all other Obligations of the Borrower to the Banks to be due and payable in full
to the Banks, without presentment, demand, protest or other requirements of any
kind, all of which are hereby waived by the Borrower.
SECTION 8
REMEDIES
8. Remedies.
8.1 Defaults. Upon the occurrence and during the con tinuation
of any Event of Default, the Requisite Banks and/or the Agent may proceed to
protect and enforce their rights by an action
82
83
at law, suit in equity or other appropriate proceeding, whether for the specific
performance of any agreement contained herein, in the Notes or in the other Loan
Documents, or for an injunction against a violation of any of the terms hereof
or thereof, or in aid of the exercise of any power granted hereby or thereby or
by law. In case of a default in the payment of any principal of or premium, if
any, or interest on the Notes, or upon acceleration thereof, the Borrower will
pay to the Banks such further amounts as shall be sufficient to cover the costs
and expenses of collection thereof, including, to the extent permitted by law,
without limitation, reasonable attorneys' fees, expenses and disbursements.
8.2 Offset. If any Event of Default shall occur and be
continuing and regardless of whether or not the Banks have accelerated the
Stated Maturity Date of the Notes or any of the other Obligations, or if the
Borrower shall fail to pay any principal of the Notes to the Agent on the due
date thereof, each Bank shall have the right then, or at any time thereafter, to
set off against any and all deposit balances and other sums and Indebtedness and
other property then held or owned by that Bank to or for the credit or account
of the Borrower, all without notice to or demand upon the Borrower or any other
Person, all such notices and demands being hereby expressly waived by the
Borrower, and in and on all of which the Borrower hereby grants each Bank a Lien
to secure the payment of the Obligations. All amounts received by a Bank
pursuant to the exercise of its right of set off against any deposit balances or
other sums and Indebtedness and other property then held or owned by such Bank
to or for the credit or account of the Borrower shall be shared pro rata with
the other Banks and applied to the payment of the Obligations in the manner set
forth in Section 12.4 hereof.
8.3 Rights Cumulative. All of the rights and remedies of the
Banks and/or the Agent upon the occurrence of an Event of Default shall be
cumulative to the greatest extent permitted by law, and shall be in addition to
all those rights and remedies afforded the Banks and the Agent at law or in
equity or under the other Loan Documents.
8.4 Payment of Costs and Expenses. All of the costs, expenses,
damages and liabilities, including, without limitation, all reasonable
attorneys' fees, incurred by and imposed upon the Banks and/or the Agent with
respect to, in connection with or as a result of any action taken or omitted to
be taken pursuant to this Loan Agreement, the Notes and the other Loan Documents
shall be paid by, and shall be the sole responsibility of, the Borrower.
83
84
SECTION 9
THE AGENT
9. The Agent.
9.1 Appointment. Each Bank hereby irrevocably designates, appoints
and authorizes PNC to act as the Agent for such Bank under this Loan Agreement
and to execute and deliver or accept on behalf of each of the Banks the other
Loan Documents. Each Bank hereby irrevocably authorizes, and each holder of any
Note by the acceptance of such Note shall be deemed irrevocably to authorize,
the Agent to take such action on behalf of such Bank and such holder under the
provisions of this Loan Agreement and the other Loan Documents and any other
instruments and agreements referred to herein, and to exercise such powers and
to perform such duties hereunder as are specifically delegated to or required of
the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. PNC agrees to act as the Agent on behalf of the Banks to the
extent provided in this Loan Agreement and to perform its duties hereunder and
under the other Loan Documents with reasonable diligence and in good faith.
9.2 Delegation of Duties. The Agent may perform any of its duties
hereunder by or through agents or employees provided such delegation is
exercised with reasonable care and does not constitute a relinquishment of the
Agent's duties as the Agent under this Loan Agreement and the other Loan
Documents. Subject to Sections 9.5, 9.6 and 9.7 hereof, the Agent shall be
entitled to engage and pay for the advice or services of any attorneys,
accountants or other advisors concerning all matters pertaining to the Agent's
duties hereunder and to rely upon any advice so obtained, provided reasonable
care is used in the selection of the foregoing experts.
9.3 Nature of Duties; Independent Credit Investigation. The Agent
shall have no duties or responsibilities except those expressly set forth in
this Loan Agreement and the other Loan Documents and no implied covenants,
functions, responsibilities, duties, obligations, or liabilities shall be
construed as part of this Loan Agreement or shall otherwise exist. The duties of
the Agent shall be mechanical and administrative in nature and shall include the
duty to provide to each Bank an executed original of such Bank's Note and an
executed original of this Loan Agreement and a copy of the other Loan Documents.
The Agent shall not have by reason of this Loan Agreement a fiduciary or trust
relationship in respect of any Bank, and nothing in this Loan Agreement,
expressed or implied, is intended to or shall be so construed as to impose upon
the Agent any obligations in respect of this Loan Agreement except as expressly
set forth herein. Each Bank
84
85
expressly acknowledges (i) that the Agent has not made any representations or
warranties to it and that no act that the Agent hereafter takes, including any
review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Bank; (ii) that it has made and
will continue to make, without reliance upon the Agent, its own independent
investigation of the financial condition and affairs and its own appraisal of
the creditworthiness of the Borrower in connection with this Loan Agreement and
the making and continuance of the Revolving Loans hereunder; and (iii) except as
expressly provided herein, that the Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Bank with any credit
or other information with respect thereto, whether coming into its possession
before the making of any Revolving Loan or at any time or times thereafter.
