FORBEARANCE AGREEMENT
This FORBEARANCE AGREEMENT ("Agreement"), dated as of July 20, 2007, is
entered into by and among MOVIE GALLERY, INC., a Delaware corporation
("Borrower"), the Lenders party hereto, XXXXXXX XXXXX CREDIT PARTNERS L.P.
("GSCP"), as Lender and in its capacity as Administrative Agent for the
Lenders ("Administrative Agent") and WACHOVIA BANK, NATIONAL ASSOCIATION
("Wachovia"), as Lender and in its capacity as Collateral Agent for the
Secured Parties ("Collateral Agent").
RECITALS:
WHEREAS, the Borrower, the Guarantors party thereto, the Lenders party
thereto, the Administrative Agent, GSCP as Syndication Agent, the Collateral
Agent, and Wachovia as Documentation Agent have entered into that certain
First Lien Credit and Guaranty Agreement, dated as of March 8, 2007 (as has
been amended, restated, supplemented or otherwise modified from time to time,
the "Credit Agreement");
WHEREAS, (a) Events of Default have occurred and are continuing under (i)
Section 8.1(c) of the Credit Agreement as a result of Borrower's failure to
maintain as of the Fiscal Quarter ended July 1, 2007 (x) the Interest
Coverage Ratio required under Section 6.7(a) of the Credit Agreement, (y) the
Leverage Ratio required under Section 6.7(b) of the Credit Agreement and (z)
the Secured Leverage Ratio required under Section 6.7(c) of the Credit
Agreement and (ii) Section 8.1(c) of the Credit Agreement as a result of
Borrower's failure to comply with the notice requirements with respect to the
Existing Defaults (as defined herein) under Section 5.1(e) of the Credit
Agreement, and (b) a Default or Event of Default has occurred and is
continuing as a result of Borrower's failure to comply with the requirements
under Section 10.23 of the Credit Agreement (clauses (a) and (b),
collectively, the "Existing Defaults");
WHEREAS, Borrower has requested that Administrative Agent and the Requisite
Lenders forbear until August 14, 2007 from the exercise of remedies available
to it as a result of the Existing Defaults; and
WHEREAS, Administrative Agent and the Requisite Lenders are willing to so
forbear upon the terms and conditions hereinafter set forth, provided that
Borrower complies with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements contained in the
Credit Agreement and the other Credit Documents and herein, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Definitions.
(a) The "Effective Date" of this Agreement shall be July 2, 2007.
(b) "Forbearance Period" shall mean the period beginning on the Effective
Date of this Agreement and ending on the earlier to occur of (the occurrence
of clause (i) or (ii), a "Termination Event"): (i) the date on which
Administrative Agent delivers to Borrower a notice terminating the
Forbearance Period, which notice may (and, at the direction of Requisite
Lenders under the Credit Agreement, shall) be delivered immediately upon and
at any time after the occurrence of any Forbearance Default (as hereinafter
defined), or (ii) August 14, 2007.
(c) "Forbearance Default" shall mean (i) the occurrence of any Event of
Default other than the Existing Defaults, (ii) the failure of Borrower or any
Guarantor to timely comply with any term, condition, or covenant set forth in
this Agreement, (iii) the failure of any representation or warranty made by
Borrower or any Guarantor under or in connection with this Agreement to be
true and complete in all material respects as of the date when made or deemed
made, or (iv) the filing of any petition (voluntary or involuntary) under the
insolvency or bankruptcy laws of the United States or any state thereof, or
of any foreign jurisdiction, with respect to Borrower, any of the Guarantors,
any of their Affiliates, or any of their Subsidiaries.
(d) Unless otherwise defined above or elsewhere in this Agreement,
capitalized terms used herein shall have the meanings ascribed to them in the
Credit Agreement.
SECTION 2. Confirmation by Borrower of Obligations and Existing Defaults
Under the Credit Agreement.
(a) Borrower and each of the Guarantors acknowledge and agree that as of July
1, 2007, the aggregate principal balance of the outstanding Obligations under
the Credit Agreement is $723,500,000.
(b) The foregoing amounts do not include interest, fees, expenses and other
amounts which are chargeable or otherwise reimbursable under the Credit
Agreement and the other Credit Documents.
(c) Borrower and each Guarantor acknowledges and agrees that (i) each of the
Existing Defaults constitutes an Event of Default that has occurred and is
continuing as of the execution of this Agreement, (ii) none of the Existing
Defaults has been cured as of the date hereof, and (iii) except for the
Existing Defaults, no other Events of Default have occurred and are
continuing as of the date hereof, or are expected to occur during the
Forbearance Period, as the case may be. Prior to the effectiveness of this
Agreement, each of the Existing Defaults: (i) relieves the Lenders, the
Issuing Bank and the Synthetic LC Issuing Bank from any obligation to extend
any Loan, issue any Letter of Credit or Synthetic Letter of Credit, or
provide other financial accommodations under the Credit Agreement or other
Credit Documents (including consenting to Borrower's use of cash collateral),
and (ii) permits the Lenders, Requisite Lenders or other Secured Parties, as
the case may be, to, among other things, (A) suspend or terminate any
commitment to provide Loans, issue any Letter of Credit or Synthetic Letter
of Credit, or make other extensions of credit under any or all of the Credit
Agreement and the other Credit Documents, (B) accelerate all or any portion
of the Obligations, (C) commence any legal or other action to collect any or
all of the Obligations from Borrower, any Guarantor and/or any Collateral,
(D) foreclose or otherwise realize on any or all of the Collateral, and/or
appropriate, set-off and apply to the payment of any or all of the
Obligations, any or all of the Collateral, and/or (E) take any other
enforcement action or otherwise exercise any or all rights and remedies
provided for by any or all of the Credit Agreement, the other Credit
Documents or applicable law.
SECTION 3. Amendments to Credit Agreement.
Subject to the occurrence of the Effective Date, the Credit Agreement is
hereby amended as follows:
(a) The definition of "Interest Payment Date" in Section 1.1 is hereby
amended by deleting the same in its entirety and replacing it with the
following:
" "Interest Payment Date" means, with respect to Loans that
are Base Rate Loans and Loans that are Eurodollar Rate Loans, the
last Business Day of each calendar month."
(b) Section 2.9(a)(i) is hereby amended by adding the following at the end
of each of subclauses (1) and (2) thereof: "plus 1.0% per annum".
(c) Section 2.9(a)(ii) is hereby amended by adding the following at the end
thereof: "plus 1.0% per annum".
(d) Section 2.9(a)(iii) is hereby amended by adding the following at the
end of each of subclauses (1) and (2) thereof: "plus 2% per annum".
(e) Section 2.12(b)(i) is hereby amended by adding the words "plus 2% per
annum" immediately following the words "plus 3.50% per annum".
