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EXHIBIT 10.3
CREDIT AGREEMENT
among
HASTINGS BOOKS, MUSIC & VIDEO, INC.
as Borrower
and
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
Individually, as the Issuing Bank and as the Agent
and
FINANCIAL INSTITUTIONS
NOW OR HEREAFTER PARTIES HERETO
$30,000,000 Revolving Credit Facility
$10,000,000 Term Loan Facility
December 12, 1994
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TABLE OF CONTENTS
Article 1 DEFINITIONAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Certain Definitions of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 General Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Article 2 THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.1 Commitments to Lend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.2 Method of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.3 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.4 Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.5 Continuations/Conversions, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.6 Commitment and Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.7 Reduction and Termination of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.8 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.9 Principal Payments on Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.10 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.11 General Provisions as to Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.12 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.13 Sharing of Payments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.14 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.15 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.16 Proceeds of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Article 3 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.1 Initial Loans on the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.2 All Loans, Conversions/Continuations and Letters of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 4 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.1 Entity Status, Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.2 Authorization; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.4 Enforceable Obligations; Lien Establishment . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.5 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.6 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.7 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.8 No Default or Adverse Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.9 Material Agreements; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.10 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.11 Use of Proceeds; Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.12 No Financing of Regulated Corporate Takeovers . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.14 Principal Office; Names; Primary; Business . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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SECTION 4.16 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.17 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.18 Government Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.19 Insider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.20 Certain Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.21 Insurance:Certifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 5 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.1 Financial Statements, Reports and Documents . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.2 Payment of Taxes and Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.3 Maintenance of Existence and Rights: Conduct of
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.4 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.5 Other Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.6 Compliance with Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.7 Compliance with Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.8 Access; Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.9 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.13 Maintenance Of Corporate Identity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.14 Primary Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.15 Subordination of Affiliate Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.16 Landlord's Subordination Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 6 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.1 Certain Financial Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.3 Limitation on Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.4 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.5 Limitation on Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.6 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.7 Limitation on Sale of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.8 Accounting Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.9 Internal Governance Documents; Name and Principal Place
of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.10 Certain Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.11 Mergers, Acquisitions and Dissolutions . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.13 Sale of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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ARTICLE 7 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.2 Remedies Upon Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.3 Certain Additional Remedies Regarding Letters of Credit . . . . . . . . . . . . . . . . . . 40
ARTICLE 8 THE AGENT AND BANKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.1 Appointment of the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.2 Exculpation; Agent's Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.3 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.4 Rights as a Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.6 Bank's Credit Decision and Non-Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.7 Deferral of Distributions; Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.8 Nature of Article 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.9 Resignation and Removal by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 9 CHANGED CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.1 Basis for Determining Interest Rate Inadequate or Unfair . . . . . . . . . . . . . . . . . 46
SECTION 9.2 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.3 Increased Cost and Reduced Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.4 Substitute Rate for Affected LIBOR Loans . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.5 Alternate Lending Office Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.2 No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.3 Payment of Costs and Expenses; Professionals and
Consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.5 Sharing of Set-Offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.6 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.7 Successors and Assigns; Participations; Assignments . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.8 Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.9 Governing Law; Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.10 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.11 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.12 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.14 Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.15 No Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.17 Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.19 Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.20 Limitation of Liability; Commencement of Actions . . . . . . . . . . . . . . . . . . . . . 61
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SECTION 10.21 Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.22 This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
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CREDIT AGREEMENT
This Credit Agreement is made and entered into as of the 12th day of
December 1994 among (i) HASTINGS BOOKS, MUSIC & VIDEO, INC., a Texas
corporation ("Borrower") (ii) each of the financial institutions that is a
signatory hereto or becomes a party hereto as provided in Section 10.7
(individually, a "Bank" and collectively, the "Banks"), and (iii) THE BOATMEN'S
NATIONAL BANK OF ST. LOUIS, a national banking association ("Boatmen's"),
individually as a Bank, as agent for the Banks acting in the manner and to the
extent provided in Article 8 (in such capacity, the "Agent"), and as the issuer
of the Letters of Credit hereinafter referred to (as such issuer, the "Issuing
Bank").
W I T N E S S E T H:
WHEREAS, Borrower has requested the Banks to provide it a revolving
credit facility and a term loan facility, and the Issuing Bank to provide it a
letter of credit facility within said revolving credit facility, for the
purposes hereinafter provided; and
WHEREAS, the Banks, severally, are willing to commit and to advance to
the extent of their respective commitments, revolving credit and term loans to,
and the Issuing Bank is willing to issue its letters of credit for the account
of, Borrower upon the terms and subject to the conditions herein provided;
NOW THEREFORE, for and in consideration of the premises and the
promises herein, and for other good and valuable considerations, the receipt,
adequacy and reasonable equivalency of which are hereby acknowledged by each
party hereto, Borrower, each Bank, the Issuing Bank and the Agent agree as
follows:
Article 1
DEFINITIONAL PROVISIONS
SECTION 1.1 Certain Definitions of Terms. For purposes of this
Agreement, unless otherwise defined herein or the context otherwise requires,
capitalized terms used in this Agreement shall have the respective meanings
assigned to them in Annex B hereto.
SECTION 1.2 General Definitional Provisions.
(a) All terms defined in this Agreement shall have their defined
meanings when used in each Loan Document and in each certificate, exhibit,
schedule, annex or other instrument related thereto, unless in any case the
context states or implies otherwise; and when required by the context, each
term shall include the plural as well as the singular, and vice versa.
Furthermore, in each Loan Document: (i) the word "or" is not exclusive, and the
word
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"including" (in its various forms) means "including without limitation"; and
(ii) provisions in the masculine, feminine or neither genders should be
construed to include any gender.
(b) Definitions of each Person specifically defined herein or in
each other Loan Document shall mean and include herein and therein, unless
otherwise expressly provided to the contrary, the successors, assigns, heirs
and legal representatives of each such Person.
(c) Unless the context otherwise requires or unless otherwise
expressly provided, references to this Agreement and each other Loan Document
shall include all amendments, modifications, supplements, restatements,
ratifications, renewals, increases, extensions, replacements, substitutions and
rearrangements thereof or thereto, as applicable, and as in effect from time to
time; provided, however, nothing contained in this sentence shall be construed
to authorize any Person to execute or enter into any such amendments,
modifications, supplements, restatements, ratifications, renewals, increases,
extensions or rearrangements to a Loan Document to which it is a party, unless
entered into and executed pursuant to the applicable provisions of the
respective Loan Documents.
(d) All accounting terms not specifically defined in a Loan
Document shall be construed, and all accounting procedures, calculations and
reporting required or provided for in any Loan Document shall be performed or
prepared, as applicable, in accordance with GAAP consistently applied.
(e) The term "Section" refers to Sections of this Agreement, and
the terms "Annex", "Exhibit" and "Schedule" refer to Annexes, Exhibits and
Schedules attached hereto, reference to which is hereby made for incorporation
herein for all intents and purposes, unless in any case the context states or
implies otherwise. The table of contents and headings in each Loan Document
are inserted for convenience of reference only and shall be ignored when
construing any such Loan Document.
Loans hereunder are distinguished by "Class" and by "Type". The
"Class" of a Loan (or of a Commitment to make such a Loan or of a Borrowing
comprised of such Loans) refers to the determination whether such Loan is a
Tenn Loan or a Revolving Loan, each of which constitutes a Class. The "Type"
of a Loan refers to the determination whether such Loan is a Base Rate Loan or
a LIBOR Loan. Loans may be identified by both Class and Type (e.g., a "Term
Base Rate Loan" is a Loan which is both a Term Loan and a Base Rate Loan).
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Article 2
THE CREDITS
SECTION 2.1 Commitments to Lend.
(a) The Term Loans. From time to time during the Term
Availability Period, each Bank severally agrees to make term loans (each, a
"Term Loan") to Borrower, on and subject to the terms and conditions set forth
in this Agreement, up to an aggregate principal amount of Term Loans not
exceeding such Bank's Term Commitment. Any Term Loan that is repaid or prepaid
may not be reborrowed.
(b) Revolving Loans. From time to time during the Revolving
Availability Period, each Bank severally agrees to make revolving loans (each,
a "Revolving Loan") to Borrower, on and subject to the terms and conditions set
forth in this Agreement, in an aggregate principal amount at any one time
outstanding up to but not exceeding such Bank's Revolving Commitment; provided,
however, at no time shall the aggregate principal amount of all Revolving Loans
outstanding plus the Letter of Credit Exposure exceed the aggregate Revolving
Commitments of all Banks. Subject to the terms and conditions of this
Agreement, Revolving Loans may be borrowed, repaid and reborrowed at any time
during the Revolving Availability Period without premium or penalty.
(c) Amount of Borrowings: Borrowings Ratable. Each Borrowing
requested by Borrower as a Base Rate Loan shall be in a minimum principal
amount of $100,000, or a multiple thereof, or if a lesser amount, the amount of
the remaining unadvanced aggregate Term Commitments or Revolving Commitments,
as applicable, of all Banks. Each Borrowing requested by Borrower as a LIBOR
Loan shall be in a minimum principal amount of $500,000, or a multiple of
$250,000 in excess thereof. All Borrowings hereunder shall be made from the
Banks ratably in proportion to their respective Commitments of the relevant
Class and Type.
(d) Types. All Loans shall, at the option of Borrower, be either
Base Rate Loans or LIBOR Loans and may be continued or converted pursuant to
Section 2.5, provided that all Loans made pursuant to the same Borrowing shall
be of the same Type; provided, however, no more than 10 LIBOR Loan Borrowings
shall be outstanding at any time.
SECTION 2.2 Method of Borrowing.
(a) Borrower shall give the Agent notice (a "Notice of
Borrowing"), in the form attached hereto as Exhibit A, not later than 12:00
noon (St. Louis time) on (i) with respect to Base Rate Loans, the Business Day
of each Borrowing consisting of a Base Rate Loan and (ii) with respect to LIBOR
Loans, the second LIBOR Business Day before each Borrowing consisting of a
LIBOR Loan, specifying:
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(1) the date of such Borrowing, which shall be a Business
Day in the case of a Borrowing consisting of a Base Rate Loan or a
LIBOR Business Day in the case of a Borrowing consisting of a LIBOR
Loan;
(2) the Class and Type of the Loans comprising such
Borrowing, provided that with respect to the initial Credit Event
hereunder, all Loans shall be Base Rate Loans;
(3) the aggregate amount of such Borrowing and of each
Loan comprising such Borrowing; and
(4) the deposit account of the Agent's Domestic Lending
Office into which such Borrowing is requested to be deposited; and
(5) in the case of a LIBOR Rate Borrowing, the duration
of the Interest Period applicable thereto.
Notwithstanding the foregoing, Borrower's right to designate any Loan as a
LIBOR Loan shall be subject to the restrictions referred to in Section 2.5(c).
(b) By 1:00 P.M. (St. Louis time) on the date of receipt of a
Notice of Borrowing, the Agent shall notify each Bank of the contents thereof
and of such Bank's ratable share of such Borrowing. Such Notice of Borrowing
shall not be revocable by Borrower.
(c) Not later than 2:00 P.M. (St. Louis time) on the date of each
Borrowing, each Bank shall make available its ratable share of such Borrowing,
in immediately available funds, to the Agent at the account number of the Agent
set forth in Annex A. Unless the Agent determines that any applicable
condition precedent has not been satisfied, the Agent will make the funds so
received from each Bank available to Borrower in its deposit account designated
in the applicable Notice of Borrowing.
(d) Unless the Agent has received notice from a Bank, prior to any
proposed Borrowing, that such Bank does not intend to fund its Loan requested
to be made on such date, the Agent may assume that such Bank has funded its
Loan and is depositing the proceeds thereof with the Agent on such date, and
the Agent in its sole discretion may, but shall not be obligated to, disburse a
corresponding amount to Borrower on such date. If Loan proceeds corresponding
to that amount are not in fact deposited with the Agent by such Bank on or
prior to the financing date of such Loan, such Bank agrees to pay, and in the
event such Bank fails to immediately pay, Borrower agrees to repay, to the
Agent forthwith on demand such corresponding amount, together with interest on
the balance thereof from time to time outstanding for each day from the date
such amount is disbursed to Borrower until the date such amount is paid or
repaid to the Agent, (i) in the case of Borrower, at the interest rate
applicable to such Borrowing, and (ii) in the case of such Bank, at the Federal
Funds Rate. If such Bank shall pay to the Agent such corresponding
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amount, the amount so paid shall constitute such Bank's Loan as part of such
Borrowing for the purposes of this Agreement. If both such Bank and Borrower
shall repay such corresponding amount, the Agent shall promptly refund to
Borrower such corresponding amount (together with any interest paid thereon by
Borrower). This Section 2.2(d) does not relieve any Bank of its obligation to
make its Loans on any funding date therefor. The obligations of each Bank
hereunder are several, AND NEITHER ANY BANK NOR THE AGENT SHALL BE RESPONSIBLE
FOR THE OBLIGATION OF ANY OTHER PERSON HEREUNDER (OR SUCH OTHER PERSON's
DEFAULT IN THE PERFORMANCE THEREOF), nor will the failure by the Agent or any
Bank to perform any of respective obligations hereunder relieve the Agent or
any other Bank from the performance of its respective obligations hereunder.
(e) All Borrowings made hereunder shall be disbursed by credit to
the deposit account maintained by Borrower at the Agent's Domestic Lending
Office that is designated in the applicable Notice of Borrowing.
SECTION 2.3 Notes.
(a) The Term Loans of each Bank shall be evidenced by a Term Note
and the Revolving Loans of each Bank shall be evidenced by a Revolving Note.
(b) Each reference in this Agreement to the "Note" of such Bank
shall be deemed to, refer to and include any or all of the Notes referred to in
the preceding clause (a), as the context may require.
(c) Upon receipt of each Bank's Notes pursuant to this Section
2.3, the Agent shall promptly mail or deliver such Notes to such Bank. Each
Bank shall record on its books, and prior to any transfer of its Notes shall
endorse on the schedule forming a part thereof appropriate notations to
evidence the date, amount and maturity of each Loan made by it and the date and
amount of each payment of principal made by Borrower with respect thereto;
provided that the failure of any Bank to make any such recordation or
endorsement shall not affect the obligations of Borrower or any Bank hereunder
or under any other Loan Document. Each Bank is hereby irrevocably authorized
by Borrower so to endorse its Notes and to attach to and make a part of its
Notes a continuation of any such schedule as and when required.
SECTION 2.4 Interest Rates.
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until it
becomes due and payable, at a rate per annum equal to the lesser of (i) the
Base Rate as in effect for each such day and (ii) the Maximum Rate. Accrued,
unpaid interest on the outstanding principal of the Base Rate Loans shall be
due and payable on each Quarterly Date. Any principal of and, to the extent
permitted by Law, accrued and unpaid interest on any Base Rate Loan which has
become due and payable
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shall bear interest on the unpaid portion thereof, payable on demand, for each
day from such due date and until paid, at the Default Rate. Not less than 5
Business Days prior to each Quarterly Date, Agent shall submit to Borrower a
statement for accrued interest on Base Rate Loans due as of such Quarterly
Date.
(b) Each LIBOR Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the lesser of (i) the sum of the Applicable Margin plus the
applicable Adjusted London Interbank Offered Rate and (ii) the Maximum Rate.
Accrued, unpaid interest on the outstanding principal of each LIBOR Loan shall
be due and payable for each Interest Period on the last day thereof. Any
principal of and, to the extent permitted by Law, interest on any LIBOR Loan
which has become due and payable shall bear interest on the unpaid portion
thereof, payable on demand, for each day from such due date and until paid, at
the Default Rate. Not less than 5 LIBOR Business Days prior to the last day of
each Interest Period, Agent shall submit to Borrower a statement for accrued
interest on LIBOR Loans due as of the end of the Interest Period.
(c) The Agent shall determine each interest rate applicable to the
Loans hereunder and each fee hereunder. Interest for all Base Rate Loans and
all fees shall be computed on the basis of a year of 365 or 366 days (as
applicable), in each case for the actual number of days elapsed (including the
first day but excluding the last day). Interest shall be computed for all
LIBOR Loans on the basis of a year of 360 days, in each case for the actual
number of days elapsed (including the first day but excluding the last day),
except that, if use of a 360-day year would result in a rate in excess of the
Maximum Rate, such computation will be made on the basis of a year consisting
of 365 or 366 days, as appropriate. Each determination by the Agent of an
interest rate or fee hereunder shall be conclusive and binding in the absence
of manifest error.
(d) Notwithstanding the foregoing, if at any time the applicable
contractual rate of interest provided for herein (without reference to the
Maximum Rate limitation) exceeds the Maximum Rate, then the rate of interest on
any Loan or other Obligation shall be limited to the Maximum Rate during such
time, and at all times thereafter (including periods during which any or all of
such applicable contractual rates of interest have fallen below the Maximum
Rate), the interest rate on any Loan or other Obligation shall be the Maximum
Rate, or if there is no Maximum Rate in effect, the Agreed Maximum Rate, until
the total amount of interest accrued on such Loan or other Obligation equals
the amount of interest which would have accrued thereon if the applicable
contractual rate of interest (without reference to the Maximum Rate limitation)
had at all times been in effect; but in no event shall the aggregate interest
payable or paid during the period beginning on the date the initial Loan is
made until the Obligations are paid in full exceed an amount equal to interest
at the Maximum Rate, so long as the Maximum Rate shall be applicable to this
Agreement and the transactions contemplated hereby. If at maturity or final
payment of any Note or other Obligations, as applicable, the total amount of
interest paid or accrued on such Note or other Obligations under the foregoing
provisions is less than the total amount of interest which would have been paid
or accrued if the applicable
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contractual rate of interest provided for herein had at all times been in
effect, then Borrower agrees, to the fullest extent permitted by Law, to pay an
amount equal to the difference between (i) the lesser of (A) the amount of
interest which would have been paid or accrued on such Note or other
Obligations, as applicable, if the Maximum Rate had at all times been in effect
and (B) the amount of interest which would have been paid or accrued on such
Note or other Obligations, as applicable, if a rate per annum equal to the
applicable contractual rate of interest provided for herein had at all times
been in effect, and (ii) the amount of interest paid or accrued in accordance
with the other provisions of such Note or other Obligations, as applicable.
(e) The payment of interest (or any amount deemed to be interest)
on any Note and on any other Obligation shall, in all respects regarding each
Loan Document, be subject to the provisions of Section 10.8.
SECTION 2.5 Continuations/Conversions, Etc.
(a) Continuation/Conversion.
(i) Borrower may elect from time to time to convert all
or any portion of the outstanding Base Rate Loan to a LIBOR Loan by
giving the Agent a completed and duly executed irrevocable notice of
such election, in the form and substance of Exhibit D hereto (the
"Continuation/Conversion Notice") not later than 12:00 noon (St. Louis
time) on the second LIBOR Business Day before the proposed date of
conversion, specifying the proposed date of conversion, the portion of
the Base Rate Loan to be converted, and the duration of the Interest
Period applicable thereto.
(ii) Borrower may elect to continue (as of the last day of
the applicable Interest Period) all or any part of any LIBOR Loan as
the same Type of Loan by giving the Agent an irrevocable
Continuation/Conversion Notice not later than 12:00 noon (St. Louis
time) on the second LIBOR Business Day before the proposed date of
continuation. The Continuation/Conversion Notice shall specify the
proposed date of continuation, the portion of LIBOR Loan to be
continued, and the duration of the Interest Period applicable thereto.
(iii) Borrower may elect from time to time to convert all
or any portion of a LIBOR Loan into a Base Rate Loan by giving the
Agent an irrevocable Continuation/Conversion Notice not later than
12:00 noon (St. Louis time) one Business Day before the date of
conversion. The Continuation/Conversion Notice shall specify the
portion of the LIBOR Loan to be converted and the date of conversion.
(iv) Upon receipt of a Continuation/Conversion Notice, the
Agent shall promptly notify each Bank thereof. Any continuation
pursuant to the preceding clause (i) or conversion pursuant to the
preceding clause (ii), may only occur on the last day of
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the applicable Interest Period. Each Borrowing continued as, or
converted to, a LIBOR Loan shall be in a minimum principal amount of
$500,000, or a multiple of $250,000 in excess thereof, and each
Borrowing continued as, or converted to, a Base Rate Loan shall be in
a minimum principal amount of $100,000 or a multiple thereof.
(b) No Notice. If no Continuation/Conversion Notice is given with
respect to any LIBOR Loan prior to the time specified in Section 2.5(a)(i) or
Section 2.5(a)(ii), or if a Continuation/Conversion Notice is timely or
otherwise given, but it is incomplete and is not completed before the
respective time required by this Agreement, Borrower shall be deemed to have
converted such Loan into a Base Rate Loan on the last day of the applicable
Interest Period.
(c) Restrictions on Use of Options. Notwithstanding anything to,
the contrary contained in this Section 2.5, no LIBOR Loan may be made or
continued as such, and no Loan shall be made or converted to a LIBOR Loan, (i)
when any Default or Event of Default has occurred and is continuing, (ii) when
any provision of any Loan Document prohibits or would preclude any such
continuation, election or conversion, or (iii) if after giving effect to any
such proposed continuation, election or conversion, it would be necessary to
prepay, in whole or part, a LIBOR Loan prior to the expiration of its then
applicable Interest period in order for Borrower to pay, in full and in
accordance with this Agreement, a mandatory, scheduled or voluntary payment or
prepayment of principal hereunder, including the final maturity payment
hereunder. During the period that a LIBOR Loan is prohibited or precluded
hereunder from continuation, election or conversion, and unless otherwise
expressly provided herein, each such LIBOR Loan shall be automatically
converted to a Base Rate Loan on the last day of the applicable Interest
Period, and each other Loan shall be continued as a Base Rate Loan.
SECTION 2.6 Commitment and Other Fees. Subject to Section 10.8:
(a) Borrower shall pay to the Agent, for the ratable account of
the Banks, the following fees: (i) 1/8 of 1% per annum on each Unavailable
Commitment during the Revolving Availability Period, (ii) 1/4 of 1% per annum
on the total unused portion of the Revolving Commitments of all Banks (other
than the then applicable, if any, Unavailable Commitment) during the Revolving
Availability Period, and (iii) 1/4 of 1% per annum on the total unused portion
of the Term Commitments of all Banks during the Term Availability Period. As
to such fees attributable to the Revolving Commitments, such fees shall be
payable quarterly in arrears on each Quarterly Date during the Revolving
Availability Period and on the Revolving Commitment Termination Date. As to
the Term Commitments, such fee shall be payable quarterly in arrears on each
Quarterly Date during the Term Availability Period and on the Term Commitment
Termination Date.
(b) Borrower shall pay to the Issuing Bank and the Banks, by
remittance to the Agent, the respective fees referred to in Section 2.14 as
consideration for the issuance and maintenance
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of letters of Credit. Such fees shall be for the account of the Issuing Bank
or for the ratable account of the Banks, as provided in Section 2.14.
(c) On the Closing Date and on each anniversary date of the
Closing Date prior to the termination all Commitments, Borrower shall pay the
Agent, for its own account, an annual, non-refundable Agent's fee as set forth
in a fee letter agreement of even date herewith, between Borrower and the
Agent.
SECTION 2.7 Reduction and Termination of Commitments.
(a) After the Closing Date, Borrower may from time to time, upon
at least 30 days' prior notice to the Agent prior to the beginning of a
calendar quarter, receipt of which notice Agent shall promptly notify the
Banks, temporarily reduce, for such calendar quarter, the unused portion of the
Revolving Commitments of all Banks by an aggregate amount of up to $10,000,000,
in minimum multiples of $1,000,000 (such reduced Commitment, the "Unavailable
Commitment"). Each Unavailable Commitment shall automatically be restored at
the end of the applicable calendar quarter, subject to Borrower's continuing
rights to make temporarily reductions, or to terminate or permanently reduce
unused portions of the Revolving Commitments, hereunder in accordance with the
applicable provisions of this Section 2.7. For purposes of this Agreement, the
face amount of each outstanding Letter of Credit shall constitute a used
portion of the Revolving Commitments of the Banks.
(b) After the Closing Date, Borrower may, upon at least 5 Business
Days' prior notice to the Agent, receipt of which notice Agent shall promptly
notify the Banks, terminate at any time, or permanently reduce from time to
time by an aggregate amount of $1,000,000 or any integral multiple of $500,000
in excess thereof, the unused portion of the Revolving Commitments of all
Banks.
(c) During the Term Availability Period, Borrower may, upon at
least 5 Business Days' prior notice to the Agent, receipt of which notice Agent
shall promptly notify the Banks, terminate at any time, or permanently reduce
from time to time by an aggregate amount of $1,000,000 or any integral multiple
of $500,000 in excess thereof, the unused portion of the Term Commitments of
all Banks.
(d) Each termination or reduction of any Commitment pursuant to
the provisions hereof shall apply proportionately to the respective Commitment
of each Bank, and each such termination or permanent reduction, once terminated
or so reduced, may not be reinstated. If any Commitment is terminated in its
entirety, all accrued commitment fees with respect thereto shall be due and
payable on the effective day of such termination.
(e) To the extent not theretofore terminated or permanently
reduced, as applicable, pursuant to other provisions of this Agreement, the
Tenn Commitments of all Banks shall
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terminate on June 1, 1996 and the Revolving Commitments of all Banks shall
terminate on January 31, 1997; provided, however, in the sole and absolute
discretion of all of the Banks, such termination date for the Revolving
Commitments of all Banks may be extended for up to an additional one-year
period on each anniversary of this Agreement upon such terms and conditions as
shall be prescribed by the all of the Banks. Any such election by all of the
Banks shall be made, if at all, pursuant to a written instrument executed by
all of the Banks, which instrument shall refer to this provision and set forth
the extended term of the Revolving Commitments of all Banks and, if applicable,
the terms and conditions for such extended term.
SECTION 2.8 Mandatory Prepayments.
(a) If at any time (whether as a result of a temporary or
permanent reduction in Commitments pursuant to Section 2.7, (i) the aggregate
principal amount of all Revolving Loans outstanding plus the Letter of Credit
Exposure exceeds the aggregate amount of the Revolving Commitments of all
Banks, Borrower shall immediately prepay the Revolving Loans in an amount at
least equal to such excess, or (ii) the aggregate principal amount of all Term
Loans outstanding exceeds the aggregate amount of the Term Commitment of all
Banks, Borrower shall immediately prepay the Term Loans in an amount at least
equal to such excess. All such mandatory Prepayments shall be accompanied by,
and Borrower shall pay, interest thereon which has accrued until the date of
payment thereof.
(b) By 12:00 noon (St. Louis time) on the date that a mandatory
prepayment is required under Section 2.8(a), Borrower shall select which
outstanding Loans (indicating the Class and Type) are to be prepaid and shall
notify the Agent thereof. Such notice shall not be revocable by Borrower. By
1:00 P.M. (St. Louis time) on the date of receipt of such notice, the Agent
shall notify each Bank of the contents thereof and of such Bank's ratable share
of such prepayment. Each such prepayment shall be applied to prepay ratably
the respective Loans so selected.
(c) As provided in Section 2.2(d), Borrower shall immediately
prepay the principal of, and accrued interest on, portions of Borrowings funded
by the Agent as to which and to the extent a Bank has not funded its pro rata
portion.
SECTION 2.9 Principal Payments on Loans.
(a) On each Quarterly Date commencing October 1, 1996 and
continuing consecutively through January 31, 1999 (or until paid in full),
there shall be due and payable a principal installment in respect of
outstanding Term Loans in an aggregate principal amount equal to five percent
(5%) of the unpaid principal balance of Term Loans as of the Term Commitment
Termination Date, together with accrued interest on the principal amount paid;
provided, however, the aggregate unpaid principal balance of the Term Loans,
together with accrued, unpaid interest thereon shall (unless the maturity
thereof is sooner accelerated or otherwise becomes due and
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payable in accordance with the terms hereof or any other Loan Document) be due
and payable in full on January 31, 1999. Not less than 5 Business Days prior
to the first Quarterly Date on which principal installment payments commence
under this clause La), the Agent shall submit to Borrower a statement of the
amount of such principal installments.
(b) By 12:00 noon (St. Louis time) on the date that a payment is
required in respect of Term Loans under this Section 2.9, Borrower shall select
which outstanding Term Loans that are either (i) Base Rate Loans or (ii) LIBOR
Loans whose last day of its Interest Period corresponds to the applicable
Quarterly Date (and so indicating the Type) are to be paid and shall notify the
Agent thereof. Such notice shall not be revocable by Borrower. By 1:00 P.M.
(St. Louis time) on the date of receipt of such notice, the Agent shall notify
each Bank of the contents thereof and of such Bank's ratable share of such
payment. Each such payment shall be applied to pay ratably the Term Loans so
selected, or if Borrower has not timely notified and identified the Agent (as
herein provided) the Tenn Loans for application, such payment shall be applied,
ratably, by the Agent as it determines in its sole discretion.
(c) The aggregate unpaid principal balance of the Revolving Loans,
together with accrued, unpaid interest thereon shall (unless the maturity
thereof is sooner accelerated or otherwise becomes due and payable in
accordance with the terms hereof or any other Loan Document) mature and be due
and payable on Revolving Commitment Termination Date.
SECTION 2.10 Optional Prepayments.
(a) Borrower may, upon notice to the Agent given not later than
1:00 P.M. (St. Louis time) on (i) the Business Day of prepayment of any Base
Rate Loan and (ii) the LIBOR Business Day prior to the date of prepayment of
any LIBOR Loan, prepay (without premium or penalty, other than any funding
losses as provided in Section 2.12) any Loan in whole at any time, or from time
to time in part, in minimum principal amounts of $250,000 or any integral
multiple of $250,000. Such notice shall specify the date and amount of
prepayment and the Loan or Loans (indicating the corresponding Class or Type)
applicable to such prepayment and shall not be revocable by Borrower. The
payment amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest thereon and other fees and
expenses due and owing to the date of prepayment. Any such prepayment of Tenn
Loans shall be applied ratably, to the unpaid scheduled principal installments
of such Loans in the inverse order of maturity thereof.
(b) Upon receipt of a notice of prepayment pursuant to this
Section 2.10, the Agent shall promptly notify each Bank of the contents thereof
and of such Bank's ratable share, if any, of such prepayment.
SECTION 2.11 General Provisions as to Payments. Except as
otherwise provided in Section 2.14(c), Borrower shall make each payment of
principal of and interest on the Loans,
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of the Reimbursement Obligations and of fees or any other Obligations not later
than 1:00 P.M. (St. Louis time) on the date when due (it being understood that
interest shall accrue and be payable for such date on any amounts which are
paid after 1:00 P.M. (St. Louis time)), in immediately available funds, without
deduction, setoff or counterclaim to the Agent, the Issuing Bank or any Bank at
the account of the Agent set forth in Annex A. By 2:00 P.M. (St. Louis time)
on the date of receipt, the Agent will distribute to the Issuing Bank or each
Bank (as applicable), in accordance with the terms of this Agreement, its
ratable share of each such payment. Whenever any payment of principal of or
interest on the LIBOR Loans shall be due on a day which is not a LIBOR Business
Day, the date for payment thereof shall be extended to the next succeeding
LIBOR Business Day unless such LIBOR Business Day falls in another calendar
month, in which case the date for payment thereof shall be the immediately
preceding LIBOR Business Day. Whenever any payment of any other Obligations
shall be due on a day which is not a Business Day, the date for payment thereof
shall be extended to the next succeeding Business Day. If the date for any
payment of principal is extended as provided above or by operation of law or
otherwise, interest thereon shall be payable for such extended time. Unless
the Agent has received notice from Borrower prior to the date on which any
payment is due to each Bank or the Agent hereunder that Borrower will not make
such payment in full, the Agent may assume that Borrower has made such payment
in full to the Agent on such date, and the Agent may, in reliance upon such
assumption, cause to be distributed to each Bank on such due date an amount
equal to the amount then due such Bank. If and to the extent Borrower has not
made such payment in full to the Agent, each Bank shall repay to the Agent
forthwith on demand such amount distributed to such Bank, together with
interest thereon, for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the Agent, at a rate per
annum equal to the Federal Funds Rate. In the event any payment received by
the Agent and so paid to Banks is rescinded or must otherwise be returned by
the Agent, each Bank shall, upon the request of the Agent, repay to the Agent
the amount of such payment paid to such Bank, together with interest thereon,
for each day from the date such amount is distributed to such Bank until the
date such Bank repays such amount to the Agent, at a rate per annum equal to
the Federal Funds Rate.