9.4 Actions in Discretion of the Agent; Instructions from the
Banks. The Agent agrees, upon the written request of the Requisite Banks, to
take or refrain from taking any action of the type specified as being within the
Agent's rights, powers or discretion herein, provided that the Agent shall not
be required to take any action which exposes the Agent to legal liability or
which is contrary to this Loan Agreement or any other Loan Instrument or
applicable law. In the absence of a request by the Requisite Banks, the Agent
shall have authority, in its sole discretion, to take or not to take any such
action, unless this Loan Agreement specifically requires the consent of the
Requisite Banks or all of the Banks. Any action taken or failure to act pursuant
to such instructions or discretion shall be binding on the Banks, subject to
Section 9.6 hereof. Subject to the provisions of Section 9.6 hereof, no Bank
shall have any right of action whatsoever against the Agent an a result of the
Agent acting or refraining from acting hereunder in accordance with the
instructions of the Requisite Banks, or in the absence of such instructions, in
the absolute discretion of the Agent.
9.5 Reimbursement and Indemnification of the Agent by the
Borrower. The Borrower unconditionally agrees to pay or reimburse the Agent
for, and to indemnify and hold harmless the Agent from and against, (a) all
reasonable and necessary out-of-pocket costs, expenses and disbursements for
which reimbursement is customarily obtained, including fees and expenses of
counsel and consultants, incurred by the Agent (i) in connection with the
preparation, negotiation, printing, execution, administration, interpretation
and performance of this Loan Agreement and the other Loan Documents, subject to
the provisions of Section 12.12 hereof, (ii) relating to any requested
amendments, waivers or consents pursuant to the provisions hereof, (iii) in
connection with the enforcement of this Loan Agreement or any other Loan
Document or
85
86
collection of amounts due hereunder or thereunder or the proof and allowability
of any claim arising under this Loan Agreement or any other Loan Document,
whether in bankruptcy or receivership proceedings or otherwise, and (iv) in any
workout or restructuring or in connection with the protection, preservation,
exercise or enforcement of any of the terms hereof or of any rights hereunder or
under any other Loan Document or in connection with any foreclosure, collection
or bankruptcy proceedings, and (b) all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against the Agent, in its capacity as such, in any way relating to or
arising out of this Loan Agreement or any other Loan Document or any action
taken or omitted by the Agent hereunder or thereunder, provided that the
Borrower shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (A) if the same results from the Agent's gross negligence or
willful misconduct, or (B) if the Borrower was not given notice of the subject
claim and the opportunity to participate in the defense thereof, at its expense,
or (C) if the same results from a compromise or settlement agreement entered
into without the consent of the Borrower which consent shall not be unreasonably
withheld.
9.6 Exculpatory Provisions. Neither the Agent nor any of its
directors, officers, employees, agents or affiliates shall (i) be liable to any
Bank for any action taken or omitted to be taken by it or them hereunder, or in
connection herewith including pursuant to any other Loan Documents, unless
caused by its or their own gross negligence or willful misconduct, (ii) be
responsible in any manner to any of the Banks for the effectiveness,
enforceability, genuineness, validity or the due execution of this Loan
Agreement or any other Loan Document or for any recital, representation,
warranty, document, certificate, report or statement herein or made or
furnished under or in connection with this Loan Agreement or any other Loan
Document, or (iii) be under any obligation to any of the Banks to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions hereof or thereof on the part of the Borrower, or the financial
condition of the Borrower, or the existence or possible existence of any Event
of Default or default under the Loan Documents. Neither the Agent nor any Bank
nor any of their respective directors, officers, employees, agents, attorneys or
affiliates shall be liable to the Borrower or any other Person for consequential
damages resulting from any breach of contract, tort or other wrong in connection
with the negotiation, documentation or administration of the Loan Documents or
the collection of the Revolving Loans.
86
87
9.7 Reimbursement and Indemnification of the Agent by the
Banks. Each Bank agrees to reimburse and indemnify the Agent (to the extent not
reimbursed by the Borrower and without limiting the obligation of the Borrower
to do so) in proportion to its Pro Rata Share from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, quite, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent, in its capacity as such, in any
way relating to or arising out of this Loan Agreement or any other Loan Document
or any action taken or omitted by the Agent hereunder or thereunder, provided
that no such reimbursement shall be required with respect to expenses incurred
by the Agent during the time period through the Closing Date and no Bank shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements (i) if
the same relates to or arises out of the Agent's gross negligence or willful
misconduct, or (ii) if such Bank was not given notice of the subject claim and
the opportunity to participate in the defense thereof, at its expense, or (iii)
if the same results from a compromise and settlement agreement entered into
without the consent of the Requisite Banks, which consent shall not be
unreasonably withheld.
9.8 Reliance by the Agent. The Agent shall be entitled to rely
upon any writing, telegram, telex or teletype message, facsimile, resolution,
notice, consent, certificate, letter, cablegram, statement, order or other
document or conversation by telephone or otherwise believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons, and upon the advice and opinions of counsel and professional advisers
selected by the Agent, including counsel to the Borrower. The Agent shall be
fully justified in failing or refusing to take any action hereunder unless it
shall first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
9.9 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any default under the Loan Documents or
Event of Default, other than the Event of Default described in Section 7(a)
hereof, unless the Agent has received written notice from a Bank or the Borrower
referring to this Loan Agreement, specifically describing such default or Event
of Default and stating that such notice is a "notice of default."