SECTION 4. Waiver.
Without limitation of any other provision of this Agreement, in accordance
with Section 10.5 of the Credit Agreement, the Requisite Lenders, the
Collateral Agent and the Administrative Agent (x) except as otherwise
provided in subclause (y) of this Section 4, hereby waive the 2% per annum
interest rate increase pursuant to Section 2.11 and (y) in respect of the
Revolving Exposure, hereby waive 1.0% of the 2% per annum interest rate
increase pursuant to Section 2.11, leaving 1.0% per annum of such interest
rate increase in place; provided, that the waiver pursuant to this Section 4
shall immediately terminate and no longer be in effect at any time that any
of the amendments pursuant to Section 3 of this Agreement shall no longer be
in full force and effect. For the avoidance of doubt, no Lender or other
Secured Party has waived or is by this Agreement waiving, and no Lender or
other Secured Party has any intention of waiving, any other provisions of the
Credit Documents, any Default or Event of Default which may be continuing on
the date hereof or any Event of Default which may occur after the date hereof
(whether the same or similar to the Existing Defaults or otherwise).
SECTION 5. Forbearance; Forbearance Default Rights and Remedies.
(a) As of the Effective Date, each of the Lenders and the Administrative
Agent agrees that until the expiration or termination of the Forbearance
Period, it will forbear from exercising its default-related rights and
remedies against Borrower or any Guarantor arising solely with respect to
the Existing Defaults; provided, however, (i) the Obligations shall continue
to bear interest as specified herein, (ii) the Lenders, the Issuing Bank and
the Synthetic LC Issuing Bank shall have no obligation to make any further
Loans, or issue any Letter of Credit or Synthetic Letter of Credit, or make
other extensions of credit to Borrower or any Guarantor, (iii) Borrower and
each Guarantor shall comply with all limitations, restrictions or prohibitions
that would otherwise be effective or applicable under the Credit Agreement or
any of the other Credit Documents during the continuance of any Event of
Default, (iv) except as otherwise expressly set forth herein, nothing herein
shall restrict, impair or otherwise affect any Lender's or other Secured
Party's other rights and remedies under any agreements, including, without
limitation, any agreement containing subordination provisions in favor of any
or all of the Lenders or amend or modify any provision thereof, and (v)
nothing herein shall restrict, impair or otherwise affect Administrative
Agent's right to file, record, publish or deliver a notice of default or
document of similar effect under any state foreclosure law.
(b) Any Forbearance Default shall constitute an immediate Event of
Default under the Credit Agreement.
(c) Upon the occurrence of a Termination Event, the agreement of
the Lenders hereunder to forbear from exercising their respective default-
related rights and remedies shall immediately terminate without the
requirement of any demand, presentment, protest, or notice of any kind
(provided, that, without limitation of this Section 5(c), the Administrative
Agent agrees to give notice of such Termination Event to the Borrower (it
being understood that the failure to give such notice will not prevent the
occurrence of such Termination Event and that the Administrative Agent shall
have no liability to the Borrower, any of its Subsidiaries or their
respective affiliates for the failure to give such notice)), all of which
Borrower and the Guarantors each waives. Borrower and the Guarantors each
agrees that any or all of the Lenders and other Secured Parties may at any
time thereafter proceed to exercise any and all of their respective rights
and remedies under any or all of the Credit Agreement and any other Credit
Document and/or applicable law, including, without limitation, their
respective rights and remedies with respect to the Existing Defaults.
Without limiting the generality of the foregoing, but subject to the
provisions of the Intercreditor Agreement, upon the occurrence of a
Termination Event, the Lenders may, in their sole discretion and without the
requirement of any demand, presentment, protest, or notice of any kind, (i)
suspend or terminate any commitment to provide Loans or other extensions of
credit under any or all of the Credit Agreement and other Credit Documents,
(ii) continue to charge interest on any or all of the Obligations in
accordance with the Credit Agreement, (iii) commence any legal or other
action to collect any or all of the Obligations from Borrower, any Guarantor
and/or any Collateral, (iv) foreclose or otherwise realize on any or all of
the Collateral, and/or appropriate, setoff or apply to the payment of any or
all of the Obligations and any or all of the Collateral, and (v) take any
other enforcement action or otherwise exercise any or all rights and remedies
provided for by any or all of the Credit Documents and/or applicable law, all
of which rights and remedies are fully reserved by the Lenders.
(d) Any agreement by the Lenders to extend the Forbearance Period,
if any, must be set forth in writing and signed by a duly authorized
signatory of each of the Administrative Agent, Borrower, the Guarantors and
the Requisite Lenders under the Credit Agreement.
(e) Borrower and the Guarantors each acknowledges that neither the
Administrative Agent nor any of the Lenders have made any assurances
concerning any possibility of an extension of the Forbearance Period.
(f) The parties hereto agree that the running of all statutes of
limitation or doctrine of laches applicable to all claims or causes of action
that any Lender or other Secured Party may be entitled to take or bring in
order to enforce its rights and remedies against Borrower or any Guarantor
is, to the fullest extent permitted by law, tolled and suspended during the
Forbearance Period.
(g) Borrower and the Guarantors each acknowledges and agrees that
any Loan or other financial accommodation which any Lender, Issuing Bank or
Synthetic Issuing Bank makes on or after the Effective Date has been made by
such party in reliance upon, and is consideration for, among other things,
the general releases and indemnities contained in Section 7 hereof and the
other covenants, agreements, representations and warranties of Borrower and
the Guarantors hereunder.
(h) Borrower acknowledges and agrees that, during the Forbearance
Period, it shall not be entitled to, and will not request, any Swing Line
Loan borrowings.
SECTION 6. Supplemental Terms, Conditions and Covenants.
The parties hereto hereby agree to comply with the following
terms, conditions and covenants, in each case notwithstanding any provision
to the contrary set forth in this Agreement, the Credit Agreement or any
other Credit Document:
(a) Retention of Financial Advisor for the Administrative Agent.