SECTION 2.12 Funding Losses. If Borrower (i) makes any payment or
prepayment of principal with respect to any LIBOR Loan, pursuant to Article 2
or otherwise, on any day other than the last day of the Interest Period
applicable thereto, (ii) fails to borrow, pay or prepay any LIBOR Loans after
notice has been given to any Bank in accordance with Section 2.2(b) or 2.10(b),
(iii) defaults in making a Borrowing of, conversion into, or continuation of,
LIBOR Loans after it has given a notice regarding same in accordance with the
provisions of this Agreement, or (iv) converts or continues a LIBOR Loan, or
converts a Base Rate Loan into a LIBOR Loan, in any event in this clause (iv)
pursuant to Section 2.5 at any time other than at the end of (or in the case of
a conversion to a Base Rate Loan, at the beginning of) the relevant Interest
Period, then Borrower shall, subject to Section 10.8, pay to each Bank on
demand an amount sufficient to compensate such Bank for any actual loss or
expense incurred or sustained
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by it as a consequence of any thereof, which compensation shall include an
amount equal to the greater of zero or
[(B-C) x D x E]/360
wherein
"B" is decimal equivalent of the London Interbank Offered Rate that is
(or would be in the case of Borrower's failure to borrow after giving
a Notice of Borrowing) payable by Borrower on such LIBOR Loan;
"C" is the decimal equivalent of the Eurodollar rate that would apply
to a hypothetical Eurodollar deposit in the Affected Principal Amount
whose investment date were on the last Business Day on or before the
first day of the Remaining Interest Period and whose Interest Period
were approximately equal, as determined by the requesting Bank, to the
Remaining Interest Period (it being agreed that in the event the
Remaining Interest Period is not a 30, 60 or 90 day period, the
requesting Bank shall determine the Eurodollar rate in its sole
discretion);
"D" is the number of days from the first day of the Remaining Interest
Period to the last day of the Remaining Interest Period;
"E" is the Affected Principal Amount.
"Affected Principal Amount" shall mean, as applicable, (i) the principal amount
of a LIBOR Loan that Borrower fails to take after having given a Notice of
Borrowing therefor (unless such Notice of Borrowing has been withdrawn prior to
becoming irrevocable) or (ii) the amount of any prepayment or repayment of a
LIBOR Loan that occurs, or the entire principal amount of a LIBOR Loan that
converts to another Type of Loan on a date which is not the last day of the
Interest Period therefor.
"Remaining Interest Period" shall mean, as applicable, (i) the entire Interest
Period that would have been applicable to a LIBOR Loan that Borrower fails to
take after having given a Notice of Borrowing therefor (unless such Notice of
Borrowing has been withdrawn prior to becoming irrevocable) or (ii) if a
prepayment or repayment on a LIBOR Loan occurs, or a LIBOR Loan converts to a
Loan of another Type of Loan, whether or not required hereby, prior to the last
day of the Interest Period therefor, the period from and including the date
thereof to but excluding the last day of such Interest Period.
If a Bank claims compensation under this Section 2.12, such Bank shall furnish
a certificate to Borrower (with a copy to the Agent if it is not the Bank
involved) that provides a detailed
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calculation of the amount to be paid to such Bank, which certificate shall be
binding against Borrower, absent manifest error.
SECTION 2.13 Sharing of Payments, etc. Each of the Agent and the
Banks agrees that if it shall, whether through the exercise of rights under any
Loan Document or rights of banker's lien, set-off, counterclaim or otherwise
against Borrower or otherwise, obtain payment of a portion of the aggregate
Obligations owed to it which, taking into account all distributions made by the
Agent under this Agreement causes the Agent or such Bank to have received more
than it would have received had such payment been received by the Agent and
distributed pursuant to this Agreement, then (i) it shall notify the Agent and
each of the other Banks, (ii) it shall be deemed to have simultaneously
purchased and shall be obligated to purchase interests in the Obligations as
necessary to cause the Agent and all Banks to share all payments as provided
for herein, and (iii) such other adjustments shall be made from time to time as
shall be equitable to ensure that the Agent and all Banks share all payments of
Obligations as provided for herein; provided, however, nothing contained herein
shall in any way affect the right of the Agent or any Bank to obtain payment
(whether by exercise of rights of banker's lien, set-off, counterclaim or
otherwise) of indebtedness other than the Obligations. Borrower expressly
consents to the foregoing arrangements and agrees that any holder of any such
interest or other participation in the Obligations, whether or not acquired
pursuant to the foregoing arrangements, may to the fullest extent permitted by
law exercise any and all rights of banker's lien, set-off or counterclaim as
fully as if such holder were a holder of the Obligations in the amount of such
interest or other participation. If all or any part of any funds transferred
pursuant to this Section 2.13 is thereafter recovered from the seller under
this Section 2.13 which received the same, the purchase provided for in this
Section 2.13 shall be deemed to have been rescinded and the purchase price
restored to the extent of such recovery, together with interest, if any, if
interest is required pursuant to court order to be paid on account of the
possession of such funds prior to such recovery.
SECTION 2.14 Letters of Credit.
(a) Subject to the terms and conditions hereof, the Revolving
Commitments may be utilized, upon the request of Borrower, in addition to the
Revolving Loans provided for in Section 2.1 hereof, by the issuance by the
Issuing Bank of one or more Letters of Credit for the account of Borrower;
provided, however, that no Letter of Credit may be issued if (i) after giving
effect thereto (A) the Letter of Credit Exposure (including the amount of the
requested Letter of Credit) would exceed the Letter of Credit Limit or (B) such
Letter of Credit Exposure plus the aggregate outstanding principal balance of
the Revolving Loans would exceed the Revolving Commitments of all Banks, and
(ii) the expiration date thereof extends beyond the earlier of one year from
issuance or 5 Business Days prior to the Revolving Commitment Termination Date.
In addition to the applicable provisions of Article 3, all Letters of Credit
shall be issued upon the request of Borrower on the terms and conditions set
forth in this Section 2.14; and the provisions hereof that are applicable to
the issuance of a Letter of Credit shall be correspondingly applicable to each
renewal, extension or reissuance thereof, or amendment thereto. Upon the date
of
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issuance by the Issuing Bank of a Letter of Credit, the Issuing Bank shall be
deemed, without further action by any party hereto, to have sold to each Bank,
and each Bank shall be deemed, without further action by any party hereto, to
have purchased from the Issuing Bank, a participation in such Letter of Credit
and the related Letter of Credit Exposure, to the extent of such Bank's pro
rata share of the Revolving Commitments of all Banks. Borrower hereby
acknowledges and agrees to all such participations.
(b) Borrower shall give the Agent and the Issuing Bank at least 5
Business Days' prior written notice specifying the date each Letter of Credit
is to be issued and describing the proposed terms of such Letter of Credit,
including without limitation, the date, face amount, beneficiary and expiry
date thereof, the nature of the transactions proposed to be supported thereby
and such other information as the Issuing Bank shall reasonably request, all in
detail reasonably satisfactory to the Issuing Bank. Upon receipt of such
notice, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's pro rata share of the amount of such proposed Letter of Credit.
The issuance by the Issuing Bank of each Letter of Credit shall, in addition to
the conditions precedent set forth in Article 3, be subject to the conditions
precedent that such Letter of Credit shall be in such form, contain such terms
and support such transactions as shall be reasonably satisfactory to the Agent
and the Issuing Bank, and that Borrower shall have executed and delivered a
reimbursement agreement acceptable to the Issuing Bank, and such other
instruments and agreements relating to such Letter of Credit as either the
Agent or the Issuing Bank shall have reasonably requested. Each Letter of
Credit shall, to the extent not inconsistent with the express terms hereof or
the applicable Application, be such to the Uniform Customs and Practices for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500 (together with any subsequent revisions thereof approved by
a Congress of the International Chamber of Commerce and adhered to by the
Issuing Bank (the "UCP")), and shall, as to matters not governed by the UCP, be
governed by, and construed and interpreted in accordance with, the laws of the
State of Texas (other than conflict of law principles).
(c) Borrower agrees to pay the following fees, by remittance to
the Agent, in respect of Letters of Credit issued hereunder: (i) with respect
to each Letter of Credit which is issued as a standby letter of credit, for the
account of the Issuing Bank, a fee equal to $175.00; (ii) with respect to each
Letter of Credit which is issued as a standby letter of credit, for the ratable
account of the Banks, a fee equal to (x) the per annum rate of interest equal
to the Applicable Margin in effect for Revolving Loans on the date of issuance
multiplied by (y) the face amount of such Letter of Credit for the stated term
of such Letter of Credit, adjusted for the actual days outstanding; (iii) with
respect to each Letter of Credit which is issued as a commercial letter of
credit, for the ratable account of the Banks, a fee in an amount equal to 1/4%
multiplied by the face amount of each such Letter of Credit (subject to a
minimum fee of $50.00 per each such Lender of Credit); and (iv) with respect to
the negotiation of each Letter of Credit, for the account of the Issuing Bank,
a fee equal to $50.00, each of the foregoing fees being non-refundable. The
foregoing fees shall be due and payable as follows: (A) fees under clause
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(i) above shall be due and payable upon issuance of the Letter of Credit; (B)
fees under clause GO above shall be due and payable quarterly in advance on
each Quarterly Date with respect to the portion of the stated term of the
Letter of Credit covered by the next succeeding calendar quarter; and (C) fees
under clauses (iii) and (iv) shall be due and payable upon negotiation of the
Letter of Credit. The foregoing fees are distinct from, and in addition to,
interest on the Notes and Loans, if any, made in respect of the Letters of
Credit, and fees and other amounts otherwise provided herein.
(d) Upon receipt from the beneficiary of any Letter of Credit of
any demand for payment under such Letter of Credit, the Issuing Bank shall
promptly notify Borrower, the Agent and each Bank of Borrower's Reimbursement
Obligations as a result of such demand and the date on which any payment is to
be made to such beneficiary in respect of such demand. Borrower shall, by 1:00
P.M. (St. Louis time) on the date on which a drawing is to be made, reimburse
the Issuing Bank for any amount paid or to be paid by the Issuing Bank upon any
drawing under any Letter of Credit, without presentment, demand, protest or
further notice or other formalities of any kind, in an amount, in same day
funds, and the unpaid balance of such amount from time to time remaining
outstanding and unpaid after each such drawing shall accrue interest, until
paid in full, at the Default Rate, which interest shall be due and payable on
demand, or if demand is not sooner made, then on the Quarterly Date next
following such drawing and, if applicable, on each Quarterly Date thereafter.
(e) If, by 1:00 P.M. (St. Louis time) on the day on which a
drawing is to be made or is made, Borrower fails to reimburse the Issuing Bank
as provided in Section 2.14(d), for whatever reason, the Issuing Bank shall
promptly notify the Agent, and the Agent shall promptly notify each Bank of the
unreimbursed amount of such drawing and of such Bank's respective pro rata
portion thereof. On the date of such notice (or if such notice is given after
1:00 P.M. (St. Louis time) on such date, on the next succeeding Business Day),
each Bank agrees, without regard to the existence of a Default or Event of
Default, to pay to the Issuing Bank, an amount equal to such Bank's pro rata
portion of such unreimbursed amount, together with interest on such amount for
each day from the date the Issuing Bank pays such draw to the date of payment
by such Bank of such amount at a rate of interest per annum equal to the
Federal Funds Rate for such period. The Issuing Bank shall pay to each Bank
such Bank's pro rata portion of all amounts received from Borrower for payment,
in whole or in part, of the Reimbursement Obligation in respect of any Letter
of Credit, but only to the extent such Bank has made payment to the Issuing
Bank in respect of such Letter of Credit pursuant to this Section 2.14(e).
(f) Reimbursement Obligations of Borrower in respect of the
Letters of Credit shall be absolute, unconditional and irrevocable, and shall
be paid strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including, without limitation, the following
circumstances:
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(1) any lack of validity or enforceability of any Letter
of Credit, or any agreement or instrument related thereto, or any
other Loan Documents;
(2) any amendment or waiver of, or any consent to
departure from, the terms of any Letter of Credit or any other Loan
Document, without the express prior written consent of the Issuing
Bank and the Required Banks;
(3) the existence of any claim, set-off, defense or other
rights which Borrower may have at any time against any beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), any Bank or
any other Person, whether in connection with such Letter of Credit,
this Agreement, any other Loan Document or any agreement or instrument
related thereto, the transactions contemplated herein, or any
unrelated transaction;
(4) any statement, draft, certificate, demand or any
other document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect
whatsoever;
(5) payment by the Issuing Bank under any Letter of
Credit against presentation of a draft, demand, certificate or other
document which appears on its face to comply but does not in fact
comply with the terms of such Letter of Credit;
(6) any material adverse change in the financial
condition of Borrower;
(7) any breach of any Loan Document by Borrower or any
other Person; or
(8) any other circumstances or happening whatsoever,
whether or not similar to any of the foregoing.
(g) IN ORDER TO INDUCE THE ISSUANCE OF LETTERS OF CREDIT BY THE
ISSUING BANK, (1) BORROWER AGREES THAT THE ISSUING BANK SHALL NOT BE
RESPONSIBLE OR LIABLE FOR, AND BORROWER'S OBLIGATIONS HEREUNDER AND UNDER EACH
OTHER LOAN DOCUMENT WITH RESPECT TO THE LETTERS OF CREDIT SHALL NOT BE AFFECTED
BY, ANY CIRCUMSTANCE, ACT OR OMISSION WHATSOEVER (WHETHER OR NOT KNOWN TO THE
ISSUING BANK) OTHER THAN A CIRCUMSTANCE, ACT OR OMISSION CAUSED SOLELY BY AND
RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE ISSUING BANK,
AS DETERMINED BY A COURT OF COMPETENT JURISDICTION, AND (II) BORROWER ASSUMES
ALL RISK OF THE ACTS OR OMISSIONS OF THE BENEFICIARY OR ANY TRANSFEREE OF ANY
LETTER OF CREDIT WITH RESPECT TO THE USE OF SUCH LETTER OF CREDIT. NETHER THE
ISSUING BANK NOR ANY OF ITS AFFILIATES, NOR ANY OF ITS OR THEIR OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS,
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DIRECTORS OR INSURERS, OR ANY OF ITS OR THEIR SUCCESSORS ASSIGNS, HEIRS AND
LEGAL REPRESENTATIVES (COLLECTIVELY, THE "ISSUING BANK PARTIES") SHALL BE
LIABLE OR RESPONSIBLE FOR: (1) VALIDITY, SUFFICIENCY OR GENUINENESS OF
CERTIFICATES OR OTHER DOCUMENTS, OR OF ANY ENDORSEMENTS THEREON, EVEN IF SUCH
CERTIFICATES OR OTHER DOCUMENTS SHOULD IN FACT PROVE TO BE IN ANY OR ALL
RESPECTS INVALID, INSUFFICIENT, FRAUDULENT OR FORGED; (2) ERRORS, OMISSIONS,
INTERRUPTIONS OR DELAYS IN TRANSMISSION OR DELIVERY OF ANY MESSAGES OR ADVICES
BY MAIL, TELEX OR OTHERWISE, WHETHER OR NOT THEY BE IN CODE; (3) ERRORS IN
TRANSLATION OR FOR ERRORS IN INTERPRETATION OF FOREIGN, TECHNICAL
INDUSTRY-SPECIFIC TERMS; (4)THE USE THAT MAY BE MADE OF ANY LETTER OF CREDIT OR
FOR ANY ACTS OR OMISSIONS OR THE BENEFICIARY AND ANY TRANSFEREE IN CONNECTION
THEREWITH; (5) PAYMENT BY THE ISSUING BANK AGAINST PRESENTATION OF DOCUMENTS
THAT DO NOT COMPLY WITH THE TERMS OF ANY CORRESPONDING LETTER OF CREDIT,
INCLUDING FAILURE OF ANY DOCUMENTS TO BEAR ANY REFERENCE OR ADEQUATE REFERENCE
TO SUCH LETTER OF CREDIT; (6)ANY CONSEQUENCE ARISING FROM CAUSES BEYOND THE
CONTROL OF THE ISSUING BANK; AND(7)ANY OTHER CIRCUMSTANCES WHATSOEVER IN MAKING
OR FAILING TO MAKE PAYMENT UNDER ANY LETTER OF CREDIT; EXCEPT ONLY THAT
BORROWER SHALL HAVE A CLAIM AGAINST THE ISSUING BANK, AND THE ISSUING BANK
SHALL BE LIABLE TO BORROWER, TO THE EXTENT, BUT ONLY TO THE EXTENT, OF ANY
DIRECT, AS OPPOSED TO CONSEQUENTIAL, SPECIAL, INDIRECT OR PUNITIVE DAMAGES
SUFFERED BY BORROWER WHICH BORROWER PROVES WERE CAUSED BY THE FAILURE OF THE
ISSUING BANK TO DETERMINE WHETHER ANY DRAFT, CERTIFICATE OR OTHER DOCUMENT
PRESENTED UNDER ANY LETTER OF CREDIT APPEARED ON ITS FACE TO COMPLY WITH THE
TERMS OF SUCH LETTER OF CREDIT. IN FURTHERANCE OF THE FOREGOING, AND NOT IN
LIMITATION THEREOF, THE ISSUING BANK MAY ACCEPT CERTIFICATES OR OTHER DOCUMENTS
THAT APPEAR ON THEIR FACE TO BE IN ORDER, WITHOUT RESPONSIBILITY FOR FURTHER
INVESTIGATION. NONE OF THE FOREGOING SHALL AFFECT, IMPAIR OR PREVENT THE
VESTING OF ANY OF THE RIGHTS AND POWERS OF THE ISSUING BANK, THE AGENT OR ANY
BANK HEREUNDER FOR ANY OF THE AGREEMENTS ENTERED INTO BY BORROWER WITH RESPECT
TO ANY LETTER OF CREDIT, ALL OF WHICH RIGHTS SHALL BE CUMULATIVE.
IN FURTHERANCE AND NOT IN LIMITATION OF THE FOREGOING PROVISIONS,
BORROWER AGREES THAT ANY ACTION TAKEN BY THE ISSUING BANK (INCLUDING AS A
RESULT OF ITS OWN NEGLIGENCE) WITHOUT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
UNDER OR IN CONNECTION WITH ANY LETTER OF CREDIT, OR ANY RELATED DRAFTS,
CERTIFICATES, DOCUMENTS OR INSTRUMENTS, SHALL BE BINDING, ABSOLUTELY,
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IRREVOCABLY AND UNCONDITIONALLY, ON BORROWER AND SHALL NOT PUT THE ISSUING BANK
UNDER ANY RESULTING LIABILITY TO BORROWER, AND BORROWER MAKES LIKE AGREEMENT AS
TO ANY INACTION OR OMISSION, UNLESS WITH GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. BORROWER ACKNOWLEDGES AND AGREES THAT THE FOREGOING PROVISIONS OF
THIS SUBSECTION 2.14(G) ARE INTENDED TO RELEASE THE ISSUING BANK FROM ANY
OBLIGATION OR LIABILITY RESULTING FROM, OR ATTRIBUTABLE TO, ANY ISSUING BANK,
UNDER, OR IN CONNECTION WITH, ANY LETTER OF CREDIT.
SECTION 2.15 Pro Rata Treatment. Except as required under Section
2.6(b), Section 2.6(c), Section 2.12, Section 2.14(c), Section 2.14(d) and
Article 9, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the fees,
each termination or reduction of the Commitments, and each refinancing of any
Borrowing with, conversion of any Borrowing to or continuation of any Borrowing
as a Borrowing of any Type, shall be allocated ratably and pro rata among the
Banks in accordance with their respective Commitments. Each Bank agrees that
in computing such Bank's portion of any Borrowing to be made hereunder, the
Agent may, in its discretion, round each Bank's portion of such Borrowing to
the next higher or lower whole dollar amount.
SECTION 2.16 Proceeds of Loans. Subject to the terms of this
Agreement, the proceeds of the Loans and the Letters of Credit shall be used
for accounts receivable and inventory financing, new store opening costs,
expansion costs of existing stores and other general corporate purposes of
Borrower.
Article 3
CONDITIONS
SECTION 3.1 Initial Loans on the Closing Date. The obligations
of the Banks to make any Loan, or of the Issuing Bank to issue any Letter of
Credit, on the Closing Date are subject to the conditions precedent that on or
before the Closing Date, the Agent shall have received, there shall have been
performed and there shall exist, the documents, actions and other matters set
forth in Annex C hereto, each in form, scope and substance, and (as applicable)
dated as of a date, satisfactory to the Agent and its counsel.
SECTION 3.2 All Loans, Conversions/Continuations and Letters of
Credit. The obligations of the Banks to make each Loan or to continue any Loan
as, or to convert any Loan into, a LIBOR Loan or a Base Rate Loan, or of the
Issuing Bank to issue any LeTter of Credit, are subject to, in addition to the
conditions referred to in Section 3.1, the satisfaction of the Agent as to the
following conditions precedent:
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(a) Representations True and No Defaults. (i) To Borrower's
knowledge, the representations and warranties contained and referred to in
Article 4 (other than those representations and warranties limited by their
terms to a specific date) shall be true, complete and accurate in all material
respects on and as of the date of the Credit Event as though made on and as of
such date; (ii) no event shall have occurred since the date of the most recent
financial statements delivered pursuant to Section 5.1 (or in the case of a
Credit Event prior to the delivery of such statements, September 30, 1994),
that has caused a Material Adverse Effect; and (iii) no Event of Default or
Default shall have occurred and be continuing.
(b) No Material Adverse Change. As of the date of the Credit
Event, no change or event that might cause a Material Adverse Effect shall have
occurred.
(c) Borrowing/Letter of Credit Documents. Other than a
continuation or conversion pursuant to Section 2.5, the Agent shall have
received (i) a certificate signed by an Authorized Officer dated as of such
date to the effects set forth in Section 3.2(a), (ii) a Notice of Borrowing
delivered in accordance with Section 2.2(a) or a notice requesting a Letter of
Credit delivered in accordance with Section 2.14(b), as the case may be, and
(iii) such other documents and certificates relating to the transactions herein
contemplated as the Issuing Bank or Banks, as applicable (through the Agent),
may reasonably require.
(d) Continuation/Conversion Documents On the date of any
continuation or conversion pursuant to Section 2.5, the Agent shall have
received (i) a certificate executed by an Authorized Officer dated as of such
date to the effects set forth in Section 3.2(a), (ii) a Continuation/Conversion
Notice delivered in accordance with Section 2.5(b), and (iii) such other
documents and certificates relating to the transactions herein contemplated as
the Banks (through the Agent) may reasonably require.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
To induce each of the Agent, the Issuing Bank and the Banks to enter
into and perform its agreements pursuant to this Agreement, including, without
limitation, the making of the Revolving Loans and Term Loans and the issuance
of Letters of Credit, Borrower (i) makes and reaffirms to each of the Agent,
the Issuing Bank and the Banks each of the representations and warranties
contained in each Loan Document, and (ii) without duplication, represents and
warrants to each of the Agent, the Issuing Bank and the Banks that, at the time
of execution hereof and the transactions contemplated hereby and as of each of
the dates of each of the financial statements required to be delivered, from
time to time, pursuant to Section 5.1:
SECTION 4.1 Entity Status, Power and Authority. Borrower is a
corporation duly organized and validly existing in good standing under the laws
of the State of Texas and is duly
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qualified as a foreign corporation and in good standing in all states in which
the failure to be so qualified could have a Material Adverse Effect, all of
which jurisdictions are set forth in Schedule 4.1 hereto. Borrower has the
corporate power and authority and all Legal Rights which are necessary (i) to
own, lease, use and operate its Property and to transact its business as now
being and as proposed to be conducted and (ii) to execute and deliver each Loan
Document, perform and comply with all obligations and agreements thereunder and
consummate the transactions contemplated thereby.
SECTION 4.2 Authorization; Consents. The execution, delivery and
performance by Borrower of each Loan Document, and the consummation of the
transactions contemplated thereby, have been duly authorized by all necessary
corporate and other action by, on behalf of, and with respect to, Borrower, and
no consent, approval, authorization, declaration, filing, order or other action
by, on behalf of, or with respect to, Borrower is required of, or from, any
Governmental Authority or other Person in connection with any of such
execution, delivery or performance, or the validity or enforceability of any
Loan Document against Borrower or any Property covered thereby which has not
been obtained and is final and in full force and effect.
SECTION 4.3 No Conflicts. Neither the execution or delivery of
any Loan Document, nor the consummation of any transaction contemplated
therein, nor the performance of, or compliance with, any of the terms and
provisions thereof, does or will (i) conflict with, or result in or constitute
a breach, violation or default of, or require a consent under, (A) any
provision of Law to which Borrower or any of its Property is subject or bound,
(B) any judgment or Legal Right applicable to Borrower or any of its Property,
(C) any lease, indenture, loan agreement, note, purchase or acquisition
agreement, mortgage, deed of trust or other agreement or instrument to which
Borrower is a party or by which it or any of its Property may be bound or
subject, or (D) any provision of the charter or bylaws of Borrower, or (ii)
result in the creation or imposition of any Lien or Negative Pledge upon
Borrower or any of its Property, except for the benefit of the Agent, the
Issuing Bank and the Banks.
SECTION 4.4 Enforceable Obligations; Lien Establishment. Each
Loan Document has been duly executed and delivered by Borrower and constitutes
the legal, valid and binding obligations of Borrower, enforceable against
Borrower in accordance with its respective terms.
SECTION 4.5 Title to Properties. Borrower has good and
indefeasible title to, or valid leasehold interests in, as applicable, all of
its Property, free and clear of all Liens (except Permitted Liens), Negative
Pledges and any other adverse claims of any nature, except any of the foregoing
which are for the benefit of the Agent, the Issuing Bank and the Banks. Except
as set forth in Schedule 4.5, there are no financing statements, lien
instruments, abstracts of judgment, levies, executions or other filings of
record in any jurisdiction naming Borrower as "debtor", "mortgagor", "obligor"
or the like, or covering any Property of Borrower, except (i) those evidencing
Permitted Liens and (ii) those which individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
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SECTION 4.6 Financial Condition.
(a) Financial Statements. Borrower has delivered to the Agent
copies of the audited balance sheet of Borrower as of January 31, 1994, and the
related statements of income, stockholders' equity and cash flows for the year
ended on such date, with reports thereon by KPMG Peat Marwick, its independent
public accountants, and unaudited copies of such financial statements of
Borrower for the monthly period ended September 30, 1994. Such financial
statements (together with related schedules and notes, the "Financial
Statements") are true, complete and accurate in all material respects, fairly
present the financial condition of Borrower as of the respective dates thereof
and have been prepared in accordance with GAAP applied throughout the periods
covered thereby, subject to normal year-end audit adjustments. As of the date
hereof, Borrower has no (i) obligations, liabilities or other Indebtedness
(including Guarantees) or (ii) Investments in any Person which are (separately
or in the aggregate) not reflected in such Financial Statements; and there has
been no material adverse change in the financial condition, management,
control, operations, business or prospects of Borrower or its Property (as
applicable) since the date of the Financial Statements. Without limiting the
foregoing, the Banks recognize that the above described interim financial
statements of Borrower do not include full footnote disclosures that are
included in the year-end financial statements of Borrower.
(b) Solvency. Upon giving effect to the issuance of each Note
(and the incurrence of the Indebtedness thereunder), the execution, delivery
and performance of each Loan Document by Borrower, and the consummation of the
transactions contemplated thereby, the following are and will be true, complete
and accurate in all material respects:
(i) the fair saleable value of the assets of Borrower
exceeds the amount that will be required to be paid on or in respect
of the existing debts and other liabilities (including contingent
liabilities) of Borrower, as they mature;
(ii) the assets of Borrower do not constitute unreasonably
small capital for Borrower to carry out its business as now conducted
and as proposed by it to be conducted;
(iii) Borrower does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be received by Borrower, and of amounts
to be payable on or in respect of debt of Borrower); and
(iv) Borrower does not intend, nor believe, that final
judgments against it in actions for money damages will be rendered at
a time when, or in an amount such that, it will be unable to satisfy
any such judgments promptly in accordance with their terms (taking
into account the maximum reasonable amount of such judgments in any
such actions and the earliest reasonable time at which such judgments
might be rendered).
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SECTION 4.7 Full Disclosure. There is no fact that Borrower has
not disclosed to the Banks which might reasonably be expected to have a
Material Adverse Effect. Neither the financial information referenced in
Section 4.6(a) nor any certificate, report, exhibit, schedule, statement,
disclosure letter or other information furnished to the Agent or any Bank by,
or on behalf of, Borrower, whether heretofore or herewith, in connection with
the negotiation, preparation, execution, delivery or consummation of this
Agreement and the other Loan Documents, or included therein or delivered
pursuant thereto, contains any untrue statement of a material fact or omits or
omitted to state any material fact necessary to make and keep the statements
contained herein or therein from being misleading. All information furnished
after the date hereof by or on behalf of Borrower shall be true, complete and
accurate in all material respects.
SECTION 4.8 No Default or Adverse Condition. No event has
occurred and is continuing which constitutes a Default or an Event of Default,
and there exists no event, circumstance, condition or casualty (whether or not
covered by insurance) which could have a Material Adverse Effect.
SECTION 4.9 Material Agreements; Insurance. Borrower is not in
default under, or in violation or breach of (nor has any event or circumstance
occurred which, but for the passage of time or the giving of notice, or both,
would constitute a default under, or a violation or breach of), (i) its
charter, bylaws or other internal governance document, (ii) any Judgment
affecting it or any of its Property, or (iii) any partnership agreement or any
material indenture promissory note, contract, lease, purchase or acquisition
agreement, loan agreement, mortgage, deed of trust, security agreement,
license, permit, franchise or other material agreement or obligation to which
it is a party or by which it or any of its Property is bound. Attached hereto
as Schedule 4.9 is a complete and correct list of all of Borrower's material
patents, trademarks, tradenames, copyrights and service marks and all
applications, registrations and licenses relating thereto. Borrower is not a
party to, or bound by, any futures contract, forward agreement or contract,
interest rate swap contract, commodity price swap contract or other hedging
agreement or material contract or agreement. Borrower maintains insurance in
compliance with Section 5.10.
SECTION 4.10 No Litigation. Except as set forth on Schedule 4.10
(and therein designating which of the following clauses (i) through (iv) is
applicable thereto), as of the date hereof, there is no Litigation or Judgment
pending, or to the knowledge of Borrower threatened, against, affecting or
challenging (as applicable) (i) any Property of Borrower, including, without
limitation, Borrower's sole legal and beneficial title therein and all Legal
Rights with respect thereto, (ii) the validity or enforceability of any Loan
Document, (iii) the ability of Borrower to enter into, execute, deliver and
perform its obligations under each Loan Document to which it is a party as
provided therein, and otherwise to consummate the actions and transactions
contemplated thereby, (iv) Borrower which, if adversely determined, could
reasonably be expected to result in a Judgment, individually or when aggregated
with all other Judgments, (A)
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for the payment of money in excess of $1,000,000 (regardless of insurance
coverage) or (B) for the forfeiture of any Legal Rights of Borrower (other than
of a trivial or non-consequential nature), or (v) Borrower, or any of its
Property or Legal Rights, which might otherwise have a Material Adverse Effect.