9.10 The Banks in Their Individual Capacities. With respect to
its Revolving Loan Commitments and the Revolving Loans made by it, the Agent
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were
87
88
not the Agent, and the term "Banks" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. PNC and its Affiliates
and each of the Banks and their respective Affiliates may, without liability to
account, except as prohibited herein, make loans to, accept deposits from,
discount drafts for, act as trustee under indentures of, and generally engage in
any kind of banking or trust business with, the Borrower and its Affiliates, in
the case of the Agent, as though it were not acting as Agent hereunder and in
the case of each Bank, as though such Bank were not a Bank hereunder.
9.11 Holders of Notes. The Agent may deem and treat any payee
of any Note as the owner thereof for all purposes hereof unless and until
written notice of the assignment or transfer thereof shall have been filed with
the Agent. Any request, authority or consent of any Person who at the time of
making such request or giving such authority or consent is the holder of any
Note shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
9.12 Equalization of the Banks. The Banks and the holders of
any participation in any Notes agree among themselves that, with respect to all
amounts received by any Bank or any such holder for application on any
obligation hereunder or under any Note or under any such participation, whether
received by voluntary payment, by realization upon security, by the exercise of
the right of set off or banker's lien, by counterclaim or by any other non-pro
rata source, equitable adjustment will be made in the manner stated in the
following sentence so that, in effect, all such excess amounts will be shared
ratably among the Banks and such holders in proportion to their interests in
payments under the Notes. The Banks or any such holder receiving any such amount
shall purchase for cash from each of the other Banks an interest in such Bank's
Revolving Loans in such amount as shall result in a ratable participation by the
Banks and each holder in the aggregate unpaid amount under the Notes, provided
that if all or any portion of such excess amount is thereafter recovered from
the Bank or the holder making such purchase, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, together with
interest or other amounts, if any, required by law (including court order) to be
paid by the Bank or the holder making such purchase.
9.13 Successor Agent. The Agent (i) may resign as Agent, which
shall require the consent of the Borrower so long as no Event of Default has
occurred and is continuing, such consent not to be unreasonably withheld or (ii)
shall resign if such resignation is requested by the Requisite Banks, in either
case (i)
88
89
or (ii) by giving not less than thirty (30) days prior written notice to the
Borrower and the Banks. If the Agent shall resign under this Loan Agreement,
then either (a) the Requisite Banks shall appoint from among the Banks a
successor agent for the Banks, subject to the consent of such successor agent by
the Borrower, such consent not to be unreasonably withheld, or (b) if a
successor agent shall not be so appointed and approved within the thirty (30)
day period following the Agent's notice to the Banks of its resignation, then
the Agent shall appoint, with the consent of the Borrower, such consent not to
be unreasonably withheld, a successor agent who shall serve as Agent until such
time as the Requisite Banks appoint, and the Borrower consents, which consent
shall not be unreasonably withheld, to the appointment of, a successor agent.
Upon its appointment pursuant to either clause (a) or (b) above, such successor
agent shall succeed to the rights, powers and duties of the Agent and the term
"Agent" shall mean such successor agent, effective upon its appointment, and the
former Agent's rights, powers and duties as Agent shall be terminated without
any other or further act or deed an the part of such former Agent or any of the
parties to this Loan Agreement. After the resignation of any Agent hereunder,
the provisions of this Section 9 shall not by reason of such resignation be
deemed to have released the Agent from liability for any actions taken or not
taken by it while it was an Agent under this Loan Agreement.
9.14 Calculations. In the absence of gross negligence or
willful misconduct, the Agent shall not be liable for any error in computing the
amount payable to any Bank whether in respect of the Revolving Loans or the fees
or other amounts due to the Banks under this Loan Agreement. In the event an
error in computing any amount payable to any Bank is made, the Agent, the
Borrower and each affected Bank shall, forthwith upon discovery of such error,
make such adjustments as shall be required to correct such error, and any
compensation therefor will be calculated at the Federal Funds Effective Rate.
9.15 Beneficiaries. Except as set forth in Section 9.13, the
provisions of this Section 9 are solely for the benefit of the Agent and the
Banks, and the Borrower shall not have any rights to rely on or enforce any of
the provisions hereof. In performing its functions and duties under this Loan
Agreement, the Agent shall act solely as agent of the Banks and does not assume
and shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for the Borrower or any other Person.