Administrative Agent may, at its sole discretion, and at the cost and expense
of the Borrower, engage one financial advisor for the benefit of itself and
any of the Lenders and/or a steering committee for the Lenders under the
Credit Agreement (the "Financial Advisor") to advise and assist
Administrative Agent, Administrative Agent's counsel, and Lenders (and/or a
steering committee for the Lenders) with their on-going assessment of
Borrower's financial performance, such assistance to include, without
limitation, the duties described in the engagement letter entered into
between the Administrative Agent and the Financial Advisor ( a copy of which
shall be provided to the Borrower). Administrative Agent and Lenders may
elect to maintain the confidentiality of any conclusions reached or reports
prepared by the Financial Advisor and may also provide that the Financial
Advisor's conclusions shall be covered by the attorney work-product
privilege. Borrower shall promptly reimburse Administrative Agent for the
fees and expenses of the Financial Advisor in accordance herewith and Section
10.2 of the Credit Agreement. Borrower and the Guarantors each authorizes
members of their senior management to (i) provide the Financial Advisor with
reasonable access to Borrower's and Guarantors' books and records and
premises, at reasonable times and subject to such Financial Advisor's
representatives acting with all discretion reasonably appropriate under the
circumstances (such access shall include, without limitation, (x) access to
books and records relating to accounts receivable and accounts payable of
Borrower and the Guarantors, all existing leases and contracts of Borrower
and the Guarantors and all leases and contracts of Borrower and the
Guarantors currently under negotiation (and the projected effects on
Borrower's future profitability) and (y) reviews and inspections of
Borrower's operations and the items outlined in clause (x) above), and (ii)
make such members of senior management and Strategic Advisor (as defined
below) reasonably available to consult with, and respond to the inquiries of,
Administrative Agent, the Financial Advisor and Administrative Agent's
counsel concerning any and all matters relating to the operations, finances
and businesses of Borrower or any Guarantor, the assets and capital stock of
Borrower or any Guarantor.
(b) Retention of Strategic Advisor for the Borrower. At all times
during the Forbearance Period, the Borrower shall have engaged and retained,
at its cost and expense, an outside crisis management firm reasonably
acceptable to the Administrative Agent (it being agreed that Xxxxxxx & Marsal
is acceptable to the Administrative Agent) (a "Strategic Advisor"), in
connection with the Borrower's business to, among other things, (a) become
familiar with and analyze the business operations, properties and financial
condition, prospects and funding requirements of Borrower, (b) consult with
the Borrower with respect to the operation of the Borrower and allocation of
its resources, (c) assist Borrower with the formulation of strategic long
term business plans and the Borrower's adoption and implementation of such
plan, and (d) consult, assist and cooperate on such other matters as the
Borrower shall determine are reasonable or necessary. The Borrower hereby
agrees to (i) cooperate with and provide such Strategic Advisor with all
information reasonably requested in order for it to perform its functions as
Strategic Advisor, and (ii) provide such Strategic Advisor with access to all
of Borrower's retained advisors and professionals and information and reports
prepared by any of them (subject to privilege concerns).
(c) Required Deliveries. Borrower, or the Strategic Advisor on
behalf of Borrower, shall provide the following to the Administrative Agent
and the Financial Advisor (each of whom may provide copies to any of the
Lenders that have entered into a confidentiality agreement in form and
substance satisfactory to the Administrative Agent and the Borrower (each
such Lender, a "Private Side Lender")):
(i) Immediate Deliveries. Within three days following the
satisfaction of the conditions to effectiveness of this Agreement: (a)
Borrower's and its Subsidiaries' store revenue, expense and cash flow
detail (including rent expense) for the annual periods 2003 through
2006 and the last twelve months through May 2007 identified by store
number only for all stores open as of May 1, 2007; (b) a summary of
Borrower's and its Subsidiaries' cash flows and working capital changes
for the second Fiscal Quarter of 2007; (c) current payables aging
report; (d) a summary of trade terms for the top 10 vendors of Borrower
and its Subsidiaries; (e) a summary and detailed schedule of inventory;
(f) a detailed explanation of major items causing material sources or
uses of cash by Borrower and its Subsidiaries in each working capital
line item (e.g. accrued liabilities and prepaid expenses); and (g) a
detailed statement of monthly results for the Borrower and its
Subsidiaries for the fiscal months April 2007 and May 2007 (including
the monthly financial package delivered to the Borrower's senior
management team for such months, which shall include, among other
items, results for the month, quarter to date, year to date, and versus
prior year and plan).
(ii) Periodic Information. (a) Within three days following the
satisfaction of the conditions to effectiveness of this Agreement,
during the Forbearance Period, a rolling 13 week cash flow prepared at
the end of June 2007 and, thereafter, a 13 week cash flow forecast for
each subsequent rolling 13 week period (each, a "Cash Flow Forecast")
due five days following the end of each fiscal month, which shall
reflect Borrower's good faith projection of all weekly cash receipts
and disbursements in connection with the operation of its business
during such period and include the Borrower's studio payment forecast
model detailing purchases by studio and title; (b) for each week ended
Sunday, due by 5:00 p.m. EST on the immediately following Wednesday, an
actual-to-projected analysis comparing Borrower's actual cash receipts
and disbursements for the immediately preceding week in the Cash Flow
Forecast compared to projected cash receipts and disbursements for such
week as set forth in the Cash Flow Forecast; (c) a weekly conference
call to discuss the Borrower's performance and address questions from
advisors to the Administrative Agent, Collateral Agent, any of the
Lenders (and/or a steering committee for the Lenders), including,
without limitation, the Financial Advisor; (d) on each Tuesday
afternoon by 1:00 p.m. PST, a weekly sales report for the Borrower and
its Subsidiaries, reflecting total sales and comparable sales versus
prior periods and budget; (e) each Tuesday afternoon by 1:00 p.m. PST,
a weekly "comp calendar" report for all divisions of the Borrower and
its Subsidiaries; and (f) on or prior to 30 days after the end of each
fiscal month, a detailed statement of monthly results for the Borrower
and its Subsidiaries for such fiscal month (including the monthly
financial package delivered to the Borrower's senior management team
for such month, which shall include, among other items, results for the
month June 2007 (and each subsequent fiscal month), for the second
Fiscal Quarter of 2007 (or such applicable quarter) to date, Fiscal
Year 2007 year to date, and versus prior year and plan).
(iii) End of Forbearance Period Deliveries. On or prior to the
last day of the Forbearance Period: (a) delivery of a financial plan
and business model (income statement, balance sheet and cash flow) for
the Borrower and its Subsidiaries, including monthly projections for
the each fiscal month ending after the Effective Date in Fiscal Year
2007 and for each fiscal month in Fiscal Year 2008, in each case with
detailed back-up containing underlying assumptions; (b) detail of
capital expenditures for the Borrower and its Subsidiaries for
remainder of Fiscal Year 2007 and for Fiscal Year 2008; (c) a
comprehensive analysis and recommendation on store closings and
associated financial impact on the Borrower and its Subsidiaries; (d) a
presentation by Borrower and Strategic Advisor on restructuring options
for the Borrower and its Subsidiaries; and (e) all reports, findings,
appraisals and recommendations developed by Strategic Advisor and other
business advisors of the Borrower's regarding the real estate leases of
Borrower and its Subsidiaries.
(iv) Other. Promptly following any such request, all other
available financial and operational information of the Borrower and its
Subsidiaries that is reasonably requested by the Administrative Agent
or its advisors, including information requested pursuant to the
Financial Advisor's July 12, 2007 Preliminary Information Request List.