SECTION 4.11 Use of Proceeds; Margin Stock. The proceeds of the
Loans and each Letter of Credit will be used solely as provided in Section
2.16, and none of such proceeds will be used (i) for the purpose of purchasing
or carrying any "margin stock" as defined in Regulations G, T, U or X, (ii) for
the purpose of maintaining, reducing or retiring any Indebtedness which Was
originally incurred to purchase or carry a "margin stock", or (iii) for any
other purpose which might constitute this transaction a "purpose credit" within
the meaning of Regulations G, T, U or X. Borrower is not engaged in the
business of extending credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying "margin stock". Neither Borrower nor any
Person acting on behalf of Borrower has taken or will take any action which
might cause any of the Loan Documents to violate Regulations G, T, U or X, or
any other regulations of the Board of Governors of the Federal Reserve System
or to violate the Exchange or any rule or regulation thereunder, in each case
as now in effect or as the same may hereafter be in effect.
SECTION 4.12 No Financing of Regulated Corporate Takeovers. No
proceeds of the, Loans will be used to acquire any security in any transaction
which is subject to Sections 13 or 14 of the Exchange Act, including
particularly Sections 13(d) and 14(d) thereof.
SECTION 4.13 Taxes. Borrower has filed all returns, reports,
statements and filings with respect to all Taxes, deductions and withholdings
required to be filed by Borrower; all such returns, reports, statements and
filings are true, complete and accurate in all material respects; and all
Taxes, deductions and withholdings with respect to Borrower or any of its
Property have been paid prior to the time that such Taxes, deductions or
withholdings could give rise to a Lien thereon, except for those being
diligently contested in good faith by appropriate proceedings and for which any
reserves required under GAAP have been established by Borrower. Except as set
forth on Schedule 4.13, to Borrower's knowledge, (i) no tax or similar Lien has
been filed on, or is being enforced against, Borrower or any of its Property,
and no United States Federal income tax returns of Borrower have ever been and
are not now being, examined or audited, and (ii) there is no proposed-Tax
assessment against Borrower or any of its Property, and there is no basis for
any such assessment.
SECTION 4.14 Principal Office; Names; Primary; Business. The
actual and anticipated principal place of business of Borrower, or if it has
more than one such place, its chief executive office, is shown in Schedule
4.14, and Borrower intends to maintain its principal records and books at such
office. Schedule 4.14 also lists the address of each location at which
Borrower operates or conducts its business or maintains or stores any of its
equipment, inventory or other Property. Except as set forth on Schedule 4.14,
Borrower (i) has not conducted within
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the last 5 years and is not now conducting and does not currently have any
plans to hereafter conduct, and has not owned within the last 5 years and is
not now owning and does not currently have any plans to hereafter own, any
material business, operations or Property in any name other than "Hastings
Books, Music & Video, Inc." or any other name which includes the word
"Hastings", and (ii) has not, within the last 5 years, merged into,
consolidated with, or acquired, and has no current plans to merge into,
consolidate with or acquire, any Person. The primary business of Borrower is
the retail sale of entertainment products, including music products, including
tapes, compact discs, prerecorded video tapes, records and accessories, as well
as the retail sale of books and the retail rental of prerecorded video tapes.
SECTION 4.15 Subsidiaries. Borrower does not have any
Subsidiaries and is not a general or limited partner in any Person, except as
set forth in Schedule 4.15, which lists as to each Subsidiary or general or
limited partnership interest: (i) name of entity; (ii) jurisdiction of
incorporation or organization; (iii) foreign qualification; (iv)
share/percentage/nature ownership; and (v) primary business. Except as set
forth in Schedule 4.15, there are no outstanding warrants, options, rights,
contracts or commitments of Borrower of any kind entitling any one or more
Persons to purchase or otherwise acquire (A) in excess of an aggregate of
30,000 shares of capital stock of Borrower or (B) any securities convertible
into or exchangeable for in excess of an aggregate of 30,000 shares of capital
stock of Borrower.
SECTION 4.16 ERISA. No Reportable Event, (as defined in Section
4043(b) of ERISA) to which the notice requirement has not been waived has
occurred with respect to any Plan. Each Plan complies with all applicable
provisions of ERISA, and Borrower has filed a reports required by ERISA and the
Code to be filed with respect to each Plan. Borrower does not have knowledge
of any event which could result in a liability of Borrower to the PBGC.
Borrower has met all requirements with respect to funding the Plans imposed by
ERISA or the Code. Since January 1, 1986, there have not been any, nor are
there now existing any events or conditions that would permit, termination of
any Plan under circumstances which would cause the Lien provided under Section
4068 of ERISA to attach to any Property of Borrower. The value of the Plans'
liabilities as defined in Section 4001(a)(16) of ERISA on the date hereof does
not exceed the value of such Plans' assets allocable to such benefits as of the
date of this Agreement by more than $500,000.00 and shall not be permitted to
do so hereafter. No existing Plan is a multiemployer plan (as defined in
Section 3(37) of ERISA) and Borrower has not made a complete or partial
withdrawal from any such multiemployer plan so as to incur withdrawal liability
as defined in Section 4201 of ERISA.
SECTION 4.17 Compliance with Law. Borrower has complied in all
material respects with, and is in compliance in all material respects with, all
Laws applicable to it and its Property, including Environmental Laws and the
provisions of the Fair Labor Standards Act of 1938, 29 U.S.C. Section 200, et
seq., as amended, including specifically, but without limitation, 29 U.S.C.
Section 215(a).
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SECTION 4.18 Government Regulation. Borrower is not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Investment Company Act of 1940, the Interstate Commerce Act (as
any of the preceding acts have been amended), or any other Law which regulates
either the incurring by Borrower of Indebtedness or the determination or
setting of, or changes to, the rates or amounts charged by Borrower for the
goods or products it sells or the services it performs, including Laws relating
to common contract carriers or the sale of electricity, gas, steam, water or
other public utility services. Borrower is not (i) an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, and Borrower is not "controlled" by such a company, or (ii) a
"holding company" or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended, and is not a "subsidiary
company" or an "affiliate" of any such company.
SECTION 4.19 Insider. Borrower is not, and no Person having
"control" (as that term is defined in 12 U.S.C. Section 375(b)(5) or in
regulations promulgated pursuant thereto) of Borrower is, an "executive
officer", "director" or "principal shareholder" (as those terms are defined in
12 U.S.C. Section 375(b) or in regulations promulgated pursuant thereto) of
any Bank, of a bank holding company of which any Bank is a Subsidiary, or of
any Subsidiary of a bank holding company of which any Bank is a Subsidiary.
SECTION 4.20 Certain Environmental Matters. Except as disclosed
in Schedule 4.20, and after reasonable inquiry made by or on behalf of
Borrower, (i) Borrower (A) is not aware of, and has not received notice or
otherwise learned of, any Environmental Complaint or Environmental Liability
which could individually or in the aggregate have a Material Adverse Effect,
(B) has no threatened or actual liability (contingent, direct or otherwise) in
connection with the release or threatened release, generation, handling,
treatment, storage, disposal or transportation of any Hazardous Material, or
other substance which could individually or in the aggregate have a Material
Adverse Effect, (C) is not aware of, and has not received notice or otherwise
learned of, any federal or state investigation evaluating whether any remedial
action is needed to respond to a release or threatened release, and/or the
generation, handling, treatment, storage, disposal or transportation of any
Hazardous Material for which Borrower is or may be liable, which could
individually or in the aggregate have a Material Adverse Effect, (D) is not in
violation of any Judgment or Litigation based upon Environmental Laws, or
subject to any such Judgment or Litigation, which could individually or in the
aggregate have a Material Adverse Effect, (E) has, in full force and effect,
all material permits, licenses, approvals and other authorizations necessary
for the use and operation of its Property, including, the generation, handling,
treatment, storage, disposal, transportation or release of any Hazardous
Material, and (F) is in compliance with all Environmental Laws, except to the
extent the failure to so comply could not reasonably be expected to have a
Material Adverse Effect or to result in any Environmental Liability that could
reasonably be expected to have a Material Adverse Effect; and (ii) all
Properties of Borrower are free from any Hazardous Material and Environmental
Liens which could individually or in the aggregate have a Material Adverse
Effect. There have been
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no environmental investigations, studies, audits, tests, reviews or other
analyses conducted by or on behalf of, or which are in the possession or
knowledge of, Borrower, or any of Borrower's predecessors, in relation to any
Property now or previously owned or leased by Borrower, or any of Borrower's
predecessors, which have not been (y) made available to any Bank or its agents,
employees or contractors and (z) listed in Schedule 4.20. Borrower has not
received a notice of any Environmental Liability, Environmental Lien or
Environmental Complaint other than those which have been provided to the Agent
and listed in Schedule 4.20.
SECTION 4.21 Insurance:Certifications. The insurance certificates
delivered pursuant to Section 3.1 are true, complete and accurate in all
material respects, and the insurance coverage set forth therein complies in all
regards with the requirements set forth in Section 5.10. In furtherance of the
foregoing, but not in limitation thereof, and in furtherance of all other
matters as to which certifications are required pursuant to Section 3.1, all
matters certified to by each and every Person which were evidenced by
certificates and certifications referred to in Section 3.1 were true, complete
and accurate in all material respects, as so certified and received by the
Agent, the Issuing Bank and each Bank, as of the Closing Date and were
certified by officers of Borrower, each of whom was authorized to execute and
deliver such certificate for and on behalf of Borrower.
ARTICLE 5
AFFIRMATIVE COVENANTS
Until payment in full of the Notes, the payment and performance of all
other Obligations, and the expiration and termination of all Letters of Credit,
and so long as the Banks have any obligation hereunder to make any Loans or the
Issuing Bank has any obligation to issue any Letters of Credit, Borrower agrees
that it will punctually and completely perform and observe each of the
following covenants:
SECTION 5.1 Financial Statements, Reports and Documents. Borrower
shall deliver the following to the Agent, in form, substance and scope
satisfactory to Agent and otherwise as provided herein:
(a) Quarterly Statements. As soon as available, and in any event
within 60 days after the end of each of the first three Fiscal Quarters of each
Fiscal Year so long as Borrower remains a privately held corporation or in any
event within 50 days after the end of each Fiscal Quarter if Borrower becomes a
public company subject to the reporting requirement of the Exchange Act, copies
of the statements of income, stockholders' equity and cash flow of Borrower for
such quarter and for the portion of the Fiscal Year ending with such quarter,
and the related balance sheet as at the end of such period, in each case
setting forth in comparative form the corresponding figures for the
corresponding periods of the preceding Fiscal Year, all in
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reasonable detail and certified by the president, chief financial officer or
controller as being true, complete and accurate in all material respects, as
fairly presenting the financial condition and results of operations of Borrower
for the periods therein covered, and as having been prepared in accordance with
GAAP, subject to normal year-end audit adjustments;
(b) Annual Statements. As soon as available, and in any event
within 120 days after the end of each Fiscal Year so long as Borrower remains a
privately held corporation or in any event within 95 days after the end of each
Fiscal Year if Borrower becomes a public company subject to the reporting
requirement of the Exchange Act, copies of the audited statements of income,
stockholders' equity and cash flow of Borrower for such Fiscal Year, and the
related balance sheet of Borrower as at the end of such Fiscal Year, in each
case setting forth in comparative form the corresponding figures for the
preceding Fiscal Year, all in reasonable detail and accompanied by (i) an
unqualified opinion of KPMG Peat Marwick or other independent public
accountants of recognized national standing selected by Borrower and reasonably
satisfactory to the Banks, to the effect that such financial statements have
been prepared in accordance with GAAP, and fairly present the financial
condition and results of operations of Borrower, as at the end of, and for,
such Fiscal Year, and (ii) a certificate executed by the president, chief
financial officer or controller to the same effect as such opinion;
(c) Audit, Management and Other Reports. Promptly upon receipt
thereof, a copy of each written report submitted to Borrower by independent
accountants in any annual, quarterly or special audit, review or examination;
(d) Compliance Certificate. Concurrently with the delivery of the
financial statements delivered pursuant to Sections 5.1(a) and (b),
respectively, a certificate in the form of Exhibit E, executed by the
president, chief financial officer or controller, (i) stating that a review of
the activities of Borrower during such period has been made under such
officer's supervision and that to the knowledge of such officer, Borrower has
observed, performed and fulfilled each and every obligation and covenant
contained in each Loan Document to which it is a party and is not in Default
under any Loan Document to which it is a party, or, if any such Default has
occurred, specifying the nature and status thereof, and (ii) setting forth in
reasonable detail the computation and information necessary to determine
whether Borrower is in compliance with Section 6.1 as of the end of the
respective Fiscal Quarter or Year, as applicable;
(e) Accountant's Certificate. Concurrently with the delivery of
the financial statements delivered pursuant to Section 5.1(b), a certificate of
the accountants who audited such financial statements and rendered the related
opinion, stating that they have reviewed this Agreement and each other relevant
Loan Document, and stating further whether, in making their audit, such
accountants have become aware of any condition or event which would constitute
a Default or Event of Default, and if any such condition or event then exists,
specifying the nature and period of existence thereof;
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(f) Insurance Reports. Within 30 days after any significant
change in insurance coverage by Borrower, a report describing such change; and,
with the annual financial statements furnished to the Agent under Section
5.1(b), a report describing the insurance coverage of Borrower;
(g) Litigation Reports. With the annual financial statements
furnished to the Agent under Section 5.1(b), reports by counsel to Borrower
describing all Litigation affecting Borrower or any of its Property; and if a
significant change in Litigation occurs or additional Litigation is threatened
or commenced during a Fiscal Quarter, with the quarterly financial statements
furnished to the Agent under Section 5.1(a) for such Fiscal Quarter, reports by
counsel to Borrower describing such changes in or additions to Litigation since
the date of the Litigation report most recently furnished to the Agent;
(h) Environmental Notices. Notice to the Agent, in writing,
promptly upon Borrower's receipt of notice or otherwise learning (whichever
first occurs) from any Person of any (i) Environmental Complaint or
Environmental Lien or (ii) any other claim, demand, action, event, condition,
report or investigation indicating any potential or actual liability (A) upon
which any Environmental Liability or Environmental Lien could result against
Borrower, any Bank or any Property of Borrower, or (B) arising in connection
with (1) the non-compliance with, or violation of, the requirements of any
Environmental Law, (2) the release or threatened release, generation,
treatment, handling, storage, disposal or transportation of any Hazardous
Material into the environment or which act, occurrence or event Borrower would
have a duty to report to a Governmental Authority under an Environmental Law,
or (3) the existence of any Environmental Lien on any Property of Borrower; and
Borrower shall immediately deliver a copy of each such notice to the Agent;
(i) Supplemented Schedules. As soon as possible, and in any event
within 15 days after Borrower obtains knowledge thereof, Borrower shall provide
the Agent with a supplement to any existing Schedule which would make such
Schedule (and any subsequent supplement thereto), and the corresponding
representation and warranty to which it applies, true, complete and accurate in
all material respects; provided, however, any such supplement shall not be
deemed to have amended any Schedule to this Agreement unless and until the
Banks have approved such amendment; and
(j) Other Information. Within such period reasonably prescribed
by the Agent, such other information concerning the business, operations,
Property or financial condition of Borrower as any Bank (through the Agent)
shall reasonably request.
SECTION 5.2 Payment of Taxes and Other Liabilities. Borrower
will pay and discharge when due, but in no event, later than 60 days following
the date when due, all trade payables, royalties, license fees, franchise fees,
operating costs and expenses, and similar expenses and obligations related to
its operations, except for Contested Claims; and, except for Contested
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Claims, Borrower will timely pay and discharge when due (i) all Taxes,
deductions and withholdings, (ii) all other material lawful claims against it
or any of its Property, and (iii) all of its other material Indebtedness,
obligations and liabilities.
SECTION 5.3 Maintenance of Existence and Rights: Conduct of
Business. Borrower will preserve and maintain its existence and all of its
Legal Rights necessary or desirable in the ordinary course of its business and
conduct and the ownership, maintenance and operation of its Property, and
conduct its business in an orderly and efficient manner consistent with good
business Practices and industry standards and in accordance with all Laws,
except where the failure to so preserve, maintain or conduct would only result
in a trivial and inconsequential effect. In addition, Borrower will act
prudently and in accordance with customary industry standards and with its
contractual obligations, in managing and operating its Property, business and
investments and will keep in good working order and condition, ordinary wear
and tear excepted, all of its Property and Legal Rights which are necessary or
desirable to the conduct of its business and the ownership and maintenance of
its Property.
SECTION 5.4 Notice of Default. As soon as possible, but in any
event within 5 Business Days of becoming aware thereof, Borrower shall furnish
to the Agent written notice of the existence of any condition or event which
constitutes or would become a Default or an Event of Default, which notice
shall specify the nature and period of existence thereof and the action which
Borrower is taking or proposes to take with respect thereto.
SECTION 5.5 Other Notices. As soon as possible, but in any event
within 5 Business Days of becoming aware thereof, Borrower will promptly notify
the Agent of (i) any material adverse change in the financial condition,
operations, Property or business of Borrower, (ii) any default under, or any
threatened or actual acceleration of the maturity of, any Indebtedness owing or
secured by Borrower (or any of its Property), which individually or in the
aggregate represents a monetary obligation of $1,000,000 or more, or one with
respect to which a default thereunder might have a Material Adverse Effect,
(iii) any default or event of default under one or more leases pertaining to
one or more locations at which Borrower operates or conducts any of its
business or stores any of its Property, if such event could individually or in
the aggregate have a Material Adverse Effect, (iv) any significant adverse
claim against or affecting Borrower or any of its Property, and (v) the
commencement of, and/or any material determination in, any Litigation which
could reasonably be expected to result in a Judgment in excess of $1,000,000
(without regard to insurance coverage). In respect to each of the foregoing
notices, Borrower will promptly provide to the Agent all reasonably related
information requested by the Agent, in reasonable detail satisfactory to the
Agent.
SECTION 5.6 Compliance with Loan Documents. Borrower will
promptly and completely comply with and observe and perform all covenants and
provisions of each Loan Document. In furtherance of the foregoing, but in no
way limiting the generality thereof, the proceeds of each Loan will be used
strictly in compliance with Section 2.16.
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SECTION 5.7 Compliance with Agreements. Borrower will promptly
comply in all material respects with all material contracts, leases,
agreements, indentures, mortgages or documents binding on it or affecting it or
its Property, business or operations.
SECTION 5.8 Access; Books and Records. Upon reasonable notice,
during all business hours, and at any time that an Event of Default continues
to exist, Borrower authorizes and will permit any representatives of the Agent,
the Issuing Bank or any Bank (i) to have access to, and grant permission for
such representatives to examine, copy or make excerpts from, any and all books,
records and documents that relate to the business, operations or Property of
Borrower, (ii) to inspect any and all Property of Borrower, and (iii) to
discuss the business, operations and financial condition of Borrower with its
officers and employees and its independent certified public accountants, legal
counsel (except for attorney/client privileged information and work product)
and other consultants, all of the foregoing at the expense of Borrower.
Borrower will maintain complete and accurate books and records of its
respective transactions in accordance with GAAP.
SECTION 5.9 Compliance with Law. Borrower will comply in all
material respects with all Laws applicable to it or any of its Property,
business operations or transactions.
SECTION 5.10 Insurance. Borrower will maintain insurance with
reputable insurers of sound financial strength and creditworthiness with
respect to its Property and as to its operations and business, all as required
by each Loan Document and otherwise in such types, amounts, scope and coverage,
and against such risks, casualties, contingencies and liabilities, as required
or necessitated by Law, and additionally, as is customarily maintained by other
Persons engaged in similar businesses and operations, the foregoing insurance
coverage specifically including the following: (i) worker's compensation or
similar insurance as may be required by applicable Law, (ii) public liability
insurance against claims for personal injury, death or property damage suffered
upon, in or about, any Property occupied by Borrower or occurring as a result
of the ownership, maintenance or operation by Borrower of any equipment,
vehicle or other Property or as the result of the use of products or equipment
manufactured, constructed, sold or operated by Borrower or services rendered by
it, and (iii) insurance against the loss or damage to the Property and
businesses of Borrower now owned or hereafter acquired. In addition, Borrower
(x) will deliver copies of the policies and endorsements for such insurance to
the Agent promptly after issuance or renewal of each, and (y) will cause each
policy of insurance to provide that such policy will not be canceled or
modified in any material respect (as to term, coverage, scope, property or
risks covered, or otherwise) without 10 days prior written notice to the Agent.
SECTION 5.11 ERISA Compliance. Borrower will at all times:
(a) make contributions to each Plan in a timely manner and in an
amount sufficient to comply with the minimum funding standards requirements of
ERISA and the Code;
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(b) immediately upon acquiring knowledge of any "reportable event"
to which the notice requirement has not been waived or of any "prohibited
transaction" (as such terms are defined in the Code or ERISA, as applicable) in
connection with a Plan, furnish the Agent with a statement executed by an
Authorized Officer setting forth the details thereof and the action which
Borrower proposes to take with respect thereto and, when known, any action
taken by the Internal Revenue Service with respect thereto;
(c) notify the Agent immediately upon receipt by Borrower of any
notice of an interest by the PBGC to terminate or appoint a trustee or of the
institution of any proceeding or other action which may result in the
termination of any Plan and furnish to the Agent copies of such notice;
(d) furnish the Agent with copies of each annual report (together
with all related schedules and attachments) for each Plan filed with the
Internal Revenue Service not later than 30 days after such report has been
filed; and
(e) furnish the Agent with copies of any request for waiver of the
funding standards or extension of the amortization periods required by Sections
303 and 304 of ERISA or Section 412 of the Code promptly after the request is
submitted to the Secretary of the Treasury, the Department of Labor or the
Internal Revenue Service, as the case may be.
SECTION 5.12 Further Assurances. Borrower will cure and cause to
be cured promptly any defects or deficiencies in the execution, delivery,
creation or issuance of the Loan Documents, or any of them, and any of the
transactions contemplated thereby. In addition, Borrower will Promptly make,
execute or endorse, and acknowledge and deliver or file, or cause each of the
same to be done, all such vouchers, invoices, notices, certifications and
additional agreements, documents, instruments, undertakings or other
assurances, and take any and all such other action, as the Agent may, from time
to time, reasonably request or deem reasonably necessary or proper under any of
the Loan Documents and the obligations of Borrower thereunder.
SECTION 5.13 Maintenance Of Corporate Identity. Borrower will
maintain separate corporate records, books and accounts. Borrower will observe
the formal legal, financial and accounting requirements necessary for the
maintenance of Borrower as a separate legal entity, including the keeping of
corporate records indicating that, to the extent required by Law or its charter
documents, transactions are reviewed and authorized by its Board of Directors
and stockholders. All monies and funds advanced and to be advanced to or on
behalf of Borrower by its Affiliates (other than capital contributions and
other equity infusions, in each case, that are of a "common stock" nature, by
shareholders or Affiliates of Borrower into Borrower), pursuant to a loan or
otherwise, will be evidenced by valid, binding and enforceable written
obligations to repay such monies and funds, the repayment of which shall be
subordinated to the full and final payment of the Obligations, on terms and
conditions satisfactory to the Banks.
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SECTION 5.14 Primary Business. Borrower will continue the retail
sale of entertainment products, including music products, including tapes,
compact discs, prerecorded video tapes, records and accessories, as well as the
retail sale of books and the retail rental of prerecorded video tapes, as its
primary business.
SECTION 5.15 Subordination of Affiliate Obligations. Borrower
will cause all loans or advances of Borrower to any Affiliate of Borrower at
any time arising or existing to be evidenced by promissory notes. All such
promissory notes are set forth on Schedule 5.15; Borrower will obtain and
deliver to the Agent the written agreement, in form, substance and scope
satisfactory to the Agent, of the holder of each such promissory note
evidencing the subordination of such holder's right to payment under each such
note to the payment of the Obligations. Borrower will cause the face of each
promissory note to be marked with a reference to such subordination agreement,
and will take and cause to be taken all such further and additional actions as
the Agent may reasonably request to effect and evidence such subordination.
SECTION 5.16 Landlord's Subordination Agreements. Within one year
after the Closing Date, Borrower will diligently use its best efforts to
deliver to the Agent a landlord's subordination agreement, in form, scope and
substance satisfactory to the Agent, with respect to each location at which it
operates or conducts its business or maintains or stores any of its equipment,
inventory or other Property. After the Closing Date, as a condition to
entering into any lease of space or acquiring any Property at which it plans to
operate or conduct its business or maintain or store any of its equipment,
inventory or other Property, Borrower shall diligently use its best efforts to
deliver to the Agent a landlord's subordination agreement, in form, scope and
substance satisfactory to the Agent, with respect to such proposed leased or
owned location.
ARTICLE 6
NEGATIVE COVENANTS
Until payment in full of the Notes, the payment and performance of all
other Obligations, and the expiration and termination of all Letters of Credit,
and so long as the Banks have any obligation hereunder to make any Loans or the
Issuing Bank has any obligation to issue any Letters of Credit, Borrower agrees
that it will punctually and completely perform and observe each of the
following covenants:
SECTION 6.1 Certain Financial Matters. Borrower will not permit:
(a) the ratio of Current Assets to Current Liabilities to be less
than 1.00 to 1.00 as of the end of any Fiscal Quarter; or
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(b) the ratio of EBITR to Fixed Charges to be less than 1.25 to
1.00 as of the end of any Fiscal Quarter for the four-quarter period ending as
of the end of such Fiscal Quarter; or
(c) the Tangible Net Worth as of the end of any Fiscal Quarter to
be less than the sum $45,000,000 plus (ii) fifty percent (50%) of the
cumulative amount of net income of Borrower from February 1, 1994 through the
end of such Fiscal Quarter (without regard to, or reduction for, any net loss
reported for any Fiscal Quarter); or
(d) the ratio of total liabilities (determined in accordance with
GAAP) of Borrower to Tangible Net Worth to be more than 2.00 to 1.00 as of the
end of any Fiscal Quarter; or
(e) the ratio of (i) Funded Debt as of the end of any Fiscal
Quarter to (ii) EBITDA for the four-quarter period ending as of the end of such
Fiscal Quarter, to be more than 2.00 to 1.00; or
(f) the aggregate amount of capital expenditures of Borrower
(excluding, however, the capitalized cost of video tapes purchased by Borrower
for rental) to exceed (i) $20,000,000 for the Fiscal Year ending January 31,
1995, (ii) $28,000,000 for the Fiscal Year ending January 31, 1996, or (iii)
$26,500,000 for any Fiscal Year commencing February 1, 1996 or thereafter.
SECTION 6.2 Limitation on Indebtedness. Borrower will not incur,
create, contract, assume, have outstanding, permit or suffer to exist,
Guarantee or otherwise be or become, directly or indirectly, liable in respect
of any Indebtedness, except the following (collectively, "Permitted
Indebtedness"):
(i) the Obligations;
(ii) current liabilities for Taxes incurred in the
ordinary course of business which are not yet due and payable;
(iii) so long as the same is paid in accordance with its
terms and neither paid in violation of, nor renewed, extended,
refinanced or modified in a manner or upon terms that would violate,
any provision of any Loan Document, Indebtedness listed in Schedule
6.2, together with all renewals, extensions, refinancings and
modifications (but not increases) thereof,
(iv) trade payables arising in the ordinary course of
business that, except for Contested Claims, are paid within the
earlier of (A) 60 days of the date when payment thereof is due and
payable and (B) 180 days of the date the respective goods are
delivered or services are rendered;
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(v) purchase-money Indebtedness for equipment purchases
which does not exceed, in aggregate, $4,000,000 for any Fiscal Year;
and
(vi) Indebtedness of Borrower which, prior to the
incurrence thereof, is subordinated to the payment of the Obligations
pursuant to a subordination agreement in form, scope and substance
satisfactory to the Required Banks and which, when added together with
other such subordinated Indebtedness of Borrower, does not exceed an
aggregate amount approved by the Required Banks.
SECTION 6.3 Limitation on Property. Borrower will not (i) grant,
create, enter into, incur permit or suffer to exist, upon or with regard to any
of its respective Property now owned or hereafter acquired, (A) any Lien,
except for Permitted Liens, or (B) any Negative Pledge, except for the benefit
of the Agent, the Issuing Bank and Banks, or (ii) enter into any
sale-and-lease-back transaction. Anything in the foregoing or elsewhere in the
Loan Documents to the contrary notwithstanding, it is understood that no Liens,
other than Permitted Liens, or Negative Pledges, except for the benefit of the
Banks, are permitted on or with respect to any of the Property of Borrower.
SECTION 6.4 Restricted Payments. Except in situations in which,
immediately before and after giving effect to the proposed transaction,
Borrower is in full compliance with the financial covenants set forth in
Section 6.1 and there is no other Default, Borrower will not directly or
indirectly (i) declare or make, or incur any liability to pay or make, any
Dividends, or (ii) redeem, repurchase, retire or otherwise acquire for value
any of its capital stock, warrants, stock equivalents or other evidence of
equity of any class or nature. Further, Borrower will not directly or
indirectly set apart any money or other Property for a defeasance, sinking or
analogous fund for any Dividend or distribution thereon, or for any redemption,
retirement or other acquisition thereof.
SECTION 6.5 Limitation on Investments. Borrower will not make or
have outstanding any Investments in any Person, except for (i) Temporary Cash
Investments; and (ii) other Investments which do not exceed $1,000,000 in
aggregate at any given time (including Investments listed in Schedule 6.5).
SECTION 6.6 Affiliate Transactions. Borrower will not enter into
any transaction with, or pay any management or other fees or compensation to,
any Affiliate of Borrower other than transactions in the ordinary course of
business which are on fair and reasonable terms no less favorable to Borrower
than would be obtained in a comparable arm's-length transaction with a Person
who is not an Affiliate of Borrower. In addition, Borrower will not enter into
any transaction with, or pay any management or other fees or compensation to,
any Person (a "Non-Affiliated Person") who is not an Affiliate of Borrower,
wherein an Affiliate of Borrower is directly or indirectly involved in, related
to, or associated with, such transaction other than transactions in the
ordinary course of business which are on fair and reasonable terms no less
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favorable to Borrower and would be obtained in a comparable arm's-length
transaction with a Non-Affiliated Person wherein an Affiliate of Borrower is
not directly or indirectly involved, related or associated.
SECTION 6.7 Limitation on Sale of Property. Borrower will not
sell, assign, lease, sublease or discount or otherwise exchange or dispose of
any of its Property other than (i) sales of inventory in the ordinary course of
its business, (ii) sales or other dispositions of obsolete equipment that is no
longer needed for its ordinary business or which is being replaced by equipment
of at least comparable value and utility to the equipment replaced when such
equipment was efficiently operational and functional, and (iii) sales of fixed
assets during each Fiscal Year which have an aggregate book value not in excess
of 10% of the book value of Borrower's total fixed assets as of the beginning
of such Fiscal Year.
SECTION 6.8 Accounting Method. Borrower may change its fiscal
year or its method of inventory valuation from LIFO to any other method
permitted under GAAP with prior notice thereof given to the Banks, provided
that Borrower will not make any other material change in its method of
accounting, without the prior written approval of the Banks, which approval
will not be unreasonably withheld.
SECTION 6.9 Internal Governance Documents; Name and Principal
Place of Business. Borrower will not amend its certificate or articles of
incorporation or bylaws in any respect which could have a Material Adverse
Effect. Without notifying the Agent in writing at least 30 Business Days prior
to the effective date of each of the following changes, Borrower will not (i)
change its name, or operate any of its business, operations or Property or own
or lease any Property under any name, different than as set forth in Schedule
4.14, (ii) change its identity or corporate structure, or (iii) change its
principal place of business or chief executive office, as applicable, from such
address and location set forth in Schedule 4.14. Further, Borrower will notify
the Agent as soon as practical and in any event within 30 days after Borrower
opens to the public for business any location at which it will conduct its
business or store or maintain any of its inventory, equipment or other
Property, other than locations set forth in Schedule 4.14.