89
90
SECTION 10
ASSIGNMENTS AND PARTICIPATION
10. Assignments and Participation in Revolving Loans and Notes.
10.1 General Assignments. Each Bank shall have the right at
any time, upon written notice to the Agent of its intent to do so, to sell,
assign, transfer or negotiate all or any part of the Revolving Loans to one or
more Banks. Each Bank shall have the right at any time, with the prior consent
of the Agent, which shall not be unreasonably withheld, and, so long as no Event
of Default has occurred and is continuing, the Borrower, to sell, assign,
transfer or negotiate all or any part of its Revolving Loans and Revolving Loan
Commitments to one or more commercial banks, insurance companies, savings and
loan associations, savings banks or other financial institutions, pension funds
or mutual funds or other accredited investors ("Eligible Assignee"); provided
that prior to receiving any confidential or other material information regarding
the Borrower or the transactions contemplated by this Loan Agreement, any
Eligible Assignee shall have entered into a Confidentiality Agreement; provided
further that any such assignment shall become effective five (5) Business Days
after the Agent's receipt of (x) a written notice of such assignment from the
assigning Bank, (y) processing and recordation fees of $3,500 from the assigning
Bank in connection with the Agent's recordation of such sale, assignment,
transfer or negotiation, and (z) an Assignment Agreement executed by the
assignee and assignor; provided still further that no Bank shall make any
assignment to any Person other than one of its Affiliates or another existing
Bank in a principal amount of less than Five Million Dollars ($5,000,000)
unless, after giving effect to such assignment, the assigning Bank will have no
Revolving Loans or Revolving Loan Commitments hereunder. In the case of any
sale, assignment, transfer or negotiation of all or part of the Revolving Loans
or the Revolving Loan Commitments authorized under this Section 10, the
assignee, transferee or recipient shall have, to the extent of such sale,
assignment, transfer or negotiation, the same rights, benefits and obligations
as it would if it were a Bank hereunder, including, without limitation (x) the
right to approve or disapprove actions which, in accordance with the terms
hereof, require the approval of the Requisite Banks, and (y) the obligation to
fund Revolving Loans directly to the Agent pursuant to Section 2 hereof. Upon
its receipt of any Assignment Agreement delivered by an assigning Bank pursuant
to this Section 10.1, the Agent shall record the information contained therein
in the records of the Agent.
90
91
10.2 Participations. Notwithstanding Section 10.1 hereof, each
Bank may grant participations in all or any part of its Revolving Loans and the
Revolving Loan Commitments only to one or more Eligible Assignees; provided that
(i) any such disposition shall not, without the consent of the Borrower, require
the Borrower to file a registration statement with the Securities and Exchange
Commission or apply to qualify the Revolving Loans or the Notes under the blue
sky law of any state; and (ii) the holder of any such participation, other than
an Affiliate of such Bank, shall not be entitled to require such Bank to take or
omit to take any action hereunder except action directly extending the final
maturity of any portion of the principal amount of or interest on a Revolving
Loan allocated to such participation or a reduction of the principal amount of
or the rate of interest payable on the Revolving Loans, or payments due in
repayment of draws under Letters of Credit allocable to such participation. For
purposes of Sections 2.6, 8.2 and 12.4 hereof, the Borrower hereby acknowledges
and agrees that any such disposition will give rise to a direct obligation of
the Borrower to the participant and the participant shall be considered to be a
"Bank" (subject to the provisions of Section 2.9 hereof).
10.3 Sales to Affiliates. Notwithstanding the foregoing
provisions of this Section 10, each Bank may at any time sell, assign, transfer,
or negotiate all or any part of the Revolving Loans and the Revolving Loan
Commitments to any Affiliate of such Bank; that an Affiliate to whom such
disposition has been made shall not be considered a "Bank" for purposes of this
Loan Agreement other than for purposes of Sections 8.2 and 12.4 hereof; provided
further that the Borrower shall not incur any additional expenses solely as a
result of such sale, assignment, transfer or negotiation.
10.4 Effect of Obligations. No Bank shall, as between the
Borrower and that Bank, be relieved of any of its obligations hereunder as a
result of any granting of participations in all or any part of the Revolving
Loans or Revolving Loan Commitments of that Bank or any other Obligations owed
to such Bank. Each Bank shall, as between the Borrower and that Bank, be
relieved of its obligations hereunder as a result of any sale, assignment,
transfer or negotiation of all or any part of the Revolving Loans or Revolving
Loan Commitments of that Bank or any other Obligations owed to such Bank made in
accordance with Section 10.1 hereof.
SECTION 11
INDEMNITY
The Borrower shall indemnify and hold harmless the Banks, their
respective successors, assigns, agents and employees, from
91
92
and against any and all claims, actions, suits, proceedings, costs, expenses,
damages, fines, penalties and liabilities, including, without limitation,
reasonable attorneys' fees and costs, arising out of, connected with or
resulting from the operation of the business of the Borrower or the transactions
contemplated by this Loan Agreement. Provided, the Borrower shall have no
obligation to indemnify the Banks for any loss caused solely by the Banks' gross
negligence or willful misconduct. At each Bank's request, the Borrower shall, at
its own cost and expense, defend or cause to be defended any and all such
actions or suits that may be brought against the applicable Bank and, in any
event, shall satisfy, pay and discharge any and all judgments, awards,
penalties, costs and fines that may be recovered against the applicable Bank in
any such action, plus all attorneys' fees and costs related thereto to the
extent permitted by applicable law; provided, however, that each Bank shall give
the Borrower, to the extent the applicable Bank seeks indemnification from the
Borrower under this Section 11, written notice of any such claim, demand or suit
as soon as practicable after the applicable Bank has received written notice
thereof, and the applicable Bank shall not settle any such claim, demand or
suit, if the applicable Bank seeks indemnification therefor from the Borrower,
without first giving notice to Borrower of the applicable Bank's desire to
settle and obtaining the consent of Borrower to the same, which consent Borrower
hereby agrees not to unreasonably withhold.