The Cash Flow Forecast and the other analyses, reports, information and
deliveries described in this Section 6(c) shall be in a form and prepared
in accordance with a methodology in each case reasonably satisfactory to
Administrative Agent.
(d) Loan-to-Value and Inventory Reporting. Borrower, or the
Strategic Advisor on behalf of Borrower, shall provide the following to the
Collateral Agent and the Financial Advisor (who may distribute a copy to each
of the Private Side Lenders): (i) within three days following the
satisfaction of the conditions to the effectiveness of this Agreement, a Loan
to Value Ratio Certificate as of May 31, 2007 and (ii) no later than July 27,
2007, a Loan to Value Ratio Certificate as of June 30, 2007.
(e) Applicable Loan to Value Ratio. During the Forbearance
Period, the Applicable Loan to Value Ratio for all purposes under the Credit
Agreement and the other Credit Documents shall be 3.5:1.0.
(f) Post-Closing Items; Additional Collateral. All post-closing
actions required under Section 10.23 of the Credit Agreement shall be
completed by August 1, 2007, unless extended by the Administrative Agent. In
addition, from time to time, Borrower and each Guarantor will, at its cost
and expense, promptly secure the Obligations by pledging or creating, or
causing to be pledged or created, in accordance hereunder and with the
applicable Collateral Documents, perfected security interests with respect to
such of its assets and properties as the Administrative Agent or the Required
Lenders shall designate (it being understood that it is the intent of the
parties that the Obligations shall be secured by substantially all the assets
of the Borrower and its Subsidiaries (including real and other properties
existing on, or acquired subsequent to, the Closing Date). Such security
interests and Liens on the Collateral will be created under the Collateral
Documents and other security agreements, mortgages, deeds of trust and other
instruments and documents in form and substance reasonably satisfactory to
the Collateral Agent, and the Borrower and/or the relevant Guarantors shall
deliver or cause to be delivered to the Collateral Agent all such instruments
and documents (including customary legal opinions (if requested by
Administrative Agent or Collateral Agent), title insurance policies and lien
searches) as the Collateral Agent shall reasonably request to evidence
compliance with this Section 6(f) and the relevant Collateral Documents; the
Borrower and each Guarantor hereby appoints the Collateral Agent as its
attorney-in-fact to execute and file such instruments, documents and other
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed (such power, being coupled with an interest, is
irrevocable).
(g) No Obligation to Make Loans. Borrower and each Guarantor
acknowledges and agrees that following the occurrence of any Forbearance
Default, no Lender shall have any obligation whatsoever to make any
additional Loans, extend any additional credit or otherwise make any further
financial accommodations to Borrower or any Guarantor under the Credit
Agreement, the other Credit Documents or otherwise (including, without
limitation, during the Forbearance Period).
(h) General Cooperation from Borrower's Advisors. During the
Forbearance Period, each of Borrower and the Guarantors shall, and shall
cause its officers, other members of senior management and advisors
(including, without limitation, the Strategic Advisor) to, cooperate fully
with Administrative Agent, Collateral Agent and/or a steering committee for
the Lenders and any of its or their respective advisors (including, without
limitation, the Financial Advisor) in furnishing information as and when
reasonably requested by any of them regarding the matters described in this
Section 6, the Collateral or Borrower's or any Guarantor's financial affairs,
finances, financial condition, business and operations. Borrower and each
Guarantor authorizes Administrative Agent, Collateral Agent and/or a steering
committee for the Lenders and any of its or their respective advisors
(including, without limitation, the Financial Advisor) to meet and/or have
discussions with any of their officers, other members of senior management
and advisors (including, without limitation, the Strategic Advisor) from time
to time during the Forbearance Period as reasonably requested by
Administrative Agent, Collateral Agent and/or a steering committee for the
Lenders or any of its or their respective advisors (including, without
limitation, the Financial Advisor) to discuss any matters regarding the
matters described in this Section 6, the Collateral or Borrower's or any
Guarantor's financial affairs, finances, financial condition, business and
operations, and shall direct and authorize all such persons and entities to
fully disclose to Administrative Agent, Collateral Agent, any of the Lenders
(and/or a steering committee for the Lenders) and any of its or their
respective advisors (including, without limitation, the Financial Advisor)
all information reasonably requested by any of them regarding the foregoing.
(i) Proceeds of Asset Sales. At all times during the Forbearance
Period, all proceeds from any Asset Sale (including, for purposes hereof, any
sale or other disposition that would have otherwise been excluded from the
definition of Asset Sale pursuant to clause (ii) thereof) by the Borrower or
any Guarantor, or any of their Subsidiaries, shall, notwithstanding anything
to the contrary in any Credit Document, be held as cash collateral to secure
the outstanding Obligations; provided, however, that, notwithstanding the
foregoing, in respect of Asset Sales of Non-Core Assets only, (x) fifty
percent (50%) of the proceeds of all such Asset Sales may be retained by the
Borrower (provided that (A) the amount retained by the Borrower pursuant to
this subclause (x) shall not exceed $5,000,000 in the aggregate and (B) such
proceeds shall not be used pursuant to or in connection with any transaction
that would otherwise be permitted under Sections 6.4, 6.6(d) (to the extent
permitted under Section 6.1(n)), (f), (g), (h), (i), (l) or (m), or 6.8(a) of
the Credit Agreement) and (y) all proceeds not permitted to be retained by
the Borrower pursuant to the foregoing subclause (x) shall be applied to
repay the Obligations in accordance with Section 7.2 of the Pledge and
Security Agreement and, notwithstanding anything to the contrary contained in
any Credit Document, all such proceeds so applied may not be reborrowed by
Borrower to the extent such proceeds would otherwise be available to be
borrowed pursuant to the terms of the Credit Documents.
(j) Prohibition Against Voluntary Repayment of Other Indebtedness.
Borrower and each Guarantor agrees that it shall not, nor shall it permit any
Subsidiary to, voluntarily prepay, redeem or repurchase any principal of, or
interest or other amounts owing with respect to, any Indebtedness other than
the Obligations during the Forbearance Period.
(k) Counsel Fees. As to the Administrative Agent, Borrower and
the Guarantors shall pay by wire transfer (i) all outstanding bills of
counsel for the Administrative Agent (as identified to Borrower by the
Administrative Agent), including amounts billed prior to the date of this
Agreement, and (ii) an evergreen retainer of $300,000 to such counsel (the
first such retainer, the "Initial Deposit"). The Company agrees upon
submission of any invoice by such counsel for the Administrative Agent, to
wire the invoice amount to such counsel (in accordance with the wire
instructions set forth in such invoice) as replenishment of the Initial
Deposit. Such counsel shall have the right to apply to any outstanding
invoice (including amounts previously billed, including prior to the date of
this Agreement), up to the remaining balance, if any, of the Initial Deposit
(as may be supplemented from time to time by supplemental deposits) at any
time. Subject to and in accordance with Section 10.2(g) of the Credit
Agreement, as to the Collateral Agent, Borrower and the Guarantors shall pay
by wire transfer (i) all outstanding bills of counsel for the Collateral
Agent (as identified to Borrower by the Collateral Agent), including amounts
billed prior to the date of this Agreement, and (ii) all future bills of such
counsel. Subject to and in accordance with Section 10.2(g) of the Credit
Agreement, the Company agrees upon submission of any invoice by such counsel
for the Collateral Agent, to wire the invoice amount to such counsel (in
accordance with the wire instructions set forth in such invoice).