SECTION 6.10 Certain Environmental Matters. Except in compliance
in all respects with Environmental Laws, and otherwise in no way posing an
imminent and significant endangerment to public health or welfare or the
environment, Borrower will not knowingly (i) cause or permit any Hazardous
Material to be placed, held, transported, located, released or disposed of on,
under, from, to, or at, any Property now or hereafter owned, leased or
otherwise controlled directly or indirectly by Borrower (for purposes of this
Section 6.10, the "Subject Property"), or (ii) permit the Subject Property ever
to be used (whether by Borrower or any other Person) as a dump site or storage
site (whether permanent or temporary) for any Hazardous Material. Without
limitation of the Agent's, the Issuing Banks' and the Banks' Rights under the
Loan Documents, the Agent and its representatives shall have the right, but not
the obligation, to enter upon the Subject Property or take such other actions
as the Agent or any Bank deems
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necessary or advisable to cleanup, remove, resolve or minimize the impact of,
or otherwise deal with, any Hazardous Discharge or Environmental Complaint upon
the Agent's or any Bank's receipt of any notice from any Governmental Authority
or other Person, asserting the existence of any Hazardous Discharge or
Environmental Complaint on or pertaining to the Subject Property which, if
true, could result in Environmental Liability against Borrower, the Agent, the
Issuing Bank, any Bank or otherwise which, in the sole opinion of any of them,
could jeopardize any of their present or future Liens against or rights to the
Subject Property. All costs and expenses incurred by the Agent, the Banks and
their representatives in the exercise of any such Rights shall become part of
the Obligations and be payable upon demand, together with interest on the
unpaid portion thereof at the Default Rate.
SECTION 6.11 Mergers, Acquisitions and Dissolutions. Except for
acquisitions by Borrower which do not involve more than $1,000,000 per
acquisition, Borrower will not, without the prior written consent of the Banks,
which consent will not be unreasonably withheld, become a party to a merger,
acquisition or consolidation, or purchase or otherwise acquire by merger, lease
or purchase all or a substantial part of the assets or Property of any Person
or any shares or other evidence of legal or beneficial ownership of any Person,
or dissolve or liquidate. Borrower acknowledges that the consent of the Banks
under the preceding provision may be conditioned upon the relevant acquired
entity becoming an obligor or guarantor of the Obligations on terms
satisfactory to the Banks. For the purposes of applying the foregoing
$1,000,000 limitation, a series of integrally related acquisitions from the
same Person or its Affiliates shall be treated as one acquisition.
SECTION 6.12 Subsidiaries. Borrower will not create or permit to
exist any Subsidiary of Borrower and will not become a general partner,
venturer or similar capacity in any partnership, venture or similar Person,
without the prior written consent of the Banks, which consent shall not be
unreasonably withheld. Borrower acknowledges that the consent of the Banks
under the preceding provision may be conditioned upon the Subsidiary or other
relevant entity becoming an obligor or guarantor of the Obligations on terms
satisfactory to the Banks.
SECTION 6.13 Sale of Receivables. Unless in favor of the Agent,
the Issuing Bank and the Banks or reasonably necessary in connection with
collection efforts on delinquent receivables, Borrower will not sell or
discount any of its accounts or notes receivable.
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.1 Events of Default. An "Event of Default" shall exist
if any one or more of the following events shall occur and be continuing:
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(a) failure or refusal to pay, within 5 Business Days of the date
when due, any principal of, or interest on, any Note, or any Reimbursement
Obligations on any Letter of Credit, or any fee, expense or other Obligations
required hereunder; or
(b) any representation, warranty or certification made or deemed
made by, or on behalf of, Borrower under, or in connection with, any of the
Loan Documents, or in any certificate, notice, request, statement or other
communication furnished or made to the Agent, the Issuing Bank or any Bank
pursuant hereto or in connection herewith is untrue, misleading or inaccurate
in any material respect as of the date on which such representation, warranty
or certification was made (or deemed made) or furnished; or
(c) (i) failure to perform, observe or comply with any covenant or
agreement contained in Article 6 or the occurrence of an event or circumstance
designated as a "default" or an "event of default" under any other Loan
Document; or (ii) except as provided in Section 7.1(a) or Section 7.1(c)(i),
failure to perform, observe or comply with any covenant or agreement contained
in this Agreement or any other Loan Document, which failure continues for a
period of 30 days after Borrower obtains knowledge of the occurrence thereof,
provided, however, that if such failure is susceptible to cure but not within
such 30-day period, a plan to cure such failure has been approved in writing by
the Required Banks and Borrower has commenced actions according to such plan
within the 30-day period and is prosecuting such plan diligently, then no Event
of Default shall occur under this Section 7.1(c)(ii) until the later of 60 days
after the Borrower obtains knowledge of such failure or such other date as
agreed to by Borrower and the Required Banks in the plan approved by the
Required Banks; provided further, however that no such grace period shall
apply, and an Event of Default shall exist under this Section 7.1(c)(ii) upon
such failure to perform, observe or comply, if such failure (A) is not
susceptible to cure, as determined in the discretion of the Required Banks, or
(B) may not be cured, as determined in the discretion of the Required Banks,
within 60 days after Borrower obtains knowledge of such failure or within a
reasonable time thereafter according to any plan provided to the Required
Banks; or
(d) either (i) default in the payment, within 3 Business Days of
when due, of Indebtedness of Borrower, individually or in the aggregate, in
excess of $1,000,000 or default in respect of any note, agreement, indenture,
loan agreement, credit agreement, bond or other document evidencing or relating
to any such Indebtedness, and such default continues for more than the period
of grace, if any, specified therein or (ii) Indebtedness of Borrower,
individually or in the aggregate, in excess of $1,000,000 becomes due or
prepayable before its stated maturity by acceleration of the maturity thereof
or otherwise; or
(e) Borrower shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, trustee, custodian, intervenor or
liquidator of Borrower or of all or a substantial part of its Property, (ii)
commence or file a voluntary petition, proceeding or case in bankruptcy, or
admit in writing that it is unable to pay its debts as they become due or
generally not pay its debts as they become due, (iii) make a general assignment
for the benefit of creditors,
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(iv) file a petition or answer seeking reorganization or an arrangement with
creditors or take advantage of any Debtor Laws, (v) file an answer admitting
the material allegations of or consenting to, or default in answering, a
petition, proceeding or case filed against it in any bankruptcy, reorganization
or insolvency proceeding or (vi) take corporate action for the purpose of
effecting any of the foregoing; or
(f) an involuntary petition, proceeding, case or complaint is
filed against Borrower seeking bankruptcy, liquidation, dissolution, winding-up
or reorganization of Borrower, or the composition or readjustments of its
debts, or the appointment of a receiver, custodian, trustee, intervenor or
liquidator of it or all or substantially all of its Property, and such
petition, proceeding, case or complaint is not dismissed within 30 days of the
filing thereof; or an order, order for relief, judgment or decree shall be
entered by any court of competent jurisdiction or other competent authority
approving a petition, proceeding, case or complaint seeking liquidation,
reorganization, dissolution, winding-up or bankruptcy of Borrower or appointing
a receiver, custodian, trustee, intervenor or liquidator of Borrower, or of all
or substantially all of its Property, and such order, order for relief,
judgment or decree continues unstayed for a period of 30 days; or
(g) any Judgment or in the aggregate, Judgments for the payment of
money in excess of the sum of $1,000,000 or that would otherwise have a
Material Adverse Effect shall be rendered against Borrower or with respect to
its Property, and such Judgment or Judgments shall not be satisfied, discharged
or appealed (provided that during the pendency of such appeal prosecution of
the Judgment or Judgments is stayed) within 30 days of the date it is rendered;
or
(h) both (i) and (ii) following shall occur: (i) either (A)
proceedings have been instituted to terminate,or a notice of termination has
been filed with respect to, any Plan by Borrower, any member of the "controlled
group" (as defined in the Code) of Borrower, PBGC or any representative of any
thereof, or any such Plan shall be terminated, in each case under Section 4041
or 4042 of ERISA, or (B) a "reportable event" (as defined in Title 4 of ERISA)
has occurred with respect to any Plan and continues for a period of 60 days,
and (ii) the sum of the estimated liability to PBGC under Section 4062 of ERISA
and the currently payable obligations of Borrower to fund liabilities (in
excess of amounts required to be paid to satisfy the minimum funding standard
of Section 412 of the Internal Revenue Code) under the Plan or Plans subject to
such event exceeds 10% of Borrower's net worth at such time; or
(i) a Change in Control shall occur; or
(j) except pursuant to the express terms of any Loan Document, any
Loan Document shall, at any time after its execution and delivery and for any
reason, cease to be in full force and effect or be declared to be null and
void, or Borrower or any other Person shall deny that it has any or any further
liability or obligations under any Loan Document to which it is a party.
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SECTION 7.2 Remedies Upon Event of Default. In the event an
Event of Default occurs and is continuing, the Agent may, and upon written
request of the Required Banks, shall, exercise any one or more of the following
Rights, and any other Rights available at law or in equity or provided in any
of the Loan Documents: (i) terminate all or any portion of the Commitments
(including the commitment to issue Letters of Credit), and such Commitments
shall thereupon terminate, and (ii) declare the principal of, and all earned
and accrued interest on, the Notes then outstanding and all other accrued and
unpaid Obligations to be immediately due and payable, whereupon the same shall
be and become due and payable, each and all of the foregoing without
presentment, demand, protest, notice of default, NOTICE OF INTENT TO
ACCELERATE, NOTICE OF ACCELERATION or other notice of any kind, all of which
are hereby waived by Borrower, provided however, upon the occurrence of any
Event of Default specified in Section 7.1(e) or Section 7.(f), all of the
Commitments shall thereupon automatically and immediately terminate and the
principal of, and all earned and accrued interest on the Notes then outstanding
and all other accrued and unpaid Obligations shall thereupon be and become
automatically and immediately due and payable, each and all of the foregoing
without presentment, demand, protest, NOTICE OF DEFAULT, NOTICE OF INTENT TO
ACCELERATE, NOTICE OF ACCELERATION or other notice of any kind, all of which
are hereby waived by Borrower. If any amount payable under any of the Loan
Documents is not paid when due the outstanding and unpaid portion of such
amount shall bear interest at the Default Rate.
SECTION 7.3 Certain Additional Remedies Regarding Letters of
Credit. Borrower hereby agrees, in addition to the provisions of Section 7.1
hereof, that upon the occurrence and during the continuance of any Event of
Default or any Letter of Credit Event, it shall, if requested by the Agent
remit (and, in the case of any Event of Default specified in Section 7.1(e) or
Section 7.1(f), forthwith, without any presentment, demand, protest, notice of
default or of occurrence of a Letter of Credit Event, NOTICE OF ANY INTENT TO
ACCELERATE, NOTICE OF ACCELERATION or any other notice of any kind or the
taking of any other action by the Agent, the Issuing Bank or the Banks (all of
which are hereby waived by Borrower), it shall remit) to the Agent an amount in
immediately available funds (which funds shall be held as collateral for the
Obligations) equal to the then aggregate amount of the Letter of Credit
Exposure. Borrower hereby grants to Agent a Security interest in, a general
lien upon, and a right of set off with respect to, all amounts from time to
time and at any time held by, or paid or remitted to, the Agent, the Issuing
Bank or any Bank, which are held as cash collateral as further security for the
payment of the Obligations.
ARTICLE 8
THE AGENT AND BANKS
SECTION 8.1 Appointment of the Agent. Each of the Banks and the
Issuing Bank hereby appoints Boatmen's as Agent to act as herein specified, and
acting in the manner and to
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the extent provided in this Article 8, Boatmen's accepts such appointment as
the Agent. Each of the Banks and the Issuing Bank hereby irrevocably
authorizes the Agent to receive payments of principal, interest and other
amounts due hereunder as specified herein and otherwise to take such action on
its behalf, to exercise such powers and to perform such duties under the Loan
Documents as are specifically delegated to, or required of, the Agent by the
terms of the Loan Documents, together with all other powers reasonably
incidental thereto, which authorization permits the Agent to perform any of its
duties under the Loan Documents by or through its agents, attorneys or
employees. The Agent shall have no duties or responsibilities except those
expressly set forth with respect to it in the Loan Documents. The relationship
of the Agent to the Banks and the Issuing Bank is only that of one company
acting solely as an administrative agent for others, and nothing in the Loan
Documents, express or implied, is intended to, or shall be construed to,
constitute the Agent a trustee or other fiduciary for the Issuing Bank, or any
holder of any of the Notes, or of any participation therein, nor to impose on
the Agent duties and obligations other than those expressly provided for in the
Loan Documents. As to any matters not expressly provided for in the Loan
Documents and any matters to which the Loan Documents place within the
discretion of the Agent, the Agent shall not be required to exercise any
discretion or take any action (and it may request instructions from the Banks
and the Issuing Bank with respect to any such matter), in which case is shall
be required to act or refrain from acting (and shall be fully protected and
free from liability to all Banks and the Issuing Bank in so acting or
refraining from acting) upon the instructions of the Required Banks (including
itself), and such instructions shall be binding upon all Banks and the Issuing
Bank, and all holders of, and participants in, the Notes and the Letters of
Credit; provided however, (i) the Agent shall in all cases be fully justified
in failing or refusing to act under any Loan Document unless it shall be
indemnified to its satisfaction by the Banks and the Issuing Bank against any
and all liability and expense (other than any such liability or expense
proximately caused by the Agent's gross negligence or willful misconduct, as
determined by a final judgment) which may be incurred by it by reason of taking
or continuing to take any such action, and (ii) the Agent shall not in any
event be required to take any action which (A) is contrary to any Loan Document
or Law or (B) exposes it to a risk of personal liability that it considers
unreasonable.
SECTION 8.2 Exculpation; Agent's Reliance. AS AMONG THE BANKS,
NEITHER THE AGENT NOR ANY OF ITS AFFILIATES, NOR ANY ITS OR THEIR DIRECTORS,
OFFICERS, AGENTS, ATTORNEYS, INSURERS OR EMPLOYEES, NOR ANY OF ITS OR THEIR
SUCCESSORS, HEIRS, LEGAL REPRESENTATIVES OR ASSIGNS (COLLECTIVELY, THE "AGENT
INDEMNITEES"), SHALL EVER BE LIABLE FOR ANY ACTION TAKEN OR OMITTED TO BE TAKEN
BY ANY OF THEM UNDER OR IN CONNECTION WITH ANY LOAN DOCUMENT, INCLUDING THEIR
NEGLIGENCE OF ANY KIND, EXCEPT THAT EACH SHALL RESPECTIVELY BE LIABLE FOR ITS
OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AS DETERMINED BY A FINAL JUDGMENT.
Without limiting the generality of the foregoing or any other provision of any
Loan Document, the Agent: (i) may treat the payee of any Note as the holder
thereof until the Agent receives and accepts an assignment and acceptance
entered into by the Persons as provided
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in Section 10.7 and all other provisions of Section 10.7 are complied with to
the reasonable satisfaction of the Agent; (ii) may consult with legal counsel
(including counsel for Borrower), independent public accountants and other
experts and advisors selected by it and shall be fully protected and free from
liability to all Banks and the Issuing Bank for any action taken or omitted to
be taken in good faith by it in accordance with the advice of such counsel,
accountants, experts or advisors; (iii) makes no warranty or representation to
any Bank or the Issuing Bank and shall not be responsible to any Bank or the
Issuing Bank for any statements, recitals, information, warranties or
representations made in or in connection with any Loan Document, or in any
communication or writing made or delivered in connection therewith; (iv) shall
not have any duty to ascertain, to inquire or to keep itself informed as to the
financial condition of the Borrower or the performance or observance of any of
the terms, covenants or conditions of any Loan Document on the part of any
Person or to inspect the Property (including the books and records) of Borrower
or its Subsidiaries or any other Person; (v) shall not be responsible to any
Bank or the Issuing Bank for the financial condition of the Borrower or the due
execution, legality, validity, enforceability, collectibility, genuineness,
sufficiency or value of any Loan Document or instrument or document furnished
in connection therewith, or the creation, perfection, continued creation or
perfection, or priority, of any Lien purported to be created by any Loan
Document, or any other instrument or document furnished pursuant hereto or
thereto; and (vi) may rely, and shall be fully protected and free from
liability to all Banks and the Issuing Bank in relying, (A) upon the
representations and warranties of Borrower, the Banks and the Issuing Bank in
exercising its powers hereunder, and (B) upon any notice, consent, certificate,
statement, resolution, instrument or other writing (which maybe by telegram,
cable, telecopy, facsimile, telex, mail or telephone) believed by it to be
genuine and signed, sent, communicated or otherwise made by the proper Person
or Persons.
SECTION 8.3 Defaults. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or Event of Default (other than the
non-payment of principal of or interest on Loans or of commitment fees) unless
the Agent has received written notice from a Bank, the Issuing Bank or Borrower
specifying the occurrence of such Default or Event of Default and stating that
such notice is a "Notice of Default". In the event that the Agent receives a
Notice of Default, it shall give prompt notice thereof to the Banks and the
Issuing Bank (and shall give each Bank and the Issuing Bank prompt notice of
each such non-payment). Subject to Section 8.1, the Agent shall take such
action with respect to such Default or Event of Default as shall be directed by
the Required Banks; provided that, unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default
or Event of Default as it shall in its sole and absolute discretion deem
advisable in the best interest of the Banks and the Issuing Bank.
SECTION 8.4 Rights as a Bank. Boatmen's (and any successor
acting as the Agent), in its capacity as a Bank or the Issuing Bank (as
applicable) hereunder shall have the same rights and powers hereunder as any
Bank or Issuing Bank (as applicable) and may exercise the same as though it
were not the Agent, and the term "Bank", "Banks", "Issuing Bank",
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"Required Banks", "holders of Notes" or similar terms shall, unless otherwise
expressly indicated, include Boatmen's (and any successor acting as Agent) in
its individual capacity. Boatmen's (and any successor acting as the Agent) and
its Affiliates may accept deposits from, lend money to, act as trustee under
indentures or as transfer agent in respect of capital stock of, and generally
engage in any kind of banking, trust, investment, financial advisory or other
business with, the Borrower or its Affiliates, and may accept fees and other
consideration from the Borrower or its Affiliates for services in connection
with any of the foregoing, any of the Loan Documents or otherwise, all as if it
were not Agent hereunder and without having to account for the same to the
Banks or the Issuing Bank. All fees and other amounts received by Agent for
its capacity as Agent hereunder shall solely be for its benefit and no other
party hereto.
SECTION 8.5 Indemnification. EACH BANK AGREES TO INDEMNIFY,
REIMBURSE AND HOLD HARMLESS EACH AGENT INDEMNITEE (TO THE EXTENT NOT
INDEMNIFIED AND REIMBURSED, ON DEMAND, BY BORROWER), RATABLY ACCORDING TO ITS
PERCENTAGE SHARE, FROM AND AGAINST ANY AND ALL LOSSES, LIABILITIES,
OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES, ACTIONS, SUITS, JUDGMENTS,
DEMANDS, SETTLEMENTS, COSTS, DISBURSEMENTS OR EXPENSES (INCLUDING FEES AND
EXPENSES OF ATTORNEYS, ACCOUNTANTS, EXPERTS AND ADVISORS) OF ANY KIND OR NATURE
WHATSOEVER (IN THIS SECTION 8.5, THE FOREGOING IS COLLECTIVELY REFERRED TO AS
THE "LIABILITIES AND COSTS"), WHICH TO ANY EXTENT (IN WHOLE OR PART) MAY BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST, SUCH AGENT INDEMNITEE IN ANY WAY
RELATING TO, OR ARISING OUT OF, THE LOAN DOCUMENTS AND THE TRANSACTION AND
EVENTS (INCLUDING THE ENFORCEMENT THEREOF) AT ANY TIME ASSOCIATED THEREWITH OR
CONTEMPLATED THEREIN (INCLUDING ANY VIOLATION OR NONCOMPLIANCE WITH ANY
ENVIRONMENTAL LAWS BY ANY PERSON OR ANY LIABILITIES OR DUTIES OF ANY PERSON
WITH RESPECT TO HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE ENVIRONMENT)
OR AS A RESULT OF ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY SUCH AGENT
INDEMNITEE, INCLUDING ITS NEGLIGENCE OF ANY KIND, OTHER THAN AS PROVIDED IN THE
FOLLOWING PROVISO, THE GROSS NEGLIGENCE OF AN AGENT INDEMNITEE; PROVIDED THAT
NO BANK SHALL BE LIABLE FOR ANY PORTION, IF ANY, OF ANY LIABILITIES AND COSTS
WHICH IS PROXIMATELY CAUSED BY THE AGENT'S OWN INDIVIDUAL GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT, AS DETERMINED IN A FINAL JUDGMENT. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, EACH BANK AGREES, IN PROPORTION WITH ITS
PERCENTAGE SHARE, TO REIMBURSE THE AGENT PROMPTLY UPON ITS DEMAND FOR ANY COSTS
AND EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPENSES AND OTHER CHARGES)
INCURRED BY THE AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY,
ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH
NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT
OF THEIR
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RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, OR ANY OF THEM, OR ANY
OTHER DOCUMENTS CONTEMPLATED BY THE WAN DOCUMENTS, TO THE EXTENT THAT THE AGENT
IS NOT REIMBURSED, ON DEMAND, FOR SUCH AMOUNTS BY BORROWER. Each Bank's
obligations under this paragraph shall survive the termination of this
Agreement and the discharge of Borrower's obligations hereunder.
SECTION 8.6 Bank's Credit Decision and Non-Reliance. Each Bank
and the Issuing Bank hereby acknowledges that it has, independently and without
reliance upon the Agent or any other Person, and based upon such documents and
information as it has deemed appropriate, made (i) its own independent
investigation and analysis (including legal and credit investigation and
analysis) of Borrower and its Affiliates, and its and their respective
financial conditions, operations and affairs, and Properties, and the
transactions provided for in, and contemplated by, each of the Loan Documents
and (ii) its own independent decision to enter into and perform each Loan
Document. Each Bank and the Issuing Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other Person, and
based on such investigation, analysis, documents and information as it shall
deem appropriate at the time, continue to make its own independent legal,
credit and other decisions in taking or omitting to take action under or in
connection with the Loan Documents. Except for notices, reports and other
documents and information expressly required to be furnished to the Banks
and/or the Issuing Bank by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Bank or the Issuing Bank with any credit
or other information concerning the affairs, financial condition, or business
of Borrower or its Affiliates which may come into the possession of the Agent
or any of its Affiliates.
SECTION 8.7 Deferral of Distributions; Investments. Whenever the
Agent in good faith determines that it is uncertain about how to distribute to
the Banks or the Issuing Bank any funds which it has received, or whenever the
Agent in good faith determines that there is any dispute among the Banks and/or
the Issuing Bank about how such funds should be distributed, the Agent may
choose to defer distribution of the funds which are the subject of such
uncertainty or dispute. If the Agent in good faith believes that the
uncertainty or dispute will not be promptly resolved, it may, or if the Agent
is otherwise required to invest funds pending distribution to the Banks and/or
the Issuing Bank, it shall, invest such funds pending distribution in any
manner it deems appropriate, absent timely instructions from the Required
Banks; all interest on any such investment (net of investment and related
costs, if any, incurred in connection therewith) shall be distributed upon the
distribution of such investment and in the same proportion and to the same
Persons as such investment. All moneys received by the Agent for distribution
to the Banks and/or the Issuing Bank (other than to the Person who is the Agent
in its separate capacity as a Bank) shall be held by the Agent pending such
distribution solely as the Agent for such Banks and/or the Issuing Bank, and
the Agent shall have no equitable title to any portion thereof. ABSENT GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT ON ITS PART (BUT EXCLUDING ITS OWN NEGLIGENCE
OF ANY OTHER KIND), AS DETERMINED BY A FINAL JUDGMENT, THE AGENT SHALL BE FULLY
PROTECTED
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AND FREE FROM LIABILITY TO THE BANKS AND/OR THE ISSUING BANK, FOR ANY COSTS AND
LIABILITIES RESULTING FROM OR RELATED TO THE DEFERRAL OF DISTRIBUTIONS AND/OR
MAKING OF INVESTMENTS AS PROVIDED FOR IN THIS SECTION 8, INCLUDING THE FAILURE
OF ANY SUCH INVESTMENT.
SECTION 8.8 Nature of Article 8. The provisions of this Article
8 (other than the following Section 8.9) are intended solely for the benefit of
the Agent, Banks and the Issuing Bank, and neither the Borrower nor any other
Person shall be entitled to rely on any such provision or assert any such
provision in a claim or defense against the Agent, any Bank or the Issuing
Bank. The Agent, Banks and the Issuing Bank may waive or amend such provisions
as they desire without any notice to or consent of the Borrower. Nothing
contained in any Loan Document, and no action taken by any Bank, the Issuing
Bank or the Agent pursuant hereto or in connection herewith or pursuant to or
in connection with the Loan Documents, shall be deemed to constitute the Banks
and the Issuing Bank, together or with or without the Agent, a partnership,
association, joint venture or other entity.
SECTION 8.9 Resignation and Removal by Agent. The Agent may
resign at any time as the Agent under the Loan Documents by giving written
notice thereof (which notice shall contain the date of such resignation) to the
Banks, the Issuing Bank and Borrower and, upon the gross negligence or manifest
incompetence of the Agent, the Agent may be removed as the Agent under the Loan
Documents by the Required Banks. Upon any such resignation or removal, the
Required Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Banks and shall
have accepted such appointment within 30 calendar days after the retiring
Agent's giving of notice of resignation or the Required Banks' removal of the
retiring Agent, as applicable, then the retiring Agent may, on behalf of Banks
and the Issuing Bank appoint a successor Agent, which shall be a commercial
bank organized under the laws of the United States of America or of any State
thereof having a combined capital and surplus of at least $500,000,000. In any
case where a successor Agent is being selected, the parties agree to attempt to
select such successor from one of the Banks. If one of the Banks is selected
as a successor Agent, such selection shall not be subject to approval by
Borrower; however, if a Person other than one of the Banks is selected as a
successor Agent, such selection shall be subject to the approval of Borrower,
which approval shall not be unreasonably withheld. Upon the acceptance of any
appointment as the Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all rights, powers,
privileges and duties of the retiring or removed Agent and the retiring or
removed Agent shall be discharged from its duties and obligations under the
Loan Documents. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article 8 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Agent under the
Loan Documents.
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ARTICLE 9
CHANGED CIRCUMSTANCES
SECTION 9.1 Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period, (i) the Agent
shall have determined (which determination shall be conclusive and binding upon
Borrower) that, by reason of circumstances affecting the interbank eurodollar
market, or reporting or data gathering and/or dissemination networks, systems
or companies related thereto or dealing therewith, adequate and reasonable
means do not exist for ascertaining the London Interbank Offered Rate for such
Interest Period, or (ii) the Agent shall have received written notice from the
Required Banks that the London Interbank Offered Rate determined or to be
determined for such Interest Rate Period will not adequately and fairly reflect
the cost to such Banks (as conclusively certified by such Banks) of making or
maintaining their LIBOR Loans during such Interest Period, then the Agent shall
forthwith give notice thereof to Borrower and the Banks. Until the Agent
notifies Borrower that such notice has been withdrawn by the Agent, no further
LIBOR Loans by any Bank shall be made or continued as such, nor shall Borrower
have the right to convert Loans to LIBOR Loans.
SECTION 9.2 Illegality. Notwithstanding any other provision
herein, if at any time a Bank determines (which determination shall be
reasonably exercised and if so reasonably exercised, shall be conclusive and
binding upon the parties, absent manifest error) that the making or maintaining
LIBOR Loans hereunder has become unlawful pursuant to applicable Law, or any
interpretation, application or administration thereof (whether or not having
the force of law), then such Bank (an "Affected Bank") shall so promptly notify
the Agent, the other Banks and Borrower. Upon giving such notice (i) the
obligations of all Banks to make or continue, or to convert Base Rate Loans
into, LIBOR Loans shall be suspended until the Affected Bank notifies the
Agent, the other Banks and Borrower that it may again make and maintain LIBOR
Loans, and (ii) Borrower shall, upon the request of any Bank, prepay any LIBOR
Loan then outstanding (which prepayment, if requested by Borrower, shall be
made with the proceeds or effect of a Base Rate Loan extended contemporaneously
by such Bank), together with accrued interest thereon, and loss and expenses,
if any, provided for in Section 2.12.
SECTION 9.3 Increased Cost and Reduced Return.
(a) If the adoption of, or any change in, any Law, or in the
interpretation, application or administration thereof, or compliance by any
Bank (or its Lending Office) with any request or directive (whether or not
having the force of law) of any central bank or other Governmental Authority:
(i) shall subject any Bank (or its Lending Office) to any
tax, duty or other charge of any kind whatsoever with respect to this
Agreement, any Note, any Letter of Credit, any Application or any
LIBOR Loan made by it, or its obligations in respect to
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any of the foregoing, or shall change the basis of taxation of
payments to such Bank (or its Lending Office) in respect to any
amounts due to it in respect to any of the foregoing (except for
changes in the rate of tax on the overall net income of such Bank or
its Lending Office imposed by any jurisdiction); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit, compulsory loan or similar requirement (including,
without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System) against assets of, deposits
with or other liabilities of or for the account of, advances, loans or
other extensions of credit by, or other acquisition of funds by, any
Bank (or its Lending Office), which is not otherwise included in the
determination of the Adjusted London Interbank Offered Rate; or
(iii) shall impose on any Bank (or its Lending Office) or
on the London interbank market any other condition affecting this
Agreement, any Note, any Letter of Credit, any Application or any
LIBOR Loan, or its obligations in respect to any of the foregoing;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making, converting into, continuing or maintaining any
LIBOR Loan or issuing or participating in any Letter of Credit, or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, then
subject to SECTION 10.8, within 5 days after demand by such Bank (with a copy
to the Agent), Borrower shall, without limiting the effect of any other
applicable provision hereof (but without duplication) pay to such Bank such
additional amount or amounts as will compensate such Bank for such increased
costs or reduction of amount receivable, but only to extent of the actual
amount of such increased costs or reduction of amount receivable.
(b) If the adoption of, or any change in, any Law regarding
capital adequacy or risk-based capital guidelines or requirements, or in the
interpretation, application or administration thereof or compliance by any Bank
(or its Lending Office, or its or any of their Affiliates) with any request or
directive regarding capital adequacy or risk-based capital guidelines or
requirements (whether or not having the force of law) of any central bank or
other Governmental Authority, does or shall, in the reasonable determination of
such Bank, have the effect of reducing the rate of return on such Bank's (or
its Lending Office, or its or their Affiliates) capital or assets as a
consequence of its obligations hereunder, or under or in respect of any Letter
of Credit, to a level below that which such Bank (or its Lending Office, or its
or their Affiliates) could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's (or its Lending Office, or
its or their Affiliates) policies with respect to capital adequacy or
risk-based capital guidelines or requirements), then from time to time, within
5 days after demand by such Bank (with a copy to the Agent), subject to Section
10.8, Borrower shall, without limiting the effect of the foregoing provisions
of this Section 9.3 (but without
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duplication), pay to such Bank such additional amount or amounts as will
compensate such Bank for the amount of such reduction, but only to the actual
amount of such reduction.
(c) Each Bank will promptly notify Borrower and the Agent of any
event of which it has knowledge which will entitle such Bank to compensation
pursuant to this Section 9.3. A certificate of any Bank claiming compensation
under this Section 9.3 and setting forth the additional amount or amounts to be
paid to it, as well as the manner in which such amount or amounts were
calculated, hereunder shall be conclusive and binding on Borrower in the
absence of manifest error. In determining such amount, such Bank may use,
among others, any reasonable averaging and attribution methods.
(d) If Borrower pays any Bank compensation under this Section 9.3
and thereafter such Bank receives a refund of amounts under this Section 9.3
with respect to which such compensation was paid by Borrower, such Bank shall
refund to Borrower the amount of such compensation to the extent of such refund
so received by such Bank.
(e) The rights and benefits of the Banks under this Section 9.3
shall also apply to the Issuing Bank in its capacity as such.
SECTION 9.4 Substitute Rate for Affected LIBOR Loans. (a) If the
obligation of any Bank to make, convert or continue (as applicable) a LIBOR
Loan shall be suspended pursuant to Section 9.1 or Section 9.2 (each such
affected LIBOR Loan, an "Affected Loan"), then each such Affected Loan that
otherwise would have been made, converted or continued (as applicable) by the
Banks as a LIBOR Loan shall be made, converted or continued (as applicable)
instead as a Base Rate Loan.