SECTION 12
MISCELLANEOUS
12.1 Submission to Jurisdiction, Etc. The Borrower hereby irrevocably
agrees that any legal action, suit or proceeding against the Borrower with
respect to the obligations and liabilities of the Borrower hereunder or any
other matter under or arising out of or in connection with this Loan Agreement
or for recognition or enforcement of any judgment rendered in any such action,
suit or proceeding may be brought in the United States District Court of the
Western District of Kentucky or in the courts of the Common wealth of Kentucky,
as the Requisite Banks may elect, and, by execution and delivery of this Loan
Agreement, the Borrower hereby irrevocably accepts and submits to the
non-exclusive jurisdiction of each of the aforesaid courts in personam generally
and unconditionally with respect to any such action, suit or proceeding in
volving the Borrower and in respect of the Borrower's property. The Borrower
further agrees that final judgment against the Borrower in any action, suit or
proceeding referred to herein shall be conclusive after all appeals have been
exhausted or waived by the Borrower, and may thereafter be enforced in any other
jurisdiction, within or outside the United States of America, by suit on the
judgment, a certified or exemplified copy of which shall be conclusive
92
93
evidence of the fact and of the amount of the Borrower's obligations and
liabilities. The Borrower further irrevocably consents and agrees to the service
of any and all legal process, summons, notices and documents out of any of the
aforesaid courts in any such action, suit or proceeding by mailing copies
thereof by registered or certified air mail, postage prepaid, to the Borrower
at the address set forth in Section 12.3 below or by serving copies thereof upon
any statutory agent for service of process of the Borrower. The Borrower agrees
that service upon the Borrower as provided for herein shall constitute valid and
effective personal service upon the Borrower and that the failure of any
statutory agent to give any notice of such service to the Borrower shall not
impair or affect in any way the validity of such service or any judgment
rendered in any action or proceeding based thereon. Nothing herein shall, or
shall be construed so as to, limit the right of the Banks to bring actions,
suits or proceedings with respect to the obligations and liabilities of the
Borrower under, or any other matter arising out of or in connection with, this
Loan Agreement and/or the other Loan Documents, or for recognition or
enforcement of any judgment rendered in any such action, suit or proceeding, in
the courts of whatever jurisdiction in which property of the Borrower may be
found or as otherwise shall to the Requisite Banks seem appropriate, or to
affect the rights to service of process in any jurisdiction in any manner
permitted by law. in addition, the Borrower hereby irrevocably and
unconditionally waives any objection which the Borrower may now or hereafter
have to the laying of venue of any of the aforesaid actions, suits or
proceedings arising out of or in connection with this Loan Agreement and/or the
other Loan Documents brought in the Circuit Court of Jefferson County, Kentucky
or in the United States District Court for the Western District of Kentucky, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim that any such action, suit or proceeding brought in either such court has
been brought in an inconvenient forum.
12.2 Role of the Banks. Notwithstanding any of the terms or conditions
hereof or of the other Loan Documents to the contrary, the Banks shall not have,
and by their execution and acceptance of this Loan Agreement hereby expressly
disclaim, any obligation or responsibility for the management, conduct or
operation of the business and affairs of the Borrower. Any term or condition
hereof, or of any of the other Loan Documents, permitting the Banks to take or
refrain from taking any action with respect to the Borrower shall be deemed
solely to permit the Banks to audit and review the management, operation and
conduct of the business and affairs of the Borrower, and may not be relied upon
by any other Person. Further, the Banks shall not have, have not assumed, and by
their execution and acceptance of this Loan Agreement hereby expressly disclaim,
any liability or responsibility for the payment
93
94
or performance of any indebtedness or obligation of the Borrower, and no term or
condition hereof, or of any of the other an Documents, shall be construed
otherwise.
12.3 Notices. All notices required or permitted to be given hereunder
shall be given in writing and shall be personally delivered or sent by
telecopier, by express courier service or by registered or certified United
States mail, return receipt requested, postage prepaid, addressed as follows
(or to such other address as to which any party hereto shall have given the
other written notice):
If to the Borrower: Regal Cinemas, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xx. Xxxxx Xxxxxx, III
cc: Xxxxxxx X. Xxxxxx, Xx., Esq.
Xxxxxx, Xxxxx & Xxxxxx
P.0. Box 1308
0000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
cc: F. Xxxxxxxx Xxxxxx, Esq.
Bass, Xxxxx & Xxxx PLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
If to the Banks: At the telecopy number or address
specified below the signature of the
applicable Bank
If to the Agent: PNC Bank, Kentucky, Inc.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxxxxx
cc: Xxxxx X. Xxxxxxxx, Esq.
Xxxxx Xxxxxx & Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
All notices hereunder shall be deemed given upon the earliest of (a)
actual delivery in person or by telecopier, (b) one (i) Business Day after
delivery to an express courier service, or (c) three (3) Business Days after
having been deposited in the United States mails, in accordance with the
foregoing.