(l) Account Control Agreement. On or before July 27, 2007, with
respect to those deposit accounts identified by the Collateral Agent and
maintained by the Borrower and any of is Subsidiaries with Bank of America,
N.A., the Borrower shall have provided to Collateral Agent and Administrative
Agent a fully-executed account control agreement entered into between the
Borrower and/or any such Subsidiary, the Collateral Agent and Bank of
America, N.A. in form and substance satisfactory to Collateral Agent and
Administrative Agent.
(m) Books and Records Inspection. In addition to the rights of
Collateral Agent under Section 5.6 of the Credit Agreement and
notwithstanding anything to the contrary contained in any Credit Document,
the Borrower and the Guarantors shall, and shall cause its officers to,
permit the Collateral Agent and its advisors to visit and inspect on July 23,
2007 (or on such other date as may be reasonably designated by Collateral
Agent to Borrower in writing) the Borrower's and Guarantors' corporate
headquarters in Dothan, Alabama (or such other location where the Borrower
and Guarantors maintain their financial and accounting records), acting with
all discretion reasonably appropriate under the circumstances, and to take
copies of the Borrower's and Guarantors' financial and accounting records.
SECTION 7. General Release; Indemnity.
(a) In consideration of, among other things, Administrative
Agent's and Requisite Lenders' execution and delivery of this Agreement, each
of Borrower and the Guarantors, on behalf of itself and its agents,
representatives, officers, directors, advisors, employees, subsidiaries,
affiliates, successors and assigns (collectively, "Releasors"), hereby
forever agrees and covenants not to xxx or prosecute against any Releasee (as
hereinafter defined) and hereby forever waives, releases and discharges, to
the fullest extent permitted by law, each Releasee (as hereinafter defined)
from any and all claims (including, without limitation, crossclaims,
counterclaims, rights of set-off and recoupment), actions, causes of action,
suits, debts, accounts, interests, liens, promises, warranties, damages and
consequential damages, demands, agreements, bonds, bills, specialties,
covenants, controversies, variances, trespasses, judgments, executions,
costs, expenses or claims whatsoever (collectively, the "Claims"), that such
Releasor now has or hereafter may have, of whatsoever nature and kind,
whether known or unknown, whether now existing or hereafter arising, whether
arising at law or in equity, against any or all of the Lenders and/or any
other Secured Party in any capacity (including, without limitation, the
Administrative Agent) and their respective affiliates, subsidiaries,
shareholders and "controlling persons" (within the meaning of the federal
securities laws), and their respective successors and assigns and each and
all of the officers, directors, employees, agents, attorneys and other
representatives of each of the foregoing (collectively, the "Releasees"),
based in whole or in part on facts, whether or not now known, existing on or
before the Effective Date, that relate to, arise out of or otherwise are in
connection with: (i) any or all of the Credit Documents or transactions
contemplated thereby or any actions or omissions in connection therewith, or
(ii) any aspect of the dealings or relationships between or among Borrower
and the Guarantors, on the one hand, and any or all of the Lenders and/or any
other Secured Party, on the other hand, relating to any or all of the
documents, transactions, actions or omissions referenced in clause (i)
hereof. In entering into this Agreement, Borrower and each Guarantor
consulted with, and has been represented by, legal counsel and expressly
disclaims any reliance on any representations, acts or omissions by any of
the Releasees and hereby agrees and acknowledges that the validity and
effectiveness of the releases set forth above do not depend in any way on any
such representations, acts and/or omissions or the accuracy, completeness or
validity hereof. The provisions of this Section shall survive the
termination of this Agreement, the Credit Agreement, other Credit Documents
and payment in full of the Obligations.
(b) Borrower and the Guarantors each hereby agrees that it shall
be jointly and severally obligated to indemnify and hold the Releasees
harmless with respect to any and all liabilities, obligations, losses,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever incurred by the Releasees, or any of them, whether
direct, indirect or consequential, as a result of or arising from or relating
to any proceeding by, or on behalf of any Person, including, without
limitation, the respective officers, directors, agents, trustees, creditors,
partners or shareholders of Borrower, any Guarantor, or any of their
respective Subsidiaries, whether threatened or initiated, in respect of any
claim for legal or equitable remedy under any statute, regulation or common
law principle arising from or in connection with the negotiation,
preparation, execution, delivery, performance, administration and enforcement
of the Credit Agreement, the other Credit Documents, this Agreement or any
other document executed and/or delivered in connection herewith; provided,
that neither Borrower nor any Guarantor shall have any obligation to
indemnify or hold harmless any Releasee hereunder with respect to liabilities
to the extent they result from the gross negligence or willful misconduct of
that Releasee as finally determined by a court of competent jurisdiction. To
the extent that the undertakings to defend, indemnify, pay and hold harmless
set forth in this Section 7(b) may be unenforceable in whole or in part
because they are violative of any law or public policy, Borrower and the
Guarantors each agrees to contribute the maximum portion that it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of
all indemnified liabilities hereunder incurred by any of them. The foregoing
indemnity shall survive the termination of this Agreement, the Credit
Agreement, the other Credit Documents and the payment in full of the
Obligations.
(c) Each of Borrower and the Guarantors, on behalf of itself and
its successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably, covenants and agrees with and in favor of
each Releasee that it will not xxx (at law, in equity, in any regulatory
proceeding or otherwise) any Releasee on the basis of any Claim released,
remised and discharged by Borrower or any Guarantor pursuant to Section 7
hereof. If Borrower, any Guarantor or any of its successors, assigns or
other legal representatives violates the foregoing covenant, Borrower and the
Guarantors, each for itself and its successors, assigns and legal
representatives, agrees to pay, in addition to such other damages as any
Releasee may sustain as a result of such violation, all attorneys' fees and
costs incurred by any Releasee as a result of such violation.
SECTION 8. Representations and Warranties of Borrower and the Guarantors.