(b) If the London Interbank Offered Rate is not published or
reported for 30 consecutive days or 30 days have passed since Borrower's
receipt of an Agent's notice as provided under in Section 9.1 or an Affected
Bank's notice as provided in Section 9.2, as applicable, and the circumstance
underlying such notice continues to exist, then within 15 days after the
earlier to occur of any such event (such earliest to occur event, a "LIBOR
Event"), and so long as such LIBOR Event shall be continuing, Borrower may
notify the Agent and the Banks that it desires to discuss with them the
availability of a reasonably comparable alternate rate option or additional
interest rate option for the Loans that is mutually agreeable to Borrower, the
Agent and the Banks; and, if Borrower, the Agent and the Banks so mutually
agree within 30 days after such notice is given by Borrower, the parties shall
as soon as reasonably practical thereafter enter into an amendment to this
Agreement and any other affected Loan Documents in form, scope and substance,
and upon terms and conditions, satisfactory to the Agent and the Banks. If, in
any event, any Bank does not, in its sole discretion (with due respect for,
among other matters, its independent requirements, considerations and
circumstances), agree to any proposed alternate or additional interest rate
option within such 30-day period, no such alternate
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or additional interest rate option shall be available with respect to the LIBOR
Event initiating the discussions related to such proposed alternative or
additional interest rate option.
SECTION 9.5 Alternate Lending Office Designation. Each Bank
agrees that it will endeavor to use reasonable efforts to designate an
alternate Lending Office with respect to any LIBOR Loans affected by the
matters or circumstances described in any of Sections 9.1, 9.2 and 9.3 to
reduce the liability of Borrower or avoid the results provided thereunder, so
long as such designation is not disadvantageous to such Bank as determined by
it in its sole discretion; provided, however, no Bank shall have any obligation
to so designate an alternate Lending Office located in the United States of
America.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 Notices. (a) All notices, requests and other
communications to any party under any Loan Document shall be in writing or, in
the case of a Notice of Borrowing, by telephone confirmed the same day in
writing on or before 12:00 noon (St. Louis time) (including bank wire,
telecopy, telex or similar writing) and shall be given to such party at its
address, telecopy or telex number set forth in Annex A or such other address,
telecopy or telex number as such party may hereafter specify for the purpose by
notice to the Agent and Borrower. Each such notice, request or other
communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified pursuant to this Section 10.1 and the
appropriate answerback is received, (ii) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified pursuant to this
Section 10.1, and the sender has received electronic confirmation thereof,
(iii) if given by registered or certified mail, return receipt requested, 72
hours after such communication is deposited in the mails with postage prepaid,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the address specified pursuant to this Section 10.1; provided that notices to
the Agent under Article 2 or Article 9 shall not be effective until actually
received by a representative of the Agent, as distinguished from received at
its place of business only.
(b) Any verbal communication or instrument in writing received by
the Agent in connection with a Borrowing or a Loan, the issuance of a Letter of
Credit or any other matter with respect to any Loan Document, which purports to
be dispatched or signed by or on behalf of Borrower and confirmed, in the case
of a verbal communication, by the Agent by telephone confirmation with an
Authorized Officer, shall conclusively be deemed to have been dispatched or
signed by or on behalf of Borrower pursuant to such Person's authority to bind
Borrower and all other Persons for the liabilities and matters in connection
therewith to the Agent, the Issuing Bank and each Bank; and the Agent, the
Issuing Bank and each Bank may conclusively rely thereon and shall have no
obligation, duty or responsibility to determine the validity or genuineness
thereof or the authority of the Person or Persons executing or dispatching the
same.
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SECTION 10.2 No Waivers. No failure or delay by the Agent, the
Issuing Bank, any Bank or Borrower in exercising any Right under any Loan
Document, and no course of dealing with respect to any such Rights, shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
or any abandonment or discontinuance of steps or actions to enforce any Rights,
preclude or prejudice the concurrent or subsequent exercise thereof or the
exercise of any other such Rights. The Rights provided in the Loan Documents
shall be cumulative and not exclusive of any rights or remedies provided by Law
or in equity.
SECTION 10.3 Payment of Costs and Expenses; Professionals and
Consultants.
(a) Borrower agrees to pay all reasonable costs and expenses
incurred (whether before, after or during the Closing Date) by or on behalf of
the Agent (including audit costs and expenses and all attorneys' and other
professionals' and consultants' fees, costs and expenses of Agent incurred in
connection with the preparation of, advice or counsel regarding, or enforcement
of, any Loan Document) in connection with (i) the investigation, review,
negotiation, preparation, execution, delivery, administration, syndication,
participation, filing, recordation, refinancing, restructuring, renegotiation
or enforcement of each of the Loan Documents, and any and all renewals,
amendments, extensions, restatements, supplements, rearrangements, consents,
waivers, assignments and modifications thereto or thereof, and the transactions
contemplated thereby, (ii) the monitoring, evaluating, making, maintaining,
servicing, enforcement and collection of the Revolving Loans and the Term Loans
and the issuance, administration, maintaining, servicing, enforcement and
payment of the Letters of Credit and the Reimbursement Obligations, (iii) the
creation, preservation, maintenance, protection, perfection and enforcement of
Rights under each Loan Document and Liens in Property (whether or not incurred
in connection with the commencement of a proceeding, litigation, foreclosure or
other proceeding), specifically including all costs and expenses incurred with
respect to any bankruptcy, insolvency or reorganization proceeding, regardless
of whether the Agent ultimately prevails in such bankruptcy, insolvency or
reorganization proceeding, and (iv) all amounts expended, advanced or incurred
by or on behalf of the Agent to satisfy any obligation of Borrower under any
Loan Document which is not timely satisfied by Borrower, if the Agent, at its
discretion, so chooses to incur any such expenses or costs. Without in any
manner limiting the foregoing, Borrower shall also pay all costs associated
with the Agent's annual audit of Borrower conducted in 1994 and each subsequent
year thereafter, subject to a maximum of $5,000 per such audit.
Notwithstanding the foregoing, Borrower's costs associated with the preparation
of this Agreement and other Loan Documents for the execution on the Closing
Date shall be limited to $25,000.
(b) Should Borrower fail to perform or observe any covenant or
agreement contained in any of the Loan Documents and such failure continues
through the cure period provided for therein, if any, the Agent, the Issuing
Bank or any Bank may then perform or attempt to perform such covenant or
agreement on behalf of Borrower. Such Person will endeavor to give Borrower
notice of such performance or attempted performance. Borrower shall, at the
request of such Person, promptly pay any amount expended in such performance or
attempted performance to
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such Person at the principal office of the Agent, together with interest on the
portion thereof from time to time remaining unpaid at the Default Rate.
Notwithstanding the foregoing, it is expressly understood and agreed that (i)
neither the Agent nor the Issuing Bank, nor any Bank, assumes any liability or
responsibility for the performance of any covenants or agreements of Borrower
hereunder or under any of the other Loan Documents, or any other documents, or
other control over the management and affairs of Borrower, and (ii) Borrower's
failure to perform any covenant or agreement that is cured, in whole or part,
by any of their action shall be and continue a Default unless and until (A) all
of such Person's attendant costs and expenses have been reimbursed as herein
provided and (B) Borrower has submitted, and the Agent has received and
approved, with the consent of the Required Banks, such objective evidence that
supports the determination that such Default will not reoccur.
(c) Borrower acknowledges and agrees that all attorneys,
accountants, auditors, and other professional Persons and consultants who are
from time to time engaged or employed by the-Agent (including, without
limitation, Fulbright & Xxxxxxxx L.L.P.) and whose fees and expenses are or may
be paid or reimbursed, as applicable, by Borrower, pursuant to the terms of any
Loan Document, are the professionals of the Agent and not of Borrower, and each
of them (i) shall have the right to act exclusively in the interest of the
Agent, and (ii) shall have no duty of disclosure, duty of loyalty, duty of care
or any other duty of any type or nature whatsoever, or deemed to have any
attorney-client or other similar professional relationship whatsoever, to
Borrower.
SECTION 10.4 Indemnification. SUBJECT TO SECTION 10.8, BORROWER
SHALL INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS EACH BANK, THE AGENT, THE
ISSUING BANK, AND THEIR RESPECTIVE AFFILIATES, SUBSIDIARIES, PARENT COMPANIES
AND OTHER RELATED ENTITIES, AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ATTORNEYS AND OTHER PROFESSIONALS AND CONSULTANTS, INSURERS
AND STOCKHOLDERS, AND EACH OF THEM (AND TOGETHER WITH EACH AND ALL OF THEIR
RESPECTIVE SUCCESSORS, ASSIGNS, HEIRS AND LEGAL REPRESENTATIVES, THE
"INDEMNIFIED PARTIES"), FROM AND AGAINST ALL LIABILITIES, OBLIGATIONS, LOSSES,
CLAIMS, ACTIONS, SUITS AND OTHER LEGAL PROCEEDINGS, JUDGMENTS, PENALTIES,
DAMAGES, COSTS, INTEREST, CHARGES, ATTORNEYS' AND OTHER PROFESSIONALS' AND
CONSULTANTS' FEES AND OTHER EXPENSES AND DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER ("INDEMNIFIED COSTS"), WHICH MAY BE IMPOSED ON, INCURRED OR
SUSTAINED BY, OR ASSERTED AGAINST, THE INDEMNIFIED PARTIES, OR ANY OF THEM, BY
REASON OF, ARISING OUT OF, OR IN ANY MANNER RELATED TO (DIRECTLY OR INDIRECTLY,
CONSEQUENTIALLY, OR OTHERWISE), ANY LOAN DOCUMENT (INCLUDING, WITHOUT
LIMITATION, ANY LETTER OF CREDIT), THE TRANSACTIONS CONTEMPLATED THEREBY, OR
THE ENFORCEMENT, PROTECTION OR ADMINISTRATION THEREOF OR WITH RESPECT THERETO
(COLLECTIVELY, THE
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"SUBJECT TRANSACTIONS"), INCLUDING, WITHOUT LIMITATION, DAMAGES, COSTS AND
EXPENSES INCURRED BY ANY OF THE INDEMNIFIED PARTIES IN INVESTIGATING, PREPARING
FOR, DEFENDING AGAINST, OR PROVIDING EVIDENCE, PRODUCING DOCUMENTS, OR TAKING
ANY OTHER ACTION IN RESPECT OF ANY COMMENCED OR THREATENED LITIGATION UNDER ANY
FEDERAL OR STATE, OR ANY SUBDIVISION THEREOF, SECURITIES OR ENVIRONMENTAL LAW
OR ANY OTHER LAW OF ANY JURISDICTION OR AT COMMON LAW.
THIS FOREGOING IS INTENDED TO INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS EACH
OF THE INDEMNIFIED PARTIES AGAINST ALL RISKS, FORESEEABLE OR UNFORESEEABLE,
INVOLVED IN TUE SUBJECT TRANSACTIONS, INCLUDING, WITHOUT LIMITATION, THE
NEGLIGENCE OR ALLEGED NEGLIGENCE (WHETHER SOLE, COMPARATIVE, CONTRIBUTORY OR
OTHERWISE) OF ANY OF TEE INDEMNIFIED PARTIES, ALL OF WHICH RISKS ARE HEREBY
ASSUMED BY BORROWER; PROVIDED, HOWEVER, AN INDEMNIFIED PARTY SHALL NOT BE
ENTITLED TO INDEMNIFICATION FOR INDEMNIFIED COSTS TO THE EXTENT SUCH
INDEMNIFIED COSTS ARE DIRECTLY CAUSED BY A BREACH OF ITS MATERIAL OBLIGATIONS
UNDER ANY LOAN DOCUMENT OR ITS OWN GROSS NEGLIGENCE OR WILFUL MISCONDUCT AS
DETERMINED BY A COURT OF COMPETENT JURISDICTION. AN INDEMNIFIED PARTY WILL
PROVIDE BORROWER WITH NOTICE OF A CLAIM FOR INDEMNIFICATION HEREUNDER AS SOON
AS REASONABLY PRACTICAL, AND SUCH INDEMNIFIED PARTY WILL PROVIDE SUCH
INFORMATION CONCERNING THE CLAIM AS BORROWER MAY REASONABLY REQUEST. BORROWER
SHALL HAVE THE RIGHT TO APPROVE, WHICH APPROVAL WILL NOT BE UNREASONABLY
WITHHELD OR DELAYED, ANY SETTLEMENT AGREEMENT TO BE ENTERED INTO BY AN
INDEMNIFIED PARTY IN CONNECTION WITH ANY ACTION, SUIT, INVESTIGATION OR
PROCEEDING UNDERLYING A CLAIM FOR INDEMNIFICATION HEREUNDER PROVIDED THAT (I)
BORROWER IS NOT IN DEFAULT (AS DEFINED IN ANNEX B) AS OF THE TIME AT WHICH SUCH
INDEMNIFIED PARTY PROPOSES TO ENTER INTO SUCH SETTLEMENT AGREEMENT, AND (II)
BORROWER HAS NOT TAKEN A POSITION IN SUCH ACTION, SUIT, INVESTIGATION OR
PROCEEDING WHICH, IN THE SOLE JUDGMENT OF SUCH INDEMNIFIED PARTY, IS ADVERSE TO
OR IN CONFLICT WITH THE POSITION OF SUCH INDEMNIFIED PARTY. IF, UNDER THE
PRECEDING SENTENCE, BORROWER DOES NOT APPROVE A SETTLEMENT AGREEMENT PROPOSED
BY AN INDEMNIFIED PARTY, BORROWER'S INDEMNIFICATION OBLIGATIONS HEREUNDER SHALL
CONTINUE IN ANY EVENT WITH RESPECT TO THE CLAIM AND INDEMNIFIED COSTS NOT
INCLUDED IN THE SETTLEMENT PROPOSAL. TO THE EXTENT THAT THE FOREGOING
INDEMNIFICATION MAY BE DEEMED UNENFORCEABLE, IN WHOLE OR IN PART, FOR ANY
REASON WHATSOEVER, INCLUDING BECAUSE IT IS VIOLATIVE OF LAW OR PUBLIC POLICY AS
DETERMINED BY A FINAL, NON-APPEALABLE JUDGMENT
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OR ORDER OF A COURT OF COMPETENT JURISDICTION, BORROWER AGREES TO CONTRIBUTE
THE MAXIMUM PORTION THAT IT IS NOT PROHIBITED TO PAY UNDER APPLICABLE LAW, TO
THE PAYMENT AND SATISFACTION OF THE SUBJECT TRANSACTIONS.
SECTION 10.5 Sharing of Set-Offs. Borrower hereby grants to
Agent, the Issuing Bank and each Bank the right of set-off, to secure repayment
of the Obligations, upon any and all monies, securities or other Property of
Borrower and the proceeds therefrom, now or hereafter held or received by or in
transit to Agent, the Issuing Bank or any Bank or any of their respective
agents, from or for the account of Borrower, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, and also upon any and all
deposits (general or special) and credits of Borrower, and any and all claims
of Borrower against Agent, the Issuing Bank or any Bank at any time existing.
In connection with any set off, counterclaim or similar action by any Bank,
such Bank agrees that it shall comply with, and otherwise be bound by, the
provisions of Section 2.13. Borrower, the Agent, the Issuing Bank and each
Bank agree that any Person purchasing a participation from a Bank pursuant to
Section 10.7(b) shall, to the fullest extent permitted by Law and if provided
in the participation agreement between the Bank and the participant, have all
of the obligations of a Bank pursuant to the terms of this Section 10.5.
Without limiting any Bank's right of set-off or counterclaim or otherwise, the
Agent shall have the right to charge any account of Borrower maintained with
Agent for the amount of any payment due under any Loan Document, under the
Notes or with respect to any of the Letters of Credit.
SECTION 10.6 Amendments and Waivers. All modifications, consents,
amendments, waivers and the like of any provision of any Loan Document, or
consent to any departure by Borrower therefrom (collectively,. the foregoing
are referred to in this Section 10.6 as a "modification"), shall be effective
only if the same is in a writing in form, scope and substance, and subject to
conditions and requirements, if any, acceptable to the Agent and the Required
Banks, and if so acceptable, is signed by Borrower, the Agent and, at least,
the Required Banks; provided that no such modification shall, unless consented
to in writing by all the Banks, (i) modify the Commitment of any Bank or
subject any Bank to any additional funding obligation, (ii) reduce the
principal amount or the stated rate of interest on any Loan or reduce any fees
hereunder (other than fees payable solely to the Agent or the Issuing Bank, as
applicable), (iii) extends the date fixed for any principal reduction pursuant
to Section 2.8 or Section 2.9, the payment of any interest on any Loan, the
payment of any Reimbursement Obligation or the payment of any fees hereunder
(other than fees payable solely to the Agent or the Issuing Bank, as
applicable), the maturity date of any of the Obligations, the Revolving
Commitment Termination Date or the Term Commitment Termination Date, (iv)
release or impair the Lien in any Property in favor of the Banks, (v) release
any guarantor of the Obligations, (vi) change the percentage of the Commitments
or the aggregate unpaid principal amount of the Notes, or the number of Banks
which shall be required for the Banks or any of them to take any action under
this Section 10.6 or any other provision of the Loan Documents, or (vii)
affects this Section 10.6
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or Section 10.3 or Section 10.4 or modifies the definition of "Required Banks";
provided, further, that, (y) no modification or waiver which modifies the
rights, duties or obligations of the Agent shall be effective without the prior
written consent of the Agent, and (z) no modification or waiver which modifies
the rights, duties, obligations or commitment of the Issuing Bank shall be
effective without the prior written consent of the Issuing Bank.
SECTION 10.7 Successors and Assigns; Participations; Assignments.
(a) The Loan Documents shall be binding upon, and inure to the
benefit of the parties thereto and their respective successors and assigns,
except that (i) Borrower may not assign or transfer any of its rights or
obligations under any Loan Document without the prior written consent of the
Agent, the Issuing Bank and all the Banks, and (ii) unless otherwise permitted
under this Section 10.7, no Bank may transfer, pledge, assign, sell
participations in or otherwise convey or encumber its Commitments or Loans or
interests in Letters of Credit. Borrower shall not directly or indirectly
purchase or otherwise retire any Obligations owed to any Bank or the Issuing
Bank nor will any Bank or the Issuing Bank accept any offer to do so, unless
each Bank or the Issuing Bank (or both, as applicable) shall have received
substantially the same offer with respect to the same pro rata share of the
Obligations owed to it. If Borrower, directly or indirectly, at any time
purchases some but less than all of the Obligations owed to the Agent, the
Issuing Bank and the Banks, then notwithstanding any provision herein to the
contrary such purchaser or purchasers shall not be entitled to any rights of
the Agent, the Issuing Bank or the Banks under the Loan Documents (including
voting rights or the right to participate in or determine any modification (as
that term is defined in Section 10.6)), unless and.until Borrower has purchased
all of the Obligations.
(b) Neither this Agreement nor any other Loan Document, nor any
benefits hereunder or thereunder, shall inure to or for the benefit of any
Person that is not a signatory party hereto, other than any of such Persons
that are expressly named or designated as indemnitees, releasees or exculpatees
herein. All conditions to make Revolving Loans or Term Loans hereunder or to
issue Letters of Credit hereunder, and all covenants, warranties,
representations, and other terms and provisions of, and applicable to, Borrower
in each Loan Document are imposed solely and exclusively for the benefit of the
Agent, the Issuing Bank and each Bank, and their respective successors and
assigns. No other Person shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to assume that no
Revolving Loans or Tenn Loans will be made or Letters of Credit will be issued
in the absence of strict compliance with any or all of such conditions; and no
other Person shall, under any circumstances, be deemed to be a beneficiary of
such conditions, covenants, warranties, representations and other terms and
provisions. Any of such conditions, and the breach of, or noncompliance with,
any such covenants, warranties, representations and other terms and provisions
may be freely waived in whole or in part by the Agent, the Issuing Bank and the
Banks (subject to applicable provisions hereof) at any time if in its or their
(as applicable) sole discretion it or they (as applicable) deem it advisable to
do so. No such conditions, covenants, warranties, representations
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or other terms or provisions are intended to release, or authorize or permit a
breach by, Borrower of any of its obligations and requirements to any third
Person, or any noncompliance therewith, or to evidence the contractual
interference therewith by the Agent, the Issuing Bank and the Banks.
(c) Subject to the provisions of this Section 10.7, any Bank may
in the ordinary course of its business, with notice to but without any consent
of Borrower with respect thereto, and in accordance with applicable Law, at any
time sell to one or more Qualified Banks (each a "Participant") a participating
interests in all or any part of any Loans, or in the Commitments, of such Bank.
In the event of any such sale by a Bank to a Participant, (i) such Bank shall
remain a "Bank" for all purposes under this Agreement, and the Participant
shall not constitute a "Bank" hereunder, (ii) such Bank's obligations under
this Agreement shall remain unchanged, (iii) such Bank shall remain solely
responsible for the performance of its obligations under this Agreement, (iv)
such Bank shall remain the holder of any such Note and the obligor to fund its
respective Commitments for all purposes under this Agreement, and (v) Borrower,
the Issuing Bank, the Agent and the other Banks shall continue to deal solely
and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement and the other Loan Documents. Participants
shall have no rights under this Agreement or any of the Loan Documents, other
than rights of set off (and attendant obligations) expressly set forth herein.
No Bank shall sell any participating interest under which the Participant shall
have, and no Participant shall have, any rights to vote on any modification (as
such term is defined in Section 10.6) of this Agreement or any other Loan
Document, and any agreement between any Bank and any Participant granting any
Participant any voting rights shall be void ab inido. Except in the case of
the sale of a participating interest to a Bank, the relevant participation
agreement shall not permit the Participant to transfer, pledge, assign, sell
participations in, or encumber its portion of, the Commitments, the Loans, or
the Letters of Credit.
(d) Subject to the provisions of this Section 10.7, any Bank may,
in the ordinary course of its business, with prior notice to and subject to the
consent of Borrower, which consent shall not be unreasonably withheld, and in
accordance with applicable Law, assign to one or more Qualified Banks (each a
"Purchaser") a proportional part (not less than $5,000,000 of each of the
Bank's Commitments, unless such Bank is reducing its Commitments to zero) of
its rights and obligations under the Loan Documents, and such Purchaser shall
(i) assume all such rights and obligations, pursuant to an assignment and
assumption agreement and other necessary and related documents, all in form,
scope and substance satisfactory to the Agent, executed by such Purchaser, such
transferor Bank, the Agent and the Issuing Bank, and (ii) pay to the Agent, for
its account, a non-refundable processing fee in the amount of $2,000. Upon the
effectiveness of such assignment and assumption agreement, such Purchaser shall
for all purposes be a Bank party to this Agreement and shall have all the
rights and obligations of a Bank under this Agreement to the same extent as if
it were an original party hereto with Commitments as set forth in the
assignment agreement, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by Borrower, the Banks or the Agent
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shall be required. Upon the consummation of any transfer to a Purchaser
pursuant to this Section 10.7(d), the transferor Bank, the Agent, the Issuing
Bank and Borrower shall make appropriate arrangements, at Borrower's cost and
expense, so that, if required, new Notes are issued to such Purchaser. Any
sale pursuant to this Section 10.7(d) shall be of an equal pro rata portion of
each of the transferor Bank's Commitments, Loans and interests in Letters of
Credit. A Purchaser shall be subject to all the provisions of this Section
10.7 the same as if it were a Bank signatory hereto as of the Closing Date.
(e) Borrower authorizes each Bank to disclose to any Participant
or Purchaser (each a "Transferee") and any prospective Transferee any and all
financial information in such Bank's possession concerning Borrower which has
been delivered to such Bank by or on behalf of them pursuant to this Agreement
or which has been delivered to such Bank by them in connection with such Bank's
credit evaluation prior to entering into this Agreement.
(f) No Transferee (including for this purpose a different Lending
Office of a Bank) shall be entitled to receive any greater payment under this
Agreement than the transferor Bank would have been entitled to receive with
respect to the rights assigned, unless such assignment is made with the prior
written consent of Borrower or by reason of the provisions referred to in
Section 9.5 regarding the designation of a different Lending Office under
certain circumstances.
(g) Notwithstanding any other provisions of this Section 10.7, no
transfer or assignment of the interests or obligations of any Bank hereunder or
any grant of participations therein shall be permitted if such transfer,
assignment or grant would require Borrower to file a registration statement
with the Securities and Exchange Commission or to qualify the Loans or the
Letters of Credit under the "Blue Sky" laws of any state.
(h) Each Bank initially party to this Agreement hereby represents,
and each person that becomes a Bank pursuant to an assignment permitted by
Section 10.7(d) will, upon its becoming party to this Agreement, represent that
it is a Qualified Bank, and that it will make or acquire Loans only for its own
account in the ordinary course of its business; provided, however, that subject
to the preceding provisions of this Section 10.7, the disposition of any
promissory notes or other evidences of or interests in Obligations held by it
shall at all times be within its exclusive control.
SECTION 10.8 Maximum Interest Rate. It is the intent of the
parties hereto that each of the Agent, the Issuing Bank and the Banks
(collectively, the "Financing Parties"), and Borrower in the execution,
delivery and performance of all Loan Documents, the transactions provided for
therein and contemplated thereby, and all matters incidental and related
thereto and arising therefrom, shall comply and conform strictly with
Applicable Law from time to time in effect, including without limitation, Usury
Laws. In furtherance thereof, the Financing Parties and Borrower stipulate and
agree that none of the terms and provisions contained in, or pertaining to, the
Loan Documents shall ever be construed to create a contract to pay for the use
or
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forbearance or detention of money with interest at a rate or in an amount in
excess of the Maximum Rate or maximum amount of interest permitted or allowed
to be contracted for, charged, received, taken or reserved under said Laws.
For purposes of each Loan Document, (i) "interest" shall include the aggregate
of all amounts which constitute or are deemed to constitute interest under the
Laws of the State of Texas or, to the extent they may apply, the Laws of the
United States of America, that are contracted for, chargeable, receivable
(whether received or deemed to have been received), taken or reserved under
each such document, and (ii) all computations of the maximum amount of interest
permitted or allowed under Applicable Law will be made on the basis of the
actual number of days elapsed over a 365 or 366 day year, whichever is
applicable. Neither Borrower nor any other person shall ever be required to
pay unearned interest on, or with respect to any of, the Loan Documents and
shall never be required to pay interest on, or with respect to any of, the Loan
Documents at a rate or in an amount in excess of the Maximum Rate or maximum
amount of interest that may be lawfully contracted for, charged, received,
taken or reserved under Applicable Law, and the provisions of this paragraph
shall control over all other provisions of the Loan Documents. If the
effective rate or amount of interest which would otherwise be payable under the
Loan Documents would exceed the Maximum Rate or maximum amount of interest any
Financing Party or any other holder of any Note or other Obligations is allowed
by Applicable Law to charge, contract for, take, reserve or receive, or in the
event any Financing Party or any holder of any Note or other Obligations shall
charge, contract for, take, reserve or receive monies that are deemed to
constitute interest which would, in the absence of this provision, increase the
effective rate or amount of interest payable under the Loan Documents to a rate
or amount in excess of that permitted or allowed to be charged, contracted for,
taken, reserved or received under Applicable Law then in effect, then the
principal amount of such Note or other Obligations or the amount of interest
which would otherwise be payable thereunder shall be payable at, or reduced to,
as applicable, the maximum amount allowed pursuant to the then applicable
indicated (weekly) rate ceiling referred to hereinabove at the definition of
the term Applicable Law, or if no such ceiling is then in effect, as authorized
and allowed under said Laws as now or hereafter construed by the courts having
jurisdiction, and all such monies so charged, contracted, for, received, taken
or reserved that are deemed to constitute interest in excess of the Maximum
Rate or maximum amount of interest permitted by. Applicable Law shall be
immediately returned or credited to the account of Borrower upon such
determination.
SECTION 10.9 Governing Law; Submission to Jurisdiction. THIS
AGREEMENT, EACH NOTE AND EACH OTHER LOAN DOCUMENT (INCLUDING ITS AND THEIR
VALIDITY, ENFORCEABILITY AND INTERPRETATION) SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO
ANY CONFLICTS OF LAW PRINCIPLES) AND TO THE EXTENT CONTROLLING, THE FEDERAL
LAWS OF THE USA; PROVIDED THAT (I) THE PROVISION OF CHAPTER 15 OF THE TEXAS
CREDIT CODE (VERNON'S TEXAS CIVIL STATUTES, ARTICLE 5069-15.01 ET SEQ.) ARE
EXPRESSLY DECLARED BY THE PARTIES NOT TO BE APPLICABLE TO ANY LOAN DOCUMENT OR
THE
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TRANSACTIONS CONTEMPLATED, BY ANY OF THEM, AND (II) THE LAWS OF THE STATE OF
TEXAS AND/OR THE UNITED STATES OF AMERICA SHALL NOT LIMIT THE AMOUNT OR RATE OF
INTEREST WHICH THE HOLDER OF ANY NOTE MAY CONTRACT FOR CHARGE, RECEIVE,
COLLECT, TAKE, RESERVE AND/OR APPLY IF OTHER APPLICABLE LAWS PERMIT AT ANY TIME
A HIGHER AMOUNT OR RATE. THE PARTIES EXPRESSLY ACKNOWLEDGE THAT (y) THEY
INTEND THAT THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL BE GOVERNED BY
THE PROVISIONS (INCLUDING, WITHOUT LIMITATION, THE RIGHT OF THE PARTIES TO
SELECT THE GOVERNING LAW) OF THE UNIFORM COMMERCIAL CODE AND NOT BY COMMON LAW
AND (z) THE STATE OF TEXAS BEARS A REASONABLE RELATIONSHIP TO THIS TRANSACTION
AND NO OTHER STATE HAS A MATERIALLY GREATER INTEREST IN THIS TRANSACTION THAN
THE STATE OF TEXAS. BORROWER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS (SAN
ANTONIO DIVISION) AND OF ANY TEXAS STATE COURT SITTING IN BEXAR COUNTY, TEXAS
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
SECTION 10.10 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, and by each of the parties hereto on
separate counterparts, all of which taken together shall constitute one and the
same instrument. This Agreement shall become effective when the Agent shall
have received counterparts hereof signed by all of the parties hereto.
SECTION 10.11 Independence of Covenants. Each covenant and
agreement of Borrower under each Loan Document shall be given independent
effect so that, if a particular action or condition is prohibited or required
by any covenant, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or Event of Default if such action is taken or
condition exists.
SECTION 10.12 Survival. The obligations of Borrower under Sections
2.12, 9.3, 10.3, 10.4, 10.8, 10.18 and 10.20 shall survive the termination of
this Agreement, the payment of all other Obligations, the termination of the
Commitments and the return of the Letters of Credit to the Issuing Bank for a
period of 5 years after the last of such events to occur. The representations
and warranties set forth in this Agreement and each of the other Loan Documents
shall survive the execution, delivery and performance of this Agreement and the
other Loan Documents and shall continue until one year after the later of (i)
the repayment of the Obligations and (ii) the date on which the Banks'
obligations to make Loans and the Issuing Bank's obligation to issue Letters of
Credit shall have fully and finally terminated; and any investigation at any
time by or on behalf of the Agent, the Issuing Bank or any Bank shall not
diminish any of their respective rights to rely thereon.
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SECTION 10.13 Severability. In case any one or more of the
provisions or part of a provision contained in any Loan Document shall for any
reason be held to be invalid, illegal or unenforceable in any respect in any
jurisdiction, such invalidity, illegality or unenforceability shall be deemed
not to affect any other jurisdiction or any other provision or part of a
provision of any Loan Document, but such Loan Document shall be reformed and
construed in such jurisdiction as if such provision or part of a provision held
to be invalid or illegal or unenforceable had never been contained herein and
such provision or part reformed so that it would be valid, legal and
enforceable in such jurisdiction to the maximum extent possible.