94
95
12.4 Ratable Sharing. Each Bank agrees with each other Bank that (i)
with respect to all amounts received by them which are applicable to the payment
of principal of or interest on the Revolving Loans and amounts payable in
respect of the Letters of Credit or commitment fees, including, without
limitation, all amounts received by such Bank pursuant to the exercise of the
right of set off pursuant to Section 8.2 hereof, equitable adjustment will be
made so that, in effect, all such amounts will be shared among the Banks
proportionately to their respective Pro Rata Shares whether received by
voluntary payment, by the exercise of the right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any or all of the
Obligations, and (ii) if any of them shall exercise any right of counterclaim,
set-off, banker's lien or similar right with respect to amounts owed by the
Borrower hereunder or in respect of the Letters of Credit, that Bank shall
apportion the amount recovered as a result of the exercise of such right pro
rata in accordance with (a) all amounts outstanding at such time owed by the
Borrower to it hereunder and (b) all amounts otherwise owed by the Borrower to
it, and (iii) if any of them shall thereby through the exercise of any right of
counterclaim, set-off, banker's lien or otherwise, or as adequate protection of
a deposit treated as cash collateral under the Bankruptcy Code, receive payment
or reduction of a proportion of the aggregate amount of principal and interest
due with respect to the Revolving Loans made by that Bank or amounts payable in
respect of any Letter of Credit or any participation therein, or any other
amount payable hereunder (collectively, the "Aggregate Amount Due" to such
Bank), which is greater than the proportion received by any other Bank in
respect of the Aggregate Amounts Due to such other Bank, then the Bank receiving
such proportionately greater payment shall (y) notify each other Bank and the
Agent of such receipt and (z) purchase participations (which it shall be deemed
to have done simultaneously upon the receipt of such payment) in the Aggregate
Amounts Due to the other Banks so that all recoveries of Aggregate Amounts Due
shall be shared by the Banks in proportion to their respective Pro Rata Shares;
provided that if all or part of such proportionately greater payment received by
such purchasing Bank is thereafter recovered from such Bank, those purchases
shall be rescinded and the purchase prices paid for such participations shall be
returned to that Bank to the extent of such recovery, but without interest. The
Borrower expressly consents to the foregoing arrangements and agrees that any
participant in respect of any Revolving Loan may exercise any and all rights of
banker's lien, set-off or counterclaim with respect to any and all rights of
banker's lien, set-off or counterclaim with respect to any and all monies owing
by the Borrower to that participant as fully as if that participant were a Bank
in the amount of such participation held by that participant.
95
96
12.5 Waiver. No course of dealing in respect of, nor any omission or
delay in the exercise of, any right, power, remedy or privilege by the Banks
shall operate as a waiver thereof, nor shall any right, power, remedy or
privilege of the Banks be exclusive of any other right, power, remedy or
privilege referred to herein or in any related document or now or hereafter
available at law, in equity, in bankruptcy, by statute or otherwise. Each such
right, power, remedy or privilege may be exercised by the Banks, either
independently or concurrently with others, and as often and in such order as the
Banks may deem expedient. No waiver or consent granted by the Banks in respect
of this Loan Agreement, the Notes or the other Loan Documents shall be binding
upon the Banks unless specifically granted in writing by a duly authorized
officer of each Bank, which writing shall be strictly construed.
12.6 Survival of Representations and Warranties. All representations,
warranties and covenants of the Borrower contained herein or in the other Loan
Documents or made pursuant hereto shall survive the execution and delivery of
the Loan Documents and shall continue throughout the term hereof. Further, the
indemnities set forth in sections 7.18 and 11 hereof shall survive the payment
of the Notes and the other Obligations.
12.7 Invalidity. If any part of this Loan Agreement shall be adjudged
invalid or unenforceable, whether in general or in any particular circumstances,
then such partial invalidity or enforceability shall not cause the remainder of
this Loan Agreement to be or to become invalid or unenforceable, and if a
provision hereof is held invalid or unenforceable in one or more of its
applications, the parties hereto agree that said provision shall remain in
effect in all valid applications that are severable from the invalid or
unenforceable application or applications.
12.8 Assignment. This Loan Agreement may not be assigned by the
Borrower without the prior written consent of the Banks. All rights of the Banks
hereunder shall inure to the benefit of their respective successors and assigns,
and all obligations, covenants and agreements of the Borrower shall bind its
successors and assigns, if any.
12.9 Governing Law. This Loan Agreement and the rights and obligations
of the parties hereunder shall, in all respects, be governed by and construed in
accordance with the laws of the Commonwealth of Kentucky.
12.10 Section Headings. The section headings of this Loan Agreement are
inserted herein solely for convenience of reference and shall not affect the
construction or interpretation of the provisions hereof.
96
97
12.11 Entire Agreement. This Loan Agreement, the Notes and the other
Loan Documents constitute the entire agreement among the Banks and the Borrower
with respect to the subject matter hereof.
12.12 Costs and Expenses. The Borrower agrees to reimburse PNC for all
charges, expenses, out-of-pocket costs and fees incurred by PNC in the
preparation, negotiation, documentation, amendment, execution and administration
(other than the ordinary and customary expenses of administration) of this Loan
Agreement and all other Loan Documents, including without limitation: the
reasonable fees of PNC's counsel, all documentary, stamp or other tax
liabilities, all security deposits and agreed loan or commitment fees, and all
costs of printing, documentation, recording, credit reports and lien searches.
All obligations of the Borrower under this Section 12.12 shall survive the
termination or cancellation of this Loan Agreement for any reason whatsoever.
12.13 Time of the Essence. Time shall be of the essence in the payment
and performance of all of the Borrower's obligations under this Loan Agreement,
the Notes and the other Loan Documents.
12.14 Amendments and Modifications. Any amendment or modification of
this Loan Agreement or any other Loan Document shall require the affirmative
written consent of the Requisite Banks; provided, notwithstanding anything
herein to the contrary, the following shall require the affirmative written
consent of all of the Banks: (i) the termination, cancellation or release of any
Loan Document, (ii) the decrease in the interest rate(s) borne by the Revolving
Loans, other than decreases in the interest rate(s) borne by the Revolving Loans
by virtue of any decreases in the Prime Rate, the Federal Funds Effective Rate
or the Adjusted LIBOR Rate and/or any changes in the Pricing Levels, in each
case as expressly contemplated herein, (iii) any changes to the Applicable
Commitment Fee Percentages or the Applicable Letter of Credit Fee Percentages,
(iv) any extension of the due dates of any installments of accrued interest on
the Revolving Loans, (v) any extension of the Revolving Loan Commitment
Termination Date, (vi) any reduction in the Pro Rata Share of any Bank except as
expressly contemplated or permitted in this Loan Agreement, (vii) any change in
the provision that Banks holding more than 66.67% of the Total Utilization of
Revolving Loan Commitments constitute the Requisite Banks, or (viii) any
amendment or modification of the provisions of this Section 12.14.