To induce Administrative Agent, Collateral Agent and Requisite
Lenders to execute and deliver this Agreement, each of Borrower and the
Guarantors represents and warrants that:
(a) The execution, delivery and performance by each of Borrower
and the Guarantors of this Agreement and all documents and instruments
delivered in connection herewith and the Credit Agreement and all other
Credit Documents have been duly authorized by Borrower's and each Guarantor's
respective board of directors (or similar governing body), and this Agreement
and all documents and instruments delivered in connection herewith and the
Credit Agreement and all other Credit Documents are legal, valid and binding
obligations of Borrower and the Guarantors enforceable against such parties
in accordance with their respective terms, except as may be limited by (i)
the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and (ii)
general principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law);
(b) Except as a result of the Existing Defaults, and except for
the representations set forth in Section 4.9 (No Material Adverse Change) and
Section 4.22 (Solvency) of the Credit Agreement, each of the representations
and warranties contained in the Credit Agreement and the other Credit
Documents is true and correct in all material respects on and as of the date
hereof to the same extent as though made on the date hereof, except to the
extent that such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties shall have
been true and correct in all material respects on and as of such earlier
date, and each of the agreements and covenants in the Credit Agreement and
the other Credit Documents is hereby reaffirmed with the same force and
effect as if each were separately stated herein and made as of the date
hereof;
(c) Neither the execution, delivery and performance of this
Agreement and all documents and instruments delivered in connection herewith
nor the consummation of the transactions contemplated hereby or thereby does
or shall contravene, result in a breach of, or violate (i) any provision of
Borrower's or any Guarantor's corporate charter, bylaws, operating agreement,
or other governing documents, (ii) any law or regulation, or any order or
decree of any court or government instrumentality, or (iii) any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which
Borrower or any Guarantor is a party or by which Borrower or any Guarantor or
any of their respective property is bound;
(d) As of the date hereof, except for the Existing Defaults, no
Event of Default has occurred or is continuing under this Agreement, the
Credit Agreement or any other Credit Document; and
(e) The Lenders' and the other Secured Parties' security interests
in the Collateral continue to be valid, binding, and enforceable first-
priority security interests which secure the Obligations subject only to the
Permitted Liens.
SECTION 9. Ratification of Liability.
Each of Borrower and the Guarantors, as debtors, grantors,
pledgors, guarantors, assignors, or in other similar capacities in which such
parties grant liens or security interests in their properties or otherwise
act as accommodation parties or guarantors, as the case may be, under the
Credit Documents, hereby ratifies and reaffirms all of its payment and
performance obligations and obligations to indemnify, contingent or
otherwise, under each of such Credit Documents to which such party is a
party, and each such party hereby ratifies and reaffirms its grant of liens
on or security interests in its properties pursuant to such Credit Documents
to which it is a party as security for the Obligations under or with respect
to the Credit Agreement and confirms and agrees that such liens and security
interests hereafter secure all of the Obligations, including, without
limitation, all additional Obligations hereafter arising or incurred pursuant
to or in connection with this Agreement, the Credit Agreement or any other
Credit Document. Borrower and the Guarantors each further agrees and
reaffirms that the Credit Documents to which it is a party now apply to all
Obligations as defined in the Credit Agreement, as modified hereby
(including, without limitation, all additional Obligations hereafter arising
or incurred pursuant to or in connection with this Agreement, the Credit
Agreement or any other Credit Document). Each such party (i) further
acknowledges receipt of a copy of this Agreement and all other agreements,
documents, and instruments executed and/or delivered in connection herewith,
(ii) consents to the terms and conditions of same, and (iii) agrees and
acknowledges that each of the Credit Documents, as modified hereby, remains
in full force and effect and is hereby ratified and confirmed. Except as
expressly provided herein, the execution of this Agreement shall not operate
as a waiver of any right, power or remedy of any Lender, nor constitute a
waiver of any provision of any of the Credit Documents nor constitute a
novation of any of the Obligations under the Credit Agreement or other Credit
Documents.
SECTION 10. Reference to and Effect Upon the Credit Agreement.
(a) Except as specifically amended hereby, all terms, conditions,
covenants, representations and warranties contained in the Credit Agreement
and other Credit Documents, and all rights of the Lenders and all of the
Obligations, shall remain in full force and effect. Each of Borrower and the
Guarantors hereby confirms that the Credit Agreement and the other Credit
Documents are in full force and effect and that neither Borrower nor any
Guarantor has any right of setoff, recoupment or other offset or any defense,
claim or counterclaim with respect to any of the Obligations, the Credit
Agreement or any other Credit Document.
(b) Except as expressly set forth herein, the execution, delivery
and effectiveness of this Agreement and any waivers set forth herein shall
not directly or indirectly (i) create any obligation to make any further
Loans or issue any Letters of Credit or Synthetic Letters of Credit, or to
continue to defer any enforcement action after the occurrence of any other
Default or Event of Default (including, without limitation, any Forbearance
Default), (ii) constitute a consent or waiver of any past, present or future
violations of any provisions of the Credit Agreement or any other Credit
Documents, (iii) amend, modify or operate as a waiver of any provision of the
Credit Agreement or any other Credit Documents or any right, power or remedy
of any Lender, (iv) constitute a consent to any merger or other transaction
or to any sale, restructuring or refinancing transaction, (v) constitute a
course of dealing or other basis for altering any Obligations or any other
contract or instrument. Except as expressly set forth herein, each Lender
and each of the other Secured Parties reserves all of its rights, powers, and
remedies under the Credit Agreement, the other Credit Documents and
applicable law. All of the provisions of the Credit Agreement and the other
Credit Documents, including, without limitation, the time of the essence
provisions, are hereby reiterated.
(c) From and after the Effective Date, (i) the term "Agreement" in
the Credit Agreement, and all references to the Credit Agreement in any
Credit Document shall mean the Credit Agreement as amended by, among other
things, this Agreement, and (ii) the term "Credit Documents" in the Credit
Agreement and the other Credit Documents shall include, without limitation,
this Agreement and any agreements, instruments and other documents executed
and/or delivered in connection herewith.
(d) No Lender or other Secured Party has waived or is by this
Agreement waiving, and no Lender or other Secured Party has any intention of
waiving (regardless of any delay in exercising such rights and remedies), any
Default or Event of Default which may be continuing on the date hereof or any
Event of Default which may occur after the date hereof (whether the same or
similar to the Existing Defaults or otherwise), and no Lender or any other
Secured Party has agreed to forbear with respect to any of its rights or
remedies concerning any Events of Default (other than, during the Forbearance
Period, the Existing Defaults solely to the extent expressly set forth
herein), which may have occurred or are continuing as of the date hereof, or
which may occur after the date hereof.
(e) Borrower and each Guarantor each agrees and acknowledges that
the Lenders' agreement to forbear from exercising certain of their default-
related rights and remedies with respect to the Existing Defaults during the
Forbearance Period does not in any manner whatsoever limit any Lender's or
other Secured Party's right to insist upon strict compliance by Borrower and
the Guarantors with the Credit Agreement, this Agreement or any other Credit
Document during the Forbearance Period, except as related to the Existing
Defaults to the extent provided herein and otherwise as expressly set forth
herein.