SECTION 10.14 Governmental Regulation. Anything contained in any
Loan Document to the contrary notwithstanding, Borrower acknowledges and agrees
that neither the Agent nor the Issuing Bank, nor any Bank, shall be obligated
(i) to extend or fund any credit or other financial accommodation to, or for
the benefit of, Borrower in an amount, or (ii) to perform any other agreement
or obligation to, or for the benefit of, Borrower in any regard, in
contradiction or violation of any limitation or prohibition provided by any
applicable statute or regulation, or any interpretation, ruling, decision,
opinion or other pronouncement in respect thereto (whether or not having the
effect of law), which any of them believes is applicable.
SECTION 10.15 No Control. None of the covenants, terms or other
provisions of any Loan Document or any document executed in conjunction
therewith or related thereto shall, or shall be deemed to, give the Agent, the
Issuing Bank or any Bank rights or powers to exercise control over, or
participate in the management of, the business, affairs, operations or
management of Borrower or any of its Property, including any right or power to
influence or affect any of its treatment, transportation, storage or disposal
of toxic and/or hazardous waste, substances or constituents. The relationship
between Borrower and the other parties hereto created by this Agreement and
each of the other Loan Documents is only that of debtor-creditor (with or
without security, as applicable), and the Rights of such other parties
hereunder and thereunder are limited to the rights to receive payment of the
Obligations and to exercise the Rights provided herein and therein and in any
other document executed in conjunction herewith or therewith or related hereto
or thereto.
SECTION 10.16 Renewals, Extensions, Rearrangements, Termination,
Etc. With respect to each and every (i) renewal, extension, increase and
rearrangement, if any, of the Obligations, or any part thereof, and (ii)
amendment, modification, supplement, restatement, waiver and consent, if any,
of or to this Agreement or any other Loan Document, all provisions of this
Agreement and the other Loan Documents shall apply with equal force and effect
to each such event or circumstance, except to the extent, if any, expressly set
forth in connection with each such event or circumstance; provided, however,
the foregoing is not intended in any regard to convey, acknowledge or otherwise
evidence on the part of the Agent, the Issuing Bank or any Bank, expressly or
by implication, any present consent or agreement to any such event or
circumstance occurring subsequent to the date hereof, it being acknowledged and
agreed that the entry by the parties hereto to any such events or circumstances
shall be evaluated as they occur
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and subject to the other provisions of the Loan Documents, as same may be
applicable. Except as expressly provided therein, all Loan Documents shall
remain in effect until full and complete payment of all Obligations,
termination of all commitments and obligations of the Issuing Bank and/or the
Banks to make or extend any credit or financial accommodation to, or for the
benefit of, Borrower, and receipt by the Agent, the Issuing Bank and the Banks,
or any of the foregoing Persons, if so requested, of such written assurances of
Borrower and any other designated Person or Persons that no other claims,
rights, defenses, liabilities or obligations exist in respect hereto or against
any of them or any other Indemnified Party.
SECTION 10.17 Conflicts. In the event of any inconsistency or
conflict between the terms of this Agreement and the terms of any other Loan
Document, the terms of this Agreement shall control.
SECTION 10.18 Confidentiality. Each Bank, the Issuing Bank and the
Agent agree to use reasonable precautions to keep confidential, in accordance
with customary procedures for handling confidential information of this nature
and in accordance with safe and sound banking practices, any non-public
information supplied to it by Borrower pursuant to this Agreement which is
identified by Borrower as being confidential at the time the same is delivered
to the Banks, the Issuing Bank or the Agent, provided that nothing herein shall
limit the disclosure of any such information (i) to the extent required by
statute, rule, regulation or judicial process, (ii) to counsel for any Bank,
the Issuing Bank or the Agent, (iii) to bank examiners, auditors or accountants
of any Bank, the Issuing Bank or the Agent, (iv) to any other Bank, the Issuing
Bank or the Agent, (v) in connection with any litigation to which any Bank, the
Issuing Bank or the Agent is a party, provided, further, that, unless
specifically prohibited by applicable Law or court order, each Bank, the
Issuing Bank and the Agent shall, at least 5 Business Days prior to disclosure
thereof, notify Borrower of any request for disclosure of any such non-public
information (A) by any governmental agency or representative thereof (other
than any such request in connection with an examination of such Bank's
financial condition by such governmental agency) or (B) pursuant to legal
process, or (vi) to any Transferee (or prospective Transferee) so long as such
Transferee (or prospective Transferee) agrees in writing to handle such
information confidentially.
SECTION 10.19 Payments Set Aside. To the extent that Borrower
makes a payment or payments to the Agent, the Issuing Bank or any Bank, or any
of them (or their Transferee), or the Agent, the Issuing Bank or any Bank, or
any of them (or their Transferee) enforces any Lien or exercises its right of
setoff, and such payment or payments or the proceeds of such enforcement or
setoff, or any part thereof, are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other Person under any Debtor Laws or equitable cause,
then, to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied, and all rights and remedies therefor, shall be
revived and shall continue in full force and effect as if such payment had not
been made or such enforcement or setoff had not occurred.
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SECTION 10.20 Limitation of Liability; Commencement of Actions. To
the extent not prohibited by applicable law, no claim may be made by or on
behalf of Borrower or any other Person against the Agent, the Issuing Bank or
any Bank or any other Indemnified Party for any punitive damages in respect of
any claim for breach of contract arising out of or related to the transactions
contemplated by any Loan Document, or any act, omission, or event occurring in
connection therewith (whether any of such is a claim based on contract, tort,
duty imposed by law or otherwise), and Borrower hereby waives, releases, and
agrees not to xxx, or commence or authorize the commencement of any Litigation,
upon any claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor. Further, any claim made by or on
behalf of Borrower or any other Person against the Agent, the Issuing Bank or
any Bank or any other Indemnified Party shall be barred unless it is asserted
by the commencement of an action or proceeding in a court as prescribed in
Section 10.9 by the filing of a complaint therein within two (2) years after
the first act, occurrence or omission upon which such claim or cause of action,
or any part thereof, is based, discovered or, in the exercise of reasonable
diligence, should have been discovered; and Borrower agrees that such period of
time is a reasonable and sufficient time for it to investigate and act upon any
such claim or cause of action. The provisions of this Section 10.20 shall
survive any termination, howsoever occurring, of this Agreement and each Loan
Document and the full and final payment of the Notes and the other Obligations.
SECTION 10.21 Review. Borrower acknowledges and represents to the
Agent, the Issuing Bank and each Bank that Borrower has reviewed this Agreement
and each other Loan Document, has had the benefit of legal counsel of its own
choice throughout its review and negotiation of this Agreement and each other
Loan Document, has been afforded an opportunity to review and negotiate this
Agreement and each other Loan Document with the advice of its legal counsel,
and is fully informed and knowledgeable of the terms, provisions, rights and
effects of this Agreement and each other Loan Document. In furtherance of the
foregoing, but not in limitation thereof, Borrower acknowledges and agrees that
each Loan Document should be and shall be construed as if jointly drafted by
the parties hereto.
SECTION 10.22 This Agreement. THIS WRITTEN LOAN AGREEMENT AND ALL
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER COVERED HEREBY AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG THE PARTIES.
[Signatures on Next Page]
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IN, WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duty executed by their respective authorized signatories as of the day and
year first above written.
BORROWER:
HASTINGS BOOKS, MUSIC & VIDEO, INC.
By: /s/ XXXX XXXXX
-----------------------------------------
Xxxx Xxxxx, Vice President,\
Secretary, Treasurer and Chief
Financial Officer
BANKS:
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
Individually, as the Agent and
the Issuing Bank
By: /s/ XXXXXX X. XXXXXXXXXXX
-----------------------------------------
Xxxxxx X. Xxxxxxxxxxx,
Vice President
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ XXXX XXXXXX
-----------------------------------------
Xxxx Xxxxxx, Senior Vice President
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ XXXXXXXX XXXXX
-----------------------------------------
Xxxxxxxx Xxxxx, Banking Officer
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ANNEX A
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
1. Domestic Lending Office:
The Boatmen's National Bank of St. Louis
000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
2. LIBOR Lending Office:
The Boatmen's National Bank of St. Louis
000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
3. Term Commitment: $ 3,750,000
4. Revolving Commitment: $11,250,000
5. Total Commitment: $15,000,000
6. Information for Notices:
The Boatmen's National Bank of St. Louis
000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
7.Account Number:
-------------------------------------
-------------------------------------
-------------------------------------
Annex A - Page 1
69
ANNEX A
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
1. Domestic Lending Office:
Texas Commerce Bank National Association
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
2. LIBOR Lending Office:
Texas Commerce Bank National Association
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
3. Term Commitment: $ 3,125,000
4. Revolving Commitment: $ 9,375,000
5. Total Commitment: $12,500,000
6. Information for Notices:
Texas Commerce Bank National Association
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Annex A - Page 2
70
ANNEX A
FIRST INTERSTATE BANK OF TEXAS, N.A.
1. Domestic Lending Office:
First Interstate Bank of Texas, N.A.
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
2. LIBOR Lending Office:
First Interstate Bank of Texas, N.A.
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
3. Term Commitment: $ 3,125,000
4. Revolving Commitment: $ 9,375,000
5. Total Commitment: $12,500,000
6. Information for Notices:
First Interstate Bank of Texas, N.A.
000 X. 0xx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxxx Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Annex A - Page 3
71
ANNEX A
Address for Borrower:
Hastings Books, Music & Video, Inc.
000 Xxxx 00xx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Vice President, Secretary,
Treasurer and Chief Financial Officer
Phone: (000) 000-0000 or
(000) 000-0000
Fax: (000) 000-0000
Annex A - Page 4
72
ANNEX B
CERTAIN DEFINITIONS
As used herein, the following terms shall have the respective meanings
assigned to them as follows:
"Adjusted London Interbank Offered Rate" means, with respect to any
Interest Period, a rate per annum equal to the quotient obtained (rounded to
the nearest 1/100 of 1%) by dividing (i) the applicable London Interbank
Offered Rate by (ii) 1.00 minus the LIBOR Reserve Percentage. The Adjusted
London Interbank Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the LIBOR Reserve Percentage.
"Affiliate" means any Person who, directly or indirectly, controls,
is controlled by or is under common control with the relevant Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with
respect to any Person, means any Person with possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, through the ownership (of record, as trustee or by
proxy) of Voting Shares, through a management contract, or otherwise. Any
Person owning or controlling directly or indirectly 25% or more of the Voting
Shares, or other equity interests of another Person shall be deemed to be an
Affiliate of such Person.
"Affected Bank" has the meaning set forth in Section 9.2.
"Agent" has the meaning set forth in the introductory paragraph of
this Agreement and shall include, at all relevant times, each successor
appointed in the manner provided for in Article 8.
"Agent Indemnitees" has the meaning set forth in Section 8.2.
"Agreed Maximum Rate" means a per annum rate of interest equal to 5%
plus the Base Rate, which Agreed Maximum Rate shall apply only during a period
while there is no Maximum Rate applicable to the transactions contemplated
hereby.
"Agreement", "hereof", "hereto", "herein", "hereunder" and words of
similar import means this Agreement as a whole, and not any particular article
or section.
"Agreement" means this Credit Agreement, as the same may be amended,
modified or supplemented from time to time.
ANNEX B - Page 1
73
"Applicable Law" means, with respect to each of the Agent, the Issuing
Bank and the Banks, the law in effect, from time to time, applicable to this
loan transaction and each Loan Document which lawfully permits the contracting
for, taking, reserving, receiving, charging and/or collection of the maximum
lawful, non-usurious rate of interest by such Person on each Loan Document and
the transactions evidenced thereby, and arising in connection therewith
(including, but without limitation, the Notes), including laws of the State of
Texas, to the extent controlling, the laws of the United States of America, and
laws of any jurisdiction whose laws may be mandatorily applicable to such
Person, notwithstanding other provisions of any Loan Document or laws of the
United States of America applicable to such Person and the transaction
contemplated hereby, which would permit such Person to contract for, take,
reserve, receive, charge or collect a greater amount of interest then under
such jurisdiction's law. To the extent that Applicable Law is determined by
reference to Article 1.04, Title 79, Revised Civil Statutes of Texas, 1925, as
amended, the interest ceiling applicable hereto and in connection herewith
shall be the "indicated" (weekly) rate ceiling as defined in said Article 1.04;
provided however, it is agreed that the terms hereof, including the rate, or
index, formula or provision of law used to compute the rate in connection
herewith, will be subject to the revisions as to current and future balances,
from time to time, pursuant to Applicable Law. IT IS FURTHER AGREED THAT IN NO
EVENT SHALL CHAPTER 15 OF SUBTITLE 3, TITLE 79, REVISED CIVIL STATUTES OF
TEXAS, 1925, AS AMENDED, APPLY To ANY LOAN DOCUMENT OR THE TRANSACTIONS
EVIDENCED THEREBY, OR ARISING IN CONNECTION THEREWITH.
"Applicable Margin" means, with respect to any LIBOR Loan, the
following per annum percentages determined by the Agent as follows:
(a) The Applicable Margin shall be equal to the
percentage set forth below based upon the ratio of Funded Debt to
EBITDA as of the end of each Fiscal Quarter with respect to the four
fiscal-quarter period ending on as of the end of such Fiscal Quarter:
========================================================================================================
LIBOR Spread
--------------------------------------------------------------------------------------------------------
Ratio of Funded Debt to EBITDA Revolving
Loans Term Loans
--------------------------------------------------------------------------------------------------------
Less than or equal to 1.00 to 1.00 1.00 1.25
--------------------------------------------------------------------------------------------------------
Greater than 1.00 to 1.00 1.25 1.50
but less than or equal to 1.50 to 1.00
--------------------------------------------------------------------------------------------------------
Greater than 1.50 to 1.00 1.50 1.75
========================================================================================================
ANNEX B - Page 2
74
(b) Each determination of the Applicable Margin
determined pursuant to subsection (a) above shall be determined by the
Agent within 10 days after the delivery to it of a certificate
required by Section 5.1(e). Promptly upon each such determination,
the Agent shall notify Borrower and each Bank of such determination.
Each change in the Applicable Margin shall remain effective until the
next such determination.
"Application" means an application, in such form as the Issuing Bank
may specify from time to time, requesting the Issuing Bank to open a Letter of
Credit.
"Authorized Officer" means the president, chief financial officer,
controller, assistant controller or accounting manager of Borrower or any other
officer of Borrower which the president or chief financial officer may from
time to time designate in writing to the Agent as having authority to act with
respect to the Loan Documents and the transactions contemplated thereby.
"Bank" has the meaning set forth in the introductory paragraph of this
Agreement.
"Base Rate" means, as determined by the Agent on a daily basis, the
higher of (i) the variable rate per annum established by Boatmen's from time to
time as its corporate base rate for short-term commercial loans to corporate
borrowers (which Borrower acknowledges is not necessarily the lowest rate
offered by Boatmen's), and (ii) the overnight cost of funds of Boatmen's as
determined solely by Boatmen's plus a margin of 1/2% per annum. Each change
in the Base Rate shall become effective, without prior notice to Borrower,
automatically as of the opening of business on the date of such change in the
Base Rate.
"Base Rate Loan" means a Loan to be made or continued as or converted
into such a designated Loan pursuant to the applicable Notice of Borrowing or
Continuation/Conversion Notice, as the case may be, which will bear interest at
the Base Rate.
"Boatmen's" has the meaning set forth in the introductory paragraph of
this Agreement.
"Borrowing" means a borrowing pursuant to a Notice of Borrowing or a
continuation or a conversion pursuant to Section 2.5 consisting, in each case,
of the same Type of Loan having in the case of LIBOR Loans, the same Interest
Period and made previously or being made concurrently by all of the Banks.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in St. Louis, Missouri are authorized or required by law
to close.
"Capital Lease Obligations" means, as to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP.
ANNEX B - Page 3
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"Change in Control" means, other than as a result of the public
offering of previously unissued common stock of Borrower, (i) Xxxx Xxxxxxxxx,
the Estate of Xxx Xxxxxxxxx and members of the immediate families of Xxxx
Xxxxxxxxx and Xxx Xxxxxxxxx (collectively, the "Marmaduke Family") shall cease
to collectively be the "beneficial owner" (as that term is used in Rules 13d-3
and 13d-5 under the Exchange Act) of at least 30% of the combined voting power
of the then outstanding voting securities of Borrower normally entitled to vote
in elections of directors; or (ii) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), other than the Marmaduke
Family or any member thereof, is or becomes the "beneficial owner" (as that
term is used in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 40%
of the combined voting power of the then outstanding securities of Borrower
normally entitled to vote in elections of directors; or (iii) during any period
of 12 consecutive months, Continuing Directors cease for any reason (other than
death or disability) to constitute a majority of the Board of Directors of
Borrower then in office.
"Class" has the meaning set forth on Section 1.2(f).
"Closing Date" means December 12, 1994.
"Code" means the Internal Revenue Code of 1986, as heretofore and
hereafter amended, or any successor statute.
"Commitment" means a Term Commitment or a Revolving Commitment, and
"Commitments" means two or more of the foregoing, as the context may require.
"Contested Claim" means any Tax, Indebtedness or other claim or
liability, (i) the validity or amount of which is being diligently contested in
good faith by appropriate proceedings being diligently prosecuted, (ii) for
which adequate reserves, if required by GAAP, have been established and (iii)
with respect to which any right to execute upon or sell any Property or assets
of Borrower has not matured or has been and continues to be effectively
enjoined, superseded or stayed.
"Continuation/Conversion Notice" has the meaning set forth in Section
2.5(a).
"Continuing Directors" means any member of the Board of Directors of
Borrower on the date of this Agreement, any director elected since the date
thereof in any annual meeting of the stockholders upon the recommendation of
the Board of Directors of Borrower or any other member of the Board of
Directors of Borrower who will be recommended or elected to succeed a
Continuing Director by a majority of Continuing Directors who are then members
of the Board of Directors of Borrower.
"Credit Event" means the making or continuation of, or conversion
into, any Loan or the issuance of any Letter of Credit, or any extension
thereof or other amendment or modification thereto.
ANNEX B - Page 4
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"Current Assets" means, at any time, (i) the current assets of
Borrower determined in accordance with GAAP (without regard to the book value
of prerecorded video tapes held for rental by Borrower) plus (ii) an amount
equal to the book value of prerecorded video tapes held for rental by Borrower.
"Current Liabilities" means, at any time, (i) the current liabilities
of Borrower determined in accordance with GAAP (without regard to the principal
amount of outstanding Revolving Loans) plus (ii) the principal amount of
outstanding Revolving Loans.
"Debtor Laws" means all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization
or similar Laws, or general equitable principles, from time to time in effect,
affecting the Rights of creditors generally or providing for relief to debtors.
"Default" means any of the events specified in Section 7.1, regardless
of whether there shall have occurred any passage of time or giving of notice or
both that would be necessary in order to constitute such event an Event of
Default.
"Default Rate" means, at the time in question, the lesser of (i) the
Base Rate, as in effect for each day during such time, plus 3% and (ii) the
Maximum Rate.
"Dividends" means, in respect of any corporation, limited liability
company or similar Person, cash distributions or any other distributions
(whether in cash, Property or obligations) on, or in respect of, any class of
capital stock of such entity, except for distribution made solely in shares of
common stock.
"Domestic Lending Office" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" opposite its name on
Annex A attached hereto and made a part hereof or such other office of such
Bank as such Bank may from time to time specify to Borrower and the Agent.
"EBITDA" means, for any period, the net income (plus or minus any
extraordinary charges or credits) of Borrower for such period plus (i) interest
expense of Borrower for such period with respect to the Loans and all other
borrowed-money Indebtedness and the interest expense component under
Capitalized Lease Obligations plus (ii) income tax expense of Borrower for such
period plus (iii) the aggregate amount deducted in determining net income of
Borrower for such period for depreciation and amortization of Property.
"EBITR" means, for any period, the net income (plus or minus any
extraordinary charges or credits) of Borrower for such period plus (i) interest
expense of Borrower for such period with respect to the Loans and all other
borrowed-money Indebtedness and the interest expense component under
Capitalized Lease Obligations plus (ii) income tax expense of Borrower for such
period plus (iii) rental expense of Borrower for such period.
ANNEX B - Page 5
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"Environmental Complaint" means any third party (including private
parties, governmental agencies, and employees) action, lawsuit, claim, demand,
event, condition, report, investigation or proceeding which seeks to impose
liability for (i) noise; (ii) pollution or contamination of the air, surface
water, groundwater, or land; (iii) generation, handling, treatment, storage,
disposal, or transportation of Hazardous Materials; (iv) exposure to Hazardous
Materials; or (v) non-compliance with any Environmental Law.
"Environmental Law" shall mean any federal, state, or local law,
statute, ordinance, or regulation pertaining to health, industrial hygiene, or
the environmental conditions, including without limitation, (i) the Resource
Conservation and Recovery Act, as amended by the Hazardous and Solid Waste
Amendments of 1984, as now or hereafter amended (42 U.S.C. Section 6901 et
seq.); (ii) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, as now or hereafter amended (42 U.S.C. Section
9601 et seq.); (iii) the Clean Water Act, as now or hereafter amended (33
U.S.C. Section 1251 et seq.); (iv) the Toxic Substances Control Act, as now or
hereafter amended (15 U.S.C. Section 2601 et seq.); (v) the Clean Air Act, as
now or hereafter amended (42 U.S.C. Section 7401 et seq.), Texas Solid Waste
Disposal Act (V.T.C.A. Health and Safety Code Section 361.001 et seq.) and the
Texas Water Code (V.T.C.A. Water Code Sections 26.001-26.407); (vi) all
regulations promulgated under any of the foregoing; (vii) any local, state or
foreign law, statute, regulation or ordinance analogous to any of the
foregoing; and (viii) any other federal, state, local, or foreign law
(including any common law), statute, regulation, or ordinance, regulating,
prohibiting, or otherwise restricting the placement, discharge, release,
threatened release, generation, treatment, or disposal upon or into any
environmental media of any substance, pollutant, or waste which is now or
hereafter classified or considered to be hazardous or toxic to human health or
the environment.
"Environmental Liability" means any claim, demand, obligation, cause
of action, order, violation, damage, injury, judgment, penalty or fine, cost of
enforcement, cost of remedial action or any other cost or expense whatsoever,
including reasonable attorneys' fees and disbursements, resulting from the
violation or alleged violation of any Environmental Law, the storage, handling,
transportation or release of Hazardous Materials, or the imposition of any
Environmental Lien.
"Environmental Lien" means a Lien in favor of a Governmental Authority
or other Person (i) for any liability under an Environmental Law or (ii) for
damages arising from or costs incurred by such Governmental Authority or other
person in response to a release or threatened release of hazardous or toxic
waste, substance or constituent into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with all presently effective and future regulations issued
pursuant thereto.
"Event of Default" shall have the meaning set forth in Section 7.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
ANNEX B - Page 6
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"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal fund 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, on 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 it.
"Financing Parties" has the meaning set forth in Section 10.8.
"Fiscal Quarter" and "Fiscal Year" refer to the fiscal quarter and
fiscal year of Borrower.
"Fixed Charges" means, for any period, without duplication, the sum of
(i) rental expense of Borrower for such period plus (ii) interest expense of
Borrower for such period on Loans and any other borrowed-money Indebtedness and
the interest expense component under Capitalized Lease Obligations plus (iii)
principal payments of Borrower scheduled for such period on the Loans and all
other borrowed-money Indebtedness which has a maturity date at least 12 months
from the date of initial borrowing (including the capital portion of payments
under Capital Lease Obligations) plus (iv) income tax expense of Borrower for
such period plus (v) cash dividends paid by the Borrower during such period to
its stockholders plus (vi) cash payments by Borrower during such period to
redeem outstanding shares of its capital stock.
"Funded Debt" means, as of any time, the outstanding principal balance
of (i) the Notes plus (ii) Reimbursement Obligations plus (iii) any other
borrowed-money Indebtedness of Borrower.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means, whether now or hereafter constituted
and/or existing, (i) any government or nation, (ii) any state, province,
commonwealth, territory, possession, county, parish, town, township, city or
municipality, (iii) any other Person or entity that exercises executive,
legislative, judicial, regulatory or administrative functions of, or pertaining
to, government, (iv) any political or other authority, district or subdivision
of any of the Persons or entities referred to in the preceding clauses (i),
(ii) and (iii), (v) any court, tribunal, panel, board, commission, department,
agency, bureau, examiner or instrumentality of the Persons or entities referred
to in the preceding clauses (i), (ii), (iii) and (iv), and (vi) any arbitrator,
mediator or arbitration and/or mediation panel, board or the like, whether
impaneled pursuant to Laws, by contract or otherwise.
ANNEX B - Page 7
79
"Guarantee" means, directly or indirectly (without duplication): (i)
guarantee or guaranty, as applicable, an endorsement, an assumption, or an
undertaking, an understanding or a contingent agreement or other agreement
(hereinafter in this definition, the foregoing shall be collectively referred
to as "any agreement", or "any other agreement", as the context may require) to
purchase or acquire, or to furnish funds or Property for the payment or
maintenance of, or otherwise to be or become liable (contingently, irrevocably,
absolutely or otherwise) under or with respect to, or to perform or cause to be
performed, the Indebtedness (or any Property constituting security therefor),
other obligations and liabilities, net worth, capital requirements, working
capital, earnings, financial condition or position, or financial covenants of
any Person, or the redemption or repurchase obligations of any Person's capital
stock, warrants or stock or other equity, partnership or similar capital
equivalents, or any class or nature; (ii) a guarantee of, or any other
agreement for, the payment of dividends or other distributions upon the stock,
equity, partnership or other interests of any Person; (iii) any agreement to
purchase, sell or lease (as lessee or lessor) Property, products, materials,
supplies or services primarily for the purpose of enabling a debtor to make
payment of its obligations or Indebtedness, or to provide assurances thereof to
any creditor or other obligee of a debtor; (iv) any agreement to assure a
creditor or other obligee against any loss, including but without limitation,
causing a bank or other Person to issue a letter of credit or other similar
instrument for the benefit of another Person; or (v) any agreement commonly
known as or referred to as a "comfort" or "keepwell" letter or agreement;
provided however, in no event shall "Guarantee" include endorsements for
collection or deposit made in the ordinary course of business. The terms
"Guarantee" and "Guaranteed" used as a verb shall have a correlative meaning.
"Hazardous Discharge" means the happening of any event, status or
circumstance involving the use, storage, spill, transportation, removal,
disposal, discharge or cleanup of any Hazardous Material.
"Hazardous Material" means (i) any hazardous substance defined in the
Comprehensive Response, Compensation and Liability Act 42 U.S.C. Section 9601
et seq.; (ii) any substance the presence of which on any Property requires
reporting or remediation under any Environmental Law; (iii) gasoline, diesel
fuel, fuel oil, motor oil and any other petroleum hydrocarbons, including any
additives or other byproducts associated therewith; and (iv) asbestos and
asbestos-containing materials in any form.
"Indebtedness" means, for any Person (without duplication), any
liability, indebtedness or obligation, contingent or otherwise, of such Person:
(i) for borrowed money (whether by loan or the issuance and sale of debt
securities or instruments or the sale of Property to another Person subject to
an understanding or agreement, contingent or otherwise, to repurchase such
Property from such Person); (ii) evidenced by bonds, notes, debentures or
similar instruments; (iii) representing the deferred purchase or acquisition
price of Property or services, including trade accounts payable; (iv) with
respect to amounts or obligations Guaranteed or Indebtedness of another secured
by a Lien on the Property of such Person, whether or not the respective
indebtedness or obligations so secured have been assumed by such Person; (v)
with respect to
ANNEX B - Page 8
80
reimbursement of, or payment in respect to, letters of credit, bankers'
acceptances, surety or other bonds or similar instruments issued or credit
transactions; (vi) for any Guarantee of such Person; (vii) under, or in respect
of, an interest rate swap, cap or collar agreement or similar arrangement
providing for the transfer or mitigation of interest or currency risks
generally or under specific contingencies; (viii) under leases serving as a
source of financing or otherwise capitalized in accordance with GAAP; (ix)
under sales or other title retention agreements; (x) under, or in respect of,
any indemnity and similar obligations, howsoever arising, including,
indemnities incurred or arising in connection with the purchase, sale or use of
Property, the scope of which indemnity is unlimited, unqualified or
unquantifiable, or exceeds the fair market value of the Property being
purchased, sold or used, or pertains to Environmental Liability or to the
negligence, actions, omissions or other activities of any Person; (xi) under,
or in respect of, any partnership, joint venture or similar entity in which
such Person is a general partner, joint venturer or similar participant; (xii)
in respect of unfunded vested benefits under any Plan; (xiii) to redeem,
repurchase, retire or otherwise acquire any shares of capital stock, warrants,
stock equivalents or other evidences of equity of any class or nature of such
person, or to set apart any money or other Property for a defeasance, shaking
or analogous fund for any Dividend or distribution thereon, or for any
redemption, repurchase, retirement or other acquisition thereof, or (xiv) which
would under GAAP be shown on such Person's balance sheet as a liability.
"Interest Period" means with respect to each Borrowing consisting of a
LIBOR Loan, the period commencing on the date of such Borrowing and ending one,
two or three months thereafter, as Borrower may elect in the applicable Notice
of Borrowing or Continuation/Conversion Notice; provided that:
(i) any Interest Period which would otherwise end on a
day that is not a LIBOR Business Day shall be extended to the next
succeeding LIBOR Business Day unless such LIBOR Business Day falls in
another calendar month, in which case such Interest Period shall end
on the immediately preceding LIBOR Business Day;
(ii) any Interest Period which begins on the last LIBOR
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (iii) below, end on the last
LIBOR Business Day of a calendar month; and
(iii) no Interest Period applicable to a Term Loan shall be
elected that extends beyond the Tenn Commitment Termination Date, and
no Interest Period applicable to a Revolving Loan shall be elected
that extends beyond the Revolving Commitment Termination Date.
"Investment" in any Person means any investment, whether by means of
share purchase, loan, advance, extension of credit (other than to customers of
such Person in the ordinary course of such Person's business), capital
contribution or otherwise, in or to such Person, the guarantee
ANNEX B - Page 9
81
of any Indebtedness of such Person or the subordination of any claim against
such Person to other Indebtedness of such Person.
"Issuing Bank" has the meaning set forth in the introductory paragraph
hereof.
"Issuing Bank Parties" has the meaning set forth in Section 2.14(g).
"Judgment" means any judgment, order, levy, abstract, mandamus,
decree, injunction, restraining order or other directive, demand or the like,
of any Governmental Authority, howsoever issued by it (whether pursuant to its
equity rights or powers, or otherwise).
"Laws" means all applicable statutes, laws, ordinances, regulations,
rules, directives, guidelines, interpretations, rulings, orders, requirements,
determinations, judgments, writs, injunctions, decrees and other similar
pronouncements or directives of any Governmental Authority, and "Law" means
each of the foregoing.
"LC Documents" means, collectively, (i) each Letter of Credit, (ii)
any application, reimbursement agreement, pledge agreement, remarketing
agreement, note, and other agreements, documents, certificates and instruments
now or hereafter relating to such Letters of Credit, and (iii) the other
documents, instruments, agreements and certificates executed or delivered in
connection with the items in clauses (i) and (ii) preceding, as the same may be
amended, modified, supplemented, renewed, extended, increased, restated,
refinanced, refunded and/or replaced from time to time, with such changes to
(i), (ii) and (iii) as the Agent and the Issuing Bank shall have approved.
"Legal Rights" means, with respect to a Person, and to such Person's
business, operations and Property, all licenses, permits, certificates
franchises, authorizations, consents, approvals, patents and patent rights,
trademarks and trademark rights, tradenames and tradename rights, copyrights,
service marks, applications, registrations and other similar rights, privileges
and authorities, used or useful and required of such Person and/or for such
Person to own and/or operate its business and Property.
"Lending Office" means, as to any Bank, its Domestic Lending Office or
its LIBOR Lending Office, as the context may require.
"Letter of Credit" means any letter of credit issued pursuant to
Section 2.14.
"Letter of Credit Event" means any proceeding brought by or against
Borrower, or any event, occurrence or circumstance in respect to a Letter of
Credit, wherein the payment of such Letter of Credit is disputed, or the basis
for such payment is disputed, or assertions with respect to any of the
foregoing are made, including, without limitations disputes between or
involving the respective account party and/or beneficiary of such Letter of
Credit, or the commencement of any injunctive action or relief by any Person in
connection therewith.