12.15 Counterparts. This Loan Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
12.16 Waiver of Jury Trial. THE BORROWER, EACH BANK AND THE
97
98
AGENT HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS LOAN AGREEMENT OR THE OTHER
LOAN DOCUMENTS. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF
ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
THE BORROWER, EACH BANK AND THE AGENT ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT FOR EACH SUCH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT THE
BORROWER, EACH BANK AND THE AGENT HAVE ALREADY RELIED ON THE WAIVER IN ITS
RELATED DEALINGS WITH THE OTHERS. THE BORROWER, EACH BANK AND THE AGENT FURTHER
WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL,
AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LOAN
AGREEMENT OR THE OTHER LOAN DOCUMENTS. IN THE EVENT OF LITIGATION, THIS LOAN
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed as of the day and year first above written.
REGAL CINEMAS, INC.
By:______________________________________
Title:___________________________________
(the "Borrower")
98
99
PNC BANK, KENTUCKY, INC.
By:_____________________________________
Title:___________________________________
Address: PNC Bank, Kentucky, Inc.
Citizens Plaza
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Senior Vice President and
Manager, Large Corporate Banking
("PNC")
BANKBOSTON, N.A.
By:_____________________________________
Title:__________________________________
Address: BankBoston, N.A.
Media & Communications Dept.
000 Xxxxxxx Xxxxxx
Mail Stop 01-08-08
Xxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxx, Director
99
100
FIRST UNION NATIONAL BANK
By:__________________________________
Title:_______________________________
Address: First Union National Bank
000 Xxxxx Xxxxxxx Xxxxxx-XX0
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attn: Xxxx Xxxx,
Associate
FIRST AMERICAN NATIONAL BANK
By:__________________________________
Title:________________________________
Address: First American National Bank
000 X. Xxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxxxxxxx,
Vice President
THE SUMITOMO BANK, LIMITED, THE SUMITOMO BANK, LIMITED, CHICAGO
CHICAGO BRANCH BRANCH
By:________________________ By:________________________________
Title:_____________________ Title:____________________________
Address: The Sumitomo Bank, Address: The Sumitomo Bank,
Limited Limited
One Peachtree Center One Peachtree Center
000 Xxxxxxxxx Xxxxxx 000 Xxxxxxxxx Xxxxxx
Xxxxx 0000 Xxxxx 0000
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx, Attn: Xxxxxx Xxxxxxxx,
Vice President Vice President
100
101
NATIONSBANK OF TENNESSEE, N.A.
By:___________________________________
Title:________________________________
Address: NationsBank of Tennessee, N.A.
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: C. Xxxxxx Xxxxxx,
Senior Vice President
WACHOVIA BANK, N.A.
By:___________________________________
Title:________________________________
Address: 000 Xxxxxxxxx Xxxxxx X.X.
Mail Code 3940
Xxxxxxx, XX 00000
Attn: Xxxx Xxxx,
Vice President
SUNTRUST BANK, EAST TENNESSEE, N.A.
By:___________________________________
Title:________________________________
Address: 000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx,
Vice President,
Corporate Banking
101
102
PNC BANK, KENTUCKY, INC., in its capacity
as the Agent
By:___________________________________
Title:________________________________
(the "Agent")
BANKBOSTON, N.A., in its capacity as
the Co-Agent
By:___________________________________
Title:________________________________
102
103
TABLE OF CONTENTS
SECTION 1
DEFINITIONS
1. Definitions and Cross Reference.........................................1
SECTION 2
REVOLVER
2. Revolver...............................................................25
2.1 Revolving Loan Commitments; Revolving Loans............................25
2.2 Interest on the Revolving Loans........................................29
2.3 Fees...................................................................35
2.4 Prepayments and Payments; Reductions in Revolving
Loan Commitments; Cash Collateralization of Letters
of Credit..............................................................36
2.5 Use of Proceeds........................................................38
2.6 Special Provisions Governing LIBOR Rate Loans..........................39
2.7 Letters of Credit......................................................42
2.8 Increased Costs; Taxes; Capital Adequacy...............................51
2.9 Bank's Obligation to Mitigate..........................................55
SECTION 3
CONDITIONS PRECEDENT
3. Closing Conditions.....................................................56
3.1 Initial Closing Conditions.............................................56
3.2 Conditions to All Revolving Loans and Letters of
Credit.................................................................58
SECTION 4
REPRESENTATIONS AND WARRANTIES
4. Representations and Warranties.........................................59
4.1 Organization, Power and Authority of the Borrower
and Each Subsidiary....................................................60
4.2 Subsidiaries...........................................................60
4.3 Qualification..........................................................60
4.4 Use of Proceeds........................................................60
4.5 Intellectual Property..................................................60
4.6 Contracts; Labor Disputes..............................................60
4.7 Accuracy of Financial Reports..........................................61
4.8 Disclosure.............................................................61
4.9 Tax Returns and Payments...............................................62
4.10 Indebtedness, etc......................................................62
4.11 Title to Properties; Liens.............................................62
4.12 Operating Leases.......................................................62
104
4.13 Litigation, etc........................................................62
4.14 Authorization and Compliance with Loan Documents by
the Borrower...........................................................63
4.15 Authorization and Compliance With Guaranty
Agreements by the Wholly-Owned Subsidiaries............................63
4.16 Governmental Consents..................................................64
4.17 Investment Company Act Status..........................................64
4.18 Regulation G, etc......................................................64
4.19 Holding Company Act....................................................64
4.20 ERISA..................................................................65
4.21 Hazardous Materials....................................................65
4.22 Xxxx Senior Notes......................................................65
4.23 Ownership..............................................................65
SECTION 5
AFFIRMATIVE COVENANTS
5. Affirmative Covenants..................................................66
5.1 Maintenance of Properties..............................................66
5.2 Monetary Obligations...................................................66
5.3 Financial Statements and Other Reports.................................67
5.4 Financial Records, Inspection..........................................69
5.5 Permits, Certificates, Leases, Licenses, Etc...........................69
5.6 Notice.................................................................70
5.7 Further Assurances.....................................................70
5.8 Payment of Obligations.................................................70
5.9 Preservation of Existence, Leases, etc.................................71
5.10 Insurance..............................................................71
5.11 Environmental Matters..................................................71
5.12 Future Wholly-Owned Subsidiaries.......................................72
5.13 Year 2000 Compatibility................................................72
5.14 Payment in Full of the Reducing Revolver Credit
Facility...............................................................72
5.15 Compliance with Covenants by the Wholly-Owned
Subsidiaries of the Borrower...........................................73
SECTION 6
NEGATIVE COVENANTS
6. Negative Covenants.....................................................73
6.1 Mergers, Dissolutions and Other Extraordinary
Events.................................................................73
6.2 Indebtedness...........................................................73
6.3 Use of Assets..........................................................75
6.4 Liens..................................................................75
6.5 Restricted Payments....................................................75
6.6 Nature of Business.....................................................75
6.7 Limitation on Restrictions.............................................75
6.8 Agreements and Licenses................................................75
6.9 Leverage Ratio.........................................................76
6.10 Fixed Charge Coverage Ratio............................................76
105
6.11 Minimum Consolidated Net Worth.........................................76
6.12 Transactions with Affiliates...........................................77
6.13 Guarantees.............................................................77
6.14 Disposition of Proceeds of Asset Sales.................................78
SECTION 7
EVENTS OF DEFAULT, ACCELERATION
7. Events of Default; Acceleration........................................79
SECTION 8
REMEDIES
8. Remedies...............................................................82
8.1 Defaults...............................................................82
8.2 Offset.................................................................83
8.3 Rights Cumulative......................................................83
8.4 Payment of Costs and Expenses..........................................83
SECTION 9
THE AGENT
9. The Agent..............................................................84
9.1 Appointment............................................................84
9.2 Delegation of Duties...................................................84
9.3 Nature of Duties; Independent Credit
Investigation..........................................................84
9.4 Actions in Discretion of the Agent; Instructions
from the Banks.........................................................85
9.5 Reimbursement and Indemnification of the Agent by
the Borrower...........................................................85
9.6 Exculpatory Provisions.................................................86
9.7 Reimbursement and Indemnification of the Agent by
the Banks..............................................................87
9.8 Reliance by the Agent..................................................87
9.9 Notice of Default......................................................87
9.10 The Banks in Their Individual Capacities...............................87
9.11 Holders of Notes.......................................................88
9.12 Equalization of the Banks..............................................88
9.13 Successor Agent........................................................88
9.14 Calculations...........................................................89
9.15 Beneficiaries..........................................................89
SECTION 10
ASSIGNMENTS AND PARTICIPATION
10. Assignments and Participation in Revolving Loans
and Notes.............................................................90
10.1 General Assignments....................................................90
10.2 Participations.........................................................91
10.3 Sales to Affiliates....................................................91
106
10.4 Effect of Obligations..................................................91
SECTION 11
INDEMNITY
Indemnity .............................................................91
SECTION 12
MISCELLANEOUS
12.1 Submission to Jurisdiction, Etc........................................92
12.2 Role of the Banks......................................................93
12.3 Notices................................................................94
12.4 Ratable Sharing........................................................95
12.5 Waiver.................................................................96
12.6 Survival of Representations and Warranties.............................96
12.7 Invalidity.............................................................96
12.8 Assignment.............................................................96
12.9 Governing Law..........................................................96
12.10 Section Headings.......................................................96
12.11 Entire Agreement.......................................................97
12.12 Costs and Expenses.....................................................97
12.13 Time of the Essence....................................................97
12.14 Amendments and Modifications...........................................97
12.15 Counterparts...........................................................97
12.16 Waiver of Jury Trial...................................................97
Exhibits:
Exhibit A - Line of Credit Promissory Note
Exhibit B - Guaranty Agreement
Exhibit C - Pledge Agreement and Annex A to Pledge Agreement
Exhibit D - Borrowing Certificate
Exhibit E - Notice of Continuation/Conversion
Exhibit F - Compliance Certificate
Exhibit G - Application and Agreement for Letter of Credit
Exhibit H - Opinion of Counsel Exhibit I - Confidentiality Agreement
Exhibit I - Confidentiality Agreement
Exhibit J - Assignment Agreement
Schedules:
Schedule 1.47 - Existing Letters of Credit
Schedule 2.1 - Pro Rata Shares of Revolving Loan Commitments
Schedule 4.2 - List of Subsidiaries
Schedule 4.10 - Existing Indebtedness and Liens
Schedule 4.23 - Stock Ownership