(f) This Agreement shall not be deemed or construed to be a
satisfaction, reinstatement, novation or release of the Credit Agreement or
any other Credit Document.
SECTION 11. Costs And Expenses.
In addition to (to the extent not otherwise provided in the
Credit Agreement), and not in lieu of, the terms of the Credit Agreement and
other Credit Documents relating to the reimbursement of fees and expenses,
Borrower shall reimburse Administrative Agent and the other Lenders, as the
case may be, promptly on demand for all fees, costs, charges and expenses,
including the fees, costs and expenses of counsel and other expenses,
incurred in connection with this Agreement and the other agreements and
documents executed and/or delivered in connection herewith.
SECTION 12. Governing Law; Consent to Jurisdiction and Venue.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES THEREOF. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
BORROWER AND/OR ANY GUARANTOR ARISING OUT OF OR RELATING HERETO OR ANY OTHER
CREDIT DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN XXX XXXXX, XXXXXX XXX XXXX XX XXX
XXXX. BY EXECUTING AND DELIVERING THIS AGREEMENT, BORROWER AND EACH
GUARANTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A)
ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE
OF SUCH COURTS; (B) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES
THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE
BORROWER OR THE APPLICABLE GUARANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE
WITH SECTION 10.1 OF THE CREDIT AGREEMENT; (D) AGREES THAT SERVICE AS
PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION
OVER THE BORROWER AND/OR THE APPLICABLE GUARANTOR IN ANY SUCH PROCEEDING IN
ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT; AND (E) AGREES THAT AGENTS AND LENDERS RETAIN THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST BORROWER OR ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 13. Construction.
This Agreement and all other agreements and documents executed
and/or delivered in connection herewith have been prepared through the joint
efforts of all of the parties hereto. Neither the provisions of this
Agreement or any such other agreements and documents nor any alleged
ambiguity therein shall be interpreted or resolved against any party on the
ground that such party or its counsel drafted this Agreement or such other
agreements and documents, or based on any other rule of strict construction.
Each of the parties hereto represents and declares that such party has
carefully read this Agreement and all other agreements and documents executed
in connection therewith, and that such party knows the contents thereof and
signs the same freely and voluntarily. The parties hereto acknowledge that
they have been represented by legal counsel of their own choosing in
negotiations for and preparation of this Agreement and all other agreements
and documents executed in connection herewith and that each of them has read
the same and had their contents fully explained by such counsel and is fully
aware of their contents and legal effect. If any matter is left to the
decision, right, requirement, request, determination, judgment, opinion,
approval, consent, waiver, satisfaction, acceptance, agreement, option or
discretion of one or more Lenders, the other Secured Parties or their
respective employees, counsel, or agents in the Credit Agreement or any other
Credit Documents, such action shall be deemed to be exercisable by such
Lenders, such other Secured Parties or such other Person in its sole and
absolute discretion and according to standards established in its sole and
absolute discretion. Without limiting the generality of the foregoing,
"option" and "discretion" shall be implied by the use of the words "if" and
"may."
SECTION 14. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed an original, but all such
counterparts shall constitute one and the same instrument, and all signatures
need not appear on any one counterpart. Any party hereto may execute and
deliver a counterpart of this Agreement by delivering by facsimile or other
electronic transmission a signature page of this Agreement signed by such
party, and any such facsimile or other electronic signature shall be treated
in all respects as having the same effect as an original signature. Any
party delivering by facsimile or other electronic transmission a counterpart
executed by it shall promptly thereafter also deliver a manually signed
counterpart of this Agreement.
SECTION 15. Severability.
The invalidity, illegality, or unenforceability of any provision
in or obligation under this Agreement in any jurisdiction shall not affect or
impair the validity, legality, or enforceability of the remaining provisions
or obligations under this Agreement or of such provision or obligation in any
other jurisdiction. If feasible, any such offending provision shall be
deemed modified to be within the limits of enforceability or validity;
however, if the offending provision cannot be so modified, it shall be
stricken and all other provisions of this Agreement in all other respects
shall remain valid and enforceable.
SECTION 16. Time of Essence.
Time is of the essence in the performance of each of the
obligations of Borrower and the Guarantors hereunder and with respect to all
conditions to be satisfied by such parties.
SECTION 17. No Other Creditor Action.
The Lenders' and the other Secured Parties' obligations to
forbear are expressly conditioned upon all other creditors of Borrower and
the Guarantors (including, without limitation, trade creditors) refraining or
otherwise forbearing from exercising remedies or otherwise taking any
enforcement action against Borrower, any Guarantor or the Collateral
(including, without limitation, acceleration of indebtedness) during the
Forbearance Period. In the event that any such creditor takes any such
action, all of the Lenders' and the other Secured Parties' obligations
hereunder shall automatically and immediately terminate without further
notice (provided, that, without limitation of this Section 17, the
Administrative Agent agrees to give notice of such event to the Borrower (it
being understood that the failure to give such notice will not prevent the
operation of this Section 17 and that the Administrative Agent shall have no
liability to the Borrower, any of its Subsidiaries or their respective
affiliates for the failure to give such notice)) or demand.
SECTION 18. Further Assurances.
Borrower and each Guarantor agrees to take all further actions
and execute all further documents as Administrative Agent may from time to
time reasonably request to carry out the transactions contemplated by this
Agreement and all other agreements executed and delivered in connection
herewith.
SECTION 19. Section Headings.
Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute part of this Agreement
for any other purpose.
SECTION 20. Notices.
All notices, requests, and demands to or upon the respective
parties hereto shall be given in accordance with the Credit Agreement.
SECTION 21. Effectiveness.
This Agreement shall become effective on the Effective Date,
provided that all of the following conditions precedent have been met (or
waived) as determined by Administrative Agent and the Requisite Lenders in
their sole discretion:
(a) Closing Fee. In consideration of the accommodations granted
by the Administrative Agent, the Collateral Agent and the Requisite Lenders
in this Agreement, in addition to all other fees and costs, the Borrower and
the Guarantors shall pay to the Administrative Agent, ratably for its account
and the account of each Lender, a fee equal to (x) 0.05% multiplied by (y)
the aggregate Revolving Exposure plus Term Loan Exposure plus Synthetic LC
Exposure of each Lender.
(b) Agreement. Administrative Agent shall have received duly
executed signature pages for this Agreement signed by Administrative Agent,
Collateral Agent, Requisite Lenders, Borrower and the Guarantors.
(c) Representations and Warranties. The representations and
warranties contained herein shall be true and correct, and no Forbearance
Default, Default or Event of Default, other than the Existing Defaults, shall
exist on the date hereof.