ANNEX B - Page 10
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"Letter of Credit Exposure" means, at any time without duplication,
the sum of (i) the aggregate undrawn amount of all unexpired Letters of Credit,
plus (ii) the aggregate unpaid amount of all Reimbursement Obligations due and
payable at such time in respect of previous drawings made under Letters of
Credit or under any LC Documents.
"Letter of Credit Limit" means $5,000,000.
"LIBOR Business Day" means any Business Day on which commercial banks
are open for international business in London.
"LIBOR Lending Office" means, as to any Bank, its office, branch or
Affiliate identified in Annex A as its LIBOR Lending Office or such other
office, branch or Affiliate of such Bank as it may hereafter designate as its
LIBOR Lending Office by notice to Borrower and the Agent.
"LIBOR Loan" means a Loan to be made or continued as or converted into
such a designated Loan pursuant to the applicable Notice of Borrowing or
Continuation/ Conversion Notice, as the case may be, which will bear interest
at the Adjusted London Interbank Offered Rate.
"LIBOR Rate Borrowing" means a Borrowing consisting of a LIBOR Loan.
"LIBOR Reserve Percentage" means, for any day, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York with deposits exceeding five billion dollars in
respect of "Eurocurrency Liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
LIBOR Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents).
"Lien" means any lien, mortgage, tax lien, pledge, encumbrance,
Environmental Lien, easement, restriction, right-of-way, charge or adverse
claim affecting title or use of, or resulting in an encumbrance against,
Property of a Person, or a security interest, conditional sale or title
retention arrangement, or any other interest in Property designed to secure the
repayment of a liability or the performance of an obligation or agreement,
whether arising by agreement, under any Law or otherwise, including, without
limitation, any lease in the nature thereof, any option, right of first refusal
or other similar agreement to sell, and any filing of, or agreement to give,
any financing statement under the UCC or equivalent statute in any jurisdiction
or any other instrument that evidences the creation, perfection, continuation,
notice and/or other aspect of a present or future Lien or asserted Lien.
ANNEX B - Page 11
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"Litigation" means any proceeding, judicial, arbitral, mediation or
otherwise) claim, complaint, demand, lawsuit, hearing, inquiry and/or
investigation conducted or threatened by or before any Governmental Authority.
"Loan" means any advance by the Banks to Borrower pursuant to their
Revolving Commitments and their Term Commitments.
"Loan Documents" means this Agreement, each Note and any and all other
agreements, documents, promissory notes, instruments, reports, opinions,
requests, certificates, notices, filings and all other documents, instruments,
agreements and writings, now or hereafter executed or delivered pursuant to, or
in connection with, this Agreement, or the transactions provided for herein or
contemplated hereby, or in or by any other Loan Document, each of the foregoing
being in form, scope and substance satisfactory to the Banks.
"London Interbank Offered Rate" means, with respect to any Interest
Period, the rate per annum (rounded to the nearest 1/100 of 1%) shown on page
3750 of the Dow Xxxxx & Company Telerate screen or any successor page as the
composite offered rate for London interbank deposits with a period equal to
such Interest Period two LIBOR Business Days before the first day of such
Interest Period. In the event that the London Interbank Offered Rate is no
longer published or reported as specified above, then the parties shall use the
rate of interest published in the Wall Street Journal (Southwest Edition) in
the "Money Rates" section as the "London Interbank Offered Rates (LIBOR)" for a
period of time equal or comparable to the applicable Interest Period, as of two
Business Days preceding the date of Borrowing, in which case Borrower agrees it
will no longer have the option to choose 60 days as an Interest Period with
respect thereto.
"Material Adverse Effect" means any circumstance or event which,
individually or in the aggregate with other circumstances or events, (i) could
have any material adverse effect whatsoever upon the validity, performance,
perfection or enforceability of any Loan Documents, or (ii) could be material
and adverse to the financial condition, business, operations or prospects of
Borrower, taken as a whole, or the Property of Borrower, taken as a whole,
(iii) could impair the ability of Borrower to fulfill promptly and completely
its obligations under any of the Loan Documents to which is a party, or (iv)
could result in or cause a Default or an Event of Default.
"Maximum Rate" means, with respect to each of the Agent, the Issuing
Bank and the Banks and on any and with respect to each day, the maximum lawful
non-usurious rate of interest (if any) which, under Applicable Law, it is
permitted or authorized to contract for, charge, collect, receive, take or
reserve from Borrower on its Notes or other Obligations owed or owing to it, as
the case may be, from time to time in effect, including changes in such Maximum
Rate attributable to changes under Applicable Law which permit a greater rate
of interest to be contracted for, charged, collected, received, taken or
reserved as of the effective dates of the respective changes.
ANNEX B - Page 12
84
"Negative Pledge" means any term, provision, agreement, contract or
undertaking that, directly or indirectly, (i) precludes or restricts, or
purports to preclude or restrict, the imposition or voluntary creation of, a
Lien on Property, or (ii) upon the imposition or voluntary creation of a Lien
on Property, requires the owner, lessee or other interest holder therein or
thereto to incur an obligation (payment, performance, creation of a Lien or
otherwise) to a Person, or requires such owner, lessee or other interest holder
to provide, or cause to be provided, any assurances or security to a Person,
which assurances and security did not theretofore exist and/or was not
theretofore required, whether such assurances or security consist of
collateral, guaranties, modifications or supplements to then existing
agreements, new agreements, or otherwise.
"Note" means a Term Note or a Revolving Note, and "Notes" means the
Term Notes or the Revolving Notes, or all of them, and as otherwise provided in
Section 2.3(b).
"Notice of Borrowing" has the meaning set forth in Section 2.2(a).
"Notice of Default" has the meaning set forth in Section 8.3.
"Obligations" means all obligations, indebtedness, fees, expenses,
costs, indemnities and other indemnification obligations, and liabilities of
Borrower to the Agent and the Banks, now existing or hereafter arising, whether
direct or indirect, related or unrelated, fixed or contingent, liquidated or
unliquidated, joint, several or joint or several, or otherwise, and all
renewals, extensions, increases, refinancings, rearrangements or modifications
thereof, or any part thereof, arising pursuant to, or in connection with, this
Agreement or any other Loan Document (including, without limitation and without
duplication, the Letters of Credit, the Letter of Credit Exposure and the
Reimbursement Obligations), and all interest accruing thereon (including,
without limitation, interest which, but for the filing of a petition in
bankruptcy with respect to Borrower, would accrue on such Obligations), and
attorneys, fees incurred in the enforcement or collection thereof.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or any of the Pension Benefit Guaranty Corporation's functions
under ERISA.
"Participant" has the meaning set forth in Section 10.6(b).
"Permitted Indebtedness" has the meaning stated in Section 6.2.
"Permitted Liens" means: (i) Liens imposed by mandatory provisions of
Law such as carrier's, materialmen's, mechanics', warehousemen's, landlord's
and other like Liens arising in the ordinary course of business, securing
Indebtedness not yet due, (ii) Liens for Taxes, if the same are not yet due and
payable or qualify as a Contested Claim, (iii) encumbrances consisting of minor
zoning restrictions, easements or other restrictions on the use of real
Property, provided that such items do not or will not impair or interfere with
the use of such Property for the purposes intended or the value thereof, (iv)
pledges or deposits in connection with or to secure
ANNEX B - Page 13
85
worker's compensation, unemployment insurance, pensions or other employee
benefits, or public or statutory obligations, (v) purchase money security
interests securing Indebtedness permitted under Section 6.2(vi), and (vi) Liens
that exist on Property owned by Borrower on the date of this Agreement and are
listed in Schedule 4.5, together with all renewals, extensions, refinancing and
modifications (but not increases) of the Indebtedness secured thereby.
"Person" includes any individual, corporation, company, joint venture,
general or limited partnership, trust, organization, association, limited
liability partnership, limited liability company or other entity (whether or
not incorporated), or Governmental Authority.
"Plan" means any plan subject to Title IV of ERISA and maintained at
any time since January 1, 1986 for employees of Borrower or of any member of a
"controlled group of corporations" or "trade or business," as such terms are
defined in Section 414(b) or (c) of the Code, of which Borrower is a member, or
any plan subject to Title IV of ERISA to which Borrower is required to
contribute, or has been required to contribute at any time since January 1,
1986, on behalf of its employees.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible (including, without
limitation, Legal Rights).
"Purchaser" has the meaning set forth in Section 103(c).
"Qualified Bank" means any commercial bank located in the USA, which
is organized under the laws of the USA or any state thereof, insures its
deposits with the Federal Deposit Insurance Corporation (or any successor) and
has capital, surplus and undivided profits aggregating at least $100,000,000 as
of the date of such commercial bank's most recent financial report.
"Quarterly Date" means each April 1, July 1, October 1 and January 1.
"Regulation D", "Regulation G", "Regulation T", "Regulation U" and
"Regulation X" mean Regulation D, G, T, U or X, as the case may be, of the
Board of Governors of the Federal Reserve System, or any successor or other
regulation hereafter promulgated by said Board to replace the prior Regulation
D, G, T, U or X and having substantially the same function.
"Reimbursement Obligations" means, at any date, the obligations of
Borrower then outstanding, or which may thereafter arise, in respect of Letters
of Credit then outstanding, under Section 2.14 to reimburse the Issuing Bank
for the amount paid by the Issuing Bank in respect of a drawing under a Letter
of Credit or any other amounts payable under any of the LC Documents.
"Required Banks" means, as of the date of any determination, Banks
that hold at least 66 2/3 % of the Commitments or, if the Commitments shall
have been terminated, holding Notes
ANNEX B - Page 14
86
and having issued (or purchased participations in) Letters of Credit evidencing
66 2/3 % of the sum of the aggregate unpaid principal amount of the Loans and
unexpired Letters of Credit.
"Revolving Availability Period" means the period from and including
the Closing Date to but not including the Revolving Commitment Termination
Date.
"Revolving Commitment" means, as to any Bank and on each relevant date
of determination, the obligation of such Bank to make Revolving Loans to
Borrower in an aggregate principal amount at any one time outstanding not
exceeding the amount set forth opposite such Bank's name in Annex A under the
caption "Revolving Commitment", as the same may be reduced from time to time
pursuant to this Agreement, including reductions attributable to each
Unavailable Commitment for the applicable quarterly period.
"Revolving Commitment Termination Date" means the earlier to occur of
(i) January 31, 1997 and (ii) the date upon which the Revolving Commitments of
all Banks have been terminated pursuant to the terms of this Agreement.
"Revolving Loan" has the meaning set forth in Section 2.1(b).
"Revolving Note" means a promissory note executed by Borrower,
substantially in the form of Exhibit C hereto and otherwise in form and
substance satisfactory to the Agent, payable to the order of each Bank and
evidencing the obligation of Borrower to repay Revolving Loans made to it by
such Bank.
"Rights" means rights, remedies, powers and privileges.
"Subsidiary" means, for any Person, any corporation or "other entity
(including, without limitation, any partnership or joint venture) (i) of which
at least a majority of the securities or other ownership interests having by
the terms thereof ordinary voting power to elect a majority of the board of
directors or other Persons having similar powers and/or performing similar
functions of such corporation or other entity (irrespective of whether or not
at any time securities or other ownership interests of any class or classes of
such corporation or other entity shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person, or (ii) of which such Person is a general partner, joint venturer
or similar capacity.
"Tangible Net Worth" means, as of any date, the total shareholders'
equity (including common stock and preferred stock [other than mandatorily
redeemable stock] at stated value, additional paid-in capital and retained
earnings after deducting treasury stock) which would appear on a balance sheet
of Borrower prepared as of such date in accordance with GAAP, Pius subordinated
Indebtedness in form and substance satisfactory to the Agent, less the sum of
the following: (i) intellectual property rights, (ii) goodwill and experimental
expenses, (iii) unamortized debt discount and expense, (iv) costs in excess of
fair value of the net assets
ANNEX B - Page 15
87
acquired. If (x) Borrower becomes a public company and (y) is required by
Regulation S-X, any Financial Reporting Releases, Staff Accounting Bulletins or
other pronouncement or promulgation by the U.S. Securities and Exchange
Commission (collectively, "SEC Requirements"), to present any portion of
shareholders' equity separately in its publicly-filed financial statements
differently from a presentation that would appear when presented in accordance
with GAAP (SEC Requirements notwithstanding), due to Borrower's obligations
with respect to redemption or repurchase of shares of its capital stock, then
GAAP accounting conventions shall prevail for the purpose of determining
Tangible Net Worth.
"Taxes" means all taxes, assessments, fees, levies, imposts, duties,
penalties or other charges of any nature whatsoever from time to time or at any
time imposed by any Law or any Governmental Authority, whether on income,
profits, Property, sales, use, excise, franchises, capital, ownership,
operations or otherwise.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the USA or any agency thereof, or obligations fully guaranteed
by the USA or any agency thereof (including indirect investments in such
obligations through repurchase agreements with the Agent or any Qualified
Bank), provided that such obligations mature within 6 months of the date of
acquisition thereof, (ii) commercial paper rated at least A-1 by Standard &
Poors or at least P-1 by Xxxxx'x Investor Service and maturing not more than 6
months from the date of acquisition thereof, (iii) time deposits with, and
certificates of deposit and banker's acceptances issued by, the Agent, (iv)
commercial paper maturing not more than 30 days from the acquisition thereof
issued by any Bank (or the parent of any Bank) and (v) Eurodollar investments
made available through any Bank or brokerage company.
"Term Availability Period" means the period from and including June 1,
1995 to but not including the Term Commitment Termination Date.
"Term Commitment" means, as to any Bank and on each relevant date of
determination, the obligation of such Bank to make Term Loans to Borrower in an
aggregate principal amount at any one time outstanding not exceeding the amount
set forth opposite such Bank's name in Annex A under the caption "Term
Commitment", as the same may be reduced from time to time pursuant to this
Agreement, including reductions attributable to each Unavailable Commitment for
the applicable quarterly period.
"Term Commitment Termination Date" means the earlier to occur of (i)
June 1, 1996, and (ii) the date upon which the Term Commitments of all Banks
have been terminated pursuant to the terms of this Agreement.
"Term Loan" has the meaning set forth in Section 2.1(a).
"Term Note" means a promissory note executed by Borrower,
substantially in the form of Exhibit B hereto and otherwise in form and
substance satisfactory to the Agent, payable to the
ANNEX B - Page 16
88
order of each Bank and evidencing the obligation of Borrower to repay Tenn
Loans made to it by such Bank.
"Transferee" has the meaning set forth in Section 10.7(d).
"Type" has the meaning set forth in Section 1.2(f).
"UCC" means the Uniform Commercial Code of the State of Texas and of
any other state to the extent Texas Law requires application of the same.
"UCP" has the meaning set forth in Section 2.14(b).
"USA" means the United States of America.
"Unavailable Commitment" has the meaning set forth in Section 2.7(a).
"Voting Shares" of any corporation means shares of any class or
classes (however designated) having ordinary voting power for the election of
at least a majority of the members of the Board of Directors (or other
governing bodies) of such corporation.
ANNEX B - Page 17
89
ANNEX C
CONDITIONS PRECEDENT:
INITIAL LOAN (AND/OR INITIAL LETTER OF CREDIT)
(a) Agreement and Schedules. This Agreement duly executed by
Borrower, and all Schedules, duly and fully completed, that are provided for in
this Agreement.
(b) Revolving Notes. A Revolving Note duly executed by Borrower
in favor of each Bank in the respective amount of such Bank's Revolving
Commitment.
(c) Term Notes. A Term Note duly executed by Borrower in favor of
each Bank in the respective amount of such Bank's Term Commitment.
(d) Opinion of Counsel to Borrower. Opinion of legal counsel for
Borrower in the form of Exhibit F.
(e) Notice of Borrowing and Other Certificates. A Notice of
Borrowing duly completed and executed by Borrower, and a Compliance Certificate
in the form of Exhibit E duly completed and executed by Borrower.
(f) Secretary Certificate. A Certificate signed by the secretary
of Borrower, which secretary's office and signature shall be confirmed by
another officer of Borrower dated and effective as of the Closing Date
attaching thereto or containing therein, and certifying as to the following:
(i) corporate resolutions, as in effect and neither revoked nor rescinded, duly
adopted by the board of directors of Borrower authorizing the execution,
delivery and performance of the Loan Documents and the transactions
contemplated thereby; (ii) true, complete and accurate copies of the articles
of incorporation and bylaws, as amended and in effect, of Borrower; and (iii)
names, incumbency and specimen signatures of the officers of Borrower
authorized to execute and deliver the Loan Documents.
(g) Official Certificates. Certificates as to incorporation,
existence and good standing for Borrower issued by the Secretary of State
(and/or other appropriate official) of the state of incorporation of Borrower
and certificates of foreign qualification and good standing (or other similar
instruments) for Borrower, issued by the Secretary of State (and/or other
appropriate official) of each of the states wherein Borrower is or should be
qualified to do business as a foreign corporation, each of the foregoing
certificates being dated within 30 days prior to the date of the Closing Date.
(h) Articles of Incorporation and Bylaws. A copy of the Articles
of Incorporation of Borrower and all amendments thereto, certified by the
Secretary of State of the state of incorporation of Borrower as being true,
complete and accurate, and being dated within 30 days prior to the Closing
Date.
ANNEX C - Page 1
90
(i) Litigation Report. A report of Borrower describing all
pending or threatened Litigation by or against Borrower or any of its Property
(including Litigation for which Borrower will be responsible after the Closing
Date). There shall be no outstanding order or injunction of any Governmental
Authority which would prohibit (i) the execution, delivery or performance, now
or hereafter, of any Loan Document or (ii) any of the transactions contemplated
by the Loan Documents.
(j) Environmental Reports. Copies of all environmental surveys or
reports relating to real Property owned or leased by Borrower which have
heretofore been performed or prepared (each of which is described in Schedule
4.20 hereof).
(k) Insurance Certificates. A certificate from each insurer or
duly authorized insurer's Agent of Borrower setting forth a listing of all
insurance coverage of Borrower and reflecting that the policies evidencing such
coverage conforms to the requirements of this Agreement and each of the other
Loan Documents, including, without limitation, modification endorsements as
specified in Section 5.10. In addition, Borrower shall deliver a certificate
executed by an Authorized Officer setting forth the insurance obtained by
Borrower in accordance with the requirements of Section 5.10 and certifying
that such insurance is in full force and effect and that all premiums then due
and payable thereon have been paid.
(l) Financial Statements. Copies of financial statements of
Borrower for the most recent period required under Section 5.1.
(m) UCC Reports. Copies of the results of Uniform Commercial Code
searches showing all financing statements and other documents or instruments on
file against Borrower in the appropriate central and local offices of the
relevant jurisdictions, each such search to be through a search period ending
as of a date no more than 10 days prior to the Closing Date.
(n) Regulatory and Other Approvals. Evidence that all necessary
approvals or consents of Governmental Authorities and all other Persons have
been obtained.
(o) Compliance with Laws. Evidence that Borrower has complied
with all Laws necessary to consummate the transactions contemplated by this
Agreement and each of the other Loan Documents.
(p) Fees. Payment of (i) the facility fee payable to the Agent on
the Closing Date, and (ii)fees of counsel to the Banks payable by Borrower in
connection with the preparation, negotiation and closing of the transactions
contemplated by this Agreement (Borrower's obligations under clause (ii) are
limited to $25,000).
(q) Additional Documentation. Such additional approvals,
opinions, documents, instruments, reports, certifications and/or agreements as
the Agent, the Banks or their counsel may reasonably request.
ANNEX C - Page 2
91
Hastings
books - music - video
March 17, 1995
Re: Credit Agreement dated December 12, 1994, among Hastings Books, Music
& Video, Inc. as borrower, The Boatmen's National Bank of St. Louis,
individually and as the Agent and certain other financial
institutions that are a party thereto (the "Credit Agreement")
(terms used below that are defined in the Credit Agreement shall have
the meanings set forth therein)
The Boatmen's National Bank of St. Louis, as Agent
000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Gentlemen:
This letter will serve to confirm our request that the definition of
"Tenn Availability Period" as set forth in the Credit Agreement, be modified to
provide that the Tenn Availability Period will commence as of March 17, 1995
instead of June 1, 1995. We understand, that this change will have the effect
of commencing the quarterly fee payable under Section 2.6(a) of the Credit
Agreement as of March 17, 1995.
If the foregoing is acceptable, please indicate your agreement as the
Agent by executing this letter where indicated below. Also, as required under
Section 10.6 of the Credit Agreement, please have the Required Banks sign below
to indicate their agreement with the foregoing. Any approval of the foregoing
by the Agent and the Banks shall not constitute a consent to any other or
similar requests made by the Borrower in the future.
HASTINGS BOOKS, MUSIC & VIDEO, INC.
By: /s/ XXXX X. XXXXX
----------------------------------------
Xxxx X. Xxxxx
Vice President, Secretary, Treasurer and
Chief Financial Officer
ANNEX C - Page 3
92
AGREED AS OF THE DATE OF THIS LETTER:
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
individually and as the Agent
By: /s/ XXXXX X. XXXXXXXX
-------------------------------
Name: Xxxxx X. Xxxxxxxx
-----------------------------
Title: Vice President
----------------------------
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ XXXX X. XXXXXX
-------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------
Title: Senior Vice President
----------------------------
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ XXXXXXXX XXXXX
-------------------------------
Name: Xxxxxxxx Xxxxx
-----------------------------
Title: Banking Officer
----------------------------
ANNEX C - Page 4
93
AMENDMENT TO CREDIT AGREEMENT
This Amendment to Credit Agreement (this "Amendment") is entered into
as of November 8, 1995, among (a) HASTINGS BOOKS, MUSIC & VIDEO, INC., a Texas
corporation ("Borrower") (b) THE BOATMEN'S NATIONAL BANK OF ST. LOUIS, a
national banking association ("Boatmen's Bank"), individually, as the issuing
Bank and as the Agent, and (c) the other financial institutions that are now or
hereafter parties to the Credit Agreement described below (each a "Bank") and
collectively the "Banks").
Recitals
A. Borrower, Boatmen's Bank individually, as the Bank and as the
Agent, and the other Banks have heretofore entered into the Credit Agreement
dated as of December 12, 1994, as amended by the Letter Agreement dated March
17, 1995 (as amended, modified, restated and supplemented from time to time,
the "Credit Agreement").
B. Borrower has requested that the Banks agree to (i) temporarily
increase their aggregate Revolving Commitments from $30,000,000 to $40,000,000
for the period commencing on the date of this Amendment and ending on April 30,
1996, whereupon such aggregate Revolving Commitments will automatically be
reduced to $30,000.000; and (ii) extend the Revolving Availability Period to
January 31, 1998.
C. The Banks are willing to agree to such requested changes on
the terms and conditions set forth in this Amendment.
Agreements
In consideration of the foregoing premises, the mutual agreements
contained herein and other good and valuable consideration and reasonably
equivalent value, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the respective meanings set
forth in the Credit Agreement.
2. Amendments. The Credit Agreement is hereby amended as
follows:
(a) Temporary Increase in Revolving Commitments. To
reflect the temporary increase in the aggregate Revolving Commitments
of the Banks from $30,000,000 to $40,000,000 for the period commencing
on the date of this Amendment and ending on April 30, 1996, Annex A
attached to the Credit Agreement is hereby amended and replaced with
the Annex A attached to this Amendment. All references in the Credit
Agreement and other Loan Documents to the "Revolving Commitments" of
the Banks shall hereafter refer to such revised amounts, as the same
may be reduced from time to time pursuant to the terms of the Credit
Agreement.
94
(b) Renewal Revolving Notes. To evidence Revolving Loans
made to Borrower by each Bank up to the amount of such Bank's
Revolving Commitment, as revised hereby, Borrower shall execute and
deliver to each Bank a Renewal Revolving Note in the form attached
hereto as Exhibit A, payable to the order of such Bank and in a stated
principal amount equal to such Bank's Revolving Commitment, as revised
hereby. On the date hereof, Borrower shall execute and deliver to
each Bank such a Renewal Revolving Note as a renewal, modification and
increase of the existing Revolving Note issued to such Bank pursuant
to the Credit Agreement. All references in the Credit Agreement and
the other Loan Documents to the "Revolving Notes" of the Banks shall
hereafter refer to the Renewal Revolving Notes executed and delivered
pursuant to this Amendment, as further amended, modified, restated,
supplemented, renewed, extended, increased, refinanced and/or replaced
from time to time.
(d) Mandatory Prepayment. Section 2.8 of the Credit
Agreement is hereby amended to add the following new subsection (d):
"(d) As described on Annex A attached hereto, the
aggregate Revolving Commitments of xx Xxxxx are automatically
reduced to $30,000,000 at 12:00 noon (St. Louis time) on
April 30, 1996. Upon the effectiveness of such automatic
reduction, Borrower shall immediately prepay the Revolving
Loans in an amount such that the aggregate principal amount of
all Revolving Loans outstanding plus the Letter of Credit
Exposure does not exceed the aggregate amount of the Revolving
Commitments of all Banks as so reduced. Any such prepayment
shall be accompanied by, and Borrower shall pay, interest
thereon which has accrued until the date of payment thereof."
(c) Extension of Revolving Availability Period. To
reflect the extension of the Revolving Availability Period, the
referenced to "January 31, 1997" in Section 2.7(e) of the Credit
Agreement is hereby amended to refer to "January 31, 1998."
(e) Revolving Commitment Termination Date. The
definition of "Revolving Commitment Termination Date" as set forth in
Annex B attached to the Credit Agreement is hereby amended to read in
its entirety as follows:
"Revolving Commitment Termination Date" means the
earlier to occur of (i) January 31, 1998 and (ii) the date
upon which the Revolving Commitments of all Banks have been
terminated pursuant to the terms of this Agreement.
3. In order to induce the Agent and the Banks to enter into this
Amendment, Borrower hereby represents and warrants to the Agent and the Banks
that, as of the date of this Amendment, (a) the representations and warranties
set forth in the Credit Agreement and each
-2-
95
other Loan Document are true and correct as if made on and as o the date hereof
(other than those representations and warranties expressly limited by their
terms to a specific date), (b) no Default or Event of Default has occurred and
in continuing, and (c) no event has occurred since the date of the most recent
financial statements delivered pursuant to Section 5.1 of the Credit Agreement
that has caused a Material Adverse Effect.
4. Borrower hereby acknowledges and agrees that no facts events,
status or conditions presently exist which, either now or with the passage of
time or the giving of notice or both, presently constitute or will constitute a
basis for any claim or cause of action against any of the Banks, or any defense
to the payment of any of the indebtedness evidenced or to be evidenced by any
of the Loan Documents.
5. Each Loan Document is hereby amended and modified to the
extent necessary to give full force and effect to the terms of this Amendment,
and each such Loan Document shall hereafter be construed and interpreted after
giving full force and effect to the terms of this Amendment. As amended,
modified and supplemented pursuant to this Amendment, Borrower hereby
ratifies, confirms and restates each Loan Document and agrees that each such
Loan Document shall continue in full force and effect. Each of the Loan
Documents now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Credit Agreement, as mended hereby, or as
further evidence of or in connection with the Credit Agreement, as amended
hereby, are hereby amended to the extent necessary so that any reference in any
such documents, instruments or agreements to the Credit Agreement shall be a
reference to the Credit Agreement as amended hereby.
6. In the event that any one or more of the provisions contained
in this Amendment shall be determined invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such
provision or provisions in every other respect and the remaining provisions of
this Amendment shall not be impaired in any way.
7. When required or implied by the context used, defined terms
herein shall include the plural as well as the singular, and vice versa.
8. The Amendment shall be governed by and construed in accordance
with the internal laws of the State of Texas and applicable federal laws of the
United States of America.
9. This Amendment shall be binding upon and inure to the benefit
of all parties hereto and their respective successors and assigns; provided,
however, that neither Borrower nor any of its successors or assigns may,
without the prior written consent of all of the Banks, assign any rights,
powers, duties or obligations hereunder.
10. This Amendment maybe executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute but one and the same instrument.
-3-
96
11. The Amendment constitutes a Loan Document.
12. Upon execution of this Agreement by the Banks, Borrower shall
pay the Agent, for the ratable account of the Banks, a non-refundable amendment
fee equal to $12,500.
[signatures on next page]
-4-
97
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized signatories as of the day and
year first above written.
BORROWER
HASTINGS BOOKS, MUSIC & VIDEO, INC.
By: /s/ XXXX X. XXXXXXXXX
--------------------------------------
Name: Xxxx X. Xxxxxxxxx
------------------------------------
Title: Chairman & CEO
-----------------------------------
AGENT/BANKS:
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS,
Individually, as the Agent and the
Issuing Bank
By: /s/ XXXXX X. XXXXXXXX
--------------------------------------
Name: Xxxxx X. Xxxxxxxx
------------------------------------
Title: Vice President
-----------------------------------
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ XXXX X. XXXXXX
--------------------------------------
Name: Xxxx X. Xxxxxx
------------------------------------
Title: Senior Vice President
-----------------------------------
TEXAS COMMERCE BANK OF TEXAS, N.A.
By: /s/ XXXXXXXX XXXXX
--------------------------------------
Name: Xxxxxxxx Xxxxx
------------------------------------
Title: Assistant Vice President
-----------------------------------
-5-
98
THIRD AMENDMENT TO CREDIT AGREEMENT
This Third Amendment to Credit Agreement (this "AMENDMENT") is entered
into as of April 30, 1996, among (a) HASTINGS BOOKS, MUSIC & VIDEO, INC., a
Texas corporation ("BORROWER"), (b) THE BOATMEN'S NATIONAL BANK OF ST. LOUIS, a
national banking association ("BOATMEN'S BANK"), individually, as the Issuing
Bank and as the Agent, and (c) the other financial institutions that are now or
hereafter parties to the Credit Agreement described below (each a "BANK" and
collectively the "BANKS").
RECITALS
A. Borrower, Boatmen's Bank individually, as the Issuing Bank and
as the Agent, and the other Banks have heretofore entered into the Credit
Agreement dated as of December 12, 1994, as amended by the Letter Agreement
dated March 17, 1995 and the Amendment to Credit Agreement dated November 8,
1995 (as amended, modified, restated and supplemented from time to time, the
"CREDIT AGREEMENT").
B. Borrower has requested that the Banks agree to (i) extend the
temporary increase in their aggregate Revolving Commitments from April 30, 1996
until June 30, 1996, whereupon such aggregate Revolving Commitments will
automatically be reduced from $40,000,000 to $30,000,000; (ii) extend the
Revolving Availability Period from January 31,1998 to April 30, 1999; (iii) fix
the Applicable Margin at 3/4 or 1% per annum from the date hereof until the
first Fiscal Quarter of the 1997 Fiscal Year and provide for the determination
of the Applicable Margin thereafter; (iv) reduce the fee from 1/4 of 1% to
.1875 of 1% per annum on the total unused and available portion of the
Revolving Commitments and Term Commitments of all Banks; (v) add a definition
of Adjusted EBITDA, and replace the Funded Debt to EBITDA ratio with a Funded
Debt to Adjusted EBITDA ratio; (vi) revise the definition of Fixed Charges, and
replace the ratio of EBITR to Fixed Charges with a ratio of Adjusted EBITDAR to
Fixed Charges; (vii) revise the definition of Tangible Net Worth to include the
LIPO reserve and deferred income taxes; (viii) delete the ratio of Current
Assets to Current Liabilities; and (ix) permit Borrower to issue up to
$30,000,000 of unsecured promissory notes on or before September 30,1996,
whereupon Borrower shall immediately prepay the entire outstanding principal
balance of the Term Loans.
C. The Banks are willing to agree to such requested changes on
the terms and conditions set forth in this Amendment.
AGREEMENTS
In consideration of the foregoing premises, the mutual agreements
contained herein and other good and valuable consideration and reasonably
equivalent value, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the respective meanings set
forth in the Credit Agreement.
2. Amendments. The Credit Agreement is hereby amended as
follows:
99
(a) Extension of Temporary Increase in Revolving
Commitments. To reflect the extension from April 30, 1996 until June
30, 1996 of the temporary increase in the Revolving Commitments from
$30,000,000 to $40,000,000, all references to "12:00 noon (St. Louis
time) on April 30, 1996" in Annex A attached to the Credit Agreement
are hereby amended and replaced with "12:00 noon (St. Louis time) on
June 30, 1996."
(b) Extension of Revolving Availability Period. To
reflect the extension of the Revolving Availability Period, the
reference to "January 21, 1998" in Section 2.7(e) of the Credit
Agreement is hereby amended to refer to "April 30, 1999." In
addition, to reflect the ability of Banks to elect to extend such
termination date for the Revolving Commitments for either up to an
additional one-year or two-year period, the reference to "an
additional one-year period" in Section 2.7(e) of the Credit Agreement
is hereby amended to refer to "an additional one-year or two-year
period."
(c) Revolving Commitment Termination Date. The
definition of "Revolving Commitment Termination Date" set forth in
Annex B attached to the Credit Agreement is hereby amended to read in
its entirety as follows:
"Revolving Commitment Termination Date" means the
earlier to occur of (i) April 30, 1999 and (ii) the date upon
which the Revolving Commitments of all Banks have been
terminated pursuant to the terms of this Agreement.
(d) Adjust the Applicable Margin. The definition of
"Applicable Margin" set forth in Annex B with respect to Term Loans,
including the table thereunder with respect to Term Loans, shall
remain unchanged, and, subject to subsection (dd) below, the
definition of Applicable Margin with respect to Revolving Loans is
hereby amended to add the following subsections (aa), (bb), (cc) and
(dd), following subsection (b) thereof:
(aa) From April 30, 1996 until determined pursuant
to subsection (bb) below, the Applicable Margin with respect
to Revolving Loans shall be equal to 3/4 of 1%;
(bb) Commencing upon receipt of the certificate
required Section 5.1(e) of the Credit Agreement for the first
Fiscal Quarter of the 1997 Fiscal Year, the Applicable Margin
with respect to Revolving Loans shall be equal to the
percentage set forth below based upon the ratio of Funded Debt
to Adjusted EBITDA as of the end of each such Fiscal Quarter
with respect to the four fiscal-quarter period ending as of
the end of such Fiscal Quarter;
2
100
======================================================================================================
LIBOR Spread
------------------------------------------------------------------------------------------------------
Ratio of Funded Debt to Adjusted EBITDA Revolving Loans
------------------------------------------------------------------------------------------------------
Less than 1.50 to 1.00 .75
------------------------------------------------------------------------------------------------------
Greater than or equal to 1.50 to 1.00 but less than 1.75 to 1.00 .875
------------------------------------------------------------------------------------------------------
Greater than or equal to 1.75 to 1.00 but less than 2.00 to 1.00 1.00
------------------------------------------------------------------------------------------------------
Greater than or equal to 2.00 to 1.00 1.25
======================================================================================================
(cc) Each determination of the Applicable Margin
pursuant to subsection (bb) above shall be determined by the
Agent within 10 days after the delivery to it of a certificate
required by Section 5.1(e). Promptly upon each such
determination, the Agent shall notify Borrower and each Bank
of such determination. Each change in the Applicable Margin
shall remain effective until the next such determination.
(dd) Paragraphs (aa), (bb) and (cc) above shall
become void and of no further force or effect if (i) the Note
Offering is not closed and funded on or before September 30,
1996; or (ii) the rate of interest on the Indebtedness
evidenced by the notes issued by Borrower pursuant to the Note
Offering exceeds the sum of (A) the yield on the 10.75% United
States Treasury Notes due May 2003, as per PX7 of Bloomberg,
at the time the rate of interest on the Indebtedness evidenced
by the notes issued by Borrower pursuant to the Note Offering
is determined (ie, the time of the circle), plus (B) 1.35%;
and the Applicable Margin with respect to Revolving Loans
shall revert to the Applicable Margin in effect immediately
prior to the Third Amendment of this Agreement, which
Applicable Margin is set forth in (a) above.
(e) Reduction of Certain Fees. To reflect the reduction
of certain fees, both references to "1/4 of 1%" in Section 2.6(a) of
the Credit Agreement are hereby amended to refer to ".1875 of 1%."
(f) Definition of Adjusted EBITDA. Annex B attached to
the Credit Agreement is hereby amended to add the following definition
of "Adjusted EBITDA":
"Adjusted EBITDA" means, for any period, the net
income (plus or minus any extraordinary charges or credits) of
Borrower for such period plus (i) interest expense of Borrower
for such period with respect to the Loans and all other
borrowed-money Indebtedness and the interest expense component
under Capitalized Lease Obligations plus (ii) income tax
expense of Borrower for such period plus (iii) other non-cash
items plus (iv) the aggregate amount deducted in determining
net income of Borrower for such period for depreciation
(excluding depreciation relating to video tapes held for
rental) and amortization of Property.
3
101
(g) Change of Funded Debt to EBITDA Ratio. To reflect a
change of the Funded Debt to EBITDA ratio, the reference to "EBITDA"
in Section 6.1(e) of the Credit Agreement is hereby amended to be
"Adjusted EBITDA," and the reference to "2.00 to 1.00" in Section
6.1(e) of the Credit Agreement is hereby amended to be "2.50 to 1.00."
(h) Definition of EBITR. The definition of "EBITR" set
forth in Annex B attached to the Credit Agreement is hereby deleted in
its entirety and replaced with the following definition:
"Adjusted EBITDAR" means, for any period, the net
income (plus or minus any extraordinary charges for credits)
or Borrower for such period plus (i) interest expense of
Borrower for such period with respect to the Loans and all
other borrowed-money Indebtedness and the interest expense
component under Capitalized Lease Obligations plus (ii) income
tax expense of Borrower for such period plus (iii) other
non-cash items plus (iv) the aggregate amount deducted in
determining net income of Borrower for such period for
depreciation (excluding depreciation relating to video tapes
held for rental) and amortization of Property plus (v) rental
expense of Borrower for such period.
(i) Change of EBITR to Fixed Charges Ratio. Section
6.1(b) of the Credit Agreement is hereby amended to read in its
entirety as follows:
(b) The ratio of Adjusted EBITDAR to Fixed
Charges to be less than 2.00 to 1.00 as of the end of any
Fiscal Quarter for the four-quarter period ending as of the
end of such Fiscal Quarter; or
(j) Definition of Fixed Charges. The definition of
"Fixed Charges" as set forth in Annex B attached to the Credit
Agreement is hereby amended to read in its entirety as follows:
"Fixed Charges" means, for any period, without
duplication, the sum of (i) rental expense of Borrower for
such period plus (ii) interest expense of Borrower for such
period on Loans and any other borrowed-money Indebtedness and
the interest expense component under the Capitalized Lease
Obligations.
(k) Definition of Tangible Net Worth. The definition of
"Tangible Net Worth" set forth in Annex B attached to the Credit
Agreement is hereby amended to read in its entirety as follows:
"Tangible Net Worth" means, as of any date, the total
shareholders' equity (including common stock and preferred
stock [other than mandatorily redeemable stock] at stated
value, additional paid-in capital and retained earnings after
deducting treasury stock) which would appear on a balance
sheet of Borrower prepared as of such date in accordance with
GAAP plus (i) subordinated Indebtedness in forma and substance
satisfactory to the Agent, (ii) LIFO reserve and (iii)
deferred income taxes, less the sum of the following: (i)
intellectural property rights, (ii) goodwil and experimental
expenses, (iii) unamortized debt
4
102
discount and expense, (iv) costs in excess of fair value of
the net assets acquired. If (x) Borrower becomes a public
company and (y) is required by Regulation S-X, any Financial
Reporting Releases, Staff Accounting Bulletins or other
prounouncement or promulgation by the U.S. Securities and
Exchange Commission (collectively, "SEC REQUIREMENTS"), to
present any portion of shareholders' equity separately in its
publicly-filed financial statements differently from a
presentation that would appear when presented in accordance
with GAAP (SEC Requirements notwithstanding), due to
Borrower's obligations with respect to redemption or
repurchase of shares of its capital stock, then GAAP
accounting conventions shall prevail for the purpose of
determining Tangible Net Worth.
(l) Delete Current Assets to Current Liabilties Ratio.
Section 6.1(a) of the Credit Agreement is hereby deleted in its
entirety.
(m) Permit Note Offering. Section 6.2 of the Credit
Agreement is hereby amended to add the following new subsection (vii):
"(vii) Indebtedness of Borrower evidenced by
promissory notes issued by Borrower pursuant to the
Note Offering; provided that all of the following
conditions are met: (i) such notes are issued only
for cash, (ii) the Indebtedness evidenced by such
notes is less than or equal to $30,000,000, (iii) the
Indebtedness evidenced by such notes is unsecured and
parri passu with the Obligations, (iv) Borrower
prepays the Revolving Loans and Term Loans required
under Sections 2.8(d) and (e); and (v) the Note
Offering closes and is funded no later than September
30, 1996."
(n) Mandatory Prepayment. Section 2.8 of the Credit
Agreement is hereby amended to (i) revise Section 2.8(d) to read in
its entirety as follows, and (ii) to add the following new subsection
(e):
(d) On the earlier to occur of (i) the closing
and funding of the Note Offering, and (ii) 12:00 noon (St.
Louis time) on June 30, 1996, the aggregate Revolving
Commitments of all Banks shall automatically be reduced to
$30,000,000. In addition, on the date of the closing and
funding of the Note Offering, the aggregate Revolving
Commitments of all Banks shall automatically be further
reduced by the amount, if any, by which the Indebtedness of
Borrower evidenced by the promissory notes issued by borrower
pursuant to the Note Offering exceeds $25,000,000. Upon the
effectiveness of any of the foregoing automatic reductions,
Borrower shall immediately prepay the revolving Loans in an
amount such that the aggregate principal amount of all
Revolving Loans outstanding plus the Letter of Credit Exposure
does not exceed the aggregate amount of the Revolving
Commitments of all Banks as so reduced. Any such prepayment
shall be accompanied by, and Borrower shall pay, interest
thereon which has accrued until the date of payment thereof.
(e) On the date of the closing and funding of the
Note Offering, the Term Commitment shall automatically
terminate and Borrower shall immediately
5
103
prepay the entire outstanding principal balance of the Term
Loans. Any such prepayment shall be accompanied by, and
Borrower shall pay, interest thereon which has accrued until
the date of payment thereof.
(o) Definition of Note Offering. Annex B attached to the
Credit Agreement is hereby amended to add the following definition of
"Note Offering":
"Note Offering" means the offering of Senior Notes
contemplated by Borrower to close no later than September 30,
1996, such notes to be in the principal amount of up to
$30,000,000.
(p) Revisions to Exhibit E. Exhibit E attached to the
Credit Agreement is hereby amended and replaced with Exhibit E
attached to this Agreement.
3. In order to induce the Agent and the Banks to enter into this
Amendment, Borrower hereby represents and warrants to the Agent and the Banks
that, as of the date of this Amendment, (a) the representations and warranties
set forth in the Credit Agreement and each other Loan Document are true and
correct as if made on and as of the date hereof (other than those
representations and warranties expressly limited by their terms to a specific
date), (b) no Default or Event of Default has occurred and is continuing, and
(c) no event has occurred since the date of the most recent financial
statements delivered pursuant to Section 5.1 of the Credit Agreement that has
caused a Material Adverse Effect.
4. Borrower hereby acknowledges and agrees that no facts events,
status or conditions presently exist which, either now or with the passage of
time or the giving of notice or both, presently constitute or will constitute a
basis for any claim or cause of action against any of the Banks, or any defense
to the payment of any of the indebtedness evidenced or to be evidenced by any
of the Loan Documents.
5. Each Loan Document is hereby amended and modified to the
extent necessary to give full force and effect to the terms of this Amendment,
and each such Loan Document shall hereafter be construed and interpreted after
giving full force and effect to the terms of this Amendment. As amended,
modified and supplemented pursuant to this Amendment, Borrower hereby ratifies,
confirms and restates each Loan Document and agrees that each such Loan
Document shall continue in full force and effect. Each of the Loan Documents
now or hereafter executed and delivered pursuant to the terms hereof or
pursuant to the terms of the credit Agreement, as amended hereby, are hereby
amended to the extent necessary so that any reference in any such documents,
instruments or agreements to the Credit Agreement shall be a reference to the
Credit Agreement as amended hereby.
6. In the event that one or more of the provisions contained in
this Amendment shall be determined invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such
provision or provisions in every other respect and the remaining provisions of
this Amendment shall not be impaired in any way.
7. When required or implied by the context used, defined terms
used herein shall include the plural as well as the singular, and vice versa.
6
104
8. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of Texas and applicable federal
laws of the United States of America.
9. This Amendment shall be binding upon and inure to the benefit
of all parties hereto and their respective successors and assigns; provided,
however, that neither Borrower nor any of its successors or assigns may,
without the prior written consent of all of the Banks, assign any rights,
powers, duties or obligations hereunder.
10. This Amendment may be executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute but one and the same instrument.
11. This Amendment constitutes a Loan Document.
[signatures on next page]
7
105
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized signatories as of the day and
year first above written.
BORROWER
HASTINGS BOOKS, MUSIC & VIDEO, INC.
By: /s/ XXXXXX XXXXXX
-------------------------------------
Name: Xxxxxx XxXxxx
-----------------------------------
Title: CFO-VP- Finance
----------------------------------
AGENT/BANKS:
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS,
Individually, as Agent and
the Issuing Bank
By: /s/ XXXXXX X. XXXXXXXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
-----------------------------------
Title: Vice President
----------------------------------
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ XXXX XXXXXX
-------------------------------------
Name: Xxxx Xxxxxx
-----------------------------------
Title: Senior Vice President
----------------------------------
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ XXXXXXXX X. XXXXX
-------------------------------------
Name: Xxxxxxxx X. Xxxxx
-----------------------------------
Title: Assistant Vice President
----------------------------------
8
000
XXXXXX XXXXXXXXX TO CREDIT AGREEMENT
This Fourth Amendment to Credit Agreement (this "Amendment") is
entered into as of June 12, 1996, among (a) HASTINGS BOOKS, MUSIC & VIDEO,
INC., a Texas corporation ("Borrower"), (b) THE BOATMEN'S NATIONAL BANK OF ST.
LOUIS, a national banking association ("Boatmen's Bank"), individually and as
the Issuing Bank and as the Agent, and (c) the other financial institutions
that are now or hereafter parties to the Credit Agreement described below (each
a "Bank" and collectively the "Banks").
Recitals
A. Borrower, Boatmen's Bank individually, as the Issuing Bank and
as the Agent, and the other Banks have heretofore entered into the Credit
agreement dated as of December 12, 1994, as amended by the Letter Agreement
dated March 17, 1995, the Amendment to Credit Agreement dated November 8, 1995,
and the Third Amendment to Credit Agreement dated April 12, 1996 (as amended,
modified, restated and supplemented from time to time, the "Credit Agreement").
B. Borrower has requested that the Banks agree to allow Borrower
to grant a negative pledge in connection with the Note Offering.
C. The Banks are willing to agree to such requested changes on
the terms and conditions set forth in this Amendment.
Agreements
In consideration of the foregoing premises, the mutual agreements
contained herein and other good and valuable consideration and reasonably
equivalent value, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the
respective meanings set forth in the Credit Agreement.
2. Amendment. Section 6.3 of the Credit Agreement is
hereby amended to read as follows:
Section 6.3 Limitation on Property. Borrower will not (I)
grant, create, enter into, incur, permit or suffer to exist,
upon or with regard to any of its respective Property now
owned or hereafter acquired, (A) any Lien, except for
Permitted Liens, or (B) any Negative Pledge, except for the
benefit of the Agent, the Issuing Bank and Banks, or the
purchasers of the promissory notes issued by Borrower pursuant
to the Note Offering, or (ii) enter into any sale-and-lease
back transaction. Anything in the foregoing or elsewhere in
the Loan Documents to the contrary notwithstanding, it is
understood that no Liens, other than Permitted Liens, or
Negative Pledges, except for the benefit of the Banks or the
purchasers of the promissory notes issued by Borrower pursuant
to the Note Offering, are permitted on or with respect to any
of the Property of Borrower.
107
3. In order to induce the Agent and the Banks to enter
into this Amendment, Borrower hereby represents and warrants to the
Agent and the Banks that, as of the date of this Amendment, (a) the
representations and warranties set forth in the Credit Agreement and
each other Loan Document are true and correct as if made on and as of
the date hereof (other than those representations and warranties
expressly limited by their terms to a specific date), (b) no Default
or Event of Default has occurred and is continuing, and (c) no event
has occurred since the date of the most recent financial statement
delivered pursuant to Section 5.1 of the Credit Agreement that has
caused a Material Adverse Effect.
4. Borrower hereby acknowledges and agrees that no
facts, events, status or conditions presently exist which, either now
or with the passage of time or the giving of notice or both, presently
constitute or will constitute a basis for any claim or cause of action
against any of the Banks, or any defense to the payment of any of the
indebtedness evidenced or to be evidenced by any of the Loan
Documents.
5. Each Loan Document is hereby amended and modified to
the extent necessary to give full force and effect to the terms of
this Amendment, and each such Loan Document shall hereafter be
construed and interpreted after giving full force and effect to the
terms of this Amendment. As amended, modified and supplemented
pursuant to this Amendment, Borrower hereby ratifies, confirms and
restates each Loan Document now or hereafter executed and delivered in
full force and effect. Each of the Loan Documents now or hereafter
executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Credit Agreement, as amended hereby, or as further
evidence of or in connection with the Credit Agreement, as amended
hereby, are hereby amended to the extent necessary so that any
reference in any such documents, instruments or agreements to the
Credit Agreement shall be a reference to the Credit Agreement as
amended hereby.
6. In the event that ny one or more of the provisions
contained in this Amendment shall be determined invalid, illegal or
unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision or provisions in even other
respect and the remaining provisions of this Amendment shall not be
impaired in any way.
7. When required or implied by the contest used, defined
terms used herein shall include the plural as well as the singular,
and vice versa.
8. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of Texas and applicable
federal laws of the United States of America.
9. This Amendment shall be binding upon and inure to the
benefit of all parties hereto and their respective successors and
assigns; provided, however, that neither Borrower nor any of its
successors may, without the prior written consent of all of the Banks,
assign any rights, powers, duties or obligations hereunder.
-2-
108
10. This Amendment may be executed in any number of
counterparts and by different parties hereto on separate counterparts,
each of which when so executed shall be deemed to be an original and
all of which when taken together shall constitute but one and the same
instrument.
11. This Amendment constitutes a Loan Document.
BORROWER:
HASTINGS BOOKS, MUSIC & VIDEO, INC.
By: /s/ XXXXXX XXXXXX
--------------------------------------
Xxxxxx XxXxxx
Chief Financial Officer, and
Vice President Finance
AGENT/BANKS:
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
Individually, as the Agent and
the Issuing Bank
By: /s/ XXXXX XXXXXXXX
--------------------------------------
Name: Xxxxx Xxxxxxxx
------------------------------------
Title: Vice President
-----------------------------------
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ XXXXX XXXXX
--------------------------------------
Name: Xxxxx Xxxxx
------------------------------------
Title: Senior Vice President
-----------------------------------
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ XXXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxxx Xxxxx
------------------------------------
Title: Assistant Vice President
-----------------------------------
-3-
109
FIFTH AMENDMENT TO CREDIT AGREEMENT
This Fifth Amendment to Credit Agreement (this "Amendment") is entered
into as of September 5, 1995, among (a) HASTINGS BOOKS, MUSIC & VIDEO, INC., a
Texas corporation ("Borrower"), (b) THE BOATMEN'S NATIONAL BANK OF ST. LOUIS, a
national banking association ("Boatmen's Bank"), individually, as the Issuing
bank and as the Agent, and (c) the other financial institutions that are now or
hereafter parties to the Credit Agreement described below (each a "Bank" and
collectively the "Banks").
RECITALS
A. Borrower, Boatmen's Bank individually, as the Issuing Bank and
as the Agent, and the other Banks have heretofore entered into the Credit
Agreement dated as of December 12, 1994, as amended by the Letter Agreement
dated March 17, 1995, the Amendment to Credit Agreement dated November 8, 1995,
the Third Amendment to Credit Agreement dated April 30, 1996 and the Fourth
Amendment to Credit Agreement dated June 12, 1996 (as amended, modified,
restated and supplemented from time to time, the "Credit Agreement").
B. Borrower has requested that the Banks agree to (i) permanently
increase their aggregate Revolving Commitments from $30,000,000 to $45,000,000;
and (ii) change the Funded Date to Adjusted EBITDA ration from "2.50 to 1.00"
to "2.25 to 1.00."
C. The Banks are willing to agree to such requested changes on
the terms and conditions set forth in this Amendment.
AGREEMENTS
In consideration of the foregoing premises, the mutual agreements
contained herein and other good and valuable consideration and reasonably
equivalent value, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the respective meanings set
forth in the Credit Agreement.
2. Amendments. The Credit Agreement is hereby amended as
follows;
(a) Extension of Permanent Increase in Revolving
Commitments. To reflect the permanent increase in the Revolving
Commitments form $30,000,000 to $45,000,000, Annex A attached to the
Credit Agreement is hereby amended and replaced with Annex A attached
to this Amendment. All references in the Credit Agreement and other
Loan Documents to the "Revolving Commitments" of the Banks shall
thereafter refer to such revised amounts.
(b) Renewal Revolving Notes. To evidence Revolving Loans
made to Borrower by each Bank up to the amount of such Bank's
Revolving Commitment, as revised hereby, Borrower shall execute and
deliver to each Bank a Renewal Revolving
110
Note in the form attached hereto as Exhibit A, payable to the order of
such Bank and in a stated principal amount equal to such Bank's
Revolving Commitment, as revised hereby. ON the date hereof, borrower
shall execute and deliver to each Bank such a Renewal Revolving Note
as a renewal, modification and increase of the existing Revolving Note
issued to such Bank pursuant to the Credit Agreement. All references
in the Credit Agreement and the other Loan Documents to the "Revolving
Notes" of the Banks shall hereafter refer to the Renewal Revolving
Notes executed and delivered pursuant to this Amendment, as further
amended, modified, restated, supplemented, renewed, extended,
increased, refinanced and/or replaced from time to time.
(c) Change of Funded Debt to Adjusted EBITDA Ratio. To
reflect a change of the Funded Debt to Adjusted EBITDA ratio, the
reference to "2.50 to 1.00" in Section 6.1(c) of the Credit Agreement
is hereby amended to be "2.25 to 1.00".
3. In order to induce the Agent and the Banks to enter into this
Amendment, Borrower hereby represents and warrants to the Agent and the Banks
that, as of the date of this Amendment, (a) the representations and warranties
set forth in the Credit Agreement and each other Loan Document are true and
correct as if made on and as of the date hereof (other than those
representations and warranties expressly limited by their terms to a specific
date), (b) no Default or Event of Default has occurred and is continuing, and
(c) no event has occurred since the date of the most recent financial
statements delivered pursuant to Section 5.1 of the Credit Agreement that has
caused a Material Adverse Effect.
4. Borrower hereby acknowledges and agrees that no facts events,
status or conditions presently exist which, either now or with the passage of
time or the giving of notice or both, presently constitute or will constitute a
basis for any claim or cause of action against any of the Banks, or any defense
to the payment of any of the indebtedness evidenced or to be evidenced by any
of the Loan Documents.
5. Each Loan Document is hereby amended and modified to the
extent necessary to give full force and effect to the terms of this Amendment,
and each such Loan Document shall hereafter be construed and interpreted after
giving full force and effect to the terms of this Amendment. As amended,
modified and supplemented pursuant to this Amendment, Borrower hereby ratifies,
confirms and restates each Loan Document and agrees that each such Loan
Document shall continue in full force and effect. Each of the Loan documents
now or hereafter executed and delivered pursuant to the terms hereof or
pursuant to the terms of the Credit Agreement, as amended hereby, or as further
evidence of or in connection with the Credit Agreement, are hereby amended to
the extent necessary so that any reference in any such documents, instruments
or agreements to the Credit agreement shall be a reference to the Credit
Agreement as amended hereby.
6. In the event that any one or more of the provisions contained
in this amendment shall be determined invalid, illegal or unenforceable in any
respect for any reason, the validity,
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111
legality and enforceability of any such provision or provisions in every other
respect and the remaining provisions of the Amendment shall not be impaired in
any way.
7. When required or implied by the context used, defined terms
used herein shall include the plural as well as the singular, and vice versa.
8. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of Texas and applicable federal
laws of the United States of America.
9. This Amendment shall be binding upon and inure to the benefit
of all parties hereto and their respective successors and assigns; provided,
however, that neither Borrower nor any of its successors or assigns may,
without the prior written consent of all of the banks, assign any rights,
powers duties or obligations hereunder.
10. This Amendment may be executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute but one and the same instrument.
11. This Amendment constitutes a Loan Document.
12. Upon the execution of this Amendment, Borrower shall pay to
the Agent, for the ratable benefit of Banks, a non-refundable placement fee in
the amount of $12,000.00.
[signatures on next page]
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112
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized signatories as of the day and
year first above written.
BORROWER
HASTINGS BOOKS, MUSIC & VIDEO, INC.
By: /s/ XXXXXX XXXXXX
--------------------------------------
Name: Xxxxxx XxXxxx
------------------------------------
Title: CFO-VP Finance
-----------------------------------
AGENT/BANKS:
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS,
Individually, as the Agent and
the Issuing Bank
By: /s/ XXXXXX X. XXXXXXXXXXX
--------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
------------------------------------
Title: Vice President
-----------------------------------
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ XXXX XXXXXX
--------------------------------------
Name: Xxxx Xxxxxx
------------------------------------
Title: Senior Vice President
-----------------------------------
XXXXX FARGO BANK (TEXAS), National
Association
By: /s/ XXXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxxx Xxxxx
------------------------------------
Title: Assistant Vice President
-----------------------------------
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113
ANNEX A
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
1. Domestic Lending Office:
The Boatmen's National Bank
of St. Louis
000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
2. LIBOR Lending Office:
The Boatmen's National Bank
of St. Louis
000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
3. Revolving Commitment: $16,876,000
4. Total Commitment: $16,875,000
5. Information for Notices:
the Boatmen's National Bank
of St. Louis
000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Annex A-1
114
ANNEX A
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
1. Domestic Lending Office:
Texas Commerce Bank National Association
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
2. LIBOR Lending Office:
Texas Commerce Bank National Association
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
3. Revolving Commitment: $14,062,500
4. Total Commitment: $14,062,500
5. Information for Notices:
Texas Commerce Bank National Association
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Annex A-2
115
ANNEX A
FIRST INTERSTATE BANK OF TEXAS, N.A.
1. Domestic Lending Office:
First Interstate Bank of Texas, N.A.
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
2. LIBOR Lending Office:
First Interstate Bank of Texas, N.A.
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
3. Revolving Commitment: $14,062,500
4. Total Commitment: $14,062,500
5. Information for Notices:
First Interstate Bank of Texas, N.A.
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxxx Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Annex A-3
116
EXHIBIT A
RENEWAL REVOLVING NOTE
$_________________________ September 5, 1996
For value received, HASTINGS BOOKS, MUSIC & VIDEO, INC., a Texas
corporation (the "Maker'), irrevocably and unconditionally promises to pay to
the order of _________________________ (the "Bank"), at the principal office of
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS in St. Louis, Missouri, as Agent for
the Banks, the principal sum of _________________________ AND NO/100 DOLLARS
($________________), or such lesser amount as shall equal the aggregate unpaid
principal amount of Revolving Loans made by the Bank to the Maker pursuant to
the terms of the Credit Agreement referred to below, in lawful money of the USA
and in immediately available funds, on the dates and in the principal amounts
provided for in the Credit Agreement, and to pay interest on the unpaid
principal amount of such Revolving Loans at such office, in like money and
funds for the period commencing on the date of each such Revolving Loan until
it is paid in full, at the rates and on the dates provided for in the Credit
Agreement. All capitalized terms used but not defined herein shall have the
meanings set forth in the Credit Agreement referred to below.
Principal of and interest on the unpaid principal balance of Revolving
Loans under this Note from time to time outstanding shall be due and payable as
set forth in the Credit Agreement.
This Note is one of the "Revolving Notes" executed by the Maker and is
referred to in, governed by, and entitled to the benefits of, the Credit
Agreement dated as of December 12, 1994, among the Maker, THE BOATMEN'S
NATIONAL BANK OF ST. LOUIS, individually, a s the Agent and as the Issuing
Bank, and the financial institutions that are now or hereafter parties thereto
(including the Bank), as amended by the Letter Agreement dated March 17, 1995,
the Amendment to Credit Agreement dated November 8, 1995, the Third Amendment
to Credit Agreement dated April 30, 1996, the Fourth Amendment to Credit
Agreement dated June 12, 1996 and the fifth Amendment to Credit Agreement dated
September 5, 1996 (as amended, restated, supplemented, renewed, extended or
otherwise modified from time to time, "Credit Agreement"), to which reference
is made for all relevant intents and purposes, including for a statement of the
rights and obligations of the Agent and the Banks and the duties and
obligations of the Maker in relation thereto, including mandatory and voluntary
prepayments hereof, interest rate and amount limitations and the acceleration
of the maturity hereof. however, neither the foregoing reference to the Credit
Agreement nor to any provision thereof or referred to therein, shall affect or
impair the irrevocable, absolute and unconditional obligation of the Maker to
pay principal of, and interest on this Note when due. Unless the maturity of
this Note shall have sooner occurred, the outstanding principal balance of this
Note and all accrued and unpaid interest thereon shall be finally and fully
payable on revolving Commitment Termination Date.
The date, amount, Type, interest rate and duration of Interest Period
(if applicable) of each Revolving Loan made by the bank to the Maker, and each
payment made on account of the principal thereof, and accrued interest thereon,
shall be recorded by the Bank on its books and prior to any transfer of this
Note, endorsed by the Bank on a schedule attached hereto or any
117
continuation thereof. The Bank's failure to make or error in making any such
recordations or endorsements shall not diminish, reduce or relieve the Maker's
obligation to pay (i) all Revolving Loans made by the Bank to the maker and
then outstanding and (ii) all accrued and earned interest on the amounts
thereof from time to time outstanding and unpaid, pursuant to this Note.
The Maker and all sureties, endorsers, guarantors and other Persons
ever liable for the payment of any sums payable on this Note, jointly and
severally, waive notice, demand, notice of presentment, presentment,
presentment for payment, demand for payment, non-payment, notice of dishonor,
dishonor, notice of intent to accelerate maturity, notice of acceleration of
maturity, notice of intent to demand, protest, notice of protest, grace and all
formalities and other notices of any and every kind, and filing of suit or
diligence in collecting this Note or enforcing (in whole or part) any security
or guaranty now or hereafter for the payment of this Note, and consent and
agree to any partial or full substitution, exchange or release of any such
security or guaranty or the partial or full release of any Person primarily or
secondarily liable hereon, and consent and agree that it will not be necessary
for any holder hereof, in order to enforce payment by it of this Note to first
institute suit or exhaust its remedies against the Maker or any other Persons
liable herefor, or to enforce it rights against any such security hereford or
guarantor or any other Person with respect hereto, and consent to any or all
extensions, increases or renewals or postponements, modifications or
rearrangements of time or payment of this Note or any other indulgence with
respect hereto, without notice thereof to, or consent thereto from, any of
them.
Except as provided by Section 10.7 of the Credit Agreement, this Note
may not be assigned by the Bank to any Person.
This Note (including its validity, enforceability and interpretation)
shall be governed by, and construed in accordance with, the laws of the State
of Texas (without regard to conflict of law principles) and, to the extent
controlling, the federal laws of the USA.
This Note is given in renewal, modification and increase of the
Renewal Revolving Note dated November 8, 1995, executed by the Maker and
payable to the Bank, in the stated principal amount of $___________________.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
HASTINGS BOOKS, MUSIC & VIDEO, INC.
By:
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Name:
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Title:
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