SECTION 22. Waivers by Borrower and the Guarantors.
(a) Waiver of Jury Trial Right and Other Matters. BORROWER AND
EACH OF THE GUARANTORS EACH HEREBY WAIVES (i) THE RIGHT TO TRIAL BY JURY IN
ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE CREDIT AGREEMENT, ANY OF THE OTHER CREDIT
DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND
PROTEST, AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NONPAYMENT, MATURITY,
RELEASE WITH RESPECT TO ALL OR ANY PART OF THE OBLIGATIONS OR ANY COMMERCIAL
PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND
GUARANTIES AT ANY TIME HELD BY ANY LENDER ON WHICH BORROWER OR ANY GUARANTOR
MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER SUCH
LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION OR
CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY
ANY COURT PRIOR TO ALLOWING ANY LENDER TO EXERCISE ANY OF THEIR RESPECTIVE
RIGHTS AND REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND
EXEMPTION LAWS AND ALL RIGHTS WAIVABLE UNDER ARTICLE 9 OF THE UNIFORM
COMMERCIAL CODE; (v) ANY RIGHT BORROWER OR ANY GUARANTOR MAY HAVE UPON
PAYMENT IN FULL OF THE OBLIGATIONS TO REQUIRE ANY LENDER OR OTHER SECURED
PARTY TO TERMINATE ITS SECURITY INTEREST IN THE COLLATERAL OR IN ANY OTHER
PROPERTY OF BORROWER OR ANY GUARANTOR UNTIL TERMINATION OF THE CREDIT
AGREEMENT IN ACCORDANCE WITH ITS TERMS AND THE EXECUTION BY BORROWER, AND BY
ANY PERSON WHO PROVIDES FUNDS TO BORROWER WHICH ARE USED IN WHOLE OR IN PART
TO SATISFY THE OBLIGATIONS, OF AN AGREEMENT INDEMNIFYING ANY OR ALL OF THE
LENDERS AND THE OTHER SECURED PARTIES FROM ANY LOSS OR DAMAGE ANY SUCH PARTY
MAY INCUR AS THE RESULT OF DISHONORED CHECKS OR OTHER ITEMS OF PAYMENT
RECEIVED BY SUCH LENDER OR OTHER SECURED PARTY FROM BORROWER, OR ANY ACCOUNT
DEBTOR AND APPLIED TO THE OBLIGATIONS AND RELEASING AND INDEMNIFYING, IN THE
SAME MANNER AS DESCRIBED IN SECTION 7 OF THIS AGREEMENT, THE RELEASEES FROM
ALL CLAIMS ARISING ON OR BEFORE THE DATE OF SUCH TERMINATION STATEMENT; AND
(vi) NOTICE OF ACCEPTANCE HEREOF, AND BORROWER THE GUARANTORS EACH
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO
ADMINISTRATIVE AGENT'S AND SIGNING LENDER'S ENTERING INTO THIS AGREEMENT AND
THAT SUCH PARTIES ARE RELYING UPON THE FOREGOING WAIVERS IN THEIR FUTURE
DEALINGS WITH BORROWER AND THE GUARANTORS. BORROWER AND THE GUARANTORS EACH
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS
LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
SECTION 23. Assignments; No Third Party Beneficiaries.
This Agreement shall be binding upon and inure to the benefit of
Borrower, the Guarantors, the Lenders and the other Secured Parties and their
respective successors and assigns; provided, that neither Borrower nor any
Guarantor shall be entitled to delegate any of its duties hereunder and shall
not assign any of its rights or remedies set forth in this Agreement without
the prior written consent of Administrative Agent in its sole discretion. No
Person other than the parties hereto, and in the case of Section 7 hereof,
the Releasees, shall have any rights hereunder or be entitled to rely on this
Agreement and all third-party beneficiary rights (other than the rights of
the Releasees under Section 7 hereof) are hereby expressly disclaimed.
SECTION 24. Final Agreement.
This Agreement, the Credit Agreement, the other Credit Documents,
and the other written agreements, instruments, and documents entered into in
connection therewith (collectively, the "Borrower/Lender Documents") set
forth in full the terms of agreement between the parties hereto and thereto
and are intended as the full, complete, and exclusive contracts governing the
relationship between such parties, superseding all other discussions,
promises, representations, warranties, agreements, and understandings between
the parties with respect thereto. No term of the Borrower/Lender Documents
may be modified or amended, nor may any rights thereunder be waived, except
in a writing signed by the party against whom enforcement of the
modification, amendment, or waiver is sought. Any waiver of any condition
in, or breach of, any of the foregoing in a particular instance shall not
operate as a waiver of other or subsequent conditions or breaches of the same
or a different kind. Administrative Agent's, any Lender's or any other
Secured Party's exercise or failure to exercise any rights or remedies under
any of the foregoing in a particular instance shall not operate as a waiver
of its right to exercise the same or different rights and remedies in any
other instances. There are no oral agreements among the parties hereto.
SECTION 25. Administrative Agent.
The Requisite Lenders hereby authorize the Administrative Agent
to execute this Agreement.
Signature pages to follow
IN WITNESS WHEREOF, as of the Effective Date, the duly authorized
representatives of the parties have caused this Agreement to be
executed and acknowledge that they have read and understood this
Agreement.
MOVIE GALLERY, INC.
By:
Name:
Title:
XXXXXXX XXXXX CREDIT PARTNERS L.P., as
Administrative Agent and a Lender
By:
Authorized Signatory
WACHOVIA BANK, NATIONAL ASSOCIATION, as
Collateral Agent and a Lender
By:
Name:
Title:
[LENDER]
By:
Name:
Title:
RATIFICATION OF OBLIGATIONS
Each of the undersigned Guarantors hereby acknowledges, agrees and
consents to the foregoing Agreement and the Forbearance and agrees that the
guaranty under the Credit Agreement and each of the other Credit Documents
remain in full force and effect, and the Guarantors confirm and ratify all of
their obligations under each Credit Document to which such Guarantor is a
party.
MOVIE GALLERY US, LLC
By: Movie Gallery, Inc., its Manager and Sole Member
By:
Name:
Title:
M.G. DIGITAL, LLC
By: Movie Gallery US, LLC, its Manager and Sole Member
By: Movie Gallery, Inc., its Manager and Sole Member
By:
Name:
Title:
M.G.A REALTY I, LLC
By: Movie Gallery US, LLC, its Manager and Sole Member
By: Movie Gallery, Inc., its Manager and Sole Member
By:
Name:
Title:
HOLLYWOOD ENTERTAINMENT CORPORATION
By:
Name:
Title:
MG AUTOMATION LLC
By: Hollywood Entertainment Corporation, its Manager and
Sole Member
By:
Name:
Title:
